AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 1996
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ROADHOUSE GRILL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
FLORIDA 5812 65-0367604
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
6600 N. ANDREWS AVE., SUITE 160
FORT LAUDERDALE, FLORIDA 33309
(954) 489-9699
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN DAVID TOOLE, III
CHIEF EXECUTIVE OFFICER
ROADHOUSE GRILL, INC.
6600 N. ANDREWS AVE., SUITE 160
FORT LAUDERDALE, FLORIDA 33309
(954) 489-9699
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
DAN BUSBEE
LOCKE PURNELL RAIN HARRELL MARY A. BERNARD
(A PROFESSIONAL CORPORATION) KING & SPALDING
2200 ROSS AVENUE, SUITE 2200 120 WEST 45TH STREET
DALLAS, TEXAS 75201-6776 NEW YORK, NEW YORK 10036-4003
(214) 740-8000 (212) 556-2100
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
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, check the following box. [ ]
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 the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [x]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock,
$.01 par value -- -- $34,500,000(1) $11,897
<FN>
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(1) Estimated pursuant to Rule 457 solely for purposes of calculating the
registration fee.
</FN>
</TABLE>
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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 THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
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 SEPTEMBER 26, 1996
PROSPECTUS
DATED , 1996
SHARES
[LOGO]
COMMON STOCK
All of the shares of Common Stock offered hereby are being issued and
sold by Roadhouse Grill, Inc. (the "Company").
Prior to this offering (the "Offering"), there has been no public market for
the Common Stock of the Company. It is currently estimated that the initial
public offering price will be between $ and $ per share. See
"Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The Company has applied to
have the Common Stock listed on the Nasdaq National Market under the symbol
"GRLL."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- --------------- ---------------- ----------------- -----------------
Per Share ..... $ $ $
- --------------- ---------------- ----------------- -----------------
Total(3) ...... $ $ $
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the Underwriters a 30-day option to purchase up
to an aggregate of additional shares of Common Stock solely to
cover over-allotments, if any, at the per share Price to Public less the
Underwriting Discount. If the Underwriters exercise this option in full,
the total Price to Public, Underwriting Discount and Proceeds to Company
will be $ , $ and $ , respectively. See
"Underwriting."
The shares of Common Stock are offered by the several Underwriters subject to
prior sale when, as and if delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected
that certificates for such shares will be available for delivery at the
offices of Piper Jaffray Inc. in Minneapolis, Minnesota on or about ,
1996.
PIPER JAFFRAY INC. ROBERTSON, STEPHENS & COMPANY
<PAGE>
[INSIDE FRONT COVER]
Appendix "A" contains a description of the artwork on inside front cover and the
inside front fold-out.
<PAGE>
APPENDIX "A"
INSIDE FRONT COVER
The inside front cover contains a full-page photograph of the outside of the
Bradenton, Florida Roadhouse Grill restaurant with the caption "Bradenton,
Florida."
INSIDE FRONT FOLD-OUT
The inside front fold-out contains the following five photographs with the
Company's motto ("Good Food and a Smile...That's Roadhouse Style!") on a
background of peanuts in the shell:
1. The game room at the Ft. Lauderdale, Florida Roadhouse Grill
restaurant with the caption "Ft. Lauderdle, Florida - Game
Room."
2. A plate with ribs and a baked potato with the caption "Full Rack BBQ
Baby Back Ribs."
3. A basket of rolls next to a rolling pin and a bag of flour with the
caption "Homemade Yeast Rolls."
4. The inside of the Delray Beach, Florida Roadhouse Grill
restaurant with the caption "Delray Beach, Florida."
<PAGE>
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and quarterly reports for the first
three quarters of each fiscal year containing unaudited interim financial
information.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS (I) REFLECTS A
FOR REVERSE SPLIT OF THE COMPANY'S COMMON STOCK EFFECTED ON
, 1996, (II) ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION AND (III) GIVES EFFECT TO THE CONVERSION OF ALL
OUTSTANDING SHARES OF THE COMPANY'S SERIES A PREFERRED STOCK AND SERIES B
PREFERRED STOCK (TOGETHER, THE "ISSUED PREFERRED STOCK") INTO SHARES OF
COMMON STOCK, WHICH CONVERSION WILL OCCUR CONCURRENTLY WITH THE CLOSING OF
THE OFFERING. THE TERMS "COMPANY" AND "ROADHOUSE GRILL" REFER TO ROADHOUSE
GRILL, INC.
THE COMPANY
The Company owns and operates 28 and franchises or licenses six
full-service, casual dining restaurants under the name "Roadhouse Grill." The
Roadhouse Grill concept offers a fun, value-oriented dining experience that
features premium quality grilled entrees and friendly service consistent with
the Company's motto: "Good Food and a Smile . . . That's Roadhouse
Style."/registered trademark/ The comfortable, entertaining roadhouse setting
was designed to appeal to a broad range of customers, including business
people, couples, singles and particularly families.
Roadhouse Grill restaurants are designed to create an energetic and casual
atmosphere. The interior of each restaurant is large, open and visually
appealing, featuring exposed ceilings and brick and lapboard cedar walls
decorated with colorful, hand-painted murals and neon signs. Multi-level
seating is used to provide guests with a full view of the restaurant,
including the exhibition grill and display kitchen, allowing everyone to
enjoy the Roadhouse Grill experience. The exhibition cooking area features a
mesquite-fired grill, a kitchen where homemade yeast rolls are made
throughout the day and a display case filled with fresh cuts of meat, seafood
and salads. To help create Roadhouse Grill's casual ambience, metal pails of
roasted peanuts top each table, guests are encouraged to toss peanut shells
on the floor, drinks are served in mason jars, long neck beers are delivered
in metal buckets filled with ice, and a classic jukebox entertains guests
with popular rock and country and western music. The exterior of each
restaurant features rough-sawed siding, a wrap-around wood plank porch, a tin
roof trimmed in neon and an oversized "Roadhouse Grill" sign.
The Roadhouse Grill menu features aged USDA Choice steaks hand cut at each
restaurant, ribs, chicken and seafood, all of which are grilled to order. In
addition to grilled selections, the menu offers a variety of appetizers,
sandwiches, salads and desserts, including signature items such as Roadhouse
cheese wraps, hot-out-of-the-oven yeast rolls made from scratch each day and
a daily selection of homemade ice cream. Prices range from $2.99 to $6.29 for
lunch entrees and from $4.99 to $15.99 for dinner entrees. During Fiscal
1995, the average guest check, including beverage, was approximately $7.25
for lunch and $13.00 for dinner.
Since opening its first Roadhouse Grill in March 1993, the Company has
grown rapidly, adding two additional restaurants in 1993, three restaurants
in 1994, 13 restaurants in 1995 and, to date, nine restaurants in 1996.
Although the Company has recently opened restaurants in Georgia, South
Carolina and upstate New York, the Company-owned Roadhouse Grill restaurants
are located primarily in Florida. The Company's growth strategy is to
continue opening Company-owned restaurants primarily in the Southeastern and
Gulf Coast regions of the United States. The Company currently plans to open
four more restaurants in 1996, all of which are under construction, and
approximately 15 restaurants in 1997.
3
<PAGE>
Of the Company's six franchised or licensed restaurants, three are located
in Malaysia, and three are located in the United States. The Company expects
that its international franchisees will open at least two additional
Roadhouse Grill restaurants in Asia and the Pacific Rim by the end of 1997.
Although the Company has granted limited domestic franchise/development
rights, it intends to focus on expansion of Company-owned restaurants in the
United States.
The Company believes that Company-owned Roadhouse Grill restaurants have
achieved attractive unit level economics. The 12 Company-owned restaurants
that were open for the entire twelve-month period ended June 30, 1996
generated average restaurant revenues of approximately $2.8 million for such
period. The average cash investment, excluding real estate costs and
pre-opening expenses, required to open the 22 Roadhouse Grill restaurants
opened by the Company prior to June 30, 1996 was approximately $1.3 million.
The Company's current prototype restaurant is approximately 6,800 square feet
with seating for 212 guests. The Company expects that the average cash
investment required to open such a prototype restaurant, excluding real
estate costs and pre-opening expenses, will be approximately $950,000 or $1.3
million, depending upon whether the Company converts an existing building or
constructs a new restaurant.
Roadhouse Grill restaurants are based upon a roadhouse-style concept
developed in 1991 by the Company's founder and Chief Executive Officer, John
David Toole III. During the last two years, the Company has assembled a
corporate management team with an average of 15 years of experience in the
restaurant industry. In addition, the Company devotes substantial resources
to employee development. The Company believes that personable, well-trained
employees are essential to the overall success of Roadhouse Grill
restaurants, and, accordingly, it selects employees based upon personality
and initiative and emphasizes training and internal promotion.
The Company was incorporated in Florida in October 1992, and its principal
executive offices are located at 6600 N. Andrews Avenue, Suite 160, Fort
Lauderdale, Florida 33309. Its telephone number at that address is (954)
489-9699.
THE OFFERING
Common Stock offered by the Company ...... shares
Common Stock to be outstanding
after the Offering ..................... shares(1)
Use of proceeds .......................... To repay indebtedness, finance the
opening of additional restaurants and
for other general corporate purposes.
See "Use of Proceeds."
Proposed Nasdaq National Market symbol ... GRLL
- --------------
(1) Does not include (i) shares reserved for issuance upon the
exercise of options outstanding or issuable under the Company's 1994 Stock
Option Plan, of which shares were subject to outstanding options at
June 30, 1996 (at a weighted-average exercise price of $ per share);
(ii) shares reserved for issuance upon exercise of outstanding
options held by the Company's President and Chief Executive Officer (at an
exercise price of $ per share); or (iii) shares reserved for
issuance upon exercise of outstanding warrants (at an exercise price of
$ per share). See "Management--Executive Compensation," "Management--
1994 Stock Option Plan," "Management--Compensation Committee Interlocks and
Insider Participation," "Certain Transactions" and "Description of Capital
Stock--Warrants."
4
<PAGE>
SUMMARY FINANCIAL AND RESTAURANT DATA
(IN THOUSANDS, EXCEPT PER SHARE AND RESTAURANT DATA)
<TABLE>
<CAPTION>
TWENTY SIX
FISCAL YEAR WEEKS ENDED
--------------------------------------- ---------------------------
JULY 2, JUNE 30,
1993 1994 1995 1995 1996
--------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue ................... $3,465 $ 11,389 $ 34,275 $ 13,773 $ 27,633
Operating income (loss) ......... (540) (1,948) (3,529) (744) 145
Net loss(1) ..................... $ (713) $ (2,519) $ (3,490) $ (632) $ (168)
========= ============= ============= ============= ============
Pro forma net loss per
common share(2) ............... $ $
============= ============
Pro forma weighted average
shares outstanding(2) .........
RESTAURANT DATA:
Restaurants open (end of
period):
Company-owned(3) ............... 3 6 19 13 23
Franchised(4) .................. 1 2 3 2 5
-- ------------- ------------- ------------- --------------
Total ......................... 4 8 22 15 28
Average sales per Company-owned
restaurant(5) ................. -- $3,048,581 $2,939,028 $1,524,514 $1,437,029
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------
AS
ACTUAL ADJUSTED(6)
----------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital .................................................... $(7,067) $
Total assets ....................................................... 49,674
Due to related parties and long-term debt, including current
portion .......................................................... 10,963
Obligations under capital leases, including current portion ....... 4,414
Total shareholders' equity ......................................... 28,613
</TABLE>
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(1) In its first three years of operation, the Company incurred net operating
losses. Accordingly, the Company has made no provision for taxes payable,
and at December 31, 1995 had a net operating loss carryforward of
approximately $5.9 million. A full valuation reserve has been established
for all net deferred tax assets.
(2) Gives effect to the conversion of the Issued Preferred Stock into Common
Stock, which will occur concurrently with the closing of the Offering.
(3) Includes two restaurants in which the Company originally held a 50%
ownership interest. The Company acquired the remaining 50% ownership
interest in one of such restaurants in March 1995 and recently contracted
to acquire the remaining 50% ownership interest in the other restaurant.
See "Business--Restaurant Locations."
(4) In March 1995, the Company acquired two franchised restaurants, one of
which was closed for a three-month period in Fiscal 1995 for remodeling.
See "Business--Restaurant Locations."
(5) Includes Company-owned restaurants (including the two restaurants owned
by limited liability companies) that were in operation for the full
period.
(6) Adjusted to reflect the sale of the shares of Common Stock
offered hereby at an assumed initial public offering price of $ per
share and the application of the net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."
THE COMPANY OPERATES ON A 52 OR 53 WEEK FISCAL YEAR ENDING ON THE SUNDAY
NEAREST TO DECEMBER 31. REFERENCES IN THIS PROSPECTUS TO "FISCAL 1993,"
"FISCAL 1994," "FISCAL 1995" AND "FISCAL 1996" REFER TO THE COMPANY'S FISCAL
YEARS ENDED OR ENDING, AS THE CASE MAY BE, ON JANUARY 2, 1994, JANUARY 1,
1995, DECEMBER 31, 1995 AND DECEMBER 29, 1996, RESPECTIVELY. EACH OF FISCAL
1993, FISCAL 1994 AND FISCAL 1995 WAS, AND FISCAL 1996 WILL BE, COMPRISED OF
52 WEEKS.
5
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN
EVALUATING AN INVESTMENT IN THE COMMON STOCK. THE DISCUSSION IN THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTY. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED HEREIN.
LIMITED OPERATING HISTORY; OPERATING LOSSES
The Company was incorporated in October 1992, and the first Company-owned
Roadhouse Grill restaurant was opened in March 1993. The Company incurred
losses of $713,000, $2.5 million, $3.5 million and $168,000 in Fiscal 1993,
Fiscal 1994, Fiscal 1995 and the twenty-six week period ended June 30, 1996,
respectively, and there can be no assurance that the Company's operations
will be profitable in the future.
RISKS OF RAPID EXPANSION; MANAGEMENT OF GROWTH
The Company's continued growth will depend on its ability to open and
operate new restaurants on a timely and profitable basis. The Company intends
to open four new restaurants during the balance of 1996 and approximately 15
restaurants during 1997. The ability of the Company to open and operate new
restaurants on a timely and profitable basis is subject to various
contingencies, some of which are beyond the Company's control. These
contingencies include, among others, the Company's ability to secure suitable
restaurant sites on a timely basis and on satisfactory terms, to obtain
required governmental permits and approvals, to complete construction on a
cost-effective and timely basis, to hire, train and retain skilled management
and other personnel, to obtain adequate financing or other capital resources
and to successfully integrate new restaurants into the Company's existing
operations. There can be no assurance that the Company will be able to
achieve its planned expansion or that its expansion will be profitable.
Profitability may be adversely affected by costs associated with developing a
significant number of new restaurants over a relatively short period of time.
New restaurants typically incur above-average operating costs during the
first several months of operation, which have a material adverse effect on
the profitability of such restaurants during such period. In addition,
although the Company intends to open new restaurants within its current
market area, it also intends to open new restaurants in geographic markets in
which the Company has limited or no previous operating experience. Failure of
the Company to achieve its planned expansion on a profitable basis would have
a material adverse effect on the Company's results of operations and
financial condition.
The Company is subject to a variety of business risks associated with
rapidly growing companies, including the risk that existing management,
information systems and financial controls will be inadequate to support the
Company's planned expansion. There can be no assurance that the Company will
be able to respond on a timely basis to all of the changing demands that its
planned expansion will impose on management and such systems and controls. In
addition, several members of the Company's management team have joined the
Company within the last year and have no experience operating a large
restaurant chain. The failure to continue to evaluate and improve management,
information systems and financial controls or unexpected difficulties
encountered during expansion could have a material adverse effect on the
Company's results of operations and financial condition.
FUTURE CAPITAL NEEDS
The Company currently intends to finance new restaurants with cash from
operations and the net proceeds from the Offering. The Company intends to
open four new restaurants during the balance of 1996 and approximately 15
restaurants in 1997. The Company expects that the average cash investment
required to open its prototype restaurants, excluding real estate costs and
pre-opening expenses, will be approximately $950,000 or $1.3 million,
depending on whether the Company converts an existing building or constructs
a new restaurant. There can be no assurance that the actual cost of opening
the
6
<PAGE>
Company's prototype restaurants will not be significantly greater than that
expected by the Company. Although the Company believes that the net proceeds
of the Offering remaining after repayment of approximately $6.8 million of
outstanding indebtedness, together with cash from operations, will be
sufficient to fund its anticipated expansion through 1997, there can be no
assurance that such funding will be sufficient. In the event such funding is
not sufficient to support the Company's planned expansion, the Company will
be required to incur short-term or long-term bank indebtedness or issue, in
public or private transactions, equity or debt securities. There can be no
assurance that such additional financing will be available on terms
acceptable to the Company, if at all. The Company currently does not have a
credit facility with a bank or other financial institution. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
GEOGRAPHIC CONCENTRATION; SMALL RESTAURANT BASE
Of the 28 restaurants currently owned and operated by the Company, 23 are
located in Florida. Consequently, the Company's results of operations may be
materially adversely affected by downturns in Florida's economy or by
hurricanes or other adverse weather conditions in Florida. Also, adverse
publicity in Florida relating to Roadhouse Grill restaurants could have a
more pronounced effect on the Company's results of operations than might be
the case if its restaurants were broadly dispersed geographically. Further,
there can be no assurance that continued expansion in the Company's current
market areas will not adversely affect the financial performance of other
restaurants already operated by the Company in those areas. In addition, the
Company has recently opened new restaurants in Georgia, South Carolina and
upstate New York. However, the Company has not previously managed restaurants
that are geographically dispersed, and there can be no assurance that the
Company will be able to operate restaurants profitably outside Florida.
The operating results achieved to date by the Company's relatively small
restaurant base may not be indicative of the future operating results of a
larger number of restaurants. In addition, due to the Company's small
restaurant base, poor operating results at any one restaurant could adversely
affect the results of operations of the entire Company.
SEASONALITY AND FLUCTUATIONS IN QUARTERLY RESULTS
The Company's sales and earnings fluctuate seasonally, and the Company's
highest sales and earnings historically have occurred in its first and fourth
fiscal quarters. The Company's restaurants are located primarily in Florida,
and the Company believes that the effects of seasonality are more pronounced
in Florida than in other states. In addition, quarterly results are
significantly affected by the timing of new restaurant openings, as new
restaurants incur above-average operating costs during the first several
months of operation. Accordingly, to the extent that restaurant openings are
concentrated in any fiscal period, results of operations for such fiscal
period and subsequent fiscal periods may be materially adversely affected.
Due to the seasonality of the Company's business and the impact of new
restaurant openings, results of operations may fluctuate significantly from
quarter to quarter, and the Company's results of operations for any
particular quarter are not necessarily indicative of the results that may be
achieved for the full fiscal year. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Seasonality and Quarterly
Results."
COMPETITION
The restaurant industry is highly competitive. The Company competes with a
broad range of restaurants, including national and regional casual dining
chains as well as locally-owned restaurants, some of which operate with
concepts similar to that of the Company. Many of the Company's competitors
are well established and have substantially greater market presence and
financial and other resources than the Company. The entrance of new
competitors into the Company's market areas or the expansion of operations by
existing competitors could have a material adverse effect on the Company's
results of operations and financial condition. In addition, the Company
competes with other restaurant
7
<PAGE>
companies and retailers for sites, labor and, in many cases, customers. The
Company believes that the key competitive factors in the restaurant industry
are quality of food and service, price, location and concept. To the extent
that one or more of its competitors becomes more successful in respect of any
key competitive factor, the Company's business could be adversely affected.
See "Business--Competition; Restaurant Industry."
RESTAURANT INDUSTRY
The restaurant industry is affected by changes in consumer tastes as well
as national, regional and local economic conditions, demographic trends,
traffic patterns, and the type, number and location of competing restaurants.
Dependence on fresh meats and produce also subjects restaurant companies to
the risk that shortages or interruptions in supply could adversely affect the
availability, quality or cost of ingredients. In addition, factors such as
inflation, increased food, labor and employee benefit costs and the
availability of qualified management and hourly employees also may adversely
affect the restaurant industry generally and the Company's restaurants in
particular. The success and future profitability of the Company will depend
in part on its ability to identify and respond to changing conditions within
the restaurant industry.
CHANGES IN FOOD AND OTHER COSTS; SUPPLY RISKS
The profitability of the Company is significantly dependent on its ability
to anticipate and react to changes in food, labor, employee benefits and
similar costs over which the Company has little or no control. The Company is
dependent on frequent deliveries of fresh beef and produce, the cost of which
represented approximately 16% of total revenues for Fiscal 1995. Shortages or
interruptions in the supply of fresh beef and produce, which may be caused by
adverse weather or other conditions, could have a material adverse effect on
the Company's results of operations and financial condition. In addition, the
Company purchased approximately 87% of its food and other products from two
distributors during Fiscal 1995. On August 5, 1996, the Company began doing
business with only one of these two principal distributors and anticipates
that approximately 80% of its food and other products will be purchased from
that distributor in the future. While the Company believes that alternative
sources of supply are readily available, the loss of this distributor could
have a material adverse effect on the Company's results of operations during
the period in which alternative supply arrangements are established.
GOVERNMENT REGULATION
The Company is subject to numerous federal, state and local government
laws and regulations, including those relating to the sale of food and
alcoholic beverages and the development, construction and operation of the
Company's restaurants. The failure to comply with any such laws and
regulations, including the failure to obtain or maintain any liquor licenses,
could have a material adverse effect on the Company's results of operations
and financial condition. The Company is also subject to laws governing its
relationship with employees, including minimum wage requirements, laws and
regulations relating to overtime and working and safety conditions and
citizenship requirements. Material increases in the minimum hourly wage,
unemployment tax rates, sales taxes or the cost of compliance with any
applicable law or regulation could materially and adversely affect the
Company. The Company is also subject in certain states to "dram-shop"
statutes which generally provide a person injured by an intoxicated person
the right to recover damages from an establishment that wrongfully served
alcoholic beverages to the intoxicated person. Any liability of the Company
under such statutes could have a material adverse effect on the Company's
results of operations and financial condition. In connection with its
franchise operations, the Company is required to comply with Federal Trade
Commission and state laws and regulations that govern the offer, sale and
termination of franchises and the refusal to renew franchises. See
"Business--Government Regulation."
8
<PAGE>
DEPENDENCE ON SENIOR MANAGEMENT
The Company's success will depend largely on the abilities of its senior
management, including John D. Toole III, President and Chief Executive
Officer of the Company. The loss of Mr. Toole's services or the services of
other members of senior management could have a material adverse effect on
the Company's results of operations and financial condition. As the Company
expands its operations, the success of its business will depend increasingly
upon the Company's ability to attract and retain skilled restaurant
management personnel. There can be no assurance that the Company will be able
to attract and retain sufficient personnel, and the inability to do so would
have a material adverse effect on the Company's results of operations and
financial condition. See "Management" and "Business--Restaurant Operations
and Management."
CONTROL BY PRINCIPAL SHAREHOLDER
Upon completion of the Offering, Berjaya Group (Cayman) Limited
("Berjaya") will beneficially own, directly or indirectly, approximately %
of the Company's outstanding Common Stock. As a result, Berjaya will be able
to control the vote on all matters requiring approval by the shareholders of
the Company, to elect the entire Board of Directors and, effectively, to
control the Company. See "Principal Shareholders" and "Description of Capital
Stock."
ABSENCE OF PUBLIC MARKET; PRICE VOLATILITY
Prior to the Offering there has been no public market for the Common
Stock, and there can be no assurance that an active public market will
develop or continue after the Offering. The initial public offering price of
the Common Stock will be determined through negotiations between the Company
and the Representatives of the Underwriters, and there can be no assurance
that the market price of the Common Stock after the Offering will not decline
below the initial public offering price. See "Underwriting" for a discussion
of the factors to be considered in determining the initial public offering
price.
The market price of the Common Stock could fluctuate significantly in
response to variations in quarterly operating results and other factors,
including the performance of other restaurant companies. In addition, the
securities markets have experienced significant price and volume fluctuations
from time to time in recent years that often have been unrelated or
disproportionate to the operating performance of particular companies. These
broad fluctuations may adversely affect the market price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
shares of Common Stock, of which the shares sold pursuant to the
Offering will be fully tradeable without restriction or further registration
under the Securities Act of 1933, as amended (the "Securities Act"). Of such
shares, shares will be restricted securities as defined by Rule 144
under the Securities Act. Of such shares constituting restricted securities,
shares will be eligible for sale, subject to certain restrictions,
beginning 90 days after the date of this Prospectus and shares will
become eligible for sale, subject to certain restrictions, at various times
between May 1997 and May 1998. Sales of substantial amounts of Common Stock
in the public market, or the perception that such sales may occur, could
adversely affect the prevailing market price of the Common Stock or the
ability of the Company to raise capital through a public offering of its
equity securities. In addition, certain shareholders have the right to
require the Company to register up to shares of Common Stock under the
Securities Act. See "Shares Eligible for Future Sale."
9
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements herein regarding the number of restaurants which the Company
expects to open in the future constitute forward-looking statements under the
federal securities laws. Such statements are subject to certain risks and
uncertainties that could cause the actual number of restaurants opened to
differ materially from that projected. With respect to such number, the
Company's management team has made certain assumptions regarding, among other
things, (i) the ability to find sufficient site locations that meet or exceed
the Company's criteria; (ii) the availability of a sufficient pool of hourly
and management labor; (iii) the relative stability of building and real
estate costs; and (iv) favorable economic climate for business expansion. The
Company's ability to open the projected number of restaurants is subject to
certain risks including the risks discussed under the caption "Risk Factors"
contained herein. Undue reliance should not be placed on the number of
restaurants which the Company expects to open in the future. These estimates
are based on the current expectations of the Company's management team, which
may change in the future due to a large number of potential events, including
unanticipated future developments.
10
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of
Common Stock offered hereby at an assumed initial public offering price of
$ per share are estimated to be approximately $ ($ if
the Underwriters' over-allotment option is exercised in full), after
deducting the underwriting discount and estimated expenses of the Offering.
The Company intends to use the net proceeds as follows:
<TABLE>
<CAPTION>
USE AMOUNT(1)
- ----- ----------
<S> <C>
Repayment of outstanding indebtedness (principal and accrued interest):
Notes payable to a former Chairman of the Board of the Company .... $4,192,000
Note payable to the principal shareholder of the Company .......... 2,049,000
Note payable to the owner of a 50% interest in Kendall
Roadhouse Grill, L.C. ............................................ 600,000
Total indebtedness repaid ........................................ 6,806,000
Purchase price for remaining interest in Kendall Roadhouse Grill,
L.C. ............................................................... 2,300,000
Purchase price for 50% interest in the Boca Raton, Florida Roadhouse
Grill restaurant ................................................... 464,000
General corporate purposes, including the development and opening
of new restaurants .................................................
-------------
Total uses ..................................................... $
=============
</TABLE>
- --------------
(1) Approximate amount as of November 15, 1996.
The indebtedness to be repaid with a portion of the net proceeds of the
Offering was incurred for the purpose of opening or acquiring Roadhouse Grill
restaurants and for other general corporate purposes. For a discussion of the
terms of the indebtedness being repaid with the net proceeds of the Offering,
see "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources," "Management--Compensation
Committee Interlocks and Insider Participation" and "Certain Transactions."
Pending the use of the net proceeds as described above, the Company plans
to invest such net proceeds in short-term, investment-grade, interest-bearing
securities.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its outstanding
capital stock. The Company intends to retain any earnings to finance
operations and expansion and does not intend to pay cash dividends on the
Common Stock in the foreseeable future. The payment of cash dividends, if
any, in the future will be at the discretion of the Board of Directors and
will depend upon such factors as earnings, capital requirements, the
Company's financial condition and other factors deemed relevant by the Board
of Directors. Future loan agreements may restrict or prohibit the payment of
dividends.
11
<PAGE>
CAPITALIZATION
The following table sets forth (i) the short-term obligations and pro
forma capitalization of the Company at June 30, 1996, giving effect to the
conversion of the Issued Preferred Stock into Common Stock, which conversion
will occur concurrently with the closing of the Offering; and (ii) such
short-term obligations and pro forma capitalization as adjusted to reflect
the sale of the shares of Common Stock offered hereby at an assumed
initial public offering price of $ per share and the application of the
estimated net proceeds therefrom. See "Use of Proceeds.'' This table should
be read in conjunction with the Financial Statements and the Notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------
PRO FORMA,
PRO FORMA AS ADJUSTED
-------------- ---------------
<S> <C> <C>
Current portion of long term debt, capital lease obligations
and due to related parties ........................................... $ 4,158,439 $
============== ==============
Long-term debt (excluding current portion) ............................. $ 7,065,531 $
Obligations under capital leases (excluding current portion) .......... 4,152,997
Due to related parties (excluding current portion) ..................... 0
-------------- --------------
Total long-term debt, obligations under capital leases and due to
related parties (excluding current portion) ......................... 11,218,528
Shareholders' equity:
Preferred Stock, $0.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding,
pro forma or pro forma as adjusted .................................. 0
Common Stock, $0.01 par value, 30,000,000 shares
authorized; shares issued and outstanding, pro forma;
shares issues and outstanding, pro forma as adjusted (1) ............ 199,979
Additional paid-in capital ............................................ 35,303,507
Retained earnings (deficit) ........................................... (6,890,622)
-------------- --------------
Total shareholders' equity .......................................... 28,612,864
-------------- --------------
Total capitalization ................................................ $39,831,392 $
============== ==============
</TABLE>
- ------------------
(1) Does not include (i) shares reserved for issuance upon the exercise
of options outstanding or issuable under the Company's 1994 Stock Option
Plan, of which shares were subject to outstanding options at June 30,
1996 (at a weighted-average exercise price of $ per share);
(ii) shares reserved for issuance upon the exercise of outstanding
options held by the Company's President and Chief Executive Officer (at
an exercise price of $ per share); or (iii) shares reserved for
issuance upon exercise of outstanding warrants (at an exercise price of
$ per share). See "Management--Executive Compensation,"
"Management--1994 Stock Option Plan," "Management--Compensation Committee
Interlocks and Insider Participation," "Certain Transactions," and
"Description of Capital Stock--Warrants."
12
<PAGE>
DILUTION
Pro forma net tangible book value per share is determined by dividing the
tangible net worth of the Company (tangible assets less liabilities) by the
pro forma aggregate number of outstanding shares of Common Stock (which
includes as outstanding the shares of Common Stock issuable upon the
conversion of the Issued Preferred Stock, which conversion will occur
concurrently with the closing of the Offering). The net tangible book value
of the Company as of June 30, 1996, was approximately $ , or $ per
share, pro forma. After giving effect to the sale of the shares of
Common Stock offered hereby at an assumed initial public offering price of
$ per share and the application of the net proceeds therefrom after
deducting the underwriting discount and estimated expenses of the Offering,
the net tangible book value of the Company as of June 30, 1996 would have
been approximately $ , or $ per share, pro forma. This represents
an immediate increase in pro forma net tangible book value per share of $
to existing shareholders and an immediate dilution of $ per share to
new investors. The following table sets forth this per share dilution.
<TABLE>
<CAPTION>
<S> <C> <C>
ASSUMED INITIAL PUBLIC OFFERING PRICE PER SHARE .................... $
Pro forma net tangible book value per share as of June 30, 1996 . $
Increase per share attributable to new investors .................
-----------
Pro forma net tangible book value per share after the Offering ....
------------
Dilution per share to new investors ................................ $
============
</TABLE>
The following table sets forth, as of June 30, 1996, the difference
between existing shareholders and new investors with respect to the number of
shares of Common Stock purchased from the Company (assuming for purposes of
such calculation that all Issued Preferred Stock has been converted into
Common Stock), the total consideration paid to the Company and the average
price per share paid by (i) the existing shareholders of the Company and (ii)
new investors (at an assumed initial public offering price of $ per
share).
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------------ ----------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Existing shareholders ... % $ % $
New investors ............
----------- ------------ ----------- ------------
Total .................... 100% $ 100%
=========== ============ =========== ============
</TABLE>
The tables set forth above do not give effect to the exercise of (i)
outstanding options to purchase shares of Common Stock (at a
weighted-average exercise price of $ per share) outstanding on June 30,
1996; (ii) options to purchase up to an additional shares of Common
Stock available for issuance under the Company's 1994 Stock Option Plan; and
(iii) outstanding warrants to purchase shares of Common Stock (at an
exercise price of $ per share) issued in connection with a certain
financing transaction. To the extent that these options and warrants become
exercisable and are exercised, there will be further dilution to new
investors. See "Management--Executive Compensation," "Management--1994 Stock
Option Plan," "Management--Compensation Committee Interlocks and Insider
Participation," "Certain Transactions" and "Description of Capital Stock--
Warrants."
13
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected financial data presented below for and as of the end of
Fiscal 1993, Fiscal 1994 and Fiscal 1995 have been derived from the Financial
Statements of the Company, which Financial Statements have been audited by
Stark & Bennett, P.A., Coopers & Lybrand L.L.P. and KPMG Peat Marwick LLP,
respectively. The Financial Statements for each of such fiscal years, and the
respective reports thereon, are included elsewhere in this Prospectus. The
selected financial data for and as of the end of the twenty-six week periods
ended July 2, 1995 and June 30, 1996 have been derived from unaudited
Financial Statements of the Company which, in the opinion of the Company's
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the information set forth
therein. The operating results for the twenty-six week period ended June 30,
1996 are not necessarily indicative of the operating results that may be
expected for the full fiscal year. The selected financial data should be read
in conjunction with the Financial Statements and Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
TWENTY SIX
FISCAL YEARS WEEKS ENDED
----------------------------------- -----------------------
JULY 2, JUNE 30,
1993 1994 1995 1995 1996
--------- ----------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues ................................. $3,465 $11,389 $34,275 $13,773 $27,633
Cost of restaurant sales:
Food and beverage ............................. 1,471 4,085 12,084 4,936 9,364
Labor ......................................... 988 4,606 12,019 4,889 8,627
Occupancy and other ........................... 1,219 2,318 8,710 3,058 5,829
--------- ----------- -------- ------------ ---------
Total cost of restaurant sales ............... 3,678 11,009 32,813 12,883 23,820
Depreciation and amortization .................. 47 415 1,663 555 1,353
General and administrative ..................... 280 1,913 3,328 1,140 2,315
--------- ----------- -------- ------------ ---------
Operating income (loss) ........................ (540) (1,948) (3,529) (805) 145
Other income (expense):
Net interest (expense) ........................ (40) (180) (404) (86) (555)
Other income .................................. 3 20 159 61 129
Equity in income (loss) of affiliate(1) ...... (136) (411) 284 198 113
--------- ----------- -------- ------------ ---------
Total other income (expense) ................. (173) (571) 39 173 (313)
--------- ----------- -------- ------------ ---------
Net loss ....................................... $ (713) $(2,519) $(3,490) $ (632) $ (168)
========= =========== ======== =========== =========
Pro forma net income per common share(2) ...... $ $
Pro forma weighted average shares ======== =========
outstanding(2) .................................
</TABLE>
<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1, DECEMBER 31, JUNE 30,
1994 1995 1995 1996
------------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital ............................................ $(2,040) $ 7,409 $(7,560) $(7,067)
Total assets ............................................... 1,685 24,843 42,201 49,674
Long-term debt and due to related parties,
including current portion ................................ 1,591 4,858 13,324 10,963
Obligations under capital leases, including current portion -- 1,272 4,484 4,414
Preferred stock ............................................ -- 59 59 58
Shareholders' equity (deficit) ............................. (613) 17,639 20,261 28,613
</TABLE>
- ------------
(1) See Note 1 to Notes to Financial Statements.
(2) Gives effect to the conversion of the Issued Preferred Stock into Common
Stock, which will occur concurrently with the closing of the Offering.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations should be read in conjunction with the Company's Financial
Statements and Notes thereto appearing elsewhere in this Prospectus.
INTRODUCTION
The Company opened its first restaurant in March 1993 in Pembroke Pines,
Florida. As of the date of this Prospectus, there were 34 Roadhouse Grill
restaurants in operation, consisting of 28 Company-owned and six franchised
or licensed restaurants. Of the Company-owned restaurants, 23 are located in
Florida and five are located in Georgia, South Carolina and upstate New York.
The Company plans to open an additional four restaurants during the remainder
of 1996 and approximately 15 restaurants in 1997. See "Risk Factors--Risks of
Rapid Expansion; Management of Growth."
The Company's revenues are derived primarily from the sale of food and
beverages. Sales of alcoholic beverages accounted for approximately 12.5%,
13.7%, 13.9% and 13.0% of total revenues in Fiscal 1993, Fiscal 1994, Fiscal
1995 and the twenty-six week period ended June 30, 1996, respectively.
Franchise and management fees have accounted for less than 1.0% of the
Company's total revenues for all periods since its inception.
The Company's new restaurants can be expected to incur above-average costs
during the first few months of operation. Pre-opening costs, such as employee
recruiting and training costs and other initial expenses incurred in
connection with the opening of a new restaurant, are amortized over a
twelve-month period commencing the first full month after the restaurant
opens.
In its first three fiscal years of operation, Fiscal 1993, Fiscal 1994 and
Fiscal 1995, the Company incurred net losses of $713,000, $2.5 million and
$3.5 million, respectively. Accordingly, the Company has made no provision
for taxes payable for such fiscal years. At December 31, 1995, the Company
had a net operating loss carryforward of approximately $5.9 million.
The average cash investment, excluding real estate costs and pre-opening
expenses, required to open the 22 Roadhouse Grill restaurants opened by the
Company prior to June 30, 1996 was approximately $1.3 million. For the
Company's ten owned properties, average real estate acquisition costs were
approximately $870,000. The Company has obtained financing in connection with
the acquisition of its owned properties, which financing generally has
required a down payment of 10% of the purchase price. The Company expects
that the average cash investment required to open its prototype restaurants,
excluding real estate costs and pre-opening expenses, will be approximately
$950,000 or $1.3 million, depending upon whether the Company converts an
existing building or constructs a new restaurant.
In August 1996, the Company contracted to purchase from an unaffiliated
third party the remaining 50% interest in Kendall, Roadhouse Grill, L.C. The
contract provides for the closing of such purchase within 15 days after the
closing of the Offering or as soon thereafter as the conditions to closing
have been satisfied; however, there can be no assurance that such purchase
will be consummated. If the purchase is consummated, the Company will own
100% of the Kendall, Florida Roadhouse Grill restaurant. In addition, the
Company is currently negotiating the purchase of a 50% interest in the Boca
Raton, Florida Roadhouse Grill restaurant from an unaffiliated third party
and expects to use a portion of the net proceeds from the Offering to pay the
purchase price therefor; however, there can be no assurance that such
purchase will be consummated. The Company has managed the Boca Raton
restaurant under a management agreement since December 1994 and expects to
continue to do so in the foreseeable future. See "Use of Proceeds."
15
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain selected
statement of operations data expressed as a percentage of total revenues.
<TABLE>
<CAPTION>
TWENTY SIX
FISCAL YEAR WEEKS ENDED
---------------------------------- -----------------------
JULY 2, JUNE 30,
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues .......................... 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of Company restaurant sales:
Food and beverage ...................... 42.4 35.9 35.3 35.8 33.9
Labor and benefits ..................... 28.5 40.4 35.1 35.5 31.2
Occupancy and other .................... 35.2 20.4 25.4 22.2 21.1
---------- ---------- ---------- ---------- -----------
Total cost of Company restaurant sales 106.1 96.7 95.8 93.5 86.2
Depreciation and amortization ........... 1.4 3.6 4.9 4.0 4.9
General and administrative .............. 8.1 16.8 9.7 8.3 8.4
---------- ---------- ---------- ---------- -----------
Total operating expenses .............. 115.6 117.1 110.4 105.8 99.5
---------- ---------- ---------- ---------- -----------
Operating income (loss) ................. (15.6) (17.1) (10.4) (5.8) 0.5
Total other income (expense) ............ (5.0) (5.0) 0.1 1.3 (1.1)
---------- ---------- ---------- ---------- -----------
Net loss ................................ (20.6)% (22.1)% (10.3)% (4.5)% (0.6)%
========== ========== ========== ========== ===========
</TABLE>
TWENTY-SIX WEEK PERIOD ENDED JUNE 30, 1996 COMPARED TO TWENTY-SIX WEEK
PERIOD ENDED JULY 2, 1995
RESTAURANTS OPEN. At the beginning of Fiscal 1996, there were 19
Company-owned restaurants in operation (including the Kendall, Florida
Roadhouse Grill restaurant which was owned by a limited liability company in
which the Company held a 50% interest). At June 30, 1996, there were 23
Company-owned restaurants in operation, compared to 13 Company-owned
restaurants at July 2, 1995, a 76.9% year-over-year increase in the number of
Company-owned restaurants.
TOTAL REVENUES. Total revenues increased $13.8 million, or 100.6%, from
$13.8 million, for the twenty-six week period ended July 2, 1995 to $27.6
million for the twenty-six week period ended June 30, 1996. This increase was
primarily attributable to the opening of four additional restaurants during
the twenty-six week period ended June 30, 1996 and the inclusion of all 13
Company-owned restaurants added in Fiscal 1995 for the entire twenty-six week
period ended June 30, 1996 and was partially offset by modest decreases in
sales at other restaurants open during such period.
FOOD AND BEVERAGE. Food and beverage costs increased $4.5 million, or
89.7%, from $4.9 million for the twenty-six week period ended July 2, 1995 to
$9.4 million for the twenty-six week period ended June 30, 1996. However,
food and beverage costs decreased as a percentage of total revenues from
35.8% for the twenty-six week period ended July 2, 1995 to 33.9% for the
comparable period in Fiscal 1996. This decrease reflects (i) the opening of
fewer new restaurants over a larger base of Company-owned restaurants in
operation during the twenty-six week period ended June 30, 1996 compared to
the twenty-six week period ended July 2, 1995 and (ii) a continuing decline
in food costs resulting from increased efficiencies associated with the
implementation in Fiscal 1995 of detailed recipes, training manuals,
inventory controls and other management tools.
LABOR AND BENEFITS. Labor and benefit costs increased $3.7 million, or
76.4%, from $4.9 million for the twenty-six week period ended July 2, 1995 to
$8.6 million for the twenty-six week period ended June 30, 1996. However,
labor and benefit costs as a percentage of total revenues decreased from
35.5%
16
<PAGE>
for the twenty-six week period ended July 2, 1995 to 31.2% for the comparable
period in Fiscal 1996. The decrease was primarily attributable to spreading
the costs associated with training managers for new restaurants over a larger
base of Company-owned restaurants in operation during the twenty-six week
period ended June 30, 1996 compared to the twenty-six week period ended July
2, 1995.
OCCUPANCY AND OTHER. Occupancy and other costs increased $2.7 million, or
90.6%, from $3.1 million for the twenty-six week period ended July 2, 1995 to
$5.8 million for the twenty-six week period ended June 30, 1996. However,
occupancy and other costs decreased as a percentage of total revenues from
22.2% for the twenty-six week period ended July 2, 1995 to 21.1% for the
comparable period in Fiscal 1996. The decrease in this percentage resulted
primarily from a significant increase in the percentage of restaurants owned,
as opposed to leased, by the Company during the twenty-six week period ended
June 30, 1996, as compared to the comparable period in Fiscal 1995.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $798,000, or 143.7%, from $555,000 for the twenty-six week period
ended July 2, 1995 to $1.4 million for the twenty-six week period ended June
30, 1996. Depreciation and amortization as a percentage of total revenues
increased from 4.0% for the twenty-six week period ended July 2, 1995 to 4.9%
for the comparable period in Fiscal 1996. The increase in this percentage
resulted primarily from a significant increase in the percentage of
restaurants owned by the Company as opposed to leased during the twenty-six
week period ended June 30, 1996, as compared to the comparable period in
Fiscal 1995.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
$1.2 million, or 103.1%, from $1.1 million for the twenty-six week period
ended July 2, 1995 to $2.3 million for the twenty-six week period ended June
30, 1996. General and administrative expense as a percentage of total
revenues remained relatively constant at 8.3% for the twenty-six week period
ended July 2, 1995 and 8.4% for the comparable period in Fiscal 1996.
Economies of scale resulting from a greater number of Company-owned
restaurants in operation during the twenty-six week period ended June 30,
1996, as compared to the comparable period in Fiscal 1995, were offset by
increased expenses in the latter half of Fiscal 1995 associated with
increasing the management and support staff infrastructure in anticipation of
future expansion.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) decreased from
income of $173,000 for the twenty-six week period ended July 2, 1995 to
expense of $313,000 for the twenty-six week period ended June 30, 1996. This
decrease resulted primarily from interest expense incurred in connection with
the purchase of eight restaurant sites during Fiscal 1995 and the twenty-six
week period ended June 30, 1996, partially offset by income earned by the
Kendall, Florida Roadhouse Grill restaurant, which was accounted for under
the equity method of accounting. See Note 5 to the Financial Statements..
FISCAL 1995 COMPARED TO FISCAL 1994
RESTAURANTS OPEN. At the beginning of Fiscal 1994, there were three
Company-owned restaurants in operation (including one restaurant which was
owned by a limited liability company in which the Company held a 50%
interest). During Fiscal 1994, the Company added three restaurants (including
one restaurant which was owned by a limited liability company in which the
Company held a 50% interest), and during Fiscal 1995 the Company added
thirteen restaurants. As of the end of Fiscal 1995, the Company had 19
Company-owned restaurants in operation.
TOTAL REVENUES. Total revenues increased $22.9 million, or 201.0%, from
$11.4 million in Fiscal 1994 to $34.3 million in Fiscal 1995. This increase
was attributable to the addition of 13 Company-owned restaurants during
Fiscal 1995 and the inclusion of a full year of operations for the two 100%
Company-owned restaurants opened in Fiscal 1994 and was partially offset by
modest decreases in sales at certain restaurants opened in Fiscal 1993 and
Fiscal 1994.
FOOD AND BEVERAGE. Food and beverage costs increased $8.0 million, or
195.8%, from $4.1 million in Fiscal 1994 to $12.1 million in Fiscal 1995, but
decreased as a percentage of total revenues from
17
<PAGE>
35.9% in Fiscal 1994 to 35.3% in Fiscal 1995. This decrease reflects a
decline in food costs resulting from increased efficiencies associated with
the implementation in Fiscal 1995 of detailed recipes, training manuals,
inventory controls and other management tools.
LABOR AND BENEFITS. Labor and benefits costs increased $7.4 million, or
160.9%, from $4.6 million in Fiscal 1994 to $12.0 million in Fiscal 1995, but
decreased as a percentage of total revenues from 40.4% in Fiscal 1994 to
35.1% in Fiscal 1995. This decline was primarily attributable to decreased
training and recruiting costs resulting from lower restaurant employee
turnover in Fiscal 1995 compared to Fiscal 1994.
OCCUPANCY AND OTHER. Occupancy and other costs increased by $6.4 million,
or 275.8%, from $2.3 million in Fiscal 1994 to $8.7 million in Fiscal 1995.
As a percentage of total revenues, occupancy and other costs increased from
20.4% in Fiscal 1994 to 25.4% in Fiscal 1995. This increase resulted
primarily from expanded advertising and promotional activities of the Company
and greater pre-opening expenses in Fiscal 1995 compared to Fiscal 1994.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $1.2 million, or 300.7%, from $415,000 in Fiscal 1994 to $1.7
million in Fiscal 1995. As a percentage of total revenues, depreciation and
amortization expense increased from 3.6% in Fiscal 1994 to 4.9% in Fiscal
1995. This percentage increase resulted from higher depreciation expense
associated with the purchase of five restaurant sites in Fiscal 1995 and from
the amortization of goodwill associated with three restaurants acquired from
franchisees in Fiscal 1995. All of the Company-owned restaurants opened prior
to Fiscal 1995 are leased.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
by $1.4 million, or 73.9%, from $1.9 million in Fiscal 1994 to $3.3 million
in Fiscal 1995. This increase was a result of increasing the management and
support staff infrastructure in anticipation of future expansion. As a
percentage of total revenues, general and administrative expense declined
from 16.8% in Fiscal 1994 to 9.7% in Fiscal 1995. The decrease in this
percentage was primarily attributable to economies of scale resulting from a
greater number of Company-owned restaurants in operation during Fiscal 1995.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) increased by
$610,000 from a $571,000 expense in Fiscal 1994 to $39,000 of income in
Fiscal 1995. This increase in total other income (expense) was primarily
attributable to income earned by the Kendall, Florida Roadhouse Grill
restaurant, which was accounted for under the equity method of accounting,
and income from game rooms in new Company-owned restaurants, which income was
partially offset by increased interest expense incurred in connection with
the purchase of five restaurant sites in Fiscal 1995.
FISCAL 1994 COMPARED TO FISCAL 1993
RESTAURANTS OPEN. At the beginning of Fiscal 1993, there were no
Company-owned restaurants in operation. The Company added three restaurants
in each of Fiscal 1993 and Fiscal 1994 (including one restaurant added in
Fiscal 1993 which was owned by a limited liability company in which the
Company owned a 50% interest, and one restaurant added in Fiscal 1994 which
was owned by a separate limited liability company in which the Company owned
a 50% interest). As of the end of Fiscal 1994, the Company had six
Company-owned restaurants in operation.
TOTAL REVENUES. Total revenues increased $7.9 million, or 228.6%, from
$3.5 million in Fiscal 1993 to $11.4 million in Fiscal 1994. This increase
was attributable to the opening of two 100% Company-owned restaurants during
Fiscal 1994 and the inclusion of a full year of operations for the two 100%
Company-owned restaurants opened in Fiscal 1993.
FOOD AND BEVERAGE. Food and beverage costs increased by $2.6 million, or
177.7%, from $1.5 million in Fiscal 1993 to $4.1 million in Fiscal 1994, but
decreased as a percentage of total revenues from 42.4% in Fiscal 1993 to
35.9% in Fiscal 1994. This decrease was attributable primarily to lower food
costs during Fiscal 1994 that resulted from the introduction of portion
controls and improved inventory management.
18
<PAGE>
LABOR AND BENEFITS. Labor and benefits costs increased by $3.6 million, or
366.2%, from $988,000 in Fiscal 1993 to $4.6 million in Fiscal 1994. As a
percentage of total revenues, labor and benefits costs increased from 28.5%
in Fiscal 1993 to 40.4% in Fiscal 1994. This increase in labor and benefits
costs was a result of overstaffing existing restaurants in order to hire and
train managers and staff for restaurants to be opened.
OCCUPANCY AND OTHER. Occupancy and other costs increased by $1.1 million,
or 90.2%, from $1.2 million in Fiscal 1993 to $2.3 million in Fiscal 1994,
but decreased as a percentage of total revenues from 35.2% in Fiscal 1993 to
20.4% in Fiscal 1994. The decrease in this percentage reflects unusually high
occupancy and other costs as a percentage of total revenues in Fiscal 1993,
which resulted primarily from spreading costs associated with the opening of
the Company's first three restaurants over a small revenue base in Fiscal
1993.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $368,000 from $47,000 in Fiscal 1993 to $415,000 in Fiscal 1994.
As a percentage of total revenues, depreciation and amortization increased
from 1.4% in Fiscal 1993 to 3.6% in Fiscal 1994 primarily as a result of
depreciation associated with two restaurants opened late in Fiscal 1993 and
three restaurants opened in Fiscal 1994.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
by $1.6 million from $280,000 in Fiscal 1993 to $1.9 million in Fiscal 1994.
As a percentage of total revenues, general and administrative expense
increased from 8.1% in Fiscal 1993 to 16.8% in Fiscal 1994. This increase was
the result of the recruitment and hiring of additional management and support
staff in anticipation of future growth.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) decreased by
$398,000 from a $173,000 expense in Fiscal 1993 to a $571,000 expense in
Fiscal 1994. The decrease in total other income (expense) was primarily
attributable to losses incurred by the North Miami and Kendall, Florida
Roadhouse Grill restaurants, which were accounted for under the equity method
of accounting, and incremental financing costs associated with the Company's
growth.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital principally for the opening of new
restaurants and has financed its requirements through the private placement
of Common Stock and Preferred Stock and loans from certain private parties,
including present and former shareholders of the Company.
In July 1996, the Company issued promissory notes in the principal amount
of $1.5 million and $500,000 to a former Chairman of the Board of Directors
of the Company (who is also a former shareholder) and a shareholder of the
Company, respectively. These notes were repaid by the Company in August 1996
with the funds received in connection with the issuance of a promissory note
in the principal amount of $2.0 million to Berjaya, the Company's principal
shareholder. In September 1996, the Company issued another promissory note in
the principal amount of $1.5 million to such former Chairman of the Board.
See "Management--Compensation Committee Interlocks and Insider Participation"
and "Certain Transactions."
The Company's capital expenditures aggregated approximately $8.8 million
for the twenty-six week period ended June 30, 1996, substantially all of
which was used to open Roadhouse Grill restaurants. During such period, the
Company received approximately $5.0 million from the private placement of
Common Stock. Net cash provided by operating activities during the twenty-six
week period ended June 30, 1996 was approximately $680,000.
The Company's capital expenditures aggregated $14.5 million for Fiscal
1995, substantially all of which was used to open Roadhouse Grill
restaurants. In addition, the Company acquired two restaurants for aggregate
cash consideration of $3.0 million. During Fiscal 1995, the Company received
19
<PAGE>
approximately $6.0 million from the private placement of Common Stock. It
also borrowed funds in the aggregate amount of approximately $2.5 million
from a former Chairman of the Board of Directors of the Company (who is also
a former shareholder), which loans were consolidated and extended in January
1996. In addition, the Company borrowed $600,000 from the owner of a 50%
interest in Kendall Roadhouse Grill, L.C. and approximately $3.5 million from
Berjaya. Net cash used in operating activities during Fiscal 1995 was
approximately $784,000.
The Company's capital expenditures aggregated approximately $10.0 million
for Fiscal 1994, substantially all of which was used to open Roadhouse Grill
restaurants. During Fiscal 1994, the Company received approximately $20.8
million from the private placement of the Issued Preferred Stock and Common
Stock. Net cash used in operating activities during Fiscal 1994 was $1.8
million.
The Company's capital expenditures aggregated $1.4 million during Fiscal
1993, substantially all of which was used to open Roadhouse Grill
restaurants. During Fiscal 1993, the Company received $1.6 million in
connection with the issuance of promissory notes to Berjaya and $100,500 from
the private placement of Common Stock. In addition, net cash provided by
operating activities during 1993 was approximately $40,000.
The Company expects to open four additional Roadhouse Grill restaurants
during the remainder of 1996 and approximately 15 restaurants during 1997.
The Company expects that the average cash investment required to open its
prototype restaurants, excluding real estate costs and pre-opening expenses,
will be approximately $950,000 or $1.3 million, depending on whether the
Company converts an existing building or constructs a new restaurant. The
Company believes that cash flow from operations, together with the proceeds
of the Offering remaining after repayment of indebtedness, will be sufficient
to fund the Company's anticipated expansion through 1997. To the extent such
funds are insufficient, the Company will be required to seek additional funds
from borrowings or the sale of equity securities, but there can be no
assurance that such funds will be available on acceptable terms, if at all.
As is common in the restaurant industry, the Company has generally
operated with negative working capital ($7.1 million as of June 30, 1996).
The Company does not have significant receivables or inventory and receives
trade credit on its purchases of food and supplies.
SEASONALITY AND QUARTERLY RESULTS
The Company's sales and earnings fluctuate seasonally. Historically, the
Company's highest earnings have occurred in its first and fourth fiscal
quarters. In addition, quarterly results have been, and in the future are
likely to be, substantially affected by the timing of new restaurant
openings. Because of the seasonality of the Company's business and the impact
of new restaurant openings, results for any quarter are not necessarily
indicative of the results that may be achieved for a full fiscal year.
IMPACT OF INFLATION
The Company does not believe that inflation has materially affected its
results of operations during the past three fiscal years. Substantial
increases in costs and expenses, particularly food, supplies, labor and
operating expenses could have a significant impact on the Company's operating
results to the extent that such increases cannot be passed along to
customers.
ACCOUNTING MATTERS
Statement of Financial Accounting Standards No. 121, "Accounting for
Long-Lived Assets and for Long-Lived Assets to be Disposed of", requires that
long-lived assets and certain identifiable intangibles to be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Impairment is evaluated by comparing future cash flows
(undiscounted and without interest charges) expected to result from use of
the asset and its eventual disposition to the carrying amount of the asset.
This new accounting principle was adopted by the Company effective January 1,
1996. As of January 1, 1996 and June 30, 1996, this new accounting principle
had no material impact on the Company's financial position or results of
operations.
20
<PAGE>
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123), which becomes effective for
financial statements for fiscal years beginning after December 15, 1995. SFAS
No. 123 defines a fair value based method of accounting for an employee stock
option or similar equity instrument and encourages all entities to adopt that
method of accounting for all of their employee stock compensation plans.
However, it also allows an entity to continue to measure compensation cost
for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). The Company is currently accounting for
stock-based compensation under APB 25, and will continue accounting for
stock-based compensation under this method.
21
<PAGE>
BUSINESS
GENERAL
The Company owns and operates 28 and franchises or licenses six
full-service, casual dining restaurants under the name "Roadhouse Grill." The
Roadhouse Grill concept offers a fun, value-oriented dining experience that
features premium quality grilled entrees and friendly service consistent with
the Company's motto: "Good Food and a Smile . . . That's Roadhouse
Style."/registered trademark/ The comfortable, entertaining roadhouse setting
was designed to appeal to a broad range of customers, including business
people, couples, singles and particularly families.
Roadhouse Grill restaurants are based upon a roadhouse-style concept
developed in 1991 by the Company's founder and chief executive officer, John
D. Toole, III. In March 1993, Mr. Toole introduced the roadhouse-style
concept to South Florida by opening the first Roadhouse Grill restaurant in
Pembroke Pines (Fort Lauderdale) with the financial backing of other
restaurant entrepreneurs. Since that time, the Company has grown rapidly,
adding two additional restaurants in 1993, three restaurants in 1994, 13
restaurants in 1995 and, to date, nine restaurants in 1996. The Company also
franchises or licenses three restaurants in Malaysia and three restaurants in
the United States. A substantial portion of the funding for the Company's
rapid expansion was obtained from capital investments and loans from Berjaya,
its principal shareholder and an affiliate of the Company's franchisees for
Asia and the Pacific Rim.
THE ROADHOUSE GRILL CONCEPT
The key elements that define the Roadhouse Grill concept are:
/bullet/ COMFORTABLE, OPEN LAYOUT. Roadhouse Grill restaurants are
designed to create an energetic and casual atmosphere. The
interior of each restaurant is large, open and visually
appealing, with exposed ceilings and brick and lapboard cedar
walls decorated with colorful, hand-painted murals and neon
signs. Multi-level seating is used to provide guests with a full
view of the restaurant, including the exhibition grill and
display kitchen, allowing everyone to enjoy the Roadhouse Grill
experience. The exhibition cooking area features a mesquite-fired
grill, a kitchen where homemade yeast rolls are made throughout
the day and a display case filled with fresh cuts of meat,
seafood and salads. To help create Roadhouse Grill's casual
ambience, metal pails of roasted peanuts top each table, guests
are encouraged to toss peanut shells on the floor, drinks are
served in mason jars, long neck beers are delivered in metal
buckets filled with ice, and a classic jukebox entertains guests
with popular rock and country and western music. The exterior of
each restaurant features rough-sawed siding, a wrap-around wood
plank porch, a tin roof trimmed in neon and an oversized
"Roadhouse Grill" sign.
/bullet/ PREMIUM QUALITY GRILLED ENTREES AND DIVERSE MENU. The Roadhouse
Grill menu features aged USDA Choice steaks, ribs, chicken and
seafood. An in-house butcher at each restaurant cuts and trims
the steaks and prime rib, which are aged both before and after
carving. In addition to grilled selections, the menu includes a
variety of appetizers, sandwiches, salads and desserts, including
signature items such as Roadhouse cheese wraps,
hot-out-of-the-oven yeast rolls made from scratch each day and a
daily selection of homemade ice cream.
/bullet/ HIGH VALUE TO GUESTS. Roadhouse Grill strives to provide a high
value dining experience for its guests by offering a broad,
moderately-priced menu and serving generous portions. At
Roadhouse Grill restaurants, the price of each entree includes a
choice of house or caesar salad, a choice of baked sweet potato,
baked potato, home fries, french fries or rice pilaf and
hot-out-of-the-oven homemade yeast rolls. From 11 a.m. to 3 p.m.
Monday through Friday, each Roadhouse Grill offers a selection of
13 "Lunch in a Rush" menu items ranging from grilled steak salad
to a half-order of ribs, all served to order in under 10 minutes
and priced at $5.99 or less. During Fiscal 1995, the average
guest check, including beverage, was approximately $7.25 for
lunch and $13.00 for dinner.
22
<PAGE>
/bullet/ BROAD CUSTOMER APPEAL; FOCUS ON FAMILIES. The Roadhouse Grill
concept is designed to appeal to a broad range of customers,
including business people, couples, singles and particularly
families. The Company believes that to be attractive to families
a concept must be appealing to both children and parents.
Consequently, Roadhouse Grill restaurants furnish children with
coloring menus, balloons and a free souvenir cup, and all
Roadhouse Grill prototype restaurants have a game room featuring
pinball and video games. In addition, each restaurant offers a
special "Kids' Menu" featuring an assortment of entrees for
$2.99. In 1995, Roadhouse Grill was voted a "Best Family
Restaurant" in a survey conducted by SOUTH FLORIDA PARENTING
magazine. For adults, each Roadhouse Grill restaurant offers
beverages from its full-service bar, which is separated from the
dining area.
/bullet/ EFFICIENT, PERSONALIZED SERVICE. The Company believes that a
distinctive, enjoyable dining experience is made possible through
excellent service. Accordingly, the Company hires individuals who
possess strong initiative and the ability to provide quality and
personalized service. Roadhouse Grill attempts to foster the
individuality of its employees, encouraging them to converse and
interact with guests on a friendly, casual basis. Servers often
sit down at the table with guests to take orders, and the
restaurant manager visits each table to help ensure customer
satisfaction.
EXPANSION STRATEGY
The Company's primary expansion strategy is to continue opening
Company-owned restaurants in targeted markets in the United States. The
Company plans to open restaurants primarily in selected medium and large
metropolitan areas primarily in the Southeast and Gulf Coast regions. In
addition, the Company is evaluating prospects for opening restaurants in Ohio
and is considering opening additional restaurants in upstate New York. In
each target market, the Company intends to cluster multiple restaurants to
help build brand awareness and increase efficiencies in marketing and
management. As of September 25, 1996, the Company had added nine restaurants
in 1996, and it plans to open four additional Company-owned restaurants
during the remainder of 1996, all of which are currently under construction.
In 1997, the Company plans to open approximately 15 restaurants, for a total
of approximately 47 Company-owned restaurants by the end of 1997.
The Company also intends to actively support the development of Roadhouse
Grill restaurants in Asia and the Pacific Rim through its international
franchisees, Roadhouse Grill Asia Pacific (H.K.) Limited, a Hong Kong
corporation ("Roadhouse Grill Hong Kong"), and Roadhouse Grill Asia Pacific
(Cayman) Limited, a Cayman Islands corporation ("Roadhouse Grill Asia''),
both of which are wholly-owned subsidiaries of Berjaya. The Company expects
that Roadhouse Grill Asia, which currently operates three Roadhouse Grill
restaurants in Kuala Lumpur, Malaysia, will develop at least two additional
Roadhouse Grill restaurants in 1997. Berjaya is a wholly-owned subsidiary of
Berjaya Group Berhad ("Berjaya Berhad"), a publicly-traded Malaysian Company
with diversified interests, which operates more than 25 other restaurants in
Asia and the Pacific Rim. Although the Company has granted limited rights for
the development of Roadhouse Grill restaurants in certain areas of the United
States, it plans to concentrate domestic expansion on the opening of
Company-owned restaurants.
SITE SELECTION; DESIGN AND LAYOUT
The Company believes the site selection process is critical to the
long-term success of any restaurant and, accordingly, devotes significant
time and effort to the investigation and evaluation of potential locations.
Among the factors it considers in the site selection process are market
demographics (including population, age and median household income), traffic
patterns and activity, site visibility and accessibility, and proximity to
residential developments, office complexes, hotels, retail establishments and
entertainment areas. The Company also considers existing or potential
competition in the area and attempts to analyze the performance of other area
restaurants. Currently, Company-owned restaurants are operated on both owned
and leased sites, with a majority being leased.
23
<PAGE>
Management generally determines which geographic areas may be suitable for
Roadhouse Grill restaurants and then employs real estate agents and brokers
to identify potential sites in each area. In connection with the Company's
evaluation, Company personnel visit and analyze each potential site. After a
location has been leased or purchased and the necessary licenses and permits
obtained, the average time for construction of new Roadhouse Grill
restaurants has been approximately 120 days and the average time for
renovation of an existing building has been approximately 90 days. However,
there can be no assurance that such construction schedules can be maintained
in the future.
Roadhouse Grill restaurants are large, open and visually appealing, with
exposed ceilings and brick and lapboard cedar walls decorated with colorful,
hand-painted murals and neon signs. The prototypical interior also includes
multi-level seating, an exhibition grill and display kitchen and a game room
featuring pinball and video games. The exterior of each restaurant features
rough-sawed siding, a wrap-around wood plank porch, a tin roof trimmed in
neon and an oversized "Roadhouse Grill" sign. Company-owned restaurants
opened prior to March 1996 range generally from 6,000 to 8,500 square feet in
size. During the last year, the Company refined its prototype from
approximately 7,500 square feet (with seating for approximately 235 guests)
to approximately 6,800 square feet (with seating for approximately 210
guests) in an effort to reduce construction costs without significantly
impacting restaurant sales. The Company expects the average cash investment
required to open its prototype restaurants, excluding real estate costs and
pre-opening expenses, will be approximately $950,000 or $1.3 million,
depending on whether the Company converts an existing building or constucts a
new restaurant. However, there can be no assurance that the cost of opening
Roadhouse Grill restaurants in the future will not increase. See "Risk
Factors--Limited Operating History; Operating Losses" and "Risk
Factors--Risks of Rapid Expansion; Management of Growth."
RESTAURANT ECONOMICS
The Company believes that Company-owned Roadhouse Grill restaurants have
achieved attractive unit level economics. The Company's 12 Company-owned
restaurants which were open for the entire twelve-month period ended June 30,
1996 generated average restaurant revenues of approximately $2.9 million,
average restaurant cash flow of approximately $380,000 and average restaurant
operating income after depreciation and amortization of approximately
$217,000. The average cash investment, excluding real estate costs and
pre-opening expenses, required to open the 22 Company-owned Roadhouse Grill
restaurants opened by the Company was approximately $1.3 million. For the
Company's ten owned properties, average real estate acquisition costs were
approximately $870,000. However, there can be no assurance that existing or
new restaurants will achieve unit economics in the future at the levels
achieved in the twelve months ended June 30, 1996 or that the cost of opening
a Roadhouse Grill restaurant will not increase. See "Risk Factors--Limited
Operating History; Operating Losses" and "Risk Factors--Risks of Rapid
Expansion; Management of Growth."
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<PAGE>
RESTAURANT LOCATIONS
The following table provides information with respect to each of the
Company's owned, franchised and licensed restaurants as of the date of this
Prospectus.
<TABLE>
<CAPTION>
APPROXIMATE
SQUARE OWNED, LEASED,
FOOTAGE/SEATING LICENSED OR
LOCATION OPENING DATE CAPACITY(1) FRANCHISED
- -------- ------------ --------------- --------------
<S> <C> <C> <C>
COMPANY-OWNED:
Pembroke Pines (Fort Lauderdale), FL March 1, 1993 5,800/208 Leased
North Miami, FL(2) November 1, 1993 7,816/221 Leased
Coral Springs (Fort Lauderdale), FL December 6, 1993 10,000/231 Leased
West Palm Beach, FL February 21, 1994 6,000/215 Leased
Kendall (Miami), FL(2) June 28, 1994 8,000/234 Leased
Casselberry (Orlando), FL September 10, 1994 12,000/237 Leased
Deerfield Beach (Fort Lauderdale), FL January 16, 1995 7,500/238 Leased
Bradenton, FL February 20, 1995 10,000/283 Owned
Davie (Fort Lauderdale), FL(2) March 15, 1995 5,800/208 Leased
Tampa, FL April 10, 1995 8,600/220 Leased
St. Petersburg, FL May 16, 1995 6,000/190 Leased
Delray Beach, FL June 27, 1995 7,500/226 Leased
Kissimmee, FL July 18, 1995 7,500/234 Owned
Lakeland, FL July 18, 1995 6,264/190 Leased
Jacksonville, FL August 15, 1995 8,300/206 Owned
Orlando South, FL October 10, 1995 7,500/236 Leased
Tallahassee, FL October 30, 1995 7,500/236 Owned
Ocala, FL October 31, 1995 7,500/226 Owned
Fort Lauderdale, FL (2)(3) December 14, 1995 12,000/196 Leased
North Palm Beach, FL February 15, 1996 8,500/226 Owned
Sandy Springs (Atlanta), GA(4) March 14, 1996 6,800/212 Leased
Longwood (Orlando), FL May 13, 1996 7,500/235 Owned
Orange Park (Jacksonville), FL(4) May 30, 1996 6,800/212 Owned
Fort Myers, FL(4) July 2, 1996 6,800/212 Owned
Columbia, SC July 2, 1996 8,400/218 Owned
Cheektowaga (Buffalo), NY August 27, 1996 5,000/190 Leased
Kennesaw (Atlanta), GA(4) September 4, 1996 6,800/212 Leased
Amherst (Buffalo), NY September 24, 1996 5,000/190 Leased
FRANCHISED OR LICENSED:
Gresham, OR January 23, 1993 8,200/190 Licensed
Boca Raton, FL (5) December 12, 1994 7,200/226 Franchised
Bangsar Baru, Malaysia November 20, 1995 5,800/160 Franchised
San Diego, CA January 22, 1996 8,600/266 Licensed
Ampang, Malaysia April 24, 1996 7,000/200 Franchised
Jalan Sultan Ismail, Malaysia July 11, 1996 5,000/172 Franchised
</TABLE>
- ---------------
(1) Excludes bar seating.
(2) The North Miami and Kendall restaurants originally were owned by limited
liability companies in which the Company held a 50% ownership interest.
The Davie and Fort Lauderdale restaurants were opened in March 1993 as
franchised restaurants. The Company acquired 100% ownership of the North
Miami, Davie and Fort Lauderdale restaurants in March 1995 and has
contracted to acquire 100% ownership of the Kendall restaurant.
(3) The Fort Lauderdale restaurant was closed for remodeling from September
to December 1995. The date indicated in the above chart is the
restaurant's re-opening date.
(4) Prototype restaurant.
(5) The Company is currently negotiating the purchase of a 50% interest in
the Boca Raton restaurant from an unaffiliated third party.
25
<PAGE>
The Company currently has under construction, and expects to open by the
end of 1996, four restaurants, one each in Rochester, New York, Duluth
(Atlanta), Georgia, Greenville, South Carolina and Lake Worth (West Palm
Beach), Florida. In addition to the foregoing, four sites for restaurants
that are expected to open in 1997 have been acquired or leased, one each in
Columbia, South Carolina and Melbourne, Doral (Miami) and Daytona Beach,
Florida.
Of the Company's 28 restaurants, 19 are located on leased sites. Existing
restaurant leases have expiration dates ranging from December 1996 to April
2015. The Company leases approximately 8,000 square feet for its corporate
offices in Fort Lauderdale, Florida under a three year lease which expires
September 30, 1998.
MENU AND PRICING
The Roadhouse Grill menu features USDA Choice steaks and prime rib, beef
ribs, chicken and seafood, all of which are grilled to order. The Company's
steaks and prime rib are aged both before and after being cut and trimmed by
each restaurant's in-house butcher. The menu features over sixty items,
including eight cuts of steak ranging from 6 oz. to 18 oz. In addition to
grilled selections, the menu offers a wide variety of appetizers, sandwiches,
salads and desserts, including signature items such as Roadhouse cheese
wraps, hot-out-of-the-oven yeast rolls made from scratch each day and a daily
selection of homemade ice cream. Each entree is served with a choice of a
house salad or caesar salad, a choice of baked sweet potato, baked potato,
home fries, french fries or rice pilaf and homemade yeast rolls. Roadhouse
Grill restaurants are open seven days a week for lunch and dinner and offer
full bar service. Prices range from $2.99 to $6.29 for lunch entrees and from
$4.99 to $15.99 for dinner entrees. From 11 a.m. to 3 p.m. Monday through
Friday, in addition to its full menu, each Roadhouse Grill offers a selection
of 13 "Lunch in a Rush" menu items ranging from grilled steak salad to a
half-order of ribs, all prepared to order in under 10 minutes and priced at
$5.99 or less. During 1995, the average guest check, including beverage, was
approximately $7.25 for lunch and $13.00 for dinner.
RESTAURANT OPERATIONS AND MANAGEMENT
RESTAURANT PERSONNEL. The Company believes that excellent service
contributes significantly to a distinctive, enjoyable dining experience.
Accordingly, the Company seeks to hire individuals who possess strong
initiative and the ability to provide quality and personalized service.
Roadhouse Grill attempts to foster the individuality of its employees,
encouraging them to interact with customers on a friendly, casual basis.
Consistent with the Company's preference to promote from within, restaurant
managers generally are selected from Company personnel. The Company seeks to
retain high-quality restaurant managers and personnel by providing them with
opportunities for promotion and financial incentives based on individual
restaurant performance. These financial incentives include a bonus plan which
enables each restaurant manager to earn a portion of a bonus pool by
achieving certain predetermined performance goals,. During Fiscal 1995, the
Company's turnover rates were approximately 55% for restaurant staff and 21%
for restaurant managers, which are significantly below the restaurant
industry averages of 92% for staff employees and 50% for managers (as
reported by the National Restaurant Association).
Roadhouse Grill restaurants generally operate with five managers,
including a general manager, an assistant general manager, a kitchen manager
and two assistant managers. The general manager of each restaurant has
primary responsibility for managing the day-to-day operations of the
restaurant in accordance with Company standards. The general manager and
kitchen manager of each restaurant generally are responsible for
interviewing, hiring and training restaurant staff. Each restaurant has a
staff of approximately 90 employees, which includes at least one full-time,
in-house butcher. The Company currently employs eight area supervisors, each
of whom is responsible for three to four restaurants. The supervisors report
to regional directors, each of whom has responsibility for four supervisors.
The Company currently has two regional directors, who communicate daily with
the Vice President of Operations.
26
<PAGE>
The Company devotes a significant amount of time and resources to
restaurant management and staff training. Each new manager participates in an
eight-week training program, which is conducted at designated training
restaurants, before assuming an assistant manager position (or, in some
instances, a kitchen manager position) at a Roadhouse Grill restaurant. This
program is designed to provide training in all areas of restaurant
operations, including food preparation and service, alcoholic beverage
service, Company philosophy, operating standards, policies and procedures,
and business management and administration techniques. The managers of the
training restaurant conduct weekly evaluations of each manager trainee.
In connection with the opening of each new restaurant, the Company sends
one of its two full-time, 16-member training teams to train and assist the
new restaurant employees. The training team generally arrives at each
restaurant two weeks prior to opening and remains for four weeks after
opening. Typically, the top three managers (the general manager, the
assistant general manager and the kitchen manager) of each new restaurant are
individuals who have been managers at an existing Roadhouse Grill restaurant.
INTERNAL CONTROLS; RESTAURANT REPORTING. The Company maintains financial
and accounting controls for each of its restaurants through the use of
centralized accounting and management information systems. The Company uses a
computerized point-of-sale system to collect sales information from each
restaurant, and restaurant managers are provided access to the operating
statements for their restaurants. The Company intends to upgrade its internal
controls by enhancing its existing point-of-sale system.
PURCHASING. Roadhouse Grill operates a centralized purchasing system that
is utilized by all restaurants operated by the Company (except those located
in upstate New York). The Company purchased approximately 87% of its food and
other products from two distributors during Fiscal 1995. Beginning August 5,
1996, the Company began doing business with only one of these two principal
distributors and anticipates that approximately 80% of its food and other
products will be purchased from that distributor. See "Risk Factors--Changes
in Food and Other Costs; Supply Risks."
ADVERTISING AND MARKETING
The Company attempts to build brand awareness by providing a distinctive
dining experience that results in a significant number of new customers being
attracted through word of mouth, as well as by traditional marketing efforts
and promotional activities. The Company believes that clustering multiple
restaurants in target markets will help build brand awareness and increase
efficiencies in its marketing efforts. The Company's marketing efforts are
centered around print media and radio advertisements using the voice of
"Cowboy Jim," the Company's mascot, and, to a lesser extent, the use of
outdoor billboards. The Company also markets at the restaurant level through
sponsorship of community charity activities, sporting events, festivals and
Chamber of Commerce events. Prior to opening a restaurant, the Company
typically conducts a six-week print and radio advertising campaign and holds
a "VIP Night" at which city officials, Chamber of Commerce members, police,
fire and rescue personnel, local business people, area media and others are
invited to have "dinner on the Roadhouse." At certain restaurants, the
Company also is test marketing t-shirts and other merchandise bearing the
Roadhouse Grill name and logo to increase the Company's brand recognition.
Approximately 2.5% of the Company's annual revenues are spent on advertising
and marketing activities.
FRANCHISING
The Company has granted franchise rights to the Roadhouse Grill concept in
Asia and the Pacific Rim and in certain limited geographic areas in the
United States. Pursuant to its expansion strategy, the Company expects to
concentrate its future franchising activity in Asia and the Pacific Rim
through its international franchisees, Roadhouse Grill Hong Kong and
Roadhouse Grill Asia. Although the Company's United States franchisees may
open a limited number of additional franchised restaurants in their
respective territories, the Company does not intend to grant additional
franchise rights in the United States.
27
<PAGE>
INTERNATIONAL FRANCHISING. In January 1996, the Company entered into a
Master Development Agreement with Roadhouse Grill Hong Kong, which provides
for the development and franchising of Roadhouse Grill restaurants in Hong
Kong. Under the agreement, Roadhouse Grill Hong Kong is not required to
develop any specific number of restaurants in Hong Kong, but any restaurants
that it develops are credited against the development obligations of
Roadhouse Grill Asia under Roadhouse Grill Asia's Master Development
Agreement with the Company. Roadhouse Grill Hong Kong is not required to pay
any franchise or reservation fee for restaurants that it develops, but it is
responsible for paying or reimbursing approved expenses incurred by the
Company in connection with the opening of each restaurant. In addition,
Roadhouse Grill Hong Kong is required to pay a royalty in connection with the
operation of each of its restaurants in the amount of 2.0% of gross sales for
each restaurant's first three years of operation and 3.0% thereafter. Under
certain circumstances, Roadhouse Grill Hong Kong or the Company may grant
franchises to third parties in Hong Kong. In that event, the Company is
entitled to receive 50% of any franchise and reservation fees and 50% of any
royalty fee payable by the third party franchisee, subject to limitations on
the amounts payable to the Company of $10,000 per restaurant in the case of
franchise and reservations fees and 2.5% of gross sales in the case of
royalty fees.
In January 1996, the Company also entered into a Master Development
Agreement with Roadhouse Grill Asia which covers countries in Asia and the
Pacific Rim (other than Hong Kong), including, but not limited to, Australia,
China, India, Indonesia, Japan, Malaysia, New Zealand, North Korea, South
Korea, The Philippines and Thailand. Under the agreement, Roadhouse Grill
Asia is required to open and maintain at least 30 Roadhouse Grill Restaurants
during the first ten years of the term of the agreement, with a minimum of
two restaurants to be developed each year. Under certain circumstances,
Roadhouse Grill Asia or the Company may grant franchises to third parties in
the territory. The fee arrangements under the agreement are substantially the
same as those under the agreement between the Company and Roadhouse Grill
Hong Kong. See "Certain Transactions."
DOMESTIC FRANCHISING. The Company has entered into franchise or license
arrangements for the development and operation of Roadhouse Grill restaurants
in Gresham, Oregon, Boca Raton, Florida, San Diego California, Clark County,
Nevada and the Greater Delaware Valley Region of Pennsylvania. The Gresham
Roadhouse Grill has been in operation since January 1993; the Boca Raton
Roadhouse Grill has been in operation since December 1994; the San Diego
Roadhouse Grill has been in operation since January, 1996; the Nevada
franchisee commenced construction of its first restaurant in July 1996; and
the Pennsylvania franchisee is currently evaluating sites for its restaurant.
COMPETITION; RESTAURANT INDUSTRY
The restaurant industry is highly competitive. The Company competes with a
broad range of restaurants, including national and regional casual dining
chains as well as locally-owned restaurants, some of which operate with
concepts similar to that of the Company. Many of the Company's competitors
are well established and have substantially greater market presence and
financial and other resources than the Company. The entrance of new
competitors into the Company's market areas or the expansion of operations by
existing competitors could have a material adverse effect on the Company's
results of operations and financial condition. In addition, the Company
competes with other restaurant companies and retailers for sites, labor and,
in many cases, customers. The Company believes that the key competitive
factors in the restaurant industry are quality of food and service, price,
location and concept. To the extent that one or more of its competitors
becomes more successful in respect of any key competitive factors, the
Company's business could be adversely affected. See "Risk Factors--
Competition."
The restaurant industry is affected by changes in consumer tastes as well
as national, regional and local economic conditions, demographic trends,
traffic patterns, and the type, number and location of competing restaurants.
Dependence on fresh meats and produce also subjects restaurant companies to
the risk that shortages or interruptions of supply could adversely affect the
availability, quality or cost of ingredients. In addition, factors such as
inflation, increased food, labor and employee benefit costs and
28
<PAGE>
the availability of qualified management and hourly employees also may
adversely affect the restaurant industry generally and the Company's
restaurants in particular. The success and future profitability of the
Company will depend in part on its ability to identify and to respond
appropriately to changing conditions within the restaurant industry. See
"Risk Factors--Restaurant Industry."
GOVERNMENT REGULATION
Each Roadhouse Grill restaurant is subject to numerous federal, state and
local laws and governmental regulations, including those relating to the
preparation, sale and service of food and alcoholic beverages, designation of
non-smoking and smoking areas, accessibility of restaurants to disabled
customers, development and construction of restaurants and environmental
matters. Roadhouse Grill also is subject to laws governing its relationship
with employees, including minimum wage requirements, overtime, working
conditions and immigration requirements. Difficulties or failures in
obtaining the required construction and operating licenses, permits or
approvals could delay or prevent the opening of a new restaurant. Roadhouse
Grill believes that it is operating in compliance in all material respects
with applicable laws and regulations that govern its operations. See "Risk
Factors--Government Regulation."
Alcoholic beverage control regulations require each Roadhouse Grill
restaurant to apply to a state authority and, in certain locations, county or
municipal authorities for a license or permit to sell alcoholic beverages on
the premises and to provide service for extended hours. Typically, licenses
must be renewed annually and may be revoked or suspended for cause at any
time. If a liquor license for any restaurant were lost, revenues for that
restaurant would be adversely affected. Alcoholic beverage control
regulations relate to numerous aspects of the Company's restaurants,
including minimum age of patrons consuming and employees serving alcoholic
beverages, hours of operation, advertising, wholesale purchasing, inventory
control, and handling, storage and dispensing of alcoholic beverages. The
Company is also subject to "dram-shop" statutes which generally provide a
person injured by an intoxicated person the right to recover damages from an
establishment that wrongfully served alcoholic beverages to the intoxicated
person. The Company carries liquor liability coverage as part of its existing
comprehensive general liability insurance.
In connection with its sale of franchises, the Company is subject to the
United States Federal Trade Commission rules and regulations and state laws
that regulate the offer and sale of franchises. The Company also is subject
to laws that regulate certain aspects of the franchise relationship.
The Company is subject to various local, state and federal laws regulating
the discharge of pollutants into the environment. The Company believes that
its operations are in compliance in all material respects with applicable
environmental laws and regulations. The Company conducts environmental audits
of a proposed restaurant site in order to determine whether there is any
evidence of contamination prior to purchasing or entering into a lease with
respect to the site. However, there can be no assurance that the Company will
not incur material environmental liability in connection with any of its
owned or leased properties.
EMPLOYEES
At September 25, 1996, the Company employed approximately 283 salaried
employees, of whom 29 served in corporate and administrative capacities and
254 served as restaurant management personnel. In addition, the Company
employed approximately 3,195 persons on an hourly basis. None of the
Company's employees is covered by a collective bargaining agreement, and the
Company has never experienced an organized work stoppage, strike or labor
dispute. The Company believes its relations with its employees are good.
TRADEMARKS, SERVICE MARKS AND TRADE DRESS
Roadhouse Grill believes its trademarks, service marks and trade dress are
important to its marketing efforts. Roadhouse Grill has registered the
"Roadhouse Grill" service mark, the "Cowboy
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<PAGE>
Jim and rocking chair" design and the slogan "Good Food and a Smile . . .
That's Roadhouse Style" with the U.S. Patent and Trademark Office. The
Company also has applied for registration of the "Roadhouse Grill" service
mark in approximately 30 foreign countries, including Australia, Brazil,
Canada, China, France, Germany, Hong Kong, Indonesia, Japan, Mexico, New
Zealand, The Philippines, South Africa, Spain, Thailand and the United
Kingdom.
LITIGATION
The Company is party to certain legal proceedings arising in the ordinary
course of business. In the opinion of the Company, any resulting liability
will not have a material adverse effect on the Company or its business.
30
<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The directors, executive officers and key employees of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John D. Toole III ...... 37 Chief Executive Officer, President and Director
Dennis C. Jones ........ 42 Chief Financial Officer, Vice President of Finance
and Treasurer
John D. Toole, Jr. .... 59 Vice President of Real Estate and Construction
H. Todd Kaufman ........ 33 Vice President of Operations
Charles D. Barnett .... 45 Secretary
Mark A. Scobee ......... 32 Director of Human Resources
Brad H. Haber .......... 35 Director of Training
Gerald P. Shore ........ 47 Director of Purchasing
Kim A. Donovan ......... 32 Director of Marketing
Tan Kim Poh(1) ......... 43 Director
Dr. Christian F. Horn(1) 68 Chairman of the Board of Directors
</TABLE>
- -----------------
(1) Member of Audit, Compensation and Stock Option Committees.
JOHN D. TOOLE III. Mr. Toole founded Roadhouse Grill in October 1992 and
has served since that time as Chief Executive Officer, President and a
director of the Company. From 1988 to October 1992, Mr. Toole served as
President of Bluegrass Steaks, Inc., where he developed the initial Logan's
Roadhouse casual dining steakhouse concept. From 1983 to 1988, Mr. Toole was
employed by Ryan's Family Steak Houses, Inc. ("Ryan's") in various
capacities, including restaurant general manager and area supervisor. In
1988, Ryan's was a 120-unit chain which operated in the Southeast, Northeast
and Midwest regions of the United States. Mr. Toole is the son of John D.
Toole, Jr., the Vice President of Real Estate and Construction of the
Company.
DENNIS C. JONES. Mr. Jones has served as Chief Financial Officer, Vice
President of Finance and Treasurer of the Company since March 1996. From
October 1994 to January 1996, Mr. Jones served as Chief Financial Officer of
Louise's Trattoria, Inc., which operated approximately 20 Italian
restaurants, primarily in southern California. From 1984 to October 1994, Mr.
Jones was employed by Acapulco Restaurants, Inc., which operated
approximately 50 Mexican restaurants, primarily in California, in various
financial management positions, including Chief Financial Officer from
January 1991 to October 1994.
JOHN D. TOOLE, JR. Mr. Toole has served as Vice President of Real Estate
and Construction of the Company since March 1993. From 1986 to March 1993,
Mr. Toole owned and operated a real estate brokerage company in Smyrna,
Georgia. Mr. Toole is the father of John D. Toole III, the Chief Executive
Officer and President of the Company.
H. TODD KAUFMAN. Mr. Kaufman has served as Vice President of Operations of
the Company since December 1995. Mr. Kaufman joined the Company in March 1994
and has served in various capacities, including as an area supervisor and
regional director. From September 1991 until April 1994, Mr. Kaufman served
as area supervisor of three restaurants in the Atlanta Market for O'Charley's
Restaurants, Inc. From 1987 until 1991, Mr. Kaufman was a manager of a Ryan's
restaurant.
CHARLES D. BARNETT. Mr. Barnett has served as Secretary of the Company
since its inception in October 1992. Since August 1992, Mr. Barnett has
served as General Counsel of Roasters Corp., a company that operates Kenny
Rogers Roasters Restaurants. From July 1990 until joining Roasters Corp., Mr.
Barnett served as General Counsel of Miami Subs Corporation, which operates
and franchises Miami Subs restaurants.
MARK A. SCOBEE. Mr. Scobee has served as Director of Human Resources of
the Company since August 1994. Mr. Scobee joined the Company in March 1993
and has served the Company in various
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<PAGE>
capacities, including restaurant manager, area supervisor and Director of
Operations. Mr. Scobee served as a general manager of various Logan's
Roadhouse restaurants from August 1991 to February 1993 and as a general
manager of various Applebee's restaurants from January 1989 to August 1990.
BRAD H. HABER. Mr. Haber has served as Director of Training of the Company
since March 1995. From February 1992 to March 1995, Mr. Haber served as
Manager Training Supervisor and a restaurant general manager of O'Charley's
Restaurants, Inc. From June 1990 to February 1992, Mr. Haber was employed by
Brinker International, Inc. as the manager of a Chili's restaurant.
GERALD P. SHORE. Mr. Shore has served as Director of Purchasing of the
Company since December 1995. From January 1994 until joining the Company, Mr.
Shore was a marketing associate with Sysco Food Services South Florida, a
food and restaurant products distributor, and, in such capacity, exclusively
serviced Roadhouse Grill restaurants. Since 1979, Mr. Shore and his wife have
owned part of and operated Marino's Italian Restaurant in Fort Lauderdale,
Florida.
KIM A. DONOVAN. Ms. Donovan has served as Director of Marketing of the
Company since January 1996. Ms. Donovan joined the Company in March 1995 as
Marketing Assistant. From August 1993 until joining the Company, Ms. Donovan
served as Marketing Coordinator for Brothers Gourmet Coffees. From November
1990 to October 1994, Ms. Donovan operated her own retail bakery and
concession business. From 1988 to October 1990, Ms. Donovan was a senior
consultant with Abbington Associates, Ltd., a restaurant and hospitality
recruiting firm serving the Boston area. From 1986 to 1988, Ms. Donovan
served in various capacities, including store manager and corporate trainer,
for Au Bon Pain, Inc.
TAN KIM POH. Mr. Tan has served as a director of the Company since May
1995. Since 1991, Mr. Tan has served as Group Executive Director of Berjaya
Berhad. Mr. Tan has also served as a director of the following companies
since the indicated dates: Berjaya Industrial Berhad, since May 1990; Berjaya
Prudential Assurance Berhad, since March 1992; Berjaya Capital Berhad, since
March 1995; Topgroup Holdings Berhard, since January 1995; UNZA Holdings
Berhad, since January 1995; Berjaya Holdings (H.K.) Ltd., since July 1993;
Rossmont Plc, since September 1994; STM Wireless, Inc., since October 1994;
and Carlovers Carwash Ltd., since December 1994.
DR. CHRISTIAN F. HORN. Dr. Horn has served as a director of the Company
since January 1994 and as Chairman of the Board since August 1996. Since
1990, Dr. Horn has been the Managing Partner of Horn Venture Partners II,
L.P., a General Partner of Cupertino Ventures Partnership III, L.P. (formerly
known as Grace Ventures Partnership III, L.P.) ("Cupertino"), which is a
shareholder of the Company. From 1982 until December 1995, Dr. Horn was also
President of Grace Ventures Corp., which had been a General Partner of Grace
Ventures Partnership III, L.P. Dr. Horn is a director of HomeTown Buffets,
Inc., a buffet-style restaurant chain, a subsidiary of which operates
Roadhouse Grill restaurants in Gresham, Oregon and San Diego, California
pursuant to licensing arrangements with the Company.
All executive officers of the Company are elected annually by, and serve
at the discretion of, the Board of Directors. Directors are elected annually
by the Company's shareholders and serve until their successors are elected
and qualified. The Company intends to add two directors not affiliated with
the Company within 90 days after completion of the Offering. These new
directors will serve on the audit and compensation committees of the Board of
Directors.
DIRECTORS COMPENSATION
During Fiscal 1995, the Company reimbursed its non-employee directors for
out-of-pocket expenses incurred in connection with attendance at board
meetings. Following completion of the Offering, the Company intends to pay
its non-employee directors a fee for each board and committee meeting
attended, as well as out-of-pocket expenses. During Fiscal 1995, the Company
granted options to acquire , and shares of the Company's
Common Stock to Tan Sri Dato Vincent Tan Chee Yioun (who served as a director
from September 1993 to August 1996 and as
32
<PAGE>
Chairman of the Board of Directors from April 1996 to August 1996), Tan Kim
Poh and Dr. Christian F. Horn, respectively. See "Management--1994 Stock
Option Plan."
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The table below sets forth certain information
concerning the compensation received during Fiscal 1995 by the Company's
Chief Executive Officer. No other employee of the Company received
compensation of $100,000 or more during Fiscal 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
----------------------
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) ALL OTHER COMPENSATION($)
- ---------------------------- ----------- ------------- ------------------------
<S> <C> <C> <C>
John D. Toole III --
President & Chief Executive Officer $120,000 $34,566
</TABLE>
- ---------------------
(1) The aggregate amount of perquisites and other personal benefits, if any,
did not exceed the lesser of $50,000 or 10% of the total annual salary
and bonus reported for the Company's Chief Executive Officer and has
therefore been omitted.
OPTION GRANTS, AGGREGATED OPTION TABLE. No stock options were granted to
the Company's Chief Executive Officer during Fiscal 1995. The table below
sets forth certain information with respect to options exercised during, and
options held at the end of, Fiscal 1995 by the Company's Chief Executive
Officer. All of such options were issued outside of the Option Plan. All of
such options that were held at the end of Fiscal 1995 are currently
exercisable.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
SHARES SUBJECT IN-THE-MONEY
SHARES TO UNEXERCISED OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT END OF FISCAL
NAME EXERCISE(1) REALIZED(2) END OF FISCAL 1995 1995(3)
- ----- ------------- ------------ ------------------- ---------------
<S> <C> <C>
John D. Toole III $1,084,443 $550,000
<FN>
- -----------
(1) Adjusted for the for reverse stock split effected by the Company on
, 1996.
(2) The value shown is based on management's estimate of the fair market
value of the Common Stock at the date of exercise.
(3) All options are options to purchase Common Stock of Roadhouse Grill, Inc.
As there is no existing public market for the Common Stock, the value
shown is based on management's estimate of the fair market value of the
Common Stock at the end of Fiscal 1995.
</FN>
</TABLE>
1994 STOCK OPTION PLAN
The Company's 1994 Stock Option Plan (The "Option Plan") was adopted by
the Board of Directors on February 14, 1994. The Option Plan provides for
grants of incentive and nonqualified stock options to Company employees and
for grants of nonqualified stock options to non-employee officers, directors
and consultants of the Company. The Option Plan is administered by the Stock
Option Committee. A maximum of shares of Common Stock may be issued
pursuant to the Option Plan. As of October , 1996, options to purchase
shares were outstanding under the Option Plan at a weighted-average
exercise price of $ per share, including options that were granted in
Fiscal 1995 to purchase shares at an exercise price of $ per
share. All of the options granted to date under the Option Plan vest over a
three year period from the date of grant, subject to the acceleration of
vesting upon a change of control of the Company.
The exercise price of incentive stock options may not be less than 100% of
the fair market value of the Common Stock on the date of grant (110% in the
case of incentive stock options granted to a holder
33
<PAGE>
of more than 10% of the total voting power of all classes of the Company's
capital stock on the date of grant). The term of options is as determined by
the Stock Option Committee but in any event may not exceed ten years from the
date of grant. The exercise price may be paid in cash and/or by delivery of
Common Stock already owned by the optionee (valued at its fair market value
at the time of exercise).
In addition to options that have been granted under the Option Plan, the
Company has granted an option outside of the Option Plan to J. David Toole,
III pursuant to which Mr. Toole may acquire up to shares of the
Company's Common Stock. Such options may be exercised at a price of and
have an expiration date of January 31, 2010.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Pursuant to the Company's Articles of Incorporation and Bylaws, the
Company is obligated to indemnify each of its directors and officers to the
fullest extent permitted by Florida law with respect to all liability and
loss suffered, and reasonable expense incurred, by such person in any action,
suit or proceeding in which such person was or is made or threatened to be
made a party or is otherwise involved by reason of the fact that such person
is or was a director or officer of the Company. The Company is also obligated
to pay the reasonable expenses of indemnified directors or officers in
defending such proceedings if the indemnified party agrees to repay all
amounts advanced should it be ultimately determined that such person is not
entitled to indemnification.
The Company maintains an insurance policy covering directors and officers
under which the insurer agrees to pay, subject to certain exclusions, for any
claim made against the directors and officers of the Company for a wrongful
act for which they may become legally obligated to pay or for which the
Company is required to indemnify its directors or officers.
EMPLOYMENT AGREEMENTS
The Company and John David Toole, III have entered into an employment
agreement providing for Mr. Toole's employment as President of the Company
through September 30, 1997. The agreement provides for an annual base salary
of $120,000 and an annual bonus in an amount equal to the greater of (i) 10%
of the profits (before taxes) of the first four Roadhouse Grill restaurants
developed by the Company (so long as such restaurants have a profit of at
least 10% of sales); or (ii) 5% of the pre-tax profits of the Company after
deducting depreciation and general corporate overhead. The agreement provides
that Mr. Toole will not compete with the Company for three years after
termination of his employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1995, the Company had no Compensation Committee or other
committee of the Board of Directors performing similar functions. Decisions
concerning the compensation of executive officers were made by the full Board
of Directors. In January 1996, the Board of Directors established a
Compensation Committee.
In Fiscal 1995, the Company obtained loans in the aggregate amount of
approximately $2.5 million from John Y. Brown, Jr. during Fiscal 1995, Mr.
Brown was the former Chairman of the Board of Directors of the Company. In
January 1996, these loans were consolidated and extended under the Company's
unsecured promissory note dated January 15, 1996, in the principal amount of
$2.5 million, bearing interest at 8.5% per annum, the principal of and
accrued interest on which are due and payable in full upon the closing, and
from the proceeds, of the Offering. The funds obtained by the Company from
such loan were used to finance the opening of new restaurants. The loan was
initially unsecured but in July 1996 was cross-collateralized by the lien
granted on the additional $1.5 million loan described in the next paragraph.
In July 1996, the Company borrowed an additional $1.5 million from Mr.
Brown under the Company's secured promissory note dated July 12, 1996,
bearing interest at 8.5% per annum, the principal of and accrued interest on
which were paid on August 19, 1996 from a portion of the proceeds of the
Company's $2.0 million loan from Berjaya described below. The loan, the
proceeds of which were
34
<PAGE>
used to finance the opening of new restaurants, was secured by a lien on all
of the furniture, fixtures and equipment located in the Company's restaurants
on July 12, 1996 that had not been previously pledged to a third party.
Following the repayment of this loan, the Company in September 1996 obtained
a new loan in the amount of $1.5 million from Mr. Brown under the Company's
unsecured promissory note dated September 5, 1996, bearing interest at 5.0%
per annum and payable in full upon the closing of the Offering.
On July 15, 1996, the Company borrowed $500,000 from Cupertino, a
shareholder of the Company, under the Company's unsecured promissory note
dated July 15, 1996, bearing interest at 8.5% per annum, the principal of and
accrued interest on which were paid on August 19, 1996. The proceeds of this
loan were used to finance the opening of new restaurants. Dr. Christian F.
Horn, the Chairman of the Board of Directors of the Company, is the managing
partner of Horn Ventures Partners II, L.P., which is a General Partner of
Cupertino.
In August 1996, the Company borrowed $2.0 million from Berjaya, its
principal shareholder, under an unsecured promissory note dated August 16,
1996, bearing interest at 8.5% per annum, the principal of and accrued
interest on which are due and payable in full on the closing of this
Offering. The proceeds of this loan were used to repay the July 1996 $1.5
million loan from Mr. Brown described above and to finance the opening of new
restaurants. In connection with this loan, the Company issued a warrant to
Berjaya to acquire that number of shares of the Company's Common Stock
determined by dividing $200,000 by the exercise price of the warrant. The
exercise price is equal to 80% of the initial public offering price of the
Common Stock offered hereby. Tan Kim Poh, a director of the Company, is Group
Executive Director of Berjaya Berhad, which directly or indirectly owns
Berjaya.
Berjaya directly or indirectly owns Roadhouse Grill Hong Kong and
Roadhouse Grill Asia. In January 1996, the Company entered into a master
development agreement with Roadhouse Grill Hong Kong which provides for the
development and franchising of Roadhouse Grill restaurants in Hong Kong.
Under the agreement, Roadhouse Grill Hong Kong is not required to develop any
specific number of restaurants in Hong Kong, but any restaurants that it
develops are credited against the development obligations of Roadhouse Grill
Asia under Roadhouse Grill Asia's Master Development Agreement with the
Company. Roadhouse Grill Hong Kong is not required to pay any franchise or
reservation fee for restaurants that it develops, but it is responsible for
paying or reimbursing approved expenses incurred by the Company in connection
with the opening of each restaurant. In addition, Roadhouse Grill Hong Kong
is required to pay a royalty in connection with the operation of each of its
restaurants in the amount of 2.0% of gross sales for each restaurant's first
three years of operation and 3.0% thereafter. Under certain circumstances,
Roadhouse Grill Hong Kong or the Company may grant franchises to third
parties in Hong Kong. In that event, the Company is entitled to receive 50%
of any franchise and reservation fees and 50% of any royalty fee payable by
the third party franchisee, subject to limitations on the amounts payable to
the Company of $10,000 per restaurant in the case of franchise and
reservations fees and 2.5% of gross sales in the case of royalty fees.
In January 1996, the Company also entered into a Master Development
Agreement with Roadhouse Grill Asia, which covers countries in Asia and the
Pacific Rim (other than Hong Kong), including, but not limited to, Australia,
China, India, Indonesia, Japan, Malaysia, New Zealand, North Korea, South
Korea, the Philippines and Thailand. Under the agreement, Roadhouse Grill
Asia is required to open and maintain at least 30 Roadhouse Grill restaurants
during the first ten years of the term of the agreement, with a minimum of
two restaurants to be developed each year. Under certain circumstances,
Roadhouse Grill Asia or the Company may grant franchises to third parties in
the territory. The fee arrangements under the agreement are substantially the
same as those under the agreement between the Company and Roadhouse Grill
Hong Kong. See "Certain Transactions."
The obligations of the original tenant, New York Roasters, Inc., under the
leases for the sites covering the Company's two restaurants in Buffalo, New
York were assumed by the Company in December 1995. At the time of such
assumptions, Mr. Brown was Chairman of the Board of Directors of the Company
and also President of Roasters Corp. New York Roasters, Inc. was a former
franchisee of Roasters Corp. Except for the franchise relationship, neither
Mr. Brown nor Roasters Corp. had, or currently has, any financial or other
interest in New York Roasters, Inc.
35
<PAGE>
CERTAIN TRANSACTIONS
For a description of certain transactions between the Company and certain
of its affiliates, see "Management--Compensation Committee Interlocks and
Insider Participation."
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of October , 1996, and as
adjusted to reflect the sale of the Common Stock offered hereby (assuming
that the underwriters' over-allotment option is not exercised), with respect
to (i) each person known by the Company to own beneficially more than 5% of
the Common Stock; (ii) the Chief Executive Officer and each of the directors
of the Company; and (iii) all directors and executive officers of the Company
as a group. The information set forth below gives effect to the conversion of
all of the Issued Preferred Stock into shares of Common Stock, which
conversion will occur concurrently with the closing of the Offering. Except
as set forth below, the shareholders named below have sole voting and
investment power with respect to all shares of Common Stock shown as being
beneficially owned by them.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF CLASS PERCENT OF CLASS
NAME BENEFICIALLY OWNED PRIOR TO OFFERING AFTER OFFERING
- ---- ------------------- -------------------- ------------------
<S> <C> <C> <C>
John D. Toole III (1) .......................... % %
Tan Kim Poh (2) ................................
Dr. Christian F. Horn (3) ......................
Berjaya Group (Cayman) Limited (2) .............
Cupertino Ventures Partnership III, L.P. (3) ..
Banque Scandinave En Suisse (4) ................
All executive officers and directors
as a group (four persons)(1)(2)(3)(5) ........
<FN>
- ------------------
* Less than 1%
(1) Reflects shares subject to options beneficially owned by Mr. Toole
that are exercisable within 60 days after the date of this Prospectus.
(2) Reflects shares beneficially owned by Berjaya. As Group Executive
Director of Berjaya Berhad, the owner of 100% of the outstanding shares
of Berjaya, Mr. Tan may be deemed to be the beneficial owner of all of
the shares owned by Berjaya in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. Mr. Tan disclaims beneficial ownership
of the shares beneficially owned by Berjaya. Mr. Tan's and Berjaya's
address is Level 16, Shahzan Prudential Tower, 30 Jalan Sultan Ismail,
50250 Kuala Lumpur, Malaysia.
(3) Includes (i) shares beneficially owned by Cupertino and (ii) shares
subject to options beneficially owned by Dr. Horn that are exercisable
within 60 days after the date of this Prospectus. As the Managing Partner
of Horn Venture Partners II, L.P., a general partner of Cupertino, Dr.
Horn may be deemed to be the beneficial owner of all of the shares owned
by Cupertino in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934. Dr. Horn's and Cupertino's address is 20300 Stevens Creek
Blvd., Suite 330, Cupertino, California 95014.
(4) Banque Scandinave En Suisse's address is c/o Ayman Sabi, 6118 St. Giles
Street, Raleigh, North Carolina 27612.
(5) Includes shares subject to options that are exercisable either
currently or within 60 days after the date of this Prospectus.
</FN>
</TABLE>
36
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 30 million shares of Common Stock, par
value $.01 per share, and 10 million shares of Preferred Stock, par value
$.01 per share. As of , the Company had issued and outstanding
shares of Common Stock, 3,422,500 shares of Series A Convertible Preferred
Stock ("Series A Preferred Stock") and 2,333,350 shares of Series B
Convertible Preferred Stock ("Series B Preferred Stock"). As of September 25,
1996, the Company had four holders of record of Common Stock, seven holders
of record of Series A Preferred Stock and six holders of record of Series B
Preferred Stock, respectively.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held
on all matters submitted to a vote of shareholders. Cumulative voting in the
election of directors is not permitted and the holders of a majority of the
number of outstanding shares of Common Stock are entitled to vote in any
election of directors and may elect all of the directors standing for
election.
Holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally
available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon a liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the
net assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred
Stock. The holders of Common Stock have no preemptive, subscription,
redemption or conversion rights. The outstanding shares of Common Stock are,
and the shares offered by the Company in this Offering, will be, when issued
and paid for, fully paid and nonassessable.
PREFERRED STOCK
The Company currently has issued and outstanding an aggregate of 5,755,850
shares of Series A Preferred Stock and Series B Preferred Stock. Upon the
closing of the Offering, all Issued Preferred Stock will be converted
automatically into an aggregate of shares of Common Stock.
After the Offering, the Company will have authorized shares of
undesignated Preferred Stock. The Board of Directors is empowered by the
Company's Articles of Incorporation to designate and issue from time to time
one or more classes or series of Preferred Stock without shareholder
approval. The Board of Directors may fix and determine the relative rights,
preferences and privileges of each class or series of Preferred Stock so
issued. Because the Board of Directors has the power to establish the
preferences and rights of each class or series of Preferred Stock, it may
afford the holders of any series or class of Preferred Stock preferences,
powers and rights, with respect to voting, liquidation or otherwise, senior
to the rights of holders of Common Stock. The issuance of Preferred Stock
could have the effect of delaying or preventing a change in control of the
Company. The Board of Directors has no present plans to issue any shares of
Preferred Stock.
WARRANTS
In August 1996, the Company issued a warrant to Berjaya, its principal
shareholder, in connection with its receipt of a $2.0 million loan from
Berjaya. The warrant is exercisable during the 1997 calendar year. Pursuant
to its terms, Berjaya may acquire up to that number of shares of the
Company's Common Stock determined by dividing $200,000 by the exercise price
of the warrant. The exercise price is equal to 80% of the initial public
offering price of the Common Stock offered hereby.
CERTAIN PROVISIONS OF FLORIDA LAW
Florida law provides that, unless the corporation has elected to opt out
of such provisions in its Articles of Incorporation or Bylaws, a public
corporation organized under Florida law is subject to
37
<PAGE>
certain statutory provisions that may have anti-takeover effects and that
require special approvals for certain "affiliated transactions." These
provisions, which are contained in the Florida Business Corporation Act,
require, subject to certain exceptions, that an "affiliated transaction" be
approved by the holders of two-thirds of the voting shares other than those
beneficially owned by an "interested shareholder" or by a majority of
disinterested directors and that voting rights be conferred on "control
shares" acquired in specified control share acquisitions generally only to
the extent conferred by resolution approved by the shareholders, excluding
holders of shares defined as "interested shares." The Company has elected to
opt out of the "control-share" acquisition provisions, but has not elected to
opt out of the affiliated transactions provisions. In addition, Florida law
presently limits the personal liability of a corporate director for monetary
damages, except where the director (i) breaches his or her fiduciary duties
and (ii) such breach constitutes or includes certain unlawful distributions
or certain other reckless, wanton or willful acts or misconduct.
REGISTRATION RIGHTS
In connection with the private placement of its Common Stock and Issued
Preferred Stock, the Company has granted certain registration rights to
certain holders of its Issued Preferred Stock and Common Stock. The Company
will have ongoing obligations with respect to those registration rights. See
"Shares Eligible for Future Sale--Registration Rights."
TRADING MARKET AND TRANSFER AGENT
No established trading market for the Common Stock existed prior to the
Offering. An application has been made for the Common Stock to be designated
on the Nasdaq National Market under the symbol "GRLL." The transfer agent for
the Common Stock is American Stock Transfer & Trust Company, and its address
is 40 Wall Street, New York, New York 10005.
SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Upon completion of the Offering, the Company will have outstanding
shares of Common Stock (assuming no exercise of outstanding options to
purchase shares of Common Stock). Of these shares, the shares of Common
Stock sold in the Offering (assuming no exercise of the Underwriters'
over-allotment option) will be freely tradeable without restriction or
further registration under the Securities Act, except for any of such shares
held by "affiliates" (as defined under the Securities Act) of the Company,
which may generally only be sold in compliance with the applicable provisions
of Rule 144 adopted under the Securities Act ("Rule 144"). The holders of the
remaining shares (the "Restricted Shares") will be entitled to sell
their shares in the public securities market only if registered under the
Securities Act or if sold in accordance with an applicable exemption from
registration, such as Rule 144 or Rule 701 promulgated under the Securities
Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned Restricted Shares for at least two years is entitled to
sell, within any three-month period, up to the number of Restricted Shares
that does not exceed the greater of (i) one percent of the then outstanding
shares of Common Stock (approximately shares immediately after the
Offering); or (ii) the average weekly trading volume during the four calendar
weeks preceding the date on which notice of the sale is filed with the
Securities and Exchange Commission (the "Commission"). Sales under Rule 144
are subject to certain restrictions relating to manner of sale, volume of
sales and the availability of current public information about the Company.
of the Restricted Shares will be eligible for sale pursuant to Rule
144, subject to these restrictions, beginning 90 days after the date of this
Prospectus, and shares will become eligible for sale subject to certain
restrictions at various times between May 1997 and May 1998. Further, a
person (or persons whose shares are aggregated) who is not deemed
38
<PAGE>
to have been an affiliate of the Company at any time during the three months
immediately preceding the sale is entitled to sell Restricted Shares pursuant
to rule 144(k) without regard to the volume limitations, current public
information or manner of sale requirements of Rule 144, provided that at
least three years have expired since the later of the date on which the
Restricted Shares were acquired from the Company or the date they were
acquired from an affiliate of the Company. Currently none of the Restricted
Shares are eligible for sale pursuant to Rule 144(k). In addition to the
foregoing, affiliates of the Company must comply with the restrictions and
requirements of Rule 144 (other than the holding period requirement) in order
to sell any Common Stock they own that does not constitute Restricted Shares.
See "Risk Factors--Shares Eligible for Future Sale."
An employee, officer or director of, or consultant to, the Company who
purchased his or her shares pursuant to a written compensatory plan or
contract is entitled to rely on the resale provisions of Rule 701 under the
Securities Act of 1933, which permits non-affiliates to sell their Rule 701
Shares without having to comply with the public information, holding period,
volume limitation or notice provisions of Rule 144 and permits affiliates to
sell their Rule 701 shares without having to comply with Rule 144's holding
period requirements, in each cash commencing 90 days after the date of this
Prospectus.
The Company, its officers and directors and shareholders have agreed that
they will not sell, offer to sell, pledge, issue, distribute or otherwise
dispose of any shares of Common Stock for a period of 180 days after the date
of this Prospectus without the prior written consent of the Representatives,
except that the Company may issue shares pursuant to the over-allotment
option.
Prior to the Offering, there has been no market for the Common Stock, and
there can be no assurance that an active public market will develop or
continue after the Offering. Sales of substantial amounts of Common Stock in
the public market, or the perception that sales may occur, could adversely
affect the prevailing market price of the Common Stock or the ability of the
Company to raise capital through a public offering of its equity securities.
See "Risk Factors--Absence of Public Market; Price Volatility."
REGISTRATION RIGHTS
Pursuant to certain registration rights agreements, the holders of the
Series A Preferred Stock and the Series B Preferred Stock have certain demand
registration rights with respect to the shares of Common Stock issuable
upon conversion of such Series A and B Preferred Stock (the "Subject
Shares"). The demand registration rights, which require the Company to use
its best efforts to effect the registration of the Subject Shares under the
Securities Acts may be exercised by the holders of at least 50% of the
Subject Shares after February 10, 1997, subject to limited exceptions. The
Company is obligated to register Subject Shares pursuant to this demand
registration right on two occasions only; provided, however, that the
Company's obligation is deemed satisfied only when a registration statement
covering at least 75% of the Subject Shares has become effective and, if the
shares are to be sold in a firm commitment underwritten public offering, all
of such shares have been sold pursuant to such offering. Notwithstanding the
foregoing, holders of Subject Shares have unlimited demand registration
rights to the extent the Company may register Subject Shares on Form S-3 or
any successor thereto, provided that the reasonably anticipated aggregate
price to the public of the offering would exceed $500,000. The Company also
is obligated to offer the holders of Subject Shares the right to register
their shares pursuant to certain registration statements filed by the
Company.
The Company has agreed to indemnify the holders of the Subject Shares for
certain liabilities under applicable state and federal securities laws in
connection with any offering pursuant to the exercise of registration rights.
The Company will not indemnify the holders of Subject Shares for any
liabilities resulting from information furnished in writing by such holders.
Except in certain limited circumstances, the Company is obligated to pay all
expenses incidental to a demand registration, excluding underwriters'
discounts and commissions.
In addition to the registration rights relating to the Subject Shares, the
Company also has granted one demand registration right to Berjaya with
respect to shares of the Company's Common
39
<PAGE>
Stock, beneficially owned by Berjaya (the "Berjaya Shares"). This
registration right is expressly subordinate to the registration rights
described above with respect to the Subject Shares. This right may be
exercised one time only by the holders of at least 50% of the Berjaya Shares
at any time after six months after the date of this Prospectus.
The Company has agreed to indemnify the holders of the Berjaya Shares for
certain liabilities under applicable state and federal securities laws in
connection with any offering pursuant to the exercise of this demand
registration right. The Company will not indemnify the holders of the Berjaya
Shares for any liabilities resulting from information furnished by such
holders. Berjaya is responsible for payment of its proportionate share of all
expenses incidental to this demand registration, including underwriters'
discounts and commissions.
REGISTRATION STATEMENT RELATING TO 1994 STOCK OPTION PLAN
The Company has reserved shares of Common Stock for issuance under
the Option Plan, and options for an aggregate of shares of Common Stock
are currently outstanding thereunder. The Company intends to file a
registration statement under the Securities Act, covering the shares of
Common Stock reserved for issuance under the Option Plan. Such registration
statement is expected to be filed soon after the date of this Prospectus and
will automatically become effective upon filing. Accordingly, shares
registered under such registration statement will be available for sale in
the open market, unless such shares are subject to vesting restrictions with
the Company or the contractual restrictions described above. See
"Management--1994 Stock Option Plan."
40
<PAGE>
UNDERWRITING
The Company has entered into a Purchase Agreement (the "Purchase
Agreement") with the underwriters listed in the table below (the
"Underwriters"), for whom Piper Jaffray Inc. and Robertson, Stephens &
Company LLC are acting as representatives (the "Representatives"). Subject to
the terms and conditions set forth in the Purchase Agreement, the Company has
agreed to sell to the Underwriters, and each of the Underwriters has
severally agreed to purchase, the number of shares of Common Stock set forth
opposite each Underwriter's name in the table below.
NUMBER
NAME OF SHARES
- ---- ---------
Piper Jaffray Inc. ...................
Robertson, Stephens & Company LLC ...
Total ..............................
Subject to the terms and conditions of the Purchase Agreement, the
Underwriters have agreed to purchase all of the Common Stock being sold
pursuant to the Purchase Agreement, if any is purchased (excluding shares
covered by the over-allotment option granted therein). In the event of a
default by any Underwriter, the Purchase Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting Underwriters may be
increased or the Purchase Agreement may be terminated.
The Representatives have advised the Company that the Underwriters propose
to offer the Common Stock directly to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession of not more than $ per share.
Additionally, the Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After
the Offering, the public offering price and other selling terms may be
changed by the Underwriters.
The Underwriters have agreed to reserve a portion of the shares of Common
Stock offered hereby for purchase by certain existing shareholders of the
Company at the initial public offering price. The maximum number of shares
that will be sold in the Offering to such shareholders will not exceed
shares. Any shares of Common Stock reserved for this purpose and not
purchased by such shareholders will be offered by the Underwriters to the
public as described in the preceding paragraph.
The Company has granted to the Underwriters an option, exercisable by the
Representatives within 30 days after the date of the Purchase Agreement, to
purchase up to an additional shares of Common Stock at the same price
per share to be paid by the Underwriters for the other shares offered hereby. If
the Underwriters purchase any of such additional shares pursuant to this option,
each Underwriter will be committed to purchase such additional shares in
approximately the same proportion as set forth in the table above. The
Underwriters may exercise the option only for the purpose of covering
over-allotments, if any, made in connection with the distribution of the Common
Stock offered hereby.
The Representatives have informed the Company that neither they, nor any
member of the National Association of Securities Dealers, Inc. (the "NASD")
participating in the distribution of the Offering, will make sales of the
Common Stock offered hereby to accounts over which they exercise
discretionary authority without the prior specific written approval of the
customer.
The Offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to
withdrawal, cancellation or modification of the Offering without notice. The
Underwriters reserve the right to reject an order for the purchase of shares
in whole or in part.
41
<PAGE>
The officers and directors of the Company and certain other shareholders
designated by the Representatives, which will beneficially own in the
aggregate shares of Common Stock after the Offering, have agreed that
they will not sell, offer to sell, distribute or otherwise dispose of any
shares of Common Stock owned by them prior to the date of the Prospectus for
a period of 180 days after the date of this Prospectus, without the prior
written consent of Piper Jaffray Inc. The Company has agreed that it will
not, without the Representatives' prior written consent, offer, sell, pledge,
issue or otherwise dispose of any shares of Common Stock, options or warrants
to acquire shares of Common Stock or securities exchangeable for or
convertible into shares of Common Stock during the 180-day period following
the date of this Prospectus, except that the Company may issue shares upon
the exercise of options and warrants granted prior to the date hereof, and
may grant additional options under the 1994 Stock Option Plan.
Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock offered hereby
has been determined by negotiation among the Company and the Representatives.
Among the factors considered in determining the initial public offering price
were prevailing market and economic conditions, the Company's revenue and
earnings, estimates of the business potential and prospects of the Company,
the present state of the Company's business operations, an assessment of the
Company's management and the consideration of the above factors in relation
to the market valuations of companies in similar businesses. The initial
public offering price for the Common Stock should not be considered an
indication of the actual value of the Common Stock offered hereby. In
addition, there can be no assurance that the Common Stock can be resold at a
price equal to or greater than the initial public offering price. See "Risk
Factors--Absence of Public Market; Price Volatility."
The Company has agreed to indemnify the Underwriters and their controlling
persons against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required
to make in respect thereof.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Ruden, McClosky, Smith, Schuster & Russell, P.A.,
Fort Lauderdale, Florida. Certain legal matters will be passed upon for the
Company by Locke Purnell Rain Harrell (A Professional Corporation), Dallas,
Texas. Certain legal matters in connection with the Offering will be passed
upon for the Underwriters by King & Spalding, Atlanta, Georgia. Locke Purnell
Rain Harrell (A Professional Corporation) and King of Spalding will rely on
Ruden, McClosky, Smith, Schuster & Russell, P.A. with respect to certain
matters of Florida law.
EXPERTS
The Financial Statements and schedules of Roadhouse Grill, Inc. as of
December 31, 1995 and for the year then ended included herein and elsewhere
in the Registration Statement have been audited and reported upon by KPMG
Peat Marwick LLP, independent certified public accountants. Certain financial
information for the year ended December 31, 1995 in the table under "Selected
Financial Data" included herein and in the Registration Statement has been
derived from financial statements audited by KPMG Peat Marwick LLP and has
been reported upon by KPMG Peat Marwick LLP to the extent set forth in their
report. Such Financial Statements, schedules, and seleted financial data have
been included herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
The financial statements of Roadhouse Grill, Inc. as of January 1, 1995
and for the year then ended included in this registration statement have been
audited and reported upon by Coopers & Lybrand
42
<PAGE>
L.L.P., independent certified public accountants. Certain financial
information as of and for the year ended January 1, 1995, in the table under
"Selected Financial Data" included in this registration statement has been
derived from financial statements audited by Coopers & Lybrand L.L.P. and has
been reported upon by Coopers & Lybrand L.L.P. to the extent set forth in
their report. Such financial statements and selected financial data have been
included in this registration statement in reliance upon the report of
Coopers & Lybrand L.L.P., given on the authority of that firm as experts in
accounting and auditing.
The Financial Statements of the Company for and as of the end of Fiscal
1993 appearing in this Prospectus and Registration Statement have been
audited by Stark & Bennett, P.A., independent auditors, and the statement of
operations data and balance sheet data under the heading "Selected Financial
Data" for and as of the end of Fiscal 1993 appearing in this Prospectus and
Registration Statement have been derived from the Financial Statements of the
Company audited by Stark & Bennett, P.A., as set forth in their report
thereon appearing elsewhere herein. Such Financial Statements and statement
of operations data and balance sheet data are included herein in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act with the Commission in
Washington, D.C., with respect to the shares of Common Stock offered hereby.
This Prospectus, which is part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain portions of which are omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
made to the Registration Statement and exhibits and schedules contained
therein, which may be inspected without charge at the principal office of the
Commission in Washington, D.C. and copies of all or any part of which may be
obtained from the Commission upon payment of the prescribed fees. The
summaries contained in this Prospectus concerning information included in the
Registration Statement, or in any exhibit or schedule thereto, are qualified
in their entirety by reference to such information, exhibit or schedule.
As a result of the Offering, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended, and in accordance therewith will file reports and other information
with the Commission. Reports, registration statements, proxy statements and
other information filed by the Company with the Commission can be inspected
and copied at the public reference facilities of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following regional offices of the Commission: Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621 and 7 World Trade Center,
Suite 1300, New York, New York 10048, upon payment of the charges prescribed
therefor by the Commission. The Commission maintains a web site, located at
http://www.sec.gov, that contains reports, proxy and information statements
regarding registrants that file electronically with the Commission.
43
<PAGE>
INDEX TO FINANCIAL STATEMENTS
ROADHOUSE GRILL, INC.
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Auditors (KPMG Peat Marwick LLP) .............................. F-2
Report of Independent Accountants (Coopers & Lybrand L.L.P.) ........................ F-3
Report of Independent Accountants (Stark & Bennett, P.A.) ........................... F-4
Balance Sheets at January 1, 1995 and December 31, 1995 and June 30, 1996 (Unaudited) F-5
Statements of Operations for the fiscal years ended January 2, 1994,
January 1, 1995 and December 31, 1995 and for the
Twenty-six Week Period Ended July 2, 1995 and June 30, 1996 (Unaudited) ........... F-6
Statements of Changes in Stockholders' Equity for the fiscal years ended
January 2, 1994, January 1, 1995, December 31, 1995 and the
Twenty-six Week Period Ended June 30, 1996 (Unaudited) ............................ F-7
Statements of Cash Flows for the fiscal years ended January 2, 1994,
January 1, 1995 and December 31, 1995 and for the
Twenty-six Week Period Ended July 2, 1995 and June 30, 1996 (Unaudited) ........... F-8
Notes to Financial Statements ....................................................... F-9
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Roadhouse Grill, Inc.:
We have audited the accompanying balance sheet of Roadhouse Grill, Inc. as of
December 31, 1995 and the related statements of operations, stockholders'
equity and cash flows for the fiscal year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Roadhouse Grill, Inc. as of
December 31, 1995, and the results of its operations and its cash flows for
the fiscal year then ended in conformity with generally accepted accounting
principles.
In our opinion, the information set forth in the selected financial data for
the year ended December 31, 1995, appearing on page 14, is fairly stated, in
all material respects, in relation to the financial statements from which it
has been derived. The selected financial data for the fiscal years ended
January 2, 1994 and January 1, 1995 were derived from financial statements
not audited by us and accordingly, we do not express an opinion on such
selected financial data.
KPMG Peat Marwick LLP
June 28, 1996
Miami, Florida
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Roadhouse Grill, Inc.
We have audited the accompanying balance sheet of Roadhouse Grill, Inc. as
of January 1, 1995, and the related statements of operations, changes in
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Roadhouse Grill, Inc. as
of January 1, 1995, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
In our opinion, the information set forth in the selected financial data
as of and for the year ended January 1, 1995, appearing on page 14, is fairly
stated, in all material respects, in relation to the financial statements
from which it has been derived.
Coopers & Lybrand L.L.P.
Miami, Florida
March 10, 1995
F-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Roadhouse Grill, Inc.
Davie, Florida
We have audited the accompanying balance sheet of Roadhouse Grill, Inc. as
of January 2, 1994 and the related statements of income (loss) and changes in
stockholders' equity (deficiency) for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Roadhouse Grill, Inc. as
of January 2, 1994, and the results of its operations for the year then ended
in conformity with generally accepted accounting principles.
Stark & Bennett, P.A.
May 27, 1994
F-4
<PAGE>
ROADHOUSE GRILL, INC.
BALANCE SHEETS
JANUARY 1, 1995 AND DECEMBER 31, 1995 AND JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
-------------- --------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ......................................... $ 7,734,493 $ 2,805,043 $ 277,325
Accounts receivable ............................................... 253,694 119,826 217,835
Due from affiliates ............................................... 572,064 155,263 194,349
Inventory ......................................................... 104,977 405,585 619,327
Current portion of note receivable ................................ -- 76,407 73,639
Pre-opening costs, net ............................................ 65,697 316,638 875,356
Prepaid expenses .................................................. 155,661 241,003 517,425
------------- -------------- --------------
Total current assets ............................................ 8,886,586 4,119,765 2,775,256
Note receivable .................................................... -- 265,128 233,563
Property and equipment, net ........................................ 16,439,238 35,844,784 44,246,438
Intangible assets, net of accumulated amortization of $28,366
and $59,226 at December 31, 1995 and June 30, 1996
(unaudited) respectively ......................................... -- 886,594 859,840
Other assets ....................................................... 64,181 1,024,449 1,385,165
Investment in affiliates ........................................... (547,117) 60,510 173,297
------------- -------------- --------------
Total assets .................................................... $24,842,888 $42,201,230 $49,673,559
============= ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................................. $ 599,925 $ 1,831,950 $ 2,463,514
Accrued expenses .................................................. 473,648 2,299,498 3,220,214
Due to related parties ............................................ -- 6,615,000 3,100,000
Current portion of long term debt ................................. 403,685 695,078 797,886
Current portion of capitalized lease obligations .................. -- 238,560 260,553
------------- -------------- --------------
Total current liabilities ....................................... 1,477,258 11,680,086 9,842,167
Long-term debt ..................................................... 4,454,638 6,014,268 7,065,531
Capitalized lease obligations ...................................... 1,271,727 4,245,391 4,152,997
------------- -------------- --------------
Total liabilities ............................................... 7,203,623 21,939,745 21,060,695
Stockholders' equity:
Preferred stock $.01 par value. Authorized 10,000,000 shares;
issued and outstanding Series A--3,525,000,
3,525,000, and 3,422,500 shares, respectively ................... 35,250 35,250 34,225
Series B--2,350,025, 2,350,025, and 2,333,350 shares,
respectively .................................................... 23,500 23,500 23,333
Common stock $.01 par value. Authorized 30,000,000 shares;
issued and outstanding 9,544,445, 11,761,872 and 14,242,158,
respectively .................................................... 95,444 117,618 142,421
Additional paid-in capital ........................................ 20,717,368 26,807,318 35,303,507
Accumulated deficit ............................................... (3,232,297) (6,722,201) (6,890,622)
------------- -------------- --------------
Total stockholders' equity ...................................... 17,639,265 20,261,485 28,612,864
Commitments and contingencies (note 13) ............................ -- -- --
------------- -------------- --------------
Total liabilities and stockholders' equity ...................... $ 24,842,888 $ 42,201,230 $49,673,559
============= ============== ==============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
ROADHOUSE GRILL, INC.
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994, JANUARY 1, 1995
AND DECEMBER 31, 1995
AND FOR THE 26 WEEKS ENDED JULY 2, 1995 AND JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
FISCAL YEAR 26 WEEKS ENDED
----------------------------------------------- ------------------------------
JULY 2, JUNE 30,
1993 1994 1995 1995 1996
------------ ------------- --------------- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total revenues .......................... $3,465,663 $11,389,060 $34,275,496 $13,772,593 $27,633,047
Cost of restaurant sales:
Food and beverage .................... 1,470,957 4,085,246 12,084,134 4,935,593 9,363,962
Labor and benefits ..................... 987,952 4,606,156 12,019,723 4,889,378 8,626,993
Occupancy and other .................... 1,218,900 2,318,014 8,710,597 3,058,036 5,829,113
------------ --------------- --------------- ------------- -------------
Total cost of restaurant sales ........ 3,677,809 11,009,416 32,814,454 12,883,007 23,820,068
Depreciation and amortization ........... 47,103 414,912 1,662,650 555,074 1,352,594
General and administrative .............. 280,418 1,913,446 3,327,680 1,140,177 2,315,692
------------ -------------- --------------- ------------- -------------
Total operating expenses ............. 4,005,330 13,337,774 37,804,784 14,578,258 27,488,354
------------ -------------- --------------- ------------- -------------
Operating income (loss) ................ (539,667) (1,948,714) (3,529,288) (805,665) 144,693
Other income (expense):
Interest expense, net .................. (40,190) (179,803) (404,009) (86,126) (554,818)
Equity in net income (loss) of
affiliates ........................... (136,035) (411,081) 284,241 198,444 112,787
Other, net ............................. 2,868 20,325 159,152 60,892 128,917
------------ ------------- --------------- ------------- -------------
Total other income (expense) ........ (173,357) (570,559) 39,384 173,210 (313,114)
------------- -------------- ------------- -------------
Net loss ............................. $ (713,024) $(2,519,273) $(3,489,904) $ (632,455) $ (168,421)
============ ============= ============= ============= =============
Net loss per common share ............... (0.11) (0.37) (0.33) (0.06) (0.01)
============ ============= ============= ============= =============
Weighted average common shares and share
equivalents outstanding ............... 6,495,434 6,775,708 10,517,554 9,848,167 12,649,105
============= ============= ============= ============= =============
Pro forma net loss per common share .... (0.21) (0.01)
============= ============= ============= ============= =============
Pro forma weighted average common shares
and share equivalents outstanding ..... 16,392,579 18,485,496
============= ============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
ROADHOUSE GRILL, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994,
JANUARY 1, 1995, DECEMBER 31, 1995
AND THE 26 WEEKS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
-------------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
------------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Balance at inception .............. -- $ -- -- $ --
Issuance of common stock ......... 500 500 -- --
Net loss ......................... -- -- -- --
------------- ----------- ------------ ----------
Balance, January 2, 1994 .......... 500 $ 500 -- $ --
Change in par value .............. -- (495) -- --
Stock split ...................... 6,443,945 64,439 -- --
Issuance of:
Common Stock ................. 3,100,000 31,000 -- --
Preferred stock--Series A ...... -- -- 3,525,000 35,250
Preferred stock--Series B ...... -- -- 2,350,025 23,500
Net loss ......................... -- -- -- --
------------- ----------- ------------ ----------
Balance January 1, 1995 ........... 9,544,445 $ 95,444 5,875,025 $58,750
------------- ----------- ------------ ----------
Issuance of common stock ......... 1,861,872 18,618 -- --
Stock options exercised .......... 355,555 3,556 -- --
Stock options outstanding ........ -- -- -- --
Deferred compensation ............ -- -- -- --
Net loss ......................... -- -- -- --
------------- ----------- ------------ ----------
Balance December 31, 1995 ......... 11,761,872 $117,618 5,875,025 $58,750
------------- ----------- ------------ ----------
Issuance of common stock
(unaudited) .................... 2,361,111 23,611 -- --
Conversion of Series A to common
stock (unaudited) .............. 102,500 1,025 (102,500) (1,025)
Conversion of Series B to common
stock (unaudited) .............. 16,675 167 (16,675 (167)
Deferred compensation (unaudited) -- -- -- --
Net loss (unaudited) ............. -- -- -- --
------------- ----------- ------------ ----------
Balance June 30, 1996 (unaudited) 14,242,158 $142,421 5,755,850 $57,558
============= =========== ============ ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN ACCUMULATED
CAPITAL DEFICIT TOTAL
-------------- --------------- --------------
<S> <C> <C> <C>
Balance at inception .............. $ -- $ -- $ --
Issuance of common stock ......... 100,000 -- 100,500
Net loss ......................... -- (713,024) (713,024)
-------------- --------------- --------------
Balance, January 2, 1994 .......... $ 100,000 $ (713,024) $ (612,524)
Change in par value .............. 495 -- --
Stock split ...................... (64,439) -- --
Issuance of:
Common Stock ................. 9,577,500 -- 9,608,500
Preferred stock--Series A ...... 5,252,250 -- 5,287,500
Preferred stock--Series B ...... 5,851,562 -- 5,875,062
Net loss ......................... -- (2,519,273) (2,519,273)
------------- -------------- -------------
Balance January 1, 1995 ........... $20,717,368 $(3,232,297) $17,639,265
------------- -------------- -------------
Issuance of common stock ......... 6,000,573 -- 6,019,191
Stock options exercised .......... 49,777 -- 53,333
Stock options outstanding ........ 118,800 -- 118,800
Deferred compensation ............ (79,200) -- (79,200)
Net loss ......................... -- (3,489,904) (3,489,904)
------------- -------------- -------------
Balance December 31, 1995 ......... $26,807,318 $(6,722,201) $20,261,485
------------- -------------- -------------
Issuance of common stock
(unaudited) .................... 8,476,389 -- 8,500,000
Conversion of Series A to common
stock (unaudited) .............. -- -- --
Conversion of Series B to common
stock (unaudited) .............. -- -- --
Deferred compensation (unaudited) 19,800 19,800
Net loss (unaudited) ............. -- (168,421) (168,421)
------------- -------------- -----------
Balance June 30, 1996 (unaudited) $35,303,507 $(6,890,622) $28,612,864
============= ============= ===========
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
ROADHOUSE GRILL, INC.
STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994, JANUARY 1, 1995 AND
DECEMBER 31, 95
AND FOR THE 26 WEEKS ENDED JULY 2, 1995 AND JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1, DECEMBER 31, JULY 2, June 30,
1994 1995 1995 1995 1996
------------- ------------ ------------- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net loss ....................................... $ (713,024) $ (2,519,273) $ (3,489,904) $ (632,455) $ (168,421)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization ................ 47,103 414,912 1,662,650 555,074 1,352,594
Noncash compensation expense .................... -- -- 39,600 -- 19,800
Equity in net income (loss) of affiliate ........ 136,035 411,081 (284,241) (198,444) (112,787)
Changes in assets and liabilities, net of
acquisitions of businesses:
Decrease (increase) in accounts receivable . -- (236,079) 133,868 (205,553) (98,009)
Decrease (increase) in other assets ............ -- 7,194 (882,068) (313,744) (81,869)
Increase in prepaid expenses ................... (80,486) (92,629) (85,342) (160,082) (276,422)
Increase in accounts payable ................... 516,228 83,697 911,772 899,706 631,564
Increase in accrued expenses ................... 190,270 283,378 1,760,798 5,609 186,118
Increase in inventory .......................... (56,361) (48,777) (300,608) (308,003) (213,742)
Increase in pre-opening costs .................. -- (65,697) (250,941) (169,892) (558,718)
-------------- ------------ ------------- ------------ -------------
Net cash provided by (used in)
operating activities ........................ 39,765 (1,762,193) (784,416) (527,784) 680,108
-------------- ------------ ------------- ------------- -------------
Cash flows from investing activities
Advances to affiliates, net .................... (161,000) (572,064) 26,031 434,723 (39,086)
Payments for other assets ........................ (71,375) -- -- -- --
Proceeds from payments on note receivable ........ -- -- 49,235 -- 34,333
Proceeds from sale leaseback transactions ........ -- -- 1,185,960 469,054 450,000
Purchases of property and equipment .............. (1,378,507) (10,112,790) (14,541,042) (7,056,636) (8,834,013)
Acquisition of restaurants ....................... -- -- (3,000,000) (3,000,000) --
-------------- ------------ --------------- ------------- -------------
Net cash used in investing activities ......... (1,610,882) (10,684,854) (16,279,816) (9,152,859) (8,388,766)
-------------- ------------- -------------- ------------- -------------
Cash flows from financing activities
Increase in cash overdraft ..................... -- -- -- -- 734,599
Proceeds from amounts due from related parties .. 1,591,172 29,045 6,615,000 -- --
Repayments of amounts due to related parties .... (29,045) (1,591,172) -- -- (135,660)
Proceeds from long-term debt ..................... -- 1,658,078 -- -- --
Repayments of long-term debt ..................... -- (664,592) (407,977) (129,872) (303,929)
Payments on capital lease obligation ............. -- (112,391) (144,765) (23,169) (114,070)
Proceeds from issuance of common and
preferred stock ................................ 100,500 20,771,062 6,072,524 4,000,000 5,000,000
------------- ------------ --------------- ------------- -------------
Net cash provided by financing activities .... 1,662,627 20,090,030 12,134,782 3,846,959 5,180,940
------------- ------------ --------------- ------------- -------------
Increase (decrease) in cash and cash equivalents . 91,510 7,642,983 (4,929,450) (5,833,684) (2,527,718)
Cash and cash equivalents at beginning of year ... -- 91,510 7,734,493 7,734,493 2,805,043
------------- ------------ --------------- ------------- -------------
Cash and cash equivalents at end of year .......... $ 91,510 $ 7,734,493 $ 2,805,043 $ 1,900,809 $ 277,325
============= ============ ============= ============= ==============
Supplementary disclosures:
Interest paid .................................. $ -- $ 343,703 $ 525,276 190,009 $ 452,731
============= ============== ============= ============= ==============
</TABLE>
Noncash investing and financing activities:
Capital lease obligations and seller financing mortgage agreeements of
$1,271,727 and $4,924,458 respectively were entered into in the year ended
January 1, 1995.
During the fiscal year ended December 31, 1995 the Company entered into
capital leases for property and equipment in the amount of $4,100,000.
In addition, the Company entered into mortgage notes payable amounting to
approximately $2,000,000 during the fiscal year ended December 31, 1995.
The Company assumed $270,000 in debt in connection with the assumption of a
lease from a third party.
During the 26 week period ended June 30, 1996, $3,500,000 of long-term debt
was converted to common stock.
The Company entered into capital lease obligations and seller financing
mortgage agreements of $44,000 and $1,458,000, respectively, during the
period from January 1, 1996 to April 21, 1996.
See accompanying notes to financial statements.
F-8
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BUSINESS
Roadhouse Grill, Inc. (the "Company") was incorporated under the laws of
the state of Florida in 1992. The principal business of the Company is the
operation of specialty restaurants located primarily in the state of Florida.
The Company has also granted franchises and licenses to operate restaurants
under the "Roadhouse Grill" name.
At December 31, 1995, there were 18 company-owned restaurants open. There
were two restaurants operating under franchise agreements and one restaurant
operating under a license agreement. In addition, at December 31, 1995, the
Company has a 50 percent interest in Kendall Roadhouse Grill, L.C., a limited
liability company that owns the Kendall, Florida Roadhouse Grill restaurant
("Kendall"). The Company manages the operations of the Kendall restaurant
pursuant to an operating agreement. Under the operating agreement, the
Company receives management fees and is allocated its share of the
restaurant's profit and losses. The Company previously had a 50 percent
interest in North Miami Roadhouse Grill, L.C., a limited liability company
that owned the North Miami Roadhouse Grill restaurant ("North Miami"), under
a similar arrangement. The remaining interest was acquired by the Company in
the first quarter of 1995.
(B) INVESTMENT IN AFFILIATE
The Company's 50 percent interest in Kendall is accounted for under the
equity method. In addition, the Company's 50 percent interest in North Miami
was accounted for under the equity method until the Company acquired a 100%
interest in that restaurant, which occurred in the first quarter of 1995.
(C) PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less accumulated depreciation.
The cost of restaurants held under capital leases is recorded at the lower of
the net present value of the minimum lease payments or the fair value of the
leased property at the inception of the lease. Repairs and maintenance are
charged to expense as incurred. Major renewals and betterments which
substantially extend the useful life of the property are capitalized and
depreciated over the useful life of the asset. When assets are retired or
otherwise disposed of, the cost and accumulated depreciation are removed from
their respective accounts and any gain or loss is recognized.
Depreciation is calculated using the straight-line method over the
estimated useful lives of the assets. Amortization of capitalized lease
assets is calculated using the straight-line method over the shorter of the
estimated useful life of the leased asset or the lease term.
(D) INTANGIBLES
Intangibles consist primarily of goodwill recorded as a result of a
restaurant acquisition during 1995 (see Note 14) and is being amortized on a
straight-line basis over the lease term of the respective restaurant
property. The Company evaluates whether changes have occurred that would
require
F-9
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(Continued)
revision of the remaining estimated useful life of the assigned goodwill or
rendered goodwill not recoverable. If such circumstances arise, the Company
uses undiscounted future cash flows to determine whether the goodwill is
recoverable. In 1996, the Company adopted Statement of Financial Accounting
Standard No. 121, "Accounting for the Impairment of Long-Lived Assets to Be
Disposed Of," (see Note 1m).
(E) CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original maturity
of three months or less to be cash equivalents.
(F) INVENTORY
Inventories are valued at the lower of cost (based on first-in, first-out
inventory costing) or net realizable value and consist primarily of
restaurant food items, beverages and paper supplies.
(G) INCOME TAXES
Prior to January 1994, the Company had elected to be treated as a S
Corporation under the appropriate sections of the Internal Revenue Code and,
accordingly, was not subject to federal and state income taxes. Instead, the
Company's taxable income or loss and available credits were the
responsibility of the Company's shareholders.
Effective January 1994, the Company terminated its S Corporation status
and consequently, became subject to federal and state income taxes. Upon
termination of the Company's S Corporation status, the Company adopted
Financial Accounting Standards Board Statement No. 109, "Accounting for
Income Taxes," which requires the utilization of the liability method of
accounting for deferred income taxes. Under this method, deferred income tax
assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities using tax rates
in effect for the year in which the differences are expected to reverse.
(H) PRE-OPENING COSTS
Pre-opening costs are costs incurred in the opening of new stores
(primarily payroll costs) which are capitalized prior to the opening of a new
restaurant and amortized over a one-year period commencing with the first
period after the new restaurant opens.
Deferred costs related to sites subsequently determined to be
unsatisfactory, and general site selection costs which cannot be identified
with a specific restaurant, are charged to operations.
(I) FISCAL YEAR
The Company's fiscal year ends on the Sunday nearest December 31.
(J) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
F-10
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(Continued)
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(K) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined
based on available information and appropriate valuation methodologies. The
carrying amounts of accounts receivable, accounts payable and accrued
expenses approximate fair value due to the short-term nature of the accounts.
The fair value of long-term debt is estimated based on market rates of
interest currently available to the Company. The fair value of long-term debt
at December 31, 1995 is approximately $6,240,000.
The fair value of long-term debt approximates carrying value at January 1,
1995.
(L) REVENUE RECOGNITION
Total revenues include sales at Company-operated restaurants, royalties
received from restaurants operating under franchise and license agreements,
and fees earned under management agreements.
(M) NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No.
121), which becomes effective for financial statements for fiscal years
beginning after December 15, 1995. The statement establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangible assets and goodwill related to those assets to be held and used,
and for long-lived assets and certain identifiable intangible assets to be
disposed of. The Company has adopted SFAS No. 121 and as of January 1, 1996
and June 30, 1996, there is no material impact to the financial position or
results of operations of the Company.
In October 1995, the FASB issued Statement of Financial Accounting
Standard No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123),
which becomes effective for financial statements for fiscal years beginning
after December 15, 1995. SFAS No. 123 defines a fair value based method of
accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the intrinsic
value based method of accounting prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). The
Company is currently accounting for stock-based compensation under APB 25 and
has opted to continue accounting for stock-based compensation under this
method.
(N) NET LOSS PER COMMON SHARE AND PRO FORMA NET LOSS PER COMMON SHARE
Net loss per common share for all periods is based on the weighted average
number of common shares outstanding plus all common shares, stock options and
warrants issued within one year prior to
F-11
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(Continued)
the estimated effective date of the initial public offering. Common stock
equivalents prior to such period are included in the determination of loss
per share only where such inclusion is dilutive.
Pro forma net loss per common share includes the conversion of all
outstanding preferred shares into common shares in connection with the
initial public offering (unaudited).
(O) RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform to the
current presentation.
(P) UNAUDITED FINANCIAL STATEMENTS
The unaudited financial statements for the 26 weeks ended July 2, 1995 and
June 30, 1996 include, in the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly
the financial information set forth herein. The results of operations for the
interim periods are not necessarily indicative of the results to be expected
for an entire fiscal year.
(2) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30, ESTIMATED
1995 1995 1996 USEFUL LIVES
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Buildings ....................... $ 2,926,801 $10,264,366 $10,831,604 20 years
Land ............................ 1,392,391 5,181,900 7,148,945 --
Land held for future development 3,997,315 3,308,069 2,529,095 --
Furniture and equipment ......... 2,885,100 8,324,125 9,598,026 3-7 years
Leasehold improvements .......... 2,617,495 8,763,326 9,476,606 7-10 years
------------- -------------- --------------
13,819,102 35,841,786 39,584,276
Less accumulated depreciation .. 460,498 2,172,857 3,229,684
------------- -------------- --------------
13,358,604 33,668,929 36,354,592
Construction in progress ........ 3,080,634 2,175,855 7,891,846
------------- -------------- --------------
$16,439,238 $35,844,784 $44,246,438
============= ============= ==============
</TABLE>
Included in property and equipment are buildings under capital lease of
$1,190,605 and $4,621,318 at January 1, 1995 and December 31, 1995,
respectively, (see Note 3). The Company capitalized interest cost of
approximately $86,400, $273,000 and $114,000 during the periods ended January
1, 1995, December 31, 1995, and June 30, 1996, respectively, with respect to
qualifying construction projects.
F-12
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(3) CAPITAL LEASES
The following is a schedule of future minimum lease payments required
under capital leases as of December 31, 1995:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
<S> <C>
1996 ......................................... $ 741,230
1997 ......................................... 743,737
1998 ......................................... 753,938
1999 ......................................... 758,127
2000 ......................................... 599,339
Thereafter ................................... 5,602,467
-----------
Total minimum lease payments ..................... 9,198,838
Less amount representing interest at varying rates
ranging from 9.5 percent to 13 percent ......... 4,714,887
-----------
4,483,951
Less current portion ............................. 238,560
-----------
Present value of minimum obligations ............. $4,245,391
===========
</TABLE>
During the fiscal year ended December 31, 1995, the Company entered into
several agreements for the sale and leaseback of restaurant equipment for a
period of sixty months at four Company stores, which were recorded as capital
leases. The equipment was sold at book value of approximately $1,200,000, and
as such, no gain or loss resulted from the transaction.
(4) OPERATING LEASES
The Company leases the majority of its operating restaurant facilities.
The lease terms vary from 5 to 10 years and generally provide for renewal
options extending the lease term to 20 years.
The following is a schedule of future minimum lease payments required
under operating leases that have remaining noncancelable lease terms in
excess of one year as of December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
1996 ............................. $ 1,297,657
1997 ............................. 1,400,294
1998 ............................. 1,371,115
1999 ............................. 1,238,745
2000 ............................. 1,104,552
Thereafter ....................... 5,044,804
------------
Total minimum lease payments .... $ 11,457,167
============
</TABLE>
F-13
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(5) INVESTMENT IN AFFILIATE
As discussed in Note 1, the Company had a 50 percent interest in Kendall
at January 1, 1995 and December 31, 1995. In addition, the Company had a 50
percent interest in North Miami at January 2, 1994 and January 1, 1995. The
Company accounted for these investments under the equity method. Summarized
balance sheet and income statement information for these investments is as
follows:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
------------- --------------- -------------
<S> <C> <C> <C>
SUMMARIZED BALANCE SHEET:
Current assets ................... $ 59,635 $ 117,246 $ 317,631
Property and equipment, net ..... 1,657,445 823,273 795,942
Other ............................ 62,599 27,325 13,035
------------ -------------- -------------
Total assets ................... 1,779,679 967,844 1,126,608
------------ -------------- -------------
Current liabilities .............. 1,992,644 838,160 641,641
Due to related parties ........... 334,152 79,975 267,226
------------ -------------- -------------
Total liabilities .............. 2,326,796 918,135 908,867
------------ -------------- -------------
Net assets (liabilities) ......... $ (547,117) $ 49,709 $ 217,741
============ ============== =============
SUMMARIZED STATEMENT OF
OPERATIONS:
Revenues ......................... $4,901,572 $3,684,177 $1,823,512
------------ -------------- -------------
Operating income (loss) .......... $ (94,264) $ 403,039 $ 253,301
------------ -------------- -------------
Net income (loss) ................ $ (275,046) $ 319,296 $ 225,573
------------ -------------- -------------
</TABLE>
Under the terms of the operating agreement, profits and losses are
allocated 50 percent to each partner and cash distributions are paid 25
percent to the Company and 75 percent to its partner until such time as the
partner recovers their investment. Thereafter, the cash distributions are
paid 50 percent to each partner. The Company absorbed all of the losses of
both affiliates during Fiscal 1994.
(6) MAJOR SUPPLIERS
For the fiscal year ended December 31, 1995, two suppliers comprised
approximately 87 percent of the Company's purchases. Purchases from these
suppliers were approximately $11,800,000 for the fiscal year.
(7) DUE TO RELATED PARTIES
Due to related parties consists principally of $2,500,000 due to a former
Chairman of the Board of Directors of the Company and $600,000 due the other
50 percent owner of the Kendall restaurant. The notes bear interest at 8.5
percent and 13 percent, respectively, and the latter requires monthly
payments of principal and interest through October 1996. A note payable to
Berjaya Group (Cayman) Ltd. ("Berjaya") at December 31, 1995 in the amount of
$3,500,000 was converted into common stock in April of 1996. (See Note 9).
F-14
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(8) LONG-TERM DEBT
The Company acquired several properties through seller financing
arrangements. These arrangements are collateralized by the properties and
bear interest at rates varying from 7 percent to 9 percent. Monthly principal
and interest payments are due through December 2004.
Annual maturities on the mortgage notes payable as of December 31, 1995
are as follows:
1996 ................... $ 695,078
1997 ................... 746,179
1998 ................... 811,066
1999 ................... 886,794
2000 ................... 882,573
Thereafter ............. 2,687,656
----------
6,709,346
Less current portion ... 695,078
----------
$6,014,268
==========
The carrying amount of assets used as collateral is approximately
$9,200,000 and $18,700,000 at January 1, 1995 and December 31, 1995,
respectively.
(9) CAPITAL STOCK
As of January 2, 1994, the Company's capital structure consisted of 1,000
shares of authorized common stock, with a par value of $1.00 of which 500
shares were issued and outstanding.
During the fiscal year ended January 1, 1995 the total number of shares of
all classes of stock which the Company had authority to issue was amended to
40 million of which 10 million shares are preferred stock having a $0.01 par
value per share and 30 million are shares of common stock having a $0.01 par
value per share.
In 1994, the Company declared a stock split whereby 12,888.88 shares of
the Company's common stock were issued for each share of common stock issued
and outstanding prior to the declaration.
In April 1996, Berjaya converted the $3,500,000 of debt into shares of
common stock at $3.60 per share. In addition, Berjaya purchased an additonal
$5,000,000 of shares of common stock at $3.60 per share.
Preferred stock consists of the following:
(A) SERIES A SHARES
The Company issued 3,525,000 shares of the Series A Shares at a purchase
price of $1.50 per share for the purpose of expansion and working capital.
The Series A Shares have a liquidation value of $1.50 per share plus unpaid
declared dividends and are convertible, subject to adjustments, into one
share of common stock per Series A Share, at the option of the holder.
Dividends are payable at $0.105 per
F-15
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(9) CAPITAL STOCK--(CONTINUED)
share as adjusted, and when and if declared. Such dividends are
noncumulative. The holders of the Series A Shares are entitled to one vote
for each share held on an as converted basis and as adjusted. Series A Shares
are mandatorily convertible into common shares upon an initial public
offering of $10,000,000 or greater.
(B) SERIES B SHARES
The Company issued 2,350,025 of the 2,366,700 authorized Series B Shares
at a purchase price of $2.50 per share for the purpose of expansion and
working capital. The Series B Shares have a liquidation value of $2.50 per
share plus unpaid declared dividends and rank pari passu with the Series A
Shares with respect to any liquidation. The Series B Shares are convertible,
subject to adjustments, into one share of common stock per Series B Share at
the option of the holder. Dividends are payable at $0.175 per share as
adjusted, when and if declared. Such dividends are noncumulative. The holders
of the Series B Shares are entitled to one vote for each share held on an as
converted basis and as adjusted. Series B Shares are mandatorily convertible
into common shares upon an initial public offering of $10,000,000 or greater.
(10) STOCK OPTION PLANS
During the fiscal year ended January 1, 1995, options were issued to the
president and chief executive officer to purchase 355,555 shares of the
authorized, but unissued shares of common stock at a purchase price of $.15
per share in connection with the founding of the Company. An additional
500,000 options were issued to the Chief Executive Officer at $2.50 per share
during the fiscal year ended January 1, 1995. These options are exercisable
at any time prior to January 31, 2010. During the fiscal year ending December
31, 1995, certain of these options were exercised whereby 355,555 shares of
common stock were purchased at $0.15 per share.
A stock option plan was adopted for employees of the Company and members
of the board of directors who are not employees, and 250,000 and 650,000
shares of the Company's common stock were reserved for issuance pursuant to
such plan at December 31, 1995 and June 30, 1996, respectively. These options
are exercisable for a period of ten years after grant. On April 25, 1994,
options were issued to a consultant of the Company to purchase 10,000 shares
of common stock at a purchase price of $1.50 per share. During the fiscal
year ending December 31, 1995, the Company granted options to employees under
the stock option plan to purchase 178,000 shares of common stock at $2.50 per
share. In addition, the Company granted options to purchase 20,000 shares of
common stock to certain directors of the Company at a price of $2.50 per
share. In connection with the granting of these options, the Company has
recorded $39,600 in compensation expense. In 1996 the Company granted
additional options to purchase 355,300 shares of common stock at a price of
$3.60 per share. At December 31, 1995 and June 30, 1996, deferred
compensation expense amounted to $79,200 and $59,400, respectively, and is
included in additional paid-in capital.
(11) INCOME TAXES
The Company adopted SFAS No. 109, effective January 3, 1994, the date it
converted from an S Corporation to a C corporation. The effect of adopting
SFAS No. 109 was not significant.
F-16
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(11) INCOME TAXES--(CONTINUED)
As a result of the Company's net operating losses for fiscal years ended
January 1, 1995 and December 31, 1995, there is no income tax payable.
The tax effects of the temporary differences comprising deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
------------- -------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward ............................ $1,002,000 $ 2,237,000
Stock options .............................................. -- 44,000
Less valuation allowance ................................... (969,000) (2,230,000)
------------- -------------
33,000 51,000
Deferred tax liabilities:
Property and equipment and pre-opening expenses,
principally due to differences in depreciation and
amortization ............................................. (33,000) (51,000)
------------- -------------
$ -- $ --
============= =============
</TABLE>
At January 1, 1995 and December 31, 1995, the Company had no deferred tax
assets or liabilities reflected on its financial statements since the net
deferred tax assets are completely offset by a valuation allowance. In
assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the level of historical income, scheduled reversal of deferred tax
liabilities, and projected future taxable income in making this assessment.
At December 31, 1995, the Company has a net operating loss carryforward of
$5,945,000 consisting of $2,515,000 and $3,430,000 expiring in varying
amounts through 2010 and 2011, respectively.
(12) CONCENTRATIONS OF BUSINESS AND CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash in bank and
investment custodian accounts. At times, the Company maintains cash balances
in excess of insured limits. The custodian of the investment account is a
major financial institution.
Approximately 82 percent of the restaurants currently owned and operated
by the Company are located in the state of Florida. Consequently, the
operations of the Company are affected by fluctuations in the Florida
economy. Furthermore, the Company may be affected by changing conditions
within the foodservice industry.
F-17
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(13) COMMITMENTS AND CONTINGENCIES
The Company is a party to legal proceedings arising in the ordinary course
of business, many of which are covered by insurance. In the opinion of
management, disposition of these matters will not materially affect the
Company's financial condition.
At June 30, 1996, the Company had 13 restaurants under development. The
estimated cost to complete these restaurants and other capital projects in
process was approximately $10,600,000 at June 30, 1996.
(14) ACQUISITIONS
At January 1, 1995, the Company was a 50 percent owner in North Miami
Roadhouse Grill, L.C. ("NMRG"), which owned the North Miami, Florida
Roadhouse Grill restaurant. In January 1995, the Company acquired the
remaining 50 percent interest in NMRG for $800,000. The purchase price was
allocated principally to inventory and property and equipment based on the
fair value of the assets acquired at the time of acquisition. In connection
with the acquisition, the Company also assumed certain liabilities in the
amount of $385,000.
During March 1995, the Company acquired two Roadhouse Grill restaurants
from a franchisee for $2.2 million. The purchase price of the restaurants was
allocated to property and equipment based on the estimated fair value of the
assets at the date of acquisition. Approximately $1,555,000 was allocated to
property and equipment as a result of the acquisition. The acquisition
generated goodwill of approximately $645,000.
In August 1996, the Company entered into an agreement to purchase the
remaining 50 percent interest in the Kendall Roadhouse Grill, L.C. from the
joint venture partner for a purchase price of $2,300,000. If an initial
public offering is not completed by the Company by December 31, 1996, either
party may terminate the agreement without any further rights or obligations.
F-18
<PAGE>
[INSIDE BACK COVER]
Appendix "B" contains a description of the artwork on inside back cover and the
inside back fold-out.
<PAGE>
APPENDIX "B"
INSIDE BACK COVER
The inside back cover contains:
1. A map indicating the location of the Company-owned restaurants and
whether they are existing or under construction.
2. A letter from Cowboy Jim, the Company's spokesperson, that reads:
HOWDY FOLKS!
My name is COWBOY JIM and I'm gonna tell you a little story 'bout how
the south was won...Won over to the finest steaks, chicken, burgers,
ribs and seafood ever served up in these here parts. Of course, the
Roadhouse Grill didn't just spring up overnight...it took a lot of
good friendly hardworking folks to make up the "house" we call home.
"Southern hospitality with a smile, there's just no substitute!"
That's what my grandaddy used to say.
So, here at the Roadhouse Grill that's exactly what we believe and if
you don't see it, hear it, and feel it, then jump up and say so!
'Cause we pride ourselves on being different.
Some of our neighbors near and far have tried to move in on our
territory, but we both know there's nothing like coming home and
there's nobody like the "original" Roadhouse Grill. A lot of folks
think we're pretty special round here and you know what? We are 'cause
you make us that way!
So hitch up your family and head down the trail (just follow the
peanut shells) 'cause we're settlin' in all over Florida...and the
east coast too!
The Roadhouse Grill...it's an old fashioned steak house and good time
saloon. It's a simple saying with delicious tastes. Built for
steaks, good food and friendly folks!
Enjoy your stay with us and we hope to see you again real soon!
/s/ Cowboy Jim
--------------
3. A quarter page photograph of the outside of the Winter Park, Florida
Roadhouse Grill restaurant with the caption "Winter Park, Florida".
INSIDE BACK FOLD-OUT
The inside back fold-out contains a two-page copy of the menu for the Roadhouse
Grill restaurants.
<PAGE>
No dealer, sales representative or other person has been authorized to
give any information or make any representation not contained in this
Prospectus in connection with the offer made by this Prospectus, and, if
given or made, such information or representation must not be relied upon as
having been authorized by the Company or the Underwriters. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making such
offer or solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such offer or solicitation. 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 to the date of this Prospectus.
TABLE OF CONTENTS
PAGE
----
Prospectus Summary ................. 3
Risk Factors ....................... 6
Use of Proceeds .................... 11
Dividend Policy .................... 11
Capitalization ..................... 12
Dilution ........................... 13
Selected Financial Data ............ 14
Management's Discussion and Analysis
of Financial Condition and
Results of Operations .............. 15
Business ........................... 22
Management ......................... 31
Certain Transactions ............... 36
Principal Shareholders ............. 36
Description of Capital Stock ....... 37
Shares Eligible for Future Sale .... 38
Underwriting ....................... 41
Legal Matters ...................... 42
Experts ............................ 42
Available Information .............. 43
Index to Financial Statements ...... F-1
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
SHARES
COMMON STOCK
P R O S P E C T U S
PIPER JAFFRAY INC.
ROBERTSON, STEPHENS & COMPANY
, 1996
<PAGE>
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table indicates the expenses expected to be incurred in
connection with the Offering described in this Registration Statement, all of
which will be paid by the Company:
SEC Registration Fee ...................... $11,897
NASD Filing Fee ........................... 3,950
Nasdaq National Market Listing Fee ....... *
Transfer Agent and Registrar Fees ........ *
Blue Sky Fees (including counsel fees) ... *
Accountants' Services and Expenses ....... *
Legal Services ............................ *
Related Legal Services .................... *
Printing and Engraving Fees ............... *
Directors' and Officers' Insurance Premium *
Miscellaneous ............................. *
----------
TOTAL ................................... $
==========
- ------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850 of the Florida Business Corporation Act permits, and, in
certain cases, requires, a corporation to indemnify certain persons,
including officers and directors and former officers and directors, and to
purchase insurance with respect to liability arising out of their capacity or
status as officers and directors. Such law provides further that the
indemnification permitted thereunder will not be deemed exclusive of any
other rights to which officers and directors may be entitled under the
corporation's articles of incorporation, bylaws, any agreement or otherwise.
In addition, Section 607.0831 of the Florida Business Corporation Act
presently limits the personal liability of a director for monetary damages,
except where the director (i) breaches his or her fiduciary duties and (ii)
such breach constitutes or includes certain unlawful distributions or certain
other reckless, wanton or willful acts or misconduct.
Paragraph 10 of the Company's Articles of Incorporation and Article IX of
the Company's Bylaws provide that the Company, to the fullest extent
permitted by the Florida Business Corporation Act, shall indemnify any person
made, or threatened to be made, a party to any action or suit because he or
she was or is a director or officer of the Company or was serving at the
request of the Company as a director or officer of another corporation.
Paragraph 10 of the Company's Articles of Incorporation and Article IX of the
Company's Bylaws, which will be filed as Exhibits and , respectively, to
this Registration Statement, will be incorporated herein by reference.
The Company intends to maintain liability insurance for the benefit of its
directors and officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following information relates to all securities issued or sold by the
Company within the past three years and not registered under the Securities
Act:
1. Pursuant to a Series A Convertible Preferred Stock Purchase Agreement
dated February 10, 1994, issued 2,000,000 shares of Series A Convertible
Preferred Stock for $1.50 per share on February 10, 1994 and 1,000,000 shares
of Series A Convertible Preferred Stock for $1.50 per share on March 21, 1994
to the persons identified below, with aggregate proceeds to the Company of
$4,500,000. These shares will be converted into an aggregate of
shares of Common Stock upon completion of the Offering.
II-1
<PAGE>
NUMBER OF
NAME SHARES(1)
- ---- -------------
Grace Ventures Partnership, III, L.P.
(now named Cupertino Ventures Partnership, III,
L.P.) ............................................. 800,000
J. P. Bolduc ........................................ 50,000
J. Peter Grace, Jr. ................................. 50,000
D. W. Robbins, Jr. .................................. 50,000
Christian F. Horn ................................... 50,000
Banque Scandinava en Suisse ......................... 1,000,000
Berjaya Group (Cayman) Limited ...................... 1,000,000
- --------------
(1) All shareholders other than Berjaya Group (Cayman) Limited acquired
shares on February 10, 1994. Berjaya Group (Cayman) Limited acquired its
shares on March 21, 1994.
2. Pursuant to the exercise of warrants issued under the Series A
Convertible Preferred Stock Purchase Agreement dated February 10, 1994,
issued 498,750 shares of Series A Convertible Preferred Stock for $1.50 per
share on June 6, 1994 and 26,250 shares of Series A Convertible Preferred
Stock for $1.50 per share on June 7, 1994 to the persons identified below,
with aggregate proceeds to the Company of $787,500. These shares will be
converted into an aggregate of shares of Common Stock upon
completion of the Offering.
NUMBER OF
NAME SHARES(1)
- ---- -----------
Grace Ventures Partnership, III, L.P.
(now named Cupertino Ventures Partnership, III,
L.P.) ............................................. 420,000
Christian F. Horn ................................... 26,250
David Walter Robbins, Jr., Trustee
under Declaration of Trust dated October 31, 1991 . 26,250
J. Peter Grace, Jr. ................................. 26,250
J. P. Bolduc ........................................ 26,250
- --------------
(1) All shareholders other than J. P. Bolduc acquired shares on June 6, 1994.
Mr. Bolduc acquired his shares on June 7, 1994.
3. Pursuant to a Series B Convertible Preferred Stock Purchase Agreement
dated June 8, 1994, issued 1,300,000 shares of Series B Convertible Preferred
Stock for $2.50 per share on June 6, 1994 and 1,000,000 shares of Series B
Convertible Preferred Stock for $2.50 per share on September 26, 1994 to the
persons identified below, with aggregate proceeds to the Company of
$5,750,000. These shares will be converted into an aggregate of
shares of Common Stock upon completion of the Offering.
NAME NUMBER OF SHARES
- ----- ----------------
Grace Ventures Partnership, III, L.P.(1)
(now named Cupertino Ventures Partnership, III,
L.P.) ............................................. 300,000
Berjaya Group (Cayman) Limited(1) ................... 1,000,000
Arab Multinational Investment Co.(2) ................ 400,000
Societe Financiere Privee(2) ........................ 600,000
- --------------
(1) Acquired shares on June 6, 1994.
(2) Acquired shares on September 26, 1994.
4. Issued 50,025 shares of Series B Convertible Preferred Stock for $2.50
per share on November 2, 1994 to the persons identified below, with aggregate
proceeds to the Company of $125,062.50. These shares will be converted into
an aggregate of shares of Common Stock upon completion of the
Offering.
II-2
<PAGE>
NAME NUMBER OF SHARES
- ----- ----------------
J. P. Bolduc ..................................... 16,675
J. Peter Grace, Jr. .............................. 16,675
David Walter Robbins, Jr., Trustee
under Declaration of Trust dated October 31,
1991 ........................................... 16,675
5. Pursuant to a Stock Purchase Agreement dated September 26, 1994, issued
3,100,000 shares of Common Stock for $3.10 per share on November 28, 1994 to
Berjaya Group (Cayman) Limited, with aggregate proceeds to the Company of
$9,610,000.
6. Pursuant to a Stock Purchase Agreement dated May 26, 1995, issued
1,250,000 shares of Common Stock for $3.20 per share on such date to the
persons identified below, with aggregate proceeds to the Company of
$4,000,000.
NAME NUMBER OF SHARES
- ----- ----------------
Grace Ventures Partnership, III, L.P.
(now named Cupertino Ventures Partnership, III,
L.P.) .............................................. 156,250
Berjaya Group (Cayman) Limited ....................... 1,083,750
Arab Multinational Investment Co. .................... 10,000
7. Pursuant to the exercise of a stock option, issued 355,555 shares of
Common Stock for $.15 per share on July 5, 1995 to J. David Toole, III, the
Company's President and Chief Executive Officer, with aggregate proceeds to
the Company of $53,333.25.
8. Purusant to a stock purchase agreement entered into October 25, 1995,
issued 606,060 shares of Common Stock for $3.30 per share on such date to
Berjaya Group (Cayman) Limited, with aggregate proceeds to the Company of
$1,999,998.
9. Issued 5,811 shares of Common Stock for $3.30 per share on November 30,
1995 to J. P. Bolduc, with aggregate proceeds to the Company of $20,919.60.
10. Pursuant to a stock purchase agreement entered into January 15, 1996,
issued an aggregate of 2,361,111 shares of Common Stock for $3.60 per share
to Berjaya Group (Cayman) Limited, with aggregate proceeds to the Company of
$8,500,000. Of such shares, 972,222 shares were issued on January 16, 1996,
555,555 shares were issued on April 15, 1996, and 833,334 shares were issued
on May 16, 1996.
All of the shares of capital stock described above were issued without
registration under the Securities Act pursuant to the exemption from
registration afforded by Section 4(2) of the Securities Act or the rules and
regulations promulgated thereunder.
II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
* 1.1 Form of Purchase Agreement.
3.1 Articles of Incorporation of the Company.
3.2 Bylaws of the Company.
4.1 Specimen of Certificate of Common Stock of the Company.
4.2 Relevant Portions of the Articles of Incorporation of the Company (reference is hereby made to Exhibit
3.1 above).
4.3 Relevant Portions of the Bylaws of the Company (reference is hereby made to Exhibit 3.2 above).
4.4 Relevant Portions of the Series A Convertible Preferred Stock Purchase Agreement dated as of February
10, 1994 between the Company and the several purchasers named in Schedule I (reference
is hereby made to Exhibit 10.15 below).
4.5 Relevant Portions of the Series B Convertible Preferred Stock Purchase Agreement dated as of June
8, 1994 between the Company and the several purchasers named in Schedule I (reference
is hereby made to Exhibit 10.17 below).
4.6 Relevant Portions of the Stock Purchase Agreement dated as of September 26, 1994 between the Company
and Berjaya (reference is hereby made to Exhibit 10.18 below).
4.7 Relevant Portions of the 1994 Registration Rights Agreement, dated February 10, 1994 (reference is
hereby made to Exhibit 10.19 below).
4.8 Relevant Portions of the Amendment to 1994 Registration Rights Agreement, dated June 8, 1994 (reference
is hereby made to Exhibit 10.20 below).
4.9 Relevant Portions of the Amendment to 1994 Registration Rights Agreement, dated July 26, 1996 (reference
is hereby made to Exhibit 10.21 below).
4.10 Relevant Portions of the Stock Option Agreement, dated February 10, 1994 (reference is hereby made to
Exhibit 10.22 below).
4.11 Relevant Portions of the Berjaya Registration Rights Agreement, dated November __, 1994 (reference is
hereby made to Exhibit 10.23 below).
4.12 Relevant Portions of the Investment Agreement, dated July 30, 1996 between Berjaya and
John Y. Brown (reference is hereby made to Exhibit 10.25 below).
4.13 Relevant Portions of the Investment Agreement, dated January 15, 1996, between Berjaya
and the Company (reference is hereby made to Exhibit 10.26 below).
* 5.1 Opinion of Locke Purnell Rain Harrell (A Professional Corporation).
10.1 Employment Agreement by and between the Company and John David Toole III, dated October 1, 1994.
10.2 Form of the Company's Development Agreement.
10.3 Form of the Company's Franchise Agreement.
10.4 1994 Stock Option Plan, as amended by the Company's Board of Directors.
10.5 Form of the Company's Stock Option Agreement.
10.6 Sub-Lease Agreement, dated July 31, 1995, between Equitable Real Estate Investment, Inc., Compass
Management and Leasing, Inc. and the Company, for property located at 6600 N. Andrews Ave.,
Ste. 160, Ft. Lauderdale, Florida 33309.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
10.7 Assignment and Assumption Agreement, dated March 15, 1995, between Roadhouse Waterway, Inc. and
Roadhouse Grill Commercial, Inc., for property located in Fort Lauderdale, Florida
(lease of restaurant premises).
10.8 Lease Agreement, dated April 26, 1994, between Piccadilly Cafeterias, Inc. and the Company
for property located in Winter Park, Florida (lease of restaurant premises).
10.9 Ground Lease, dated May 25, 1995, between Bruno, Inc. and the Company, for property located
in Sandy Springs, Georgia (lease of restaurant premises).
10.10 Lease, dated April 17, 1995, between Captec Net Lease Realty, Inc. and New York Roasters, for property
located in Cheektowaga, New York (lease of restaurant premises, assumed by the Company).
10.11 Operating Agreement, dated April 28, 1994, of Kendall Roadhouse Grill, L.C.
10.12 Management Agreement, dated November 8, 1994, between Boca Roadhouse, Inc. and the Company.
10.13 Promissory Note, dated January 15, 1996, made by the Company in favor of John Y. Brown.
10.14 Promissory Note, dated September 27, 1995, made by the Company in favor of Hal Dickson.
10.15 Series A Convertible Preferred Stock Purchase Agreement, dated as of February 10, 1994, between
the Company and the several purchasers named in Schedule I.
10.16 Initial Stockholders Agreement, dated February 10, 1994, among the Company, the several purchasers
of the Series A Preferred Shares, and the initial shareholders of the Company.
10.17 Series B Convertible Preferred Stock Purchase Agreement, dated as of June 8, 1994, between
the Company and the several purchasers named in Schedule I.
10.18 Stock Purchase Agreement, dated as of September 26, 1994, between the Company and Berjaya.
10.19 1994 Registration Rights Agreement, dated February 10, 1994.
10.20 Amendment to 1994 Registration Rights Agreement, dated June 8, 1994.
10.21 Amendment to 1994 Registration Rights Agreement, dated July 26, 1996.
10.22 Stock Option Agreement, dated February 10, 1994, between the Company and J. David Toole III.
10.23 Berjaya Registration Rights Agreement, dated November , 1994.
10.24 Consulting Agreement, dated August , 1992, between Americana Entertainment Group, Inc. and David Toole,
as amended on October 7, 1992.
10.25 Investment Agreement, dated July 30, 1996, between Berjaya and John Y. Brown.
10.26 Investment Agreement, dated January 15, 1996, between Berjaya and the Company.
10.27 Assignment and Assumption Agreement, dated February 10, 1994, by and between John Y. Brown, Jr. and
the Company.
10.28 Purchase and Sale Agreement, dated August 30, 1996, between Roadwear, Inc. and the Company, relating
to the Kendall restaurant.
10.29 Warrant, dated August 16, 1996, between the Company and Berjaya.
10.30 Promissory note, dated August 16, 1996, made by the Company in favor of Berjaya.
10.31 Master Development Agreement, dated January 5, 1996, between the Company and Roadhouse Grill Asia.
10.32 Lease Transfer and Assumption Agreement for equipment used in New York Roadhouse Grill restaurant, dated March
29, 1995, assumed by the Company.
*21.1 List of subsidiaries of the Company.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- --------- -----------------------
<S> <C>
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Stark & Bennett, P.A.
*23.4 Consent of Locke Purnell Rain Harrell (A Professional Corporation) (reference is hereby made to
Exhibit 5.1).
24.1 Powers of Attorney (included on signature pages).
27.1 Financial Data Schedule
99.1 Statement of Stark & Bennett, P.A.
</TABLE>
- -------------
* To be filed by amendment.
(b) Financial Statement Schedules.
[None]
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission have been
omitted because they are not required under the related instructions, are not
applicable or the information has been provided in the Financial Statements
or the notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Company hereby undertakes to provide the representative of
the Underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required
by the Underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Company, the Company has been advised that in the 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 Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by any director, officer or
controlling person in connection with the securities being registered, the
Company 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.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus 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.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of
Florida, on this 26th day of September, 1996.
ROADHOUSE GRILL, INC.
By: /s/ John D. Toole, III
John David Toole, III
President and Chief Executive Officer
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 the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John David Toole, III and Dennis
Jones, and each of them, such individual's true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for such
individual and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any registration statement
related to the offering contemplated by this registration statement that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act
of 1933, and to file the same, with all exhibits thereto, and all documents
in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ John D. Toole, III President, Chief Executive September 26, 1996
John David Toole, III Officer and Director
(Principal Executive Officer)
/s/ Dennis Jones Chief Financial Officer, September 26, 1996
Dennis Jones (Principal Financial Officer
and Principal
Accounting Officer)
/s/ Dr. Christian F. Horn Director August 15, 1996
Dr. Christian F. Horn
/s/ K.P. Tan Director September 26, 1996
</TABLE>
K.P. Tan
II-7
<PAGE>
ROADHOUSE GRILL, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF PERIOD EXPENSES WRITE-OFFS PERIOD
- ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS -- $29,015 (29,015) $ --
</TABLE>
S-1
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
ROADHOUSE GRILL, INC.
The undersigned, acting as an incorporator of a corporation under the
Florida Business Corporation Act, adopts the following Articles of
Incorporation:
1. The name of the corporation is Roadhouse Grill, Inc.("Corporation").
2. The mailing address and principal office address of the Corporation
is 600 Corporate Drive, Suite 100, Ft. Lauderdale, Florida 33334.
3. The period of its duration is perpetual, unless sooner dissolved.
4. The date and time of the commencement of the corporate existence
shall be the time of filing of Articles of Incorporation by the Department of
State.
5. The general purpose or purposes for which the Corporation is
organized are to engage in the transaction of any or all lawful business for
which corporations may be incorporated under the provisions of the Florida
Business Corporation Act.
6. The aggregate number of shares which the Corporation shall have
authority to issue is one thousand (1,000) shares, par value One Dollar ($1.00)
per share. All such shares are of one class, and are designated as common
shares.
7. The street address of the initial registered office of the
Corporation is 600 Corporate Drive, Suite 100, Ft. Lauderdale, Florida 33334,
and the name of its initial registered agent at such address is Charles D.
Barnett.
8. Thee affairs and business of the Corporation are to be conducted
(a) by a Board of Directors of such number as the shareholders may select at
each annual meeting of shareholders; (b) by a President, who shall be elected by
the Board of Directors at such time and in such manner as the Board of Directors
may select; and (c) by such other officers, assistant officers and agents as the
Board of Directors may authorize the President of the Corporation to appoint.
The first Board of Directors consisting of one director, who shall
serve until the first annual meeting of shareholders or until his successor(s)
is elected and qualifies, is as follows:
John Y. Brown, Jr.
600 Corporate Drive
Suite 100
Ft. Lauderdale, Florida 33334
9. The name and address of the incorporator is:
<PAGE>
John Y. Brown, Jr.
600 Corporate Drive
Suite 100
Ft. Lauderdale, Florida 33334
DATED October 13, 1992, at Fort Lauderdale, Florida.
/s/ JOHN Y. BROWN, JR.
--------------------------------
JOHN Y. BROWN, JR.
STATE OF FLORIDA ss.
ss.
COUNTY OF BROWARD ss.
The foregoing instrument was acknowledged before me this 13th October,
1992, by John Y. Brown, Jr., for Roadhouse Grill, Inc., and who is person known
to me and did not take an oath.
/s/ CHARLOTTE A. STOCKEMER
--------------------------------
Notary Public, State of Florida
My Commission Expires:
NOTARY SEAL- FLORIDA
CHARLOTTE A. STOCKEMER
MY COMMISSION #
===============
CC 191383
EXPIRES: April 6, 1996
Bonded thru Notary
Public Underwriters
CHARLES D. BARNETT, having been designated to act as Registered Agent,
hereby agrees to act in this capacity.
/s/ CHARLES D. BARNETT
--------------------------------
CHARLES D. BARNETT
<PAGE>
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
ROADHOUSE GRILL, INC.
The undersigned, J. David Toole, III, President of Roadhouse Grill, Inc.,
a Florida corporation (the "Corporation"), desiring to amend the Articles of
Incorporation of the Corporation pursuant to the Florida Business Corporation
Act, states as follows:
A. The name of the Corporation is Roadhouse Grill, Inc.
B. Paragraph 6 of the Articles of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
6. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 35,000,000, of which
5,000,000 shall be preferred stock, (hereinafter called the "Preferred
Stock"), having a $.01 par value per share, and 30,000,000 shares shall be
common stock (hereinafter called the "Common Stock"), having $.01
par value per share.
The Preferred Stock may be issued from time to time in series, with
such designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, qualifications, limitations or
restrictions thereof as shall be stated and expressed in the resolution or
resolutions providing for the issuance of such Preferred Stock, adopted by
the Board of Directors pursuant to the authority granted in these
Articles.
C. Pursuant to the provisions of Section 607.0602 of the Florida Business
Corporation Act, the Articles of Incorporation of the Corporation are hereby
amended to provide for the designation of 3,525,000 shares of the Company's
preferred stock as the Series A Convertible Preferred Stock, having the rights
and preferences set forth in the attached "Terms of the Series A Convertible
Preferred Stock" attached hereto as Exhibit "A."
D. The Articles of Incorporation of the Corporation are further amended by
adding the following new paragraph 10.
10. The Corporation shall indemnify, or advance expenses to, to the
fullest extent authorized or permitted by the Florida Business Corporation
Act, any person made, or threatened to be made, a party to any action,
suit or proceeding by reason of the fact that he (i) is or was a director
of the Corporation; (ii) is or was serving at the request of the
Corporation as a director of another corporation; (iii) is or was an
officer of the Corporation, provided that lie is or was at the time a
director of the Corporation; or (iv) is or was serving at the request of
the Corporation as an officer of another corporation, provided that he is
or was at the time a director of the Corporation or a director of such
other corporation, serving at the request of
<PAGE>
the Corporation. Unless otherwise expressly prohibited by the Florida
General Corporation Act, and except as otherwise provided in the foregoing
sentence, the Board of Directors of the Corporation shall have the sole
and exclusive discretion, on such terms and conditions as it shall
determine, to indemnify, or advance expenses to, any person made, or
threatened to be made, a party to any action, suit or proceeding by reason
of the fact that he is or was an officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as an
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. No person falling within the purview
of the foregoing sentence may apply for indemnification or advancement of
expenses to any court of competent jurisdiction.
References to the Florida Business Corporation Act in this paragraph
10 are to that law as from time to time amended. No amendment to the
Corporation's Articles shall affect any right of any person under this
paragraph 10 based on any event, omission or proceeding prior to such
amendment.
E. This Amendment to the Articles of Incorporation of the Corporation was
approved by unanimous consent of the Board of Directors on February 9, 1994.
F. This Amendment was approved by 96 % of the shareholders entitled to
vote at a meeting of the shareholders held on February 9, 1994. 96% was
sufficient.
DATED: February 9, 1994.
ROADHOUSE GRILL, INC.
By: /s/ J. DAVID TOOLE III
-------------------------------
Name: J. DAVID TOOLE III
Title: PRESIDENT
<PAGE>
EXHIBIT "A"
TERMS OF SERIES A CONVERTIBLE PREFERRED STOCK
(To be Included in Charter Document of Roadhouse Grill, Inc.)
The designations, voting powers, preferences and relative participating,
optional or other special rights, and qualifications, limitations or
restrictions of the above classes of the Series A Convertible Preferred Stock
are as follows:
1. VOTING.
A. GENERAL. Except as may be otherwise provided in these terms of
the Series A Convertible Preferred Stock or by law, the Series A Convertible
Preferred Stock shall vote together with all other classes and series of stock
of the Corporation having general voting rights as a single class on all actions
to be taken by the stockholders of the Corporation. Each share of Series A
Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series A
Convertible Preferred Stock is then convertible.
B. MATTERS REQUIRING CLASS VOTE. In the event that any shares of
Series A Convertible Preferred Stock are outstanding, the Corporation shall not,
without the affirmative vote of the holders of if least two-thirds of the shares
of Series A Convertible Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) as a single class:
(i) create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series A
Convertible Preferred Stock as to the payment of dividends and the distribution
of assets on the liquidation, dissolution or winding up of the Corporation, or
increase the authorized amount of the Series A Convertible Preferred Stock, or
increase the authorized amount of any additional class or series of shares of
stock unless the same ranks junior to the Series A Convertible Preferred Stock
as to the payment of dividends and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, or create or
authorize any obligation or security convertible into shares of Series A
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to the Series A Convertible Preferred Stock as to
the payment of dividends and the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Charter or by
merger, consolidation or otherwise;
(ii) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Charter of the Corporation; provided, however, that the Charter
may be amended to provide for an increase in the authorized preferred stock of
the Corporation or
<PAGE>
the creation and issuance of any other capital stock of the Corporation ranking
junior in all respects to the Series A Convertible Preferred Stock;
(iii) merge, consolidate, enter into a share exchange or engage
in any other transaction in which the Corporation is not the surviving entity or
in which effective control of the Corporation has been transferred to another
entity; provided however, that this paragraph shall not apply so long as John Y.
Brown, Jr. is a member of the Board of Directors, in which case paragraph 1C
shall apply;
(iv) engage in any transaction that would be considered a "deemed
dividend" transaction under Section 305 of the Code;
(v) consent to any liquidation, dissolution, winding up of the
Corporation or the sale or transfer of all or substantially all of its assets;
(vi) amend, alter or repeal the Corporation's By-Laws;
(vii) purchase or set aside any sums for the purchase of, or pay
any dividend or make any distribution on, any shares of stock other than the
Series A Convertible Preferred Stock; or
C. MERGER, ETC. In the event that any shares of Series A Convertible
Preferred Stock are outstanding and John Y. Brown, Jr. is a member of the Board
of Directors, the Corporation may nor merge, consolidate, enter into a share
exchange or engage in any other transaction in which the Corporation is not the
surviving entity or in which effective control of the Corporation has been
transferred to another entity if all of the holders of more than 500,000 shares
the Series A Convertible Preferred Stock then outstanding have voted against
such transaction.
D. BOARD SIZE. The Corporation shall not, without the written
consent or affirmative vote of the holders of a majority of the then outstanding
shares of Series A Convertible Preferred Stock given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class,
increase (whether by amendment of the Charter or By-Laws or otherwise) the
maximum number of directors constituting the Board of Directors to a number in
excess of five (5).
E. BOARD SEATS. The holders of the Series A Convertible Preferred
Stock, voting as a separate class, shall be entitled to elect one (1) director
of the Corporation. The holders of the Common Stock and the Series A Convertible
Preferred Stock, voting together as a single class, shall be entitled to elect
the other directors of the Corporation.
In the event John Y. Brown, Jr. ceases to be a member of the Board
of Directors, the holders of the Series A Convertible Preferred Stock shall, for
a period of three (3) years beginning on the date on which John Y. Brown, Jr.
ceases to be a member,
2
<PAGE>
elect a majority of the members of the Board of Directors; provided however,
that the election of a majority of the members of the Board of Directors shall
in no way affect the rights and obligations under the employment agreement with
the Chief Executive Officer or the Chief Executive Officer's right to be a
member of the Board of Directors.
At any meeting (or in a written consent in lieu thereof) held for
the purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of a majority of the shares of Series A
Convertible Preferred Stock then outstanding shall constitute a quorum of the
Series A Convertible Preferred Stock for the election of directors to be elected
solely by the holders of the Series A Convertible Preferred Stock.
At a meeting (or in a written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of a majority of the shares of Series A
Convertible Preferred Stock then outstanding and a majority of the shares of
Common Stock then outstanding shall constitute a quorum of the Series A
Convertible Preferred Stock and the Common Stock for the election of directors
to be elected jointly by the holders of the Series A Convertible Preferred Stock
and the Common Stock.
A vacancy in any directorship elected solely by the holders of the
Series A Convertible Preferred Stock shall be filled only by vote or written
consent of the holders of the Series A Convertible Preferred Stock; and a
vacancy in the directorship elected jointly by the holders of the Series A
Convertible Preferred Stock and the Common Stock shall be filled only by vote or
written consent of the Series A Convertible Preferred Stock and the Common
Stock, as provided above.
2. DIVIDENDS. The holders of the Series A Convertible Preferred Stock
shall be entitled to receive, out of funds legally available therefor, when, as
and if declared by the Board of Directors, quarterly dividends at the rate per
annum of $.105 per share of Series A Convertible Preferred Stock as adjusted for
stock splits, stock dividends, recapitalizations, reclassifications and similar
events which affect the number of outstanding shares of Series A Convertible
Preferred Stock (together referred to herein as "Recapitalization Events").
Dividends on the Series A Convertible Preferred Stock shall not be cumulative.
3. LIQUIDATION. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation"), the holders of
the shares of Series A Convertible Preferred Stock shall be entitled, before any
distribution or payment is made upon any stock ranking on liquidation junior to
the Series A Convertible Preferred Stock, to be paid an amount equal to $1.50
per share (appropriately adjusted for Recapitalization Events) plus, in the case
of each share, an amount equal to all dividends, if any, declared but unpaid
thereon, computed to the date payment thereof is made available, such amount
payable with respect to one share of Series A Convertible Preferred Stock being
sometimes referred to as the "Series A Liquidation Payment" and with respect to
all shares of Series A Convertible Preferred Stock being sometimes
3
<PAGE>
referred to as the "Series A Liquidation Payments." If any assets of the
Corporation remain after the Series A Liquidation Payments, the Series A
Convertible Preferred Stock shall be deemed to have been converted into Common
Stock so that the holders of shares of Series A Convertible Preferred Stock will
be entitled to their pro rata share (on an as converted basis) of such net
assets with the shares of Common Stock. If, however upon such Liquidation, the
assets to be distributed among the holders of Series A Convertible Preferred
Stock shall be insufficient to permit payment to the holders of Series A
Convertible Preferred Stock of the amount distributable as aforesaid, then the
entire assets of the Corporation to be so distributed shall be distributed
ratably among the holders of Series A Convertible Preferred Stock.
Written notice of such Liquidation, stating a payment date, the amount of
any payments to be made to the holders of the Series A Convertible Preferred
Stock and the place where said payments shall be payable, shall be given by
mail, postage prepaid, or by facsimile to non-U.S. residents, not less than
twenty (20) days prior to the payment date stated therein, to the holders of
record of Series A Convertible Preferred Stock, such notice to be addressed to
each such holder at its address as shown by the records of the Corporation. The
consolidation or merger of the Corporation into or with any other entity or
entities which results in the holders of the Corporation's outstanding Common
Stock or other voting securities of the Corporation holding less than fifty
percent (50%) of the combined voting power of the entity or entities surviving
such transaction, or the sale or transfer by the Corporation of all or
substantially all of its assets, shall be deemed to be a Liquidation, within the
meaning of the provisions of this Paragraph 3.
For purposes hereof, the Common Stock and any other capital stock of the
Corporation shall rank on Liquidation junior to the Series A Convertible
Preferred Stock.
Notwithstanding anything to the contrary contained in this Section 3,
unless the holders of the Series A Convertible Preferred Stock shall otherwise
notify the Corporation, no such holder shall be deemed to have elected to
convert its shares of Series A Convertible Preferred Stock into Common Stock or
redeemed its shares of Series A Convertible Preferred Stock, as the case may be
as a result of a Liquidation and no such conversion or redemption shall be
effective, unless and until the Liquidation referred to in the notice given to
holders of record of Series A Convertible Preferred Stock pursuant to Section 3
hereof shall have been consummated.
4. CONVERSIONS. The holders of shares of Series A Convertible Preferred
Stock shall have the following conversion rights ("Conversion Rights'):
A. RIGHT TO CONVERT. Subject to the terms and conditions of this
Paragraph 4, the holder of any share or shares of Series A Convertible Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Convertible Preferred Stock (except that upon any Liquidation of the
Corporation the right of conversion shall terminate at the close of business on
the business day fixed for payment of the amount distributable on the Series A
Convertible Preferred Stock) into such number of fully paid and nonassessable
shares of Common Stock as is obtained by: (i) multiplying
4
<PAGE>
the number of shares of Series A Convertible Preferred Stock so to be converted
by $1.50 in the case of the Series A Convertible Preferred Stock, and (ii)
dividing the result by the conversion price of $1.50 in the case of the Series A
Convertible Preferred Stock or, in case an adjustment of such price has taken
place pursuant to the further provisions of this Paragraph 4, then by the
conversion price as last adjusted and in effect at the date any share or shares
of Series A Convertible Preferred Stock are surrendered for conversion (such
prices, or such price as last adjusted, being referred to individually as a
"Conversion Price" and collectively as the "Conversion Prices"). Such rights of
conversion shall be exercised by the holder thereof by giving written notice
that the holder elects to convert a stated number of shares of Series A
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series A
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address and social security or taxpayer identification number) in which
the certificate or certificates for shares of Common Stock shall be issued.
B. ISSUANCE OF CERTIFICATES: TIME CONVERSION EFFECTED. Promptly after
the receipt of the written notice referred to in sub-paragraph 4A and surrender
of the certificate or certificates for the share or shares of Series A
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series A Convertible Preferred Stock. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Conversion
Price shall be determined as of the close of business on the date on Which such
written notice shall have been received by the Corporation and the certificate
or certificates for such share or shares shall have been surrendered as,
aforesaid, and at such time the rights of the holder of such share or shares of
Series A Convertible Preferred Stock shall cease, and the person or persons in
whose name or names any certificate or certificates for shares of COMMON Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby.
C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No fractional
shares shall be issued upon conversion of Series A Convertible Preferred Stock
into Common Stock and the aggregate number of shares of Common Stock to be
issued to a holder shall be rounded to the nearest whole shares. At the time of
each conversion, the Corporation shall pay in cash an amount equal to all
dividends, if any, declared and unpaid on the shares of Series A Convertible
Preferred Stock surrendered for conversion to the date upon which such
conversion is deemed to take, place as provided in sub-paragraph 4B. In case the
number of shares of Series A Convertible Preferred Stock represented by the
certificate or certificates surrendered pursuant to sub-paragraph 4A exceeds the
number of shares converted, the Corporation shall, upon such conversion, execute
and deliver to the holder, at the expense of the Corporation, a new certificates
or certificates for
5
<PAGE>
the number of shares of Series A Convertible Preferred Stock represented by the
certificate or certificates surrendered which are not to be converted. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this sub-paragraph 4C, be delivered upon such conversion, the
Corporation, in lieu of delivering such fractional share, shall pay to the
holder surrendering the Series A Convertible Preferred Stock for conversion an
amount in cash equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the Corporation.
D. ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON STOCK. Except as
provided in sub-paragraph 4E, if and whenever the Corporation shall issue or
sell, or is, in accordance with sub-paragraphs 41)(i) through 41)(vii), deemed
to have issued or sold, any shares of Common Stock for a consideration per share
less than the applicable Conversion Price for the Series A Convertible Preferred
Stock immediately prior to the time of such issue or sale (such issuance or sale
shall be referred to as a "Dilutive Issuance"), then, forthwith upon the
Dilutive Issuance, such Conversion Price shall be adjusted by multiplying such
Conversion Price by the fraction:
X + Y
-----
X + Z
where:
X = the number of shares of Common Stock issuable upon conversion of
the Series A Convertible Preferred Stock at the Conversion Price in
effect immediately before the Dilutive Issuance;
Y = the number of shares of Common Stock which the aggregate
consideration received by the Corporation in the Dilutive Issuance
would purchase at the Conversion Price in effect immediately before
the Dilutive Issuance; and
Z = the number of shares of Common Stock issued or deemed issued in the
Dilutive Issuance.
For purposes of this sub-paragraph 4D, the following sub-paragraphs 4D(i)
through 4D(vii) shall also be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible or exchangeable
stock or securities being called "Convertible Securities") whether or not such
Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the effective price per share for which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
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exchange of such Convertible Securities (determined by dividing (1) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or exchange
thereof, by (2) the total maximum number of shares of Common Stock issuable upon
the exercise of all such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the applicable Conversion Price for the Series A Convertible Preferred
Stock immediately prior to the time of the granting of such Options or
Convertible Securities, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to have been issued for such effective price per
share as of the date of granting of such Options or the issuance of such
Convertible Securities. Except as otherwise provided in sub-paragraph 41)(iii),
no adjustment of any Conversion Price shall be made upon the actual issue of
such Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately exercisable,
and the effective price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (1) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (2) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the applicable Conversion Price for the Series A Convertible
Preferred Stock immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
for such effective price per share as of the date of the issue or sale of such
Convertible Securities, provided that (1) except as otherwise provided in
sub-paragraph 41)(iii), no adjustment of any Conversion Price shall be made upon
the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and (2) if any such issue or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such Convertible
Securities for which adjustments of any Conversion Price have been or are to be
made pursuant to other provisions of this subparagraph 4D, no further adjustment
of such Conversion Price shall be made by reason of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening
of any of the following events, namely, if the purchase price provided for in
any
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Option referred to in sub-paragraph 4D(i) or 4D(ii) shalt change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the applicable Conversion Price for any
series of Convertible Preferred Stock at the time of such event shall forthwith
be readjusted to the Conversion Price which would have been in effect at such
time had such Options or Convertible Securities still outstanding provided for
such changed purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold, but only if as a
result of such adjustment the Conversion Price then in effect hereunder is
thereby reduced; and on the expiration of any such Option or the termination of
any such right to convert or exchange such Convertible Securities, the
Conversion Price then in effect hereunder shall forthwith be increased to the
Conversion Price which would have been in effect at the time of such expiration
or termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination, never been
issued.
(iv) STOCK DIVIDEND. In case the Corporation shall declare a dividend
or make any other distribution upon any stock of the Corporation other than on
the Series A Preferred Shares payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the case may
be, issuable in payment of such dividend or distribution shall be deemed to have
been issued or sold at a consideration equal to $.01 per share.
(v) CONSIDERATION FOR STOCK. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Corporation.
(vi) RECORD DATE. In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities, or (2) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the
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<PAGE>
making of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(vii) TREASURY SHARES. The disposition of any shares of Common Stock
owned or held by or for the account of the Corporation shall be considered an
issue or sale of Common Stock for the purpose of this sub-paragraph 4D.
E. CERTAIN ISSUES OF COMMON STOCK EXCEPTED. Anything herein to the
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of any Conversion Price in the case of the grant of options or other
rights to acquire Common Stock and the issuance of Common Stock upon exercise of
such options or rights pursuant to the Corporation's Stock Option Plan for
employees and directors who are not employees of the Corporation in connection
with their service as directors or their employment by the Corporation, but not
exceeding in the aggregate 200,000 shares of Common Stock, the exercise of the
Stock Option granted to J. David Toole, III for 355,555 shares of Common Stock,
the issuance of shares of Series A Convertible Preferred Stock upon the exercise
of certain warrants issued pursuant to the Series A Convertible Preferred Stock
Purchase Agreement to be entered into on or about February 10, 1994 between the
Corporation and the Purchasers listed in Schedule I thereto, or the conversion
of any Series A Convertible Preferred Stock into Common Stock.
F. SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect for the Series A Convertible Preferred Stock
immediately prior to such subdivision shall be proportionately reduced and,
conversely, in case the outstanding shares of Common Stock shall be combined
into a smaller number of shares, the Conversion Price in effect for any series
of Convertible Preferred Stock immediately prior to such combination shall be
proportionately increased.
G. REORGANIZATION OR RECLASSIFICATION. If any capital reorganization or
reclassification of the capital stock of the Corporation shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Series A
Convertible Preferred Stock shall thereupon have the right to receive, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series A Convertible Preferred Stock, such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such Common Stock immediately theretofore receivable upon
such conversion had such reorganization or reclassification not taken place, and
in any such case appropriate provisions shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the applicable Conversion
Price) shall thereafter be applicable, as nearly as may be, in relation
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<PAGE>
to any shares of stock, securities or assets thereafter deliverable upon the
exercise of such conversion rights.
H. NOTICE OF ADJUSTMENT. Upon any adjustment of any Conversion Price,
then and in each such case the Corporation shall give written notice thereof, by
first class mail, postage prepaid, or by facsimile to non-U.S. residents,
addressed to each holder of shares of Series A Convertible Preferred Stock at
the address of such holder as shown on the books of the Corporation, which
notice shall state the Conversion Price resulting from such adjustment, setting
forth in reasonable detail the method upon which such calculation is based.
I. OTHER NOTICES. In case at any time:
(i) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of its
Common Stock;
(ii) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or a consolidation or merger of the
Corporation with or into, or a sale of all or substantially all of its assets
to, another entity or entities; or
(iv) there shall be a Liquidation of the Corporation; then, in any
one or more of said cases, the Corporation shall give, by first class mail,
postage prepaid, or by facsimile for non-U.S. residents addressed to each holder
of any shares of Series A Convertible Preferred Stock at the address of such
holder as shown on the books of the Corporation (1) at least twenty (20) days
prior written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale or Liquidation, and (2) in the
case of any such reorganization, reclassification, consolidation, merger, sale
or Liquidation, at least twenty (20) days prior written notice of the date when
the same shall take place. Such notice in accordance with the foregoing clause
(1) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto and such notice in accordance with the foregoing clause (2)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale or Liquidation, as the case maybe.
J. STOCK TO BE RESERVED. The Corporation will, at all times, reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series A Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all
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<PAGE>
outstanding shares of Series A Convertible Preferred Stock and securities
convertible into Series A Convertible Preferred Stock (and the subsequent
conversion of such Series A Convertible Preferred Stock). The Corporation
covenants that all shares of Common Stock which shall be so issued shall be duly
and validly issued and fully paid and nonassessable and free from all taxes,
liens and to charges with respect to the issue thereof and, without limiting the
generality of the foregoing, the Corporation covenants that it will from time to
time take all such action as may be requisite to assure that the par value per
share of the Common Stock is at all times equal to or less than any Conversion
Price in effect at the time for the Series A Convertible Preferred Stock. The
Corporation will take all such action as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or regulation, or of any requirement of any national securities exchange
upon which the Common Stock may be listed. The Corporation will not take any
action which results in any adjustment of any Conversion Price if the total
number of shares of Common Stock issued and issuable after such action upon
conversion of the Series A Convertible Preferred Stock would exceed the total
number of shares of Common Stock then authorized by the Charter of the
Corporation.
K. NO REISSUANCE OF CONVERTIBLE PREFERRED STOCK. Shares of Series A
Convertible Preferred Stock which are converted into shares of Common Stock as
provided herein shall not be reissued.
L. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of the Series A Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series A Convertible
Preferred Stock which is being converted.
M. CLOSING OF BOOKS. The Corporation will at no time close its transfer
books against the transfer of any Series A Convertible Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Series A Convertible Preferred Stock in any manner which interferes with the
timely conversion of such Series A Convertible Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
N. DEFINITION OF COMMON STOCK. As used in this paragraph 4, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
par value $.01 per share, as constituted on the date of filing of these Terms of
the Series A Convertible Preferred Stock, and shall also include any capital
stock of any class of the Corporation thereafter authorized which shall not be
limited to a fixed sum or percentage of par value in respect of the rights of
the holders thereof to participate in dividends or in the distribution of assets
upon the Liquidation of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series A Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization or
reclassification of the
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outstanding shares thereof, the stock, securities or assets provided for in
sub-paragraph 4G.
O. MANDATORY CONVERSION. If at any time the Corporation shall effect a
firm commitment underwritten public offering of shares of Common Stock in which
the aggregate price paid for such shares by the public shall be at least
$10,000,000, then effective upon the closing of the sale of such shares by the
Corporation pursuant to such public offering, all outstanding shares of Series A
Convertible Preferred Stock shall automatically convert to shares of Common
Stock based on the Conversion Price in effect at the time of such closing. The
Corporation shall give each holder of the Series A Convertible Preferred Stock
at least twenty (20) days written notice prior to such public offering.
5. AMENDMENTS. No provision of these terms of the Series A Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least two-thirds of the then
outstanding shares of Series A Convertible Preferred Stock voting separately as
a series.
6. RIGHT OF FIRST REFUSAL.
A. The Corporation shall, prior to (or as soon thereafter as is
reasonably practical) any issuance by the Corporation of any of its securities
(other than debt securities with no equity feature), offer to each holder of
Series A Convertible Preferred Stock continuing to hold at least fifty percent
(50%) of the shares of Series A Convertible Preferred Stock purchased by such
stockholder (the "Eligible Purchaser") by written notice the right, for a period
of thirty (30) days, to purchase a pro rata amount (based on the percentage
ownership of the Common Stock of the Corporation assuming the conversion of the
Series A Convertible Preferred Stock) of such securities on the same terms and
conditions for which such securities are to be issued (unless the Eligible
Purchaser is unable to meet such terms and conditions, in which case the
Eligible Purchaser shall purchase such securities for cash at an amount equal to
the price or other consideration for which such securities are to be issued);
provided, however, that the first refusal rights of the Eligible Purchasers
pursuant to this Section 6A shall not apply to securities issued (1) upon the
exercise of the Warrants, (2) upon conversion of any of the Series A Convertible
Preferred Stock, (3) as a stock dividend or upon any subdivision of shares of
Common Stock, provided that the securities issued pursuant to such stock
dividend or subdivision are limited to additional shares of Common Stock, (4)
pursuant to the Corporation's Option Plan, (5) solely in consideration for the
acquisition (whether by merger or otherwise) by the Corporation or any of its
subsidiaries of all or substantially all of the stock or assets of any other
entity, and (6) pursuant to a firm commitment underwritten public offering. The
Corporation's written notice to the Eligible Purchasers shall describe the
securities proposed to be issued by the Corporation and specify the number,
price and payment terms.
Each Eligible Purchaser may accept the Corporation's offer as to the full
number of securities offered to it or any lesser number, by written notice
thereof given by it to the
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Corporation prior to the expiration of the aforesaid thirty (30) day period, in
which event the Corporation shall promptly sell and such Eligible Purchaser
shall buy, upon the terms specified, the number of securities agreed to be
purchased by such Eligible Purchaser.
B. The Corporation shall be free at any time prior to one hundred
twenty (120) days after the date of its notice of offer pursuant to this section
6 to offer and sell to any third party or parties the number of such securities
not agreed by the Eligible Purchasers, as the case may be, to be purchased by
them, at a price and on payment terms no less favorable to the Corporation than
those specified in such notice of offer. However, if such third party sale or
sales are not consummated within such one hundred twenty (120) day period, the
Corporation shall not sell such securities as shall not have been purchased
within such period without again complying with this Section 6.
C. In case the Corporation issues any of its securities at a price per
share (or at a price per share of Common Stock assuming their full conversion
into Common Stock, if applicable) less than the price per share paid by each
Eligible Purchaser hereunder, each Eligible Purchaser shall have aright of
over-allotment such that if any Eligible Purchaser fails to exercise such
Eligible Purchaser's right hereunder to purchase such Eligible Purchaser's full
proportionate share of the securities proposed to be issued (the "Incomplete
Purchasers"), the Purchasers purchasing their full respective proportionate
share of such . securities (the "Complete Purchasers") may purchase the portion
of such securities which has not been purchased by the Incomplete Purchasers as
hereinafter provided. The Complete Purchasers shall have ten (10) days from the
date notice is given by the Corporation to the Complete Purchasers that such
Incomplete Purchasers have rejected or failed to accept their right to purchase
their proportionate share of securities, to agree to purchase up to such
Complete Purchaser's proportionate share of such securities not purchased by the
Incomplete Purchasers. Notwithstanding anything in Section 6B to the contrary,
as used in this Section 6C with respect to the Complete Purchasers only, each
Complete Purchaser's "proportionate share" shall be calculated by excluding from
the denominator of the fraction the total number of shares of Common Stock of
any Incomplete Purchaser and the total number of shares of Common Stock into
which the shares of such Incomplete Purchaser's Preferred Stock or other
convertible securities, if any, are convertible.
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ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
ROADHOUSE GRILL, INC.
The undersigned, Charles D. Barnett, of Roadhouse Grill, Inc., a
Florida corporation (the "Corporation"), desiring to amend the Articles of
Incorporation of the Corporation pursuant to the Florida Business Corporation
Act, states as follows:
1. The name of the Corporation is Roadhouse Grill, Inc.
2. Paragraph 6 of the Articles of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
6. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 40,000,000, of which
10,000,000 shall be preferred stock (hereinafter called the "Preferred
Stock"), having a $.01 par value per share, and 30,000,000 shares shall
be common stock (hereinafter called the "Common Stock"), having $.01
par value per share.
The Preferred Stock may be issued from time to time in series,
with such designations, preferences conversion rights, cumulative,
relative, participating, optional or other rights qualifications,
limitations or restrictions thereof as shall be stated and expressed in
the resolution or resolutions providing for the issuance of such
Preferred Stock, adopted by the Board of Directors pursuant to the
authority granted in these Articles.
3. Pursuant to the provisions of Section 607.0602 of the Florida
Business Corporation Act, the Articles of Incorporation of the Corporation are
hereby amended to provide for the designation of 2,366,700 shares of the
Company's Preferred Stock as the Series B Convertible Preferred Stock. The
rights and preferences of the Series A Convertible Preferred Stock is hereby
amended and restated in its entirety and the rights and preferences of the
Series B Convertible Preferred Stock is as set forth in the attached "Terms of
the Series A Convertible Preferred Stock and Series B Convertible Preferred
Stock" attached hereto as Exhibit "A."
4. This Amendment to the Articles of Incorporation of the Corporation
was approved by unanimous consent of the Board of Directors on May 23, 1994.
<PAGE>
5. This Amendment was approved by 95% of the shareholders entitled to
vote at a meeting of the shareholders held on June 3, 1994, such number being
sufficient to approve this Amendment.
DATED: June 6, 1994.
ROADHOUSE GRILL, INC.
By: /s/ CHARLES D. BARNETT
Title: Secretary
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EXHIBIT "A"
TERMS OF SERIES A CONVERTIBLE PREFERRED STOCK
AND SERIES B CONVERTIBLE PREFERRED STOCK
(To be Included in Charter Document of Roadhouse Grill, Inc.)
There shall be initially two series of Preferred Stock consisting of
3,525,000 shares of Series A Convertible Preferred Stock, $.01 par value
("Series A Preferred Stock") and 2,366,700 shares of Series B Convertible
Preferred Stock, $.01 par value ("Series B Preferred Stock"). The Series A
Preferred Stock and the Series B Preferred Stock are herein sometimes referred
to, collectively, as the "Preferred Stock". Except as expressly set forth
herein, the Series A Preferred Stock and the Series B Preferred Stock shall be
identical in all respects.
1. VOTING.
A. GENERAL. Except as may be otherwise provided herein or by law, the
Preferred Stock shall vote together with all other classes and series of stock
of the Corporation having general voting rights as a single class on all actions
to be taken by the stockholders of the Corporation. Each share of Preferred
Stock shall entitle the holder thereof to such number of votes per share on each
such action as shall equal the number of shares of Common Stock (including
fractions of a share) into which each share of Preferred Stock is then
convertible.
B. MATTERS REQUIRING CLASS VOTE.
I. SERIES A PREFERRED STOCK. In the event that any shares of
Series A Preferred Stock are outstanding, the Corporation shall not, without the
affirmative vote of the holders of at least two-thirds of the shares of Series A
Preferred Stock given in writing or by vote at a meeting, consenting or voting
(as the case may be) as a single class:
(i) create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series A Preferred
Stock as to the payment of dividends and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, or increase the
authorized amount of the Series A Preferred Stock, or increase the authorized
amount of any additional class or series of shares of stock unless the same
ranks junior to the Series A Preferred Stock as to the payment of dividends and
the distribution of assets on the liquidation, dissolution or winding up of the
Corporation, or create or authorize any obligation or security convertible into
shares of Series A Preferred Stock or into shares of any other class or series
of stock unless the same ranks junior to the Series A Preferred Stock as to the
payment of dividends and the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Charter or by
merger, consolidation or otherwise.
II. SERIES B PREFERRED STOCK. In the event that any shares of
Series B Preferred Stock are outstanding, the Corporation shall not, without the
affirmative vote of the holders of at least two-thirds of the shares of Series B
Preferred Stock given in writing or by vote at a meeting, consenting or voting
(as the case may be) as a single class:
(i) create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series B Preferred
Stock as to the payment of dividends and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, or increase the
authorized amount of the Series B Preferred Stock, or increase the
<PAGE>
authorized amount of any additional class or series of shares of stock unless
the same ranks junior to the Series B Preferred Stock as to the payment of
dividends and the distribution of assets on the liquidation, dissolution or
winding up of the Corporation, or create or authorize any obligation or security
convertible into shares of Series B Preferred Stock or into shares of any other
class or series of stock unless the same ranks junior to the Series B Preferred
Stock as to the payment of dividends and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, whether any such
creation, authorization or increase shall be by means of amendment to the
Charter or by merger, consolidation or otherwise;
III. PREFERRED STOCK. In the event that any shares of Preferred
Stock are outstanding, the Corporation shall not, without the affirmative vote
of the holders of at least a majority of the shares of Preferred Stock then
outstanding given in writing or by vote at a meeting, consenting or voting (as
the case may be) as a single class:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Charter of the Corporation; provided, however, that the Charter
may be amended to provide for an increase in the authorized preferred stock of
the Corporation or the creation and issuance of any other capital stock of the
Corporation ranking junior in all respects to the Preferred Stock;
(ii) merge, consolidate, enter into a share exchange or engage in
any other transaction in which the Corporation is not the surviving entity or in
which effective control of the Corporation has been transferred to another
entity; provided however, that this paragraph shall not apply so long as John Y.
Brown, Jr. is a member of the Board of Directors, in which case paragraph 1C
shall apply;
(iii) engage in any transaction that would be considered a "deemed
dividend" transaction under Section 305 of the Code;
(iv) consent to any liquidation, dissolution, winding up of the
Corporation or the sale or transfer of all or substantially all of its assets;
(v) amend, alter or repeal the Corporation's By-Laws;
(vi) purchase or set aside any sums for the purchase of, or pay
any dividend or make any distribution on, any shares of stock other than the
Preferred Stock; or
(vii) redeem or otherwise acquire any shares of Preferred Stock.
C. MERGER, ETC. In the event that any shares of Preferred Stock are
outstanding and John Y. Brown, Jr. is a member of the Board of Directors, the
Corporation may not merge, consolidate, enter into a share exchange or engage in
any other transaction in which the Corporation is not the surviving entity or in
which effective control of the Corporation has been transferred to another
entity if all of the holders of Series A Preferred Stock, each of whom owns more
than 500,000 shares of the Series A Preferred Stock then outstanding or if all
of the holders of Series B Preferred Stock, each of whom owns more than 250,000
shares of the Series B Preferred Stock then outstanding have voted against such
transaction.
D. BOARD SIZE. The Corporation shall not, without the written consent
or affirmative vote of the holders of a majority of the then outstanding shares
of Preferred Stock given in writing or by vote at a meeting, consenting or
voting (as the case may be) separately as a class, increase (whether by
amendment of the Charter or By-Laws or otherwise) the maximum number of
directors constituting the Board of Directors to a number in excess of five (5).
<PAGE>
E. BOARD SEATS. The holders of the Series A Preferred Stock, voting
as a separate class, shall be entitled to elect one (1) director of the
Corporation. The holders of the Common Stock and the Preferred Stock, voting
together as a single class, shall be entitled to elect the other directors of
the Corporation.
In the event John Y. Brown, Jr. ceases to be a member of the Board of
Directors, the holders of the Series A Preferred Stock shall, for a period of
three (3) years beginning on the date on which John Y. Brown, Jr. ceases to be a
member, elect a majority of the members of the Board of Directors; provided
however, that the election of a majority of the members of the Board of
Directors shall in no way affect the rights and obligations under the employment
agreement with the Chief Executive Officer or the Chief Executive Officer's
right to be a member of the Board of Directors.
At any meeting (or in a written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of a majority of the shares of Series A
Preferred Stock then outstanding shall constitute a quorum of the Preferred
Stock for the election of directors to be elected solely by the holders of the
Series A Preferred Stock.
At a meeting (or in a written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of a majority of the shares of Preferred Stock
then outstanding and a majority of the shares of Common Stock then outstanding
shall constitute a quorum of the Preferred Stock and the Common Stock for the
election of directors to be elected jointly by the holders of the Preferred
Stock and the Common Stock.
A vacancy in any directorship elected solely by the holders of the
Preferred Stock shall be filled only by vote or written consent of the holders
of the Preferred Stock; and a vacancy in the directorship elected jointly by the
holders of the Preferred Stock and the Common Stock shall be filled only by vote
or written consent of the Preferred Stock and the Common Stock, as provided
above.
2. DIVIDENDS. The holders of the then outstanding Preferred Stock shall be
entitled to receive, out of funds legally available therefor, when, as and if
declared by the Board of Directors, quarterly dividends at the rate per annum of
$.105 per share of Series A Preferred Stock (the "Series A Preferred Dividend")
and $.175 per share of Series B Preferred Stock (the "Series B Preferred
Dividend"), as adjusted for stock splits, stock dividends, recapitalizations,
reclassifications and similar events which affect the number of outstanding
shares of Preferred Stock (together referred to herein as "Recapitalization
Events"). Dividends on the Preferred Stock shall not be cumulative.
3. LIQUIDATION.
A. Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary (a "Liquidation"), the holders of the shares of
Series A Preferred Stock shall be entitled, before any distribution or payment
is made upon any stock ranking on liquidation junior to the Series A Preferred
Stock, to be paid an amount equal to $1.50 per share (appropriately adjusted for
Recapitalization Events) plus, in the case of each share, an amount equal to all
dividends, if any, declared but unpaid thereon, computed to the date payment
thereof is made available, such amount payable with respect to one share of
Series A Preferred Stock being sometimes referred to as the "Series A
Liquidation Payment" and with respect to all shares of Series A Preferred Stock
being sometimes referred to as the "Series A Liquidation Payments."
B. Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary (a "Liquidation"), the holders of the shares of
Series B Preferred Stock shall be entitled, before any distribution or payment
is made upon any stock ranking on liquidation junior to the Series B Preferred
Stock, to be paid an amount equal to $2.50 per share (appropriately adjusted for
Recapitalization Events) plus, in the case of each share, an amount equal to all
dividends,
<PAGE>
if any, declared but unpaid thereon, computed to the date payment thereof is
made available, such amount payable with respect to one share of Series B
Preferred Stock being sometimes referred to as the "Series A Liquidation
Payment" and with respect to all shares of Series B Preferred Stock being
sometimes referred to as the "Series A Liquidation Payments."
C. The Series A Preferred Stock and the Series B Preferred Stock shall
rank pari passu with each other with respect to any Liquidation. If any assets
of the Corporation remain after the Series A Liquidation Payments and the Series
B Liquidation Payments, the Preferred Stock shall be deemed to have been
converted into Common Stock so that the holders of shares of Preferred Stock
will be entitled to their pro rata share (on an as converted basis) of such net
assets with the shares of Common Stock. If, however, upon such Liquidation, the
assets to be distributed among the holders of Preferred Stock shall be
insufficient to permit payment to such holders of the full Series A Liquidation
Payments and Series B Liquidation Payments, then the entire assets of the
Corporation to be distributed shall be distributed as follows: (i) ratably among
the holders of Preferred Stock in proportion to $1.50 per share of Series A
Preferred Stock and $2.50 per share of Series B Preferred Stock; and (ii) after
payment in full to the holders of record of the shares of Preferred Stock in
proportion to the remaining unpaid Series A Liquidation Payments and the
remaining unpaid Series B Liquidation Payments.
Written notice of such Liquidation, stating a payment date, the amount of
any payments to be made to the holders of the Preferred Stock and the place
where said payments shall be payable, shall be given by mail, postage prepaid,
or by facsimile to non-U.S. residents, not less than twenty (20) days prior to
the payment date stated therein, to the holders of record of Preferred Stock,
such notice to be addressed to each such holder at its address as shown by the
records of the Corporation. The consolidation or merger of the Corporation into
or with any other entity or entities which results in the holders of the
Corporation's outstanding Common Stock or other voting securities of the
Corporation holding less than fifty percent (50%) of the combined voting power
of the entity or entities surviving such transaction, or the sale or transfer by
the Corporation of all or substantially all of its assets, shall be deemed to be
a Liquidation, within the meaning of the provisions of this Paragraph 3.
For purposes hereof, the Common Stock and any other capital stock of the
Corporation shall rank on Liquidation junior to the Preferred Stock.
Notwithstanding anything to the contrary contained in this Section 3,
unless the holders of the Preferred Stock shall otherwise notify the
Corporation, no such holder shall be deemed to have elected to convert its
shares of Preferred Stock into Common Stock or redeemed its shares of Preferred
Stock, as the case may be, as a result of a Liquidation, and no such conversion
or redemption shall be effective, unless and until the Liquidation referred to
in the notice given to holders of record of Preferred Stock pursuant to Section
3 hereof shall have been consummated.
4. CONVERSIONS. The holders of shares of Preferred Stock shall have the
following conversion rights ("Conversion Rights"):
A. RIGHT TO CONVERT. Subject to the terms and conditions of this
Paragraph 4, the holder of any share or shares of Preferred Stock shall have the
right, at its option at any time, to convert any such shares of Preferred Stock
(except that upon any Liquidation of the Corporation the right of conversion
shall terminate at the close of business on the business day fixed for payment
of the amount distributable on the Preferred Stock) into Common Stock. The
number of shares of Common Stock into which one share of Preferred Stock will be
converted will be equal to $1.50 in the case of the Series A Preferred Stock,
and $2.50 in the case of the Series B Preferred Stock (the "Original Purchase
Price") divided by the Conversion Price (as hereinafter defined) then in effect
for each Series of Preferred Stock, such conversion ratio being referred to as
the "Conversion Rate". The initial Conversion Price for the Preferred Stock will
be the Original Purchase Price and will be
<PAGE>
subject to adjustment as provided herein. Such rights of conversion shall be
exercised by the holder thereof by giving written notice that the holder elects
to convert a stated number of shares of Preferred Stock into Common Stock and by
surrender of a certificate or certificates for the shares so to be converted to
the Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the holders
of the Preferred Stock) at any time during its usual business hours on the date
set forth in such notice, together with a statement of the name or names (with
address and social security or taxpayer identification number) in which the
certificate or certificates for shares of Common Stock shall be issued.
B. ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. Promptly after
the receipt of the written notice referred to in sub-paragraph 4A and surrender
of the certificate or certificates for the share or shares of Preferred Stock to
be converted, the Corporation shall issue and deliver, or cause to be issued and
delivered, to the holder, registered in such name or names as such holder may
direct, a certificate or certificates for the number of whole shares of Common
Stock issuable upon the conversion of such share or shares of Preferred Stock.
To the extent permitted by law, such conversion shall be deemed to have been
effected and the Conversion Price shall be determined as of the close of
business on the date on which such written notice shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Preferred Stock shall cease, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby.
C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No fractional
shares shall be issued upon conversion of the Preferred Stock into Common Stock
and the aggregate number of shares of Common Stock to be issued to a holder
shall be rounded to the nearest whole shares. At the time of each conversion,
the Corporation shall pay in cash an amount equal to all dividends, if any,
declared and unpaid on the shares of the Preferred Stock surrendered for
conversion to the date upon which such conversion is deemed to take place as
provided in sub-paragraph 4B. In case the number of shares of Preferred Stock
represented by the certificate or certificates surrendered pursuant to
sub-paragraph 4A exceeds the number of shares converted, the Corporation shall,
upon such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Preferred Stock represented by the certificate or certificates surrendered which
are not to be converted. If any fractional share of Common Stock would, except
for the provisions of the first sentence of this sub-paragraph 4C, be delivered
upon such conversion, the Corporation, in lieu of delivering such fractional
share, shall pay to the holder surrendering the Preferred Stock for conversion
an amount in cash equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the Corporation.
D. ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON STOCK. Except as
provided in sub-paragraph 4E, if and whenever the Corporation shall issue or
sell, or is, in accordance with sub-paragraphs 4D(i) through 4D(vii), deemed to
have issued or sold, any shares of Common Stock for a consideration per share
less than the applicable Conversion Price for the Preferred Stock immediately
prior to the time of such issue or sale (such issuance or sale shall be referred
to as a "Dilutive Issuance"), then, forthwith upon the Dilutive Issuance, such
Conversion Price shall be adjusted by multiplying such Conversion Price by the
fraction:
X + Y
X + Z
where:
X = the number of shares of Common Stock issuable upon conversion of
the Preferred Stock at the Conversion Price in effect immediately
before the
<PAGE>
Dilutive Issuance;
Y = the number of shares of Common Stock which the aggregate
consideration received by the Corporation in the Dilutive
Issuance would purchase at the Conversion Price in effect
immediately before the Dilutive Issuance; and
Z = the number of shares of Common Stock issued or deemed issued in
the Dilutive Issuance.
For purposes of this sub-paragraph 4D, the following sub-paragraphs 4D(i)
through 4D(vii) shall also be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible or exchangeable
stock or securities being called "Convertible Securities") whether or not such
Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the effective price per share for which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (1) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or exchange
thereof, by (2) the total maximum number of shares of Common Stock issuable upon
the exercise of all such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the applicable Conversion Price for the Preferred Stock immediately prior
to the time of the granting of such Options or Convertible Securities, then the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such effective price per share as of the date of
granting of such Options or the issuance of such Convertible Securities. Except
as otherwise provided in sub-paragraph 4D(iii), no adjustment of any Conversion
Price shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately exercisable,
and the effective price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (1) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (2) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the applicable Conversion Price for the Preferred Stock
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such
effective price per share as of the date of the issue or sale of such
Convertible Securities, provided that (1) except as otherwise provided in sub-
paragraph 4D(iii), no adjustment of any Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
<PAGE>
Convertible Securities, and (2) if any such issue or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such Convertible
Securities for which adjustments of any Conversion Price have been or are to be
made pursuant to other provisions of this sub-paragraph 4D, no further
adjustment of such Conversion Price shall be made by reason of such issue or
sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the
happening of any of the following events, namely, if the purchase price provided
for in any Option referred to in sub-paragraph 4D(i) or 4D(ii) shall change at
any time (including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the applicable Conversion
Price for any series of Preferred Stock at the time of such event shall
forthwith be readjusted to the Conversion Price which would have been in effect
at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold, but
only if as a result of such adjustment the Conversion Price then in effect
hereunder is thereby reduced; and on the expiration of any such Option or the
termination of any such right to convert or exchange such Convertible
Securities, the Conversion Price then in effect hereunder shall forthwith be
increased to the Conversion Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
(iv) STOCK DIVIDEND. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation other
than on the Preferred Shares payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the case may
be, issuable in payment of such dividend or distribution shall be deemed to have
been issued or sold at a consideration equal to $.01 per share.
(v) CONSIDERATION FOR STOCK. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Corporation.
(vi) RECORD DATE. In case the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them (1) to receive
a dividend or other distribution payable in Common Stock, Options or Convertible
Securities, or (2) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(vii) TREASURY SHARES. The disposition of any shares of Common
Stock owned or held by or for the account of the Corporation shall be considered
an issue or sale of Common Stock for the purpose of this sub-paragraph 4D.
E. CERTAIN ISSUES OF COMMON STOCK EXCEPTED. Anything herein to the
contrary
<PAGE>
notwithstanding, the Corporation shall not be required to make any
adjustment of any Conversion Price in the case of the grant of options or other
rights to acquire Common Stock and the issuance of Common Stock upon exercise of
such options or rights pursuant to the Corporation's Stock Option Plan for
employees and directors who are not employees of the Corporation in connection
with their service as directors or their employment by the Corporation, but not
exceeding in the aggregate 200,000 shares of Common Stock, the exercise of the
stock option granted to J. David Toole, III for 355,555 shares of Common Stock,
the issuance of shares of Series A Preferred Stock upon the exercise of certain
warrants issued pursuant to the Series A Convertible Preferred Stock Purchase
Agreement entered into on February 10, 1994 between the Corporation and the
Purchasers listed in Schedule I thereto, or the conversion of any Series A
Preferred Stock or Series B Preferred Stock into Common Stock.
F. SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect for the Preferred Stock immediately prior to such
subdivision shall be proportionately reduced and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Conversion Price in effect for any series of Preferred Stock
immediately prior to such combination shall be proportionately increased.
G. REORGANIZATION OR RECLASSIFICATION. If any capital reorganization
or reclassification of the capital stock of the Corporation shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Preferred
Stock shall thereupon have the right to receive, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore receivable upon the conversion of such share or shares
of Preferred Stock, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such Common Stock immediately
theretofore receivable upon such conversion had such reorganization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of such holder to the end
that the provisions hereof (including without limitation provisions for
adjustments of the applicable Conversion Price) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights.
H. NOTICE OF ADJUSTMENT. Upon any adjustment of any Conversion Price,
then and in each such case the Corporation shall give written notice thereof, by
first class mail, postage prepaid, or by facsimile to non-U.S. residents,
addressed to each holder of shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment, setting forth in reasonable
detail the method upon which such calculation is based.
I. OTHER NOTICES. In case at any time:
(i) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(ii) the Corporation shall offer for subscription PRO RATA to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all of
its assets to, another entity or entities; or
<PAGE>
(iv) there shall be a Liquidation of the Corporation;
then, in any one or more of said cases, the Corporation shall
give, by first class mail, postage prepaid, or by facsimile for non-U.S.
residents, addressed to each holder of any shares of Preferred Stock at the
address of such holder as shown on the books of the Corporation (1) at least
twenty (20) days prior written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale or
Liquidation, and (2) in the case of any such reorganization, reclassification,
consolidation, merger, sale or Liquidation, at least twenty (20) days prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (1) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto and such notice in accordance
with the foregoing clause (2) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale or Liquidation, as the case may be.
J. STOCK TO BE RESERVED. The Corporation will, at all times, reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of the Preferred Stock as herein provided, such
number of shares of Common Stock as shall then be issuable upon the conversion
of all outstanding shares of Preferred Stock and securities convertible into the
Preferred Stock (and the subsequent conversion of such Preferred Stock). The
Corporation covenants that all shares of Common Stock which shall be so issued
shall be duly and validly issued and fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof and, without
limiting the generality of the foregoing, the Corporation covenants that it will
from time to time take all such action as may be requisite to assure that the
par value per share of the Common Stock is at all times equal to or less than
any Conversion Price in effect at the time for the Preferred Stock. The
Corporation will take all such action as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or regulation, or of any requiremen of any national securities exchange upon
which the Common Stock may be listed. The Corporation will not take any action
which results in any adjustment of any Conversion Price if the total number of
shares of Common Stock issued and issuable after such action upon conversion of
the Preferred Stock would exceed the total number of shares of Common Stock then
authorized by the Charter of the Corporation.
K. NO REISSUANCE OF PREFERRED STOCK. Shares of Preferred Stock which
are converted into shares of Common Stock as provided herein shall not be
reissued.
L. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of the Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Preferred Stock which is being
converted.
M. CLOSING OF BOOKS. The Corporation will at no time close its transfer
books against the transfer of any Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Preferred Stock in
any manner which interferes with the timely conversion of such Preferred Stock,
except as may otherwise be required to comply with applicable securities laws.
N. DEFINITION OF COMMON STOCK. As used in this paragraph 4, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
par value $.01 per share, as constituted on the date of filing of these Terms,
and shall also include any capital stock of any class
<PAGE>
of the Corporation thereafter authorized which shall not be limited to a fixed
sum or percentage of par value in respect of the rights of the holders thereof
to participate in dividends or in the distribution of assets upon the
Liquidation of the Corporation; provided that the shares of Common Stock
receivable upon conversion of shares of Preferred Stock shall include only
shares designated as Common Stock of the Corporation on the date of filing of
this instrument, or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities or assets provided for in
sub-paragraph 4G.
O. MANDATORY CONVERSION. If at any time the Corporation shall effect a
firm commitment underwritten public offering of shares of Common Stock in which
the aggregate price paid for such shares by the public shall be at least
$10,000,000, then effective upon the closing of the sale of such shares by the
Corporation pursuant to such public offering, all outstanding shares of
Preferred Stock shall automatically convert to shares of Common Stock based on
the Conversion Price in effect at the time of such closing. The Corporation
shall give each holder of the Preferred Stock at least twenty (20) days written
notice prior to such public offering.
5. AMENDMENTS. No provision of these terms of the Preferred Stock may be
amended, modified or waived without the written consent or affirmative vote of
the holders of at least two-thirds of the then outstanding shares of Preferred
Stock voting separately as a series.
6. RIGHT OF FIRST REFUSAL.
A. The Corporation shall, prior to (or as soon thereafter as is
reasonably practical) any issuance by the Corporation of any of its securities
(other than debt securities with no equity feature), offer to each holder of
Preferred Stock continuing to hold at least fifty percent (50%) of the shares of
Preferred Stock purchased by such stockholder (the "Eligible Purchaser") by
written notice the right, for a period of thirty (30) days, to purchase a pro
rata amount (based on the percentage ownership of the Common Stock of the
Corporation assuming the conversion of the Preferred Stock) of such securities
on the same terms and conditions for which such securities are to be issued
(unless the Eligible Purchaser is unable to meet such terms and conditions, in
which case the Eligible Purchaser shall purchase such securities for cash at an
amount equal to the price or other consideration for which such securities are
to be issued); provided, however, that the first refusal rights of the Eligible
Purchasers pursuant to this Section 6A shall not apply to securities issued (1)
upon the exercise of the Warrants, (2) upon conversion of any of the Series A
Preferred Stock, (3) pursuant to the existing option granted to J. David Toole,
III to purchase 355,555 shares of Common Stock, (4) as a stock dividend or upon
any subdivision of shares of Common Stock, provided that the securities issued
pursuant to such stock dividend or subdivision are limited to additional shares
of Common Stock, (5) pursuant to the Corporation's Option Plan, (6) solely in
consideration for the acquisition (whether by merger or otherwise) by the
Corporation or any of its subsidiaries of all or substantially all of the stock
or assets of any other entity, and (7) pursuant to a firm commitment
underwritten public offering. The Corporation's written notice to the Eligible
Purchasers shall describe the securities proposed to be issued by the
Corporation and specify the number, price and payment terms.
Each Eligible Purchaser may accept the Corporation's offer as to the full
number of securities offered to it or any lesser number, by written notice
thereof given by it to the Corporation prior to the expiration of the aforesaid
thirty (30) day period, in which event the Corporation shall promptly sell and
such Eligible Purchaser shall buy, upon the terms specified, the number of
securities agreed to be purchased by such Eligible Purchaser.
B. The Corporation shall be free at any time prior to one hundred
twenty (120) days after the date of its notice of offer pursuant to this section
6 to offer and sell to any third party or parties the number of such securities
not agreed by the Eligible Purchasers, as the case may be, to be purchased by
them, at a price and on payment terms no less favorable to the Corporation than
<PAGE>
those specified in such notice of offer. However, if such third party sale or
sales are not consummated within such one hundred twenty (120) day period, the
Corporation shall not sell such securities as shall not have been purchased
within such period without again complying with this Section 6.
C. In case the Corporation issues any of its securities at a price per
share (or at a price per share of Common Stock assuming their full conversion
into Common Stock, if applicable) less than the price per share paid by each
Eligible Purchaser hereunder, each Eligible Purchaser shall have a right of
over-allotment such that if any Eligible Purchaser fails to exercise such
Eligible Purchaser's right hereunder to purchase such Eligible Purchaser's full
proportionate share of the securities proposed to be issued (the "Incomplete
Purchasers"), the Purchasers purchasing their full respective proportionate
share of such securities (the "Complete Purchasers") may purchase the portion of
such securities which has not been purchased by the Incomplete Purchasers as
hereinafter provided. The Complete Purchasers shall have ten (10) days from the
date notice is given by the Corporation to the Complete Purchasers that such
Incomplete Purchasers have rejected or failed to accept their right to purchase
their proportionate share of securities, to agree to purchase up to such
Complete Purchaser's proportionate share of such securities not purchased by the
Incomplete Purchasers. Notwithstanding anything in Section 6B to the contrary,
as used in this Section 6C with respect to the Complete Purchasers only, each
Complete Purchaser's "proportionate share" shall be calculated by excluding from
the denominator of the fraction the total number of shares of Common Stock of
any Incomplete Purchaser and the total number of shares of Common Stock into
which the shares of such Incomplete Purchaser's Preferred Stock or other
convertible securities, if any, are convertible.
Exhibit 3.2
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BYLAWS
OF
ROADHOUSE GRILL, INC.
(A Florida corporation)
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(Adopted as of October 16, 1993)
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TABLE OF CONTENTS
ARTICLE I. - SHAREHOLDERS.................................................. 1
1.1 Annual Meeting....................................................... 1
1.2 Special Meeting...................................................... 1
1.3 Place of Meeting..................................................... 1
1.4 Action Without a Meeting............................................. 1
1.5 Notice of Meeting.................................................... 2
1.6 Waiver of Notice of Meeting.......................................... 2
1.7 Fixing of Record Date................................................ 3
1.8 Voting Record........................................................ 3
1.9 Voting Per Share..................................................... 3
1.10 Voting of Shares..................................................... 3
1.11 Proxies.............................................................. 4
1.12 Quorum............................................................... 5
1.13 Manner of Action..................................................... 5
1.14 Voting for Directors................................................. 5
ARTICLE II. - BOARD OF DIRECTORS........................................... 5
2.1 General Powers....................................................... 5
2.2 Number, Terms, Classification and Qualification...................... 6
2.3 Regular Meetings..................................................... 6
2.4 Special Meetings..................................................... 6
2.5 Waiver of Notice of Meeting.......................................... 7
2.6 Quorum............................................................... 7
2.7 Manner of Action..................................................... 7
2.8 Presumption of Assent................................................ 7
2.9 Action Without a Meeting............................................. 7
2.10 Meetings of the Board of Directors by Means
of a Conference Telephone or Similar
Communications Equipment............................................. 7
2.11 Resignation.......................................................... 7
2.12 Removal.............................................................. 8
2.13 Vacancies............................................................ 8
2.14 Compensation......................................................... 8
ARTICLE III. - COMMITTEES OF THE BOARD OF DIRECTORS.................. 8
ARTICLE IV. - OFFICERS............................................... 8
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4.1 Officers............................................................. 8
4.2 Appointment and Term of Office....................................... 9
4.3 Resignation.......................................................... 9
4.4 Removal.............................................................. 9
4.5 Vacancies............................................................ 9
4.6 Duties of Officers................................................... 9
4.7 Vice Presidents...................................................... 9
4.8 Secretary............................................................ 9
4.9 Treasurer............................................................ 10
4.10 Other Officers, Employees and Agents................................. 10
4.11 Compensation......................................................... 10
ARTICLE V. - CERTIFICATES OF STOCK......................................... 10
5.1 Certificates for Shares.............................................. 10
5.2 Transfer of Shares; Ownership of Shares.............................. 10
5.3 Lost Certificates.................................................... 11
ARTICLE VVI. - ACTIONS WITH RESPECT TO SECURITIES OF OTHER
CORPORATIONS................................................ 11
ARTICLE VII. - AMENDMENTS.................................................. 11
ARTICLE VIII. - CORPORATE SEAL............................................. 11
ARTICLE IX. - INDEMNIFICATION.............................................. 12
ARTICLE X. CONTROL SHARE ACQUISITIONS......................................12
ARTICLE XI. - GENDER....................................................... 12
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BYLAWS OF
ROADHOUSE GRILL, INC.
ARTICLE I.
SHAREHOLDERS
1.1 ANNUAL MEETING. A meeting of shareholders shall be held each year for
the election of Directors and for the transaction of any other business that may
come before the meeting. The time and place of the meeting shall be as set forth
by resolution of the Board of Directors.
1.2 SPECIAL MEETING. Special meetings of the shareholders, for any purpose
or purposes, shall be held when directed by the Board of Directors, or at the
request of the holders of not less than one-tenth (1/10th) of all outstanding
shares of the Corporation entitled to vote at the meeting.
1.3 PLACE OF MEETING. The Board of Directors may designate any place,
either within or without the State of Florida, as the place of meeting for any
annual or special meeting of the shareholders. If no designation is made, the
place of meeting shall be the principal office of the Corporation in the State
of Florida.
1.4 ACTION WITHOUT A MEETING. Unless otherwise provided in the Articles of
Incorporation, action required or permitted to be taken at any meeting of the
shareholders may be taken without a meeting, without prior notice, and without a
vote if the action is taken by the holders of outstanding shares of each voting
group entitled to vote thereon having not less than the minimum number of votes
with respect to each voting group that would be necessary to authorize or take
such action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted. In order to be effective, the action must be
evidenced by one or more written consents describing the action taken, dated and
signed by approving shareholders having the requisite number of votes of each
voting group entitled to vote thereon, and delivered to the Corporation by
delivery to its principal office in Florida, its principal place of business,
the corporate secretary, or another office or agent of the Corporation having
custody of the book in which proceedings of meetings of shareholders are
recorded. No written consent shall be effective to take the corporate action
referred to herein unless, within sixty (60) days of the date of the earliest
dated consent delivered in the manner required by this Section, written consents
signed by the number of holders required to take action are delivered to the
Corporation by delivery as set forth herein.
Any written consent may be revoked prior to the date that the Corporation
receives the required number of consents to authorize the proposed action. No
revocation is effective unless in writing and until received by the Corporation
at its principal office or its principal place of business, or received by the
corporate secretary or other officer or agent
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of the Corporation having custody of the book in which proceedings of meetings
of shareholders are recorded.
Within ten (10) days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing or who are not entitled to vote on the action. The notice shall fairly
summarize the material features of the authorized action and, if the action be
such for which dissenters' rights are provided under the Articles of
Incorporation or Bylaws, the notice shall contain a clear statement of the right
of shareholders dissenting therefrom to be paid the fair value of their shares
upon compliance with applicable law.
A consent signed as set forth in this Section has the effect of a meeting
vote and may be described as such in any document.
Whenever action is taken as set forth in this Section, the written consent
of the shareholders consenting thereto or the written reports of inspectors
appointed to tabulate such consents shall be filed with the minutes of
proceedings of shareholders.
1.5 NOTICE OF MEETING. Except as set forth in the Florida Business
Corporation Act (hereinafter referred to as the "FBCA"), written or printed
notice stating the place, day and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be delivered not less than ten (10) nor more than sixty (60) days before the
date of the meeting, either personally or by first class mail, by, or at the
direction of, the president or the secretary, or the officer or other persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If the notice is mailed at least thirty (30) days before the date of
the meeting, it may be effected by a class of United States mail other than
first class. If mailed, such notice shall be effective when mailed, if mailed
postage prepaid and correctly addressed to the shareholder's address shown in
the current record of shareholders of the Corporation.
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
If, however, after the adjournment, the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be given
as provided in this section to each shareholder of record on the new record date
entitled to vote at such meeting.
1.6 WAIVER OF NOTICE OF MEETING. Whenever any notice is required to be
given to any shareholder, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether signed before, during or after the time
of the meeting stated therein, and delivered to the Corporation for inclusion in
the minutes or filing with the corporate
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records, shall be equivalent to the giving of such notice. Attendance
of a person at a meeting shall constitute a waiver of (a) lack of or defective
notice of such meeting, unless, at the beginning of the meeting, the person
objects to the holding of the meeting or the transacting of any business at the
meeting, or (b) consideration of a particular matter at a meeting that is not
within the purpose or purposes described in the meeting notice, unless the
person objects to considering such matter when it is presented.
1.7 FIXING OF RECORD DATE. In order that the Corporation may determine the
shareholders entitled to notice of, or to vote at, any meeting of shareholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to demand a special meeting, the Board of Directors may
fix, in advance, a record date, which shall not be more than seventy (70) days
before the date of such meeting or prior to any other action. A determination of
shareholders of record entitled to notice of, or to vote at, a meeting of
shareholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date, which it must do if the meeting is adjourned
to a date more than one hundred twenty (120) days after the date fixed for the
original meeting.
If no prior action is required by the Board of Directors pursuant to the
FBCA, the record date for determining shareholders entitled to take action
without a meeting is the date the first signed written consent is delivered to
the Corporation under Section 1.4 of this Article.
1.8 VOTING RECORD. After fixing a record date for a meeting of
shareholders, the Corporation shall prepare an alphabetical list of the names of
all its shareholders who are entitled to notice of the meeting, arranged by
voting group with the address of, and the number and class and series, if any,
of shares held by each. The shareholders' list must be available for inspection
by any shareholder for a period of ten (10) days prior to the meeting or such
shorter time as exists between the record date and the meeting and continuing
through the meeting at the Corporation's principal office, at a place identified
in the meeting notice in the city where the meeting will be held, or at the
office of the Corporation's transfer agent or registrar. Any shareholder of the
Corporation or his agent or attorney is entitled on written demand to inspect
the shareholders' list (subject to the requirements of FBCA Section
607.1602(3)), during regular business hours and at his expense, during the
period it is available for inspection.
The Corporation shall make the shareholders' list available at the meeting
of shareholders, and any shareholder or his agent or attorney is entitled to
inspect the list at any time during the meeting or any adjournment.
1.9 VOTING PER SHARE. Except as otherwise provided in the Articles of
Incorporation or by FBCA Section 607.0721, each shareholder is entitled to one
(1) vote
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<PAGE>
for each outstanding voting share held by him on each matter voted at a
shareholders' meeting.
1.10 VOTING OF SHARES. A shareholder may vote at any meeting of
shareholders of the Corporation, either in person or by proxy.
Shares standing in the name of another corporation, domestic or foreign,
may be voted by the officer, agent or proxy designated by the bylaws of such
corporate shareholder or, in the absence of any applicable bylaw, by such person
or persons as the Board of Directors or the corporate shareholder may designate.
In the absence of any such designation or, in case of conflicting designation by
the corporate shareholder, the chairman, the president, any vice president, the
secretary and the treasurer of the corporate shareholder, in that order, shall
be presumed to be fully authorized to vote such shares.
Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
Shares held by or under the control of a receiver, a trustee in bankruptcy
proceedings, or an assignee for the benefit of creditors may be voted by such
person without the transfer thereof into his name.
If the shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the secretary of the Corporation
is given notice to the contrary and is furnished with a copy of the instrument
or order appointing them or creating the relationship wherein it is so provided,
then acts with respect to voting shall have the following effect: (a) if only
one votes, in person or by proxy, his act binds all; (b) if more than one vote,
in person or by proxy, the act of the majority so voting binds all; (c) if more
than one vote, in person or by proxy, but the vote is evenly split on any
particular matter, each faction is entitled to vote the share or shares in
question proportionately; or (d) if the instrument or order so filed shows that
any such tenancy is held in unequal interest, a majority or a vote evenly split
for purposes hereof shall be a majority or a vote evenly split in interest. The
principles of this paragraph shall apply, insofar as possible, to execution of
proxies, waivers, consents, or objections and for the purpose of ascertaining
the presence of a quorum.
1.11 PROXIES. Any shareholder of the Corporation, other person entitled to
vote on behalf of a shareholder pursuant to FBCA Section 607.0721, or
attorney-in-fact for such
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persons may vote the shareholder's shares in person or by proxy. Any shareholder
of the Corporation may appoint a proxy to vote or otherwise act for him by
signing an appointment form, either personally or by his attorney-in-fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, shall be deemed a sufficient appointment form.
An appointment of a proxy is effective when received by the secretary of
the Corporation or such other officer or agent which is authorized to tabulate
votes, and shall be valid for up to 11 months, unless a longer period is
expressly provided in the appointment form.
The death or incapacity of the shareholder appointing a proxy does not
affect the right of the Corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest.
1.12 QUORUM. Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of these shares exists with
respect to that matter. Except as otherwise provided in the Articles of
Incorporation or Bylaws, a majority of the shares entitled to vote on the matter
by each voting group, represented in person or by proxy, shall constitute a
quorum at any meeting of shareholders, but in no event shall a quorum consist of
less than one third (1/3) of the shares of each voting group entitled to vote.
If less than a majority of outstanding shares entitled to vote are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. After a quorum has been established at
any shareholders' meeting, the subsequent withdrawal of shareholders, so as to
reduce the number of shares entitled to vote at the meeting below the number
required for a quorum, shall not affect the validity of any action taken at the
meeting or any adjournment thereof.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
1.13 MANNER OF ACTION. If a quorum is present, action on a matter (other
than tile election of directors) by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing the
action, unless a greater or lesser number of affirmative votes is required by
the Articles of Incorporation or Bylaws.
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1.14 VOTING FOR DIRECTORS. Unless otherwise provided in the Articles of
Incorporation, directors shall be elected by a plurality of the votes cast by
the shares entitled to vote in the election at a meeting at which a quorum is
present.
ARTICLE II.
BOARD OF DIRECTORS
2.1 GENERAL POWERS. Except as provided in the Articles of Incorporation
and Bylaws, all corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be managed under the
direction of, its Board of Directors.
2.2 NUMBER, TERMS, CLASSIFICATION AND QUALIFICATION. The Board of
Directors of the Corporation shall consist of no less than one (1) person. The
number of directors may at any time and from time to time be increased or
decreased by action of either the shareholders or the Board of Directors, but no
decrease in the number of directors shall have the effect of shortening the term
of any incumbent director. A director must be a natural person of at least
eighteen (18) years of age, but need not be a citizen of the United States of
America, a resident of the State of Florida, nor a shareholder of the
Corporation. Each director shall hold office until his successor shall have been
elected and qualified or until his earlier resignation, removal from office or
death.
2.3 REGULAR MEETINGS. An annual regular meeting of the Board of Directors
shall be held without notice immediately after, and at the same place as, the
annual meeting of shareholders for the purpose of the election of officers and
the transaction of such other business as may come before the meeting, and at
such other time and place as may be determined by the Board of Directors. The
Board of Directors may, at any time and from time to time, provide by
resolution, the time and place, either within or without the State of Florida,
for the holding of the annual regular meeting or additional regular meetings of
the Board of Directors without other notice than such resolution.
2.4 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the chairman of the board, the president or any two (2) directors.
The person or persons authorized to call special meetings of the Board of
Directors may designate any place, either within or without the State of
Florida, as the place for holding any special meeting of the Board of Directors
called by them. If no designation is made, the place of meeting shall be the
principal office of the Corporation in the State of Florida.
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Notice of any special meeting of the Board of Directors may be given by
any reasonable means, whether oral or written, and at any reasonable time prior
to such meeting. The reasonableness of any notice given in connection with any
special meeting of the Board of Directors shall be determined in light of all of
the pertinent circumstances. It shall be presumed that notice of any special
meeting given at least two (2) days prior to such special meeting either orally
(whether telephonically or face-to-face), or by written notice delivered
personally or mailed to each director at his business or residence address, is
reasonable. If mailed, such notice of any special meeting shall be deemed to be
delivered on the second day after it is deposited in the United States mail, so
addressed, with postage thereon prepaid. If notice is given by telegram, such
notice, shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Neither the business to be transacted at, nor the purpose or
purposes of, any special meeting of the Board of Directors need be specified in
the notice or in any written waiver of notice of such meeting.
2.5 WAIVER OF NOTICE OF MEETING. Notice of a meeting of the Board of
Directors need not be given to any director who signs a written wavier of notice
before, during or after the meeting. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting and a waiver of any and all
objections to the place of the meeting, the time of the meeting and the manner
in which it has been called or convened, except when a director states, at the
beginning of the meeting or promptly upon arrival at the meeting, any objection
to the transaction of business because the meeting is not lawfully called or
convened.
2.6 QUORUM. A majority of the number of directors fixed by, or in the
manner provided in, these Bylaws shall constitute a quorum for the transaction
of business; provided, however, that whenever, for any reason, a vacancy occurs
in the Board of Directors, a quorum shall consist of a majority of the remaining
directors until the vacancy has been filled.
2.7 MANNER OF ACTION. The act of a majority of the directors present at a
meeting at which a quorum is present when the vote is taken shall be the act of
the Board of Directors.
2.8 PRESUMPTION OF ASSENT. A director of the Corporation who is present at
a meeting of the Board of Directors or a committee of the Board of Directors
when corporate action is taken shall be presumed to have assented to the action
taken, unless he objects at the beginning of the meeting, or promptly upon his
arrival, to holding the meeting or transacting specific business at the meeting,
or he votes against or abstains from the action taken.
2.9 ACTION WITHOUT A MEETING. Any action required or permitted to be taken
at a meeting of the Board of Directors or a committee thereof may be taken
without a
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<PAGE>
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all the directors. Action taken under this Section is effective when
the last director signs the consent, unless the consent specifies a different
effective date. A consent signed under this Section shall have the effect of a
meeting vote and may be described as such in any document.
2.10 MEETINGS OF THE BOARD OF DIRECTORS BY MEANS OF A CONFERENCE TELEPHONE
OR SIMILAR COMMUNICATIONS EQUIPMENT. Members of the Board of Directors may
participate in a meeting of the board by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
2.11 RESIGNATION. Any director may resign at any time by giving written
notice to the Corporation, the Board of Directors or its chairman. The
resignation of any director shall take effect when the notice is delivered
unless the notice specifies a later effective date, in which event the Board of
Directors may fill the pending vacancy before the effective date if they provide
that the successor does not take office until the effective date.
2.12 REMOVAL. Any director, or the entire Board of Directors, may be
removed at any time, with or without cause, by action of the shareholders, and
any director may be removed for cause by the Board of Directors. In the case of
any director which is elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove him. The
notice of the meeting at which a vote is taken to remove a director must set
forth that the purpose or one of the purposes of the meeting is the removal of
such director or directors.
2.13 VACANCIES. Any vacancy occurring in the Board of Directors, including
any vacancy created by reason of an increase in the number of directors, may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors, or by the shareholders.
2.14 COMPENSATION. Each director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors and committee thereof, and
may be paid a stated salary as a director or a fixed sum for attendance at each
meeting of the Board of Directors (or committee thereof) or both, as may from
time to time be determined by action of the Board of Directors. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor.
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ARTICLE III.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors, by resolution adopted by a majority of the full
Board of Directors, may designate from among its members an executive committee
and one or more other committees each of which, to the extent provided in such
resolution, shall have and may exercise all the authority of the Board of
Directors, except as prohibited by Section 607.0825(1) of the FBCA.
Each committee must have two or more members who serve at the pleasure of
the Board of Directors. The Board of Directors, by resolution adopted in
accordance with this Article, may designate one or more directors as alternate
members of any committee, who may act in the place and stead of any absent
member or members at any meeting of such committee.
ARTICLE IV.
OFFICERS
4.1 OFFICERS. The Corporation shall have such officers as may be appointed
by resolution of the Board of Directors, and may include a Chairman of the
Board, a President, a Secretary and a Treasurer. The Board of Directors may also
appoint one or more Vice Presidents, a Chief Financial Officer, one or more
Assistant Secretaries and Assistant Treasurers and such other officers as the
Board of Directors shall deem appropriate. Any two (2) or more offices may be
held by the same person.
4.2 APPOINTMENT AND TERM OF OFFICE. The officers of the Corporation shall
be appointed annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of the shareholders. If the
appointment of officers shall not occur at such meeting, such appointment shall
occur as soon thereafter as practicable. Each officer shall hold office until
his successor shall have been duly appointed and qualified, or until his earlier
resignation, removal from office or death.
4.3 RESIGNATION. Any officer of the Corporation may resign from his
respective office or position by delivering notice to the Corporation. Such
resignation is effective when delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
Corporation accepts the future effective date, the Board of Directors may fill
the pending vacancy before the effective date if the Board provides that the
successor does not take office until the effective date.
4.4 REMOVAL. Any officer elected or appointed, whether by the shareholders
or the Board of Directors, may be removed by either the shareholders or the
Board of Directors if in either of their respective judgments the best interests
of the Corporation will be served thereby. Removal shall be without prejudice to
the contract rights, if any, of the
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person removed. Election or appointment of an officer shall not itself create
contract rights.
4.5 VACANCIES. Any vacancy, however occurring, in any office may be filled
by the Board of Directors.
4.6 DUTIES OF OFFICERS. The Chairman of the Board of the Corporation, or
if there shall not be a Chairman of the Board, the President, shall preside at
all meetings of the Board of Directors and of the shareholders. The President
shall be the chief executive officer of the Corporation. Subject to the
foregoing, the officers of the Corporation shall have such powers and duties as
usually pertain to their respective offices and such additional powers and
duties specifically conferred by law, by the Articles of Incorporation, by these
Bylaws, or as may be assigned to them from time to time by the Board of
Directors.
4.7 VICE PRESIDENTS. Each vice president shall possess, and may exercise,
such power and authority, and shall perform such duties, as may from time to
time be assigned to him by the Board of Directors.
4.8 SECRETARY. The secretary shall keep the minutes of the proceedings of
the shareholders and of the Board of Directors in one or more books provided for
that purpose, see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law, be custodian of the corporate
records and of the seal of the Corporation and keep a register of the post
office address of each shareholder of the Corporation. In addition, the
secretary shall possess, and may exercise, such power and authority, and shall
perform such duties, as may from time to time be assigned to him by the Board of
Directors and as are incident to the office of secretary.
4.9 TREASURER. The treasurer shall have charge and custody of, and be
responsible for, all funds and securities of the Corporation, receive and give
receipts for monies due and payable to the Corporation from any source
whatsoever and deposit all such monies in the name of the Corporation in such
banks, trust companies or other depositories as shall be utilized by the
Corporation. In addition, the treasurer shall possess, and may exercise such
power and authority, and shall perform such duties, as may from time to time be
assigned to him by the Board of Directors and as are incident to the office of
treasurer.
4.10 OTHER OFFICERS, EMPLOYEES AND AGENTS. Each and every other officer,
employee and agent of the Corporation shall possess, and may exercise, such
power and authority, and shall perform such duties, as may from time to time be
assigned to him by the Board of Directors, the officer so appointing him and
such officer or officers who may from time to time be designated by the Board of
Directors to exercise such supervisory authority.
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4.11 COMPENSATION. The compensation of the officers of the Corporation
shall be fixed from time to time by the Board of Directors.
ARTICLE V.
CERTIFICATES OF STOCK
5.1 CERTIFICATES FOR SHARES. The Board of Directors shall determine
whether shares of the Corporation shall be uncertificated or certificated. If
certificated shares are issued, certificates representing shares in the
Corporation shall be signed (either manually or by facsimile) by the president
or vice president and the secretary or an assistant secretary (which may be the
same person) and may be sealed with the seal of the Corporation or a facsimile
thereof. A certificate which has been signed by an officer or officers who later
shall have ceased to be such officer when the certificate is issued shall
nevertheless be valid.
5.2 TRANSFER OF SHARES; OWNERSHIP OF SHARES. Transfers of shares of stock
of the Corporation shall be made only upon the stock transfer books of the
Corporation, and only after the surrender to the Corporation of the certificate
representing such shares. Except as provided by Section 607.0721 of the FBCA,
the person in whose name shares stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes and the
Corporation shall not be bound to recognize any equitable or other claim to, or
interest in, such shares on the part of any other person, whether or not it
shall have express or other notice thereof.
5.3 LOST CERTIFICATES. The Corporation shall issue a new stock certificate
in the place of any certificate previously issued if the holder of record of the
certificate: (a) makes proof in affidavit form that the certificate has been
lost, destroyed or wrongfully taken; (b) requests the issuance of a new
certificate, before the Corporation has notice that the lost, destroyed or
wrongfully taken certificate has been acquired by a purchaser for value in good
faith and without notice of any adverse claim; (c) at the discretion of the
Board of Directors, gives bond in such form and amount as the Corporation may
direct, to indemnify the Corporation, the transfer agent and registrar against
any claim that may be made on account of the alleged loss, destruction or theft
of a certificate; and (d) satisfies any other reasonable requirements imposed by
the Corporation.
-11-
<PAGE>
ARTICLE VVI.
ACTIONS WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS
Unless otherwise directed by the Board of Directors, the president or a
designee of the president shall have power to vote and otherwise act on behalf
of the Corporation, in person or by proxy, at any meeting of shareholders of, or
with respect to, any action of shareholders of any other corporation in which
the Corporation may hold securities and to otherwise exercise any and all rights
and powers which the Corporation may possess by reason of its ownership of
securities in other corporations.
ARTICLE VII.
AMENDMENTS
These Bylaws may be altered, amended or repealed, and new Bylaws may be
adopted, by action of the Board of Directors, subject to the limitations of FBCA
Section 607.1020(1). The shareholders of the Corporation may alter, amend or
repeal these Bylaws or adopt new Bylaws even though these Bylaws may also be
amended or repealed by the Board of Directors.
ARTICLE VIII.
CORPORATE SEAL
The Corporation may provide for a corporate seal in such a form as the
Board of Directors deems appropriate.
ARTICLE IX.
INDEMNIFICATION
The Corporation shall indemnify, or advance expenses to, to the fullest
extent authorized or permitted by the FBCA, any person made, or threatened to be
made, a party to any action, suit or proceeding by reason of the fact that he
(i) is or was a director of the Corporation; (ii) is or was serving at the
request of the Corporation as a director of another corporation; (iii) is or was
an officer of the Corporation, provided that he is or was at the time a director
of the Corporation; or (iv) is or was serving at the request of the Corporation
as an officer of another corporation, provided that he is or was at the time a
director of the Corporation or a director of such other corporation, serving at
the request of the Corporation. Unless otherwise expressly prohibited by the
FBCA, and except as otherwise provided in the foregoing sentence, the Board of
Directors of the Corporation shall have the sole and exclusive discretion, on
such terms and conditions as it shall determine, to
-12-
<PAGE>
indemnify, or advance expenses to, any person made , or threatened to be made, a
party to any action, suit or proceeding by reason of the factthat he is or was
an officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as an officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. No person
falling within the purview of the foregoing sentence may apply for
indemnification or advancement of expenses to any court of competent
jurisdiction.
ARTICLE X.
CONTROL SHARE ACQUISITIONS
The provisions of Florida Statutes Section 607.0902 entitled
"Control-share Acquisitions" (1989), as amended, shall not apply to control
share acquisitions of any shares of stock of the Corporation.
ARTICLE XI.
GENDER
All words used in these Bylaws in the masculine gender shall extend to and
shall include the feminine and neuter genders.
-13-
ROADHOUSE GRILL LOGO
NUMBER Roadhouse Grill, Inc. SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
CUSIP NUMBER
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY-PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
ROADHOUSE GRILL, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject to all
the provisions of the Memorandum of Association and Articles of Incorporation
and amendments thereto of the Corporation, to all of which the holder by
acceptance hereof assents. This certificate is not valid until countersigned
and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
ROADHOUSE GRILL, INC
CORPORATE SEAL
OCTOBER 16, 1992
FLORIDA /s/ CHARLES D. BARNETT /s/ JOHN DAVID TOOLE III
SECRETARY PRESIDENT
[LANDSCAPED]
COUNTERSIGNED AND REGISTERED
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, N.Y.)
TRANSFER AGENT AND REGISTRAR
AUTHORIZED SIGNATURE
(SEE REVERSE SIDE)
<PAGE>
ROADHOUSE GRILL, INC.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian_______
(Cust) (Minor)
TEN ENT - as tenants by the
entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with rights Act _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
For value received, _______________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------- Shares
of the stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
- --------------------------------------------------------------------, Attorney,
to transfer the said stock on the books of the within-name Corporation with full
power of substitution in the premises.
Dated, ___________________________________
___________________________________________________________________
[LANDSCAPED]
The signature to this assignment must correspond with the name as
NOTICE: written upon the face of the Certificate, in every particular,
without alteration or enlargement or any change whatever.
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT executed as of October 1, 1994, by and between Roadhouse
Grill, Inc., a Florida corporation (the "Company") and J. David Toole, III, (the
"Employee").
RECITALS:
A. The Company is engaged in the operation and franchising of
steak restaurants in the United States and internationally.
B. Employee is currently employed by the Company as its
President.
C. The Company desires to employ the Employee in the capacity
of President and to be assured of the Employee's availability to render services
to the Company and the Employee desires to be so employed by the Company on the
terms and provisions hereinbelow set forth.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the receipt and sufficiency of which is hereby acknowledged by
the parties, the parties hereby agree as follows:
1. EMPLOYMENT, TERM, DUTIES AND ACCEPTANCE.
(a) The Company shall employ the Employee for the Employment
Period, as hereinafter defined, as President to perform such duties as are
customarily associated with such position and those which may, from time to
time, be assigned to the Employee by the Company's Board of Directors. The
Employee hereby agrees to accept such employment and to devote his full time,
attention and best efforts in and to the faithful performance of his duties
hereunder, (subject to the general direction and control of the Company's Board
of Directors).
(b) The Employee hereby agrees to contribute his best skills
and services at all times to the Company. The Employee agrees to devote his full
time, attention and energy to diligently and competently performing the duties
and responsibilities assigned to him by the Company.
(c) The Employee hereby agrees that all written documentation,
articles, brochures, proposed advertisements, ideas and drawings, Company
records, ledgers, accounts, customer lists and all related and similar materials
prepared or collected by him during his
<PAGE>
employment and in connection with the rendering of his services to the Company,
as well as notes taken with respect to lectures, seminars and other business
related activities attended while in the employ of the Company shall be the sole
and exclusive property of the Company. Accordingly, the Employee acknowledges
that his employment does not confer upon him any ownership interest in or
personal claim upon any such materials.
(d) The Employee hereby agrees to abide by all reasonable
rules and regulations established by the Board of Directors of the Company and
restrictions, if any, applicable to the Employee which may, from time to time,
be set forth in the Company's Articles of Incorporation and By Laws.
2. COMPENSATION. Except as otherwise set forth in this
Section 2, as compensation for all duties to be rendered by the Employee
hereunder, the Company shall pay or grant to the Employee during the Employment
Period:
(a) A base salary of $120,000 per annum;
(b) An annual bonus in an amount equal to the greater of (i)
10% of the profits (before of the first 4 Roadhouse Grill restaurants developed
by the Company (so long as such restaurants have a profit of at least 10% of
sales) or (ii) 5% of the pre-tax profits of the Company after deducting
depreciation and general corporate overhead ; and
(c) Group benefits generally available to executives
of the Company. The first four (4) Roadhouse Grill restaurants described in
Section 2(b) above are those located at the following addresses: (i) 8525 Pines
Boulevard, Pembroke Pines, Florida, (ii) 12599 Biscayne Boulevard, North Miami,
Florida, (iii)1580 University Drive, Coral Springs, Florida, and (iv) 4201
Okeechobee Boulevard, West Palm Beach, Florida.
3. COMMENCEMENT, TERM AND TERMINATION.
(a) Notwithstanding any other provision in this agreement,
unless otherwise terminated pursuant to the provisions of this Section 3, the
Employment Period shall commence as of October 1, 1994 and shall terminate 36
months thereafter.
2
<PAGE>
(b) The Company shall have the right to terminate this
Agreement and the Employee's employment hereunder "for cause", meaning any one
of the following:
(i) A material breach or violation of any
provision of this Agreement or the failure of the Employee to materially perform
his duties or responsibilities hereunder after the Employee has been given
written notice together with a reasonable opportunity to cure said breach,
violation or failure during such period;
(ii) Commission of a felony;
(iii) Illegal use of drugs; or
(iv) Unlawful harassment of employees.
The right of the Company to so terminate this Agreement and
the Employee's employment hereunder shall be exercisable by the Company upon
giving of written notice to the Employee specifying the grounds for such
termination. Such termination shall be effective upon the giving of such written
notice by the Company subject to any "cure periods" provided in this Section 3.
4. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) The Employee hereby acknowledges that, in and as of a
result of his employment hereunder, he will be making use of, acquiring and/or
adding to confidential information of a special and unique nature and value
relating to certain Company records, secrets, documentation, ledgers and general
Company information, account receivable and payable ledgers, customer list,
prospective franchisees and franchisee list, financial and other records of the
Company, its subsidiaries and affiliates, customer, franchisees and other
similar matters (all such information together with that certain information
described herein, being hereinafter referred to as "Confidential Information");
and the Employee further acknowledges that the Confidential Information is of
great value to the Company. The parties recognize that the duties and services
to be performed by the Employee are special and unique and that, by reason of
his employment thereunder, the Employee will acquire the Confidential
Information. The parties confirm that it is reasonably necessary to protect the
Company's goodwill and that, accordingly, the Employee hereby agrees that he
will not, at any time, directly or indirectly, except in connection with the
Employee's employment hereunder or as otherwise authorized by the Company's
Board of Directors for the benefit of the Company:
3
<PAGE>
(i) Divulge to any person, firm or corporation
other than the Company (hereinafter referred to as "Third Parties"), or use or
cause to authorize any Third Parties to use the Confidential Information or any
other information relating to the business or interests of the Company which he
knows or should know is regarded as Confidential and valuable by the Company
(whether or not any of the foregoing information is actually novel or unique or
is actually known to others), except as required by law; or as authorized by the
Company;
(ii) Solicit or cause to authorize, directly
or indirectly, to be solicited, for or on behalf of himself or any Third
Parties, any business competitive to the business of the Company from Third
Parties who are at any time within one year prior to the cessation of the
Employment Period customers of the Company;
(iii) Accept, cause or authorize, directly or
indirectly, to be accepted for or on behalf of himself or any Third Parties, any
business competitive to the business of the Company from any such customers of
the Company; or
(iv) Solicit, cause to authorize, directly or
indirectly, to be solicited for employment for or on behalf of himself or any
Third Parties, any persons who are at any time within one year prior to
cessation of the Employment Period, employees of the Company.
(b) The Employee agrees that upon expiration of his employment
by the Company for any reason, he shall forthwith deliver or cause to be
delivered to the Company any and all Confidential Information; including
drawings, notebooks, keys, data and other documents and materials belonging to
the Company which is in his possession or under his control relating to the
Company or its business, and will deliver upon such expiration of employment any
other property of the Company which is in this possession or under his control.
(c) For purposes of this Agreement, "proprietary
information" shall mean any information relating to the Business of the Company
that has not previously been publicly and shall include, without limitation,
information included in all drawings, designs, plans proposals, marketing and
sales programs, financial information, costs, pricing information, customer
information, recipes and all methods, concepts or ideas in or reasonably related
to the Company's business. The Employee understands and agrees that all
"proprietary information" conceived by him either alone or with others or
provided to him by the Company or others is the sole and exclusive property of
the Company.
4
<PAGE>
(d) The Employee hereby acknowledges that the services to be
rendered by him to the Company hereunder are or a special and unique nature and
that it would be very difficult or impossible to measure the damages resulting
from a breach of this Agreement. The Employee hereby further acknowledges that
the restrictions herein and goodwill of the Company and that a violation by the
employee of any such covenant will cause irreparable damage to the Company. The
Employee therefore agrees that any breach or threatened breach by him of any
provisions of this Section 4 shall entitle the Company, in addition to any other
legal remedy available to it, to apply any court of competent jurisdiction for a
temporary and permanent injunction or any other applicable decree of specific
performance, without any bond or security being required thereof, in order to
enjoin such breach or threatened breach. The parties understand and intend that
each provision and restriction agreed to in this Section 4 shall be construed as
separable and divisible from every other provision and restriction and that the
unenforceability of any one provision or restrictions shall not limit the
enforceability, in whole or in part, of any other provision or restriction and
that one or more of all of such provisions or restrictions may be enforced, in
whole or in part, as the circumstances warrant.
5. AGREEMENT NOT-TO-COMPETE. The Employee hereby agrees, to the extend
permitted by law, that during the three year period subsequent to the date of
termination of his employment with the Company hereunder, the Employee shall
not, either directly or indirectly, engage in any business giving, offering, or
selling any service or products which comprise a part of the Roadhouse system,
either as a proprietor, partner, investor, shareholder, employee, agent or
consultant.
It is the intention of this provision to preclude not only direct
competition, but also all forms of indirect competition, such as consultation
for competitive businesses, service as an independent contractor for such
competitive business, or any assistance or transmission of information of any
kind or nature whatsoever which would be of any material assistance to be
competitor. Nothing herein shall prevent the Employee from owning for investment
purposes, up to an aggregate of five percent (5%) of the capital stock of any
such competitive business, provided that such business is a publicly held
corporation, whose stock is listed and traded on a national or regional stock
exchange, or through the National Association of Securities Dealers Automated
Quotation System (NASDAQ), provided that Employee does not control any such
company.
5
<PAGE>
6. INVALIDITY. If all or any portion of the foregoing covenant not to
compete is held unreasonable, void, vague, or illegal by any court or agency
having valid jurisdiction in any unappealed final decision to which Roadhouse is
a party, the court or agency shall be empowered to revise and/or construe said
covenant so as to cause same to fall within permissible legal limits and shall
not invalidate the entire covenant. Employee expressly agrees to be bound by any
lesser covenant. Employee expressly agrees to be bound by any lesser covenant
subsumed within the terms of this Agreement, as if the resulting covenant were
separately stated in and made a part of hereof.
7. INDEMNIFICATION. The Company agrees to indemnify, defend
and hold harmless against any and all legal claims, suits, damages, or
liabilities arising out of or resulting from the performance of the Employee's
duties as a Director or Officer of the Company.
8. GENERAL PROVISIONS.
(a) The Employee may not at any time assign this Agreement not
any right or interest hereunder. Except as otherwise herein provided, this
Agreement shall be binding upon and inure to the benefit of this parties hereto,
the Employee's legal representative and the Company's successors an assigns.
(b) For purposes only of Section 5 hereof, the term "Company"
shall mean and include subsidiaries, parents and affiliated companies of the
Company in existence from time to time.
(c) Any notice, request, instruction or their documentation
required or permitted to be given hereunder shall be sufficient if in writing
and hand delivered or sent by United States Certified Mail, Return Receipt
Requested to the parties at:
If to the Company: 4801 S. University Drive
Suite 304E
Davie, Florida 33328
If to the Employee: ________________________
________________________
Either party may change the address to which notices shall be delivered by
notice given to the other party as provided herein. For all purposes, the date
of the giving of any notice hereunder shall be the date of the hand delivery or
the mailing thereof.
6
<PAGE>
(d) This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof and any and all prior
negotiations, agreements or understandings relating thereto, written or oral,
are superseded hereby. This Agreement may not be changed, modified, extended,
renewed or supplemented and no provision hereof may be waived, except by an
enforcement of any change, modification, extension, renewal, supplement or
waiver is sought.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. The invalidity of any portion
of this Agreement shall not affect the enforceability of the remaining portions
of this Agreement or any part thereof, all of which are inserted herein
conditionally on their being valid in law. In the event that any portion or
portions contained herein shall be invalid, this Agreement shall be construed so
as to make such portion or portions valid or, if such construction is not
legally possible, as in such invalid portion or portions had not been inserted.
(f) Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver or
relinquishment of any such terms, covenants or conditions, nor shall any waiver
or relinquishment of any right or power hereunder of any one time or more times
be deemed a waive or relinquishment of such right or power at other time or
times.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Employment Agreement as of the day and year first above written.
COMPANY: EMPLOYEE:
Roadhouse Grill, Inc.
By: /s/ JOHN Y. BROWN, JR. /s/ JOHN DAVID TOOLE, III
---------------------- -------------------------
JOHN Y. BROWN, JR. JOHN DAVID TOOLE, III
Chairman of the Board
7
Exhibit 10.2
ROADHOUSE GRILL, INC.
MASTER DEVELOPMENT AGREEMENT
THIS AGREEMENT made and entered into this _____ day of ______________
199__, by and between ROADHOUSE GRILL, INC., a Florida corporation with offices
in Davie, Florida (herein called "Company"), and _____________________________
(herein called "Franchise Owner").
P R E A M B L E S:
A. Company is the owner of a Format and Operating System ("Roadhouse Grill
Format") for the preparation and sale of unique food products and service in
connection therewith, and is engaged in operating and granting Franchises to
operate Roadhouse Grill Restaurants ("Restaurants") using the Roadhouse Grill
Format and any and all service marks, trademarks, trade names, copyrights,
patents, slogans and logos as are now or may be adopted by Company in connection
with the operation of a Restaurant ("Marks").
B. Each Restaurant is identified and distinguished by a unique and
standardized design, exhibition cooking of entrees, uniform and high quality
food items, and by the Marks used in connection therewith.
C. Franchise Owner is desirous of acquiring franchises and the right to
use the Roadhouse Grill Format and the Marks in the sale of food, beverages, and
related items in the area hereinafter designated, and company is willing to
grant franchises upon the terms hereinafter set forth.
<PAGE>
D. Franchise Owner acknowledges that he has read and agrees to the
terms of the Roadhouse Grill, Inc. Franchise Agreement containing the terms and
conditions under which the franchises for individual Restaurants will be
granted, and is aware that an individual franchise agreement will be executed
for each Restaurant established under this Master Development Agreement in
substantially the form attached hereto as Exhibit A ("Franchise Agreement").
NOW, THEREFORE, in consideration of the payment of good and valuable
consideration being paid herewith, the receipt of which is hereby acknowledged,
and also in consideration of the performance by Franchise Owner of the terms,
conditions, and covenants herein contained, the parties agree as follows:
1. DEVELOPMENT AREA AND FEES.
A. THE AREA.
The Development Area for which Franchise Owner is herein granted
development rights in the following states, counties, cities, provinces, or
standard metropolitan statistical areas (herein "SMSA"), as same may be set
forth from time to time, or such comparable urban area designation as may be
employed from time to time by the United States Census Bureau, U.S.
Commerce Department:
----------------------------------------------------------
- ------------------------------------------------------------------------------
("Development Area"). Development Area excludes all military establishments.
B. FRANCHISE FEES AND ROYALTY FEES.
(1) FRANCHISE FEES.
Franchise Owner agrees to develop _____________ (___) Restaurants
within the Development Area described above. Franchise Owner shall pay a
non-refundable fee of
2
<PAGE>
_____________________ Thousand Dollars ($__________), receipt of which is hereby
acknowledged. The non-refundable fee shall be applied as follows:
Thirty Thousand Dollars ($30,000) shall be applied to the
franchise fee for the first Restaurant to be developed in the Development Area
and the franchise fee shall be considered paid in full. The balance of the
non-refundable fee, which is __________________________ Thousand Dollars
($___________), shall be applied to the franchise fee for the remaining
____________ (____) Restaurants at the rate of Ten Thousand Dollars ($10,000)
per Restaurant and shall be considered a non-refundable reservation fee.
The balance of the Thirty Thousand Dollar ($30,000) franchise
fee for the remaining _________________ (_____) Restaurants, which is Twenty
Thousand Dollars ($20,000) per Restaurant, shall be due and payable in full upon
execution of a lease for an
approved site.
For all Restaurants developed by Franchise Owner after the
first _________ (____) Restaurants, the franchise fee shall be Thirty Thousand
Dollars ($30,000), which shall be due and payable upon execution of a lease for
an approved site.
It is expressly understood that the non-refundable fee of
______________________ Thousand Dollars ($_________) recited herein is paid for
the reservation of the particular areas described and is deemed to be fully
earned upon payment as consideration of Company's agreement not to franchise
those areas to others.
(2) ROYALTY FEES.
The royalty fees shall in all cases be four percent (4.0%) of gross
sales as set forth in Section 5B of the Franchise Agreement.
2. DEVELOPMENT PROCEDURES.
3
<PAGE>
A. SITE SELECTION.
Franchise Owner shall select a site or sites within the Development
Area and shall submit the site or sites for approval by Company on the forms
prescribed by Company and at times allowing the prescribed schedule for site
openings to be met by Franchise Owner. Company shall have a reasonable time from
the receipt of said submittal to send a representative to the site or sites
selected. If the Company fails or refuses to review the selected site or sites,
Franchise Owner may go forward with the development of the site or sites on its
own accord and at its own risk.
If the Company reviews the site and advises Franchise Owner that such
site or sites are not acceptable, the Company shall be under no duty to
franchise the site or sites to Franchise Owner and the Company will not incur
any liability to Franchise Owner for rejecting the site.
B. NO LIABILITY BY COMPANY.
In either instance above, Company does not by approval of a site or in
rejecting a site guarantee sales volumes and in no instance will Company incur
any liability for approving or disapproving any site.
C. DESIGN APPROVAL.
Upon selection and approval of the site and prior to construction, the
Company may (upon submittal of the plans by Franchise Owner) advise Franchise
Owner on layout and design. Franchise Owner will construct the Restaurant using
the equipment layout and design of Company. All costs of such construction and
equipment involved will be paid by Franchise Owner.
4
<PAGE>
D. STANDARD FRANCHISE AGREEMENT.
Upon approval of the site, Franchise Owner shall execute a Franchise
Agreement and pay any applicable franchise fees prior to construction at any
approved site and shall be bound by the terms of said Franchise Agreement.
3. GRANT OF DEVELOPMENT RIGHTS.
Company hereby grants to Franchise Owner, subject to the provisions of
this Agreement, the right to develop __________ (____) or more Restaurants as
set forth above in the Development Area according to the Development Schedule
set forth below, and contingent upon the execution of a Franchise Agreement with
Company for each Restaurant to be established by Franchise Owner pursuant to
this Agreement. In the event of a conflict between the terms and conditions set
forth herein and those in the Franchise Agreement, for any particular
Restaurant, the terms and conditions of the Franchise Agreement shall govern
except as to the Development Schedule, Franchise Fees and Royalty Fees set forth
herein.
4. THE DEVELOPMENT SCHEDULE.
A. THE PERFORMANCE SCHEDULE.
As further consideration for the execution of this Agreement, Franchise
Owner agrees to open and maintain, as a minimum requirement, an overall rate of
development of the Restaurants in the Development Area set forth above, the
following:
DEVELOPMENT SCHEDULE
--------------------
PERIOD SPECIFIED TOTAL NUMBER OF NEW
NO LATER THAN RESTAURANTS TO BE OPENED
5
<PAGE>
DEVELOPMENT SCHEDULE
--------------------
PERIOD SPECIFIED TOTAL NUMBER OF NEW
NO LATER THAN RESTAURANTS TO BE OPENED
Franchise Owner is required to open at least one (1) Restaurant every
six (6) months.
(1) EXCLUSIVITY.
As long as Franchise Owner is maintaining the Development Schedule set
forth above and is not in arrears in his monetary obligations, the areas defined
will be exclusive to the extent that no other Restaurants using the Marks will
be franchised to others or constructed in the Development Area. This exclusivity
will continue for the period set forth in paragraph 5 and so long as Franchise
Owner has opened all of the required Restaurants and continues to annually
expand the area as set forth in Section 5 below.
(2) RIGHTS RETAINED.
Provided Franchise Owner and its affiliates are in full compliance with
all of the terms and conditions contained in this Agreement and contained in any
other agreements with the Company or any of its affiliates, then during the term
of this Agreement the Company will not operate (directly or through an
affiliate), nor grant a franchise for the operation of, any Restaurant to be
operated under the System and located within the Development Area.
Except as otherwise provided, the Company retains the right, in its
sole discretion, to: (a) operate (directly or through an affiliate), and grant
franchises for the operation of, Restaurants at locations and on conditions as
it deems appropriate outside of the Development Area; (b) sell (itself or
through designees) Products utilizing the Marks through retail outlets other
than
6
<PAGE>
Restaurants such as from supermarkets, food courts, or certain types of
kiosk-type format, as well as at major events, such as carnivals, fairs, and
concerts whether located within or outside of the Development Area; and (c)
establish other channels of distribution selling the same or similar products or
services under a different trademark.
B. CUMULATIVE CREDITS.
The Development Schedule shall be cumulative and, therefore, if
additional Restaurants are completed ahead of schedule, these will be credited
to the subsequent period of performance.
5. SUBSEQUENT DEVELOPMENT SCHEDULE.
At the expiration of the Development Schedule described above, if
Franchise Owner has completed the required development, this Agreement may be
extended for an additional fifteen (15) year period. Franchise Owner shall
retain its exclusivity during such fifteen (15) year period so long as Franchise
Owner continues to develop Restaurants at the rate of two (2) per year in the
Development Area until there is one (1) Restaurant for each 70,000 population in
the Development Area.
6. DEFAULT IN PERFORMANCE.
A. If Franchise Owner fails or refuses to meet the Development Schedule
set forth herein and it is determined by Company to be in material default and
such material default continues for a period of sixty (60) days after Company
has sent Franchise Owner written notice of such default, then all rights of
Franchise Owner under this Development Agreement shall be immediately terminated
including the right to open any additional Restaurants in this Development Area
and the territorial rights granted herein; provided, however, that all rights,
obligations, and duties of the parties under the individual Franchise Agreements
previously executed by the parties
7
<PAGE>
hereto, for the Restaurants previously opened by Franchise Owner, including the
exclusive protected territory surrounding each Restaurant as set forth in the
individual Franchise Agreements, shall continue.
B. Except as otherwise provided in Section 6A, above, if Franchise
Owner fails to comply with any material term and condition of this Agreement, or
fails to comply with the terms and conditions of any franchise agreement or
development agreement between Franchise Owner and the Company, such action shall
constitute a default under this Agreement, for which the Company may terminate
this Agreement by giving written notice of termination stating the nature of
such default to Franchise Owner at least thirty (30) days prior to the effective
date of termination; provided, however, that Franchise Owner may avoid
termination by immediately initiating a remedy to cure such default, curing it
to the Company's satisfaction, and by promptly providing proof thereof to the
Company within the thirty (30) day period. If any such default is not cured
within the specified time, or such longer period as applicable law may require,
this Agreement and all rights granted hereunder (including, but not limited to,
the right to develop new Restaurants) will terminate without further notice to
Franchise Owner effective immediately upon the expiration of the thirty (30) day
period or such longer period as applicable law may require.
7. LIMITATION OF THIS AGREEMENT.
The parties each agree that this Master Development Agreement is not a
grant of a franchise for any particular Restaurant, but this Agreement is an
understanding of certain terms and conditions which, if fully satisfied, will
result in the grant of a franchise in the future for the operation of a
Restaurant in the defined Development Area. Franchise Owner also acknowledges
that it will pay those fees provided herein or in the Franchise Agreement
(Exhibit A) for each
8
<PAGE>
Restaurant developed pursuant to that Franchise Agreement, as amended, and as
modified by Section 1B above.
8. TRANSFER AND ASSIGNMENT.
A. TRANSFER BY COMPANY.
Company shall have the right to sell, assign, or transfer all or any
part of its rights or obligations herein to any third party or legal entity
provided, however, the rights, duties and obligations of the Company set forth
under this Agreement shall be assumed by the purchaser or assignee.
B. TRANSFER BY FRANCHISE OWNER.
Franchise Owner and the Guarantor(s), if any, have been carefully
selected by Company in reliance of their business skills, financial ability,
personal character and their business experience in Franchise Development of the
programs. Accordingly, this Development Agreement may not be sold, assigned,
transferred, pledged, donated, mortgaged, or encumbered in any manner whatsoever
by Franchise Owner without the express written approval of Company. Company
shall have sole discretion in determining whether it will agree to any such
transfer of this Agreement. Company reserves the right at all times, even though
it may agree to an assignment or sale, to require Franchise Owner to enter into
additional conditions and limitations of this Master Development Agreement
before it effectuates such sale or assignment.
C. CONTROL PERSON.
If Franchise Owner is a corporation or partnership, or subsequently
sells or assigns its rights, duties and obligations herein to a corporate
entity, Franchise Owner or assignee shall designate one (1) and only one (1)
person to make operational decisions on behalf of Franchise
9
<PAGE>
Owner, and the person designated shall have the right to bind the Franchise
Owner and will be the "Control Person." Any change in the "Control Person" will
be deemed a transfer pursuant to Section 8B above.
D. NON-WAIVER OF CLAIMS.
The consent by Company to a transfer of interest in this Agreement
shall not constitute a waiver of any claims against the Franchise Owner herein,
nor shall it be deemed a waiver of Company's right to demand full compliance
with any and all terms of this Agreement.
E. SUB-FRANCHISING.
Franchise Owner shall not (under any circumstances) have the right
under this Agreement to "sub-franchise" others in the Development Area.
F. NON-COMPETITION.
Franchise Owner, its agents, employees, and representatives agree not
to divulge any proprietary and/or confidential information to any person or
company which information has been furnished or disclosed to him/her as a result
of this Agreement.
9. RELOCATION OF RESTAURANT.
Franchise Owner may relocate a Restaurant to another location within
the Development Area upon approval by Company. A Restaurant relocated will not
be credited as a new Restaurant for purposes of compliance with the development
schedule herein, and Company and Franchise Owner will amend the Franchise
Agreement accordingly, as directed by Company as to location of the Restaurant.
10
<PAGE>
10. BANKRUPTCY OR INSOLVENCY - TERMINATION.
If Franchise Owner makes an assignment for the benefit of creditors;
files a petition in bankruptcy; admits to insolvency; or if a bankruptcy
petition is filed against Franchise Owner and it is not opposed; or if Franchise
Owner is adjudicated bankrupt or insolvent; or if a bill in equity or other
proceeding for the appointment of a receiver for Franchise Owner or custodian
for Franchise Owner's business or assets is filed and consented to by Franchise
Owner, this Agreement shall be deemed terminated and all sums paid herein will
be forfeited.
11. COMPANY'S APPROVAL, ADVICE, OR SERVICES.
Company shall not, by virtue of any approvals, advice or services
provided to Franchise Owner, assume responsibility or liability to Franchise
Owner, or any third parties to which Company would not otherwise be subject.
12. SUITABILITY OF FRANCHISE OWNER.
A. Franchise Owner shall employ an experienced Director of Operations
who has the experience, reputation, and track record in the restaurant industry
for Franchise Owner to meet its Development Schedule. The Company shall have a
continuing right to approve or disapprove said Director of Operations or any
replacement of said Director of Operations at Company's discretion.
B. If Franchise Owner has been required to have a personal guarantor
for this Development Agreement, it shall be deemed that such guarantor is
CRITICAL, and the loss of or removal of such guarantor shall be grounds for
revocation or termination of this Master Development Agreement unless another
guarantor approved by the Company is substituted.
11
<PAGE>
13. CONFIDENTIAL RELATIONSHIP.
It is recognized that during the period of time prior to the execution
of this Agreement, Franchise Owner may receive from Company certain confidential
information of a proprietary nature. It is, therefore, agreed that the provision
of the Franchise Agreement pertaining to confidentiality of information shall
govern Franchise Owner's obligations and responsibilities respecting said
information.
14. GOVERNING LAW.
The law of the State of Florida shall govern the procedural and
substantive rights of the parties hereto.
15. NOTICES.
Franchise Owner shall receive any notices and information recited
herein at the following address:
________________________________
________________________________
________________________________
Company shall receive any notice and information recited herein at
the following address:
Roadhouse Grill, Inc.
4801 South University Drive, Suite 304 East
Davie, Florida 33328
16. ENTIRE AGREEMENT.
This Agreement and the attached Exhibits constitutes the complete
understanding and agreement between the parties, and all prior negotiations,
conversations, and representations of
12
<PAGE>
each of the parties are hereby superseded and merged herein. This Agreement may
only be amended in writing, duly executed by both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
FRANCHISOR:
ROADHOUSE GRILL, INC.,
a Florida corporation
By:___________________________________
Title:________________________________
FRANCHISE OWNER:
______________________________________
By:___________________________________
Title:________________________________
13
<PAGE>
GUARANTORS:
As an inducement to Company to enter into this Master Development
Agreement with Franchise Owner, __________________ hereby unconditionally (and
if more than one, jointly and severally) guarantee(s) the performance by
Franchise Owner of all of Franchise Owner's obligations under this Master
Development Agreement and each Franchise Agreement to be executed pursuant to
the Master Development Agreement.
14
EXHIBIT 10.3
ROADHOUSE GRILL FRANCHISE AGREEMENT
BETWEEN
ROADHOUSE GRILL, INC.
A FLORIDA CORPORATION
(FRANCHISOR)
AND
A
(FRANCHISEE)
DATED: , 199
ROADHOUSE GRILL RESTAURANT
[ADDRESS]
<PAGE>
ROADHOUSE GRILL FRANCHISE AGREEMENT
Between
ROADHOUSE GRILL, INC.
a Florida corporation
(Franchisor)
and
a
(Franchisee)
Dated: , 199
Roadhouse Grill Restaurant
[ADDRESS]
<PAGE>
ROADHOUSE GRILL, INC.
FRANCHISE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION NUMBER PAGE NUMBER
<S> <C> <C>
1. PREAMBLES, ACKNOWLEDGEMENTS AND GRANT OF FRANCHISE.......................................................1
A. PREAMBLES.......................................................................................1
B. ACKNOWLEDGEMENTS................................................................................1
C. GRANT OF FRANCHISE..............................................................................2
D. RIGHTS RESERVED BY THE COMPANY/PROTECTED AREA...................................................2
2. DEVELOPMENT OF RESTAURANT................................................................................2
A. SITE SELECTION..................................................................................2
B. LEASE OF PREMISES OF THE RESTAURANT.............................................................3
C. RESTAURANT DEVELOPMENT..........................................................................4
D. EQUIPMENT, FIXTURES, FURNISHINGS, STOREFRONT AND SIGNS..........................................4
E. RESTAURANT OPENING..............................................................................5
F. GRAND OPENING PROGRAM...........................................................................5
3. TRAINING AND GUIDANCE....................................................................................5
A. TRAINING........................................................................................5
B. GUIDANCE........................................................................................6
C. OPERATIONS MANUAL...............................................................................6
D. OPENING ASSISTANCE..............................................................................6
4. MARKS....................................................................................................6
A. OWNERSHIP AND GOODWILL OF MARKS.................................................................6
B. LIMITATIONS ON FRANCHISE OWNER'S USE OF MARKS...................................................7
C. DISCONTINUANCE OF USE OF MARKS..................................................................7
D. NOTIFICATION OF INFRINGEMENTS AND CLAIMS........................................................7
E. INDEMNIFICATION OF FRANCHISE OWNER..............................................................7
5. FEES.....................................................................................................8
A. FRANCHISE FEE...................................................................................8
B. ROYALTY FEE.....................................................................................8
C. DEFINITION OF "GROSS SALES".....................................................................8
D. INTEREST AND LATE PAYMENTS......................................................................8
E. APPLICATION OF PAYMENTS.........................................................................8
6. CONFIDENTIAL INFORMATION/EXCLUSIVE RELATIONSHIP..........................................................9
7. RESTAURANT IMAGE AND OPERATING STANDARDS................................................................10
A. CONDITION AND APPEARANCE OF THE RESTAURANT.....................................................10
B. RESTAURANT MENU................................................................................11
C. SALES OF PRODUCTS TO THE FRANCHISE OWNER'S AFFILIATES..........................................11
D. APPROVED PRODUCTS, DISTRIBUTORS AND SUPPLIERS..................................................11
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION NUMBER PAGE NUMBER
<S> <C> <C>
E. SPECIFICATIONS, STANDARDS AND PROCEDURES.......................................................13
F. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES...............................................13
G. RESTAURANT MANAGEMENT AND PERSONNEL............................................................14
H. INSURANCE......................................................................................14
8. ADVERTISING AND PROMOTION...............................................................................15
A. ADVERTISING PRODUCTION FUND (APF)..............................................................15
B. ADVERTISING BY FRANCHISE OWNER.................................................................16
C. NATIONAL ADVERTISING FUND (NAF)................................................................16
9. ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS............................................................17
10. INSPECTIONS AND AUDITS..................................................................................18
A. COMPANY'S RIGHT TO INSPECT THE RESTAURANT......................................................18
B. COMPANY'S RIGHT TO AUDIT.......................................................................18
11. TRANSFER................................................................................................19
A. BY THE COMPANY.................................................................................19
B. FRANCHISE OWNER MAY NOT TRANSFER WITHOUT APPROVAL OF THE
COMPANY........................................................................................19
C. CONDITIONS FOR APPROVAL OF TRANSFER............................................................20
D. TRANSFER TO A CORPORATION OR PARTNERSHIP.......................................................21
E. DEATH OR DISABILITY OF FRANCHISE OWNER.........................................................22
F. EFFECT OF APPROVAL OF A TRANSFER...............................................................22
G. COMPANY'S RIGHT OF FIRST REFUSAL...............................................................22
H. PUBLIC OFFERINGS OF SECURITIES.................................................................23
12. EXPIRATION OF AGREEMENT.................................................................................23
A. FRANCHISE OWNER'S RIGHT TO ACQUIRE A SUCCESSOR FRANCHISE.......................................23
B. GRANT OF A SUCCESSOR FRANCHISE.................................................................24
C. AGREEMENTS/RELEASES............................................................................24
13. TERMINATION OF AGREEMENT................................................................................25
14. RIGHTS AND OBLIGATIONS OF THE COMPANY AND FRANCHISE OWNER UPON
TERMINATION OR EXPIRATION OF THE FRANCHISE..............................................................26
A. PAYMENT OF AMOUNTS OWED TO THE COMPANY.........................................................26
B. DE-IDENTIFICATION..............................................................................27
C. CONFIDENTIAL INFORMATION.......................................................................28
D. COVENANT NOT TO COMPETE........................................................................28
F. CONTINUING OBLIGATIONS.........................................................................30
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION NUMBER PAGE NUMBER
<S> <C> <C>
15. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.............................................................30
A. INDEPENDENT CONTRACTORS........................................................................30
B. NO LIABILITY FOR ACTS OF OTHER PARTY...........................................................30
C. TAXES..........................................................................................30
D. INDEMNIFICATION................................................................................31
16. ENFORCEMENT.............................................................................................31
A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS..............................................31
B. WAIVER OF OBLIGATIONS..........................................................................32
C. INJUNCTIVE RELIEF..............................................................................32
D. RIGHTS OF PARTIES ARE CUMULATIVE...............................................................33
E. COSTS AND ATTORNEYS' FEES......................................................................33
F. GOVERNING LAW/CONSENT TO JURISDICTION..........................................................33
G. BINDING EFFECT.................................................................................33
H. LIMITATIONS OF CLAIMS..........................................................................33
I. WAIVER OF PUNITIVE DAMAGES.....................................................................34
J. ARBITRATION....................................................................................34
K. DEFINITIONS....................................................................................34
17. NOTICES AND PAYMENTS....................................................................................35
EXHIBIT A TO THE ROADHOUSE GRILL, INC. FRANCHISE AGREEMENT LOCATION OF
THE PREMISES/PROTECTED AREA.............................................................................36
EXHIBIT B TO THE ROADHOUSE GRILL, INC. FRANCHISE AGREEMENT RESTAURANT
LOCATION AREA...........................................................................................37
EXHIBIT C TO THE ROADHOUSE GRILL, INC. FRANCHISE AGREEMENT GUARANTY
AND ASSUMPTION OF FRANCHISE OWNER'S OBLIGATIONS.........................................................38
</TABLE>
iii
<PAGE>
ROADHOUSE GRILL, INC.
FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of
_____________, 199___, between ROADHOUSE GRILL, INC., a Florida corporation,
with its principal office at 6600 North Andrews Avenue, Suite 160, Fort
Lauderdale, Florida 33309 (the "Company"), and
_______________________________________________________, whose principal address
is _______________________________________________________________ (the
"Franchise Owner").
1. PREAMBLES, ACKNOWLEDGEMENTS AND GRANT OF FRANCHISE.
A. PREAMBLES. The Company franchises certain steak restaurants, known
as Roadhouse Grill Restaurants (the "Restaurants"), which feature steaks,
vegetables, salads, beverages and certain other food products (the "Products")
for consumer consumption through on-premises and carry-out sales. The Company
uses and licenses certain trademarks, service marks and trade dress, including
"Roadhouse Grill" and associated logo, and may hereafter adopt, use and license
additional trademarks, service marks and trade dress (collectively, the "Marks")
in conjunction with the operation of Restaurants. Restaurants operate under the
Company's confidential and proprietary information, trade secrets, distinctive
image, designs, business formats, methods, procedures, specifications and the
Marks (collectively, the "System"), all of which may be further developed or
otherwise modified by the Company from time to time.
B. ACKNOWLEDGEMENTS. Franchise Owner acknowledges that it has read this
Agreement and the Company's Uniform Franchise Offering Circular. Franchise Owner
acknowledges that it understands and accepts the provisions of this Agreement as
being reasonably necessary to maintain the Company's high standards of quality
and service and the uniformity of those standards at Restaurants in order to
protect and preserve the goodwill of the System and the Marks. Franchise Owner
acknowledges that the restaurant business is a highly competitive industry, with
constantly changing market conditions. Franchise Owner acknowledges that it has
conducted an independent investigation of the restaurant business contemplated
by the Agreement and recognizes that the nature of the business conducted by
Restaurants may change over time, that an investment in a Restaurant involves
business risks and that the success of the venture is largely dependent upon
Franchise Owner's business abilities and efforts. The Company expressly
disclaims the making of, and Franchise Owner acknowledges that it has not
received or relied upon any representations of revenue, profits or success of
the business venture contemplated by this Agreement. Franchise Owner further
acknowledges that it has not received or relied upon any representations by the
Company or its officers, directors, employees or agents that are contrary to the
statements contained in the terms of this Agreement or in the Uniform Franchise
Offering Circular delivered to it prior to the execution of this Agreement.
Franchise Owner represents and warrants to the Company that his, her or its
execution, delivery and performance of this Agreement
1
<PAGE>
will not violate the terms and conditions of, and will not create a default
under, any other contract or agreement to which Franchise Owner, any of
Franchise Owner's shareholders or partners (if Franchise Owner is a corporation
or partnership) or any member of his, her, its or their immediate families is
subject to or is a party to such contract or agreement. Franchise Owner further
represents to the Company, as an inducement to its entry into this Agreement,
that it has made no misrepresentation in obtaining the franchise.
C. GRANT OF FRANCHISE. Franchise Owner has applied for a franchise to
own and operate a Restaurant at the premises identified in Exhibit A attached to
this Agreement (the "Premises"). The Company has approved Franchise Owner in
reliance upon all of its representations made in connection therewith. Subject
to the provisions of this Agreement, the Company hereby grants to Franchise
Owner a franchise to operate a Restaurant at the Premises, and to use the Marks
in operation thereof, for a term of twenty (20) years, commencing on the date of
this Agreement, unless sooner terminated by the Company in accordance with
Section 13 hereof. Termination or expiration of this Agreement shall constitute
a termination or expiration of the Franchise.
Franchise Owner may not operate the Restaurant at any other site other
than the Premises and may not relocate the Restaurant without the Company's
prior written approval. If the Company approves the relocation of the
Restaurant, it shall have the right to charge Franchise Owner for all expenses
incurred in connection therewith. Franchise Owner agrees that it will at all
times faithfully, honestly and diligently perform its obligations under this
Agreement, that it will continuously exert its best efforts to promote and
enhance the business of the Restaurant and that it will not engage in any other
business or activity that may conflict with its obligations under this
Agreement.
D. RIGHTS RESERVED BY THE COMPANY/PROTECTED AREA. Except as
otherwise provided the Company retains the right, in its sole discretion, to:
(a) operate and grant others to operate or franchise other Restaurants at such
locations and on such conditions as the Company deems appropriate outside of the
Franchise Owner's Protected Area; and (b) sell Company Products utilizing the
Marks through other retail outlets other than the Restaurants. The Protected
Area defined in this Agreement relates to competition from other Restaurants.
Provided Franchise Owner and its affiliates are in full compliance with
all of the terms and conditions contained in this Agreement and contained in any
other agreements with the Company or any of its affiliates, then during the term
of this Agreement the Company will not operate (directly or through an
affiliate) nor grant a franchise for the operation of any Restaurant to be
located within the geographical area described in Exhibit A (the "Protected
Area").
2. DEVELOPMENT OF RESTAURANT.
A. SITE SELECTION. If Franchise Owner has not located and the
Company has not approved the site for the Premises of the Restaurant at the time
of execution of this Agreement, Franchise Owner agrees to locate, within one
hundred twenty (120) days after the date of this Agreement, a site suitable for
the operation of a Restaurant and acceptable to the Company within
2
<PAGE>
the geographical area designated on Exhibit B hereof (the "Area"). Franchise
Owner must submit a site report, in the form specified by the Company, for the
proposed site within the Area that meets the Company's standard site selection
criteria for demographic characteristics, traffic patterns, parking, character
of neighborhood, competition from other businesses within the Area, the
proximity to other businesses, the nature of other businesses in proximity to
the site and other commercial characteristics, and the size, appearance and
other physical characteristics of the Premises. The Company agrees to expend
such time and effort and incur such expense as may reasonably be required to
inspect the site Franchise Owner proposes. The Company will, at its sole
discretion, approve or disapprove of the proposed site for the Restaurant and
notify Franchise Owner thereof within thirty (30) days after the Company
receives the complete site report and other materials the Company requests
containing all information the Company reasonably requires. If Franchise Owner
is unable to locate an acceptable site within the time specified above, the
Company may terminate this Agreement at any time thereafter. Upon such
termination, and provided that Franchise Owner shall have executed general
releases, in form and substance satisfactory to the Company of any and all
claims against the Company and its affiliates and each of their respective
officers, directors, employees and agents, the Company shall refund (without
interest) the franchise fee that Franchise Owner has paid the Company pursuant
to Section 5A of this Agreement, less actual expenses the Company has incurred
in connection with its review of sites proposed by Franchise Owner.
FRANCHISE OWNER ACKNOWLEDGES AND AGREES THAT THE COMPANY'S APPROVAL OF
A PROPOSED SITE AND ANY INFORMATION COMMUNICATED TO FRANCHISE OWNER REGARDING
THE PROPOSED SITE SHALL NOT CONSTITUTE A WARRANTY OR REPRESENTATION OF ANY KIND,
EXPRESS OR IMPLIED, AS TO THE SUITABILITY OF THE PROPOSED SITE FOR A RESTAURANT
OR FOR ANY OTHER PURPOSE, AND THE COMPANY'S SELECTION OR APPROVAL OF SUCH SITE
MERELY SIGNIFIES THAT THE COMPANY IS WILLING TO GRANT A FRANCHISE FOR A
RESTAURANT AT SUCH PROPOSED SITE. FRANCHISE OWNER FURTHER ACKNOWLEDGES AND
AGREES THAT ITS ACCEPTANCE OF A RESTAURANT FRANCHISE AT THE PROPOSED SITE SHALL
BE BASED SOLELY ON ITS OWN INDEPENDENT INVESTIGATION OF THE SUITABILITY OF SUCH
PROPOSED SITE FOR A RESTAURANT.
B. LEASE OF PREMISES OF THE RESTAURANT. Franchise Owner shall, within
one hundred twenty (120) days after the execution of this Agreement, lease,
sublease or purchase the Premises for the Restaurant. The Company shall have the
right to approve the terms of any lease, sublease or purchase contract for the
Premises and Franchise Owner agrees to deliver a copy thereof to the Company for
its approval prior to Franchise Owner's execution. Any lease or sublease for the
Premises shall, in form satisfactory to the Company: (a) provide for notice to
the Company of, and the Company's right to cure, Franchise Owner's default under
said lease or sublease; (b) provide for Franchise Owner's right to assign to the
Company its interest under said lease or sublease without the lessor's or
sublessor's consent; and (c) authorize the lessor or sublessor to disclose to
the Company sales information Franchise Owner furnishes. Franchise Owner agrees
that it will not execute a lease, sublease or purchase contract which the
Company has, for any reason, disapproved. Franchise Owner shall deliver a copy
of the signed lease, sublease or purchase contract to the Company within five
(5) days after its execution. If the Company so requires, Franchise Owner agrees
that it will, in a form satisfactory to the Company as security for Franchise
Owner's timely
3
<PAGE>
performance of all Franchise Owner's covenants and obligations under this
Agreement, secure the consent of the lessor or sublessor of the Premises to such
collateral assignment.
C. RESTAURANT DEVELOPMENT. Franchise Owner shall be responsible for
developing the Restaurant. The Company will furnish to Franchise Owner mandatory
and suggested specifications and layouts for a Restaurant, including
requirements for dimensions, design, image, interior layout, decor fixtures,
equipment, signs, furnishings, storefront and color scheme. It shall be
Franchise Owner's responsibility to have prepared all required construction
plans and specifications to suit the shape and dimensions of the Premises.
Franchise Owner must insure that such plans and specifications comply with the
applicable ordinances, building codes and permit requirements and with lease
requirements and restrictions. Franchise Owner shall submit construction plans
and specifications to the Company for its approval before construction of the
Restaurant is commenced and shall, upon the Company's request, submit all
revised or "as built" plans and specifications during the course of such
construction. All construction must be in accordance with construction plans and
specifications the Company approves and comply in all respects with applicable
laws, ordinances and local rules and regulations. The Company may furnish
guidance to Franchise Owner in developing the Restaurant and may periodically
inspect the Premises during its development.
Franchise Owner agrees, at its sole expense, to do or cause to be done
the following within one hundred twenty (120) days after the execution of the
lease, sublease or purchase contract for the Premises of the Restaurant:
(1) secure all financing required to develop the Restaurant fully;
(2) obtain all required building, utility, sign, health, sanitation,
business and other permits and licenses;
(3) construct all required improvements to the Premises and decorate
the Restaurant in compliance with plans and specifications
approved by the Company;
(4) purchase or lease and install all required fixtures, equipment,
furnishings and signs required for the Restaurant; and
(5) purchase an opening inventory of authorized and approved products
and other materials and supplies.
D. EQUIPMENT, FIXTURES, FURNISHINGS, STOREFRONT AND SIGNS. Franchise
Owner agrees to use in the development and operation of the Restaurant only
those fixtures, furnishings, equipment, storefront and signs that the Company
has approved for Restaurants as meeting its specifications and standards for
quality, design, appearance, function and performance. Franchise Owner further
agrees to place or display at the Premises (interior and exterior) only such
signs, emblems, lettering, logos and display materials that the Company approves
in writing from time to time. Franchise Owner shall purchase or lease approved
brands, types or models of fixtures, furnishings, equipment, storefront and
signs only from suppliers designated or approved by the Company. If Franchise
Owner proposes to purchase, lease or otherwise use any fixture, furnishings,
equipment, storefront or sign which is not then approved by the Company,
Franchise Owner shall
4
<PAGE>
first notify the Company in writing and shall submit to the Company in writing,
upon its request, sufficient specifications, photographs, drawings and/or other
information or samples for a determination whether such fixture, furnishings,
equipment, storefront and/or sign complies with the Company's specifications and
standards.
E. RESTAURANT OPENING. Franchise Owner agrees not to open the
Restaurant for business until: (a) all of Franchise Owner's obligations under
Section 2C have been fulfilled; (b) the Company determines that the Restaurant
has been constructed, decorated, furnished, equipped and stocked with materials
and supplies in accordance with approved plans and specifications; (c)
pre-opening training of Restaurant managers and other personnel has been
completed to the Company's satisfaction; (d) the franchise fee and other amounts
due to the Company have been paid; and (e) the Company has been furnished with
copies of all insurance policies required by Section 7G of this Agreement, or
such other evidence of insurance coverage and payment of premiums as the Company
requests, and with certification that all have been obtained. Franchise Owner
agrees to comply with these conditions and to open the Restaurant for business
on the earlier of one hundred twenty (120) days after the Company's approval of
the site for the Restaurant or the date specified for opening the Restaurant
contained in the lease for the Premises.
F. GRAND OPENING PROGRAM. If requested by the Company, Franchise Owner
shall conduct a grand opening advertising and promotional program for the
Restaurant within sixty (60) days after the opening of the Restaurant. The
Company shall furnish guidance to Franchise Owner with respect to grand opening
advertising and promotion as the Company deems appropriate.
3. TRAINING AND GUIDANCE.
A. TRAINING. Prior to the opening, the Company shall designate and
furnish a training program on the operation of a Restaurant. The training
program will include classroom instruction and training at the Company's
training facilities in the Davie, Florida area and at a Restaurant nearby.
Classroom instruction and training includes: management skills and on-the-job
proficiency training to insure the Company's standards of quality and
consistency, and shall last at least eight (8) weeks. Franchise Owner may
attend, and shall designate at least three (3) manager trainees and a meat
cutter to attend the Company's training program. Franchise Owner shall be
responsible for all compensation, insurance, travel and living expenses which
Franchise Owner and its trainees incur in connection with the training program.
All manager trainees shall be required to complete all phases of the training
program to the Company's satisfaction. If such trainees complete the training
program to the Company's satisfaction, the Company shall issue to Franchise
Owner certificates of completion for such trainees ("Certified Managers").
If the Restaurant subsequently receives inspection reports from the
Company which are unsatisfactory to the Company in any manner, the Company may
require Franchise Owner's Certified Managers to attend refresher courses at
locations designated by the Company or the Company will offer the training
program to new manager trainees subsequent to the opening of the Restaurant.
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B. GUIDANCE. The Company shall advise Franchise Owner from time to time
of any operating problems of the Restaurant disclosed by reports submitted to or
inspections made by the Company and shall furnish to Franchise Owner guidance in
connection with: (a) methods, standards and operating procedures utilized by
Restaurants; (b) purchasing approved fixtures, furnishings, equipment, signs,
supplies and Products; (c) advertising and promotional programs; and (d)
employee training and general operating and management procedures. Such guidance
shall, in the Company's discretion, be furnished in a form found in the
Company's confidential operations manual ("Operations Manual"), bulletins and
other written materials, telephone conversations and/or consultations at the
Company's offices or at the Restaurant.
C. OPERATIONS MANUAL. The Company will loan to Franchise Owner during
the term of this Agreement two (2) copies of the Operations Manual at no cost.
The Operations Manual contains mandatory and suggested specifications, standards
and operating procedures prescribed from time to time by the Company for
Restaurants and information relating to Franchise Owner's obligations under this
Agreement. Franchise Owner agrees to comply fully with such obligations and
mandatory specifications. The Operations Manual may be modified from time to
time to reflect changes in the image, specifications, standards, procedures,
approved products and supplies of a Restaurant, provided that no such addition
or modification shall alter Franchise Owner's fundamental status and rights
under this Agreement. Franchise Owner shall keep its copy of the Operations
Manual current. If a dispute relating to the contents of the Operations Manual
develops, the master copy maintained by the Company at its principal office
shall control. If an Operations Manual is lost, stolen or destroyed, Franchise
Owner may receive a new manual at a deposit price set by the Company not to
exceed $100.00. Such deposit shall be refunded upon termination of this
Agreement. The Operations Manual remains the property of the Company.
D. OPENING ASSISTANCE. The Company will provide Franchise Owner
with such opening assistance as it deems necessary to effectively open the
Restaurant and supplement general operating and management procedures.
4. MARKS.
A. OWNERSHIP AND GOODWILL OF MARKS. Franchise Owner acknowledges
that its right to use the Marks is derived solely from this Agreement and is
limited to its conduct of business pursuant to and in compliance with this
Agreement. Any unauthorized use of the Marks by Franchise Owner shall constitute
a breach of this Agreement and an infringement of the Company's rights in and to
the Marks. Franchise Owner acknowledges and agrees that its usage of the Marks
and any goodwill established thereby shall inure to the Company's exclusive
benefit and that this Agreement does not confer any goodwill or other interest
in the Marks upon Franchise Owner. All provisions of this Agreement applicable
to the Marks shall apply to any additional trademarks, service marks and trade
dress hereafter authorized for use by and licensed to Franchise Owner by the
Company.
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B. LIMITATIONS ON FRANCHISE OWNER'S USE OF MARKS. Franchise
Owner agrees to use the Marks as the sole identification of the Restaurant,
provided that Franchise Owner shall identify itself as the independent owner
thereof in the manner prescribed by the Company. Franchise Owner shall not use
any Mark as part of any corporate or trade name or with any prefix, suffix or
other modifying words, terms, designs or symbols, or in any modified form, nor
may Franchise Owner use any Mark in connection with the performance or sale of
any unauthorized services or products or in any other manner not expressly
authorized in writing by the Company. Franchise Owner agrees to prominently
display the Marks at the Restaurant, or on supplies or materials designed by the
Company and in connection with packaging materials, forms, labels and
advertising and marketing materials. All Marks shall be displayed in the manner
prescribed by the Company. Company is required by law to control the quality of
the goods and services offered through use of its Marks, and Franchise Owner
acknowledges that compliance with this Section is a necessary condition to
Franchise Owner's continued use of the Marks. Franchise Owner agrees to execute
any and all instruments and documents, render such assistance and do such acts
and things as may, in the opinion of the Company's counsel, be necessary or
advisable to protect and maintain the Company's interests in any litigation or
U.S. Patent and Trademark Office or other proceedings or otherwise to protect
and maintain the Company's interest in the Marks.
C. DISCONTINUANCE OF USE OF MARKS. If it becomes advisable at any time,
in the Company's sole discretion, for the Company and/or Franchise Owner to
modify or discontinue use of any Mark and/or use one or more additional or
substitute trademarks or service marks, Franchise Owner agrees to comply with
the Company's directions to modify or otherwise discontinue the use of such Mark
within a reasonable time after notice thereof by the Company, and the Company
shall have no liability or obligation with respect to Franchise Owner's
modification or discontinuance of any Mark.
D. NOTIFICATION OF INFRINGEMENTS AND CLAIMS. Franchise Owner shall
immediately notify the Company of any apparent infringement of or challenge to
Franchise Owner's use of any Mark, or claim by any person of any rights in any
Mark and Franchise Owner shall not communicate with any person other than the
Company or its counsel in connection with any such infringement, challenge or
claim.
E. INDEMNIFICATION OF FRANCHISE OWNER. The Company agrees to indemnify
Franchise Owner against and to reimburse Franchise Owner for all damages for
which it is held liable in any proceeding arising out of its authorized use of
any Mark pursuant to and in compliance with this Agreement and for all costs it
reasonably incurs in defending any such claim brought against it or any
proceeding in which it is named as a party, providing that Franchise Owner has
timely notified the Company of such claim or proceeding and has otherwise
complied with this Agreement. The Company, at its discretion, shall be entitled
to defend any proceeding arising out of Franchise Owner's use of any Mark
pursuant to this Agreement, and the Company shall have no obligation to
indemnify or reimburse Franchise Owner with respect to any fees or disbursement
of any counsel retained by Franchise Owner.
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5. FEES.
A. FRANCHISE FEE. Franchise Owner shall pay the Company a
nonrecurring franchise fee in the amount of Thirty Thousand Dollars
($30,000.00). Franchise Owner shall pay this franchise fee to the Company upon
execution of this Agreement. This fee shall be fully earned by the Company when
paid and, except as provided in Section 2A of this Agreement, is nonrefundable.
B. ROYALTY FEE. Franchise Owner agrees to pay the Company a
monthly royalty fee in an amount to be determined by the Company which shall not
exceed four and one-half percent (4.5%) of the Gross Sales (as defined in
Section 5C) of the Restaurant, payable on or before the tenth (10th) day of the
month following the month for which they are due.
C. DEFINITION OF "GROSS SALES". As used in this Agreement, the term
"Gross Sales" shall mean and include the aggregate amount of all sales of food,
beverages and other products sold and services rendered in connection with the
Restaurant, including monies derived at or away from the Restaurant, whether for
cash or credit, but excluding: (a) all Federal, state or municipal sales or
service taxes collected from customers and paid to the appropriate taxing
authority; (b) all customer refunds and adjustments and promotional discounts
made by the Restaurant; and (c) employee meal credits and discounts.
D. INTEREST AND LATE PAYMENTS. All royalty fees, Advertising Production
Fund and National Advertising Fund contributions (as provided in Sections 8A and
8C), amounts due for purchases by Franchise Owner from the Company or its
affiliates and other amounts which Franchise Owner owes to the Company or its
affiliates shall bear interest ten (10) days after their due date at the highest
applicable legal rate for open account business credit, not to exceed one and
one-half percent (1.5%) per month. Franchise Owner acknowledges that this
Section shall not constitute the Company's agreement to accept such payments
after they are due or a commitment by the Company to extend credit to, or
otherwise finance Franchise Owner's operation of the Restaurant. Further,
Franchise Owner acknowledges that its failure to pay all amounts when due shall
constitute grounds for termination of this Agreement, as provided in Section 13
hereof, notwithstanding the provisions of this Section.
E. APPLICATION OF PAYMENTS. Notwithstanding any designation
by Franchise Owner, the Company shall have sole discretion to apply any payments
by Franchise Owner to any of its past due indebtedness for royalty fees,
Advertising Production Fund and National Advertising Fund contributions,
purchases from the Company or its affiliates, interest or any other
indebtedness.
However, if any payment to any fund is a matter in dispute then
Franchise Owner may request in writing that the designation of the payment not
be applied to disputed amount.
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6. CONFIDENTIAL INFORMATION/EXCLUSIVE RELATIONSHIP.
The Company possesses certain proprietary and confidential information
relating to the operation of Restaurants, which includes the ingredients,
formulas, recipes and methods of preparation of certain food products sold at
Restaurants, and methods, techniques, formats, specifications, systems,
procedures, methods of business management, sales and promotional techniques and
knowledge of and experience in the operation and franchise of Restaurants (the
"Confidential Information"). The Company will disclose the Confidential
Information to Franchise Owner in furnishing to Franchise Owner the training
program and subsequent training, the Operations Manual and in guidance furnished
to Franchise Owner during the term of this Agreement.
Franchise Owner acknowledges and agrees that it will not acquire any
interest in the Confidential Information, other than the right to utilize it in
the operation of the Restaurant during the term of this Agreement, and that the
use or duplication of the Confidential Information in other business would
constitute an unfair method of competition. Franchise Owner acknowledges and
agrees that the Confidential Information is proprietary, may involve trade
secrets of the Company and is disclosed to Franchise Owner solely on the
condition that Franchise Owner agrees, and Franchise Owner does hereby agree,
that it shall: (a) not use the Confidential Information in any other business or
capacity; (b) maintain the absolute confidentiality of the Confidential
Information during and after the term of this Agreement; (c) not make
unauthorized copies of any portion of the Confidential Information disclosed in
written form; and (d) adopt and implement all reasonable procedures that the
Company prescribes from time to time to prevent unauthorized use or disclose of
the Confidential Information including, without limitation, restrictions on
disclosure thereof to its employees and the use of nondisclosure agreements with
employees, including, without limitation, Certified Managers who have access to
the Confidential Information. Notwithstanding anything to the contrary contained
in this Agreement and provided Franchise Owner shall have obtained the Company's
prior written consent, which consent shall not be unreasonably withheld, the
restrictions on Franchise Owner's disclosure and use of the Confidential
Information shall not apply to the following: (1) information, processes or
techniques which are generally known in the restaurant industry, other than
through disclosure (whether deliberate or inadvertent) by Franchise Owner; and
(2) disclosure of the Confidential Information in judicial or administrative
proceedings to the extent that Franchise Owner is legally compelled to disclose
information, provided Franchise Owner shall have used its best efforts and shall
have afforded the Company the opportunity to obtain an appropriate protective
order or other assurance satisfactory to the Company of confidential treatment
for the information required to be so disclosed.
Franchise Owner acknowledges and agrees that the Company would be
unable to protect the Confidential Information against unauthorized use or
disclosure and would be unable to encourage a free exchange of ideas and
information among Restaurants if Franchise Owners of Restaurants were permitted
to hold interests in or perform services for any competitive businesses.
Franchise Owner therefore agrees that, during the term of this Agreement,
neither Franchise Owner, any of Franchise Owner's shareholders or partners (in
the event Franchise Owner is a corporation or partnership) nor any member of
his, her or their immediate families shall: (A) have any direct or
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indirect interest or beneficial ownership in any other restaurant business
serving or selling steak as the main menu item in conjunction with other
principal products then being offered in Restaurants; (B) perform services as a
director, officer, manager, employee, consultant, representative, agent or
otherwise for any other restaurant business serving or selling steak as the main
menu item in conjunction with other principal products then being offered in
Restaurants; or (C) have any direct or indirect interest in any entity which has
granted or is granting franchises or licenses to others to operate any other
restaurant business serving or selling steak as the main menu item in
conjunction with other principal products then being offered in Restaurants.
Notwithstanding the foregoing, Franchise Owner shall not be prohibited from
operating other Restaurants under franchise agreements with the Company nor from
owning securities in a company engaged in such competitive activities, if such
securities are listed on a stock exchange or traded on the over-the-counter
market and represent five percent (5%) or less of that class of securities.
Franchise Owner agrees that the Company and its affiliates shall have
the perpetual right to use and authorize other Restaurants to use, and Franchise
Owner shall fully and promptly disclose to the Company, all ideas, concepts,
formulas, recipes, methods and techniques relating to the development and/or
operation of a Restaurant during the term of this Agreement. Franchise Owner
acknowledges that such ideas, concepts, formulas, recipes, methods and
techniques shall be the Company's sole property, and the Franchise Owner shall
not be entitled to any compensation whatsoever for the same.
7. RESTAURANT IMAGE AND OPERATING STANDARDS.
A. CONDITION AND APPEARANCE OF THE RESTAURANT. Franchise Owner
agrees that:
(1) neither the Restaurant nor the Premises will be used for
any purpose other than the operation of a Restaurant in compliance with this
Agreement;
(2) Franchise Owner will maintain the condition and appearance of the
Restaurant, its equipment, fixtures, furnishings, signs and vehicles, and the
Premises in accordance with the Company's standards and specifications and
consistent with the image of a Restaurant as a clean, sanitary, attractive and
efficiently operated restaurant offering high quality food, beverages and other
products and courteous and helpful service. Without limiting the foregoing,
Franchise Owner acknowledges that the building decor and signage are an integral
part of Roadhouse Grill Restaurants and agrees to conduct such maintenance in
connection with such building decor and signage;
(3) Franchise Owner will perform such maintenance of the Restaurant and
the Premises as the Company requires from time to time to maintain such
condition, appearance and efficient operation including, without limitation:
(a) continuous and thorough cleaning and sanitation of the
interior and exterior of the Restaurant;
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(b) interior and exterior repair of the Restaurant;
(c) replacement of worn out or obsolete fixtures, furnishings,
equipment, storefront and signs with approved improvements,
fixtures, furnishings, equipment, storefront and
signs; and
(d) periodic painting and decorating;
(4) Franchise Owner will upgrade and/or remodel the Restaurant pursuant
to plans and specifications provided by the Company; provided however, that the
Company will not require substantial remodeling more often than seven (7) years
during the term hereof when required uniformly of all Franchise Owners;
(5) Franchise Owner will place or display at the Premises (interior or
exterior) only such signs, emblems, lettering, logos and display and advertising
materials that the Company approves in writing from time to time; and
(6) Franchise Owner will not make any material alterations to the
Premises or to the appearance of the Restaurant as originally developed without
the Company's prior written consent.
If Franchise Owner does not maintain the condition and appearance of
the Restaurant as herein required, the Company may, upon not less than thirty
(30) days' written notice to Franchise Owner: (A) arrange for the necessary
cleaning or sanitation, repair, remodeling, upgrading, painting or decorating;
or (B) replace the necessary fixtures, furnishings, equipment, storefront or
signs. Franchise Owner shall pay the entire cost thereof on or before the fifth
(5th) day following the receipt of a bill thereof from the Company.
B. RESTAURANT MENU. Franchise Owner agrees that the Restaurant shall
offer for sale all food and beverage products and the on-premises consumption,
carry-out and delivery services that the Company authorizes from time to time.
Franchise Owner further agrees that the Restaurant shall not offer for sale or
sell any other products or services at or from the Restaurant or use the
Premises for any other purpose other than the operation of the Restaurant.
C. SALES OF PRODUCTS TO THE FRANCHISE OWNER'S AFFILIATES.
With respect to sales of products and services to affiliates of the Franchise
Owner, if any, such sales shall be on terms and conditions regularly applicable
to nonaffiliated customers of the Franchise Owner, which in all cases shall be
arm's-length.
D. APPROVED PRODUCTS, DISTRIBUTORS AND SUPPLIERS. The reputation
and goodwill of Restaurants are based upon, and can only be maintained by, the
sale of distinctive, high quality food products and beverages and the
presentation, packaging and service of such products in an efficient and
appealing manner. The Company may develop certain proprietary food products
which will be prepared by or for the Company according to the Company's
proprietary
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special recipes and formulas. The Company also has developed standards and
specifications for other food products, ingredients, seasonings, mixes,
marinades, beverages, materials and supplies incorporated in or used in the
preparation, cooking, serving, packaging and delivery of prepared food products
authorized for sale at Restaurants. The Company may approve suppliers and
distributors of the foregoing products that meet its standards and requirements
including, without limitation, standards and requirements relating to product
quality, prices, consistency, reliability, financial capability, labor and
customer relations. Franchise Owner agrees that the Restaurant will: (a)
purchase the Company's food products developed by the Company pursuant to a
special recipe or formula only from the Company or a third party designated and
licensed by the Company to prepare and sell such products; and (b) purchase from
distributors and other suppliers approved by the Company all other goods, food
products, ingredients, spices, seasonings, mixes, marinades, beverages,
materials, equipment and suppliers (used in the preparation of the Products) and
menus, forms, paper and plastic products, packaging or other materials that meet
the Company's standards and specifications. The Company may from time to time
modify the list of approved brands and/or suppliers, and Franchise Owner shall
not, after receipt in writing of such modification, reorder any brand from any
supplier which is no longer approved.
The Company may approve a single distributor or other supplier for any
product or special equipment and may approve a distributor or other supplier
only as to certain products. The Company may concentrate purchases with one or
more distributors or suppliers to obtain lower prices and/or the best
advertising support and/or services for any group of Restaurants franchised or
operated by the Company. Approval of a distributor or other supplier may be
conditioned on requirements relating to the frequency of delivery, standards of
service, including prompt attention to complaints, or other criteria, and
concentration of purchases, as set forth above, and may be temporary pending a
further evaluation of such distributor or other supplier by the Company. The
Company may establish Company or affiliate owned and operated food commissaries
and distribution facilities which the Company may designate as an approved
distributor or supplier.
Franchise Owner shall notify the Company and submit to the Company such
information, specifications and samples as the Company requests if the Franchise
Owner proposes to purchase any products, packaging or other materials or
utensils from a distributor or other supplier whom the Company has not
previously approved. The Company shall notify Franchise Owner within sixty (60)
days whether the Franchise Owner is authorized to purchase such products from
such distributor or other supplier.
Franchise Owner shall at all times maintain an inventory of approved
food products, beverages, ingredients and other products sufficient in quantity
and variety to realize the full potential of the Restaurant. The Company may,
from time to time, conduct market research and testing to determine consumer
trends and the stability of new food products and service. Franchise Owner
agrees to cooperate by participating in the Company's customer survey and market
research programs, provided the costs are reasonable.
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E. SPECIFICATIONS, STANDARDS AND PROCEDURES. The Company shall endeavor
to maintain the high standards of quality and service at all Restaurants it
operates and franchises. Franchise Owner agrees to cooperate with the Company by
maintaining such high standards in the operation of the Restaurant. Franchise
Owner further agrees to comply with all mandatory specifications, standards and
operating procedures (whether contained in the Operations Manual or any other
written communication to Franchise Owner) relating to the appearance, function,
cleanliness and operation of the Restaurant, including but not limited to: (a)
type, quality, taste, weight, dimensions, ingredients, uniformity, cooking
methods, manner of preparation and sale of all food products and beverages sold
by the Restaurant and all other products used in the packaging and sale thereof;
(b) sales and marketing procedures and customer service; (c) advertising and
promotional programs; (d) layout, decor and color scheme of the Restaurant; (e)
appearance and dress of employees; (f) safety, maintenance, appearance,
cleanliness, sanitation, standards of service and operation of the Restaurant;
(g) submission of requests for approval of brands of Products, supplies and
suppliers; (h) use and illumination of signs, posters, displays, standard
formats and similar items; (i) identification of Franchise Owner as the owner of
the Restaurant; (j) types of fixtures, furnishings, equipment and signs; (k)
delivery and service; and (l) days and hours of operation. Mandatory
specifications, standards and operating procedures that the Company prescribes
from time to time in the Operations Manual, or otherwise communicated to
Franchise Owner in writing, shall constitute provisions of this Agreement as if
fully set forth herein. All references herein to this Agreement shall include
these mandatory specifications, standards and operating procedures.
F. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES.
Franchise Owner shall secure and maintain in force in its name all required
licenses, permits and certificates relating to the operation of the Restaurant
and shall transmit a copy of all such licenses, certificates, and permits to the
Company within ten (10) days after their receipt by Franchise Owner. Franchise
Owner shall operate the Restaurant in full compliance with all applicable laws,
ordinances and regulations including, without limitation, all laws governing the
sale of alcoholic beverages, all government regulations relating to handling of
food products, occupational hazards and health, workers' compensation insurance,
unemployment insurance and withholding and payment of Federal and state income
taxes, social security taxes and sales taxes. All advertising and promotion by
Franchise Owner shall be completely factual and shall conform to the highest
standards of ethical advertising. Franchise Owner shall in all dealings with its
customers, suppliers and the public adhere to the highest standards of honesty,
integrity, fair dealing and ethical conduct. Franchise Owner agrees to refrain
from any business or advertising practice which may be injurious to the business
of the Company and the goodwill associated with the Marks and other Restaurants.
Franchise Owner shall notify the Company in writing within five (5) days after
the commencement of: (a) any action, suit or proceeding, or the issuance of any
order, written injunction, award or decree of any court, agency or other
governmental instrumentality, which may adversely affect the operation or
financial condition of Franchise Owner or the Restaurant; or (b) of any notice
or violation of any law, ordinance or regulation relating to health, sanitation
or the possession or sale of alcoholic beverages at the Restaurant.
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G. RESTAURANT MANAGEMENT AND PERSONNEL. The Restaurant shall at
all times be under the direct, on-premises supervision of a Certified Manager
who has satisfactorily completed the Company's training program. Franchise Owner
(or their designee) shall remain active in overseeing the operations of the
Restaurant. Franchise Owner (or their designee) shall hire all employees of the
Restaurant and be exclusively responsible for the terms of their employment and
compensation and for the proper training of such employees in the operation of
the Restaurant. Franchise Owner shall establish at the Restaurant an employee
training program meeting the standards prescribed by the Company. Franchise
Owner shall require all employees to maintain a neat and clean appearance and to
conform to the standards of dress and/or uniforms specified by the Company from
time to time for the Restaurants. Franchise Owner shall not recruit or hire any
current employee of the Company, its affiliates or another Franchise Owner of
the Company without obtaining the prior written permission of the Company, its
affiliates or Franchise Owner.
H. INSURANCE. During the term of this Agreement, Franchise Owner, at
its sole expense, shall maintain in force policies of insurance issued by
carriers approved by the Company: (a) comprehensive general liability insurance
including, but not limited to, coverage for personal injury and product
liability, and motor vehicle (franchisee-owned vehicles) liability with a
combined single limit of One Million Dollars ($1,000,000.00) against claims for
bodily and personal injury, death and property damages caused by or occurring in
conjunction with the operation of the Restaurant or the conduct of business by
Franchise Owner pursuant to the Franchise; (b) general casualty insurance
including fire and extended coverage, vandalism and malicious mischief insurance
for the replacement value of the Restaurant and its contents; (c) all insurance
required by the terms of the lease of the Premises; and (d) builder's risk
insurance on a completed value non-reporting basis during the period of any
construction or remodeling of the Restaurant. Such insurance may be maintained
in such amounts as the Company specifies from time to time. The Company may
periodically increase the amounts of coverage required under such insurance
policies and require different or additional kinds of insurance at any time,
including excess liability insurance, to reflect inflation, identification of
new risks, changes of law or standards of liability, higher damage awards or
other relevant changes in circumstances. Each insurance policy shall name the
Company and its affiliates as additional insureds and shall provide for thirty
(30) days' prior written notice to the Company of any material modification,
cancellation or expiration of such policy. Franchise Owner shall furnish Company
with a copy of the policy.
Prior to the expiration of the term of each insurance policy, Franchise
Owner shall furnish the Company with a copy of each insurance policy to be
maintained by the Franchise Owner for the immediately following term, evidence
of payment of the premium therefore and certificates of insurance for each
policy. If Franchise Owner fails or refuses to maintain required insurance
coverage, or to furnish satisfactory evidence thereof and the payments of the
premiums therefor, the Company, at its option and in addition to its other
rights and remedies hereunder, may obtain such insurance coverage on behalf of
the Franchise Owner. Franchise Owner shall fully cooperate with the Company in
its effort to obtain or maintain any such insurance policies, promptly execute
all forms or instruments required to obtain or maintain any such insurance,
allow any inspections of the
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Restaurant or vehicles and pay to the Company, on demand, any costs and premiums
incurred by the Company.
Franchise Owner's obligations to maintain insurance coverage as herein
described shall not be affected in any manner by reason of any separate
insurance.
8. ADVERTISING AND PROMOTION.
A. ADVERTISING PRODUCTION FUND (APF). Recognizing the value of
advertising to the goodwill and public image of the Restaurants, the Company
will establish, maintain and administer an Advertising Production Fund (APF) for
the creation and development of such advertising and related programs and
materials as the Company may deem appropriate in its sole discretion. Franchise
Owner shall contribute to the APF an amount to be determined by the Company
which shall not exceed three-quarters of one percent (0.75%) of Gross Sales of
the Restaurant, payable monthly together with the royalty fees due under this
Agreement. Restaurants owned by the Company and its affiliates shall contribute
to the APF on the same basis as Franchise Owner.
The Company shall direct all marketing programs financed by the APF,
with sole discretion over the creative concepts, materials and endorsements used
therein. Franchise Owner agrees that the APF may be used to pay the costs of
preparing and producing such marketing materials and programs as the Company may
determine, including video, audio and written advertising materials, employing
advertising agencies; and supporting market research activities. The Company may
furnish Franchise Owner with marketing, advertising and promotional materials at
the Company's cost of producing them, plus any related administrative, shipping,
handling and storage charges.
The APF shall be accounted for separately from the Company's other
funds and shall not be used to defray any of the Company's general operating
expenses, except for such reasonable salaries, administrative costs and overhead
as the Company may incur in activities reasonably related to the administration
of the APF and its marketing programs including, without limitation, conducting
market research, preparing advertising and marketing materials and collecting
and accounting for contributions to the APF. The Company may spend in any fiscal
year an amount greater or less than the aggregate contribution of all
Restaurants to the APF in that year and the APF may borrow from the Company or
other lenders to cover deficits of the APF or cause the APF to invest any
surplus for future use by the APF. A statement of monies collected and costs
incurred by the APF shall be prepared annually by the Company and shall be
furnished to Franchise Owner upon written request. The Company will have the
right to cause the APF to be incorporated or operated through an entity separate
from the Company at such time as the Company deems appropriate, and such
successor entity shall have all rights and duties of the Company pursuant to
this Section. Except as expressly provided in this Section, the Company assumes
no direct or indirect liability or obligation to Franchise Owner with respect to
the maintenance, direction or administration of the APF.
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The Company reserves the right, in its sole discretion, to suspend
contributions to and operation of the APF for one or more periods that it
determines to be appropriate and the right to terminate the APF upon thirty (30)
days' written notice to Franchise Owner. All unspent monies on the date of
termination shall be distributed to the Company's Franchise Owners in proportion
to their respective contributions to the APF during the preceding twelve
(12)-month period. The Company has the right to reinstate the APF upon the same
terms and conditions set forth herein upon thirty (30) days' prior written
notice to Franchise Owner.
B. ADVERTISING BY FRANCHISE OWNER. In addition to Franchise Owner's
contributions to the APF specified in Section 8A, Franchise Owner agrees to
spend annually for advertising and promotion of the Restaurant an amount equal
to at least three percent (3%) of the Gross Sales of the Restaurant during each
fiscal year. For purposes of the foregoing minimum advertising requirements the
advertising expenditures shall include: (a) amounts contributed to advertising
cooperatives established pursuant to this Section; and (b) amounts expended for
advertising media such as television, radio, newspaper, billboards, magazines,
posters, direct mail, yellow pages, sports program booklet advertising,
collateral promotional and novelty items (E.G., matchbooks, pens, pencils,
bumper stickers), advertising on public vehicles, such as cabs and busses, and,
if not provided by the Company, the cost of producing approved materials
necessary to participate in these media, including advertising agency
commissions related to the production of such advertising.
Prior to their use, samples of all advertising and promotional
materials not prepared or previously approved by the Company and which vary from
the Company's standard advertising and promotional materials shall be submitted
to the Company for its prior written approval. Franchise Owner shall not use any
advertising or promotional materials that the Company has disapproved.
If the Company establishes a regional advertising cooperative for
Roadhouse Grill Restaurants in Franchise Owner's local or regional area, as
designated by the Company in its sole discretion, the Franchise Owner agrees to
participate in such advertising cooperative and to contribute such amounts as
are determined from time to time by such cooperative, but shall not be required
to expend more than two percent (2%) of the Restaurant's annual Gross Sales and
such amounts SHALL BE CREDITED TO THE LOCAL ADVERTISING REQUIREMENT SET FORTH
ABOVE.
C. NATIONAL ADVERTISING FUND (NAF). If and when one hundred fifty (150)
Restaurants shall be open and operating in the United States, the Company will
establish, maintain and administer a National Advertising Fund (NAF) for such
advertising and related programs as the Company may deem appropriate, in its
sole discretion. Franchise Owner shall contribute to the NAF two percent (2%) of
the Gross Sales of the Restaurant, payable monthly together with the royalty
fees due under this Agreement. Roadhouse Grill Restaurants owned by the Company
and its affiliates shall contribute to the NAF on the same basis as Franchise
Owner.
The Company shall direct all marketing programs financed by the NAF,
with sole discretion over the creative concepts, materials, and endorsements
used in this Agreement, and the geographic,
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market and media placement and allocation thereof. Franchise Owner agrees that
the NAF may be used to pay the costs of administrating regional and
multi-regional advertising programs including, without limitation, purchasing
direct mail and other media advertising and employing advertising agencies to
assist therewith, and supporting public relations, marketing research and other
advertising and marketing activities.
The NAF shall be accounted for separately from the Company's general
operating expenses, except for such reasonable salaries, administrative costs
and overhead as the Company may incur in activities reasonably related to the
administration of the NAF and its marketing programs including, without
limitation, preparing advertising and marketing materials, and collecting and
accounting for contributions to the NAF. The Company may spend in any fiscal
year an amount greater or less than the aggregate contribution of all
Restaurants to the NAF or cause the NAF to invest any surplus for future use by
the NAF. A statement of monies collected and costs incurred by the NAF shall be
prepared annually by the Company and shall be furnished to Franchise Owner upon
written request. The Company will have the right to cause the NAF to be
incorporated or operated through an entity separate from the Company at such
time as the Company deems appropriate, and such successor entity shall have
rights and duties of the Company pursuant to this Section.
Franchise Owner understands and acknowledges that the NAF is intended
to enhance recognition of the Marks and patronage of Restaurants. Although the
Company will endeavor to utilize the NAF to develop advertising and marketing
materials and programs, and to place advertising that will benefit all
Restaurants, the Company undertakes no obligation to insure that expenditures by
the NAF in or affecting any geographic area are proportionate or equivalent to
the contributions to the NAF by Restaurants operating in the geographic area or
that any Restaurants will benefit directly or in proportion to its contribution
to the NAF from the development of advertising and marketing materials or the
placement of advertising. Except as expressly provided in this Section, the
Company assumes no direct or indirect liability or obligation to Franchise Owner
with respect to the maintenance, direction or administration of the NAF.
The Company reserves the right, in its sole discretion, to suspend
contributions to and operations to the NAF for one or more periods that it
determines to be appropriate and the right to terminate the NAF upon thirty (30)
days' written notice to the Franchise Owner. All unspent monies on the date of
termination shall be distributed to the Company and Franchise Owners in
proportion to their respective contributions to the NAF during the preceding
twelve (12)-month period. The Company has the right to reinstate the NAF upon
the same terms and conditions set forth in this Agreement upon thirty (30) days'
prior written notice to Franchise Owner.
9. ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS.
A. Franchise Owner shall establish and maintain at its own
expense a bookkeeping, accounting, record keeping and data processing system
conforming to the requirements and formats prescribed by the Company from time
to time. Franchise Owner shall furnish to the Company on
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such forms that the Company prescribes from time to time: (a) within fifteen
(15) days after the end of each calendar month, a report of Gross Sales for such
calendar month and such other reports as the Company may designate from time to
time, including food and labor costs reports, sales tax reports and a quarterly
profit and loss statement; (b) within fifteen (15) days after such returns are
filed, copies of state sales tax returns and such other forms, records, books
and other information as the Company may require; and (c) within ninety (90)
days after the end of Franchise Owner's fiscal year, a fiscal year-end balance
sheet and income statement and statement of changes in financial position of the
Restaurant for such fiscal year. Each report and financial statement shall be
signed and verified by Franchise Owner in the manner prescribed by the Company.
B. Franchise Owner shall install such computer hardware and software as
the Company may specify, including without limitation such peripheral devices
and equipment as the Company may specify in the Manual or otherwise in writing
as reasonably necessary for the efficient management and operation of the
Restaurant and the transmission of data to and from the Company. The Company
may, from time-to-time, specify in the Manuals or otherwise in writing the
information that Franchise Owner shall collect and maintain on the computer
system installed at the Restaurant, and Franchise Owner shall provide to the
Company such reports as the Company may reasonably request from the data so
collected and maintained. Franchise Owner shall afford the Company access, by
modem, to the computer system installed at the Restaurant for the purpose of
downloading information from the computer system. The reporting requirements set
forth herein shall be in addition to and not in lieu of the reporting
requirements set forth under Section 9A hereof.
10. INSPECTIONS AND AUDITS.
A. COMPANY'S RIGHT TO INSPECT THE RESTAURANT. To determine whether
Franchise Owner and the Restaurant are complying with this Agreement and with
all specifications, quality standards and operating procedures prescribed by the
Company for the operation of a Restaurant, the Company or its designated agents
shall have the right at any reasonable time and without prior notice to
Franchise Owner to: (a) inspect the Premises: (b) observe the operations of the
Restaurant; (c) remove samples of any food and beverage product, material or
other products for testing and analysis; (d) interview personnel of the
Restaurant; (e) interview customers of the Restaurant; and (f) inspect and copy
any books, records and documents relating to the operation of the Restaurant.
Franchise Owner shall present to its customers such evaluation forms as are
periodically prescribed by the Company and shall participate in any surveys
performed by and/or on behalf of the Company.
B. COMPANY'S RIGHT TO AUDIT. The Company shall have the right at any
reasonable time during business hours, and upon ten (10) days' prior notice to
Franchise Owner, to inspect and audit, or cause to be inspected and audited,
sales and income tax records and returns and other records of the Restaurant and
the books and records of any corporation or partnership which holds the
Franchise. Franchise Owner shall cooperate with the Company's representatives
and independent accountants hired by the Company to conduct any such inspection
or audit. If any inspection or audit discloses an understatement of the Gross
Sales of the Restaurant, the Franchise
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Owner shall pay to the Company, within fifteen (15) days after receipt of the
inspection or audit report, the royalty fees on APF and NAF contributions due in
the amount of such understatement, plus interest (as the rate and on the terms
provided in Section 5D hereof) from the date originally due until the date of
payment. Further, if such inspection or audit is made necessary by Franchise
Owner's failure to furnish reports, supporting records or other information on a
timely basis, or if an understatement of Gross Sales for the period of any audit
is determined by any such audit or inspection to be greater than two percent
(2%), the Franchise Owner shall reimburse the Company for the cost of such audit
or inspection, including without limitation, the charges of any independent
accountants and the travel expenses, room and board and compensation of the
Company's employees. The foregoing remedies shall be in addition to the
Company's other remedies and rights under this Agreement or applicable law.
11. TRANSFER.
A. BY THE COMPANY. This Agreement is fully transferable by
the Company and shall inure to the benefit of any transferee or other legal
successor to the Company's interest in this Agreement.
B. FRANCHISE OWNER MAY NOT TRANSFER WITHOUT APPROVAL OF THE COMPANY.
Franchise Owner understands and acknowledges that the rights and duties created
by this Agreement are personal to Franchise Owner (or, if Franchise Owner is a
corporation or partnership, to its owners) and that the Company has granted the
Franchise to Franchise Owner in reliance upon the Company's perception of the
individual or collective character, skill, aptitude, attitude, business ability
and financial capacity of Franchise Owner (or its owners). Accordingly, neither
this Agreement nor the Franchise (or any interest therein) nor any part or all
of the ownership of Franchise Owner, the Restaurant or the assets of the
Restaurant (or any interest therein) may be transferred without the Company's
prior written approval. Any transfer without such approval shall constitute a
breach of this Agreement and be void and of no effect. However, Franchise Owner
may transfer shares of stock or interest in the Franchise providing he or she
maintains management control and further providing that he or she informs
Company of his or her action in writing.
As used in this Agreement, the term "transfer" shall mean and include
the voluntary, involuntary, direct or indirect assignment, sale, sublease,
collateral assignment, granting of a security interest, gift or other transfer
by Franchise Owner (or any of its owners) of any interest in: (1) this
Agreement; (2) the Franchise; (3) the ownership of Franchise Owner; (4) the
Restaurant; or (5) the assets of the Restaurant. An assignment, sale or other
transfer shall include the following events: (a) transfer of ownership of
capital stock or a partnership interest; (b) merger or consolidation or issuance
of additional securities representing an ownership interest in Franchise Owner;
(c) any sale of voting stock of Franchise Owner or any security convertible to
voting stock of Franchise Owner; (d) transfer of an interest in Franchise Owner,
this Agreement, the Franchise, the Restaurant or the assets of the Restaurant in
a divorce, insolvency, corporate or partnership dissolution proceeding or
otherwise by operation of law; or (e) transfer of an interest in this Agreement,
the Franchise,
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Franchise Owner, the Restaurant or the assets of the Restaurant in the event of
the death of Franchise Owner by will, declaration of or transfer in trust or
under the laws of intestate succession.
C. CONDITIONS FOR APPROVAL OF TRANSFER. If Franchise Owner is a
corporation or partnership and its owners are in full compliance with this
Agreement, the Company shall not unreasonably withhold its approval of a
transfer that meets all applicable requirements of this Section. The proposed
transferee and its owners must be individuals of good moral character and
otherwise meet the Company's then applicable standards for Restaurant
Franchises. A transfer of ownership in the Restaurant may only be made in
conjunction with a transfer of the Franchise. If the transfer is of the
Franchise or a controlling interest in Franchise Owner, or is one of a series of
transfers which in the aggregate constitutes the transfer of the Franchise or
management control in Franchise Owner, all of the following conditions must be
met prior to or concurrently with the effective date of the transfer.
(1) the transferee must have sufficient business experience,
aptitude and financial resources to operate the Restaurant;
(2) Franchise Owner must pay such royalty fees, advertising
contributions, rental obligations, amounts owed for purchases by Franchise Owner
from the Company and its affiliates and all other amounts owed to the Company or
its affiliates and third-party creditors which are then due and unpaid and
submit all required reports and statements which have not yet been submitted;
(3) the transferee and/or its personnel must agree to complete
the Company's training program to the Company's satisfaction and to pay the
Company its then-current training fee;
(4) the transferee must, at the Company's option, agree to be bound by
all of the terms and conditions of this Agreement for the remainder of its term
or execute the Company's then current standard form of Franchise Agreement
(which may provide for different fees, advertising contributions and
expenditures, duration and other rights and obligations from those provided in
this Agreement);
(5) Franchise Owner or the transferee must pay the Company a
transfer fee in an amount equal to the Company's actual expenses relating to the
transfer;
(6) Franchise Owner (and its owners) must execute a general release, in
form satisfactory to the Company, of any and all claims against the Company, its
affiliates and their officers, directors, employees and agents;
(7) the Company must approve the material terms and conditions of such
transfer including, without limitation, that the price and terms of the payment
are not so burdensome as to affect adversely the operation of the Restaurant by
the transferee;
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(8) if Franchise Owner finances any part of the sale price of the
transferred interest, Franchise Owner and/or its owners must agree that all
obligations of the transferee under or pursuant to any promissory notes,
agreements or security interests reserved by Franchise Owner or its owners in
the assets of the Restaurant or the Premises shall be subordinate to the
obligations of the transferee to pay royalty fees, advertising contributions and
the other amounts due to the Company and its affiliates and otherwise to comply
with this Agreement or the Franchise Agreement executed by the transferee;
(9) Franchise Owner and its owners must execute a non-competition
covenant in favor of the Company and the transferee agreeing that, for a period
of two (2) years commencing on the effective date of the transfer, Franchise
Owner, its owners and members of the immediate families of Franchise Owner and
each of its owners will not hold any direct or indirect interest as a disclosed
or beneficial owner, investor, partner, director, officer, manager, employee,
consultant, representative or agent, or in any other capacity, in any restaurant
business offering steak as the main menu item in conjunction with other
principal products then being offered in Restaurants and located, operating or
engaging in delivery within a radius of twenty (20) miles of the Premises or any
other Restaurant in operation or under construction on the effective date of
transfer, or any entity which is granting franchises or licenses to others to
operate any other restaurant business serving or selling steak as the main menu
item in conjunction with other principal products then being offered in
Restaurants;
(10) the lessor or sublessor of the Premises must have consented to the
assignment or sublease of the Premises to the transferee or the transferee must
have secured substitute premises for the Restaurant approved by the Company;
(11) the Company shall not have exercised its right of first
refusal pursuant to Section 11G of this Agreement; and
(12) the transferee and Franchise Owner shall acknowledge and agree
that the Company's approval of the proposed transfer indicates only that the
transferee falls within the acceptable criteria established by the Company for
Franchise Owners as of the time of such transfer and that the Company's approval
thereof does not constitute a warranty or guaranty by the Company, express or
implied, of the suitability of the terms of sale or of the successful operation
or profitability of the Franchise by the transferee.
If the proposed transfer is to or among owners of Franchise Owner,
Subparagraph (5) of the above requirements shall not apply. Subparagraphs (7)
and (8) shall not apply to transfer by gift, bequest or inheritance.
D. TRANSFER TO A CORPORATION OR PARTNERSHIP. If Franchise Owner
is in full compliance with this Agreement, the Company shall not unreasonably
withhold its approval of a proposed assignment or transfer of this Agreement and
the Franchise to a corporation or partnership which conducts no business other
than the Restaurant, which is actually managed by
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Franchise Owner or a Certified Manager who has satisfactorily completed the
Company's initial training program and in which Franchise Owner maintains
management control of the general partnership interest or equity and voting
power of all issued and outstanding capital stock. Transfers of shares or
partnership interest in such corporation or partnership will be subject to the
provisions of Section 11C. Notwithstanding anything to the contrary herein,
Franchise Owner shall remain personally liable under this Agreement as if the
transfer to such corporation or partnership has not occurred. The articles of
partnership, partnership agreement, articles of incorporation, bylaws and other
organizational documents of such partnership or corporation shall recite that
the issuance and assignment of any interest therein is restricted by the terms
of Section 11 of this Agreement, and all issued and outstanding stock
certificates of such corporation shall bear a legend reciting or referring to
the restrictions thereof. Each partner or shareholder of Franchise Owner owning
ten percent (10%) or more of the equity or voting power of Franchise Owner at
any time during the term of this Agreement must execute an "Guaranty and
Assumption of Franchise Owner's Obligations," or such other agreement that the
Company prescribes from time to time, undertaking to be bound jointly and
severally by all provisions of this Agreement. Franchise Owner will furnish to
the Company at any time upon request, in such form as the Company may require, a
list of its general and limited partners or all shareholders (of record and
beneficially) reflecting their respective interest in Franchise Owner.
E. DEATH OR DISABILITY OF FRANCHISE OWNER. Upon the death or
permanent disability of Franchise Owner or, if Franchise Owner is a corporation
or partnership, the owner of management control in Franchise Owner, the
executor, administrator, conservator, guardian or other personal representative
of such person shall transfer his or her interest in this Agreement and the
Franchise or such interest in Franchise Owner to a third party approved by the
Company. Such disposition of this Agreement and the Franchise or such interest
in Franchise Owner (including, without limitation, transfer by bequest or
inheritance) shall be completed within a reasonable time, not to exceed six (6)
months from the date of death or permanent disability, and shall be subject to
all the terms and conditions applicable to transfers contained in this Section.
Failure to transfer the interest in Franchise Owner within said period of time
shall constitute a breach of this Agreement. For purposes hereof, the terms
"permanent disability" shall mean a mental or physical disability, impairment or
condition that is reasonably expected to prevent or actually does prevent
Franchise Owner or an owner of a management control in Franchise Owner from
managing and/or supervising the Restaurant as required under Section 7F of this
Agreement for a period of ninety (90) days or more from the onset of such
disability, impairment or condition.
F. EFFECT OF APPROVAL OF A TRANSFER. The Company's approval of a
transfer of this Agreement and the Franchise or any interest in Franchise Owner
or the Restaurant shall not constitute a waiver of any claims it may have
against Franchise Owner (or its owners) nor be deemed a waiver of the Company's
right to demand exact compliance with any of the terms or conditions of this
Agreement by transferee.
G. COMPANY'S RIGHT OF FIRST REFUSAL. If Franchise Owner (or
its owners) shall at any time decide to sell controlling interest in this
Agreement, the Franchise, the Restaurant,
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the assets of the Restaurant, the Premises or a controlling ownership interest
in Franchise Owner, Franchise Owner (or its owners) shall first obtain a bona
fide, executed written offer and earnest money deposit in the amount of five
percent (5%) or more of the offering price from a responsible and fully
disclosed purchaser and shall immediately submit to the Company a true and
complete copy of such offer. If the offeror proposes to buy any other property
or rights from Franchise Owner or an affiliate of Franchise Owner, such proposal
must be set forth in a separate, contemporaneous offer, and the price and terms
of purchase offered to Franchise Owner (or its owners) for the interest in the
Agreement, the Franchise, the Restaurant or Franchise Owner shall reflect the
bona fide price offered therefor and shall not reflect any value of any other
property or rights. The Company shall have the right, exercisable by written
notice delivered to Franchise Owner or its owners within sixty (60) days from
the date of delivery of an exact copy of such offer to the Company, to purchase
such interest for the price and on the terms and conditions contained in such
offer, provided that the Company may substitute cash for any form of payment
proposed in such offer, and the Company shall have thirty (30) days to prepare
for closing. The Company shall be entitled to purchase such interest subject to
all customary representations and warranties given by the seller including
representations and warranties as to ownership, condition and title to stock
and/or assets, liens and encumbrances relating to the stock and/or assets,
validity of contracts and liabilities of the corporation whose stock is
purchased and affecting the assets, contingent or otherwise. If the Company does
not exercise its right of first refusal, Franchise Owner or its owners may
complete the sale to such purchaser pursuant to and on the exact terms of such
offer, subject to the Company's approval of the transfer as provided in Sections
11B and 11C, provided that is the sale to such purchaser is not completed within
one hundred twenty (120) days after delivery of such offer to the Company, or if
there is a material change in the terms of the sale, the Company shall have an
additional right of first refusal for thirty (30) days on the same terms and
conditions as are applicable to the initial right of first refusal.
H. PUBLIC OFFERINGS OF SECURITIES. Notwithstanding any other provisions
of this Agreement, Franchise Owner shall not, without the Company's prior
written consent, which can be arbitrarily withheld, sell or offer to sell any
security of Franchise Owner if such sale or offer would be required to be
registered pursuant to the provisions of the Securities Act of 1933, as amended,
and the rules and regulations pursuant thereto, or the securities laws of any
other state or territory of the United States of America or of any other
jurisdiction. If the Company grants Franchise Owner its written consent thereto,
Franchise Owner agrees to comply with all of the Company's requirements and
restrictions concerning use of information about the Company and its affiliates.
12. EXPIRATION OF AGREEMENT.
A. FRANCHISE OWNER'S RIGHT TO ACQUIRE A SUCCESSOR
FRANCHISE. Subject to the provisions of this Section, upon expiration of the
initial term of this Agreement, if: (a) Franchise Owner has substantially
complied with this Agreement during its term; and (b) (1) Franchise Owner
maintains possession of and agrees to remodel and/or expand the Premises, add or
replace leasehold improvements, equipment, fixtures, furnishings and signs and
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otherwise modify the Restaurant to bring it into compliance with specifications
and standards then applicable for Restaurants, or (2) if Franchise Owner is
unable to maintain possession of the Premises, or in the Company's judgment the
Restaurant should be relocated, Franchise Owner shall secure substitute premises
approved by the Company and agrees to develop such substitute premises in
compliance with specifications and standards then applicable for Restaurants,
subject to the conditions contained in Section 12B below. Franchise Owner shall
have the right to acquire a successor franchise for the Restaurant on the terms
and conditions of the Company's then current Franchise Agreement for
Restaurants. Franchise Owner shall have no obligation to pay an initial
franchise or renewal fee thereunder.
B. GRANT OF A SUCCESSOR FRANCHISE. Franchise Owner shall give the
Company written notice of its election to acquire a successor franchise during
the one hundred eighty (180) days prior to the nineteenth anniversary of the
date of this Agreement. The Company agrees to give Franchise Owner written
notice, not more than one hundred eighty (180) days after receipt of Franchise
Owner's notice, of the Company's decisions to grant or not to grant a successor
franchise (based on the criteria specified in Section 12A above) to Franchise
Owner and/or its willingness to grant a successor franchise on condition that
deficiencies of the Restaurant, the Premises, or the operation of the Restaurant
are corrected. Such notice shall state the actions Franchise Owner must take to
correct such deficiencies and the time period in which to do so. Franchise
Owner's right to acquire a successor franchise shall be subject to Franchise
Owner's compliance with all the terms of this Agreement up to the date of
expiration and may be granted conditionally, subject to remodeling and/or
expanding the Restaurant, replacement of equipment, fixtures, furnishings and
signs, and decorating or other obligations with respect to the Restaurant or the
Premises to be completed before commencement of the term of successor franchise.
The Company shall give the Franchise Owner written notice of a decision
not to grant a successor franchise based upon Franchise Owner's failure to cure
deficiencies not less than ninety (90) days prior to the expiration of this
Agreement; provided, however, that the Company shall not be required to give
such notice to Franchise Owner if the Company decides not to grant a successor
franchise due to Franchise Owner's violation of this Agreement during the ninety
(90)-day period prior to its expiration. In the event the Company fails to give
Franchise Owner: (a) notice of deficiencies of the Restaurant or the Premises,
or in Franchise Owner's operation of the Restaurant within one hundred eighty
(180) days after the receipt of Franchise Owner's timely election to acquire a
successor franchise; or (b) notice of the Company's decision not to grant a
successor franchise (subject to the provisions above) at least ninety (90) days
prior to the expiration of this Agreement, the Company may extend the term of
this Agreement for such period of time as is necessary in order to provide
Franchise Owner reasonable time to correct deficiencies or the ninety (90) days'
notice of the Company's refusal to grant a successor franchise required
hereunder.
C. AGREEMENTS/RELEASES. If the Company grants a successor
franchise to Franchise Owner, Company and Franchise Owner (and the owners of
Franchise Owner) shall execute the form of Franchise Agreement and any ancillary
agreement the Company then customarily uses in granting franchises for the
operation of Restaurants. Franchise Owner and
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Franchise Owner's shareholders or partners (if Franchise Owner is a corporation
or partnership) shall execute general releases, in forms satisfactory to the
Company, of any and all claims against the Company and its affiliates and their
officers, directors, employees, agents, successors and assigns. Failure by
Franchise Owner (and its shareholders or partners) to sign such agreements and
releases within sixty (60) days after delivery thereof to Franchise Owner shall
be deemed an election by Franchise Owner not to acquire a successor franchise.
13. TERMINATION OF AGREEMENT.
If Franchise Owner fails to locate an acceptable site for the
Restaurant within one hundred twenty (120) days after the execution of this
Agreement or open the Restaurant and commence business on the earlier of one
hundred twenty (120) days after the Company's approval of the site for the
Restaurant or the date specified in the prime lease or sublease for the
Premises, provided in Section 2B, the Company shall have the right to terminate
this Agreement effective upon delivery of notice of termination to Franchise
Owner.
Further, the Company shall have the right to terminate this Agreement,
effective upon delivery of notice of termination if Franchise Owner (or its
owners):
(a) abandons or fails actively to operate the Restaurant for three (3)
consecutive days unless the Restaurant has been closed for a purpose approved by
the Company or because of fire, flood or other casualty or act of God;
(b) surrenders or transfers management control of the operation
of the Restaurant without the Company's prior written consent;
(c) has made any material misrepresentation or omission in its
application for the Franchise;
(d) suffers cancellation or termination of the lease or sublease
for the Restaurant;
(e) is or has been convicted of, pleads or has pleaded no contest
to a felony that may adversely affect the goodwill of the Marks or the
reputation of Roadhouse Grill Restaurants;
(f) makes an unauthorized assignment of the Franchise or an
ownership interest in Franchise Owner;
(g) makes any unauthorized use or disclosure of any Confidential
or Proprietary Information or uses, duplicates or discloses any portion of the
Operations Manual in violation of this Agreement;
(h) fails or refuses to comply with any mandatory specification,
standard or operating procedure prescribed by the Company relating to the
cleanliness and sanitation of the Restaurant or
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violates any health, safety or sanitation law, ordinance or regulation and does
not correct such failure or refusal within seventy-two (72) hours after written
notice thereof is delivered to Franchise Owner;
(i) fails to report accurately the Gross Sales of the Restaurant or to
make payments of any amount due the Company for royalty fees, advertising
contributions, or any other amounts due to the Company or its affiliates
hereunder and does not correct such failure within ten (10) days after written
notice of such failure is delivered to Franchise Owner;
(j) fails to pay any Federal or state income, sales or other
taxes arising from the operations of the Restaurant as required in Section 15C
of this Agreement;
(k) fails to comply with any other provision of this Agreement or any
mandatory specification, standard or operating procedure prescribed by the
Company and does not: (A) correct such failure within five (5) days if such
failure relates to the use of any Mark or the quality of the Products in the
Restaurant, otherwise thirty (30) days after written notice of such failure to
comply is delivered to Franchise Owner; or (B) provide proof acceptable to the
Company of efforts which are reasonably calculated to correct such failure if
such failure cannot reasonably be corrected within thirty (30) days after
written notice of such failure to comply is delivered to Franchise Owner;
(l) fails on three (3) or more separate occasions within any period of
twelve (12) consecutive months to submit when due, reports or other data,
information or supporting records or to pay when due the royalty fees,
advertising contributions or other payments due to the Company or its affiliates
or otherwise fails to comply with this Agreement, whether or not such failures
to comply are corrected after notice thereof is delivered to Franchise Owner;
(m) makes an assignment for the benefit of creditors or an
admission of its inability to pay its obligations as they become due or has a
petition in bankruptcy filed; or
(n) does not, in all dealings with customers, suppliers and the public
adhere to the highest standards of honesty, integrity, fair dealing and ethical
conduct.
14. RIGHTS AND OBLIGATIONS OF THE COMPANY AND FRANCHISE OWNER
UPON TERMINATION OR EXPIRATION OF THE FRANCHISE.
A. PAYMENT OF AMOUNTS OWED TO THE COMPANY. Franchise Owner agrees to
pay the Company within thirty (30) days after the effective date of termination
or expiration of the Franchise, or such later date that the amounts due to the
Company are determined, such as royalty fees, advertising contributions, amounts
owed for purchases by Franchise Owner from the Company or its affiliates,
interest due on any of the foregoing and all other amounts owed to the Company
or its affiliates which are then unpaid.
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B. DE-IDENTIFICATION. Franchise Owner agrees that, upon
termination or expiration of this Agreement, Franchise Owner will:
(1) not directly or indirectly at any time or in any manner identify
itself or any business as a current or former Restaurant Franchise Owner,
licensee or dealer of the Company or its affiliates, use any Mark, or any
colorable imitation thereof, or other indicia of a Restaurant in any manner or
for any purpose, or utilize for any purpose a trade name, trademark or service
mark or other commercial symbol that suggests or indicates a connection or
association with the Company or its affiliates;
(2) take such action as may be required to cancel all fictitious
or assumed name or equivalent registrations relating to Franchise Owner's use of
any Mark;
(3) if the Company does not exercise its rights to purchase the assets
of the Restaurant pursuant to Section 14E hereof, Franchise Owner shall promptly
remove from the Premises, and discontinue using for any purpose, any and all
signs, fixtures, furniture, decor items, advertising materials, forms and other
articles which display any of the Marks or any distinctive features, images, or
designs associated with Restaurants, including without limitation, the display
cooking, color schemes, wall signs, booths, tables and counter tops, and at its
expense make such alterations as may be necessary to distinguish the Restaurant
clearly from its former appearance and from other Restaurants as to prevent any
possibility of confusion therewith by the public, including, without limitation,
repainting the exterior of the Restaurant to a new color. If Franchise Owner
fails to initiate immediately or complete such alterations and/or removals
within such time as the Company deems appropriate, Franchise Owner agrees that
the Company or its designated agents may enter the Premises and adjacent areas
without prior notice and forcibly, if necessary, make such alterations and/or
removals, at Franchise Owner's sole risk and expense, without responsibility for
any actual or consequential damages to the property of Franchise Owner or
otherwise, and without liability for trespass or other tort or criminal act.
Franchise Owner expressly acknowledges that its failure to make such alterations
will cause irreparable injury to the Company and consents to entry, (at
Franchise Owner's expense), or an ex-parte order by any court of competent
jurisdiction authorizing the Company or its agents to take such action, if the
Company seeks such an order;
(4) return all materials and supplies identified by the Marks in full
cases or packages to the Company for credit at actual cost to Franchise Owner
and dispose of all other materials and supplies identified by the Marks within
thirty (30) days after the effective date of termination or expiration of this
Agreement;
(5) notify the telephone company and all telephone directory publishers
of the termination or expiration of Franchise Owner's right to use any telephone
number and any regular, classified or other telephone directory listings
associated with any Mark and to authorize transfer thereof to the Company at its
direction. Franchise Owner acknowledges that, as between it and the Company, the
Company has the sole rights to and interest in all telephone numbers and
directory listings associated with any Mark. Franchise Owner authorizes the
Company, and hereby appoints
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the Company and any of its officers as Franchise Owner's attorneys in fact, to
direct the telephone company and all telephone directory publishers to transfer
any telephone numbers and directory listings to the Company at its direction,
should Franchise Owner fail or refuse to do so, and the telephone company and
all telephone director publishers may accept such direction or this Agreement as
conclusive proof of the Company's exclusive rights in such telephone numbers and
directory listings and the Company's authority to direct their transfer; and
(6) furnish the Company, within thirty (30) days after the effective
date of the termination or expiration, evidence satisfactory to the Company of
Franchise Owner's compliance with the foregoing obligations.
C. CONFIDENTIAL INFORMATION. Franchise Owner agrees that, upon
termination or expiration of the Franchise, it will immediately cease to use any
Confidential or Proprietary Information of the Company disclosed to it pursuant
to this Agreement in any business or otherwise and return to the Company all
copies of the Operations Manual and any other confidential materials which have
been loaned to it by the Company. All deposits on loaned materials will be
returned by the Company.
D. COVENANT NOT TO COMPETE. Upon termination of this Agreement by the
Company in accordance with its terms and conditions or by Franchise Owner
without cause, or upon expiration of the term of this Agreement and the
Company's exercise of its right to purchase the Restaurant pursuant to Section
14E hereof, Franchise Owner and its owners agree that, for a period of two (2)
years commencing on the effective date of termination or expiration or the date
on which Franchise Owner ceases to conduct business, whichever is later, neither
Franchise Owner nor its owners shall have any direct or indirect interest
(through a member of the immediate families of Franchise Owner or its owners or
otherwise) as disclosed or beneficial owner, investor, partner, director,
officer, employee, consultant, representative or agent in any other capacity in:
(a) any restaurant business offering steak as the main menu item in conjunction
with other principal products then being offered in Restaurants and located,
operating or engaging in delivery at or from the Premises; (b) any restaurant
business offering steak as the main menu item in conjunction with other
principal products then being offered in Restaurants and located, operating or
engaging in delivery within a radius of twenty (20) miles of the Premises or any
Restaurant in operation or under construction on the effective date of
termination or expiration; or (c) any entity which is granting franchises or
licenses to others to operate any other business serving or selling steak as the
main menu item in conjunction with other principal products then being offered
in Restaurants. The restrictions of this Section shall not be applicable to the
ownership of shares of a class of securities listed on a stock exchange or
traded on the over-the-counter market that represents five percent (5%) or less
of the number of shares of that class of securities issued and outstanding.
Franchise Owner and/or its owners expressly acknowledge that they possess skills
and abilities of a general nature and have other opportunities for exploiting
such skills. Consequently, enforcement of the covenants made in this Section
will not deprive them of their personal goodwill or ability to earn a living.
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E. THE COMPANY HAS THE RIGHT TO PURCHASE RESTAURANT. Upon
expiration or termination, for whatever reason, of the Franchise, the Company
shall have the right, exercisable by giving written notice thereof ("Appraisal
Notice") within ten (10) days after the date of such expiration or termination,
to require a determination of the "Fair Market Value" (as defined below) of all
the tangible assets of the Restaurant which are owned by Franchise Owner,
including, without limitation, inventory of nonperishable Products, materials,
supplies, furniture, fixtures, equipment, signs, and any and all leasehold
improvements and fixtures owned by Franchise Owner, but excluding any cash and
short-term investments (Purchased Assets). Upon such notification, Franchise
Owner shall not sell or remove any of the tangible assets of the Restaurant from
the Premises and shall give the Company, its designated agents and the Appraiser
(as defined below) full access to the Restaurant and the Premises and all of
Franchise Owner's books and records at any time during customary business hours
in order to conduct inventories of the tangible assets of the Restaurant and to
determine the price for the purchase of its tangible assets. The Fair Market
Value shall be the amount which an arm's length purchaser would be willing to
pay for the Purchased Assets, as determined by the Company and Franchise Owner.
If the Company and Franchise Owner are unable to agree on the Fair Market Value
of the Purchased Assets within fifteen (15) days after the Appraisal Notice,
then Fair Market Value shall be finally determined by a member of a nationally
recognized accounting firm (other than a firm which conducts the audit of the
Company's financial statements) selected by the Company who has experience in
the valuation of restaurant businesses (the "Appraiser"). The Company shall
notify Franchise Owner of the identity of the Appraiser, who shall make his or
her determination and submit a written report thereof to the Company and the
Franchise Owner (Appraisal Report) as soon as possible, but in no event more
than sixty (60) days after his or her appointment. Each party may submit in
writing its judgment of Fair Market Value to the Appraiser (together with its
reasons therefore); however, the Appraiser shall not be limited to these
submissions and may make such independent investigations as he or she shall
reasonably determine to be necessary. The Appraiser's fees and costs shall be
borne equally between the parties. The Company shall have the option,
exercisable by delivering written notice thereof within thirty (30) days after
submission of the Appraisal Report (or the date agreement is reached if the
parties agree to the Fair Market Value of the purchased assets), to purchase the
Purchased Assets at the Fair Market Value. The Company shall have unrestricted
right to assign this option to purchase separate and apart from the remainder of
this Agreement. The purchase price for the Purchased Assets shall be paid in
cash at the closing, which shall occur at the place, time and date designated by
the Company, but no later than thirty (30) days after the Company's exercise of
its option to purchase the Purchased Assets. At the closing, the Company shall
be entitled to all warranties, closing documents and post-closing
indemnifications as it may require, including without limitation: (a)
instruments transferring good and merchantable title to the assets purchased,
free and clear of all liens, encumbrances, and liabilities, to the Company or
its designee, with all sales and other transfer taxes paid by Franchise Owner;
and (b) as assignment of Franchise Owner's leasehold interest to the Premises
(or if any assignment is prohibited, a sublease of the Premises to the Company
or its designee for the full remaining term and on the same terms and conditions
as Franchise Owner's lease, including renewal and/or purchase options) or if
Franchise Owner is not the lessee of the Premises and instead directly or
indirectly owns the Premises, Franchise Owner shall grant the Company a lease
for the premises at reasonable rental rates and upon customary terms prevailing
in
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the community where the Premises is located. In the event that Franchise Owner
cannot delivery clear title to all of the assets, or in the event there are
unresolved issues, the closing of the same may at the Company's option be
accomplished through an escrow of such terms and conditions as the Company deems
appropriate. Further, Franchise Owner and the Company shall, prior to closing,
comply with any applicable Bulk Sales provisions of the Uniform Commercial Code
as enacted in the state, and local sales tax notification and/or escrow
procedures. The Company shall have the right to set off against and reduce the
purchase price by any and all amount owed by Franchise Owner to the Company or
any of its affiliates.
F. CONTINUING OBLIGATIONS. All obligations of the Company
and the Franchise Owner which expressly or by their nature survive the
expiration or termination of this Agreement shall continue in full force and
effect subsequent to and notwithstanding its expiration or termination and until
they are satisfied in full or by their nature expire.
15. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.
A. INDEPENDENT CONTRACTORS. It is understood and agreed by the parties
hereto that this Agreement does not create a fiduciary relationship between
them, that the Company and the Franchise Owner are and shall be independent
contractors and that nothing in this Agreement is intended to make either party
a general or special agent, joint venturer, partner or employee of the other for
any purpose. Franchise Owner shall identify itself in all dealings with
customers, suppliers, public officials, Restaurant personnel and others as the
owner of the Restaurant under a franchise granted by the Company and shall place
such notices of independent ownership on such forms, business cards, stationery,
advertising and other materials as the Company may require from time to time.
B. NO LIABILITY FOR ACTS OF OTHER PARTY. Franchise Owner shall not
employ any of the Marks in signing any contract or applying for any license or
permit or in a manner that may result in the Company's liability for any of
Franchise Owner's indebtedness or obligations, nor may Franchise Owner use the
Marks in any way not expressly authorized in writing. Neither the Company nor
Franchise Owner shall make any express or implied agreements, warranties,
guarantees or representations or incur any debt in the name or on behalf of the
other, represent that their relationship is other than franchisor and franchisee
or be obligated by or have any liability under any agreements or representations
made by the other that are not expressly authorized in writing. The Company
shall not be obligated for any damages to any person or property directly or
indirectly arising out of the operation of the Restaurant or Franchise Owner's
business authorized by or conducted pursuant to the Franchise.
C. TAXES. The Company shall have no liability for any sales,
use, service, occupation, excise, gross receipts, income, property or other
taxes, whether levied upon Franchise Owner, the Restaurant, Franchise Owner's
property or upon the Company, in connection with the sales made, or business
conducted by the Franchise Owner (except any taxes the Company is required by
law
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to collect from Franchise Owner with respect to purchases from the Company).
Payment of all such taxes shall be Franchise Owner's responsibility.
D. INDEMNIFICATION. Franchise Owner indemnifies, defends and holds
harmless the Company, its subsidiaries and entities and their shareholders,
directors, officers, employees, agents, successors and assignees ("Indemnified
Parties") against and to reimburse any one or more of them for all claims,
obligations and damages described in this Section, and all taxes described in
Section 15C and any and all claims and liabilities directly or indirectly
arising out of the operation of the Restaurant or the use of the Marks in any
manner not in accordance with this Agreement. Provided that the Franchise Owner
is responsible ONLY to indemnify Company against claims arising out of Franchise
Owner's: i) breach of contract, ii) negligence, iii) civil wrong, or iv) payment
of taxes described in Section 15C above. For purposes of this indemnification,
claims shall mean and include all obligations, actual and consequential damages
and costs reasonably incurred in the defense of any claim against any one or
more of the Indemnified Parties including, without limitation, reasonable
accountants', attorneys', and expert witness fees, cost of investigation and
proof of facts, court costs, other litigation expenses and travel and living
expenses including appellate, bankruptcy and post-judgment proceedings. The
Company shall have the right to defend any such claim against it in such a
manner as the Company deems appropriate or desirable in its discretion. This
indemnity continues in full force and effect subsequent to and notwithstanding
the expiration or termination of this Agreement.
16. ENFORCEMENT.
A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS. Except
as expressly provided to the contrary in this Agreement, each section,
paragraph, term and provision of the Agreement, and any portion thereof, shall
be considered severable and if, for any reason, any such provision of the
Agreement is held to be invalid, contrary to or in conflict with any applicable
present or future law or regulation in a final, unappealable ruling by any
court, agency or tribunal with competent jurisdiction in a proceeding to which
the Company is a party, that such ruling shall not impair the operation of, or
have any other effect upon, or such affect any portions of this Agreement which
shall continue to be given full force and effect and bind the parties hereto,
and any portion held to be invalid shall be deemed not to be a part of this
Agreement as of the date the time for appeal expires, if Franchise Owner is a
party thereto, otherwise upon Franchise Owner's receipt of a notice of
non-enforcement thereof from the Company whichever last occurs. If any covenant
herein which restricts competitive activity is deemed unenforceable by virtue of
its scope in terms of area, business activity prohibited and/or length of time,
but could be enforceable by reducing any part or all thereof, Franchise Owner
and the Company agree that the same shall be enforced to the fullest extent
permissible under the laws and public policies applied in the jurisdiction in
which enforcement is sought. If any applicable and binding law or rule of any
jurisdiction requires a greater prior notice of the termination of or refusal to
enter into a successor franchise than is required hereunder, or if, under any
applicable and binding law or rule of any jurisdiction, any provision of this
Agreement or any specification, standard or operating procedure prescribed by
the Company is invalid or unenforceable, the prior notice and/or other action
required by such law or rule shall be
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substituted for the comparable provisions hereof, and the Company shall have the
right, in its sole discretion, to modify such invalid or unenforceable
provision, specification, standard or operating procedure to the extent required
to be valid and enforceable. Franchise Owner agrees to be bound by any promise
or covenant imposing the maximum duty permitted by law which is assumed within
the terms of any provision hereof, as though it were separately articulated in
and made party of this Agreement, or any specification, standard or operating
procedure by the Company, and portion or portions which a court may hold to be
unenforceable in a final decision to which the Company is a party, or from
reducing the scope of any promise or covenant to the extent required to comply
with such a court order. Such modification to this Agreement shall be effective
only in said jurisdiction, unless the Company elects to give them greater
applicability, and shall be enforced as originally made and entered into in all
other jurisdictions.
B. WAIVER OF OBLIGATIONS. The Company and the Franchise Owner may, by
written instrument, unilaterally waive or reduce any obligation of or
restriction upon the other under this Agreement, effective upon delivery of
written notice thereof to the other or such other effective date stated in the
notice of waiver. Any waiver granted by the Company shall be without prejudice
to any other rights the Company may have, will be subject to continuing review
by the Company and may be revoked, in the Company's sole discretion, at any time
for any reason, effective upon delivery to Franchise Owner of ten (10) days'
prior written notice. The Company and Franchise Owner shall not be deemed to
have waived or impaired any right, power or option reserved by the Agreement
(including, without limitation, the right to demand exact compliance with every
term, condition and covenant herein or to declare any breach thereof to be a
default and to terminate the Franchise prior to the expiration of its term) by
virtue of any custom or practice of the parties at variance with the terms
hereof; any failure, refusal or neglect of the Company or Franchise Owner to
exercise any right under this Agreement or to insist upon exact compliance by
the other with its obligations under this Agreement including, without
limitation, any mandatory specification, standard or operating procedure; any
waiver, forbearance, delay, failure or omission by the Company to exercise any
right, power or option, whether of the same, similar or different nature, with
respect to other Restaurants; or the acceptance by the Company of any payments
due from Franchise Owner after any breach of this Agreement. Neither the Company
nor Franchise Owner shall be liable for loss or damage or deemed to be in breach
of this Agreement if its failure to perform its obligations results from: (a)
transportation shortages, inadequate supply of equipment, merchandise, supplies,
labor, material or energy or the voluntary foregoing in order to accommodate to
comply with the orders, requests, regulations, recommendations or instructions
of any Federal, state or municipal government or any department or agency
thereof; (b) compliance with any law, ruling, order, regulation, requirements or
instruction of any Federal, state or municipal government or any department or
agency thereof; (c) acts of God; (d) fires, strikes, embargoes, war or riot; or
(e) any other similar event or cause. Any delay resulting from any of said
causes shall extend performance accordingly or excuse performance in whole or in
part, as may be reasonable, except that said causes shall not excuse payments of
amounts owed at the time of such occurrence or payment of royalties due on any
sales thereafter.
C. INJUNCTIVE RELIEF. Nothing contained herein shall bar:
(a) the Company's right to obtain injunctive relief against threatened conduct
that will cause it irreparable loss or
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damages, under customary equity rules, including applicable rules for obtaining
restraining orders and preliminary injunctions; or (b) in any dispute regarding
possession of the Premises, the Company's right to obtain the remedy of forcible
detainer against Franchise Owner for any breach of a sublease for the Premises
under customary rules governing such actions. Franchise Owner agrees that the
Company may have such injunctive relief, without bond, but upon due notice, in
addition to such further and other relief as may be available at equity or law,
and the sole remedy of Franchise Owner in the event of the entry of such
injunction shall be the dissolution of such injunction, if warranted, upon
hearing duly had (all claims for damages by reason of the wrongful issuance of
any such injunction being expressly waived hereby). All such action shall be
brought as provided in Section 16F below.
D. RIGHTS OF PARTIES ARE CUMULATIVE. The rights of the Company and the
Franchise Owner under this Agreement are cumulative and no exercise or
enforcement by the Company or Franchise Owner of any right or remedy under this
Agreement shall preclude the exercise or enforcement by the Company or Franchise
Owner of any other right or remedy under this Agreement which the Company or
Franchise Owner is entitled by law to enforce.
E. COSTS AND ATTORNEYS' FEES. If a claim for amounts owed by
Franchise Owner to the Company is asserted in any judicial or arbitration
proceeding or appeal thereof, or if the Company or Franchise Owner is required
to enforce this Agreement in a judicial or arbitration proceeding or appeal
thereof, the party prevailing in such proceedings shall be awarded its costs and
expenses including, but not limited to, reasonable accounting, paralegal, expert
witness, attorneys' and arbitrators fee, whether incurred prior to, in
preparation for or in contemplation of the filing of any written demand, claim,
action, hearing or proceeding to enforce the obligations of this Agreement.
F. GOVERNING LAW/CONSENT TO JURISDICTION. THIS AGREEMENT, THE FRANCHISE
AND THE RELATIONSHIP BETWEEN THE COMPANY AND THE FRANCHISE OWNER SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF FLORIDA, EXCEPT FOR SECTION 14D WHICH SHALL
BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE RESTAURANT IS LOCATED.
FRANCHISE OWNER AGREES THAT THE COMPANY MAY INSTITUTE ANY ACTION AGAINST
FRANCHISE OWNER TO ENFORCE THE ARBITRATION PROVISIONS OF THIS AGREEMENT OR ON
CAUSES OF ACTION NOT TO BE ARBITRATED PURSUANT HERETO OR PURSUANT TO LAW IN ANY
STATE OR FEDERAL COURT OF GENERAL JURISDICTION IN BROWARD COUNTY, FLORIDA AND
THE FRANCHISE OWNER IRREVOCABLY SUBMITS TO THE JURISDICTION OR VENUE OF SUCH
COURTS AND WAIVES ANY OBJECTION IT MAY HAVE TO EITHER THE JURISDICTION OR VENUE
OF SUCH COURTS.
G. BINDING EFFECT. This Agreement is binding upon the parties
hereto and their respective personal representatives, heirs, assigns and
successors in interest and shall not be modified except by written agreement
signed by both Franchise Owner and the Company.
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H. LIMITATIONS OF CLAIMS. Any and all claims arising out of
this Agreement or the relationship among the parties hereto must be made by
written notice to the other party within eighteen (18) months from the
occurrence of the facts giving rise to such claim, except to the extent any
applicable law or statute provides for a shorter period of time to bring a
claim.
I. WAIVER OF PUNITIVE DAMAGES. Except with respect to Franchise
Owner's obligation to indemnify the Company pursuant to Section 15D, the parties
and their owners and guarantors waive to the fullest extent permitted by law any
right to or claim for any punitive or exemplary damages against the other and
agree that, in the event of a dispute between them, the party making a claim
shall be limited to a recovery of any actual damages it sustains.
J. ARBITRATION. ALL CONTROVERSIES, DISPUTES OR CLAIMS ARISING BETWEEN
THE COMPANY, AND ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES AND ATTORNEYS (IN
THEIR REPRESENTATIVE CAPACITY), AND FRANCHISE OWNER (ITS OWNERS AND GUARANTORS,
IF APPLICABLE), SHALL BE SUBMITTED FOR ARBITRATION TO THE FT. LAUDERDALE FLORIDA
OFFICE OF THE AMERICAN ARBITRATION ASSOCIATION ON DEMAND OF EITHER PARTY. SUCH
ARBITRATION PROCEEDINGS SHALL BE CONDUCTED IN FT. LAUDERDALE, FLORIDA AND, SHALL
BE CONDUCTED BY ONE (1) ARBITRATOR IN ACCORDANCE WITH THE THEN CURRENT
COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. THE
ARBITRATOR SHALL HAVE THE RIGHT TO AWARD OR INCLUDE IN HIS OR HER AWARD ANY
RELIEF WHICH HE OR SHE DEEMS PROPER IN THE CIRCUMSTANCES INCLUDING, WITHOUT
LIMITATION, MONEY DAMAGES (WITH INTEREST ON UNPAID AMOUNTS FROM THE DUE DATE),
SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF AND ATTORNEYS' FEES AND COSTS IN
ACCORDANCE WITH THIS SECTION. THE AWARD AND DECISION OF THE ARBITRATOR SHALL BE
CONCLUSIVE AND BINDING UPON ALL PARTIES HERETO AND JUDGMENT UPON THE AWARD MAY
BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION. EACH PARTY HERETO AGREES TO
CONTEST ANY SUCH AWARD ONLY IN THE DISTRICT IN WHICH THE ARBITRATION AWARD WAS
ENTERED. THE PARTIES FURTHER AGREE IN CONNECTION WITH ANY SUCH ARBITRATION
PROCEEDING TO BE BOUND BY THE PROVISIONS OF RULE 13 OF THE FEDERAL RULES OF
CIVIL PROCEDURE WITH RESPECT TO COMPULSORY COUNTERCLAIMS (AS THE SAME MAY BE
AMENDED FROM TIME TO TIME), PROVIDED ANY SUCH COUNTERCLAIM SHALL BE FILED WITHIN
THIRTY (30) DAYS OF THE FILING OF THE ORIGINAL CLAIM. WITHOUT LIMITING THE
FOREGOING, THE PARTIES SHALL BE ENTITLED IN ANY SUCH ARBITRATION PROCEEDING TO
THE ENTRY OF AN ORDER BY A COURT OF COMPETENT JURISDICTION PURSUANT TO AN
OPINION OF THE ARBITRATOR FOR SPECIFIC PERFORMANCE OF ANY OF THE REQUIREMENTS OF
THIS AGREEMENT. THIS AGREEMENT TO ARBITRATE SHALL CONTINUE IN FULL FORCE AND
EFFECT SUBSEQUENT TO AND NOTWITHSTANDING THE EXPIRATION OR TERMINATION OF THIS
AGREEMENT. FRANCHISE OWNER AND THE COMPANY AGREE THAT ARBITRATION SHALL BE
CONDUCTED ON AN INDIVIDUAL, NOT A CLASS-WIDE BASIS.
K. DEFINITIONS. The preambles, exhibits and any specifications,
standards, operating procedures and rules the Company uses pursuant to this
Agreement are a part of this Agreement, which constitutes the entire agreement
of the parties, and there are not other oral or written understandings or
agreements between the Company and Franchise Owner relating to the subject
matter of this Agreement. Nothing in the Agreement is intended or shall be
deemed to confer any rights or remedies upon any person or legal entity not a
party hereto. Except where this Agreement expressly obligates the Company
reasonably to approve or not unreasonably to withhold its approval of any action
or request by Franchise Owner, the Company has the absolute right to refuse any
request by Franchise Owner or to withhold its approval of any action by
Franchise Owner. The headings of the several sections and paragraphs hereof are
for convenience only and do not
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define, limit or construe the contents of such sections or paragraphs. The term
"affiliate" as used herein is applicable to any company directly or indirectly
owned or controlled by, under common control with or owning or controlling the
Company that sells Products or otherwise transacts business with Franchise
Owner. The term Franchise Owner as used herein is applicable to one or more
persons, a corporation or a partnership, as the case may be, and the singular
usage includes the plural and the masculine and neuter usages include the other
and the feminine. If two or more persons are at any time Franchise Owner
hereunder, whether or not as partners or joint venturers, their obligations and
liabilities to the Company shall be joint and several. References to "Franchise
Owner" or "assignee" if an individual, or "owners" if Franchise Owner of
assignee is a corporation or partnership, shall mean the principal owners of
Franchise Owner or assignee, unless the terms or provision is made expressly
applicable to all shareholders and partners. "Principal owners" means any person
owning, of record or beneficially, ten percent (10%) or more of the equity or
voting power of Franchise Owner or assignee. References to management control in
Franchise Owner shall mean control of the equity or voting control of Franchise
Owner. This Agreement shall be executed in multiple copies each of which shall
be deemed an original. Time is of the essence in this Agreement.
17. NOTICES AND PAYMENTS.
All written notices and reports permitted or required to be delivered
by the provisions of this Agreement or the Operations Manual shall be deemed
delivered at the time delivered by hand, one (1) business day after transmission
be telegraph or other electronic system, one (1) business day after being placed
in the hands of a commercial courier service for overnight delivery, or five (5)
business days after placement in the United States Mail by Registered or
Certified Mail, Return Receipt Requested, postage prepaid and addressed to the
party to be notified at its most current principal business address of which the
notifying party has been notified in writing. All payments and reports required
by this Agreement shall be sent to the Company at the address to which Franchise
Owner is notified from time to time, or to such other persons and places as the
Company may direct from time to time.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Agreement.
FRANCHISOR: FRANCHISE OWNER:
ROADHOUSE GRILL, INC. ___________________________________
a Florida corporation
By:_____________________________ By:________________________________
Title:___________________________ Title:_____________________________
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EXHIBIT A
TO THE ROADHOUSE GRILL, INC.
FRANCHISE AGREEMENT
LOCATION OF THE PREMISES/PROTECTED AREA
The Premises of the Restaurant will be located at:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
The Protected Area will be as follows:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
ROADHOUSE GRILL, INC., A FLORIDA
CORPORATION
__________________________________ By:___________________________________
FRANCHISE OWNER
Title:________________________________
____________________________________
FRANCHISE OWNER
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EXHIBIT B
TO THE ROADHOUSE GRILL, INC.
FRANCHISE AGREEMENT
RESTAURANT LOCATION AREA
Pursuant to Section 2A of this Agreement, if the location of the Restaurant has
not been approved at the time of execution hereof, the area will be as follows:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
ROADHOUSE GRILL, INC., A FLORIDA
CORPORATION
__________________________________ By:____________________________________
FRANCHISE OWNER
Title: ________________________________
__________________________________
FRANCHISE OWNER
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EXHIBIT C
TO THE ROADHOUSE GRILL, INC.
FRANCHISE AGREEMENT
GUARANTY AND ASSUMPTION OF
FRANCHISE OWNER'S OBLIGATIONS
In consideration of, and as an inducement to, the execution of this
Franchise Agreement for the location described herein, dated as of
______________________, 199___ (the "Agreement") by and between ROADHOUSE GRILL,
INC. (the "Company"), and _________________________ ("Franchise Owner"), each of
the undersigned ("GUARANTORS"), each owning ten percent (10%) or more of the
equity or voting power of Franchise Owner, hereby personally and
unconditionally: (a) guarantees to the Company and its successors and assigns,
for the term of the Agreement and thereafter as provided in the Agreement, that
Franchise Owner shall punctually pay and perform each and every undertaking,
agreement and covenant set forth in the Agreement; and (b) agrees personally to
be bound by, and personally liable for the breach of, each and every provision
in the Agreement. Each of the undersigned waives: (1) acceptance and notice of
acceptance by the Company of the foregoing undertakings; (2) notice of demand
for payment of any indebtedness or nonperformance of any obligations hereby
guaranteed; (3) protest and notice of default to any party with respect to the
indebtedness or nonperformance of any obligations hereby guaranteed; (4) any
right he or she may have to require that an action be brought against Franchise
Owner or any other person as a condition of liability; and (5) any and all other
notices and legal or equitable defenses to which he or she may be entitled. Each
of the undersigned consents and agrees that: (A) his or her direct and immediate
liability under this guarantee shall be joint and several; (B) he or she shall
render any payment or performance required under the Agreement upon demand if
Franchise Owner fails or refuses punctually to do so; (C) such liability shall
not be contingent or conditioned upon pursuit by Company of any remedies against
Franchise Owner or any other person; and (D) such liability shall not be
diminished, relieved or otherwise affected by an extension of time, credit or
other indulgence which the Company may from time to time grant to Franchise
Owner or to any other person including, without limitation, the acceptance of
any partial payment or performance or the compromise or release of any claims,
none of which shall in any way modify or amend this guaranty, which shall be
continuing and irrevocable during the term of the Agreement.
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IN WITNESS WHEREOF, each of the undersigned has hereunto affixed his or her
signature, under seal, on the same day and year as the Agreement was executed.
PERCENTAGE OF OWNERSHIP GUARANTOR(S)
INTEREST IN FRANCHISE
_________________________ ____________________________________
_________________________ ____________________________________
_________________________ ____________________________________
DATE:______________________________
39
EXHIBIT 10.4
ROADHOUSE GRILL, INC.
1994 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this Plan is to further the growth of Roadhouse
Grill, Inc., a Florida corporation (the "Company") by offering an incentive to
officers, directors, other key employees and consultants of the Company to
continue in the employ of the Company, and to increase the interest of these
employees in the Company, through additional ownership of its common stock.
2. DEFINITIONS
Whenever used in this Plan, the following terms shall have the
meanings set forth in this Section:
(a) "Board of Directors" means the Board of Directors
of the Company.
(b) "Change of Control" means the acquisition by any person or
group (as that term is defined in the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules promulgated pursuant to that act) in
a single transaction or a series of transactions of 30% or more in voting power
of the outstanding stock of the Company and a change of the composition of the
Board of Directors so that, within two years after the acquisition took place, a
majority of the members of the Board of Directors of the Company, or of any
corporation with which the Company may be consolidated or merged, are persons
who were not directors or officers of the Company or one of its Subsidiaries
immediately prior to the acquisition, or to the first of a series of
transactions which resulted in the acquisition of 30% or more in voting power of
the outstanding stock of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Stock Option Committee of the
Company.
(e) "Common Stock" means the common stock, par value $0.01
per share, of the Company.
(f) "Corporate Transaction" means any (i) reorganization or
liquidation of the Company, (ii) reclassification of the Company's capital
stock, (iii) merger of the Company with or into another corporation, or (iv) the
sale of all or substantially all the assets of the Company, which results in a
significant number of Employees being transferred to a new employer or
discharged or in the creation or severance of a parent-subsidiary relationship.
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(g) "Date of Grant" means, as the case may be: (i) the date
fixed in this Plan for mandatory grants of Options; (2) the date the Committee
approves the grant of an Option pursuant to this Plan; or (3) such later date as
may be specified by the Committee as the date a particular Option granted
pursuant to this Plan will become effective.
(h) "Employee" means any person employed by the Company within
the meaning of Section 3401(c) of the Code and the regulations promulgated
thereunder. For purposes of any Non-Qualified Option only, any officer, director
or consultant of the Company shall be considered an Employee even if he is not
an employee within the meaning of the first sentence of this subsection.
(i) "Exercise Price" means the price per share which must be
paid upon exercise of an Option. The Exercise Price may be paid in cash,
property (including Common Stock) or a combination of both cash and property, as
determined by the Employee upon exercise of the Option and as set forth in
Section 9(c) hereof.
(j) "Fair Market Value" means: (i) if the Common Stock is
traded in a market in which actual transactions are reported, the mean of the
high and low prices at which the Common Stock is reported to have traded on the
relevant date in all markets on which trading in the Common Stock is reported
or, if there is no reported sale of the Common Stock on the relevant date, the
mean of the highest reported bid price and lowest reported asked price for the
Common Stock on the relevant date; (ii) if the Common Stock is Publicly Traded
but only in markets in which there is no reporting of actual transactions, the
mean of the highest reported bid price and the lowest reported asked price for
the Common Stock on the relevant date; or (iii) if the Common Stock is not
Publicly Traded, the value of a share of Common Stock as determined by the most
recent valuation prepared by an independent expert at the request of the
Committee.
(k) "Incentive Stock Option" means any Option which, at the
time of the grant, is an incentive stock option within the meaning of Section
422 of the Code.
(l) "Non-Qualified Option" means any Option that is not an
Incentive Stock Option pursuant to the terms of this Plan.
(m) "Option" means any option granted pursuant to this Plan.
(n) "Publicly Traded" means that a class of stock is required
to be registered pursuant to Section 12 of the Exchange Act, or that stock of
that class has been sold within the preceding 12 months in an underwritten
public offering, or stock that is regularly traded in a public market.
(o) "Retirement" means a Termination of Employment by reason
of an Employee's retirement at a time when the Employee is at least 65 years
old, other than by reason of a termination by resignation, discharge, death or
Total Disability or the resignation, failure to stand for re-election or
dismissal from the Board of Directors.
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(p) "Termination of Employment" means the time when the
employee-employer relationship between an Employee and the Company ceases to
exist for any reason including, but not limited to, a termination by
resignation, discharge, death, Total Disability or Retirement or the
resignation, failure to stand for re-election or dismissal from the Board of
Directors.
(q) "Total Disability" means the inability of an Employee to
perform the material duties of his or her job by reason of a medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a continuous period of
not less than 12 months. All determinations as to the date and extent of
disability, if any, of the Company by which the Employee is employed. In the
absence of a written policy pertaining to Employee disability, all
determinations as to the date and extent of disability of an Employee will be
made by the Committee in its sole and absolute discretion. In making its
determination, the Committee may consider the opinion of the personal physician
of the Employee or the opinion of an independent licensed physician of the
Company's choosing.
3. EFFECTIVE DATE OF THE PLAN
The "Effective Date" of this Plan is February 14, 1994. This
Plan shall become effective on the Effective Date, subject to approval of the
Plan not later than 12 months from the Effective Date, by the affirmative vote
or consent of the holders of a majority of the shares of voting stock of the
Company outstanding at the time of the approval.
4. ADMINISTRATION OF THE PLAN
The Committee shall be responsible for the administration of
this Plan, and shall grant Options pursuant to this Plan. Subject to the express
provisions of this Plan, the Committee shall have full authority to interpret
this Plan, to prescribe, amend and rescind rules and regulations relating to it,
and to make all other determinations which it believes to be necessary or
advisable in administering this Plan. The determinations of the Committee on the
matters referred to in this Section shall be conclusive. The Committee may not
amend this Plan. No member of the Committee shall be liable for any act or
omission in connection with the administration of this Plan unless it resulted
from the member's willful misconduct.
5. THE COMMITTEE
The Committee shall hold its meeting at such times and places
as it may determine and shall maintain written minutes of its meetings. A
majority of the members of the Committee shall constitute a quorum at any
meeting of the Committee. All determinations of the Committee shall be made by
the vote of a majority of the members who participate in a meeting. The members
of the Committee may participate in a meeting of the Committee in person or by
conference telephone or similar communications equipment by means of which all
members of the Committee shall be as effective as if it had been made by a vote
of a majority of the members who participate in a meeting.
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<PAGE>
6. STOCK SUBJECT TO THE PLAN
The maximum number of shares of Common Stock as to which
Options may be granted pursuant to this Plan is Two Hundred Thousand (200,000)
shares. If any Option expires or is canceled without being exercised in full,
the number of shares as to which the Option is not exercised will once again
become shares as to which new Options may be granted. The Common Stock that is
issued on exercise of Options may be authorized but unissued shares or shares
that have been issued and reacquired by the Company.
7. PERSONS ELIGIBLE TO RECEIVE OPTIONS
Options may be granted only to Employees, as defined in
Section 2(h) above.
8. GRANTS OF OPTIONS
Except as otherwise provided herein (including but not limited
to subsections (b) and (c) of this Section 8), the Committee shall have complete
discretion to determine when and to which Employees Options are to be granted,
the number of shares of Common Stock as to which Options granted to each
Employee will relate, whether Options granted to an Employee will be Incentive
Stock Options or Non-Qualified Options or partly Incentive Stock Options and
partly Non-Qualified Options and, subject to the limitations in Sections 9 and
10 below, the Exercise Price and the term of Options granted to an Employee. Any
Options that are not designated as Incentive Stock Options when they are granted
shall be Non-Qualified Options. No grant of an Incentive Stock Option may be
conditioned upon a Non-Qualified Option's having yet been exercised in whole or
in part, and no grant of a Non-Qualified Option may be conditioned upon an
Incentive Stock Option's having not been exercised in whole or in part.
Notwithstanding the foregoing, from the date that the Company registers a class
of equity securities under Section 12(g) of the Exchange Act, directors who are
members of the Committee shall not receive options pursuant to the Plan other
than pursuant to subsection (b) below, so long as they are serving on the
Committee, and may not have received options pursuant to the Plan other than
pursuant to subsection (b) below, or pursuant to any other plan of the Company,
during the period which is the shorter of (i) the twelve month period
immediately prior to their becoming a member of the Committee, or (ii) the
period that the Company has been subject to Section 12(g).
9. OPTION PROVISIONS
(a) EXERCISE PRICE. The Exercise Price of each Option
shall be as determined by the Committee; provided, however, that in the case of
Incentive Stock Options, the Exercise Price shall not be less than 100% of the
Fair Market Value of the Common Stock on the Date of Grant of the Option; and,
provided further, however, that notwithstanding the foregoing, the Exercise
Price of Non-Qualified Options for directors granted pursuant to Section 8(b)
above shall be 100% of the Fair Market Value of the Common Stock on the Date of
Grant of the Option.
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(b) TERM. The term of each Option shall be as determined by
the Committee, but in no event shall the term of an Option (whether or not an
Incentive Stock Option) be longer than ten (10) years from the Date of Grant.
(c) MANNER OF EXERCISE. An Option that has vested pursuant to
the terms of this Plan may be exercised in whole or in part, in increments of a
minimum of 100 shares, at any time, or from time to time, during its term. To
exercise an Option, the Employee exercising the Option must deliver to the
Company, at its principal office:
(i) a written notice of exercise of the Option,
which states the extent to which the Option is being exercised and which is
executed by the Employee;
(ii) a check in an amount, or Common Stock with
a Fair Market Value, equal to the Exercise Price of the Option times the number
of shares being exercised, or a combination of the foregoing; and
(iii) a check equal to any withholding taxes the
Company is required to pay as a result of the exercise of the Option by the
Employee.
The day on which the Company receives all of the
items specified in this subsection shall be the date on which the Option is
exercised to the extent described in the notice of exercise.
(d) DELIVERY OF STOCK CERTIFICATES. As promptly as practicable
after an Option is exercised, the Company shall cause the transfer agent to
deliver to the Employee who exercises the Option certificates, registered in
that person's name, representing the number of shares of Common Stock that were
purchased by the exercise of the Option. Unless the Common Stock was issued in a
transaction that was registered pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), each certificate may bear a legend to indicate
that if the Common Stock represented by the certificate was issued in a
transaction that was not registered pursuant to the Securities Act, and may only
be sold or transferred in a transaction that is registered pursuant to the
Securities Act or is exempt from the registration requirements of the Securities
Act.
(e) VESTING OF OPTIONS. Except as otherwise provided in this
Plan, the Options granted hereunder to Employees shall be subject to such
conditions as to vesting as shall be determined by the Committee, in its sole
and absolute discretion, at the Date of Grant of the Option, and the terms of
such vesting shall be clearly set forth in the instrument granting the
Option; provided, however, that upon a Change of Control, any Options that have
not yet vested in accordance with the terms of this Plan and the Stock Option
Agreement shall vest upon such Change of Control. An Option shall "vest" at such
time as it becomes exercisable in accordance with this Plan and the Stock Option
Agreement. Upon exercise of an Option and the delivery of the stock certificates
as provided herein, the Common Stock acquired upon exercise of the Option shall
not be subject to forfeiture by the Employee for any reason whatsoever.
Notwithstanding any of the foregoing, an officer, director
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or person who beneficially owns ten percent (10%) or more of the Common Stock
(including Options to acquire Common Stock) shall not sell or otherwise dispose
of Common Stock acquired upon exercise of an Option granted hereunder until at
least six months shall elapse from latter of (i) the Effective Date of the Plan,
or (ii) the Date of Grant of the Option to the date of sale or other disposition
of the Common Stock acquired upon exercise of the Option.
(f) NONTRANSFERABILITY OF OPTIONS. During the lifetime of a
person to whom an Option is granted pursuant to this Plan, the Option may be
exercised only by that person or by his or her guardian or legal representative.
An Option may not be assigned, transferred, sold, pledged or hypothecated in any
way; shall not be subject to levy or execution or disposition under the
Bankruptcy Code of 1978, as amended, or any other state or federal law granting
relief to creditors, whether now or hereafter in effect; and shall not be
transferable otherwise than by will or the laws of descent and distribution. The
Company will not recognize any attempt to assign, transfer, sell, pledge,
hypothecate or otherwise dispose of an Option contrary to the provisions of this
Plan, or to levy any attachment, execution or similar process upon any Option
and, except as expressly stated in this Plan, the Company shall not be required
to, and shall not, issue Common Stock on the exercise of an Option to anyone who
claims to have acquired that Option from the person to whom it was granted in
violation of this subsection.
(g) RETIREMENT OF HOLDER OF OPTION. If there is a Termination
of Employment of an Employee to whom an Option has been granted due to
Retirement, each Incentive Stock Option held by the retired Employee, whether or
not then vested, may be exercised until the earlier of: (x) the end of the three
(3) month period immediately following the date of such Termination of
Employment; or (y) the expiration of the term specified in the Option. In the
case of a Non-Qualified Option, there shall be substituted the words, "the end
of the twelve (12) month period) for the words "the end of the three (3) month
period" in the immediately preceding sentence.
(h) TOTAL DISABILITY OF HOLDER OF OPTION. If there is a
Termination of Employment of an Employee to whom an Option has been granted by
reason of his or her Total Disability, each Option held by the Employee, whether
or not then vested, may be exercised until the earlier of: (x) the end of the
twelve (12) month period immediately following the date of such Termination of
Employment; or (y) the expiration of the term specified in the Option.
(i) DEATH OF HOLDER OF OPTION. If there is a Termination of
Employment of an Employee to whom as Option has been granted by reason of (i)
his or her death, or (ii) the death of a former Employee within three (3) months
following the date of his or her Retirement (or, in the case of a Non-Qualified
Option, within twelve (12) months following the date of his or her Retirement),
or (iii) the death of a former Employee within twelve (12) months following the
date of his or her Termination of Employment by reason of Total Disability, then
each Option held by the person at the time of his or her death, whether or not
then vested, may be exercised by the person or persons to whom the Option shall
pass by will or by the laws of descent and distribution (but by no other
persons) until the earlier of: (x) the end of the twelve (12) month period
immediately following the date of death (or such longer period as is permitted
by the Committee); and (y) the expiration of the
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<PAGE>
term specified in the Option, provided, however, that in no event is the
term of the Option to be deemed to expire prior to the end of three (3) months
from the date of death of the Employee.
(j) TERMINATION OF EMPLOYMENT OTHER THAN FOR RETIREMENT, DEATH
OR DISABILITY. If there is a Termination of Employment of an Employee to whom an
Option has been granted pursuant to this Plan for any reason other than the
Retirement, death or Total Disability of the Employee, then all Options held by
such Employee which are then vested may be exercised until the earlier of: (x)
the three (3) month period immediately following the date of such Termination of
Employment; or (y) the expiration of the term specified in the Option.
(k) STOCK OPTION AGREEMENT. As promptly as practicable after
an Employee is granted an Option pursuant to this Plan, the Committee shall send
the Employee a document setting forth the terms and conditions of the grant. The
form of grant document shall be substantially as set forth in Exhibit "A"
attached hereto. Each Option granted pursuant to this Plan must be clearly
identified as to whether it is or is not an Incentive Stock Option and shall set
forth all other terms and conditions relating to the exercise thereof. In the
case of an Incentive Stock Option, the document shall include all terms and
provisions that the Committee determines to be necessary or desirable in order
to qualify the Option as an Incentive Stock Option within the meaning of Section
422 of the Code. If an Employee is granted an Incentive Stock Option and a
Non-Qualified Option at the same time, the Committee shall send the Employee a
separate document relating to each of the Incentive Stock Option and the
Non-Qualified Option.
10. SPECIAL PROVISIONS RELATING TO INCENTIVE STOCK OPTIONS
No Incentive Stock Option may be granted pursuant to this Plan
after ten (10) years from the first to occur of: (i) the date this Plan is
adopted by the Board of Directors; or (ii) the date this Plan is approved by the
stockholders of the Company. No Incentive Stock Option may be exercised after
the expiration of ten (10) years from the Date of Grant or such shorter period
as is provided herein. Notwithstanding Section 8(b), Incentive Stock Options may
not be granted to an Employee who, at the time the Option is granted, owns more
than ten (10%) percent of the total combined voting power of the stock of the
Company, unless: (i) the purchase price of the Common Stock pursuant to the
Incentive Stock Option is at least 110 percent of the Fair Market Value of the
Common Stock on the Date of Grant; and (ii) the Incentive Stock Option by its
terms is not exercisable after the expiration of five (5) years from the Date of
Grant. The Committee is authorized, pursuant to the last sentence of Section
422(b) of the Code, to provide at the time an Option is granted, pursuant to the
terms of such Option, that such Option shall not be treated as an Incentive
Stock Option even though it would otherwise qualify as an Incentive Stock
Option. The terms of any Incentive Stock Option granted hereunder shall, in the
hands of any individual grantee thereof, be subject to the dollar limitations
set forth in Section 422(d) of the Code (pertaining to the $100,000 per year
limitation).
11. RECAPITALIZATION
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(a) IN GENERAL. If the Company increases the number of
outstanding shares of Common Stock through a stock dividend or a stock split, or
reduces the number of outstanding shares of Common Stock through a combination
of shares or similar recapitalization then, immediately after the record date
for the change: (i) the number of shares of Common Stock issuable on the
exercise of each outstanding Option granted pursuant to this Plan (whether or
not then vested) shall be increased in the case of a stock dividend or a stock
split, or decreased in the case of a combination or similar recapitalization
that reduces the number of outstanding shares, by a percentage equal to the
percentage change in the number of outstanding shares of Common Stock as a
result of the stock dividend, stock split, combination or similar
recapitalization; (ii) the Exercise Price of each outstanding Option granted
pursuant to this Plan (whether or not then vested) shall be adjusted so that the
total amount to be paid upon exercise of the Option in full will not change; and
(iii) the number of shares of Common Stock that may be issued on exercise of
Options granted pursuant to this Plan (whether or not then vested) and that are
outstanding or remain available for grant shall be increased or decreased by a
percentage equal to the percentage change in the number of outstanding shares of
Common Stock. Any fractional shares will be rounded up to whole shares.
(b) CORPORATE TRANSACTIONS. If, as a result of a Corporate
Transaction while an Option granted pursuant to this Plan is outstanding
(whether or not then vested), and the holders of the Common Stock become
entitled to receive, with respect to their Common Stock, securities or assets
other than, or in addition to, their Common Stock, then upon exercise of that
Option the holder shall receive what the holder would have received if the
holder had exercised the Option immediately before the first Corporate
Transaction that occurred while the Option was outstanding and as if the Company
had not disposed of anything the holder would have received as a result of that
and all subsequent Corporate Transactions. The Company shall not agree to any
Corporate Transaction unless the other party to the Corporate Transaction agrees
to make available on exercise of the Options granted pursuant to this Plan that
are outstanding at the time of the Corporate Transaction, the securities or
other assets the holders of those Options are entitled pursuant to this
subsection to receive.
12. RIGHTS OF OPTION HOLDER
(a) STOCKHOLDER. The holder of an Option (whether or
not then vested) shall not have any rights as a stockholder by reason of holding
that Option. Upon exercise of an Option granted pursuant to this Plan, the
holder shall be deemed to acquire the rights of a stockholder when, but not
before, the issuance of Common Stock as a result of the exercise is recorded in
the stock transfer records of the Company.
(b) EMPLOYMENT. Nothing in this Plan or in the grant of an
Option shall confer upon any Employee the right to continue in the employ of the
Company or shall interfere with or restrict in any way the rights of the Company
to discharge any Employee at any time for any reason whatsoever, with or without
cause.
13. LAWS AND REGULATIONS
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The obligation of the Company to sell and deliver shares of
Common Stock on vesting and exercise of Options granted pursuant to this Plan
shall be subject to the condition that counsel for the Company be satisfied that
the sale and delivery thereof will not violate the Securities Act or any other
applicable laws, rules or regulations. In addition, the Company may, as a
condition to such sale and delivery, require the Employee to represent and
warrant at the time of any such exercise that the shares are being purchased
only for investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation is
required pursuant to such securities laws.
This Plan is intended to meet the requirements of Rule 16(b)-3
in order to provide directors and executive officers with certain exemptions
from the application of Section 16(b) of the Exchange Act.
14. WITHHOLDING OF TAXES
(a) IN GENERAL. In addition to the requirement set forth in
Section 9(c) above that, in order to exercise an Option granted pursuant to this
Plan a person must make a payment to the Company or authorize withholding in
order to enable the Company to pay any withholding taxes due as a result of the
exercise of that Option, if an Employee who exercised an Incentive Stock Option
disposes of shares of Common Stock acquired through exercise of that Incentive
Stock Option either (x) within two years after the Date of Grant of the
Incentive Stock Option or (y) within one year after the issuance of the shares
on exercise of the Incentive Stock Option then, promptly thereafter, the
Employee shall notify the Company of the occurrence of the event and the amount
realized upon the disposition of such Common Stock by the Employee, and pay any
federal, state and other taxes due as a result thereof.
(b) WITHHOLDING OF TAXES. If, whether because of a disposition
of Common Stock acquired on exercise of an Incentive Stock Option, the exercise
of a Non-Qualified Option or otherwise, the Company becomes required to pay
withholding taxes to any federal, state or other taxing authority and the
Employee fails to provide the Company with the funds with which to pay that
withholding tax, then the Company may withhold, subject to applicable state law,
up to 50% of each payment of salary or bonus to the Employee (which will be in
addition to any other required or permitted withholding), until the Company has
been reimbursed for the entire withholding tax it was required to pay.
15. RESERVATION OF SHARES
The Company shall at all times keep reserved for issuance on
exercise of Options granted pursuant to this Plan a number of authorized but
unissued or reacquired shares of Common Stock equal to the maximum number of
shares the Company may be required to issue on exercise of outstanding Options
(whether or not then vested) granted pursuant to this Plan.
16. AMENDMENT OF THE PLAN
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The Board of Directors may, at any time and from time to time,
modify or amend this Plan in any respect at any date the Board of Directors
determines; provided, however, that, without the approval of the stockholders of
the Company the Board of Directors may not: (i) increase the maximum number of
shares of Common Stock that may be issued on exercise of Options (whether or not
then vested) granted pursuant to this Plan; (ii) change the categories of
Employees eligible to receive Options; (iii) extend the period during which
Options (whether or not then vested) may be exercised; (iv) change the
provisions fixing the minimum Exercise Price; or (v) change the provisions as to
termination of Options. No modification or amendment of this Plan shall, without
the consent of the holder of an outstanding Option (whether or not then vested),
adversely affect the holder's rights pursuant to that Option.
17. TERMINATION OF THE PLAN
The Board of Directors may suspend or terminate this Plan at
any time or from time to time, but no such action shall adversely affect the
rights of a person holding an outstanding Option, whether or not then vested,
granted pursuant to this Plan prior to that date.
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EXHIBIT A
ROADHOUSE GRILL, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of ___, 199___, by and between ROADHOUSE
GRILL, INC, (the "Company") and ___________, who is an employee, officer,
consultant or director of the Company or one of its subsidiaries
(the "Employee").
WHEREAS, the Employee is a valuable and trusted employee, officer,
consultant or director of the Company, and the Company considers it desirable
and in its best interests that the Employee be given an inducement to acquire a
further proprietary interest in the Company, and an added incentive to advance
the interests of the Company by possessing a right (the "Option Right") to
purchase shares of the Company's common stock, $.01 par value (the "Option
Stock"), in accordance with the Roadhouse Grill, Inc. 1994 Stock Option Plan
(the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. DEFINITIONS. All terms not defined herein and defined in the
Plan shall be giver the meaning expressed in the Plan.
2. GRANT OF OPTION. The Company hereby grants to the Employee the
right, privilege and option to purchase the number of shares
of Option Stock, at the purchase price as shown on Schedule I
attached hereto (the "Option Price"), in the manner and
subject to the conditions hereinafter provided in this
Agreement and as provided in the Plan. The Option Right
granted hereunder is either an Incentive Stock Option or
Non-Qualified Option, as specified on Schedule I.
3. TIME OF EXERCISE OF OPTION. The aforesaid Option Right may be
exercised at any time, subject to Section 4, below, and from
time to time, until the termination thereof as provided in
Section 5, below, or as otherwise provided in the Plan;
provided, however, that the Option Right granted herein may
not be exercised after the termination date as shown on
Schedule I, unless provided otherwise in the Plan.
4. VESTING OF OPTION RIGHT. The Option Right shall vest as
provided on Schedule I.
5. METHOD OF EXERCISE. The Option Right shall be exercised in
whole or in part, in increments of a minimum of 100 shares
(unless the total Option Right is for less than 100 shares),
at any time, or from time to time, during its term. To
exercise an option, the Employee shall deliver written notice
in the form attached hereto as Schedule II to the Company at
its principal place of business, accompanied by payment of the
Option Price per share and in
<PAGE>
compliance with such other conditions and requirements as
set forth in the Plan. Payment shall be made by a check and/or
by submitting certificates of Common Stock of the Company
endorsed to the Company, which shall be given their Fair
Market Value on the date of exercise of the Option Right, and
by a check equal to any withholding taxes that the Company is
required to pay as a result of the exercise of the Option by
the Employee. Such an exchange of Common Stock, however, is
subject to prior receipt of an opinion of the Company's
counsel that the exchange is allowable for all purposes under
the securities laws of the United States and the laws of
applicable states.
Subject to the terms and conditions set forth in the Plan, as
promptly as practicable after an Option is exercised, the
Company shall deliver such shares issuable upon exercise of
the Option.
6. TERMINATION OF EMPLOYMENT. The rights and obligations of the
Employee upon Termination of Employment shall be as set forth
in the Plan.
7. RESTRICTIONS ON RESALES. An Employee who may be deemed an
"affiliate" of the Company, as that term is defined by the
United States Securities and Exchange Commission (the "SEC"),
may not resell the shares purchased hereunder except pursuant
to registration under the Securities Act of 1933, as amended
(the "Securities Act") or an exemption therefrom. Generally,
directors, executive officers and holders of ten percent or
more of the Company's shares may be regarded as affiliates of
the Company.
An affiliate who desires to reoffer and resell shares acquired
from the Company hereby may do so pursuant to the applicable
requirements of Rule 144 under the Securities Act, including
the provisions governing the amount of securities that may be
sold during any three-month period, the manner of sale and the
filing of a Form 144 notice. Alternatively, such an affiliate
may reoffer or resell such shares pursuant to a separate
reoffer prospectus, if one is available. The amount of shares
that may be reoffered or resold pursuant to such prospectus by
such affiliate, and any other persons with whom such affiliate
is acting in concert for the purpose of selling shares, may be
subject to limitations specified in Rule 144(e). The
Employee's status as an affiliate is determined at the time of
the exercise of the Option.
Resale of shares issuable hereunder may be subject to other
state and federal securities law. The Employee is advised to
consult with legal counsel as to compliance with the
Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and such other laws prior to
resale of such shares.
-2-
<PAGE>
Under the plan, the Company, as a condition to the exercise of
an Option to acquire shares not registered under the
Securities Act, may require the Employee to represent and
warrant at the time of any exercise that the shares are being
purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion
of counsel for the Company, such a representation is required
by the Securities Act.
8. RECLASSIFICATION, MERGER, ETC. The rights and obligations of
the Company and the Employee as result of the transactions
specified in Section 11 of the Plan shall be as provided
therein.
9. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option Right is
nonassignable and nontransferable by the Employee except as
provided in the Plan and, during his lifetime, is exercisable
only by him. The Employee shall have no rights as a
stockholder with respect to the Stock Option until payment of
the Option Price and delivery to hire of such shares as herein
provided. Nothing in this Agreement shall confer any right in
an employee to continue in the employment of the Company or
interfere in any way with the right of the Company to
terminate such employment at any time.
10. BINDING EFFECT. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ROADHOUSE GRILL, INC.
By: ______________________ By: ______________________________
Charles D. Barnett, J. David Toole, III, President
Secretary
-3-
<PAGE>
I hereby accept the Stock Option Right offered to me by the Company, as
set forth in this Stock Option Agreement dated as of_____, 19____ and
Schedule I, which is attached thereto.
Accepted by:
_________________________________
Employee
_________________________________
Date
-4-
<PAGE>
SCHEDULE I
The information set forth in this Schedule I is subject to all of the
terms of the Roadhouse Grill, Inc. Stock Option Agreement to which this Schedule
is attached.
1. Name of Employee, Officer, Consultant or Director:
______________________________________________________________________
2. Address:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
3. Social Security Number:______________________________________
4. Number of Shares:____________________________________________
5. Exercise Price: $________per share.
6. Type of Option (check one):
__ Incentive Stock Option
X Non-Qualified Stock Option
7. NUMBER OF SHARES DATE VESTED TERMINATION DATE
-5-
<PAGE>
SCHEDULE II
NOTICE OF EXERCISE
I, the undersigned Employee, hereby give notice of the exercise of the
Option described below, to the extent and in the manner specified herein,
subject to all of the terms and conditions of the Roadhouse Grill, Inc. Stock
Option Agreement granting this Option and the Roadhouse Grill, Inc. 1994 Stock
Option Plan. If the shares to be acquired pursuant to this exercise of the
Option are not registered under the Securities Act of 1933, as amended, the
undersigned represents and warrants that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares.
1. Name of Employee, Officer, Consultant or Director:
______________________________________________________________________
2. Address:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
3. Social Security Number:______________________________________
4. Number of Shares Being Exercised on This Date:
_____________________________________________________________
5. Exercise Price: $______per share
6. Manner of Payment:
_____ Check (amount enclosed: $__________________________
_____ Stock Certificates (subject to receipt of
opinion of counsel, as specified in Section 5 of the
Stock Option Agreement)
______________________________
Signature
______________________________
Print Name
-6-
<PAGE>
ROADHOUSE GRILL, INC.
MINUTES OF THE
MEETING OF THE BOARD OF DIRECTORS
MAY 3, 1995
A meeting of the Board of Directors of Roadhouse Grill, Inc.
("Corporation") was held at 10:00 a.m. on May 3, 1995, at 899 West Cypress Creek
Road, Suite 500, Fort Lauderdale, Florida. Present at the meeting were Governor
John Y. Brown, Jr., J. David Toole, III and Dr. Christian F. Horn. Also present
by invitation was Charles D. Barnett. Mr. Brown acted as Chairman of the meeting
and Mr. Barnett recorded the proceedings.
The Chairman declared a quorum present pursuant to proper notice of the
meeting.
The Chairman stated that the first order of business was the review and
approval of the minutes of the Board of Directors meeting held on September 26,
1994. After each director reviewed the minutes, upon motion duly made by Dr.
Horn and seconded by Mr. Toole, the following resolution was unanimously
adopted:
RESOLVED, that the minutes of Board of Directors meeting held
on September 26, 1994 as submitted to the Board of Directors are hereby
approved.
The next order of business to come before the Board of Directors was
the expansion of the Board and the election of additional directors. Upon motion
duly made by Dr. Horn and seconded by Mr. Toole, the following resolution was
unanimously adopted:
RESOLVED, that the Board of Directors is hereby expanded to
five members; and
FURTHER RESOLVED, that Tan Sri Dato'Vincent Tan Chee Yioun and
K. P. Tan are hereby elected as Directors to fill the two vacancies on
the Board of Directors, each to serve as a Director until the next
annual meeting of Shareholders or until his earlier resignation or
removal.
The Chairman called upon Mr. Toole to review the financial results of
the Corporation including the year to date results, the plan for the balance of
1995 and the capital budget. Mr. Toole reviewed in detail the financial results
and presented to the Board the financial statements for the period ending April
23, 1995. The Board then discussed the financial needs of the Corporation. After
a full discussion, the Board decided that the Corporation should raise
additional capital through the sale of additional shares of common stock. Mr.
Barnett reported that there is currently outstanding an offer by several of the
existing shareholders to purchase additional shares of the Corporation's common
stock. The
<PAGE>
Board agreed to sell an additional 1,250,000 shares of common stock at $3.20 per
share. Thereupon, after a full discussion and upon motion duly made and
seconded, the following was unanimously adopted by the Board of Directors:
WHEREAS, there has been presented to this Board of Directors
and this Board of Directors has carefully reviewed, the proposed
purchase and sale agreement between the Corporation and the various
investors listed therein (the "Agreement"), a copy of which is attached
hereto; and
WHEREAS, this Board of Directors has determined that it is in
the best interest of the Corporation to enter into the Agreement and
consummate the transactions covered and contemplated thereby;
NOW THEREFORE, BE IT RESOLVED, that the Corporation hereby
ratifies the actions through the date hereof by its officers, agents
and attorneys in furtherance of its consummation of the Agreement; and
FURTHER RESOLVED, that the officers of the Corporation are
hereby authorized, directed and empowered to accept the Agreement on
behalf of the Corporation; and
FURTHER RESOLVED, that upon delivery of the executed Agreement
and related documents and of the purchase price of $3.20 per share by
each purchaser for a total of 1,250,000 of the Corporation's Common
Voting Stock, the Corporation shall issue the appropriate certificate
to each purchaser for the shares purchased; and
FURTHER RESOLVED, that the appropriate officers of the
Corporation are hereby authorized, empowered and directed to take such
further action and to execute and deliver such additional documents, as
any of them may deem necessary or appropriate to effectuate the intent
purposes of the foregoing resolutions and the Agreement referred to
therein.
Mr. Toole reported to the Board on the status of various real estate
transactions and potential leases for the Corporation. The Chairman requested
that Mr. Toole obtain approval of the business terms on any future real estate
transactions from Dr. Horn and himself. The Chairman assured Mr. Toole that this
process would not delay the approval or execution of any proposed transaction.
The Chairman conducted a general discussion regarding the expansion of
the Corporation. Expansion by means of franchising was discussed. Additionally,
the Chairman discussed the concept of the Corporation "going public" through a
merger into Clucker's Wood Roasted Chicken, Inc. The Board authorized the
Chairman to explore these possibilities further.
<PAGE>
The Chairman next discussed the terms of employment for Mr. Toole. The
Chairman stated that at the time of the last offering of shares, Mr. Toole had
agreed to certain changes in his employment agreement. The following specific
changes were agreed to:
1. Mr. Toole's incentive compensation will change from 10% of the
profits from the first 4 restaurants to 5% of the pre-tax profits after
depreciation and general and administrative expenses on a consolidated basis.
The change in incentive compensation shall occur when Mr. Toole will receive
greater compensation from 5% of pre-tax profits.
2. The term of the employment agreement is extended for three
additional years.
3. Mr. Toole is granted an option to purchase an additional 500,000
shares at $2.50 per share.
4. Mr. Toole will enter into a non-compete agreement with the
Corporation for a period of three years following termination of his employment.
The Chairman requested that Mr. Barnett draft an employment agreement
reflecting the tenons outlined at this meeting.
The Chairman requested that the Board considered the granting of
options pursuant the Corporation's Stock Option Plan. The Board discussed the
stock option plan and the establishment of criteria for qualified individuals to
earn options. The Board discussed the expansion of the number of shares
permitted to be issued pursuant to the plan. After a full discussion and upon
motion duly made, seconded and unanimously carried, the following resolutions
were adopted:
WHEREAS, the Corporation deems it advisable to increase the number of
shares of common stock that may be issued pursuant to the stock option
plan; and
WHEREAS, the Corporation deems it advisable at this time to grant stock
options to each of the employees listed on Schedule A attached hereto
in the amounts listed beside the name of each employee;
NOW, THEREFORE, IT IS
RESOLVED, that the number of shares subject to the
Corporation's 1994 Stock Option Plan is hereby increased from 200,000
shares to 350,000 shares; and
FURTHER RESOLVED, that each of the individuals listed on
Schedule A attached hereto are hereby granted options to purchase the
number of shares of the Corporation's common stock listed beside each
individual's name at a price of Two and 50/100 Dollars ($2.50) per
share with
<PAGE>
the date of grant being January 1, 1995. One-third (1/3) of such
options shall become exercisable on January 1st of each of the next
three (3) years and will remain exercisable for a period for five (5)
years thereafter, provided that the individual receiving the option
remains an officer, director, employee or consultant of the
Corporation; and
FURTHER RESOLVED, that Christian F. Horn, as a director and
consultant to the Corporation, is hereby granted an option to purchase
15,000 shares of the Corporation's common stock at a price of Two and
50/100 Dollars ($2.50) per share with the date of grant being October
1, 1994. One- third (1/3) of such options shall become exercisable on
September 30 of each of the next three (3) years and will remain
exercisable for a period for five (5) years thereafter, provided that
the individual receiving the option remains a director or consultant of
the Corporation; and
FURTHER RESOLVED, that Charles D. Barnett, a consultant to the
Corporation, is hereby granted an option to purchase five thousand
(5,000) shares of the Corporation's common stock at a price of Two and
50/100 Dollars ($2.50) per share with the date of grant being May 1,
1995. One-third (1/3) of such options shall become exercisable on April
30 of each of the next three (3) years and will remain exercisable for
a period for five (5) years thereafter, provided that the individual
receiving the option remains a consultant of the Corporation; and
FURTHER RESOLVED, that the appropriate officers of the
Corporation are hereby authorized and directed to execute and deliver
such documents as may be necessary or proper to effect the foregoing
resolutions.
The Chairman thanked the members of the board for attending the meeting
and stated that since there was no further business, the meeting was adjourned.
/s/ CHARLES D. BARNETT
------------------------------
Charles D. Barnett
Secretary
Approved:
/s/ JOHN Y. BROWN, JR.
- --------------------------
John Y. Brown, Jr.
Chairman
<PAGE>
ROADHOUSE GRILL, INC.
MINUTES OF THE
MEETING OF THE BOARD OF DIRECTORS
APRIL 30, 1996
A meeting of the Board of Directors of Roadhouse Grill, Inc.
("Corporation") was held at 10:00 a.m. on April 30, 1996, at the Westin Hotel,
Fort Lauderdale, Florida. The following directors were present at the meeting:
Governor John Y. Brown, Jr., Tan Sri Dato Vincent Tan, K. P. Tan, J. David
Toole, III and Dr. Christian F. Horn. Also present by invitation was Charles D.
Barnett and Dennis Jones. Mr. Brown acted as Chairman of the meeting and Mr.
Barnett recorded the proceedings.
The Chairman declared a quorum present pursuant to proper notice of the
meeting.
The Chairman stated that the first order of business was the review and
approval of the minutes of the Board of Directors meeting held on January 5,
1996. After each director reviewed the minutes, upon motion duly made by Dr.
Horn and seconded by Mr. K. P. Tan, the following resolution was unanimously
adopted:
RESOLVED, that the minutes of Board of Directors meeting held
on January 5, 1996 as submitted to the Board of Directors are hereby
approved with the following clarifications of the resolution dealing
with the formation of Roadhouse Grill Asia Pacific and the development
agreement with the Corporation:
1. The royalty fee payable to the Corporation for restaurants
developed by Bejaya or its affiliates will be 2% of gross
sales for the first 3 years a restaurant is opened and 3% of
gross sales thereafter. There will be no franchise fee for
these restaurants only payment of out of pocket expenses.
2. The royalty fee payable to the Corporation for restaurants
developed by third party franchisees will be 50% of the amount
paid to Roadhouse Grill Asia Pacific, not to exceed 2.5% of
gross sales. The franchise fee for each of these restaurants
will be 50% of the amount paid to Roadhouse Grill Asia
Pacific, not to exceed $ 10,000 per restaurant.
3. Roadhouse Grill Asia Pacific is to be responsible for all
franchiser services to be provided to restaurants developed by
Bejaya or third party franchisees. The Corporation will be
paid a fee to be agreed upon for any services to be provided
by it.
<PAGE>
The Board then reviewed the proposed investment in Roadhouse Grill Asia
Pacific and the capital needed to establish the company. After a thorough review
of these costs, the Board determined that the capital of the Corporation was
better utilized in developing new restaurants in the United States. The Board
requested that Berjaya provide all of the capital for the establishment of
Roadhouse Grill Asia Pacific with the result that Roadhouse Grill Asia Pacific
would be a wholly owned subsidiary of the Berjaya Group.
Mr. Toole then reviewed with Board of Directors the Corporation's
financial projections and compared them with other restaurant companies in this
segment of the market.
At this time Mr. Toole requested that Robertson Stephens & Co. make its
presentation to the Board. Kenneth R. Fitzsimmons, Jr., Jeffrey T. Seely and
Andrew M. Barish presented to the Board its general ideas on the value of the
Corporation and the prospects of the Corporation conducting an initial public
offering of common stock. The Board questioned the values given and the
comparison made with competing restaurant companies. The Board thanked the
representatives of Robertson Stephens & Co. for the presentation and told them
the Board would make a decision shortly concerning the direction the Corporation
would take regarding an IPO.
Mr. Toole reviewed with the Board the new products the Corporation is
intending to introduce in 1996. Mr. Toole described the food items being tested
and the results of these tests. Mr. Toole also showed the Board the T-shirts and
caps that the restaurants intend to begin selling during 1996. Mr. Toole then
reviewed the planned store openings for the balance of 1996 and 1997.
The Chairman stated the next order of business was consideration of
stock options to be granted from the Corporation's stock option plan. The
Chairman explained that the plan currently has the right to grant options for
350,000 shares, of which 189,000 had previously been granted. Mr. Toole
presented a plan for the granting of options for the remaining 161,000 shares.
Mr. Toole explained that he believed the shares subject to the plan should be
increased by 300,000 shares so that additional options can be granted to current
employees and so that the plan would have additional shares to be held in
reserve for newly hired employees and promotions of existing employees. The
Board reviewed with Mr. Toole the suggested grants of options he presented and
suggested certain changes to the amounts being granted. After a full discussion
and upon motion made by Mr. Toole and seconded by Dr. -3XHorn, the following
resolutions were unanimously adopted:
WHEREAS, the Corporation deems it advisable to increase the number of
shares of common stock that may be issued pursuant to the stock option
plan; and
WHEREAS, the Corporation deems it advisable at this time to grant stock
options to each of the employees listed on Schedule A attached hereto
in the amounts listed beside the name of each employee;
2
<PAGE>
NOW, THEREFORE, IT IS
RESOLVED, that the number of shares subject to the
Corporation's 1994 Stock Option Plan is hereby increased from 350,000
shares to 650,000 shares; and
FURTHER RESOLVED, that each of the individuals listed on
Schedule A attached hereto are hereby granted options to purchase the
number of shares of the Corporation's common stock listed beside each
individual's name at a price of Three and 60/100 Dollars ($3.60) per
share with the date of grant being January 1, 1996. One-third (1/3) of
such options shall become exercisable on January 1 of each of the next
three (3) years and will remain exercisable for a period for five (5)
years thereafter, provided that the individual receiving the option
remains an officer, director, employee or consultant of the
Corporation; and
FURTHER RESOLVED, that each of Vincent Tan Chee Yioun and K.
P. Tan, as directors of the Corporation, is hereby granted an option to
purchase 15,000 shares of the Corporation's common stock at a price of
Three and 60/100 Dollars ($3.60) per share with the date of grant being
January 1, 1996. One-third (1/3) of such options shall become
exercisable on January 1 of each of the next three (3) years and will
remain exercisable for a period for five (5) years thereafter, provided
that the individual receiving the option remains a director or
consultant of the Corporation; and
FURTHER RESOLVED, that Charles D. Barnett, a consultant to the
Corporation, is hereby granted an option to purchase fifteen thousand
(15,000) shares of the Corporation's common stock at a price of Three
and 60/1 00 Dollars ($3.60) per share with the date of grant being
January 1, 1996. One-third (1/3) of such options shall become
exercisable on January 1 of each of the next three (3) years and will
remain exercisable for a period for five (5) years thereafter, provided
that the individual receiving the option remains a consultant of the
Corporation; and
FURTHER RESOLVED, that the appropriate officers of the
Corporation are hereby authorized and directed to execute and deliver
such documents as may be necessary or proper to effect the foregoing
resolutions.
At this point in the meeting, Governor Brown announced that he was
resigning as a director of the Corporation and was nominating Vincent Tan Chee
Yioun to be the Chairman of the Board. On behalf of Bejaya, both Vincent Tan
Chee Yioun and K. P. Tan thanked Governor Brown for his services to the
Corporation and the guidance he provided Mr. Toole and the Corporation. They
appreciated his bringing this opportunity to Berjaya. Dr. Horn also thanked
Governor Brown on behalf of himself and his investors. He praised
3
<PAGE>
Governor Brown's guidance and the time he spent assisting Mr. Toole. Upon motion
made by Dr. Horn and seconded by Mr. K. P. Tan, the following motion was
unanimously adopted by the Board of Directors:
RESOLVED, that the Board of Directors does hereby accept the
resignation of John Y. Brown, Jr.; and
FURTHER RESOLVED, that Vincent Tan Chee Yioun is hereby
elected Chairman of the Board to serve at the pleasure of the Board of
Directors.
After Governor Brown left the meeting, the directors agreed that the
Corporation would make an appropriate gift to Governor Brown in recognition of
his services in founding the Corporation and as Chairman.
Mr. Toole then asked the representatives of Piper Jaffray, Inc. to make
their presentation to the Board. Representing Piper Jaffray were Allan F.
Hickok, Paul R. Jevnick, Rob J. Nicoski and Darren L. Acheson. These individuals
described Piper Jaffray's strengths and reviewed their analysis of the value of
the Corporation. The Board discussed the comparables that were used and the
projections that were made. The Piper representatives then discussed the
prospects of the Corporation to have an initial public offering of securities.
The Board thanked the Piper representatives for their presentation and their
comments.
After the Piper representatives left, the Chairman then led a
discussion on whether the Corporation should have a public offering of
securities. The Board agreed that it was in the best interests of the
Corporation to pursue an IPO. The Board further agreed that it would prefer to
have Piper Jaffray, Inc., act as the lead underwriter with Robertson Stephens &
Company act as the second underwriter.
The Chairman thanked the members of the board for attending the meeting
and stated that since there was no further business, the meeting was adjourned.
/s/ CHARLES D. BARNETT
--------------------------
Charles D. Barnett
Secretary
4
EXHIBIT 10.5
ROADHOUSE GRILL, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of ___, 199___, by and between ROADHOUSE
GRILL, INC, (the "Company") and ___________, who is an employee, officer,
consultant or director of the Company or one of its subsidiaries
(the "Employee").
WHEREAS, the Employee is a valuable and trusted employee, officer,
consultant or director of the Company, and the Company considers it desirable
and in its best interests that the Employee be given an inducement to acquire a
further proprietary interest in the Company, and an added incentive to advance
the interests of the Company by possessing a right (the "Option Right") to
purchase shares of the Company's common stock, $.01 par value (the "Option
Stock"), in accordance with the Roadhouse Grill, Inc. 1994 Stock Option Plan
(the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. DEFINITIONS. All terms not defined herein and defined in the
Plan shall be giver the meaning expressed in the Plan.
2. GRANT OF OPTION. The Company hereby grants to the Employee the
right, privilege and option to purchase the number of shares
of Option Stock, at the purchase price as shown on Schedule I
attached hereto (the "Option Price"), in the manner and
subject to the conditions hereinafter provided in this
Agreement and as provided in the Plan. The Option Right
granted hereunder is either an Incentive Stock Option or
Non-Qualified Option, as specified on Schedule I.
3. TIME OF EXERCISE OF OPTION. The aforesaid Option Right may be
exercised at any time, subject to Section 4, below, and from
time to time, until the termination thereof as provided in
Section 5, below, or as otherwise provided in the Plan;
provided, however, that the Option Right granted herein may
not be exercised after the termination date as shown on
Schedule I, unless provided otherwise in the Plan.
4. VESTING OF OPTION RIGHT. The Option Right shall vest as
provided on Schedule I.
5. METHOD OF EXERCISE. The Option Right shall be exercised in
whole or in part, in increments of a minimum of 100 shares
(unless the total Option Right is for less than 100 shares),
at any time, or from time to time, during its term. To
exercise an option, the Employee shall deliver written notice
in the form attached hereto as Schedule II to the Company at
its principal place of business, accompanied by payment of the
Option Price per share and in
<PAGE>
compliance with such other conditions and requirements as
set forth in the Plan. Payment shall be made by a check and/or
by submitting certificates of Common Stock of the Company
endorsed to the Company, which shall be given their Fair
Market Value on the date of exercise of the Option Right, and
by a check equal to any withholding taxes that the Company is
required to pay as a result of the exercise of the Option by
the Employee. Such an exchange of Common Stock, however, is
subject to prior receipt of an opinion of the Company's
counsel that the exchange is allowable for all purposes under
the securities laws of the United States and the laws of
applicable states.
Subject to the terms and conditions set forth in the Plan, as
promptly as practicable after an Option is exercised, the
Company shall deliver such shares issuable upon exercise of
the Option.
6. TERMINATION OF EMPLOYMENT. The rights and obligations of the
Employee upon Termination of Employment shall be as set forth
in the Plan.
7. RESTRICTIONS ON RESALES. An Employee who may be deemed an
"affiliate" of the Company, as that term is defined by the
United States Securities and Exchange Commission (the "SEC"),
may not resell the shares purchased hereunder except pursuant
to registration under the Securities Act of 1933, as amended
(the "Securities Act") or an exemption therefrom. Generally,
directors, executive officers and holders of ten percent or
more of the Company's shares may be regarded as affiliates of
the Company.
An affiliate who desires to reoffer and resell shares acquired
from the Company hereby may do so pursuant to the applicable
requirements of Rule 144 under the Securities Act, including
the provisions governing the amount of securities that may be
sold during any three-month period, the manner of sale and the
filing of a Form 144 notice. Alternatively, such an affiliate
may reoffer or resell such shares pursuant to a separate
reoffer prospectus, if one is available. The amount of shares
that may be reoffered or resold pursuant to such prospectus by
such affiliate, and any other persons with whom such affiliate
is acting in concert for the purpose of selling shares, may be
subject to limitations specified in Rule 144(e). The
Employee's status as an affiliate is determined at the time of
the exercise of the Option.
Resale of shares issuable hereunder may be subject to other
state and federal securities law. The Employee is advised to
consult with legal counsel as to compliance with the
Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and such other laws prior to
resale of such shares.
-2-
<PAGE>
Under the plan, the Company, as a condition to the exercise of
an Option to acquire shares not registered under the
Securities Act, may require the Employee to represent and
warrant at the time of any exercise that the shares are being
purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion
of counsel for the Company, such a representation is required
by the Securities Act.
8. RECLASSIFICATION, MERGER, ETC. The rights and obligations of
the Company and the Employee as result of the transactions
specified in Section 11 of the Plan shall be as provided
therein.
9. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option Right is
nonassignable and nontransferable by the Employee except as
provided in the Plan and, during his lifetime, is exercisable
only by him. The Employee shall have no rights as a
stockholder with respect to the Stock Option until payment of
the Option Price and delivery to hire of such shares as herein
provided. Nothing in this Agreement shall confer any right in
an employee to continue in the employment of the Company or
interfere in any way with the right of the Company to
terminate such employment at any time.
10. BINDING EFFECT. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ROADHOUSE GRILL, INC.
By: ______________________ By: ______________________________
Charles D. Barnett, J. David Toole, III, President
Secretary
-3-
<PAGE>
I hereby accept the Stock Option Right offered to me by the Company, as
set forth in this Stock Option Agreement dated as of_____, 19____ and
Schedule I, which is attached thereto.
Accepted by:
_________________________________
Employee
_________________________________
Date
-4-
<PAGE>
SCHEDULE I
The information set forth in this Schedule I is subject to all of the
terms of the Roadhouse Grill, Inc. Stock Option Agreement to which this Schedule
is attached.
1. Name of Employee, Officer, Consultant or Director:
______________________________________________________________________
2. Address:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
3. Social Security Number:______________________________________
4. Number of Shares:____________________________________________
5. Exercise Price: $________per share.
6. Type of Option (check one):
__ Incentive Stock Option
X Non-Qualified Stock Option
7. NUMBER OF SHARES DATE VESTED TERMINATION DATE
-5-
<PAGE>
SCHEDULE II
NOTICE OF EXERCISE
I, the undersigned Employee, hereby give notice of the exercise of the
Option described below, to the extent and in the manner specified herein,
subject to all of the terms and conditions of the Roadhouse Grill, Inc. Stock
Option Agreement granting this Option and the Roadhouse Grill, Inc. 1994 Stock
Option Plan. If the shares to be acquired pursuant to this exercise of the
Option are not registered under the Securities Act of 1933, as amended, the
undersigned represents and warrants that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares.
1. Name of Employee, Officer, Consultant or Director:
______________________________________________________________________
2. Address:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
3. Social Security Number:______________________________________
4. Number of Shares Being Exercised on This Date:
_____________________________________________________________
5. Exercise Price: $______per share
6. Manner of Payment:
_____ Check (amount enclosed: $__________________________
_____ Stock Certificates (subject to receipt of
opinion of counsel, as specified in Section 5 of the
Stock Option Agreement)
______________________________
Signature
______________________________
Print Name
-6-
EXHIBIT 10.6
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this "Sublease") is made as of this 31st day of
July, 1995, by and between EQUITABLE REAL ESTATE INVESTMENT MANAGEMENT, INC. and
COMPASS MANAGEMENT AND LEASING, INC. (collectively, the "Lessor") and ROADHOUSE
GRILL, INC. (the "Lessee").
WITNESSETH:
WHEREAS, Lessor is a party to that certain Standard Office Lease dated
September 13, 1993 (the "Prime Lease") by and between THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES (the "Landlord"" as landlord and Lessor
as tenant, a copy of which as attached hereto as Exhibit "A"; and
WHEREAS, subject to the terms and conditions hereinafter set forth,
Lessor desires to sublease to Lessee, and Lessee desires to sublease from
Lessor, a portion of the Premises (as such term is defined in the Prime Lease)
consisting of approximately 7,580 square feet of rentable area which is
stipulated and agreed by the parties and more particularly identified as Suite
160 on Exhibit "A" attached to the Prime Lease (the "Demised Premises").
NOW, THEREFORE, in consideration at the foregoing premises, the mutual
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEMISE. Lessor hereby leases and demises to Lessee, and Lessee
hereby leases and hires from Lessor, the Demised Premises. The Demised Premises
are leased in "AS IS" condition as on the date hereof. Any improvements or
refurbishments desired by Lessee shall be at its expense and prosecuted in
accordance with Section 12 of the Prime Lease, although Lessor's approval for
such improvements or refurbishments shall not be required so long as Lessee
obtains Landlord's approval for same.
2. TERM. The term of this Sublease (the "Term") shall commence on
September 1, 1995 and shall terminate on September 30, 1998. So long as Lessee
is not in default of its obligations under this Sublease beyond any applicable
grace period, Lessor agrees it shall not exercise the Cancellation Option set
forth in Paragraph 4 of that certain First Addendum attached to the Prime Lease.
3. RENT. Lessee shall pay to Lessor annual Base Rent with respect to
the Demised Premises at the applicable per square foot rate set forth in the
Prime Lease with respect to the Premises. Lessee shall also pay Overhead Rent
(as such term is defined in the Prime Lease) with respect to the Premises, and
in connection with same, Tenant's Share (as such term is used in the Prime
Lease) shall be 6.1%. Notwithstanding the foregoing, Lessor waives and Lessee
shall not be obligated to pay Base Rent and Overhead Rent for the months of
September and October of 1995; provided, however, in the event of a default by
Lessee under this Sublease which remains uncured beyond any applicable grace
period (as contemplated by the effect of Paragraph 8 below), such abated amounts
shall be immediately due and payable by Lessee to Lessor.
<PAGE>
4. SECURITY DEPOSIT AND PREPAID BASE RENT. Upon its execution of this
Sublease, Lessee shall pay Lessor Base Rent for the first month in which same is
due under this Sublease and a Security Deposit equal to one month of Base Rent
plus sales tax ($11,570.00). The rights and obligations of Lessor and Lessee
with respect to the Security Deposit shall be governed by Paragraph 4.A. of the
Prime Lease as though Lessor were the Landlord and Lessee the Tenant under the
Prime Lease.
5. FURNITURE. The conference and reception furniture with the exception
of one foyer table located against the wall to the right of the receptionist is
hereby transferred by Lessor to Lessee. All pictures, mirror, planters,
furniture and other decorative items remain the property of Lessor and may be
removed by Lessor from the Premises at any time.
6. PARKING. Lessor hereby assigns to Lessee the use of 14 of its
covered parking spaces and 14 of its uncovered parking spaces.
7. ASSIGNMENT AND SUBLETTING. This Sublease is personal to Lessee, and
Lessee may not assign all or any portion of this Sublease or sublet all or any
portion of the Demised Premises. Any purported assignment of this Sublease or
sublet of the Demised Premises shall be null and void.
8. PRIME LEASE. This Sublease is subject and subordinate in all
respects to the Prime Lease. Except as otherwise expressly set forth in this
Sublease, all the terms, covenants and conditions of the Prime Lease shall
apply to Lessor and Lessee under this Sublease with the same force and effect
as if Lessor were the Landlord and Lessee the tenant under the Prime Lease.
Without limiting the generality of the foregoing, in the event Lessee shall
breach any term, covenant or condition this Sublease, Lessor shall have all the
rights and remedies against Lessee as would be available under the Prime Lease
to the Landlord against the Tenant if such breach were by the Tenant thereunder.
Notwithstanding the foregoing, the following concepts shall control:
A. except to the extent Lessor directs Lessee to pay Base Rent
and Overhead Rent directly to Landlord, all monetary obligations payable by the
Lessor under the Prime Lease shall be payable by Lessor unless the same are
incurred directly by or on behalf of Lessee.
B. Paragraphs 6., 7. and 14. of the Prime Lease have no
application as between Lessor and Lessee.
C. Lessor shall have no personal liability under this Lease, and
any claim by Lessee against Lessor shall be enforced solely against Lessor's
leasehold interest under the Prime Lease.
9. TERMINATION OF PRIME LEASE. Lessee shall not cause or permit to be
caused any act or omission which would give the Landlord the right to terminate
or cancel the Prime Lease prior to the Expiration Date set forth in the Prime
Lease. Lessee shall indemnify and hold Lessor harmless from and against any
loss, liability, claim, costs and expenses (including reasonable attorneys fees)
incurred by Lessor as a result of any cancellation or termination of the Prime
Lease resulting from any such act or omission.
2
<PAGE>
10. NOTICES. All payments or notices required or permitted hereunder
shall be in the form required for notices under the Prime Lease, except that
notices hereunder shall be sent to the following addresses. If to Lessee, at the
Demised Premises; if to Lessor, as follows:
Compass Management and Leasing, Inc.
NationsBank Tower
Fort Lauderdale, Florida 33394
ATTENTION: On Site Property Manager
With copies to:
Equitable Real Estate Investment Management, Inc.
Atlanta Regional Office
The Equitable Building
100 Peachtree Street, Suite 2300
Atlanta, Georgia 30303
ATTENTION: Asset Manager
and to:
Holland & Knight
One East Broward Blvd.
P.O. Box 14070
Fort Lauderdale, Florida 33301
ATTENTION: Irwin J. Fayne, Esq.
11. MISCELLANEOUS.
A. If any term or condition of this Sublease or the application
thereof to any person or circumstance is, to any extent, invalid or
unenforceable, the remainder of this Sublease, or the application of such term
or condition to persons or circumstances other than those as to which it is held
invalid or unenforceable, is not to be affected thereby and each term and
condition of this Sublease is to be valid and enforceable to the fullest extent
permitted by law. This Sublease will be construed in accordance with the laws of
the State of Florida.
B. Lessee acknowledges that it has not relied upon any statement,
representation, prior or contemporaneous written or oral promises, agreements or
warranties, except such as are expressed herein.
C. Each party represents and warrants that it has not dealt with
any agent or broker in connection with this transaction except for Compass
Management and Leasing, Inc., Cushman & Wakefield of Florida, Inc. and Raintree
Properties and Investments, Inc. If either party's representation and warranty
proves to be untrue, such party will indemnify the other party against all
resulting liabilities, costs, expenses, claims, demands and causes of action,
including reasonable attorneys' fees and costs through all appellate actions and
proceedings, if any. The foregoing will survive the end of the Sublease Term.
3
<PAGE>
12. RIGHT OF FIRST REFUSAL. As used in this paragraph, the "Negotiation
Space" refers to the approximately 945 square feet of rentable area more
particularly identified as Suite 160A on Exhibit "A" attached to the Prime
Lease. If the Negotiation Space becomes the subject of a bona fide lease
proposal (the "Proposal") by Lessor to a prospective tenant or by a prospective
tenant to Lessor, Lessor shall deliver to Lessee a copy of any Proposal by
notice to Lessee ("Lessor's Notice"), and Lessee shall have an option to lease
the Negotiation Space described in the Proposal (the "Right") as provided in
this paragraph. Lessee agrees to maintain the confidentiality of any Proposal.
In order to exercise the Right, Lessee must deliver notice of such exercise to
Lessor not later than 5 business days after Lessor's Notice. The Right shall be
null and void should Lessee fail to exercise it within said 5 business days, and
Lessor shall thereafter be free to deal with the prospective tenant in
connection with the Negotiation Space as Lessor sees fit. Upon exercise of the
Right, Lessee shall be deemed to have leased such Negotiation Space on the same
terms and conditions of this Sublease and the Demised Premises shall be deemed
to include the Negotiation Space, except as follows: (i) any conflict between
the Proposal and this Sublease with regard to Rent and other economic terms in
connection with such Negotiation Space shall be resolved in favor of the
Proposal except as modified by this paragraph, (ii) the Expiration Date of the
Negotiation Space shall be as contemplated by the Proposal notwithstanding the
Expiration Date of the Demised Premises as originally set forth herein, (iii)
Lessee's obligation to pay Rent with respect to the Negotiation Space shall
commence as and when contemplated by the Proposal, (iv) Lessee's Share shall be
ratably increased based on the rentable area of such Negotiation Space, and (v)
Lessee shall accept the Negotiation Space in its "as-is" condition unless
otherwise set forth in the Proposal. The parties shall execute an amendment to
this Sublease that evidences the terms and conditions of Lessee's lease of the
Negotiation Space as provided herein.
13. CONSENT OF LANDLORD. By its signature below, Landlord hereby agrees
as follows:
A. Landlord does hereby consent to the Sublease pursuant to the Prime
Lease. This consent shall not be construed to amend the Prime Lease in any
respect, any purported modifications being solely for the purpose of setting
forth the rights and obligations as between Lessee and Lessor, but not binding
Landlord.
4
<PAGE>
B. The parties acknowledge that the Sublease is subordinate and inferior
to the Prime Lease, and that the Sublease shall automatically terminate upon any
termination of the Prime Lease.
C. Lessor acknowledges and agrees that it shall not be released from,
and shall continue to be bound under, the Prime Lease irrespective of Landlord's
consent to the Sublease.
D. Lessee acknowledges that it and Landlord are not contractually bound
in any manner except as expressly set forth in this Paragraph entitled Consent
of Landlord. Lessee specifically acknowledges that Landlord is not a party to
the Sublease.
E. If Lessor breaches any of the terms and provisions of the Prime
Lease, Landlord may elect to receive directly from Lessee all sums due or
payable to Lessor by Lessee pursuant to the Sublease, and upon receipt of a
written notice from Landlord referencing this paragraph, Lessee shall thereafter
pay to Landlord any and all sums becoming due or payable under the Sublease.
Lessor shall receive from Landlord a corresponding credit for such sums against
any payments then due or thereafter becoming due from Lessee. Neither the giving
of such written notice to Lessee nor the receipt of such direct payments from
Lessee shall cause Landlord to assume any of Lessor's duties, obligations and/or
liabilities under the Sublease, nor shall such event impose upon Landlord the
duty or obligation to honor the Sublease nor subsequently to accept Lessee's
attornment.
F. Lessee shall have an option (the "Option") to extend the term of the
Prime Lease for one additional period of three years from the Expiration Date
set forth therein (the "renewal Term") and assume the Prime Lease upon
commencement of the renewal Term. In order to exercise the Option, Lessee must
give written notice to Landlord not less than nine months prior to the
Expiration Date that it wished to extend the term of the Prime Lease; provided,
however, that Lessee shall not be entitled to exercise the Option unless each of
the following conditions shall be fully satisfied at the time of its exercise:
(i) the Prime Lease shall be in full force and effect; (ii) the original Lessee
named in this Sublease shall be in possession of the Demised Premises; and (iii)
Lessee shall not then be in default under any terms, provisions, convenants or
conditions of either the Prime Lease or this Sublease. If Lessee exercises the
Option as provided, the Expiration Date shall be extended for a period of three
years and Base Rent shall be adjusted to market rent. Notwithstanding anything
to the contrary herein or in the Prime Lease, Lessor shall have no liability for
and shall automatically be released from any obligations arising under the Prime
Lease during the renewal Term. If Lessee shall fail to give written notice to
Landlord of Lessee's exercise of the Option provided, Lessee shall be deemed to
have waived its right to exercise the Option and to occupy any space in the
Building beyond the Expiration Date. Market rent (including escalations for
successive years of the renewal term) shall be determined by Landlord in its
reasonable discretion. Landlord's determination shall be based, as Landlord
deems appropriate, upon then current and projected rents for spaces in the
Building which are then for rent (or, if none, which have been rented during the
prior twelve months) or projected to be for rent during the Prime Lease Term,
adjusted for any special conditions applicable to such spaces and leases, for
location, length of term, amount of space and other factors Landlord deems
relevant in computing rents for space in the Building. Including adjustments for
anticipated inflation, and subject to adjustments for fluctuations in market
rents, market conditions and price conditions. Notwithstanding anything herein
to the contrary, Landlord's determination of market rent shall be final, and
Lessee's sole remedy in the event that it is dissatisfied with such
determination shall be non-exercise of the Option. Landlord agrees that, if
requested by Lessee not less than twelve nor more than thirteen months prior to
the expiration date of the Prime Lease, it will advise Lessee of and be bound by
Landlord's determination of market rent for the renewal Term. Landlord grants to
Lessee the Option specifically due to the character and nature of Lessee.
IN WITNESS WHEREOF, the parties hereto have executed this Sublease under
seal as of the date first above written.
Signed, sealed and delivered
in the presence of
Witnesses: LESSOR:
EQUITABLE REAL ESTATE
INVESTMENT MANAGEMENT, INC.
/s/ LINDA A. QUINN
- ---------------------------- By: /s/ SUSAN HAWKEN
LINDA A. QUINN --------------------------
- ---------------------------- Name: VICE PRESIDENT
Name Printed -------------------------
Title: authorized agent
/s/ J. SUE KING
- ----------------------------
J. SUE KING
- ----------------------------
Name Printed
COMPASS MANAGEMENT AND LEASING, INC.
/s/ MICHAEL FESS
- ----------------------------
MICHAEL FESS By: /s/ ILLEGIBLE
- ---------------------------- ----------------------------
Name Printed Name: VICE PRESIDENT
----------------------------
Title: authorized agent
/s/ MICHAEL VULLIS
- ----------------------------
MICHAEL VULLIS
- ----------------------------
Name Printed
5
<PAGE>
LESSEE:
/s/ GARY EGGLINSTON
- -----------------------------
GARY EGGLINSTON ROADHOUSE GRILL, INC.
- -----------------------------
Name Printed
/s/ JENNIFER VERDI
- ------------------------------ By: /s/ JOHN D. TOOLE
JENNIFER VERDI -----------------------------
- ------------------------------ Name JOHN D. TOOLE
Name Printed ----------------------------
Title: VICE PRESIDENT
--------------------------
LANDLORD:
/s/ LINDA A. QUINN
- ------------------------------ THE EQUITABLE LIFE ASSURANCE
LINDA A. QUINN SOCIETY OF THE UNITED STATES
- ------------------------------
Name Printed
By: /s/ TERRELL E. DAFFER
/s/ J. SUE KING ---------------------------
- ------------------------------ Name: TERRELL E. DAFFER
J. SUE KING -------------------------
- ----------------------------- Title: INVESTMENT OFFICER
Name Printed ------------------------
6
<PAGE>
EXHIBIT "A"
CYPRESS CENTRE
STANDARD OFFICE LEASE
<PAGE>
INDEX TO
CYPRESS CENTRE
STANDARD OFFICE LEASE
LEASE
Basic Lease Information Rider .........................................I,II,III
1 Premises; Common Areas....................................................1
2 Lease Term; Lease Dates ..................................................1
3 Rent......................................................................2
4 Security Deposit..........................................................5
5 Use.......................................................................6
6 Delay of Possession.......................................................7
7 Acceptance of Premises; Landlord's Work...................................8
8 Parking...................................................................8
9 Building Services.........................................................9
10 Security.................................................................12
11. Repairs and Maintenance..................................................12
12. Tenant's Alterations.....................................................13
13. Landlord's Additions and Alterations.....................................15
14. Assignment and Subletting................................................15
15. Tenant's Insurance Coverage..............................................16
16. Landlord's Insurance Coverage............................................17
17 Subrogation..............................................................17
18. Damage or Destruction By Casualty........................................17
19. Condemnation and Eminent Domain..........................................18
20. Limitation of Landlord's Liability; Indemnification......................19
21. Relocation of Tenant.....................................................19
22. Compliance With Laws and Procedures......................................20
23. Right of Entry...........................................................21
24 Default..................................................................21
25. Landlord's Remedies for Tenant's Default.................................22
26. Landlord's Right to Perform for Tenant's Account.........................23
27 Liens....................................................................23
28 Notices..................................................................24
29. Mortgage; Estoppel Certificate; Subordination............................24
30. Attornment and Mortgagee's Request.......................................24
31. Transfer by Landlord.....................................................25
32. Surrender of Premises; Holding Over......................................25
33. No Waiver; Cumulative Remedies...........................................26
34 Waiver...................................................................26
35. Consents and Approvals...................................................26
36. Rules and Regulations....................................................27
37. Successors and Assigns...................................................27
38. Quiet Enjoyment..........................................................27
39. Entire Agreement.........................................................27
40. Hazardous Materials......................................................27
41. Bankruptcy Provisions....................................................28
42. Miscellaneous............................................................30
<PAGE>
EXHIBIT(S):
Exhibit "A" Floor Plan
Exhibit "B" Space Plan
Exhibit "C" Rules and Regulations
ADDENDUM:
First Addendum
- -------------------------------------------
- -------------------------------------------
GUARANTY:
- -------------------------------------------
- -------------------------------------------
<PAGE>
BASIC LEASE INFORMATION RIDER
Corporate Lease
CYPRESS CENTRE
STANDARD OFFICE LEASE
Preamble
Page 1 Date of Lease: SEPTEMBER 13. 1993
Preamble Landlord: THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
Page 1 STATES, a New York corporation qualified to do business in the
State of Florida.
Preamble Tenant: EQUITABLE REAL ESTATE INVESTMENT MANAGEMENT INC. AND
COMPASS MANAGEMENT AND LEASING INC. a FLORIDA entity
Page 1 formed under the laws of the State of DELAWARE and qualified to
do business in the State of Florida jointly and severally.
Section 1 Premises: SUITE #160 AND 160 A
Page 1 6600 North Andrews Avenue
Fort Lauderdale, Florida 33309
Section 1 Net Rentable Area of Premises: 8525 (R)
Page 1
Section 2 Lease Commencement Date: October 1. 1993
Page 1
Section 2 Expiration Date: September 30. 1998
Page 1
Section 2 Lease Term: Five years (60 Months)
Page 1
Section 2 Rent Commencement Date: October 1. 1993
Page 1
Section 3 Base Rent: -
Page 2
(a) During the first 12 months of the Lease
Term beginning with the payment, if any, due
10/1/93 - 9/30/94 on the Lease Commencement Date, the Monthly
Base Rent shall be $ 9.00 per net rentable
square foot of the Premises, that is, $6393.75
per month, plus Florida State Sales tax;
(b) During the next 12 months of the Lease
Term beginning with the payment due on the day
10/1/94 - 9/30/95 following the expiration of the period
described in subsection (a) above, the Monthly
Base Rent shall be $ 9.36 per net rentable
square foot of the Premises, that is, $6649.50
per month, plus Florida State Sales tax;
(c) During the next 12 months of the Lease
Term beginning with the payment due on the day
10/1/95 - 9/30/96 following the expiration of the period
described in subsection (b) above, the Monthly
Base Rent shall be $ 9.73 per net rentable
square foot of the Premises, that is, $6912.35
per month, plus Florida State Sales tax;
<PAGE>
(d) During the next 12 months of the Lease Term
beginning with the payment due on the day
10/1/96 - 9/30/97 following the expiration of the period
described in subsection (c) above, the Monthly
Base Rent shall be $ 10.12 per net rentable
square foot of the Premises, that is, $7189.42
per month, plus Florida State sales tax;
(e) During the next 12 months of the Lease Term
beginning with the payment due on the day
10/1/97 -9/30/98 following the expiration of the period
described in subsection (d) above, the Monthly
Base Rent shall be $ 10.53 per net rentable
square foot of the Premises, that is, $7480.69
per month, plus Florida State Sales tax;
Section 3 Tenant's Share: 6.85%
Page 4 ---------------------------------------------------
Sections Security Deposit Received: Waived
3, 4 ------------------------------------------
Pages 5, 6
Section 5 Use of Premises: General Administrative Offices
Pages 6, 7 --------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
Tenant's Address for Notices Prior to Lease
Commencement Date:
1900 Glades Road
--------------------------------------------------
Suite #451
--------------------------------------------------
Boca Raton. FL 33431
--------------------------------------------------
Tenant's Address for Notices After Lease Commencement Date:
Tenant
The Premises
Landlord's Address for Notices:
The Equitable Life Assurance Society of the
United States
Cypress Centre
6600 N. Andrews Ave
Fort Lauderdale, FL 33309
ATTENTION: Regional Property Manager
With copies to:
Building Management Office
<PAGE>
6600 North Andrews Avenue
Fort Lauderdale, Florida 33309
ATTENTION: On Site Property Manager
and to:
Shutts & Bowen
1500 Edward Ball Building - Miami Center
Miami, Florida 33131
ATTENTION: Kevin D. Cowan, Esq.
Section 8 Number of Parking Spaces in
Pages 7, 8, Covered Parking Area: Sixteen (16)
9 --------------------------------------
a) Monthly Rate Per Parking Space $ -0
--------------------------
Number of Parking Spaces in
Uncovered Parking Area: Sixteen (16)
------------------------------------
a) Monthly Rate Per Parking Space $ -0
--------------------------
Section 15 Amount of General Comprehensive Liability
Pages 14, 15 Insurance: $ 1,000,000
--------------------------------------------------
Section 40 Tenant's Real Estate Broker:
Page 24 N/A
-------------------------------------------------------------
Landlord's Real Estate Broker:
N/A
------------------------------------------------------------
Certain of the information relating to the Lease, including many of the
principal economic terms, are set forth in the foregoing Basic Lease Information
Rider (the "BLI Rider") . The BLI Rider and the Lease are, by this reference,
hereby incorporated into one another. In the event of any direct conflict
between the terms of the BLI Rider and the terms of the Lease, the BLI Rider
shall control. Where the Lease simply supplements the BLI Rider and does not
conflict directly therewith, the Lease shall control.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have signed this BLI Rider as
of this 28 day of September, 1993.
"TENANT"
--------
Equitable Real Estate
Investment Management Inc.
By: /s/ SUSAN HAWKEN
-----------------------------
Its: ATTORNEY-IN-FACT
-----------------------
SUSAN HAWKEN
Witnesseth:
/s/ ANN M. FLYN
--------------------------------
/s/ ILLEGIBLE
--------------------------------
"LANDLORD" "TENANT"
The Equitable Life COMPASS Management and Leasing, Inc.
Assurance Society of the
United States
By: /s/ ILLEGIBLE By: /s/ ILLEGIBLE
-------------------------- ------------------------------
Its: Investment Officer Its: Vice President
---------------------- -------------------------
Witnesseth: Witnesseth:
/s/ ILLEGIBLE /s/ ILLEGIBLE
- ------------------------------- ----------------------------------
/s/ ILLEGIBLE /s/ ILLEGIBLE
- ------------------------------- ----------------------------------
<PAGE>
CYPRESS CENTRE
STANDARD OFFICE LEASE
THIS LEASE ("Lease") is made as of the 13th day of SEPTEMBER , 1993, by and
between THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a New York
corporation authorized to do business in the State of Florida ("Landlord"), and
EQUITABLE REAL ESTATE INVESTMENT MANAGEMENT INC. AND COMPASS MANAGEMENT AND
LEASING. INC. an entity formed under the Laws of the State of DELAWARE
authorized to do business in the State of Florida, are referred to herein as
"Tenant", jointly and severally.
W I T N E S S E T H:
1. PREMISES: COMMON AREAS:
Landlord leases to Tenant and Tenant leases from Landlord the premises
in the Cypress Centre Building located at 6600 North Andrews Avenue, Fort
Lauderdale, Florida 33309 (together with the covered and uncovered parking
facilities sometimes collectively referred to herein as the "Building") known by
that certain suite number set forth in the Basic Lease Information Rider (the
"BLI Rider") attached to the front of this Lease and incorporated into this
Lease by this reference, which space is more particularly shown on the floor
plan attached hereto as Exhibit "A" and by this reference incorporated herein
("Premises"). The parties hereby agree that the Premises contain the number of
net rentable square feet set forth in the BLI Rider and that such total amount
of net rentable square feet already includes an add-on factor to usable square
feet of fifteen percent (15%). In addition to the Premises, Tenant has the right
to use, in common with others, the lobby, public entrances, public stairways and
public elevators of the Building. The common areas serving the Building,
including those referenced above, the parking facilities, and all others, will
at all times be subject to Landlord's exclusive control and management in
accordance with the terms and provisions of this Lease.
<PAGE>
2. LEASE TERM: LEASE DATE:
A. General. The lease term ("Lease Term") is for the period of time set
forth in the BLI Rider, commencing on the Lease commencement date set forth in
the BLI Rider ("Lease Commencement Date") and ending on the Lease expiration
date set forth in the BLI Rider ("Expiration Date"). Tenant's obligation to pay
all rent, including Base Rent, Overhead Rent and Additional Rent, (collectively,
"Rent"), as such terms are hereafter defined, will commence on the rent
commencement date set forth in the BLI Rider ("Rent Commencement Date").
Notwithstanding the foregoing, the parties agree and acknowledge that the
aforesaid Lease Commencement Date and/or the Rent Commencement Date are subject
to change pursuant to the work letter attached hereto as Exhibit "B" and by this
reference incorporated herein ("Work Letter"), including, but not limited to,
Sections 6 and/or 7 thereof.
B. Default Prior to Rent Commencement Date. The parries agree that as long as
Tenant shall have duly kept and performed all of the terms and conditions to be
kept and performed by Tenant under this Lease, for the time period (if any)
beginning on the Lease Commencement Date and ending on the Rent Commencement
Date (hereinafter referred to as the "Rent Free Period"), Tenant and only Tenant
hereunder (this provision shall not apply to any assignee or subtenant of
Tenant) may occupy the Premises without any obligation to pay Rent, whether
pursuant to all of the terms of this Lease and (iii) Tenant hereby acknowledges
that Landlord's waiver of the Rent during the Rent Free Period, as well as
Landlord's giving of any other lease concessions to Tenant, including, but not
limited to, tenant improvement work and funds, are conditioned upon Tenant not
being in default hereunder and should Tenant default hereunder, such amounts
shall, without notice and in addition to all other rights and remedies available
to Landlord, become immediately due and payable by Tenant to Landlord.
3. RENT:
A. BASE RENT. During the Lease Term, Tenant will pay as the base rent
for the Premises ("Base Rent") the amounts set forth in the BLI Rider, with same
being payable without demand, setoff or deduction, in advance, on or before the
first day of each month, in equal monthly installments of the amounts set forth
in the BLI Rider plus applicable sales and other such taxes as are now or later
enacted.
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B. OVERHEAD RENT. Tenant shall pay, as overhead rent ("Overhead Rent"),
prorated for that part of the Lease Term within the applicable calendar year,
Tenant's share ("Tenant's Share"), as hereafter defined, of the total amount of
(i) the annual operating expenses ("Operating Expenses"), as hereafter defined,
and (ii) the annual taxes ("Taxes"), as hereafter defined. For all years during
the Lease Term, Landlord shall, in advance, reasonably estimate for each such
calendar year the total amount of the Overhead Rent. One-twelfth (1/12) of the
estimated Overhead Rent shall be payable monthly, in advance, along with the
monthly payment of the Base Rent. Landlord shall use good faith efforts to make
such estimate on or before January 1 of each calendar year. On or before March
31 following a year for which Overhead Rent is payable hereunder, Landlord shall
use good faith efforts to provide Tenant with the amount of the actual Overhead
Rent for the previous year, and a reasonable breakdown of the items included
therein, together with an invoice for any underpayments of Overhead Rent (to be
paid within thirty (30) days following receipt of such invoice, or to be
included with the next monthly payment of Rent, whichever shall first occur) or
either notice that Tenant's overpayment of Overhead Rent will be deducted from
Tenant's Share of Overhead Rent for the forthcoming year or a check to Tenant to
reimburse Tenant for any such overpayment of Overhead Rent. For a period of
thirty (30) days after receipt of the aforedescribed reconciliation statements,
Tenant shall have the right, upon advance notice, to visit Landlord's office in
the Building during Business Hours, as hereafter defined, to inspect its books
and record concerning the Overhead Rent. When calculating annual Taxes, such
calculation shall, with respect to ad valorem taxes, be calculated with
reference to the gross amount set forth in the official tax bill issued by the
appropriate taxing authorities, irrespective of the amount actually paid by
Landlord for such year in light of a protest or dispute over the amount of such
Taxes. In the event the Taxes for any year are in fact contested by Landlord,
however, ultimately the amount payable for that year shall be the amount found
to be payable in a final determination, whether such final determination is in
the form of a pronouncement from the appropriate tribunal or a settlement. The
delivery of the aforedescribed projection statement after January 1 and/or the
reconciliation after March 31 shall not be deemed a waiver of any of Landlord's
rights to collect monies and/or a waiver of any of the duties and obligations of
Tenant as described in this section or as provided elsewhere in this Lease.
C. DEFINITION OF MATERIAL TERMS.
(a) The term "Operating Expenses. shall mean (i) any and all costs of
ownership, management, operation repair and maintenance of the Building,
including, without limitation, wages, salaries, professionals' fees, taxes,
insurance, benefits and other payroll burdens of all employees, janitorial,
maintenance, guard and other services, building management office rent or rental
value, power, fuel, water, waste disposal, landscaping care, lighting, garbage
removal, window cleaning, system maintenance, parking area care, and any and all
other utilities, materials, supplies, maintenance, repairs, insurance applicable
to the Building and Landlord's personal property and depreciation on personal
property, and (ii) the cost (amortized over such reasonable period as landlord
shall determine together with interest at the rate of twelve percent (12%) per
annum on the unamortized balance) of any capital improvements made to the
building by landlord after the date of this lease that reduce other operating
expenses or made to the building by landlord after the date of this lease that
are required under any governmental law or regulation; provided, however, that
operating expenses shall not include real property taxes, depreciation on the
building other than depreciation on carpeting in public corridors and common
areas, costs of tenants' improvements, real estate broker's commissions,
interest and capital items other than those referred to in subsection (ii)
above. Landlord shall maintain accounting books and records in accordance with
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sound accounting principles. In determining the amount of Operating Expenses for
any calendar year, including the Base Year, (i) if less than one-hundred percent
(100%) of the Building shall have been occupied by tenants and fully used by
them, Operating Expenses shall be increased to an amount equal to the like
operating expenses which would normally be expected to be incurred had such
occupancy been one-hundred percent (100%) and had such full utilization been
made during the entire period or (ii) if Landlord is not furnishing particular
work or services (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 deemed to be increased by an amount equal to the additional expense which
would reasonably have been incurred during such period by Landlord had Landlord
furnished such work or service to such tenant. Landlord hereby agrees to deduct
each year from the amount of the Operating Expenses the total amount of any and
all sums, amounts or charges paid by Tenant or other tenants of the Building
directly to Landlord or its agent for specific tenant requested services.
(b) The term "Taxes" shall mean the gross amount of all impositions,
taxes, assessments (special or otherwise), water and sewer assessments and other
governmental liens or charges of any and every kind, nature and sort whatsoever,
ordinary and extraordinary, foreseen and unforeseen, and substitutes therefor,
including all taxes whatsoever (except for taxes for the following categories
which shall be excluded from the definition of Taxes: any inheritance, estate,
succession, transfer or gift taxes imposed upon Landlord or any income taxes
specifically payable by Landlord as a separate tax-paying entity without regard
to Landlord's income source as arising from or out of the Building and/or the
land on which it is located) attributable in any manner to the building, the
land on which the Building is located or the rents (whether Base Rent, Overhead
Rent or Additional Rent) or other payments receivable therefrom, or any part
thereof, or any use thereon, or any faculty located therein or used in
conjunction therewith or any charge or other amount required to be paid to any
governmental authority, whether or not any of the foregoing shall be designated
"real estate tax", "sales tax", "rental tax", "excise tax", "business tax", or
designated in any other manner.
(c) The term "Tenant's Share" shall mean the percentage set forth in the
BLI Rider. Landlord and Tenant acknowledge that Tenant's Share has been obtained
by taking the net rentable area of the Premises, which Landlord and Tenant
hereby stipulate for all purposes is the amount set forth in the BLI Rider, and
dividing such number by the total net rentable area of the Building, which
Landlord and Tenant hereby stipulate for all purposes is 124,462 net rentable
square feet, and multiplying such quotient by 100. In the event Tenant's Share
is changed during a calendar year by reason of a change in the net rentable area
of the Premises, Tenant's Share shall thereafter mean the result obtained by
dividing the new net rentable area of the Premises by 124,462 net rentable
square feet and multiplying such quotient by 100 and for the purposes of
subsection 3B, Tenant's Share shall be determined on the basis of the number of
days during such calendar year applicable to each such Tenant's Share.
<PAGE>
(d) The term "Rent" shall mean the sum of the Base Rent and the Overhead
Rent and the parking charges and, in the event of a default hereunder by Tenant,
shall also include Additional Rent. The term "Additional Rent" is sometimes
used herein to refer to any and all other sums payable by Tenant hereunder,
including, but not limited to, parking charges. Tenant agrees to pay Additional
Rent upon demand by Landlord and that Additional Rent is to be treated in the
same manner as Rent hereunder, both in terms of the lien for Rent herein
provided and in terms of the default provisions herein contained.
D. RELATED PROVISIONS.
(a) Tenant covenants and agrees, notwithstanding the existence of any
grace periods hereunder, to pay a late charge for any payment of Rent or
Additional Rent not received by Landlord on or before the date when same is
due. *Said late charge shall be computed from the first day of the month in the
case of Rent and from the date when same is due in the case of Additional Rent.
The amount of the late charge shall be an amount equal to the interest accruing
on the sum(s) outstanding, with such interest commencing on the dates aforesaid,
ending on the date of receipt of the sum(s) by Landlord and having a rate equal
to eighteen percent (18%) per annum. In the event any late charge is due to
Landlord, Landlord shall advise Tenant in writing and Tenant shall pay said late
charge to Landlord along with and in addition to the next payment of Rent.
(b) All sums due and payable pursuant to the terms and provisions of
this Lease shall be paid by Tenant without offset, demand or other credit, and
shall be payable only in lawful money of the United States of America which
shall be legal tender in payment of all debts and dues, public and private, at
the time of payment. All sums payable by Tenant hereunder by check shall be
obtained against a financial institution located in the United States of
America. The Rent and Additional Rent shall be paid by Tenant at the Building
management office located in the Building or elsewhere as designated by Landlord
in writing to Tenant. Landlord hereby acknowledges payment by Tenant of the
amount set forth in the BLI Rider, representing payment of the first month's
Base Rent and Florida State Sales Tax for the first month of this Lease.
(c) In addition to Base Rent and Overhead Rent, Tenant shall and hereby
agrees to pay to Landlord each month a sum equal to any sales tax, tax on
rentals and any other similar charges now existing or hereafter imposed, based
upon the privilege of leasing the space leased hereunder or based upon the
amount of rent collected therefor.
(d) If Tenant's possession of the Premises commences on any day other
than the first day of the month, Tenant shall occupy the Premises under the
terms of this Lease and the pro rata portion of the Rent shall be paid by
Tenant; provided, however, that in such an event the Lease Commencement Date,
for the purposes of this Lease, shall be deemed to be the first day of the month
immediately following the month in which possession is a given.
(e) Overhead Rent for the final months of this Lease is due and payable
even though it may not be calculated unti1
<PAGE>
subsequent to the Expiration Date of the Lease. Tenant expressly agrees that
Landlord, at Landlord's sole discretion, may apply the security deposit
("Security Deposit"), as hereafter defined, in full or partial satisfaction of
any Overhead Rent due for the final months of this Lease. If said Security
Deposit is greater than the amount of any such Overhead Rent and there are no
other sums or amounts owed Landlord by Tenant by reason of any other terms,
provisions, covenants or conditions of this Lease, then Landlord shall refund
the balance of said Security Deposit to Tenant as provided herein. Nothing
herein contained shall be construed to relieve Tenant, or imply that Tenant is
relieved, of the liability for or the obligation to pay any Overhead Rent due
for the final months of this Lease by reason of the provisions of this
paragraph, nor shall Landlord be required first to apply said Security Deposit
to such Overhead Rent if there are any other sums or amounts owed Landlord by
Tenant by reason of any other terms, provisions, covenants or conditions of this
Lease.
(f) Tenant hereby agrees that the Base Rent and the Overhead Rent from
time to time computed by Landlord shall be final and binding for all purposes of
this Lease unless, within thirty (30) days after Landlord provides Tenant with
written notice of the amount thereof, Tenant provides Landlord with written
notice (i) disputing the mathematical accuracy of such amount (the "Disputed
Amount"), (ii) designating an attorney or accountant, reasonably acceptable to
Landlord, and appointed by Tenant, at its sole cost and expense, to review the
mathematical accuracy of the Disputed Amount with Landlord and/or its designated
representatives and (iii) confirming that the Disputed Amount shall not be
subject to adjustment, and agreeing to pay all of Landlord's costs and expenses
in connection with such review, including attorneys' fees and accountants' fees,
unless as a result thereof the Disputed Amount is demonstrated to contain a
mathematical error in excess of five percent (5%) of the Disputed Amount.
Landlord hereby agrees, in the event it receives such notice from Tenant, to
cooperate in promptly completing such review and promptly refunding any excess
portion of the Disputed Amount so long as such excess portion exceeds five
percent (5%) of the Disputed Amount.
4. SECURITY DEPOSIT: SECURITY INTEREST:
A. SECURITY DEPOSIT. Tenant, concurrently with the execution of this
Lease, has deposited with Landlord the amount set forth in the BLI Rider as the
security deposit ("Security Deposit") hereunder. This sum will be retained by
Landlord as security for the payment by Tenant of the Rent and Additional Rent
and for the faithful performance by Tenant of all the other terms and conditions
of this Lease. In the event Tenant fails to faithfully perform the terms and
conditions of this Lease, Landlord, at Landlord's option, may at any time apply
the Security Deposit or any part thereof toward the payment of the Rent and/or
Additional Rent and/or toward the performance of Tenant's obligations under this
Lease; in such event, within five (5) days after notice, Tenant will deposit
with Landlord cash sufficient to restore the Security Deposit to its original
amount. The Security Deposit is not liquidated damages. Landlord will return the
unused portion of the Security Deposit to Tenant within thirty (30) days after
the Expiration Date if Tenant is not in violation of any of the provisions of
this Lease. Landlord may (but is not obligated to) exhaust any or all rights and
remedies against Tenant before resorting to the Security Deposit. Landlord will
not be required to pay Tenant any interest on the Security Deposit nor hold same
in a separate account. If Landlord sells or otherwise conveys the Building,
Landlord will deliver the Security Deposit or the unapplied portion thereof to
the new owner. Tenant agrees that if Landlord turns over the Security Deposit or
the unapplied portion thereof to the new owner Tenant will look to the new owner
only and not to Landlord for its return upon expiration of the Lease Term. If
Tenant assigns this Lease with the consent of Landlord, the Security Deposit
will remain with Landlord for the benefit of the
<PAGE>
new tenant and will be returned to such tenant upon the same conditions as would
have entitled Tenant to its return.
B. SECURITY INTEREST. In addition to any statutory lien granted to
landlords under the laws of Florida, Landlord shall have, at all times, and
Tenant hereby grants and agrees to grant Landlord a valid security interest to
secure payment of all Base Rent, Overhead Rent and Additional Rent and all other
sums payable under this Lease as Rent becoming due hereunder from Tenant, and to
secure payment of any damages or loss which Landlord may suffer by reason of the
breach by Tenant of any covenant, agreement or condition contained herein, upon
all goods, equipment, fixtures, furniture, improvements, inventory, chattel, and
other personal property of Tenant presently, or which may hereafter be situated
within the Premises whether now owned or hereafter acquired, and all proceeds
therefrom, including, without limitation, insurance proceeds (collectively
"Personal Property"), and such Personal Property shall not, during any period a
default exists, be removed from the Premises without the prior consent of
Landlord, which consent may be withheld in Landlord's sole discretion, until all
arrearages in Rent, as well as any and all other sums of money then due to
Landlord hereunder, shall first have been paid and discharged and all the
covenants, agreements and conditions hereof have been fully complied with and
performed by Tenant. In the event of a default by Tenant hereunder, Landlord
may, in addition to any other remedies provided elsewhere herein or allowed by
law, all of which are cumulative, enter upon the Premises and take possession of
any and all Personal Property of Tenant situated within the Premises, without
liability for trespass or conversion, and sell the same at public or private
sale, with or without having such property at the sale, after giving Tenant
reasonable notice of the time and place of any public sale or of the time after
which any private sale is to be made, at which sale the Landlord or its assigns
may purchase such Personal Property unless otherwise prohibited by law. Unless
otherwise provided by law, and without intending to exclude any other manner of
giving Tenant reasonable notice; the requirement of reasonable notice shall be
met if such notice is given in the manner prescribed in this Lease at least five
(5) days before the time of sale. The proceeds from any such disposition, less
any and all expenses connected with the taking of possession, holding and
selling of the Personal Property (including, without limitation, reasonable
attorneys' fees and legal expenses) shall be applied as a credit against the
indebtedness secured by the security interest granted in this Section. Any
surplus shall be paid to Tenant or as otherwise required by law, and Tenant
shall pay any deficiencies forthwith. Contemporaneous with the execution of this
Lease, and, at any other time during the Lease Term if requested by Landlord,
Tenant shall execute and deliver to Landlord Uniform Commercial Code financing
statements in sufficient form so that when properly filed, the security interest
hereby given shall thereupon be perfected. If requested hereafter by Landlord,
Tenant shall also execute and deliver to Landlord Uniform Commercial Code
financing statement change instruments in sufficient form to reflect any proper
amendment or modification in or extension of the aforesaid contract lien and
security interest hereby granted. Landlord shall, in addition to all of its
rights hereunder, also have all of the rights and remedies of a secured party
under the Uniform Commercial Code as applicable in Florida.
<PAGE>
5. USE:
A. GENERAL. Tenant will use and occupy the Premises solely for the
operation of the business set forth in the BLI Rider and for no other use
whatsoever. Tenant acknowledges that its type of business, as above specified,
is a material consideration for Landlord's execution of this Lease. Tenant will
not commit waste upon the Premises nor suffer or permit the Premises or any part
of them to be used in any manner, or suffer or permit anything to be done in or
brought into or kept in the Premises or the Building, which would: (i) violate
any law or requirement of public authorities, (ii) cause injury to the Building
or any part thereof, (iii) annoy or offend other tenants or their patrons or
interfere with the normal operations of HVAC, plumbing or other mechanical or
electrical systems of the Building or the elevators installed therein, (iv)
constitute a public or private nuisance, or (v) alter the appearance of the
exterior of the Building or of any portion of the interior other than the
Premises pursuant to the provisions of this Lease. Tenant agrees and
acknowledges that Tenant shall be responsible for obtaining any special
amendments to the certificate of occupancy for the Premises and/or the Building
and any other governmental permits, authorizations or consents required solely
on account of Tenant's use of the Premises.
B. PROHIBITED USES. Tenant hereby represents, warrants and agrees that
Tenant's business is not and shall not be photographic, multilith or multigraph
reproductions or offset printing. Anything contained herein 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, (i) for the business of
photographic, multilith or multigraph reproductions or offset printing; (ii) for
a retail banking, trust company, depository, guarantee or safe deposit business
open to the general public, (iii) as a savings bank, a savings and loan company
open to the general public, (iv) for the sale to the general public of travelers
checks, money orders, drafts, foreign exchange or letters of credit or for the
receipt of money for transmission, (v) as a stock broker's or dealer's office or
for the underwriting or sale of securities open to the general public, (vi) as a
restaurant or bar or for the sale of confectionery, soda, beverages, sandwiches,
ice cream or baked goods or for the preparation, dispensing or consumption of
food or beverages in any manner whatsoever, (vii) as a news or cigar stand,
(viii) as an employment agency, labor union office, physician's or dentist's or
dentist's office, dance or music studio, school (except for the training of
employees of Tenant), or (ix) as a barber shop or beauty salon. Nothing in this
Section shall preclude Tenant from using any part of the Premises for
photographic, multilith or multigraph reproductions to the extent that such uses
are incidental to Tenant's own business or activities.
C. WEIGHT LIMITATIONS. Tenant shall not place a load upon any floor of
the Premises exceeding the floor load per square foot area which such floor was
designated to carry and which may be allowed by law. Landlord reserves the right
to prescribe the weight limitations and position of all heavy equipment and
similar items, and to prescribe the reinforcing necessary, if any, which in the
opinion of the Landlord may be required under the circumstances, such
reinforcing to be at Tenant's expense.
<PAGE>
6. DELAY OF POSSESSION:
A. INITIAL DELAY. If Landlord is unable to deliver possession of the
Premises by reason of the holding over of any prior tenant or any other reason
not attributable to fault on the part of Tenant, the payment of Rent shall not
commence until Landlord delivers possession of the Premises to Tenant. However,
nothing set forth herein will operate to extend the Lease Term and said
abatement will be the full extent of Landlord's liability to Tenant on account
of a delay in delivery of possession of the Premises.
B. SUBSEQUENT DELAY. Notwithstanding Section 6A above, if Landlord is
unable to deliver possession of the Premises to Tenant within ninety (90) days
after the Lease Commencement Date, by reason of anything other than fault on the
part of Tenant or any of Tenant's Agents, as hereafter defined, or on account of
an event or condition described in Section 42R, either Landlord or Tenant will
have the right to terminate this Lease upon written notice delivered to the
other party within ten (10) days after the lapse of said 90-day period. Upon
such termination, Landlord and Tenant will each be released from all further
liability under this Lease. The failure to complete minor or insubstantial
details of construction, decoration or mechanical adjustments shall not be
considered a delay in delivery of the Premises.
7. ACCEPTANCE OF PREMISES: LANDLORD'S WORK:
Improvements, if any, to be made to the Premises by Tenant shall be made
in accordance with the Work Letter. Improvements, if any, to be made to the
Premises by Landlord are specifically set forth in the Work Letter and there are
no others. All improvements made to the Premises, whether by Landlord or Tenant,
will become the property of Landlord when attached to or incorporated into the
Premises. Such property will remain the property of Landlord upon termination of
this Lease. The taking of possession by Tenant (or any permitted assignee or
subtenant of Tenant) of all or any portion of the Premises for the conduct of
business will be deemed conclusive evidence that Tenant has found the Premises,
and all of their fixtures and equipment, acceptable.
8. PARKING:
A. GENERAL. As long as Tenant is not in default under this Lease,
Landlord will provide Tenant during the Lease Term with the number of assigned
parking spaces as set forth in the BLI Rider in the covered parking areas
located in the Building ("Covered Parking"). Such parking spaces may be used
only by principals and employees of Tenant. Tenant will, subject to Section 8C
below, pay Landlord parking rent (plus tax) each month, per parking space, in
the amount set forth in the BLI Rider with respect to the Covered Parking.
B. UNCOVERED PARKING. In addition to the Covered Parking and also so
long as Tenant is not in default under this Lease, Landlord shall provide Tenant
with the number of unassigned parking spaces as set forth in the BLI Rider in
the uncovered parking areas located adjacent to the Building (.Uncovered
Parking"). Such Uncovered Parking, and all driveways and walkways may be used by
Tenant on a non-exclusive basis with Landlord and other tenants of the building'
their guests and invitees. All Uncovered Parking shall be provided at no charge
to Tenant.
<PAGE>
C. RATES. The rates charged for Tenant parking in the Covered Parking
Area may be increased from time to time. The parking rates charged hereunder
will be increased only in accordance with prevailing market conditions,
consistent with office buildings of similar quality to and in the immediate
geographic area of the Building. Tenant will be billed for monthly parking
charges along with normal Rent billing. If Tenant fails to pay parking charges
when due, Landlord may, by written notice to Tenant, elect to proceed as
provided under the default provisions of this Lease and/or cease to provide all
or any of the foregoing parking spaces.
D. RESERVATIONS. Landlord has and reserves the right to alter the
methods used to control parking and the right to establish such controls and
rules and regulations (such as parking stickers to be affixed to vehicles)
regarding parking that Landlord may deem desirable. Without liability, Landlord
will have the right to tow or otherwise remove vehicles improperly parked,
blocking ingress or egress lanes, or violating parking rules, at the expense of
the offending tenant and/or owner of the vehicle. In the event Tenant fails to
utilize, regularly and consistently, all of the parking spaces for which Tenants
pays monthly parking rent under the BLI Rider, Landlord shall have the right to
terminate Tenant's right to use such unused parking. Upon such termination of
the use of parking spaces by Landlord, Tenant shall receive a reduction in
parking rent in an amount equal to the number of parking spaces taken hereunder,
times the per space rent paid by Tenant. Tenant agrees (i) to comply with the
notice of termination; (ii) that such termination shall become unconditionally
effective, without further documentation on the noticed date of termination; and
(iii) that such termination shall not constitute an eviction, constructive or
otherwise, a default or breach by Landlord or any kind, or the basis for any
form of Rent abatement, set-off, claim or like action by Tenant. Landlord and
Tenant further agree that any parking spaces, the use of which are terminated
under the aforementioned procedure, shall be made available by Landlord to
Tenant or other tenants, as Landlord elects in its discretion.
E. CONDITIONS. Tenant's right to use, and its right to permit its
principals and guests to use, the parking facilities pursuant to this Lease are
subject to the following conditions: (i) Landlord has made no representations or
warranties with respect to either the Covered Parking Area or the Uncovered
Parking Area, the number of spaces located therein or access thereto; (ii)
Landlord reserves the right to reduce the number of spaces in the parking area
by not more than ten percent (10%) of the then number of parking area spaces in
the parking area and/or change access thereto; and none of the foregoing shall
entitle Tenant to any claim against Landlord or to any abatement of Rent (or any
part thereof); (iii) Landlord has no obligation to provide a parking lot
attendant and Landlord shall have no liability on account of any loss or damage
to any vehicle or the contents thereof, Tenant hereby agreeing to bear the risk
of loss for same; (iv) Tenant, its agents, employees and invitees, shall park
their automobiles and other vehicles only where and as designated from time to
time by Landlord within the parking areas; (v) if and when so requested by
Landlord, Tenant shall furnish Landlord with the license numbers of any vehicles
of Tenant, its agents and employees; (vi) Landlord (or the operator of the
parking area) may charge Tenant (and/or its employees, invitees and visitors)
directly for the parking fee established by Landlord (or such operator) from
time to time for the use of such parking area.
<PAGE>
9. BUILDING SERVICES:
A. GENERAL. In general, the services set forth below will be provided by
Landlord at a service level set, defined and regulated by Landlord consistent
with office buildings of similar quality to and in the same immediate geographic
area as the Building. During the Lease Term, the regular business hours
("Business Hours:) of the Building will be 8:00 a.m. to 6:00 p.m., Monday
through Friday, and on Saturday, 8:00 a.m. to 1:00 p.m. on a limited basis so
long as Tenant provides Landlord with advance notice of Tenants requirement for
same, except holidays generally recognized by state and federal governments. The
Building will be accessible to Tenant, its subtenants, agents, servants,
employees, contractors, invitees or licensees (collectively, "Tenant's Agents")
at all times during Business Hours.
(1) JANITORIAL SERVICE:
Landlord agrees to provide during the Lease Term janitorial services for
the Premises customarily provided in office buildings of similar quality to and
in the same immediate geographic area as the Building. Janitorial service will
be provided after Business Hours at the Building, but no Janitorial services
will be provided on Saturdays, Sundays and holidays generally recognized by
state and federal government. Should Tenant require additional janitorial
services beyond those customarily provided by Landlord, Tenant may request same
in writing from Landlord and if Landlord agrees to provide such services, Tenant
will be billed for same by Landlord at a reasonable rate, as determined by
Landlord, and those costs and expenses when billed will be Additional Rent due
under this Lease.
(2) ELECTRICITY:
(a) During the Lease Term, electric power will be available for the
purposes of lighting and general office equipment use in amounts consistent with
Building standard electrical capacities. The Building standard mechanical and
electrical systems are designed to accommodate loads generated by lights and
office equipment such as typewriters, dictating equipment, photocopy equipment,
etc., up to the standard maximum capacities as set forth in the Work Letter
attached hereto as Exhibit "B".
(b) Tenant acknowledges that Tenant's intended use of the Premises
excludes material use of the Premises beyond Business Hours. Material use shall
be deemed to mean the operation of an additional "shift", either full or part
time, or use of the Premises after Business Hours in any way that may preclude
or interfere with the providing of janitorial services to the Premises. In the
event Tenant's use of the Premises requires more electrical power than set
forth above, whether by intensity of use, load or type of equipment, Tenant may
then be billed for such additional use and such billings will be billed to
Tenant as Additional Rent. Landlord will utilize Landlord's customary method of
billing Tenant for excess electrical power consumption. At Landlord's option,
<PAGE>
Landlord, at Tenant's expense, may have an engineer estimate Tenant's usage,
and bill Tenant at standard utility rates for the excess usage or install a
submeter for the purposes of monitoring Tenant's excess power consumption.
Landlord and Tenant agree that Landlord's implementation of the electrical
monitoring and billing procedures set forth herein shall in no way be construed
so as to deem Landlord a private or public utility company.
(c) Landlord will provide routine maintenance and electric lighting
service for all Common Areas and service areas of the Building in the manner and
to the extent deemed by Landlord to be standard.
(d) Landlord reserves the right, after Business Hours, to turn off all
unnecessary lighting in the unoccupied areas of the Building and the Premises to
minimize the energy consumption of the Building in both the Common Areas and the
Premises.
(e) Tenant's electrical equipment shall be restricted to that equipment
which individually does not have a rated capacity greater than one-half (0.5)
kilowatts per hour and/or require voltage other than 120/208 volts, single
phase. Collectively, Tenant's equipment shall not have an electrical design load
greater than an average of four (4) watts per square foot of usable area of the
Premises (including overhead lighting).
(f) Tenant's overhead lighting shall not have a design load greater than
an average of two (2) watts per square foot of usable area of the Premises.
(g) If Tenant's consumption of electrical services exceeds either the
rated capacities and/or design loads as per subsections (e) and (f) above, then
Tenant shall remove such equipment and/or lighting to achieve compliance within
ten (10) days after receiving notice from Landlord. Or upon receiving Landlord's
prior written approval, such equipment and/or lighting may remain in the
Premises, subject to the following conditions:
(i) Tenant shall pay for all costs, installation, and maintenance
of submeters, wiring, air conditioning and other items required by
Landlord, in Landlord's discretion, to accommodate Tenant's excess
design loads and capacities.
(ii) Tenant shall pay to Landlord, upon demand, the cost of the
excess demand and consumption of electrical service at rates reasonably
determined by Landlord, which rates shall reflect the actual or
estimated cost of such demand and consumption and shall be in accordance
with any applicable laws.
(iii) Landlord may, at its option, upon not less than thirty (30)
days prior written notice to Tenant, discontinue the availability of
such extraordinary utility service. If Landlord gives any such notice,
Tenant will contract directly with the appropriate public utility for
the supplying of such utility service to the Premises
(3) HVAC SERVICES:
Landlord agrees to provide, during Business Hours, heating, ventilating
and air conditioning for the purposes of comfort control. Landlord and Tenant
agree that Landlord's HVAC system is not designed to cool machinery and
equipment. If Tenant requires additional HVAC services for comfort control at
times other than during Business Hours, Landlord will bill Tenant as Additional
Rent for the number of hours used at Landlord's then existing actual costs,
provided that HVAC services during other than Business Hours will be furnished
to the Premises at Tenant's expense by means of a key-activated control system,
the cost of such additional services to be determined by Landlord from time to
time. This rate will be subject to change during the Lease Term based upon
operational costs and expenses, including wear and tear on the system and its
components. The HVAC air distribution system and control system will remain
under the control of Landlord, who will regulate the systems' setting and
adjustment.
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(4) WATER & SEWER:
Landlord agrees to provide water and sewer at those points of supply
provided for general use of Tenant and other tenants in the Building.
(5) ELEVATOR SERVICE:
Landlord will provide elevator service during Business Hours to each
floor of the Building and, at Landlord's sole discretion, Landlord may provide
restricted elevator service during non-Business Hours. Tenant shall be permitted
to use such elevators for the purpose of moving bulky property in and out of the
Building only during other than Normal Business Hours, and only after first
obtaining Landlord's consent for such use. Tenant's request for such consent
shall be submitted to Landlord not less than five (5) days in advance of any
such move. Tenant shall promptly reimburse Landlord for all costs associated
with the after-hours operation of the elevator service for moving purposes,
including without limitation the cost of any operator or security personnel, and
Tenant shall also promptly reimburse Landlord's cost to repair any damage in
the elevator cab(s) or the Building resulting from Tenant's moving.
B. INTERRUPTION OF SERVICES. It is understood and agreed that Landlord
does not warrant that any of the services referred to above, or any other
services which Landlord may supply, will be free from interruption. Tenant
acknowledges that any one or more of such services may be suspended by reason of
accident or repairs, alterations or improvements necessary to be made, or by
strikes or lockouts, or by reason of operation of law, or other causes beyond
the control of Landlord. No such interruption or discontinuance of service will
be deemed an eviction or a disturbance of Tenant's use and possession of the
Premises or any part thereof, or render Landlord liable to Tenant for damages or
abatement of Rent or relieve Tenant from the responsibility of performing any of
Tenant's obligations under this Lease.
10. SECURITY:
With respect to security for the building and the parking areas,
Landlord and Tenant hereby agree as follows:
A. LANDLORD'S RESPONSIBILITY. Security in the form of limited access to
the Building during other than Normal Business Hours shall be provided by means
of a coded key or card activated automated access system serving the plaza level
and higher floors of the Building. Landlord may also, at its option, provide
ful1 or part time security personnel after Normal Business Hours. Landlord,
however, shall have no liability to Tenant, its employees, agents, invitees or
licensees for losses due to theft or burglary, or for damages done by
unauthorized persons on the Premises and neither shall Landlord be required to
insure against any such losses.
B. TENANT'S RESPONSIBILITY. Tenant shall: (1) abide by all policies,
procedures and rules and regulations for use of the access system, {2) report
promptly the loss or theft of all keys, security cards or security codes which
would permit unauthorized entrance to the Premises, Building or parking area(s),
(3) report to Landlord the employment or discharge of employees and their
vehicle's make, model, and license number, (4) promptly report to Landlord
door-to-door solicitation or other unauthorized activity in the Building or
parking garage(s), and (5) promptly inform the Landlord's Building manager in
the event of a break-in or other emergency.
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C. INTERRUPTION OF SECURITY. Tenant acknowledges that the above security
provisions may be suspended or modified at Landlord's sole discretion or as a
result of causes beyond the reasonable control of Landlord. No such
interruption, discontinuance or modification of security service will constitute
an eviction, constructive eviction, or a disturbance of Tenant's use and
possession of the Premises, and further, no interruption, discontinuance or
modification of security service will render Landlord liable to Tenant or
third-parties for damages, abatement of Rent, or otherwise, or relieve Tenant of
the responsibility of performing Tenant's obligations under this Lease.
11. REPAIRS AND MAINTENANCE:
A. LANDLORD'S RESPONSIBILITIES. During the Lease Term, Landlord shall
define, set, and maintain the level of repairs and maintenance for the Building,
the common areas, and all other areas serving the Building, in a manner
comparable to office buildings of similar quality to and in the immediate
geographic area of the Building. Landlord's responsibilities with respect to
this paragraph are as follows: (1) the structural and roof systems of the
Building and parking areas, (2) the Building standard electrical and mechanical
systems, (3) the primary water and sewer systems of the Building, (4) the
Building common areas and the common area furniture, fixtures, and equipment,
(5) the landscaped areas in and about the Building, (6) the covered Parking Area
and uncovered Parking Area, and (7) replacement of Building standard light bulbs
in the common areas.
B. TENANT'S RESPONSIBILITIES. During the Lease Term, Tenant will repair
and maintain the following at Tenant's expense:
(1) The interior portion of the demising walls, the interior partition
walls of the Premises and their wall-covering, and the entry door to the
Premises.
(2) The electrical and mechanical systems not considered Building
standard which have been installed by either
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Landlord or Tenant, for the exclusive use and benefit of Tenant. The following
examples are for clarification and are not all inclusive: (a) electrical
services for computers or similar items, (b) projection room equipment such an
dimmers, curtains, or similar items, (c) water closet plumbing, kitchen plumbing
or similar items, (d) HVAC for other than comfort cooling in the Premises, (e)
security systems for the Premises, (f) telephone system for the Premises; and
(g) other similar systems.
(3) Except for the janitorial services, if any, set forth in Section
9A(1) of this Lease, the repair and maintenance of the floor covering of the
Premises, including VAT flooring, ceramic tiles, marble, wood flooring, or
similar coverings, shall be performed by Landlord upon Tenant's request, at
Tenant's expense, and Tenant will be billed for same as Additional Rent. At
least once per year, if necessary, Landlord will clean Tenant's carpeting at
Tenant's expense to be billed to Tenant as Additional Rent. Should additional
cleaning be requested by Tenant, such cleaning will be available at Tenant's
expense and will be billed to Tenant as Additional Rent.
(4) All cabinets and millwork (regardless of ownership) so long as said
cabinets and millwork are for the exclusive use and benefit of Tenant.
(5) All other personal property, improvements or fixtures (including
Building standard improvements once delivered by Landlord and possession has
been taken by Tenant), and those items enumerated in Section llA hereof. Those
items to be repaired and maintained by Tenant include, but are not limited to,
the following: (a) ceiling tiles and ceiling grid, (b) moulding or other
woodwork and panelling, (c) light fixtures and bulbs, (d) draperies, blinds or
wallhangings, (e) glass partition walls, (f) water closets and kitchen areas,
(g) doors and locksets, and (h) vaults, safes, or secured areas. For the
aforesaid items, Landlord may elect, with Tenant's approval (which approval
will not be unreasonably withheld) to maintain and repair same at Tenant's
expense and Tenant will be billed for same as Additional Rent.
C. REPAIRS AND MAINTENANCE: MISCELLANEOUS. Notwithstanding any of the
provisions of this paragraph 11 to the contrary, Landlord shall have no
responsibility to repair or maintain the Building, any of its components, the
common areas, the Premises, or any fixture, improvement, trade fixture, or any
item of personal property contained in the Building, the common areas, and/or
the Premises if such repairs or maintenance are required because of the
occurrence of any of the following: (i) the acts, misuse, improper conduct,
omission or neglect of Tenant or Tenant's Agents, or (ii) the conduct of
business in the Premises. Should Landlord elect to make repairs or maintenance
occasioned by the occurrence of any of the foregoing, Tenant shall pay as
Additional Rent all such costs and expenses incurred by Landlord. Landlord shall
have the right to approve in advance all work, repair, maintenance or otherwise,
to be performed under this Lease by Tenant and all of Tenant's repairmen,
contractors, subcontractors and suppliers performing work or supplying
materials. Tenant shall be responsible for all permits, inspections and
certificates for accomplishing the above. Tenant shall obtain lien waivers for
all work done in or to the Premises. Tenant shall comply with the provisions of
Section 22 of this Lease.
12. TENANT'S ALTERATIONS:
A. GENERAL. During the Lease Term, Tenant will make no alterations,
additions or improvements in or to the Premises, of any kind or nature,
including, but not limited to, alterations, additions or improvements in, to, or
on, telephone or computer installations (any and all of such alterations,
additions or improvements other than those set forth in the work letter attached
hereto are collectively referred to in this Section 12 as the "Alteration(s)"),
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant shall submit to Landlord detailed drawings and
plans of the proposed alterations at the time Landlord's consent is sought.
Should Landlord consent to any proposed Alterations by Tenant, such consent will
be conditioned upon Tenant's agreement to comply with all requirements
established by Landlord, including safety requirements and the matters
referenced in Section 22 of this Lease. As stated herein, all Alterations made
hereunder will become Landlord's property when incorporated into or affixed to
the Building. However, at Landlord's option Landlord may, at the expiration of
the Lease Term, require Tenant, at Tenant's expense, to remove Alterations made
by or on behalf of Tenant and to restore the Premises to their original
condition.
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B. ALTERATION FEE.
(a) Tenant shall pay to Landlord as additional rent in connection with
all Alterations a fee (the "Alteration Fee") for its supervision and overhead in
connection with each such Alteration, for Landlord's review and approval of all
plans and specifications for such Alteration, for Landlord's construction
coordination and monitoring of such Alteration, and for all other reasonable
costs and expenses incurred by Landlord as a result of or in connection with
each such Alteration, a fee equal to ten percent (10%) of the total construction
cost of each such Alteration. There shall be excluded from the computation of
the construction cost of each Alteration the cost of furniture, removable
furnishings, draperies, office equipment, painting, carpeting, removable
cabinetry, items of special decoration and telephone installation and
engineer's, architects', space planners' and other professionals' fees.
(b) Prior to making any Alteration, Tenant shall submit to Landlord a
statement of Tenant's independent architect, if one is employed, or Tenant's
contractor, estimating the total cost of such Alteration and the estimated time
required to complete such Alteration. The Alteration Fee shall be calculated on
the basis of such estimate and paid in equal monthly installments during the
course of the performance of the Alteration, together with the monthly
installments of Base Rent thereafter coming due. Within ten business days after
completion of the Alteration, Tenant shall pay to Landlord the entire balance of
the Alteration Fee if not theretofore paid in full.
(c) Within ten business days after completion of any Alteration, Tenant
shall submit to Landlord a statement of Tenant's independent architect, if one
is employed, or Tenant's contractor, certifying the total cost of such
Alteration. The Alteration Fee shall be adjusted, if necessary, based on the
certification. If the Alteration Fee, as adjusted, shall be greater than the
amount theretofore paid to Landlord by Tenant on account of such Alteration Fee,
Tenant shall pay such deficiency simultaneously with the delivery to Landlord of
the certification, which deficiency shall bear interest at the annual rate (the
"Applicable Rate") equal to two percent (2%) in excess of the publicly announced
prime (or corporate base) rate of interest then in effect at Citibank, N.A. (or
its successors) until paid if not paid within the time required for the payment
thereof. If such Alteration Fee, as adjusted, is less than the amount
theretofore paid to Landlord by Tenant on account of such Alteration Fee,
Landlord, within 30 days after Landlord's receipt of the certification, shall
pay to Tenant the amount of such overpayment. If Landlord shall dispute the
statement certifying the total costs of such Alteration, Landlord shall have the
right, within 30 days after receipt of the certification, to employ an
independent certified public accountant to review Tenant's books and records
relating to such Alteration. The determination of such accountant shall be
conclusively binding upon the parties, and, if necessary, the Alteration Fee
shall be adjusted accordingly based upon such
<PAGE>
determination. If such determination shall reveal that the Alteration Fee paid
on account of such Alteration shall have been understated by more than five
percent (5%), then Tenant shall pay the fees of the accountant in connection
with such review, and the payment to be made to Landlord as a result of such
understatement shall bear interest at the Applicable Rate. Any adjustment in the
Alteration Fee, together with interest thereon at the Applicable Rate, as well
as any payment of the fees of such accountant, shall be paid by Tenant to
Landlord as additional rent within ten (10) business days after such
accountant's determination.
13. LANDLORD'S ADDITIONS AND ALTERATIONS:
Landlord has the right to make changes in and about the Building,
Covered Parking Area and Uncovered Parking Area, including, but not limited to,
signs, entrances, name or address of Building. Such changes may include, but not
be limited to, rehabilitation, redecoration, refurbishment and refixturing of
the Building and expansion of or structural changes to the Building. The right
of Tenant to quiet enjoyment and peaceful possession given under the Lease will
not be deemed breached or interfered with by reason of Landlord's actions
pursuant to this paragraph as long as such actions do not materially deprive
Tenant of its use and enjoyment of the Premises.
14. ASSIGNMENT AND SUBLETTING:
A. GENERAL. Tenant agrees not to assign, mortgage, hypothecate, pledge,
or encumber this Lease, or any part thereof, or sublet the Premises, or any part
thereof, or permit the Premises, or any part thereof, to be used or occupied by
others, intentionally or by operation of law, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld by Landlord. Any
of same, or attempt at same, is a material default hereunder and is null, void
and of no force or effect whatsoever. If Landlord consents to an assignment or
sublet, (i) such assignment or subletting will not relieve Tenant of its
obligations or liabilities under this Lease and (ii) any extensions, renewals,
first refusal rights or options hereunder will automatically be of no further
force or effect for the assignee or sublessee or Tenant, and (iii) in the event
that Landlord consents to such assignment or subletting hereunder, any excess
funds or other consideration, over what Tenant is obligated to pay as Rent and
what Tenant receives pursuant to such assignment or subletting, shall
immediately be remitted to Landlord. If Tenant is an entity, other than a
corporation whose shares are traded on a nationally recognized stock exchange,
any change to the structure of such entity or any disposition(s) of any of the
interests therein by sale, assignment, operation of law or otherwise, or any
change in the power to vote the interests therein, will be treated a prohibited
assignment of this Lease requiring Tenant to obtain Landlord's prior written
consent.
<PAGE>
B. RECAPTURE. Notwithstanding any other provision contained herein to
the contrary, in lieu of giving its consent to a proposed assignment or
sublease, Landlord may, without incurring any liability to Tenant, elect to
recapture, effective as of the proposed effective date of the assignment or
proposed commencement date of the sublease, all or part of the Premises that are
the subject of the proposed assignment or sublease (in the latter case, for the
proposed term of the sublease). As to the portion of the Premises so recaptured,
Tenant shall be released from liability to perform any obligations for the term
beginning with the proposed effective date of the assignment or proposed
commencement date of the sublease (and, in the latter case, for the proposed
term of the sublease). As a prerequisite for giving its consent to a proposed
assignment or sublease, Landlord may require, among other things, that it
receive, in addition to all Rent and other sums due under this Lease, one-half
of the Net Profit, as defined below, due Tenant under the assignment or sublease
and/or Landlord may require that the new tenant execute an instrument prepared
by Landlord with terms, provisions, conditions and covenants acceptable to
Landlord in its sole discretion. "Net Profit" shall mean all Rent, including
Base Rent, Overhead Rent and Additional Rent (including all sums that would
otherwise be Additional Rent were they not timely paid), and other consideration
due Tenant under the assignment or sublease in excess of all Rent required under
this Lease, but less any reasonable tenant improvement allowance, reasonable
brokerage commissions and Rent concessions. Landlord's share of the Net Profit
shall be paid by Tenant to Landlord upon Tenant's receipt of same, and the
failure of the assignee or sublessee to timely pay same, or any default under
the applicable assignment or sublease instrument, shall constitute a default
under this Lease. Landlord's share of the Net Profit shall be considered
Additional Rent and included in Landlord's lien for rent. Landlord shall have
the right to audit Tenant's books upon reasonable notice to determine Landlord's
share of the Net Profit. A default under this Lease shall occur if Tenant is
determined to have understated Landlord's share of the Net Profit by more than
five percent (5%) on a noncumulative basis. Tenant shall pay Landlord the sum of
Five Hundred Dollars ($500.00) each and every time Tenant obtains Landlord's
consent to enter into any assignment or sublease. Said Five Hundred Dollars
($500.00) shall be paid within ten (10) days after Landlord submits to Tenant an
invoice for same. If not paid within said ten (10) days, said sum shall be
considered an Additional Rent and included in any lien for rent.
15. TENANT'S INSURANCE COVERAGE:
A. GENERAL. Tenant agrees that, at all times during the Lease Term (as
well as prior and subsequent thereto if Tenant or any of Tenant's Agents should
then use or occupy any portion of the Premises), it will keep in force, with an
insurance company licensed to do business in the State of Florida, and at least
A-rated in the most recent edition of Best's Insurance Reports, and otherwise
acceptable to Landlord, (i) without deductible, comprehensive general liability
insurance, including coverage for bodily injury and death, property damage and
personal injury and contractual liability as referred to below, in the amount of
not less than the amount-set forth in the BLI Rider, combined single limit per
occurrence for injury (or death) and damages to property, (ii) with deductible
of not more than Five Thousand Dollars ($5,000.00), insurance on an "All Risk or
Physical Loss" basis, including sprinkler leakage, vandalism, malicious
mischief, fire and extended coverage, covering all improvements to the Premises,
fixtures, furnishings, removable floor coverings, equipment, signs and all other
decoration or stock in trade, in the amounts of not less than the full
replacement value thereof, and (iii) workmen's compensation and employer's
liability insurance, if required by statute. Such policies will: (i) include
Landlord and such other parties as Landlord may reasonably designate as
additional insured's, (ii) be considered primary insurance, (iii) include within
the terms of the policy or by contractual liability endorsement coverage
insuring Tenant's indemnity obligations under Section 20, and (iv) provide that
it may not be cancelled or changed without at least thirty (30) days prior
written notice from the company providing such insurance to each party insured
thereunder. Tenant will also maintain throughout the Lease Term worker's
compensation insurance with not less than the maximum statutory limits of
coverage.
B. EVIDENCE. The insurance coverages to be provided by Tenant will be
for a period of not less than one year. At least fifteen (15) days prior to the
Lease Commencement Date, Tenant will deliver to Landlord original certificates
of all such paidup insurance; thereafter, at least fifteen (15) days prior to
the expiration of any policy Tenant will deliver to Landlord such original
certificates as will evidence a paidup renewal or new policy to take the place
of the one expiring.
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16. LANDLORD'S INSURANCE COVERAGE:
A. GENERAL. Landlord will at all times during the Lease Term maintain a
policy or policies of insurance insuring the Building against loss or damage by
fire, explosion or other hazards and contingencies typically covered by
insurance for an amount acceptable to the mortgagees encumbering the Building.
Landlord reserves the right to self insure in lieu of maintaining such policies.
B. TENANT'S ACTS. Tenant will not do or permit anything to be done upon
or bring or keep or permit anything to be brought or kept upon the Premises
which will increase Landlord's rate of insurance on the Building. If by reason
of the failure of Tenant to comply with the terms of this Lease, or by reason of
Tenant's occupancy (even though permitted or contemplated by this Lease), the
insurance rate shall at any time be higher than it would otherwise be, Tenant
will reimburse Landlord for that part of all insurance premiums charged because
of such violation or occupancy by Tenant. Tenant agrees to comply with any
requests or recommendation made by Landlord's insurance underwriter inspectors.
17. SUBROGATION:
A. GENERAL. Each party will look first to any insurance in its favor
before making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Tenant hereby
waives and releases all rights of subrogation under Tenant's insurance policies
discussed in paragraph 15 and Tenant will cause each such insurance policy to be
properly endorsed to evidence such waiver and release of subrogation in favor of
Landlord.
B. EXCLUSIONS. Tenant acknowledges that Landlord will not carry
insurance on improvements, furniture, furnishings, trade fixtures, equipment
installed in or made to the Premises by or for Tenant, and Tenant agrees that
Tenant, and not Landlord, will be obligated to promptly repair any damage
thereto or replace the same.
18. DAMAGE OR DESTRUCTION BY CASUALTY:
A. ABSOLUTE RIGHT TO TERMINATE. If by fire or other casualty the
Premises are damaged or destroyed to the extent of twenty five-percent (25%) or
more of the replacement cost thereof, or the Building is damaged or destroyed
to the extent of twenty-five per cent (25%) or more of the replacement cost
thereof, Landlord will have the option of terminating this Lease or any renewal
thereof by serving written notice upon Tenant within one hundred and eighty
(180) days from the date of the casualty and any prepaid Rent or Additional
Rent will be prorated as of the date of destruction and the unearned portion of
such Rent will be refunded to Tenant without interest.
B. QUALIFIED RIGHT TO TERMINATE. If by fire or other casualty either
the Premises or the Building is damaged or destroyed to the extent of less than
twenty-five per cent (25%) but more than ten percent (10%) of the replacement
cost of the Premises or the Building (as applicable) (or the Premises or
Building are damaged to a lesser degree but Section 18C does not apply because
<PAGE>
of the number of years remaining in the Lease Term), then Landlord may, so long
as it treats Tenant and similarly situated tenants in a nondiscriminatory
manner, either terminate this Lease by serving written notice upon Tenant within
one hundred and eighty (180) days of the date of destruction or Landlord may
restore the Premises.
C. OBLIGATION TO RESTORE. If by fire or other casualty either the
Premises or the Building is destroyed or damaged, but only to the extent of ten
percent (10%) or less of the replacement cost of the Premises or the Building
(as applicable), and, also, the unexpired Lease Term, including any previously
exercised renewal option, is more than three years, then Landlord will restore
the Premises.
D. RENT ADJUSTMENTS. In the event of restoration by Landlord, all Base
Rent and Additional Rent paid in advance shall be apportioned as of the date of
damage or destruction and all such Base Rent and Additional Rent as above
described thereafter accruing shall be equitably and proportionately adjusted
according to the nature and extent of the destruction or damage, pending
substantial completion of rebuilding, restoration or repair. In the event the
destruction or damage is so extensive as to make it unfeasible for Tenant to
conduct Tenant's business in the Premises, Rent and Additional Rent under this
Lease will be completely abated until the Premises are substantially restored by
Landlord or until Tenant resumes use and occupancy of the Premises, whichever
shall first occur. Landlord will not be liable for any damage to or any
inconvenience or interruption of business of Tenant or any of Tenant's Agents
occasioned by fire or other casualty.
E. QUALIFICATIONS. Said restoration, rebuilding or repairing will exist
and will be at Landlord's sole cost and expense, subject to the availability of
applicable insurance proceeds. Landlord shall have no duty to restore, rebuild
or replace Tenant's personal property and trade fixtures. Notwithstanding
anything to the contrary in this Lease, including, but not limited to this
Section 18A, Landlord's obligation(s) to repair, rebuild or restore the Building
or the Premises shall exist (i) only to the extent of insurance proceeds
received by Landlord in connection with the condition or event which gave rise
to Landlord's obligation to repair, rebuild or restore and/or (ii) only so long
as the area unaffected by the casualty may, as determined by Landlord using
reasonable business judgment, be restored as a profitable, self functioning
unit.
19. CONDEMNATION AND EMINENT DOMAIN:
A. ABSOLUTE RIGHT TO TERMINATE. If all or a material part of the
Premises or the Building or the parking spaces is taken for any public or
quasi-public use under any governmental law, ordinance or regulation or by right
of eminent domain or by purchase in lieu thereof, and the taking would prevent
or materially interfere with the use of the Premises for the purpose for which
they are then being used, this Lease will terminate and the Rent and Additional
Rent will be abated during the unexpired portion of this Lease effective on the
date physical possession is taken by the condemning authority. Tenant will have
no claim to the condemnation award.
<PAGE>
B. OBLIGATION TO RESTORE. In the event an immaterial part of the
Premises or the Building or the parking spaces is taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain or by purchase in lieu thereof, and this Lease is not
terminated as provided in subsection A above, then Landlord shall, subject to
the remaining provisions of this Section 19, at Landlord's expense, restore the
Premises to the extent necessary to make them reasonably tenantable. The Rent
and Additional Rent payable under this Lease during the unexpired portion of the
Lease Term shall be adjusted to such an extent as may be fair and reasonable
under the circumstances. Tenant shall have no claim to the condemnation award
with respect to the leasehold estate but, in a subsequent, separate proceeding,
may make a separate claim for trade fixtures installed in the Premises by and at
the expense of Tenant and Tenant's moving expense. In no event will Tenant have
any claim for the value of the unexpired Lease Term.
C. QUALIFICATIONS. Notwithstanding the foregoing, Landlord's obligation
to restore exists (i) only if and/or to the extent, that the condemnation or
similar award received by Landlord is sufficient to compensate Landlord for its
lose and its restoration costs and/or (ii) the area unaffected by the
condemnation or similar proceeding may, as determined by Landlord's reasonable
business judgment, be restored as a profitable, and self functioning unit.
20. LIMITATION OF LANDLORD'S LIABILITY: INDEMNIFICATION:
A. PERSONAL PROPERTY. All personal property placed or moved into the
Building will be at the sole risk of Tenant or other owner. Landlord will not be
liable to Tenant or others for any damage to person or property arising from
Environmental Concerns, as hereafter defined, theft, vandalism, HVAC
malfunction, the bursting or leaking of water pipes, any act or omission of any
co-tenant or occupant of the Building or of any other person, or otherwise.
B. LIMITATIONS. Notwithstanding any contrary provision of this Lease:
(i) Tenant will look solely (to the extent insurance coverage is not applicable
or available) to the interest of Landlord (or its successor as Landlord
hereunder) in the Building for the satisfaction of any judgment or other
judicial process requiring the payment of money as a result of any negligence or
breach of this Lease by Landlord or its successor or of Landlord's managing
agent (including any beneficial owners, partners, corporations and/or others
affiliated or in any way related to Landlord or such successor or managing
agent) and Landlord has no personal liability hereunder of any kind, and (ii)
Tenant's sole right and remedy in any action or proceeding concerning Landlord's
reasonableness (where the same is required under this Lease) will be an action
for declaratory judgment and/or specific performance.
C. INDEMNITY. Tenant agrees to indemnify, defend and hold harmless
Landlord and-its agents from and against all claims, causes of actions,
liabilities, judgments, damages, losses, costs and expenses, including
reasonable attorneys' fees and costs, including appellate proceedings and
bankruptcy proceedings, incurred or suffered by Landlord and arising from or in
any way connected with the Premises or the use thereof or any acts, omissions,
neglect or fault of Tenant or any of Tenant's Agents, including, but not limited
to, any breach of this Lease or any death, personal injury or property damage
occurring in or about the Premises or the Building or arising from Environmental
Concerns, as hereafter defined. Tenant will reimburse Landlord upon request for
all costs incurred by Landlord in the interpretation and enforcement of any
provisions of this Lease and/or the collection of any sums due to Landlord under
this Lease, including collection agency fees, and reasonable attorneys' fees and
costs, regardless of whether litigation is commenced, and through all appellate
actions and proceedings, including bankruptcy proceedings, if litigation is
commenced.
<PAGE>
21. RELOCATION OF TENANT:
A. GENERAL. Recognizing that the Building is large and the needs of
tenants as to space may vary from time to time, and in order for Landlord to
accommodate Tenant and prospective tenants, Landlord expressly reserves the
right, prior to and/or during the Lease Term, at Landlord's sole expense, to
move Tenant from the Premises and relocate Tenant in other comparable space of
Landlord's choosing of approximately the same dimensions and size within the
Building or an adjacent building owned by Landlord, which other space will be
decorated by Landlord at its expense. Landlord may use decorations and materials
from the existing Premises, or other materials, so that the space in which
Tenant is relocated will be comparable in its interior design and decoration to
the space from which Tenant is removed.
B. NO INTERFERENCE. During the relocation period Landlord will use
reasonable efforts not to unduly interfere with Tenant's business activities
and Landlord agrees to substantially complete the relocation within a reasonable
time under all then existing circumstances.
C. PROMISES. This Lease and each of its terms and conditions will
remain in full force and effect and be applicable to any such new space and such
new space will be deemed to be the Premises demised hereunder; upon request
Tenant will execute such documents which may be requested to evidence,
acknowledge and confirm the relocation (but it will be effective even in the
absence of such confirmation).
D. COSTS. Landlord's obligation for expenses of removal and relocation
will be the actual cost of relocating and decorating Tenant's new space, and
Tenant agrees that Landlord's exercise of its election to remove and relocate
Tenant will not release Tenant in whole or in part from its obligations
hereunder for the full Lease Term. No rights granted in this Lease to Tenant,
including the right of peaceful possession and quiet enjoyment, will be deemed
breached or interfered with by reason of Landlord's exercise of the relocation
right reserved herein.
E. NOTICE. If Landlord exercises its relocation right under this
paragraph, (i) Tenant will be given thirty (30) days prior notice in writing,
and (ii) Landlord will reimburse Tenant for the reasonable cost of replacement
of stationery and telephone relocation and other similar expenses necessitated
by the exercise of said right of relocation.
22. COMPLIANCE WITH LAWS AND PROCEDURES:
A. COMPLIANCE. Tenant will promptly comply with all applicable laws,
guidelines, rules, regulations and requirements, whether of federal, state, or
local origin, applicable to the Premises and the Building, including, but not
limited to, the Americans With Disabilities Act, 42 U.S.C. (0) 12101 et. seq.,
and those for the correction, prevention and abatement of nuisance, unsafe
conditions, or other grievances arising from or pertaining to the use or
occupancy of the Premises. Tenant acknowledges that the Premises and the parking
facilities may contain potentially hazardous substances, including, but not
limited to, asbestos containing materials, radon gas, mineral fibers, and other
like materials (all of such materials are referred to herein as "Environmental
Concerns"). Accordingly, Tenant agrees that Tenant and Tenant's Agents shall
comply with all operation and maintenance programs and guidelines implemented or
promulgated from time to time by Landlord or its consultants, including, but not
limited to, those matters set forth in subsections B and C below, in order to
reduce the risk to Tenant, Tenant's Agents or any other tenants of the Building
of injury from Environmental Concerns.
<PAGE>
B. NOTICE PRIOR TO WORK. Tenant shall provide thirty (30) days notice to
Landlord prior to the performance by Tenant, Tenant's Agents or contractors of
any structural repairs, renovation and/or maintenance, to the Premises. Such
notice shall include a detailed description of the work contemplated. Tenant
shall not perform, or cause to be performed, any such repair, renovation and/or
maintenance without the written consent of Landlord, and, if such consent is
granted, the repair, renovation and/or maintenance must be performed in
accordance with the terms of Landlord's consent. Tenant agrees to bear the
expense of whatever preventive or abatement measures are required by Landlord's
consent with respect to friable asbestos or any other material.
C. INDEMNIFICATION. Tenant shall indemnify, defend, and hold harmless
Landlord from and against any and all claims or liability arising from the
performance of the repair, renovation, and/or maintenance described above.
This indemnity shall include, but not be limited to, claims or liabilities
asserted against Landlord based upon negligence, strict liability or other
liability by operation of law to any third party or government entity, and all
costs, attorney's fees, expenses, and liabilities incurred by Landlord in the
defense of any such claim. Landlord shall defend any such claim at Tenant's
expense by counsel selected by Landlord. Furthermore, as a material part of the
consideration to Landlord for the entering into of this Lease, Tenant assumes
all risk of damages to property or injury to persons in, upon, or about the
Premises arising from any act or omission of Tenant, Tenant's Agents, employees,
contractors, and invitees, resulting in the release or threatened release of
friable asbestos. Tenant shall be liable for the entire cost of abating and
remediating any such release or threatened release, and Tenant shall indemnify,
defend, and hold harmless Landlord from and against any and all claims or
liability arising therefrom.
D. RADON. In accordance with Florida Law, the following disclosure is
hereby made:
RADON GAS: Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may
present health risk to persons who are exposed to it over time.
Levels of radon that exceed Federal and State Guidelines have been
found in buildings in Florida. Additional information regarding radon
and radon testing may be obtained from your county public health
unit.
23. RIGHT OF ENTRY:
Landlord and its agents will have the right to enter the Premises during
all reasonable hours to make necessary repairs to the Premises. In the event of
an emergency, Landlord or its agents may enter the Premises at any time, without
notice, to appraise and correct the emergency condition. Said right of entry
will, after reasonable notice, likewise exist for the purpose of removing
placards, signs, fixtures, alterations, or additions which do not conform to
this Lease. Landlord or its agents will have the right to exhibit the Premises
at any time to prospective tenants within one hundred and eighty days (180)
before the Expiration Date of the Lease.
<PAGE>
24. DEFAULT:
A. EVENTS OF DEFAULT BY TENANT. If (1) Tenant vacates, abandons or
surrenders all or any part of the Premises prior to the Expiration Date; or (2)
Tenant fails to fulfill any of the terms or conditions of this Lease or any
other lease heretofore made by Tenant for space in the Building; or (3) the
appointment of a trustee or a receiver to take possession of all or
substantially all of Tenant's assets occurs, or if the attachment, execution or
other judicial seizure of all or substantially all of Tenant's assets located at
the Premises, or of Tenant's interest in this Lease, occurs; or (4) Tenant or
any of its successors or assigns or any guarantor of this Lease ("Guarantor")
should file any voluntary petition in bankruptcy, reorganization or arrangement,
or an assignment for the benefit of creditors or for similar relief under any
present or future statute, law or regulation relating to relief of debtors; or
(5) Tenant or any of its successors or assigns or any Guarantor should be
adjudicated bankrupt or have an involuntary petition in bankruptcy,
reorganization or arrangement filed against it; or (6) Tenant shall permit,
allow or suffer to exist any lien, judgment, writ, assessment, charge,
attachment or execution upon Landlord's or Tenant's interest in this Lease or
the Premises, and/or the fixtures, improvements and furnishings located thereon;
or (7) Tenant is dispossessed from the Premises (other than by Landlord) by
process of law or otherwise; or (8) Tenant holds over the Premises after the
Expiration Date without Landlord's prior written consent, which may be withheld
in Landlord's sole discretion; or (9) this Lease or the interest or estate of
Tenant hereunder shall be transferred to, pass to, or devolve to or on any other
person or entity in contradiction to the manner permitted under this Lease; or
(10) Tenant violates any of the covenants or restrictions set forth in the rules
and regulations which may, from time to time, be promulgated by Landlord with
reference to the Premises, or any portion thereof, or to the Building, then
Tenant shall be in default hereunder. In the event of a default under this
Lease, Landlord may pursue any remedies provided by law or equity and/or the
remedies provided in Section 25 of this Lease.
B. TENANT'S GRACE PERIOD. Tenant shall have a period of ten (10) days to
cure a default under this Lease (other than a default for nonpayment of Base
Rent or Additional Rent on the due date, or for failure to comply with the terms
of Sections 14, 15 or 22 of this Lease, in which cases there shall be no grace
period whatsoever) after notice from Landlord specifying the nature of such
default. This grace period shall be extended if the default is of a nature that
it cannot be completely cured within said ten (10) day period and steps have
been diligently commenced and continuously pursued in good faith by Tenant to
cure or remedy the default within such ten (10) day period. If the default is
not cured after the expiration of the grace period, then Landlord may pursue any
remedies provided by law or equity and/or the remedies provided in Section 25 of
this Lease.
C. LANDLORD'S DEFAULT. If Tenant asserts that Landlord has failed to
meet any of its obligations under this Lease, Tenant shall provide written
notice ("Notice of Default") to Landlord specifying the alleged failure to
perform, and Tenant shall send by certified mail, return receipt requested, a
copy of such Notice of Default to any and all mortgage holders, provided that
Tenant has been previously advised of the address(es) of such mortgage
holder(s). Landlord shall have a thirty (30) day period after receipt of the
Notice of Default in which to commence during any non-performance by Landlord,
and Landlord shall have as much time thereafter to complete such cure as is
necessary so long as Landlord's cure efforts are diligent and continuous. If
Landlord has not begun the cure within thirty (30) days of receipt of the Notice
of Default, or Landlord does not thereafter diligently and continuously attempt
to cure, then Landlord shall be in default under this Lease. If Landlord is in
default under this Lease, then the mortgage holder(s) shall have an additional
thirty (30) days, after receipt of a second written notice from Tenant, within
which to cure such default or, if such default cannot be cured within that time,
then such additional time as may be necessary so long as their efforts are
diligent and continuous.
<PAGE>
25. LANDLORD'S REMEDIES FOR TENANT'S DEFAULT:
A. LANDLORD'S REMEDIES. If Tenant is in default under this Lease,
Landlord may, at its option, in addition to such other remedies as may be
available under Florida law:
(1) terminate this Lease and Tenant's right of possession, and retake
possession for Landlord's account; or
(2) terminate Tenant's right of possession without terminating this
Lease, retake possession of the Premises for the Tenant's account, repair and
alter the Premises in any manner as Landlord deems reasonably necessary or
advisable, and relet the Premises or any part of it, as the agent of Tenant, for
the whole or any part of the remainder of the Lease Term or for a longer period,
and Landlord may grant concessions or free rent or charge a higher rental than
that reserved in this Lease. Out of any rent collected or received from
subtenants or as a result of such reletting, Landlord shall pay to itself (a)
all expenses of every nature which landlord may incur such as (by way of
illustration and not limitation) those for attorneys' fees, brokerage,
advertising, and refurbishing the Premises in good order or preparing them for
reletting, and (b) any balance remaining on account of the liability of Tenant
for the sum equal to all Base Rent, Additional Rent and other charges due from
Tenant through the Expiration Date. Should Landlord, pursuant to this Section,
not collect rent which, after deductions is sufficient to fully pay to Landlord
a sum equal to all Base Rent, Additional Rent and other charges payable through
the Expiration Date, the balance or deficiency shall, at the election of
Landlord, be paid by Tenant; or
(3) stand by and do nothing, and hold the Tenant liable for all Base
Rent, Additional Rent and other charges payable under this Lease through the
Expiration Date.
B. EXERCISE OF LANDLORD'S REMEDIES. If Landlord does not notify Tenant
which remedy it is pursuing, or if Landlord's notice to Tenant does not
expressly state that Landlord is exercising its remedies under subsection (1)
or subsection (3) above, then it shall be deemed that Landlord is pursuing the
remedy set forth in subsection (2) above. If Landlord exercises option (1) or
(2) above, Tenant agrees to immediately and peacefully surrender the Premises
to Landlord; and if Tenant refuses to do so, Landlord may without further notice
reenter the Premises either by force or otherwise and dispossess Tenant, as well
as the legal representative(s) of Tenant and/or other occupant(s) of the
Premises, by summary proceedings or otherwise, and remove their effects.
<PAGE>
C. ACCELERATION. If Landlord exercises the remedies in subsection (2)
or (3) above, Tenant shall immediately pay to Landlord as damages for loss of
the bargain caused by Tenant's default, and not as a penalty, in addition to
any other damages, an aggregate sum which represents the present value of the
full amount of the Base Rent, Additional Rent and all other charges payable by
Tenant hereunder that would have accrued for the balance of the Lease Term. If
Landlord exercises the remedy in subsection (2) above, Landlord shall account
to Tenant at the Expiration Date for amounts actually collected by Landlord as
a result of a reletting, net of amounts to be paid to Landlord under subsection
(2) above.
26. LANDLORD'S RIGHT TO PERFORM FOR TENANT'S ACCOUNT:
If Tenant fails to observe or perform any term or condition of this
Lease within the grace period, if any, applicable thereto, then Landlord may
immediately or at any time thereafter perform the same for the account of
Tenant. If Landlord makes any expenditure or incurs any obligation for the
payment of money in connection with such performance for Tenant's account
(including reasonable attorneys' fees and costs in instituting, prosecuting
and/or defending any action or proceeding through appeal), the sums paid or
obligations incurred, with interest at eighteen percent (18%) per annum, will be
paid by Tenant to Landlord within ten (10) days after rendition of a bill or
statement to Tenant. In the event Tenant in the performance or non-performance
of any term or condition of this Lease should cause an emergency situation to
occur or arise within the Premises or in the Building, Landlord will have all
rights set forth in this paragraph immediately without the necessity of
providing Tenant any advance notice.
27. LIENS:
A. GENERAL. In accordance with the applicable provisions of the Florida
Mechanic's Lien Law and specifically Florida Statutes, Section 713.10, no
interest of Landlord whether personally or in the Premises, or in the underlying
land or Building of which the Premises are a part or the leasehold interest
aforesaid shall be subject to liens for improvements made by Tenant or caused to
be made by Tenant hereunder. Further, Tenant acknowledges that Tenant, with
respect to improvements or
<PAGE>
alterations made by Tenant or caused to be made by Tenant hereunder, shall
promptly notify the contractor making such improvements to the Premises of this
provision exculpating Landlord's liability for such liens.
B. DEFAULT. Notwithstanding the foregoing, if any mechanic's lien or
other lien, attachment, judgment, execution, writ, charge or encumbrance is
filed against the Building or the Premises or this leasehold, or any
alterations, fixtures or improvements therein or thereto, as a result of any
work action or inaction done by or at the direction of Tenant or any of Tenant's
Agents, Tenant will discharge same of record within ten (10) days after the
filing thereof, failing which Tenant will be in default under this Lease. In
such event, without waiving Tenant's default, Landlord, in addition to all
other available rights and remedies, without further notice, may discharge the
same of record by payment, bonding or otherwise, as Landlord may elect, and
upon request Tenant will reimburse Landlord for all costs and expenses so
incurred by Landlord plus interest thereon at the rate of eighteen percent (18%)
per annum.
28. NOTICES:
Notices to Tenant under this Lease will be addressed to Tenant and
mailed or delivered to the address set forth for Tenant in the BLI Rider.
Notices to Landlord under this Lease (as well as the required copies thereof)
will be addressed to Landlord (and its agents) and mailed or delivered to the
address set forth in the BLI Rider. Notices will be personally delivered or
given by registered or certified mail, return receipt requested. Notices
delivered personally will be deemed to have been given as of the date of
delivery and notices given by mail will be deemed to have been given forty-eight
(48) hours after the time said properly addressed notice is placed in the mail.
Each party may change its address from time to time by written notice given to
the other as specified above.
29. MORTGAGE: ESTOPPEL CERTIFICATE: SUBORDINATION:
Landlord has the unrestricted right to convey, mortgage and refinance
the Building, or any part thereof. Tenant agrees, within seven (7) days after
notice, to execute and deliver to Landlord or its mortgagee or designee such
instruments as Landlord or its mortgagee may require, certifying the amount of
the Security Deposit and whether this Lease is in full force and effect, and
listing any modifications. This estoppel certificate is intended to be for the
benefit of Landlord, any purchaser or mortgagee of Landlord, or any purchaser or
assignee of Landlord's mortgage. The estoppel certificate will also contain such
other information as Landlord or its designee may request. This Lease is and at
all times will be subject and subordinate to all present and future mortgages or
ground leases which may affect the Building and/or the parking areas, and to all
recastings, renewals, modifications, consolidations, replacements, and
extensions of any such mortgage(s), and to all increases and voluntary and
involuntary advances made thereunder. The foregoing will be self-operative and
no further instrument of subordination will be required. Tenant hereby agrees to
give any holder of any first mortgage on the Building, by registered or
certified mail, a copy of any default notice served upon Landlord by Tenant
provided Tenant has been provided advance written notice of the name and address
of such first mortgage holder.
30. ATTORNMENT AND MORTGAGEE'S REQUEST:
A. ATTORNMENT. If any mortgagee of the Building comes into possession
or ownership of the Premises, or acquires Landlord' a interest by foreclosure of
the mortgage or otherwise, upon the mortgagee's request Tenant will attorn to
the mortgagee.
<PAGE>
B. MORTGAGE MODIFICATION. If a mortgagee of the Building requests
modifications to this Lease as a condition to disbursing any monies to be
secured by the mortgage, Tenant agrees that within seven (7) days after request
by the mortgagee Tenant will execute, acknowledge and deliver to the mortgagee
an agreement, in form and substance satisfactory to the mortgagee, evidencing
such modifications, provided they do not increase Tenant's obligations under
this Lease or materially adversely affect the leasehold interest created by this
Lease.
C. ESTOPPEL LETTER. Tenant agrees that within seven (7) days after
request by any mortgagee of the Building, Tenant will execute, acknowledge and
deliver to the mortgagee a notice in form and substance satisfactory to the
mortgagee, setting forth such information as the mortgagee may require with
respect to this Lease and/or the Premises. If for any reason Tenant does not
timely comply with the provisions of this paragraph, Tenant will be deemed to
have confirmed that this Lease is in full force and effect with no defaults on
the part of either part and without any right of Tenant to offset, deduct or
withhold any Rent or Additional Rent.
31. TRANSFER BY LANDLORD:
If Landlord's interest in the Building terminates by reason of a
bonafide sale or other transfer, Landlord wi11, upon transfer of the Security
Deposit to the new owner, thereupon be released from all further liability to
Tenant under this Lease.
32. SURRENDER OF PREMISES: HOLDING OVER:
A. SURRENDER. Tenant agrees to surrender the Premises to Landlord on
the Expiration Date (or sooner termination of the Lease Term pursuant to other
applicable provisions hereof) in as good condition as they were at the
commencement of Tenant's occupancy, ordinary wear and tear, and damage by fire
and windstorm excepted.
B. RESTORATION. In all events, Tenant will promptly restore all damage
caused in connection with any removal of Tenant's personal property. Tenant will
pay to Landlord, upon request, all damages that Landlord may suffer on account
of Tenant's failure to surrender possession as and when aforesaid and will
indemnify Landlord against all liabilities, costs and expenses (including all
reasonable attorneys' fees and costs if any) arising out of Tenant's delay in so
delivering possession, including claims of any succeeding tenant.
<PAGE>
C. REMOVAL. Upon expiration of the Lease Term, Tenant will not be
required to remove from the Premises Building standard items, installed by
Landlord, all of such Building standard items are the property of Landlord.
However, should Tenant, prior to the expiration of the Lease Term or during the
Lease Term, install or cause to be installed fixtures, trade fixtures or any
tenant improvements in excess of Building standard, Landlord shall have the
option of retaining same or requiring Tenant to remove same. Should Landlord
elect to cause Tenant to remove such items, the cost of removal of same, upon
Landlord's election and notice to Tenant, shall be at Tenant's sole cost and
expense. Landlord has no obligation to compensate Tenant for any items which
are required hereunder to remain on or with the Premises.
D. HOLDOVER. Without limiting Landlord's rights and remedies, if Tenant
holds over in possession of the Premises beyond the end of the Lease Term,
during the holdover period the Rent will be double the amount of the Rent due
and payable for the last month of the Lease Term.
E. NO SURRENDER. No offer of surrender of the Premises, by delivery to
Landlord or its agent of keys to the Premises or otherwise, will be binding on
Landlord unless accepted by Landlord, in writing, specifying the effective
surrender of the Premises. At the expiration or termination of the Lease Term,
Tenant shall deliver to Landlord all keys to the Premises and make known to
Landlord the location and combinations of all locks, safes and similar items. No
receipt of money by Landlord from Tenant after the Expiration Date (or sooner
termination) shall reinstate, continue or extend the Lease Term, unless Landlord
specifically agrees to same in writing signed by Landlord at the time such
payment is made by Tenant.
33. NO WAIVER: CUMULATIVE REMEDIES:
A. NO WAIVER. No waiver of any provision of this Lease by either party
will be deemed to imply or constitute a further waiver by such party of the same
or any other provision hereof. The rights and remedies of Landlord under this
Lease or otherwise are cumulative and are not intended to be exclusive and the
use of one will not be taken to exclude or waive the use of another, and
Landlord will be entitled to pursue all rights and remedies available to
landlords under the laws of the State of Florida. Landlord, in addition to all
other rights which it may have under this Lease, hereby expressly reserves all
rights in connection with the Building or the Premises not expressly and
specifically granted to Tenant under this Lease and Tenant hereby waives all
claims for damages, loss, expense, liability, eviction or abatement it has or
may have against Landlord on account of Landlord's exercise of its reserved
rights, including, but not limited to, Landlord's right to alter the existing
name, address, style or configuration of the Building or the common areas,
signage, suite identifications, parking facilities, lobbies, entrances and
exits, elevators and stairwells.
B. RENT PAYMENTS. No receipt of money by Landlord from Tenant at any
time, or any act, or thing done by, Landlord or its agent shall be deemed a
release of Tenant from any liability whatsoever to pay Rent, Additional Rent, or
any other sums due hereunder, unless such release is in writing, subscribed by a
duly authorized officer or agent of Landlord and refers expressly to this
Section 33. Any payment by Tenant or receipt by Landlord of less than the entire
amount due at such time shall be deemed to be on account of the earliest sum
due. No endorsement or statement on any check or any letter accompanying any
check or payment shall be deemed an accord and satisfaction. In the case of such
a partial payment or endorsement, Landlord may accept such payment, check or
letter without prejudice to its right to collect all remaining sums due and
pursue all of its remedies under the Lease.
<PAGE>
34. WAIVER:
To the extent permitted by law, Tenant hereby waives: (a) jury trial in
any action or proceeding regarding a monetary default by Tenant and/or Landlord'
a right to possession of the Premises, and (b) in any action or proceeding by
Landlord for monies owed by Tenant and/or possession of the Premises, then
Tenant waives the right to interpose any crossclaim or counterclaim (except a
mandatory crossclaim or counterclaim if the same is provided for pursuant to
Florida law). However, the foregoing will not prohibit Tenant from bringing a
separate lawsuit against Landlord.
35. CONSENTS AND APPROVALS:
If Tenant requests Landlord's consent or approval under this Lease, and
if in connection with such requests Landlord deems it necessary to seek the
advice of its attorneys, architects and/or other experts, then Tenant shall pay
the reasonable fee of Landlord's attorneys, architects and/or other experts in
connection with the consideration of such request and/or the preparation of
any documents pertaining thereto. Whenever under this Lease Landlord's consent
or approval is expressly or impliedly required, the same may be arbitrarily
withheld except as otherwise specified herein.
36. RULES AND REGULATIONS:
Tenant agrees to abide by all rules and regulations attached hereto as
Exhibit "C" and incorporated herein by this reference, as reasonably amended
and supplemented from time to time by Landlord. Landlord will not be liable to
Tenant for violation of the same or any other act or omission by any other
tenant.
37. SUCCESSORS AND ASSIGNS:
This Lease will be binding upon and inure to the benefit of the
respective heirs, personal and legal representatives, successors and permitted
assigns of the parties hereto.
38. QUIET ENJOYMENT:
In accordance with and subject to the terms and provisions of this
Lease, Landlord warrants that it has full right to execute and to perform under
this Lease and to grant the estate demised and that Tenant, upon Tenant's
payment of the required Rent and Additional Rent and performing of all of the
terms, conditions, covenants, and agreements contained in this Lease, shall
peaceably and quietly have, hold and enjoy the Premises during the full Lease
Term.
<PAGE>
39. ENTIRE AGREEMENT:
This Lease, together with the BLI Rider, exhibits, schedules, addends
and guaranties (as the case may be) fully incorporated into this Lease by this
reference, contains the entire agreement between the parties hereto regarding
the subject matters referenced herein and supercedes all prior oral and written
agreements between them regarding such matters. This Lease may be modified only
by an agreement in writing dated and signed by Landlord and Tenant after the
date hereof.
40. HAZARDOUS MATERIALS:
A. PROHIBITION OF STORAGE. Tenant shall, at its own expense, at all
times and in all respects comply with all federal, state and local laws,
statutes, ordinances and regulations, rules, rulings, policies, orders and
administrative actions and orders ("Hazardous Materials Laws"), including,
without limitation, any Hazardous Materials Laws relating to industrial hygiene,
environmental protection or the use, analysis, generation, manufacture, storage,
disposal or transportation of any oil, flammable explosives, asbestos, urea
formaldehyde, radioactive materials or waste, infectious waste, or other
hazardous, toxic, contaminated or polluting materials, substances or wastes,
including, without limitation, any "hazardous substances", a "hazardous wastes,"
"hazardous materials" or "toxic substances" under any such laws, ordinances or
regulations (collectively, "Hazardous Materials"). Tenant shall, at its own
expense, procure, maintain in effect and comply with all conditions of any and
all permits, licensee and other governmental and regulatory approvals relating
to the presence of Hazardous Materials within, on, under or about the Premises
required for Tenant's use of any Hazardous Materials in or about the Premises
in conformity with all applicable Hazardous Materials Laws and prudent industry
practices regarding management of such Hazardous Materials. Landlord recognizes
and agrees that Tenant may use materials in normal quantities that are
applicable to general office use and that such use by Tenant shall not be deemed
a violation of this Section, so long as the levels are not in violation of any
Hazardous Materials Laws. Upon termination or expiration of the Lease, Tenant
shall, at its own expense, casas all Hazardous Materials placed in or about the
Premises by Tenant or at Tenant's direction to be removed from the Premises and
Building Common Area and transported for use, storage or disposal in accordance
and compliance with all applicable Hazardous Materials Laws. Landlord
acknowledges that it is not the intent of this Article to prohibit Tenant from
operating its business as described in this Lease. Tenant may operate its
business according to the custom of the industry so long as the use or presence
of Hazardous Materials is strictly and properly monitored according to all
applicable governmental requirements. Tenant shall indemnify, protect, defend
(by counsel reasonably acceptable to Landlord), and hold Landlord and Landlord's
Indemnitees free and harmless from and against any and all claims, liabilities,
penalties, forfeitures, losses and expenses (including attorneys' fees or death
of or injury to any person or damage to any property whatsoever, including,
without limitation, the Building common area, arising from or caused in whole or
in part, directly or indirectly, by the presence in or about the Premises of any
Hazardous Materials placed in or about the Premises or used by Tenant or at
Tenant's direction, or by Tenant's failure to comply with any Hazardous
Materials Law or in connection with any removal, remediation, clean up,
restoration and materials required hereunder to return the Premises and any
other property of whatever nature to their condition existing prior to the
appearance of the Hazardous Materials.
<PAGE>
B. DISCLOSURE WARNING AND NOTICE OBLIGATIONS. Tenant shall comply with
all laws, ordinances and regulations in the State where the Premises is located
regarding the disclosure of the presence or danger of Hazardous Materials.
Tenant acknowledges and agrees that all reporting and warning obligations
required under the Hazardous Materials Laws are the sole responsibility of
Tenant, whether or not such Hazardous Materials Laws permit or require Landlord
to provide such reporting or warnings, and Tenant shall be solely responsible
for complying with Hazardous Materials Laws regarding the disclosure of, the
presence or danger of Hazardous Materials. Tenant shal1 immediately notify
Landlord, in writing, of any complaints, notices, warnings, reports or asserted
violations of which Tenant becomes aware relating to Hazardous Materials on or
about-the Premises. Tenant shall also immediately notify Landlord if Tenant
knows or has reason to believe has or will be released on or about the Premises.
C. ENVIRONMENTAL TESTS AND AUDITS. Tenant shall not perform or cause to
be performed, any Hazardous Materials surveys, studies, reports or inspection,
relating to the Premises without obtaining Landlord's advance written consent,
which consent may be withheld in Landlord's sole discretion. At any time prior
to the expiration of the Lease Term, Landlord shall have the right to enter upon
the Premises in order to conduct appropriate tests and to deliver to Tenant the
results of such tests to demonstrate that levels of any Hazardous Materials in
excess of permissible levels has occurred as a result of Tenant's use of the
Premises.
D. SURVIVAL/TENANT'S OBLIGATIONS. The respective rights and obligations
of Landlord and Tenant under this Article shall survive the expiration or
termination of this Lease.
41. BANKRUPTCY PROVISIONS:
A. EVENT OF BANKRUPTCY. If this Lease is assigned to any person or
entity pursuant to the provisions of the United States Bankruptcy Code, 11
U.S.C. Section 101 et seq. (the "Bankruptcy Code"), any and 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 the 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 this
Section is not paid or delivered to Landlord shall be held in trust for the
benefit of Landlord and shall be promptly paid or delivered to Landlord. 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.
B. ADDITIONAL REMEDIES. In addition to any rights or remedies
hereinbefore or hereinafter conferred upon Landlord under the terms of this
Lease, the following remedies and provisions shall specifically apply in the
event Tenant engages in any one or more of the acts contemplated by the
provisions of Section 24 A (3), (4), (5) or (6) of this Lease:
(1) In all events, any receiver or trustee in bankruptcy shall either
expressly assume or reject this Lease within sixty (60) days following the entry
of an "Order for Relief" or within such earlier time as may be provided by
applicable law.
<PAGE>
(2) In the event of an assumption of this Lease by a debtor or by a
trustee, such debtor or trustee shall within fifteen (15) days after such
assumption :(i) cure any default or provide adequate assurance that defaults
will be promptly cured; (ii) compensate Landlord for actual pecuniary loss or
provide adequate assurance that compensation will be made for actual monetary
loss, including, but not limited to, all attorneys' fees and costs incurred by
Landlord resulting from any such proceedings; and (iii) provide adequate
assurance of future performance.
(3) Where a default exists under this Lease, the trustee or debtor
assuming this Lease may not require Landlord to provide services or supplies
incidental to this Lease before its assumption by such trustee or debtor, unless
Landlord is compensated under the terms of this Lease for such services and
supplies provided before the assumption of such Lease.
(4) The debtor or trustee may only assign this Lease if (i) it is
assumed and the assignee agrees to be bound by this Lease, (ii) adequate
assurance of future performance by the assignee is provided, whether or not
there has been a default under this Lease, and (iii) the debtor or trustee has
received Landlord' a prior written consent pursuant to the provisions of this
Lease. Any consideration paid by any assignee in excess of the rental reserved
in this Lease shall be the sole property of, and paid to, Landlord.
(5) Landlord shall be entitled to the fair market value for the Premises
and the services provided by Landlord (but in no event less than the rental
reserved in this Lease) subsequent to the commencement of a bankruptcy event.
(6) Any security deposit given by Tenant to Landlord to secure the
future performance by Tenant of all or any of the terms and conditions of this
Lease shall be automatically transferred to Landlord upon the entry of an
"Order of Relief".
(7) The parties agree that Landlord is entitled to adequate assurance of
future performance of the terms and provisions of this Lease in the event of an
assignment under the provisions of the Bankruptcy Code. For purposes of any such
assumption or assignment of this Lease, the parties agree that the term
"adequate assurance" shall include, without limitation, at least the following:
(i) any proposed assignee must have, as demonstrated to Landlord's satisfaction,
a net worth (as defined in accordance with generally accepted accounting
principles consistently applied) in an amount sufficient to assure that the
proposed assignee will have the resources to meet the financial responsibilities
under this Lease, including the payment of all Rent; the financial condition and
resources of Tenant are material inducements to landlord entering into this
Lease (ii) any proposed
<PAGE>
assignee must have engaged in the permitted use described in the BLI Rider for
at least five (5) years prior to any such proposed assignment, the parties
hereby acknowledging that in entering into this Lease, Landlord considered
extensively Tenant's permitted use and determined that such permitted business
would add substantially to the tenant balance in the Project, and were it not
for Tenant's agreement to operate only Tenant's permitted business on the
Premises, Landlord would not have entered into this Lease, and that Landlord's
operation of the Project will be materially impaired if a trustee in bankruptcy
or any assignee of this Lease operates any business other than Tenant's
permitted business; (iii) any assumption of this Lease by a proposed assignee
shall not adversely affect Landlord's relationship with any of the remaining
tenants in the Project taking into consideration any and all other "use" clauses
and/or "exclusively" clauses which may then exist under their leases with
Landlord; and (iv) any proposed assignee must not be engaged in any business or
activity which it will conduct on the Premises and which will subject the
Premises to contamination by any Hazardous Materials.
42. MISCELLANEOUS:
A. If Tenant has a lease for other space in the Building, any default
by Tenant under such lease will constitute a default hereunder.
B. If any term or condition of this Lease or the application thereof to
any person or circumstance is, to any extent, invalid or unenforceable, the
remainder of this Lease, or the application of such term or condition to persons
or circumstances other than those as to which it is held invalid or
unenforceable, is not to be affected thereby and each term and condition of this
Lease is to be valid and enforceable to the fullest extent permitted by law.
This Lease will be construed in accordance with the laws of the State of
Florida.
C. Submission of this Lease to Tenant does not constitute an offer, and
this Lease becomes effective only upon execution and delivery by both Landlord
and Tenant.
D. Tenant acknowledges that it has not relied upon any statement,
representation, prior or contemporaneous written or oral promises, agreements or
warranties, except such as are expressed herein.
E. Tenant will pay before delinquency all taxes assessed during the
Lease Term against any occupancy interest in the Premises or personal property
of any kind owned by or placed in, upon or about the Premises by Tenant.
F. If Tenant, with Landlord's consent, occupies the Premises or any
part thereof prior to the beginning of the Lease Term, all provisions of this
Lease will be in full force and effect commencing upon such occupancy, and Base
Rent and Additional Rent, where applicable, for such period will be paid by
Tenant at the same rate herein specified.
G. Each party represents and warrants that it has not dealt with any
agent or broker in connection with this transaction except for the agents or
brokers specifically act-forth in the BLI Rider with respect to each Landlord
and Tenant. If either partys' representation and warranty proves to be untrue,
such party wi11 indemnify the other party against all resulting liabilities,
costs, expenses, claims, demands and causes of action, including reasonable
attorneys' fees and costs through all appellate actions and proceedings, if any.
The foregoing will survive the end of the Lease Term.
H. Neither this Lease nor any memorandum hereof will be recorded by
Tenant.
<PAGE>
I. Nothing contained in this Lease shall be deemed by the parties hereto
or by any third party to create the relationship of principal and agent,
partnership, joint venturer or any association between Landlord and Tenant, it
being expressly understood and agreed that neither the method of computation of
Rent nor any other provisions contained in this Lease nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.
J. Whenever in this Lease the context allows, the word "including" will
be deemed to mean "including without limitation". The headings of articles,
sections or paragraphs are for convenience only and shall not be relevant for
purposes of interpretation of the provisions of this Lease.
K. This Lease does not create, nor will Tenant have, any express or
implied easement for or other rights to air, light or view over or about the
Building or any part thereof.
L. Landlord reserves the right to use, install, monitor, and repair
pipes, ducts and conduits within the walls, columns, and ceilings of the
Premises.
M. Any acts to be performed by Landlord under or in connection with this
Lease may be delegated by Landlord to its managing agent or other authorized
person or firm.
N. It is acknowledged that each of the parties hereto has been fully
represented by legal counsel and that each of such legal counsel has
contributed substantially to the content of this Lease. Accordingly, this Lease
shall not be more strictly construed against either party hereto by reason of
the fact that one party may have drafted or prepared any or all of the terms and
provisions hereof.
O. Landlord and Tenant acknowledge that the terms and provisions of this
Lease have been negotiated based upon a variety of factors, occurring at a
coincident point in time, including, but not limited to: (i) the individual
principals involved and the financial strength of Tenant, (ii) the nature of
Tenant's business and use of the Premises, (iii) the current leasing market
place and the economic conditions affecting rental rates, (iv) the present and
projected tenant mix of the Building, and (v) the projected juxtaposition of
tenants on the floor(s) upon which the Premises are located and the floors
within the Building. Therefore, recognizing the totality, uniqueness, complexity
and interrelation of the aforementioned factors, the Tenant agrees to use its
best efforts not to disseminate in any manner whatsoever, (whether by word of
mouth, mechanical reproduction, physical tender or by any manner of visual or
aural transmission or review) the terms and conditions of this Lease to third
parties who could in any way be considered presently or in the future as
prospective tenants for this or any other leasehold property with which Landlord
may be involved.
P. If more than one person or entity is named herein as Tenant, their
liability hereunder will be joint and several. In case Tenant is a corporation,
Tenant (a) represents and warrants that this Lease has been duly authorized,
executed and delivered by and on behalf of Tenant and constitutes the valid and
binding agreement of Tenant in accordance with the terms hereof, and (b) Tenant
shall deliver to Landlord or its agent, concurrently with the delivery of this
Lease, executed by Tenant, certified resolutions of the board of directors (and
shareholders, if required) authorizing Tenant's execution and delivery of this
Lease and the performance of Tenant to obligations hereunder. In case Tenant is
a partnership, Tenant represents and warrants that all of the persons who are
general or managing partners in said partnership have executed this Lease on
behalf of Tenant, or that
<PAGE>
this Lease has been executed and delivered pursuant to and in conformity with a
valid and effective authorization therefor by all of the general or managing
partners of such partnership, and is and constitutes the valid and binding
agreement of the partnership and each and every partner therein in accordance
with its terms. It is agreed that each and every present and future partner in
Tenant shall be and remain at all times jointly and severally liable hereunder
and that neither the death, resignation or withdrawal of any partner, nor the
subsequent modification or waiver of any of the terms and provisions of this
Lease, shall release the liability of such partner under the terms of this Lease
unless and until Landlord shall have consented in writing to such release.
Q. Landlord has made no inquiries about and makes no representations
(express or implied) concerning whether Tenant is proposed use of the Premises
is permitted under applicable law, including applicable zoning law; should
Tenant's proposed use be prohibited, Tenant shall be obligated to comply with
applicable law and this Lease shall nevertheless remain in full force and
effect.
R. Notwithstanding anything to the contrary in this Lease, if Landlord
cannot perform any of its obligations due to events beyond Landlord's control,
the time provided for performing such obligations shall be extended by a period
of time equal to the duration of such events. Events beyond Landlord's control
include, but are not limited to, hurricanes and floods and other acts of God,
war, civil commotion, labor disputes, strikes, fire, flood or other casualty,
shortages of labor or material, government regulation or restriction and weather
conditions.
S. Tenant agrees to pay, before delinquency, all taxes assessed during
the Lease Term agreement (i) all personal property, trade fixtures, and
improvements located in or upon the Premises and (ii) any occupancy interest of
Tenant in the Premises.
T. Landlord shall provide and install, at Tenant's cost, all letters or
numerals on doors entering the Premises. All such letters and numerals shall be
in the standard graphics as approved by Landlord for the Building, and no others
shall be permitted on the Premises without Landlord's prior written consent.
<PAGE>
IN WITNESS WHEREOF, the parties have signed and delivered this Lease as
of the day and year first above written.
Witnesses: LANDLORD :
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES, Inc.
/s/ ILLEGIBLE
- --------------------------- By: /s/ GRANT GRIMES
/s/ ILLEGIBLE ------------------------------
- --------------------------- Its: Investment Officer
(As to Landlord) --------------------------
TENANT:
EQUITABLE REAL ESTATE INVESTMENT
MANAGEMENT, Inc.,
a Delaware Corporation
/s/ ANN M. FLYN
- --------------------------- By: /s/ SUSAN HAWKEN
/s/ ILLEGIBLE ------------------------------
- --------------------------- Its: ATTORNEY-IN-FACT
(As to Tenant) SUSAN HAWKEN
--------------------------
COMPASS MANAGEMENT AND LEASING, Inc.,
a Delaware corporation
/s/ ILLEGIBLE
- --------------------------- By: /s/ JOHN NEMECEK
/s/ ILLEGIBLE ------------------------------
- --------------------------- Its: Vice President
(As to Landlord) --------------------------
<PAGE>
EXHIBIT "A"
FLOOR PLAN
----------
<PAGE>
EXHIBIT A
---------
[BLUEPRINT OF FLOOR PLAN]
<PAGE>
EXHIBIT B
LOBBY FURNITURE
4 Burgandy/Green Plaid Chairs
1 Pewter Coffee Table (with glass top)
1 Small Wood Telephone Table
1 Custom Lighting Fixture
CONFERENCE ROOM FURNITURE
1 Oval Conference Room Table (wood with glass protective top)
6 Green Conference Room Arm Chairs (with wheels)
1 Green Conference Room Arm Chair (no wheels)
1 End Table (wood) for telephone
1 Drywipe/Slide Screen (in wood cabinet on wall)
1 Custom Lighting Fixture
<PAGE>
EXHIBIT "C".
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors, and halls shall not be obstructed or encumbered by any
Tenant or used for any purpose other than ingress and egress to and from the
Premises.
2. No awnings or other projections shall be attached to the outside
walls of the Building without the prior written consent of Landlord. No
curtains, blinds, shades, or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises, without the prior written
consent of Landlord. Such awnings, projections, curtains, blinds, shades,
screens, or other fixtures must be of a quality, type, design, and color, and
attached in the manner approved by Landlord.
3. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the Premises or Building or on the inside of the Premises if the same
can be seen from the outside of the Premises without the prior written consent
of Landlord except that the name of Tenant may appear on the entrance door of
the Premises. In the event of a violation of the foregoing by Tenant, Landlord
may remove same without any liability and may charge the expense incurred by
such removal to the Tenant or Tenants violating this rule. Interior signs on
doors and the directory shall be inscribed, painted or affixed for each Tenant
by Landlord at the expense of such Tenant and shall be of a size and style
acceptable to the Landlord.
4. Tenant shall not occupy or permit any portion of the Premises demised
to it to be occupied as an office for a public stenographer or typist, or as a
barber or manicure shop, or as an employment bureau. Tenant shall not engage or
pay any employees on the Premises, except those actually working for Tenant at
the Premises, nor advertise for labor giving an address at the Premises. The
Premise. shall not be used for gambling, lodging, or sleeping or for any immoral
or illegal purposes. The Premises shall not be used for the manufacture,
storage, or sale of merchandise, goods or property of any kind whatsoever.
5. The sashes, sash doors, skylights, windows, and doors that reflect or
admit light and air into the halls, passageway or other public places in the
Building shall not be covered or obstructed by any Tenant nor shall any bottles,
parcels or other articles be placed on the window sills. No materials shall be
placed in the corridors or vestibules nor shall any articles obstruct any
air conditioning supply or exhaust vent.
6. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed and no
sweepings, rubbish, rage, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures by Tenant, its servants,
employees, agents, or licensees shall be borne by Tenant.
7. No Tenant shall mark, paint, drill into, or in any way deface any
part of the Premises or the Building of which they form a part. No boring,
cutting, or stringing of wires shall be permitted, except with the prior written
<PAGE>
consent of Landlord, and as it may direct. Should a Tenant require telegraphic,
telephonic, annunciator or other communication service, Landlord will direct the
electricians where and how wires are to be introduced and placed, and none shall
be introduced or placed except as Landlord shall direct. Electric current shall
not be used for power or heating without Landlord's prior written permission.
Neither Tenant nor Tenant's Agents including, but not limited to electrical
repairmen and telephone installers, shall lift, remove or in any way alter or
disturb any of the interior ceiling materials of the Premises or Building, nor
shall any of same have any access whatsoever to the area above the interior
ceiling of the Premises or the Building except with the prior written contact of
Landlord and in accordance with guidelines established by Landlord. No antennas
shall be permitted.
8. No bicycles, vehicles, or animals of any kind shall be brought into
or kept in or about the Premises, and no cooling shall be done or permitted by
any Tenant on said Premises. No Tenant shall cause or permit any unusual or
objectionable odors to be produced upon or permeate from the Premises.
9. Landlord shall have the right to retain a passkey and to enter the
Premises at any time, to examine same or to make such alterations and repairs as
may be deemed necessary, or to exhibit same to prospective Tenants during normal
business hours.
l0. No Tenant shall make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, talking machine, unmusical noise, whistling,
singing, or in any other way. No Tenant shall throw anything out of doors,
windows, or skylights, or down the passageways.
11. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or the mechanism thereof. Each Tenant must, upon the termination of his
tenancy restore to the Landlord all keys of offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant. Tenant shall pay to the
Landlord the cost of any lost keys.
12. Tenant will refer all contractors, contractors' representatives and
installation technicians, rendering any service to Tenant, to Landlord for
Landlord's supervision, approval, and control before performance of any
contractual service. This provision shall apply to all work performed in the
building, including installations of telephones, telegraph equipment, electrical
devices and attachments, and installations of any nature affecting floors,
walls, woodwork, trim, windows, ceilings, equipment or any other physical
portion of the Building.
13. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place during the hours
which the Landlord or its agent may determine from time to time. All such
movement shall be under supervision of Landlord and in the manner agreed between
Tenant and Landlord by pre-arrangement before performance. Such pre-arrangements
initiated by Tenant will include determination by Landlord, subject to his
decision and control, of the time, method, and routing of movement and
limitations imposed by safety or other concerns which may prohibit any article,
<PAGE>
equipment or any other item from being brought into the building. Landlord
reserves the right to prescribe the weight and position of all safes, which must
be placed upon 2-inch thick plank strips to distribute the weight. Any damage
done to the Building or to other Tenants or to other persons in bringing in or
removing safes, furniture or other bulky or heavy articles shall be paid for by
the Tenant.
14. Tenant agrees that all machines or machinery placed in the Premises
by Tenant will be erected and placed so as to prevent any vibration or annoyance
to any other Tenants in the Building of which the Premises are a part, and it is
agreed that upon written request of Landlord, Tenant will, within ten (10) days
after the mailing of such notice, provide approved settings for the absorbing,
preventing, or decreasing of noise from any or a11 machines or machinery placed
in the Premises.
15. Each Tenant shall, at its expense, provide artificial light for the
employees of the Landlord while doing janitor service or other cleaning, and in
making repairs or alterations in said Premises.
16. The requirements of Tenant will be attended to only upon written
application at the office of the Building. Employees of Landlord shall not
receive or carry messages for or to any Tenant or other person nor contract with
or render free or paid services to any Tenant or Tenant's agent, employees, or
invitees.
17. Canvassing, soliciting, and peddling in the Building is prohibited
and each Tenant shall cooperate to prevent the same.
18. Tenant shall have the free use of the mail chutes, if any, installed
in the Building, but the landlord in no wise guarantees efficiency of the said
mail chutes and shall be in a no wise responsible for any damage or delay which
may arise from use thereof.
19. Landlord will not be responsible for lost, stolen, or damaged
property, equipment, money, or Jewelry from Tenant's area or public rooms
regardless of whether such loss occurs when area is locked against entry or not.
20. Landlord specifically reserves the right to refuse admittance to the
Building from 6 p.m. to 8 a.m. daily, or on Saturdays, Sundays or legal
holidays, to any person or persons who cannot furnish satisfactory
identification, or to any person or persons who, for any other reason in the
Landlord's Judgment, should be denied access to the Premises. Landlord, for
the protection of the Tenant and Tenant's effects may prescribe hours and
intervals during the night and on Saturdays, Sundays and holidays, when all
persons entering and departing the Building shall be required to enter their
names, the offices to which they are going or from which they are leaving, and
the time of entrance and departure in a register provided for the purpose by
that Landlord.
21. No Tenant, nor any of Tenant's Agents, shall at any time bring or
keep upon the Premises any inflammable, combustible, or explosive fluid,
chemical, or substance.
22. Landlord reserves the right to make such other and further
reasonable rules and regulations as in its judgment may from time to time be
needful for the safety, care and cleanliness of the Premises, and for the
preservation of good order therein and any such other or further rules and
regulations shall be binding upon the parties hereto with the same force and
effect as if they had been inserted herein at the time of the execution hereof.
<PAGE>
FIRST ADDENDUM CYPRESS CENTRE STANDARD OFFICE LEASE
This addendum to Cypress Centre Standard Office Lease (this "Addendum")
dated this 13th day of September 1993 hereby amends that certain Cypress Centre
Standard Office Lease (the "Lease") dated concurrently herewith, by and between
The Equitable Life Assurance Society of the United States ("Landlord") and
Equitable Real Estate Investment Management a Delaware Corporation and COMPASS
Management and Leasing, Inc., a Delaware Corporation ("Tenant"). The parties
hereby agree as follows:
1. RATIFICATION. Except as expressly set forth herein, the terms of the
lease are hereby ratified and affirmed.
2. CONFLICT. In the event of a conflict between the provisions of the
Lease and this Addendum, the terms of this Addendum shall prevail.
3. TERMS. Unless otherwise defined herein, terms used herein shall
have the meaning or definition as set forth in the Lease.
4. CANCELLATION OPTION. So long as Tenant is not in default hereunder,
Tenant shall have a one (1) time option to cancel the Lease during any time
after the end of the Thirty Sixth (36th) month of the Lease Term, provided that
Tenant gives written notice to Landlord of Tenant's intention to cancel the
Lease ninety (90) days before the intended expiration date and further provided
that such notice includes a check made payable to Landlord which represents
reimbursement to Landlord for all unamortized Tenant Improvement Costs for the
remaining months canceled on the Lease Term plus applicable Florida State Sales
Tax.
5. MORTGAGE SUBORDINATION: NON-DISTURBANCE AGREEMENT. The following
sentence is added to the end of Section 29 and 30 of the Lease, entitled
"Mortgage Subordination". Notwithstanding anything in this Section 30 to the
contrary, as of the date of execution of this First Amendment, there are no
mortgages encumbering the Building. In the future, if Lessor encumbers the
Building with a mortgage, then Lessee shall not be obligated to sign a
Subordination/Attornment Agreement in favor of any such mortgagee unless such
mortgagee signs a Non-Disturbance Agreement in favor of Lessee stating
essentially that so long as Lessee is not in default, Lessee's possession of the
Premises shall not be disturbed if such mortgage is foreclosed.
<PAGE>
6. BUILD OUT ALLOWANCE. Landlord and Tenant agree the Build-Out
Allowance will not exceed $224,889.50 (Two hundred twenty four thousand, eight
hundred eighty-nine dollars and 50/100) and shall be based upon a mutually
agreed upon space plan and working drawings prepared by Mummaw and Associates,
Project #9216-llSA attached hereto.
7. SQUARE FOOTAGE OF PREMISES. Landlord and Tenant hereby acknowledge
that the amount of 8525 square feet contained in the Lease, describing the
amount of square feet contained in the Premises, is the amount of rentable
square feet which Landlord demises to Tenant. It is of the Landlord's
understanding that internally, the Tenant may allocate the Rent due with
Equitable Real Estate Investment Management to pay fifty-seven percent (57%) and
COMPASS Management and Leasing, Inc. to pay forty three (43%), however, in no
event shall this relieve either party from responsibility to pay the amount due
in the BLI Rider.
8. ASSIGNMENT AND SUBLETTING. Section 14.A should include that
Landlord's prior written consent will not be unreasonably withheld.
9. HOLDOVER RENT. Section 32.D shall be revised to read that, without
limiting Landlord's right and remedies, if Tenant holds over in possession of
the Premises beyond the end of the Lease Term, during the holdover period the
Rent will continue in the amount due and payable for the last month of the Lease
Term.
l0. RADON GAS. Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your county public health unit.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date
first set out above.
Witnesses: LANDLORD :
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES, Inc.
/s/ ILLEGIBLE
- --------------------------- By: /s/ GRANT GRIMES
/s/ ILLEGIBLE ------------------------------
- --------------------------- Its: Investment Officer
(As to Landlord) --------------------------
TENANT:
EQUITABLE REAL ESTATE INVESTMENT
MANAGEMENT, Inc.,
a Delaware Corporation
/s/ ANN M. FLYN
- --------------------------- By: /s/ SUSAN HAWKEN
/s/ ILLEGIBLE ------------------------------
- --------------------------- Its: Attorney-In-Fact
(As to Tenant) SUSAN HAWKEN
--------------------------
COMPASS MANAGEMENT AND LEASING, Inc.,
a Delaware corporation
/s/ ILLEGIBLE
- --------------------------- By: /s/ JOHN NEMECEK
/s/ ILLEGIBLE ------------------------------
- --------------------------- Its: Vice President
(As to Tenant) --------------------------
EXHIBIT 10.7
Assignment and Assumption Agreement
Return to: (enclose self-addressed stamped envelope)
NAME:
Bruce D. Goorland, Esq.
Address:
P.O. Box 1900
Fort Lauderdale, Florida 95-12436 T#001
03-16-95 02:50PM
This Instrument Prepared by:
Bruce D. Goorland, Esq.
Address:
Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A.
200 East Broward Boulevard
15th Floor
Fort Lauderdale, Florida 33301
Property Appraisers Parcel I.d. (Folio) Number(s):
Grantee(a)S.S.#(s): Assignment and Assumption Agreement
<TABLE>
<S> <C>
SPACE ABOVE THIS LINE FOR PROCESSING DATA SPACE ABOVE THIS LINE FOR RECORDING DATA
</TABLE>
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT made and executed the 15TH day
of MARCH A.D., 1995 by and between ROADHOUSE WATERWAY, INC., a Florida
corporation ("Assignor") and ROADHOUSE GRILL COMMERCIAL, INC., a Florida
corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor is the "Lessee" under that certain Lease ("Lease") by
and between Stan's on the Water, Inc., a Florida corporation, as Lessor
("Landlord") and Assignor as "Lessee"; a Memorandum of Lease and covenants
("Memorandum") with respect thereto having been recorded in Official Records
Book 22518, at Page 212 of the Public Records of Broward County, Florida; and
WHEREAS, Assignor desires to sell, assign and transfer Assignors
interest in the Lease to Assignee and Assignee desires to accept said,
assignment and transfer upon the terms and conditions hereinafter set forth.
1
<PAGE>
NOW THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency whereof is hereby acknowledged by
each party hereto from the other party hereto, the parties hereto do hereby
agree as follows:
1. INCORPORATION OF RECITATIONS. The foregoing recitations are true
and correct and are incorporated herein by this reference.
2. ASSIGNMENT. Assignor hereby sells, assigns and transfers to
Assignee all of the Assignor's right, title and interest in and to the Lease.
3. ACCEPTANCE AND ASSUMPTION. Assignee hereby accepts the foregoing
sale, assignment and transfer and agree to pay all "Base monthly rent,"
"Percentage Rental," and other charges to be paid by Lessee under the Lease and
first accruing on or after the date hereof and to faithfully perform all
covenants, stipulations, agreements and obligations to be performed by Lessee
under the Lease first accruing on or after the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement effective of the day and year first above written.
Signed, sealed and delivered in presence of:
ROADHOUSE WATERWAY, INC.,
a Florida corporation
/s/ SHEILA J. EICHAR By: /s/ GERALD T. MCDONALD
- -------------------------- ---------------------------------
Witness Signature
Sheila J. Eichar Gerald T. McDonald
- -------------------------- ---------------------------------
Print Name: Printed Name:
/s/ JOAN WAGNER President
- -------------------------- ---------------------------------
Witness Signature Title:
7951 SW 6th Street, Suite 112
Joan Wagner Plantation, FL 33324
- -------------------------- ---------------------------------
Print Name: Post Office Address
(Corporate Seal)
2
<PAGE>
ROADHOUSE GRILL COMMERCIAL, INC.,
a Florida corporation
/s/ JEFFREY HOMER By: /s/ JOHN DAVID TOOLE III
- -------------------------- ---------------------------------
Witness Signature
Jeffrey Homer John David Toole III
- -------------------------- ---------------------------------
Print Name: Printed Name:
/s/ CHARLES D. BARNETT PRESIDENT
- -------------------------- ---------------------------------
Witness Signature Title:
4801 S. UNIVERSITY DR.
Charles D. Barnett DAVIE, FL 33328
- -------------------------- ---------------------------------
Print Name: Post Office Address
(Corporate Seal)
3
<PAGE>
CONSENT
The undersigned hereby consents to the foregoing Assignment from
Assignor to Assignee.
STAN'S ON THE WATER, INC.
a Florida corporation
/s/ SHEILA J. EICHAR By: /s/ GUS BOULIS
- -------------------------- ---------------------------------
Witness Signature
Sheila J. Eichar Gus Boulis
- -------------------------- ---------------------------------
Print Name: Printed Name:
/s/ JOAN WAGNER President
- -------------------------- ---------------------------------
Witness Signature Title:
2400 W. Cypress Creek Rd., Ste. 200
Joan Wagner Ft. Lauderdale, Fl 33309
- -------------------------- ---------------------------------
Print Name: Post Office Address
(Corporate Seal)
STATE OF FLORIDA SS.
SS.
COUNTY OF BROWARD SS.
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by JERRY
MCDONALD the PRES. of ROADHOUSE WATERWAY, INC., a Florida corporation, freely
and voluntarily under authority duly vested in him/her by said corporation and
that the seal affixed thereto is the true corporate seal of said corporation.
He/She is personally known to me.
4
<PAGE>
WITNESS my hand and official seal in the County and State last
aforesaid this 10 day of March, 1995.
/s/ JOAN S. WAGNER
---------------------------------
Notary Public
Joan S. Wagner
---------------------------------
Typed, printed or stamped name of
Notary Public
My Commission Expires: 9-7-96
5
<PAGE>
STATE OF FLORIDA SS.
SS.
COUNTY OF BROWARD SS.
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by DAVID
TOOLE the PRESIDENT of ROADHOUSE GRILL COMMERCIAL, INC., a Florida corporation,
freely and voluntarily under authority duly vested in him/her by said
corporation and that the seal affixed thereto is the true corporate seal of said
corporation. He/She is personally known to me or who has produced
________________________ as identification.
WITNESS my hand and official seal in the County and State last
aforesaid this 15TH day of MARCH, 1995.
/s/ JEFFREY HOMER
---------------------------------
Notary Public
Jeffrey B. Homer
---------------------------------
Typed, printed or stamped name of
Notary Public
My Commission Expires: 10-16-98
STATE OF FLORIDA SS.
SS.
COUNTY OF BROWARD SS.
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by GU
BOULIS the PRESIDENT of STAN'S ON THE WATER, INC., a Florida corporation, freely
and voluntarily under authority duly vested in him/her by said corporation and
that the seal affixed thereto is the true corporate seal of said corporation.
He/She is personally known to me.
WITNESS my hand and official seal in the County and State last
aforesaid this 10 day of MARCH, 1995.
/s/ JOAN S. WAGNER
---------------------------------
6
<PAGE>
Notary Public
Joan S. Wagner
---------------------------------
Typed, printed or stamped name of
Notary Public
My Commission Expires: 9-7-96
7
<PAGE>
W/CALL TRI-COUNTY COURTHOUSE COURIER
RECORD AND RETURN TO AND
THIS INSTRUMENT PREPARED BY
JEFFREY B. HOMER, ESQUIRE
BRUCE M. LEVINE, P.A.
5300 N.W. 33RD AVENUE
SUITE 119
FORT LAUDERDALE, FLORIDA 33309
MEMORANDUM OF LEASE AND COVENANTS
THIS MEMORANDUM OF LEASE AND COVENANTS is made the 29 day of July, 1994
between STAN'S ON THE WATER, INC., whose address is 2400 West Cypress Creek
Road, Suite 200, Fort Lauderdale, Florida 33309 (the "Lessor") and ROADHOUSE
WATERWAY, INC., a Florida corporation, whose address is c/o G.T. McDONALD
ENTERPRISES, 7951 Sixth Street, Suite 112, Plantation, Florida 33324 (the
"Lessee").
W I T N E S S E T H:
1. That by Lease dated October 1, 1993 (the "Lease"), Lessor has
demised and leased and hereby demises and leases to Lessee, and Lessee has
rented and does hereby rent from Lessor, those premises (hereinafter called the
"Leased Premised") on that certain parcel of land in the City of Fort
Lauderdale, Broward County, Florida, legally described in Exhibit "A" attached
to this Memorandum of Lease and Covenants and made a part hereof by this
reference.
2. The Lease Term shall commence on the date hereof and shall
continue without interruption to September 30, 2012.
3. So long as Lessee is in good standing under the term and
provisions of the Lease, then Lessor grants to Lessee a right of first refusal
should Lessor decide to sell the Leased Premises.
<PAGE>
4. Lessor covenants and agrees, which covenants and agreements shall
be for a period of three years commencing on October 1, 1993, not to open,
operate or manage a Stan's on the Water Restaurant and Bar" within a five mile
radius of the Leased Premises.
5. This instrument does not alter, amends, modify or change the Lease
or the Exhibits which are a part thereof in any respect. This instrument in
executed by the parties solely for the purpose of recordation in the Public
Records of Broward County, Florida and it is the intent of the parties that it
shall be so recorded and shall give notice of and confirm the Lease and
Exhibits, and the covenants herein not forth, and all of the terms of the Lease
to same extent as if all the provisions of the Lease and Exhibits were fully set
forth herein.
6. All capitalized terms used in this Memorandum of Lease and
Covenants which are not defined herein shall have the meanings ascribed to them
in the Lease.
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have caused this Memorandum of
Lease and Covenants to be duly executed as of the date first above written.
Signed, Sealed and delivered
in the presence of:
LESSOR:
STAN'S ON THE WATER, INC.
/s/ JOAN S. WAGNER By: /s/ GUS BOULIS
- -------------------------- -----------------------------
Print Name: Joan Wagner GUS BOULIS, President
/s/ GLORIA HAUGHNEY LESSEE:
- --------------------------
Print Name: (As to ROADHOUSE WATERWAY, INC.
Gloria Haughney Lessor) a Florida Corporation
/s/ AUDREY FRAHAM By: /s/ GERALD T. McDONALD
- -------------------------- -----------------------------
Print Name: Audrey Frahm GERALD T. McDONALD, President
/s/ ROBERTA OHLSON
- --------------------------
Print Name: (As to
Roberta Ohlson Lessee)
(Corporate Seal)
STATE OF FLORIDA SS.
SS.
COUNTY OF BROWARD SS.
I HEREBY CERTIFY that on this 29 day of July, 1994, before me, an
officer duly qualified to take acknowledgments, personally appeared GUS BOULIS,
as President of Stan's on the Water, Inc., personally known to me or who has
produced a Florida drivers license as identification and has acknowledged before
me that he executed the foregoing freely and voluntarily for the purpose therein
expressed, and who did take an oath.
<PAGE>
WITNESS my hand and official seal in the State and County, last
aforesaid this 29 day of July, 1994.
/s/ JOAN S. WAGNER
---------------------------------
Notary Public
State of Florida
Joan S. Wagner
---------------------------------
(Print name)
My Commission expires: 9-7-96
My Commission number: CC 225849
<PAGE>
STATE OF FLORIDA SS.
SS.
COUNTY OF BROWARD SS.
I HEREBY CERTIFY that on this 29 day of July, 1994, before me, an
officer duly qualified to take acknowledgments, personally appeared GERALD T.
McDONALD, as President of ROADHOUSE WATERWAY, INC., a Florida corporation,
personally known to me or who has produced a Florida driver's license as
identification and has acknowledged before me that he executed the foregoing
freely and voluntarily for the purpose therein expressed, and who did take an
oath.
WITNESS my hand and official seal in the State and County, last
aforesaid this 29 day of July, 1994.
/s/ AUDREY FRAHM
---------------------------------
Notary Public
State of Florida
Audrey Frahm
---------------------------------
(Print name)
My Commission expires:
My Commission number:
<PAGE>
Lots 1 and 2 of RESUBDIVISION of Block 6 of the AMENDED PLAT OF CORAL RIDGE
COMMERCIAL BOULEVARD ADDITION, according to the Plat thereof, as recorded in
Plat Book 70, at Page 17, of the Public Records of Broward County, Florida; also
described as: A Resubdivision of Block 6 of THE AMENDED PLAT OF A PORTION OF
CORAL RIDGE COMMERCIAL BOULEVARD ADDITION, according to the Plat thereof, an
recorded in Plat Book 70, at Page 17, of the Public Records of Broward County,
Florida; and Lot 25 in Block 7 of AMENDED PLAT OF A PORTION OF CORAL RIDGE
COMMERCIAL BOULEVARD ADDITION, recorded in Plat Book 53, at Page 36, of the
Public Records of Broward County, Florida.
RECORDED IN THE OFFICIAL RECORDS
BOOK OF BROWARD COUNTY, FLORIDA
COUNTY ADMINISTRATOR
EXHIBIT "A"
<PAGE>
LEASE
This LEASE AGREEMENT is a conversion lease of a sub-lease dated October
1st, 1993, and is made and entered into this 1st day of October, 1993, by and
between Stan's On The Water, Inc., whose address is 2400 West Cypress Creek
Road, Suite 200, Fort Lauderdale, FL 33309, (hereinafter "LESSOR") and Roadhouse
Waterway, Inc., whose address is c/o G.T. McDonald Enterprises, Inc., 7951 S.W.
6th Street, Suite 112, Plantation, FL 33324 (hereinafter "LESSEE").
Whereas, LESSOR is the owner of property located at 3300 East
Commercial Boulevard, Fort Lauderdale, Florida 33308, (known as Stan's
Restaurant Lounge and Gift Shop and referred to hereinafter as the "Property"
and the Property is more fully described pursuant to the description attached as
Exhibit 1)
Whereas, the LESSOR desire to let and the LESSEE wishes to lease the
property.
Now therefore, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency which is
hereby acknowledged, the parties do hereby agree as follows:
1. LESSOR hereby leases to LESSEE and LESSEE hereby rents from
LESSOR upon the subject terms, conditions, provisions and covenants of this
Lease, the Property known as Stan's at 3300 East Commercial Boulevard, Fort
Lauderdale, Florida and which is more fully described in Exhibit 1 attached
hereto and made a part hereof;
2. The terms, conditions and covenants of the Lease shall be the same
as the contract which is attached hereto as Exhibit 2 and made a part hereof
with the following exceptions which shall be in place of and take precedent over
in conflicting or similar terms, conditions,
(1) LESSOR, confers no option to purchase the subject property
to the LESSEE, but reserves this right onto itself.
Therefore, Articles 26, 27, 28, 29, 30, 31, 32, 33, 34, 35,
36, 37, 38 and 39 of Lease are not made a part of this Lease
and shall not be included in this Lease.
<PAGE>
(2) LESSOR confers no rights of assignment, subletting, or
mortgaging the subject property to the LESSEE and reserves
those rights to itself; with the exception that LESSEE may
assign this lease subject to prior written approval by
LESSOR. LESSEE shall have the right to mortgage leasehold
estate, including a landlord waiver on trade fixtures,
furniture, and equipment, but not including a landlord
waiver on fixtures as defined in Section 679.313(1) of the
Florida Statutes. Notwithstanding any provision herein to
the contrary, assignor shall be and remain liable and
responsible for payment, performance and observance of all
the provisions and obligations undertaken to be paid,
performed, or observed in the Lease. Further, Gerald
McDonald shall continue to guaranty payment, performance and
observance of all provisions and obligations under his
Guaranty; unless, the assignee has a net worth in excess of
two million dollars, the LESSOR will release Gerald McDonald
of his obligations under the Guaranty.
(3) LESSOR agrees to let the premises for 25 years from October
1, 1987 and LESSEE agrees to rent the property for this
duration.
(4) COVENANT NOT TO COMPETE. LESSOR covenants and agrees not to
open, operate or manage a "Stan's on the Water Restaurant
and Bar" within a five-mile radius of the Property for a
period of three years commencing on October 1, 1993, and, in
consideration for this covenant not to compete, LESSEE
agrees to pay the following consideration to LESSOR: Ten
Thousand Dollars ($10,000.00) per month, on the first day of
each month, commencing on the first day of April, 1994 and
running for 22 consecutive months with the last payment
being due on January 1, 1996, plus an additional Five
Thousand Dollars ($5,000.00) per month on the first day of
each month commencing on the first day of April, 1994 and
running for ten consecutive months with the last payment
being due on January 1, 1995. This covenant is more fully
set out in the "Non-Compete Agreement" attached hereto as
Exhibit 3. This covenant does not prohibit LESSOR from
owning, operating or managing other restaurants and/or bars
in the subject territory.
(5) RENT: LESSEE agrees to pay all expenses of any nature,
including, but not limited to insurance, tangible and real
estate taxes commencing October
<PAGE>
1, 1993 and to pay rent commencing December 1, 1993, and
then to pay rent as follows:
(a) BASE MONTHLY RENT on the first day of each month
shall be $25,000.00 subject to CPI increases
ANNUALLY. CPI as used herein refers to the consumer
price index as published by the Bureau of Labor and
Statistics for the U.S. Department of Labor.
(1982-1984 equals 100); and, LESSEE agrees to pay:
<PAGE>
(b) PERCENTAGE RENTAL shall be paid on a quarterly basis
of the periods from December through February; March
through May; June through August; and September
through November ("Percentage Rent Quarter"), but
calculated on an annual basis and shall be equal to
seven and one-half (7 1/2% of gross revenues from the
property and any source on the property minus BASE
MONTHLY rent. The percentage rent shall be calculated
annually beginning December 1, 1993 and ending
November 30, 1994 and continuing on from December 1
through November 30 in future years. In the event
that LESSEE has paid percentage rent in any of the
first two percentage rent quarters and if the
cumulative percentage rent would provide a credit for
the third quarter, no such credit will be made and
instead $25,0000 base monthly rent shall be paid. Any
additional percentage rent or credit to LESSEE for
percentage rent, will be calculated as of November 30
and offset or paid in addition to the January rent.
Percentage rental payments are due no later than the
15th of the month following the end of the percentage
rent quarter and will be based upon sales as reported
on all the LESSEE'S sales tax reports for the
property, which will be provided to the LESSOR.
Additionally, in any percentage rental year where
sales exceed $4 million, percentage rent will be paid
on a monthly basis as soon as the $4 million sales
level is reached. In summary, in the event that gross
revenue from the property and any source on the
property is greater than $4 million, rent will not
exceed 7 1/2% in any given percentage rent year and
if less than $4 million, rent will not be less than
$25,000 per month.
(6) INSURANCE. If the Building or other Improvements
located on the Demised Premises should be damaged by
fire or other casualty, LESSEE shall immediately
notify LESSOR of such casualty and LESSEE shall
promptly commence to repair or reconstruct such
Building or other Improvements as nearly as may be to
their condition immediately prior to such casualty.
In the event of a casualty which is insured against,
the parties hereto will make all insurance proceeds
available for the cost of such restoration unless
required to be paid to Superior Mortgagee(s).
(7) LESSEE agrees to continuously operate during business
hours a restaurant known as "Roadhouse Grill" for the
term of this Lease. The LESSEE covents that it has
the exclusive rights to open
<PAGE>
"Roadhouse Grill" restaurants within a seven-mile
radius of the property and further covents that no
other "Roadhouse Grill" restaurant will be opened or
operated within a seven-mile radius of the property.
Should LESSEE desire to operate a restaurant at this
location other than a "Roadhouse Grill" he must
obtain LESSOR's ADVANCED WRITTEN APPROVAL, which will
not be unreasonably withheld by LESSOR.
<PAGE>
(8) RIGHT OF FIRST REFUSAL: So long as LESSEE is in good
standing under the terms and provisions of this LEASE
LESSOR grants to LESSEE a right a right of first
refusal should LESSOR decide to sell the subject
property. The LESSOR shall present to LESSEE a
written contract and LESSEE shall have fourteen days
to agree to, execute and deliver to LESSOR a contract
on the exact terms and conditions as the contract
presented by LESSOR. The Right of First Refusal
expires at 4:30 p.m. on the fourteenth day after
delivery of the contract.
(9) NOTICE: If either party agrees to give notice to the
other or to make tender to the other, such notice or
tender shall be in writing and shall be deemed to be
given when it shall be deposited with adequate
postage in the United States mail, certified or
registered, return receipt requested and addressed to
the party for whom it is intended as follows:
LESSOR: Gus Boulis c/o KB Holdings
2400 W. Cypress Creek Road
Suite 200
Ft. Lauderdale, FL 33309
LESSEE: Roadhouse Waterway, Inc.
c/o G.T. McDonald Enterprises, Inc.
7951 S.W. 6th Street, Suite 112
Plantation, FL 33324
IN WITNESS WHEREOF, the parties hereto have placed their hands and
seals the 12 day of JULY, 1994.
Signed, Sealed and delivered
in the presence of:
LESSOR:
/s/ JOAN S. WAGNER /s/ BUS BOULIS
- -------------------------- ---------------------------------
Gus Boulis, President
/s/ ILLEGIBLE STAN'S ON THE WATER, INC.
- --------------------------
LESSEE:
/s/ ILLEGIBLE /s/ G.T. McDONALD
- -------------------------- ---------------------------------
G. T. McDONALD, President
- -------------------------- ROADHOUSE WATERWAY, INC.
<PAGE>
GUARANTY
The undersigned, GERALD McDONALD, unconditionally guarantees payment of
all obligations due from ROADHOUSE WATERWAY, INC. ("Roadhouse") under that
certain Non-Compete Agreement and that Sub-Lease Agreement by and among
KONSTANTINOS (GUS) BOULIS and ROADHOUSE ("The Agreements"), dated of even date
herewith, and further unconditionally guarantees the full performance and
observance of all covenants of Roadhouse set forth in the Agreements. The
undersigned affirms all of Roadhouse's waivers and consents contained in the
Agreements. This Guaranty shall continue in full force and effect as to any
renewal, extension or modification of the Agreements. This Guaranty shall be
binding upon the undersigned's heirs and executors and may not be assigned.
GUARANTOR:
Date: 4/28/94
- --------------------------
/s/ GERALD McDONALD
---------------------------------
GERALD McDONALD
<PAGE>
LEGAL DESCRIPTION
Lots 1 and 2 of RESUBDIVISION of Block 6, of the AMENDED PLAT OF CORAL RIDGE
COMMERCIAL BOULEVARD ADDITION, according to the Plat thereof, recorded in Plat
Book 70, Page 17, of the Public Records of Broward County, Florida; also
described as: A RESUBDIVISION of Block 6, OF THE AMENDED PLAT OF A PORTION OF
CORAL RIDGE COMMERCIAL BOULEVARD ADDITION, according to the Plat thereof, as
recorded in Plat Book 70, Page 17, of the Public Records of Broward County,
Florida. Said lands situate, lying and being in Broward County, Florida.
AND
Lot 25, Block 7, of AMENDED PLAT OF A PORTION OF CORAL RIDGE COMMERCIAL
BOULEVARD ADDITION, as recorded in Plat Book 35, Page 36, of the Public Records
of Broward County, Florida. Said lands situate, lying and being in Broward
County, Florida.
Exhibit "A"
<PAGE>
LEASE AGREEMENT AND OPTION FOR PURCHASE AND SALE
THIS LEASE AGREEMENT AND OPTION FOR PURCHASE AND SALE is made and
entered into this 1ST day of OCTOBER , 1987, by and between JOHN S. STRATTON,
whose address is 512 Southeast 28th Avenue, Pompano Beach, Florida (hereinafter
referred to as "Landlord") and GUS BOULIS, whose address is 3706 A North
Roosevelt Boulevard, Key West, Florida (hereinafter collectively referred to as
"Tenant").
W I T N E S S E T H:
WHEREAS, Landlord is the owner of certain real property lying and being
situate in Broward County, Florida, more particularly described on Exhibit "A",
appended hereto and made a part hereof, including all buildings located thereon,
personal property, all easements, tenements, appurtenances, herediments,
fixtures, rights and privileges belonging on or in any way appertaining to such
premises subject to any restrictions, easements and encroachments now existing
and to any zoning and governmental regulations now or hereinafter in effect,
affecting the premises (collectively referred to as the "Property", and also
sometimes hereinafter referred to as the "Premises"); and
WHEREAS, the Landlord desires to let and the Tenant desires to lease
the Property; and
WHEREAS, Landlord additionally desires to grant Tenant and Tenant
desires to acquire an option to purchase the Property in accordance with the
terms and provisions set forth herein.
NOW THEREFORE, for and in consideration for the premises Ten Dollars
($10.00) and other good and valuable considerations, the receipt and sufficiency
which is hereby acknowledged, the parties do hereby agree as follows:
ARTICLE 1
PREMISES INCORPORATED BY REFERENCE
The above and foregoing premises is acknowledged by the parties to be
true and is hereby incorporated by reference herein.
ARTICLE 2
LEASED PREMISES
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord,
upon and subject to the terms, covenants, provisions and conditions of this
Lease, the Property, which is known as Stan's Lounge located at 3300 East
Commercial Boulevard, Fort Lauderdale, Florida 33308 (the "Business") and
includes the necessary parking to service the Business (hereinafter also
referred to as the "Premises").
<PAGE>
ARTICLE 3
COMMENCEMENT OF RENT AND TERM
The term of this Lease shall be for a term of twenty-five (25) years
commencing on the day and year first above written, the "Commencement Date", and
continuing for said number of years subject to prior termination or extension
thereof pursuant to conditions and covenants contained herein and the applicable
provisions of Florida law.
ARTICLE 4
FIXED RENT AND GENERAL RENTAL PAYMENT PROVISION
The rental shall be and consist of:
(a) Fixed rent (hereinafter referred to as the "Fixed Rent") at the
initial rate of Three Hundred Sixty Thousand Dollars ($360,000.00) per
annum, plus applicable sales tax thereon, subject to adjustment,
payable in equal monthly installments in the amount of Thirty Thousand
Dollars ($30,000.00) plus applicable sales tax on the first day of each
and every calendar month during the term of this Lease; and
(b) Additional charges for taxes, insurance, utilities, repairs and
maintenance, as hereinafter set forth, consisting of all sums of money
which shall become due from and payable by Tenant. All sums which must
be paid to Landlord, shall be paid in lawful money of the United States
to Landlord at his office or such other place as the Landlord shall
designate by notice to Tenant. In addition to the above, Tenant shall
pay all governmental taxes, fees or charges on account of the Fixed
Rent and the Additional Rent, as set forth in Article 5 below. Landlord
acknowledges receipt of the sum of Thirty One Thousand Five Hundred
($31,500.00) Dollars upon the execution hereof, to be applied against
the first installment of Fixed Rent, and sales tax thereon, becoming
due hereunder.
ARTICLE 5
FIXED RENT ADJUSTMENT
The Fixed Rent shall be a minimal based rental for the entire term of
this Lease. As of the time of the commencement of the third year of this Lease,
the Fixed Rent shall be adjusted as of such date and as of like date for each
year thereafter during the term hereof by an increase of three percent (3%) per
year over the Fixed Rent. Accordingly, as of the commencement of the third year
of this Lease, and for each year of this Lease thereafter, the annual rental
shall increase by Ten Thousand Eight Hundred ($10,800.00) Dollars per year.
Florida sales tax shall be computed based upon the adjusted rentals and the
Tenant shall be responsible for such additional amount. All of the above rental
increases shall hereinafter be referred to as "Additional Rent".
-2-
<PAGE>
ARTICLE 6
UTILITIES
Tenant shall pay when due all bills for water, sewer, trash and garbage
services, gas, electricity and all other utilities used on the Premises from the
Commencement Date of this Lease and until expiration of the term of this Lease.
ARTICLE 7
REPAIRS AND MAINTENANCE
Landlord shall be under no obligation to make any repairs, alterations
or improvements, to or upon the Property, or any part thereof, at any time.
Accordingly, Tenant shall, at its own expense, at all times of the term of this
Lease maintain the Property, make all repairs to the building and appurtenances
both inside and outside including, but not limited to, fixtures, walls, sea
wall, non-structural portions, decorations, sidewalks, yards and areas, paved
vehicle driving and parking areas, water and sewer mains and connections, water,
gas and electric pipes and conduits, and all other fixtures in and appurtenant
to the Property, whether or not enumerated herein, and Tenant shall make any and
all repairs, replacements, substitutions, improvements and additions, ordinary
or extraordinary, necessary for that purpose. All such repairs, replacements,
substitutions and improvements shall be in all respects of new and good quality
materials, and work shall be performed in a good and workmanlike manner and
shall be made to the approved satisfaction of any and all Federal, state,
county, municipal and other governmental authorities at any time having
jurisdiction of the Property. Tenant shall not cause or permit any waste, injury
of disfigurement of the Premises, the property improvements, or any part
thereof, normal wear and tear excepted. Tenant shall keep the entire Premises in
a clean, neat and sanitary condition. It is acknowledged that the plumbing
system connected to the Property must be pumped out approximately four (4) times
a year, at a cost of approximately One Hundred Fifty ($150.00) Dollars for each
cleaning, and the same shall be the responsibility of the Tenant.
ARTICLE 8
SIGNAGE
Tenant may install and operate interior and exterior electric and other
signs, machinery and any other mechanical equipment and in so doing shall comply
with all lawful requirements. Said signage shall be subject to Landlord's prior
written consent, which consent shall not be unreasonably withheld.
ARTICLE 9
"AS IS"
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Tenant agrees to accept the Premises in "as is" condition and
acknowledges that the condition of the Premises is satisfactory to Tenant as of
the Commencement Date of this Lease.
ARTICLE 10
USE OF LEASED PREMISES
10.01 OPERATION OF TENANT'S BUSINESS. Tenant shall occupy the Premises
for the following purposes only: restaurant, lounge and gift shop.
10.02 OCCUPANCY OF THE PREMISES. If any governmental license or permit,
other than a certificate of occupancy, shall be required for the proper and
lawful conduct of Tenant's business on the Premises and any part thereof, Tenant
at its expense, shall duly procure and thereafter maintain such license or
permit. Tenant shall at all times comply with the terms and conditions of each
such license or permit and any and all laws and ordinances applicable to
Tenant's business. Tenant shall not at any time use or occupy of suffer or
permit anyone to use of occupy the Premises or permit anything to be done in the
Premises in any manner which may: (a) violate the certificate of occupancy for
the Premises; or (b) be liable to cause injury to the Property or any portion
thereof or any equipment facilities or systems therein; (c) constitute a
violation of the laws and requirements of any public authority or the
requirements for insurance bodies; (d) impair or tend to impair the character,
reputation or appearance of the Premises as a first class restaurant, lounge and
gift shop; (e) impair or tend to impair the proper and economic maintenance,
operation and repair of the Premises and/or its equipment, facilities or
systems.
ARTICLE 11
SUBORDINATION OF LEASE
This Lease, and all rights of Tenant hereunder, are and shall be
subject and subordinate to the terms and provisions of all mortgages which may
now or hereafter affect the Property (whether or not such mortgages shall also
cover other liens and/or buildings). The subordination shall likewise apply to
each and every advance made or hereafter to be made under such mortgages, to all
renewals, modifications, replacements and extensions of such mortgages and
spreaders and consolidations of such mortgages. This section shall be
self-operative and no further instrument of subordination shall be required. In
confirmation of such subordination, Tenant shall promptly execute, acknowledge
and deliver any instrument that Landlord, or the holder of any such mortgage (or
their respective successors in interest), may reasonably request to evidence
such subordination. Any mortgage to which this Lease is subject and subordinate
is hereinafter referred to as a "Superior Mortgage" and the holder of a Superior
Mortgage is hereinafter referred to as a "Superior Mortgagee". Notwithstanding
the above, Tenant
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may require a non-disturbance agreement prior to subordination becoming
effective hereunder.
ARTICLE 12
NOTICE IN THE EVENT OF DEFAULT
If any act or omission of Landlord would give Tenant the right,
immediately after the lapse of a period of time, to cancel or terminate this
Lease or to claim a partial or total eviction, Tenant shall not exercise such
right (a) until it has given written notice of such act or omission to Landlord
and each Superior Mortgagee whose name and address shall previously have been
furnished to Tenant, and (b) until a reasonable period for remedying such act or
omission shall have elapsed following the giving of such notice and following
the time when such Superior Mortgagee shall have become entitled under such
Superior Mortgage to remedy the same (which reasonable period shall in no event
be less than the period to which Landlord would be entitled under this Lease or
otherwise, after similar notice to effect such remedy), provided such Superior
Mortgagee shall, with due diligence, give Tenant notice of intention to, and
commence and continue to, remedy such act or omission.
ARTICLE 13
PROPERTY TAXES AND OPERATING EXPENSES
13.1 Tenant shall be liable for and shall pay for before delinquency
all taxes and assessments of whatsoever kind or nature, and penalties and
interest thereon, if any, levied against the Property and Tenant's personal
property and any other personal property, of whatsoever kind and to whomsoever
belonging situate or installed in and upon the Property, whether or not affixed
to the realty.
13.2 Tenant shall be liable for and shall pay ninety (90) days before
delinquency all general and special real property taxes, including assessments
for local improvements, and other governmental charges which may be lawfully
charged, assessed or imposed upon the Property.
13.3 If some method or type of taxation shall replace the current
method of assessment of real property taxes, or the type thereof, the Tenant
agrees to pay the same. If a tax (other than a Federal or State income tax) is
assessed on account of the rent, the real estate or personal property taxes, or
other charges payable by Tenant under this Lease, Tenant agrees to pay the same
before delinquency, unless applicable law prohibits the payment of such tax by
the Tenant.
13.4 The real estate taxes on the Premises for the first and the last
calendar year of the Lease shall be prorated.
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13.5 If any of Tenant's Superior Mortgagee(s) require a tax escrow,
Tenant shall make such monthly payments for tax escrow to the Landlord, along
with each month's rental payment, as required by any Superior Mortgagee(s).
ARTICLE 14
INSURANCE
14.1 Throughout the term of this Lease, Tenant shall, at its own cost
and expense, provide and keep in force for the mutual benefit of Landlord and
Tenant and any and all Superior Mortgagee(s), the following insurance:
(a) Insurance against loss or damage by fire and such other risk as are
customarily included in broad form extended coverage endorsements
covering all risks hazard insurance, and which are attached to fire and
hazard insurance policies covering property in Broward County and all
replacements, additions and improvements thereof and all fixtures,
equipment and other personal property therein to the extent of the
highest insurable value of said property, but in no event in an amount
less than one hundred percent (100%) of the full replacement cost
thereof. All Superior Mortgagee(s) shall be named, along with the
Landlord as a co-insured in the fire and extended coverage policy.
Notwithstanding any provision to the contrary, the Tenant agrees to pay
the cost of any deductibles in the event of a loss up to the total cost
of restoration.
(b) The Tenant is required to carry flood insurance on the buildings
located on the Property to the highest insurable value of the Property
and the contents contained therein. Said policy shall name the Landlord
and all Superior Mortgagee(s) as co-insured. All insurance proceeds
payable under Sub-Articles (a) and (b) of this Article 14, shall be
paid to Landlord unless required to be paid to Superior Mortgagee(s).
Notwithstanding the foregoing, if not prohibited by an Superior
Mortgagee, after the Landlord and/or Superior Mortgagee(s) have been
restored to their original position as a result of payment of insurance
proceeds, the excess shall be paid to Tenant.
(c) Tenant, at its expense, shall maintain at all times during the term
of this Lease public liability insurance with respect to the Premises
and the conduct or operation of the Business thereon, protecting Tenant
against any and all claims for injury and damage to persons or property
or for the loss of life or property occurring in, on or about the
Premises, arising out of the act, negligence, omission, nonfeasance or
malfeasance of Tenant, its employees, agents, contractors, customers,
licensees and invitees. Such insurance shall be carried in a minimum
amount of not less than Three
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Million, ($3,000,000.00) Dollars for bodily injury or death to any one
person or any number of persons in any one occurrence and for property
damage. Landlord and all Superior Mortgagee(s) shall be named as
additional insured.
(d) The Tenant shall be required to carry business interruption
insurance, guaranteeing payments under the Lease for a period of at
least six (6) months.
(e) The Tenant shall be required to carry Dram Act insurance to the
extent of the highest possible amount which can be obtained by Tenant.
14.02 All insurance to be provided and kept in force by Tenant under
the provisions of this Lease shall name as the insured, Landlord and Tenant,
and, all Superior Mortgagee(s) as their respective interests may appear. All
such insurance shall be obtained and paid for by Tenant. Tenant shall deliver to
Landlord and any additional named insured, such fully paid for policies or
certificates of insurance, in form satisfactory to Landlord, issued by the
insurance company or its authorized agent, at least ten (10) days prior to the
Commencement Date. Tenant shall procure and pay for renewals of such insurance
from time to time before the expiration thereof and deliver to Landlord (and any
additional named insured) such renewal policy at least thirty (30) days prior to
the expiration of any existing policy. All such policies shall be issued by
companies of recognized responsibility, having at least a "AA" rating, licensed
to do business in the State of Florida, and, all such policies shall contain a
provision whereby the same cannot be cancelled or modified unless Landlord and
any additional named insured are given at least thirty (30) days prior written
notice of such cancellation or modification. Landlord may require the amount of
any public liability insurance to be maintained by Tenant be increased so that
the amount thereof adequately protects Landlord's interest.
ARTICLE 15
SUCCESSOR LANDLORD
If any Superior Mortgagee shall succeed to the rights of Landlord
hereunder, whether through possession or foreclosure action or delivery of a new
Lease or deed, then, at the request of such party (hereinafter referred to as
"Successor Landlord"), Tenant shall attorn to and recognize each Successor
Landlord as Tenant's Landlord under this Lease and shall promptly execute and
deliver any instrument such Successor Landlord may reasonably request to
evidence such attornment.
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ARTICLE 16
QUIET ENJOYMENT
So long as Tenant pays all of the Fixed Rent and Additional Rent and
other charges, where applicable, and performs all of its other obligations
hereunder Tenant shall peaceably and quietly have, hold and enjoy the Premises
without hindrance, ejection or molestation by Landlord or any other person
lawfully claiming through or under Landlord, subject, nevertheless, to the
provisions of this Lease and to Superior Mortgages. This covenant shall be
construed as a covenant running with the land and is not, nor shall it be
construed as, a personal covenant of Landlord, except to the extent of
Landlord's interest in this Lease and only so long as such interest shall
continue. Thereafter, this covenant shall be binding only upon Landlord's
successors in interest, to the extent of their respective interest herein, as
and when they shall have acquired the same and for so long as they shall retain
such interest.
ARTICLE 17
ASSIGNMENT, SUBLETTING AND MORTGAGING
17.01 Tenant shall not, whether voluntarily, involuntarily, or by
operation of law, or otherwise (a) assign or otherwise transfer this Lease or
the term and estate hereby granted, or offer or advertise to do so, (b) sublet
the Premises or any part thereof, or offer or advertise to do so, or allow the
same to be used or occupied by anyone other than Tenant, or (c) mortgage,
pledge, encumber, or otherwise hypothecate this Lease or the Premises or any
part thereof in any manner whatsoever without in each instance obtaining the
prior written consent of Landlord, which consent shall not be unreasonably
withheld. Any violation of the provisions hereinabove set forth shall constitute
a default in this Lease and, thereupon, Landlord shall have the option to cancel
the same and proceed in accordance with the provisions set forth herein.
17.02 If this Lease is assigned, whether or not in violation of the
provisions herein, Landlord may collect rent from the assignee. If the premises
or any part thereof are sublet or used or occupied by anyone other than Tenant,
whether or not in violation of this Lease, Landlord may collect rent from the
subtenant or occupant. In either event, Landlord may apply the net amount
collected to the Fixed Rent, Additional Rent, or other sums herein reserved, but
no such assignment, subletting, occupancy or collection shall be deemed a waiver
by Landlord of any of the provisions of this Lease or the acceptance of the
assignee, subtenant or occupant as a tenant, or a release of Tenant from the
performance of its obligations hereunder. The consent by Landlord assignment,
mortgaging, subletting, or use or occupancy by others shall not in any way be
considered to relieve Tenant from obtaining the express prior written consent of
Landlord to any other or further assignment, mortgaging or subletting or use or
occupancy by others not expressly permitted by this Article. Tenant covenants
that, notwithstanding any assignment or transfer, and notwithstanding the
acceptance of Fixed Rent and Additional
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Rent, where applicable, by Landlord from an assignee, transferee, or any other
party, it shall remain fully liable for the payment of the Fixed Rent and
Additional Rent, where applicable, and for the other obligations of this Lease
to be performed or observed by Tenant.
17.03 Notwithstanding anything to the foregoing contained above, Tenant
shall have the absolute right to assign or sublet its interest in this Lease for
the entire term of or for a portion of the term of this Lease, to any entity
which is wholly owned by Tenant or any subsidiary corporation of any corporation
which is wholly owned by Tenant. Additionally, the Tenant shall have the
absolute right to assign or sublet its interest in this Lease to any entity
whatsoever so long as the tenant agree to become or remain personally liable on
the Lease.
ARTICLE 18
COMPLIANCE WITH LAWS
Tenant shall give prompt notice to Landlord of any notice it receives
of the violation of any law or requirement of any public authority with respect
to the Property or the use or occupation thereof. Tenant shall, at Tenant's
expense, comply with all laws and requirements of any public authorities which
shall, in respect of the Premises or the use and occupation thereof, or the
abatement of any nuisance in, on or about the Premises, impose any violation,
order or duty on Landlord or Tenant arising from (a) Tenant's use of the
Premises; (b) the manner or conduct of Tenant's business or operation of its
installations, equipment or other property therein; (c) any cause or condition
created by or at the instance of Tenant; or (d) breach of any of Tenant's
obligations hereunder, whether or not such compliance requires work which is
structural or non-structural, ordinary or extraordinary, foreseen or unforeseen;
and Tenant shall pay all the costs, expenses, fines, penalties and damages which
may be imposed upon Landlord or any successor Landlord by reason or arising out
of Tenant's failure to fully and promptly comply with and observe the provisions
of this Section.
ARTICLE 19
ALTERATIONS
19.01 Tenant may, from time to time, at its expense, make such
alterations, decorations, additions, or improvements (hereinafter collectively
referred to as "Alterations") in and to the Premises, excluding structural
changes, as Tenant may reasonably consider necessary for the conduct of its
business in the Premises, provided, however, that before proceeding with any
Alteration, Tenant shall submit to Landlord for Landlord's approval, plans and
specifications for the work to be done and Tenant shall not proceed with such
work until it has received said approval. However, if Landlord's written
approval or disapproval has not been received by Tenant within fifteen (15) days
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of the submission to Landlord of said plans, the Alterations shall be deemed
approved. Tenant shall obtain and deliver to Landlord (if so requested) either
(i) a performance bond and a labor and materials payment bond (issued by a
corporate surety licensed to do business in Florida), each in an amount equal to
one hundred percent (100%) of the estimate of the cost of the Alterations and in
form satisfactory to Landlord, or (ii) such other security as shall be
satisfactory to Landlord.
19.02 Tenant, at its expense, shall obtain all necessary governmental
permits and certificates for the commencement and completion of Alterations and
for the final approval thereof upon completion, and shall cause the Alterations
to be performed in compliance therewith and with all applicable law and
requirements of public authorities and with all applicable requirements of
insurance bodies. The Alterations shall be diligently performed in lien free and
a good and workmanlike manner, using new materials and equipment satisfactory to
Landlord and shall be performed by bonded contractors approved by Landlord, in
writing.
19.03 Tenant, at its expense, and with due diligence and dispatch,
shall procure the cancellation or discharge of all notices of violation arising
from or otherwise connected with Alterations, or any other work, labor, services
or material done for or supplied to Tenant, or any person claiming through or
under Tenant, which shall be issued by any public authority having jurisdiction
or asserting jurisdiction. Tenant shall have no authority to create any liens
for labor or materials on or against the Premises and, accordingly, Tenant shall
defend, indemnify, and save Landlord harmless of, from and against any and all
mechanic's and other liens and encumbrances filed in connection with Alterations
or any other work, labor, services, or materials done for or supplied to Tenant,
or any person claiming through or under Tenant, including, without limitation,
security interests in any materials, fixtures or articles installed in and
constituting a part of the Premises and against all costs, expenses, and
liabilities (including reasonable attorney's fees, through and including
appellate level) incurred in connection with any such lien or encumbrance or any
action or proceeding brought thereon. Tenant, at its expense, shall procure the
satisfaction or discharge of record of all such liens and encumbrances within
fifteen (15) days after the filing thereof. In the event Tenant has not so
performed, Landlord may, at his option, pay and discharge such liens and Tenant
shall be responsible to reimburse Landlord for all costs and expenses incurred
in connection therewith, which expenses shall include reasonable attorney's fees
and any costs in posting bond to effect discharge or release of the lien as an
encumbrance against the Premises.
19.04 Tenant shall not permit any mechanic's or similar liens to remain
upon the Premises for more than fifteen (15) days for labor or material claimed
to have been furnished to Tenant in connection with work or any character
performed or claimed to have been performed on the Premises or at the direction
of or with the consent of Tenant, whether performed or finished before or after
commencement of the term of this Lease. Tenant may contest the validity of any
such lien or claim, provided that Tenant, if
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required by Landlord, shall give to Landlord reasonable security to secure
payment and to prevent any sale, foreclosure or forfeiture of the Premises by
reason of such non-payment. Upon a final determination of the validity of any
such lien or claim, Tenant shall immediately pay any judgment or decree rendered
against Tenant or Landlord with all proper costs and charges and shall cause
such lien to be released of record without cost to Landlord. Tenant shall in no
event have any right to cause or permit any lien to affect the fee simple
interest of Landlord to the Property.
ARTICLE 20
DAMAGES OR DESTRUCTION
20.01 Tenant agrees to notify the Landlord immediately in the case of
damage to, or destruction of, the Premises or any portion thereof resulting from
fire or other casualty. The Tenant shall forthwith repair, reconstruct and
restore the Premises to substantially the same or an improved condition or
utility value as existed prior to the event causing such damage. Net proceeds of
any insurance (whether carried by Landlord or Tenant) relating to such damage
shall be paid directly to Landlord and/or Superior Mortgagee(s) as required. To
the extent not prohibited by Superior Mortgagee(s), insurance proceeds
remaining, after completion of such repair, reconstruction or restoration, so
long as the Property is restored to its full original value, shall be paid to
Tenant.
20.02 Rent shall not abate during any period when Tenant is repairing,
reconstructing or restoring the Premises.
ARTICLE 21
EMINENT DOMAIN
21.01 If the whole of the Premises shall be taken for a public or
quasi-public use or purpose under power of eminent domain, the term of this
Lease shall terminate as of the date actual physical possession thereof shall be
so taken.
21.02 If any portion of the Premises shall be taken for a public or
quasi-public use or purpose under the power of eminent domain and such partial
taking may reasonably be construed to render the remainder of the Premises
unsuitable for the business of Tenant, Tenant shall be entitled either to elect
to cancel and terminate this Lease or to remain in possession of the remainder
of the Premises not so taken; PROVIDED, however, that Tenant shall give Landlord
written notice of its said election within ten (10) days of passing of title,
and failing so to do Tenant shall be deemed to have elected to remain in
possession, or if the portion of the Premises so taken shall not be so
substantial as may reasonably be construed to render the remainder of the Leased
Premises unsuitable for the Business of Tenant, then and in either such event
Landlord shall (but only out of and not exceeding the award received by
Landlord, excluding the award for land value, for or on account of such taking)
repair, reconstruct or restore the remainder of the Premises
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(including the building which is a part thereof) to their condition as it
existed immediately prior to such taking (and Tenant shall not be entitled to
any damages by reason of any inconvenience or loss sustained by Tenant as a
result thereof) and, except as otherwise herein provided, this Lease shall
continue in all respects in full force and effect.
21.03 If any portion of the building located on the Premises shall be
taken for a public or quasi-public use or purpose and Tenant shall elect or be
deemed to have elected to remain in possession as hereinabove provided, or if
the portion of the Premises so taken shall not be so extensive as may reasonably
be construed to render the remainder of the Building unsuitable for the business
of Tenant, then, and in either such event, the rent payable under Articles 4 and
5 shall be adjusted as follows:
(a) During the period between the date of such actual taking and the
completion of said repairs, reconstruction or restoration, Tenant shall
be required to pay only such portion of the rent as shall be equal to
the proportion thereof which the number of square feet of gross floor
area in the building located on the Premises remaining in a tenantable
condition during such period bears to the total number of square feet
of gross floor area in the building immediately prior to such taking.
(b) Upon completion of said repairs, reconstruction or restoration, and
thereafter throughout the remainder of the term of this Lease, the rent
reserved herein shall be equitably reduced in the same proportion which
the number of square feet of gross floor area in the building so taken
bears to the total number of square feet of gross floor area in the
building immediately prior to such taking.
21.04 If any portion of the land portion of the Property is condemned
and Tenant elects, or is deemed to have elected, to remain in possession as
hereinabove provided, then the land portion of the rent shall be proportionately
abated.
21.05 If a leasehold interest in the Premises shall be taken for a
public or quasi-public use or purpose under the power of eminent domain, this
Lease shall not be terminated nor shall Tenant be excused from full performance
of its covenants for the payment of money or any other obligations hereunder
capable of performance by Tenant, but in such event Tenant may claim and recover
from the condemning authority all compensation and damages payable on account of
Tenant's leasehold interest in the Premises.
21.06 Except as otherwise herein provided, all damages awarded or other
sums or awards paid on account of any condemnation or taking under the power of
eminent domain of the Premises or any portion or portions thereof shall belong
to and shall be the sole property of Landlord, whether such damages or other
sums are awarded as
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compensation for loss or diminution in value of the leasehold, or for the fee of
the Premises, or otherwise, to the extent of the sum of Three Million
($3,000,000.00) Dollars, with any excess condemnation award over the sum of
Three Million ($3,000,000.00) Dollars, to be awarded to the Tenant unless
prohibited by any Superior Mortgages.
21.07 In the event this Lease is cancelled or terminated pursuant to
any of the provisions of this Article, all rentals and other charges payable on
the part of Tenant to Landlord hereunder shall be paid either as of the date
upon which actual physical possession shall be taken by the condemnor, or as of
the date upon which actual physical possession shall be taken by the condemnor,
or as of the date upon which Tenant ceases doing business in, upon or from the
Premises, whichever last occurs; and the parties shall thereupon be released
from all further liability hereunder, except that Landlord shall make an
equitable refund to Tenant of any unearned, unused or unappropriated advance
rental theretofore paid by Tenant to Landlord hereunder.
21.08 The Tenant's right to cancel this Lease under this Article 21
shall be limited to a substantial taking that is agreed upon by the parties. If
they cannot agree that the taking is substantial, each side shall appoint an
arbitrator within ten (10) days of request by the other side and both
arbitrators shall select a third arbitrator within thirty (30) days after the
appointment of the second arbitrator. The arbitrators shall determine within
thirty (30) days after all three have been appointed, whether or not the taking
is substantial, and the decision of a majority of the arbitrators shall be final
and binding on the Landlord and Tenant; provided in any event that a taking of
twenty (20%) or less of the Premises shall not be deemed a substantial taking
unless legal access to the premises is prevented thereby.
21.09 Property dedicated to the public for approval of site plan shall
not be included in the percentage of subsequent taking, whether said dedication
is by easement or grant.
ARTICLE 22
RISK OF LOSS
The Tenant takes all risk of any damage to its property, and to any
property brought on the Premises by it or its agents, servants, licensees or
invitees, that may occur by reason of any cause whatsoever, except the
intentional or negligent act of the Landlord or its agents and the failure of
the Landlord to perform the obligations of Landlord contained herein.
ARTICLE 23
CONDITIONS OF LIMITATIONS
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23.01 In the event that Tenant shall make an assignment for the benefit
of creditors, or shall file a voluntary petition under any bankruptcy or
insolvency law, or an involuntary petition alleging an act of bankruptcy or
insolvency shall be filed against Tenant under any bankruptcy or insolvency law,
or whenever a petition shall be filed by or against Tenant under the
reorganization provisions of the United States Bankruptcy Act or under the
provisions of any law of like import, or whenever a petition shall be filed by
Tenant under the arrangement provisions of the United States Bankruptcy Act or
under the provisions of any law of like import, or whenever a permanent receiver
of Tenant, or of or for the property of Tenant shall be appointed, then Landlord
if such event occurs without the acquiescence of Tenant at any time after the
event continues for sixty (60) days, may give Tenant a notice of intention to
end the term of this Lease at the expiration of five (5) days from the date of
service of such notice whereupon this Lease, and the term and estate hereby
granted, whether or not the term shall theretofore have commenced, shall
thereupon terminate with the same effect as if that day were the expiration date
of the Lease; however, Tenant shall remain liable for all damages set forth in
this Lease.
23.02 This Lease and the term and estate hereby granted are subject to
the following limitations: (a) If Tenant shall default in the payment of Fixed
Rent and Additional Rent, where applicable, or any other payment due hereunder;
(b) if Tenant shall, whether by action or inaction, be in default of any of its
obligations under this Lease (other than a default in any payment hereunder) and
such default shall continue and not be remedied within fifteen (15) days after
Landlord shall have given to Tenant a notice specifying the same; (c) in the
case of a default which cannot with due diligence be cured within a period of
fifteen (15) days and the continuance of which for the period required for cure
will not subject Landlord or any Superior Mortgagee to foreclosure of any
mortgage, subject the Premises or any part thereof to being condemned or
vacated, subject the Property, or any part thereof, to any lien or encumbrance,
or result in the foreclosure of any Superior Mortgage, if Tenant shall not (i)
within said fifteen (15) day period advise Landlord of Tenant's intention to
take all steps necessary to remedy such default, (ii) duly commence within said
fifteen (15) day period and thereafter diligently prosecute to completion all
steps necessary to remedy the default, and (iii) complete such remedy within a
reasonable time after the date of said notice of Landlord; (d) if any event
shall occur or any contingency shall arise whereby this Lease or the estate
hereby granted or the unexpired balance of the term hereof would, by operation
of law or otherwise, devolve upon or pass to any person, firm or corporation
other than Tenant, except as permitted in Article 17 above; and (e) if Tenant
shall vacate or abandon the Premises. In any of the above cases, Landlord may
give to Tenant a notice of intention to end the term of this Lease. At the
expiration of five (5) days from the date of the service of such notice,
whereupon this Lease and the term and estate hereby granted, whether or not the
term shall theretofore have commenced, shall terminate with the same effect as
if that day were the expiration date of this Lease, but Tenant shall remain
liable for all damages set forth herein.
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23.03 If Tenant shall default in the performance of any of its
obligations under this Lease, Landlord, without thereby waiving such default,
may (but shall not be obligated to) perform the same for the account and at the
expense of Tenant, without notice in a case of emergency, and in any other case
only if such default continues after the expiration of fifteen (15) days from
the date Landlord gives Tenant notice of the default. Any expenses incurred by
Landlord in connection with any such performance, and all costs, expenses, and
disbursements of every kind and nature whatsoever, including reasonable
attorneys fees involved in collecting or endeavoring to collect the Fixed Rent
and Additional Rent, where applicable, or any part thereof or enforcing or
endeavoring to enforce any rights against Tenant or Tenant's obligations
hereunder, shall be due and payable upon Landlord's submission of an invoice
therefor. All sums advanced by Landlord on account of Tenant under this Article,
or pursuant to any other provision of this Lease, and all Fixed Rent, and
Additional Rent, where applicable, if delinquent or not paid by Tenant and
received by Landlord when due hereunder, shall bear interest at the rate of two
percent (2%) over the Prime Rate of interest, as determined by Citibank N.A.
(for unsecured loans to its most favored corporate customers) or the maximum
contract rate permitted by law, whichever is less, from the due date thereof
until paid and the same shall be and constitute additional rental and be due and
payable upon Landlord's submission of an invoice therefor.
ARTICLE 24
DAMAGES
24.01 In the event this Lease is terminated under the provisions of
this Lease or any provision of law by reason of default hereunder on the part of
Tenant, Tenant shall pay to Landlord, as damages, at the election of Landlord
either:
(a) A sum which at the time of such termination of this Lease or at the
time of any re-entry by Landlord, as the case may be, represents the
then value of the excess, if any, of (i) the aggregate amount of the
Fixed Rent and Additional Rent, where applicable, and any other unpaid
charges due and owing under the terms and provisions of this Lease,
which would have been payable by Tenant for the period commencing with
such earlier termination of this Lease or the date of any such
re-entry, as the case may be, and ending with the date contemplated as
the expiration date hereof if this Lease had not so terminated or if
Landlord had not so re-entered the Premises, over (ii) the aggregate
rental value of the Premises for the same period, or
(b) Sums equal to the Fixed Rent and Additional Rent, where applicable,
and any applicable unpaid additional charges, if any, which would have
been payable by Tenant had this Lease not so terminated or had Landlord
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not so re-entered the Premises, payable upon the due dates therefor
specified herein following such termination or such re-entry and until
the date contemplated as the expiration date if this Lease had not so
terminated or if Landlord had not so re-entered the Premises.
If Landlord, at its option, shall relet the Premises during said
period, Landlord shall, after taking into consideration any credits
previously recognized, credit Tenant with the net rents and other
Tenant expenses and charges received by Landlord or paid on behalf of
Tenant as a result of the reletting, from such reletting, such net
rents to be determined by first deducting from the gross rents and
other payments, as and when received by Landlord and/or paid by the
substitute Tenant, the expenses incurred or paid by Landlord in
terminating this Lease and/or re-entering the Premises and in securing
possession thereof, as well as the expenses of reletting, including,
without limitation, the alteration and preparation of the Premises for
new Tenants, brokers commissions, legal fees, and all other expenses
properly chargeable against the Premises and the rental therefrom. It
is hereby understood that any such reletting may be for a period
shorter or longer than the remaining term of this Lease but in no event
shall Tenant be entitled to receive any excess of such net rents over
the sum payable by Tenant to Landlord hereunder, nor shall Tenant be
entitled in any suit for the collection of damages pursuant hereto to a
credit in respect of any net rents or tenant expenses, from a
reletting, except to the extent that such net rents are actually
received by Landlord and to the extent such expenses are paid by the
substitute Tenant.
24.02 Suit or suits for the recovery of such damages, or any
installments thereof, may be brought by Landlord from time to time at its
election, and nothing contained herein shall be deemed to require Landlord to
postpone suit until the date when the term of this Lease would have expired nor
limit or preclude recovery by Landlord against Tenant of any sums or damages
which, in addition to the damages particularly provided above, Landlord may
lawfully be entitled by reason of any default hereunder on the part of Tenant.
The various rights, remedies and elections of Landlord reserved, expressed or
contained herein are cumulative and no one of them shall be deemed to be
exclusive of the others or of such other rights, remedies, options or elections
as are now or may hereafter be conferred upon Landlord by law. Landlord is
hereby granted a valid security interest to secure payment of all Fixed Rent,
Additional Rent and tenant expenses due hereunder where applicable, becoming due
hereunder and to secure payment of any loss or damage due to any default by
Tenant hereunder upon all of Tenants Property and Tenant's Personal Property and
any other personal property of Tenant which may now or hereafter be installed or
placed in or on the Premises.
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ARTICLE 25
SECURITY FOR THE LEASE
As security for the Lease, upon the commencement of this Lease, Tenant
shall execute in favor of Landlord a Chattel Mortgage and Security Agreement
along with UCC-1 Financing Statements to be recorded in the Public Records of
Broward County, Florida and with the Florida Secretary of State, Tallahassee,
Florida, which shall pledge and assign to Landlord all furniture, fixtures,
goods and chattels of the Tenant whether now located or hereafter located on the
premises along with an Assignment of Liquor License from Tenant to Landlord,
collaterally assigning Tenant's rights in and to liquor license used in
connection with the Business. In the event of any default under this Lease,
Landlord shall be entitled to immediately foreclosure upon all properties
secured by the Chattel Mortgage and Security Agreement, UCC-1 Financing
Statements and Assignment of Liquor License and Tenant does hereby agree to pay
attorney's fees, through and including appellate level together with costs and
charges incurred or paid by the Landlord in connection with the same.
As additional security for the Tenant's performance under the terms and
provisions of this Lease, upon the execution of this Lease, tenant shall deposit
the sum of Two Hundred Fifty Thousand ($250,000.00) Dollars with Landlord as a
security deposit (the "Security Deposit"). It is acknowledged that the Security
Deposit may be used by the Landlord, at any time, for whatever purposes the
Landlord deems fit. Subject to the terms and provisions of Article 29, below,
the Security Deposit shall be returned by the Landlord to the Tenant within
thirty (30) days of the termination of the Lease with the proviso that monies
may be deducted from the Security Deposit by Landlord for the purpose of
repairing any damage or destruction to the Property caused by the Tenant, normal
wear and tear excepted.
ARTICLE 26
OPTION TO PURCHASE THE PROPERTY
So long as Tenant is in good standing under the terms and provisions of
this Lease, commencing with the Commencement Date and terminating on the seventh
(7th) anniversary date of the commencement date of this Lease, Tenant shall have
an option to purchase the Property (the "Option"), in consideration of this
Lease and the sum of One Thousand ($1,000.00) Dollars (the "Option Payment").
The Option Payment shall be non-refundable but shall be credited against the
Purchase Price at closing.
ARTICLE 27
EXERCISE OF OPTION
As set forth above, the option to purchase shall be good and viable
provided that Tenant is in good standing under the Lease for a period of three
and one-half (3 1/2) years from a date being two and one-half (2 1/2) years or
thirty (30) months from the
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Commencement Date of this Lease until the seventh (7th) anniversary date of
this Lease. In the event Tenant wishes to exercise its option to purchase the
Property, Tenant must notify Landlord in writing of its election to purchase the
Property during the three and one-half (3 1/2) year option period, in accordance
with the below noted Notice provision of this agreement. Additionally, Tenant
must pay the Option Payment to Landlord at the time of the execution of this
Lease.
ARTICLE 28
PURCHASE AND SALE OF PROPERTY
In the event Tenant exercises its option to purchase the Property, upon
said exercise of option, and subject to the terms and conditions set forth
herein, Landlord agrees to sell, convey, transfer, assign and deliver to Tenant,
and Tenant agrees to purchase from Landlord the Property, including all
buildings located thereon, personal property, all easements, tenements,
appurtenances, heridiments, fixtures, rights and privileges belonging in or in
any way appertain to such premises, subject to any restrictions, easements and
encroachments now existing and to any zoning and governmental regulations now or
hereinafter in effect, affecting the premises.
ARTICLE 29
PURCHASE PRICE
29.01 The purchase price for the Property, from the fifth (5th)
anniversary date of the Commencement Date of this Lease until the seventh (7th)
anniversary date of this Lease (i.e., during years five (5) and six (6) of the
Lease), shall be Three Million Two Hundred Fifty Thousand ($3,250,000.00)
Dollars (the "Purchase Price"), to be paid as follows:
(a) Credit for Option Payment 1,000.00
(b) Twenty year Purchase Money Promissory
Note and First Purchase Money Mortgage to be
executed at closing 2,000,000.00
(c) Credit for $250,000.00 Security Deposit
set forth in Article 25 above. In the event
Tenant closes and receives credit for the Security
Deposit, it is agreed and acknowledged that
Landlord shall NOT be obligated to return the
Security Deposit in the amount of $250,000.00
to Tenant and shall be entitled to retain the
same 250,000.00
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(d) Balance of Purchase Price to be paid in
cash at closing, subject to certain
adjustments and prorations 999,000.00
TOTAL $3,250,000.00
29.02 The portion of the Purchase Price to be evidenced by a
Purchase Money Promissory Note from Tenant (the "Note"), shall contain the
following terms and conditions:
(a) Interest at a fixed interest rate, at the rate of thirteen
(13%) percent per annum;
(b) No right to prepay in whole or in part, during the first five
(5) years of the Note, excepting for the partial release
provisions set forth in Article 29.03 below;
(c) Default interest rate equal to the highest interest rate
permissible under law.
(d) Equal monthly payments of principal and interest based upon the
then in effect interest rate, based upon a twenty (20) year
amortization schedule, due and payable in full twenty (20) years
from the date of the execution of the Note.
29.03 The Note is to be secured by a Purchase Money Mortgage
encumbering the Property (the "Mortgage"). The Mortgage shall contain partial
release provisions, under the terms and provisions of which portions of the
Property may be released from the lien of the Mortgage for a release price of
one hundred ten (110%) percent of the appraised value of the portion of the
Property being released; said appraisal to be performed by an independent
appraiser, mutually agreed upon by the Landlord and Tenant. The Mortgage shall
also contain provisions that any construction to be performed on the Property or
any portion of the Property, including released portions of the Property, must
first be approved, in writing, by Landlord, and that no construction on the
Property shall be permitted without Landlord's prior written consent. In
connection with such construction, Landlord shall have a right of approval over
all plans and specifications for ALL work to be done, and, Tenant shall not be
permitted to proceed with said work until it has received said approval.
Additionally, any construction on the Property, including any released portion
of the Property, must be done in such a manner that it does not interfere with
the parking requirements for the Premises under the standards established by the
City of Fort Lauderdale, as said parking standards are now in effect or under
any amended standards set forth in the future by the City. Releases may only be
obtained for the purpose of constructing residential condominiums),
townhouse(s), apartment building(s), swimming pool(s) or parking garage(s) on
the Property. Construction approval shall not be unreasonably withheld.
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<PAGE>
29.04 Tenant shall be responsible for all costs and expenses
associated with the security taken back by Landlord in connection with the
closing of this transaction, i.e., the payment of all recording fees,
documentary stamps, intangible tax, and recording of any release documentation
related thereto.
29.05 In the event that Tenant exercises the Option at any time
during a period beginning two and one-half (2 1/2) years or thirty (30) months
from the Commencement Date of this Lease until the end of the fourth (4th) year
of this Lease (i.e., the initial eighteen (18) months of the three and one-half
(3 1/2) year option period), in addition to the Purchase Price, Tenant shall be
obligated to pay to Landlord, in the form of cash at closing, any prepayment
penalties under Superior Mortgages, which Landlord must pay as a result of
prepaying any Superior Mortgages, and, additionally, Tenant shall pay to
Landlord in the form of cash at closing, any additional "income tax
differential" resulting to Landlord in the year of sale as a result of the sale
and purchase of the Property, as said tax liability is determined by Landlord's
accountant at or prior to closing. Income tax differential shall be defined as
the difference between the amount of income tax which would have been due and
owing from Landlord as a result of selling the Property in years five (5) or six
(6) of the Option verses the income tax which would be due and owing from
Landlord as a result of selling the Property during the above noted initial
eighteen (18) month period of the Option Period.
ARTICLE 30
TITLE TO PROPERTY
30.01 Landlord shall convey to Tenant a marketable and insurable
title, subject only to liens, encumbrances, exceptions, or qualifications
contained herein, and those which shall be discharged by Landlord at or before
the closing date. Simultaneous herewith, it is acknowledged that the Property is
subject to those title exceptions as set forth on Exhibit "B", appended hereto
and made a part hereof (the "Permitted Exceptions"). In connection therewith,
Landlord shall deliver a title insurance commitment to Tenant at Landlord's
expense. In the event that Tenant elects to procure a title policy, the cost of
said title insurance policy shall be borne by Tenant.
30.02 Tenant shall have fifteen (15) days from the date of
receiving such evidence of title, including the recertification thereof, to
examine the same and determine that title is good and marketable and only
affected by the Permitted Exceptions. If title is found defective, or if
affected by other than the Permitted Exceptions, Tenant shall, within three (3)
days thereafter, notify Landlord, in writing, specifying the defect(s). If said
defect(s) renders title unmarketable or subject to other than the Permitted
Exceptions, Landlord shall have ten (10) days from the receipt of notice within
which to remove said defect(s) or
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if Landlord is unsuccessful in removing them within said time, Tenant shall have
the option of either (1) accepting title as it then is without any adjustment in
the Purchase Price or modification of the terms hereof, or (2) demanding from
Landlord a full refund of the Option Payment paid hereunder, which shall
forthwith be returned to Tenant and, thereupon, Tenant and Landlord shall be
released as to one another of all further obligations and liability hereunder;
however, Landlord agrees that he will, if title is found to be unmarketable, or
subject to other than the Permitted Exceptions, use diligent effort to correct
the defect(s) in title within the time frame provided therefor. Landlord,
however, shall have no obligation to institute any suits whatsoever to
accomplish the same.
ARTICLE 31
"AS IS"
Tenant acknowledges that they have had the opportunity to investigate
the Property, and after due inquiry and investigation, with the exception of
possible title defects as noted in Article 30 above, is accepting the Property
in "as is" condition.
ARTICLE 32
CLOSING
The closing of this transaction shall take place at the law offices of
Spear & Deuschle, P.A. 800 Southeast Third Avenue, Fort Lauderdale, Florida
33316, on or before ninety (90) days from the date of Tenant's exercise of the
option to purchase. Time is of the essence.
ARTICLE 33
CLOSING DOCUMENTATION
33.01 At the time of the Closing Date, Landlord shall deliver to
Tenant executed originals of the following:
(a) Warranty Deed to the Property,
(b) Assignment of or termination of this Lease, at Tenant's option
(c) Properly executed mechanic's lien affidavit to
the effect that there are no unpaid bills for repair or
materials furnished to the Property which could be the subject
matter of a mechanic's or materialmen's lien,
(d) FIRPTA Affidavit,
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(e) All insurance policies in effect, and assignments thereof,
if assumed by Tenant; if assumed, insurance is to be prorated at closing.
33.02 At the time of the Closing Date, Landlord shall deliver to
Tenant such other documents as may be reasonably required to be delivered by
Landlord in accordance with the terms and provisions set forth herein.
33.03 At the time of closing, Tenant shall deliver to Landlord
executed originals of the following:
(a) The Purchase Price and the Closing Proceeds,
(b) The Note
(c) The Mortgage
(d) Corporate or Partnership Resolution, if applicable,
authorizing transaction,
(e) Corporate Incumbency Certificate, if applicable,
(f) Corporate or Partnership Certificates of Good Standing,
if applicable (Florida and State of
incorporation or formation, if different),
(g) Partnership Agreement, if applicable,
(h) Assumption or Termination of Lease.
33.04 At the time of the Closing Date, Tenant shall deliver to
Landlord such other documents as may be reasonably required to be delivered by
Tenant in accordance with the terms and provisions set forth herein.
ARTICLE 34
EXPENSES AND PRORATIONS
The costs relating to the state documentary stamps which are to be
required to be affixed to the deed of conveyance shall be the sole
responsibility of Landlord. All costs and charges associated with the Note and
Mortgage, and the recording of the same, along with recording of the deed, shall
be the sole responsibility of Tenant. Certified liens and pending liens on the
Property, if any, shall be assumed by Tenant. Each party shall bear their own
respective counsel fees.
ARTICLE 35
ASSIGNMENT OF OPTION PORTION OF AGREEMENT
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The Option shall be binding upon and shall inure to the benefit of the
parties hereto and their respective permitted successors and assigns. Neither
the Option nor any interest therein shall be assigned by Tenant without the
prior written consent of Landlord, made in Landlord's sole and absolute
discretion; excepting, however, the Option may be assigned to a Corporation or a
Partnership which is wholly-owned by Tenant. If Tenant attempts to assign the
Option otherwise than in accordance with the terms hereof, it shall be and
constitute a default hereunder. Notwithstanding anything to the contrary
contained herein, under no circumstances shall the option portion of this
Agreement be permitted to be sold or assigned, or in any way conveyed, separate
or apart from the lease portion of this Lease and Option for Purchase and Sale
Agreement, and any assignment or conveyance of the option portion of this
Agreement without the simultaneous assignment of the lease portion of this
Agreement, within the permitted terms and provisions of this Agreement, shall be
considered null and void.
ARTICLE 36
REAL ESTATE BROKERAGE
Landlord and Tenant warrant and represent to each other that they have
entered into no written brokerage agreement in connection with the purchase and
sale of the Property, other than that certain brokerage agreement entered into
by Landlord with L. A. CASTILLE ("Broker"), pursuant to brokerage agreement
dated the 23rd day of January, 1987 (the "Brokerage Agreement") under which
Landlord is responsible for payment to the Broker of a brokerage fee, and
applicable sales tax thereon, in accordance with the terms and provisions of the
Brokerage Agreement. Landlord and Tenant warrant and represent to each other
that no broker is entitled to any brokerage commission in connection with the
Lease. L.A. Castille shall split the real estate commission fifty-fifty with
Alpha Real Estate of the Keys.
ARTICLE 37
DEFAULT
In addition to the rights and remedies herein set forth, if Tenant
fails to perform under the Option within the time specified, the Security
Deposit heretofore paid shall, at Landlord's option, be retained by Landlord as
agreed and liquidated damages, not as a penalty, whereupon all parties shall be
relieved of and from any and all further liability under the Option. If for any
reason, other than Landlord being unable to render its title marketable after
diligent effort, Landlord fails or neglects to perform its obligations under
this Agreement, Tenant's sole remedies shall be to seek specific performance.
ARTICLE 38
DOCUMENTS FOR CLOSING
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Landlord's attorney shall prepare a Statutory Form Warranty Deed,
Non-Lien Affidavit, FIRPTA Affidavit, the Note and the Mortgage, and any
corrective instruments that may be required in connection with perfecting the
title. Tenant's attorney shall prepare a closing statement.
ARTICLE 39
RECORDATION OF MEMORANDUM OF LEASE AND OPTION AGREEMENT
Either party hereto shall have the right to have executed and recorded
in the Public Records of Broward County, Florida a Memorandum of Lease and
Option Agreement in order to protect both parties rights under this Lease and
Option Agreement. Any such document shall expressly state that it is executed
pursuant to the provisions contained in this Lease and Option Agreement and is
not intended to vary the terms and conditions contained herein.
ARTICLE 40
FINANCIAL STATEMENTS
Tenant shall deliver to Landlord, within ninety (90) days of the end of
each calendar year, financial statements prepared in accordance with generally
accepted accounting principles for the term of this Lease, and/or the term of
the Mortgage, as applicable.
ARTICLE 41
NOTICE
If either party agrees to give notice to the other or to make tender to
the other, such notice or tender shall be in writing and shall be deemed to be
given when it shall have been deposited with adequate postage in the United
States mail, certified or registered, return receipt requested, and addressed to
the party for whom it is intended as follows:
TENANT: GUS BOULIS
3706 A North Roosevelt Boulevard
Key West, Florida 33040
LANDLORD: JOHN S. STRATTON
512 Southeast 28th Avenue
Pompano Beach, Florida
With a copy to: GARY S. SINGER, ESQ.
Spear & Deuschle, P.A.
800 Southeast Third Avenue
Fort Lauderdale, Florida 33316
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ARTICLE 42
MISCELLANEOUS
42.01 All prior understandings and agreements between the parties
are merged in this Lease and Option Agreement which alone fully and completely
express the agreement of the parties. No agreement shall be effective to change,
modify, waive, release, discharge, terminate or effect an abandonment of this
Lease, in whole or in part, unless such agreement is in writing, and is signed
by the party against whom enforcement of said change or modification is sought.
42.02 The failure of either party to insist in any one or more
instances upon the strict performance of any one or more of the obligations of
this Lease and Option Agreement, or to exercise any election herein contained,
shall not be construed as a waiver or relinquishment for the future of the
performance of such one or more obligations of this Lease and Option Agreement
or of the right to exercise such election, but the Lease shall continue and
remain in full force and effect with respect to any subsequent breach, act or
omission.
42.03 If any provision of this Lease and Option Agreement or the
application thereof to any person or circumstance shall, for any reason and to
any extent be invalid or unenforceable, the remainder of this Lease and Option
Agreement and the application of that provision to other persons or
circumstances shall not be affected but rather shall be enforced to the extent
permitted by law. This Lease and Option Agreement shall be construed without
regard to any presumption or other rule requiring construction against the party
causing this Lease and Option Agreement to be drafted. Each covenant, agreement,
obligation, or other provision of this Lease and Option Agreement on Tenant's
part to be performed, shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Lease and Option Agreement. All terms and words used in this Lease, regardless
of the number or gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require.
42.04 Any holding over by Tenant after the expiration of the term
of this Lease shall be treated as a daily tenancy at sufferance at a rate equal
to 1 1/2 times the then effective Land and Building rent, plus additional rent
and other charges herein provided (prorated on a daily basis) and shall
otherwise be on the terms and conditions set forth in this Lease to the extent
applicable.
42.05 In the event it becomes necessary for the Landlord or the
Tenant to enforce any provision of this Lease by suit or through an attorney,
the prevailing party shall be awarded reasonable legal expenses, through and
including appellate level, incurred by the prevailing party.
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42.06 This Lease and Option Agreement constitutes the entire
agreement between the parties hereto and shall be interpreted in accordance with
the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have placed their hands and
seals the day and year first above written.
Signed, sealed and delivered in the presence of:
LANDLORD:
/s/ WENDY MOCKEL /s/ JOHN S. STRATTON
- ---------------------------------- --------------------------
JOHN S. STRATTON
/s/ ILLEGIBLE
- ----------------------------------
TENANT:
/s/ JILL A. ZIMMERMAN /s/ GUS BOULIS
- ---------------------------------- --------------------------
GUS BOULIS
/s/ LINDA P. GERALD
- ----------------------------------
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ADDENDA
ADDENDUM TO ARTICLE IV.
Article IV is hereby modified by adding thereto the following:
b) PERCENTAGE RENTAL - In the event that Lessee shall elect to
extend the term of this Lease as provided in Article II hereof then, and only in
such event, Lessee covenants and agrees to pay to Lessor as hereinafter
provided, as further and additional rent (hereinafter called "Percentage
Rental"), during, and only during any extension of the original term hereof (but
not during said original term) a sum equal to five (5%) percent of the amount,
if any, by which Lessee's annual gross sales, hereinafter defined, for such year
shall exceed twenty times the above mentioned minimum rental.
c) BUSINESS STATEMENTS - During any extension of the original
term hereof (but not during the original term), the Lessee agrees to submit to
the Lessor quarterly statements of gross sales received from the business
operated upon the premises, and within thirty (30) days immediately following
the end of the first and each succeeding full year of the term a statement of
yearly gross sales, and within thirty (30) days following the expiration or
earlier termination of said lease a statement of gross sales made since the last
quarterly statement. All such statements shall be signed by a responsible and
authorized financial officer of the Lessee certifying as to the amount of gross
sales as hereinafter defined for the period to be accounted for. If by any such
yearly statement it appears that any percentage rental is due and payable to the
Lessor for the preceding yearly period, it shall be paid to the Lessor within
thirty (30) days immediately following the rendition date of such yearly
statement. If there is any question concerning the accuracy of any statement, it
shall be settled as conveniently as possible between the parties, but not so as
to unreasonably interrupt the operation of Lessee's business.
1. DEFINITION OF GROSS SALES: The term "gross sales", as used herein,
shall be construed to mean for all the purposes hereof the following:
a) The aggregate amount of all sales made upon the demised premises;
<PAGE>
b) All other business done upon the demised premises which according to
standard use and accepted accounting practices are gross sales of the Lessee
excepting the following:
(i) The sales price of returned merchandise;
(ii) Sales and/or exchanges made to or with other restaurants, stores
or ocher establishments operated and conducted by the Lessee;
<PAGE>
(iii) Receipts from telephones, cigarette machines, and all other
vending type machines, excepting those vending "Howard Johnson's food
products;
(iv) The amount of any federal, state of local sales or food taxes
now or hereafter levied, assessed
or imposed;
(v) Meals served to employees of the Lessee whether such meals
are served with or without charge, or whether such meals are treated as
meals sold for any other purpose.
2. LESSEE'S BOOKS: The Lessee, with respect to business done on
the above described premises, shall keep at its Central Accounting Office true
and accurate records and accounts which shall show all sales made and all gross
receipts from the business done upon and within the demised premises. The Lessee
covenants that accurate cash registers will be installed and kept, or caused to
be installed and kept, by the Lessee within the demised premises which shall
show and record each and every sale made upon and within the demised premises.
Such registers shall show the total of the daily sales of all business done upon
and within the said demised premises by the Lessee. Said books and accounts of
the restaurant shall be available to the Lessor or accountant representing the
Lessor and may be inspected at reasonable times after notification to the
Lessee; however, said books and records shall be made available only for the
full lease year prior to said notification.
For the purposes of reporting "gross sales" and making payment for any
"percentage rental" as provided in this Article, Lessor and Lessee agree that
Lessee may use the so-called "4-4-5" method of accounting and that, in such
event, the anniversary date of each lease year and the date of each quarterly
reporting period may vary up to seven (7) days before or after the respective
dates specified in this Article.
(this page ends here)
<PAGE>
ADDENDA
ADDENDUM TO ARTICLE V.
Article V is modified by substituting for paragraph c) thereof the
following:
c) Each of Lessor and Lessee hereby releases the other to the
extent of its insurance coverage, from any and all liability for any loss or
damage caused by fire or any of the extended coverage casualties or any other
casualty insured against, even if such fire or other casualty shall be brought
about by the fault or negligence of the other party, or any persons claiming
under it, provided, however, this release shall be in force and effect only with
respect to loss or damage occurring during such time as releasor's policies of
fire and extended coverage insurance shall contain a clause to the effect that
this release shall not affect said policies or the right of the releasor to
recover thereunder. Each of Lessor and Lessee agrees that its fire and extended
coverage insurance policies will include such a clause so long as the same is
obtainable and is includable without extra cost, or if such extra cost is
chargeable therefor, so long as the other party pays such extra cost. If extra
cost is chargeable therefor, each party will advise the other thereof and of the
amount thereof, and the other party, at its election, may pay the same but shall
not be obligated to do so.
(this page ends here)
<PAGE>
ADDENDA
NEW ARTICLE XIV
Article XIV within is deleted in its entirety and the following
language inserted in lieu thereof:
Lessee shall pay all real property taxes levied against the demised
premises for and during the fiscal tax years or portions thereof which fall
within the term of this Lease.
Lessor agrees to apply for and obtain a separate assessment of the land
and buildings comprising the demised premises as hereinbefore defined for real
estate tax purposes from the governmental authorities having jurisdiction
thereof and until such separate assessment is obtained, Lessee shall not be
required or obligated to pay any real property taxes.
The Lessee shall have the right to contest the amount or validity in
whole or in part of any real property taxes or assessed valuations imposed or
assessed by any taxing or assessing authority upon or against the demised
premises and the right to seek a reduction in the assessed valuation of the
demised premises for tax purposes at Lessee's expense. The Lessor hereby
covenants and agrees to join in and cooperate in any action or proceeding which
may be brought by the Lessee for any of the aforementioned purposes. To the
extent to which any tax refund payable as a result of any action or proceeding
which Lessee may institute or payable by reason of a compromise or settlement of
any such action or proceeding is based upon a payment made by the Lessee, the
Lessee is hereby authorized to receive, collect and retain the same.
<PAGE>
SUBORDINATION AND NON-DISTURBANCE
AGREEMENT
THIS AGREEMENT made this 13 day of OCTOBER, 1977 by and between HOWARD
JOHNSON COMPANY (INC.), a Maryland corporation with its principal place of
business at One Howard Johnson Plaza, Boston, Massachusetts 02125 (hereinafter
referred to as "Tenant"), and ERIE SAVINGS BANK, a New York banking corporation
having its principal office at One Main Place, Buffalo, New York 14202
(hereinafter referred to as "Mortgagee").
W I T N E S S E T H
WHEREAS, by a certain Lease (hereinafter referred to as "Lease") dated
January 21, 1977 between North Star Construction Co., Inc., a New York
corporation having an office at 1750 Statler Hilton, Buffalo, New York 14202
(hereinafter referred to as "Landlord") and Tenant, Landlord leased to Tenant
premises and building which Landlord will construct or has constructed at
7566-80 Transit Road, Amherst, New York, said premises being more particularly
described in Schedule A attached hereto and made a part hereof; and
WHEREAS, Mortgagee is or will be the holder of a $385,000.00 mortgage
or deed of trust (hereinafter referred to as "Mortgage") on said parcel of land;
said mortgage having been or to be recorded in the Erie County Clerk's Office.
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
1. Mortgage agrees that if it shall exercise any right or remedy
under the Mortgage because of a default of Landlord, Mort-
<PAGE>
[PAGES MISSING FROM HARD COPY]
<PAGE>
STATE OF NEW YORK SS.
SS.
COUNTY OF ERIE SS.
On the 17th day of October, 1977, before me personally came W. John
Dziadul to me known, who, being by me duly sworn, did depose and say that he
resides in the Town of Hamburg, New York that he is Assistant Vice President of
ERIE SAVINGS BANK, the corporation described in and which executed the above
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Trustees of said corporation, and that he signed his name thereto by
like order.
/s/ CHARLOTTE CLARK
--------------------------
Charlotte Clark
STATE OF MASSACHUSETTS SS.
SS.
COUNTY OF NORFOLK SS.
On the 13th day of Oct., 1977, before me personally came EUGENE J.
DURGIN to me known, who, being by me duly sworn, did acknowledge that he resides
in Milton, Norfolk county, Massachusetts; that he is the Vice President of
HOWARD JOHNSON COMPANY (INC.), the corporation described in and which executed
the above instrument, and he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation, and that he signed his name
thereto by like order.
/s/ KAREN L. HELMULLER
--------------------------
<PAGE>
PARCEL 1
ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Amherst, County of Erie
and State of New York, being part of Lot No. Ninety (90), Township twelve (12),
Range seven (7) of the Holland Land Company's Survey, bounded and described as
follows:
BEGINNING at a point in the westerly line of Transit Road, a now laid
out sixty-six (66) feet wide, one thousand four hundred forty-two (1442) feet
southerly from its intersection with the southerly line of Sheridan Drive, as
now laid out sixty six (66) feet wide; running thence southerly along the
westerly line of Transit Road sixty-five (65) feet; running thence westerly
along line drawn parallel with the southerly line of Sheridan Drive, six hundred
eighty-seven and twenty-one hundredths (687.21) feet, more or less to the
easterly line of lands conveyed to Christian Metz by deed recorded in Erie
County Clerk's office in Liber 271 of Deeds at page 15; running thence northerly
along the easterly line of lands so conveyed to Christian Metz sixty-five and
five hundredths (65.05) feet more or less to its intersection with a line drawn
parallel with the southerly line of Sheridan Drive through the point of
beginning; running thence easterly along said line drawn parallel with the
southerly line of Sheridan Drive, six hundred eighty-eight and thirty-eight
hundredths (688.38) feet to the westerly line of Transit Road at the point or
place of beginning.
PARCEL 2
ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Amherst, County of Erie
and State of New York, being part of Lot No. 90, Township 12, Range 7 of the
Holland Land Company's Survey, bounded and described as follows:
BEGINNING at a point in the westerly line of Transit Road, as now laid
out sixty-six (66) feet wide, one thousand three hundred forty-two (1342) feet
southerly from its intersection with the southerly line of Sheridan Drive, as
now laid out sixty-six (66) feet wide: running thence southerly along the
westerly line of Transit Road one hundred (100) feet: running thence westerly
alone a line drawn parallel with the southerly line of Sheridan Drive six
hundred eighty-eight and thirty-eight hundredths (688.38) feet more or less to
the easterly line of lands conveyed to Christian Metz by deed recorded in Erie
County Clerk's office in Liber 271 of Deeds at Page 15: running thence northerly
along the easterly line of lands so conveyed to Christian Metz one hundred and
seven hundredths (100.07) feet more or less to its intersection with a line
drawn parallel with the southerly line of Sheridan Drive through the point of
beginning: running thence easterly along said line drawn parallel with the
southerly line of Sheridan Drive six hundred ninety and eighteen hundredths
(690.18) feet to the westerly line of Transit Road at the point or place of
beginning.
Exhibit 10.8
LEASE AGREEMENT
(1870 Semoran Blvd., Winter Park, Florida)
1. PARTIES This lease is made and entered into between the following
parties: Piccadilly Cafeterias, Inc., hereafter referred to and known as Lessor,
together with its successors, assigns and heirs and Roadhouse Grill, Inc.,
hereafter referred to and known as Lessee together with its successors, assigns
and heirs.
2. PREMISES Lessor hereby leases to Lessee and Lessee hereby leases
from Lessor, as of the "Effective Date" specified in Section 3, at the rental
and upon the covenants and conditions hereinafter set forth, the commercial
space referred to herein as the "Premises" and described in Exhibit A attached
hereto and incorporated herein by this reference. Lessee agrees that (i) Lessee
has accepted the Premises in an "as is" condition, (ii) Lessor shall have no
responsibility to make any "Improvements" (as defined in Section 13) which may
be required to prepare the Premises for Lessee's use, (iii) Lessee, at its sole
cost and expense, shall complete any Improvements which may be required upon the
Premises prior to the Rent Commencement Date (as defined in Section 3) and (iv)
all such Improvements shall be done in accordance with Sections 13 and 14.
3. TERM This Lease shall become legally binding as of the "Effective Date"
which is defined as the date when Lessor and
<PAGE>
Lessee shall have executed this Lease. The term of this Lease "Lease Term")
shall commence on October 1, 1994 at 12:01 A.M. (the "Rent Commencement Date")
and shall remain in full force and effect until September 30, 2004 at 12:00 P.M.
(Midnight) (the "Expiration Date"). At the expiration of the Lease Term or
earlier termination of this Lease, Lessee will surrender possession of the
Premises and deliver the same to Lessor in good condition and repair.
4. RENT Lessor agrees to lease the Premises to Lessee for the Lease Term at the
following rental rates:
A: Years 1 through 5: Annual rental (the "Annual Rental")
shall be one Hundred Thirty Two Thousand Dollars ($132,000.00). This
annual rental shall be divided into twelve (12) equal monthly
payments of Eleven Thousand Dollars ($11,000.00) which shall be due
and payable by close of normal business hours on the first day of
each month. Rental received after the fifth day of the month shall be
adjudged to be late and will be assessed a late fee of 5% of the
rental due plus all applicable taxes.
B: Years 6 through 10: Annual Rental shall be One Hundred
Forty Six Thousand Four Hundred Dollars ($146,400.00). This annual
rental shall be divided into twelve (12) equal monthly payments of
Twelve Thousand Two Hundred Dollars ($12,200.00) which shall be due
and payable by close of normal business hours on the first day of
each month. Rental received after the fifth day of the month shall be
adjudged to be late and will be assessed a late fee of 5% of the
rental due plus all applicable taxes.
5. UTILITIES Lessee agrees to make application in Lessee's own name and to
obtain directly from, and pay for the same when due directly to, the applicable
utility company. The term utilities for purposes hereof shall include but not be
to electricity, water, sewer, gas, telephone, trash collection, cable
television, or other public or private utilities used by Lessee at the Premises.
Lessee further 2
<PAGE>
agrees to defend, indemnify, protect and hold Lessor, together with its
successors, assigns and heirs, harmless from and against any and all claims,
liabilities, charges, deposits, encumbrances, penalties, forfeitures, losses or
expenses (including attorney's fees) levied or claimed by any public or private
utility company. Any discontinuance, failure or interruption in service
resulting from Lessee's failure to pay any charge due and payable shall not be
deemed a constructive eviction of Lessee or entitle Lessee, to terminate this
Lease. 6. TAXES Lessee agrees to pay as additional rent without setoff or
deduction the amount of all "Taxes" assessed for any reason and levied on the
Premises and the realty underlying the Premises, whether separately or as part
of the larger parcel. As used in this Lease, the term "Taxes" levied on the
Premises or the realty underlying the Premises shall mean any form of tax,
assessment, lien, bond obligation, license fee, license tax, tax or excise on
rent, or any other levy, charge or expense, together with any statutory interest
thereon, imposed or required at any time by any federal, state, county or city
authority having jurisdiction, or any school, agricultural, lighting, drainage
or other improvement or special assessment district thereof. Should Lessor make
any tax payments directly, including any real estate or ad valorem tax payment,
Lessee shall reimburse Lessor within thirty (30) days after presentation of said
tax charge from Lessor to Lessee. In the event Lessee fails to pay, when the
same is due and payable, any Taxes, Lessee shall hold Lessor, together with its
successors, assigns and heirs, harmless from any resulting penalties, fees,
fines or other charges.
3
<PAGE>
7. ASSIGNMENT AND SUBLETTING Lessee shall not have the right to assign
or sublet the Premises during the Lease Term without Lessor's prior written
approval.
8. POSSESSION AND SURRENDER Lessee shall deliver the Premises at the
expiration of the Lease Term or the earlier termination of this Lease in a broom
clean condition, with the removal of all personal property and trade fixtures
not affixed to the Premises, with the exception of Lessee's sign and temporary
mounted fixtures. Lessee shall be responsible for repairing damage caused by
Lessee or Lessee's invitees or employees, normal wear and tear accepted. It is
expressly agreed and understood by both Lessor and Lessee that the failure by
Lessee to surrender possession of the Premises at the expiration of the Lease
Term or earlier termination of this Lease shall result in substantial damages to
Lessor and those damages are impossible or impracticable to measure. In the
event Lessee does not surrender possession of the Premises to Lessor as set
forth herein, Lessee shall be deemed a hold over tenant on a month-to-month
basis and shall pay to Lessor, as liquidated damages, for each month or portion
of a month in which Tenant holds over in the Premises, an amount equal to the
greater of (i) two times the portion of the Annual Rental which was payable
under the Lease during the last month of the Lease Term plus all additional rent
payable in accordance with the terms of this Lease or (ii) the prevailing market
rent, on a monthly basis, plus all additional rent payable in accordance with
4
<PAGE>
the terms of this Lease; such amount shall be payable in advance on the first
day of each and every month.
9. USE OF PREMISES Lessor agrees to lease to Lessee the Premises for the
purposes of operating a restaurant and grill. Should Lessee desire to change the
use for which Lessee leases the Premises, Lessee must first obtain Lessor's
written consent. Lessee warrants that Lessee will use the Premises for lawful
purposes only and will obey all applicable federal, state and local laws,
ordinances and codes. Upon paying the Annual Rent and any additional rent,
including taxes, fees, and licenses, and otherwise conforming to the terms and
conditions of this Lease, Lessee shall have the quiet enjoyment of the Premises.
Lessor may enter the Premises during normal business hours to inspect the
Premises. Lessor or Lessor's agent may place appropriate 'For Sale or For Lease*
signs on the Premises sixty (60) days prior to the Expiration Date or earlier
termination of the Lease.
10. REPAIRS, MAINTENANCE Lessee agrees at all times from and after delivery of
the Premises, at its own cost and expense, to repair, maintain in good and
tenantable condition and replace, as necessary, the Premises and every part
thereof, including the following: the air conditioning system; all meters,
pipes, conduits, equipment, components and facilities that supply the Premises
with utilities; all fixtures and other equipment installed in the Premises; all
exterior and interior glass installed in the Premises; all signs, locks and
closing devices;
5
<PAGE>
all window sashes, casements and frames; doors and door frames; floor coverings;
and all such items of repair, maintenance, alteration, improvement or
reconstruction as may be required for compliance with all laws, regulations,
codes, ordinances and other governmental regulations. All replacements made by
Lessee in accordance with this Section shall be of like size, kind and quality
to the items replaced as they existed when Lessee originally took possession.
Lessee agrees to permit Lessor to enter the Premises at all times during usual
business hours to inspect the sam e or to perform any work therein as permitted
by the terms and conditions of this Lease.
Lessor shall repair, maintain in good and tenantable condition and replace,
as necessary, the roof, exterior walls, and structural parts of the Premises.
Lessor shall not be required to make repairs necessitated by reason of the
negligence of Lessee or anyone claiming under Lessee, by reason of the failure
of Lessee to perform or observe any terms or conditions of this Lease, or by
reason of Improvements made by Lessee or anyone claiming under Lessee. As used
in this Section, "exterior walls" shall exclude storefronts, plate glass, window
cases or window frames, doors or door frames.
If Lessee refuses to repair, replace or maintain the Premises, or any part
thereof, in a manner reasonably satisfactory to Lessor, Lessor shall have the
right, upon giving Lessee reasonable written notice of its election to do so, to
make such
6
<PAGE>
repairs or perform such maintenance on behalf of and for the account of Lessee.
In such event, Lessee shall pay the cost of such work as additional rent
promptly upon receipt of an invoice therefor.
11. INDEMNITY Lessor shall not be liable for, and Lessee shall defend (with
counsel satisfactory to Lessor), indemnify and protect Lessor from, any claim,
demand, liability, judgment, award, fine, mechanics' lien or other lien, loss,
damage, expense, charge or cost of any kind or character (including actual
attorney fees and court costs) arising directly or indirectly from (a) any labor
dispute involving Lessee or its contractors and agents, or (b) the construction,
repair, alteration, improvement, use (including all claims arising from Lessee's
sale of alcoholic beverages, if any), occupancy or enjoyment of the Premises
(hereinafter referred to as "Claims"), including without limitation, Claims
caused by the concurrent negligent act or omission, whether active or passive,
of Lessor or its agents; provided, however, Lessee shall have no obligation to
defend, indemnify or protect Lessor from Claims caused by the sole and grossly
negligent, willful or criminal acts of the Lessor and/or its agents. Lessee's
duty to indemnify Lessor under this Section shall not extend to damages awarded
to a third party to the extent that such damages were awarded as a result of
Lessor's gross negligence, provided the issue of negligence has been fully
7
<PAGE>
adjudicated, and in such event, Lessor will reimburse Lessee for its prorata
share of costs of defense.
12. INSURANCE Lessee agrees that from and after the Effective Date, and prior to
any use or occupancy of the Premises, Lessee shall obtain and maintain, at its
sole cost and expense, the following types of insurance, in the amounts
specified and in the form hereinafter provided for:
(a) Comprehensive general liability insurance for bodily
injury and property damage with broad form contractual liability coverage and
with coverage limits of not less than One Million Dollars ($1,000,000) combined
single limit, per occurrence and in the aggregate insuring against any and all
liability of the insured with respect to said Premises or arising out of the
maintenance, use or occupancy thereof, and shall specifically include liquor
liability insurance covering consumption of alcoholic beverages by customers of
Lessee, if the sale of alcoholic beverages is permitted under this Lease.
(b) Lessee shall also carry insurance covering Lessee's
merchandise, fixtures and Improvements in the amount not less than ninety
percent (90%) of their full replacement cost providing protection against any
peril included within the classification "All Risks," including, without
limitation, coverage for fire and flood damage and theft.
All policies of insurance provided for herein shall be with insurance
companies licensed to do business in the State of
8
<PAGE>
Florida and Seminole County and approved by the Landlord, such approval not to
be unreasonably withheld. All such policies shall contain cross-liability
endorsements and shall name Lessor as an additional insured. Executed copies of
such policies of insurance or certificates thereof shall be delivered to Lessor
within ten (10) days after the Effective Date, and thereafter executed copies of
renewal policies or certificates thereof shall be delivered to Lessor within
thirty (30) days prior to the expiration of the term of each such policy.
Lessee's obligations to carry the insurance provided for above may be
satisfied by inclusion of the Premises within the coverage of a so-called
blanket policy or policies of insurance carried and maintained by Lessee;
provided, Lessor shall be named as an additional insured thereunder and that the
coverage afforded Lessor will not be reduced or diminished by reason of the use
of such blanket policies of insurance, and provided further that the
requirements set forth herein are otherwise satisfied. Lessee agrees to permit
Lessor at all reasonable times to inspect any policies of insurance of Lessee
which Lessee has not delivered to Lessor.
13. IMPROVEMENTS At Lessee's own expense, after giving Lessor notice in writing
of its intentions to do so, andwithout limiting Lessee's right to remove and/or
replace personal property, Lessee
9
<PAGE>
may, from time to time, make such permanent and nonstructural alterations,
replacements, additions, changes and/or improvements (collectively referred to
in this Lease as "Improvement") to the Premises as Lessee may find necessary or
convenient for its purposes, provided that the value of the Premises is not
thereby diminished; provided, however, no Improvements costing in excess of
Thirty Thousand Dollars ($30,000.00) may be made without obtaining the prior
written approval of Lessor. In no event shall any Improvements be made to any
mechanical system, the exterior walls, floor or roof of the Premises without the
prior written approval of Lessor. In no event shall Lessee make or cause to be
made any penetration into or through the roof or floor of the Premises without
obtaining the prior written approval of Lessor.
Lessee shall be liable for and shall indemnify and defend Lessor from any claim,
demand, lien, loss, damage or expense, including reasonable attorney fees and
costs, arising from any Improvements permitted under this Section.
14. CONSTRUCTION REQUIREMENTS Improvements to be made to the Premises which
require the approval of Lessor shall be made under the supervision of a
competent architect or licensed structural engineer and made in accordance
with the plans and specifications submitted to Lessor for its approval prior to
commencement of the work, in accordance with such procedures as Lessor shall
reasonably specify. Lessor's approval of Lessee's plans for any Improvements
shall in no event create any responsibility or
10
<PAGE>
liability on the part of Lessor for their completeness, design sufficiency, or
compliance with any and all laws, regulations, codes, ordinances and other
governmental regulations. All work with respect to any Improvements must be done
in a good and workmanlike manner and diligently prosecuted to completion. Lessee
covenants to keep the Premises free and clear of all mechanics liens and other
liens on account of work done for Lessee or persons claiming under Lessee.
15. CASUALTY DAMAGE In the event the Premises are wholly or partially damaged by
fire, flood or other casualty, Lessee shall immediately inform Lessor. If the
Premises are destroyed so that in the Lessor a reasonable opinion, the cost of
the repairs would exceed 25% of the replacement value of the Premises, Lessor
shall each have the right to terminate this Lease by giving sixty (60) days
prior written notice to the other. In the event this Lease is cancelled because
of such casualty, any insurance proceeds shall be turned over to Lessor.
In the event Lessee and Lessor agree to repair such damage, and during the
course of such repair Lessee cannot continue to operate or conduct its business,
the Annual Rent shall be abated until such time as the Premises is again open
for business; provided, that such abatement shall not exceed ninety (90) days.
Should Lessee remain open for business during the course of such repair, there
shall be no abatement of any rents.
16. HAZARDOUS MATERIALS Lessee shall not use, generate, manufacture,
produce, store, treat, dispose or permit the escape on, under, about or from the
Premises, or any part thereof, any asbestos or any flammable, explosive,
radioactive, hazardous, toxic, contaminating, polluting matter, waste, or
substance or related injurious materials, whether injurious by themselves or in
combination with other materials (collectively "Hazardous Materials"). Further,
Lessee shall not use, generate, manufacture, produce, store, treat, dispose or
permit the escape on, under, about or from the Premises any material substance,
or chemical which is regulated by any federal, state or local law, rule
ordinance or regulation (collectively "Regulated Materials").
Any exceptions to the foregoing shall require Lessor"s express written
approval. Lessee shall defend, indemnify, protect and hold Lessor, together with
its successors, assigns and heirs,
11
<PAGE>
harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorney's fees), or death of or
injury to any person or damage to any property whatsoever, arising from or
caused in whole or in part, directly or indirectly, by any breach of this
Section.
17. LEGAL NOTICES All notices required under this Lease shall be given
or exercised in writing and shall be deemed to be properly served when delivered
by certified mail with return receipt requested, or by private courier service,
to the addresses for the Lessor and Lessee, respectively, set forth below:
Piccadilly Cafeterias, Inc.
P. 0. Box 2467
Baton Rouge, LA 70821
Attention: General Counsel
Piccadilly Cafeterias, Inc.
P. 0. Box 2467
Baton Rouge, LA 70821
Attention: Director of Real Estate
Roadhouse Grill, Inc.
4801 S. University Drive, Suite 304
Davie, Florida 33328
Attention: David Tulle, Jr., President
18. FORCE MAJEURE. If either party hereto shall be delayed or prevented
from the performance of any act required hereunder by reason of acts of God,
riots, civil commotion, strikes, lockouts, labor troubles, inability to procure
materials, restrictive governmental laws or regulations or other cause without
fault beyond the control of the party obligated (financial inability excepted),
performance of such act shall be excused for the period
12
<PAGE>
of the delay and the period for performance of any such act shall be extended
for a period equivalent to the period of such delay, provided notice is given
within ten (10) days of such delay.
19. BROKERAGE COMMISSIONS. The parties hereby agree that Lessor shall be
responsible for any and all brokerage commissions in connection with this Lease.
20. SUBORDINATION AND NON-DISTURBANCE. Lessor reserves the right to subject and
subordinate Lessor's interest in the Premises and this Lease at all times to the
lien of any first mortgage or first deed of trust placed upon Lessor's interest
in the Premises. In such event, Lessee shall execute and deliver such further
instruments as may be reasonably requested by Lessor to evidence the
subordination or to subject Lessor's interest in this Lease to the lien of any
such mortgage or deed of trust. If this Lease is at any time subject or
subordinate to any mortgage or deed of trust which now or hereafter affects the
Premises, such mortgage or deed of trust (or a separate non-disturbance
agreement delivered to Lessee contemporaneously with the execution of the
mortgage or deed of trust, or in the case of a mortgage or deed of-trust
existing, prior to the date of this Lease, delivered to Lessee within forty-five
days after the date of this Lease) shall provide that Lessee shall not in any
way be disturbed in its peaceable possession of the Premises, and that the
validity and continuance of this Lease and every provision hereof shall be
recognized and provided for in the event of foreclosure, or by
13
<PAGE>
conveyance in lieu of foreclosure, so long as Lessee shall not be in default
under the terms of this Lease beyond any applicable cure period.
21. CONFIRMATION OF LEASE Each of the parties agrees, upon request of the other,
to execute a statement to the effect that this Lease remains in full force and
effect in accordance with its terms and, if such be the case, that the other
party is not in default hereunder, in order that such statement may be relied
upon by any then present or prospective purchaser, lender, auditor, mortgagee,
landlord or other interested party.
22. DEFAULTS BY LESSEE Lessee's failure to pay any amount of the Annual Rent or
any additional rents when due or to fully and promptly perform any covenant or
condition of this Lease after reasonable notice from Lessor of such obligation
to cure shall constitute a default by Lessee and a breach of this Lease In the
event of a default by Lessee which remains uncured for thirty (30) days, Lessor
at Lessor's option may (i) terminate Lessee's right to possession of the
Premises, with or without terminating this Lease, and reenter and take
possession of the Premises and of all fixtures and personal property therein to
collect any unpaid rentals and other charges, which have become payable, or
which may, thereafter become payable, or 2) terminate the Lease and recover from
Lessee as damages the amount of unpaid rental (including all Annual Rent and
additional rent) for the balance of the term of the Lease that would have been
earned had Lessee not
14
<PAGE>
defaulted and such sum shall be due and payable within thirty (30) days
following termination. Lessee hereby grants Lessor a security interest in
Lessee's fixtures and personal property located on the Premises to secure
Lessee's performance of any and all of Lessee's obligations under this Lease. To
perfect said security interest, Lessee agrees to execute and deliver to Lessor
such financing statements required by the applicable uniform Commercial Code as
Lessor may request.
23. DEFAULTS BY LESSOR If Lessor shall neglect or fail to
perform or observe any of the terms and conditions of this Lease, Lessee shall
provide Lessor with written notice of such failure. Upon receipt of such notice,
Lessor shall have thirty (30) days to remedy such failure. If Lessor does not
remedy such failure or proceed diligently to do so within thirty (30) days after
receipt of notice, then Lessee shall have the right to cure such default and
deduct reasonable costs therefor from the rental due.
24. EMINENT DOMAIN In the event the Premises or any part thereof shall be
appropriated or taken under the power of eminent domain by any public or
quasi-public authority, this Lease shall terminate and expire as of the date of
such taking, and Lessor and Lessee
shall each thereupon be released from any further liability accruing under this
Lease.
15
<PAGE>
25. ATTORNEY FEES If at any time after the Effective Date, either Lessor or
Lessee institutes any action or proceeding against the other, the nonprevailing
party in such action or proceeding shall reimburse the, prevailing party for the
reasonable expenses of attorney fees, and all costs and disbursements incurred
therein by the prevailing party, including, without limitation, any such fees,
costs or disbursements incurred on any appeal from such action or proceeding.
Subject to the provisions of local law, the prevailing party shall recover all
such fees, costs or disbursements as costs taxable by the court or arbiter in
the action or proceeding itself without the necessity for a crossaction by the
prevailing party.
26. APPLICABLE LAW This lease is executed pursuant to and shall be construed in
accordance with the laws of the state of Florida.
27. CONSTRUCTION OF LEASE INSTRUMENT The invalidity or unenforceability of any
provision of this Lease shall not affect or impair any other provision. The
submission of this document for examination does not constitute an offer to
Lease, or a reservation of or option for the Premises and becomes effective only
upon execution and delivery thereof by Lessor and Lessee. All negotiations,
considerations, representations and understandings between the parties are
incorporated herein, and may be modified or altered only by an agreement in
writing between the parties. The headings or captions of the several articles
16
<PAGE>
contained herein are for convenience only and do not define, limit
or construe the
contents of such articles. All handwritten changes, deletions or additions to
this agreement which have been initialed by the parties shall have precedence
over the printed text.
17
<PAGE>
This Lease is executed by Lessor at Baton Rouge, Louisiana, on this 3rd day
of May, 1994.
WITNESSES AS TO LESSOR PICCADILLY CAFETERIAS, INC.
/S/ MOLLY MCGRAW By: /S/ JAMES W. BENNETT
- --------------------------- ---------------------------
James W. Bennett,
Chairman and C.E.O.
/S/ ILLEGIBLE
- ---------------------------
This Lease is executed by Lessee at DAVIE, FLORIDA on this 26TH
day of April, 1994.
WITNESSES AS TO LESSEE ROADHOUSE GRILL, INC.
/S/ KIMBERLY REIHING By: /S/ JOHN D. TOOLE, JR.
- --------------------------- ---------------------------
/S/ ILLEGIBLE
- ---------------------------
Exhibits:
Exhibit "A" - Leased Premises
Exhibit "B" - Equipment and Fixtures
18
<PAGE>
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
BEFORE ME, the undersigned authority, duly commissioned, qualified
and sworn within and for the State and Parish aforesaid, on this day personally
appeared JAMES W. BENNETT appearing herein as Chairman and C.E.O. of Piccadilly
Cafeterias, Inc., personally known to me to be the identical person whose name
is subscribed to the foregoing lease as the said officer of the said
corporation, and he acknowledged to me that he executed the foregoing lease on
behalf of Piccadilly Cafeterias, Inc. as lessor for the purposes and
consideration therein expressed, as the free act and deed of Piccadilly
Cafeterias, Inc., and pursuant to authority of the Board of Directors of
Piccadilly Cafeterias, Inc.
GIVEN under my hand and seal this 4TH day of MAY, 1994.
/S/ SHARON M. TAYLOR
-------------------------------
Sharon M. Taylor, Notary Public
My Commission Expires
At My Death; Lifetime Commission (Notary's Seal)
19
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
BEFORE ME, the undersigned authority, duly commissioned, qualified and sworn
within and for the State and County aforesaid, on this day personally appeared
JOHN D. TOOLE JR., appearing herein in his capacity as VICE PRESIDENT of
ROADHOUSE GRILL, INC., personally known to me to be the identical person whose
name is subscribed to the foregoing lease as the said officer of the said
corporation, and he acknowledged to me that he executed the foregoing lease on
behalf of ROADHOUSE GRILL, INC. as lessee for the purposes and consideration
therein expressed, as the free act and deed of said corporation and pursuant to
authority of the Board of Directors of said corporation.
GIVEN under my hand and seal this 26TH of APRIL, 1994.
/S/ KERRY M. MOSSOR
--------------------------------
Kerry M. Mossor, Notary Public
My Commission Expires:
Aug 2, 1997 (Notary's Seal)
- ---------------
[stamped notary seal] [stamped notary seal]
20
<PAGE>
EXHIBIT A
[MAP DEPICTING THE LEASED PREMISES]
<PAGE>
EXHIBIT B
EQUIPMENT AND FIXTURES
The following equipment and fixtures located in the Premises shall be left for
the use of the Lessee:
[TO COME)
EXHIBIT 10.9
GROUND LEASE
BRUNO, INC.
an Alabama corporation
("Landlord")
AND
ROAD HOUSE GRILL INC.
d/b/a ROAD HOUSE GRILL
("Tenant")
May 25, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. FUNDAMENTAL LEASE PROVISIONS, DEFINITIONS, AND CONDITIONS......... 2
1.1 Exhibits................................................... 2
1.2 Fundamental Provisions..................................... 2
1.3 Definitions.................................................4
ARTICLE 2. CONSTRUCTION OF IMPROVEMENTS BY TENANT............................7
2.1 Inspection/Condition of Premises............................7
2.2 Permitting..................................................8
2.3 Design and Construction.....................................8
2.4 Insurance...................................................8
2.5 Tenant's Work...............................................9
2.6 Inspection.................................................10
2.7 Indemnity..................................................10
2.8 Mechanics and Materialman's Liens..........................11
2.9 Completion of Tenant's Work................................11
2.10 Tenant Equipment...........................................11
2.11 Ownership..................................................12
ARTICLE 3. GRANT OF LEASE...................................................12
3.1 Grant......................................................12
3.2 Covenant of Title; Quiet Enjoyment.........................12
3.3 Short Form Lease...........................................12
ARTICLE 4. TERM.............................................................12
4.1 Term of Lease..............................................12
4.2 Extension Options..........................................13
4.3 Term Commencement Agreement................................13
4.4 Procedure of Termination...................................13
4.5 Holding Over...............................................13
ARTICLE 5. USE AND OPERATION................................................14
5.1 Use........................................................14
5.2 Operating Covenant.........................................14
5.3 Operations.................................................14
5.4 Restrictions on Tenant's Activities........................14
ARTICLE 6. RENT.............................................................15
6.1 Minimum Rent Prior to Primary Term.........................15
6.2 Minimum Rent Thereafter....................................15
6.3 Monthly Payments...........................................15
6.4 Late Fee...................................................15
6.5 Net Nature of Rent.........................................15
<PAGE>
ARTICLE 7. TAXES............................................................15
7.1 Definition of Taxes........................................15
7.2 Separate Assessment........................................16
7.3 Payment by Tenant..........................................17
ARTICLE 8. COMMON AREAS.....................................................17
8.1 Landlord Control...........................................17
8.2 Grant of Right to Use Common Area..........................18
8.3 Maintenance and Operation of Common Area...................18
8.4 Reimbursement for Pro Rata Share of CAM....................18
ARTICLE 9. INDEMNIFICATION..................................................18
9.1 By Tenant..................................................18
9.2 By Landlord................................................19
ARTICLE 10. INSURANCE........................................................19
10.1 Liability Insurance of Tenant..............................19
10.2 Property Insurance of Tenant...............................20
10.3 General Clauses Concerning Insurance.......................20
ARTICLE 11. UTILITIES AND SERVICE............................................21
11.1 Payment for Utility Service................................21
11.2 No Obligations of Landlord.................................21
11.3 Covenants of Tenant with Respect to Sanitary Sewer.........21
ARTICLE 12. MAINTENANCE OF LEASEHOLD IMPROVEMENTS............................22
12.1 Repairs and Maintenance....................................22
12.2 Compliance.................................................22
12.3 Surrender..................................................22
12.4 Alterations, Change of Grade...............................22
12.5 Tenant Equipment...........................................23
12.6 Mechanic's Liens...........................................23
12.7 Signs......................................................23
ARTICLE 13. DESTRUCTION......................................................23
13.1 No Abatement...............................................23
13.2 No Termination.............................................24
13.3 Obligation to Repair.......................................24
13.4 Waiver of Subrogation......................................24
ARTICLE 14. CONDEMNATION.....................................................25
14.1 Total or Substantial Partial Taking of Leased Premises.....25
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14.2 Taking for Temporary Use...................................25
14.3 Disposition of Awards......................................25
ARTICLE 15. RESTRICTIONS.....................................................26
15.1 Restrictions...............................................26
ARTICLE 16. DEFAULT..........................................................26
16.1 Event of Default...........................................26
16.2 Remedies of Landlord.......................................27
16.3 Landlord's Right to Perform for Account of Tenant..........28
16.4 Additional Remedies, Waivers, Etc..........................28
16.5 Attorney's Fees and Disbursements..........................28
16.6 Bankruptcy.................................................28
ARTICLE 17. TRANSFERS........................................................29
17.1 Assignment and Subletting by Tenant........................29
17.2 Assignment by Landlord.....................................29
17.3 Estoppel Certificate.......................................30
ARTICLE 18. OPTION TO PURCHASE...............................................30
18.1 Option to Purchase.........................................30
ARTICLE 19. MISCELLANEOUS PROVISIONS.........................................31
19.1 Non-Waiver.................................................31
19.2 Modifications..............................................31
19.3 Entire Agreement...........................................31
19.4 Brokerage..................................................31
19.5 Captions...................................................31
19.6 Binding Effect.............................................31
19.7 Counterparts...............................................32
19.8 Time of Essence............................................32
19.9 Exculpation................................................32
19.10 Severance..................................................32
19.11 Successors and Assigns.....................................32
19.12 Time of Essence............................................32
19.13 Warranties as to Standing and Authority....................32
19.14 Independent Contractual Relationship.......................33
19.15 Applicable Law.............................................33
19.16 Interpretation.............................................33
19.17 Construction...............................................33
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GROUND LEASE
This is a Ground Lease ("Lease") dated May 25, 1995 by and between:
BRUNO'S, INC., an Alabama corporation
800 Lakeshore Parkway
Birmingham, Alabama 35411 ("Landlord")
and
ROAD HOUSE GRILL, INC. d/b/a Road House Grill
4801 South University Drive, Suite 304
Davie, Florida 33328 ("Tenant").
The parties agree to the following:
PREAMBLE
WHEREAS:
A. Landlord owns that certain real property (the "Development Site")
located in Fulton County, Georgia, and more particularly described in Exhibit A
attached hereto.
B. Tenant is in the restaurant business and desires to lease a portion
of the Development Site for the construction and development of a Road House
Grill restaurant.
C. Landlord desires to lease such portion of the Development Site
together with the improvements thereon to Tenant, upon all the terms and
provisions set forth below.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements as hereinafter set forth, it is agreed as follows:
<PAGE>
ARTICLE 1. FUNDAMENTAL LEASE PROVISIONS, DEFINITIONS, AND CONDITIONS
1.1 EXHIBITS.
The following described exhibits are attached to and incorporated into this
Lease:
EXHIBIT A Legal Description of Development Site
EXHIBIT B Site Plan of Development Site
EXHIBIT C Legal Description of Leased Premises
EXHIBIT D Site Plan of Leased Premises after Construction of Restaurant
EXHIBIT E Encumbrances on Development Site
EXHIBIT F Declaration of Covenants and Easements
1.2 FUNDAMENTAL PROVISIONS
1.2.1 DEVELOPMENT SITE. The Development Site is comprised of a 17-acre
tract which is legally described in Exhibit A attached to and incorporated as a
part of this Lease, and is graphically depicted in Exhibit B.
1.2.2 LEASED PREMISES. The "Leased Premises" means a parcel of land
situated on and constituting a part of the Development Site, as described in
Exhibit C, containing approximately 42,400 square feet.
1.2.3 LEASEHOLD IMPROVEMENTS. Tenant intends to construct a Road House
Grill restaurant containing approximately 7500 square feet (the "Restaurant") on
the Leased Premises and shall install in the Restaurant all equipment, furniture
and furnishings necessary for the operation of the Restaurant, all in accordance
with Article 2 of this Lease. All improvements to the Restaurant including any
personal property (other than "Tenant Equipment" as defined in Article 1.2.4
hereof) affixed to or used in connection with the operation, maintenance,
protection, and safety of the Restaurant, shall be collectively referred to as
'Leasehold Improvements. Heating, ventilating, air conditioning, plumbing,
electrical, sprinkler, detection, and illumination equipment are all a part of
the Leasehold Improvements and are not "Tenant Equipment." The Leasehold
Improvements shall include all alterations and replacements.
1.2.4 TENANT EQUIPMENT. "Tenant Equipment" is not a part of the
Leasehold Improvements. "Tenant Equipment" means all trade fixtures, machinery,
equipment (including but not limited to refrigeration equipment, coolers and
freezers unless such coolers and freezers are permanently affixed to the
Leasehold Improvements), furniture and furnishings (whether affixed or not to
the Restaurant) installed and maintained by Tenant for use in connection with
the conduct of its business.
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1.2.5 EFFECTIVE DATE. The date on which all parties shall have executed
this Lease.
1.2.6 PRE-CONSTRUCTION PERIOD. The Pre-Construction Period of this
Lease commences on the Effective Date and expires sixty (60) days thereafter.
1.2.7 CONSTRUCTION PERIOD. The Construction Period of this Lease
commences on the day following the end of the Pre-Construction Period and
expires on the last day of the seventh month thereafter, or upon Tenant's
opening for business, should that event sooner occur.
1.2.8 PRIMARY TERM. The Primary Term of this Lease commences on the day
following the Construction Period and expires ten (10) years thereafter unless
the first day of the Primary Term should fall on a day other than the first day
of the month in which case the Primary Term shall expire on the last day of the
tenth Lease Year (as defined below) of the Primary Term.
1.2.9 EXTENDED TERMS. Tenant shall be entitled to two (2) options to
extend the term of this Lease for extension terms of five (5) years each, as
more fully defined in Article 4.2.
1.2.10 RENT.
(a) RENT DEFINED. "Rent" means "Minimum Rent," "Percentage
Rent," and "Contributions Rent."
(b) NO MINIMUM RENT DURING PRE-CONSTRUCTION PERIOD. During the
Pre-Construction Period, Tenant shall not pay any Minimum Rent.
(c) MINIMUM RENT DURING CONSTRUCTION PERIOD. During the
Construction Period, the monthly rate of "Minimum Rent" shall be $5,000.00.
However, if Tenant shall complete construction of the Leasehold Improvements and
open for business prior to the expiration of the Construction Period, then the
Primary Term shall commence at such time and the monthly rate of the "Minimum
Rent" shall immediately increase to $11,000.00.
(d) MINIMUM RENT DURING PRIMARY TERM. During the Primary Term,
the monthly rate of "Minimum Rent" shall be $11,000.00 (being at the annual rate
of $132,000.00).
(e) ANNUAL RATE OF MINIMUM RENT DURING EXTENDED TERM. During
each of the Extended Terms, the annual rate of "Minimum Rent," payable monthly,
shall be increased by ten percent (10%) over the preceding Primary Term or
Extended Term, as the case may be.
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(f) LEASE YEAR. The first "Lease Year" shall begin on the first
day of the next month following the "Construction Period" (unless the
Construction Period shall end on the first day of the month) and shall end on
the last day of the twelfth month thereafter. Each subsequent Lease Year shall
begin on the day after the previous Lease Year expires and, except for the last
Lease Year, shall end on the first anniversary of the day before it begins. The
last Lease Year shall end on the Expiration Date.
1.2.11 CONTRIBUTIONS RENT. All charges and payment which are to be paid
by Tenant, all of which shall be payable as additional rent for purposes of
Article 16 (but which shall not be considered additional rent for purposes of
any lease tax which may be payable hereunder), including without limitation the
following:
(a) REAL ESTATE TAXES, Tenant shall be responsible to pay all
"Taxes" with respect to the Leased Premises as more particularly provided in
Article 7.
(b) COMMON AREA MAINTENANCE ("CAM"). Tenant shall pay Tenant's
Proportionate Share of CAM charges as more particularly described in Article 8.
(c) INSURANCE. Tenant shall carry its own insurance on the
Leasehold Improvements, including fire and extended coverage and public
liability insurance, as more particularly described in Article 10.
(d) NET LEASE. The Rent payable to Landlord shall be absolutely
net to Landlord, as more particularly provided in Article 6.5.
1.3 DEFINITIONS.
In addition to definitions set forth elsewhere in this Lease, the following
terms shall have the meanings hereinafter set forth in this Article 1.3:
1.3.1 COMMON AREAS. Collectively, those portions of the Development
Site developed and/or permitted to be developed for the general use, convenience
and benefit of all or substantially all tenants of the Development Site and
their respective Permittees. Common Areas shall include, without limitation, all
parking areas, roadways, driveways, sidewalks, curbs, exterior landscaped areas,
truck roadways and truck standing areas and service courts (except those parking
areas roadways, areas, courts reserved for the exclusive use of any one tenant,
if any, but not otherwise), and walkways. Parking decks, if and when
constructed, shall be part of the Common Areas.
1.3.2 CONSENT. Unless otherwise noted, Consent and Approval as used in
this Lease must be written, must be obtained before the action shall be taken
for
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<PAGE>
which Consent or Approval is required, and may not be unreasonably withheld. In
the case of both Consent and Approval as used in this Lease, the use of the term
"unreasonably withheld" will mean "unreasonably withheld, delayed, or
conditioned." If a request for Consent or Approval contains a conspicuous
statement that "failure to grant or deny Consent or Approval of this request
within thirty (30) days after such request shall be deemed to constitute the
granting of such Consent or Approval," and the party from whom Consent or
Approval is requested fails to return a written grant or denial within such time
then Consent or Approval shall be deemed to have occurred. Notwithstanding
anything to the contrary contained in this Article 1.3.2. if, in this Lease,
Landlord or Tenant has a Consent or Approval right which may be exercised "in
its discretion," the phrase "in its discretion" shall mean that Landlord or
Tenant may, exercise such right freely, for any reason and without any
constraint whatsoever.
1.3.3 FORCE MAJEURE. The delay or prevention of the performance of any
act required by this Lease, by act of God, fire and other casualties,
earthquake, flood, explosion, action of the elements, invasion, mob violence,
vandalism, sabotage; inability to procure or general shortage of necessary
labor, equipment, facilities, materials or supplies in the open market; failure
of transportation; action of labor unions; a taking; requisition, laws,
Governmental Regulations; strikes, lockouts, riots, insurrections, default of
the other party, war, or other reason not within the reasonable control of the
party delayed or prevented thereby including reasonable delays for adjustments
of insurance shall be Force Majeure, except that lack of money or inability to
obtain financing will not constitute Force Majeure, nor will Force Majeure ever
apply to Tenant's obligation to pay money. Force Majeure shall apply to all
obligations, dates and times contained in this Lease unless affirmatively stated
that Force Majeure shall not apply. In the event of Force Majeure, the party
whose performance is affected thereby will notify the other party as soon as
possible. The Notice will describe the event of Force Majeure and will estimate
the effect of such event on the schedule of performance of such act. On Notice
given within fifteen (15) business days of the occurrence of a Force Majeure
Event, performance of such act will be excused for the period of the delay, and
the period of the performance of any such act will be extended for a
period,equivalent to the period of such delay. If Notice is given after the said
fifteen (15) business day period, the period of the excused delay will begin
with the giving of such Notice.
1.3.4 GOVERNMENTAL AUTHORITY. Any Governmental Authority, agency,
department, district, commission, board or instrumentality of the United States,
the State of Georgia, the City of Sandy Springs, Fulton County, or any political
subdivision thereof having jurisdiction over the Development Site, the Tenant or
the Landlord.
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<PAGE>
1.3.5 GOVERNMENTAL REGULATIONS. Any and all laws, rules, ordinances or
regulations promulgated by any Governmental Authority applicable to the
Development Site.
1.3.6 HAZARDOUS SUBSTANCE. Any hazardous or toxic substance which is
regulated by any Governmental Authority, the State of Georgia, or the United
States Government; including, without limitation (except as excluded below),
asbestos; nuclear or radioactive material or waste; chemical liquids or solids;
liquid or gaseous products; oil; petroleum; pesticides; or any substance which
is (a) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. Section 1317), (b) defined as
"hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act (42 U.S.C. Sections 6901, 6903 ET SEQ.) (c) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601(14) ET SEQ.),
or (d) is covered under the Asbestos Hazard Emergency Response Act, by the
Superfund Amendments and Reauthorization Act, by the Clean Air Act, by 42 U.S.C.
Section 6991, or by any other similar federal, state, or local law or
regulation.
1.3.7 INDEMNIFY. The terms "Indemnify" and "Indemnity" as used in this
Lease will refer to an indemnity of the designated party, together with its
respective officers, directors, partners, contractors, agents and employees,
from and against any and all actions, causes of action suits, losses, costs,
liabilities, damages, and expenses, including personal injury, death, and
property damage, and including reasonable attorneys' and other professionals,
fees, incurred by such party or parties as a result of or arising out of the
designated breach, peril, condition, or occurrence. The Indemnitee shall give
prompt Notice to the indemnitor of the assertion of claim or liability received
by the indemnitee, and shall cooperate with the indemnitor in any defence of the
claim or liability giving rise to the Indemnity, including the filing of
counterclaims or cross-claims if appropriate. The indemnitor will consult with
the indemnitee with reference to such claim or liability, but the indemnitor
will have complete control over the defense of such claim or liability (subject
to any conflict of interest issues), including any decision to retain counsel,
expert witnesses, or other professionals, and including settlement of such claim
or liability for the payment of money alone and without admission of any
liability. If any of the foregoing is unacceptable to indemnitee, indemnitee may
on Notice to indemnitor waive the Indemnity provided herein and undertake its
own defense of the claim at no cost to indemnitor.
1.3.8 INTEREST. Simple interest, calculated on a per annum basis, on
any balance due from time to time, from the due date through the date of payment
in full, at 3.00 percentage points more than the announced annual prime interest
rate in effect from time to time at AmSouth Bank of Alabama or its successor,
but in no event to exceed the maximum legal rate.
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<PAGE>
1.3.9 MAINTAIN. The terms "Maintain" or "Maintenance" as used in this
Lease will refer to maintenance in the broad sense of the word, including
keeping clean as appropriate, and in good working order and repair, and
including replacement and restoration when appropriate, all in full compliance
with applicable law and insurance requirements and in a manner appropriate for a
first class restaurant. With respect to signs and lighting fixtures, Maintenance
will include replacement of bulbs and ballast as necessary.
1.3.10 NOTICE. The terms "Notice" or "Notify" as used in this Lease
will refer to a Notice in writing. Notice will be deemed given on receipt, or on
documented refusal of receipt, whether (a) mailed by United States certified
mail (return receipt requested), postage prepaid; (b) sent by public or
nationwide private courier service; (c) sent via facsimile transmission with
return confirmation signed by the recipient; or (d) delivered by hand. The
addresses of the parties for Notice will be as follows, or at the last changed
address given (by Notice) by the party to be notified:
LANDLORD: Two copies as follows: in separate envelopes delivered to:
Bruno's, Inc.
800 Lakeshore Parkway
Birmingham, Alabama 35211
Attention: Real Estate Department
With a copy to: Maurice L. Shevin, Esq.
Sirote & Permutt, P.C.
2222 Arlington Avenue, South
Birmingham, Alabama 35205
TENANT: Road House Grill, Inc., d/b/a Road House Grill
4801 South University Drive, Suite 304
Davie, Florida 33328
With a copy to: Charlie D. Barnett
899 West Cypress Creek Rd.
Suite 500
Fort Lauderdale, FL 33309
1.3.11 OPEN FOR BUSINESS. Regularly and continuously operating a
Restaurant for the use and benefit of the public beginning no later than nine
(9) months from the Effective Date or the expiration of the Construction Period,
whichever shall sooner occur (the "Opening Date") and at all times thereafter
during the term of this Lease.
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1.3.12 OPERATING COVENANT. The covenant of Tenant to be Open for
Business during the term of this Lease from and after the Opening Date.
1.3.13 PERMITTEES. Each party and its partners, officers, directors,
employees, agents, contractors, customers, patrons, clients, visitors,
licensees, concessionaires, vendors and invitees.
1.3.14 PROPORTIONATE SHARE. A fraction the numerator of which is the
acreage in the Leased Premises and the denominator of which is the acreage in
the Development Site.
ARTICLE 2. CONSTRUCTION OF IMPROVEMENTS BY TENANT
2.1 INSPECTION/CONDITION OF PREMISES
Except as expressly set forth in this Lease, Landlord makes no other
representations, warranties or covenants whatever with respect to the physical
condition of the Leased Premises, and leases the same to Tenant in its present
condition, "as is," without any other or further representations, warranty or
covenant.
2.2 PERMITTING
The parties agree to cooperate in all actions reasonably necessary to (i) enable
Tenant to obtain all required permits and licenses from Governmental Authorities
for the construction of the Restaurant. Tenant shall be responsible for all
costs, fees, charges or impositions, general and special, ordinary and
extraordinary, including without limitation, inspection fees, utility connection
and hook-up fees, building and other permit fees, impact fees, license fees and
all costs required to obtain a Certificate of Occupancy, whether or not such
fees shall have been within the contemplation of the parties hereto, which are
at any time levied or assessed by a Governmental Authority upon or against the
Leased Premises or are attributable thereto. In connection therewith, Tenant
shall also bear the expense of any engineers or surveyors whose services are
required for the issuance of any such permits and/or licenses. Tenant shall
pursue the application for such permits in good faith and with due diligence.
2.3 DESIGN AND CONSTRUCTION
Within thirty (30) days after the execution of this Lease, Tenant shall, at its
own expense, submit to Landlord for its Approval plans and specifications for
the construction of the Restaurant on the Leased Premises ("Tenant's Work").
Such plans shall be prepared by professional architects and engineers duly
licensed in the State of Georgia and shall comply with all Governmental
Regulations. The said
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<PAGE>
plans and specifications ("Plans") shall not provide for any Hazardous Substance
to be included within any of the construction materials. Such plans shall be
approved or objections made thereto by Landlord within thirty (30) days after
receipt of the same. Tenant shall take into account any objections or
suggestions of Landlord. Following receipt by Tenant of any such objections, the
Tenant's architects and engineers shall take such objections into account in
revising the Plans, delivering a revised set of plans to Landlord no later than
thirty (30) days after receipt of the Landlord's objections, and each party
shall cooperate with the other in resolving any issues with respect to the
proposed Plans. The final Plans and specifications approved by Landlord shall be
referred to herein as the "Final Plans." The Approval of the Final Plans by
Landlord shall not be deemed to be a warranty by Landlord that such Plans have
been prepared in a professional manner or that construction in accordance with
the Final Plans will be structurally or mechanically sound or in compliance with
Governmental Regulations.
2.4 INSURANCE
Prior to commencement of the Work and until completion thereof, Tenant shall
cause its contractor, at the contractor's or Tenant's sole cost and expense, to
procure, maintain and deliver to Landlord certificates for Builder's Risk
Insurance insuring Landlord, Tenant and Tenant's contractor, as their respective
interests may appear, against loss or damage by fire, vandalism and malicious
mischief and such other risks as are customarily covered by a so-called
"extended coverage endorsement" upon the Restaurant and the Leasehold
Improvements, whether under construction or completed and in place, and all
materials, equipment, supplies and temporary structures of all kinds incident to
the construction of the Leasehold Improvements in an amount equal to the full
insurable value thereof at all times. Tenant further agrees to require all
contractors and subcontractors engaged in the performance of the Work to
procure, maintain and deliver to Landlord and Tenant, prior to the commencement
of the Work and until completion thereof, certificates evidencing the existence
of the following insurance coverages:
(a) Workers' Compensation with limits of liability as required by law
and Employer's Liability Insurance with limits of not less than Five Hundred
Thousand Dollars ($500,000.00) per occurrence in Contractor's name containing a
waiver of subrogation in favor of Landlord executed by the insurance company;
(b) Public Liability Insurance (including contractual liability) in
Contractor's name with bodily injury limits of not less than Three Million
Dollars ($3,000,000.00), which may be a combination of primary and umbrella
coverage;
(c) Automobile Liability Insurance in Contractor's name with bodily
injury limits of not less than Three Million Dollars ($3,000,000.00) which may
be a combination of primary and umbrella coverage;
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(d) Contractual Liability Insurance in Contractor's name specifically
endorsed to cover the Indemnity agreement required of Contractor (set forth
below). Limits of liability shall not be less than Three Million Dollars
($3,000,000.00), which may be a combination of primary and umbrella coverage;
and
The construction contract shall contain an Indemnity agreement whereby
the Contractor shall Indemnify the Landlord against claims of third parties
arising out of injuries or damages suffered by the acts or actions or omissions
of the Contractor under such construction contract. The foregoing Indemnity
shall cover, without limiting the foregoing language, all acts and omissions of,
and all injury to, the officers, employees and agents of contractor and its
subcontractors in connection with the Work required to be done under such
construction contract. Tenant agrees to use reasonable efforts to cause each
construction contract with the contractor and each insurance policy provided by
contractor to contain a waiver of subrogation clause in favor of Landlord.
2.5 TENANT'S WORK
When all necessary permits, approvals and licenses described in Article 2.2 for
the Tenant's Work shall have been obtained by Tenant, and the Final Plans have
been approved by the parties, Tenant shall promptly thereafter commence the
Tenant's Work in accordance with the Final Plans at the sole cost of the Tenant
and shall prosecute the construction diligently to completion in accordance with
the Final Plans and all applicable Governmental Regulations. All terms and
provisions of this Lease shall be applicable during the Construction Period. All
improvements shown on the Site Plan attached as Exhibit D shall be constructed
by Tenant at Tenant's sole cost and expense. In connection with such, Tenant's
Work, the following covenants shall apply until construction shall have been
completed:
2.5.1 Tenant shall secure the area within which the Tenant's Work shall
be accomplished by appropriate fencing and shall contain all its activities and
the activities of all its contractors to the Leased Premises.
2.5.2 Tenant shall take all reasonable steps to attempt to minimize
dust, debris, mud or other unsightly material from being carried from the Leased
Premises to the balance of the Development Site and Tenant shall attempt to
minimize noise or offensive odors arising from its work.
2.5.3 Tenant shall use its reasonable, good faith efforts to minimize
the extent to which its construction or other work or activities shall delay or
interfere with the operations being conducted by Landlord or any other tenant
within the balance of the Development Site.
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2.5.4 Tenant shall, provided its construction schedule is not delayed
thereby, cooperate with Landlord from time to time for the coordination of
Tenant's construction, with other activities taking place on the balance of the
Development Site.
2.6 INSPECTION
Landlord may from time to time during the term of the Tenant's Work inspect the
same to determine whether or not the work is being satisfactorily performed in a
good and workmanlike manner and in accordance with the Final Plans. In the event
the Tenant's Work is not being constructed in a good and workmanlike manner or
not in accordance with the Final Plans, then the Tenant shall, upon receipt of
written notice from Landlord's architect, take all necessary and requisite steps
in order to assure that the Tenant's Work shall be constructed in a good and
workmanlike manner in accordance with the Final Plans and in compliance with any
provisions as may be set forth in Landlord's notice. If Landlord exercises such
right of inspection, Landlord shall Indemnify Tenant from and against any claims
arising from the exercise of such rights and shall assume the risk of any injury
which might occur in the course of such inspection unless caused by the
negligent or willful act of Tenant, its agents, suppliers or contractors.
Landlord's right to inspect and the exercise of that right shall be a protection
solely for the Landlord, and Landlord disclaims any responsibility to Tenant or
any other third party which might allegedly arise from such inspection rights.
2.7 INDEMNITY
Tenant covenants and agrees to Indemnify Landlord against any and all claims
arising out of the construction of the Tenant's Work, including, specifically
the cost of any labor performed and materials furnished to the Leased Premises
or the Common Areas by any person, firm or corporation.
2.8 MECHANICS AND MATERIALMAN'S LIENS
The Consent by Landlord to any such alterations and the construction of the
Tenant's Work shall not be so construed as to subject Landlord or the Leased
Premises to any liability whatsoever for the payment of any labor performed or
materials furnished in connection therewith, and in the event that any claim
therefor is asserted against Landlord or the Leased Premises, Tenant agrees to
forthwith pay the same, or cause such security to be deposited for the payment
thereof as may be reasonably required by Landlord. In the event that any person,
firm or corporation files a mechanic's lien or materialman's lien against the
Leased Premises or the Tenant's leasehold interest therein, Tenant agrees to
cause the same to be bonded or discharged of record within thirty (30) days
after Notice from Landlord of the filing of such lien. Tenant shall have the
right to diligently and
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in good faith contest any such mechanic's and materialman's liens. In the event
any such lien is not discharged within said thirty (30) day period or should
Tenant fail to diligently pursue the contest of such liens so as to discharge
the same, Landlord may either: (i) terminate the Lease on the date specified in
the Notice, in which event the term of said Lease shall thereupon expire on the
date fixed in such Notice, as if the date specified therein was the date
originally fixed in said Lease for the expiration thereof; or (ii) Landlord may
declare the Lease to be in default and may exercise any rights provided under
said Lease with respect to a default. Landlord may, in addition to any other
right or remedy provided herein, or as may be provided in the Lease, pay the
amount of such lien or discharge the same by bonding proceedings or pay any
judgment recovered on such claim, and any amount paid or expense incurred by
Landlord shall be deemed additional rent for the Leased Premises and shall be
due and payable by Tenant upon demand by Landlord.
2.9 COMPLETION OF TENANT'S WORK
Tenant shall complete its Work in substantial accordance with the Final Plans
and shall obtain a certificate of occupancy from the applicable Governmental
Authority and a lien waiver from the general contractor which shall also be
executed by the Tenant. Copies of the lien waivers and certificate of occupancy
shall be delivered to Landlord when obtained and prior to opening the Leasehold
Improvements for business. Tenant shall remove all construction materials,
equipment and debris from the Leased Premises prior to opening the Restaurant to
the public.
2.10 TENANT EQUIPMENT
Tenant shall install in the Restaurant at its sole cost and expense the Tenant
Equipment, including such furniture, furnishings, trade fixtures, equipment and
machinery, upon the completion of the Tenant's Work as to make the Leased
Premises operationally functional as a Restaurant, and shall Open for Business
not later than the Opening Date.
2.11 OWNERSHIP
The Leasehold Improvements shall be the sole property of Tenant until the
Expiration Date for purposes of depreciation on its tax returns. The Leasehold
Improvements and any other leasehold improvements shall pass to and become the
sole property of Landlord on the Expiration Date, in accordance with Article 4.4
hereof, unless this Lease has been extended in writing by Landlord and Tenant.
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ARTICLE 3. GRANT OF LEASE
3.1 GRANT
Subject to the terms of this Lease, and in consideration of the mutual covenants
contained in this Lease between Landlord and Tenant, Landlord hereby leases to
Tenant the Leased Premises and Tenant hereby accepts such lease from Landlord
together with a nonexclusive easement for Tenant and its Permittees to use the
Common Areas without charge in common with Landlord and other tenants and their
Permittees.
3.2 COVENANT OF TITLE; QUIET ENJOYMENT
Landlord warrants that it has a good and marketable fee simple title to the
Development Site (including the Leased Premises), free and clear of all
encumbrances other than those described on Exhibit E. Landlord warrants that it
has full and lawful authority to enter into this Lease and grant the easements
contained herein. Landlord covenants that so long as no Tenant's Event of
Default is continuing, Tenant may peaceably and quietly have, hold, and enjoy
the Leased Premises and all the rights granted in Article 3.1 throughout the
Lease Term without hindrance by Landlord or any other person claiming by,
through or under Landlord, but subject to the provisions of Articles 13 and 14
hereof and further subject to any Government Regulations imposed by the City of
Sandy Springs.
3.3 SHORT FORM LEASE
The parties agree at the request of either party to execute and record a short
form lease. Any costs or expenses associated with such recording shall be borne
by Tenant.
ARTICLE 4. TERM
4.1 TERM OF LEASE
The Primary Term of this Lease shall be ten (10) years from the first day
following the end of the Construction Period (unless the first day of the
Primary Term should fall other than on the first day of a month, in which event
the Primary Term of the lease shall expire ten (10) years from the first day of
the first month following the end of the Construction Period. The "Expiration
Date" is the last day of the month in which the tenth anniversary of the Primary
Term occurs, except that if Tenant has an option to extend the term of this
Lease and Tenant shall validly exercise the option as specified in Article 4.2
hereof, the last day of the term as so extended shall be the "Expiration Date."
If this Lease shall be earlier terminated, the date on which the termination
shall become effective shall be the "Expiration Date."
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4.2 EXTENSION OPTIONS
Tenant shall have two (2) successive options to extend the term of this Lease,
each for a separate additional period of five (5) years from the date such term
would otherwise expire; provided, however, that at the time of the exercise of
such option and at the time such extended term shall commence (i) Tenant shall
be open for business and conducting a Restaurant operation thereon, and (ii) no
Tenant's Event of Default shall have occurred and be continuing uncured. Each
such extension will be subject to the same terms and conditions as those already
in effect except for the rent. If Tenant elects to exercise any option, it will
do so by timely notifying Landlord of such election at least six (6) months
before the expiration of the then-current period, it being understood that time
is of the essence in the exercise of each such option to extend.
4.3 TERM COMMENCEMENT AGREEMENT
Within twelve (12) months after the Effective Date, the parties shall execute a
Term Commencement Agreement which will set forth the Pre-Construction Period,
Opening Date, Construction Period, Primary Term, the Lease Year and the
Expiration Date.
4.4 PROCEDURE OF TERMINATION
The Tenant will yield up and surrender the Leased Premises and all improvements,
including all Leasehold Improvements, at the Expiration Date in a good and
tenantable condition, reasonable wear and tear, damage by fire and other
casualties, condemnation and appropriation by eminent domain excepted. Tenant
may remove Tenant Equipment at its expense, if Tenant is not in default under
the terms of this Lease when this Lease shall terminate, provided Tenant shall
repair any damage caused by affixing, installing or removing such Tenant
Equipment. The Leasehold Improvements shall become the sole property of Landlord
on the Expiration Date, which shall be automatically effective as of the
Expiration Date, without the need for any deed of conveyance, bill of sale or
otherwise.
4.5 HOLDING OVER
Should the Tenant continue to occupy the Leased Premises after the Expiration
Date, such holdover shall not be construed as a renewal or extension of the
Lease and the Tenant shall be liable for damage for any such wrongful holding
over. Any such holdover, whether with or without consent of Landlord, shall
constitute the Tenant as a tenant at sufferance only unless otherwise provided
by written agreement between the parties, and at a daily rental rate the
equivalent of 150% of such rate of the term just ended.
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ARTICLE 5. USE AND OPERATION
5.1 USE
Tenant shall use the Leased Premises for the operation of a restaurant only.
Tenant shall not use the Leased Premises for any other purpose. Tenant further
acknowledges and agrees that Tenant shall be bound by the terms and covenants of
the Declaration of Covenants and Easements both as to the Use and Operation of
the Leased Premises in the event that Tenant shall exercise its option to
purchase the Leased Premises; including without limitation, the use restrictions
on the Leased Premises created by the Declaration of Covenants and Easements.
5.2 OPERATING COVENANT
Tenant hereby covenants to Open for Business on the Opening Date and to remain
Open for Business thereafter as a Road House Grill restaurant. Accordingly,
Tenant further acknowledges that Landlord will not have an adequate remedy at
law if Tenant fails to be Open for Business in violation of its Operating
Covenant, and agrees that injunctive relief or other equitable relief would be
appropriate in the event of such failure.
5.3 OPERATIONS
Tenant shall obtain and pay for all licenses and permits which may be necessary
in connection with the operation of its business in the Leased Premises. Tenant
shall comply with all Governmental Regulations, including zoning ordinances, of
any Governmental Authority and all restrictive covenants and documents of record
that apply to the Leased Premises.
5.4 RESTRICTIONS ON TENANT'S ACTIVITIES
5.4.1 Tenant will not knowingly use or permit all or any part of the
Leased Premises to be used for any purpose contrary to any Governmental
Regulations of any Governmental Authority, or in violation of this Lease.
5.4.2 Tenant will not knowingly permit any of its agents or invitees to
bring in or on the Leased Premises or the Development Site any material that is
then defined as a Hazardous substance pursuant to Article 1.3.6, unless used in
the course of and in Connection with Tenant's business, and then used in
accordance with applicable Governmental Regulations, nor will Tenant install or
permit the installation of any underground storage tanks during the term of the
Lease, and Tenant agrees to Indemnify Landlord against any loss, damage, claims
or injuries arising from a breach by Tenant, its representatives, agents or
employees,
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affecting the Leased Premises and/or Development Site and/or adjacent areas.
Such Indemnification shall survive the expiration or termination of this Lease.
ARTICLE 6. RENT
6.1 MINIMUM RENT PRIOR TO PRIMARY TERM
The monthly rate of Minimum Rent during the Construction Period shall be the
amounts set forth in Article 1.2.9(c) hereof.
6.2 MINIMUM RENT THEREAFTER
The annual rate of Minimum Rent, payable monthly, during the Primary Term and
any Extended Term shall be the amounts set forth in Article 1.2.9(d) and (e)
hereof.
6.3 MONTHLY PAYMENTS
Each installment of Minimum Rent shall be due and payable monthly, in advance,
on the first day of each month, without demand and without any reduction,
abatement, counterclaim or setoff, at such address as may from time to time be
designated by Landlord. If the Primary Term falls on a day other than the first
day of the month, the, Minimum Rent and all Contribution Rent shall be prorated
for the partial month.
6.4 LATE FEE
If any monetary obligation due hereunder is not paid within ten (10) days after
the due date, Tenant shall pay to Landlord a late fee equal to five percent (5%)
of the delinquent payment.
6.5 NET NATURE OF RENT
Landlord and Tenant intend that the payments provided the Landlord under this
Lease shall provide a return to Landlord absolutely net of any and all costs and
expenses relating to the Leased Premises. Accordingly, and without limiting the
generality of the foregoing, Tenant shall be responsible for taxes and
assessments, insurance charges, maintenance and repair expenses, and expenses of
every kind, as hereinafter provided in this Lease, and in no event shall the
Rent be abated for any reason.
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ARTICLE 7. TAXES
7.1 DEFINITION OF TAXES
7.1.1 The term "Taxes" shall mean and include all real estate taxes,
assessments, water and sewer rents and other governmental levies and charges of
every kind and nature whatsoever, general and special, extraordinary as well as
ordinary, foreseen and unforeseen, and each and every installment thereof, which
shall or may during the Lease term be levied, assessed, imposed, become due and
payable, or liens upon or arising in connection with the use, occupancy and
possession of, or become due and payable Out of, or for, the Leased Premises or
Development Site or any part thereof, or any land, buildings or other
improvements therein (as initially constructed, or as the same may at any time
thereafter be enlarged or reduced), including interest on installment payments
and all costs, expenses and fees (including attorney's fees) incurred by
Landlord in contesting Taxes, assessments and/or negotiating with the any
Governmental Authorities as to the same. Nothing herein contained shall be
construed to include as "Taxes" any inheritance, estate, succession, transfer,
gift, franchise, corporation, income or profit tax or capital levy that is or
may be imposed upon Landlord.
7.1.2 In addition, if at any time during the term of this Lease
including the Commencement Date, any Governmental Regulation is effective or
shall be enacted, imposed or modified by any Governmental Authority having
jurisdiction over Landlord, Tenant, the Leased Premises or the use thereof, such
that Landlord incurs an additional, anticipated or unanticipated tax, charge,
assessment, excise, levy, cost or expense with reference to the use, condition
or occupancy of the Leased Premises including, without limitation, any tax on
the Rents generated by this Lease, Tenant shall pay to Landlord within fifteen
(15) days of demand, an amount equal to such tax, charge, assessment, excise,
levy, cost or expense, it being understood that the Rents under this Lease shall
be net to Landlord. To the extent that Tenant shall pay directly to such taxing
authority or to Landlord the amount of any rent tax payable to the State of
Georgia, Landlord shall remit same to the taxing authority and shall Indemnify
Tenant from and against any liability to the taxing authority with respect to
the money so paid to Landlord.
7.2 SEPARATE ASSESSMENT
Landlord shall endeavor to obtain a separate assessment of the Leased Premises
and, if reasonable under the circumstances, shall file a subdivision plat for
the purpose of obtaining separate assessments if such action is required in
order to constitute the Leased Premises as a separate tax parcel. If the Leased
Premises do not constitute a separate tax lot, but the tax assessor's office
shall provide a letter or other documentation which sets forth the assessed
valuation of the
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Leased Premises separately from the other land and improvements included within
the tax lot of which the Leased Premises is a part, the same shall be deemed a
separate assessment for purposes of this Lease.
7.3 PAYMENT BY TENANT
7.3.1 If a separate assessment cannot be obtained, Landlord shall
determine the amount of Taxes allowable or attributable to the Leased Premises
(including the Leasehold Improvements) by reference to the tax assessor's
records or calculations, and shall provide Tenant with a calculation of: (i)
Tenant's Taxes relating to the Leased Premises and (ii) Tenant's Proportionate
Share of Taxes relating to the Common Areas of the Development Site. Landlord
shall provide Tenant with supporting data from the taxing authority.
7.3.2 In addition to the foregoing, Tenant shall pay all taxes assessed
on Tenant Equipment and all other personal property, of Tenant situated on the
Leased Premises.
7.3.3 Taxes shall be equitably prorated during any partial Lease Year
at the beginning and end of the Lease Term.
7.3.4 Landlord shall pay all Taxes directly to the taxing authority.
Tenant shall pay to Landlord the amount of taxes due by Tenant as provided in
this Article 7 within thirty (30) days following delivery of invoice by Landlord
with supporting data. The amount of such Taxes shall be deemed correct unless
disputed by Tenant within such thirty (30) day period, in which event, the
parties shall meet together within fifteen (15) days thereafter and endeavor in
good faith to agree on the correct amount of such Taxes. All information
obtained from the local taxing authority shall be conclusively deemed to be
correct.
ARTICLE 8. COMMON AREAS
8.1 LANDLORD CONTROL
The term "Common Areas" is defined in Article 1.3.1. The Common Areas shall be
subject to the exclusive control and management of Landlord and to such rules
and regulations as Landlord may from time to time adopt. Landlord hereby
reserves the right at any time or from time to time to:
(a) change the areas, locations and arrangement of parking areas and
other Common Areas;
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(b) enter into, modify and terminate easements and other agreements
pertaining to the maintenance and use of the parking areas and other Common
Areas;
(c) close any or all portions of the Common Areas to such extent and
from such time as may, in the sole discretion of Landlord's counsel, be legally
necessary to prevent a dedication thereof or the accrual of any rights to any
person or to the public therein;
(d) close temporarily, if necessary, any part of the Common Areas in
order to discourage non-customer parking;
(e) make changes, additions, deletions, alterations or improvements in
and to such Common Areas; and
(f) adopt reasonable rules and regulations by which Tenant shall abide
relating to the use of the Common Areas.
3.2 GRANT OF RIGHT TO USE COMMON AREA
Landlord hereby grants to Tenant and its Permittees, during the term of this
Lease, the nonexclusive right to use, in common with all others so entitled, the
Common Areas of the Development Site.
8.3 MAINTENANCE AND OPERATION OF COMMON AREAS
Landlord shall maintain the Common Areas including paving, landscaping and
lighting standards, in good condition and repair.
8.4 REIMBURSEMENT FOR PRO RATA SHARE OF CAM
8.4.1 In addition to the Rent payable by Tenant pursuant to Article 5
hereof, Tenant shall, throughout the term hereof, be responsible for its pro
rata cost of the maintenance of the interior road network and ten percent (10%)
of sweeping charges, such charges to be paid quarterly in arrears.
Tenant's pro rata cost of maintaining the interior road network shall
be based upon the Leased Premises' square footage as a percentage of the square
footage of the two outparcels plus the Bruno's parcel.
ARTICLE 9. INDEMNIFICATION
9.1 BY TENANT. Tenant hereby Indemnifies Landlord, its stockholders,
employees and agents, in accordance with Article 1.3.7, from and against: (a)
all
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claims resulting or alleged to have resulted from any breach, violation or
nonperformance of any covenant on the part of Tenant contained in this Lease;
and (b) all claims of injury or damage to person or property to the extent that
any such damage or injury which (i) may be incident to, arise out of, or be
caused either proximately or remotely, wholly or in part, by an act, omission,
negligence or misconduct on the part of Tenant or any of its officers,
employees, agents or contractors, (ii) may be the result, proximate or remote,
of the violation by Tenant or any of its officers, employees, agents or
contractors, of any Governmental Regulation or any of the Rules and Regulations
included in this Lease (as such Rules and Regulations may hereafter at any time
or from time to time be amended or supplemented), or (iii) may in any other way
arise from or out of the construction activities, occupancy or use by Tenant, or
its officers, employees, agents or contractors of the Leased Premises.
9.2 BY LANDLORD
Landlord hereby Indemnifies Tenant, its officers, employees and directors, in
accordance with Section 1.3.7, from and against: (a) all claims resulting or
alleged to have resulted from any breach, violation or non-performance of any
covenant or obligation on the part of Landlord contained in this Lease, and (b)
all claims of injury or damage to person or property to the extent that any such
damage or injury which: (i) may be incident to, arise out of, or be caused
either proximately or remotely, wholly or in part, by an act, omission,
negligence or misconduct on the part of Landlord or any of its officers,
employees, agents or contractors, (ii) may be the result, proximate or remote,
of the violation by Landlord or any of its officers, employees, agents or
contractors, of any Governmental Regulation or any of the Rules and Regulations
included in this Lease (as such Rules and Regulations may hereafter at any time
or from tine to time be amended or supplemented), or (iii) may in any other way
arise from or out of the construction activities, occupancy or use by Landlord,
or any of its officers, employees, agents or contractors, of the Leased
Premises.
ARTICLE 10. INSURANCE
10.1 LIABILITY INSURANCE OF TENANT
10.1.1 Tenant shall maintain a comprehensive general liability
insurance policy with respect to the Leased Premises and Restaurant. The
obligation to maintain the policy shall begin on the date on which Tenant enters
the Leased Premises for any reason. The obligation shall end on the later to
occur of the Expiration Date or the date on which Tenant surrenders actual and
exclusive possession of the Leased Premises, the Restaurant and all other
Leasehold Improvements to Landlord.
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10.1.2 The policy shall name Landlord and any designee of Landlord as
additional insureds. The policy shall insure Landlord, Tenant and any designee
of Landlord against liability arising from any occurrences on or about the
Leased Premises and the Restaurant. The policy shall include a contractual
liability endorsement which shall insure Landlord against liability arising from
any of the claims against which Tenant is required to indemnify Landlord
pursuant to this Lease.
10.1.3 The coverage limits shall be at least Three Million Dollars
($3,000,000.00) with respect to any occurrence as to personal injury or wrongful
death and Five Hundred Thousand Dollars ($500,000.00) with respect to any
occurrence as to property damage.
10.2 PROPERTY INSURANCE OF TENANT
10.2.1 Tenant shall carry an "All Risk" extended coverage insurance
policy with respect to the Restaurant, Leasehold Improvements, Tenant Equipment,
other personal property and inventory. Tenant shall also carry the following
types of coverage pursuant to endorsements or separate policies: Contingent
Liability from the Operation of Building Laws," "Increased Cost of Construction"
and "Demolition Costs Which May Be Necessary to Comply with Building Laws."
10.2.2 The coverage limits shall not be less than a reasonable estimate
of the cost of replacing the Restaurant, Leasehold Improvements, Tenant
Equipment, other personal property and inventory. Coverage shall be at least
sufficient so that losses shall be paid in full up to the face amount of the
policy. The cost of replacing the Restaurant and Leasehold Improvements' is the
cost of replacing damage to the Restaurant and Leasehold Improvements with new
materials of like kind and quality except for foundation, footings, and other
building elements customarily excluded from the applicable coverage.
10.2.3 Tenant shall also carry an "Agreed Amount Endorsement" in the
amount of the estimated cost of replacement. Tenant shall furnish all
information requested by the insurer in connection with the issuance of the
Agreed Amount Endorsement.
10.3 GENERAL CLAUSES CONCERNING INSURANCE
10.3.1 Each insurance policy carried pursuant to Articles 10.1 through
10.2 shall be issued by an insurance company that is rated as A or better by A.
M. Best Company of Oldwick, New Jersey.
10.3.2 Landlord shall be named as an additional insured with respect to
insurance carried under Article 10.1. Insurance carried on the Restaurant and
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Leasehold Improvements pursuant to Article 10.2 shall be carried in favor of
Landlord, any mortgagee, and Tenant as their respective interests may appear.
10.3.3 The insurance required by Articles 10.1 through 10.2 may be
included in general coverage under policies which also include the coverage of
other property in which Tenant has, or Tenant's affiliates have, an insurable
interest.
10.3.4 Each insurance policy carried pursuant to Articles 10.1 and 10.2
or a certificate with respect to the policy shall be delivered to Landlord.
10.3.5 Each insurance policy and certificate carried pursuant to
Articles 10.1 and 10.2 shall provide, in effect, that the policy may not be
canceled, reduced in amount, or modified by the insurer until at least thirty
(30) days after the insurer shall have notified Landlord, Tenant and any
mortgagee in writing by certified mail, return receipt requested. Each insurance
policy and certificate shall provide, in effect, that the policy will be renewed
and further renewed on substantially the same terms and conditions and without
increases in premiums unless the insurer shall give Landlord, Tenant, and any
mortgagee at least thirty (30) days notice in writing by certified mail, return
receipt requested.
10.3.6 Each insurance policy carried pursuant to Articles 10.1 and 10.2
shall contain provisions to the following effect: Losses shall be payable
despite the negligence of any person having an insurable interest in the
Restaurant.
10.3.7 Either party may request a review of insurance policies for
coverage, exclusion policy limits and deductibles.
10.3.8 "Insurance Proceeds" are the proceeds received on insurance
required by Article 10.2 with respect to damage to the Restaurant and Leasehold
Improvements less all reasonable expenses incurred in connection with collecting
the proceeds including the reasonable fees and disbursements of attorneys,
adjusters, appraisers, and expert witnesses. Insurance Proceeds shall be held as
trust funds by Landlord and Tenant and applied solely to the repair of damaged
elements of the Restaurant and Leasehold Improvements as required by Article 13,
unless the parties otherwise agree in writing.
10.3.9 Landlord shall have the right to require the Tenant, in its
reasonable discretion, to increase the insurance coverages required hereunder to
an amount and on terms customary in the Fulton County, Georgia area for a
restaurant.
ARTICLE 11. UTILITIES AND SERVICES
11.1 PAYMENT FOR UTILITY SERVICE
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Tenant shall pay or cause to be paid the cost of all water, garbage and sewer
service, gas, electric power, telephone, fuel and other utilities consumed or
used in or at the Leased Premises, including appropriate deposits as required.
Tenant shall indemnify Landlord against any liability or charges on account
thereof.
11.2 NO OBLIGATION OF LANDLORD
Landlord shall not be required to furnish any utility services to the Leased
Premises, and shall have no liability whatever should there be an interruption
in utility services unless such interruption shall have been directly caused by
Landlord's negligent or willful act or omission, but in no event shall Landlord
have any liability for consequential or speculative damages.
11.3 COVENANTS OF TENANT WITH RESPECT TO SANITARY SEWER
If Tenant connects its Leasehold Improvements to the sanitary sewerage
facilities in Development Site, Tenant agrees:
(a) to install grease traps to prevent grease or other waste materials
from accumulating in the sanitary sewerage system;
(b) that it will not dispose of any substances in the sanitary sewage
system which might clog, erode or damage the system; and
(c) that it will not dispose of any Hazardous Substance in the sanitary
sewerage system.
ARTICLE 12. MAINTENANCE OF LEASEHOLD IMPROVEMENTS
12.1 REPAIRS AND MAINTENANCE
Tenant shall Maintain the Leased Premises, the Restaurant and other Leasehold
Improvements in good order and repair. Tenant's obligations for Maintenance
extend to interior as well as exterior Maintenance, to structural as well as
nonstructural Maintenance, to extraordinary as well as ordinary and to foreseen
as well as unforeseen Maintenance. The quality of such Maintenance shall be at
least equal to the quality of the original construction work, and shall be
performed in a good and workmanlike manner and in accordance with applicable
Governmental Regulations. Landlord shall have no obligation whatsoever to
Maintain the Restaurant or Leasehold Improvements.
12.2 COMPLIANCE
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Tenant shall comply with all present and future Governmental Regulations of any
Governmental Authority relating to the Restaurant and Leasehold Improvements.
12.3 SURRENDER
Tenant shall surrender to Landlord actual and exclusive possession of the Leased
Premises, the Restaurant and Leasehold Improvements on the Expiration Date, as
provided in Article 4.5 hereof.
12.4 ALTERATIONS, CHANGE OF GRADE
Tenant shall not make any material "Alteration" to the exterior of the Tenant
Restaurant without Consent of Landlord. "Alteration" includes any replacement,
improvement, or change. Tenant shall not materially change the elevation or
facade of the Leased Premises. Tenant shall not make an Alteration to the
interior of the Restaurant or any other Leasehold Improvements that would impair
the safety or structural integrity of the Restaurant. All Alterations shall be
performed in a good and workmanlike manner and in accordance with applicable
Governmental Regulations.
12.5 TENANT EQUIPMENT
Tenant shall be entitled at any time and from time to time to affix the Tenant
Equipment to, to install Tenant Equipment in, and to remove Tenant Equipment
from, the Restaurant. The Tenant Equipment shall be the property of Tenant and
shall not be part of the Restaurant. Tenant shall remove Tenant Equipment from
the Restaurant on or before the Expiration Date. Upon removal of Tenant
Equipment, Tenant shall repair any damage to the Restaurant or the Leasehold
Improvements which shall have resulted from affixing, installing, or removing
the Tenant Equipment.
12.6 MECHANIC'S LIENS
Within thirty (30) days after any mechanic's lien or materialman's lien shall be
filed against the Development Site, the Leased Premises, the Restaurant, any
Leasehold Improvement, or the leasehold estate created by this Lease, as the
result of any construction, alteration, repair, maintenance, installation, or
improvement made by or on behalf of Tenant or any other work or act of Tenant or
on behalf of Tenant, Tenant shall without cost or expense to Landlord cause the
lien to be discharged of record by payment, bond, court order or otherwise.
Tenant shall Indemnify Landlord from and against any such lien.
12.7 SIGNS
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Tenant may affix a sign to the exterior of the Restaurant and shall Maintain the
sign in accordance with the following principles:
(a) No sign other than those provided for in the Final Plans may be
affixed to the exterior of the Restaurant unless Landlord approves the
dimensions, materials, content, location and design of the sign.
(b) Any sign affixed to the Restaurant shall comply with applicable
Governmental Regulations.
(c) Tenant shall obtain and pay for all permits and licenses required
in connection with any sign affixed to the Restaurant and shall deliver copies
of the permits and licenses to Landlord promptly after they are issued.
(d) Commencing one (1) month after the Effective Date and until the
Opening Date Tenant shall have the right to display a temporary sign identifying
the Leased Premises as a future Road House Grill restaurant.
ARTICLE 13. DESTRUCTION
13.1 NO ABATEMENT
If all or any part of the Restaurant or any Leasehold Improvements are "Damaged"
by fire or other catastrophe, Rent shall not abate. Landlord shall have no
obligation to Repair the Restaurant or any Leasehold Improvements. "Damage"
includes the words "and destruction," "or destruction," "and destroy," as the
case may be.
13.2 NO TERMINATION
This Lease shall not be terminated by reason of Damage resulting from a fire or
any other cause to all or any part of the Restaurant or any Leasehold
Improvements. Tenant waives all rights to terminate this Lease as a result of
Damage to which Tenant may be entitled pursuant to any statute or other law that
presently exists or that will be enacted in the future.
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13.3 OBLIGATION TO REPAIR
If all or any part of the Restaurant or any Leasehold Improvements shall be
Damaged by fire or other cause, Tenant shall Repair the Damage within a
reasonable time after the Damage shall have occurred. In the event that the
Damage shall exceed ninety percent (90%) of the replacement cost of the
Leasehold Improvements and Restaurant, then Tenant may at its option, pay to
Landlord the full replacement cost of the Restaurant and Leased Premises, and
thereupon, terminate the Lease, without further obligation. The term "Repair"
includes the concepts of any replacement and/or restoration, as may be necessary
or appropriate under the circumstances at the time. Any element of the
Restaurant or any Leasehold Improvements that are Damaged by fire or other cause
shall be Repaired with new materials of like kind and quality. After giving
effect to the Repair, the Restaurant and Leasehold Improvements shall comply
with all applicable Governmental Regulations.
13.4 WAIVER OF SUBROGATION
13.4.1 Tenant releases Landlord and its partners, employees and agents
from liability or responsibility for any loss or Damage to the Restaurant, all
Leasehold Improvements, and the contents of the Restaurant, which could arise as
a result of a fire or other peril with respect to which fire or other property
insurance is carried or is required to be carried pursuant to this Lease.
13.4.2 A clause or endorsement of an insurance policy pursuant to which
an insurance company states, in effect, that a release of the type set forth in
Article 13.4.1 shall not impair or reduce coverage under the policy is referred
to below as a "waiver of subrogation." Tenant shall cause its insurance
companies to include a waiver of subrogation clause or endorsement in the
property insurance policies maintained with respect to the Restaurant, the
Leasehold Improvements and/or the contents of the Restaurant.
ARTICLE 14. CONDEMNATION
14.1 TOTAL OR SUBSTANTIAL PARTIAL TAKING OF LEASED PREMISES
14.1.1 If all of the Leased Premises are "Taken" or if all of the
Restaurant is Taken, this Lease shall be terminated automatically as of the
"Taking Date." "Taking" means the taking of, or damage to, property pursuant to
the exercise of any power of eminent domain or condemnation or a purchase of
property induced by a threat that property will be taken pursuant to the
exercise of this power. "Taken" means taken pursuant to a Taking. "Taking Date"
is the first date on
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which the condemning authority shall have the right of possession of property it
will have Taken.
14.1.2 If so much of the Leased Premises is permanently taken that
Tenant is unable in its reasonable discretion to use the balance of the Leased
Premises for use as a Restaurant, if at such time the Leased Premises are
actually being operated as a Restaurant, or for such other use permitted herein
as it may then be used, Tenant shall have the option to terminate this Lease.
The option to terminate may be exercised only by giving Notice to Landlord prior
to the thirtieth day after the Taking Date.
14.2 TAKING FOR TEMPORARY USE
The following shall apply if all or part of the Leased Premises or the
Restaurant are Taken for temporary use:
14.2.1 This Lease shall continue in full force and effect despite the
Taking, and Landlord shall be entitled to the entire award for such temporary
use.
14.2.2 Tenant shall continue to comply with all of its obligations
pursuant to this Lease, except that Tenant's obligations relating to use,
Repair, and Maintenance of the Tenant Restaurant and other Leasehold
Improvements shall be suspended to the extent that compliance is impossible or
impractical as a result of the Taking, and the Rent payable hereunder shall be
equitably abated during the term of such Taking.
14.3 DISPOSITION OF AWARDS
An "Award" is the amount by which an award for, or proceeds of, a Taking exceeds
all expenses incurred in connection with a Taking. Expenses include reasonable
fees and disbursements of attorneys and expert witnesses. Awards arising from a
total or partial Taking of the Leased Premises, Tenant's leasehold estate
pursuant to this Lease, and the Restaurant and the Leasehold Improvements shall
be allocated between Landlord and Tenant in accordance with the following
principles:
14.3.1 If the Lease is terminated as a consequence of a Taking
described in Article 14.1.1, Tenant shall be entitled to a portion of the Award
equal to the unamortized cost of the Leasehold Improvements and any amounts
provided for in Article 14.3.2. Landlord shall be entitled to the balance of the
Award, including without limitation the value of the property so taken,
including the value of the remainder. In no event shall Tenant be entitled to
any other portion of the Award. Amortization of the Leasehold Improvements shall
be computed on a straight line basis and under the assumption that the unexpired
portion of the term of this Lease at the time of construction or installation of
an improvement is its useful life.
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In this context, references to the "Term" exclude any period as to which the
Term could have been, but was not, extended pursuant to an unexercised option to
extend the Term.
14.3.2 Tenant shall be entitled to claim and receive from the
condemning authority only such awards as are attributable to the cost of removal
of Tenant's trade fixtures and personalty and for moving expenses, provided,
however, any such award shall in no way diminish the Award due Landlord for the
value of the property so Taken, including any damage to the remainder.
14.3.3 If the Lease is not terminated, the Award shall be paid into a
trust fund to be used by Landlord and Tenant to Repair the Restaurant and
Leasehold Improvements to a condition architecturally harmonious with the
Restaurant prior to such taking and in accordance with Article 13.3 of the
Lease, but only to the extent of any acreage not affected by the Taking. The
obligation of the parties for such Repair shall be limited to the Award so
received by them. Landlord shall be absolutely entitled to any amount of the
Award not needed to effect such Repairs together with any interest earned
thereon. Awards shall be paid to Landlord by the appropriate taking authority.
The share of any Award to which Tenant is entitled pursuant to this Lease shall
be remitted to Tenant promptly after the date on which the Award is received by
Landlord.
ARTICLE 15. RESTRICTIONS
15.1 RESTRICTIONS
In addition to the limitations on use and other restrictions placed upon Tenant
in this Lease, Tenant acknowledges and agrees that it is and shall be bound by
the Declaration of Covenants and Easements set forth in Exhibit "F".
ARTICLE 16. DEFAULT
16.1 EVENT OF DEFAULT
The term "Event of Default" wherever used in this Lease, shall mean any one or
more of the following events:
(a) failure by the Tenant to pay as and when due and payable any
monthly installment of rent or other additional charges as provided herein and
the continued failure to pay within five (5) days after Notice of such
non-payment;
(b) failure by the Tenant for a period of thirty (30) days after Notice
from Landlord to cure the default of any other covenant, condition or agreement
of this Lease to be observed or performed; provided, however, that no such
advance
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Notice shall be required in the event Tenant shall not open by the Opening Date
or cease to Open for Business as required by its Operating Covenant set forth in
Article 5.2 hereof, unless such cessation shall be the result of a Force Majeure
event.
(c) the filing by or against the Tenant of a petition in bankruptcy,
which petition is not dismissed within sixty (60) days from the filing thereof;
(d) an assignment by Tenant for the benefit of creditors; or
(e) the appointment by any court of a receiver, trustee or other court
officer of all or substantially all of Tenant's property, which such
receivership is not dismissed within thirty (30) days from the date of such
appointment.
16.2 REMEDIES OF LANDLORD
If an Event of Default shall have occurred, the Landlord may, in addition to any
remedies it may otherwise have for the collection thereof, at its option, either
(i) terminate this Lease; or (ii) reenter the Leased Premises by summary
proceedings or otherwise, expel Tenant and remove all property therefrom and
relet the Leased Premises and. receive the rent therefrom; but Tenant shall
remain liable for the deficiency, if any, between Tenant's Rent hereunder
(including all additional rent), and the rent obtained by Landlord on reletting.
Nothing herein, however, shall be construed to require Landlord to re-enter and
relet the Leased Premises. If Landlord elects to re-enter the Leased Premises,
Landlord may relet all or any portion of the Leased Premises for the account of
the Tenant, for such rent, for such time and on such terms as Landlord shall
determine. The Landlord shall not, in any event, be required to pay Tenant any
surplus of any sums received by Landlord on the reletting of the Leased Premises
in excess of the rent provided in this Lease. The Landlord, in addition to any
other remedies it may have, may recover from Tenant all damages it may incur by
reason of such default, including the cost of recovering the Leased Premises,
and a reasonable attorney's fee. The Landlord, in addition to other rights and
remedies it may have, shall have the right to remove all or any part of the
Tenant's property from the Leased Premises and any property removed may be
stored at any public warehouse or elsewhere at the cost of, and for the account
of Tenant, and the Landlord shall not be responsible for the care and
safekeeping thereof. Tenant hereby waives any and all loss, destruction and/or
damage or injury which may be occasioned by any of the aforesaid acts.
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16.3 LANDLORD'S RIGHT TO PERFORM FOR ACCOUNT OF TENANT
If Tenant fails to comply with any of its obligations pursuant to this Lease,
Landlord may perform the obligation for the account and at the expense of
Tenant. If Landlord does so, Landlord may render an invoice to Tenant for any
expense or capital expenditure incurred by Landlord as a result of performing
the obligation and the fees and disbursements of any attorney incurred by
Landlord as a result of Tenant's failure to comply. Tenant shall discharge any
invoice so rendered together with Interest from the date on which Landlord shall
have incurred the applicable expense or capital expenditure to the date on which
the invoice is paid. If Tenant fails to discharge any invoice so rendered within
thirty (30) days after it is received by Tenant, the amount of the invoice shall
be added to the next month's installment of Minimum Rent.
16.4 ADDITIONAL REMEDIES, WAIVERS, ETC.
The rights and remedies of Landlord set forth in this Lease shall be in addition
to any other right and remedy now or hereafter provided by law. All of
Landlord's rights and remedies shall be cumulative and not exclusive of each
other. Landlord may exercise its rights and remedies at such times, in such
order, to such extent, and as often as Landlord deems advisable. Landlord may
exercise its rights and remedies regardless of whether the exercise of one right
or remedy precedes, concurs with, or succeeds the exercise of another right or
remedy. A single or partial exercise of a right or remedy shall not preclude a
further exercise of the right or remedy or the exercise of another right or
remedy. No delay or omission by Landlord in exercising a right or remedy shall
exhaust or impair the right or remedy or constitute a waiver of, or acquiescence
to, an Event of Default. No waiver of an Event of Default shall be effective
unless it is in writing. No waiver of an Event of Default shall extend to or
affect any other Event of Default or impair any right or remedy with respect to
any other Event of Default.
16.5 ATTORNEY'S FEES AND DISBURSEMENTS
Tenant shall promptly reimburse Landlord for the reasonable fees and
disbursements of attorneys and expert witnesses employed by Landlord to enforce
Landlord's rights or Tenant's obligations under this Lease.
16.6 BANKRUPTCY
If Landlord shall not be permitted to terminate this Lease as hereinabove
provided because of the provisions of Title 11 of the United States Code
relating to Bankruptcy, as amended ("Bankruptcy Code"), then Tenant as a
debtor-in-possession or any trustee for Tenant agrees promptly, within no more
than sixty (60) days upon request by Landlord to the Bankruptcy Court, to assume
or reject
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this Lease and Tenant on behalf of itself, and any trustee agrees not to seek or
request any extension or adjournment of any application to assume or reject this
Lease by Landlord with such Court. In such event, Tenant or any trustee for
Tenant may assume this Lease only if:
(a) it cures or provides adequate assurance that the trustee or
debtor-in-possession will promptly cure any default hereunder;
(b) compensates or provides adequate assurance that Tenant will
promptly compensate Landlord for any actual pecuniary loss to Landlord resulting
from Tenant's defaults; and
(c) provides adequate assurance of performance during the fully stated
term hereof of all of the terms, covenants, and provisions of this Lease to be
performed by Tenant. In no event after the assumption of this Lease shall any
then existing default remain uncured for a period in excess of the earlier of
ten (10) days or the time period set forth herein. Adequate assurance of
performance of this Lease, as set forth hereinabove, shall include, without
limitation, adequate assurance: (i) of the source of rent reserved hereunder;
(ii) that the financial condition and operating performance of the proposed
assignee will be similar to the financial condition and operating performance of
the debtor as of the time the debtor became the Tenant under the Lease; and
(iii) the assumption of this Lease will not breach any provision hereunder and
will not destroy or disturb any tenant mix in the Development Site.
In the event of a filing of a petition under the Bankruptcy Code, Landlord shall
have no obligation to provide Tenant with any services or utilities as herein
required, unless Tenant shall have paid and be current in all payments of Common
Area Maintenance Costs, taxes, utilities or other charges under this Lease.
ARTICLE 17. TRANSFERS
17.1 ASSIGNMENT AND SUBLETTING BY TENANT
Neither Tenant nor Tenant's successors-in-interest by operation of law or
otherwise shall assign this Lease or sublease the Leased Premises or any part
thereof, without the prior express written Consent of Landlord which shall be in
the sole and unfettered right of Landlord to withhold; and any attempt to do so
without such prior express written Consent of Landlord shall be void and of no
effect. In no event shall Tenant sublet or assign less than all of the Leased
Premises; and, in no event shall Tenant be released from its obligations
hereunder.
17.2 ASSIGNMENT BY LANDLORD
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Landlord shall have the right to transfer, assign and convey, in whole or in
part, the Development Site and any and all of its rights under the Lease and in
the event Landlord assigns its rights under this Lease, Landlord shall thereby
be released from any further obligations hereunder, and Tenant agrees to look
solely to such successor-in-interest of the Landlord for performance of such
obligations. The term "Landlord" as used in this Lease shall mean the owner of
the Leased Premises, at the time in question, and in the event of the transfer
by such owner of its interest in the Leased Premises, such owner shall thereupon
be released and discharged from all covenants and obligations of the Landlord
thereafter accruing, but such covenants and obligations shall be binding during
the Term upon each new owner for the duration of such owner's ownership.
17.3 ESTOPPEL CERTIFICATE
Within twenty (20) days after each request by either party, the other shall
execute and acknowledge an estoppel certificate and deliver it to the requesting
party. Landlord, any Mortgagee, any assignee of a Mortgagee, any purchaser, or
any other person specified by the requesting party may rely upon an estoppel
certificate executed by the other. The estoppel certificate shall contain the
following information concerning the following:
(a) Whether Tenant is in possession of the Leased Premises.
(b) Whether this Lease is in full force and effect.
(c) This Lease is unmodified (or if this Lease has been modified, then
describing the modification).
(d) The dates, if any, to which Rent has been paid in advance.
(e) Any other information reasonably requested.
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ARTICLE 18. OPTION TO PURCHASE
18.1 OPTION TO PURCHASE
For a period of three (3) years following the Effective Date of this Lease (the
"Option Period"), provided there is no Event of Default, Tenant shall have the
option to purchase the Leased Premises, upon delivery of ninety (90) days
written notice from the Tenant to Landlord offering to purchase the Leased
Premises for the purchase price and on the terms and provisions contained herein
("Offer"). Should Tenant extend an Offer to Landlord, Landlord agrees to convey
the Leased Premises to Tenant by statutory warranty deed subject only to such
exceptions to title as are set forth on Exhibit E or as have arisen subsequent
to the Effective Date, and the Declaration of Covenants and Easements as set
forth in Exhibit "F" and any title exceptions imposed on the Leased Premises by
the Tenant. The sale shall be closed and the deed delivered at a time elected by
Tenant but in no event later than sixty (60) days from the date of Tenant's
Offer ("Closing Date"). At the Closing, Tenant shall pay to Landlord the full
amount of the purchase price in cash which equals $1,100,000. The parties agree
to prorate the payment of rent under this Lease and real estate ad valorem taxes
and other assessments affecting the Leased Premises as of the Closing Date. In
the event of any casualty loss or condemnation after the Tenant's exercise of
its right to purchase, Tenant shall have the right to either close the
transaction and have assigned to it all proceeds paid to Landlord for
condemnation or casualty losses or to rescind its offer to purchase with its
rights to the Leased Premises governed by the terms of this Lease. Tenant shall
pay all closing costs other than any real estate commission owed to a real
estate agent engaged by the Landlord.
ARTICLE 19. MISCELLANEOUS PROVISIONS
19.1 NON-WAIVER
No waiver of a breach of any of the covenants in this Lease shall be construed
to be a waiver of a succeeding breach of the same covenants or any other
covenant.
19.2 MODIFICATIONS
No modification, release, discharge or waiver of any of the provisions hereof
shall be of any force, effect or value unless in writing signed by the Landlord
and the Tenant.
19.3 ENTIRE AGREEMENT
This instrument contains the entire agreement between the parties as of this
date and the execution hereof has not been induced by either party by
representations, promises or understandings not expressed herein and there are
no collateral
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agreements, stipulations, promises or undertakings, whatsoever, upon the
respective parties in any way touching the subject matter of this instrument
which are not expressly contained herein.
19.4 BROKERAGE
Landlord and Tenant covenant and agree one with the other that no real estate
commissions, finders' fees or brokers' fees have been or will be incurred in
connection with the execution of this Lease other than that owing by Landlord to
Northside Commercial, and Landlord hereby Indemnifies Tenant from and against
any and all costs, damages or expenses (including attorneys' fees) incurred or
paid as a result of any claim for area] estate commission or other fee arising
out of the actions of Landlord other than that owing by Landlord to Northside
Commercial, and Tenant hereby Indemnifies Landlord from and against any and all
costs, damages or expenses (including attorneys' fees) incurred or paid as a
result of any claim for a real estate commission or other fee arising out of the
actions of Tenant.
19.5 CAPTIONS
The captions or titles used throughout this Lease are for convenience only and
shall in no way define, limit or describe the scope of intent of this Lease.
19.6 BINDING EFFECT
This Lease and all the covenants and provisions hereof shall inure to the
benefit of and be binding upon the parties hereto and their respective permitted
successors and assigns.
19.7 COUNTERPARTS
This Lease Agreement may be executed in several counterparts, each of which
shall be deemed an original and all of which shall constitute but one and the
same instrument.
19.8 TIME OF ESSENCE
For all purposes under this Lease Agreement, time shall be considered of the
essence.
19.9 EXCULPATION
Anything in this instrument to the contrary notwithstanding, Tenant agrees that
it shall look solely to the leasehold estate of Landlord in and to the Leased
Premises, subject to the rights of any mortgagee of Landlord's interest or other
party who
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may have priority, 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 terms, covenants and conditions of
this Lease to be observed or performed by Landlord, and (i) neither Landlord nor
any partner, officer or director of Landlord, shall have any personal liability,
and (ii) no other property or assets of Landlord or any of its partners,
officers or directors shall be subject to levy, execution or other procedures
for the satisfaction of Tenant's remedies.
19.10 SEVERANCE
If any term of this Lease or any application thereof will be invalid or
unenforceable, the remainder of this Lease and any other application of such
term will not be affected thereby.
19.11 SUCCESSORS AND ASSIGNS
Subject to Article 17, this Lease will bind and benefit the parties. their
successors, and assigns.
19.12 TIME OF ESSENCE
Time is of the essence with respect to the performance of all obligations of
this Lease.
19.13 WARRANTIES AS TO STANDING AND AUTHORITY
Tenant represents and warrants to Landlord that it is a duly formed, validly
existing, in good standing under the laws of the State of Florida, that it has
all requisite authority to execute and deliver this Lease and to perform its
obligations hereunder. Landlord represents and warrants to Tenant that it is an
Alabama corporation, duly formed, validly existing, in good standing under the
laws of Alabama, and that it has all requisite authority to execute and deliver
this Lease and to perform its obligations hereunder. Each party represents and
warrants that the person or persons who have executed this Lease have the
requisite authority and approval to do so. Each party represents and warrants to
the other that this Lease is a legal, valid, and binding obligation, enforceable
against such party in accordance with its terms, subject to (a) bankruptcy,
insolvency, reorganization, or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (b) general principles of equity
and specific performance.
19.14 INDEPENDENT CONTRACTUAL RELATIONSHIP
Nothing within any of the provisions of this Lease shall be deemed in any way to
create between the parties any relationship of partnership, joint venture or
other
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association. The parties hereto disclaim any such relationship and declare that
their relationship is that of a contract between independent parties.
19.15 APPLICABLE LAW
This Lease shall be governed by the laws of the State of Georgia, and any action
or proceeding arising hereunder shall be brought in the Courts of Fulton County,
Georgia, or the United States District Court having jurisdiction.
19.16 INTERPRETATION
As used herein, all references made (i) in the neuter, masculine or feminine
gender shall be deemed to have been made in all such genders (ii) in the
singular or plural number shall be deemed to have been made, respectively, in
the plural or singular number as well, and (iii) to any Article, paragraph or
subparagraph shall be deemed, unless otherwise expressly indicated, to have been
made to such Article, paragraph or subparagraph of this Lease.
19.17 CONSTRUCTION
Each party to this Lease was actively involved in negotiation and drafting. In
interpreting the provisions of this Lease, there shall be no construction for or
against either party based upon who drafted the Lease.
IN WITNESS WHEREOF, the Landlord and the Tenant, each by and through duly
authorized representatives, executed this Lease on the day and year first above
written.
LANDLORD:
ATTEST: Bruno's, Inc.,
an Alabama corporation
/S/ R. MIKE CEULEY By:/S/ KEN BRUNO
- ------------------------- ------------------------------
SECRETARY
- -------------------------
Its: EXECUTIVE VICE PRESIDENT
-------------------------
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TENANT:
ATTEST: Road House Grill, Inc. d/b/a Road House
Grill
/S/ KIMBERLY CRISAFULLI By:/S/ JOHN D. TOOLE JR.
- ------------------------- -------------------------------
SECRETARY
- -------------------------
Its: VICE PRESIDENT
-------------------------------
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STATE OF ALABAMA ss.
ss.
JEFFERSON COUNTY ss.
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that KEN BRUNO , whose name EXECUTIVE VICE PRESIDENT, of
Bruno's, Inc., an Alabama corporation, is signed to the foregoing and who is
known to me, acknowledged before me on this day that, being informed of the
contents of the Lease, he, in his capacity as such general partner and with full
authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and official seal, this the 15TH day of MAY , 1995.
/S/ ILLEGIBLE
---------------------------------
Notary Public
My Commission Expires: 3-12-96
STATE OF FLORIDA ss.
ss.
BROWARD COUNTY ss.
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that JOHN D. TOOLE JR. , whose name as VICE PRESIDENT of
Road House Grill, Inc., a Florida corporation, is signed to the foregoing and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the Lease, he, in his capacity as such officer and with full
authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and official seal, this the day 25 of MAY , 1995.
-- ------
/S/ JENNIFER VERDI
-------------------------------
Notary Public
My Commission Expires: STAMP ILLEGIBLE
------------------
-39-
<PAGE>
EXHIBIT "A"
BRUNO'S SANDY SPRINGS COMBINED PARCELS
(INCLUDING LOTS 1 THROUGH 5. BLOCK A)
LEGAL DESCRIPTION
All and singular that certain tact or parcel of land situated, lying,
and being in Land Lots 89 and 90, 17th District, Fulton County,
Georgia, being more particularly described as follows:
Commencing at the point of intersection of the westerly termination
line of the right-of-way of Sandy Springs Drive and the southerly
right-of-way line of Sandy Springs Drive (a.k.a. Sandy Springs Circle),
said point being the POINT OF BEGINNING;
L-50 Thence, leaving said right-of-way line, S 00(degree)45'21"W, a distance
of 344.81 feet to a point on the northerly right-of-way line of Hammond
Drive;
L-51 Thence, along said right-of-way line, S 85(degree)44'47"W, a distance
of 81.01 feet to a point;
C-9 Thence, along said right-of-way line, the arc of a curve to the right,
a distance of 127.54 feet to a point, said curve having a radius of
2668.00 feet and a chord of S 88(degree)06'29"W, 127.53 feet;
L-52 Thence, along said right-of-way line, N 85(degree)10'47" W, a distance
of 339.99 feet to a point;
L-53 Thence, along said right-of-way line, N 85(degree)49'28"W, a distance
of 3.15 feet to a point;
L-54 Thence, along said right-of-way line, N 83(degree)47'51" W, a distance
of 87.11 Feet to a point;
L-55/
C-12 Thence, along said right of way line, the arc of a curve to the left, a
distance of 74.45 feet to a point, said curve having a radius of
1983.10 feet and a chord of N 84(degree)11'40"W, 74.45 feet;
C-2 Thence, along said right-of-way line, the arc of a curve to the left, a
distance of 86.39 feet to a point, said curve having a radius of
1,983.10 feet and a chord of N 86(degree)31'05"W, 86.38 feet;
Page 1
<PAGE>
L-11 Thence, along said right-of-way line, S 55(degree)21'33"E, a distance
of 22.56 fee to a point;
C-3 Thence, along said right-of-way line, the arc of a curve to the left, a
distance of 30.97 feet to a point, said curve having a radius of
1,971.10 feet and a chord of N 87(degree)39'44"W, 30.97 feet;
L-12 Thence N 88(degree)25'5O" W, a distance of 252.27 feet to a point at
the intersection of the northerly right-of-way line of Hammond Drive
and the corner connector line to the easterly right-of-way line of
Sandy Springs Circle;
L-13 Thence, along said connector line, N 59(degree)18'13" W, a distance of
45.32 feet to a point on the easterly right-of-way line of Sandy
Springs Circle;
C-1 Thence, along said right-of-way line, the arc of a curve to the right,
a distance of 215.40 feet to a point, said curve having a radius of
541.90 feet and a chord of N 13(degree)17'30"W, 213.98 feet;
C-4 Thence, along said right-of-way line, the arc of a curve to the right,
a- distance of 56.16 feet to a point, said curve having a radius of
541.90 feet and a chord of N 01(degree)03'29"E, 56.13 feet;
C-5 Thence, along said right-of-way line, the arc of a curve to the right,
a distance of 53.81 feet to a point, said curve having a radius of
541.90 feet and a chord of N 06(degree)52'53"E, 53.79 feet;
L-23 Thence, leaving said right-of-way line, S 83(degree)23'55" E, a
distance of 169.02 feet to a point;
L-24 Thence N 22(degree)28'10"E, a distance of 237.08 feet to a point;
L-25 Thence S 62(degree)35'09"E, a distance of 16.00 feet to a point;
C-6 Thence, along the arc of a curve to the left, a distance of 25.11 feet
to a point, said curve having a radius of 16.00 feet and a chord of N
72(degree)34'58"E, 22.61 feet;
L-26 Thence N 27(degree)32'12"E, a distance of 139.89 feet to a point;
L-27 Thence N 21(degree)48'46"E, a distance of 62.17 feet to a point on the
southerly right-of-way line of Sandy Springs Place (variable
right-of-way);
Page 2
<PAGE>
L-28 Thence, along said right-of-way line, S 89(degree)21'47"E, a distance
of 20.43 feet to a point;
L-32 Thence, along said right-of-way line, S 89(degree)21'47"E, a distance
of 46.06 feet to a point;
C-7 Thence, along said right-of-way line, the arc of a curve to the left, a
distance of 178.29 feet to a point, said curve having a radius of
607.59 feet and a chord of N 82(degree)13'50"E, 177.66 feet;
L-33 Thence, along said right-of-way line, N 73(degree)49'25"E, a distance
of 190.11 feet to a point;
C-8 Thence, along said right-of-way fine, the arc of a curve to the right,
a distance of 43.07 feet to a point, said curve having a radius of
179.94 fee and a chord Of N 80(degree)40'53" E, 42.97 feet;
L-34 Thence, along said right-of-way line, N 87(degree)32'19"E, a distance
of 44.74 feet to a point;
L-56 Thence, along said right-of-way line, N 02(degree)27'40"W, a distance
of 12.00 fee to a point;
L-57 Thence, along said right-of-way line, N 87(degree)32'19"E. a distance
of 117.21 feet to a point;
C-10 Thence, along said right-of-way line, the arc, of a curve to the right
a distance of 84.59 feet to a point, said curve having a radius of
374.04 feet and a chord of S 86(degree)11'21"E, 84.41 feet;
C-11 Thence, along said right-of-way line, the arc of a curve to the right,
a distance of 186.75 feet to a point, said curve having a radius of
157.80 feet and a chord of S 36(degree)54'37"E, 176.04 feet;
L-58 Thence, along said right-of-way line, S 86(degree)59'37"W, a distance
of 12.02 feet to a point;
L-59 Thence, along said right-of-way line, S 00(degree)26'09"E, a distance
of 256.21 feet to a point;
L-60 Thence, leaving said right-of-way line, S 89(degree)33'54"W, distance
of 20.00 feet to a point;
L-61 Thence S 54(degree)43'41"W, a distance of 52.00 feet to a point;
Page 3
<PAGE>
L-45 Thence S 07(degree)39'16"W, a distance of 12.91 feet to a point;
L-46 Thence S 52(degree)08'46"E, a distance of 7.99 feet to a point;
L-47 Thence S 60(degree)05'39"E, a distance of 17.01 feet to a point;
L-48 Thence S 65(degree)56'34"E, a distance of 21.98 feet to a point at the
interaction of the northerly right-of-way line of Sandy Springs Drive
and the westerly termination line of the right-of-way of Sandy Springs
Drive;
L-49 Thence, along said right-of-way termination line, S 24(degree)03'26"W,
a distance of 51.12 feet to the POINT OF BEGINNING;
THIS CONCLUDES THIS LEGAL DESCRIPTION
THE ABOVEDESCREBED PARCEL CONTAINS 796,521.89 SQ FT. = 18.2856
ACRES.
The notation in the left margin indicates where the information can be
found on the enclosed exhibit
Page 4
<PAGE>
[MAP DEPICTING PREMISES]
EXHIBIT B
<PAGE>
EXHIBIT "C"
BRUNO'S SANDY SPRINGS, LOT 3 BLOCK A
(FUTURE DEVELOPMENT #02)
LEGAL DESCRIPTION
All and singular that contain tract or parcel of land situated, lying,
and being in Land Lot 89, 17th District, Fulton County, Georgia, being
more particularly described as follows:
Commencing at the intersection point of the easterly right-of-way line
of Sandy Springs Circle and the corner connector line that connects the
northerly right-of-way line of Hammond Drive to the easterly
right-of-way line of Sandy Springs Circle,
C-1 Thence, along said right-of-way line, the arc of a curve to the right,
adistance of
C-4 325-37 feet to a point, said curve having a radius of 541.90 feet
and a chord of
C-5 N 07(degree)28'46" W, 320.50 feet; said point being the POINT OF
BEGINNING;
L-23 Thence, leaving said right-of-way line, S 83(degree)23'55"E, a
distance of 169.02 feet to a point;
L-24 Thence N 22(degree)28'10"E, a distance of 237.08 feet to a point;
L-25 Thence S 62(degree)35'09"E, a distance of 16.00 feet to a point;
C-6 Thence, along the arc of a curve to the left, a distance of 25.11 feet
to a point, said curve having a radius of 16.00 feet and a chord of N
72(degree)34'58"E, 22.61 feet;.
L-26 Thence N 27(degree)32'12'E, a distance of 139.89 feet to a point;
L-27 Thence N 21(degree)48'46"E, a distance of 62.17 feet to a point on the
southerly right-of-way line of Sandy Springs Place (variable
right-of-way);
L-28 Thence, along said right-of-way line, S 89(degree)21'47"E, a distance
of 20.43 feet to a point;
L-29 Thence, leaving said right-of-way line, S 03(degree)55'49"W, a distance
of 225.36 feet to a point;
L-30 Thence S 08(degree)37'51"W, a distance of 117.55 feet to a point;
Page 1
<PAGE>
L-31 Thence S 03(degree)56'12"W, a distance of 54.28 feet to a point;
L-16 Thence N 86(degree)46'02"W, a distance of 43.79 feet to a point;
L-15 Thence S 77(degree)15'45"W, a distance of 187.88 feet to a point;
L-14 Thence N 89(degree)56'14", a distance of 145.15 feet to a point on the
easterly right-of-way line, of Sandy Springs Circle;
C-5 Thence, along said right-of-way line, the arc of a curve to the right,
a distance of 53.81 feet to a point, said curve having a radius of
541.90 feet and a chord of N 06(degree)52'53"E, 53.79 feet, said point
being the POINT OF BEGINNING;
THIS CONCLUDES THIS LEGAL DESCRIPTION
THE ABOVE DESCRIBED PARCEL CONTAINS 54,564.59 SQ. FT. = 1.2526
ACRES.
The notation in the left margin indicates where the information can be
found on the enclosed exhibit.
Page 2
<PAGE>
Amendment to Ground Lease
Between
Bruno's Food Stores, Inc. ("Landlord")
and
Roadhouse Grill, Inc.
d/b/a Roadhouse Grill ("Tenant")
Amend page 3, 1.2.10 paragraph c
To read: Notwithstanding anything contained herein, the tenant
shall have 60 days rent free following execution of the
ground release and thereafter, for the next seven (7)
months shall pay a rent of $5000.00 per month
(construction phase). This is per letter dated February
27, 1995, signed by W. Neill Fox.
Amend page 19 Article 10 paragraph 10.13
The coverage limits shall be one million dollars
($1,000,000.00) for single occurrence and two million
($2,000,000.00) aggregate contained in an umbrella package.
Amend page 20 Section 1013 paragraph 10.3.1
Company that is rated as B+ or better by A.M. Best
Standard & Poors Duff & Phelps, Demotech on Lloyds of
London.
LANDLORD:
Bruno's Food Stores, Inc.
Attest: an Alabama, Corporation
/S/ R. MIKE CEULEY By: /S/ KEN BRUNO
- -------------------------- ------------------------------
SECRETARY Its: EXECUTIVE VICE PRESIDENT
- -------------------------- ----------------------------
TENANT:
Roadhouse Grill, Inc.
Attest: d/b/a Roadhouse Grill
/S/ KIMBERLY CRISAFULLI By: /S/ JOHN D. TOOLE JR.
- -------------------------- -----------------------------
SECRETARY Its: VICE PRESIDENT
- -------------------------- --------------------------------
Page 1
<PAGE>
SECOND AMENDMENT TO GROUND LEASE BETWEEN
BRUNO'S, INC. ("LANDLORD") AND
ROADHOUSE GRILL, INC. ("TENANT")
This Second Amendment to the Ground Lease dated MAY 25, 1995 ("Ground
Lease") by and between Bruno's Food Stores, Inc. and Roadhouse Grill, Inc. shall
be incorporated into the Ground Lease pursuant to the desires of the parties
named above, who have executed this Second Amendment this 25th day of MAY,
1995.
The parties hereto agree as follows:
Landlord enters into this Ground Lease and relying on representations
made by Coopers & Lybrand, certified public accountants for Tenant, that
Tenant's Annual Financial Statement for the Year ended January 1, 1995 will not
differ in a negative, material manner from the Draft Financial Statement for the
Year ended January 1, 1995 which has been submitted to Landlord by Tenant.
Landlord hereby reserves the right to review the financial condition of Tenant
with regard to the terms and obligations of the Ground Lease and rescind the
Ground Lease in the event Tenant's financial condition as reported by its Annual
Financial Statement differs materially from the financial condition upon which
Landlord has relied and entered into this Ground Lease.
LANDLORD:
Bruno's Food Stores, Inc.
Attest: an Alabama, Corporation
/S/ R. MIKE CEULEY By:/S/ KEN BRUNO
- -------------------------- ---------------------------------
SECRETARY Its: EXECUTIVE VICE PRESIDENT
- -------------------------- ------------------------------
TENANT:
Roadhouse Grill, Inc.
Attest: d/b/a Roadhouse Grill
/S/ KIMBERLY CRISAFULLI By:/S/ JOHN D. TOOLE JR.
- ------------------------- -----------------------------
SECRETARY Its: VICE PRESIDENT
- ------------------------- ----------------------------
EXHIBIT 10.10
Lease No. 03-05778
LEASE
BETWEEN
CAPTEC NET LEASE REALTY, INC.
AND
NEW YORK ROASTERS, INC.
Dated: April 17, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 FUNDAMENTAL LEASE PROVISIONS...................... 4
ARTICLE 2 EXHIBITS.......................................... 5
ARTICLE 3 PREMISES.......................................... 5
ARTICLE 4 TERM.............................................. 6
4.01 Term.............................................. 6
4.02 Option to Extend Lease Term....................... 6
ARTICLE 5 LIENS............................................. 6
ARTICLE 6 RENT.............................................. 7
6.01 Rent.............................................. 7
6.02 Rental Adjustments................................ 7
6.03 Net Lease.......................................... 8
6.04 Security Deposit................................... 8
ARTICLE 7 USE OF THE PREMISES................................ 9
7.01 Use................................................ 9
7.02 Compliance With Law................................ 9
7.03 Permits and Licenses.............................. 10
ARTICLE 8 UTILITIES......................................... 10
8.01 Payment........................................... 10
8.02 Interruption in Service........................... 10
ARTICLE 9 TAXES............................................. 10
9.01 Payment of Taxes.................................. 10
9.02 Definition of "Real Property Taxes"............... 11
9.03 Personal Property Taxes........................... 11
9.04 Tenant's Right to Contest Taxes................... 11
ARTICLE 10 MAINTENANCE AND REPAIRS.......................... 13
10.01 Tenant's Obligations..................................... 13
10.02 Landlord's Obligations................................... 13
10.03 Landlord's Rights........................................ 14
ARTICLE 11 INSURANCE AND INDEMNIFICATION..................... 14
11.01 Tenant's Insurance Obligation............................ 14
11.02 INTENTIONALLY OMITTED.................................... 16
11.03 Subrogation Waiver....................................... 16
11.04 Insurance Use Restrictions............................... 16
11.05 Indemnification.......................................... 16
11.06 Payment of Insurance..................................... 17
1
<PAGE>
ARTICLE 12 ALTERATIONS....................................... 17
12.01 Permitted Improvements................................... 17
12.02 Liens.................................................... 17
12.03 Structural Alterations................................... 18
12.04 Removal of Alterations................................... 18
12.05 Alterations Required by Law.............................. 18
12.06 General Conditions Relating to Alterations............... 18
ARTICLE 13 SIGNS............................................. 19
ARTICLE 14 DAMAGE, DESTRUCTION, OBLIGATION TO REBUILD........ 19
14.01 Obligation to Rebuild.................................... 19
14.02 No Abatement of Rent..................................... 20
ARTICLE 15 EMINENT DOMAIN.................................... 20
15.01 Total Taking............................................. 20
15.02 Partial Taking........................................... 20
15.03 Distribution of Award.................................... 21
15.04 Transfer Under Threat of Taking.......................... 21
ARTICLE 16 ASSIGNMENT AND SUBLETTING......................... 21
16.01 Landlord's Consent Required.............................. 21
16.02 Assumption of Obligations................................ 21
16.03 Assignment to Affiliate.................................. 21
16.04 Hypothecation of Lease................................... 22
16.05 Corporate/Partnership/Limited Liability
Company Restrictions..................................... 22
16.06 No Release of Tenant..................................... 22
ARTICLE 17 DEFAULT; REMEDIES................................. 23
17.01 Default.................................................. 23
17.02 Remedies................................................. 24
17.03 Administrative Fee....................................... 25
ARTICLE 18 SUBORDINATION..................................... 25
ARTICLE 19 QUIET ENJOYMENT................................... 26
ARTICLE 20 REPRESENTATIONS AND WARRANTIES.................... 26
20.01 Representations and Warranties........................... 26
20.02 Financial Statements..................................... 27
ARTICLE 21 SURRENDER OF PREMISES............................. 28
ARTICLE 22 OPTION TO PURCHASE................................ 28
22.01 Option to Purchase....................................... 28
22.02 Option Price............................................. 28
22.03 Closing.................................................. 29
22.04 Termination of Option.................................... 29
2
<PAGE>
ARTICLE 23 BANKRUPTCY OR INSOLVENCY.......................... 29
23.01 Bankruptcy or Insolvency................................. 29
ARTICLE 24 HAZARDOUS MATERIALS............................... 33
24.01 Representations and Warranties........................... 33
24.02 Definitions.............................................. 34
24.03 Tenant's Obligation...................................... 35
24.04 Landlord Options......................................... 35
24.05 Indemnity................................................ 36
24.06 Survival................................................. 36
ARTICLE 25 GENERAL PROVISIONS................................ 36
25.01 Estoppel Certificates.................................... 36
25.02 Severability............................................. 36
25.03 Entire Agreement......................................... 37
25.04 Notices.................................................. 37
25.05 Waivers.................................................. 37
25.06 Recording................................................ 37
25.07 Holding Over............................................. 37
25.08 Cumulative Remedies...................................... 38
25.09 Choice of Law............................................ 38
25.10 Attorneys' Fees.......................................... 38
25.11 Waiver of Jury Trial..................................... 38
25.12 Liability of Landlord.................................... 38
25.13 No Merger................................................ 39
25.14 Reports.................................................. 39
25.15 Definition of Rent....................................... 39
25.16 Interpretation........................................... 39
25.17 Relationship of the Parties.............................. 39
25.18 Successors............................................... 40
25.19 Modifications............................................ 40
25.20 Brokerage Fees........................................... 40
25.21 Waiver of Redemption..................................... 40
25.22 Not Binding Until Executed............................... 40
EXHIBIT A ............................................................... A-1
EXHIBIT B ............................................................... B-1
EXHIBIT C ............................................................... C-1
EXHIBIT D ............................................................... D-1
EXHIBIT E ............................................................... E-1
EXHIBIT F ............................................................... F-1
3
<PAGE>
LEASE
In consideration of the rents and covenants-Bet forth below, Landlord
(as hereinafter defined) hereby leases to Tenant (as hereinafter defined), and
Tenant hereby leases from Landlord, the following Premises (as hereinafter
defined) upon the following terms and conditions:
ARTICLE 1
FUNDAMENTAL LEASE PROVISIONS
Date: April 17, 1995
Landlord: Captec Net Lease Realty, Inc.
Tenant: New York Roasters, Inc.
Tenant's
Trade Name: Kenny Rogers Roasters
Lease Term: Twenty (20) years, commencing on the date hereof and
ending on April 30, 2015 with two (2) renewal options
of five (5) years each.
(Article 4, Section 4.01)
Minimum Annual
Rent: One Hundred Eleven Thousand Six Hundred Twenty Five and
00/100 Dollars ($111,625.00), and shall be subject to
adjustment as hereinafter provided. (Article 6,
Section 6.01)
The Minimum Annual Rent shall be payable on the first
day of each month, commencing May 1, 1995, in twelve
(12) equal installments each in the amount of Nine
Thousand Three Hundred Two and 00/100 Dollars
($9,302.00) during each year of the term of this
Lease, subject to proration or adjustment as
hereinafter provided.
Addresses for
Notices: To Landlord: 24 Frank Lloyd Wright Drive
Lobby L, 4th Floor
P.O. Box 544
Ann Arbor, Michigan 48106-0544
To Tenant: 690 Delaware Avenue
Buffalo, New York 14209
4
<PAGE>
With a copy to:
Roasters Corp.
899 West Cypress Creek Rd., Ste. 500
Fort Lauderdale, Florida 33309
Attention: Real Estate Department
Premises: That, certain real property, with all improvements
located thereon, commonly known as Kenny Rogers
Roasters, located at 1449 French Road, Cheektowaga,
New York and more particularly described in Exhibit A
attached hereto and incorporated herein by this
reference.
References in this Article 1 to other Articles are for convenience and
designate some of the other Articles where references to the Fundamental Lease
Provisions appear. Each reference in this Lease to any of the Fundamental Lease
Provisions contained in this Article 1 shall be construed to incorporate all of
the terms Provided under such Fundamental Lease Provision. In the event of any
conflict between any Fundamental Lease Provision and the balance of this Lease,
the latter shall control.
ARTICLE 2
EXHIBITS
The following are attached hereto as Exhibits and made a part of this
Lease:
EXHIBIT A -- Description of the Premises
EXHIBIT B -- Form of Estoppel Certificate
EXHIBIT C -- Memorandum of Lease
EXHIBIT D -- [INTENTIONALLY OMITTED)
EXHIBIT E -- Subordination, Non-Disturbance and
Attornment Agreement
EXHIBIT F -- Letter of Credit Agreement
In the event of any conflict between any of the above-referenced
Exhibits and the balance of this Lease, the Exhibits shall control.
ARTICLE 3
PREMISES
5
<PAGE>
Landlord hereby leases and demises unto Tenant and Tenant hereby leases
and takes from Landlord, for the term, at the rental, and upon the terms,
covenants, and conditions hereinafter set forth, the property referred to in
Article 1 as the Premises and described on Exhibit A attached hereto.
ARTICLE 4
TERM
4.01 TERM. The term of this Lease shall be the term specified in
Article 1 hereof (the initial term and any extensions exercised by Tenant
thereof are hereinafter referred to as the "Lease Term") and shall commence on
the date hereof (the "Commencement Date").
4.02 OPTION TO EXTEND LEASE TERM. Tenant shall have the option to
extend the initial term of this Lease for two (2) additional successive periods
of five (5) years each on the same terms, covenants and conditions of this
Lease. In the event Tenant elects to exercise the option(s), Tenant shall
provide Landlord written notice not less than ninety (90) days prior to the end
of the then current term of Tenant's exercise of the option(s), such notice to
be given in the manner provided in Section 25.04 of this Lease. Tenant's right
to exercise the foregoing option(s) is conditioned upon Tenant's performance of
all of the duties and obligations on its part to be performed under this Lease
so that, at the time of the exercise of such option, Tenant shall not be in
default hereunder. In the event that Tenant elects to extend the initial term of
this Lease, the Minimum Annual Rent shall continue to be adjusted as provided in
Section 6.02 of this Lease.
ARTICLE 5
LIENS
Tenant shall do all things necessary to prevent the filing of any
mechanics' or other liens or encumbrances against the Premises, or any part
thereof, or upon any interest of Landlord or Prime Landlord or any mortgagee or
beneficiary under a deed of trust or any ground or underlying lessor in any
portion of the Premises, 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 or
encumbrance shall at any time be filed against the Premises, or any portion
thereof, Tenant shall either cause same to be discharged of record within ten
(10) days after the date of filing of same or, if Tenant in good faith
6
<PAGE>
determines that such lien should be contested, Tenant shall furnish such
security as Landlord shall determine to be necessary and/or required to prevent
any foreclosure proceedings against the Premises, or any portion thereof, during
the pendency of such contest, and Tenant shall cause the title insurance company
or companies insuring the respective interests in the Premises of Landlord,
Prime Landlord and/or Landlord's mortgagees and/or any ground or underlying
lessor in any portion of the Premises to remove such lien as a matter affecting
title to the Premises. If Tenant shall fail to discharge any such lien or
encumbrance within such period or fail to furnish such security, then, in
addition to any other right or remedy of Landlord resulting from said default of
Tenant, Landlord may, but shall not be obligated to, discharge the same either
by paying the amount claimed to be due or by procuring the discharge of such
lien by giving security or in such other manner as is, or may be, prescribed by
law, and Tenant agrees to reimburse Landlord promptly upon demand for all costs,
expenses, and other sums of money spent in connection therewith together with
the applicable Administrative Fee (as hereinafter defined). All materialmen,
contractors, artisans, mechanics, laborers, and any other persons now or
hereafter contracting with Tenant for the furnishing of any labor, services,
materials, supplies, or equipment with respect to any portion of the Premises,
are hereby charged with notice that they must look exclusively to Tenant to
obtain payment for same. Tenant shall give Landlord adequate notice and
opportunity, and Landlord shall have the right, to post and maintain on the
Premises such notices, including notices of nonresponsibility and other similar
notices, as are provided for under the laws of the state in which the Premises
are located, evidencing Tenant's obligations with respect to any of the matters
covered by this Article.
ARTICLE 6
RENT
6.01 RENT. Tenant covenants and agrees to pay for the use and
occupancy of the Premises, the Minimum Annual Rent specified in Article 1
hereof, subject to increase pursuant to the provisions of Section 6.02 hereof,
in twelve (12) equal monthly installments during each year of the Lease Term, in
advance, on the first day of each calendar month, without any offset or
deduction. Should the Lease Term commence on a day other than the first day of a
calendar month, then the rental for such first fractional month shall be
computed on a daily basis for the period from the Commencement Date to the end
of such calendar month at an amount equal to one three hundred sixty-fifth
(1/365) of the Minimum Annual Rent for each day. Should the Lease Term end on a
day other than the last day of a calendar month, then the rental for such
fractional month shall be computed on a daily basis at an
7
<PAGE>
amount equal to one three hundred sixty-fifth (1/365) of the Minimum Annual Rent
for each day. Rent shall be paid in lawful money of the United States to
Landlord at the address stated in Article 1 or to such other persons or at such
other places as Landlord may designate in writing to Tenant.
6.02 RENTAL ADJUSTMENTS. The Minimum Annual Rent payable under this
Lease shall be increased on May 1, 1996 and every May 1 thereafter ("Increase
Date") during the Lease term by three (3%) percent.
6.03 NET LEASE. This Lease is what is commonly called a "triple net
lease," it being understood that Landlord shall receive the Minimum Annual Rent
set forth in Article 1 hereof, as increased pursuant to Section 6.02 or
otherwise, free and clear of any and all other impositions, taxes, liens,
charges, or expenses of any nature whatsoever incurred in connection with the
ownership and operation of the Premises. In addition to the Minimum Annual Rent
reserved by Article 1 hereof, as increased, Tenant shall pay to the parties
respectively entitled thereto all impositions, insurance premiums, Real Property
Taxes (as defined below), operating charges, maintenance charges, construction
costs, accounting and legal fees, and any other charges, costs and expenses
which arise or may be contemplated under any provision of this Lease during the
Lease Term (collectively "Impositions"). All of such Impositions shall
constitute additional rent, and upon the failure of Tenant to pay any of such
Impositions, Landlord shall have the same rights and remedies as otherwise
provided in this Lease for the failure of Tenant to pay rent. Tenant shall
furnish to Landlord, promptly after payment of any Real Property Taxes or
insurance premiums, and, with respect to any other Impositions, promptly upon
request of Landlord, official receipts or other satisfactory proof evidencing
payment of such Impositions. In addition, Tenant shall, promptly upon request,
furnish to Landlord, but not more frequently than semiannually, throughout the
term of this Lease, a certificate executed by an executive officer of Tenant,
stating that all Impositions have been paid to date. Upon Tenant's failure to
pay such impositions or failure to provide proof of such payment or failure to
deliver any such certificate, as above provided, Landlord shall have the right,
at Landlord's option, to require Tenant to (a) promptly deposit with Landlord
funds sufficient for the payment of the current impositions required to be paid
by Tenant hereunder; and (b) also deposit one-twelfth of the current annual or
annualized Impositions, as the case may be (or those of the preceding years if
the current amounts thereof have not been fixed), on the first day of each month
in advance. It is the intention of the parties hereto that this Lease shall not
be terminable for any reason by Tenant, and that Tenant shall in no event be
entitled to any abatement of, deductions of any kind, offset or reduction in
rent
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payable under this Lease. Any present or future law to the contrary shall not
alter this agreement of the parties.
6.04 SECURITY DEPOSIT. Tenant shall deposit with Landlord upon
execution hereof the amount of Nine Thousand Three Hundred Two and 08/100
Dollars ($9,302.08) as security for Tenant's faithful performance of Tenant's
obligations hereunder. If Tenant fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provisions of this Lease,
Landlord may use, apply, or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Landlord may become obligated by reason of Tenant's default, or to
compensate Landlord for any loss or damage which Landlord may suffer thereby. If
Landlord so uses or applies all or any portion of said deposit, Tenant shall
within ten (10) days after written demand therefor deposit with LANDLORD an
amount sufficient to restore the deposit to the full amount hereinabove stated
and Tenant's failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep the security deposit separate from its general
accounts or to pay interest thereon, unless otherwise required by applicable
law.
If Tenant performs all of Tenant's obligations hereunder, said deposit, or
so much thereof as has not theretofore been applied by Landlord, shall be
returned in cash, without payment of interest or other increment for its use, to
Tenant at the expiration of the Lease Term. No trust relationship is created
herein between Landlord and Tenant with respect to the security deposit.
ARTICLE 7
USE OF THE PREMISES
7.01 USE. Tenant shall occupy and use the Premises solely for the
operation of a Kenny Rogers Roasters franchise. Tenant may not use the Premises
for any other purpose without obtaining the prior written consent of Landlord.
7.02 COMPLIANCE WITH LAW.
(a) Tenant accepts the Premises in "AS IS" condition. Tenant accepts
the Premises "AS IS" in reliance upon Tenant's own knowledge as owner of a
leasehold interest in and occupier of the Premises immediately prior to
commencement of this Lease. Landlord makes no warranties of any type whatsoever,
including without limitation, whether there has been or are currently any
violations of any covenants or restrictions of record, or any applicable
building code, regulation or ordinance in effect regarding the Premises on the
Commencement Date.
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(b) Tenant shall, at Tenant's sole expense, fully comply with all
present and future laws, ordinances, orders, rules, regulations, of any
governmental authorities and with any directive of any public officer which
shall impose any violation, order or duty upon Landlord or Tenant with respect
to Premises or the use or occupation thereof including, without limitation, any
governmental law or statute, rule, regulation, ordinance, code, policy or rule
of common law now or hereafter in effect relating to the environment, health or
safety.
(c) Tenant shall not use or permit the Premises to be used in any
manner which will result in waste or the creation of a nuisance, and Tenant
shall maintain the Premises free of any objectionable noises, odors, or
disturbances.
7.03 PERMITS AND LICENSES. Tenant shall be solely responsible to
apply for and secure any building permit or permission of any duly constituted
authority for the purpose of doing any of the things which Tenant is required or
permitted to do under the provisions of this Lease.
ARTICLE 8
UTILITIES
8.01 PAYMENT. Tenant shall pay to the utility companies or other
parties entitled to payment the cost of all water, heat, air conditioning, gas,
electricity, telephone, and other utilities and services provided to or for the
Premises, including connection fees and taxes thereon. In the case of any
utilities or services which are not separately metered and billed directly to
Tenant, but are metered jointly with other premises, Tenant shall pay to the
parties entitled thereto, a PRO RATA share based on Tenant's usage of such
utilities and services.
8.02 INTERRUPTION IN SERVICE. Landlord shall not be liable in damages
or otherwise for any failure or interruption of any utility or other service
being furnished to the Premises, and no such failure or interruption shall
entitle Tenant to any abatement of, set off or reduction in the amounts payable
to Landlord hereunder or otherwise entitle Tenant to terminate this Lease.
ARTICLE 9
TAXES
9.01 PAYMENT OF TAXES. Tenant shall pay the Real Property Taxes (as
defined in Section 9.02) applicable to the Premises during the Lease Term.
Landlord shall provide Tenant with copies of any tax bills applicable to the
Premises promptly after receipt
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of such bills. All such payments shall be made at least ten (10) days prior to
the delinquency date of such payment. Tenant shall promptly furnish Landlord
with satisfactory evidence that such Real Property Taxes have been paid. If any
such Real Property Taxes paid by Tenant shall cover any period of time prior to
or after the expiration of the Lease Term, Landlord shall reimburse Tenant to
the extent required. If Tenant shall fail to pay any such Real Property Taxes,
Landlord shall have the right but not the obligation to pay the same in which
case Tenant shall repay such amount plus any penalties and interest resulting
therefrom to Landlord with Tenant's next Minimum Annual Rental installment
together with the applicable Administrative Fee.
9.02 DEFINITION OF "REAL PROPERTY TAXES". As used herein, the term
"Real Property Taxes" shall include any form of real estate tax or assessment,
ad valorem tax or gross receipts tax, imposed by any authority having the direct
or indirect power to tax, including any city, county, state, or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, on, against or with respect to the Premises,
this Lease, any legal or equitable interest of Landlord or any superior landlord
in the Premises or in the real property of which the Premises are a part,
Landlord's right to rent or other income therefrom, and Landlord's business of
leasing the Premises. The term "Real Property Taxes" shall also include any tax,
fee, levy, assessment, penalty, interest or other charge (i) in substitution of,
partially or totally, any tax, fee, levy, assessment, or charge hereinabove
included within the definition of Real Property Tax, (ii) the nature of which
was hereinbefore included within the definition of Real Property Tax, or (iii)
any tax or increase in any tax which is imposed as a result of a transfer,
either partial or total, of Landlord's interest in the Premises or which is
added to a tax or charge hereinbefore included within the definition of Real
Property Taxes by reason of such transfer, or which is imposed by reason of this
transaction, any modifications or changes hereto, or any transfers hereof.
Notwithstanding the foregoing, the term "Real Property Tax" shall not include
any general income taxes, inheritance taxes, and estate taxes imposed upon
Landlord or any superior landlord.
9.03 PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency,
all taxes assessed against and levied upon trade fixtures, furnishings,
equipment, and all other personal property of Tenant contained in the Premises
or elsewhere. Tenant shall cause said trade fixtures, furnishings, equipment,
and all other personal property to be assessed and billed separately from the
real property of Landlord.
9.04 TENANT'S RIGHT TO CONTEST TAXES.
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(a) Tenant shall have the right, at its cost and expense, to contest
the amount or validity, in whole or in part, of any Real Property Taxes of any
kind by appropriate proceedings diligently conducted in good faith, but no such
contest shall be carried on or maintained by Tenant after the time limit for the
payment of any Real Property Taxes unless Tenant, at its option: (i) shall pay
the amount involved under protest; or (ii) shall procure and maintain a stay of
all proceedings to enforce any collection of any Real Property Taxes, together
with all penalties, interest, costs and expenses, by a deposit of a sufficient
sum of money, or by such undertaking, as may be required or permitted by law to
accomplish such stay; or (iii) shall deposit with Landlord, as security for the
performance by Tenant of its obligations hereunder with respect to such Real
Property Taxes, such security in amounts equal to one hundred fifty percent
(150%) of such contested amount or such other reasonable security as may be
demanded by Landlord to insure payment of such contested Real Property Taxes and
all penalties, interest, costs and expenses which may accrue during the period
of the contest. Upon the termination of any such proceedings, it shall be the
obligation of Tenant to pay the amount of such Real Property Taxes or part
thereof, as finally determined in such proceedings, together with any costs,
fees (including attorneys' fees), penalties or other liabilities in connection
therewith; provided, however, that if Tenant has deposited cash or cash
equivalents with Landlord as security under clause (iii) above, then, so long as
no material default exists under this Lease, Landlord will arrange to pay such
Real Property Taxes (or part thereof) together with the applicable costs, fees
and liabilities as described above out of such cash or cash equivalents and
return any unused balance, if any, to Tenant. Otherwise, Landlord will arrange
to have returned to Tenant all amounts, if any, held by or on behalf of Landlord
which were deposited by Tenant in accordance with the provisions hereof and to
return any unused balance, if any, to Tenant.
(b) Tenant shall have the right, at its cost and expense, toseek a
reduction in the valuation of the Premises as assessed for tax purposes and to
prosecute any action or proceeding in connection therewith. Provided Tenant is
not in default hereunder, Tenant shall be authorized to collect any tax refund
of any tax paid by Tenant obtained by reason thereof and to retain the same.
(c) Landlord agrees that, whenever Landlord's cooperation is required
in any of the proceedings brought by Tenant as aforesaid, Landlord will
reasonably cooperate therein, provided same shall not entail any cost, liability
or expense to Landlord, and Tenant will pay, indemnify and save Landlord
harmless of and from, any and all liabilities, losses, judgments, decrees, costs
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and expenses (including all reasonable attorneys, fees and expenses) in
connection with any such contest and will, promptly after the final settlement,
fully pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith, and
Tenant shall perform and observe all acts and obligations, the performance of
which shall be ordered or decreed as a result thereof. No such contest shall
subject Landlord to the risk of any civil liability or the risk of any criminal
liability, and Tenant shall give such reasonable indemnity or security to
Landlord, as may reasonably be demanded by Landlord to insure compliance with
the foregoing provisions of this Section 9.05.
ARTICLE 10
MAINTENANCE AND REPAIRS
10.01 TENANT'S OBLIGATIONS.
(a) Tenant shall, at Tenant's expense, maintain in good repair,
order, and serviceable condition the Premises and every part thereof, including
but not limited to all plumbing, ventilation, heating, air conditioning, and
electrical systems and equipment in, on, or exclusively serving the Premises,
and windows, doors, storefronts, plate glass, interior walls, and ceilings which
are part of the Premises.
(b) Tenant shall not commit or suffer to be committed any waste upon
or about the Premises, and shall promptly at Tenant's cost and expense, make all
necessary replacements, restorations, renewals and repairs to the Premises and
appurtenances thereto, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, and foreseen or unforeseen. Repairs,
restorations, renewals and replacements shall be at least equivalent in quality
to the original work or the property replaced, as the case may be. Tenant shall
not make any claim or demand upon or bring any action against Landlord for any
loss, cost, injury, damage or other expense caused by any failure or defect,
structural or non-structural, of the Premises or any part thereof.
(c) Upon the expiration or earlier termination of this Lease, Tenant
shall return the Premises to Landlord clean and in the same condition as on the
date that Tenant took possession, except for normal wear and tear. Any damage to
the Premises, including any structural damage, resulting from Tenant's use or
from the removal of Tenant's fixtures, furnishings, and equipment pursuant to
Section 12.04 hereof, shall be repaired by Tenant at Tenant's expense.
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10.02 LANDLORD'S OBLIGATIONS. Except for the obligations of Landlord
under Article 14 hereof (relating to destruction of the Premises), and under
Article 15 hereof (relating to the condemnation of the Premises), it is intended
by the parties hereto that Landlord have no obligation, in any manner
whatsoever, to repair and maintain the Premises nor the building located thereon
nor the equipment therein, whether interior or exterior, structural or
nonstructural, ordinary or extraordinary, all of which obligations are that of
Tenant under Article 10.01 hereof. Tenant expressly waives the benefit of any
statute or law now or hereafter in effect which would otherwise afford Tenant
the right to terminate this Lease because of landlords failure to keep the
Premises in good order, condition, and repair, or the right to repair and offset
the cost related thereto against rent.
10.03 LANDLORD'S RIGHTS. If Tenant refuses or neglects to make repairs
or maintain the Premises, or any part thereof, in a manner reasonably
satisfactory to Landlord, without prejudice to any other remedy Landlord may
have hereunder, upon giving Tenant tan (10) days prior written notice, Landlord
shall have the right to enter the Premises and perform such maintenance or make
such repairs on behalf of and for the account of Tenant. In the event Landlord
so elects, Tenant shall pay the cost of such repairs, maintenance, or
replacements promptly following Tenants' receipt of a bill therefor, together
with the applicable Administrative Fee. Tenant agrees to permit Landlord or its
agent to enter the Premises, upon reasonable notice by Landlord, during normal
business hours for the purpose of inspecting the Premises.
ARTICLE 11
INSURANCE AND INDEMNIFICATION
11.01 TENANT'S INSURANCE OBLIGATION. Tenant covenants and agrees that
from and after taking possession of the Premises, Tenant will carry and
maintain, at its sole cost and expense, the following types of insurance, in the
amounts specified and in the form hereinafter provided for:
(a) COMPREHENSIVE GENERAL LIABILITY. Comprehensive general liability
insurance against any loss, liability or damage on, about or relating to the
Premises, with limits of not less than Two Million Dollars ($2,000,000) for
death or injuries to one person and not less than Two Million Dollars
($2,000,000) for death or injuries to two or more persons in one occurrence, and
not less than One Million Dollars ($1,000,000) for damage to property. If such
insurance coverage has a deductible clause, the deductible amount shall not
exceed One Thousand Dollars ($1,000) per occurrence, and Tenant shall be liable
for such deductible amount. Such insurance coverage limits shall be subject to
review
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every three (3) years during the Lease Term by an independent insurance
consultant selected by Landlord. The insurance coverage limits shall be
increased every three (3) years as determined to be reasonable and appropriate
for Tenant's business operation by the independent insurance consultant. The
cost and expense of the independent insurance consultant shall be borne solely
by Tenant.
(b) BUSINESS INTERRUPTION. Tenant shall purchase a policy of
business interruption insurance to protect Tenant and Landlord against loss of
earnings in the event of interruption of Tenant's business through destruction
of real or personal property at the Premises. Such policy shall be written in an
amount equal to not less than twelve (12) monthly installments of Minimum Annual
Rent. Such policy shall insure against loss of earnings by at least the perils
of fire and lightning, extended coverage, vandalism, malicious mischief and,
where pertinent, sprinkler leakage.
(c) WORKERS' COMPENSATION. Worker's compensation insurance or self
insurance as required by the jurisdiction in which the Premises is located and
employer's liability insurance in amounts as reasonably determined by Landlord.
(d) PROPERTY DAMAGE. Insurance covering all improvements located on
the Premises and all of Tenant's fixtures, merchandise, and personal property
from time to time in, on or upon the Premises, in an amount not less than one
hundred percent (100%) of their full replacement value providing protection
against any peril included within the classification "All Risk", together with
insurance, if pertinent, against sprinkler damage. Any policy proceeds shall be
used for the repair or replacement of the property damaged or destroyed.
(e) ADDITIONAL COVERAGE. Such other insurance and in such amounts
as may be reasonably required from time to time by Landlord.
(f) POLICY FORM.
(i) All policies of insurance provided for herein (including the
policies specified in Section 11.02 hereof) shall be issued by reputable and
financially sound insurance companies satisfactory to Landlord, and such
insurance companies shall be qualified to do business in the jurisdiction where
the Premises is situated. All such policies shall be issued in the names of
Landlord and Tenant, and if requested by Landlord, any superior landlord and any
mortgagee or beneficiary of Landlord, which policies shall be for the mutual and
joint benefit and protection of Landlord, Tenant, any superior landlord and any
mortgagee or beneficiary of Landlord. Executed copies of such policies of
insurance or certificates thereof shall be delivered to Landlord
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prior to Landlord's execution of this Lease, and thereafter executed copies of
renewal policies or certificates thereof shall be delivered to Landlord within
thirty (30) days prior to the expiration of the term of each such policy. As
often as any such policy shall expire or terminate, renewal or additional
policies shall be procured and maintained by Tenant in like manner and to like
extent. All policies of insurance delivered to Landlord must contain a provision
that the company writing said policy will give to Landlord, any superior
landlord, and any mortgagee or beneficiary of Landlord thirty (30) days, notice
in writing in advance of any modification, cancellation, lapse, or reduction in
the amounts of insurance, and shall further contain an agreement that any loss
otherwise payable thereunder shall be payable notwithstanding any act or
negligence of Landlord or Tenant which might, absent such agreement, result in a
forfeiture of all or part of the payment of such loss. All public liability,
property damage, and other casualty policies shall be written on an occurrence
basis as primary policies, not contributing with or in excess of coverage which
Landlord may carry.
(ii) Tenant's obligations to carry the insurance provided for above
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant; provided, however, that such policy
or policies must have limits of not less than Five Million and 00/100 Dollars
($S,000,000.00) and that Landlord, any superior landlord and any mortgagee or
beneficiary of Landlord shall be named as an additional insured thereunder as
their interests may appear and that the coverage afforded Landlord will not be
reduced or diminished by reason of the use of such blanket policies, and the
requirements set forth herein are otherwise satisfied. Tenant agrees to permit
Landlord at all reasonable times to inspect any policies of insurance of Tenant
which Tenant has not delivered to Landlord.
11.02 INTENTIONALLY OMITTED.
11.03 SUBROGATION WAIVER. Landlord (for itself and its insurer) hereby
waives any rights, including rights of subrogation, and Tenant (for itself and
its insurer) hereby waives any rights, including rights of subrogation, each may
have against the other on account of any loss or damage occasioned to Landlord
or Tenant, as the case may be, to their respective property, the Premises or its
contents that are caused by or result from risks insured against under any
insurance policies carried by the parties hereto and in force at the time of any
such damage. The foregoing waivers of subrogation shall be operative only so
long as available,in the jurisdiction where the Premises are located and so long
as no policy of insurance is invalidated thereby.
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11.04 INSURANCE USE RESTRICTIONS. Tenant agrees that it will not carry
any stock or goods or do anything in, on, or about the Premises which will
substantially increase the insurance rates upon the building of which the
Premises are a part.
11.05 INDEMNIFICATION. Tenant shall at all times indemnify Landlord
for, defend Landlord against, and save Landlord harmless from, any liability,
loss, cost, injury, damage or other expense or risk whatsoever that may occur or
be claimed by or with respect to any person(s) or property on or about the
Premises and resulting directly or indirectly from the use, misuse, occupancy,
possession or disuse of the Premises by Tenant or other persons claiming through
or under Tenant, or their respective agents, employees, licensees, invitees,
guests or other such persons, or from the condition of the Premises. Tenant
shall, at its cost and expense, defend against any and all such actions, claims
and demands and shall indemnify Landlord for all costs, expenses and liabilities
it may incur in connection therewith. Landlord shall not in any event whatsoever
be liable for any injury or damage to the Premises or to the Tenant or to any
other persons claiming through or under Tenant, or their respective agents,
employees, licensees, invitees, guests or other such persons or to any property
of any such persons. Tenant shall not make any claim or demand upon or institute
any action against Landlord as a result of such injury or damage. Tenant
covenants and agrees during the Lease Term hereof to pay when due or reimburse
and indemnify and hold Landlord harmless from and against all inspection fees,
taxes, bonds, permits, certificates, assessments and sales, use, property or
other taxes, fees or tolls of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed against Landlord, any superior
landlord or Tenant by any federal, state, county or local governmental authority
upon or with respect to the Premises or the use thereof or upon the possession,
leasing, use operation or other disposition thereof or upon the rents, receipts
or earnings arising therefrom or upon or with respect to this Lease (excepting
only federal, state, and local net income taxes on the income of Landlord or any
superior landlord).
11.06 PAYMENT OF INSURANCE. In the event that Tenant shall fail to
obtain the insurance policies required hereby or to pay the premiums due for the
insurance policies required hereby, Landlord shall have the right, but not the
obligation, to pay the same in which case Tenant shall repay such amount plus
any penalties or additional amounts resulting therefrom to Landlord with
Tenant's next Minimum Annual Rent installment together with the applicable
Administrative Fee.
ARTICLE 12
ALTERATIONS
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12.01 PERMITTED IMPROVEMENTS. Except as provided in Section 12.03
hereof, and subject to the provisions of this Article 12, at Tenant's own
expense and after giving Landlord notice in writing of its intention to do so,
as well as providing copies of all architectural plans and specifications and
related governmental permits, Tenant may from time to time make alterations,
replacements, additions, changes, and improvements (collectively referred to in
this Article 12 as "Alterations") in and to the interior of the Premises as it
may find necessary or convenient for its purposes; provided, however, that no
such Alterations shall decrease the value of the Premises.
12.02 LIENS. Tenant shall pay the costs of any Alterations done on the
Premises pursuant to Section 12.01, and shall keep the Premises free and clear
of liens of any kind. Tenant shall indemnify and defend Landlord from and
against any liability, loss, damage, costs, attorneys' fees, and any other
expense incurred as a result of claims of lien by any person performing work or
furnishing materials or supplies for Tenant or any person claiming under Tenant.
Before the actual commencement of any work for which a claim of lien may be
filed, Tenant shall give Landlord notice of the intended commencement date at
least ten (10) days before said date to enable Landlord to post notices of non-
responsibility or any other notices which Landlord deems necessary for the
proper protection of Landlord's interest in the Premises and Landlord shall have
the right to enter the Premises and post such notices at any reasonable time.
12.03 STRUCTURAL ALTERATIONS. Tenant shall not make any structural
Alterations to the Premises including the foundations, structural walls, roof,
roof membrane, utilities and/or building systems, without obtaining the prior
written consent of Landlord. Landlord's consent may be conditioned upon Tenant's
removing any such Alterations upon the expiration or termination of the Lease
Term and restoring the Premises to the condition which existed on the date
Tenant took possession, subject to normal wear and tear. All work with respect
to any Alteration shall be done in a good and workmanlike manner by properly
qualified and licensed personnel, and such work shall be diligently prosecuted
to completion.
12.04 REMOVAL OF ALTERATIONS. All Alterations made on the Premises
shall become the property of Landlord at the expiration or termination of the
Lease Term and shall be surrendered with the Premises; provided, however, that
if Tenant is not in default at the time of such expiration or termination,
Tenant's equipment, machinery, and trade fixtures shall remain the property of
Tenant and may be removed by Tenant, and Tenant shall repair any damage
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by its removal of any such equipment, machinery, and trade fixtures.
12.05 ALTERATIONS REQUIRED BY LAW. Any Alteration, structural or
otherwise, to or on the Premises, or any part thereof, which may be necessary or
required by reason of any law, rule, regulation, or order promulgated by
competent government authority, shall be made by and at the sole cost and
expense of Tenant.
12.06 GENERAL CONDITIONS RELATING TO ALTERATIONS. Any Alteration,
structural or otherwise, to or on the Premises, shall be subject to the
following conditions:
(a) No Alteration shall be undertaken until Tenant shall have
procured and paid for all required permits and authorizations of all municipal
departments and governmental subdivisions having jurisdiction.
(b) Any Alteration involving an estimated cost of more than Twenty
Five and 00/100 Dollars ($25,000.00) shall be conducted under the supervision of
a licensed architect or engineer selected by Tenant and satisfactory to Landlord
and shall be made in accordance with detailed plans and specifications (the
"Plans and Specifications") and cost estimates prepared by such architect or
engineer and approved in writing in advance by Landlord.
(c) Any Alteration shall be made promptly and in a good workmanlike
manner and in compliance with all applicable permits and, authorizations and
building and zoning laws and all laws and in accordance with the orders, rules
and regulations of the Board of Fire Insurance Underwriters and any other body
hereafter exercising similar functions having or asserting jurisdiction over the
Premises.
(d) No Alteration shall tie-in or connect the Premises or any
improvements thereon with any property outside the Premises without the prior
written consent of Landlord.
(e) No Alteration shall reduce the value of the Premises or impair
the structural integrity of any building comprising a part of the Premises.
(f) In connection with any Alteration involving an estimated cost in
excess of Twenty Five and 00/100 Dollars ($25,000.00), Landlord may require
Tenant to post a bond or other security reasonably satisfactory to Landlord to
insure the completion of such Alteration.
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ARTICLE 13
SIGNS
In addition to those signs already existing at the Premises, Tenant
shall have the right to erect signs on the Premises or affix signs to the
windows and doors of the Premises of such sizes, colors, and designs as are
customarily used in other comparable Kenny Rogers Roasters, owned or operated by
Tenant. All signs on the Premises shall fully comply with all present and future
laws, ordinances, orders, rules, regulations and requirements of any
governmental entity having jurisdiction over the Premises.
ARTICLE 14
DAMAGE, DESTRUCTION, OBLIGATION TO REBUILD
14.01 OBLIGATION TO REBUILD. If any portion of the Premises is damaged
or destroyed by fire or other casualty, Tenant shall forthwith give notice
thereof to Landlord. Tenant shall, at its sole cost and expense, forthwith
repair, restore, rebuild or replace the damaged or destroyed improvements,
fixtures or equipment, and complete the same as soon as reasonably possible, to
the condition they were in prior to such damage or destruction, except for such
changes in design or materials as may then be required by law. Landlord, in such
event, shall, to the extent and at the times the proceeds of the insurance are
made available to Landlord, reimburse Tenant for the costs of making such
repairs, restoration, rebuilding and replacements on such terms as Landlord may
reasonably require. To the extent, if any, that the proceeds of insurance made
available as aforesaid are insufficient to pay the entire cost of making such
repairs, restoration, rebuilding and replacements, and notwithstanding the
expiration or termination of the Lease Term of this Lease, Tenant shall pay the
amount by which such costs exceed the insurance proceeds made available as
aforesaid. Any surplus of insurance proceeds over the cost of restoration, net
of all reasonable expenses incurred by Landlord in connection with the
administration thereof, shall be promptly paid over to Tenant.
14.02 NO ABATEMENT OF RENT. Notwithstanding the partial or total
destruction of the Premises and any part thereof, there shall be no abatement of
rent or of any other obligation of Tenant hereunder by reason of such damage or
destruction.
ARTICLE 15
EMINENT DOMAIN
15.01 TOTAL TAKING. If the entire Premises are taken under the power
of eminent domain by any public or quasi-public
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authority, this Lease shall terminate and expire as of the date of such taking,
and upon Tenant's payment to Landlord of all rents accruing through such date,
Landlord and Tenant shall each thereafter be released from any further liability
accrued under this Lease.
15.02 PARTIAL TAKING. In the event that (a) more than twenty-five
percent (25%) of the floor area of the Premises is taken under the power of
eminent domain by any public or quasi-public authority; or (b) by reason of any
appropriation or taking, regardless of the amount so taken, the remainder of the
Premises is not one undivided parcel of property; or (c) as a result of any
taking, regardless of the amount so taken, the remainder of the Premises is
rendered unsuitable for the continued operation of Tenant's business, either
Landlord or Tenant shall have the right to terminate.this Lease as of the date
Tenant is required to vacate a portion of the Premises, upon giving notice in
writing of such election within thirty (30) days after receipt by Tenant from
Landlord of written notice that said Premises has been so appropriated or taken.
In the event of such termination, upon Tenant's payment to Landlord of all rents
accruing through such date, both Landlord and Tenant shall thereupon be released
from any liability thereafter accruing hereunder. Landlord agrees immediately
after learning of any appropriation or taking to give to Tenant notice in
writing thereof. If both parties elect not to terminate this Lease, Tenant shall
remain in that portion of the Premises not so taken and Tenant, at Tenant's sole
cost and expense, shall restore the remaining portion of the Premises as soon as
possible to a complete unit of like quality and character as existed prior to
such taking. Landlord agrees to reimburse Tenant for the cost of restoration,
but in no event shall Landlord's obligation to reimburse Tenant for the cost of
restoring the remaining portion of the Premises exceed the amount of award of
compensation that Landlord receives for a partial taking of that portion of the
Premises resulting in the need for restoration. So long as this Lease is not
terminated in the manner provided above, there shall be an equitable adjustment
of the rent payable by Tenant hereunder by reason of such partial taking. Tenant
hereby waives any statutory rights of termination which may arise by
reason of any partial taking of the Premises under the power of eminent domain.
15.03 DISTRIBUTION OF AWARD. The entire award or compensation in such
eminent domain proceeding, whether for a total or partial taking or for
diminution in the value of the leasehold or for the fee shall be distributed to
Landlord, provided however, that Tenant may apply for award of the value of
Tenant's personal property, according to the law in effect in the jurisdiction
where the Premises are located, so long an such award does not diminish the
value of Landlord's award.
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15.04 TRANSFER UNDER THREAT OF TAKING. For the purposes of this Article
only, a voluntary sale or conveyance under threat and in lieu of condemnation
shall be deemed an appropriation or taking under the power of eminent domain.
ARTICLE 16
ASSIGNMENT AND SUBLETTING
16.01 LANDLORD'S CONSENT REQUIRED. For purposes of this Article 16, the
terms "assign" and "assignment" shall include and mean any act attempting to, or
document purporting to, assign, transfer, sublet, enter into license or
concession agreements for, change ownership of, mortgage or hypothecate this
Lease or Tenant's interest in and to the Premises or any part thereof. Tenant
shall not assign this Lease or Tenant's interest in and to the Premises without
obtaining the prior written consent of Landlord, such consent not to be
unreasonably withheld. Any attempted assignment without such consent shall be
void, and shall constitute a breach of this Lease. Tenant hereby agrees to pay
to Landlord twenty five percent (25%) of any rent or other substitute
consideration in excess of the monthly rent payable hereunder (as adjusted from
time to time) which Tenant receives by reason of any permitted assignment (the
"Rent Premium"), such payment of Tenant's share of the Rent Premium to be made
within two (2) business days following the date that such payment is due to
Tenant.
16.02 ASSUMPTION OF OBLIGATIONS. Any assignment to which Landlord has
consented shall be by an instrument in writing and any assignee, transferee,
licensee, concessioner, or mortgagee shall agree for the benefit of Landlord to
be bound by, assume, and perform all of the terms, covenants, and conditions of
this Lease. Consent by Landlord to any assignment shall not constitute consent
to any subsequent assignment.
16.03 ASSIGNMENT TO AFFILIATE. Notwithstanding anything to the contrary
contained in this Article 16, Tenant shall have the right to assign this Lease,
or sublet the Premises or any portion thereof, without the consent of, but with
notice to, Landlord to any corporation (a) with which Tenant may merge or
consolidate, (b) which is a parent or subsidiary of Tenant, or (c) which is the
successor corporation to Tenant in the event of a corporate reorganization,
provided that said assignee assumes, in full, the obligations of Tenant under
this Lease and Tenant remains primarily liable under this Lease. Further,
Landlord agrees to not unreasonably withhold its consent to an assignment of
this Lease to Tenant's franchisor or to another franchisee of Tenant's
franchisor; provided that such other franchisee of Tenant's
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franchisor satisfies Landlord's then existing underwriting standards and,
provided further, that such assignee assumes, in full, the obligations of Tenant
under this Lease and Tenant remains primarily liable under this Lease.
16.04 HYPOTHECATION OF LEASE. Without the prior written consent of
Landlord, Tenant may not mortgage, pledge or otherwise encumber its leasehold
estate hereunder, and any attempt to mortgage, pledge or otherwise encumber such
estate shall be null and void and of no force and effect.
16.05 CORPORATE/PARTNERSHIP/LIMITED LIABILITY COMPANY RESTRICTIONS. In
the event that Tenant shall, at any time, be a corporation, no change shall
occur in one or a series of related transactions in the majority ownership of
and/or the power to vote the majority of the outstanding capital stock of
Tenant, without the prior written consent of Landlord. In the event that Tenant
shall, at any time, be a partnership, no change shall occur in any one or more
of the general partners of the partnership or in the control of any general
partner, without the prior written consent of Landlord. In the event that Tenant
shall, at any time, be a limited liability company, no change shall occur in any
member of the limited liability company or in the control of any member, without
the prior written consent of Landlord.
16.06 NO RELEASE OF TENANT. Regardless of Landlord's consent, no
subletting or assignment shall release Tenant of Tenant's obligation or alter
the primary liability of Tenant to pay the rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any other person shall not be deemed to be a waiver by Landlord of
any provision hereof. Consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting. In the event of
default by any assignee of Tenant or any successor Tenant, in the performance of
any of the terms hereof, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against said assignee. 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.
ARTICLE 17
DEFAULT; REMEDIES
17.01 DEFAULT. The occurrence of any one or more of the following
events shall constitute a material default under this Lease by Tenant:
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(a) The vacating or abandonment of the Premises by Tenant.
(b) The failure by Tenant to make any payment within five (5) days
of the date when due of Minimum Annual Rent, Impositions or any other payment
required to be made by Tenant hereunder.
(c) Except as otherwise provided in this Lease, the failure by Tenant
to observe or perform any of the covenants, conditions, or provisions of this
Lease to be observed or performed by Tenant, other than described in Paragraph
(b) above, where such failure shall continue for a period of fifteen (15) days
after written notice thereof from Landlord to Tenant; provided, however, that if
the nature of Tenant's noncompliance is such that more than fifteen (15) days
are reasonably required for its cure, then Tenant shall not be deemed to be in
default if Tenant commences such cure within said fifteen (15)-day period and
thereafter diligently prosecutes such cure to completion and the final
determination thereof.
(d) (i) The making by Tenant of any general arrangement or general
assignment for the benefit of creditors; (ii) Tenant becomes a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in
the case of a petition filed against Tenant, the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or (iv) the attachment, execution, or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. In the event that any provision of this Section 17.01(d) is contrary to
any applicable law, such provision shall be of no force or effect.
(e) The discovery by Landlord that any financial statement given to
Landlord by Tenant, or any assignee, or successor-in-interest of Tenant, was
false in any material respect.
(f) The discovery by Landlord of any Tenant default under the
Tenant's franchise agreement.
(g) The default by Tenant under any other agreement with Landlord or
any "affiliate" (as hereinafter defined) of Landlord. For purposes of this
Lease, "affiliate" shall mean (i) a person or entity which owns ten percent
(10%) or more of the voting securities of Landlord, or (ii) a person or entity
which directly or indirectly controls or is controlled by Captec Financial
Group, Inc., a Michigan corporation.
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17.02 REMEDIES. In the event of any such material default by Tenant,
Landlord may at any time thereafter, with or without notice or demand and
without limiting Landlord in the exercise of any right or remedy which Landlord
may have by reason of such default:
(a) Terminate Tenant's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Tenant shall immediately surrender possession of the Premises to Landlord.
In such event, Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant's default including, but not limited
to, the cost of recovering possession of the Premises, expenses of reletting,
including reasonable and necessary renovation and alteration of the Premises,
reasonable attorneys' fees, and any real estate commission actually paid; and
the worth at the time of award by the court having jurisdiction thereof of the
amount by which the unpaid rent for the balance of the term after the time of
such award exceeds the amount of such unpaid rent for the same period that
Tenant proves could be reasonably avoided.
(b) Maintain Tenant's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall continue in
effect whether or not Tenant shall have vacated or abandoned the Premises. In
such event Landlord shall be entitled to enforce all of Landlord's rights and
remedies under the Lease, including the right to recover the rent as it becomes
due hereunder.
(c) Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the jurisdiction where the
Premises is located, including, without limitation, an action to recover
monetary damages in an amount equal to the sum of (i) all due and unpaid
installments of the Minimum Annual Rent, together with any other due and unpaid
monetary obligations of the Tenant then due under the terms of this lease,
together with the applicable Administrative Fee, plus (ii) the present value of
all payments of Minimum Annual Rent not yet due.
(d) The rights and remedies whether herein or anywhere else in
this Lease provided shall be cumulative, and the exercise of any one right or
remedy shall not preclude the exercise of or act as a waiver of any other right
or remedy of Landlord hereunder, or which may be existing at law, or in equity
or by statute or otherwise.
(e) In addition to the foregoing, Tenant, and its successors and
assigns, shall at all times indemnify Landlord for,
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defend Landlord against and save Landlord harmless from any liability, loss,
cost, injury, damage or other expense or risk whatsoever, directly or
indirectly, arising out of, resulting from or otherwise in connection with (i)
the failure for any reason on the part of Tenant to perform, observe or comply
with any of the covenants, conditions and obligations under this Lease to be
performed, observed or complied with by Tenant, and/or (ii) the failure for any
reason of any representation, warranty or covenant given by Tenant in connection
with the execution of this Lease by Landlord to be materially true, complete and
accurate.
(f) Prior to exercising any rights under Sections 17.02(a), (b)
or (c), Landlord shall provide written notice to Tenant's franchisor, and
Tenant's franchiser shall have ten (10) days to cure any monetary default(s) and
thirty (30) days to cure any non-monetary default(s).
17.03 ADMINISTRATIVE FEE. Tenant hereby acknowledges that late payment
by Tenant to Landlord of rent and other sums due hereunder will cause Landlord
to incur administrative costs not contemplated by this Lease, the exact amount
of which will be extremely difficult to ascertain. Such administrative costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed on Landlord by the terms of any superior lease,
mortgage or trust deed covering the Premises. Accordingly, if any installment of
rent or any other sum due from Tenant shall not be received by Landlord or
Landlord's designee within five (5) days of the date such amount shall be due,
then, without any requirement for notice to Tenant, Tenant shall pay to Landlord
an administrative fee equal to five percent (5%) of such overdue amount (the
"Administrative Fee"). The parties hereby agree that such Administrative Fee
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant. Acceptance of such Administrative Fee by
Landlord shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder. In the event that an Administrative Fee
is payable hereunder, whether or not collected, for three (3) consecutive
installments of Minimum Annual Rent, then the minimum Annual Rent shall, at
Landlord's option, become due and payable quarterly in advance, rather than
monthly, notwithstanding any other provision of this Lease to the contrary.
ARTICLE 18
SUBORDINATION
At Landlord's option, this Lease shall be subordinate to any superior
lease, mortgage, deed of trust, or any other
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hypothecation or security now or hereafter placed upon the Premises and to any
and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements, and extensions thereof; provided
that a Subordination, Non Disturbance and Attornment Agreement substantially in
the form attached hereto as Exhibit E, is executed by Landlord, Tenant and any
other necessary party with respect to any superior lease, mortgage, deed of
trust, hypothecation, or security.
ARTICLE 19
QUIET ENJOYMENT
Subject to the terms and conditions of this Lease and conditional upon
the performance of all of the provisions to be performed by Tenant hereunder,
Landlord agrees to secure to Tenant during the Lease Term and any and all
extensions thereof, the quiet and peaceful possession of the Premises and all
rights and privileges appertaining thereto and under this Lease.
ARTICLE 20
REPRESENTATIONS AND WARRANTIES
20.01 REPRESENTATIONS AND WARRANTIES. To induce Landlord to enter into
this Lease, Tenant represents and warrants to Landlord as follows:
(a) It is a corporation duly organized and validly existing, in
good standing under the laws of Delaware, and is qualified to do business and is
in good standing in the jurisdiction in which the Premises are located with full
power and authority to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Lease has been duly
authorized by all action as may be required under the terms and provisions of
its governing instruments and the laws of the jurisdiction where the Premises
are located; this Lease will not violate or result in any breach of, or
constitute a default under, or result in the creation of any lien, encumbrance,
attachment, charge or other right or claim of any other party upon any assets of
Tenant or upon Tenant's beneficiary interest under the terms of this Lease
pursuant to any instrument or applicable law to which Tenant is a party or by
which it may be bound or create in favor of or grant to any third party any
interest whatsoever in Tenant's interest under the terms of this Lease; this
Lease is valid and enforceable in accordance with its terms, and the execution
and delivery of this Lease, and the consummation of the transactions
contemplated hereby, does not require the approval or consent of any
governmental authority having jurisdiction over Tenant or its
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property, or if such approval or consent is required, it has been obtained.
(c) Tenant's financial statements heretofore delivered to
Landlord are true and correct in all respects, have been prepared in accordance
with generally accepted accounting principles, and fairly present the respective
financial conditions of the subjects thereof as of the respective dates thereof.
No materially adverse change has occurred in the financial conditions reflected
therein since the respective dates thereof.
(d) There are no actions, suits or proceedings pending, or to
the best of Tenant's knowledge, threatened, against or affecting it or the
Premises, or involving the validity or enforceability of this Lease, at law or
in equity, or before or by any governmental authority except actions, suits and
proceedings fully covered by insurance or which, if adversely determined, would
not materially impair the ability of Tenant to satisfy their obligations under
this Lease.
(e) Tenant is not in default under any obligation for the
payment of borrowed money, for the deferred purchase price of property or for
the payment of any rent under any lease agreement, which, either individually or
in the aggregate, would adversely affect the financial condition of Tenant, or
the ability of Tenant to perform its obligations hereunder, or comply with the
terms of this Lease.
(f) Tenant's franchise agreement with Roasters Franchise Corp.,
a Florida corporation, is in full force and effect, there are no defaults under
any of the provisions thereof, all conditions to the effectiveness or continuing
effectiveness thereof required to be satisfied as of the date hereof have been
satisfied, and Tenant will take all actions necessary or required to keep the
franchise agreement in full force and effect throughout the term of this Lease.
(g) At the request of Tenant, the purchase contract between
Suburban Restaurants of Western New York, as Seller, and Tenant, as Purchaser
("Contract") has been assigned to Landlord as of the date hereof. Tenant has
performed all due diligence and satisfied all conditions required under the,
Contract, and Tenant instructs Landlord to accept the deed from the Seller under
the Contract.
20.02 FINANCIAL STATEMENTS. Tenant hereby covenants and agrees to
deliver annual audited financial statements for Tenant to Landlord within one
hundred twenty (120) days after the end of Tenant's fiscal year, and management
prepared and certified quarterly financial statements for Tenant within sixty
(60) days
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after the end of Tenant's respective fiscal quarter Tenant agrees to assist
Landlord in obtaining consent from Tenant's auditor in the event that the audit
report is required to be included in a regulatory report filed by Landlord. Such
financial statements shall be true and correct in all respects, be prepared in
accordance with generally accepted accounting principles, and fairly present the
respective financial conditions of the subjects thereof as of the respective
dates thereof. If Tenant's financial statements are prepared on a consolidated
basis, Tenant hereby covenants and agrees to prepare financial statements
specifically relating to the operation of the Premises. Tenant further agrees to
deliver annual, unit level profit and loss statements on the operations of the
Premises.
ARTICLE 21
SURRENDER OF PREMISES
Except for changes resulting from eminent domain proceedings, at the
expiration or sooner termination of the Lease Term, Tenant shall surrender the
Premises in the same condition as the Premises were in upon delivery of
possession thereto under this Lease, reasonable wear and tear excepted, and
shall surrender all keys for the Premises to Landlord at the place then fixed
for the payment of rent and shall inform Landlord of all combinations on locks,
safes and vaults, if any, in the Premises. Tenant shall at such time remove all
of Tenant's property, as well as any alterations or improvements, if requested
to do so by Landlord, and shall repair any damage to the Premises caused
thereby, and any or all of such property not so removed shall, at Landlord's
option, become the exclusive property of Landlord or be disposed of by Landlord,
at Tenant's cost and expense, without further notice to or demand upon Tenant.
If the Premises are not surrendered as and when aforesaid, Tenant shall
indemnify Landlord against lose or liability resulting from the delay by Tenant
in so surrendering the Premises including, without limitation, any claims made
by any succeeding occupant founded on such delay. Tenant's obligation to observe
or perform this covenant shall survive the expiration or other termination of
the Lease Term.
ARTICLE 22
OPTION TO PURCHASE
22.01 OPTION TO PURCHASE. Landlord hereby grants Tenant an option to
purchase the Premises in accordance with the terms and conditions hereinafter
set forth. Tenant's option to purchase the Premises shall be exercised by
Tenant's delivery during the "window period" (as hereinafter defined) of a
written notice to Landlord of such election, time being of the essence. For
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purposes of this Lease, "window period" shall mean a period of time commencing
on the first day following the sixth anniversary date of the Lease and expiring
ninety (90) days thereafter.
22.02 OPTION PRICE. The option price that Tenant shall be required to
pay Landlord for the Premises shall equal One Million Two Hundred Eleven
Thousand Six Hundred Ninety Two and 00/100 Dollars ($1,211,692.00).
22.03 CLOSING. Tenant shall close on the purchase of the Premises
within sixty (60) days after the date of Tenant's written notice of its election
to exercise such option to purchase. At the closing, Tenant shall pay Landlord
the purchase price in immediately available funds and upon receipt of payment
Landlord shall deliver a deed to Tenant conveying marketable fee simple title to
the Premises to Tenant. Tenant shall pay all costs associated with the closing,
including, without limitation, title insurance premiums, recordation and
transfer taxes, transfer fees, appraisal fees, brokerage commissions and
attorneys' fees, (including the reasonable fees of Landlord's counsel). The
Premises shall be conveyed free and clear of all financing encumbrances created
by Landlord and/or any superior landlord.
22.04 TERMINATION OF OPTION. Tenant shall have no right to exercise
the option to purchase the Premises if: (a) this Lease has expired or been
terminated, (b) a material default (as defined in Section 17.01 hereof) exists
as of the date Tenant attempts to exercise such option, or (c) in the event that
Tenant has been more than fifteen (15) days delinquent in the payment of Minimum
Annual Rent on three (3) or more occasions during the Lease Term.
ARTICLE 23
BANKRUPTCY OR INSOLVENCY
23.01 BANKRUPTCY OR INSOLVENCY. Landlord and Tenant acknowledge and
agree that the provisions of this Section 23.01 shall control notwithstanding
anything to the contrary contained in this Lease:
(a) In the event that Tenant shall become a debtor under Chapter
7 of the Bankruptcy Reform Act of 1978, 11 U.S.C. 1, ET SEQ. ("Bankruptcy
Code"), and Tenant's trustee or Tenant shall elect to assume this Lease for the
purpose of assigning the same or otherwise, such election and assignment may be
made only if the provisions of this Section 23.01 are satisfied. If Tenant or
Tenant's trustee shall fail to assume this Lease within sixty (60) days after
the entry of an order for relief, this Lease shall be deemed to have been
rejected. Immediately thereupon Landlord shall be entitled to possession of the
Premises without further
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obligation to Tenant or Tenant's trustee and this Lease, upon the election of
Landlord, shall terminate, but Landlord's right to be compensated for damages
shall survive, whether or not this Lease shall be terminated.
(b) In the event that a voluntary petition for reorganization is
filed by Tenant, or an involuntary petition is filed against Tenant under
Chapter 11 of the Bankruptcy Code, or in the event of the entry of an order for
relief under Chapter 7 in a case which is then transferred to Chapter 11,
Tenant's trustee or Tenant, as debtor-in-possession, must elect to assume this
Lease within sixty (60) days from the date of the filing of the petition under
Chapter 11 or the transfer thereto, or Tenant's trustee or the
debtor-in-possession shall be deemed to have rejected this Lease. Immediately
thereupon Landlord shall be entitled to possession of the Premises without
further obligation to Tenant@or Tenant's trustee and this Lease, upon the
election of Landlord, shall terminate, but Landlord's right to be compensated
for damages, shall survive, whether or not this Lease shall be terminated.
(c) No election by Tenant's trustee or the debtor-in-possession
to assume this Lease, whether under Chapter 7 or Chapter 11, shall be effective
unless each of the following conditions has been satisfied:
(i) Tenant's trustee or the debtor-in-possession has cured
all defaults under this Lease, or has provided Landlord with evidence
satisfactory to Landlord that it will cure all defaults susceptible of
being cured by the payment of money within ten (10) days from the date
of such assumption and that it will cure all other defaults under this
Lease which are susceptible of being cured by the performance of any
act within thirty (30) days after the date of such assumption.
(ii) Tenant's trustee or the debtor-in-possession has
compensated, or has provided Landlord with evidence satisfactory to
Landlord that, within ten (10) days from the date of such assumption,
that it will compensate Landlord for any actual pecuniary loss incurred
by Landlord arising from the default of Tenant, Tenant's trustee, or
the debtor-in- possession as indicated in any statement of actual
pecuniary loss sent by Landlord to Tenant's trustee or the debtor-in-
possession.
(iii) Tenant's trustee or the debtor-in-possession (A) has
provided Landlord with "Assurance", as hereinbelow defined, of the
future performance of each of the obligations under this Lease of
Tenant, Tenant's trustee or the debtor-
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in-possession, and (B) shall, in addition to any other security
deposits held by Landlord, deposit with Landlord, as security for the
timely payment of Minimum Annual Rent and for the performance of all
other obligations of Tenant under this Lease, an amount equal to three
(3) monthly installments of minimum Annual Rent (at the rate then
payable), and (C) pay in advance to Landlord on the date each
installment of Minimum Annual Rent is due and payable, one-twelfth of
Tenant's annual obligations for Impositions to be made by Tenant
pursuant to this Lease. The obligations imposed upon Tenant's trustee
or the debtor-in-possession by this Section 23.01 shall continue with
respect to Tenant or any assignee of this Lease, after the conclusion
of proceedings under the Bankruptcy Code.
(iv) Such assumption will not breach or cause a default
under any provision of any other lease, mortgage, financing agreement
or other agreement by which Landlord is bound, relating to the
Premises.
(d) For purposes of Section 23.01(c)(iii) hereof, Landlord and
Tenant shall acknowledge that "Assurance" shall mean no less than:
(i) Tenant's trustee or the debtor-in-possession has and
will continue to have sufficient unencumbered assets after the payment
of all secured obligations and administrative expenses to assure
Landlord that sufficient funds will be available to fulfill the
obligations of Tenant under this Lease; and
(ii) To secure to Landlord the obligations of Tenant,
Tenant's trustee or the debtor-in-possession and to assure the ability
of Tenant, Tenant's trustee or the debtor- in-possession to cure the
defaults under this Lease, monetary and/or nonmonetary, there shall
have been: (A) sufficient cash deposited with Landlord, or (B) the
bankruptcy court shall have entered an order segregating sufficient
cash payable to Landlord, and/or (C) Tenant's trustee or the
debtor-in-possession shall have granted to Landlord a valid and
perfected first lien and security interest and/or mortgage in property
of Tenant, Tenant's trustee or the debtor-in-possession, acceptable as
to value and kind to Landlord.
(e) In the event that this Lease is assumed in accordance with
Section 23.01(b) hereof and thereafter Tenant is liquidated or files, or has
filed against it, a subsequent petition under any provision of the Bankruptcy
Code or any similar statute for relief of debtors, Landlord may, at its option,
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terminate this Lease and all rights of Tenant hereunder, by giving Tenant notice
of its election to so terminate within thirty (30) days after the occurrence of
either of such events.
(f) If Tenant's trustee or the debtor-in-possession has assumed
this Lease pursuant to the terms and provisions of this Section 23.01 for the
purpose of assigning (or elects to assign) this Lease, this Lease may be so
assigned only if the proposed assignee has provided adequate assurance of future
performance of all of the terms, covenants and conditions of this Lease to be
performed by Tenant. Landlord shall be entitled to receive all consideration for
such assignment, whether cash or otherwise. As used in this Section 23.01(f)
"adequate assurance of future performance" shall mean at least that clauses (B)
and (C) of Section 23.01(c)(iii) hereof and each of the following conditions,
has been satisfied:
(i) The proposed assignee has furnished Landlord with a
current financial statement audited by a certified public accountant
determined in accordance with generally accepted accounting principles
consistently applied indicating a credit rating, net worth and working
capital in amounts which Landlord reasonably determines to be
sufficient to assure the future performance of such assignee of
Tenant's obligations under this Lease, but in no event indicating a net
worth less than the net worth of the Tenant and any guarantors of this
Lease, on the date of execution hereof.
(ii) Such assignment will not breach or cause a default
under any provision of any other lease, mortgage, financing agreement
or other agreement by which Landlord is bound, relating to the
Premises.
(iii) The proposed assignment will not release or impair any
guarantee under this Lease.
(g) When, pursuant tb the Bankruptcy Code, Tenant's trustee or
the debtor-in-possession shall be obligated to pay reasonable use and occupancy
charges for the use of the Premises, such charges shall not be less than the
Minimum Annual Rent and all additional rent payable by Tenant under this Lease
and shall be paid at the times and when due as though such charges were Minimum
Annual Rent and additional rent.
(h) Anything in this Lease to the contrary notwithstanding,
neither the whole nor any portion of Tenant's interest in this Lease or its
estate in the Premises shall pass to any trustee, receiver, assignee for the
benefit of creditors, or any other similar person or entity, or otherwise by
operation of law under the Bankruptcy Code or any similar federal statute now
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<PAGE>
or hereinafter enacted, or under the laws of any state, district or municipality
having jurisdiction of the person or property of Tenant unless Landlord shall
have consented to such transfer in writing. No acceptance by Landlord of rent or
any other payments from any such trustee, receiver, assignee, person or other
entity shall be deemed to constitute such consent by Landlord nor shall it be
deemed a waiver of Landlord's right to terminate this Lease for any transfer of
Tenant's interest under this Lease without such consent.
(i) Anything in this Lease to the contrary notwithstanding,
Tenant covenants and agrees that this Lease is an extension of financial
benefits and accommodations to Tenant which are uniquely personal in nature and
such financial benefits and accommodations are a material inducement for
Landlord's execution and delivery of this Lease and are an integral part of the
consideration for this Lease.
(j) Notwithstanding anything in this Lease to the contrary, and
as a material inducement for Landlord's execution and delivery of this Lease,
and the extension of financial benefits and accommodations uniquely personal to
Tenant, Tenant covenants and agrees for itself, its successors and assigns, that
it will maintain at all times a net worth determined in accordance with
generally accepted accounting principles consistently applied of not less than
the net worth so determined of Tenant and any guarantors of this Lease on the
date of execution hereof. Failure to comply with the provisions of this Section
23.01(j) shall be deemed a default relating to a monetary obligation entitling
Landlord to the remedies herein provided.
(k) In the event of an assumption or assignment, or both, of
Tenant's interests pursuant to this Section 23.01, the right to extend the term
of this Lease for an extended term beyond the then term of this Lease and the
option to purchase the Premises shall each be extinguished.
ARTICLE 24
HAZARDOUS MATERIALS
24.01 REPRESENTATIONS AND WARRANTIES. Notwithstanding anything to the
contrary which may be contained in this Lease, Tenant represents, warrants and
covenants to Landlord as follows:
(a) To the best of Tenant's knowledge after due inquiry, there
are no and have been no violations of the Relevant Environmental Laws (as
hereinafter defined) respecting the Premises and no consent orders have been
entered with respect thereto.
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(b) To the best of Tenant's knowledge after due inquiry, there
are no and have been no Hazardous wastes (as hereinafter defined) or Asbestos
(as hereinafter defined) either at, upon, under or within, or discharged or
emitted at or from, the Premises, including, but not limited to, the air, soil,
surface, and ground water; no Hazardous Wastes or Asbestos have flowed, blown or
otherwise become present at the Premises from neighboring land; and no Hazardous
Wastes or Asbestos have been removed from the Premises other than those
Hazardous Wastes which are necessary and commercially reasonable for the conduct
of Tenant's business operated on the Premises and which Hazardous Wastes have
been, at all times prior to the date hereof, and at all times hereafter shall
be, handled and disposed of in compliance with all Relevant Environmental Laws
and industry standards and in a commercially reasonable manner by Tenant.
(c) The Premises will not be used for the purpose of storing
Hazardous Wastes, and no such storage or use will otherwise be allowed on the
Premises which will cause or increase the likelihood of causing the release of
Hazardous Wastes onto the Premises. There are no underground storage tanks
located on the Premises.
(d) Tenant is not aware of any claims or litigation, and has not
received any communication from any person (including any governmental
authority), concerning the presence or possible presence of Hazardous Wastes or
Asbestos at or adjacent to the Premises or concerning any violation or alleged
violation of the Relevant Environmental Laws respecting the Premises. Tenant
shall promptly notify Landlord of any such claims and shall furnish Landlord
with a copy of any such communications received by Tenant.
(e) Tenant shall notify Landlord promptly and in reasonable
detail in the event that Tenant becomes aware of or suspects the presence of
Hazardous Wastes (other than those Hazardous Wastes which are necessary and
commercially reasonable for the conduct of Tenant's business operated on the
Premises and which Hazardous Wastes have been, at all times prior to the date
hereof, and at all times hereafter shall be, handled and disposed of in
compliance with all Relevant Environmental Laws and industry standards and in a
commercially reasonable manner by Tenant) or Asbestos or a violation of the
Relevant Environmental Laws, at or adjacent to the Premises.
(f) Tenant shall ensure that the Premises complies and continues
to comply in all respects with the Relevant Environmental Laws.
35
<PAGE>
(g) If the Premises are used or maintained so as to subject
Tenant, Landlord or the user of the Premises to a claim of violation of the
Relevant Environmental Laws (unless contested in good faith by appropriate
proceedings), Tenant shall immediately cease or cause a cessation of such use or
operations and shall remedy and fully cure any conditions arising therefrom, at
its own cost and expense.
(h) Upon Landlord's reasonable belief that there is a breach of
one of the environmental representations or warranties set forth above, Tenant
shall permit Landlord, at its option, at any time upon five (5) days prior
written notice to Tenant, to cause or conduct a complete environmental audit to
be performed at Tenant's sole cost and expense.
24.02 DEFINITIONS.
(a) The "Relevant Environmental Laws," as referred to herein,
shall mean all applicable federal, state and local laws, rules, regulations,
orders, judicial determinations, and decisions or determinations by any
judicial, legislative or executive body of any governmental or
quasi-governmental entity, whether in the past, the present or the future, with
respect to: (A) the installation, existence, or removal of, or exposure to,
Asbestos on the Premises; (B) the existence on, discharge from, or removal from
the Premises of Hazardous Wastes; or (C) the effects on the environment of the
Premises or of any activity now, previously, or hereafter conducted on the
Premises. The Relevant Environmental Laws shall include, but not be limited to,
the following: (1) the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Sections 9601 ET SEQ.; the Superfund Amendments and
Reauthorization Act, Public Law 99-499, 100 Stat. 1613; the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 ET SEQ.; the National
Environmental Policy Act, 42 U.S.C. Section 4321; the Safe Drinking Water Act,
42 U.S.C. Sections 300F ET SEQ.; the Toxic Substances Control Act, 15 U.S.C.
Section 2601; the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801; the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 ET SEQ.;
the Clean Air Act, 42 U.S.C. Sections 7401 ET SEQ.; and the regulations
promulgated in connection therewith; (2) Environmental Protection Agency
regulations pertaining to Asbestos (including 40 C.F.R. Part 61, Subpart M);
Occupational Safety and Health Administration regulations pertaining to Asbestos
(including 29 C.F.R. Sections 1910.1001 and 1926.58); as each may now or
hereafter be amended; and (3) any state and local laws and regulations
pertaining to Hazardous wastes and/or Asbestos;
(b) "Asbestos," as referred to herein, shall have the meanings
provided under the Relevant Environmental Laws, and shall include, but not be
limited to, asbestos fibers and friable
36
<PAGE>
asbestos, as such terms are defined under the Relevant Environmental Laws; and
(c) "Hazardous Wastes," as referred to herein, shall mean any
of the following as defined by the Relevant Environmental Laws: solid wastes;
petroleum and petroleum derivatives; natural or synthetic gas; radon gas; toxic
or hazardous substances, wastes, pollutants or contaminants (including, but not
limited to, polychlorinated biphenyls ("PCB's"), paint containing lead, and urea
formaldehyde); and discharges of sewage or effluent.
24.03 TENANT'S OBLIGATION. At its sole cost and expense, Tenant shall:
(a) Pay immediately when due the cost of compliance with the
Relevant Environmental Laws.
(b) Keep the Premises free of any lien imposed pursuant to the
Relevant Environmental Laws.
24.04 LANDLORD OPTIONS. In the event that Tenant fails to comply with
the requirements of this Article 24, after notice to Tenant and the earlier of
the expiration of any applicable cure period hereunder, or the expiration of the
cure period permitted under the Relevant Environmental Laws, if any, or such
earlier time if Landlord determines that life, person or property is in
jeopardy, Landlord may, but shall not be obligated to, exercise its right to do
one or more of the following: (a) declare that such failure constitutes a
default; and/or (b) take any and all actions, at Tenant's expense, that Landlord
deems necessary or desirable to cure said failure of compliance.
Any costs incurred pursuant to this Section 24.04 shall become
immediately due and payable by Tenant without notice and together with the
applicable Administrative Fee.
24.05 INDEMNITY. Landlord shall not be liable for and Tenan shall
immediately pay to Landlord when incurred and shall indemnify, defend and hold
Landlord harmless from and against, all loss, cost, liability, damage and
expense (including, but not limited to, attorneys' fees and costs incurred in
the investigation, defense and settlement of claims) that Landlord may suffer or
incur as a result of or in connection in any way with any of the Relevant
Environmental Laws, any environmental assessment or study from time to time
undertaken or requested by Tenant or Landlord, or breach of any covenant or
undertaking by the Tenant herein.
24.06 SURVIVAL. The provisions of this Article 24 shall survive the
expiration or termination of the Lease Term.
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ARTICLE 25
GENERAL PROVISIONS
25.01 ESTOPPEL CERTIFICATES. Each party ("Responding Party") shall at
any time upon not less than ten (10) days' prior written notice from the other
party ("Requesting Party") execute, acknowledge, and deliver to the Requesting
Party a statement substantially in the form attached hereto as Exhibit B in
writing, certifying and acknowledging the following: (i) that this Lease
represents the entire agreement between Landlord and Tenant, and is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the Minimum Annual Rent and other charges are
paid in advance, if any; and (ii) that there are not, to the Responding Party's
knowledge, any uncured defaults on the part of the Requesting Party, or
specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises or of the business of the Requesting
Party.
25.02 SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
25.03 ENTIRE AGREEMENT. It is understood that there are no oral or
written agreements or representations between the parties hereto affecting this
Lease, and that this Lease and the Exhibits hereto supersede and cancel any and
all previous negotiations, arrangements, representations, brochures, displays,
projections, estimates, agreements, and understandings, if any, made by or
between Landlord and Tenant with respect to the subject matter thereof and none
thereof shall be used to interpret, construe, supplement, or contradict this
Lease. This Lease, and the Exhibits hereto, and all amendments hereto,
constitute and shall be considered to be the only agreement between the parties
hereto and their representatives and agents.
All negotiations and oral agreements acceptable to both parties have
been merged into and are included herein and in the Exhibits hereto.
25.04 NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and may be given by personal delivery, certified mail return
receipt requested or by nationally recognized overnight courier service and if
given personally or by mail or courier service, shall sufficiently given if
addressed to Tenant or to Landlord, as the case may be, at the addresses noted
in Article 1 hereof. Either party may by notice to the other
38
<PAGE>
specify a different address for notice purposes. A copy of all notices required
or permitted to be given to Landlord hereunder shall be concurrently transmitted
to such party or parties at such addresses an Landlord may from time to time
hereafter designate by notice to Tenant.
25.05 WAIVERS. No waiver by Landlord of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Tenant of the same of any other provision. Landlord's consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act by Tenant. The
acceptance of rent hereunder by Landlord shall not be a waiver of any preceding
breach by Tenant of any provision hereof, other than the failure of Tenant to
pay the particular rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent.
25.06 RECORDING. Either Landlord or Tenant shall, upon request of the
other, execute, acknowledge, and deliver to the other a "short form" memorandum
of this Lease for recording purposes. Such memorandum shall be substantially in
the form attached hereto as Exhibit C. In addition, any termination agreement
shall be similarly recorded, which agreement shall survive the termination of
this Lease.
25.07 HOLDING OVER. If Tenant remains in Possession of the Premises or
any part thereof after the expiration or termination of the Lease Term, such
occupancy shall be a tenancy from month-to-month upon all the provisions of this
Lease pertaining to the obligations of Tenant and Tenant shall thereby waive its
rights of notice to quit, but all options, if any, granted under the terms of
this Lease shall be deemed terminated and be of no further force or effect. The
monthly rental during such hold-over period shall be equal to two hundred
percent (200%) of the monthly installment of Minimum Annual Rent payable
immediately prior to expiration or termination of the Lease Term. In addition,
Tenant shall continue to be obligated to pay all Impositions and other amounts
required to be paid by the terms of this Lease.
25.08 CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
25.09 CHOICE OF LAW. The laws of the jurisdiction in which the Premises
is located shall govern the validity, performance, and enforcement of this
Lease.
25.10 ATTORNEYS' FEES. Should either party institute any action or
proceeding to enforce any provision hereof or for a
39
<PAGE>
declaration of such party's rights or obligations hereunder, the prevailing
party shall be entitled to receive from the losing party such amounts as the
court may adjudge to be reasonable attorneys fees for services rendered to the
party prevailing in any such action or proceeding, and such fees shall be deemed
to have accrued upon the commencement of such action or proceeding and shall be
enforceable whether or not such, action or proceeding is prosecuted to judgment.
25.11 WAIVER OF JURY TRIAL. Landlord and Tenant each hereby waives all
right to a trial by jury in any claim, action, proceeding or counterclaim by
either Landlord or Tenant against the other on any matters arising out of or in
any way connected with this Lease, the relationship of Landlord and Tenant
and/or Tenant's use or occupancy of the Premises.
25.12 LIABILITY OF LANDLORD.
(a) In the event of any sale or other transfer of Landlord's
interest in the Premises, Landlord shall be and hereby is entirely freed and
relieved of all liabilities and obligations of Landlord hereunder arising after
the date of such transfer.
(b) Notwithstanding anything contained herein to the contrary,
it is specifically understood and agreed that there shall be no personal
liability of Landlord in respect of any of the terms, covenants, conditions or
provisions of this Lease, and in the event of a breach or default by Landlord of
any of its liabilities and obligations under this Lease, Tenant and any persons
claiming by, through or under Tenant shall look solely to the equity of the
Landlord in the Premises for the satisfaction of Tenant's and/or such persons'
remedies and claims for damages.
25.13 NO MERGER. There shall be no merger of this Lease, or the
leasehold estate created by this Lease, with any other estate or interest in the
Premises, or any part thereof, by reason of the fact that the same person, firm,
corporation or other entity may acquire or own or hold, directly, or indirectly,
(a) this Lease or the leasehold estate created by this Lease, or any interest in
this Lease or in any such leasehold estate, and (b) any such other estate or
interest in the Premises or any part thereof; and no such merger shall occur
unless and until all persons, corporations, firms and other entities having an
interest (including a security interest) in (i) this Lease or the leasehold
estate created by this Lease; and (ii) any such other estate or interest in the
Premises, or any part thereof, shall join in a written instrument effecting such
merger and shall duly record the same.
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25.14 REPORTS. Tenant agrees to furnish to Landlord, with reasonable
promptness: (a) copies of financial statements of Tenant (including, but not
limited to, annual balance sheets, income statements and surplus statements,
prepared by independent certified public accountants); and (b) other financial
statements, reports and documents which Tenant sends to or makes available to
its shareholders in the event that the Tenant becomes a publicly-traded company.
In addition to the foregoing, Tenant shall obtain and deliver to Landlord, with
reasonable promptness, such other information respecting the operation of the
Premises or the financial condition and affairs of Tenant, as Landlord may from
time to time reasonably request.
25.15 DEFINITION OF RENT. All monetary obligations of Tenant to
Landlord under the terms of this Lease, including, without limitation, the Real
Property Taxes and insurance premiums payable hereunder shall be deemed to be
"rent".
25.16 INTERPRETATION. The captions by which the Articles and Sections
of this Lease are identified are for convenience only and shall have no effect
upon the interpretation of this Lease. Whenever the context so requires,
singular numbers shall include the plural, the plural shall refer to the
singular, the neuter gender shall include the masculine and feminine genders,
and the words "Landlord" and "Tenant" and "person" shall include corporations,
partnerships, associations, other legal entities, and individuals.
25.17 RELATIONSHIP OF THE PARTIES. Nothing in this Lease shall create
a partnership, joint venture, employment relationship, borrower and lender
relationship or any other relationship between Landlord and Tenant other than
the relationship of landlord and tenant.
25.18 SUCCESSORS. This Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective personal and legal
representatives, heirs, successors, and assigns.
25.19 MODIFICATIONS. This Lease may not be altered, amended, changed,
waived, terminated, or modified in any manner unless the same shall be in
writing and signed by or on behalf of the party to be bound.
25.20 BROKERAGE FEES. Landlord and Tenant each represent and warrant
that they have not employed a broker in connection with the execution of this
Lease. Landlord and Tenant shall each indemnify and hold the other harmless from
and against any claim or claims for brokerage or other commissions arising from
such party having employed a broker contrary to its representation in this
Section 25.20.
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25.21 WAIVER OF REDEMPTION. To the extent permitted by law Tenant
hereby waives any and all rights of redemption with respect to this Lease.
Tenant hereby waives any rights it may have to any notice to cure or vacate or
to quit provided by any current or future law; provided that the foregoing shall
not be deemed to waive any notice expressly provided in this Lease.
25.22 NOT BINDING UNTIL EXECUTED. This Lease does not constitut an
"offer" and is not binding until fully executed and delivered by Landlord.
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WITNESSES: LANDLORD:
CAPTEC NET LEASE REALTY, INC.
/s/ ILLEGIBLE By /s/ W. ROSS MARTIN
- -------------------------- -------------------------------
/s/ ILLEGIBLE Its Vice President
- --------------------------
TENANT:
NEW YORK ROASTERS, INC.
/s/ ILLEGIBLE By /s/ PAUL L. SNYDER III
- -------------------------- -------------------------------
/s/ ILLEGIBLE Its President
- --------------------------
STATE OF MICHIGAN ss.
ss. ss.
COUNTY OF WASHTENAW ss.
On this 10TH day of April 1995, before me personally came W. Ross
Martin, to me known to be the person who executed the foregoing instrument and
who being duly sworn by me, did depose and say that he resides at 24 Frank Lloyd
Wright Drive, Lobby L, Fourth Floor, Ann Arbor, Michigan 48106, that he is the
Vice President of Captec Net Lease Realty, Inc., a Michigan corporation, the
corporation described in, and which executed the above instrument; and that he
signed his name thereto by order of the board of directors of said corporation.
/s/ LIGGIE V. PERKINS
-------------------------------
Notary Public
Livingston County, acting in
Washtenaw County, Michigan
My Commission Expires: 2/18/98
43
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STATE OF NEW YORK ss.
ss.
COUNTY OF ERIE ss.
On this 6TH day of April 1995, before me personally came Paul L. Snyder
III, to me known to be the person who executed the foregoing instrument and who
being duly sworn by me, did deposes and say that he resides in the town of
Amherst, New York, that he is the President of New York Roasters, Inc., a
Delaware corporation, the corporation described in, and which executed the above
instrument; and that he signed his name thereto by order of the board of
directors of said corporation.
/s/ ILLEGIBLE
-------------------------------
Notary Public
Erie County, New York
My Commission Expires: 4/95
44
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EXHIBIT A
TO
LEASE
ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Cheektowaga,
County of Erie and State of New York, being part of Lots Number 42 and
43, Township 10, Range 7 of the Buffalo Creek Reservation and more
particularly bounded and described as follows:
BEGINNING at a point located on the southerly highway boundary of
French Road (90.0 feet wide) said point being 435.49 feet westerly of
the westerly highway boundary of Transit Road (100 feet wide) as
measured along the southerly highway boundary of French Road; thence
south 2 degrees 05' 20" east parallel with the east line of Lot Number
42, Township 10, Range 8, a distance of 26.01 feet to a point located
on the south line Lot Number 43, Township 10, Range 7; thence south 87
degrees 38' 25" west along the southerly line of Lot Number 43,
Township 10, Range 7, a distance of 15.22 feet to a point; thence south
2 degrees 05' 20" east and parallel with the east line of Lot Number
42, Township 10, Range 7 a distance of 417.57 feet to a point on the
north line of land subdivided under Map Covers 2264 and 2273; thence
south 87 degrees 22' 50" west along the north line of land subdivided
and filed in the Erie County Clerk's Office under Map Covers 2264 and
2273 as aforesaid a distance of 200.01 feet to a point; thence north 2
degrees 05' 20" west and parallel with the east line of Lot Number 42,
Township 10, Range 7 a distance of 407.51 feet to a point located on
the southerly boundary of French Road; thence north 77 degrees 33' 23"
east and along the southerly highway boundary of French Road a distance
of 153.98 feet to a point of curve; thence easterly along the southerly
highway boundary of French Road curving to the right, having a radius
of 1592.02 feet and being tangent to the last described line an arc
distance of 64.58 feet to the point or place of beginning.
A-1
<PAGE>
EXHIBIT B
TO
LEASE
ESTOPPEL CERTIFICATE
As to that certain Lease dated ___________________________, 199_____
("Lease"), between CAPTEC NET LEASE REALTY, INC. ("Landlord"), and NEW YORK
ROASTERS, INC. ("Tenant"), covering the premises described on Schedule A
attached hereto and creating a leasehold estate in Tenant, ___________________
_________________________________________ certifies to _______________________
_______________________________ the following:
1. The Lease is the entire agreement between Landlord and Tenant and
is presently in full force and effect and unmodified (except as follows: ).
2. The Tenant is not in default (a) in the payment of rent (such rent
having been paid through ________________________________) or any other amount
under the Lease, or (b) to the knowledge of the undersigned, in the observance
or performance of any other covenant or condition to be observed or performed by
the Tenant under the Lease, and (c) to the knowledge of the undersigned, no
event has occurred which now or will hereafter authorize the Landlord to
terminate the Lease.
Dated this ____________ day of__________________________, 19_______ .
NEW YORK ROASTERS, INC.
By:_________________________________
Its_____________________________
B-1
<PAGE>
SCHEDULE A
TO
ESTOPPEL CERTIFICATE
ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Cheektowaga,
County,of Erie and State of Now York, being part of Lots Number 42 and 43,
Township 10, Range 7 of the Buffalo Creek Reservation and more particularly
bounded and described as follows:
BEGINNING at a point located on the southerly highway boundary of French Road
(90.0 feet wide) said point being 435.49 feet westerly of the westerly highway
boundary of Transit Road (100 feet wide) as measured along the southerly highway
boundary of French Road; thence south 2 degrees 05' 20" east parallel with the
east line of Lot Number 42, Township 10, Range 8, a distance of 26.01 feet to a
point located on the south line Lot Number 43, Township 10, Range 7; thence
south 87 degrees 38' 25" west along the southerly line of Lot Number 43,
Township 10, Range 7, a distance of 15.22 feet to a point; thence south 2
degrees 05' 20" east and parallel with the east line of Lot Number 42, Township
10, Range 7, a distance of 417.57 feet to a point on the north line of land
subdivided under Map Covers 2264 and 2273; thence south 87 degrees 22' 50" west
along the north line of land subdivided and filed in the Erie County Clerk's
Office under Map Covers 2264 and 2273 as aforesaid a distance of 200.01 feet to
a point; thence north 2 degrees 05' 20" west and parallel with the east line of
Lot Number 42, Township 10, Range 7 a distance of 407.51 feet to a point located
on the southerly boundary of French Road; thence north 77 degrees 33' 23" east
and along the southerly highway boundary of French Road a distance of 153.98
feet to a point of curve; thence easterly along the southerly highway boundary
of French Road curving to the right, having a radius of 1592.02 feet and being
tangent to the last described line an arc distance of 64.58 feet to the point or
place of beginning.
B-2
<PAGE>
EXHIBIT C
TO
LEASE
MEMORANDUM OF LEASE
This Memorandum of Lease made this _________ day of April, 1995,
between CAPTEC NET LEASE REALTY, INC., a Michigan corporation, having an office
at 24 Frank Lloyd Wright Drive, Lobby L, Ann Arbor, Michigan 48106 ("Landlord")
and NEW YORK ROASTERS, INC., a Delaware corporation, having an office at 690
Delaware Avenue, Buffalo, New York 14209, ("Tenant").
W I T N E S S E T H:
1. Landlord and Tenant have this day entered into a lease ("Lease")
of the following described premises in the Town of Cheektowaga, County of Erie,
and State of New York, as further described on Schedule A attached hereto.
2. The Lease sets forth the above names and addresses of the parties
thereto.
3. The term of the Lease is Twenty (20) years beginning on the date
hereof and ending on April 30, 2015.
4. Tenant has a right to extend the term for two (2) successive
periods of five (5) years each. The maximum date to which the Lease may be
extended is midnight on April 30, 2025. The rights of extension are exercisable
as set forth in the Lease.
5. The Lease contains provisions giving Tenant an option to purchase
the property, exercisable as set forth in the Lease.
6. The terms and conditions of the Lease are incorporated into this
Memorandum of Lease as if set forth in full herein.
Landlord and Tenant have caused this Memorandum of Lease, to be duly
executed and delivered as of the day and year first written above, for the
purpose of providing an instrument for recording.
WITNESSES: CAPTEC NET LEASE REALTY, INC.
__________________________ By_______________________________
__________________________ Its Vice President
C-1
<PAGE>
NEW YORK ROASTERS, INC.
__________________________ By_______________________________
__________________________ Its President
STATE OF MICHIGAN ss.
ss.
COUNTY OF WASHTENAW ss.
On this _______ day of April 1995, before me personally came W. Ross
Martin, to me known to be the person who executed the foregoing instrument and
who being duly sworn by me, did depose and say that he resides at 24 Frank Lloyd
Wright Drive, Lobby L, Fourth Floor, Ann Arbor, Michigan 48106, that he is the
Vice President of Captec Net Lease Realty, Inc., a Michigan corporation, the
corporation described in, and which executed the above instrument; and that he
signed his name thereto by order of the board of directors of said corporation.
____________________________________
Notary Public
______________________County,_______
My Commission Expires: _____________
STATE OF NEW YORK ss.
ss.
COUNTY OF ___________ ss.
On this ______ day of April 1995, before me personally came Paul L.
Snyder III, to me known to be the person who executed the foregoing instrument
and who being duly sworn by me, did depose and say that he resides at the town
of Amherst, New York, that he is the President of New York Roasters, Inc., a
Delaware corporation, the corporation described in, and which executed the above
instrument; and that he signed his name thereto by order of the board of
directors of said corporation.
___________________________________
Notary Public
___________________ County, _______
My Commission Expires:_____________
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<PAGE>
Drafted By And When
Recorded Return To:
Liggie V. Perkins
Captec Financial Group, Inc.
24 Frank Lloyd Wright Drive
Lobby L, Fourth Floor
P.O. Box 544
Ann Arbor, Michigan 48106-0544
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<PAGE>
SCHEDULE A
TO
MEMORANDUM OF LEASE
ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Cheektowaga, County of
Erie and State of New York, being part of Lots Number 42 and 43, Township 10,
Range 7 of the Buffalo Creek Reservation and more particularly bounded and
described as follows:
BEGINNING at a point located on the southerly highway boundary of French Road
(90.0 feet wide) said point being 435.49 feet westerly of the westerly highway
boundary of Transit Road (100 feet wide) as measured along the southerly highway
boundary of French Road; thence south 2 degrees 05' 20" east parallel with the
east line of Lot Number 42, Township 10, Range 8, a distance of 26.01 feet to a
point located on the south line Lot Number 43, Township 10, Range 7; thence
south 87 degrees 38' 25" west along the southerly line of Lot Number 43,
Township 10, Range 7, a distance of 15.22 feet to a point; thence south 2
degrees 05' 20" east and parallel with the east line of Lot Number 42, Township
10, Range 7 a distance of 417.57 feet to a point on the north line of land
subdivided under Map Covers 2264 and 2273; thence south 87 degrees 22' 50" west
along the north line of land subdivided and filed in the Erie County Clerk's
Office under Map Covers 2264 and 2273 as aforesaid a distance of 200.01 feet to
a point; thence north 2 degree 05' 20" west and parallel with the east line of
Lot Number 42, Township 10, Range 7 a distance of 407.51 feet to a point located
on the southerly boundary of French Road; thence north 77 degrees 33' 23" east
and along the southerly highway boundary of French Road a distance of 153.98
feet to a point of curve; thence easterly along the southerly highway boundary
of French Road curving to the right, having a radius of 1592.02 feet and being
tangent to the last described line an arc distance of 64.58 fed to the point or
place of beginning.
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<PAGE>
EXHIBIT D
TO
LEASE
[INTENTIONALLY OMITTED
D-1
<PAGE>
EXHIBIT E
TO
LEASE
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(this "Agreement") is made and entered into as of the___________ day of
________________________, 19_____, by and among (i) NEW YORK ROASTERS, INC.,
a Delaware corporation ("Tenant"); (ii) CAPTEC NET LEASE REALTY, INC., a
Michigan corporation ("Landlord"); and (iii)________________________________
("Lender").
WITNESSETH:
WHEREAS, Lender is the holder of that certain mortgage/deed of trust
dated ______________ , 19____ ("Mortgage/Deed of Trust") encumbering that
certain parcel of real property together with all improvements thereon, commonly
known as the Kenny Rogers Roasters Restaurant located at 1449 French Road,
Cheektowaga, New York and more particularly described in Exhibit "A" attached
hereto and incorporated herein by this reference (the "Property");
WHEREAS, Lender and Landlord are parties to the Mortgage/Deed of Trust,
pursuant to which Landlord financed the Property from Lender; and
WHEREAS, Landlord and Tenant are parties to that certain Lease, dated
April ____ , 1995 (the "Lease"), pursuant to which Tenant leased the Property
from Landlord.
NOW, THEREFORE, in consideration for the mutual covenants and
agreements contained herein, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
1. SUBORDINATION. The Lease, and the rights of Tenant in, to and
under the Lease and the Property, are hereby made subject, junior and
subordinate in all respects to the Mortgage/Deed of Trust and to all renewals,
modifications, consolidations, replacements and extensions thereof and to the
rights of Lender thereunder as if all such instruments had been executed,
delivered and recorded prior to the execution of the Lease. This clause shall be
self-operative, and no further instrument shall be required. However, Tenant
covenants and agrees that if requested by Lender it will execute, acknowledge
and deliver any instrument or document reasonably requested to confirm the
foregoing subordination of the Lease within ten (10) days after receipt of
written request therefor.
2. NON-DISTURBANCE. So long as Tenant is not in default beyond any
applicable grace or cure period in the payment of rent or any other sums payable
under the Lease or any of the other terms, covenants or conditions of the Lease
on Tenant's part to be performed, then: (a) Tenant's possession of the Property
shall not be diminished or interfered with by Lender or any third party
purchaser; (b) the Lease shall not be terminated or affected by
E-1
<PAGE>
the termination of the Mortgage/Deed of Trust or the Lender's exercise of any
remedy provided for in the Mortgage/Deed of Trust; and (c) in the event that
Lender forecloses upon the Property, Lender shall elect to preserve the Lease as
a lease between Lender and Tenant in accordance with the terms of this
Agreement.
3. ATTORNMENT. In the event that the Lender forecloses upon the
Property, then:
(a) Tenant shall be bound to Lender, and Lender shall be bound
to Tenant, under all of the terms, covenants and conditions of the Lease for the
balance of the term thereof remaining, and any extensions or renewals thereof
which may be effected in accordance with any option therefor contained in the
Lease, with the same force and effect as if Lender were the original landlord
under the Lease, except that Paragraph 3(b) below and the other provisions of
this Agreement shall modify the Lease, and Tenant does hereby attorn to Lender
as its landlord, said attornment to be effective and self-operative without the
execution of any further instruments; provided, however, that within ten (10)
days after receipt of written request therefor from Lender, Tenant will execute
and deliver to Lender any instrument or other documents reasonably requested by
Lender to confirm Tenant's attornment to Lender.
(b) It is agreed that in no event shall Lender:
(1) be liable for any act or omission of any prior landlord
(including Landlord);
(2) be obligated to cure any defaults of any prior landlord
(including Landlord) which occurred prior to the date
that Lender succeeded to the interest of such prior
landlord under the Lease; provided that from and after
the date Lender becomes owner of the Property, Lender
shall be obligated to cure any continuing default of
the landlord under the Lease to the extent such default
is capable of being cured by Lender;
(3) be subject to any offsets or defenses which Tenant may
be entitled to assert against any prior landlord
(including Landlord) with respect to events occurring
prior to the date Lender succeeded to Landlord's
interest;
(4) be bound by any Minimum Annual Rent or other amounts
paid by Tenant to any prior landlord (including
Landlord) more than one (1) month in advance of the
date that Lender succeeded to the interest of such
prior landlord under the Lease; or
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<PAGE>
(5) be bound by any amendment or modification of the Lease
or any supplemental agreement made without the written
consent of Lender.
4. PAYMENT OF RENT TO LENDER. Tenant agrees to pay the Minimum
Annual Rent and any other, payments due under the Lease upon receipt of written
notice from Lender that it has succeeded to the interest of Landlord under the
Lease, and Landlord agrees that Tenant is entitled to rely conclusively upon
such notice without any duty of inquiry.
5. LIMITATION ON LIABILITY OF LENDER. There shall be no personal
liability on the part of Lender or any officer, director, employee, shareholder
or partner of Lender for the performance of the Lease or any covenant or
agreement contained therein or in this Agreement. Tenant shall look solely to
Lender's estate and interest in the Property for the satisfaction of every
remedy of Tenant for any breach by Lender under the Lease or this Agreement or
otherwise arising out of or in connection with the Lease, and Tenant will not
collect or attempt to collect any such claim out of any other assets of Lender.
6. PERFORMANCE BY LENDER; CONFLICT. Nothing in this Agreement shall
be or be deemed to be an agreement by Lender to perform any obligation of
Landlord under the Lease unless and until the Lender acquires or takes
possession of the Property, and then only if required to do so by the terms of
the Lease, as modified and limited by this Agreement. In the event of any
conflict between the terms of this Agreement and the terms of the Lease, the
terms of this Agreement shall control.
7. NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and may be given by personal delivery, certified mail,
return receipt requested or by nationally recognized overnight courier service
and if given personally or by mail or by courier service, shall be deemed
sufficiently given if addressed to parties at the addresses set forth below. Any
party may by notice specify a different address for notice purposes.
Addresses for Notices:
To Lender:____________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
To Landlord: Captec Net Lease Realty, Inc.
24 Frank Lloyd Wright Drive
Lobby L, 4th Floor
P.O. Box 544
Ann Arbor, Michigan 48106-0544
To Tenant: New York Roasters, Inc.
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<PAGE>
690 Delaware Avenue
Buffalo, New York 14209
9. SUCCESSORS AND ASSIGNS. This Agreement and each and every covenant
and provision contained herein shall be binding upon and shall inure to the
benefit of the parties hereto and their respective representatives, successors
and assigns.
10. MODIFICATIONS, COUNTERPARTS. This Agreement shall not be modified
or amended in whole or in part except by a writing executed by all of the
parties hereto or their respective representatives successors or assigns. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be a fully-executed original and all of which shall constitute one and
the same instrument.
11. GOVERNING LAW: JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the jurisdiction in which the
Property is located.
12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
INTENTIONALLY AND FREELY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY, OTHER PARTY HERETO IN RESPECT OF ANY MATTER ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date hereinabove first written.
TENANT:
WITNESSES: NEW YORK ROASTERS, INC.
__________________________ By:________________________________
__________________________ Its:_________________________
LANDLORD:
WITNESSES: CAPTEC NET LEASE REALTY, INC.
__________________________ By:________________________________
__________________________ Its:__________________________
LENDER:
WITNESSES: ___________________________________
__________________________ By:________________________________
__________________________ Its:__________________________
E-4
<PAGE>
STATE OF NEW YORK ss.
ss. ss.
COUNTY OF ________ ss.
On this________ day of ___________________, 19__, before me personally
came , to me known to be the person who executed the foregoing instrument and
who being duly sworn by me, did depose and say that he resides in the town of
Amherst, New York, that he is the ______________________ of New York Roasters,
Inc., a Delaware corporation, the corporation described in, and which executed
the above instrument; and that he signed his name thereto by order of the board
of directors of said corporation.
________________________________
Notary Public
________________County, ___________________
My Commission Expires:
STATE OF MICHIGAN )
) ss.
COUNTY OF ___________________ )
On this _____________ day of __________________________ 19_______,
before me personally came , to me known to be the person who executed the
foregoing instrument and who being duly sworn by me, did deposes and say that he
resides at 24 Frank Lloyd Wright Drive, Lobby L, Fourth Floor, Ann Arbor,
Michigan 48106, that he is the _____________________________ of Captec Net Lease
Realty, Inc., a Michigan corporation, the corporation described in, and which
executed the above instrument; and that he signed his name thereto by order-of
the board of directors of said corporation.
_________________________________
Notary Public
______________ County, _____________________
My Commission Expires ______________________
E-5
<PAGE>
STATE OF ____________________ )
) ss.
COUNTY OF ___________________ )
On this __________ day of ________________________ 19_____, before me
personally came to me known to be the person who executed the foregoing
instrument and who being duly sworn by me, did deposes and say that he resides
at _____________________________, that he is the _________________________ of
_____________________________________, a ____________________________________,
the corporation described in, and which executed the above instrument; and that
he signed his name thereto by order of the board of directors of said
corporation.
______________________________________
Notary Public
______________ County, ____________________
My Commission Expires:_____________________
Drafted By And
When Recorded Return To:
Captec Financial Group, Inc
Attn: Liggie V. Perkins
24 Frank Lloyd Wright Drive
Fourth Floor, Lobby L
P.O. Box 544
Ann Arbor, MI 48106-0544
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<PAGE>
EXHIBIT F
TO
LEASE
LETTER OF CREDIT AGREEMENT
THIS LETTER OF CREDIT AGREEMENT ("Agreement") is made as of April 1995,
between NEW YORK ROASTERS, INC., a Delaware corporation, whose address is 640
Delaware Ave., Buffalo, New York 14209 ("Tenant") and CAPTEC NET LEASE REALTY,
INC., a Michigan corporation, whose address is 24 Frank Lloyd Wright Drive,
Lobby L, 4th Floor, P. 0. Box 544, Ann Arbor, Michigan 48106-0544 ("Landlord").
RECITALS:
Tenant has entered into a Lease, dated of even date, with Landlord for
property located at 1449 French Road, Cheektowaga, New York ("Lease").
As security for performance of the Tenant's obligations under the
Lease, the Tenant has provided a letter of credit (Number ____________________),
dated of even date ("Letter of Credit"), from ________________________________
("Bank"), in the form attached as Exhibit A.
This Agreement sets forth the terms and conditions upon which the
Landlord shall have the right to draw upon the Letter of Credit.
FOR GOOD AND VALUABLE CONSIDERATION, THE PARTIES AGREE AS
FOLLOWS:
1. LETTER OF CREDIT. The Tenant covenants and agrees to continue to
maintain the Letter of Credit, or a substitute letter of credit satisfactory to
the Landlord, throughout the term of the Lease, to secure the obligations of the
Tenant under the Lease. The Letter of Credit, as modified, amended, extended
and/or renewed is hereinafter referred to as the Letter of Credit.
2. DRAWS ON THE LETTER OF CREDIT. The Landlord shall be permitted to
draw on the Letter of Credit under the following circumstances:
(a) To cure any monetary default under the terms and provisions
of the Lease after the expiration of any applicable cure period.
(b) If the Letter of Credit is being cancelled and a
satisfactory substitute letter of credit has not been delivered to the Landlord.
3. LIMITED LIABILITY. The Landlord shall be permitted to make
multiple draws under the Letter of Credit for any one, or any combination, of
any of the purposes set forth in Section 2 above; provided, however, no
F-1
<PAGE>
request for payment under the Letter of Credit shall exceed either singularly,
or in the aggregate, the stated amount of the Letter of Credit.
4. EXTENSION OR REPLACEMENT OF LETTER OF CREDIT. On or before the
stated expiration date of the Letter of Credit, the Tenant shall use its best
efforts to cause the Letter of Credit (or substitute letter of credit)
to be extended for not less than one (1) additional year or replace the Letter
of Credit with a replacement letter of credit satisfactory to the Landlord for
a term of not less than one (1) year.
5. APPLICATION OF PROCEEDS. The Landlord shall apply the proceeds of
any draw on the Letter of Credit to cure any existing monetary default under the
terms and provisions of the Lease. In the event that the Landlord shall draw on
the Letter of Credit pursuant to the provisions of Section 2(b) above, the
Landlord shall deposit such proceeds in a non-interest bearing account which
shall be under the exclusive control and possession of the Landlord throughout
the term of the Lease, to be applied to cure any subsequent monetary default
under the terms and provisions of the Lease; provided, however, the Landlord
shall deliver proceeds of any draw under the Letter of Credit, in accordance
with written instructions from the Tenant, upon the Landlord's receipt of a
6. SEVERABILITY. The invalidity of any provision of this Agreement
as determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
7. ENTIRE AGREEMENT. It is understood that there are no oral or
written agreement or representations between the parties hereto affecting this
Agreement, and that this Agreement and the Exhibits hereto supersede and cancel
any and all previous negotiations, arrangements, representations, brochures,
displays, projections, estimates, agreement, and understandings, if any, made by
or between the Landlord and the Tenant with respect to the subject matter
thereof, and none thereof shall be used to interpret, construe, supplement, or
contradict this Agreement.
8. NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and may be given by personal delivery, certified mail,
return receipt requested or by nationally recognized overnight courier service
and if given personally or by mail or courier service, shall be deemed
sufficiently given if addressed to the Tenant or to the Landlord, as the case
may be, at the addresses noted in the initial paragraph hereof. Any party may
by notice to the other parties specify a different address for notice purposes.
9. WAIVERS. No waiver by the Landlord of any provision hereof shall
be deemed a waiver of any other provision hereof of or any subsequent breach by
the Tenant of the same of any other provision.
F-2
<PAGE>
10. CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
11. CHOICE OF LAW. The laws of the State of New York shall govern the
validity, performance, and enforcement of this Agreement.
12. ATTORNEYS' FEES. Should any party institute any action or
proceeding to enforce any provision hereof or for a declaration of such party's
rights or obligations hereunder, the prevailing party shall be entitled to
receive from the losing party such amounts as the court may adjudge to be
reasonable attorneys' fees for services rendered to the party prevailing in any
such action or proceeding, and such fees shall be deemed to have accrued upon
the commencement of such action or proceeding and shall be enforceable whether
or not such action or proceeding is prosecuted to judgment.
13. WAIVER OF JURY TRIAL. The Landlord and the Tenant each hereby
waive all right to a trial by jury in any claim, action, proceeding or
counterclaim by the Landlord or the Tenant against the other on any matters
arising out of or in any way connected with this Agreement, the relationship of
the Landlord and the Tenant.
14. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective personal and legal
representatives, heirs, successors, and assigns.
15. MODIFICATIONS. This Agreement may not be altered, amended,
changed, waived, terminated, or modified in any manner unless the same shall be
in writing and signed by or on behalf of the party to be bound.
16. NO EQUITABLE REMEDIES. The Tenant agrees and acknowledges that the
objective of the Letter of Credit is to provide the Landlord with
immediately available funds upon demand and therefore, the Tenant hereby waives
any rights to equitable relief or remedies under the Letter of Credit or
relating to monies in any account arising from a draw on the Letter of Credit
upon the occurrence of any default under the Lease, relating to the voluntary or
involuntary bankruptcy, receivership, insolvency or other similar federal or
state laws, the failure to extend the Letter of Credit as required herein, or
any payment default under the Lease.
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<PAGE>
IN WITNESS WHEREOF, the parties have hereto have executed this
Agreement as of the day and year first written above.
WITNESSES: NEW YORK ROASTERS, INC.
__________________________ By:_______________________________
__________________________ Its: President
CAPTEC NET LEASE REALTY, INC.
__________________________ By:_______________________________
__________________________ Its: Vice President
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<PAGE>
EXHIBIT A
TO
LETTER OF CREDIT AGREEMENT
IRREVOCABLE LETTER OF CREDIT NO. ____________________
April _______________, 1995
Captec Net Lease Realty, Inc.
24 Frank Lloyd Wright Drive
Lobby L, 4th Floor
P. 0. Box 544
Ann Arbor, Michigan 48106-0544
Ladies and Gentlemen:
We hereby authorize you to draw on ourselves for account of New York
Roasters, Inc. up to the aggregate amount of One Hundred Twenty Thousand and
00/100 Dollars ($120,000.00), available by your clean eight draft or drafts.
Drafts under this credit must be marked "Drawn Unde Irrevocable Letter
of Credit No.______________ , Dated April ________, 1995", and presented at our
office no later than ___________________________ .
This Letter of credit must accompany any draft presented to us for
payment, and will be returned to you if the draft does not exhaust the amount of
this Letter of Credit.
We hereby represent and warrant that the issuance of this Letter of
Credit does not exceed our lending limit for the account party.
Our obligation under this Letter of Credit is independent from that of
New York Roasters, Inc. with you. No defense or claim of New York Roasters, Inc.
against you, and no bankruptcy or insolvency of New York Roasters, Inc., shall
impair or affect in any way our obligation to honor your drafts under and in
compliance with this Letter of Credit. Our obligation to you is in no way
contingent upon our reimbursement from New York Roasters, Inc. or by anyone
else.
We hereby undertake that drafts drawn in compliance with the terms of
this credit will be duly honored by us within two (2) hours after presentation.
This Letter of Credit is subject to the provisions of the New York
Uniform Commercial Code.
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<PAGE>
Very truly yours,
___________________________________
Authorized Signature
___________________________________
Authorized Signature
F-6
<PAGE>
1449 French Road, Cheektowaga, New York
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is made as of
the 31st day of December, 1995, by and among NEW YORK ROASTERS, INC., a Delaware
corporation, whose address is 690 Delaware Avenue, Buffalo, New York 14209
("Assignor"); ROADHOUSE GRILL BUFFALO, L.L.C., a New York limited liability
company, whose address is 1449 French Road, Cheektowaga, New York ("Assignee");
and CAPTEC NET LEASE REALTY, INC., a Michigan corporation, whose address is 24
Frank Lloyd Wright Drive, Lobby L, 4th Floor, P.O. Box 544, Ann Arbor, Michigan
48106-0544 ("Landlord").
R E C I T A L S
A. Landlord and Assignor entered into that certain Lease dated
April 17, 1995, under which Landlord agreed to lease to Assignor the real
property located at 1449 French Road, Cheektowaga, New York and more
particularly described on Exhibit A attached hereto ("Premises").
B. Assignor wished to assign its rights and obligations under the
Lease to Assignee. Assignor has requested that Landlord consent to this
assignment upon the following conditions and with the following understandings.
C. Landlord has agreed to consent to the assignment (but to no future
assignment) upon the terms and conditions set forth below.
IN CONSIDERATION OF THE FOREGOING AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE PARTIES AGREE AS FOLLOWS:
1. Assignor assigns the Lease to Assignee, and Assignee accepts such
assignment, and assumes and agrees to pay, perform and to bound by all of the
terms and provisions of the Lease, just as if Assignee executed the Lease
originally. Assignee represents to Landlord that Assignee possesses and has
carefully reviewed a complete and accurate copy of the Lease and all amendment
thereto.
2. Landlord consents to the assignment by Assignor to Assignee as set
forth in this Agreement under the conditions of, and with the understanding
contained in, this Agreement. Assignee acknowledges and agrees that this
Agreement shall not imply any consent by Landlord to any future assignment of
rights and obligations without the prior written consent of Landlord and
compliance with all of the conditions in the Lease. Landlord and Assignee agree
that all references to "Tenant" in the Lease shall refer, from and after the
date hereof, to Assignee rather than Assignor.
3. Landlord and Assignee agree that this Agreement shall not modify
the Lease except as follows:
a. In Article I of the Lease, the Tenant's trade name shall be
amended to read as follows: "Roadhouse Grill."
b. In Article I of the Lease, the Tenant's notice address shall
be amended to read as follows:
1449 French Road
Cheektowaga, New York
<PAGE>
With a copy to:
Roadhouse Grill, Inc.
4801 South University Drive
Suite 304 East
Davie, Florida 3328
Attention: President
And:
Roadhouse Grill of Western New York, L.L.C.
690 Delaware Avenue
Buffalo, NY 14209
c. The first sentence of Article 7.01 shall be amended to read
as follows: "Tenant shall use and occupy the Premises solely for the
operation of a Roadhouse Grill franchise or such other use as Landlord
shall consent to in the exercise of its reasonable judgment."
d. The first sentence of Article 13 shall be amended to read as
follows: "Tenant shall have the right to erect signs on the Premises or
affix signs to the windows and doors of the Premises of such sizes,
colors and designs as are customarily used in other Roadhouse Grill
restaurants."
e. Section 20.02 shall be amended to read as follows:
Tenant hereby covenants and agrees to deliver annual CPA reviewed
financial statements for Tenant to Landlord within one hundred
twenty (120) days after the end of Tenant's fiscal year, and
management prepared and certified quarterly financial statements
for Tenant within sixty (60) days after the end Tenant's fiscal
quarter. Each guarantor shall deliver annual financial statements
within one hundred twenty (120) days after the end of each
guarantor's fiscal year. Such financial statements shall be true
and correct in all respects, be prepared in accordance with
generally accepted accounting principles, and fairly present the
respective financial conditions of the subjects thereof as of the
respective dates thereof. If Tenant's financial statements are
prepared on a consolidated basis, Tenant hereby covenants and
agrees to prepare financial statements specifically relating to
the operation of the Premises. Tenant further agrees to deliver
annual unit level profit and loss statements on the operation of
the Premises.
f. The first sentence of Section 25.14 shall be amended to read
as follows:
Tenant agrees to furnish to Landlord, with reasonable promptness:
(a) copies of financial statements of Tenant and each guarantor
(including, but not limited to, annual balance sheets, income
statements and surplus statements); and (b) other financial
statements, reports and documents which Tenant sends to or makes
available to its shareholders.
g. The Letter of Credit Agreement attached to the Lease as
Exhibit F, and all references thereto in the Lease, shall be
deleted.
h. Except as modified above, the terms and provisions of the
Lease remain in full force and effect.
4. Assignor, Assignee and Landlord agree that all of Landlord's
reasonable costs, expenses and fees, including but not limited to attorney's
fees, incurred in connection with the assignment and the transactions
contemplated in this Agreement shall be the sole responsibility of Assignor.
5. The Agreement shall bind and inure to the benefit of the parties
of this Agreement, their successors and assigns.
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<PAGE>
6. This Agreement shall be governed by and construed in accordance
with the laws of New York.
7. This Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one in the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written above.
NEW YORK ROASTERS, INC.
By: /s/ PAUL L. SNYDER
------------------
Paul L. Snyder
Its: CHIEF EXECUTIVE OFFICER
-----------------------
ROADHOUSE GRILL BUFFALO, L.L.C.
By: /s/ ILLEGIBLE
-------------
Its: VICE PRESIDENT
--------------
CAPTEC NET LEASE REALTY, INC.
By: /s/ GARY A. BRUDER
------------------
Gary A. Bruder
Its: VICE PRESIDENT
--------------
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<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF ERIE )
On this 28th day of December, 1995, before me personally came Paul L.
Snyder, to me known to be the person who executed the foregoing instruments and
who being duly sworn by me, did depose and say that he resides at 690 Delaware
Avenue, Buffalo, New York, that he is the CEO of New York Roasters, Inc., a
Delaware corporation, the corporation described in, and which executed the above
instrument; and that he signed his name thereto by order of the board of
directors of said corporation.
/s/ SANDRA S. SCHOELLKOPF
Sandra S. Schoellkopf ---------------------
Notary Public, State of New York Sandra S. Schoellkopf
Qualified in Erie County Notary Public
My Commission Expires 7/3/97 Erie County, State of New York
My Commission expires: 7/3/97
STATE OF )
) ss.
COUNTY OF )
On this ________ day of December, 1995, before me personally came
___________________________ , to me known to be the person who executed the
foregoing instrument and who being duly sworn by me, did depose and say that he
resides at _______________________ , that he is the _________________ of
Roadhouse Grill Buffalo, L.L.C., a New York limited liability company, the
company described in, and which executed the above instrument; and that he
signed his name thereto by order of the members of the said company.
______________________________________
Notary Public
_________________ County,____________
My Commission expires:________________
STATE OF MICHIGAN )
) ss.
COUNTY OF WASHTENAW )
On this 9th day of February, 1995, before me personally came Gary A
Bruder, to me known to be the person who executed the foregoing instrument and
who being duly sworn by me, did depose and say that he resides at 24 Frank Lloyd
Wright Drive, Lobby L, 4th Floor, P.O. Box 544, Ann Arbor, Michigan 48106-0544,
that he is the Vice President of Captec Net Lease Realty, Inc., a Michigan
corporation, the corporation described in, and which executed the above
instrument; and that he signed his name thereto by order of the board of
directors of the said corporation.
/s/ MARGARET K. RIVERA
------------------
Margaret K. Rivera
Notary Public
Wayne County, MI
My Commission expires: 6/12/99
ACTING IN WASHTENAW COUNTY, MI
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<PAGE>
EXHIBIT A
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Cheektowaga,
County of Erie and State of New York, being part of Lots Number 42 and 43,
Township 10, Range 7 of the Buffalo Creek Reservation and more particularly
bounded and described as follows:
BEGINNING at a point located on the southerly highway boundary of French Road
(90.0 feet wide) said point being 435.49 feet westerly of the westerly highway
boundary of Transit Road (100 feet wide) as measured along the southerly highway
boundary of French Road; thence south 2 degrees 05' 20" east parallel with the
east line of Lot Number 42, Township 10, Range 8, a distance of 26.01 feet to a
point located on the south line Lot Number 43, Township 10, Range 7; thence
south 87 degrees 38' 25" west along the southerly line of Lot Number 43,
Township 10, Range 7, a distance of 15.22 feet to a point; thence south 2
degrees 05' 20" east and parallel with the east line of Lot Number 42, Township
10, Range 7 a distance of 417.57 feet to a point on the north line of land
subdivided under Map Covers 2264 and 2273; thence south 87 degrees 22' 50" west
along the north line of land subdivided and filed in the Erie County Clerk's
Office under Map Covers 2264 and 2273 as aforesaid a distance of 200.01 feet to
a point; thence north 2 degrees 05' 20" west and parallel with the east line of
Lot number 42, Township 10, Range 7 a distance of 407.51 feet to a point located
on the southerly boundary of French Road; thence north 77 degrees 33' a distance
of 407.51 feet to a point located on the southerly boundary of French Road;
thence north 77 degrees 33' 23" east and along the southerly highway boundary of
French Road a distance of 153.98 feet to a point of curve; thence easterly along
the southerly highway boundary of French Road curving to the right, having a
radius of 1592.02 feet and being tangent to the last described line an arc
distance of 64.58 feet to the point or place of beginning.
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EXHIBIT 10.11
OPERATING AGREEMENT
OF
KENDALL ROADHOUSE GRILL, L.C.
TABLE CONTENTS
ARTICLE I OFFICES............................................................1
1.1 Principal Office............................................... 1
1.2 Registered Office.............................................. 1
ARTICLE II MEETINGS..........................................................1
2.1 Annual Meeting..................................................1
2.2 Regular Meetings................................................1
2.3 Special Meetings................................................1
2.4 Notice of Meeting...............................................1
2.5 Quorum..........................................................2
2.6 Proxies.........................................................2
2.7 Voting by Certain Members.......................................2
2.8 Manner of Acting................................................2
2.8.1 Formal Action by Members.............................2
2.8.2 Procedure............................................2
2.8.3 Presumption of Assent................................3
2.8.4 Informal Action of Members...........................3
2.9 Order of Business..............................................3
2.10 Telephonic Meeting.............................................3
ARTICLE III FISCAL MATTERS...................................................3
3.1 Fiscal Year.....................................................3
3.2 Deposits........................................................4
3.3 Checks, Drafts, Etc.............................................4
3.4 Loans...........................................................4
3.5 Contracts.......................................................4
3.6 Accountant......................................................4
3.7 Legal Counsel...................................................4
ARTICLE IV COMPANY BUSINESS..................................................4
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ARTICLE V MANAGEMENT CERTIFICATES AND THEIR TRANSFER.........................4
5.1 Certificates....................................................4
5.2 Certificate Register............................................5
5.3 Transfer of Shares..............................................5
ARTICLE VI BOOKS AND RECORDS.................................................5
6.1 Books and Records...............................................5
6.2 Right of Inspection.............................................5
6.3 Financial Records...............................................5
ARTICLE VII DISTRIBUTION OF PROFITS..........................................6
7.1 Distributions...................................................6
7.2 Time............................................................6
7.3 Distribution Among Members......................................6
ARTICLE VIII ALLOCATIONS OF PROFITS AND LOSSES...............................6
8.1 Profits and Losses..............................................6
ARTICLE IX OFFICERS...........................................................7
9.1 Operating Manager...............................................7
9.2 Management Contracts............................................7
9.3 Other Officers..................................................7
9.4 Election and Tenure.............................................8
9.5 Resignations and Removal........................................8
9.6 Vacancies.......................................................8
9.7 Salaries........................................................8
ARTICLE X MISCELLANEOUS.......................................................9
10.1 Notice.........................................................9
10.2 Waiver of Notice...............................................9
10.3 Indemnification By Company.....................................9
10.4 Indemnification Funding........................................9
10.5 Duality of Interest Transactions...............................9
10.6 Anticipated Transactions.......................................9
10.7 Gender and Number.............................................10
10.8 Articles and Other Headings...................................10
10.9 Reimbursement of Officers and Members.........................10
ARTICLE XI ADMENDMENTS.......................................................10
11.1 Amendments....................................................10
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<PAGE>
ARTICLE XII DEFINITIONS.................................................... 10
CERTIFICATION................................................................11
-iii-
<PAGE>
OPERATING AGREEMENT
OF
KENDALL ROADHOUSE GRILL, L.C.
ARTICLE I
OFFICES
1.1 PRINCIPAL OFFICE. The principal office of Kendall Roadhouse Grill,
L.C. ("Company") in the State of Florida shall be located at 7199 S.W. 117th
Avenue, Kendall, Florida 33183. The Company may have such other offices, either
within or without the state of Florida as the Members may designate or as the
business of the Company may from time to time require.
1.2 REGISTERED OFFICE. The registered office of the Company, required
by the Florida Limited Liability Company Act to be maintained in the State of
Florida, may, but need not, be identical with the Principal office in the State
of Florida. The address of the initial registered office of the Company is 600
Corporate Drive, Suite 100, Fort Lauderdale, Florida 33334, and the initial
registered agent at such address is Charles D. Barnett. The registered office
and the registered agent may be changed from time to time by action of the
Members and by filing the prescribed form with the Florida Secretary of State.
ARTICLE II
MEETINGS
2.1 ANNUAL MEETING. The annual meeting of the Members shall be held
during the month of April in each year, beginning with the year 1994 upon
appropriate notice from the Operating Manager, for the purpose of electing an
Operating Manager and for the transaction of such other business as may come
before the meeting. Each member shall be responsible for paying its own expenses
to attend such meetings.
2.2 REGULAR MEETINGS. The Members may by resolution prescribe the time
and place for the holding of regular meetings and may provide that the adoption
of such resolution shall constitute notice of such regular meetings. If the
members do not prescribe the time and place for the holding of regular meetings,
such regular meetings shall be held at the time and place specified by the
Operating Manager in the notice of each such regular meeting. Each member shall
be responsible for paying its own expenses to attend such meetings.
2.3 SPECIAL MEETINGS. Special meetings of the Members, for any purpose
or purposes, unless otherwise prescribed by statute, may be called by the
Operating Manager or by any two Members.
2.4 NOTICE OF MEETING. Written or telephonic notice stating the place,
day, and hour of the meeting and, in case of a special meeting, the purposes for
which the meeting is called, shall be
<PAGE>
delivered not less than three (3) days before the date of the meeting, either
personally or by mail, by or at the direction of the Operating Manager, to each
Member of record entitled to vote at such meeting. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail, addressed to
the Member at his address as it appears on the books of the Company, with
postage thereon prepaid. When all the Members of the Company are present at any
meeting, or if those not present sign in writing a waiver of notice of such
meeting, or subsequently ratify all the proceedings thereof, the transactions of
such meetings are as valid as if a meeting were formally called and notice had
been given.
2.5 QUORUM. At any meeting of the Members, a majority of the equity
interests, as determined from the capital contribution of each Member as
reflected by the books of the Company, represented in person or by proxy, shall
constitute a quorum at a meeting of Members. If less than said majority of the
equity interests are represented at a meeting, a majority of the interests so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The Members present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Members to leave less than a quorum.
2.6 PROXIES. At all meetings of Members, a Member may vote by proxy
executed in writing by the Member or by his duly authorized attorney-in-fact.
Such proxy shall be filed with the Operating Manager of the Company before or at
the time of the meeting. No proxy shall be valid after three months from date of
execution, unless otherwise provided in the proxy.
2.7 VOTING BY CERTAIN MEMBERS. Membership Certificates standing in the
name of a corporation, partnership or company may be voted by such officer,
partner, agent or proxy as the Bylaws of such entity may prescribe or, in the
absence of such provision, as the Board of Directors of such entity may
determine. Certificates held by a trustee, personal representative,
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such certificates into his name.
2.8 MANNER OF ACTING.
2.8.1 FORMAL ACTION BY MEMBERS. Ordinarily, the act of a majority
of the Members present at a meeting at which a quorum is present shall be the
act of the Members. Upon demand of any Member, voting on a particular issue may
be in accordance with percentage of equity ownership in the Company.
2.8.2 PROCEDURE. The Operating Manager of the Company (or its
representative) shall preside at meetings of the Members, may move, second or
vote on any item of business.
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<PAGE>
A record shall be maintained of the meetings of the Members. The Members may
adopt their own rules of procedure which shall not be inconsistent with this
Operating Agreement.
2.8.3 PRESUMPTION OF ASSENT. A Member of the Company who is present
at a meeting of the Members at which action on any matter is taken shall be
presumed to have assented to the action taken, unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person Acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by certified mail
to the secretary of the meeting immediately after the "adjournment of the
meeting". Such right to dissent shall not apply to a Member who voted in favor
of such action.
2.8.4 INFORMAL ACTION OF MEMBERS. Unless otherwise provided by law,
any action required to be taken at a meeting of the Members, or any other action
which may be taken at a meeting of the Members, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be.signed by
all the Members entitled to vote with respect to the subject letter thereof.
2.9 ORDER OF BUSINESS. The order of business at all meetings of the
Members shall be as follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Report of the Operating Manager.
5. Reports of Committees.
6. Unfinished Business.
7. New Business.
2.10 TELEPHONIC MEETING. Members of the Company may participate in any
meeting of the Members by means of conference telephone or similar communication
if all persons participating in such meeting can hear one another for the entire
discussion of the matter(s) to be voted upon. Participating in a meeting
pursuant to this Section shall constitute presence in person at such meeting.
ARTICLE III
FISCAL MATTERS
3.1 FISCAL YEAR. The fiscal year of the Company shall begin on the
first day of January and end on the last day of December each year, unless
otherwise determined by resolution of the Members.
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<PAGE>
3.2 DEPOSITS. All funds of the Company shall be deposited from time to
time to the credit of the Company in such banks, trust companies or other
depositories as the Operating Manager may select.
3.3 CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for the
payment of money, and all notes or other evidences of indebtedness issued in the
name of the Company shall be signed by the Operating Manager.
3.4 LOANS. No loans shall be contracted on behalf of the Company or no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Members. Such authority may be general or confined to specific
instances.
3.5 CONTRACTS. The Operating Manager is authorized to enter into any
contract or execute any instrument in the name of and on behalf of the Company
to promote the purposes of the Company.
3.6 ACCOUNTANT. An Accountant may be selected from time to time by the
Operating Manager to perform such tax and accounting services as may, from time
to time be required. The accountant may be removed by the Operating Manager
without assigning any cause.
3.7 LEGAL COUNSEL. One or more Attorney(s) at Law may be selected from
time to time by the Operating Manager to review the legal affairs of the Company
and to perform such other services as may be required and to report to the
Members with respect thereto. The Legal Counsel may be removed by the Operating
Manager without assigning any cause.
ARTICLE IV
COMPANY BUSINESS
The purpose of the Company is to (i) own and operate a Roadhouse Grill
store in the State of Florida; and (ii) engage in all business activities
related or incidental to (i) above. The Company shall engage in no other
business without the prior written consent of all Members.
ARTICLE V
MANAGEMENT CERTIFICATES AND THEIR TRANSFER
5.1 CERTIFICATES. Management Certificates representing equity interest
in the Company shall be in such form as shall be determined by the Members. Such
Management Certificates shall be signed by the Operating Manager and by all
other Members. All Management Certificates shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the Management
Certificates are issued, with the Capital Contribution and the rate of issue,
shall be
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<PAGE>
entered in the Certificate Register of the Company. In case of a lost, destroyed
or mutilated management Certificate, a new one may be issued upon such terms and
indemnity to the Company as the Members may prescribe.
5.2 CERTIFICATE REGISTER. Any and all changes in Members or their
amount of capital contribution shall be formalized by filing notice of the same
with the Secretary of State by amendment of the Articles of Organization. The
most recent filing of the Articles of organization, as amended, shall be deemed
the Register of Certificates.
5.3 TRANSFER OF SHARES. Any Member proposing a transfer or 5.3
assignment of his Certificate shall first notify the Company, in writing, of all
the details and consideration for the proposed transfer or assignment. The
Company, for the benefit of the remaining Members, shall have the first right to
acquire the equity by cancellation of the Certificate under the same terms and
conditions as provided in the formal Articles of Organization as filed with the
Florida Secretary of State for Members who are deceased, retired, resigned,
expelled, or dissolved.
If the Company declines to elect such option, the remaining Members
desiring to participate may proportionately (or in such proportions as the
remaining Members may agree) purchase such interest under the same terms and
conditions first proposed by the withdrawing Member.
If the transfer or assignment is made as originally proposed and the
other Members fail to approve the transfer or assignment by unanimous written
consent, the transferee or assignee shall have no right to participate in the
management of the business and affairs of the Company or to become a Member. The
transferee or assignee shall only be entitled to receive the share of the profit
or other compensation by way of income and the return of contributions to which
that Member would otherwise be entitled.
ARTICLE VI
BOOKS AND RECORDS
6.1 BOOKS AND RECORDS. The books and records of the Company shall be
kept at the principal office of the Company or at such other places, within or
without the state of Florida, as the Members shall from time to time determine.
6.2 RIGHT OF INSPECTION. Any Member of record shall have the right to
examine, at any reasonable time or times for all purpose, the books and records
of account, minutes and records of Members and to make copies thereof. Such
inspection may be made by any agent or attorney of the Member. Upon the written
request of any Member of the Company, it shall mail to such Member its most
recent financial statements, showing in reasonable detail its assets and
liabilities and the results of its operations.
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<PAGE>
6.3 FINANCIAL RECORDS. All financial record shall be maintained and
reported based on generally acceptable accounting practices.
ARTICLE VII
DISTRIBUTION OF PROFITS
7.1 DISTRIBUTIONS. Initially, until each of the Non-Operating Members
receives the return of its Capital Contributions, distributions will be made as
follows.
Seventy-five percent (75%) to the Non-Operating Members and Twenty-five
percent (25%) to the Operating Manager.
After each of the Non-Operating Members has received the return of its
Capital Contributions, distributions will be made as follows:
Fifty percent (50%) to the Non-Operating Members and Fifty percent
(50%) to the Operating Manager.
7.2 TIME. Distributions shall be made at such times and in such amounts
as determined by the Operating Manager. However, to the extent permitted by
applicable law and the profits of the Company, the Company will make an annual
distribution to the members sufficient to permit them to pay any federal income
tax liabilities (based on the maximum rate applicable to single individuals)
associated with the profit of the Company passed through to the members.
7.3 DISTRIBUTION AMONG MEMBERS. If there is more than one Operating
Manager or one Non-Operating Member, all sums distributed to the Members shall
be distributed to them in accordance with this Agreement. The Operating Manager
may conclusively rely on a sworn statement provided by one Member of any class
in making distributions, unless it receives an instrument signed by all the
affected Members in that class to the contrary. In the event of a dispute among
the Members as the allocation of any such distributions, the Operating Member
shall be entitled to interplead such sums pending resolution.
ARTICLE VIII
ALLOCATIONS OF PROFITS AND LOSSES
8.1 PROFITS AND LOSSES. Profits and Losses, including gains derived
from sale or of all or a substantial portion of the assets of the
Partnership,for any fiscal year shall be allocated equally to the Members.
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<PAGE>
ARTICLE IX OFFICERS
9.1 OPERATING MANAGER. The Operating Manager shall be Roadhouse Grill,
Inc. which shall act as such until its resignation or removal as provided
hereafter. The Operating Manager shall appoint an individual who shall be
the.chief executive officer of the Company responsible for the general overall
supervision of the business and affairs of the Company. He shall, when present,
preside at all meetings of the Members. The Operating Manager may sign, on
behalf of the Company, such deeds, mortgages, bonds, contracts or other
instruments which have been appropriately authorized to be executed, by the
Members except in cases where the signing or execution thereof shall be
expressly delegated by the members or by this Operating Agreement or by Statue
to some other Officer or Agent of the Company; and in general, he shall perform
all duties as may be prescribed by the Members from time to time.
The specific authority and responsibility of the Operating Manager
shall also include the following:
(1) The Operating Manager shall effectuate this Operating Agreement and
the Regulations and decisions of the Members.
(2) The Operating Manager shall direct and supervise the operations of
the Company.
(3) The Operating Manager shall establish such charges for services and
products of the Company as may be necessary to provide adequate
income for the efficient operation of the Company.
(4) The Operating Manager, within the budget established by the
members, shall set and adjust wages and rates of pay for all
personnel of the Company and shall appoint, hire and dismiss all
personnel and regulate their hours of work.
(5) The Operating Manager shall keep the Members advised in all matters
pertaining to the operation of the Company, services rendered,
operating income and expense, financial position, and, to this end,
shall prepare and submit a report to the Members at each regular
meeting and at other times as may be directed by the Members, but
not more often than monthly.
9.2 MANAGEMENT CONTRACTS. The Company may retain the Operating Manager
or Affiliates of the Operating Manager or its shareholders to manage the
restaurants for one and one half percent (1.5%) of Gross Sales of the business
and such other terms and conditions as are reasonably competitive.
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<PAGE>
9.3 OTHER OFFICERS. The Company may, at the discretion of the Members,
have additional officers including, without limitation, one or more Assistant
Operating Managers, one or more Secretaries and one or more Treasures. Officers
need not be selected from among the Members. One person may hold two or more
offices, except one person may not hold both the office of Operating Manager and
the office of Secretary. When the incumbent of an office is (as determined by
the incumbent himself or by the Members) unable to perform the duties thereof,
or when there is no incumbent of an office (both such situations referred to
hereafter as the "absence" of the officer), the duties of the office shall be
performed by the person specified by the Members.
9.4 ELECTION AND TENURE. The Officers of the Company shall be elected
annually by the Members at the annual meeting. Each Officer shall hold office
from the date of his election until the next annual meeting and until his
successor shall have been elected, unless he shall sooner resign or be removed.
9.5 RESIGNATIONS AND REMOVAL. Any officer may resign at any time giving
written notice to the Operating Manager or to all of the Members, and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. Any Officer, other than the Operating Manager,
may be removed at any time by the Members with or without cause. The Operating
Manager may only be removed upon the occurrence of one of the following
conditions:
(a) Willful, wanton or grossly negligent disregard or breach
of the responsibilities of the Operating Manager hereunder;
(b) Bankruptcy or insolvency of the Operating Manager or
assignment for the benefit of creditors of the Operating Manager which is not
cured within the time provided in the Act or admission in writing by the
Operating Manager on behalf of the Company or itself of inability to pay its
debts when they become due; or
(c) Material breach of the Operating Manager's fiduciary
duty to the other Members.
9.6 VACANCIES. A vacancy in any office may be filled for the unexpired
portion of the term by the Members.
9.7 SALARIES. The salaries of the officers shall be fixed from time to
time by the Members and no officer shall be prevented from receiving such salary
by reason of the fact that he is also a Member of the Company.
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<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 NOTICE. Any notice required or permitted to be given pursuant to
the provisions of the Statue, the Articles of Association of the Company or this
Operating Agreement shall be effective as of the date personally delivered, or
if sent by mail, on the date deposited with United States Postal Service,
prepaid and addressed to the intended receiver at his last known address as
shown in the records of the Company.
10.2 WAIVER OF NOTICE. Whenever any notice is required to be given
pursuant to the provisions of the Statue, the Articles of Association of the
Company or this Operating Agreement, a waiver thereof in writing, signed by the
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
10.3 INDEMNIFICATION BY COMPANY. The Company may indemnify any person
who was or is a party defendant or is threatened to be made a party defendant to
any threatened, pending or completed action, suit or proceedings, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was a Member of the
Company, Officer, employee, or agent of the Company, or is or was serving the
request of the Company, against expenses (including attorney's fees), judgements
fines, and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if the Members determine that he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the Company, and with respect to any criminal
action or proceeding, has no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgement,
order, settlement, conviction, or upon a plea of nolo contenders or its
equivalent, shall not in itself create a presumption that the person did or did
not act in good faith and in a manner which he reasonably believed to be in the
best interest of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
10.4 INDEMNIFICATION FUNDING. The Company shall fund the
indemnification obligations provided by Section 10.3 in such manner and to such
extent as the Members may from time to time deem proper.
10.5 DUALITY OF INTEREST TRANSACTIONS. Members of this Company have a
duty of undivided loyalty to this Company in all matters affecting this
Company's interests.
10.6 ANTICIPATED TRANSACTIONS. Notwithstanding the provision of Section
11.5, the Operating Manager and the Non-Operating Member(s) may now or hereafter
engage in or possess an interest in other business ventures of every type and
nature whatsoever, independently or with
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<PAGE>
others, whether or not such other business ventures compete with the business of
the Company, including but not limited to, other Roadhouse Grill stores;
provided, however, that if, after the Roadhouse Grill store to be developed
hereunder has been developed, the Operating Manager decides to develop, own and
operate additional Roadhouse Grill stores and the Operating Manager decides to
seek financing, the Non-Operating Member(s) will have the first right to invest
in such financing on such terms as are offered to other potential investors by
the Operating Manager.
10.7 GENDER AND NUMBER. Whenever the context requires, the gender of
all words used herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and the plural thereof.
10.8 ARTICLES AND OTHER HEADINGS. The Articles and other headings
contained in this Operating Agreement are for reference purposes" only and shall
not affect the meaning or interpretation.
10.9 REIMBURSEMENT OF OFFICERS AND MEMBERS. Officers and members shall
receive reimbursement for expenses reasonably incurred in the performance of
their duties.
ARTICLE XI
AMENDMENTS
11.1 AMENDMENTS. This Operating Agreement may be altered, amended,
restated, or repealed and a new Operating Agreement may be adopted by
three-fourths action of all of the Members, after notice and opportunity for
discussion of the proposed alteration, amendment, restatement or repeal.
ARTICLE XII
DEFINITIONS
"Capital Contribution" means, for any Partner at any time, the sum of
such Partner's initial Capital Contribution and any additional Capital
Contributions made by such Partner at or prior to such time.
"Member Loans" means loans made by one or more Members to the Company.
"Profits" and "Losses" means, for each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such fiscal year or
period, determined in accordance with the Internal Revenue Code, as amended from
time to time ("Code"), with the following adjustments:
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<PAGE>
(1) Any income of the Company that is exempt from Federal
Income Tax and not otherwise taken into account in computing Profits and Losses
shall be added to such taxable income;
(2) Any expenditures of the Company described in the Code and
not otherwise taken into account in computing Profits and Losses shall be
subtracted from taxable income.
CERTIFICATION
THE UNDERSIGNED, being all of the Members of KENDALL ROADHOUSE GRILL,
L.C., a Florida limited liability company, hereby evidence their adoption and
ratification of the foregoing Operating Agreement of the Company.
EXECUTED by each Member of the Date indicated.
ROADWEAR, INC.
Date: 4/28/94 By: /s/ WILLIAM A. HOFFMAN
------------- -----------------------------------
Title: CEO
-------------------------------
ROADHOUSE GRILL, INC.
Date: 4/28/94 By: /s/ J. DAVID TOOLE III
------------- ----------------------------------
Title: PRESIDENT
-------------------------------
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EXHIBIT 10.12
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT, made as of this 8th day of NOVEMBER, 1994,
--- --------
by and between Boca Roadhouse, Inc., a Florida corporation (hereinafter
"Owner"), and Roadhouse Grill, Inc., a Florida corporation (hereinafter
"Manager"), both of whom may be sometimes hereinafter referred to as the
"Parties".
W I T N E S S E T H:
THAT, WHEREAS, the Owner has recently caused to be constructed a
restaurant to be known as Roadhouse Grill, located at 21212 St. Andrews
Boulevard, Suites 22A and 22B, Boca Raton, Florida 33434, which consists of
approximately seven thousand two hundred thirty-five (7,235) square feet of
space (the "Premises"), all of which complete with the lease, equipment,
furnishings, inventory and tradename shall be referred to hereinafter as the
"Restaurant"; and
WHEREAS, Owner desires to avail itself of the benefits and advantages
of the Manager's expertise in the management and operation of the Restaurant,
and Manager desires to be engaged by Owner in such capacity; and
WHEREAS, Owner and Manager desire to set forth in this Management
Agreement all their respective rights and obligations in connection with the
management of the Restaurant.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the Parties agree as follows:
1. TERM. The term of this Agreement shall commence on _____________
and continue for a term of five (5) years from such date unless terminated
earlier by reason of any of the provisions contained hereinafter.
<PAGE>
2. RENEWAL OPTIONS. The Owner shall have the right and option to
renew this Agreement for three (3) successive five (5) year terms. In the event
that the Owner chooses to renew this Management Agreement or any remaining
option period for an additional period of five (5) years, it shall so notify
Manager in writing no later than ninety (90) days prior to the expiration of the
then current term, and in such event, the Manager shall be obligated to maintain
the management of the Restaurant for an additional five (5) year period of time.
Failure of the Owner to exercise any one of these options shall cause any
remaining options to be void.
3. CAUSE OF TERMINATION. Irrespective of any time that may be
remaining within the initial term of this Agreement or any option extension
thereof, in the event that David Toole, III is no longer employed by Manager,
the Owner shall have the right and option to immediately cause this Management
Agreement to be terminated by giving thirty (30) days' written notice to the
Manager, in accordance with the notice provision contained later herein.
4. DUTIES OF MANAGER. Owner hereby engaged Manager, and Manager
agrees to be engaged by Owner as Manager of the Restaurant and all other food
and beverage services to be provided at the Restaurant upon the terms and
conditions hereinafter set forth. Owner hereby grants to Manager, and Manager
agrees to assume the obligation to supervise and direct the management and
operation of the Restaurant on behalf of the Owner. Without limiting the
generality of the foregoing, Owner grants to Manager the right, and Manager
agrees from and after the commencement date to do the following at the expense
of Owner and on Owner's behalf:
A) To make such capital expenditures as it deems necessary and
advisable to maintain the Restaurant, and to make or install, or cause
to be made or installed, all repairs,
-2-
<PAGE>
declarations, renewals, revisions, alterations, additions and
improvements in and to the Restaurant, and its furnishings and
equipment as the Manager shall deem necessary or desirable, up to a
maximum of Five Thousand and 00/100 Dollars ($5,000.00) per item,
unless a greater amount is approved in writing by Owner. This takes
into account the fact that the Manager has recently completed the
construction of the Restaurant on behalf of the Owner, and that all of
the above powers shall be subject to all warranties and rights that the
Owner may have with respect to the construction already performed by
the Manager.
B) To operate and manage the Restaurant in such manner as
Manager may deem necessary or advisable. In this connection, Manager
shall have full responsibility for the operation, direction, management
and supervision of the Restaurant, and retention of any services to be
provided to the Restaurant by third parties.
C) To hire, promote, discharge and supervise the work of the
executive staff of the Restaurant and to supervise the hiring,
promotion, discharge and work of all other operating and service
employees performing services for the restaurant. However, no agreement
shall extend beyond the then current term of this Agreement.
D) To enter into contracts for the furnishing of the Restaurant
of electricity, gas, water, telephone, cleaning, including window
cleaning, where necessary, vermin exterminators, maintenance, laundry
service, dry cleaning service, and any other utilities, services and
concessions which are provided in connection with the maintenance and
the operation of the Restaurant. However, no term of any contract
entered into by Manager shall extend beyond the date of the then
current term of this Agreement.
-3-
<PAGE>
E) To purchase for the Restaurant all supplies, cleaning
materials, food and beverage, including beer, wine and liquor, fuel,
stationery, inventory, certain other consumable items and other
materials and supplies.
F) To apply for and obtain and maintain all licenses and permits
required of Owner or Manager in connection with the management and
operation of the Restaurant. Owner agrees to execute and deliver any
and all applications and other documents, and otherwise cooperate to
the fullest extent with Manager in applying for or obtaining and
maintaining such licenses and permits.
G) To maintain insurance for the Restaurant in such amounts and
coverage of such risks as are customarily maintained by similar
restaurants doing business in Boca Raton, Florida. Owner, however,
shall pay for and maintain liability and premises insurance throughout
the term of the Management Agreement.
H) To file all renewals of liquor licenses and other licenses
required for the operation of the restaurant; attend and defend with
counsel chosen by Owner in any and all proceedings with respect
thereto.
I) All of the services to be rendered by Manager under this
Agreement shall be rendered in its own name and not of the name of the
Owner. Without limiting the generality of the foregoing, all contracts,
agreements, and commitments made by Manager in connection with the
operation of the Restaurant shall be in the name of the Manager, and
all persons employed at the Restaurant shall be employed directly by
the Manager.
-4-
<PAGE>
5. COMPENSATION OF MANAGER. Manager shall be entitled to receive four
percent (4%) of the gross receipts less sales tax and refunds monthly as its fee
for all services performed hereunder, such amount to be paid from the first
dollars available.
6. COLLECTION OF PROCEEDS. From and after the effective date,
Manager shall collect all gross receipts from the operation of the Restaurant,
and shall deposit the gross receipts in such bank account or accounts in the
name of the Owner, as may from time to time be designated by the Manager or the
Owner. All checks drawn on the account shall require only the signature of an
officer of the Manager.
7. PAYMENT OF OBLIGATIONS. From gross receipts, Manager shall,
monthly, or more often to take advantage of vendor discounts or payment
obligations, pay the following, on behalf of the Owner from the restaurant's
bank accounts:
A) All invoices and expenses which are attributable to the
operation of the Restaurant, including without limitation food,
beverage and supplies, sales tax with respect to the sales of the
Restaurant, and water and sewer charges, if applicable to the
Restaurant, payroll and payroll taxes, unemployment insurance taxes at
such time as required by law, insurance repairs, maintenance, capital
expenditures, rent payable to the Landlord.
B) The management fee payable to the Manager.
C) Any additional funds over and above the foregoing shall be
paid to the Owner in the following manner:
(i) For the first six (6) months of the operation of the
restaurant, seventy-five percent (75%) of such additional funds
shall be paid to the Owner monthly, and
-5-
<PAGE>
the remaining twenty-five percent (25%) shall be withheld in a
separate account for the benefit of the Owner to be used by the
Manager only if needed by reason of a cash shortfall.
(ii) After such six (6) month period of time, the
twenty-five percent (25%) balance that has been withheld, or any
remaining part of the same, shall be paid directly to the Owner.
(iii) Thereafter, monthly, all additional funds over and above
those set forth hereinabove shall be paid directly to the Owner.
(iv) All payments shall be made no later than the tenth
(10th) day of the month for the previous month.
8. NAME LICENSE AGREEMENT. The Owner, by separate agreement
executed concurrently herewith, has been granted the right to use the name
"Roadhouse Grill" by the Manager pursuant to a Name License Agreement. If for
any reason the name "Roadhouse Grill" is not available to be used for this
restaurant, this Management Agreement shall, at the sole option of the Owner,
immediately cease and be of no further force and effect. In such event the
Manager shall be entitled only to payments up until the time of the termination
of this Management Agreement.
9. REPRESENTATIONS AND WARRANTIES OF OWNER. Owner represents and
warrants that:
A) Owner is a corporation duly organized, validl existing and
in good standing under the laws of the State of Florida and has all
requisite corporate power and authority to own, lease and operate its
properties and carry on its business as and in the places where such
properties are now owned, leased or operated or such business is now
being conducted.
-6-
<PAGE>
B) Owner has all requisite corporate power and authority to
enter into this Agreement and to assume and perform its obligations
hereunder. The execution and delivery of this Agreement and the
performance by Owner of its obligations hereunder have been duly and
validly authorized by all necessary corporate action of Owner and no
further action or approval, corporate or otherwise, is required in
order to constitute this Agreement as a valid, binding and enforceable
obligation of Owner. The execution and delivery of this Agreement and
the performance by Owner of its obligations hereunder do not and will
not conflict with or violate any provision of the Certificate of
Incorporation or By-Laws of Owner, and (ii) do not and will not
conflict with or result in any breach of any condition or provisions
of, or constitute a default under or give rise to any right of
termination, cancellation or acceleration or (whether after the giving
of notice or lapse of time or both) result in the creation or
imposition of any lien, charge, pledge, security interest or other
encumbrance upon any of the assets of the Restaurant by reason of the
terms of any contract, mortgage, lien, lease, agreement, indenture,
instrument, judgment or decree to which Manager is a party or which is
or purports to be binding upon Manager or which affects or purports to
affect any of the assets of the Restaurant, except as contemplated by
this Agreement.
C) Subject to the approval of the Florida Alcohol Beverage
Control Commission ("ABC") , no action, approval, consent or
authorization by or filing with any governmental or quasi-governmental
agency, commission, board, bureau or instrumentality, is necessary or
required as to Owner in order to constitute this Agreement as a valid,
binding and enforceable obligation of Owner in accordance with its
terms.
-7-
<PAGE>
D) Owner, upon completion of the construction by Manager as set
forth in the Construction Agreement signed concurrently herewith, and
upon payment to Manager of all costs of construction, owns outright and
has good and marketable title to all of the assets of the Restaurant,
free and clear of any mortgage, lien, pledge, charge, conditional sales
or other agreement, lease, right or encumbrance of any sort except for
any interests of the Landlord. The heating, ventilation, and
air-conditioning systems servicing the Restaurant any in good
operation, condition and repair.
E) Manager will apply for, on behalf of Owner, all permits,
licenses, orders and approvals of all Federal, state or local
governmental regulatory bodies required for it to operate the
Restaurant, including without limitation an on-premises liquor license
(2-COP) issued by the ABC in the name of Owner; and all such permits,
licenses, orders and approvals are in full force and effect, have been
paid concurrently, and no suspension or cancellation of any of them is
pending or threatened.
10. REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager represents and
warrants that:
A) Manager is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has all
requisite power and authority to own, lease and operate its properties
and carry on its business as and in the places where such properties
are now owned, leased or operated or such business is now being
conducted.
B) Manager has all requisite corporate power and authority to
enter into this Agreement and to assume and perform its obligations
hereunder. The execution and delivery of this Agreement and the
performance by Manager of its obligations hereunder have been
-8-
<PAGE>
duly and validly authorized by all necessary corporate action of
Manager, and no further action or approval, corporate or otherwise, is
required in order to constitute this Agreement as a valid, binding and
enforceable obligation of Manager. The execution and delivery of this
Agreement and the performance by Manager of its obligations hereunder
(i) do not and will not conflict with or violate any provision of the
Certificate of Incorporation or By-Laws of Manager, and (ii) do not and
will not conflict with or result in any breach of any condition or
provisions of, or constitute a default under or give rise to any right
of termination, cancellation or acceleration or (whether after the
giving of notice or lapse of time or both) result in the creation or
imposition of any lien, charge, pledge, security interest or other
encumbrance upon any of the assets of the Restaurant by reason of the
terms of any contract, mortgage, lien, lease, agreement, indenture,
instrument, judgment or decree to which Owner is a party or which is or
purports to be binding upon Owner or which affects or purports to
affect any of the assets of the Restaurant, except as contemplated by
this Agreement.
C) Subject to the approval of the ABC, no action, approval,
consent or authorization, including, but not limited to any action,
approval, consent or authorization by or filing with any governmental
or quasi-governmental agency, commission, board, bureau or
instrumentality, is necessary or required as to Manager in order to
constitute this Agreement as a valid, binding and enforceable
obligation of Manager in accordance with its terms.
11. ADDITIONAL COVENANTS.
-9-
<PAGE>
A) Manager may not enter into any agreement relating to the
Ownership or operation of any restaurant during the term of this
Agreement within a seven (7) mile radius from the location of this
restaurant, except for the current existing restaurants owned by
Manager and presently under construction within the cities of Delray
Beach, Florida and Deerfield Beach, Florida, unless prior written
consent is given by the Owner.
B) All equipment, furnishings and supplies are, and shall
remain, the property of the Owner. At the commencement of the Term
hereunder, the Owner and Manager shall make an inventory of all of such
items, including glassware, china, silverware and smallwares used in
the operation of the Restaurant, and shall again inventory such items
as of the date of termination of this Agreement. In the event of any
unaccounted shortage, a monetary adjustment at cost or the value of
such items shall be made.
12. INDEMNIFICATION OF OWNER. Manager shall defend and indemnify the
Owner, and hold the Owner, its officers, directors and stockholders, safe and
harmless from any and all claims, liabilities or costs, including without
limitation reasonable fees and disbursements to counsel of Owner, incurred by
Owner by reason of (i) the operation of the Restaurant during the term of this
Agreement, or (ii) any breach by Manager of the representations, warranties,
covenants and agreements made by Manager under this Agreement or under any
agreement with Owner entered into in connection herewith.
13. ABC APPROVAL. Promptly after the execution of this Agreement,
Owner and Manager shall, if necessary, file an application with the ABC for a
license to be issued in the name of the Owner, for Manager to sell alcoholic
beverages on the Premises. Owner and Manager shall use their
-10-
<PAGE>
best efforts to cause a temporary license, and subsequently a permanent license
to be obtained at the earliest practical time.
14. NOTICES. Any notices necessary or required to be served hereunder
shall be directed to the following parties:
If to Owner: Boca Roadhouse, Inc.
___________________________________
___________________________________
Attention:_________________________
If to Manager: Roadhouse Grill, Inc.
___________________________________
___________________________________
Attention:_________________________
with a copy in all cases to Stanley D. Gottsegen, Esquire, Abrams, Anton,
Robbins, Resnick & Schneider, P.A., One Boca Place, Suite 411-E, 2255 Glades
Road, Boca Raton, Florida 33431.
15. ARBITRATION. In the event of any dispute arising with respect to
any of the terms or conditions hereunder, the same shall be subject to binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The decision of the arbitrator shall be final and
binding upon the parties, and not subject to appeal, except as provided by the
Florida Statutes.
16. SEPARABILITY. If any of the provisions of this Agreement are found
to be contrary to the law, such findings shall not affect any of the other
provisions of this Agreement.
17. LAW. In the event of any conflict arising out of this Agreement,
the same shall be governed by the laws of the State of Florida.
-11-
<PAGE>
18. VENUE. If any dispute arises hereunder, the same shall have its
venue in the Circuit Court in and for Palm Beach County, Florida.
19. PARAGRAPH HEADINGS. The paragraph headings set forth in this
Agreement are for identification purposes, and shall not in any manner be
interpreted to form any of the substance of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands
and seals the day and year first above written.
BOCA ROADHOUSE, INC.
By: /s/ WILLIAM A. HOFFMAN
----------------------------
Title: CHIEF EXECUTIVE OFFICER
--------------------------
ROADHOUSE GRILL, INC.
By: /s/ JOHN DAVID TOOLE, III
---------------------------
Title: President
------------------------
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EXHIBIT 10.13
PROMISSORY NOTE
U.S. $2,500,000.00 Fort Lauderdale, Florida
January 15, 1996
FOR VALUE RECEIVED, the undersigned, Roadhouse Grill, Inc., a Florida
corporation, (hereinafter referred to as the "Maker"), promises to pay to the
order of John Y. Brown, Jr., (hereinafter referred to as the "Holder"), the
principal sum of Two Million Five Hundred Thousand Dollars ($2,500,000.00),
together with interest thereon at eight and one-half percent (8.5%) per annum
payable monthly and with the entire principal balance due and payable on June
30, 1996.
Maker may prepay the principal amount outstanding in whole or in part
at any time without penalty. All such prepayments shall be applied first to the
payment of all accrued but unpaid interest and second to the outstanding
principal balance. Neither a partial prepayment of principal, nor an offset
against the principal balance as described herein, shall reduce the amount of
the monthly payments due hereunder.
Maker shall make all of its payments to Holder at 899 West Cypress
Creek Road, Suite 500, Fort Lauderdale, Florida, 33309, or at such other place
as Holder may designate to Maker.
This Note shall be in default when any payment required to be made
hereunder shall not have been made on the due date. While in default, the
outstanding principal balance shall bear interest at the maximum rate permitted
by law. If Maker is in default by failing to make any monthly payment of
interest on its due date, and Maker fails to make such monthly payment within
ten (10) days after the date of Holder's mailing written notice of such default
to Maker or if Maker is otherwise in default as provided for herein, then the
entire outstanding principal balance, and all accrued but unpaid interest
thereon, shall immediately become due and payable at the option of the Holder
without notice to or demand upon Maker. Holder may exercise this option to
accelerate in accordance with the terms of this Note notwithstanding any prior
forbearance. If suit is brought to collect this Note, the Holder shall be
entitled to collect from Maker all costs and expenses of such suit, including,
but not limited to, reasonable attorneys fees through trial and appellate
levels.
Maker and all endorsers and guarantors jointly and severally waive
presentment for payment demand, notice of nonpayment protest, and notice of
protest and consent to the terms hereof and to any extension or postponement of
the time for payment or any other indulgence and shall remain fully liable
hereunder in the event of any such extension, postponement or other indulgence.
It is the intention of the Maker and the Holder that the interest
charged hereunder shall in no event ever exceed the maximum rate permitted by
law, and any interest or payments in the nature of interest which would render
this Note usurious shall, at the option of the Holder, be either refunded to the
Maker or credited against the outstanding principal balance.
This Note shall be governed by and construed in accordance with the
laws of the State of Florida.
ROADHOUSE GRILL, INC.,
a Florida corporation
By: /s/ J. DAVID TOOLE III
-----------------------------------
Title: President
EXHIBIT 10.14
PROMISSORY NOTE
U.S. $600,000.00 Fort Lauderdale, Florida
September 27, 1995
FOR VALUE RECEIVED the undersigned, Roadhouse Grill, Inc., a Florida
Corporation, (hereinafter referred to as the "Maker"), promises to pay to the
order of Hal Dickson, (hereinafter referred to as the "Holder"), the principal
sum of Six Hundred Thousand Dollars ($600,000.00), together with interest
thereon at the rate of thirteen percent (13.00%) per annum, as follows:
Monthly Payments of interest shall be made commencing November 1, 1995,
and on the 1st day of each and every month thereafter through September 1, 1996.
On September 27, 1996, the entire outstanding principal balance, and payable.
The Maker, at its option, may extend the term of this Promissory Note for one
(1) year upon the same terms as contained herein by giving notice to Holder on
or before September 27, 1996.
Maker may prepay the principal amount outstanding in whole or in part
at any time without penalty. All such prepayments shall be first applied to the
payment of all accrued but unpaid interest, and second to the outstanding
principal balance. Neither a partial prepayment of principal nor an offset
against the principal balance as described herein, shall reduce the amount of
the monthly payments due hereunder.
Maker shall make all of its payments to Holder at such place as Holder
may designate to Maker.
This Note shall be in default when any payment required to be made
hereunder shall not have been made on the due date. While in default, the
outstanding principal balance shall bear interest at the maximum rate permitted
by law. If Maker is in default by failing to make any monthly t of principal and
interest on its due date, and Maker fails to make such monthly payment within
ten (10) days after the date of Holder's mailing written notice of such default
to Maker or if Maker is otherwise in default as provided for herein, then the
entire outstanding balance and all accrued but unpaid interest thereon, shall
immediately become due and payable at the option of the Holder without notice to
or demand upon Maker. Holder may exercise this option to accelerate in
accordance with the terms of this Note notwithstanding any prior forbearance. If
suit is brought to collect this Note, the Holder shall be entitled to collect
from Maker all costs and expenses of such suit, including, but not limited to,
reasonable attorney's fees through trial and appellate levels.
Maker and all endorsers and guarantors jointly and severally waive
presentment for payment demand, notice of nonpayment, protest, and notice of
protest, and consent to the terms hereof and to any extension or postponement of
the time for payment or any other indulgence and shall remain fully liable
hereunder in the event of any such extension, postponement or other indulgence.
It is the intention of the Maker and the Holder that the interest
charged hereunder shall in no event ever exceed the maximum rate permitted by
law, and any interest or payments in the nature of interest which would render
this Note usurious shall, at the option of the Holder, be either refunded to the
Maker or credited against the outstanding principal balance.
This Note shall be governed by and construed in accordance with the
laws of the State of Florida.
ROADHOUSE GRILL, INC.,
a Florida corporation
By: /s/ J. DAVID TOOLE III
------------------------------------
Title: President
<PAGE>
STATE OF FLORIDA ss.
ss:
COUNTY OF BROWARD ss.
The foregoing Promissory Note was executed and acknowledged before me
by J. David Toole, III, as President of Roadhouse Grill, Inc., a Florida
corporation, WHO IS PERSONALLY KNOWN TO ME or who has produced ________________
as identification and who did (did not) take and oath, for and on behalf of
said corporation, this 27 day of SEPTEMBER , 1995
----- ---------
WITNESS my hand and official seal.
/s/ JENNIFER VERDI
-----------------------------------
Notary Public
My commission expires: Commission No. CC 428923
JENNIFER VERDI
SEAL OF FLORIDA MY COMMISSION #
CC 428923
EXPIRES: DECEMBER
22, 1998
BONDED THRU NOTARY
PUBLIC UNDERWRITERS
EXHIBIT 10.15
SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
BETWEEN
ROADHOUSE GRILL, INC.
AND
THE SEVERAL PURCHASERS NAMED IN SCHEDULE I
DATED AS OF FEBRUARY 10, 1994
-----------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PAGE
ARTICLE I. - THE SERIES A PREFERRED SHARES...................................................................... 1
Section 1.1. Issuance, Sale and Delivery of the Series A Preferred Shares......................... 1
Section 1. Closing.............................................................................. 1
ARTICLE II. - REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................... 2
Section 2.1. Organization, Qualification and Corporate Power...................................... 2
Section 2. Authorization of Agreements, Etc..................................................... 3
Section 2.3. Validity............................................................................. 4
Section 2.4. Authorized Capital Stock............................................................. 4
Section 2.5. Financial Statements................................................................. 5
Section 2.6. Events Subsequent to the Date of the Balance Sheet................................... 6
Section 2.7. Litigation: Compliance with Law..................................................... 6
Section 2.8. Proprietary Information of Third Parties............................................. 7
Section 2.9. Title to Properties.................................................................. 7
Section 2.10. Leasehold Interests.................................................................. 8
Section 2.11. Insurance............................................................................ 8
Section 2.12. Taxes................................................................................ 8
Section 2.13. Other Agreements..................................................................... 9
Section 2.14. Patents, Trademarks, Etc............................................................. 11
Section 2.15. Loans and Advances................................................................... 11
Section 2.16. Assumptions, Guaranties, Etc. of Indebtedness of Other Persons....................... 11
Section 2.17. Significant Suppliers and Licensees.................................................. 12
Section 2.18. Governmental Approvals............................................................... 12
Section 2.19. Disclosure........................................................................... 12
Section 2.20. Offering of the Series A Preferred Shares............................................ 13
Section 2.21. Brokers.............................................................................. 13
Section 2.22. Officers............................................................................. 13
Section 2.23. Transactions With Affiliates......................................................... 13
Section 2.24. Employees............................................................................ 14
Section 2.25. U.S. Real Property Holding Corporation............................................... 14
Section 2.26. License.............................................................................. 14
Section 2.27. Restaurants Under Development........................................................ 14
Section 2.28. Compliance With Franchise Laws....................................................... 14
ARTICLE III. - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................................................. 15
i
<PAGE>
ARTICLE IV. - CONDITIONS TO THE CLOSING......................................................................... 16
Section 4.1. Conditions to the Obligations of the Purchasers...................................... 16
Section 4.2. Conditions to the Obligations of the Company......................................... 18
ARTICLE V. - COVENANTS OF THE COMPANY.................................................................. 19
Section 5.1. Financial Statements, Reports, Etc................................................... 19
Section 5.2. Right of First Refusal............................................................... 20
Section 5.3. Reserve for Shares................................................................... 21
Section 5.4. Corporate Existence.................................................................. 22
Section 5.5. Properties, Business, Insurance...................................................... 22
Section 5.6. Restrictive Agreements Prohibited.................................................... 22
Section 5.7. Transactions with Affiliates......................................................... 23
Section 5.8. Expenses of Directors................................................................ 23
Section 5.9. Use of Proceeds...................................................................... 23
Section 5.10. Board of Directors Meetings.......................................................... 23
Section 5.11. Compensation......................................................................... 24
Section 5.12. By-Laws.............................................................................. 24
Section 5.13. Performance of Contracts............................................................. 24
Section 5.14. Proprietary Information Agreements................................................... 24
Section 5.15. Maintenance of Ownership of Subsidiaries............................................. 24
Section 5.16. Distributions by Subsidiaries........................................................ 25
Section 5.17. Compliance with Laws................................................................. 25
Section 5.18. Keeping of Records and Books of Account.............................................. 25
Section 5.19. U.S. Real Property Interest Statement................................................ 25
Section 5.20. Initial Public Offering.............................................................. 26
ARTICLE VI. - ADDITIONAL SERIES A CONVERTIBLE PREFERRED
STOCK COVENANTS................................................................................................. 26
Section 6.1. Special Class Vote................................................................... 26
Section 6.2. Merger, etc.......................................................................... 27
Section 7.1. Expenses............................................................................. 27
Section 7.2. Survival of Agreements............................................................... 28
Section 7.3. Brokerage............................................................................ 28
Section 7.4. Parties in Interest.................................................................. 28
Section 7.5. Notices.............................................................................. 28
Section 7.6. Governing Law........................................................................ 29
Section 7.7. Entire Agreement..................................................................... 29
Section 7.8. Counterparts......................................................................... 29
Section 7.9. Amendments........................................................................... 29
Section 7.10. Severability......................................................................... 29
Section 7.11. Titles and Subtitles................................................................. 30
Section 7.12. Certain Defined Terms................................................................ 30
</TABLE>
ii
<PAGE>
INDEX TO EXHIBITS:
EXHIBIT A: Form of 1994 Registration Rights Agreement
EXHIBIT B: Restated Certificate of Incorporation
EXHIBIT C: Form of Confidentiality Agreement
EXHIBIT D: Form of 1994 Voting Agreement
EXHIBIT E: Form of Initial Stockholders' Agreement
iii
<PAGE>
SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
THIS SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT dated as
of February 10, 1994 between ROADHOUSE GRILL, INC., a Florida corporation (the
"Company"), and the several purchasers named in the attached SCHEDULE I
(individually a "Purchaser" and collectively the "Purchasers").
WHEREAS, the Company wishes to issue and sell to the Purchasers a
minimum of 2,000,000 shares of the authorized but unissued Series A Convertible
Preferred Stock, $.01 par value, of the Company (the "Series A Preferred
Shares"); and
WHEREAS, the Purchasers, severally, wish to purchase the Series A
Preferred Shares on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I.
THE SERIES A PREFERRED SHARES
Section 1.1. ISSUANCE, SALE AND DELIVERY OF THE SERIES A
PREFERRED SHARES.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, the Company agrees
to issue and sell to each Purchaser, and each Purchaser hereby agrees to
purchase from the Company, the number of Series A Preferred Shares set forth
opposite the name of such Purchaser under the heading "Number of Series A
Preferred Shares to be Purchased" on SCHEDULE I, at the aggregate purchase price
set forth opposite the name of such Purchaser under the heading "Aggregate
Purchase Price for Series A Preferred Shares" on SCHEDULE I.
Section 1.2. CLOSING.
The initial closing under this Agreement shall take place at such
location and at such date and time at which irrevocable subscriptions for at
least 1,000,000 Series A Preferred Shares shall have been received and as may be
agreed upon between the Purchasers and the Company (such closing being called
the "Closing" and such date and time being called the "Closing Date.") In the
event that less than 3,000,000 Series A Preferred Shares are subscribed and
issued at the Closing, the Company shall hold a subsequent closing or closings
for any remaining unsold Series A Preferred Shares, provided that no more than
3,000,000 Series A Preferred Shares shall be issued as part of this Offering.
All of such subsequent closings shall be held within thirty days of the initial
closing. At
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each closing, the Company shall deliver to each Purchaser a certificate or
certificates in such denominations and registered in such names as set forth on
Schedule I, representing the number of Series A Preferred Shares to be purchased
by such Purchaser from the Company, against payment by such Purchaser to the
Company of the full purchase price of the Series A Preferred Shares in the
amount set forth opposite the name of each Purchaser under the heading
"Aggregate Purchase Price for Series A Preferred Shares" on SCHEDULE I (as such
SCHEDULE I shall be revised to take into account subsequent closings) by wire
transfer of immediately available funds or as otherwise agreed by the Company
and the Purchasers.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, John Y. Brown, Jr. and J. David Toole, III, jointly and
severally, represent and warrant to the Purchasers that, except as set forth in
the Disclosure Schedule attached as SCHEDULE II (which Disclosure Schedule makes
explicit reference to the particular representation or warranty as to which
exception is taken, which in each case shall constitute the sole representation
and warranty as to which such exception shall apply):
Section 2.1. ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
(a) The Company is a corporation incorporated and
organized under the laws of the State of Florida and its status is active, and
it is duly licensed or qualified to transact business as a foreign corporation
and is in good standing in each jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification. The Company has the corporate power
and authority to own and hold its properties and to carry on its business as now
conducted and as proposed to be conducted, to execute, deliver and perform this
Agreement and the 1994 Registration Rights Agreement with the Purchasers in the
form attached as EXHIBIT A (the "1994 Registration Rights Agreement"), the 1994
Voting Agreement with the Purchasers in the form attached as EXHIBIT D (the
"1994 Voting Agreement"), the Initial Stockholders' Agreement with the
Purchasers and the initial stockholders of the Company in the form attached as
EXHIBIT E (the "Initial Stockholders Agreement") and the Warrant to purchase
shares of Series A Preferred Shares (the "Warrant"), to issue, sell and deliver
the Series A Preferred Shares, to issue and deliver the shares of Common Stock,
one cent ($.01) par value, of the Company (the "Common Stock") issuable upon
conversion of the Series A Preferred Shares (the "Series A Conversion Shares"),
to issue, sell and deliver the Series A Preferred Shares upon exercise of the
Warrant ("Warrant Shares") and to issue and deliver Common Stock issuable upon
conversion of the Warrant Shares (the "Warrant Conversion Shares").
(b) Except as provided in SCHEDULE II the Company has
no subsidiaries and does not own of record or beneficially, directly or
indirectly, (i) any shares of capital stock or securities convertible into
capital stock of any other corporation, or (ii) any participating interest in
any
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partnership, joint venture or other non-corporate business enterprise, or
(iii) control, directly or indirectly, any other entity.
Section 2.2. AUTHORIZATION OF AGREEMENTS, ETC.
(a) The execution and delivery by the Company of this
Agreement and the 1994 Registration Rights Agreement, the 1994 Voting Agreement,
the Initial Stockholders' Agreement and the Warrant, the performance by the
Company of its obligations hereunder and thereunder, the issuance, sale and
delivery of the Series A Preferred Shares and the Warrant Shares and the
issuance and delivery of the Series A Conversion Shares and the Warrant
Conversion Shares have been duly authorized by all requisite corporate action
and will not violate any provision of law, any order of any court or other
agency of government, the Articles of Incorporation of the Company, as amended
or supplemented (the "Charter"), or the By-Laws of the Company, or any provision
of any indenture, agreement or other instrument to which the Company or any of
its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.
(b) The Series A Preferred Shares have been duly
authorized and, when issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable with no personal liability attaching to the
ownership thereof and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company except
as set forth in the 1994 Registration Rights Agreement and the 1994 Voting
Agreement. The Series A Conversion Shares, the Warrant Shares and the Warrant
Conversion Shares have been duly reserved for issuance upon exercise or
conversion of the Series A Preferred Shares, the Warrant or the Warrant Shares,
as the case may be, and, when so issued, will be duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock or Series A
Preferred Shares, as the case may be, with no personal liability attaching to
the ownership thereof and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company except
as set forth in the 1994 Registration Rights Agreement and the 1994 Voting
Agreement. Neither the issuance, sale or delivery of the Series A Preferred
Shares nor the issuance or delivery of the Series A Conversion Shares, the
Warrant Shares or the Warrant Conversion Shares is subject to any preemptive
right of stockholders of the Company or to any right of first refusal or other
right in favor of any person.
Section 2.3. VALIDITY.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms. The 1994 Registration Rights Agreement, the 1994
Voting Agreement, the Initial Stockholders Agreement and the Warrant when each
is executed and delivered in accordance with this Agreement,
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will constitute legal, valid and binding obligations of the Company, enforceable
in accordance with the terms of each instrument.
Section 2.4. AUTHORIZED CAPITAL STOCK.
Immediately prior to the Closing, the authorized capital stock of the
Company will consist of (i) 5,000,000 shares of Preferred Stock, $.01 par value
(the "Preferred Stock"), of which 3,525,000 shares have been designated Series A
Convertible Preferred Stock, and (ii) 30,000,000 shares of Common Stock.
Immediately prior to the Closing, 6,444,445 shares of Common Stock will be
validly issued and outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof and no shares of Series A
Convertible Preferred Stock will have been issued. The stockholders of record of
the Company and the number of shares of Common Stock held by each are set forth
in the attached SCHEDULE IV, and except as contemplated by this Agreement, there
are no subscriptions, warrants, options, convertible securities, and other
rights (contingent or otherwise) to purchase or otherwise acquire equity
securities of the Company. At the Closing, the Company will grant an option to
J. David Toole, III to purchase 355,555 shares of Common Stock at $.15 per share
(the "Toole Option"). The Company has adopted, or will adopt after the Closing,
a 1994 Stock Option Plan providing for the issuance of not more than 200,000
shares of Common Stock (the "Option Plan") and form of option agreements in the
form heretofore delivered to counsel for the Purchasers for the issuance of
options to purchase shares of the Company's Common Stock to employees and
consultants of the Company and members of the Board of Directors who are not
employees. Except for the shares of Common Stock issuable upon the conversion of
the Series A Preferred Shares and the Warrant Shares, and the 200,000 and
355,555 shares of Common Stock reserved for issuance pursuant to the Option Plan
and the Toole Option, respectively, no shares of Common Stock or other capital
stock of the Company are reserved for possible future issuance. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
the Company are as set forth in the Charter, a copy of which is attached as
EXHIBIT B, and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
and in accordance with all applicable laws. Except as set forth in the attached
SCHEDULE II or SCHEDULE IV, (i) no person owns of record or is known to the
Company to own beneficially any share of Common Stock or capital stock of the
Company, (ii) no subscription, warrant, option, convertible security, or other
right (contingent or otherwise) to purchase or otherwise acquire equity
securities of the Company is authorized or outstanding, and (iii) there is no
commitment by the Company to issue shares, subscriptions, warrants, options,
equity securities any evidence of indebtedness or asset. Except as provided for
in the Charter, or as set forth in the attached SCHEDULE II or SCHEDULE IV, the
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interest therein or to pay
any dividend or make any other distribution in respect thereof. Except for the
1994 Voting Agreement referred to in Article IV, Section 4.01(e) and as provided
in this Agreement, to the best of the Company's knowledge, there are no voting
trusts or agreements, stockholders' agreements, pledge agreements, buy-sell
agreements, rights of first refusal, preemptive rights or proxies relating
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to any securities of the Company or any of its subsidiaries (whether or not the
Company or any of its subsidiaries is a party thereto), except as set forth in
the attached SCHEDULE II or SCHEDULE IV. All of the outstanding securities of
the Company were issued in compliance with all applicable Federal and state
securities laws.
Section 2.5. FINANCIAL STATEMENTS.
(a) The Company has furnished to the Purchasers the
unaudited balance sheet of the Company as of December 31, 1993 ("Balance
Sheet"), and the related statements of operations, changes in partners'
deficiency and cash flows of the Company for the year ended December 31, 1993.
All such financial statements have been prepared in accordance with the
generally accepted accounting principles consistently applied and fairly present
the financial position of the Company as of such dates and the results of its
operations for the periods then ended. Since the date of the Balance Sheet,
other than as disclosed in SCHEDULE II, (i) there has been no material change in
the assets, liabilities or financial condition of the Company from that are
reflected in the Balance Sheet except for changes in the ordinary course of
business which in the aggregate have not been materially adverse, and (h) none
of the business, prospects, financial condition, operations, property or affairs
of the Company have been materially adversely affected by any occurrence or
development, individually or in the aggregate, whether or not insured against.
(b) Except as provided in documents referred to in
SCHEDULE V hereto, the Company has no material liability or obligation, absolute
or contingent (individually or in the aggregate), including, without limiting
the generality of the foregoing, any tax liabilities due or to become due, not
reflected in the above referred to financial statements, except (i) obligations
and liabilities incurred after the date of the Balance Sheet in the ordinary
course of business that are not individually or in the aggregate material, and
(ii) obligations and liabilities incurred in the ordinary course of business
that would not be required to be reflected in financial statements prepared in
accordance with generally accepted accounting principles. Without limiting the
generality of the foregoing, the Company does not know, and has no reasonable
ground to know, of any basis for the assertion against the Company as of the
date hereof of any material liabilities (not reflected in SCHEDULE WA) or the
above referred to financial statements.)
Section 2.6. EVENTS SUBSEQUENT TO THE DATE OF THE BALANCE SHEET.
Since the date of the Balance Sheet, other than as disclosed on
Schedule 11, the Company has not (i) issued any stock, bond or other corporate
security or partnership interest, (ii) borrowed any amount or incurred or become
subject to any liability (absolute, accrued or contingent), except current
liabilities incurred and liabilities under contracts entered into in the
ordinary course of business, (iii) discharged or satisfied any lien or
encumbrance or incurred or paid any obligation or liability (absolute, accrued
or contingent) other than current liabilities shown on the Balance Sheet and
current liabilities incurred since the date of the Balance Sheet in the ordinary
course of business and in connection with the development of the Company's
restaurants, (iv) declared or made any
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payment or distribution to stockholders or partners or purchased or redeemed any
share of its capital stock or partnership interests or other security, (v)
mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, other than all liens of current real property taxes not yet due and
payable, (vi) sold, assigned or transferred any of its tangible assets except in
the ordinary course of business, or canceled any debt or claim, (vii) sold,
assigned, transferred or granted any exclusive licenses with respect to any
patent, trademark, trade name, service mark, copyright, trade secret or other
intangible asset, except rights or licenses granted in the ordinary course of
business to licensees of the Company, (viii) suffered any loss of property or
waived any right of substantial value whether or not in the ordinary course of
business, (ix) made any material change in officer compensation, (x) made any
material change in the manner of business or operations, (xi) entered into any
transaction except in the ordinary course of business or as otherwise
contemplated hereby, (xii) entered into any commitment (contingent or otherwise)
to do any of the foregoing, or (xiii) engaged in any transaction with any
director, officer, employee, stockholder or partner of the Company.
Section 2.7. LITIGATION: COMPLIANCE WITH LAW.
Other than (a) routine litigation occurring in the ordinary course of
business which the Company is adequately insured against and which is listed on
SCHEDULE II, (b) the matters described in the attached SCHEDULE II, or (c) in
the case of a threatened action, suit, claim, proceeding or investigation, one
that is not material to the Company or its business, there is no (i) action,
suit, claim, proceeding or investigation pending or, to the best of the
Company's knowledge, threatened against or affecting the Company, at law or in
equity, or before or by any Federal, State, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) arbitration proceeding relating to the Company pending under
collective bargaining agreements or otherwise, or (iii) governmental inquiry
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company (including without limitation any inquiry as to the
qualification of the Company to hold or receive any license or permit), and to
the Company's knowledge, there is no basis for any of the foregoing. Except as
described in the attached SCHEDULE II, the Company has not received any opinion
or memorandum or legal advice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or disadvantage which may be
material to its business, prospects, financial condition, operations, properties
or affairs. The Company is not in default with respect to any order, writ,
injunction or decree known to or served upon the Company of any court or of any
Federal, State, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign. Except as described in
the attached Schedule II, there is no action or suit by the Company pending or
threatened against others. The Company has complied in all material respects
with all laws, rules, regulations and orders which are material and applicable
to its business, operations, properties, assets, products and services, and the
Company has all necessary permits, licenses and other authorizations required to
conduct its business as conducted and as proposed to be conducted in all
material respects, including all laws regulating the development and operation
of restaurants and all applicable environmental laws. There is no existing law,
rule, regulation or order, and the Company is not aware of any proposed law,
rule, regulation or order, whether Federal or state, which would prohibit or
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restrict the Company from, or otherwise materially adversely affect the Company
in, conducting its business in any jurisdiction in which it is now conducting
business or in which it proposes to conduct business.
Section 2.8. PROPRIETARY INFORMATION OF THIRD PARTIES.
Except as disclosed in the attached SCHEDULE II, no third party has
claimed or has reason to claim that any person now or previously employed or
engaged as a consultant by the Company has (a) violated or, to the Company's
knowledge, may be violating any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or, to the best of the Company's knowledge, may be disclosing or utilized or, to
the best of the Company's knowledge, may be utilizing any trade secret or
proprietary information or documentation of such third party or violated any
confidential relationship which such person may have had with such third party
in connection with the development, manufacture or sale of any product or
proposed product or the development or sale of any service or proposed service
of the Company, or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. Except as described in the attached Schedule 11, no third party has
requested information from the Company which reasonably suggests that such a
claim might be contemplated. To the best of the Company's knowledge, none of the
execution or delivery of this Agreement, or the carrying on of the business of
the Company as officers, employees or agents by any officer, director or key
employee of the Company, or the conduct or proposed conduct of the business of
the Company, will conflict with or result in a breach of the terms, conditions
or provisions of or constitute a default under any contract, covenant or
instrument under which any such person is obligated.
Section 2.9. TITLE TO PROPERTIES.
The Company has good and marketable title to its properties and assets
reflected on the Balance Sheet, or acquired by it since the date of the Balance
Sheet (other than properties and assets disposed of in the ordinary course of
business since the date of the Balance Sheet), and all such properties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges, claims, restrictions and other encumbrances, except for liens for
current taxes not yet due and payable and minor imperfections of title, if any,
not material in nature or amount and not materially detracting from the value or
impairing the use of the property subject thereto or impairing the operations or
proposed operations of the Company, except as reflected on the Balance Sheet or,
with respect to properties and assets acquired after the date of the Balance
Sheet, except as disclosed in the attached SCHEDULE II.
Section 2.10. LEASEHOLD INTERESTS.
Each lease or agreement to which the Company is a party under which it
is a lessee of any property, real or personal, is a valid and subsisting
agreement, without any material default of the
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Company thereunder and, to the best of the Company's knowledge, without any
material default thereunder of any other party thereto. No event has occurred
and is continuing which, with due notice or lapse of time or both, would
constitute a default or event of default by the Company under any such lease or
agreement or, to the best of the Company's knowledge, by any other party
thereto. The Company's possession of such property has not been disturbed and,
to the best of the Company's knowledge, no claim has been asserted against the
Company adverse to its rights in such leasehold interests.
Section 2.11. INSURANCE.
The Company holds valid policies covering all of the insurance required
to be maintained by it under Section 5.05 (except for policies indicated to be
obtained after, Closing).
Section 2.12. TAXES.
The Company has filed all tax returns, Federal, state, county and
local, required to be filed by it and, with respect to such state, county and
local returns, if not filed would have a material adverse effect on its
financial condition or operations, and the Company paid all taxes shown to be
due by such returns as well as all other taxes, assessments and governmental
charges which have become due or payable, including without limitation all taxes
which the Company is obligated to withhold from amounts owing to employees,
creditors and third parties. All such taxes with respect to which the Company
has become obligated pursuant to elections made by the Company in accordance
with generally accepted practice have been paid and adequate reserves have been
established for all taxes accrued but not yet payable. The Federal income tax
returns of the Company have never been audited by the Internal Revenue Service.
No deficiency assessment with respect to or proposed adjustment of the Company's
Federal, state, county or local taxes is pending or, to the best of the
Company's knowledge, threatened. There is no tax lien, whether imposed by any
Federal, state, county or local taxing authority, outstanding against the
assets, properties or business of the Company. Except as set forth in the
attached Schedule 11. neither the Company nor any of its stockholders have ever
filed a consent pursuant to Section 341(f) of the Internal Revenue Code
("Code"), relating to collapsible corporations.
Section 2.13. OTHER AGREEMENTS.
Except as set forth in the attached SCHEDULE V(A) and the documents to
be executed in connection with the transactions contemplated by this Agreement,
the Company is not a party to or otherwise bound by any written or oral contract
or instrument or, to the knowledge of the Company, other restriction which
individually or in the aggregate could materially adversely affect the business,
prospects, financial condition, operations, property or affairs of the Company.
Except as set forth in the attached SCHEDULE V(B), the Company is not a party to
or otherwise bound by any written or oral:
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(a) contract with any labor union (and, to the knowledge
of the Company, no organizational effort is being made with respect to any of
its employees);
(b) contract or other commitment with any supplier
containing any provision permitting any party other than the Company to
renegotiate the price or other terms pursuant to which the Company has or is
expected to purchase in excess of $50,000 worth of products or services during
any twelve month period;
(c) contract for the future purchase of fixed assets or
for the future purchase of materials, supplies or equipment in excess of its
normal operating requirements;
(d) contract for the employment of any officer,
employee or other person (whether of a legally binding nature or in the nature
of informal understandings) on a full time or consulting basis which is not
terminable on notice without cost or other liability to the Company, except
normal severance arrangements and accrued vacation pay;
(e) bonus, pension, profit sharing, retirement,
hospitalization, insurance, stock purchase, stock option or other plan, contract
or understanding pursuant to which benefits are provided to any employee of the
Company (other than group insurance plans applicable to employees generally);
(f) agreement or indenture relating to the borrowing of
money or to the mortgaging or pledging of, or otherwise placing a lien or
security interest on, any asset of the Company;
(g) guaranty of any obligation for borrowed money or
otherwise;
(h) voting trust or agreement, stockholders' agreement,
pledge agreement, buy-sell agreement or first refusal or preemptive rights
agreement relating to any securities of the Company;
(i) agreement, or group of related agreements with the
same party or any group of affiliated parties, under which the Company has
advanced or agreed to advance money or has agreed to lease any property as
lessee or lessor;
(j) agreement or obligation (contingent or otherwise)
to issue, sell or otherwise distribute or to repurchase or otherwise acquire or
retire any share of its capital stock, partnership interest or any of its other
equity securities;
(k) assignment, license or other agreement with respect
to any form of intangible property;
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(l) agreement under which it has granted any person any
registration rights, other than the 1994 Registration Rights Agreement;
(m) agreement under which it has limited or restricted
its right to compete with any person in any respect;
(n) other contract or group of related contracts with
the same party involving more than $25,000 or continuing over a period of more
than six months from the date or dates thereof (including renewals or extensions
optional with another party), which contract or group of contracts is not
terminable by the Company without penalty upon notice of thirty (30) days or
less; or
(o) other contact, instrument, commitment, plan or
arrangement, a copy of which would be required to be filed with the Securities
and Exchange Commission (the "Commission") as an exhibit to a registration
statement on Form S-1 pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act of 1933 (the "Securities Act") if the Company were registering
securities under the Securities Act.
The Company, and to the best of the Company's knowledge, each other
party thereto have in all material respects performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default, in any material respect, (with due notice or lapse of time
or both), under any lease, agreement, or contract now in effect to which the
Company is a party or by which it or its property may be bound. The Company is
not in violation of any provision of its Charter or By-Laws. The Company has no
present expectation or intention of not fully performing all its obligations
under each such lease, contract or other agreement in all material respects, and
the Company has no knowledge of any breach and has received no written notice of
any anticipated breach by the other party to any contract or commitment to which
the Company is a party.
Section 2.14. PATENTS, TRADEMARKS, ETC.
Set forth in SECTION II is a list and brief description of all patents,
patent rights, patent applications, trademarks, trademark applications, service
marks, service mark applications, trade names and copyrights, and all
applications for such which are in the process of being prepared, owned by or
registered in the name of the Company, or of which the Company is a licensor or
licensee or in which the Company has any right, and in each case a brief
description of the nature of such right. The Company owns or possesses adequate
licenses or other rights to use, free and clear of all liens, claims and
restrictions, all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade names, copyrights,
manufacturing processes, formulae, trade secrets and know how (collectively,
"Intellectual Property") necessary to the conduct of its business as conducted
and as currently planned to be conducted, and no claim is pending or, to the
best of the Company's knowledge, threatened to the effect that the operations of
the Company infringe upon or conflict with the asserted rights of any other
person under any Intellectual Property, and to the best
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of the Company's knowledge, there is no basis for any such claim (whether or not
pending or threatened). No claim is pending or threatened to the effect that any
such Intellectual Property owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company and, to the best of the Company's knowledge, there is no basis for any
such claim (whether or not pending or threatened). The Company is not obligated
or under any liability whatsoever to make any payments by way of royalties, fees
or otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service mark, trade name, copyright or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business or
otherwise. To the best of the Company's knowledge, all proprietary technology
developed by and belonging to the Company and material to its business which has
not been patented has been kept confidential by the Company, its employees and
licensees. Except as set forth in SCHEDULE II, the Company has not granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the proprietary products or proposed proprietary
services of the Company that are material to its business.
Section 2.15. LOANS AND ADVANCES.
Except as described in the attached SCHEDULE II, the Company does not
have any outstanding loans or advances to any person and is not obligated to
make any such loans or advances, except, in each case, for advances to employees
of the Company in respect of reimbursable business expenses anticipated to be
incurred by them in connection with their performance of services for the
Company.
Section 2.16. ASSUMPTIONS, GUARANTIES, ETC. OF INDEBTEDNESS OF
OTHER PERSONS.
The Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
Section 2.17. SIGNIFICANT SUPPLIERS AND LICENSEES.
No supplier or licensee during the period covered by the financial
statements referred to in Section 2.05 or which has been material to the Company
thereafter, has terminated, materially reduced or, to the knowledge of the
Company, threatened to terminate or materially reduce its provision of products
or services to the Company or has terminated or materially amended or modified a
license agreement.
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Section 2.18. GOVERNMENTAL APPROVALS.
Subject to the accuracy of the representations and warranties of the
Purchasers set forth in Article III, no registration or filing with, or consent
or approval of or other action by, any Federal, state or other governmental
agency or instrumentality is or will be necessary for the valid execution,
delivery and performance by the Company of this Agreement, the 1994 Voting
Agreement, the Initial Stockholders Agreement, the Warrant or the 1994
Registration Rights Agreement, or the issuance, sale and delivery of the Series
A Preferred Shares or, upon conversion thereof, the issuance and delivery of the
Series A Conversion Shares, the issuance, sale and delivery of the Warrant
Shares or the issuance and delivery of the Warrant Conversion Shares, other than
(i) filings pursuant to Federal and State securities laws (all of which filings
have been or, with respect to those filings which may be duly made after the
Closing will be, made by or on behalf of the Company) in connection with the
sale of the Series A Preferred Shares, and (ii) with respect to the 1994
Registration Rights Agreement, the registration of the shares covered thereby
with the Commission and filings pursuant to Federal and state securities laws.
Section 2.19. DISCLOSURE.
This Agreement, including any Schedule or Exhibit to this Agreement,
does not contain an untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
None of the statements, documents, certificates or other items prepared or
supplied by the Company with respect to the transactions contemplated hereby
contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading. There is no
fact which the Company has not disclosed to the Purchasers and their counsel in
writing and of which the Company is aware which materially and adversely affects
or could materially and adversely affect the business, prospects, financial
condition, operations, property or affairs of the Company.
Section 2.20. OFFERING OF THE SERIES A PREFERRED SHARES.
Neither the Company nor any person authorized or employed by the
Company as agent, broker, dealer or otherwise in connection with the offering or
sale of the Series A Preferred Shares or any security of the Company similar to
the Series A Preferred Shares has offered the Series A Preferred Shares or any
such similar security for sale to, or solicited any offer to buy the Series A
Preferred. Shares or any such similar security from, or otherwise approached or
negotiated with respect thereto with, any person or persons, and neither the
Company nor any person acting on its behalf has taken or will take any other
action (including, without limitation, any offer, issuance or sale of any
security of the Company under circumstances which might require the integration
of such security with the Series A Preferred Shares under the Securities Act or
the rules and regulations of the Commission thereunder), in either case so as to
subject the offering, issuance or sale of the Series A Preferred Shares to the
registration provisions of the Securities Act.
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Section 2.21. BROKERS.
Except as set forth in the attached SCHEDULE II, the Company has no
contract, arrangement or understanding with any broker, finder or similar agent
with respect to the transactions contemplated by this Agreement.
Section 2.22. OFFICERS.
Set forth in SCHEDULE II is a list of the names of the officers of the
Company, together with the title or job classification of each such person.
Except as set forth in SCHEDULE II, none of such persons has an employment
agreement or understanding, whether oral or written, with the Company or any of
its subsidiaries, which is not terminable on notice by the Company or such
subsidiary, without cost or other liability to the Company or such subsidiary.
Section 2.23. TRANSACTIONS WITH AFFILIATES.
Except as set forth in the attached SCHEDULE II, no director, officer,
employee or stockholder of the Company, or member of the family of any such
person, or any corporation, partnership, trust or other entity in which any such
person, or any member of the family of any such person, has a substantial
interest or is an officer, director, trustee, partner or holder of more than
five percent of the outstanding capital stock thereof, is presently or
contemplated to be a party to any transaction with the Company, including any
contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or otherwise
requiring payments to any such person or firm.
Section 2.24. EMPLOYEES.
Each of the officers of the Company, each key employee and each other
employee now employed by the Company who has access to proprietary business
information of the Company including, without limitation, the Company's recipes,
operating system, business strategy and other information related to the
operations of the Company, has executed an Employee Confidential Disclosure
Agreement substantially in the form of Exhibit C attached hereto (collectively,
the "Confidentiality Agreements"), and the Confidentiality Agreements are in
full force and effect. No officer or key employee of the Company has advised the
Company (orally or in writing) that he or she intends to terminate employment
with the Company. The Company has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes, and with the Employee Retirement
Income Security Act of 1974, as amended.
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Section 2.25. U.S. REAL PROPERTY HOLDING CORPORATION.
The Company is not now and has never been a "United States real
property holding corporation," as defined in Section 897(c)(2) of the Code and
Section 1.987-2(b) of the Regulations promulgated by the Internal Revenue
Service.
Section 2.26. LICENSE.
Except as set forth in SCHEDULE II, all of the Company's license
agreements are in good standing, full force and effect as of the date hereof and
no party to any such agreements is in material default thereof.
Section 2.27. RESTAURANTS UNDER DEVELOPMENT.
SCHEDULE II describes all currently outstanding plans, arrangements,
contracts, agreements or negotiations relating to the purchase, development,
construction or renovation of restaurants by the Company.
Section 2.28. COMPLIANCE WITH FRANCHISE LAWS.
The Company has complied with the applicable laws, rules and
regulations relating to franchising in all jurisdictions where the conduct of
the Company's business requires such qualification to the extent necessary such
that any failure to so comply will not have a material adverse effect upon the
Company or its operations.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning
of Rule 501 under the Securities Act and was not organized for the specific
purpose of acquiring the Series A Preferred Shares;
(b) it has sufficient knowledge and experience in investing
in companies similar to the Company in terms of the Company's stage of
development so as to be able to evaluate the risks and merits, of its investment
in the Company and it is able financially to bear the risks thereof;
(c) it has received and reviewed the financial statements
and projections of the Company, and it has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management;
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(d) it has made an independent investigation of the business
of the Company and is making this investment as a result of this investigation
and not as a result of any projections made by the Company;
(e) the Series A Preferred Shares being purchased by it are
being acquired for its own account for the purpose of investment and not with a
view to or for sale in connection with any distribution thereof;
(f) it understands that (i) the Series A Preferred Shares
and the Series A Conversion Shares have not been registered under the Securities
Act by reason of their issuance in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) or Section 3(b)
thereof or Rule 505 or 506 promulgated under the Securities Act, (ii) the Series
A Preferred Shares and, upon conversion thereof, the Series A Conversion Shares
must be held indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration, (iii) the Series A
Preferred Shares and the Series A Conversion Shares will bear a legend to such
effect, and (iv) the Company will make a notation on its transfer books to such
effect;
(g) if an entity and not a natural person, it is validly
existing under the laws of the state of its organization and the consummation of
the transactions contemplated hereby is authorized by, and will not result in a
violation of, state law or its Charter or other organizing documents; and
(h) it has full right, power and authority to execute this
Agreement, the 1994 Voting Agreement, the Initial Stockholders Agreement, the
Warrant (to the extent a party thereto) and the 1994 Registration Rights
Agreement and to perform its obligations hereunder and thereunder.
ARTICLE IV.
CONDITIONS TO THE CLOSING
Section 4.1. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS.
The obligations of each Purchaser to purchase and pay for the Series A
Preferred Shares being purchased by it on the Closing Date is, at its option,
subject to the satisfaction, on or before the Closing Date@, of the following
conditions:
(a) PERFORMANCE. The Company shall have performed and
complied with all agreements contained herein required to be performed or
complied with by it prior to or at the Closing Date, and the Chief Executive
Officer of the Company shall have certified to the Purchasers in writing to such
effect and to the further effect that all of the conditions set forth in this
Article IV have been satisfied.
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(b) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and
other proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchasers and their counsel, and the Purchasers and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they reasonably may request.
(c) SUPPORTING DOCUMENTS. The Purchasers and their counsel
shall have received copies of the following documents:
(i) (A) the Charter, certified as of a recent date by
the Secretary of State of the State of Florida, which Charter shall contain the
terms of the Series A Convertible Preferred Stock agreed upon by the parties
hereto, and (B) a certificate of said Secretary dated as of a recent date as to
the active status of the Company and listing all documents of the Company on
file with said Secretary;
(ii) a certificate of the Secretary or an Assistant
Secretary of the Company dated the Closing Date and certifying: (A) that
attached thereto is a true and complete copy of the By-Laws of the Company as in
effect on the date of such certification; (B) that attached thereto is a true
and complete copy of all resolutions adopted by the Board of Directors or the
stockholders of the Company authorizing the execution, delivery and performance
of this Agreement, the 1994 Registration Rights Agreement, the 1994 Voting
Agreement, the Initial Stockholders' Agreement and the Warrant, the issuance,
sale and delivery of the Series A Preferred Shares and the reservation, issuance
and delivery of the Series A Conversion Shares, the Warrant Shares and the
Warrant Conversion Shares and that all such resolutions are in full force and
effect and are all the resolutions adopted in connection with the transactions
contemplated by this Agreement, the 1994 Registration Rights Agreement, the 1994
voting Agreement, the Initial Stockholders' Agreement and the Warrant; (C) that
the Charter has not been amended since the date of the last amendment referred
to in the certificate delivered pursuant to clause (i)(B) above; and (D) to the
incumbency and specimen signature of each officer of the Company executing this
Agreement, the 1994 Registration Rights Agreement, the 1994 Voting Agreement,
the Initial Stockholders' Agreement and the Warrant, the stock certificates
representing the Series A Preferred Shares and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of the Company
as to the incumbency and signature of the officer signing the certificate
referred to in this clause (ii); and (iii) such additional supporting documents
and other information with respect to the operations and affairs of the Company
as the Purchasers or their counsel reasonably may request.
(d) 1994 REGISTRATION RIGHTS AGREEMENT. The Company shall
have executed and delivered the 1994 Registration Rights Agreement in the form
attached as EXHIBIT A.
(e) 1994 VOTING AGREEMENT. Each of the Purchasers and the
Company shall have executed and delivered the 1994 Voting Agreement in the form
attached as EXHIBIT D.
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(f) CHARTER. The Charter, including the Certificate of
Designation containing the terms of the Series A Convertible Preferred Stock,
shall read in its entirety as set forth in EXHIBIT B.
(g) TRANSACTION FEES AND EXPENSES. The Company shall have
paid in accordance with Section 7.01 the fees and disbursements of a single
Purchaser's counsel invoiced at the Closing.
(h) PURCHASE BY OTHER PURCHASERS. Each Purchaser shall have
purchased and paid for the Series A Preferred Shares being purchased by it on
the Closing Date, and the aggregate purchase price paid by all Purchasers for
the Series A Preferred Shares being purchased by them on the Closing Date shall
be at least $1,500,000.
(i) CONFIDENTIALITY AGREEMENT. The Company shall have
entered into confidentiality agreements with those employees listed in Schedule
II in a form and subject to terms acceptable to the Purchasers.
(j) PROPOSED 1994 BUDGET. The Company shall have provided
to the Purchasers a proposed 1994 budget, assuming the sale of $3,000,000 of
Series A Preferred Shares in this offering.
(k) WARRANTS. The Company shall have executed and delivered
the Warrants as instructed by Grace Ventures Partnership III, L.P. ("Grace
Ventures").
(l) INITIAL STOCKHOLDERS' AGREEMENT. Each of the Initial
Stockholders, the Purchasers and the Company shall have executed and delivered
the Initial Stockholders' Agreement in the form attached as EXHIBIT E.
(m) 1993 FINANCIAL STATEMENTS. The Company shall have
delivered the unaudited consolidated. financial statements for the year ending
December 31, 1993.
(n) OPINION OF COUNSEL. The Purchasers shall have received
from Charles D. Barnett, counsel for the Company, an opinion dated the Closing
Date, in a form reasonably acceptable to Purchasers' counsel.
(o) NONSOLICITATION AGREEMENT. The Company shall have
entered into a nonsolicitation agreement, in a form reasonably satisfactory to
Purchasers' counsel, from J. David Toole, III.
(p) ADDITIONAL AGREEMENTS. The Company shall have delivered
such other agreements and instruments as the Purchasers shall have reasonably
requested.
All such documents shall be satisfactory in form and substance to the
Purchasers and their counsel.
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Section 4.2. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to sell the Series A Preferred Shares
being sold by it on the Closing Date is, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) 1994 REGISTRATION RIGHTS AGREEMENT. The Purchasers
shall have accepted the terms of and executed and delivered the 1994
Registration Rights Agreement.
(b) PURCHASE BY OTHER PURCHASERS. Each Purchaser shall
have purchased and paid for the Series A Preferred Shares being purchased by it
on the Closing Date, and the aggregate purchase price paid by all Purchasers for
the Series A Preferred Shares being purchased by them on the Closing Date shall
be at least $1,500,000.
(c) ACCREDITED INVESTOR STATUS. The Company shall have
received documentation from each Purchaser indicating that he or it is an
"accredited investor" within the meaning of Rule 501 under the Securities Act.
(d) ADDITIONAL AGREEMENTS. The Purchasers shall have
delivered such other agreements and instruments as the Company shall have
reasonably requested.
ARTICLE V.
COVENANTS OF THE COMPANY
The Company covenants and agrees with each Purchaser that so long as
any of the Series A Preferred Shares, the Warrants or the Warrant Shares are
outstanding:
Section 5.1. FINANCIAL STATEMENTS, REPORTS, ETC.
The Company shall furnish:
(a) to each Purchaser, within ninety (90) days after the end
of each fiscal year of the Company, or as soon as practicable thereafter, a
consolidated balance sheet of the Company and its subsidiaries as of the end of
such fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended, prepared in
accordance with generally accepted accounting principles and certified by
Coopers & Lybrand or such other "Big 6" accounting firm selected by the Board of
Directors of the Company and an annual report containing a narrative discussion
of the results of the Company's operations for the past fiscal year and the
status of the Company's liquidity and capital resources as of the end of such
year materially conforming to the disclosure requirements contained in Item 303
of Regulation S-K or Regulation S-B, if applicable, under the Securities Act;
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(b) to each Purchaser owning more than 500,000 share (as the
same may be adjusted for stock splits, stock dividends, recapitalizations,
reclassifications or other similar events) ("Major Purchaser") within thirty
(30) days after the end of each month a consolidated balance sheet of the
Company and its subsidiaries and the related consolidated statements of income
and cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company, or the principal accounting officer if the Company does not have a
Chief Financial Officer, such consolidated balance sheet to be as of the end of
such quarter and such consolidated statements of income and cash flows to be for
such quarter and for the period from the beginning of the fiscal year to the end
of such quarter, in each case with comparative statements for the prior fiscal
year; provided that the Company's obligations under this Section 5.01 shall
terminate upon the completion of a firm commitment underwritten public offering
of the Company's securities where the Company becomes and continues to
be subject to the reporting requirements of the Securities Exchange Act of 1934;
(c) to each Purchaser, at the time of delivery of each
annual financial statement pursuant to Section 5.01(a), a certificate executed
by the Chief Financial Officer of the Company, or the principal accounting
officer if the Company does not have a Chief Financial Officer, stating that he
has reviewed this Agreement and the Series A Convertible Preferred Stock and has
no knowledge of any default by the Company in the performance or observance of
any of the provisions of this Agreement, or the series A Convertible Preferred
Stock or, if such officer has such knowledge, specifying such default and the
nature thereof;
(d) to each Major Purchaser, at the time of delivery of
each monthly statement pursuant to Section 5.01(b), a management narrative
report explaining all significant variances from forecasts and all significant
current developments in staffing, marketing, sales and operations; and
(e) to each Purchaser, within thirty (30) days prior to the
end of each fiscal year, an annual business plan.
Section 5.2. RIGHT OF FIRST REFUSAL.
(a) The Company shall, prior to (or as soon thereafter
as is reasonably practical) any issuance by the Company of any of its securities
(other than debt securities with no equity feature), offer to each Purchaser
continuing to hold at least fifty percent (50%) of the Series A Preferred Shares
purchased hereby (the "Eligible Purchaser") by written notice the right, for a
period of thirty (30) days, to purchase a pro rata amount (based on the
percentage ownership of the Common Stock of the Company assuming the conversion
of the Series A Preferred Shares) of such securities on the same terms and
conditions for which such securities are to be issued (unless the Eligible
Purchaser is unable to meet such terms and conditions, in which case the
Eligible Purchaser shall purchase such securities for cash at an amount equal to
the price or other consideration for which such securities are to be issued);
provided, however, that the first refusal rights of the Eligible Purchasers
pursuant to this Section 5.02 shall not apply to securities issued (A) upon the
exercise of
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the Warrants, (B) upon conversion of any of the Series A Convertible Preferred
Stock, (C) as a stock dividend or upon any subdivision of shares of Common
Stock, provided that the securities issued pursuant to such stock dividend or
subdivision are limited to additional shares of Common Stock, (D) pursuant to
the Company's Option Plan, (E) solely in consideration for the acquisition
(whether by merger or otherwise) by the Company or any of its subsidiaries of
all or substantially all of the stock or assets of any other entity, and (F)
pursuant to a firm commitment underwritten public offering. The Company's
written notice to the Eligible Purchasers shall describe the securities proposed
to be issued by the Company and specify the number, price and payment terms.
Each Eligible Purchaser may accept the Company's offer as to the full
number of securities offered to it or any lesser number, by written notice
thereof given by it to the Company prior to the expiration of the aforesaid
thirty (30) day period, in which event the Company shall promptly sell and such
Eligible Purchaser shall buy, upon the terms specified, the number of securities
agreed to be purchased by such Eligible Purchaser.
(b) The Company shall be free at any time prior to one
hundred twenty (120) days after the date of its notice of offer pursuant to this
Section 5.02, to offer and sell to any third party or parties the number of such
securities not agreed by the Purchasers or the Eligible Purchasers, as the case
may be, to be purchased by them, at a price and on payment terms no less
favorable to the Company than those specified in such notice of offer. However,
if such third party sale or sales are not consummated within such one hundred
twenty (120) day period, the Company shall not sell such securities as shall not
have been purchased within such period without again complying with this Section
5.02.
(c) in case the Company issues any of its securities at
a price per share (or at a price per share of Common Stock assuming their full
conversion into Common Stock, if applicable) less than the price per share paid
by each Eligible Purchaser hereunder, each Eligible Purchaser shall have a right
of over-allotment such that if any Eligible Purchaser fails to exercise such
Eligible Purchaser's right hereunder to purchase such Eligible Purchaser's full
proportionate share of the securities proposed to be issued (the "Incomplete
Purchasers"), the Purchasers purchasing their full respective proportionate
share of such securities (the "Complete Purchasers") may purchase the portion of
such securities which has not been purchased by the Incomplete Purchasers as
hereinafter provided. The Complete Purchasers shall have ten (10) days from the
date notice is given by the Company to the Complete Purchasers that such
Incomplete Purchasers have rejected or failed to accept their right to purchase
their proportionate share of securities, to agree to purchase up to such
Complete Purchaser's proportionate share of such securities not purchased by the
Incomplete Purchasers. Notwithstanding anything in Section 5.02(b) to the
contrary, as used in this Section 5.02(c) with respect to the Complete
Purchasers only, each Complete Purchaser's "proportionate share" shall be
calculated by excluding from the denominator of the fraction the total number of
shares of Common Stock of any Incomplete Purchaser and the total number of
shares of Common Stock into which the shares of such Incomplete Purchaser's
Preferred Stock or other convertible securities, if any, are convertible.
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Section 5.3. RESERVE FOR SHARES.
The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Series A Convertible Preferred Stock, for the
purpose of issuing such shares upon the exercise of the Warrants, such number of
its duly authorized shares of Series A Convertible Preferred Stock as shall be
sufficient for the exercise of the Warrants. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of the Series A Convertible
Preferred Stock and the Warrant Shares and otherwise complying with the terms of
this Agreement, such number of its duly authorized shares of Common Stock as
shall be sufficient to effect the conversion of the Series A Convertible
Preferred Stock from time to time outstanding and the Warrant Shares or
otherwise to comply with the terms of this Agreement. If at any time the number
of authorized but unissued shares of Series A Convertible Preferred Stock or
Common Stock shall not be sufficient for the exercise of the Warrant or to
effect the conversion of the Series A Convertible Preferred Stock and the
Warrant Shares and otherwise to comply with the terms of this Agreement, the
Company will forthwith take such corporate action as may be necessary to
increase its authorized but unissued shares of Series A Convertible Preferred
Stock or Common Stock, as applicable, to such number of shares as shall be
sufficient for such purposes. The Company will obtain any authorization,
consent, approval or other action by or make any filing with any court or
administrative body that may be required under applicable state securities laws
in connection with the issuance of shares of Series A Convertible Preferred
Stock upon the exercise of the Warrant or Common Stock upon conversion of the
Series A Convertible Preferred Stock or the Warrant Shares.
Section 5.4. CORPORATE EXISTENCE.
The Company shall maintain and cause any subsidiary which it may create
to maintain their respective corporate existence, rights and franchises in full
force and effect; provided however, that the Company may liquidate or merge any
subsidiary into the Company if the Board of Directors deems such action
appropriate.
Section 5.5. PROPERTIES, BUSINESS, INSURANCE.
The Company shall maintain and cause any subsidiary which it may create
to maintain as to their respective properties and business, with financially
sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated, which insurance shall be deemed by the Company to
be sufficient. The Company shall not cause or permit any assignment or change in
beneficiary and shall not borrow against any such policy. The Company will apply
for, and make a good faith effort to obtain, key man executive life and
disability insurance policies on each of John Y. Brown, Jr. and J. David Toole,
III, each in the amount of $2,000,000 with the Company named as the sole
beneficiary of such policy. The Company will pay all premiums and take whatever
action is necessary to maintain the policy in
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effect for one year, and such period may be extended upon the determination of
the Board of Directors.
Section 5.6. RESTRICTIVE AGREEMENTS PROHIBITED.
Neither the Company nor any of its subsidiaries shall become a party to
any agreement which by its terms restricts the Company's performance of this
Agreement, the 1994 Registration Rights Agreement, the 1994 Voting Agreement,
the Initial Stockholders' Agreement or the Warrant.
Section 5.7. TRANSACTIONS WITH AFFILIATES.
Except for transactions contemplated by this Agreement or as otherwise
approved by the Board of Directors, neither the Company nor any of its
subsidiaries shall enter into any transaction with any director, officer,
employee or holder of more than five percent of the outstanding capital stock of
any class or series of capital stock of the Company or any of its subsidiaries,
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or member of the family of any such
person, is a director, officer, trustee, partner or holder of more than five
percent of the outstanding capital stock thereof, except for transactions on
customary terms related to such person's employment and transactions on terms
which are no less favorable than could be obtained with an independent third
party in an arm's length transaction and which are approved by a majority of the
disinterested directors of the Company.
Section 5.8. EXPENSES OF DIRECTORS.
The Company shall promptly reimburse in full each director of the
Company who is not an employee of the Company for all of his reasonable
out-of-pocket expenses incurred in attending each meeting of the Board of
Directors of the Company or any Committee thereof.
Section 5.9. USE OF PROCEEDS.
The Company shall use the proceeds from the sale of the Series A
Preferred Shares for expansion and working capital. Additionally, if more than
$3,000,000 of the Series A Preferred Shares are sold by the Company, the amount
in excess of $3,000,000 shall be used to repay the pre-existing debt of John Y.
Brown, Jr. No other distributions from the proceeds of this offering may be made
to the Initial Stockholders while the Series A Preferred Stock is outstanding
except that to the extent that there remains debt owed to John Y. Brown, Jr.,
such debt may, be repaid upon the occurrence of any one of the following: (i)
four consecutive quarters of positive earnings before taxes and interest
("EBIT"); (ii) if the Warrant is exercised, two consecutive quarters of positive
EBIT; or (iii) if the Warrant is exercised and the Company sells additional
shares, provided that such repayment shall not inhibit the Company's growth as
reasonably determined by the outside members of the Board of Directors.
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Section 5.10. BOARD OF DIRECTORS MEETINGS.
The Company shall use its best efforts to ensure that meetings of its
Board of Directors are held at least quarterly as well as to obtain directors
and officers insurance coverage as approved by the Board of Directors.
Section 5.11. COMPENSATION.
The Company shall pay to its officers compensation as determined by the
Board of Directors upon the recommendation of the compensation committee of the
Board of Directors.
Section 5.12. BY-LAWS.
The Company shall at all times cause its By-Laws to provide that,
unless otherwise required by the laws of the state of Florida, any holders of at
least twenty-five percent (25%) of the outstanding Series A Convertible
Preferred Stock or any two directors shall have the right to call a meeting of
the stockholders. The Company shall at all times maintain provisions in its
By-Laws and/or Charter indemnifying all directors against liability and
absolving all directors from liability to the Company and its stockholders to
the maximum extent permitted under the laws of the state of Florida.
Section 5.13. PERFORMANCE OF CONTRACTS.
The Company shall not amend, modify, terminate, waive or otherwise
alter, in whole or in part, the Employment Agreement of J. David Toole, III or
the Confidentiality Agreements without the consent of the member of the
Company's Board of Directors elected by the holders of Series A Convertible
Preferred Stock voting as a separate class.
Section 5.14. PROPRIETARY INFORMATION AGREEMENTS.
The Company shall use its best efforts to obtain and cause any
subsidiary which it may create to use their best efforts to obtain, a
Confidentiality Agreement in substantially the form of Exhibit C hereto from all
present and future officers, key employees and other employees who will have
access to confidential information of the Company or any of its subsidiaries,
upon their employment by the Company or any of its subsidiaries.
Section 5.15. MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES.
The Company shall not sell or otherwise transfer any shares of capital
stock of any subsidiary which it may create, except to the Company or another
subsidiary which it may create, or permit any subsidiary which it may create to
issue, sell or otherwise transfer any shares of its capital stock or the
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capital stock of any subsidiary which it may create, except to The Company or
another subsidiary which it may create.
Section 5.16. DISTRIBUTIONS BY SUBSIDIARIES.
The Company shall not permit any subsidiary which it may create to
purchase or set aside any sums for the purchase of, or pay any dividend or make
any distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another subsidiary which it may create.
Section 5.17. COMPLIANCE WITH LAWS.
The Company shall comply, and cause each subsidiary to comply with, all
applicable laws, rules, regulations and orders, non-compliance with which could
materially adversely affect its business or condition, financial or otherwise,
including all laws relating to the offer and sale of franchises, and the
development and operation of the restaurants and applicable environmental laws.
Section 5.18. KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
The Company shall keep, and cause each subsidiary to keep, adequate
records and books of account, in which complete entries will be made in
accordance with generally accepted accounting principles consistently applied,
reflecting all financial transactions of the Company and such subsidiary, and in
which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.
Section 5.19. U.S. REAL PROPERTY INTEREST STATEMENT.
Upon a written request by any Purchaser, the Company shall provide such
Purchaser with a written statement informing the Purchaser whether such
Purchaser's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comply with the requirements of Treasury
Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company
shall provide timely notice to the Internal Revenue Service, in accordance with
and to the extent required by Treasury Regulation Section 1. 897-2(h)(2) or any
successor regulation, that such statement has been made. The Company's written
statement to any Purchaser shall be delivered to such Purchaser within ten (10)
days of such Purchaser's written request therefor. The Company's obligation to
furnish a written statement pursuant to this Section 5.19 shall continue
notwithstanding the fact that a class of the Company's stock may be regularly
traded on an established securities market.
24
<PAGE>
Section 5.20. INITIAL PUBLIC OFFERING.
If and when the Company has an initial public offering of equity
securities, the Company will use its best efforts to make available to the
Purchasers on a pro-rata basis up to five percent (5%) of the shares offered by
the Company in the Company's initial public offering; however, in any case, the
Company shall make available to the Purchasers a total of one percent (1%) of
the shares offered by the Company in the Company's initial public offering.
ARTICLE VI.
ADDITIONAL SERIES A CONVERTIBLE PREFERRED STOCK COVENANTS
Section 6.1. SPECIAL CLASS VOTE.
Except where the vote or written consent of the holders of a greater
number of shares of the Company is required by law or by the Charter, and in
addition to any other vote required by law or the Charter, until the
consummation of the first firm commitment underwritten public offering of the
Company's Common Stock pursuant to an effective Registration Statement on Form
S-I or SB-2 (or its then equivalent) under the Securities Act (the "Initial
Public Offering"), where the aggregate sales price of the Common Stock (before
deduction of underwriting discounts and expenses of sale) is not less than
$10,000,000, the Company covenants and agrees with each Purchaser of Series A
Preferred Shares that, at any time when Series A Preferred Shares or Series A
Conversion Shares are outstanding, without the approval of the holders of at
least two-thirds of the then outstanding Series A Conversion Shares (on an as-if
converted basis), given in writing or by vote at a meeting and consenting or
voting (as the case may be) together the Company will not:
(a) create or authorize the creation of any additional
class or series of shares of stock unless the same ranks junior to the Series A
Convertible Preferred Stock as to the payment of dividends or the distribution
of assets on the liquidation, dissolution or winding up of the Company, or
increase the authorized amount of the Series A Convertible Preferred Stock, or
increase the authorized amount of any additional class or series of shares of
stock unless the same ranks junior to the Series A Convertible Preferred Stock
as to the payment of dividends or the distribution of assets on the liquidation,
dissolution or winding up of the Company, or create or authorize any obligation
or security convertible into shares of Series A Convertible Preferred Stock or
into shares of any other class or series of stock unless the same ranks junior
to the Series A Convertible Preferred Stock as to the payment of dividends or
the distribution of assets on the liquidation, dissolution or winding up of the
Company, whether any such creation, authorization or increase shall be by means
of amendment to the Charter or by merger, consolidation or otherwise;
(b) amend, alter or repeal, whether by merger, consolidation
or otherwise, the Charter of the Company; provided, however, that the Charter
may be amended to provide for an increase in the authorized preferred stock of
the Company or the creation and issuance of any other
25
<PAGE>
capital stock of the Company ranking junior in all respects to the Series A
Convertible Preferred Stock;
(c) merge, consolidate, enter into a share exchange or
engage in any other transactions in which the Company is not the surviving
entity or in which control of the Company has been transferred to another
entity; provided however, that so long as John Y. Brown, Jr. is a member of the
Board of Directors this Section 6.01(c) shall not apply and Section 6.02 shall
apply;
(d) engage in any transaction that would be considered a
"deemed dividend" transaction under Section 305 of the Code;
(e) consent to any liquidation, dissolution, winding up of
the Company or the sale or transfer of all or substantially all of its assets;
(f) amend, alter or repeal the Company's By-Laws;
(g) purchase or set aside any sums for the purchase of, or
pay any dividend or make any distribution on, any shares of stock other than the
Series A Convertible Preferred Stock; (h) redeem or otherwise acquire any shares
of Series A Convertible Preferred Stock; or (i) permit the sale, assignment or
transfer of options issued pursuant to the Company's Option Plan prior to
vesting.
Section 6.2. MERGER, ETC.
In the event that any shares of Series A Convertible Preferred Stock
are outstanding and John Y. Brown, Jr. is a member of the Board of Directors,
the Company may not merge, consolidate, enter into a share exchange or engage in
any other transaction in which the Company is not the surviving entity or in
which effective control of the Company has been transferred to another entity if
all of the Major Purchasers have voted against such transaction.
ARTICLE VII.
MISCELLANEOUS
Section 7.1. EXPENSES.
Each party hereto will pay its own expenses in connection with the
transactions contemplated hereby, whether or not such transactions shall be
consummated; provided, however, that the Company shall pay the fees and
disbursements of the Purchasers' special counsel, Fulbright & Jaworski L.L.P.
(which legal fees shall not exceed $30,000) in connection with such transactions
and the subsequent amendment or enforcement thereof.
26
<PAGE>
Section 7.2. SURVIVAL OF AGREEMENTS.
All covenants, agreements, representations and warranties made herein
or in the 1994 Registration Rights Agreement, the Warrants or any certificate or
instrument delivered to the Purchasers pursuant to or in connection with this
Agreement or the 1994 Registration Rights Agreement or the Warrants shall
survive the execution and delivery of this Agreement, the 1994 Registration
Rights Agreement, the Warrants, the issuance, sale and delivery of the Series A
Preferred Shares, and the issuance and delivery of the Series A Conversion
Shares, and all statements contained in any certificate or other instrument
delivered by the Company hereunder or thereunder or in connection herewith or
therewith shall be deemed to constitute representations and warranties made by
the Company.
Section 7.3. BROKERAGE.
Each party hereto will indemnify and hold harmless the others against
and in respect of any claim for brokerage or other commissions relative to this
Agreement or to the transactions contemplated hereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party.
Section 7.4. PARTIES IN INTEREST.
All representations, covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and, assigns of the parties hereto
whether so expressed or not. Without limiting the generality of the foregoing,
all representations, covenants and agreements benefitting the Purchasers shall
inure to the benefit of any and all subsequent holders from time to time of
Series A Preferred Shares or Series A Conversion Shares.
Section 7.5. NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person or mailed by certified or
registered mail, return receipt requested, or telexed in the case of non-U.S.
residents, addressed as follows:
(a) If to the Company:
4801 South University Drive, Suite 304
East Davie, Florida 33328
Attention: Chief Executive Officer
(b) If to any Purchaser, at the address of
such Purchaser set forth in SCHEDULE 1,
27
<PAGE>
with copies to:
Paul Jacobs, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
Section 7.6. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
Section 7.7. ENTIRE AGREEMENT.
This Agreement, including the Schedules and Exhibits hereto,
constitutes the sole and entire agreement of the parties with respect to the
subject matter hereof. All Schedules and Exhibits hereto are hereby incorporated
herein by reference.
Section 7.8. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each
of.which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Section 7.9. AMENDMENTS.
This Agreement may not be amended or modified, and no provisions hereof
may be waived, without the written consent of the Company and the holders of at
least two-thirds of the outstanding shares of Common Stock issued or issuable
upon conversion of the Series A Preferred Shares, or in the case of Article V,
the holders of at least two-thirds of the outstanding shares of Common Stock
issued and issuable upon conversion of the Series A Convertible Preferred Stock,
voting as a separate class.
Section 7.10. SEVERABILITY.
If any provision of this Agreement shall be declared void or
unenforceable by any judicial or administrative authority, the validity of any
other provision and of the entire Agreement shall not be affected thereby.
28
<PAGE>
Section 7.11. TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are for convenience
only, and are not to be considered in construing or interpreting any term or
provision of this Agreement.
Section 7.12. CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defused):
(a) "affiliate" shall mean a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.
(b) "person" shall mean an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government agency or
any agency or political subdivision thereof, or other entity.
(c) "subsidiary" shall mean, as to the Company, any
corporation of which more than 50% of the outstanding shares having ordinary
voting power to elect a majority of the Board of Directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by the
Company, or by one or more of its subsidiaries, or by the Company and one or
more of its subsidiaries.
29
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ROADHOUSE GRILL, INC.
Attest:
/s/ CHARLES D. BARNETT By: /s/ JOHN D. TOOLE, III
- ----------------------------- ---------------------------------
Charles D. Barnett, Secretary Its: President
PURCHASERS:
_____________________________________
_____________________________________
_____________________________________
_____________________________________
FOR PURPOSES OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III
/s/ JOHN Y. BROWN, JR. /s/ J. DAVID TOOLE, III
- ---------------------- ------------------------
John Y. Brown, Jr. J. David Toole, III
30
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ROADHOUSE GRILL, INC.
Attest:
___________________________ By:__________________________________
________________, Secretary Its:__________________________
PURCHASERS:
GRACE VENTURES PARTNERSHIP III
By: Horn Venture Partners II
/s/ ROBERT E. PEDIGO
------------------------------
Robert E. Pedigo
General Partner
_____________________________________
_____________________________________
31
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ROADHOUSE GRILL, INC.
Attest:
___________________________ By: _________________________________
________________, Secretary Its: _________________________
PURCHASERS:
/s/ ILLEGIBLE
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
32
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ROADHOUSE GRILL, INC.
Attest:
___________________________ By: _________________________________
_______________, Secretary Its: _________________________
PURCHASERS:
/s/ J. PETER GRACE
-------------------------------------
-------------------------------------
-------------------------------------
--------------------------------------
33
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ROADHOUSE GRILL, INC.
Attest:
___________________________ By: _________________________________
________________, Secretary Its: _________________________
PURCHASERS:
/s/ ILLEGIBLE
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
34
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ROADHOUSE GRILL, INC.
Attest:
___________________________ By: _________________________________
________________, Secretary Its:__________________________
PURCHASERS:
DAVID WALTER ROBBINS, INC.
DECLARATION OF TRUST
DATED OCTOBER 31, 1991
By: /s/ DAVID WALTER ROBBINS, JR., TRUSTEE
----------------------------------
David Walter Robbins, Jr.
Trustee
-------------------------------------
-------------------------------------
-------------------------------------
35
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ROADHOUSE GRILL, INC.
Attest:
/s/ CHARLES D. BARNETT By: /s/ JOHN D. TOOLE, III
- ----------------------------- ---------------------------------
Charles D. Barnett, Secretary Its: President
PURCHASERS:
BANQUE SCANDINAVE EN SUISSE
By:/s/ ILLEGIBLE
----------------------------------
Its:
--------------------------
-------------------------------------
-------------------------------------
-------------------------------------
FOR PURPOSES OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III
/s/ JOHN Y. BROWN, JR. /s/ J. DAVID TOOLE, III
- ----------------------------- -------------------------------------
John Y. Brown, Jr. J. David Toole, III
36
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ROADHOUSE GRILL, INC.
Attest:
________________________________ By:___________________________________
_____________________, Secretary Its:__________________________
PURCHASERS:
BERJAYA GROUP (CAYMAN) LTD.
By: /s/ ILLEGIBLE
---------------------------------
Its: Chairman
-------------------------
-------------------------------------
-------------------------------------
-------------------------------------
FOR PURPOSES OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III
- -------------------------------- -------------------------------------
John Y. Brown, Jr. J. David Toole, III
37
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
PURCHASERS
NUMBER OF
SERIES A AGGREGATE
PREFERRED PURCHASE PRICE
NAME AND MAILING SHARES TO FOR SERIES A
ADDRESS OF PURCHASER BE PURCHASED PREFERRED SHARES
- -------------------- ------------ ----------------
<S> <C> <C>
Grace Ventures Partnership III, L. P. 800,000 $1,200,000
20300 Stevens Creek Blvd.
Cupertino, CA 95014
J. Peter Grace 50,000 $75,000
c/o Mr. Frank Vest
The Catterton Group, Inc.
10 Hale Street, Suite 205
P. 0. Box 1871
Charleston, West Virginia 25327
J. P. Bolduc 50,000 $75,000
c/o W. R. Grace & Co.
One Town Center Road
Boca Raton, FL 33486
David Walter Robbins, Jr. 50,000 $75,000
c/o, W. R. Grace & Co.
One Town Center Road
Boca Raton, FL 33486
Dr. Christian F. Horn 50,000 $75,000
c/o Grace Horn Ventures
20300 Stevens Creek Blvd.
Cupertino, CA 95014
Banque Scandinave En Suisse 1,000,000 $1,500,000
c/o Mr. Xavier Justo
Case Postale 901
CH-1211 Geneve 3,
Switzerland
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SERIES A AGGREGATE
PREFERRED PURCHASE PRICE
NAME AND MAILING SHARES TO FOR SERIES A
ADDRESS OF PURCHASER BE PURCHASED PREFERRED SHARES
- -------------------- ------------ ----------------
<S> <C> <C>
Berjaya Group (Cayman) Ltd. 1,000,000 $1,500,000
c/o K. P. Tan
Level 28
Shahzan Prudential Tower
30 Jalan Sultan Ismail
50250 Kuala Lumpur
Malaysia
</TABLE>
<PAGE>
SCHEDULE II
TO SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Section 2.01 (a). QUALIFICATIONS.
None
Section 2.01 (b). SUBSIDIARIES, JOINT VENTURES AND AFFILIATES.
2.01 (b)(ii) The Company is a member of North Miami Roadhouse
Grill, L.L.C., a Florida limited liability company
that owns the Roadhouse Grill restaurant located at
12599 Biscayne Boulevard, North Miami, Florida 33181.
North Miami Roadhouse Grill, L.L.C. owns all of the
issued and outstanding shares of Roadhouse Grill
North Miami, Inc. Roadhouse Grill North Miami, Inc.
holds the lease to the premises at 12599 Biscayne
Boulevard, North Miami, Florida 33181.
2.01(b)(iii) The Company may be deemed to have control over North
Miami Roadhouse Grill, L.L.C.
Section 2.04 AUTHORIZED CAPITAL STOCK.
John Y. Brown, Jr. and J. David Toole, 111, have
agreed that in case of the death of John Y. Brown,
Jr., J. David Toole, III shall have the right to vote
the shares of the Company's common stock owned by the
estate or heirs of John Y. Brown, Jr.
Section 2.05 FINANCIAL STATEMENTS AND PROJECTIONS.
No material change.
Section 2.06 EVENTS SUBSEQUENT TO DECEMBER 31, 1993.
None
Section 2.07 LITIGATION.
The Company is the defendant in a lawsuit entitled
Roberts v. Roadhouse Grill, Inc., Case No. 93-25277,
in the circuit court for Broward County, Florida. The
case alleges food poisoning from the sale of bad
fish. It is being handled by the Company's insurance
carrier.
<PAGE>
Section 2.09 TITLE TO PROPERTIES.
The Company may be subject to mechanics liens in
connection with recently opened restaurants and
improvements to other restaurants under development.
Section 2.11 INSURANCE.
The Company is in the process of obtaining key man
life insurance as required under Section 5.05 of the
Agreement.
Section 2.13 OTHER AGREEMENTS.
Reference is made to Schedule V.
Section 2.14 PATENTS, TRADEMARKS, ETC.
The ROADHOUSE GRILL LOGO was registered as a service
mark in the state of Florida.
Section 2.15 LOANS AND ADVANCES.
None
Section 2.22 OFFICERS.
The following is a list of the names and titles of
the officers of the Company:
John Y. Brown, Jr. Chairman of the Board
J. David Toole, III President and Chief Executive
Officer
Charles D. Barnett Secretary
Section 2.23 TRANSACTIONS WITH AFFILIATES.
Pursuant to the terms of a series of promissory
notes, the Company owes John Y. Brown, Jr. an
aggregate of $1,591,000 which bears interest at 7%
per annum. It is contemplated that upon the sale of
3,000,000 shares of the Company's Series A Preferred
Stock, the Company will repay Mr. Brown $1,500,000.
Section 2.27 RESTAURANTS UNDER DEVELOPMENT.
The following are restaurants under development by
the Company:
<PAGE>
1. Restaurant to be located on Okeechobee Boulevard
in West Palm Beach, Florida.
2. Restaurant to be located in the Kendall area of
Miami, Florida. A lease is under negotiation but
is as of now unsigned.
<PAGE>
SCHEDULE IV
TO SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
SHAREHOLDERS OF THE COMPANY
The following is a list of shareholders of the Company, and the number of
shares to be owned by each at the Closing.
NAME NUMBER OF SHARES
- ---- ----------------
John Y. Brown, Jr. 5,155,555
J. David Toole, III 644,445
John Y. Brown, III 128,889
Eleanor Brown 128,889
Sandra Steier 128,889
John Y. Brown, 111, as custodian 128,889
for Lincoln Brown
John Y. Brown, III, as custodian 128,889
for Pamela Brown
<PAGE>
SCHEDULE V
TO SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
AGREEMENTS
Unless otherwise defined herein, terms used herein shall have the same
meaning as set forth in the Series A Convertible Preferred Stock Purchase
Agreement dated February 10, 1994 and in Schedule II.
A. The following is a list of certain contracts, agreements and instruments of
the Company.
1. Notes payable to John Y. Brown, Jr, in the principal amount of
$1,591,000.
2. The 1994 Stock Option Plan.
3. The North Miami Roadhouse Grill, L.L.C. Articles of Organization and
Operating Agreement.
4. Lease Agreement between Prudential-Bache/CNL National Net Lease
Properties, Ltd. and the Company for the restaurant located at 8525
Pines Boulevard, Pembroke Pines, Florida.
5. Sublease Agreement between Meatballs, Inc. and Roadhouse Grill North
Miami, Inc. for the restaurant located at 12599 Biscayne Boulevard,
North Miami, Florida.
6. Lease Agreement between Steve Cohen, as Trustee and the Company for the
restaurant located at 1580 University Drive, Coral Springs, Florida.
7. Lease Agreement between Wise Oak Corp. and the Company for a restaurant
being developed at 4201 Okeechobee Boulevard, West Palm Beach, Florida.
8. Agreement between J. David Toole, III and John Y. Brown, Jr. dated July
12, 1992 as amended June 10, 1993.
9. Agreement with Rodberg Construction Co. for construction and
improvements of the restaurant under development by the Company at 4201
Okeechobee Boulevard, West Palm Beach, Florida.
B. The following are agreements, written or oral, to which the Company is
a party that the Company is required to disclose under Section 2.13 of the
Agreement:
<PAGE>
Section 2.13 (d) Agreement between J. David Toole, III and John Y.
Brown, Jr. dated July 12, 1092, as amended June 10,
1993 and which has been assumed by the Company.
Section 2.13 (e) 1. 1994 Stock Option Plan.
2. Stock Option Agreement with J. David Toole, III.
3. An apartment is being furnished to certain of the
employees of the Company at a monthly rental of
$600 per month on an interim basis.
Section 2.13 (f) Reference is made to the notes, leases and other
instruments listed in Section A to this Schedule V.
Section 2.13 (i) Reference is made to the leases listed in Section A
to this Schedule V.
Section 2.13 (k) Agreement dated August 5, 1992 between John Y. Brown,
Jr. and G.T. McDonald Enterprises, Inc. and for which
an amendment is being negotiated.
Agreement between Americana Entertainment Group, Inc.
and John Y. Brown and David Toole dated August 1992
which was amended as of October 7, 1992.
Agreement between the Company and Lone Star Roasters
dated as of May 17, 1993.
Section 2.13 (m) Reference is made to the agreements listed under
Section 2.13 (k).
Section 2.13 (n) Reference is made to the agreements listed in Sectio
A to this Schedule V.
EXHIBIT 10.16
INITIAL STOCKHOLDERS' AGREEMENT
AGREEMENT dated as of February 10, 1994 by and among Roadhouse Grill,
Inc., a Florida corporation (the "Company"), the several purchasers (the
"Purchasers") of the Series A Preferred Shares pursuant to the Series A
Convertible Preferred Stock Purchase Agreement (the "Purchase Agreement") and
the Initial Stockholders of the Company as defined in the Purchase Agreement and
named on the signature pages hereto.
In order to induce the Purchasers to enter into and perform the
Purchase Agreement, the parties hereto hereby agree as follows:
1. During the term of the Initial Stockholders' Agreement if an Initial
Stockholder at any time or times proposes to sell, transfer, assign, pledge or
otherwise dispose of ("Transfer") common stock of the Company ("Common Stock")
owned of record by him or it, such Initial Stockholder (in such capacity, a
"Proposing Stockholder") shall, as a condition precedent to any such Transfer by
him or it, afford each of the Purchasers the right to Transfer Common Stock
owned by such Purchaser as follows:
a. Such Proposing Stockholder shall give written notice to the
Purchasers at least twenty (20) days prior to any proposed Transfer of any of
the Common Stock and such notice shall specify the number of shares of such
Common Stock which such Proposing Stockholder desires to Transfer, the
percentage of the total number of Common Stock (determined by giving effect to
the conversion of Series A Preferred Shares or any securities convertible into
Common Stock) then held by him or it represented thereby (the "Sales
Percentage"), the identity of the proposed transferee of such Common Stock, and
the time within which and the price and all other material terms and conditions
upon which such Proposing Stockholder proposes to Transfer such Common Stock.
Each Purchaser shall notify such Proposing Stockholder in writing, within ten
(10) days after receipt of such Proposing Stockholder's notice, whether such
Purchaser desires to Transfer any Common Stock held by him or it concurrently
with the Proposing Stockholder in accordance with the terms and provisions of
this Section. Failure to provide such written notice after actual receipt of
notice from such Proposing Stockholder within said 10-day period shall, for the
purpose hereof, be deemed to constitute a refusal by a particular Purchaser to
Transfer any of his or its Common Stock concurrently with such Proposing
Stockholder.
b. Concurrently with the delivery by the Proposing Stockholder
of the notice referred to in Section l(a) above, such Proposing Stockholder
shall offer the
1
<PAGE>
Purchasers the opportunity to Transfer to the proposed transferee of the Common
Stock, or to such other transferee or transferees as such Proposing Stockholder
shall obtain (except pursuant to a Transfer by such Proposing Stockholder made
under Rule 144 (other than pursuant to paragraph (k) of Rule 144) as promulgated
by the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), or any successor Rule), that percentage of the
Common Stock then held by each Purchaser which is equal to the Sale Percentage.
It is agreed and understood that such Proposing Stockholder shall obtain the
same agreements and commitments from the transferee or transferees of the Common
Stock to be Transferred by the Purchasers as such Proposing Stockholder has
obtained from the transferee of the Common Stock proposed to be transferred by
him or it, including the time of Transfer, the Transfer price and the other
terms and conditions upon which the Transfer of such Proposing Stockholder's
Common Stock is to be made.
c. In the event that such Proposing Stockholder cannot obtain
agreements or commitments from the transferee or other transferees to have
transferred to It or them that percentage of the Common Stock held by the
Purchasers which is equal to the Sales Percentage of the Common Stock, then such
Proposing Stockholder shall reduce the number of shares of Common Stock which he
proposes to Transfer and allow the Purchasers to Transfer the number of shares
of Common Stock represented by such reduction, so that both such Proposing
Stockholder and each Purchaser shall be entitled to sell an identical percentage
of the Common Stock then held by them, respectively.
d. Any Transfer of Common Stock by such Proposing Stockholder
pursuant to the provisions of this Section shall be made concurrently with the
Transfer of the Common Stock by the Purchasers.
If any Transfer or attempted Transfer of the Common Stock is
made contrary to the provisions of this Section 1, each Purchaser shall have the
right, in addition to any other legal or equitable remedies which it may have,
to enforce its rights hereunder by an action for, specific performance; the
parties hereto recognize the rights set forth herein as unique, the violation of
which cannot be remedied by an award of monetary damages.
This Section 1 shall be effective until the earlier of (i) termination
of this Agreement or (ii) five (5) years from the date hereof.
2. In the event of an initial underwritten public offering of the
Company's Common Stock, each Initial Stockholder shall agree not to sell
publicly any shares of Common Stock for such period as requested by the
Underwriters, which period shall not
2
<PAGE>
exceed 180 days following the effective date of the registration statement
relating to such offering.
3. The Initial Stockholders shall act in all capacities and vote the
shares of Common Stock now or hereafter owned or controlled by them so as to
cause and maintain the number of directors on the Board of Directors to be no
less than three (3) nor more than five (5) directors; provided however, that the
holders of a majority of the Series A Preferred Shares outstanding may permit an
increase in the number of directors to serve on the Board of Directors.
4. In the event that John Y. Brown, Jr. ceases to be a member of the
Board of Directors of the Company and for a period of three (3) years after such
event, the Initial Stockholders shall act in all capacities and vote the shares
of Common Stock now or hereafter owned or controlled by them so as to cause a
majority of the Board of Directors to be elected by the holders of the Series A
Preferred Shares; provided however, that the election of a majority of the Board
of Directors shall in no way affect the rights and obligations under the
employment agreement with the Company's Chief Executive Officer or the Chief
Executive's right to be a member of the Board of Directors.
5. All certificates for shares of Common Stock heretofore or
hereafter issued to the Initial Stockholders shall bear substantially the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A STOCKHOLDERS' AGREEMENT DATED AS OF FEBRUARY 10, 1994 A
COPY OF WHICH IS ON FILE AT THE CORPORATION'S PRINCIPAL OFFICE, AND ANY
HOLDER HEREOF IS SUBJECT TO THE PROVISIONS OF SUCH AGREEMENT."
6. This Agreement and all of its provisions shall continue in effect
until the earlier of (a) the consummation of an underwritten public
offering of the securities of the Company pursuant to a Registration
Statement filed with the Securities and Exchange Commission pursuant to
the Securities Act where the aggregate sales price of such securities
(before deduction of underwriting discounts and expenses of sale) is
not less that Ten Million Dollars ($ 10,000,000); (b) the provisions
terminate upon their terms, (c) the aggregate number of shares of
Series A Preferred Shares issued and outstanding and shares of Series A
Preferred Shares issuable upon the exercise of the Warrants is less
than 25 % of the number issued and sold pursuant to the Purchase
Agreement (including shares of Series A Preferred Shares issuable upon
exercise of the Warrants), or (d) the acquisition,
3
<PAGE>
merger or other business combination in which effective control of the
Company is transferred to an unrelated or unaffiliated party.
7. This Agreement shall in all respects be governed by, and
construed and enforced in accordance with, the laws of the State of Florida.
8. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, and such
counterparts together shall constitute one instrument.
9. The invalidity or unenforceability of any provision of this
Agreement shall not invalidate or affect the enforceability of any other
provision of this Agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
/S/ J. DAVID TOOLE III
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
/S/ J. DAVID TOOLE III
----------------------
/S/ JOHN Y. BROWN
---------------------------------
Individually and as custodian for
Lincoln Brown and Pamela Brown
PURCHASERS:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
GRACE VENTURE PARTNERSHIP III
By: HORN VENTURE PARTNERS II
By: /S/ ROBERT E. PEDIGO
---------------------
Robert E. Pedigo
General Partner
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
--------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
/S/ ILLEGIBLE
----------------------------------
----------------------------------
----------------------------------
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
/S/ J. PETER GRACE
----------------------------------
----------------------------------
----------------------------------
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
/S/ ILLEGIBLE
----------------------------------
----------------------------------
----------------------------------
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
DAVID WALTER ROBBINS, JR.
DECLARATION OF TRUST DATED
OCTOBER 31, 1991
/S/ DAVID WALTER ROBBINS, JR.,
------------------------------
TRUSTEE
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
BANQUE SCANDINAVE EN SUISSE
/S/ G. DINICHERT VP
-------------------
G. DINICHERT
-------------------
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
BERJAYA GROUP (CAYMAN) LTD
By: /S/ ILLEGIBLE
----------------------
Title: Chairman
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
/S/ ILLEGIBLE
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
----------------------------------
----------------------------------
----------------------------------
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ROADHOUSE GRILL, INC.
-------------------------------------
By: J. David Toole, III
President and Chief Executive Officer
INITIAL STOCKHOLDERS:
/S/ ILLEGIBLE
----------------------------------
----------------------------------
----------------------------------
PURCHASERS:
----------------------------------
----------------------------------
----------------------------------
14
EXHIBIT 10.17
SERIES B CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
BETWEEN
ROADHOUSE GRILL INC.
AND
THE SEVERAL PURCHASERS NAMED IN SCHEDULE I
Dated as of June 8, 1994
------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I - THE SERIES B PREFERRED SHARES................................................ 1
Section 1.1 Issuance, Sale and Delivery of the Series B Preferred Shares...... 1
Section 1.2 Closing........................................................... 1
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................... 2
Section 2.1 Organization, Qualification and Corporate Power................... 2
Section 2.02 Authorization of Agreements, Etc.................................. 3
Section 2.03 Validity.......................................................... 3
Section 2.04 Authorized Capital Stock.......................................... 4
Section 2.05 Financial Statements.............................................. 5
Section 2.06 Events Subsequent to the Date of the Balance Sheet................ 6
Section 2.07 Litigation: Compliance with Law................................... 6
Section 2.08 Proprietary Information of Third Parties.......................... 7
Section 2.09 Title to Properties............................................... 7
Section 2.10 Leasehold Interests............................................... 8
Section 2.11 Insurance......................................................... 8
Section 2.12 Taxes............................................................. 8
Section 2.13 Other Agreements.................................................. 9
Section 2.14 Patents, Trademarks, Etc.......................................... 11
Section 2.15 Loans and Advances................................................ 11
Section 2.16 Assumptions, Guaranties, Etc. of Indebtedness of Other Persons.... 11
Section 2.17 Significant Suppliers and Licensees............................... 12
Section 2.18 Governmental Approvals............................................ 12
Section 2.19 Disclosure........................................................ 12
Section 2.20 Offering of the Series B Preferred Shares......................... 13
Section 2.21 Brokers........................................................... 13
Section 2.22 Officers.......................................................... 13
Section 2.23 Transactions With Affiliates...................................... 13
Section 2.24 Employees......................................................... 14
Section 2.25 U.S. Real Property Holding Corporation............................ 14
Section 2.26 License........................................................... 14
Section 2.27 Restaurants Under Development..................................... 14
Section 2.28 Compliance With Franchise Laws.................................... 14
Section 4.01 Conditions to the Obligations of the Purchasers................... 16
Section 4.02 Conditions to the Obligations of the Company...................... 18
Section 5.01 Financial Statements, Etc......................................... 18
Section 5.02 Right of First Refusal............................................ 19
Section 5.03 Reserve for Shares................................................ 21
Section 5.04 Corporate Existence............................................... 21
Section 5.05 Properties, Business, Insurance................................... 21
Section 5.06 Restrictive Agreements Prohibited................................. 21
Section 5.07 Transactions with Affiliates...................................... 21
<PAGE>
Section 5.08 Expenses of Directors..............................................22
Section 5.09 Use of Proceeds....................................................22
Section 5.10 Board of Directors Meetings........................................22
Section 5.11 Compensation.......................................................22
Section 5.12 By-Laws............................................................22
Section 5.13 Performance of Contracts...........................................23
Section 5.14 Proprietary Information Agreements.................................23
Section 5.15 Maintenance of Ownership of Subsidiaries...........................23
Section 5.16 Distributions by Subsidiaries......................................23
Section 5.17 Compliance with Laws...............................................23
Section 5.18 Keeping of Records and Books of Account............................24
Section 5.19 U.S. Real Property Interest Statement..............................24
Section 6.01 Special Class Vote.................................................24
Section 6.02 Merger, etc........................................................26
Section 7.01 Expenses...........................................................26
Section 7.02 Survival of Agreements.............................................26
Section 7.03 Brokerage..........................................................26
Section 7.04 Parties in Interest................................................27
Section 7.05 Notices............................................................27
Section 7.07 Entire Agreement...................................................27
Section 7.08 Counterparts.......................................................28
Section 7.09 Amendments.........................................................28
Section 7.10 Severability.......................................................28
Section 7.11 Titles and Subtitles...............................................28
Section 7.12 Certain Defined Terms..............................................28
</TABLE>
<PAGE>
SERIES B CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
THIS SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT dated as
of June 8, 1994 between ROADHOUSE GRILL, INC., a Florida corporation (the
"Company"), and the several purchasers named in the attached SCHEDULE I
(individually a "Purchaser" and collectively the "Purchasers").
WHEREAS, the Company has previously authorized 3,525,000 shares of the
Series A Convertible Preferred Stock, $.01 par value, of the Company (the
"Series A Preferred Shares"), of which 3,000,000 shares are issued and
outstanding; and
WHEREAS, the Company wishes to issue and sell to the Purchasers a
maximum of 2,366,700 shares of the authorized but unissued Series B Convertible
Preferred Stock, $.01 par value, of the Company (the "Series B Preferred
Shares"); and
WHEREAS, the Series A Preferred Shares and the Series B Preferred
Shares are herein sometimes referred to, collectively, as the "Preferred
Shares"; and
WHEREAS, the Purchasers, severally, wish to purchase the Series B
Preferred Shares on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
THE SERIES B PREFERRED SHARES
Section 1.1 ISSUANCE, SALE AND DELIVERY OF THE SERIES B PREFERRED
SHARES.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, the Company agrees
to issue and sell to each Purchaser, and each Purchaser hereby agrees to
purchase from the Company, the number of Series B Preferred Shares set forth
opposite the name of such Purchaser under the heading "Number of Series B
Preferred Shares to be Purchased" on SCHEDULE I, at the aggregate purchase price
set forth opposite the name of such Purchaser under the heading "Aggregate
Purchase Price for Series B Preferred Shares" on SCHEDULE I.
-1-
<PAGE>
Section 1.2 CLOSING.
The closing under this Agreement shall take place at such location and
at such date and time at which irrevocable subscriptions for at least 2,300,000
Series B Preferred Shares shall have been received and as may be agreed upon
between the Purchasers and the Company (such closing being called the "Closing"
and such date and time being called the "Closing Date"). At the Closing, the
Company shall deliver to each Purchaser a certificate or certificates in such
denominations and registered in such names as set forth on Schedule I,
representing the number of Series B Preferred Shares to be purchased by such
Purchaser from the Company, against payment by such Purchaser to the Company of
the full purchase price of the Series B Preferred Shares in the amount set forth
opposite the name of each Purchaser under the heading "Aggregate Purchase Price
for Series B Preferred Shares" on SCHEDULE I by wire transfer of immediately
available funds or as otherwise agreed by the Company and the Purchasers.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, John Y. Brown, Jr. and J. David Toole, III, jointly and
severally, represent and warrant to the Purchasers that, except as set forth in
the Disclosure Schedule attached as SCHEDULE II (which Disclosure Schedule makes
explicit reference to the particular representation or warranty as to which
exception is taken, which in each case shall constitute the sole representation
and warranty as to which such exception shall apply):
Section 2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
(a) The Company is a corporation incorporated and organized
under the laws of the State of Florida and its status is active, and it is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing in each jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification. The Company has the corporate power
and authority to own and hold its properties and to carry on its business as now
conducted and as proposed to be conducted, to execute, deliver and perform this
Agreement and the amendment to the 1994 Registration Rights Agreement with the
Purchasers in the form attached as EXHIBIT A (the "Amendment to the 1994
Registration Rights Agreement"), to issue, sell and deliver the Series B
Preferred Shares and to issue and deliver the shares of Common Stock, one cent
($.01) par value, of the Company (the "Common Stock") issuable upon conversion
of the Series B Preferred Shares (the "Series B Conversion Shares").
(b) Except as provided in SCHEDULE II, the Company has no
subsidiaries and does not own of record or beneficially, directly or indirectly,
(i) any shares of capital stock or securities convertible into capital stock of
any other corporation, or (ii) any participating interest in any partnership,
joint venture or other non-corporate business enterprise, or (iii) control,
directly or indirectly, any other entity.
-2-
<PAGE>
Section 2.02 AUTHORIZATION OF AGREEMENTS, ETC.
(a) The execution and delivery by the Company of this Agreement
and the Amendment to the 1994 Registration Rights Agreement, the performance by
the Company of its obligations hereunder and thereunder, the issuance, sale and
delivery of the Series B Preferred Shares and the issuance and delivery of the
Series B Conversion Shares have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Articles of Incorporation of the Company, as
amended or supplemented (the 'Charter'), or the By-Laws of the Company, or any
provision of any indenture, agreement or other instrument to which the ' Company
or any of its properties or assets is bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge, restriction, claim or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company.
(b) The Series B Preferred Shares have been duly authorized
and, when issued in accordance with this Agreement, will
be validly issued, fully paid and nonassessable with no
personal liability attaching to the ownership thereof and
will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or
through the Company except as set forth in the 1994
Registration Rights Agreement, as amended, and the 1994
Voting Agreement. The Series B Conversion Shares have been
duly reserved for issuance upon conversion of the Series B
Preferred Shares and, when so issued, will be duly
authorized, validly issued, full' paid and nonassessable
shares of Common Stock with no personal liability
attaching to the ownership thereof and will be free and
clear of all liens, charges, restrictions, claims and
encumbrances imposed by or through the Company except as
set forth in the 1994 Registration Rights Agreement, as
amended, and the 1994 Voting Agreement dated as of
February 10, 1994 ('1994 Voting Agreement'). Neither the
issuance, sale or delivery of the Series B Preferred
Shares nor the issuance or delivery of the Series B
Conversion Shares is subject to any preemptive right of
stockholders of the Company or to any right of first
refusal or other right in favor of any person.
Section 2.03 VALIDITY.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms. The Amendment to the 1994 Registration Rights
Agreement, when it is executed and delivered in accordance with this Agreement,
will constitute a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
-3-
<PAGE>
Section 2.04 AUTHORIZED CAPITAL STOCK.
Immediately prior to the Closing, the authorized capital
stock of the Company will consist of (i) 10,000,000 shares
of Preferred Stock, $.01 par value (the 'Preferred
Stock"), of which 3,525,000 have been designated Series A
Convertible Preferred Stock and 2,366,700 shares have been
designated Series B Convertible Preferred Stock, and (ii)
30,000,000 shares of Common Stock. Immediately prior to
the Closing, 6,444,445 shares of Common Stock will be
validly issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the
ownership thereof and 3,000,000 shares of Series A
Convertible Preferred Stock will be validly issued and
outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof. The
stockholders of record of the Company and the number of
shares of Common Stock and Preferred Stock held by each
are set forth in the attached SCHEDULE IV, and except as
set forth herein and as contemplated by this Agreement,
there are no subscriptions, warrants, options, convertible
securities, and other rights (contingent or otherwise) to
purchase or otherwise acquire equity securities of the
Company. The Company has granted an option to J.David
Toole, III to purchase 355,555 shares of Common Stock at
$.15 per share (the "Toole Option"). The Company has
granted warrants to purchase a total of 525,000 shares of
Series A Convertible Preferred Stock ('Warrant Shares') at
$1.50 per share. Such warrants are expected to be
exercised in conjunction with the execution of this
Agreement. The Company has adopted a 1994 Stock Option
Plan providing for the issuance of not more that 200,000
shares of Common Stock (the 'Option Plan') and form of
option agreements for the issuance, of options to purchase
shares of the Company's Common Stock to employees and
consultants of the Company and members of the Board of
Directors who are not employees. Except for the shares of
Common Stock issuable upon the conversion of the Series A
Preferred Shares, the Series B Preferred Shares and the
Warrant Shares, and the 200,000 and 355,555 shares of
Common Stock reserved for issuance pursuant to the Option
Plan and the Toole Option, respectively, no shares of
Common Stock or other capital stock of the Company are
reserved for possible future issuance. The designations,
powers, preferences, rights, qualifications, limitations
and restrictions in respect of each class and series of
authorized capital stock of the Company are as set forth
in the Charter, a copy of which is attached as EXHIBIT B,
and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid,
binding and enforceable and in accordance with all
applicable laws. Except as set forth in the attached
SCHEDULE II or SCHEDULE IV, (i) no person owns of record
or is known to the Company to own beneficially any share
of Common Stock or capital stock of the Company, (ii) no
subscription, warrant, option, convertible security, or
other right (contingent or otherwise) to purchase or
otherwise acquire equity securities of the Company is
authorized or outstanding, and (iii) there is no
commitment by the Company to issue shares, subscriptions,
warrants, options, convertible securities, or other such
rights or to distribute to holders of any of its equity
securities any evidence of indebtedness or asset. Except
as provided for in the Charter, or as set forth in the
attached SCHEDULE II or SCHEDULE IV, the Company has no
obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other
distribution in respect thereof. Except as provided in
this Agreement or in the 1994 Voting Agreement, to the
best of the Company's knowledge, there are no voting
trusts or agreements, stockholders'
-4-
<PAGE>
agreements, pledge agreements, buy-sell agreements, rights
of first refusal, preemptive rights or proxies relating to
any securities of the Company or any of its subsidiaries
(whether or not the Company or any of its subsidiaries is
a party thereto), except as set forth in the attached
SCHEDULE 11 or SCHEDULE IV. All of the outstanding
securities of the Company were issued in compliance with
all applicable Federal and state securities laws.
Section 2.05 FINANCIAL STATEMENTS.
(a) The Company has furnished to the Purchasers the unaudited
balance sheet of the Company as of December 31, 1993, and the related statements
of operations, changes in shareholders' deficiency and cash flows of the Company
for the year ended December 31, 1993. The Company has furnished to the
Purchasers the unaudited balance sheet of the Company as of April 24, 1994
("Balance Sheet"), and the related statements of operations of the Company for
the period ended April 24, 1994. All such financial statements have been
prepared in accordance with the generally accepted accounting principles
consistently applied and fairly present the financial position of the Company as
of such dates and the results of its operations for the periods then ended.
Since the date of the Balance Sheet, other than as disclosed in SCHEDULE 11, (i)
there has been no material change in the assets, liabilities or financial
condition of the Company from that are reflected in the Balance Sheet except for
changes in the ordinary course of business which in the aggregate have not been
materially adverse, and (ii) none of the business, prospects, financial
condition, operations, property or affairs of the Company have been materially
adversely affected by any occurrence or development, individually or in the
aggregate, whether or not insured against.
(b) Except as provided in documents referred to in SCHEDULE V
hereto, the Company has no material liability or obligation, absolute or
contingent (individually or in the aggregate), including, without limiting the
generality of the foregoing, any tax liabilities due or to become due, not
reflected in the above referred to financial statements, except (i) obligations
and liabilities incurred after the date of the Balance Sheet in the ordinary
course of business that are not individually or in the aggregate material, and
(ii) obligations and liabilities incurred in the ordinary course of business
that would not be required to be reflected in financial statements prepared in
accordance with generally accepted accounting principles. Without limiting the
generality of the foregoing, the Company does not know, and has no reasonable
ground to know, of any basis for the assertion against the Company as of the
date hereof of any material liabilities (not reflected in SCHEDULE V(A) or the
above referred to financial statements.)
Section 2.06 EVENTS SUBSEQUENT TO THE DATE OF THE BALANCE SHEET.
Since the date of the Balance Sheet, other than as disclosed on
SCHEDULE 11, the Company has not (i) issued any stock, bond or other corporate
security or partnership interest, (ii) borrowed any amount or incurred or become
subject to any liability (absolute, accrued or contingent), except current
liabilities incurred and liabilities under contracts entered into in the
ordinary course of business, (iii) discharged or satisfied any lien or
encumbrance or incurred or paid any obligation or
-5-
<PAGE>
liability (absolute, accrued or contingent) other than current liabilities shown
on the Balance Sheet and current liabilities incurred since the date of the
Balance Sheet in the ordinary course of business and in connection with the
development of the Company's restaurants, (iv) declared or made any payment or
distribution to stockholders or partners or purchased or redeemed any share of
its capital stork or partnership interests or other security, (v) mortgaged,
pledged or subjected to lien any of its assets, tangible or intangible, other
than liens of current real property taxes not yet due and payable, (vi) sold,
assigned or transferred any of its tangible assets except in the ordinary course
of business, or canceled any debt or claim, (vii) sold, assigned, transferred or
granted any exclusive licenses with respect to any patent, trademark, trade
name, service mark, copyright, trade secret or other intangible asset, except
rights or licenses granted in the ordinary course of business to licensees of
the Company, (viii) suffered any loss of property or waived any right of
substantial value whether or not in the ordinary course of business, (ix) made
any material change in officer compensation, (x) made any material change in the
manner of business or operations, (xi) entered into any transaction except in
the ordinary course of business or as otherwise contemplated hereby, (xii)
entered into any commitment (contingent or otherwise) to do any of the
foregoing, or (xiii) engaged in an y transaction with any director, officer,
employee, stockholder or partner of the Company.
Section 2.07 LITIGATION: COMPLIANCE WITH LAW.
Other than (a) routine litigation occurring in the ordinary course of
business which the Company is adequately insured against and which is listed on
SCHEDULE II, (b) the matters described in the attached SCHEDULE 11, or (c) in
the case of a threatened action, suit, claim, proceeding or investigation, one
that is not material to the Company or its business, there is no (i) action,
suit, claim, proceeding or investigation pending or, to the best of the
Company's knowledge, threatened against or affecting the Company, at law or in
equity, or before or by any Federal, State, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) arbitration proceeding relating to the Company pending under
collective bargaining agreements or otherwise, or (iii) governmental inquiry
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company (including without limitation any inquiry as to the
qualification of the Company to hold or receive any license or permit), and to
the Company's knowledge, there is no basis for any of the foregoing. Except as
described in the attached SCHEDULE II, the Company has not received any opinion
or memorandum or legal advice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or disadvantage which may be
material to its business, prospects, financial condition, operations, properties
or affairs. The Company is not in default with respect to any order, writ,
injunction or decree known to or served upon the Company of any court or of any
Federal, State, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign. Except as described in
the attached SCHEDULE II, there is no action or suit by the Company pending or
threatened against others. The Company has complied in all material respects
with all laws, rules, regulations and orders which are material and applicable
to its business, operations, properties, assets, products and services, and the
Company has all necessary permits, licenses and other authorizations required to
conduct its business as conducted and as proposed to be conducted in all
material respects, including all laws regulating the development and operation
of restaurants and all applicable environmental laws. There
-6-
<PAGE>
is no existing law, rule, regulation or order, and the Company is not aware of
any proposed law, rule, regulation or order, whether Federal or state, which
would prohibit or restrict the Company from, or otherwise materially adversely
affect the Company in, conducting its business in any jurisdiction in which it
is now conducting business or in which it proposes to conduct business.
Section 2.08 PROPRIETARY INFORMATION OF THIRD PARTIES.
Except as disclosed in the attached SCHEDULE II, no third party has
claimed or has reason to claim that any person now or previously employed or
engaged as a consultant by the Company has (a) violated or, to the Company's
knowledge, may be violating any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or, to the best of the Company's knowledge, may be disclosing or utilized or, to
the best of the Company's knowledge, may be utilizing any trade secret or
proprietary information or documentation of such third party or violated any
confidential relationship which such person may have had with such third party
in connection with the development, manufacture or sale of any product or
proposed product or the development or sale of any service or proposed service
of the Company, or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. Except as described in the attached SCHEDULE II, no third party has
requested information from the Company which reasonably suggests that such a
claim might be contemplated. To the best of the Company's knowledge, none of the
execution or delivery of this Agreement, or the carrying on of the business of
the Company as officers, employees or agents by any officer, director or key
employee of the Company, or the conduct or proposed conduct of the business of
the Company, will conflict with or result in a breach of the terms, conditions
or provisions of or constitute a default under any contract, covenant or
instrument under which any such person is obligated.
Section 2.09 TITLE TO PROPERTIES.
The Company has good and marketable title to its properties and assets
reflected on the Balance Sheet, or acquired by it since the date of the Balance
Sheet (other than properties and assets disposed of in the ordinary course of
business since the date of the Balance Sheet), and all such properties and
assets are free and clear of mortgages, pledges,
security interests, liens, charges, claims, restrictions and other encumbrances,
except for liens for current taxes not yet due and payable and minor
imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company, except as reflected on the Balance Sheet or, with respect to properties
and assets acquired after the date of the Balance Sheet, except as disclosed in
the attached SCHEDULE II.
Section 2.10 LEASEHOLD INTERESTS.
Each lease or agreement to which the Company is a party under which it
is a lessee of any property, real or personal, is a valid and subsisting
agreement, without any material default of the
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Company thereunder and, to the best of the Company's knowledge, without any
material default thereunder of any other party thereto. No event has occurred
and is continuing which, with due notice or lapse of time or both, would
constitute a default or event of default by the Company under any such lease or
agreement or, to the best of the Company's knowledge, by any other party
thereto. The Company's possession of such property has not been disturbed and,
to the best of the Company's knowledge, no claim has been asserted against the
Company adverse to its rights in such leasehold interests.
Section 2.11 INSURANCE.
The Company holds valid policies covering all of the insurance required
to be maintained by it under Section 5.05.
Section 2.12 TAXES.
The Company has filed all tax returns, Federal, state, county and
local, required to be filed by it and, with respect to such state, county and
local returns, if not filed would have a material adverse effect on its
financial condition or operations, and the Company paid all taxes shown to be
due by such returns as well as all other taxes, assessments and governmental
charges which have become due or payable, including without limitation all taxes
which the Company is obligated to withhold from amounts owing to employees,
creditors and third parties. All such taxes with respect to which the Company
has become obligated pursuant to elections made by the Company in accordance
with generally accepted practice have been paid and adequate reserves have been
established for all taxes accrued but not yet payable. The Federal income tax
returns of the Company have never been audited by the Internal Revenue Service.
No deficiency assessment with respect to or proposed adjustment of the Company's
Federal, state, county or local taxes is pending or, to the best of the
Company's knowledge, threatened. There is no tax lien, whether imposed by any
Federal, state, county or local taxing authority, outstanding against the
assets, properties or business of the Company. Except as set forth in the
attached SCHEDULE II, neither the Company nor any of its stockholders have ever
filed a consent pursuant to
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Section 341(f) of the Internal Revenue Code ("Code'), relating to collapsible
corporations.
Section 2.13 OTHER AGREEMENTS.
Except as set forth in the attached SCHEDULE V(A) and the documents to
be executed in connection with the transactions contemplated by this Agreement,
the Company is not a party to or otherwise bound by any written or oral contract
or instrument or, to the knowledge of the Company, other restriction which
individually or in the aggregate could materially adversely affect the business,
prospects, financial condition, operations, property or affairs of the Company.
Except as set forth in the attached SCHEDULE V(B), the Company is not a party to
or otherwise bound by any written or oral:
(a) contract with any labor union (and, to the knowledge of
the Company, no organizational effort is being made with respect to any of its
employees);
(b) contract or other commitment with any supplier containing
any provision permitting any party other than the Company to renegotiate the
price or other terms pursuant to which the Company has or is expected to
purchase in excess of $50,000 worth of products or services during any twelve
month period;
(c) contract for the future purchase of fixed assets or for
the future purchase of materials, supplies or equipment in excess of its normal
operating requirements;
(d) contract for the employment of any officer, employee or
other person (whether of a legally binding nature or in the nature of informal
understandings) on a full time or consulting basis which is not terminable on
notice without cost or other liability to the Company, except normal severance
arrangements and accrued vacation pay;
(e) bonus, pension, profit sharing, retirement,
hospitalization, insurance, stock purchase, stock option or other plan, contract
or understanding pursuant to which benefits are provided to any employee of the
Company (other than group insurance plans applicable to employees generally);
(f) agreement or indenture relating to the borrowing of money
or to the mortgaging or pledging of, or otherwise placing a lien or security
interest on, any asset of the Company;
(g) guaranty of any obligation for borrowed money or
otherwise;
(h) voting trust or agreement, stockholders' agreement, pledge
agreement, buy-sell agreement or first refusal or preemptive rights agreement
relating to any securities of the Company;
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(i) agreement, or group of related agreements with the same
party or any group of affiliated parties, under which the Company has advanced
or agreed to advance money or has agreed to lease any property as lessee or
lessor;
(j) agreement or obligation (contingent or otherwise) to
issue, sell or otherwise distribute or to repurchase or otherwise acquire or
retire any share of its capital stock, partnership interest or any of its other
equity securities;
(k) assignment, license or other agreement with respect to any
form of intangible property;
(l) agreement under which it has granted any person any
registration rights, other than the 1994 Registration Rights Agreement;
(m) agreement under which it has limited or restricted its
right to compete with any person in any respect;
(n) other contract or group of related contracts with the same
party involving more than $25,000 or continuing over a period of more than six
months from the date or dates thereof (including renewals or extensions optional
with another party), which contract or group of contracts is not terminable by
the Company without penalty upon notice of thirty (30) days or less; or
(o) other contract, instrument, commitment, plan or
arrangement, a copy of which would be required to be filed with the Securities
and Exchange Commission (the "Commission") as an exhibit to a registration
statement on Form S-1 pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act of 1933 (the "Securities Act") if the Company were registering
securities under the Securities Act.
The Company, and to the best of the Company's knowledge, each other
party thereto have in all material respects performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default, in any material respect, (with due notice or lapse of time
or both), under any lease, agreement, or contract now in effect to which the
Company is a party or by which it or its property may be bound. The Company is
not in violation of any provision of its Charter or By-Laws. The Company has no
present expectation or intention of not fully performing all its obligations
under each such lease, contract or other agreement in all material respects, and
the Company has no knowledge of any breach and has received no written notice of
any anticipated breach by the other party to any contract or commitment to which
the Company is a party.
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Section 2.14 PATENTS, TRADEMARKS, ETC.
Set forth in SCHEDULE II is a list and brief description of all
Patents, patent rights, patent applications, trademarks, trademark applications,
service marks, service mark applications, trade names and copyrights, and all
applications for such which are in the process of being prepared, owned by or
registered in the name of the Company, or of which the Company is a licensor or
licensee or in which the Company has any right, and in each case a brief
description of the nature of such right. The Company owns or possesses adequate
licenses or other rights to use, free and clear of all liens, claims and
restrictions, all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade names, copyrights,
manufacturing processes, formulae, trade secrets and know how (collectively,
"Intellectual Property") necessary to the conduct of its business as conducted
and as currently planned to be conducted, and no claim is pending or, to the
best of the Company's knowledge, threatened to the effect that the operations of
the Company infringe upon or conflict with the asserted rights of any other
person under any Intellectual Property, and to the best of the Company's
knowledge, there is no basis for any such claim (whether or not pending or
threatened). No claim is pending or threatened to the effect that any such
Intellectual Property owned or licensed by the Company, or which the Company
otherwise has the right to use, is invalid or unenforceable by the Company and,
to the best of the Company's knowledge, there is no basis for any such claim
(whether or not pending or threatened). The Company is not obligated or under
any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service mark, trade name, copyright or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business or
otherwise. To the best of the Company's knowledge, all proprietary technology
developed by and belonging to the Company and material to its business which has
not been patented has been kept confidential by the Company, its employees and
licensees. Except as set forth in SCHEDULE II, the Company has not granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the proprietary products or proposed proprietary
services of the Company that are material to its business.
Section 2.15 LOANS AND ADVANCES.
Except as described in the attached SCHEDULE II, the Company does not
have any outstanding loans or advances to any person and is not obligated to
make any such loans or advances, except, in each case, for advances to employees
of the Company in respect of reimbursable business expenses anticipated to be
incurred by them in connection with their performance of services for the
Company.
Section 2.16 ASSUMPTIONS, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS.
The Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except
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for guaranties by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business.
Section 2.17 SIGNIFICANT SUPPLIERS AND LICENSEES.
No supplier or licensee during the period covered by the financial
statements referred to in Section 2.05 or which has been material to the Company
thereafter, has terminated, materially reduced or, to the knowledge of the
Company, threatened to terminate or materially reduce its provision of products
or services to the Company or has terminated or materially amended or modified a
license agreement.
Section 2.18 GOVERNMENTAL APPROVALS.
Subject to the accuracy of the representations and warranties of the
Purchasers set forth in Article III, no registration or filing with, or consent
or approval of or other action by, any Federal, state or other governmental
agency or instrumentality is or will be necessary for the valid execution,
delivery and performance by the Company of this Agreement or the Amendment to
the 1994 Registration Rights Agreement, or the issuance, sale and delivery of
the Series B Preferred Shares or, upon conversion thereof, the issuance and
delivery of the Series B Conversion Shares, other than (i) filings pursuant to
Federal and State securities laws (all of which filings have been or, with
respect to those filings which may be duly made after the Closing will be, made
by or on behalf of the Company) in connection with the sale of the Series B
Preferred Shares, and (ii) with respect to the 1994 Registration Rights
Agreement, as amended, the registration of the shares covered thereby with the
Commission and filings pursuant to Federal and state securities laws.
Section 2.19 DISCLOSURE.
This Agreement, including any Schedule or Exhibit to this Agreement,
does not contain an untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
None of the statements, documents, certificates or other items prepared or
supplied by the Company with respect to the transactions contemplated hereby
contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading. There is no
fact which the Company has not disclosed to the Purchasers and their counsel in
writing and of which the Company is aware which materially and adversely affects
or could materially and adversely affect the business, prospects, financial
condition, operations, property or affairs of the Company.
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Section 2.20 OFFERING OF THE SERIES B PREFERRED SHARES.
Neither the Company nor any person authorized or employed by the
Company as agent, broker, dealer or otherwise in connection with the offering or
sale of the Series B Preferred Shares or any security of the Company similar to
the Series B Preferred Shares has offered the Series B Preferred Shares or any
such similar security for sale to, or solicited any offer to buy the Series B
Preferred Shares or any such similar security from, or otherwise approached or
negotiated with respect thereto with, any person or persons, and neither the
Company nor any person acting on its behalf has taken or will take any other
action (including, without limitation, any offer, issuance or sale of any
security of the Company under circumstances which might require the integration
of such security with the Series B Preferred Shares under the Securities Act or
the rules and regulations of the Commission thereunder), in either case so as to
subject the offering, issuance or sale of the Series B Preferred Shares to the
registration provisions of the Securities Act.
Section 2.21 BROKERS.
Except as set forth in the attached SCHEDULE II, the Company has no
contract, arrangement or understanding with any broker, finder or similar agent
with respect to the transactions contemplated by this Agreement.
Section 2.22 OFFICERS.
Set forth in SCHEDULE II is a list of the names of the officers of the
Company, together with the title or job classification of each such person.
Except as set forth in SCHEDULE II, none of such persons has an employment
agreement or understanding, whether oral or written, with the Company or any of
its subsidiaries, which is not terminable on notice by the Company or such
subsidiary, without cost or other liability to the Company or such subsidiary.
Section 2.23 TRANSACTIONS WITH AFFILIATES.
Except as set forth in the attached SCHEDULE II, no director, officer,
employee or stockholder of the Company, or member of the family of any such
person, or any corporation, partnership, trust or other entity in which any such
person, or any member of the family of any such person, has a substantial
interest or is an officer, director, trustee, partner or holder of more than
five percent of the outstanding capital stock thereof, is presently or
contemplated to be a party to any transaction with the Company, including any
contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or otherwise
requiring payments to any such person or firm.
Section 2.24 EMPLOYEES.
Each of the officers of the Company, each key employee and each other
employee now employed by the Company who has access to proprietary business
information of the Company
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including, without limitation, the Company's recipes, operating system, business
strategy and other information related to the operations of the Company, has
executed an Employee Confidential Disclosure Agreement substantially in the form
of EXHIBIT C attached hereto (collectively, the "Confidentiality Agreements"),
and the Confidentiality Agreements are in full force and effect. No officer or
key employee of the Company has advised the Company (orally or in writing) that
he or she intends to terminate employment with the Company. The Company has
complied in all material respects with all applicable laws relating to the
employment of labor, including provisions relating to wages, hours, equal
opportunity, collective bargaining and the payment of Social Security and other
taxes, and with the Employee Retirement Income Security Act of 1974, as amended.
Section 2.25 U.S. REAL PROPERTY HOLDING CORPORATION.
The Company is not now and has never been a "United States real
property holding corporation," as defined in Section 897(c)(2) of the Code and
Section 1.987-2(b) of the Regulations promulgated by the Internal Revenue
Service.
Section 2.26 LICENSE.
Except as set forth in Schedule II all of the Company's license
agreements are in good standing, full force and effect as of the date hereof and
no party to any such agreements is in material default thereof.
Section 2.27 RESTAURANTS UNDER DEVELOPMENT.
SCHEDULE II describes all currently outstanding plans, arrangements,
contracts, agreements or negotiations relating to the purchase, development,
construction or renovation of restaurants by the Company.
Section 2.28 COMPLIANCE WITH FRANCHISE LAWS.
The Company has complied with the applicable laws, rules and
regulations relating to franchising in all jurisdictions where the conduct of
the Company's business requires such qualification to the extent necessary such
that any failure to so comply will not have a material adverse effect upon the
Company or its operations.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning of Rule
501 under the Securities Act and was not organized for the specific purpose of
acquiring the Series B Preferred Shares;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company and it is able financially to bear the risks thereof;
(c) it has received and reviewed the financial statements and
projections of the Company, and it has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management;
(d) it has made an independent investigation of the business
of the Company and is making this investment as a result of this investigation
and not as a result of any projections made by the Company;
(e) the Series B Preferred Shares being purchased by it are
being acquired for its own account for the purpose of investment and not with a
view to or for sale in connection with any distribution thereof;
(f) it understands that (i) the Series B Preferred Shares and
the Series B Conversion Shares have not been registered under the Securities Act
by reason of their issuance in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) or Section 3(b)
thereof or Rule 505 or 506 promulgated under the Securities Act, (ii) the Series
B Preferred Shares and, upon conversion thereof, the Series B Conversion Shares
must be held indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration, (iii) the Series B
Preferred Shares and the Series B Conversion Shares will bear a legend to such
effect, and (iv) the Company will make a notation on its transfer books to such
effect;
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(g) if an entity and not a natural person, it is validly
existing under the laws of the state of its organization and the consummation of
the transactions contemplated hereby is authorized by, and will not result in a
violation of, state law or its Charter or other organizing documents; and
(h) it has full right, power and authority to execute this
Agreement and the Amendment to the 1994 Registration Rights Agreement and to
perform its obligations hereunder and thereunder.
ARTICLE IV
CONDITIONS TO THE CLOSING
Section 4.01 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS.
The obligations of each Purchaser to purchase and pay for the Series B
Preferred Shares being purchased by it on the Closing Date is, at its option,
subject to the satisfaction, on or before the Closing Date, of the following
conditions:
(a) PERFORMANCE. The Company shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the Chief Executive Officer of the
Company shall have certified to the Purchasers in writing to such effect and to
the further effect that all of the conditions set forth in this Article IV have
been satisfied.
(b) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and
other proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchasers and their counsel, and the Purchasers and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they reasonably may request.
(c) SUPPORTING DOCUMENTS. The Purchasers and their counsel
shall have received copies of the following documents:
(i) (A) the Charter, certified as of a recent date by
the Secretary of State of the State of Florida, which Charter shall contain the
terms of the Series B Convertible Preferred Stock agreed upon by the parties
hereto, and (B) a certificate of said Secretary dated as of a recent date as to
the active status of the Company and listing all documents of the Company on
file with said Secretary;
(ii) a certificate of the Secretary or an Assistant
Secretary of the Company dated the Closing Date and certifying: (A) that
attached thereto is a true and complete copy of the By-Laws of the Company as in
effect on the date of such certification; (B) that attached thereto is
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a true and complete copy of all resolutions adopted by the Board of Directors or
the stockholders of the Company authorizing the execution, delivery and
performance of this Agreement, the 1994 Registration Rights Agreement, the
issuance, sale and delivery of the Series B Preferred Shares and the
reservation, issuance and delivery of the Series B Conversion Shares and that
all such resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated by this Agreement and
the 1994 Registration Rights Agreement; (C) that the Charter has not been
amended since the date of the last amendment referred to in the certificate
delivered pursuant to clause (i)(B) above; and CD) to the incumbency and
specimen signature of each officer of the Company executing this Agreement, the
1994 Registration Rights Agreement, the stock certificates representing the
Series B Preferred Shares and any certificate or instrument furnished pursuant
hereto, and a certification by another officer of the Company as to the
incumbency and signature of the officer signing the certificate referred to in
this clause (ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the Company as the
Purchasers or their counsel reasonably may request.
(d) 1994 REGISTRATION RIGHTS AGREEMENT. The Company shall have executed
and delivered an Amendment to the 1994 Registration Rights Agreement in the form
attached as EXHIBIT A.
(e) CHARTER. The Charter, including the Certificate of Designation
containing the terms of the Series B Convertible Preferred Stock, shall read in
its entirety as set forth in EXHIBIT B.
(f) PURCHASE BY OTHER PURCHASERS. Each Purchaser shall have purchased
and paid for the Series B Preferred Shares being purchased by it on the Closing
Date, and the aggregate purchase price paid by all Purchasers for the Series B
Preferred Shares being purchased by them on the Closing Date shall be at least
$5,750,000.
(g) CONFIDENTIALITY AGREEMENT. The Company shall have entered into
confidentiality agreements with those employees listed in SCHEDULE II in a form
and subject o terms acceptable to the Purchasers.
(h) 1994 FINANCIAL STATEMENTS. The Company shall have delivered the
unaudited consolidated financial statements for the period ending April 24,
1994.
(i) ADDITIONAL AGREEMENTS. The Company shall have delivered
such other agreements and instruments as the Purchasers shall have reasonably
requested.
All such documents shall be satisfactory in form and substance to the
Purchasers and their counsel.
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Section 4.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to sell the Series B Preferred Shares
being sold by it on the Closing Date is, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) 1994 REGISTRATION RIGHTS AGREEMENT. The Purchasers shall
have accepted the terms of and executed and delivered the Amendment to the 1994
Registration Rights Agreement.
(b) PURCHASE BY OTHER PURCHASERS. Each Purchaser shall have
purchased and paid for the Series B Preferred Shares being purchased by it on
the Closing Date, and the aggregate purchase price paid by all Purchasers for
the Series B Preferred Shares being purchased by them on the Closing Date shall
be at least $5,750,000.
(c) ADDITIONAL AGREEMENTS. The Purchasers shall have delivered
such other agreements and instruments as the Company shall have reasonably
requested.
ARTICLE V
COVENANT'S OF THE COMPANY
The Company covenants and agrees with each Purchaser that so long as
any of the Series B Preferred Shares are outstanding:
Section 5.01 FINANCIAL STATEMENTS, ETC.
The Company shall furnish:
(a) to each Purchaser, within ninety (90) days after the end
of each fiscal year of the Company, or as soon as practicable thereafter, a
consolidated balance sheet of the Company and its subsidiaries as of the end of
such fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended, prepared in
accordance with generally accepted accounting principles and certified by
Coopers & Lybrand or such other "Big 6" accounting firm selected by the Board of
Directors of the Company and an annual report containing a narrative discussion
of the results of the Company's operations for the past fiscal year and the
status of the Company's liquidity and capital resources as of the end of such
year materially conforming to the disclosure requirements contained in Item 303
of Regulation S-K or Regulation S-B, if applicable, under the Securities Act;
(b) to each Purchaser owning more than 250,000 shares (as the
same may be adjusted for stock splits, stock dividends, recapitalization,
reclassifications or other similar events) ("Major Purchaser") within thirty
(30) days after the end of each month a consolidated balance sheet of the
Company and its subsidiaries and the related consolidated statements of income
and cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by
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the Chief Financial Officer of the Company, or the principal accounting officer
if the Company does not have a Chief Financial Officer, such consolidated
balance sheet to be as of the end of such quarter and such consolidated
statements of income and cash flows to be for such quarter and for the period
from the beginning of the fiscal year to the end of such quarter, in each case
with comparative statements for the prior fiscal year; provided that the
Company's obligations under this Section 5.01 shall terminate upon the
completion of a firm commitment underwritten public offering of the Company's
securities where the Company becomes and continues to be subject to the
reporting requirements of the Securities Exchange Act of 1934;
(c) to each Purchaser, at the time of delivery of each annual
financial statement pursuant to Section 5.01(a), a certificate executed by the
Chief Financial Officer of the Company, or the principal accounting officer if
the Company does not have a Chief Financial Officer, stating that he has
reviewed this Agreement and the Series B Convertible Preferred Stock and has no
knowledge of any default by the Company in the performance or observance of any
of the provisions of this Agreement, or the Series B Convertible Preferred Stock
or, if such officer has such knowledge, specifying such default and the nature
thereof;
(d) to each Major Purchaser, at the time of delivery of each
monthly statement pursuant to Section 5.01(b), a management narrative report
explaining all significant variances from forecasts and all significant current
developments in staffing, marketing, sales and operations; and
(e) to each Purchaser, within thirty (30) days prior to the
end of each fiscal year, an annual business plan.
Section 5.02 RIGHT OF FIRST REFUSAL.
(a) The Company shall, prior to (or as soon thereafter as is
reasonably practical) any issuance by the Company of any of its securities
(other than debt securities with no equity feature), offer to each Purchaser
continuing to hold at least fifty percent (50%) of the Preferred Shares
purchased hereby (the "Eligible Purchaser") by written notice the right, for a
period of thirty (30) days, to purchase a pro rata amount (based on the
percentage ownership of the Common Stock of the Company assuming the conversion
of the Preferred Shares) of such securities on the same terms and conditions for
which such securities are to be issued (unless the Eligible Purchaser is unable
to meet such terms and conditions, in which case the Eligible Purchaser shall
purchase such securities for cash at an amount equal to the price or other
consideration for which such securities are to be issued); provided, however,
that the first refusal rights of the Eligible Purchasers pursuant to this
Section 5.02 shall not apply to securities issued (A) upon the exercise of the
Warrants, (B) upon conversion of any of the Series A Preferred Shares or the
Series B Preferred Shares, (C) pursuant to the existing option granted to J.
David Toole, III to purchase 355,555 shares of Common Stock, (D) as a stock
dividend or upon any subdivision of shares of Common Stock, provided that the
securities issued pursuant to such stock dividend or subdivision are limited to
additional shares of Common Stock, (E) pursuant to the Company's Option Plan,
(F) solely in consideration for the acquisition (whether by merger or otherwise)
by the Company or any of its subsidiaries of all or substantially all
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of the stock or assets of any other entity, and (G) pursuant to a firm
commitment underwritten public offering. The Company's written notice to the
Eligible Purchasers shall describe the securities proposed to be issued by the
Company and specify the number, price and payment terms.
Each Eligible Purchaser may accept the Company's offer as to the full
number of securities offered to it or any lesser number, by written notice
thereof given by it to the Company prior to the expiration of the aforesaid
thirty (30) day period, in which event the Company shall promptly sell and such
Eligible Purchaser shall buy, upon the terms specified, the number of securities
agreed to be purchased by such Eligible Purchaser.
(b) The Company shall be free at any time prior to one hundred
twenty (120) days after the date of its notice of offer pursuant to this Section
5.02, to offer and sell to any third party or parties the number of such
securities not agreed by the Purchasers or the Eligible Purchasers, as the case
may be, to be purchased by them, at a price and on payment terms no less
favorable to the Company than those specified in such notice of offer. However,
if such third party sale or sales are not consummated within such one hundred
twenty (120) day period, the Company shall not sell such securities as shall not
have been purchased within such period without again complying with this Section
5.02.
(c) In case the Company issues any of its securities at a
price per share (or at a price per share of Common Stock assuming their full
conversion into Common Stock, if applicable) less than the price per share paid
by each Eligible Purchaser hereunder, each Eligible Purchaser shall have a right
of over-allotment such that if any Eligible Purchaser fails to exercise such
Eligible Purchaser's right hereunder to purchase such Eligible Purchaser's full
proportionate share of the securities proposed to be issued (the "Incomplete
Purchasers"), the Purchasers purchasing their full respective proportionate
share of such securities (the "Complete Purchasers") may purchase the portion of
such securities which has not been purchased by the Incomplete Purchasers as
hereinafter provided. The Complete Purchasers shall have ten (10) days from the
date notice is given by the Company to the Complete Purchasers that such
Incomplete Purchasers have rejected or failed to accept their right to purchase
their proportionate share of securities, to agree to purchase up to such
Complete Purchaser's proportionate share of such securities not purchased by the
Incomplete Purchasers. Notwithstanding anything in Section 5.02(b) to the
contrary, as used in this Section 5.02(c) with respect to the Complete
Purchasers only, each Complete Purchaser's "proportionate share" shall be
calculated by excluding from the denominator of the fraction the total number of
shares of Common Stock of any Incomplete Purchaser and the total number of
shares of Common Stock into which the shares of such Incomplete Purchaser's
Preferred Shares or other convertible securities, if any, are convertible.
Section 5.03 RESERVE FOR SHARES.
The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, for the purpose of effecting the
conversion of the Series B Preferred Shares and otherwise complying with the
terms of this Agreement, such number of its duly authorized shares of Common
Stock as shall be sufficient to effect the conversion of the Series B Preferred
Shares from
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time to time outstanding or otherwise to comply with the terms of this
Agreement. If at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of the Series B Preferred
Shares and otherwise to comply with the terms of this Agreement, the Company
will forthwith take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes. The Company will obtain any authorization,
consent, approval or other action by or make any filing with any court or
administrative body that may be required under applicable state securities laws
in connection with the issuance of shares of Common Stock upon conversion of the
Series B Preferred Shares.
Section 5.04 CORPORATE EXISTENCE.
The Company shall maintain and cause any subsidiary which it may create
to maintain their respective corporate existence, rights and franchises in full
force and effect; provided however, that the Company may liquidate or merge any
subsidiary into the Company if the Board of Directors deems such action
appropriate.
Section 5.05 PROPERTIES, BUSINESS, INSURANCE.
The Company shall maintain and cause any subsidiary which it may create
to maintain as to their respective properties and business, with financially
sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated, which insurance shall be deemed by the Company to
be sufficient. The Company shall not cause or permit any assignment or change in
beneficiary and shall not borrow against any such policy.
Section 5.06 RESTRICTIVE AGREEMENTS PROHIBITED.
Neither the Company nor any of its subsidiaries shall become a party to
any agreement which by its terms restricts the Company's performance of this
Agreement or the 1994 Registration Rights Agreement, as amended.
Section 5.07 TRANSACTIONS WITH AFFILIATES.
Except for transactions contemplated by this Agreement or as otherwise
approved by the Board of Directors, neither the Company nor any of its
subsidiaries shall enter into any transaction with any director, officer,
employee or holder of more than five percent of the outstanding capital stock of
any class or series of capital stock of the Company or any of its subsidiaries,
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or member of the family of any such
person, is a director, officer, trustee, partner or holder of more than five
percent of the outstanding capital stock thereof, except for transactions on
customary terms related to such person's employment and transactions on terms
which are no less
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favorable than could be obtained with an independent third party in an arm's
length transaction and which are approved by a majority of the disinterested
directors of the Company.
Section 5.08 EXPENSES OF DIRECTORS.
The Company shall promptly reimburse in full each director of the
Company who is not an employee of the Company for all of his reasonable
out-of-pocket expenses incurred in attending each meeting of the Board of
Directors of the Company or any Committee thereof.
Section 5.09 USE OF PROCEEDS.
The Company shall use the proceeds from the sale of the Series B
Preferred Shares for expansion and working capital. No distributions from the
proceeds of this offering may be made to the Initial Stockholders while the
Series B Preferred Shares are outstanding except that to the extent that there
remains debt owed to John Y. Brown, Jr., such debt may be repaid upon the
occurrence of any one of the following: (i) two consecutive quarters of positive
net earnings before interest and taxes; or (ii) provided that such repayment
shall not inhibit the Company's growth as reasonably determined by the outside
members of the Board of Directors.
Section 5.10 BOARD OF DIRECTORS MEETINGS.
The Company shall use its best efforts to ensure that meetings of its
Board of Directors are held at least quarterly as well as to obtain directors
and officers insurance coverage as approved by the Board of Directors.
Section 5.11 COMPENSATION.
The Company shall pay to its officers compensation as determined by the
Board of Directors upon the recommendation of the compensation committee of the
Board of Directors.
Section 5.12 BY-LAWS.
The Company shall at all times cause its By-Laws to provide that,
unless otherwise required by the laws of the state of Florida, any holders of at
least twenty-five percent (25%) of the outstanding Series B Preferred Shares or
any two directors shall have the right to call a meeting of the stockholders.
The Company shall at all times maintain provisions in its ByLaws and/or Charter
indemnifying all directors against liability and absolving all directors from
liability to the Company and its stockholders to the maximum extent permitted
under the laws of the state of Florida.
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Section 5.13 PERFORMANCE OF CONTRACTS.
The Company shall not amend, modify, terminate, waive or otherwise
alter, in whole or in part, the Employment Agreement of J. David Toole, III or
the Confidentiality Agreements without the consent of the member of the
Company's Board of Directors elected by the holders of the Preferred Shares
voting as a separate class.
Section 5.14 PROPRIETARY INFORMATION AGREEMENTS.
The Company shall use its best efforts to obtain and cause any
subsidiary which it may create to use their best efforts to obtain, a
Confidentiality Agreement in substantially the form of EXHIBIT C hereto from,
all present and future officers, key employees and other employees who will have
access to confidential information of the Company or any of its subsidiaries,
upon their employment by the Company or any of its subsidiaries.
Section 5.15 MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES.
The Company shall not sell or otherwise transfer any shares of capital
stock of any subsidiary which it may create, except to the Company or another
subsidiary which it may create, or permit any subsidiary which it may create to
issue, sell or otherwise transfer any shares of its capital stock or the capital
stock of any subsidiary which it may create, except to the Company or another
subsidiary which it may create.
Section 5.16 DISTRIBUTIONS BY SUBSIDIARIES.
The Company shall not permit any subsidiary which it may create to
purchase or set aside any sums for the purchase of, or pay any dividend or make
any distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another subsidiary which it may create.
Section 5.17 COMPLIANCE WITH LAWS.
The Company shall comply, and cause each subsidiary to comply with, all
applicable laws, rules, regulations and orders, non-compliance with which could
materially adversely affect its business or condition, financial or otherwise,
including all laws relating to the offer and sale of franchises, and the
development and operation of the restaurants and applicable environmental laws.
Section 5.18 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
The Company shall keep, and cause each subsidiary to keep, adequate
records and books of account, in which complete entries will be made in
accordance with generally accepted accounting principles consistently applied,
reflecting all financial transactions of the Company and such subsidiary, and in
which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.
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Section 5.19 U.S. REAL PROPERTY INTEREST STATEMENT.
Upon a written request by any Purchaser, the Company shall provide such
Purchaser with a written statement informing the Purchaser whether such
Purchaser's interest in the Company constitutes a U.S. real property
interest. The Company's determination shall comply with the
requirements of Treasury Regulation Section 1.897-2(h)(1) or any
successor regulation, and the Company shall provide timely notice to
the Internal Revenue Service, in accordance with and to the extent
required by Treasury Regulation Section 1. 897-2(h)(2) or any successor
regulation, that such statement has been made. The Company's written
statement to any Purchaser shall be delivered to such Purchaser within
ten (10) days of such Purchaser's written request therefor. The
Company's obligation to furnish a written statement pursuant to this
Section 5.19 shall continue notwithstanding the fact that a class of
the Company's stock may be regularly traded on an established
securities market.
ARTICLE VI
ADDITIONAL SERIES B CONVERTIBLE PREFERRED STOCK COVENANTS
Section 6.01 SPECIAL CLASS VOTE.
A. Except where the vote or written consent of the holders of a greater
number of shares of the Company is required by law or by the Charter, and in
addition to any other vote required by law or the Charter, until the
consummation of the first firm commitment underwritten public offering of the
Company's Common Stock pursuant to an effective Registration Statement on Form
S-1 or SB-2 (or its then equivalent) under the Securities Act (the "Initial
Public Offering"), where the aggregate sales price of the Common Stock (before
deduction of underwriting discounts and expenses of sale) is not less than
$10,000,000, the Company covenants and agrees with each Purchaser of Series B
Preferred Shares that, at any time when Series B Preferred Shares or Series B
Conversion Shares are outstanding, without the approval of the holders of at
least two-thirds (2/3rds) of the then outstanding Series B Conversion Shares (on
an as if converted basis), given in writing or by vote at a meeting and
consenting or voting (as the case may be) together the Company will not:
(a) create or authorize the creation of any additional class
or series of shares of stock unless the same ranks junior to the Series B
Preferred Shares as to the payment of dividends or the distribution of assets on
the liquidation, dissolution or winding up of the Company, or increase the
authorized amount of the Series B Preferred Shares, or increase the authorized
amount of any additional class or series of shares of stock unless the same
ranks junior to the Series B Preferred Shares as to the payment of dividends or
the distribution of assets on the liquidation, dissolution or winding up of the
Company, or create or authorize any obligation or security convertible into
shares of Series B Preferred Shares or into shares of any other class or series
of stock unless the same ranks junior to the Series B Preferred Shares as to the
payment of dividends or the distribution of assets on
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the liquidation, dissolution or winding up of the Company, whether any such
creation, authorization or increase shall be by means of amendment to the
Charter or by merger, consolidation or otherwise.
B. Except where the vote or written consent of the holders of a greater
number of shares of the Company is required by law or by the Charter, and in
addition to any other vote required by law or the Charter, until the
consummation of the Initial Public Offering, the Company covenants and agrees
with each Purchaser of Series B Preferred Shares that, at any time when the
Preferred Shares or the Common Shares into which the Preferred Shares are
convertible ("Conversion Shares"), are outstanding, without the approval of the
holders of a majority of the then outstanding Conversion Shares (on an as if
converted basis), given in writing or by vote at a meeting and consenting or
voting (as the case may be) together the Company will not:
(a) amend, alter or repeal, whether by merger, consolidation
or otherwise, the Charter of the Company; provided, however, that the Charter
may be amended to provide for an increase in the authorized preferred stock of
the Company or the creation and issuance of any other capital stock of the
Company ranking junior in all respects to the Preferred Shares;
(b) merge, consolidate, enter into a share exchange or engage
in any other transactions in which the Company is not the surviving entity or in
which control of the Company has been transferred to another entity; provided
however, that so long as John Y. Brown, Jr. is a member of the Board of
Directors this Section 6.01(c) shall not apply and Section 6.02 shall apply;
(c) engage in any transaction that would be considered a
"deemed dividend" transaction under Section 305 of the Code;
(d) consent to any liquidation, dissolution, winding up of the
Company or the sale or transfer of all or substantially all of its assets;
(e) amend, alter or repeal the Company's By-Laws;
(f) purchase or set aside any sums for the purchase of, or pay
any dividend or make any distribution on, any shares of stock other than the
Preferred Shares;
(g) redeem or otherwise acquire any of the Preferred Shares;
or
(i) permit the sale, assignment or transfer of options issued
pursuant to the Company's Option Plan prior to vesting.
Section 6.02 MERGER, ETC.
In the event that any Preferred Shares are outstanding and John Y.
Brown, Jr. is a member of the Board of Directors, the Company may not merge,
consolidate, enter into a share exchange or engage in any other transaction in
which the Company is not the surviving entity or in which effective
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control of the Company has been transferred to another entity if all of the
Major Purchasers have voted against such transaction.
ARTICLE VII
MISCELLANEOUS
Section 7.01 EXPENSES.
Each party hereto will pay its own expenses in connection with the
transactions contemplated hereby, whether or not such transactions shall be
consummated.
Section 7.02 SURVIVAL OF AGREEMENTS.
All covenants, agreements, representations and warranties made herein
or in the 1994 Registration Rights Agreement, as amended, or any certificate or
instrument delivered to the Purchasers pursuant to or in connection with this
Agreement or the 1994 Registration Rights Agreement, as amended, shall survive
the execution and delivery of this Agreement, the 1994 Registration Rights
Agreement, as amended, the issuance, sale and delivery of the Series B Preferred
Shares, and the issuance and delivery of the Series B Conversion Shares, and all
statements contained in any certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.
Section 7.03 BROKERAGE.
Each party hereto will indemnify and hold harmless the others against
and in respect of any claim for brokerage or other commissions relative to this
Agreement or to the
transactions contemplated hereby, based in any way on agreements, arrangements
or understandings made or claimed to have been made by such party with any third
party.
Section 7.04 PARTIES IN INTEREST.
All representations, covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. Without limiting the generality of the foregoing,
all representations, covenants and agreements benefitting the Purchasers shall
inure to the benefit of any and all subsequent holders from time to time of
Series B Preferred Shares or Series B Conversion Shares.
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Section 7.05 NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person or mailed by certified or
registered mail, return receipt requested, or sent by facsimile transmission in
the case of non-U.S. residents, addressed as follows:
(a) If to the Company:
4801 South University Drive, Suite 304 East
Davie, Florida 33328
Attention: Chief Executive Officer
(b) If to any Purchaser, at the address of such Purchaser set
forth in SCHEDULE I, or, in any such case, at such other address or
addresses as shall have been furnished in writing by such party to the
others.
Section 7.06 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
Section 7.07 ENTIRE AGREEMENT.
This Agreement, including the Schedules and Exhibits hereto,
constitutes the sole and entire agreement of the parties with respect to the
subject matter hereof. All Schedules and Exhibits hereto are hereby incorporated
herein by reference.
Section 7.08 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Section 7.09 AMENDMENTS.
This Agreement may not be amended or modified, and no provisions hereof
may be waived, without the written consent of the Company and the holders of at
least two-thirds of the outstanding shares of Common Stock issued or issuable
upon conversion of the Series B Preferred Shares, or in the case of Article VI,
the holders of at least two-thirds of the outstanding shares of Common Stock
issued and issuable upon conversion of the Series B Preferred Shares, voting as
a separate class. To the extent necessary to effectuate the terms of this
Agreement, the Series A Convertible Preferred Stock Purchase Agreement dated as
of February 10, 1994 is hereby amended.
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Section 7.10 SEVERABILITY.
If any provision of this Agreement shall be declared void or
unenforceable by any judicial or administrative authority, the validity of any
other provision and of the entire Agreement shall hot be affected thereby.
Section 7.11 TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are for convenience
only, and are not to be considered in construing or interpreting any term or
provision of this Agreement.
Section 7.12 CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
(a) "affiliate" shall mean a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.
(b) "person" shall mean an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government agency or
any agency or political subdivision thereof, or other entity.
(c) "subsidiary" shall mean, as to the Company, any
corporation of which more than 50% of the outstanding shares having ordinary
voting power to elect a majority the Board of Directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by the
Company, or by one or more of its subsidiaries, or by the Company and one or
more of its subsidiaries.
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IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
Attest: ROADHOUSE GRILL, INC.
/s/ CHARLES D. BARNETT By: /s/ JOHN DAVID TOOLE III
- ---------------------------- ----------------------------------
Secretary Title:
-------------------------------
PURCHASERS:
(BERJAYA GROUP (CAYMAN) LTD.)
By: /s/ ILLEGIBLE
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
FOR PURPOSES OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III
/s/ JOHN Y. BROWN, JR. /S/ J. DAVID TOOLE III
- -------------------------------- -------------------------------------
John Y. Brown, Jr. J. David Toole, III
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of the happening of any contingency) is at the time directly or indirectly owned
by the Company, or by one or more of its subsidiaries, or by the Company and one
or more of its subsidiaries.
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
Attest: ROADHOUSE GRILL, INC.
By:
- -------------------------- ---------------------------------
Secretary Title:
------------------------------
PURCHASERS:
ARAB MULTINATIONAL INVESTMENT CO.
By: /s/ ILLEGIBLE
---------------------------------
SOCIETE FINANCIERE PRIVEE
By: /s/ ILLEGIBLE
---------------------------------
FOR PURPOSES OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III
- ------------------------------- -----------------------------------
John Y. Brown, Jr. J. David Toole, III
of the happening of any contingency) is at the time directly or indirectly owned
by the Company, or by one or more of its subsidiaries, or by the Company and one
or more of its subsidiaries.
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IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
Attest: ROADHOUSE GRILL, INC.
/s/ CHARLES D. BARNETT By: /s/ JOHN DAVID TOOLE III
- ---------------------------- ---------------------------------
Secretary Title: President
------------------------------
PURCHASERS:
GRACE VEMTIRES PARTNERSHIP III
By: Horn Venture Partners II
/s/ ROBERT E. PEDIGO
------------------------------------
Robert E. Pedido
General Partner
FOR PURPOSES OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III
/s/ JOHN Y. BROWN, JR. /s/ J. DAVID TOOLE III
- ------------------------------- -----------------------------------
John Y. Brown, Jr. J. David Toole, III
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SCHEDULE I
PURCHASERS
NUMBER OF
SERIES B PREFERRED AGGREGATE
NAME AND MAILING SHARES TO PURCHASE PRICE
ADDRESS OF PURCHASER BE PURCHASED FOR PREFERRED SHARES
- -------------------- ------------------ --------------------
Grace Ventures Partnership, 300,000 $ 750,000
111, L.P.
20300 Stevens Creek Blvd.
Cupertino, CA 95014
Arab Multinational Investment Co. 400,000 $1,000,000
Societe Financiere Privee 600,000 $1,500,000
Berjaya Group (Cayman) Ltd. 1,000,000 $2,500,000
c/o K. P. Tan
Level 28
Shahzan Prudential Tower
'30 Jalan Sultan Ismail
50250 Kuala Lumpur
Malaysia
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SCHEDULE H
TO PREFERRED STOCK
PURCHASE AGREEMENT
Section 2.01 (a). QUALIFICATIONS.
None
Section 2.01 (b). SUBSIDIARIES, JOINT VENTURES AND AFFILIATES.
2.01 (b) (ii) The Company is a member of North Miami
Roadhouse Grill, L.C., a Florida limited
liability company that owns the Roadhouse
Grill restaurant located at 12599 Biscayne
Boulevard, North Miami, Florida 33181. North
Miami Roadhouse Grill, L.C. owns all of the
issued and outstanding shares of Roadhouse
Grill North Miami, Inc. Roadhouse Grill
North Miami, Inc. holds the lease to the
premises at 12599 Biscayne Boulevard, North
Miami, Florida 33181.
The Company is a member of Kendall Roadhouse
Grill, L.C., a Florida limited liability
company that owns the Roadhouse Grill being
constructed at 7199 S.W. 117th Avenue,
Miami, Florida.
2.01 (b) (iii) The Company may be deemed to have control
over North Miami Roadhouse Grill, L.C. and
Kendall Roadhouse Grill, L.C.
Section 2.04 AUTHORIZED CAPITAL STOCK.
John Y. Brown, Jr. and J. David Toole, 111,
have agreed that in case of the death of
John Y. Brown, Jr., J. David Toole, III
shall have the right to vote the shares of
the Company's common stock owned by the
estate or heirs of John Y. Brown, Jr.
Section 2.05 FINANCIAL STATEMENTS AND PROJECTIONS.
No material change.
Section 2.06 EVENTS SUBSEQUENT TO APRIL 24, 1994.
None
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Section 2.07 LITIGATION.
The Company is the defendant in a lawsuit
entitled Roberts v. Roadhouse Grill, Inc.,
Case No. 93-25277, in the circuit court for
Broward County, Florida. The case alleges
food poisoning from the sale of bad fish. It
is being handled by the Company's insurance
carrier.
The Company is the defendant in a lawsuit
entitled BESWICK V. ROADHOUSE GRILL, INC.,
Case No. 94-03640. The case alleges that the
plaintiff fell in one of the Company's
restaurants. The case is being handled by
the Company's insurance carrier.
The Company is the defendant in a lawsuit
entitled ESCOBAR V. ROADHOUSE GRILL, INC.,
Case No. 94-03289. The case alleges that the
plaintiff fell in one of the Company's
restaurants. The case is being handled by
the Company's insurance carrier.
The Company is the defendant in a lawsuit
entitled PICCIANO V. Roadhouse Grill, Inc.,
Case No. 94-03759. The case alleges that the
plaintiff fell in one of the Company's
restaurants. The case is being handled by
the Company's insurance carrier.
Section 2.09 TITLE TO PROPERTIES.
The Company may be subject to mechanics
liens in connection with recently opened
restaurants and improvements to other
restaurants under development.
The Company has purchased a restaurant site
located at 200 Yacht Club Drive, North Palm
Beach, Florida. The purchase price was $
1,100,000, of which $900,000 was financed by
delivering to the seller a promissory note
bearing interest at eight percent (8%) per
annum payable over ten (10) years and which
is secured by a mortgage on the property.
Section 2.11 INSURANCE.
The Company is in the process of obtaining
key man life insurance as required under
Section 5.05 of the Agreement.
Section 2.13 OTHER AGREEMENTS.
Reference is made to Schedule V.
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Section 2.14 PATENTS, TRADEMARKS, ETC.
The ROADHOUSE GRILL logo was registered as a
service mark in the state of Florida.
Section 2.15 LOANS AND ADVANCES.
None
Section 2.22 OFFICERS.
The following is a list of the names and
titles of the officers of tile Company:
John Y. Brown, Jr. Chairman of the
Board
J. David Toole, III President and
Chief Executive
Officer
J. David Toole, Jr. Vice President
Charles D. Barnett Secretary
Section 2.23 Transactions with Affiliates.
Pursuant to the terms of a series of
promissory notes, the Company owed John Y.
Brown, Jr. an aggregate of $1,591,000 with
interest at 7% per annum. As of April 5,
1994, the Company repaid Mr. Brown
$1,500,000. $91,000 remains outstanding.
Section 2.27 RESTAURANTS UNDER DEVELOPMENT.
The following are restaurants under
development by the Company:
1. Restaurant to be located at 200 Yacht
Club Drive, North Palm Beach, Florida.
2. Restaurant to be located at 7199 S.W.
117th Avenue, Miami, Florida (in the
Kendall area).
3. Restaurant to be located at 1870 Semoran
Boulevard, Winter Park, Florida (in the
Orlando area).
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SCHEDULE IV
TO PREFERRED STOCK
PURCHASE AGREEMENT
SHAREHOLDERS OF THE COMPANY
The following is a list of the shareholders of the Company's common
stock, and the number of shares to be owned by each at the Closing.
NAME NUMBER OF SHARES
- ---- ----------------
John Y. Brown, Jr. 4,300,000
J. David Toole, III 144,445
Berjaya Group (Cayman) Ltd. 2,000,000
The following is a list of the shareholders of the Company's Series A Preferred
stock, and the number of shares to be owned by each at the Closing.
NAME NUMBER OF SHARES
- ---- ----------------
Grace Ventures Partnership 111, L.P. 800,000
J. P. Bolduc 50,000
J. Peter Grace 50,000
D. W. Robbins, Jr. 50,000
Christian F. Horn 50,000
Banque Scandinave En Suisse 1,000,000
Berjaya Group (Cayman) Ltd. 1,000,000
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SCHEDULE V
TO PREFERRED STOCK
PURCHASE AGREEMENT
AGREEMENTS
Unless otherwise defined herein, terms used herein shall have the same
meaning as set forth in the Purchase Agreement dated___________________________
1994 and in Schedule II.
A. The following is a list of certain contracts, agreements and
instruments of the Company.
1. Note payable to John Y. Brown, Jr, in the principal amount of
$91,000.
2. The 1994 Stock Option Plan.
3. The North Miami Roadhouse Grill, L.C. Articles of Organization and
Operating Agreement.
4. The Roadhouse Grill Kendall, L.C. Articles of Organization and
Operating Agreement.
5. Lease Agreement between Prudential-Bache/CNL National Net Lease
Properties, Ltd. and the Company for the restaurant located at 8525
Pines Boulevard, Pembroke Pines, Florida.
6. Sublease Agreement between Meatballs, Inc. and Roadhouse Grill
North Miami, Inc. for the restaurant located at 12599 Biscayne
Boulevard, North Miami, Florida.
7. Lease Agreement between Steve Cohen, as Trustee and the Company for
the restaurant located at 1580 University Drive, Coral Springs,
Florida.
8. Lease Agreement between Wise Oak Corp. and the Company for a
restaurant being developed at 4201 Okeechobee Boulevard, West Palm
Beach, Florida.
9. Lease Agreement between Muben-Lamar, L.P. and the Company for a
restaurant being developed at 7199 S.W. 117th Avenue, Miami,
Florida.
10. Mortgage between the Company and Jean D. Allegretti for the
building where a restaurant is being developed at 200 Yacht Club
Drive, North Palm Beach, Florida.
11. Lease Agreement for a restaurant being developed at 1870 Semoran
Boulevard, Winter Park, Florida.
12. Agreement between J. David Toole, III and John Y. Brown, Jr. dated
July 12, 1992 as amended June 10, 1993.
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13. Agreement with Rodberg Construction Co. for construction and
improvements of the restaurant under development by the Company at
200 Yacht Club Drive, North Palm Beach, Florida.
14. Agreement with Rodberg Construction Co. for construction and
improvements of the restaurant under development by the Company at
7199 S.W. 117th Avenue, Miami, Florida.
15. Agreement with Rodberg Construction Co. for construction and
improvements of the restaurant under development by the Company at
1870 Semoran Boulevard, Winter Park, Florida.
B. The following are agreements, written or oral, to which the Company is a
party that the Company is required to disclose under Section 2.13 of the
Agreement:
Section 2.13 (d) Agreement between J. David Toole, III and John Y.
Brown, Jr. dated July 12, 1992, as amended June 10, 1993 and
which has been assumed by the Company.
Section 2.13 (e) 1. 1994 Stock Option Plan.
2. Stock Option Agreement with J. David Toole, 111.
3. An apartment is being furnished to certain of the employees
of the Company at a monthly rental of $600 per month on an
interim basis.
Section 2.13 (f) Reference is made to the notes, leases and other instruments
listed in Section A to this Schedule V.
Section 2.13 (i) Reference is made to the leases listed in Section A to this
Schedule V.
Section 2.13 (k) Agreement dated August 5, 1992 between John Y. Brown, Jr. and
G.T. McDonald Enterprises, Inc. and for which an amendment is
being negotiated.
Agreement between Americana Entertainment Group, Inc. and John
Y. Brown and David Toole dated August 1992 which was amended
as of October 7, 1992.
Agreement between the Company and Lone Star Roasters dated as
of May 17, 1993.
Section 2.13 (m) Reference is made to the agreements listed under Section 2.13
(k).
Section 2.13 (n) Reference is made to the agreements listed in Section A to
this Schedule V.
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EXHIBIT 10.18
STOCK PURCHASE AGREEMENT
BETWEEN
ROADHOUSE GRILL, INC.
AND
BERJAYA GROUP (CAYMAN) LIMITED
DATED AS OF SEPTEMBER 26, 1994
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - THE COMMON SHARES.................................................1
Section 1.01 Issuance, Sale and Delivery of the Common Shares.............1
Section 1.02 Closing......................................................1
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................2
Section 2.01 Organization, Qualification and Corporate Power..............2
Section 2.02 Authorization of Agreements, Etc.............................2
Section 2.03 Validity.....................................................3
Section 2.04 Authorized Capital Stock.....................................3
Section 2.05 Financial Statements.........................................4
Section 2.06 Events Subsequent to the Date of the Balance Sheet...........5
Section 2.07 Litigation: Compliance with Law..............................6
Section 2.08 Proprietary Information of Third Parties.....................6
Section 2.09 Title to Properties..........................................7
Section 2.10 Leasehold Interests..........................................7
Section 2.11 Insurance....................................................7
Section 2.12 Taxes........................................................8
Section 2.13 Other Agreements.............................................8
Section 2.14 Patents, Trademarks, Etc....................................10
Section 2.15 Loans and Advances..........................................11
Section 2.16 Assumptions, Guaranties, Etc. of Indebtedness of Other........
Persons.....................................................11
Section 2.17 Significant Suppliers and Licensees.........................11
Section 2.18 Governmental Approvals......................................11
Section 2.19 Disclosure..................................................12
Section 2.20 Offering of the Common Stock................................12
Section 2.21 Brokers.....................................................12
Section 2.22 Officers....................................................12
Section 2.23 Transactions With Affiliates................................13
Section 2.24 Employees...................................................13
Section 2.25 U.S. Real Property Holding Corporation......................13
Section 2.26 License.....................................................13
Section 2.27 Restaurants Under Development...............................13
Section 2.28 Compliance With Franchise Laws..............................14
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ARTICLE III- REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER..................................................... 14
ARTICLE IV - CONDITIONS TO THE CLOSING.......................................15
Section 4.01 Conditions to the Obligations of the Purchaser..............15
ARTICLE V - COVENANTS OF THE COMPANY.........................................16
Section 5.01 Financial Statements, Reports, Etc..........................17
Section 5.02 Right of First Refusal......................................18
Section 5.03 Corporate Existence.........................................19
Section 5.04 Properties, Business, Insurance.............................19
Section 5.05 Restrictive Agreements Prohibited...........................19
Section 5.06 Transactions with Affiliates................................19
Section 5.07 Expenses of Directors.......................................19
Section 5.08 Use of Proceeds.............................................20
Section 5.09 Board of Directors Meetings.................................20
Section 5.10 Compensation.................................................20
Section 5.11 By-Laws......................................................20
Section 5.12 Maintenance of Ownership of Subsidiaries.....................20
Section 5.13 Distributions by Subsidiaries................................20
Section 5.14 Compliance with Laws.........................................21
Section 5.15 Keeping Records and Books of Account.........................21
Section 5.16 U.S. Real Property Interest Statement........................21
ARTICLE VI - AGREEMENT TO ENTER INTO A VOTING TRUST..........................21
Section 6.01 Special Vote................................................21
ARTICLE VII - CONSENTS BY PURCHASER..........................................22
Section 7.01 Employment Agreement with T. David Toole, III...............22
Section 7.02 Right to Sell Shares........................................22
Section 7.03 Sale of Shares by Brown.....................................23
ARTICLE VIII - MISCELLANEOUS.................................................23
Section 8.01 Expenses.....................................................23
Section 8.02 Survival of Agreements.......................................23
Section 8.03 Brokerage....................................................23
Section 8.04 Parties in Interest..........................................24
Section 8.05 Notices......................................................24
Section 8.06 Governing Law................................................24
Section 8.07 Entire Agreement.............................................24
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Section 8.08 Counterparts................................................25
Section 8.09 Amendments................................................. 25
Section 8.10 Severability.................................................25
Section 8.11 Titles and Subtitles.........................................25
Section 8.12 Certain Defined Terms........................................25
INDEX TO EXHIBITS:
EXHIBIT A: Form of Berjaya Registration Rights Agreement
EXHIBIT B: Restated Certificate of Incorporation
EXHIBIT C: Form of Confidentiality Agreement
-iii-
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of September 26, 1994
-------
between ROADHOUSE GRILL, INC., a Florida corporation (the "Company"), and
Berjaya Group (Cayman) Limited ("Purchaser").
WHEREAS, the Company wishes to issue and sell to the Purchaser shares
of the authorized but unissued Common Stock, $.01 par value, of the Company (the
"Common Stock"); and
WHEREAS, the Purchaser wishes to purchase the shares of Common Stock on
the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
THE COMMON SHARES
Section 1.01 ISSUANCE, SALE AND DELIVERY OF THE COMMON SHARES.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, the Company agrees
to issue and sell to Purchaser, and Purchaser hereby agrees to purchase from the
Company, 3,100,000 shares of Common Stock at a price of $3.10 per share.
Section 1.02 CLOSING.
The closing under this Agreement shall take place at the offices of the
Company within fourteen (14) days following receipt of approval from the
Department of Justice and/or the Federal Trade Commission in connection with the
required notifications filed by each of the Purchaser and the Company under the
Hart-Scott-Rodino Act (such closing being called the "Closing" and such dated
and time being called the "Closing Date"). At the Closing, the Company shall
deliver to Purchaser a certificate registered in the name of Purchaser
representing the number of shares to be purchased by Purchaser from the Company,
against payment by such Purchaser to the Company of the full purchase price in
the amount of $9,610,000 by wire transfer of immediately available funds or as
otherwise agreed by the Company and the Purchaser.
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that, except as
set forth in the Disclosure Schedule attached as SCHEDULE II (which Disclosure
Schedule makes explicit reference to the particular representation or warranty
as to which exception is taken, which in each case shall constitute the sole
representation and warranty as to which such exception shall apply):
Section 2.01 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
(a) The Company is a corporation incorporated and organized
under the laws of the State of Florida and its status is active, and it is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing in each jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification. The Company has the corporate power
and authority to own and hold its properties and to carry on its business as now
conducted and as proposed to be conducted, to execute, deliver and perform this
Agreement and the Registration Rights Agreement with the Purchaser in the form
attached as EXHIBIT A ("Berjaya Registration Rights Agreement") and to issue,
sell and deliver the Common Stock.
(b) Except as provided in SCHEDULE II, the Company has no
subsidiaries and does not own of record or beneficially, directly or indirectly,
(i) any shares of capital stock or securities convertible into capital stock of
any other corporation, or (ii) any participating interest in any partnership,
joint venture or other non-corporate business enterprise, or (iii) control,
directly or indirectly, any other entity.
Section 2.02 AUTHORIZATION OF AGREEMENTS, ETC.
(a) The execution and delivery by the Company of this
Agreement and the Berjaya Registration Rights Agreement, the performance by the
Company of its obligations hereunder and thereunder, and the issuance, sale and
delivery of the Common Stock have been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, the Articles of Incorporation of the
Company, as amended or supplemented (the "Charter"), or the By-Laws of the
Company, or any provision of any indenture, agreement or other instrument to
which the Company or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company.
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<PAGE>
(b) The shares of Common Stock have been duly authorized and,
when issued in accordance with this Agreement, will be validly issued, fully
paid and nonassessable with no personal liability attaching to the ownership
thereof and will be free and clear of all liens, charges, restrictions, claims
and encumbrances imposed by or through the Company except as set forth in the
Berjaya Registration Rights Agreement and the 1994 Voting Agreement dated as of
February 10, 1994 ("1994 Voting Agreement") or as set forth elsewhere herein.
The issuance, sale or delivery of the shares of Common Stock is not subject to
any preemptive right of stockholders of the Company or to any right of first
refusal or other right in favor of any person.
Section 2.03 VALIDITY.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms. The Berjaya Registration Rights Agreement, when it
is executed and delivered in accordance with this Agreement, will constitute a
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms.
Section 2.04 AUTHORIZED CAPITAL STOCK.
Immediately prior to the Closing, the authorized capital stock of the
Company will consist of (i) 10,000,000 shares of Preferred Stock, $.01 par value
(the "Preferred Stock"), of which 3,525,000 have been designated Series A
Convertible Preferred Stock and 2,366,700 shares have been designated Series B
Convertible Preferred Stock, and (ii) 30,000,000 shares of Common Stock.
Immediately prior to the Closing, 6,444,445 shares of Common Stock will be
validly issued and outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof, 3,525,000 shares of Series A
Convertible Preferred Stock will be validly issued and outstanding, fully paid
and nonassessable with no personal liability attaching to the ownership thereof
and 2,300,000 shares of Series B Convertible Preferred Stock will be validly
issued and outstanding, fully paid and nonassessable with no personal liability
attaching to the ownership thereof. Certain individuals who own shares of the
Series A Preferred Stock have the right to purchase up to 66,700 shares of the
Series B Preferred Stock at a prices of $2.50 per share. Such right shall
terminate upon thirty (30) days written notices to such stockholders. The
stockholders of record of the Company and the number of shares of Common Stock
and Preferred. Stock held by each are set forth in the attached SCHEDULE IV, and
except as set forth herein and as contemplated by this Agreement, there are no
subscriptions, warrants, options, convertible securities, and other rights
(contingent or otherwise) to purchase or otherwise acquire equity securities of
the Company. The Company has granted an option to J. David Toole, III to
purchase 355,555 shares of Common Stock at $.15 per share (the "Toole Option").
In connection with this transaction, the Company intends to grant an option to
J. David Toole, III to purchase 500,000 shares of Common Stock at $2.50 per
share (the "Second Toole Option") to vest equally per year at the end of the
next 3 years. The Company has adopted a 1994 Stock Option Plan providing for the
issuance of not more than 200,000 shares of Common Stock (the "Option Plan") and
form of option agreements for the issuance of options to purchase shares of the
Company's Common Stock to employees and consultants of the Company and members
of the Board of Directors who are not employees. Except
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<PAGE>
for the shares of Common Stock issuable upon the conversion of the Series A
Preferred Shares, the Series B Preferred Shares, and the 200,000 shares of
Common Stock reserved for issuance pursuant to the Option Plan, and the 355,555
and 500,000 shares of Common Stock reserved for issuance pursuant to the Toole
Option and the Second Toole Option, respectively, no shares of Common Stock or
other capital stock of the Company are reserved for possible future issuance.
The designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
the Company are as set forth in the Charter, a copy of which is attached as
EXHIBIT B, and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
and in accordance with all applicable laws. Except as set forth in the attached
SCHEDULE II or SCHEDULE IV, (i) no person owns of record or is known to the
Company to own beneficially any share of Common Stock or capital stock of the
Company, (ii) no subscription, warrant, option, convertible security, or other
right (contingent or otherwise) to purchase or otherwise acquire equity
securities of the Company is authorized or outstanding, and (iii) there is no
commitment by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to holders of any
of its equity securities any evidence of indebtedness or asset. Except as
provided for in the Charter, or as set forth in the attached SCHEDULE II or
SCHEDULE IV, the Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in
respect thereof. Except as provided in this Agreement or in the 1994 Voting
Agreement, to the best of the Company's knowledge, there are no voting trusts or
agreements, stockholders' agreements, pledge agreements, buy-sell agreements,
rights of first refusal, preemptive rights or proxies relating to any securities
of the Company or any of its subsidiaries (whether or not the Company or any of
its subsidiaries is a party thereto), except as set forth in the attached
SCHEDULE II or SCHEDULE IV. All of the outstanding securities of the Company
were issued in compliance with all applicable Federal and state securities laws.
Section 2.05 FINANCIAL STATEMENTS.
(a) The Company has furnished to the Purchaser the audited
balance sheet of the Company as of January 2, 1994, and the related statements
of operations, changes in shareholders' deficiency and cash flows of the Company
for the year ended January 2, 1994. The Company has furnished to the Purchaser
the unaudited balance sheet of the Company as of ____________________ 1994
("Balance Sheet"), and the related statements of operations of the Company for
the period ended _________________________ 1994. All such financial statements
have been prepared in accordance with the generally accepted accounting
principles consistently applied and fairly present the financial position of the
Company as of such dates and the results of its operations for the periods then
ended. Since the date of the Balance Sheet, other than as disclosed in SCHEDULE
II, (i) there has been no material change in the assets, liabilities or
financial condition of the Company from that are reflected in the Balance Sheet
except for changes in the ordinary course of business which in the aggregate
have not been materially adverse, and (ii) none of the business, prospects,
financial condition, operations, property or affairs of the Company have been
materially adversely affected by any occurrence or development, individually or
in the aggregate, whether or not insured against.
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<PAGE>
(b) Except as provided in documents referred to in SCHEDULE V
hereto, the Company any has no material liability or obligation, absolute or
contingent (individually or in the aggregate), including, without limiting the
generality of the foregoing, any tax liabilities due or to become due, not
reflected in the above referred to financial statements, except (i) obligations
and liabilities incurred after the date of the Balance Sheet in the ordinary
course of business that are not individually or in the aggregate material, and
(ii) obligations and liabilities incurred in the ordinary course of business
that would not be required to be reflected in financial statements prepared in
accordance with generally accepted accounting principles. Without limiting the
generality of the foregoing, the Company does not know, and has no reasonable
ground to know, of any basis for the assertion against the Company as of the
date hereof of any material liabilities (not reflected in SCHEDULE V(A) or the
above referred to financial statements.)
Section 2.06 EVENTS SUBSEQUENT TO THE DATE OF THE BALANCE SHEET.
Since the date of the Balance Sheet, other than as disclosed on
SCHEDULE II, the Company has not (i) issued any stock, bond or other corporate
security or partnership interest, (ii) borrowed any amount or incurred or become
subject to any liability (absolute, accrued or contingent), except current
liabilities incurred and liabilities under contracts entered into in the
ordinary course of business, (iii) discharged or satisfied any lien or
encumbrance or incurred or paid any obligation or liability (absolute, accrued
or contingent) other than current liabilities shown on the Balance Sheet and
current liabilities incurred since the date of the Balance Sheet in the ordinary
course of business and in connection with the development of the Company's
restaurants, (iv) declared or made any payment or distribution to stockholders
or partners or purchased or redeemed any share of its capital stock or
partnership interests or other security, (v) mortgaged, pledged or subjected to
lien any of its assets, tangible or intangible, other than liens of current real
property taxes not yet due and payable, (vi) sold, assigned or transferred any
of its tangible assets except in the ordinary course of business, or canceled
any debt or claim, (vii) sold, assigned, transferred or granted any exclusive
licenses with respect to any patent, trademark, trade name, service mark,
copyright, trade secret or other intangible asset, except rights or licenses
granted in the ordinary course of business to licensees of the Company,
(viii)suffered any loss of property or waived any right of substantial value
whether or not in the ordinary course of business, (ix) made any material change
in officer compensation, (x) made any material change in the manner of business
or operations, (xi) entered into any transaction except in the ordinary course
of business or as otherwise contemplated hereby, (xii) entered into any
commitment (contingent or otherwise) to do any of the foregoing, or (xiii)
engaged in any transaction with any director, officer, employee, stockholder or
partner of the Company.
Section 2.07 LITIGATION: COMPLIANCE WITH LAW.
Other than (a) routine litigation occurring in the ordinary course of
business against which the Company is adequately insured, (b) the matters
described in the attached SCHEDULE II, or (c) in the case of a threatened
action, suit, claim, proceeding or investigation, one that is not material to
the Company or its business, there is no (i) action, suit, claim, proceeding or
investigation pending or, to the best of the Company's knowledge, threatened
against or affecting the Company, at law or in equity, or before or by any
Federal, State, municipal or other governmental department, commotion,
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<PAGE>
board, bureau, agency or instrumentality, domestic or foreign, (ii) arbitration
proceeding relating to the Company pending under collective bargaining
agreements or otherwise, or (iii) governmental inquiry pending or, to the best
of the Company's knowledge, threatened against or affecting the Company
(including without limitation any inquiry as to the qualification of the Company
to hold or receive any license or permit), and to the Company's knowledge, there
is no basis for any of the foregoing. Except as described in the attached
SCHEDULE II, the Company has not received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to its
business, prospects, financial condition, operations, properties or affairs. The
Company is not in default with respect to any order, writ, injunction or decree
known to or served upon the Company of any court or of any Federal, State,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. Except as described in the attached
SCHEDULE II, there is no action or suit by the Company pending or threatened
against others. The Company has complied in all material respects with all laws,
rules, regulations and orders which are material and applicable to its business,
operations, properties, assets, products and services, and the Company has all
necessary permits, licenses and other authorizations required to conduct its
business as conducted and as proposed to be conducted in all material respects,
including all laws regulating the development and operation of restaurants and
all applicable environmental laws. There is no existing law, rule, regulation or
order, and the Company is not aware of any proposed law, rule, regulation or
order, whether Federal or state, which would prohibit or restrict the Company
from, or otherwise materially adversely affect the Company in, conducting its
business in any jurisdiction in which it is now conducting business or in which
it proposes to conduct business.
Section 2.08 PROPRIETARY INFORMATION OF THIRD PARTIES.
Except as disclosed in the attached SCHEDULE II, no third party has
claimed or has reason to claim that any person now or previously employed or
engaged as a consultant by the Company has (a) violated or, to the Company's
knowledge, may be violating any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or, to the best of the Company's knowledge, may be disclosing or utilized or, to
the best of the Company's knowledge, may be utilizing any trade secret or
proprietary relationship which information or documentation of such third party
or violated any confidential relationship which such person may have had with
such third party in connection with the development, manufacture or sale of any
product or proposed product or the development or sale of any service or
proposed service of the Company, or (c) interfered or may be interfering in the
employment relationship between such third party and any of its present or
former employees. Except as described in the attached SCHEDULE II, no third
party has requested information from the Company which reasonably suggests that
such a claim might be contemplated. To the best of the Company's knowledge, none
of the execution or delivery of this Agreement, or the carrying on of the
business of the Company as officers, employees or agents by any officer,
director or key employee of the Company, or the conduct or proposed conduct of
the business of the Company, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such person is obligated.
-6-
<PAGE>
Section 2.09 TITLE TO PROPERTIES.
The Company has good and marketable title to its properties and assets
reflected on the Balance Sheet, or acquired by it since the date of the Balance
Sheet (other than properties and assets disposed of in the ordinary course of
business since the date of the Balance Sheet), and all such properties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges, claims, restrictions and other encumbrances, except for liens for
current taxes not yet due and payable and minor imperfections of title, if any,
not material in nature or amount and not materially detracting from the value or
impairing the use of the property subject thereto or impairing the operations or
proposed operations of the Company, except as reflected on the Balance Sheet or,
with respect to properties and assets acquired after the date of the Balance
Sheet, except as disclosed in the attached SCHEDULE II.
Section 2.10 LEASEHOLD INTERESTS.
Each lease or agreement to which the Company is a party under which it
is a lessee of any property, real or personal, is a valid and subsisting
agreement, without any material default of the Company thereunder and, to the
best of the Company's knowledge, without any material default thereunder of any
other party thereto. No event has occurred and is continuing which, with due
notice or lapse of time or both, would constitute a default or event of default
by the Company under any such lease or agreement or, to the best of the
Company's knowledge, by any other party thereto. The Company's possession of
such property has not been disturbed and, to the best of the Company's
knowledge, no claim has been asserted against the Company adverse to its rights
in such leasehold interests.
Section 2.11 INSURANCE.
The Company holds valid policies covering all of the insurance required
to be maintained by it under Section 5.05.
Section 2.12 TAXES.
The Company has filed all tax returns, Federal, state, county and
local, required to be filed by it and, with respect to such state, county and
local returns, if not filed would have a material adverse effect on its
financial condition or operations, and the Company paid all taxes shown to be
due by such returns as well as all other taxes, assessments and governmental
charges which have become due or payable, including without limitation all taxes
which the Company is obligated to withhold from amounts owing to employees,
creditors and third parties. All such taxes with respect to which the Company
has become obligated pursuant to elections made by the Company in accordance
with generally accepted practice have been paid and adequate reserves have been
established for all taxes accrued but not yet payable. The Federal income tax
returns of the Company have never been audited by the Internal Revenue Service.
No deficiency assessment with respect to or proposed adjustment of the Company's
Federal, state, county or local taxes is pending or, to the best of the
Company's knowledge, threatened. There is no tax lien, whether imposed by any
Federal,
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state, county or local taxing authority, outstanding against the assets,
properties or business of the Company. Except as set forth in the attached
SCHEDULE II. neither the Company nor any of its stockholders have ever filed a
consent pursuant to Section 341(f) of the Internal Revenue Code ("Code"),
relating to collapsible corporations.
Section 2.13 OTHER AGREEMENTS.
Except as set forth in the attached SCHEDULE V(A) and the documents to
be executed in connection with the transactions contemplated by this Agreement,
the Company is not a party to or otherwise bound by any written or oral contract
or instrument or, to the knowledge of the Company, other restriction which
individually or in the aggregate could materially adversely affect the business,
prospects, financial condition, operations, property or affairs of the Company.
Except as set forth in the attached SCHEDULE V(B), the Company is not a party to
or otherwise bound by any written or oral:
(a) contract with any labor union (and, to the knowledge of
the Company, no organizational effort is being made with respect to any of its
employees);
(b) contract or other commitment with any supplier containing
any provision permitting any party other than the Company to renegotiate the
price or other terms pursuant to which the Company has or is expected to
purchase in excess of $50,000 worth of products or services during any twelve
month period;
(c) contract for the future purchase of fixed assets or for
the future purchase of materials, supplies or equipment in excess of its normal
operating requirements;
(d) contract for the employment of any officer, employee or
other person (whether of a legally binding nature or in the nature of informal
understandings) on a full time or consulting basis which is not terminable on
notice without cost or other liability to the Company, except normal severance
arrangements and accrued vacation pay;
(e) bonus, pension, profit sharing, retirement,
hospitalization, insurance, stock purchase, stock option or other plan, contract
or understanding pursuant to which benefits are provided to any employee of the
Company (other than group insurance plans applicable to employees generally);
(f) agreement or indenture relating to the borrowing of money
or to the mortgaging or pledging of, or, otherwise placing a lien or security
interest on, any asset of the Company;
(g) guaranty of any obligation for borrowed money or
otherwise;
(h) voting trust or agreement, stockholders' agreement, pledge
agreement, buy-sell agreement or first refusal or preemptive rights agreement
relating to any securities of the Company;
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<PAGE>
(i) agreement, or group of related agreements with the same
party or any group of affiliated parties, under which the Company has advanced
or agreed to advance money or has agreed to lease any property as lessee or
lessor;
(j) agreement or obligation (contingent or otherwise) to
issue, sell or otherwise distribute or to repurchase or otherwise acquire or
retire any share of its capital stock, partnership interest or any of its other
equity securities;
(k) assignment, license or other agreement with respect to any
form of intangible property;
(l) agreement under which it has granted any person any
registration rights, other than the 1994 Registration Rights Agreement, as
amended, and the Berjaya Registration Rights Agreement;
(m) agreement under which it has limited or restricted its
right to compete with any person in any respect;
(n) other contract or group of related contracts with the same
party involving more than $25,000 or continuing over a period of more than six
months from the date or dates thereof (including renewals or extensions optional
with another party), which contract or group of contracts is not terminable by
the Company without penalty upon notice of thirty (30) days or less; or
(o) other contract, instrument, commitment, plan or
arrangement, a copy of which would be required to be filed with the Securities
and Exchange Commission (the "Commission") as an exhibit to a registration
statement on Form S-1 pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act of 1933 (the "Securities Act") if the Company were registering
securities under the Securities Act.
The Company, and to the best of the Company's knowledge, each other
party thereto have in all material respects performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default, in any material respect, (with due notice or lapse of time
or both), under any lease, agreement, or contract now in effect to which the
Company is a party or by which it or its property may be bound. The Company is
not in violation of any provision of its Charter or By-Laws. The Company has no
present expectation or intention of not fully performing all its obligations
under each such lease, contract or other agreement in all material respects, and
the Company has no knowledge of any breach and has received no written notice of
any anticipated breach by the other party to any contract or commitment to which
the Company is a party.
Section 2.14 PATENTS, TRADEMARKS, ETC.
Set forth in SCHEDULE II is a list and brief description of all
patents, patent rights, patent applications, trademarks, trademark applications,
service marks, service mark applications, trade
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names and copyrights, and all applications for such which are in the process of
being prepared, owned by or registered in the name of the Company, or of which
the Company is a licensor or licensee or in which the Company has any right, and
in each case a brief description of the nature of such right. The Company owns
or possesses adequate licenses or other rights to use, free and clear of all
liens, claims and restrictions, all patents, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names,
copyrights, manufacturing processes, formulae, trade secrets and know how
(collectively, "Intellectual Property") necessary to the conduct of its business
as conducted and as currently planned to be conducted, and no claim is pending
or, to the best of the Company's knowledge, threatened to the effect that the
operations of the Company infringe upon or conflict with the asserted rights of
any other person under any Intellectual Property, and to the best of the
Company's knowledge, there is no basis for any such claim (whether or not
pending or threatened). No claim is pending or threatened to the effect that any
such Intellectual Property owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company and, to the best of the Company's knowledge, there is no basis for any
such claim (whether or not pending or threatened). The Company is not obligated
or under any liability whatsoever to make any payments by way of royalties, fees
or otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service mark, trade name, copyright or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business or
otherwise. To the best of the Company's knowledge, all proprietary technology
developed by and belonging to the Company and material to its business which has
not been patented has been kept confidential by the Company, its employees and
licensees. Except as set forth in SCHEDULE II, the Company has not granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the proprietary products or proposed proprietary
services of the Company that are material to its business.
Section 2.15 LOANS AND ADVANCES.
Except as described in the attached SCHEDULE II, the Company does not
have any outstanding loans or advances to any person and is not obligated to
make any such loans or advances, except, in each case, for advances to employees
of the Company in respect of reimbursable business expenses anticipated to be
incurred by them in connection with their performance of services for the
Company.
Section 2.16 ASSUMPTIONS, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS.
The Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
Section 2.17 SIGNIFICANT SUPPLIERS AND LICENSEES.
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No supplier or licensee during the period covered by the financial
statements referred to in Section 2.05 or which has been material to the Company
thereafter, has terminated, materially reduced or, to the knowledge of the
Company, threatened to terminate or materially reduce its provision of products
or services to the Company or has terminated or materially amended or modified a
license agreement.
Section 2.18 GOVERNMENTAL APPROVALS.
Subject to the accuracy of the representations and warranties of the
Purchaser set forth in Article III, no registration or filing with, or consent
or approval of or other action by, any Federal, state or other governmental
agency or instrumentality is or will be necessary for the valid execution,
delivery and performance by the Company of this Agreement or the Berjaya
Registration Rights Agreement, or the issuance, sale and delivery of the Common
Stork, other than (i) filings pursuant to Federal and State securities laws (all
of which filings have been or, with respect to those filings which may be duly
made after the Closing will be, made by or on behalf of the Company) in
connection with the sale of the Common Stock, (ii) with respect to the 1994
Registration Rights Agreement, as amended, the registration of the shares
covered thereby with the Commission and filings pursuant to Federal and state
securities laws, (iii) with respect to the Berjaya Registration Rights
Agreement, the registration of the shares covered thereby with the Commission
and filings pursuant to Federal and State Securities laws, and (iv) filings with
the Department of Justice and the Federal Trade Commission in connection with
required notifications under the Hart-Scott-Rodino Act.
Section 2.19 DISCLOSURE.
This Agreement, including any Schedule or Exhibit to this Agreement,
does not contain an untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
None of the statements, documents, certificates or other items prepared or
supplied by the Company with respect to the transactions contemplated hereby
contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading. There is no
fact which the Company has not disclosed to the Purchaser and its counsel in
writing and of which the Company is aware which materially and adversely affects
or could materially and adversely affect the business, prospects, financial
condition, operations, property or affairs of the Company.
Section 2.20 OFFERING OF THE COMMON STOCK.
Neither the Company nor any person authorized or employed by the
Company as agent, broker, dealer or otherwise in connection with the offering or
sale of the Common Stock or any security of the Company similar to the Common
Stock has offered the Common Stock or any such similar security for sale to, or
solicited any offer to buy the Common Stock or any such similar security from,
or otherwise approached or negotiated with respect thereto with, any person or
persons, and neither the Company nor any person acting on its behalf has taken
or will take any other action (including, without limitation, any offer,
issuance or sale of any security of the Company under
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circumstances which might require the integration of such security with the
Common Stock under the Securities Act or the rules and regulations of the
Commission thereunder), in either case so as to subject the offering, issuance
or sale of the Common Stock to the registration provisions of the Securities
Act.
Section 2.21 BROKERS.
Except as set forth in the attached SCHEDULE II, the Company has no
contract, arrangement or understanding with any broker finder or similar agent
with respect to the transactions contemplated by this Agreement.
Section 2.22 OFFICERS.
Set forth in SCHEDULE II is a list of the names of the officers of the
Company, together with the title or job classification of each such person.
Except as set forth in SCHEDULE II, none of such persons has an employment
agreement or understanding, whether oral or written, with the Company or any of
its subsidiaries, which is not terminable on notice by the Company or such
subsidiary, without cost or other liability to the Company or such subsidiary.
Section 2.23 TRANSACTIONS WITH AFFILIATES.
Except as set forth in the attached SCHEDULE II, no director, officer,
employee or stockholder of the Company, or member of the family of any such
person, or any corporation, partnership, trust or other entity in which any such
person, or any member of the family of any such person, has a substantial
interest or is an officer, director, trustee, partner or holder of more than
five percent of the outstanding capital stock thereof, is presently or
contemplated to be a party to any transaction with the Company, including any
contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or otherwise
requiring payments to any such person or firm.
Section 2.24 EMPLOYEES.
Each of the officers of the Company, each key employee and each other
employee now employed by the Company who has access to proprietary business
information of the Company including, without limitation, the Company's recipes,
operating system, business strategy and other information related to the
operations of the Company, has executed an Employee Confidential Disclosure
Agreement substantially in the form of EXHIBIT C attached hereto (collectively,
the "Confidentiality Agreements"), and the Confidentiality Agreements are in
full force and effect. No officer or key employee of the Company has advised the
Company (orally or in writing) that he or she intends to terminate employment
with the Company. The Company has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes, and with the Employee Retirement
Income Security Act of 1974, as amended.
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Section 2.25 U.S. REAL PROPERTY HOLDING CORPORATION.
The Company is not now and has never been a United States real property
holding corporation, as defined in Section 897(c)(2) of the Code and Section
1.987-2(b) of the Regulations promulgated by the Internal Revenue Service.
Section 2.26 LICENSE.
Except as set forth in SCHEDULE II, all of the Company's license
agreements are in good standing, full force and effect as of the date hereof and
no party to any such agreements is in material default thereof.
Section 2.27 RESTAURANTS UNDER DEVELOPMENT.
SCHEDULE II describes all currently outstanding plans, arrangements,
contracts, agreements or negotiations relating to the purchase, development,
construction or renovation of restaurants by the Company.
Section 2.28 COMPLIANCE WITH FRANCHISE LAWS.
The Company has complied with the applicable laws, rules and
regulations relating to franchising in all jurisdictions where the conduct of
the Company's business requires such qualification to the extent necessary such
that any failure to so comply will not have a material adverse effect upon the
Company or its operations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning of Rule
501 under the Securities Act and was not organized for the specific purpose of
acquiring the shares of Common Stock;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company and it is able financially to bear the risks thereof;
(c) it has received and reviewed the financial statements and
projections of the Company, and it has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management;
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(d) it has made an independent investigation of the business
of the Company and is making this investment as a result of this investigation
and not as a result of any projections made by the Company;
(e) the Common Stock being purchased by it are being acquired
for its own account for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof;
(f) it understands that (i) the Common Stock has not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) or Section 3(b) thereof or Rule 505 or 506 promulgated under the
Securities Act, (ii) the Common Stock must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration, (iii) the Common Stock will bear a legend to such
effect, and (iv) the Company will make a notation on its transfer books to such
effect;
(g) if an entity and not a natural person, it is validly
existing under the laws of the state of its organization and the consummation of
the transactions contemplated hereby is authorized by, and will not result in a
violation of, state law or its Charter or other organizing documents; and
(h) it has full right, power and authority to execute this
Agreement and the Berjaya Registration Rights Agreement and to perform its
obligations hereunder and thereunder.
ARTICLE IV
CONDITIONS TO THE CLOSING
Section 4.01 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.
The obligations of Purchaser to purchase and pay for the Common Stock
being purchased by it on the Closing Date is, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) PERFORMANCE. The Company shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the Chief Executive Officer of the
Company shall have certified to the Purchaser in writing to such effect and to
the further,effect that all of the conditions set forth in this Article IV have
been satisfied.
(b) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and
other proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchaser and the Purchaser shall have received all
such counterpart originals or certified or other copies of such documents as it
reasonably may request.
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(c) SUPPORTING DOCUMENTS. The Purchaser shall have received
copies of the following documents:
(i) (A) the Charter, certified as of a recent date by
the Secretary of State of the State of Florida, and (B) a certificate of said
Secretary dated as of a recent date as to the active status of the Company and
listing all documents of the Company on file with said Secretary;
(ii) a certificate of the Secretary or an Assistant
Secretary of the Company dated the Closing Date and certifying: (A) that
attached thereto is a true and complete copy of the By-Laws of the Company as in
effect on the date of such certification; (B) that attached thereto is a true
and complete copy of all resolutions adopted by the Board of Directors or the
stockholders of the Company authorizing the execution, delivery and performance
of this Agreement, the Berjaya Registration Rights Agreement, the issuance, sale
and delivery of the Common Stock and that all such resolutions are in full force
and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement and the Berjaya Registration Rights
Agreement; (C) that the Charter has not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to clause (i)(B)
above; and to the incumbency and specimen signature of each officer of the
Company executing this Agreement, the Berjaya Registration Rights Agreement, the
stock certificates representing the Common Stock and any certificate or
instrument furnished pursuant hereto, and a certification by another officer of
the Company as to the incumbency and signature of the officer signing the
certificate referred to in this clause (ii); and (iii) such additional
supporting documents and other information with respect to the operations and
affairs of the Company as the Purchaser or its counsel reasonably may request.
(d) BERJAYA REGISTRATION RIGHTS AGREEMENT. The Company shall
have executed and delivered the Berjaya Registration Rights Agreement in the
form attached as EXHIBIT A.
(e) WAIVER OF RIGHT OF FIRST REFUSAL. Each of the holders of
shares of the Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock shall deliver to the Company and Purchaser a waiver of their
right of first refusal on the sale and issuance of the Common Stock being sold
hereunder.
(f) ADDITIONAL AGREEMENTS. The Company shall have delivered
such other agreements and instruments as the Purchaser shall have reasonably
requested.
All such documents shall be satisfactory in form and substance to the
Purchaser.
Section 4.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to sell the Common Stock being sold by it
on the Closing Date is, at its option, subject to the satisfaction, on or before
the Closing Date, of the following conditions:
(a) BERJAYA REGISTRATION RIGHTS AGREEMENT. The Purchaser shall
have accepted the terms of and executed and delivered the Berjaya Registration
Rights Agreement.
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(b) ADDITIONAL AGREEMENTS. The Purchaser shall have delivered
such other agreements and instruments as the Company shall have reasonably
requested.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with Purchaser that until the earlier
to occur of: (i) Purchaser owns less than fifty percent (50%) of the shares of
Common Stock being acquired hereunder or (ii) the consummation of the first firm
commitment underwritten public offering of the Company's Common Stock pursuant
to an effective Registration Statement on Form S-1 or SB-2 (or its then
equivalent) under the Securities Act (the "Initial Public Offering"), where the
aggregate sales price of the Common Stock (before deductions of underwriting
discounts and expenses of sale) is not less than $10,000,000 and the price per
share of the Common Stock is at least thirty percent (30%) more than the price
per share being paid by Purchaser for the Common Stock being purchased from the
Company hereunder.
Section 5.01 FINANCIAL STATEMENTS, REPORTS, ETC.
The Company shall furnish:
(a) to Purchaser, within ninety (90) days after the end of
each fiscal year of the Company, or as soon as practicable thereafter, a
consolidated balance sheet of the Company and its subsidiaries as of the end of
such fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended, prepared in
accordance with generally accepted accounting principles and certified by
Coopers & Lybrand or such other "Big 6" accounting firm selected by the Board of
Directors of the Company and an annual report containing a narrative discussion
of the results of the Company's operations for the past fiscal year and the
status of the Company's liquidity and capital resources as of the end of such
year materially conforming to the disclosure requirements contained in Item 303
of Regulation S-K or Regulation S-B, if applicable, under the Securities Act;
(b) within thirty (30) days after the end of each month a
consolidated balance sheet of the Company and its subsidiaries and the related
consolidated statements of income and cash flows, unaudited but prepared in
accordance with generally accepted accounting principles and certified by the
Chief Financial Officer of the Company, or the principal accounting officer if
the Company does not have a Chief Financial Officer, such consolidated balance
sheet to be as of the end of such quarter and such consolidated statements of
income and cash flows to be for such quarter and for the period from the
beginning of the fiscal year to the end of such quarter, in each case with
comparative statements for the prior fiscal year; provided that the Company's
obligations under this Section 5.01 shall terminate upon the completion of a
firm commitment underwritten public offering of the Company's securities where
the Company becomes and continues to be subject to the reporting requirements of
the Securities Exchange Act of 1934;
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(c) at the time of delivery of each annual financial statement
pursuant to Section 5.01(a), a certificate executed by the Chief Financial
Officer of the Company, or the principal accounting officer if the Company does
not have a Chief Financial Officer, stating that he has reviewed this Agreement
and has no knowledge of any default by the Company in the performance or
observance of any of the provisions of this Agreement, or, if such officer has
such knowledge, specifying such default and the nature thereof;
(d) at the time of delivery of each monthly statement pursuant
to Section 5.01(b), a management narrative report explaining all significant
variances from forecasts and all significant current developments in staffing,
marketing, sales and operations; and
(e) within thirty (30) days prior to the end of each fiscal
year, an annual business plan.
Section 5.02 RIGHT OF FIRST REFUSAL.
(a) The Company shall, prior to (or as soon thereafter as is
reasonably practical) any issuance by the Company of any of its securities
(other than debt securities with no, equity feature), offer to Purchaser
continuing to hold at least fifty percent (50%) of the Common Stock purchased
hereby (the "Eligible Purchaser") by written notice the right, for a period of
thirty (30) days, to purchase a pro rata amount (based on the percentage
ownership of the Common Stock of the Company assuming the conversion of all
Preferred Shares) of such securities on the same terms and conditions for which
such securities are to be issued (unless the Eligible Purchaser is unable to
meet such terms and conditions, in which case the Eligible Purchaser shall
purchase such securities for cash at an amount equal to the price or other
consideration for which such securities are to be issued); provided, however,
that the first refusal rights, of the Eligible Purchaser pursuant to this
Section 5.02 shall not apply to securities issued (A) upon conversion of any of
the Series A Preferred Shares or the Series B Preferred Shares, (B) upon
exercise of the Toole Option or the Second Toole Option, (C) as a stock dividend
or upon any subdivision of shares of Common Stock, provided that the securities
issued pursuant to such stock dividend or subdivision are limited to additional
shares of Common Stock, (C) pursuant to the Company's Option Plan, and (E)
pursuant to a firm commitment underwritten public offering. The Company shall
use reasonable efforts to enable Purchaser to purchase shares in the Company's
initial public offering equal to Purchaser's proportionate interest in the
Company. This Right of First Refusal supersedes and replaces the right of first
refusal granted Purchaser in the Investment Agreement dated April 7, 1994 among
Brown, Toole, Purchaser and the Company. The Company's written notice to the
Eligible Purchaser shall describe the securities proposed to be issued by the
Company and specify the number, price and payment terms.
Each Eligible Purchaser may accept the Company's offer as to the full
number of securities offered to it or any lesser number, by written notice
thereof given by it to the Company prior to the expiration of the aforesaid
thirty (30) day period, in which event the Company shall promptly sell and such
Eligible Purchaser shall buy, upon the terms specified, the number of securities
agreed to be purchased by such Eligible Purchaser.
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(b) The Company shall be free at any time prior to one hundred
twenty (120) days after the date of its notice of offer pursuant to this Section
5.02, to offer and sell to any third party or parties the number of such
securities not agreed by the Purchaser or the Eligible Purchaser, as the case
may be, to be purchased by them, at a price and on payment terms no less
favorable to the Company than those specified in such notice of offer. However,
if such third party sale or sales are not consummated within such one hundred
twenty (120) day period, the Company shall not sell such securities as shall not
have been purchased within such period without again complying with this Section
5.02.
Section 5.03 CORPORATE EXISTENCE.
The Company shall maintain and cause any subsidiary which it may create
to maintain their respective corporate existence, rights and franchises in full
force and effect; provided however, that the Company may liquidate or merge any
subsidiary into the Company if the Board of Directors deems such action
appropriate.
Section 5.04 PROPERTIES, BUSINESS, INSURANCE.
The Company shall maintain and cause any subsidiary which it may create
to maintain as to their respective properties and business, with financially
sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated, which insurance shall be deemed by the Company to
be sufficient. The Company shall not cause or permit any assignment or change in
beneficiary and shall not borrow against any such policy.
Section 5.05 RESTRICTIVE AGREEMENTS PROHIBITED.
Neither the Company nor any of its subsidiaries shall become a party to
any agreement which by its terms restricts the Company's performance of this
Agreement or the Berjaya Registration Rights Agreement.
Section 5.06 TRANSACTIONS WITH AFFILIATES.
Except for transactions contemplated by this Agreement or as otherwise
approved by the Board of Directors, neither the Company nor any of its
subsidiaries shall enter into any transaction with any director, officer,
employee or holder of more than five percent of the outstanding capital stock of
any class or series of capital stock of the Company or any of its subsidiaries,
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or member of the family of any such
person, is a director, officer, trustee, partner of holder of more than five
percent of the outstanding capital stock thereof, except for transactions on
customary terms related to such person's employment and transactions on terms
which are no less favorable than could be obtained with an independent third
party in an arm's length transaction and which are approved by a majority of the
disinterested directors of the Company.
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Section 5.07 EXPENSES OF DIRECTORS.
The Company shall promptly reimburse in full each director of the
Company who is not an employee of the Company for all of his reasonable
out-of-pocket expenses incurred in attending each meeting of the Board of
Directors of the Company or any Committee thereof.
Section 5.08 USE OF PROCEEDS.
The Company shall use the proceeds from the sale of the Common Stock
for expansion and working capital.
Section 5.09 BOARD OF DIRECTORS MEETINGS.
The Company shall use its best efforts to ensure that meetings of its
Board of Directors are held at least quarterly as well as to obtain directors
and officers insurance coverage as approved by the Board of Directors.
Section 5.10 COMPENSATION.
The Company shall pay to its officers compensation as determined by the
Board of Directors upon the recommendation of the compensation committee of the
Board of Directors.
Section 5.11 BY-LAWS.
The Company shall at all times maintain provisions in its By-Laws
and/or Charter indemnifying all directors against liability and absolving all
directors from liability to the Company and its stockholders to the maximum
extent permitted under the laws of the state of Florida.
Section 5.12 MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES.
The Company shall not sell or otherwise transfer any shares of capital
stock subsidiary which it may create, except to the Company or another
subsidiary which create, or permit any subsidiary which it may create to issue,
sell or otherwise transfer any, shares of its capital stock or the capital stock
of any subsidiary which it may create, except to the Company or another
subsidiary which it may create.
Section 5.13 DISTRIBUTIONS BY SUBSIDIARIES.
The Company shall not permit any subsidiary which it may create to
purchase or set aside any sums for the purchase of, or pay any dividend or make
any distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another subsidiary which it may create.
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Section 5.14 COMPLIANCE WITH LAWS.
The Company shall comply, and cause each subsidiary to comply with, all
applicable laws, rules, regulations and orders, non-compliance with which could
materially adversely affect its business or condition, financial or otherwise,
including all laws relating to the offer and sale of franchises, and the
development and operation of the restaurants and applicable environment laws.
Section 5.15 KEEPING RECORDS AND BOOKS OF ACCOUNT.
The Company shall keep, and cause each subsidiary to keep, adequate
records and books of account, in which complete entries will be made in
accordance with generally accepted accounting principles consistently applied,
reflecting all financial transactions of the Company and such subsidiary, and in
which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.
Section 5.16 U.S. REAL PROPERTY INTEREST STATEMENT.
Upon a written request by any Purchaser, the Company shall provide such
Purchaser with a written statement informing the Purchaser whether such
Purchaser's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comply with the requirements of Treasury
Regulation Section 1.897-21(h)(1) or any successor regulation, and the Company
shall provide timely notice to the Internal Revenue Service, in accordance with
and to the, extent required by Treasury Regulation Section 1.897-2(h)(2) or any
successor regulation, that such statement has been made. The Company's written
statement to any Purchaser shall be delivered to such Purchaser within ten (10)
days of such Purchaser's written request therefor. The Company's obligation to
furnish a written statement pursuant to this Section 5.16 shall continue
notwithstanding the fact that a class of the Company's stock may be regularly
traded on an established securities market.
ARTICLE VI
AGREEMENT TO ENTER INTO A VOTING TRUST
Section 6.01 SPECIAL VOTE.
Purchaser agrees to enter into a voting trust agreement whereby John Y.
Brown, Jr. ("Brown") may vote the shares of Common Stock acquired hereby as well
as those being acquired pursuant to Section 7.03 below for a period of three (3)
years after the Closing. Such period may be extended for an additional two (2)
years at the sole discretion of Purchaser. Brown may vote such shares in such
manner as he deems, in his sole discretion, in the best interest of the Company
and to the extent not inconsistent with the interests of the Company, Brown will
not vote such shares in a manner that materially and adversely affects
Purchaser. Brown's discretion in voting such shares shall
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be limited to matters involving management of the Company and for no other
purpose. Without limiting the foregoing and without the prior written consent of
Purchaser, Brown will not vote such shares if as a result of the vote. The
Company will:
(a) engage in any transaction that would be considered a
"decreed dividend" transaction under Section 305 of the Code:
(b) consent to any liquidation, dissolution, winding up of the
Company or the sale or transfer of all or substantially all of its assets, or
the merger or consolidation of the Company with another entity;
(c) charge the fundamental character of the Company's
business;
(d) redeem or otherwise acquire any of the Company's Stock; or
(e) permit the see assignment or transfer of options issued
pursuant to the Company's Option Plan prior to vesting.
If for any reason Brown discontinues serving as voting trustee,
Purchaser shall have the right to vote such shares in any matter requiring a
shareholder vote. The creation of and entering into the voting trust shall in no
way give Brown any ownership rights in the shares held by the trust and Brown
shall have no tight to pledge assign or otherwise transfer shares without the
specific written instructions of Purchaser.
ARTICLE VII
CONSENTS BY PURCHASER
The Purchaser consents and agrees to the following:
Section 7.01 EMPLOYMENT AGREEMENT WITH T. DAVID TOOLE, III.
The Company may amend the employment agreement with T. David Toole, III
("Toole") whereby Toole will receive, in addition to his base compensation, for
a period of three (3) years an amount equal to five percent (5%) of the profits
of the Company after deducting depreciation and general corporate overhead.
Purchaser shall have the right to review and comment upon the amended employment
agreement prior to its execution.
Section 7.02 RIGHT TO SELL SHARES.
For a period of three (3) years after the Closing Date and if for any
reason Brown discontinues serving as voting trustee as set forth ia Article VI
hereof, all the shareholders of the Company (other than Purchaser) shall have
the right, upon thirty (30) days prior Writ= notice, to sell all or a portion of
their shares of Preferred Stock or Common Stock
to Purchaser at a price, of $3.10
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<PAGE>
per share. Such price shall increase as follows (i) one year after the Closing
the price shall be $3.41 per share, (ii) two years after the Closing the price
shall be $3.72 per share, and (iii) three years after (he Closing the price
Shall be $4.03 per share. At the end of three (3) years, this Fiat shall
terminate.
Section 7.03 SALE OF SHARES BY BROWN.
In addition to the sale of shares of Common Stock by the Company
described in this Agreement, Brown agrees to sell and deliver to Purchaser and
Purchaser agrees to purchase from Brown a total of 1,465,000 shares of Common
Stock for the following price. Pursuant to a previously granted option,
Purchaser will purchase 250,000 shares of Common Stock at a price of $2.50 per
share, and Purchaser will purchase the balance of the shares of Common Stock,
which is 1,215,000 at a price of $3.10 per share. The closing for the Brown
shares shall occur simultaneously with the Closing.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 EXPENSES.
Each party hereto will pay its own expenses in connection with the
transactions contemplated hereby, whether or not such transactions shall be
consummated.
Section 8.02 SURVIVAL OF AGREEMENTS.
All covenants, agreements, representations and warranties made herein
or in the Berjaya Registration Rights Agreement, or any certificate or
instrument delivered to the Purchaser pursuant to or in connection with this
Agreement or the Berjaya Registration Rights Agreement, shall survive the
execution and delivery of this Agreement, the Berjaya Registration Rights
Agreement, the issuance, sale and delivery of the shares of Common Stock, and
all statements contained in any certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.
Section 8.03 BROKERAGE.
Each party hereto will indemnify and hold harmless the others against
and in respect of any claim for brokerage or other commissions relative to this
Agreement or to the transactions contemplated hereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party.
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<PAGE>
Section 8.04 PARTIES IN INTEREST.
All representations, covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. Without limiting the generality of the foregoing,
all representations, covenants and agreements benefitting the Purchaser shall
inure to the benefit of any and all subsequent holders from time to time of
Common Stock.
Section 8.05 NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person or mailed by certified or
registered mail, return receipt requested, or sent by facsimile transmission in
the case of non-U.S. residents, addressed as follows:
(a) If to the Company:
4801 South University Drive, Suite 304 East
Davie, Florida 33328
Attention: Chief Executive Officer
(b) If to the Purchaser:
Berjaya Group Berhad
Level 18
Shahzan Prudential Tower
30 Jalan Sultan Ismail
50250 Kuala Lumpur
MALAYSIA
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
Section 8.06 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
Section 8.07 ENTIRE AGREEMENT.
This Agreement, including the Schedules and Exhibits hereto,
constitutes the sole and entire agreement of the parties with respect to the
subject matter hereof. All Schedules and Exhibits hereto are hereby incorporated
herein by reference.
Section 8.08 COUNTERPARTS.
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This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Section 8.09 AMENDMENTS.
This Agreement may not be amended or modified, and no provisions hereof
may be waived, without the written consent of the Company and the Purchaser.
Section 8.10 SEVERABILITY.
If any provision of this Agreement shall be declared void or
unenforceable by any judicial or administrative authority, the validity of any
other provision and of the entire Agreement shall not be affected thereby.
Section 8.11 TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are for convenience
only, and are not to be considered in construing or interpreting any term or
provision of this Agreement.
Section 8.12 CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
(a) "affiliate" shall mean a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.
(b) "person" shall mean an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government agency or
any agency or political subdivision thereof, or other entity.
(c) "subsidiary" shall mean, as to the Company, any
corporation of which more than 50% of the outstanding shares having ordinary
voting power to elect a majority of the Board of Directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by the
Company, or by one or more of its subsidiaries, or by the Company and one or
more of its subsidiaries.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
Attest: ROADHOUSE GRILL, INC.
/s/ CHARLES D. BARNETT BY: /s/ JOHN DAVID TOOLE III
- ------------------------------ --------------------------------
Secretary TITLE: President
----------------------------
BERJAYA GROUP (CAYMAN) LIMITED
BY: /s/ ILLEGIBLE
-------------------------------
TITLE Chairman
-----------------------------
FOR THE PURPOSE OF AGREEING TO THE SALE OF SHARES SET FORTH IN SECTION 7.03.
/s/ JOHN Y. BROWN, JR.
----------------------------------
JOHN Y. BROWN, JR.
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EXHIBIT 10.19
1994 REGISTRATION RIGHTS AGREEMENT
THIS 1994 REGISTRATION RIGHTS AGREEMENT dated as of February 10,
------------
1994 among ROADHOUSE GRILL, INC. (together with its successors, the "Company"),
and each of the several Purchasers named in Schedule I of the Series A
Convertible Preferred Stock Purchase Agreement of even date herewith (the "1994
Purchase Agreement").
WHEREAS, on the date hereof, each Purchaser purchased from the Company
and is the beneficial owner of shares of Series A Convertible Preferred Stock,
par value $.01 per share (the "Series A Convertible Preferred Stock"), or has
received a warrant (the "Warrant") to purchase shares of Series A Convertible
Preferred Stock;
WHEREAS, the Company wishes to provide the Purchasers the rights
described herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
(b) "Common Stock" shall mean the Common Stock, $.01 par value, of
the Company, as constituted as of the date of this Agreement.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(d) "Registration Expenses" shall mean the expenses so described in
Section 8.
(e) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(f) "Selling Expenses" shall mean the expenses so described in
Section 8.
(g) "Series A Conversion Shares" shall mean shares of Common Stock
issued upon conversion of the Series A Preferred Shares.
(h) "Series A Preferred Shares" shall mean the shares of Series A
Convertible Preferred Stock purchased by the Purchasers pursuant to the 1994
Purchase Agreement or issued to certain purchasers pursuant to the Warrants.
(i) "Series A Shares" shall mean, collectively, the Series A
Conversion Shares that are issued and outstanding and the shares of Common Stock
issuable upon conversion of Series A Preferred Shares.
<PAGE>
2. Restrictive Legend. Each Certificate representing Series A Preferred
Shares or Series A Conversion Shares shall, except as otherwise provided in this
Section 2 or in Section 3, be stamped or otherwise imprinted with a legend
substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company (it being agreed that Fulbright & Jaworski L.L.P.
shall be satisfactory) the securities being sold thereby may be publicly sold
without registration under the Securities Act.
3. NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer of any
Series A Preferred Shares or Series A Conversion Shares (other than under the
circumstances described in Sections 4, 5 or 6), the holder thereof shall give
written notice to the Company of its intention to effect such transfer. Each
such notice shall describe the manner of the proposed transfer and, if requested
by the Company, shall be accompanied by an opinion of counsel satisfactory to
the Company (it being agreed that Fulbright & Jaworski L.L.P. shall be
satisfactory) to the effect that the proposed transfer may be effected without
registration under the Securities Act, whereupon the holder of such stock shall
be entitled to transfer such stock in accordance with the terms of its notice;
PROVIDED, HOWEVER, that no such opinion of counsel shall be required for a
transfer to one or more partners of the transferor (in the case of a transferor
that is a partnership) or to an affiliated corporation (in the case of a
transferor that is a corporation).
Each certificate for Series A Preferred Shares or Series A Conversion
Shares transferred as above provided shall bear the legend set forth in Section
2, except that such certificate shall not bear such legend if (i) such transfer
is in accordance with the provisions of Rule 144 (or any other rule permitting
public sale without registration under the Securities Act), or (h) the opinion
of counsel referred to above is to the further effect that the transferee and
any subsequent transferee (other than an affiliate of the Company) would be
entitled to transfer such securities in a public sale without registration under
the Securities Act. The restrictions provided for in this Section 3 shall not
apply to securities which are not required to bear the legend prescribed by
Section 2 in accordance with the provisions of that Section.
4. REQUIRED REGISTRATION.
(a) At any time after the earlier of (i) six months after any
registration statement covering a public offering of securities of the Company
under the Securities Act shall have become effective (other than a registration
of securities in a Rule 145 transaction or with respect to one or more employee
benefit plans), and (ii) the date upon which John Y. Brown, Jr. is no longer a
director of the Company (but in no event earlier than the third anniversary of
the date of this Agreement) the holders of the Series A Shares constituting at
least fifty percent (50%) of such Series A Shares may request the Company to
register under the Securities Act all or any portion of the Series A Shares
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<PAGE>
held by such requesting holder or holders for sale in the manner specified in
such notice. The only securities which the Company shall be required to register
pursuant hereto shall be shares of Common Stock, and in any underwritten public
offering contemplated by this Section 4 or Sections 5 and 6, the holders of
Series A Preferred Shares shall be entitled to sell such Series A Preferred
Shares to the underwriters for conversion and sale of the shares of Common Stock
issued upon conversion thereof. Notwithstanding anything to the contrary
contained herein, no request may be made under this Section 4 within one hundred
twenty (120) days after the effective date of a registration statement filed by
the Company covering a firm commitment underwritten public offering in which the
holders of Series A Shares shall have been entitled to join pursuant to Sections
5 or 6 and in which there shall have been effectively registered at least
seventy-five percent (75%) of the total Series A Shares as to which registration
shall have been requested.
(b) Following receipt of any notice under this Section 4, the
Company shall immediately notify all holders of Series A Shares from whom notice
has not been received and shall use its best efforts to register under the
Securities Act, for public sale in accordance with the method of disposition
specified in such notice from requesting holders, the number of Series A Shares
specified in such notice (and in all notices received by the Company from other
holders all within 30 days after the giving of such notice by the Company). If
such method of disposition shall be an underwritten public offering, the holders
of a majority of the Series A Shares to be sold in such offering may designate
the managing underwriter of such offering, subject to the approval of the
Company, which approval shall not be unreasonably withheld or delayed. The
Company shall be obligated to register Series A Shares pursuant to this Section
4 on two occasions only, PROVIDED, HOWEVER, that such obligation shall be deemed
satisfied only when a registration statement covering at least seventy-five
percent (75%) of the total Series A Shares specified in notices received as
aforesaid, for sale in accordance with the method of disposition specified by
the requesting holders, shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Series A Shares to be sold. Except for the registration
statements on Form S-4, S-8, or any successor thereto, the Company will not file
with the Commission any other registration statement with respect to its Common
Stock, whether for its own account or that of other stockholders, from the date
of receipt of a notice from requesting holders pursuant to this Section 4 until
the completion of the period of distribution of the registration contemplated
thereby.
5. INCIDENTAL REGISTRATION. If the Company at any time (other than
pursuant to Section 4 or Section 6) proposes to register any of its securities
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Forms S-4, S-8 or another form not available for
registering the Series A Shares for sale to the public), each such time it will
give written notice to all holders of Series A Shares of its intention so to do.
Upon the written request of any such holder, received by the
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<PAGE>
Company within thirty (30) days after the giving of any such notice by the
Company, to register any of its Series A Shares, in whole or in part (which
request shall state the intended method of disposition thereof), the Company
will use its best efforts to cause the Series A Shares as to which registration
shall have been so requested to be included in the securities to be covered by
the registration statement proposed to be filed by the Company, all to the
extent requisite to permit the sale or other disposition by the holder (in
accordance with its written request) of such Series A Shares so registered. In
the event that any registration pursuant to this Section 5 shall be, in whole or
in part, an underwritten public offering of Common Stock, the number of Series A
Shares to be included in such an underwriting may be reduced, in whole or in
part (pro rata among the requesting holders based upon the number of Series A
Shares owned by such holders) if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would adversely affect the marketing
of the securities to be sold by the Company therein, PROVIDED, HOWEVER, that
such number of Series A Shares shall not be reduced if any shares are to be
included in such underwriting for the account of any person other than the
Company or requesting holders of Series A Shares, PROVIDED, FURTHER that after
the Company's initial public offering of securities for its own account, such
number of Series A shares shall not be reduced below twenty percent (20%) of the
aggregate number of shares offered by the Company and the requesting holders of
Series A Shares. Notwithstanding the foregoing provisions, the Company may
withdraw any registration statement referred to in this Section 5 without
thereby incurring any liability to the holders of Series A Shares.
6. REGISTRATION ON FORM S-3. If at any time (i) a holder or holders of
Series A Shares request that the Company file a registration statement on Form
S-3 or any successor thereto for a public offering of all or any portion of the
Series A Shares held by such requesting holder or holders, the reasonably
anticipated aggregate price to the public of which would exceed $500,000, and
(ii) the Company is a registrant entitled to use Form S-3 or any successor
thereto to register such shares, then the Company shall use its best efforts to
register under the Securities Act on Form S-3 or any successor thereto, for
public sale in accordance with the method of disposition specified in such
notice, the number of Series A Shares specified in such notice. Whenever the
Company is required by this Section 6 to use its best efforts to effect the
registration of Series A Shares, each of the procedures and requirements of
Section 4 (including but not limited to the requirement that the Company notify
all holders of Series A Shares from whom notice has not been received and
provide them with the opportunity to participate in the offering) shall apply to
such registration, PROVIDED, HOWEVER, that there shall be no limitation on the
number of registrations on Form S-3 which may be requested and obtained under
this Section 6, and PROVIDED, FURTHER, that the requirements contained in the
first sentence of Section 4(a) shall not apply to any registration on Form S-3
which may be requested and obtained under this Section 6.
7. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Sections 4, 5 or 6 to use its best efforts to effect the
registration of any Series A Shares under the Securities Act, the Company will,
as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 4,
shall be on Form S-1 or other form of general applicability satisfactory to the
managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and
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<PAGE>
remain effective for the period of the distribution contemplated thereby
(determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Series A Shares
covered by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Series A Shares and to each
underwriter such number of copies of the registration statement and the
prospectus included in the registration statement (including each preliminary
prospectus) as such persons reasonably may request in order to facilitate the
public sale or other disposition of the Series A Shares covered by such
registration statement;
(d) use all reasonable efforts to register or qualify the Series A
Shares covered by such registration statement under the Securities or "Blue Sky"
laws of such jurisdictions as the sellers of Series A shares or, in the case of
an underwritten public offering, the managing underwriter reasonably shall
request, PROVIDED, HOWEVER, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to general service
of process in any such jurisdiction;
(e) use its best efforts to list the Series A Shares covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;
(f) immediately notify each seller of Series A Shares and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(g) if the offering is underwritten and at the request of any seller
of Series A Shares, use its best efforts to furnish on the date that Series A
Shares is delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to such seller,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the registration statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements contained therein), and (C) to such other
effects as reasonably may be requested by counsel for the underwriters or by
such seller or its counsel, and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that
5
<PAGE>
they are independent public accountants within the meaning of the Securities Act
and that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of such
letter) with respect to such registration as such underwriters reasonably may
request; and
(h) make available for inspection by each seller of Series A Shares,
upon such seller signing an appropriate confidentiality agreement, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
For purposes of Section 7(a) and 7(b) and of Section 4(c), the period
of distribution of Series A Shares in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it (but no later than 180 days), and
the period of distribution of Series A Shares in any other registration shall be
deemed to extend until the earlier of the sale of all Series A Shares covered
thereby and 120 days after the effective date thereof.
In connection with each registration hereunder, the sellers of Series A
Shares will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by, them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
In connection with each registration pursuant to Sections 4, 5 or 6
covering an underwritten public offering, the Company and each seller agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment statute.
8. EXPENSES. All expenses incurred by the Company in complying with
Sections 4, 5 and 6, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or "blue sky" laws,
fees of the National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, costs of insurance and reasonable fees
and disbursements of any counsel for the sellers of Series A Shares, but
excluding any Selling Expenses, are called "Registration Expenses." All
underwriting discounts and selling commissions applicable to the sale of the
Series A Shares are called "Selling Expenses."
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The Company will pay all Registration Expenses in connection with each
registration statement under Sections 4, 5 or 6, except to the extent that any
such Registration Expenses must be borne by the participating sellers in order
to permit the sale of shares in any state under the state securities or "blue
sky" laws thereof. All Selling Expenses in connection with each registration
statement under Sections 4, 5 or 6, and any Registration Expenses borne by the
sellers pursuant to the preceding sentence shall be borne by the participating
sellers in proportion to the number of shares sold by each, or by such
participating sellers (including the Company if it shall be a participating
seller) as they may agree.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of a registration of any of the Series A Shares
under the Securities Act pursuant to Sections 4, 5 or 6, the Company will
indemnify and hold harmless each seller of such Series A Shares thereunder and
each of its partners, officers and directors, as applicable, each underwriter of
such Series A Shares thereunder and each other person, if any, who controls such
seller or underwriter within the meaning of the Securities Act, against any
losses, claims, damages, liabilities or expenses, joint or several (or actions
in respect thereof), to which such seller, underwriter or controlling person may
become subject under the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any registration
statement (the "Registration Statement") under which such Series A Shares was
registered or qualified under the Securities Act or applicable state securities
laws pursuant to Sections 4, 5 or 6, any preliminary prospectus (the
"Preliminary Prospectus") or final prospectus ("Prospectus") contained therein,
or any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Company contained in an underwriting
agreement with the underwriters or any failure of the Company to perform its
obligations under such underwriting agreement or under applicable law; and will
reimburse each such seller and each of its partners, officers and directors, as
applicable, each such underwriter and each such controlling person for any legal
and other expenses as such expenses are reasonably incurred by them in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with the
information furnished by any such seller, any such underwriter or any such
controlling person.
(b) In the event of a registration of any of the Series A Shares
under the Securities Act pursuant to Sections 4, 5 or 6, each seller of such
Series A Shares thereunder, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the
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registration statement, each director of the Company, each underwriter, each
person who controls any underwriter within the meaning of the Securities Act and
each other seller of Series A Shares thereunder, against any losses, claims,
damages, liabilities or expenses, joint or several, to which the Company or such
officer, director, underwriter, controlling person or other seller may become
subject under the Securities Act, Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of seller of the Series A Shares), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the seller of such Series A Shares contained
in an underwriting agreement with the underwriters or any failure of such seller
to perform its obligations under such agreement or under applicable law;
PROVIDED, HOWEVER, that such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in strict conformity with
information pertaining to such seller, as such, furnished in writing to the
Company by such seller stated to be specifically for use in such registration
statement and prospectus; PROVIDED FURTHER, HOWEVER, that the indemnification
contained in this Section 9(b) with respect to any Preliminary Prospectus shall
not inure to the benefit of each seller (or to the benefit of any person
controlling such seller) on account of any such loss, claim, damage, liability
or expense arising from the sale of the Series A Shares by such seller to any
person if a copy of the Prospectus shall not have been delivered or sent to such
person within the time required by the Act and the regulations thereunder, and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such Preliminary Prospectus was corrected in the
Prospectus; PROVIDED FURTHER, HOWEVER, that the liability of each seller
hereunder shall be limited to the proportion of any such loss, claim, damage,
liability or expense which is equal to the proportion that the public offering
price of the shares sold by such seller under such registration statement bears
to the total public offering price of all securities sold thereunder, but not in
any event to exceed the proceeds received by such seller from the sale of Series
A Shares covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to such indemnified party for contribution or
otherwise other than under this Section 9, and shall only relieve it from any
liability which it may have to such indemnified party under this Section 9 if
and to the extent that the indemnifying party is prejudiced by such omission. In
case any such action shall be brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in and, to the extent it
may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the
8
<PAGE>
indemnified party and indemnifying party and the indemnified party shall have
reasonably concluded that there may be a conflict between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel), or (ii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Series A Shares exercising rights under this Agreement, or any controlling
person of any such holder makes a claim for indemnification pursuant to this
Section 9 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section
9; then, and in each such case, the Company and such holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its Series A Shares offered by the registration statement
bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; PROVIDED, HOWEVER, that in any such case, (A) no such holder will be
required to contribute any amount in excess of the public offering price of all
such Series A Shares offered by it pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
10. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as,
there is any change in the Common Stock or the Series A Convertible Preferred
Stock by way of a stock split, stock dividend, combination or reclassification,
or through a merger, consolidation, reorganization or recapitalization, or by
any other means, appropriate adjustment shall be made in the provisions hereof
so that the rights and privileges granted hereby shall continue with respect to
the Common Stock or the Series A Convertible Preferred Stock as so changed.
9
<PAGE>
11. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Series A Shares to the public without registration, at all times
after 90 days after any registration statement covering a public offering of
securities of the Company under the Securities Act shall have become effective,
the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act ("Rule 144");
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Series A Shares forthwith upon request
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, a copy
of the most recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as such holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
such holder to sell any Series A Shares without registration.
12. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Charter or ByLaws of the Company or any provision of any
indenture, agreement or other instrument to which it or any of its properties or
assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
13. MISCELLANEOUS.
(a) All covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto (including without
limitation transferees of any Series A Shares), whether so expressed or not,
PROVIDED, HOWEVER, that registration rights conferred herein on the holders of
Series A Shares shall only inure to the benefit of a transferee of Series A
Shares if (i) the transferee receives from the transferor at least all Series A
Shares originally issued to the transferor pursuant to the 1994 Purchase
Agreement or 200,000 Series A Shares, whichever is less, or (ii) such transferee
is a partner, shareholder, family member (or trusts for family members) or
affiliate of the transferor.
10
<PAGE>
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or registered
mail, return receipt requested, postage prepaid, or faxed, in the case of
non-U.S. residents, addressed as follows:
if the Company or any other party hereto, at the address of
such party set forth in the 1994 Purchase Agreement;
if to any subsequent holder of Series A Shares, to it at such
address as may have been furnished to the Company in writing
by such holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Series A Shares) or to the
holders of Series A Shares (in the case of the Company) in accordance with the
provisions of this paragraph.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida.
(d) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the holders
of at least two-thirds of the outstanding Series A Shares.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) The obligations of the Company to register Series A Shares under
Sections 4, 5 or 6 shall terminate as to any holder of Series A Shares or
permissible transferees or assignees of such rights (but only during such times
as both (i) and (ii) are applicable) if such person (i) holds one percent (1%)
or less of the outstanding shares of Common Stock of the Company (on an
as-converted basis); and (ii) would be permitted to sell all of the Series A
Shares held by him within one three-month period pursuant to Rule 144.
(g) If requested in writing by the underwriters for the initial
underwritten public offering of securities of the Company, each holder of Series
A Shares who is a party to this Agreement shall agree not to sell publicly any
Series A Shares or any other shares of Common Stock (other than Series A Shares
or other shares of Common Stock being registered in such offering), without the
consent of such underwriters, for a period of not more than 180 days following
the effective date of the registration statement relating to such offering;
PROVIDED, HOWEVER, that all persons entitled to registration rights with respect
to shares of Common Stock who are not parties to this Agreement, all other
persons selling shares of Common Stock in such offering and all executive
officers and directors of the Company shall also have agreed not to sell
publicly their Common Stock under the circumstances and pursuant to the terms
set forth in this Section 13(g).
(h) Notwithstanding the provisions of Section 7(a), the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective, shall be suspended for a period not to
exceed 90 days in any 24-month period if there exists at the time
11
<PAGE>
material non-public information relating to the Company which, in the reasonable
opinion of the Company, should not be disclosed.
(i) The Company shall not grant to any third party any registration
rights more favorable than any of those contained herein, so long as any of the
registration rights under this Agreement remain in effect.
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By: /s/ JOHN DAVID TOOLE III
-------------------------------
-------------------------------
12
<PAGE>
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By:
-------------------------------
GRACE VENTURES PARTNERSHIP
By: HORN VENTURE PARTNERS
-----------------------------------
/s/ ROBERT E. PEDIGO
-----------------------------------
Robert E. Pedigo
General Partner
13
<PAGE>
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By:
------------------------------
/s/ ILLEGIBLE
---------------------------------
13
<PAGE>
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By:
------------------------------
/s/ J. PETER GRACE
---------------------------------
13
<PAGE>
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By:
------------------------------
/s/ ILLEGIBLE
---------------------------------
13
<PAGE>
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By:
-------------------------------------
DAVID WALTER ROBBINS, JR.
DECLARATION OF TRUST
DATED OCTOBER 31, 1991
/s/ DAVID WALTER ROBBINS, JR. TRUSTEE
-------------------------------------
13
<PAGE>
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By: /s/ JOHN DAVID TOOLE III
-------------------------------------
BANQUE SCANDINAVE EN SUISSE
/s/ ILLEGIBLE
-------------------------------------
13
<PAGE>
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By:
-------------------------------------
BERJAYA GROUP (CAYMAN) LTD.
By: /s/ ILLEGIBLE
---------------------------------
Title: CHAIRMAN
------------------------------
19
Exhibit 10.20
AMENDMENT TO 1994 REGISTRATION RIGHTS AGREEMENT
This Amendment dated as of June 8, 1994 and is an Amendment
------
to the 1994 Registration Rights Agreement dated as of February 10, 1994 ("1994
Registration Rights Agreement"), is made by and among Roadhouse Grill, Inc., a
Florida corporation (together with its successors, the "Company"), and each of
the several Purchasers named in Schedule I of the Series B Convertible Preferred
Stock Purchase Agreement of even date herewith (the "Series B Purchase
Agreement").
RECITALS:
A. On February 10, 1994, the Company entered into the 1994 Registration
Rights Agreement that permitted, in certain instances, the registration of
shares owned by the Purchasers under the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
B. The Company is issuing shares of Series B Convertible Preferred
Stock pursuant to the Series B Purchase Agreement.
C. The Company wishes to provide the Purchasers with the rights
described in the 1994 Registration Rights Agreement.
NOW THEREFORE, the parties agree as follows:
1. Paragraph 1 of the 1994 Registration Rights Agreement is hereby
amended by adding the following:
(j) "Series B Conversion Shares" shall mean the shares of Common
Stock issued upon conversion of the Series B Preferred Shares.
(k) "Series B Preferred Shares" shall mean the shares of Series B
Convertible Preferred Stock purchased by the Purchasers pursuant to the Series B
Purchase Agreement.
(l) "Series B Shares" shall mean, collectively, the Series B
Conversion Shares that are issued and outstanding and the Shares of Common Stock
issuable upon conversion of the Series B Preferred Shares.
2. The 1994 Registration Rights Agreement is amended so that each
reference to Series A Preferred Shares shall also include Series B Preferred
Shares.
3. The 1994 Registration Rights Agreement is amended so that each
reference to Series A Conversion Shares shall also include Series B Conversion
Shares.
<PAGE>
4. The 1994 Registration Rights Agreement is amended so that each
reference to Series A Shares shall also include Series B Shares.
5. The Company confirms that all representations and warranties
contained in the 1994 Registration Rights Agreement are still valid and are
hereby extended to the Purchasers of the Series B Convertible Preferred Stock.
6. Each of the Purchasers hereby agrees to be bound by the terms of the
1994 Registration Rights Agreement.
7. In all other respects, the 1994 Registration Rights Agreement
remains unchanged and in full force and effect.
8. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and each of the Purchasers have
executed this Amendment as of the date first above written.
ROADHOUSE GRILL, INC.
By: /s/ JOHN DAVID TOOLE III
-------------------------------------
Title: President
----------------------------------
GRACE VENTURES PARTNERSHIP III
By: Horn Venture Partners II
/s/ ROBERT E. PEDIGO
-----------------------------------------
Purchaser
Robert E. Pedigo
General Partner
<PAGE>
3. The 1994 Registration Rights Agreement is amended so that each
reference to Series A Conversion Shares shall also include Series B Conversion
Shares.
4. The 1994 Registration Rights Agreement is amended so that each
reference to Series A Shares shall also include Series B Shares.
5. The Company confirms that all representations and warranties
contained in the 1994 Registration Rights Agreement are still valid and are
hereby extended to the Purchasers of the Series B Convertible Preferred Stock.
6. Each of the Purchasers hereby agrees to be bound by the terms of the
1994 Registration Rights Agreement.
7. In all other respects, the 1994 Registration Rights Agreement
remains unchanged and in full force and effect.
8. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and each of the Purchasers have
executed this Amendment as of the date first above written.
ROADHOUSE GRILL, INC.
By: /s/ JOHN DAVID TOOLE III
------------------------------------
Title: President
---------------------------------
BERJAYA GROUP (CAYMAN) LTD.
/s/ ILLEGIBLE
----------------------------------------
PURCHASER
EXHIBIT 10.21
AMENDMENT TO 1994 REGISTRATION RIGHTS AGREEMENT
This Amendment dated as of July 26, 1996 and is an Amendment to the
1994 Registration Rights Agreement dated as of February 10, 1994 ("1994
Registration Rights Agreement"), is made by and between Roadhouse Grill, Inc., a
Florida corporation (together with its successors, the "Company"), and Berjaya
Group (Cayman) Limited "Berjaya").
RECITALS:
A. On February 10, 1994, the Company entered into the 1994 Registration
Rights Agreement that permitted, in certain instances, the registration of
shares owned by the Purchasers under the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
B. Berjaya currently owns 13,727,157 shares of the Company's common
stock ("Common Stock") that has been issued by the Company or purchased from
various of the Company's shareholders.
C. The Company wishes to provide Berjaya with the rights described in
the 1994 Registration Rights Agreement for the Common Stock.
NOW THEREFORE, the parties agree as follows:
1. Paragraph 1 of the 1994 Registration Rights Agreement is hereby
amended by adding the following:
(m) "Common Shares" shall mean the shares of Common Stock owned by
Berjaya.
2. The 1994 Registration Rights Agreement is amended so that each
reference to Series A Preferred Shares shall also include Common Shares.
3. The 1994 Registration Rights Agreement is amended so that each
reference to Series A Shares shall also include Common Shares.
4. In all other respects, the 1994 Registration Rights Agreement
remains unchanged and in full force and effect.
5. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
1
<PAGE>
IN WITNESS WHEREOF, the Company and Berjaya have executed this
Amendment as of the date first above written.
ROADHOUSE GRILL, INC.
By: /s/ J. DAVID TOOLE, III
-------------------------
Title: PRESIDENT
-------------------------
BERJAYA GROUP (CAYMAN) LIMITED
By: /s/ K.P. TAN
--------------------------
Title: GROUP EXECUTIVE DIRECTOR
--------------------------
2
EXHIBIT 10.22
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered into
the day and year hereafter indicated by and between Roadhouse Grill, Inc., a
Florida corporation with offices in Fort Lauderdale, Florida (the "Corporation")
and J. David Toole, III ("Toole").
WHEREAS, Toole is the chief executive officer of the Corporation and as
part of his employment arrangement, it was agreed that Toole would own ten
percent (10%) of the Corporation's stock after the first phase of financing; and
WHEREAS, the Corporation has agreed to sell shares of Series A
Preferred Stock to an investment group led by Grace Horn Ventures, which would
result in the dilution of Toole's ownership in the Corporation; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises hereinafter set forth, the parties agree as follows:
1. OPTION. The Corporation hereby grants to Toole an irrevocable option
to purchase up to Three Hundred Fifty-Five Thousand Five Hundred Fifty Five
(355,555) shares of the Corporation's common voting stock upon the terms and
conditions as set forth in this Agreement.
2. EXERCISE PRICE. The Exercise Price for the shares subject to this
Agreement shall be Fifteen Cents ($0.15) per share, payable in full upon
exercise of this option.
3. TERM. The rights of Toole under this option are exercisable at any
time prior to January 31, 2010. This option is exercisable by Toole by notice to
the Corporation at its offices at 4801 South University Drive, Suite 304 East,
Davie, Florida 33328. The closing on the issuance of said stock shall occur no
later than ten (10) days following the notice by Toole of his exercise of his
rights hereunder, at which time the Corporation shall tender the stock and Toole
shall tender the purchase price.
4. ASSIGNMENT. The rights under this Agreement and the common stock
which Toole may acquire are subject to an Initial Stockholders' Agreement dated
February 10, 1994. Other than as set forth in the Initial Stockholders'
Agreement, the rights under this Agreement and the common stock which Toole may
acquire are freely assignable by Toole without the consent of the Corporation so
long as Toole complies with all applicable state and federal securities laws.
5. MISCELLANEOUS.
a. AMENDMENT. This Agreement may not be modified or terminated
orally, and no modification or termination shall be valid unless
in writing and signed by the party against whom the same is
sought to be enforced.
b. BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs,
successors and permitted assigns.
<PAGE>
c. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given when mailed by
first class mail, postage prepaid, addressed to the party at the
address stated above, or such other address as such party may
specify by written notice to the other party
d. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and
all of which shall be deemed to be one and the same instrument.
e. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of
this Agreement.
f. CAPTIONS. Captions appearing in this Agreement are for
convenience only and shall not be deemed to explain, limit or
amplify the provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
10th day of February, 1994.
ROADHOUSE GRILL, INC.
BY: /s/ JOHN Y. BROWN, JR.
-----------------------------
/s/ J DAVID TOOLE, III John Y. Brown, Jr.
- ------------------------- Chairman of the Board
J. DAVID TOOLE, III
2
EXHIBIT 10.23
BERJAYA REGISTRATION RIGHTS AGREEMENT
THIS BERJAYA REGISTRATION RIGHTS AGREEMENT dated as of November _____ ,
1994, between ROADHOUSE GRILL, INC. (together with its successors, the
"Company"), and BERJAYA GROUP (CAYMAN) LTD. ("Berjaya").
WHEREAS, on the date hereof, Berjaya purchased from John Y. Brown, Jr.
("Brown") and the Company, a total of 4,565,000 shares of the Company's Common
Stock, par value, $.01 per share (the "Shares");
WHEREAS, the Company wishes to provide Berjaya the rights described
herein;
WHEREAS, the Company has previously granted registration rights to the
holders of the shares of Series A Convertible Preferred Stock of the Company
(the "Series A Preferred Stock") and the shares of Series B Convertible
Preferred Stock of the Company (the "Series B Preferred Stock"), pursuant to
that certain 1994 Registration Rights Agreement dated as of February 10, 1994,
as amended as of June 8, 1994 ("Preferred Registration Rights Agreement").
WHEREAS, the rights granted to Berjaya herein shall be subordinate, and
subject to, the rights granted to the holders of the Series A Preferred Stock
("Series A Preferred Stockholders") and the holders of the Series B Preferred
Stock ("Series B Preferred Stock") pursuant to the Preferred Registration Rights
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
(b) "Common Stock" shall mean the Common Stock, $.01 par value, of
the Company, as constituted as of the date of this Agreement.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(d) "Registration Expenses" shall mean the expenses so described
in Section 4.
(e) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
<PAGE>
(f) "Selling Expenses" shall mean the expenses so described in
Section 4.
2. REQUIRED REGISTRATION.
(a) At any time after six months after any registration statement
covering an initial public offering of securities of the Company under the
Securities Act shall have become effective, the holders of the Shares
constituting at least fifty percent (50%) of such Shares may, one time only,
request the Company to register under the Securities Act all or any portion of
the Shares held by such requesting holder or holders for sale in the manner
specified in such notice. The only securities which the Company shall be
required to register pursuant hereto shall be shares of Common Stock, and in any
underwritten public offering contemplated by this Section 2, the holders of the
Shares shall be entitled to sell such Shares to the underwriters, subject to
this Agreement and the rights of the Series A Preferred Stockholders and the
Series B Preferred Stockholders under the Preferred Registration Rights
Agreement.
(b) Following receipt of any notice under this Section 2, the
Company shall immediately notify all holders of Shares from whom notice has not
been received, the Series A Preferred Stockholders, the Series B Preferred
Stockholders and any other holders of the Company's Common Stock which possess
registration rights and shall use its best efforts to register under the
Securities Act, for public sale in accordance with the method of disposition
specified in such notice from requesting holders, the number of Shares specified
in such notice (and in all notices received by the Company from other holders
within 30 days after the giving of such notice by the Company).
(c) In addition to the rights of the Series A Preferred
Stockholders and other holders of registration rights, the Company shall be
entitled to include in any registration statement referred to in this Section 2,
for sale in accordance with the method of disposition specified by the
requesting holders, shares of Common Stock to be sold by the Company for its own
account, to the extent permitted by the managing underwriter.
3. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 2 to use its best efforts to effect the registration
of any of the Shares under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 2,
shall be on Form S-1 or other form of general applicability satisfactory to the
managing underwriter) with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as hereinafter
provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all of the Shares covered
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<PAGE>
by such registration statement in accordance with the sellers' intended method
of disposition set forth in such registration statement for such period;
(c) furnish to each seller of the Shares and to each underwriter
such number of copies of the registration statement and the prospectus included
in the registration statement (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Shares covered by such registration statement;
(d) use all reasonable efforts to register or qualify the Shares
covered by such registration statement under the securities or "blue sky" laws
of such jurisdictions as the sellers of the Shares or, in the case of an
underwritten public offering, the managing underwriter reasonably shall request,
PROVIDED, HOWEVER, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to list the Shares covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;
(f) immediately notify each seller of the Shares and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(g) if the offering is underwritten and at the request of any
seller of the Shares, use its best efforts to furnish on the date that the
Shares are delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to such seller,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the registration statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements contained therein), and (C) to such other
effects as reasonably may be requested by counsel for the underwriters or by
such seller or its counsel, and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no
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<PAGE>
more than five business days prior to the date of such letter) with respect to
such registration as such underwriters reasonably may request; and
(h) make available for inspection by each seller of the Shares,
upon such seller signing an appropriate confidentiality agreement, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
For purposes of Section 3(a) and 3(b) and of Section 2(c), the period
of distribution of the Shares in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the distribution
of all securities purchased by it (but no later than 180 days), and the period
of distribution of the Shares in any other registration shall be deemed to
extend until the earlier of the sale of all the Shares covered thereby and 120
days after the effective date thereof.
In connection with the registration hereunder, the sellers of the
Shares will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
In connection with registration pursuant to Section 2, covering an
underwritten public offering, the Company and each seller agree to enter into a
written agreement with the managing underwriter selected in the manner herein
provided in such form and containing such provisions as are customary in the
securities business for such an arrangement between such underwriter and
companies of the Company's size and investment statute.
4. EXPENSES. All expenses incurred by the Company in complying with
Section 2, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees) incurred
in connection with complying with state securities or "blue sky" laws, fees of
the National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, costs of insurance and reasonable fees and
disbursements of any counsel for the sellers of the Shares, but excluding any
Selling Expenses, are called "Registration Expenses." All underwriting discounts
and selling commissions applicable to the sale of the Series A Shares are called
"Selling Expenses."
Berjaya shall bear its proportionate share of Registration and Selling
Expenses in connection with a registration statement under Section 2.
5. INDEMNIFICATION AND CONTRIBUTION.
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<PAGE>
(a) In the event of a registration of any of the Shares under the
Securities Act pursuant to Section 2, the Company will indemnify and hold
harmless each seller of the Shares thereunder, each underwriter of the Shares
thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages, liabilities or expenses, joint or several (or actions in
respect thereof), to which such seller, underwriter or controlling person may
become subject under the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any registration
statement (the "Registration Statement") under which such Shares was registered
or qualified under the Securities Act or applicable state securities laws
pursuant to Section 2, any preliminary prospectus (the "Preliminary Prospectus")
or final prospectus ("Prospectus") contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arise out of or are
based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained in an underwriting agreement with the
underwriters or any failure of the Company to perform its obligations under such
underwriting agreement or under applicable law; and will reimburse each such
seller and each of its partners, officers and directors, as applicable, each
such underwriter and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by them in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; PROVIDED, HOWEVER, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with the information
furnished by any such seller, any such underwriter or any such controlling
person.
(b) In the event of a registration of any of the Shares under the
Securities Act pursuant to Section 2, each seller of such Shares thereunder,
severally and not jointly, will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter, each person who controls any
underwriter within the meaning of the Securities Act and each other seller of
Series A Shares thereunder, against any losses, claims, damages, liabilities or
expenses, joint or several, to which the Company or such officer, director,
underwriter, controlling person or other seller may become subject under the
Securities Act, Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of seller of
the Shares), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the
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<PAGE>
statements therein not misleading, or arise out of or are based in whole or in
part on any inaccuracy in the representations and warranties of the seller of
such Shares contained in an underwriting agreement with the underwriters or any
failure of such seller to perform its obligations under such agreement or under
applicable law; PROVIDED, HOWEVER, that such seller will be liable hereunder in
any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in strict
conformity with information pertaining to such seller, as such, furnished in
writing to the Company by such seller stated to be specifically for use in such
registration statement and prospectus; PROVIDED FURTHER, HOWEVER, that the
liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the proceeds received
by such seller from the sale of Shares covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to such indemnified party for contribution or
otherwise other than under this Section 5, and shall only relieve it from any
liability which it may have to such indemnified party under this Section 5 if
and to the extent that the indemnifying party is prejudiced by such omission. In
case any such action shall be brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in and, to the extent it
may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and indemnifying party and the indemnified
party shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel), or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.
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<PAGE>
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of the Shares exercising rights under this Agreement, or any controlling
person of any such holder makes a claim for indemnification pursuant to this
Section 5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section
5; then, and in each such case, the Company and such holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such holder
is responsible for the portion represented by the percentage that the public
offering price of the Shares and other shares offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; PROVIDED, HOWEVER, that in any such case, (A) no such holder will be
required to contribute any amount in excess of the public offering price of all
such Shares offered by it pursuant to such registration statement; and (B) no
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent misrepresentation.
6. CHANGES IN COMMON STOCK. If, and as often as, there is any change in
the Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
7. MISCELLANEOUS.
(a) All covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto (including without
limitation transferees of any of the Shares), whether so expressed or not,
PROVIDED, HOWEVER, that registration rights conferred herein on the holders of
the Shares shall only inure to the benefit of a transferee of the Shares if (i)
the transferee receives from the transferor at least fifty percent (50%) of the
Shares originally issued to the transferor pursuant to the Investment Agreement
to the direct or indirect transferor of such transferee or (ii) such transferee
is a partner, shareholder, or affiliate of the transferor.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or registered
mail, return receipt requested, postage prepaid, or faxed, in the case of
non-U.S. residents, addressed as follows:
if the Company or any other party hereto, at the address of such
party set forth in the Investment Agreement;
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<PAGE>
if to any subsequent holder of the Shares, to it at such address
as may have been furnished to the Company in writing by such
holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of the Shares) or to the
holders of the Shares (in the case of the Company) in accordance with the
provisions of this paragraph.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of the Company and
the holders of at least two-thirds of the outstanding Shares.
(e) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(f) The obligations of the Company to register the Shares under
Section 2, shall terminate as to any holder of the Shares or permissible
transferees or assignees of such rights (but only during such times as both (i)
and (h) are applicable) if such person (i) holds one percent (1%) or less of the
outstanding shares of Common Stock of the Company (on an as converted basis);
and (h) would be permitted to sell all of the Shares held by him within one
three-month period pursuant to Rule 144.
(g) If requested in writing by the underwriters for the initial
underwritten public offering of securities of the Company, each holder of the
Shares who is a party to this Agreement shall agree not to sell publicly any
Shares or any other shares of Common Stock (other than Shares or other shares of
Common Stock being registered in such offering), without the consent of such
underwriters, for a period of not more than 120 days following the effective
date of the registration statement relating to such offering.
(h) Notwithstanding the provisions of Section 3(a), the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective, shall be suspended for a period not to
exceed 90 days in any 24-month period if there exists at the time material
non-public information relating to the Company which, in the reasonable opinion
of the Company, should not be disclosed. Further, the Company shall not be
required to procure an audit of its financial statements other than in the
ordinary course under its reporting obligations under the Securities Exchange
Act of 1934, as amended.
(i) The registration rights granted herein shall be subject, and
subordinate to, the rights granted to the Series A Preferred Stockholders and
the Series B Preferred Stockholders pursuant to the Preferred Registration
Rights Agreement.
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<PAGE>
(j) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding agreement between the Company and you.
ROADHOUSE GRILL, INC.
By: [signed copy unavailable]
Title: _________________________________
BERJAYA GROUP (CAYMAN) LTD.
By: ___________________________________
Title: ________________________________
-9-
Exhibit 10.24
CONSULTING AGREEMENT
THIS AGREEMENT is entered into this _______ day of August, 1992,
between Americana Entertainment Group, Inc., 9171 Town Centre Drive, Suite 260,
San Diego, California 92122 ("AEG") and John Y. Brown ("Brown") and David Toole
("Toole").
R E C I T A L S:
AEG, through its MacKenzie Grill, Inc. subsidiary, currently operates
MACKENZIE GRILL restaurants in Beaverton, Oregon and Gresham, Oregon and
Gresham, Oregon. AEG desires to change the format of these restaurants to a
steakhouse format. Brown and Toole have information, expertise, and contacts
which may be of assistance to AEG in converting AEG's two MacKenzie Grill
restaurants to a steakhouse format. The parties are entering into this agreement
in order to provide for such assistance and also to confirm commitments with
respect to possible future restaurant arrangements involving the parties.
NOW, THEREFORE, the parties agree as follows:
1. CONSULTING WORK. Beginning August 24, 1992, and continuing through
February 24, 1993, Toole will expend best efforts in assisting AEG in
development of a complete steakhouse concept for use in connection with the two
subject restaurants, including menu, recipes, systems, budgets, training
materials, product specifications, pre-opening information, and physical
presence at the opening, as well as any and all other information reasonably
necessary to develop and implement the concept. Toole will confer with and
obtain such assistance from Brown as reasonably necessary in his judgment to
properly develop the concept and to insure reasonable conformity with the
restaurant concept which Toole and Brown intend to develop on a nationwide
basis.
2. COMPENSATION. AEG will pay Toole a consulting fee of $10,000 per
month (for a total of $60,000) plus reasonable expenses. Any substantial or
unusual expenses will be preapproved by ABC.
3. CONFIDENTIALITY. The parties agree to keep confidential, and not to
use or disclose except as specifically authorized, any confidential information
of the other obtained in connection with this agreement. Confidential
information will be disclosed to agents or employees of a party only on a
need-to-know basis and only after such agents or employees have been informed of
and obligated to abide by the confidentiality provisions of this agreement.
Confidential information shall not include any information which is now or
becomes part of the public domain through lawful means, was already known to the
recipient at the time of receipt, was independently developed by recipient
without use of confidential information, or was rightfully obtained from a third
party not subject to any confidentiality obligation.
4. PROPRIETARY RIGHTS. AEG, or any corporation controlled by it, shall
have the unlimited right to use, in connection with the two subject restaurants,
any information, ideas, systems, formats,
<PAGE>
recipes, menus, or other information provided to it in connection with this
agreement, and Toole warrants that use of such information or format will not
violate the proprietary or other rights of any third party and agree to defend,
indemnify and hold AEG and any controlled subsidiary and their officers,
directors, agents, and employees, harmless from any claim of infringement or
misappropriation of third-party rights. Except for the consulting fee to be paid
to Toole pursuant to this agreement, AEG will not be obligated to pay any other
amounts to Brown or Toole or any affiliated entity, including, without
limitation, payment of any royalty. The relationship between the parties with
respect to the two subject restaurants will not involve any franchise
relationship, and AEG will select and use its own trademarks (with approval of
Brown and Toole, which approval shall not unreasonably be withheld) in
connection with operation of the two subject restaurants. Except as provided in
this agreement, Brown and Toole or any affiliated entity will retain all rights
to the format or proprietary information developed or conveyed pursuant to this
agreement.
5. FUTURE RESTAURANTS. In the event that Brown and Toole, or any
affiliated entity, obtain the right to use the name "Willie and Waylon's
Roadhouse," (or a similar name based on appropriate authorizations from Willie
Nelson and/or Waylon Jennings), AEG shall use that name in connection with the
two subject restaurants upon payment of a 1 1/2 percent royalty on sales. If AEG
decides to expand use of Brown and Toole's steakhouse concept beyond the two
subject restaurants, it will pay to Brown and Toole, or their affiliated entity,
a royalty of 1 1/2 percent of sales from such restaurants. If Brown and Toole or
an affiliated entity obtain the right to use the Willie and Waylon's Roadhouse
name or similar name, AEG will have the right to use that name for other
restaurants, in which event it will pay a royalty of 3 percent of sales from
such restaurants developed beyond the two initial restaurants at locations
approved by Brown and Toole, which approval shall not unreasonably be withheld.
If Brown and Toole or an affiliated entity go forward with plans to develop a
chain of steakhouse restaurants, it is the intent of the parties that AEG will
be given an opportunity to negotiate for an exclusive West Coast franchise
territory, upon good-faith negotiation of a franchise agreement and compliance
with applicable franchise laws.
6. ASSIGNMENT. References to AEG in this agreement include its wholly
owned subsidiary, MacKenzie Grill, Inc., and any controlled subsidiary formed by
it to carry out the purposes of this agreement. AEG may assign this agreement to
any entity controlling, controlled by, or under common control with it, and
otherwise may assign with the consent of the other parties, which consent shall
not unreasonably be withheld.
7. ENTIRE AGREEMENT. This is the entire agreement between the parties
and supersedes all prior or contemporaneous agreements, understandings, or
representations with respect to the subject matter hereof. This agreement may
not be modified or amended except in writing signed by both parties.
8. SEVERABILITY. If any term or provision of this agreement shall to
any extent be invalid or unenforceable, the remainder of this agreement shall
not be affected thereby and each term and provision of the agreement shall be
valid and enforced to the fullest extent permitted by law.
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<PAGE>
9. WAIVER. No waiver of any violation or nonperformance of this
agreement in one instance shall be deemed to be a waiver of any subsequent
violation or nonperformance. All waivers must be in writing.
10. DISPUTES. Any disputes to this agreement shall be determined by
binding arbitration in La Jolla, California in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and the prevailing
party will be entitled to recover all reasonable expenses associated with
arbitration, including attorneys' fees. Judgment upon an arbitration award may
be entitled in any court of competent jurisdiction.
AMERICANA ENTERTAINMENT GROUP, INC.
By: [executed page not available]
--------------------------------
Its:
-------------------------------
JOHN Y. BROWN
/s/ JOHN Y. BROWN
-----------------------------------
DAVID TOOLE
-----------------------------------
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<PAGE>
October 7, 1992
John Y. Brown Jr.
David Toole
Roadhouse Grill Inc.
The following addendum to the "Consulting Agreement" is made to adjust for
delays in building plan approvals and construction for the conversion of the
Beaverton MacKenzie Grill into a Roadhouse Grill:
The consulting period shall be revised to delay by two months the consulting
services of Toole to AEG in assisting them in the development of the Roadhouse
Concept with the new expiration date of the consulting agreement being April 24,
1993.
Toole will not be required to provide consultation during the months of November
and December 1992 (two months) except as needed by telephone, through the mail,
or visits by the AEG operator to a Florida Roadhouse Grill.
AEG will continue to pay the consulting fee of $10,000 per month through
February 24, 1993 (6 months) to allow Roadhouse to maintain the operating cash
flow that was agreed upon.
AEG will not pay a consulting fee for the months of March and April 1993 which
will have been paid for with the November and December payments which will be
made while no consulting is taking place.
Americana Entertainment Group, Inc.
By: /S/ ILLEGIBLE
---------------------------------------
Vice President, Operations
/s/ JOHN Y. BROWN, JR.
---------------------------------------
John Y. Brown Jr.
/s/ J. DAVID TOOLE III
---------------------------------------
David Toole
EXHIBIT 10.25
BERJAYA GROUP (CAYMAN) LTD.
LEVEL 28
SHAHZAN PRUDENTIAL TOWER
30 JALAN SULTAN ISMAIL
50250 KUALA LUMPUR
MALAYSIA
Governor John Y. Brown, Jr.
899 West Cypress Creek Road
Suite, 500
Fort Lauderdale, Florida 33309
Re: Roadhouse Grill, Inc.
Gentlemen:
This investment agreement ("Investment Agreement") sets forth the terms
pursuant to which the undersigned (referred to as "Purchaser") shall be legally
bound. This Investment Agreement is being made contemporaneously with and is
outlined in Section 7.03 of the Stock Purchase Agreement between the Company and
Purchaser. Purchaser agrees to purchase from Governor John Y. Brown, Jr.
("Brown") and Brown agrees to sell to Purchaser Two Hundred Fifty Thousand
(250,000) shares of Common Stock of Roadhouse Grill, Inc, (the "Company") for
$2.50 per Share, pursuant to an option granted by Brown to Purchaser.
Additionally, Purchaser agrees to purchase from Brown and Brown agrees to sell
to Purchaser One Million Two Hundred Fifteen Thousand (1,215,000) Shares for
$3.10 per Share (the 250,000 and 1,215,000 shares of common stock are
collectively referred as the "shares"). Purchaser further sets forth statements
upon which the Company, Brown or their affiliates may rely to determine the
suitability of the Purchaser to acquire the Shares.
1. PRIVATE OFFERING. Subject to the terms and conditions set forth
in this Investment Agreement, Purchaser hereby tenders this offer to purchase
the shares.
2. REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF PURCHASER. In
connection with Purchaser's investment, Purchaser hereby makes the following
representations, warranties, and agreements and confirms the following
understandings:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act and was not organized for the specific purpose of
acquiring the Shares;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company and it is able financially to bear the risks thereof;
<PAGE>
Governor John Y. Brown, Jr.
July 30, 1996
Page 2
(c) it has received and reviewed the financial statements and
projections of the Company, and it has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management;
(d) it has made an independent investigation of the business of
the Company and is making this investment as a result of this investigation and
not as a result of any projections made by the Company;
(e) the Shares being purchased by it are being acquired for its
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof:
(f) it understands that (i) the Shares have not been registered
under the Securities Act by reason of their issuance in a transaction exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) or Section 3(b) thereof or Rule 505 or 506 promulgated under the Securities
Act, (ii) the Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, (iii) the Shares will bear a legend to such effect, and (iv) the
Company will make a notation on its transfer books to such effect;
(g) if an entity and not a natural person, it i validly existing
under the laws of the state of its organization and the consummation of the
transactions contemplated hereby is authorized by, and will not result in, a
violation of, state law or its Charter or other organizing documents; and
(h) it has full right, power and authority to execute this
Investment Agreement and to perform its obligations hereunder and thereunder.
3. REPRESENTATIONS AND WARRANTIES OF THE BROWN. Brown represents and
warrants to the Purchaser that, as of the date hereof and the time of the
Closing, as follows:
(a) STOCK OWNERSHIP. Brown is the owner, beneficially and of
record, of the Shares, free and clear of any claim, lien, option, charge,
security interest or encumbrance of any nature whatsoever (collectively, the
"Liens"). There are no known proceedings or litigation of any kind pending
against Brown with respect to the Shares to be sold by Brown which would or
could constitute a lien on the Shares or which would or could contest Brown's
ownership of or rights to transfer ownership of the Shares to the Purchaser.
Brown has full power and authority to sell the Shares to the Purchaser in
accordance with the terms and provisions of this Agreement and, upon delivery of
the Shares to the Purchaser at the
<PAGE>
Governor John Y. Brown, Jr.
July 30, 1996
Page 3
Closing and payment therefor as contemplated by this Agreement, the Purchaser
shall acquire good and marketable title to the Shares, free and clear of all
Liens.
(b) TITLE. Brown warrants title to the Shares and covenants and
agrees at his expense to defend the Purchaser's right, title and ownership of
the Shares against the claims and demands of all persons whomsoever.
(c) COMPANY'S GOOD STANDING. To the best of Brown's knowledge
the Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida and has all necessary powers to
carry on its business as now operated by it.
(d) AUTHORIZATION TO CONVEY STOCK. Brown has full power and
authority to sell, convey, assign and transfer the Shares to the Purchaser and
otherwise consummate the transaction contemplated by this Agreement; this
Agreement constitutes the valid and binding obligation of Brown, enforceable
against him in accordance with its respective terms; neither the execution and
delivery of this Agreement, nor the consummation of the transaction contemplated
herein in the manner herein provided, will violate any agreement to which Brown
is a party or by which Brown is bound, or any law. order, decree or judgment
applicable to Brown; and no authorization, approval or consent of any third
party is required for the lawful execution, delivery and performance, of this
Agreement by Brown.
4. MODIFICATION, DISCHARGE, TERMINATION. Neither this Investment
Agreement nor any provisions hereof shall be modified, discharged, or terminated
except by an instrument in writing signed by the party against whom any waiver,
change, discharge, or termination is sought.
5. NOTICES. Any notice demand or other communication that any party
hereto may be required, or may elect to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, registered or
certified, return receipt requested, addressed to such address as may be given
herein; or (b) delivered personally at such address.
6. SEPARATE SIGNATURE PAGES. This Investment Agreement may be
executed through the use of separate signature pages or in any member of
counterparts, and each of such counterparts shall, for all purposes, Constitute
one agreement binding on all the parties, notwithstanding that all parties are
not signatories to the same counterpart.
<PAGE>
Governor John Y. Brown, Jr.
July 30, 1996
Page 4
7. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, thi
Investment Agreement shall be binding upon and inure to Purchaser's benefit and
the benefit of Purchaser's successors, legal representatives, and assigns.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
The representations, warranties, covenants, and agreements contained herein
shall survive Purchaser's delivery of and payment for the Shares and acceptance
by Brown of its subscription to acquire the Shares.
9. ENTIRE AGREEMENT. This Investment Agreement contains the entire
agreement of the parties, and there are no representations, covenants, or other
agreements except as stated or referred to herein.
10. GOVERNING LAW. This Investment Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, both substantive
and remedial.
11. SEVERABILITY. If any provision of this Investment Agreement shall
be held to be void or unenforceable under the laws of any place governing its
construction or enforcement, this Investment Agreement shall not be void or
vitiated thereby, but shall he construed to be in force with the same effect as
though such provisions were omitted.
12. SECTION HEADINGS. The section headings contained herein are for
reference, purposes only and shall not in any way affect the meaning or
interpretation of this Investment Agreement.
13. CLOSING. Closing of the purchase of shares is to be
contemporaneous with the Closing pursuant to the Stock Purchase Agreement with
Company and subject to approval under the Hart-Scott-Rodino Art.
<PAGE>
Governor John Y. Brown, Jr.
July 30, 1996
Page 5
Please confirm that the foregoing correctly sets forth our agreement by
executing and returning one copy of this Agreement.
BERJAYA GROUP (CAYMAN) LTD.
Accepted: By: /s/ ILLEGIBLE
-----------------------------
/s/ JOHN Y. BROWN, JR. Title: Chairman
- ----------------------------- -------------------------
John Y. Brown, Jr. Date: 9/26/94
Date: Sept. 26, 1994 -------------------------
----------------------
EXHIBIT 10.26
BERJAYA GROUP (CAYMAN) LTD.
LEVEL 28
SHAHZAN PRUDENTIAL TOWER
30 JALAN SULTAN ISMAIL
50250 KUALA LUMPUR
MALAYSIA
Roadhouse Grill, Inc.
6600 North Andrews Avenue
Suite 160
Fort Lauderdale, FL 33309
Re: Purchase of Common Stock
Gentlemen:
This investment agreement ("Investment Agreement") sets forth the terms
pursuant to which the undersigned (referred to as "Purchaser") shall be legally
bound. Purchaser agrees to purchase from Roadhouse Grill, Inc. (the "Company")
and the Company agrees to sell to Purchaser Two Million Three Hundred Sixty One
Thousand One Hundred Eleven (2,361,111) shares (the "Shares") of the Company's
Common Stock for $3.60 per share. In December 1995, Purchaser paid the Company
$3,500,000. In April 1996 Purchaser paid the Company $2,000,000. Purchaser has
agreed to pay the Company an additional $3,000,000 on or before May 8, 1996. The
issuance of the Shares shall occur as payment for the shares are received from
Purchaser. Upon execution of this Agreement, the Company will issue to Purchaser
a certificate representing One Million Five Hundred Twenty Seven Thousand Seven
Hundred Seventy Eight Shares. Purchaser further sets forth statements upon which
the Company may rely to determine the suitability of the Purchaser to acquire
the Shares.
I PRIVATE OFFERING. Subject to the terms and conditions set forth in this
Investment Agreement, Purchaser hereby tenders this offer to purchase the
Shares.
1. REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF PURCHASER. In
connection with Purchaser's investment or subscription, Purchaser hereby makes
the following representations, warranties, and agreements and confirms the
following understandings:
1
<PAGE>
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act and was not organized for the specific purpose of
acquiring the Shares;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company and it is able financially to bear the risks thereof;
(c) it has received and reviewed the financial statements and
projections of the Company, and it has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management;
(d) it has made an independent investigation of the business of
the Company and is making this investment as a result of this investigation and
not as a result of any projections made by the Company;
(e) the Shares being purchased by it are being acquired for its
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof;
(f) it understands that (i) the Shares have not been registered
under the Securities Act by reason of their issuance in a transaction exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) or Section 3(b) thereof or Rule 505 or 506 promulgated under the Securities
Act, (ii) the Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, (iii) the Shares will bear a legend to such effect, and (iv) the
Company will make a notation on its transfer books to such effect;
(g) if an entity and not a natural person, it is validly existing
under the laws of the state of its organization and the consummation of the
transactions contemplated hereby is authorized by, and will not result in a
violation of, state law or its Charter or other organizing documents;
(h) it has full right, power and authority to execute this
Investment Agreement and to perform its obligations, hereunder and thereunder.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants, as of the date hereof and the time of the Closing, as
follows:
(a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company
is a corporation incorporated and organized under the laws of the State of
Florida and its status is active, and it is qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of business transacted by it or the character of the properties owned or
leased by it requires such licensing or qualification, except where
2
<PAGE>
the failure to be so qualified would not have a material adverse effect on the
financial condition, results of operations, business or properties of the
Company. The Company has the corporate power and authority to own and hold its
properties and to carry on its business as now conducted and as proposed to be
conducted, to execute, deliver and perform this Agreement.
(b) AUTHORIZATION OF AGREEMENTS, ETC.
(i) The execution and delivery by the Company of this
Agreement, the performance by the Company of its obligation hereunder and the
issuance, sale and delivery of the Shares have been duly authorized by all
requisite corporate action and will not violate any provision of law, any order
of any court or other agency of government, the Charter of the Company, or the
By-laws of the Company, or any provision of any indenture, agreement or to her
instrument to which the Company or any of its properties or assets is bound, or
conflict with, result in a breach of or constitute (with due notice of lapse of
time or both) a default under any such indenture, agreement or other instrument
or result in the creation or imposition of any lien, charge, restriction, claim
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(ii) The Shares have been duly authorized and, when the
Shares are issued in accordance with this Agreement, the Shares will be validly
issued, fully paid and nonassessable with no personal liability attaching to the
ownership thereof and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company.
(c) VALIDITY. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.
(d) AUTHORIZED CAPITAL STOCK. The authorized capital stock of the
Company consists of (i) 10,000,000 shares of preferred stock and (ii) 30,000,000
shares of Common Stock. Immediately prior to the issuance of the Shares and
assuming no conversion of the Series A Preferred Stock or the Series B Preferred
Stock, 11,761,871 shares of Common Stock will be validly issued and outstanding,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof, and 3,525,000 shares of the Series A Preferred Stock and
2,350,025 shares of the Series B Preferred Stock will have been issued. All of
the outstanding securities of the Company were issued in compliance with all
applicable federal and state securities laws.
(e) GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchaser set forth in Section 2, no
approval, authorization, consent, order or other action of, or filing with, any
person, firm or corporation or any court, administrative agency or other
governmental authority is required in connection with the execution and delivery
of this Agreement by the Company or the consummation of the transactions
described herein, except as disclosed herein.
3. RIGHT OF FIRST REFUSAL. (a) In addition to the right of first
refusal available to the holders of the Series A Convertible Preferred Stock,
prior to (or as soon thereafter as is reasonably practical) any issuance by the
Company of any of its securities (other than debt securities with no equity
feature), the Company shall offer to the Purchaser so long as Purchaser
continues to hold at
3
<PAGE>
least fifty percent (50%) of the shares (both common and Series A Preferred
shares) held by Purchaser immediately after the transfer of the Shares purchased
hereby, and until immediately after such time as the Company issues securities
pursuant to an initial public offering, the right to purchase a pro rata amount
(based on Purchaser's percentage ownership of all of the Common Stock of the
Company assuming the conversion of the Series A Preferred Shares prior to such
issuance) of such securities for cash at an amount equal to the price or other
consideration for which such securities are to be issued; provided, however,
that in the event of an initial public offering, Purchaser shall not be entitled
to purchase from the Company any securities that will result in Purchaser's
being the "beneficial owner," as that term is defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended, of more than twenty
percent (20%) of the issued and outstanding shares of Common Stock of the
Company on, a fully diluted basis; further provided, that the first refusal
rights of Purchaser pursuant to this Section shall not apply to securities
issued upon conversion of any of the Class A Preferred Stock or Class B
Preferred Stock.
In the event of a private sale of securities, the Company shall
promptly notify Purchaser, in writing, of any issuance or proposed issuance of
securities. In the event of an initial public offering, the Company shall notify
Purchaser, in writing, of its intention to issue securities within five (5)
business days of the filing of the registration statement for the Company's
securities. In the case of either a private sale of securities or an initial
public offering, such written notice shall include (i) the aggregate amount of
securities to be offered, (ii) the amount of securities offered to Purchaser
(such amount to be adjusted on the pricing date, in the event of an initial
public offering), (iii) the offering price of the securities (or, in the event
of any initial public offering, the anticipated range of prices for the
offering), (iv) the payment terms and (v) in the event of an initial public
offering, the anticipated effective date of the registration statement for the
Company's securities.
Purchaser may accept the Company's offer as to the full amount of
securities offered to it or any lesser amount, by written notice thereof no
later than thirty (30) days from the date of notice from the Company, and (i) in
the event of a private sale of securities, the Company shall promptly sell and
Purchaser shall buy, upon the terms specified, the amount of securities agreed
to be purchased by Purchaser and (ii) in the event of an initial public offering
of securities, the Company shall sell and Purchaser shall buy, at the initial
public offering price, with payment for the securities due on the date of
closing of the initial public offering, or such other date as may be agreed to
by the parties, the amount of securities agreed to be purchased by Purchaser.
The first refusal rights of the Purchaser pursuant to this Section
shall not apply to securities issued (A) upon the exercise of the Warrants, (B)
upon the exercise of the options currently issued to J. David Toole, III, (C)
upon conversion of any of the Series A Convertible Preferred Stock or the Series
B Convertible Preferred Stock or (D) pursuant to the Company's Option Plan.
(b) The Company shall be free at any time prior to one hundred
twenty (120) days after the date of its notice of offer pursuant to this
Section, to offer and sell to any third party or parties the number of such
securities not agreed by the Purchaser to be purchased by them, at a price and
on payment terms no less favorable to the Company than those specified in such
notice of offer. However, if such third party sale or sales are not consummated
within such one hundred twenty (120)
4
<PAGE>
day period, the Company shall not sell such securities as shall not have been
purchased within such period without again complying with this Section.
4. MODIFICATION, DISCHARGE, TERMINATION. Neither this Investment
Agreement nor any provisions hereof shall be modified, discharged, or terminated
except by an instrument in writing signed by the party against whom any waiver,
change, discharge, or termination is sought.
5. NOTICES. Any notice, demand, or other communication that any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, registered or
certified, return receipt requested, addressed to such address as may be given
herein; or (b) delivered personally at such address.
6. SEPARATE SIGNATURE PAGES. This Investment Agreement may be executed
through the use of separate signature pages or in any number of counterparts,
and each of such counterparts shall, for all purposes, constitute one agreement
binding on all the parties, notwithstanding that all parties are not signatories
to the same counterpart.
7. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Investment Agreement shall be binding upon and inure to Purchaser's benefit and
the benefit of Purchaser's successors, legal representatives, and assigns.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
The representations, warranties, covenants, and agreements contained herein
shall survive Purchaser's delivery of and payment for the Shares and acceptance
by Bolduc of its subscription to acquire the Shares.
9. ENTIRE AGREEMENT. This Investment Agreement contains the entire
agreement of the parties, and there are no representations, covenants, or other
agreements except as stated or referred to herein.
10. GOVERNING LAW, This Investment Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, both substantive
and remedial.
11. SEVERABILITY - if any provision of this Investment Agreement shall
be held to be void or unenforceable under the laws of any place governing its
construction or enforcement, this Investment Agreement shall not be void or
vitiated thereby, but shall be construed to be in force with the same effect as
though such provisions were omitted.
12. SECTION HEADINGS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Investment Agreement.
Please confirm that the foregoing correctly sets forth our agreement by
executing and returning one copy of this Agreement.
5
<PAGE>
BERJAYA GROUP (CAYMAN) LIMITED
By: /s/ ILLEGIBLE
---------------------------
Title:
------------------------
Date: January 15, 1996
------------------------
Accepted:
ROADHOUSE GRILL, INC.
By: /s/ JOHN D. TOOLE, III
------------------------
Title: ____________________
Date: _____________________
6
EXHIBIT 10.27
ASSIGNMENT AND ASSUMPTION OF AGREEMENT
ASSIGNMENT AND ASSUMPTION made and entered into as of February 10,
1994, by and between John Y. Brown, Jr. ("Assignor"); and Roadhouse Grill, Inc.
a Florida corporation ("Assignee").
WITNESSETH
WHEREAS, Assignor has entered into an employment agreement with J.
David Toole, III to be President and Chief Executive Officer of Assignee dated
July 12, 1992, as amended on June 10, 1993 ("Agreement"); and
WHEREAS, Assignor has agreed to assign, convey and transfer to Assignee
all of its right, title and interest in the Agreement, or arising thereunder,
and Assignee has agreed to accept such assignment and to assume and become
obligated to pay, perform and observe all obligations undertaken to be paid,
performed or observed in the Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
undertakings of the parties hereinbelow set forth and other good and valuable
considerations each unto the other in hand paid, the receipt and sufficiency of
all of which is hereby acknowledged, the parties agree as follows:
I. ASSIGNMENT. Assignor hereby assigns and transfers to the Assignee,
and the Assignor hereby sells, assigns and transfers to Assignee, all right,
title and interest in and to the Agreement, and all rights thereunder, subject
to the provisions of the Agreement.
1. ACCEPTANCE AND ASSUMPTION. The Assignee hereby accepts and assumes
all obligations undertaken by Assignor to be paid, performed or observed by
Assignor under the Agreement, and Assignee similarly accepts and assumes all
obligations of the Assignor undertaken herein or under the Agreement to be paid,
performed or observed by such persons.
2. CONTINUING RESPONSIBILITY. The Assignor hereby agrees,
notwithstanding the assignments and agreements set forth herein and
notwithstanding any subsequent assignment or sublease, or any indulgence granted
by the franchiser to the Assignee or to any subsequent assignee, that the
Assignor shall remain fully obligated under the Agreement.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the day and year first written above.
ASSIGNOR:
/s/ JOHN Y. BROWN, JR.
----------------------------------
JOHN Y. BROWN, JR.
<PAGE>
ASSIGNEE:
ROADHOUSE GRILL, INC., a Florida
corporation
BY: /s/ JOHN Y. BROWN, JR.
-----------------------------
Title: ILLEGIBLE
-----------------------------
2
EXHIBIT 10.28
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ( the "Agreement") is dated this 30th
day of August, 1996, by and between Roadwear, Inc., a Florida corporation
("Seller") and Roadhouse Grill, Inc., a Florida corporation ("Buyer").
RECITALS:
A. Seller and Buyer are the only members of Roadhouse Grill Kendall,
L. C., a Florida limited liability company ("Kendall L. C."), that owns and
operates a Roadhouse Grill restaurant located at 7199 S.W. 117th Avenue,
Kendall, Florida ("Restaurant").
B. Buyer desires to purchase Seller's interest and Seller desires to sell
to Buyer its interest in Kendall L. C. upon the following terms and conditions.
C. The parties acknowledge that Buyer is currently proposing to consummate
an initial public offering of its common stock prior to December 31, 1996 (the
"Offering").
In consideration of the following mutual covenants and representations,
the parties agree as follows:
1. RECITALS. The recitals set forth above are true and correct.
2. SUBJECT MATTER. Buyer agrees to purchase from Seller, and Seller
agrees to sell and deliver to Buyer, all of Seller's interest in Kendall L. C.
("Interest"). The sale of the Interest will be made free and clear of all
claims, liens and obligations.
3. CLOSING. The closing hereunder ("Closing") shall take place on or
before fifteen (15) days following the Offering at the offices of Buyer's
attorney, or as soon thereafter as the conditions to Closing are satisfied. If
the Offering is not completed by December 31, 1996, either party may terminate
this Agreement without any further rights or obligations hereunder.
4. PURCHASE PRICE AND PAYMENT. The purchase price shall be Two Million
Three Hundred Thousand Dollars ($2,300,000), less the outstanding principal
amount as of the date of the Closing of the promissory note due to Buyer from
Seller as a result of the sale of the North Miami Roadhouse Grill, which shall
be paid in cash at the Closing.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. The parties agree and
acknowledge that Buyer owns a fifty percent (50%) interest in Kendall L. C. and
Seller's Interest consists of a fifty percent (50%) interest therein. The
parties further agree and acknowledge that notwithstanding Seller's Interest,
Buyer or Buyer's representatives formed and presently maintain all of the
corporate books and records of Kendall L. C. and have primary responsibility for
the operation of the Restaurant. Accordingly, Seller's knowledge with respect to
the financial and
<PAGE>
operating status of Kendall L. C. and the Restaurant is substantially obtained
from Buyer or Buyer's representatives. Subject to the foregoing, Seller
represents and warrants that, as of the date hereof:
A. Seller has no actual knowledge of any liens, mortgages,
restrictions, pledges, encumbrances or charges on the Interest as of the date of
hereof, and as of the date of hereof, Seller has not taken any action, and
between the date hereof and the Closing, Seller will not take any action, that
would create any liens, mortgages, restrictions, pledges, encumbrances or
charges on the Interest. Subject to Buyer's representations and warranties
contained in paragraph 6 of this Agreement, (i) this Agreement is a valid and
binding obligation of Seller, enforceable in accordance with its terms; (ii)
neither the execution nor the delivery of this Agreement, nor the consummation
of the transactions contemplated by it, will result in a breach of, or give rise
to termination of, or accelerate the performance required by any terms of, any
agreement to which Seller is a party, or constitute a default thereunder, or
result in the creation of any lien, charge or encumbrance upon any of the assets
of Seller; (iii) the consent or approval of a third party is not required in
order that Seller may enter into this Agreement; and (iv) Seller knows of no
broker, finder, intermediary, attorney or other person who may have been
involved in this transaction who would be entitled to a commission or finder's
fee upon its consummation.
B. To Seller's actual knowledge, Kendall L. C. is not engaged
in or threatened with any legal action or other proceedings in any court or
administrative agency, and no act has been committed which would give rise to
any legal action or proceeding before a court or administrative agency.
C. Seller has no actual knowledge that none of the Seller,
Kendall L. C. or the Restaurant has failed to file any required federal, state
and local franchise, sales, use, occupation, income, property, payroll or any
other tax returns required to be filed by Seller, Kendall L. C. or Seller in a
timely manner with the proper authorities.
D. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of Florida and has the
power and authority to carry on business as presently conducted. The Seller has
full power and authority to enter into, execute and deliver this Agreement and
the other documents and instruments to be executed and delivered by Seller
pursuant to this Agreement and to carry into effect the transactions
contemplated hereunder and thereunder. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been or shall be duly authorized by all necessary corporate action on the
part of Seller.
E. Seller shall take no action between the date of this
Agreement and the date of the Closing which shall cause any of its
representations or warranties to be untrue as of the date of the Closing.
2
<PAGE>
6. REPRESENTATIONS AND WARRANTIES OF BUYER.
A. This Agreement is a valid and binding obligation of Buyer,
enforceable in accordance with its terms. Neither the execution nor the delivery
of this Agreement, nor the consummation of the transactions contemplated by it,
will result in a breach of, or give rise to termination of, or accelerate the
performance required by any terms of, any agreement to which Buyer or Kendall L.
C. is a party, or constitute a default thereunder, or result in the creation of
any lien, charge or encumbrance upon any of the assets of Buyer. The consent or
approval of a third party is not required in order that Buyer may enter into
this Agreement. Buyer knows of no broker, finder, intermediary, attorney or
other person who may have been involved in this transaction who would be
entitled to a commission or finder's fee upon its consummation.
B. Kendall L. C. is not engaged in or threatened with any
legal actions or other proceedings in any court or administrative agency, and no
act has been committed which would give rise to any legal action or proceeding
before a court or administrative agency.
C. Kendall L. C. and the Restaurant are in material compliance
in all respects with all applicable federal, state and local laws, rules,
regulations or other orders or directives of any governmental authority relating
to pollution or protection of the environment in effect in the jurisdiction in
which such Restaurant, properties, businesses and operations may be located and
all federal, state and local franchise, sales, use, occupation, income,
property, payroll or any other tax returns required to be filed by Kendall L. C.
or Buyer have been filed in a timely manner with the proper authorities; the
parties hereby acknowledging that Buyer and/or its representatives have had
primary responsibility for the compliance of the foregoing with respect to
Kendall L. C. and the Restaurant.
D. Kendall L. C. is a limited liability company duly
organized, validly existing and in good standing under the laws of the state of
Florida and has the power and authority to carry on its business as presently
conducted.
E. Buyer shall take no action between the date of this
Agreement and the date of the Closing which shall cause any of its
representations or warranties to be untrue as of the date of the Closing.
F. Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the state of Florida and has the power and
authority to carry on business as presently conducted. Buyer has full power and
authority to enter into, execute and deliver this Agreement and the other
documents and instruments to be executed and delivered by Buyer pursuant to this
Agreement and to carry into effect the transactions contemplated hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been or shall be duly
authorized by all necessary corporate action on the part of Buyer.
3
<PAGE>
7. TRANSFER COSTS. All sales, transfer or use taxes and/or other fees,
including bulk sales taxes which may be imposed or assessed as the result of the
transactions effected by this Agreement, except those taxes imposed upon the
income of Seller, if any, shall be paid equally by the Buyer and the Seller as
soon after the closing as may be required by taxing authorities pursuant to
Federal, State or local laws. Each party shall pay its own attorneys' fees.
8. INDEMNIFICATION BY SELLER. Seller shall indemnify Buyer from and
hold it harmless against any claims, demands, losses, expenses and charges
incurred by Buyer as a result of any debts or liens against the Interest arising
prior to the Closing. Buyer may offset such amounts due it hereunder against any
amounts due Seller by Buyer.
9. INDEMNIFICATION BY BUYER. Buyer shall indemnify Seller from and hold
it harmless against any and all claims, demands, losses, expenses and charges
incurred by Seller as a result of any claims brought against Seller arising
subsequent to the Closing related to Kendall L. C. except such claims which
arose due to the fault or neglect of Seller.
10. CONDITIONS TO CLOSING. The obligations of Buyer and Seller (any of
which may be waived by the party seeking to enforce the obligation) to complete
the transactions contemplated herein are subject to the following conditions:
A. All representations and warranties of Seller and Buyer
contained in this Agreement shall be true and correct in all material respects
as of the Closing.
11. CLOSING DOCUMENTS.
A. At the Closing, the Seller shall deliver to Buyer:
(i) an assignment of interest so as to transfer to
Buyer title to all of Seller's Interest; and
(ii) such documents and instruments as may be
reasonably required by counsel for Buyer.
B. At the Closing, Buyer shall deliver to Seller:
(i) The cash purchase price; and
(ii) Such documents and instruments as may be
reasonably required by counsel for Seller.
12. NOTICES. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been
4
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properly given if delivered personally or mailed first class, postage prepaid,
registered or certified mail, return receipt requested, as follows:
SELLER: Roadwear, Inc.
-------------------------
-------------------------
BUYER: Roadhouse Grill, Inc.
6600 North Andrews Avenue
Suite 160
Fort Lauderdale, Florida 33309
Any party hereto may change the address or addresses to which such
communications should be directed by giving written notice to the other party of
such change.
13. CAPTION HEADINGS AND CONSTRUCTION OF AGREEMENT. The caption
headings are used in this Agreement only as a matter of convenience and for
reference and do not define, limit or describe the scope of this Agreement nor
the intent of any provision. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida. Any suit,
action or other legal proceeding arising out of or relating to this Agreement
shall be brought in a court of the state of Florida, Broward County, or in the
United States District Court Souther District, having subject matter
jurisdiction of such forum.
14. ENTIRE AGREEMENT - MODIFICATION: SURVIVAL. This Agreement sets
forth the entire agreement and understanding of the parties in respect to the
transactions contemplated by it and supersedes any and all prior agreements and
understandings relating to the subject matter of this Agreement. The
representations and warranties made herein shall survive the Closing and shall
be binding upon and shall inure to the benefit of the parties and their
successors, assigns, heirs and personal representatives. This Agreement may be
amended, modified, superseded or canceled, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, only by a
written instrument executed by the parties or, in the case of a waiver, by the
party waiving compliance.
15. NON-WAIVER. No waiver or waivers by any party of any provision of
this Agreement, whether by conduct or otherwise, shall be deemed to be a further
or continuing waiver of that or any other provision of this Agreement.
16. CONTINUED PAYMENTS. Notwithstanding anything to the contrary
contained herein, Buyer shall cause Kendall, L. C. to continue to fund, from
operations, the following payments through the date of the Closing: (i) the
Dixon Notes; (ii) the Burmeister and Hoffman $5,000 payments; and the North
Miami Roadhouse Grill note payments.
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This Agreement is hereby executed by the parties on the day and year
first written above.
SELLER: BUYER:
ROADWEAR, INC., ROADHOUSE GRILL, INC.
a Florida corporation a Florida corporation
By: /S/ William A. Hoffman By: /S/ John D. Toole III
Title: CEO Title: President
6
EXHIBIT 10.29
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1993, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE OFFERED FOR SALE UNLESS SUCH TRANSACTION IS REGISTERED UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
Dated: August 16, 1996 No. B-1
WARRANT
To Purchase Shares of
Common Stock of
ROADHOUSE GRILL, INC.
Expiring December 31, 1997
THIS IS TO CERTIFY THAT, for value received, BERJAYA GROUP (CAYMAN)
LIMITED or registered assigns ("Holder") is entitled to purchase shares of
Common Stock from Roadhouse Grill, Inc., a Florida corporation (the "Company"),
at a per share price equal to the Exercise Price then in effect at any time or
from time to time after 9:00 a.m., Eastern time, on January 1, 1997 and prior to
5:00 p.m., Eastern time, on December 31, 1997 at the place where the Warrant
Agency is located. The number of shares of Common Stock for which this Warrant
shall be exercisable from time to time shall be that number of shares (rounded
up to the nearest whole number) equal to (a) the Warrant Share Amount (which is
initially $200,000) divided by (b) the Exercise Price, all subject to adjustment
and upon the terms and conditions hereinafter provided.
Certain terms used in this Warrant are defined in Article I hereof.
<PAGE>
ARTICLE I
DEFINITIONS
The following terms, as used in this Warrant, have the following
meanings:
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day on
which banking institutions located in Florida are authorized by law or other
governmental action to be closed, unless there shall have been an offering of
the Common Stock of the Company registered under the Securities Act, in which
case "Business Day" means (a) if the Common Stock is listed or admitted to
trading on a national securities exchange, a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to trading
is open for business or (b) if the Common Stock is not so listed or admitted to
trading, a day on which the New York Stock Exchange is open for business.
"COMMON STOCK" means the Common Stock, par value $.01 per share, of the
Company.
"EXERCISE DATE" means the date on which the Holder exercises all or any
portion of this Warrant in accordance with the provisions of Section 2.1.
"EXERCISE PERIOD" means the period beginning on January 1, 1997, and
terminating at 5:00 p.m. Eastern time on December 31, 1997.
"EXERCISE PRICE" means (a) if the Company has consummated an IPO, 80%
of the IPO Price, or (b) $3.60 per share, in the event the Company has not
consummated an IPO, as of the applicable Exercise Date, subject to adjustment as
provided in Section 4.1 hereof.
"HOLDER" has the meaning set forth in the first paragraph of this
Warrant.
"IPO" means the initial public offering by the Company of shares of
Common Stock pursuant to a registration statement filed in accordance with the
Securities Act that has been declared effective by the Securities and Exchange
Commission and the shares registered thereunder have been distributed to the
public in accordance with the plan of distribution described in such
registration statement.
"IPO PRICE" means the price per share to the public of the Common
Stock in the IPO.
"NASD" means The National Association of Securities Dealers, Inc.
"PERSON" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust,
2
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business trust or other organization, whether or not a legal entity, and any
government agency or political subdivision thereof.
"PRICE DATE" shall mean, if the Exercise Price is determined based upon
clause (a) of the definition of "Exercise Price", the date of the consummation
of the IPO, or, if the Exercise Price is determined based upon clause (b) of the
definition of "Exercise Price", the date of this Warrant.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and any
successor federal statute, and the rules and regulations promulgated thereunder.
"WARRANT AGENCY" has the meaning set forth in Section 3.1.
"WARRANT SHARE AMOUNT" at any point in time while this Warrant is
outstanding means an amount equal to $200,000 less the total amount of the
Exercise Price theretofore paid to the Company pursuant to all prior exercises
of this Warrant.
ARTICLE II
EXERCISE OF WARRANTS
2.1 METHOD OF EXERCISE. To exercise this Warrant in whole or in part,
the Holder shall deliver on any Business Day to the Company, at the Warrant
Agency, (a) this Warrant; (b) a written notice of such Holder's election to
exercise this Warrant, which notice shall specify the number of shares to be
purchased, the denominations of the share certificate or certificates desired
and the name or names in which such certificates are to be registered; and (c) a
check payable to the Company in an amount equal to the product of the Exercise
Price multiplied by the number of shares of Common Stock being purchased upon
such exercise.
The Company shall, as promptly as practicable and in any event
within seven days after receipt of such notice execute and deliver or cause to
be executed and delivered, in accordance with such notice, a certificate or
certificates representing the aggregate number of shares of Common Stock
specified in said notice and, to the extent this Warrant was not fully
exercised, a new Warrant for the remaining portion of this Warrant. The share
certificate or certificates so delivered shall be in such denominations as may
be specified in such notice, and shall be issued in the name of the Holder or
such other name or names as shall be designed in such notice. This Warrant shall
be deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and such Holder or any other Person so designated to
be named therein shall be deemed for all purposes to have become a holder of
record of shares, as of the date the aforementioned notice is received by the
Company. The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of share certificates,
except that, if share certificates shall be registered in a name or names other
than the name of the Holder, funds sufficient to pay all transfer taxes payable
as a result of such transfer shall be paid by the Holder at the time
3
<PAGE>
of delivery of the aforementioned notice of exercise or promptly upon receipt
of a written request of the Company for payment.
2.2 SHARES TO BE FULLY PAID AND NONASSESSABLE. All shares of Common
Stock issued upon the exercise of this Warrant shall be validly issued, fully
paid and nonassessable, free and clear from all encumbrances of any nature
whatsoever other than any restrictions imposed under any federal or state
securities laws or encumbrances created by the Holder, and such shares will rank
pari passu with all other outstanding shares of Common Stock.
2.3 RESERVATION. The Company has duly reserved and will keep available
for issuance upon exercise of this Warrant the total number of shares of Common
Stock deliverable from time to time upon full exercise of this Warrant.
ARTICLE III
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANT
3.1 WARRANT AGENCY. So long as this Warrant remains outstanding, the
Company shall perform the obligations of and be the warrant agency with respect
to this Warrant (the ("Warrant Agency") at its address set forth on the
signature page hereof or at such other address as the Company shall specify by
notice to the Holders.
3.2 OWNERSHIP OF WARRANT. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(nothwithstanding any notations of ownership or writing hereon made by any
person other than the Company) for all purposes and shall not be affected by any
notice to the contrary, until due presentment of this Warrant for registration
of transfer as provided in this Article III.
3.3 TRANSFER OF WARRANT. The Company agrees to maintain at the Warrant
Agency books for the registration of transfers of this Warrant, and transfers of
this Warrant and all rights hereunder shall be registered, in whole or in part,
on such books, upon surrender of this Warrant at the Warrant Agency, together
with a written assignment of this Warrant duly executed by the Holder or its
duly authorized agent or attorney, with (if the Holder is a natural person)
signatures guaranteed by a bank or trust company or a broker or dealer
registered with the NASD, and funds sufficient to pay any transfer taxes payable
upon such transfer. Upon surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees and in the denominations specified in the instrument of assignment
(which shall be whole dollar amounts with respect to the Warrant Share Amount)
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled.
4
<PAGE>
3.4 DIVISION OR COMBINATION OF WARRANTS. This Warrant may be divided or
combined with other Warrants upon presentment hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations (which
shall be whole dollar amounts with respect to the Warrant Share Amount) in which
the new Warrant or Warrants are to be issued, signed by the holders hereof and
thereof or their respective duly authorized agents or attorneys. Subject to
compliance with Section 3.3 as to any transfer or assignment which may be
involved in the division or combination, the Company shall execute and deliver a
new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
3.5 LOSS, THEFT, DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt of
evidence satisfactory to the Company of the ownership of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of Common
Stock.
3.6 EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants hereunder.
ARTICLE IV
ADJUSTMENT OF EXERCISE PRICE
4.1 If the Company, at any time after the Price Date with respect to a
particular exercise of this Warrant, subdivides (by any stock split, stock
dividend, recapitalization or otherwise) the outstanding shares of Common Stock
into a greater number of shares, the Exercise price in effect immediately prior
to such subdivision will be proportionately reduced. If the Company, at any time
after the Price Date with respect to a particular exercise of this Warrant,
combines (by reverse stock split or otherwise) the outstanding shares of Common
Stock into a smaller number of shares, the Exercise Price in effect immediately
prior to such combination will be proportionately increased.
ARTICLE V
MISCELLANEOUS
5.1 NO VOTING RIGHTS; LIMITATIONS OF LIABILITY. This Warrant will not
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision hereof, in the absence of affirmative action by the
Holder to purchase Common Stock, and no enumeration herein of the rights or
privileges of the Holder shall give rise to any liability of such holder for the
Exercise Price of Common Stock acquirable by exercise hereof or as a stockholder
of the Company.
5
<PAGE>
5.2 NOTICES. Notices and other communications provided for herein shall
be in writing and may be given by mail, courier, confirmed telex or facsimile
transmission and shall, unless otherwise expressly required, be deemed given
when received or when delivery thereof is refused. In the case of the Holder,
such notices and communications shall be addressed to its address as shown on
the books maintained by the Warrant Agency, unless the Holder shall notify the
Warrant Agency that notices and communications should be sent to a different
address (or telex or facsimile number), in which case such notices and
communications shall be sent to the address (or telex or facsimile number)
specified by the Holder.
5.3 WAIVERS; AMENDMENTS. No failure or delay of any party in exercising
any power or right hereunder shall operate as a waiver thereof (except where a
specific time period for the exercise of such power or right is expressly set
forth herein), nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. No notice or demand on any party in any case shall entitle
such party to any other or future notice or demand in similar or other
circumstances. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Holder and the Company.
5.4 GOVERNING LAW. This Warrant shall be construed in accordance with
and governed by the laws of the State of Florida. The venue for all legal
proceedings arising out of this Warrant shall be Broward County, Florida.
5.5 SEVERABILITY. In case any one or more of the provisions contained
in this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as possible to that of the invalid, illegal or unenforceable provisions.
5.6 SECTION HEADINGS. The section headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized, and its
corporate seal to be hereunto affixed, attested by its Secretary or an Assistant
Secretary, all as of the day and year first above written.
6
<PAGE>
ROADHOUSE GRILL, INC.
By: /S/ J. DAVID TOOLE, III
----------------------------
Name: J. David Toole, III
Title: President and Chief Executive
Attest:
/S/ CHARLES D. BARNETT
- ----------------------
Name: Charles D. Barnett
Title: Secretary
ADDRESS:
6600 North Andrews Avenue
Suite 160
Fort Lauderdale, Florida 33309
7
EXHIBIT 10.30
PROMISSORY NOTE
U.S. $2,000,000.00 Fort Lauderdale, Florida
August 16, 1996
FOR VALUE RECEIVED, the undersigned, Roadhouse Grill, Inc., a Florida
corporation, (hereinafter referred to as the "Maker"), promises to pay to the
order of Berjaya Group (Cayman) Limited (hereinafter referred to as the
"Holder"), the principal sum of Two Million Dollars ($2,000,000), together with
interest thereon at the rate of eight and one half percent (8.50%) per annum
calculated on a daily basis from the date of the disbursement of the principal
up to the date of its full repayment. Interest shall be payable at the earlier
of (i) when the principal amount is due and payable or (ii) every three months
with the first payment due November 1, 1996. The principal amount shall be due
and payable upon the earlier of (i) the initial public offering of Maker's
securities or (ii) July 31, 1997.
Maker may prepay the principal amount outstanding in whole or in part
at any time without penalty. All such prepayments shall be applied first to the
payment off all accrued but unpaid interest, and second to the outstanding
principal balance.
Maker shall make all of its payments to Holder at such place as Holder
may designate to Maker.
This Note shall be in default when any payment required to be made
hereunder shall not have been made on the due date. While in default, the
outstanding principal balance shall bear interest at the maximum rate permitted
by law. If Maker is in default by failing to make any payment of principal
and/or interest on its due date, and Maker fails to make such payment within ten
(10) days after the date of Holder's mailing written notice of such default to
Maker or if Maker is otherwise in default as provided for herein, then the
entire outstanding principal balance, and all accrued but unpaid interest
thereon, shall immediately become due and payable at the option of the Holder
without notice to or demand upon Maker. Holder may exercise this option to
accelerate in accordance with the terms of this Note notwithstanding any prior
forbearance. If suit is brought to collect this Note, the Holder shall be
entitled to collect from Maker all costs and expenses of such suit, including,
but not limited to, reasonable attorney's fees through trial and appellate
levels.
Maker and all endorsers and guarantors jointly and severally waive
presentment for payment, demand, notice of nonpayment, protest, and notice of
protest, and consent to the terms hereof and to an extension or postponement of
the time for payment or any other indulgence and shall remain fully liable
hereunder in the event of any such extension, postponement or other indulgence.
It is the intention of the Maker and the Holder that the interest
charged hereunder shall in no event ever exceed the maximum rate permitted by
law, and any interest or payments in the nature
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of interest which would render his Note usurious shall, at the option of the
Holder, be either refunded to the Maker or credited against the outstanding
principal balance.
This Note shall be governed by and construed in accordance with the
laws of the State of Florida.
ROADHOUSE GRILL, INC.,
a Florida corporation
By:/S/ J. DAVID TOOLE, III
---------------------------
Title:PRESIDENT
------------------------
2
EXHIBIT 10.31
MASTER DEVELOPMENT AGREEMENT
EXECUTION DATE: 5 JANUARY 1996
BETWEEN
ROADHOUSE GRILL, INC. ("COMPANY")
AND
ROADHOUSE GRILL ASIA PACIFIC (H.K.) LIMITED
("DEVELOPER")
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
----
1. PREAMBLES................................................................. 1
2. CERTAIN DEFINITIONS....................................................... 1
3. DEVELOPMENT RIGHTS AND OBLIGATIONS........................................ 3
A. GRANT OF DEVELOPMENT RIGHTS............................................ 3
B. EXCLUSIVE RIGHTS....................................................... 3
C. RIGHTS RETAINED BY COMPANY............................................. 3
4. DEVELOPMENT SCHEDULE...................................................... 4
A. PERFORMANCE SCHEDULE................................................... 4
B. CUMULATIVE CREDITS..................................................... 4
C. SUBSEQUENT DEVELOPMENT SCHEDULE........................................ 4
5. SERVICE RIGHTS AND OBLIGATIONS............................................ 4
A. GRANT OF SERVICE RIGHTS................................................ 4
B. EXCLUSIVE RIGHTS....................................................... 4
C. RIGHTS RETAINED BY COMPANY............................................. 5
6. TRAINING AND ASSISTANCE................................................... 5
A. INITIAL ASSISTANCE..................................................... 5
B. INITIAL AND CONTINUING TRAINING........................................ 6
C. CONTINUING ASSISTANCE BY COMPANY....................................... 6
D. OPERATING MANUAL................................................. ......6
7. GRANT, SUPPORT AND SUPERVISION OF FRANCHISES
AND AFFILIATES............................................................ 7
A. FRANCHISEE APPROVAL.................................................... 7
B. SITE SELECTION......................................................... 7
C. SPECIFICATIONS, STANDARDS AND PROCEDURES............................... 7
D. FRANCHISEE SUPPORT............................................... ..... 9
E. FRANCHISEE COMPLIANCE WITH THE SYSTEM.................................. 9
F. APPROVED PRODUCTS, DISTRIBUTORS AND SUPPLIERS.......................... 9
G. INSURANCE..............................................................10
H. RECORDS AND REPORTS....................................................10
I. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES.......................11
J. MANAGEMENT OF DEVELOPER......................................... ......11
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8. FEES.....................................................................12
A. THIRD PARTY FRANCHISEE FEES...........................................12
B. DEVELOPER FEES........................................................12
9. ADVERTISING..............................................................13
A. ADVERTISING FUNDS.....................................................13
B. CONDUCT OF ADVERTISING ACTIVITIES.....................................13
10. CONFIDENTIAL INFORMATION.................................................14
11. EXCLUSIVE RELATIONSHIP...................................................15
12. INDEPENDENT CONTRACTORS/INDEMNIFICATION..................................16
13. MARKS....................................................................17
A. OWNERSHIP AND GOODWILL OF MARKS.......................................17
B. LIMITATIONS ON DEVELOPER'S USE OF MARKS...............................17
C. DISCONTINUANCE OF USE OF MARKS........................................17
D. NOTIFICATION OF INFRINGEMENTS AND CLAIMS..............................18
E. INDEMNIFICATION OF DEVELOPER..........................................18
14. TRANSFER AND ASSIGNMENT..................................................18
A. TRANSFER BY COMPANY...................................................18
B. TRANSFER BY DEVELOPER.................................................18
15. TERMINATION OF AGREEMENT.................................................19
16. RIGHTS AND OBLIGATIONS UPON TERMINATION..................................20
A. PAYMENT OF AMOUNTS OWED TO COMPANY....................................20
B. CONTINUING OBLIGATIONS................................................20
17. ENFORCEMENT..............................................................20
A. JUDICIAL ENFORCEMENT INJUNCTIONS, AND
SPECIFIC PERFORMANCE..................................................20
B. ARBITRATION...........................................................21
C. WAIVER OF OBLIGATIONS.................................................21
D. RIGHTS OF PARTIES ARE CUMULATIVE......................................21
E. LIMITATION OF CLAIMS..................................................21
F. COSTS AND LEGAL FEES..................................................21
G. GOVERNING LAW.........................................................22
H. CONSENT TO JURISDICTION...............................................22
-ii-
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I. BINDING EFFECT........................................................22
J. CONSTRUCTION..........................................................22
K. ENTIRE AGREEMENT......................................................22
18. NOTICES AND APPROVALS....................................................22
-iii-
<PAGE>
MASTER DEVELOPMENT AGREEMENT
THIS AGREEMENT is made and entered into this 5 day of January, 1996
(the "Execution Date"), by and between ROADHOUSE GRILL, INC., a Florida
corporation with its principal offices at 6600 North Andrews Avenue, Suite 160,
Fort Lauderdale, Florida 33309 ("Company"), and ROADHOUSE GRILL ASIA PACIFIC (H.
K.) LIMITED, a Hong Kong corporation ("Developer").
1. PREAMBLES. The Company franchises certain steak restaurants, known
as Roadhouse Grill Restaurants (the "Restaurants"), which feature steaks,
vegetables, salads, beverages and certain other food products (the "Products")
for consumer consumption through on-premises and carry-out sales. The Company
uses and licenses certain trademarks, service marks and trade dress, including
"Roadhouse Grill" and associated logo, and may hereafter adopt, use and license
additional trademarks, service marks and trade dress (collectively, the "Marks")
in conjunction with the operation of Restaurants. Restaurants operate under the
Company's confidential and proprietary information, trade secrets, distinctive
image, designs, business formats, methods, procedures, specifications and the
Marks (collectively, the "System"), all of which may be further developed or
otherwise modified by the Company from time to time.
DEVELOPER ACKNOWLEDGES AND AGREES THAT, PURSUANT TO THIS AGREEMENT,
DEVELOPER WELL RECEIVE VALUABLE AND PROPRIETARY COMMERCIAL RIGHTS AND BENEFITS.
DEVELOPER WILL BE PROVIDED WITH THE TECHNIQUES AND KNOW-HOW UNDERLYING THE
SYSTEM, INCLUDING FUTURE IMPROVEMENTS AND DEVELOPMENTS, IN THE FORM OF OPERATING
MANUALS AND OTHER DOCUMENTATION, TRAINING PROGRAMS AND ONGOING CONSULTATION
SERVICES.
2. CERTAIN DEFINITIONS. For purposes of this Agreement, the terms
listed below have the meanings indicated. Other terms used in this Agreement are
defined and construed in the context in which they occur.
"AFFILIATE" - Any person or entity that directly or indirectly owns or
controls, that is directly or indirectly owned or controlled by, or that is
under common ownership or control with, Company or Developer. For purposes of
this definition, the term "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person or entity, whether through ownership of voting rights by
contract or otherwise.
"AGREEMENT DATE" - The date on which this Agreement is executed.
<PAGE>
"AGREEMENT TERM" - The period commencing upon the Agreement Date and
continuing in perpetuity unless terminated as provided herein.
"COMPETITIVE BUSINESS" - A dine-in, sit down restaurant, other than a
Restaurant, that (a) serves or sells steaks and other items similar to those
being offered in the Restaurants using display cooking; or (b) grants or has
granted franchises or licenses, or establishes or has established partnerships
or joint ventures, for the development and/or operation of an enterprise or
business described in the foregoing clause (a).
"DEVELOPMENT RIGHTS" - The right to develop and operate a Restaurant or
grant a Franchise to a Third Party Franchisee.
"FRANCHISE" - The right to develop and operate a Restaurant within a
defined area of the Territory and to use the Marks and the System in the
operation thereof.
"FRANCHISE AGREEMENT" - The form of franchise agreement (including all
exhibits, ancillary documents and guarantees attached thereto) attached as
Exhibit "A" to this Agreement, subject to such modifications and amendments as
reasonably necessary to comply with applicable law, for the grant of Franchises
to Franchisees, and any ancillary agreements required by Company for the
operation of a Restaurant (as defined below).
"FRANCHISEE" - A person or legal entity that meets Company's standards
and requirements for owners of Franchises, including, without limitation,
financial requirements and limits on the total number of holders of equity
interests and requirements for owners of noncontrolling ownership interests.
Unless the context requires otherwise, the term "Franchisee" shall include
Affiliates of Developer who have entered into Franchise Agreements for the
operation of a Restaurant.
"FRANCHISEE SERVICES" - All services required or permitted to be
provided by the Company to Franchisees pursuant to the Franchise Agreement.
"LEGAL REQUIREMENTS" - Applicable laws, ordinances, regulations, rules,
administrative orders, decrees and policies of any government, governmental
agency or department, including but not limited to the government of the United
States and the government of the Territory.
"OWNERS" - All persons or entities holding Ownership Interests in
Developer.
"OWNERSHIP INTEREST" - A direct or indirect, disclosed or undisclosed,
legal or beneficial ownership or property right, including, without limitation
(1) in relation to a corporation, the ownership of capital stock in the
corporation; (2) in relation to a partnership, the ownership of a general or
limited partnership interest; or (3) in relation to a trust, the ownership of
the beneficial interest of such trust.
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"PRODUCTS" - All products and services which Company authorizes for
sale at Restaurants.
"RESTRICTED PERSONS" - Developer, Owners and its or their spouses.
"ROYALTY SALES" - The revenue generated from the sale of products and
services in connection with the operation of a Restaurant, as defined in the
Franchise Agreement.
"RESTAURANT" - A Roadhouse Grill restaurant owned and operated by the
Developer or a Franchisee.
"SERVICE RIGHTS" - The right to provide Franchisee Services to
Restaurants.
"TERRITORY" - The country of Hong Kong.
"THIRD PARTY FRANCHISEE" - A Franchisee that is not the Developer or an
Affiliate of the Developer.
3. DEVELOPMENT RIGHTS AND OBLIGATIONS.
A. GRANT OF DEVELOPMENT RIGHTS. Subject to the terms and conditions
of this Agreement, Company grants to Developer all Development Rights to develop
and franchise Restaurants in the Territory. The rights granted to Developer by
this Agreement are limited to the Territory and Developer agrees that it is not
granted any rights other than the Development Rights and Service Rights for
Restaurants in the Territory.
B. EXCLUSIVE RIGHTS. Except as hereinafter provided, and provided
that Developer is in full compliance with this Agreement, from and after the
date of this Agreement, Company (on behalf of itself and its Affiliates) will
not develop, own or operate Restaurants or grant others the right to develop,
own or operate Restaurants within the Territory during the Agreement Term. Upon
the termination of this Agreement, Company and its Affiliates, subject to the
rights granted to Developer pursuant to any other agreements entered into with
Company, shall have the right to own or operate Restaurants, and to grant to
others the right to own and operate Restaurants within the Territory.
C. RIGHTS RETAINED BY COMPANY. Subject to the exclusive rights
granted to Developer by Paragraph B of this Section, Company (on behalf of
itself and its Affiliates)
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retains all rights with respect to the Restaurants, the marks and the sale of
Products and any other products and services, anywhere in the world, including,
without limitation:
(1) the right to operate or grant others the right to operate
Restaurants at such locations and on such terms and conditions as the Company,
in its sole discretion, determines; and
(2) the right to develop, manufacture, distribute and/or sell
Products and other products and services through any channel of distribution or
own or operate any business, under or in association with the marks or any other
trademark.
4. DEVELOPMENT SCHEDULE.
A. PERFORMANCE SCHEDULE. The opening of Restaurants pursuant to this
Agreement shall be credited against the Development Schedule set forth in the
Master Development Agreement between Company and Roadhouse Grill Asia Pacific
(Cayman) Limited dated even date herewith ("RGAP Cayman Development Agreement").
B. CUMULATIVE CREDITS. The Development Schedule shall be cumulative
and, therefore, if additional Restaurants are completed ahead of schedule, these
will be credited to the subsequent period of performance.
C. SUBSEQUENT DEVELOPMENT SCHEDULE. After the initial term set forth
in Section 4A, if Developer has completed the required development, Developer
shall continue to develop and/or franchise Restaurants as part of the RGAP
Cayman Development Agreement. If Developer fails to meet this Development
Schedule, then either party may sell franchises to Third Party Franchisees on
behalf of the Developer so long as the royalty fee is at least three percent
(3%) of gross sales, as defined in the Franchise Agreement.
5. SERVICE RIGHTS AND OBLIGATIONS.
A. GRANT OF SERVICE RIGHTS. Subject to the terms and conditions of
this Agreement, Company grants to Developer all Service Rights for Restaurants
in the Territory. The rights granted to Developer by this Agreement are limited
to the Territory and Developer agrees that it is not granted any rights other
than the Service Rights and Development Rights for Restaurants.
B. EXCLUSIVE RIGHTS. Except as hereinafter provided, and provided
that Developer is in full compliance with this Agreement, from and after the
date of this Agreement, Company (on behalf of itself and its Affiliates) will
not provide or grant others the right to provide Franchisee Services to the
Restaurants owned by Developer or other Franchisees within the Territory during
the Agreement Term. Upon the termination of this Agreement, Company and its
Affiliates, subject to the rights granted to Developer pursuant to any other
agreements entered
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into with Company, shall have the right to provide Franchisee Services to, and
to grant to others rights to provide Franchisee Services, to Restaurants within
the Territory.
C. RIGHTS RETAINED BY COMPANY. Subject to the exclusive rights
granted to Dteveloper under Paragraph B of this Section, Company (on behalf of
itself and its Affiliates) retains all rights with respect to Restaurants, the
marks and the sale of Products and any other products and services, anywhere in
the world, including, without limitation:
(1) the right to provide or grant others the right to provide
Franchisee Services to Restaurants at such locations and on such terms and
conditions as the Company, in its sole discretion, determines; and
(2) the right to develop, manufacture, distribute and/or sell
Products and other products and services through any channel of distribution or
own or operate any business, under or in association with the marks or any other
trademark.
6. TRAINING AND ASSISTANCE.
A. INITIAL ASSISTANCE. Company shall instruct and consult with
Developer's personnel on adaptation of the System to the operation of
Restaurants in the Territory. In connection with such assistance, Company shall
furnish written and other materials and various of its personnel to communicate
the System to Developer. Written and other materials and instruction and
consultation furnished by Company personnel will relate to: (a) design, image,
layout, appearance and decor of the Restaurants; (b) furnishings, fixtures,
equipment and signage; (c) purchasing and sources of materials, supplies and
products; (d) employee and Franchisee training; (e) bookkeeping, accounts and
recordkeeping procedures and reports; (f) advertising, promotion, public
relations, and marketing; (g) auditing, inspection, Franchisee Services, and
other Restaurant services; (h) operating procedures; (i) franchise compliance
programs and procedures; and (j) computer hardware and software systems and
programs. Instruction and consultation by Company personnel shall be provided
solely in Florida (except as otherwise set forth in this Paragraph) through the
initial training program described in Paragraph B below and by telephone,
facsimile transmission, and correspondence. All materials will be furnished in
English. Developer, at its expense, will be responsible to translate the
materials into the appropriate language(s) for use in the Territory.
After an appropriate number of Restaurants are opened in the
Territory, Developer shall establish a training facility to provide a training
program which has been certified by the Company. In connection with the opening
of the training facility, Company will make available the services of one of its
qualified representatives to provide on-site pre-opening advice and guidance.
Such services shall be available to Developer for a period not to exceed one (1)
week prior to the opening of the training facility. Company shall be responsible
for all travel and living expenses and compensation of its representatives who
perform such services.
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B. INITIAL AND CONTINUING TRAINING. Developer shall designate at
least two (2) trainees to attend an initial training program offered by Company.
All wages and travel, lodging and living expenses incurred by such trainees
shall be the sole responsibility of Developer. The initial training program
shall consist of approximately two (2) months of instruction at Company's
headquarters and at open and operating Restaurants in Florida. The training
program shall cover, among other things, the subjects described in Paragraph A
hereof. Upon completion of the instruction of Developer's trainees, Company
shall determine, in its sole discretion, which of such trainees have
successfully completed the instruction program.
Developer's personnel shall have the right to attend, on a
space-available basis, subsequent training programs conducted by Company from
time to time at times and locations designated by Company. Such subsequent
training program will be made available at no charge, to the number of
supervisory personnel Developer is required to maintain in accordance with
Company's guidelines, and at Company's then standard charges for such training
program, to additional personnel. Developer shall be responsible for all travel
and living expenses and compensation of its personnel who attend such training
programs.
C. CONTINUING ASSISTANCE BY COMPANY. Company personnel shall be
available for periodic consultation with Developer's personnel. Such
consultation shall be by telephone, facsimile transmission, and correspondence.
Company personnel shall have no obligation to travel to the Territory (except in
connection with the opening of the training facility as set forth in Paragraph A
above); however, Company shall have the right, through employees, agents or
consultants, to visit and inspect any Restaurants in the Territory at any time
during the Agreement Term.
D. OPERATING MANUAL. Company shall furnish to Developer a copy of
its operating manual (which may consist of one or more manuals) and other
materials describing the System. Such operating manual and materials will
contain specifications, standards and operating procedures prescribed to Company
for the development and operation of Restaurants constituting the System.
Developer shall submit for review and approval by Company any material
modifications to the System that Developer believes to be necessary to comply
with the legal requirements or for the commercial success of Restaurants
operated in the Territory. Company agrees to consider such proposed
modifications in good faith and notify Developer of Company's acceptance or
rejection of
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such modifications. The modified System, developed as hereinabove provided,
shall be reflected in a development and operating manual for the Territory
(herein the "Operating Manual"). The Operating Manual and the copyright thereof
shall be the property of Company. Company will loan copies of the Operating
Manual to Developer and Franchisees as required for the development and
operation of Restaurants in accordance with this Agreement and Franchise
Agreements. The Operating Manual may be modified by Company, from time to time,
to reflect changes to the System. In the event of a dispute relative to the
contents or meaning of the Operating Manual, the version maintained by Company
at its headquarters shall be controlling. The Operating Manual shall be
furnished in English. Developer, at its expense, will be responsible to
translate the materials into the appropriate language(s) for use in the
Territory.
7. GRANT, SUPPORT AND SUPERVISION OF FRANCHISES AND AFFILIATES.
A. FRANCHISEE APPROVAL. Subject to the Company's final approval,
Developer shall select each Franchisee in accordance with Company's then current
criteria for Franchisees, which shall include, without limitation, criteria with
respect to: (1) character, background and reputation; (2) financial and
management capability; and (3) existing or prior involvement in Competitive
Businesses. Each Franchisee shall enter into a Franchise Agreement with
Developer in such form as is approved by the Company and complies with the Legal
Requirements. Each Franchise Agreement shall provide that upon termination of
this Agreement, the Franchise Agreement will be automatically assigned to
Company.
B. SITE SELECTION. Each site for a Restaurant in the Territory shall
be in accordance with Company's then current prescribed site selection criteria,
and shall be approved by both Company and Developer. Company shall approve or
disapprove a site within ten (10) days after receipt by Company of its site
selection package fully completed.
C. SPECIFICATIONS, STANDARDS AND PROCEDURES. Developer acknowledges
that the image, appearance, layout, decor, furnishings, equipment, services and
operation of the Restaurants is important to the Company and any, Restaurants.
Developer agrees to maintain the high standards of quality and service of
Restaurants it operates through Affiliates and of Restaurants operated by
Franchisees. Developer further agrees to comply with and cause the Franchisees
to comply with all mandatory specifications, standards and operating procedures
(whether contained in the Operating Manual or any other written communication to
Developer) relating to the operation of a Restaurant (the "System Standards"),
including, but not limited to:
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(1) type, quality, dimensions, uniformity, manner of presentation
of all products sold by Restaurants and all other products used in
the packaging and sale thereof;
(2) sales and marketing procedures and customer service;
(3) advertising and promotional programs;
(4) location, image, layout, appearance and decor of Restaurants;
(5) appearance and dress of employees;
(6) safety, maintenance, appearance, cleanliness, standards of
service, and operation of Restaurants;
(7) submission of requests for approval of brands of products,
materials, supplies and suppliers;
(8) use and illumination of signs, posters, displays, standard
formats and similar items;
(9) identification of Franchisee as the owner of the Restaurant;
(10) brands, types and features of materials, fixtures,
furnishings, equipment, computer software and signs;
(11) use of the marks and use and protection of the confidential
information;
(12) days and hours of operation;
(13) bookkeeping, accounting and recordkeeping procedures;
(14) participation in warranty and guarantee programs; and
(15) regulation of such other elements and aspects of the
development or operation of Restaurants as Company from time to time
determines to be required to preserve or enhance the efficient
operation, image or goodwill of Restaurants or of the Marks.
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The System Standards that Company prescribes from time to time in
the Operating Manual, communicated to Developer in writing, shall constitute
provisions of this Agreement as if fully set forth herein, so long as they are
uniformly applied to the System. All references herein to this Agreement shall
include all such System Standards.
D. FRANCHISEE SUPPORT. Developer agrees to diligently and
continuously provide support and assistance to Franchisees as required under the
Franchise Agreement and as otherwise prescribed by Company. All services and
assistance provided to Franchisees and Affiliates in connection with the
operation of Restaurants shall be provided by Developer.
E. FRANCHISEE COMPLIANCE WITH THE SYSTEM. Developer agrees to
diligently and continuously monitor compliance with the System, to strictly
enforce compliance with the System Standards by all Restaurants operated by
Franchisees, and to furnish assistance to Franchisees to correct deficiencies in
operation. Developer also agrees that if it is unable to obtain a Franchisee's
compliance with the System and System Standards, it will:
(1) assist such Franchisee, where possible, to transfer ownership
of its Restaurant and the Franchise; or
(2) terminate the Franchise Agreement with such Franchisee.
F. APPROVED PRODUCTS, DISTRIBUTORS AND SUPPLIERS. The reputation and
goodwill of Restaurants are based upon, and can only be maintained by, the sale
of distinctive, high quality food products and beverages and the presentation,
packaging and service of such products in an efficient and appealing manner. The
Company will develop certain proprietary food products which will be prepared by
or for the Company according to the Company's proprietary special recipes and
formulas. The Company also has developed standards and specifications for other
food products, ingredients, seasonings, mixes, beverages, materials and supplies
incorporated in or used in the preparation, cooking, serving, packaging and
delivery of prepared food products authorized for sale at Restaurants. The
Company may approve suppliers and distributors of the foregoing products that
meet its standards and requirements including, without limitation, standards and
requirements relating to product quality, prices, consistency, reliability,
financial capability, labor and guest relations. Developer agrees to require
Franchisees: (1) to use in the operation of the Restaurants food products
developed by the Company pursuant to a special recipe or formula; and (2) to
purchase from distributors and other suppliers approved by the Company all other
goods, food products, ingredients, spices, seasonings, mixes, beverages,
materials and supplies used in the preparation of Products and equipment, menus,
forms,
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paper and plastic products, packaging or other materials that meet the Company's
standards and specifications.
G.INSURANCE. During the Agreement Term, Developer agrees to maintain
insurance against claims for bodily and personal injury, death and property
damage caused by or occurring in connection with the conduct of Developer's
business pursuant to this Agreement. Such insurance shall be maintained under
one or more policies of insurance containing liability and types of coverages
reasonably prescribed by Company from time to time. Each which it designates as
an additional named insurance policy shall name Company and Affiliates which it
designates as an additional named insured, shall contain a waiver of all
subrogation rights against Company, its Affiliates, and their successors and
assigns, and shall provide for thirty (30) days' prior written notice to Company
of any material modification, cancellation, or expiration of such policy.
Developer shall furnish to company annually a copy of the certificates of
insurance or other evidence requested by Company that such insurance coverage is
in force. The maintenance of sufficient insurance coverage shall be the
responsibility of Developer. Notwithstanding any other provision of this
Agreement, Company shall have no obligation to prescribe types or amounts of
insurance coverage and shall have no obligation to indemnify Developer if it
does not do so or if the types or amounts of insurance coverage prescribed by
Company are insufficient to fully cover a claim made against Developer.
H.RECORDS AND REPORTS. Developer agrees, at its expense, to maintain
and preserve at its principal office full, complete and accurate records and
reports pertaining to the development and operation of all Restaurants in the
Territory and the performance by Developer of its obligations under this
Agreement, including but not limited to records and information relating to the
following: site reports, inspection and supervisory reports relating to the
operation of Restaurants, and such other records and reports as may be
prescribed by Company from time to time. Company shall be required to advise
Developer of any pertinent financial data pertaining to the Franchisees. Company
and/or Developers shall have the right, at any time during business hours, to
inspect, audit and make copies or extracts of such records and reports and
Developer hereby agrees to fully cooperate with any such inspection or audit.
In addition to the reports required in connection with the operation
of Restaurants, Developer shall deliver to Company in the form from time to time
prescribed by Company:
(1) by the twentieth (20th) day of each month, a report of the
number of Restaurants opened and closed during the immediately
preceding month;
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(2) Developer shall furnish Company with such data, reports and
information and supporting records relating to Franchisees and
Royalty Sales of Restaurants as Company may from time to time
prescribe; and
(3) upon request by Company, such other data, reports,
information and supporting records as Company may from time to time
prescribe.
Each such report and financial statement submitted by Developer
shall be verified as correct and signed by Developer in the manner prescribed by
Company.
Developer shall immediately report to Company any events or
developments which may have a significant or material adverse impact on the
operation of any Restaurant, the performance of Developer under this Agreement
or the goodwill associated with the Marks and Restaurants.
I. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES. Developer shall
secure and maintain in force in its name all required licenses, permits, and
certificates necessary for the performance of this Agreement. Developer shall at
all times comply with legal requirements. All advertising by Developer shall be
completely factual, in good taste in the judgment of Company, and shall conform
to high standards of ethical advertising. Developer shall in all dealings with
Company, public officials and other third parties adhere to high standards of
honesty, integrity, fair dealing and ethical conduct. Developer agrees to
refrain from any business or advertising practice which may be injurious to the
business of Company of Developer and the goodwill associated with the Marks and
Restaurants. Company and/or Developer shall notify the other party within ten
(10) days of the commencement of any action, suit or proceeding, and of the
issuance of any order, writ, injunction, award or decree of any court, agency or
other governmental instrumentality, which may adversely affect the operation or
financial condition of Company, Developer or a Restaurant.
J. MANAGEMENT OF DEVELOPER.
(1) CHIEF EXECUTIVE OFFICER. Promptly after the execution of this
Agreement, Developer shall designate a Chief Executive Officer. The Chief
Executive Officer shall exert his full time efforts to the operations of
Developer and shall not engage in any other business or other activity, directly
or indirectly, that requires any significant management responsibility or time
commitments or that may otherwise conflict with Developer's obligations
hereunder. The Chief Executive Officer shall attend and complete to Company's
satisfaction the initial training program described in Paragraph B of Section 6.
If the relationship of the Chief Executive Officer with Developer terminates,
the
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Developer agrees to promptly designate a replacement Chief Executive Officer,
who shall satisfactorily complete the training program.
(2) MANAGEMENT PERSONNEL. Developer shall hire and maintain the
number, type and level of management personnel required for the management,
servicing and supervision of Restaurants franchised in the Territory, in
accordance with guidelines established from time to time by Company in its sole
discretion. Developer shall keep Company advised of the identities of such
personnel. Developer shall be responsible for ensuring that such personnel are
properly trained to perform their duties. Company will from time to time make
available a training program for such personnel at times and -locations as are
designated by Company as described in Paragraph B of Section 6 hereof.
8. FEES.
A. THIRD PARTY FRANCHISEE FEES. With respect to each Franchise
granted to Third Party Franchisees in the Territory, Developer shall pay to the
Company the following fees:
(1) Fifty percent (50%) of the franchise fee and reservation fee,
if any, paid by each Third Party Franchisee, due and payable within fifteen (15)
days after receipt of such amount by the Developer, for each Restaurant in the
Territory; subject however, that the Company shall receive a maximum franchise
fee of Ten Thousand Dollars ($10,000) for each Restaurant owned by Third Party
Franchisees; and
(2) Fifty percent (50%) of the royalty fee paid by each Third
Party Franchisee, due and payable within ten (10) days after the end of the
month in which the fee was received by Developer from each Third Party
Franchisee in the Territory; subject however, that the maximum royalty fee due
the Company shall not exceed two and one-half percent (2.5 %) of gross sales as
defined in the Franchise Agreement.
B. DEVELOPER FEES. With respect to each Restaurant owned or
majority-owned by Developer or its Affiliates, Developer shall pay to the
Company the following fees:
(1) Developer shall not be required to pay a franchise or
reservation fee; however, Developer shall pay Company's out-of-pocket expenses,
if any, incurred in connection with the opening of each Restaurant; provided
that, Company must obtain prior approval from Developer or its Affiliates.
(2) For the first three (3) years after a Restaurant is opened, a
royalty fee in the amount of two percent (2.0%) of gross sales as defined in the
Franchise
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Agreement, and thereafter, a royalty fee in the amount of three percent (3.0%)
of gross sales as defined in the Franchise Agreement, due and payable within ten
(10) days after the end of the month in which the sales were made.
9. ADVERTISING.
A. ADVERTISING FUNDS. Recognizing the value of advertising to the
goodwill and public image of the Restaurants, Developer will establish, maintain
and administer such advertising funds for the creation and development of such
advertising and related programs and materials as the Company may deem
appropriate in its sole discretion. Restaurants owned by the Developer and its
Affiliates shall contribute to the advertising funds on the same basis as the
Franchisees.
Developer shall direct all marketing programs financed by the
advertising funds; however, the Company shall retain sole discretion over the
creative concepts, materials and endorsements used therein. The advertising
funds may be used to pay the costs of preparing and producing such marketing
materials and programs as the Developer may determine, including video, audio
and written advertising materials, employing advertising agencies; and
supporting market research activities,
The advertising funds shall be accounted for separately from the
Developer's other funds and shall not be used to defray any of the Developer's
general operating expenses, except for such reasonable salaries, administrative
costs and overhead as the Developer may incur in activities reasonably related
to the administration of the advertising funds and its marketing programs
including, without limitation, conducting market research, preparing advertising
and marketing materials and collecting and accounting for contributions to the
advertising funds. The Developer may spend in any fiscal year an amount greater
or less than the aggregate contribution of all Restaurants to the advertising
funds in that year and the advertising funds may borrow from the Developer or
other lenders to cover deficits of the advertising funds or cause the
advertising funds to invest any surplus for future use by the advertising funds.
A statement of monies collected and costs incurred by the advertising funds
shall be prepared quarterly by the Developer and shall be furnished to the
Company upon written request. Developer will have the right to cause the
advertising funds to be incorporated or operated through an entity separate from
Developer at such time as Developer deems appropriate, and such successor entity
shall have all rights and duties of Developer pursuant to this Section.
B. CONDUCT OF ADVERTISING ACTIVITIES. Prior to their use by
Developer or Franchisees, samples of all advertising, marketing and promotional
materials and programs not previously approved by Company shall be submitted to
Company for approval in the form and manner prescribed by Company from time to
time. If written
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approval is not received by Developer within fifteen (15) days from the date of
receipt by Company of such materials, Company shall be deemed to have approved
the use of such material. Developer shall not use and shall report Franchisees
who are using any advertising or promotional materials that Company has
disapproved.
10.CONFIDENTIAL INFORMATION. Company possesses and will further develop
certain confidential and proprietary information relating to the operation of
Restaurants, which includes the ingredients, formulas, recipes and methods of
preparation of certain food sold at Restaurants and methods, techniques,
formats, specifications, systems, procedures, methods of business management,
sales and promotion techniques and knowledge and experience in the operation of
Restaurants (the "Confidential Information").
Company will disclose certain Confidential Information to Developer in
the Operating Manual and in training, guidance and assistance furnished to
Developer pursuant to this Agreement. Developer, on behalf of itself and its
Owners, acknowledges and agrees that neither Developer nor its Owners will
acquire any interest in the Confidential Information, other than the right to
use it in developing and operating Restaurants pursuant to this Agreement and
the Franchise Agreements, and that the use or duplication of the Confidential
Information in any other business would constitute a breach of its obligations
of confidentiality and an unfair method of competition. Developer, on behalf of
itself and its Owners, further acknowledges and agrees that the Confidential
Information, individually and in combination, is a valuable asset of Company and
its Affiliates, is proprietary and includes trade secrets of Company and its
Affiliates and is disclosed to Developer solely on the condition that Developer
and its Owners agree, and Developer hereby does agree, on behalf of itself and
its Owners, that Developer and its Owners:
A. Will not use the Confidential Information in any other business
or capacity other than pursuant to this Agreement and other agreements with
Company.
B. Will maintain the absolute confidentiality of the Confidential
Information during and after the term of this Agreement.
C. Will not make unauthorized copies of any portion of the
Confidential Information disclosed or recorded in written or other tangible
form.
D. Will adopt and implement all reasonable procedures prescribed
from time to time by Company to prevent unauthorized use or disclosure of the
Confidential Information including, without limitation, restricting access to
Confidential Information and requiring employees who will have access to such
information to execute confidentiality agreements in form prescribed by Company.
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Notwithstanding anything to the contrary contained in this
Agreement, the restrictions on Developer's disclosure and use of the
Confidential Information shall not apply to the following:
A. Information, methods, procedures, techniques and knowledge which
are or become generally known in the restaurant industry, other than through
disclosure (whether deliberate or inadvertent) by Developer.
B. The disclosure of the Confidential Information in judicial or
administrative proceedings to the extent that Developer is legally compelled to
disclose such information, provided Developer shall have used its best efforts,
and shall have afforded Company the opportunity to obtain an appropriate
protective order or other assurance satisfactory to Company of confidential
treatment for the information required to be so disclosed.
Developer agrees to disclose, and report any Franchisees who fail to
disclose, to Company all ideas, concepts, methods, techniques and products
relating to the development and operation of Restaurants conceived or developed
by Developer or a Franchisee during the Agreement Term, and Company shall have a
perpetual, non-exclusive and worldwide right to incorporate any such idea,
concept, method, technique or product in System for use in all Restaurants
operated by Company, its Affiliates and their respective franchisees. Company
shall have no obligation to make any payment to Developer with respect to any
idea, concept, method, technique or product developed or suggested by Developer
or a Franchisee and incorporated by Company in System. Developer agrees that
neither Developer nor any Franchisee will use any concept, method, technique or
product developed by Developer or Franchisees in the development or operation of
a Restaurant without obtaining Company's prior written approval.
11. EXCLUSIVE RELATIONSHIP. Developer acknowledges and agrees that
Company would be unable to protect the Confidential Information against
unauthorized use or disclosure and would be unable to encourage a free exchange
of ideas and information among owners of Restaurants if Developer, its
Affiliates or Restricted Persons were permitted to hold Ownership Interests in
or perform services for Competitive Business. Developer further acknowledges
that restrictions on the right of Developer, its Affiliates and Restricted
Persons to hold Ownership Interests in or perform services for Competitive
Businesses will not hinder their activities under this Agreement or in general.
Company has entered into this Agreement with Developer on the express condition
that with respect to the operation of businesses engaged in the sale of
Products, Developer, its Affiliates and Restricted Persons will deal exclusively
with Company. Developer therefore agrees that during the Agreement Term, neither
Developer, any Affiliate of Developer nor any Restricted Person shall anywhere:
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(1) have any Ownership Interest in any Competitive Business;
(2) perform services as a director, officer, manager, employee,
consultant, representative, Developer or otherwise for any Competitive Business;
or
(3) directly or indirectly employ or seek to employ any person
who is employed by Company, its Affiliates or by any other licensee or franchise
owner of a Restaurant, nor induce any such person to leave said employment
without the prior written consent of such person's employer.
The restrictions of subparagraphs (1) and (2) shall not be
applicable to the ownership of shares of a class of securities publicly traded
in the United States or Malaysia that represent less than five percent (5%) of
the number of the shares of that class of securities issued and outstanding. The
restrictions of this section also shall not be construed to prohibit any
Restricted Person from having an Ownership Interest in any Restaurant, or
Franchise Agreement for the operation of any Restaurant, or any entity owning,
controlling or operating a Restaurant, or from providing services to any
Restaurant.
12.INDEPENDENT CONTRACTORS/INDEMNIFICATION. Company and Developer are
independent contractors. Neither Company nor Developer shall be obligated by or
have any liability under any agreements, representations, or warranties made by
the other that are not expressly authorized hereunder, nor shall Company be
obligated for any damages to any person or property directly or indirectly
arising out of the operation of Developer's business conducted pursuant to this
Agreement, whether or not caused by Developer's negligent or willful action or
failure to act. Company shall have no liability for any value added, sales,
service, use, excise, income, gross receipts, property, or other taxes levied
upon Developer or its assets or upon Company in connection with the business
conducted by Developer; provided however, that the Company shall bear the cost
of any withholding taxes or other impositions levied on the royalty fee,
franchise fee or any other payments or fees due the Company.
Developer agrees to indemnify, defend and hold harmless the Company,
its subsidiaries and affiliated entities and their shareholders, directors,
officers, employees, agents, successors and assignees (the "Indemnified
Parties") against and to reimburse any one or more of them for all claims,
obligations and damages described in this Section, and any and all claims and
liabilities directly or indirectly arising out of the use of the Marks in any
manner not in accordance with this Agreement. For purposes of this
indemnification, claims shall mean and include all obligations, actual and
consequential damages and costs reasonably incurred in the defense of any claim
against any one or more of the Indemnified Parties including, without
limitation, reasonable accountants', attorneys' and expert witness fees, costs
of investigation and proof of facts, court costs, other litigation expenses and
travel
16
<PAGE>
and living expenses. The Company shall have the right to defend any such claim
against it in such manner as the Company deems appropriate or desirable in its
sole discretion. This indemnity shall continue in full force and effect
subsequent to and notwithstanding the expiration or termination of this
Agreement.
13. MARKS.
A. OWNERSHIP AND GOODWILL OF MARKS. Developer acknowledges that its
right to use the Marks is derived solely from this Agreement and is limited to
its conduct of business pursuant to and in compliance with this Agreement. Any
unauthorized use of the Marks by Developer shall constitute a breach hereof and
an infringement of the Company's rights in and to the Marks. Developer
acknowledges and agrees that its usage of the Marks and any goodwill established
thereby shall inure to the Company's exclusive benefit and that this Agreement
does not confer any goodwill or other interests in the Marks upon Developer. All
provisions of this Agreement applicable to the Marks shall apply to any
additional trademarks, service marks and trade dress hereafter authorized for
use by and licensed to Developer by the Company.
B. LIMITATIONS ON DEVELOPER'S USE OF MARKS. Developer agrees that in
its use of the Marks, Developer shall identify itself as the independent owner
thereof in the manner prescribed by the Company. Developer shall not use any
Mark as part of any corporate or trade name or with any prefix, suffix or other
modifying words, terms, designs or symbols, or in any modified form, nor may
Developer use any Mark in connection with the performance or sale of any
unauthorized services or products or in any other manner not expressly
authorized in writing by the Company. Developer agrees to prominently display
the Marks on supplies or materials designed by the Company and in connection
with packaging materials, forms, labels and advertising and marketing materials.
All Marks shall be displayed in the manner prescribed by the Company. Developer
agrees to give such notices of trademarks and service mark registrations as the
Company specifies and to obtain such fictitious or assumed name registrations as
may be required under applicable law. Developer agrees, at Company's expense, to
execute any and all instruments and documents, render such assistance and do
such acts and things as may, in the opinion of the Company's counsel, be
necessary or advisable to protect and maintain the Company's interests in any
litigation or U.S. Patent and Trademark Office or other proceeding or otherwise
to protect and maintain the Company's interests in the Marks.
C. DISCONTINUANCE OF USE OF MARKS. If it becomes advisable at any
time, in the Company's discretion, for the Company and/or Developer to modify or
discontinue use of any Mark and/or use one or more additional or substitute
trademarks or service marks, Developer agrees to comply with the Company's
directions to modify or
17
<PAGE>
otherwise discontinue the use of such Mark within a reasonable time after notice
thereof by the Company.
D. NOTIFICATION OF INFRINGEMENTS AND CLAIMS. Developer shall
immediately notify the Company of any apparent infringement of or challenge to
Developer's use of any Mark, or claim by any person of any rights in any Mark,
and Developer shall not communicate with any person other than the Company, its
counsel or Developer's counsel in connection with any such infringement,
challenge or claim.
E. INDEMNIFICATION OF DEVELOPER. The Company agrees to indemnify
Developer, its subsidiaries and affiliated entities and their shareholders,
directors, officers, employees, agents, successors and assignees ("Indemnified
Parties") against and to reimburse any one or more of them for all claims for
which it is held liable in any proceeding arising out of his authorized use of
any Mark pursuant to and in compliance with this Agreement and for all costs it
reasonably incurs in defending any such claim brought against it or any
proceeding in which it is named as a party, provided that Developer has timely
notified the Company of such claim or proceeding and has otherwise complied with
this Agreement. The Company, at its sole discretion, shall be entitled to defend
any proceeding arising out of Developer's use of any Mark pursuant to this
Agreement, and if the Company undertakes the defense of such proceeding, the
Company shall not have any obligation to indemnify or reimburse Developer with
respect to any fees or disbursements of any counsel retained by Developer. This
indemnity shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement. For purposes of
this indemnification, claims shall mean and include all obligations, actual and
consequential damages and costs reasonably incurred in the defense of any claim
against any one or more of the Indemnified Parties including, without
limitation, reasonable accountants', attorneys' and expert witness fees, costs
of investigation and proof of facts, court costs, other litigation expenses and
travel and living expenses.
14. TRANSFER AND ASSIGNMENT.
A. TRANSFER BY COMPANY. Company shall have the right to sell,
assign, or transfer all or any part of its rights or obligations herein to any
third party or legal entity provided, however, the rights, duties, and
obligations of the Company set forth under this Agreement shall be assumed by
the purchaser or assignee.
B. TRANSFER BY DEVELOPER. Developer has been carefully selected by
the Company in reliance on the business skills, financial ability, personal
character and business experience in franchise development programs.
Accordingly, this Agreement may not be sold, assigned, transferred, pledged,
donated, mortgaged, or encumbered in any manner whatsoever by Developer without
the express written approval of the Company.
18
<PAGE>
The Company shall have sole discretion in determining whether it will agree to
any encumbrance of this Agreement. Company reserves the right at all times, even
though it may agree to an assignment or sale, to require Developer to enter into
additional conditions and limitations of this Agreement before it effectuates
such sale or assignment.
15. TERMINATION OF AGREEMENT. This Agreement shall terminate on the
happening of any of the following events:
A. Upon one (1) year's prior written notice from Developer to
Company;
B. Upon Developer's failure to cure any breach (other than
noncompliance with the Development Schedule set forth in Section 4 hereof) of
this Agreement before the expiration of any period of time within which such
breach may be cured; or
C. Any of the following:
(1) Developer makes an unauthorized assignment or transfer of
this Agreement or a substantial part or all of the assets of Developer;
(2) Developer is convicted by a trial court of, or pleads guilty
to, a crime or offense that may materially adversely affect the goodwill
associated with the Marks or the reputation of Restaurants, or engages in any
conduct which materially adversely affects the reputation of Restaurants or the
goodwill associated with the Marks;
(3) Developer (a) is or acknowledges that it is unable to pay its
debts when they fall due, commences negotiations with any one or more of its
creditors with a view to the general readjustment or rescheduling of its
indebtedness or makes a general assignment for the benefit of or a composition
with its creditors; (b) takes any corporate action or other steps are taken or
legal proceedings are started by third parties for its winding up, dissolution,
administration or reorganization or for the appointment of a receiver, receiver
and manager, official manager, liquidator, provisional liquidator, trustee or
similar officer of it or of any or all of its revenues and assets; (c) commits
an act of bankruptcy or assigns its estate for the benefit of creditors, or a
petition for an order of bankruptcy or sequestration of its estate is presented
by a receiver or a trustee in bankruptcy is appointed to any part of its
property or estate; (d) takes any step to obtain protection or is granted
protection from its creditors under any Legal Requirements; or (e) Developer's
financial condition has deteriorated to such an extent that it has a significant
adverse effect on Developer's ability to perform its obligations under this
Agreement (other than as a result of any act or omission by the Company);
19
<PAGE>
(4) Developer habitually breaches this Agreement and Company has
given formal written notice of default on eight (8) or more separate occasions
within any twelve (12) month period, whether or not such breaches are cured,
after notice thereof is delivered to Developer.
16. RIGHTS AND OBLIGATIONS UPON TERMINATION.
A. PAYMENT OF AMOUNTS OWED TO COMPANY. Developer agrees to pay to
Company within fifteen (15) days after the effective date of termination of this
Agreement or expiration of the Agreement Tenn, or such later date that the
amounts due to Company are determined, all other amounts owed to Company or its
Affiliates which are then unpaid and any interest due on any of the foregoing.
All rights of Developer to collect any monies or funds from Third Party
Franchisees including advertising funds shall cease immediately upon
termination, and Company shall assume all of the rights and duties of the
Developer in the Territory.
B. CONTINUING OBLIGATIONS. All obligations of Company and Developer
which expressly or by their nature survive the termination of this Agreement or
the expiration of the Agreement Term shall continue in full force and effect
subsequent to and notwithstanding its expiration or termination and until they
are satisfied in full or by their nature expire.
17. ENFORCEMENT.
A. JUDICIAL ENFORCEMENT INJUNCTIONS, AND SPECIFIC PERFORMANCE.
Notwithstanding anything to the contrary contained in Paragraph B of this
Section, Company and Developer shall have ag a remedy, in addition to any
monetary damages available as provided in Paragraph B of this Section, the entry
of interim or interlocutory injunctions, restraining orders or orders of
specific performance restraining or mandating specific conduct or actions in
compliance therewith after due notice to the party against whom such relief is
sought. Company or Developer may seek such remedies only after notice to the
other party and a hearing before a court of competent jurisdiction. If Company
or Developer secures any such injunction or order, the party against whom such
relief is awarded agrees to pay to the party seeking the injunction or order an
amount equal to the aggregate of its costs of obtaining such injunction or
order, including without limitation reasonable attorneys' fees, costs and
expenses as provided in Paragraph F of this Section.
20
<PAGE>
B. ARBITRATION. All controversies, disputes or claims arising
between the Company and Developer shall be submitted for arbitration on demand
of either party. Such arbitration proceedings shall be conducted in New York,
New York or such other location as the parties may agree, before an arbitration
panel and in accordance with the then current UNCITRAL arbitration rules. The
arbitration panel shall have the right to award or include in its award any
relief which it deems proper in the circumstances, including without limitation
money damages (with interest on unpaid amounts from date due), injunctions or
orders restraining or mandating specific conduct or actions, legal fees and
costs in accordance with Paragraph F of this Section, provided that the
arbitrator shall not award exemplary or punitive damages. The award and decision
of the arbitrator shall be conclusive and binding upon all parties hereto and
judgment upon the award may be entered in any court of competent jurisdiction,
and Developer and Company waive any right to contest the validity or
enforceability of such award.
C. WAIVER OF OBLIGATIONS. Company and Developer may, only by written
instrument, unilaterally waive any obligation of or restriction upon the other
under this Agreement. No acceptance by the Company of any payment by Developer
or any other person or entity and no failure, refusal or neglect of Company or
Developer to exercise any right under this Agreement or to insist upon full
compliance by the other with its obligations hereunder shall constitute a waiver
of any provision of this Agreement.
D. RIGHTS OF PARTIES ARE CUMULATIVE. The rights of Company and
Developer hereunder are cumulative and no exercise or enforcement by Company @
or Developer of any right or remedy hereunder shall preclude the exercise or
enforcement by Company or Developer of any other right or remedy hereunder or
which Company or Developer is entitled by law to enforce.
E. IMITATION OF CLAIMS. Any and all claims arising out of or
relating to this Agreement or the relationship of Developer and Company shall be
barred unless an arbitration or judicial proceeding is commenced within two (2)
years from the date Company or Developer knew or, exercising reasonable
diligence should have known, of the facts giving rise to such claims. This
paragraph shall not apply if the parties are actively seeking a resolution of
the claim.
F. COSTS AND LEGAL FEES. If Company or Developer is required to
enforce this Agreement in a judicial or arbitration proceeding, the party
prevailing in such proceeding shall recover from the other party its costs and
expenses, including, without limitation, reasonable court costs and fees, legal
fees (for attorneys, barristers and solicitors, on a solicitor-client basis) and
legal assistants, accountants, arbitrators and expert witness fees, whether
incurred prior to, in preparation for or in contemplation of the filing of any
such proceeding. If Company or Developer is required to engage legal counsel in
21
<PAGE>
connection with any failure by the other party to comply with this Agreement,
such party shall be entitled to reimbursement for any of the above listed costs
and expenses incurred by it, including without limitation the cost of
investigation and proof of acts, court costs, other litigation expenses, and
travel and living expenses.
G. GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of Florida.
H. CONSENT TO JURISDICTION. Company and Developer agree that any and
all actions seeking an injunction or order pursuant to Paragraph A hereof or the
enforcement of an arbitration award may be brought in a state or federal court
of general jurisdiction in Broward County, Florida, and Company and Developer
hereby irrevocably submits to the nonexclusive jurisdiction of such courts and
waives any objection it may have to the jurisdiction or venue of such courts.
I. BINDING EFFECT. This Agreement is binding upon the parties hereto
and their respective heirs, assigns and successors in interest, and shall not be
modified except by written agreement signed by both Developer and Company.
J. CONSTRUCTION. The term "Developer" as used herein is applicable
to one or more persons, a corporation or a partnership, as the case may be, and
the singular usage includes the plural and the masculine and neuter usages
include the other and the feminine. If two or more persons are at any time
Developer hereunder, whether or not as partners or joint venturers, their
obligations and liabilities to Company shall be joint and several. This
Agreement may be executed in multiple copies, each of which shall be deemed an
original.
K. ENTIRE AGREEMENT. The preambles and exhibits are a part of this
Agreement, which constitutes the entire agreement of the parties, and there are
no other oral or written understandings or agreements between Company and
Developer relating to the subject matter of this Agreement. The headings of the
several sections and paragraphs hereof are for convenience only and do not
define, limit or construe the contents of such sections or paragraphs.
18. NOTICES AND APPROVALS. All written notices and reports permitted or
required to be delivered by the provisions of this Agreement or of the Operating
Manual shall be deemed so delivered at the time delivered by hand, one (1)
business day after transmission by telegraph, facsimile transmission or other
electronic system, two (2) business days after being placed in the hands of a
commercial courier service for express delivery, or five (5) business days after
transmittal via registered or certified mail, Return Receipt Requested, postage
prepaid and addressed as follows:
22
<PAGE>
If to Company: ROADHOUSE GRILL, INC.
6600 North Andrews Avenue, Suite 160
Fort Lauderdale, FL 33309
Attention: J. David Toole, III,
President
Telephone No: 954/489-9699
Fax No: 954/489-1485
If to Developer: c/o Berjaya Group Berhad
Level 28
Shahzan Prudential Tower
30 Jalan Sultan Ismail
50250 Kuala Lumpur
MALAYSIA
Attention: Tan Kim Poh
Telephone No: 03-2422622
Fax No: 03-2484660
or its most current principal business address of which the other party has been
notified.
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in ____________ counterparts on the day and year first above written.
DEVELOPER:
ROADHOUSE GRILL ASIA PACIFIC
(H.K.) LIMITED, a Hong Kong corporation
/s/ CHARLES D. BARNETT By:/s/ ILLEGIBLE
---------------------- --------------------------
Title: DIRECTOR
---------------------- -------------------
COMPANY:
ROADHOUSE GRILL, INC.,
a Florida corporation
/s/ CHARLES D. BARNETT By:/s/ ILLEGIBLE
---------------------- --------------------------
Title:PRESIDENT
--------------------
24
EXHIBIT 10.32
ref: 7566 Transit Road, Amherst NY
LEASE TRANSFER AND ASSUMPTION AGREEMENT
WHEREAS NEW YORK ROASTERS, INC. (hereinafter called the "Lessee") has entered
into Equipment Least Agreement No. 05776 dated March 29, 1995 (hereinafter
called the "Lease" with CAPTEC FINANCIAL GROUP, INC. (hereinafter called the
"Lessor"), covering the following equipment: SEE SCHEDULE A TO EQUIPMENT LEASE
NO 05776 ATTACHED HERETO
together with all additions, substitutions, repairs, replacements, accessions,
accessories and attachments thereto, whether now owner or hereafter acquired;
and
WHEREAS the scheduled monthly rental payments remaining unpaid under the Lease
as of December 6, 1995 are as follows: 53 successive monthly rentals commencing
with the one which is due December 15, 1995 in the amount of $1,103.59
($1,021.85 rent plus $81.74 use tax) and one on the same date of each month
thereafter until paid in full; and,
WHEREAS under the terms of the Lease the Lessee may not assign its right, title
and interest in and to the Lease without the written consent of the Lessor, and
now the Lessee desires to make an assignment of its interest under the Lease to
ROADHOUSE GRILL NY, INC., A NEW YORK CORPORATION (hereinafter called the
"Transferee"), and both Lessee and Transferee hereby request the Lessor to
consent to such a transfer, and
WHEREAS the Lessor is willing to consent to the above-mentioned transfer
provided the parties hereto enter into this Agreement.
NOW THEREFORE in consideration of the premises and the mutual promises,
covenants and agreements herein contained, the parties agree as follows:
1. The Lessee hereby sells, transfers, conveys, assigns and delivers to the
Transferee all of its right, title and interest in and to the Lease. The
lessee represents, warrants and covenants to the Transferee, its legal
representatives, successors and assigns that the Lessee is the lawful
lessee of the Lease and holds the right and authority to make the herein
described transfer. The Lessee, Lessor and Transferee each agree to execute
such additional documents from time to time at the request of any party
hereto as may be reasonably necessary to accomplish the transfer made
herein.
2. The Transferee hereby promises to pay all rental payments remaining unpaid
under the Lease as above stated as the same are due and payable and hereby
unconditionally assumes all the obligations and agrees to abide by all the
terms, covenants and conditions of the Lease, as though the Transferee were
for all intents and purposes the original Lessee named in the Lease. This
assumption is effective as of the date noted below.
3. The Lessor consents to the above-mentioned transfer and assumption.
4. The Lessee is hereby unconditionally released from all liability under the
Lease.
1
<PAGE>
5. This Agreement shall be binding upon and inure to the benefit of the
respective heirs, executors, administrators, personal representatives and
successors and permitted assigns of the parties hereto.
6. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together constitute one and
the same agreement.
IN WITNESS WHEREOF the parties have duly executed this Agreement as of the 31st
day of December, 1995.
LESSEE TRANSFEREE
NEW YORK ROASTERS, INC. ROADHOUSE GRILL NY, INC.
By:______________________ By:/s/ J. DAVID TOOLE III
----------------------
Title: __________________ J. David Toole III
Title: PRESIDENT
-------------------
LESSOR
CAPTEC FINANCIAL GROUP, INC.
By:/s/ GARY A. BRUDER
-------------------
Gary A. Bruder
Title: SENIOR VICE PRESIDENT
ADMINISTRATION
---------------------
2
<PAGE>
Document contains a two-page Lease Agreement on a Captec invoice formatted with
boxes of information, lease terms as follows:
Description of Leased Equipment: See Schedule A attached hereto.
Rental Payment Schedule: Commencement Date: May 15, 1995
60 payments of $1,021.85 per month
Advance Payment: $2,043.70
163.50 - 8% tax
$2,207.20
1st and last rental payment
Additional terms Nos. 1-24 on remainder of 1st page and entire 2nd page,
illegible.
LESSOR LESSEE
Accepted:
NEW YORK ROASTERS, INC., A
DELAWARE CORPORATION DBA
CAPTEC FINANCIAL GROUP, INC. KENNY ROGERS ROASTERS
LESSOR LESSEE (Complete Legal Name)
Date: March 29, 1995 Address 690 DELAWARE AVE.
By: /s/ GEORGE R. BEACH
--------------- City BUFFALO County ERIE St NY
George R. Beach, SECRETARY Zip 142__
LEASE NO. 05776 Phone (716)881-6200 Date MARCH 29, ____
By: /s/ PAUL L. SNYDER, III,
------------------------
Paul L. Snyder, III
PRESIDENT
<PAGE>
AMENDMENT
TO
LEASE NO. 05776 DATED MARCH 29, 1995
BETWEEN CAPTEC, AS LESSOR
AND
NEW YORK ROASTERS, INC., AS LESSEE
LESSEE AND LESSOR HEREBY AGREE TO AMEND THE LEASE AS FOLLOWS:
1. SECTION 15 DEFAULT, REMEDIES (a)(ii) shall read: "failure by Lessee to
fully perform, keep, and observe any term, provision, warranty or
condition contained in this Lease or in any other agreement, lease,
instrument or document heretofore, now or hereafter executed by Lessee
and delivered to Lessor or its affiliates, successors and assigns,
which term, provision, warranty or condition is required to be
performed, kept or observed by Lessee;"
IN ALL OTHER RESPECTS, THE TERMS AND CONDITIONS OF THE LEASE SHALL REMAIN THE
SAME.
IN WITNESS WHEREOF, LESSOR AND LESSEE HAVE EXECUTED THIS AMENDMENT THIS 29TH DAY
OF MARCH, 1995.
LESSOR LESSEE
CAPTEC NEW YORK ROASTERS, INC.
DBA KENNY ROGERS ROASTERS
BY:/s/ GEORGE R. BEACH BY: /s/ PAUL L. SNYDER, III
------------------- -----------------------
George R. Beach Paul L. Snyder, III
TITLE: SECRETARY TITLE: PRESIDENT
---------------- ---------------------
<PAGE>
FRANCHISEE ADDENDUM
TO LEASE NUMBER 05776 DATED MARCH 29, 1995
---------------------------------
LESSEE HEREBY ACKNOWLEDGES THAT LESSOR IS NOT A REPRESENTATIVE OR RELATED ENTITY
OF LESSEE'S FRANCHISOR ("FRANCHISOR") AND NO REPRESENTATIVE OF THE FRANCHISOR IS
AN AGENT OF LESSOR. LESSOR HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR
REPRESENTATION WHATSOEVER EITHER EXPRESSED OR IMPLIED CONCERNING THE FRANCHISOR
OR THE FRANCHISE. LESSEE HAS MADE ALL INQUIRIES CONCERNING THE FRANCHISOR AND
THE FRANCHISE INDEPENDENT OF THE LESSOR. LESSOR SHALL NOT BE LIABLE TO LESSEE
FOR ANY LOSS, DAMAGE OR EXPENSE OF ANY KIND OR NATURE CAUSED DIRECTLY OR
INDIRECTLY BY THE RELATIONSHIP BETWEEN FRANCHISOR AND LESSEE OR THE CONTINUED
EXISTENCE OF THE AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS
LEASE AND NO REPRESENTATION AS TO THE EQUIPMENT OR ANY OTHER MATTER BY THE
FRANCHISOR SHALL IN ANY WAY AFFECT LESSEE'S DUTY TO PERFORM ITS OBLIGATIONS
HEREUNDER. LESSEE'S OBLIGATIONS HEREUNDER ARE INDEPENDENT OF THE CONTINUED
EXISTENCE OF THE FRANCHISOR OR THE FRANCHISE.
DATE: MARCH 29, 1995
LESSOR LESSEE
CAPTEC NEW YORK ROASTERS, INC.
dba KENNY ROGERS ROASTERS
BY:/s/ GEORGE R. BEACH BY:/s/ PAUL L. SNYDER, III
------------------- -----------------------
George R. Beach Paul L. Snyder, III
TITLE: SECRETARY TITLE: PRESIDENT
---------------- --------------------
<PAGE>
SCHEDULE A
Schedule A, annexed to and forming part of Lease Agreement between CAPTEC
(Lessor) and NEW YORK ROASTERS, INC. DBA KENNY ROGERS ROASTERS (Lessee), lease
number 05776, dated MARCH 29, 1995.
- --------------------------------------------------------------------------------
EQUIPMENT LOCATION: 7566 TRANSIT ROAD, AMHERST, NY 14221
- --------------------------------------------------------------------------------
QTY EQUIPMENT DESCRIPTION SERIAL #
- --------------------------------------------------------------------------------
SUPPLIER: CONCEPT CONSTRUCTION CORP., 24555 TRANSIT ROAD, ELMA, NY 14059
CERAMIC TILE
CABINETS
FOUNTAIN HEAD 1X1 BULLNOSE
MIRRORS
PLUMBING
LIGHT BOX/MIRROR BOXES
CAB LABOR
COFFEE CABINET
PREFINISH CABINET
ELECTRIC
TRACK LIGHTING
CAB TAX
WINDOW IN FOYER LUMBER, GLASS
FINISH MENU BOARDS/SIGN BOXES
4X4 EXTERIOR WINDOW
150 AMP PANEL
SUPPLIER: N.A.S QUICK SIGN 1628 ELMWOOD AVENUE, BUFFALO, NY 14207
1 NEON WALL SIGN 8" SCRIPT LILY'S ICE CREAM
1 TRANSFORMER, RUB CAPS, SLEEVES
1 NEON WALL SIGN "OLD TYME ICE CREAM PARLOR"
1 CLEAR PLEX SHIELD
SUPPLIER: UNITED DAIRY MACHINERY CORP, 301 MEYER ROAD, BUFFALO, NY 14224
1 950 3 SPINDLE MIXER
1 D1-1-10-X HAND SINK
2 FSP FUDGE PUMP
1 SR-3 SYRUP RAIL
6 6X6X2 1/2 PAN
6 6X6X4 PAN
12 COVERS
1 CFW-1D CHEST W/DRAIN
12 8L 1 1/2 OZ. 7" LADLE
2 88T-CMT MIX-TRANS 230-60-1 WATER TWIST HEAD
1 114931 HDM-75 ARTIC SWIRL BLENDER
LESSOR /s/ GB LESSEE /s/ PS
<PAGE>
SUPPLIER: LA TOURAINE COFFEE COMPANY 116 GRUNER RD., CHEEKTOWAGA, NY 14227
1 CURTIS 500-AP S/N #1571
6 THERMO PUMP AIRPORTS
1 JAMAICAN BLUE MOUNTAIN COFFEE, BARREL
1 ESPRESSO/CAPPUCCINO LIGHTED SIGN
6 GLASS COOKIE JARS
1 EPPENS SMITH FLAVOR OF THE DAY SIGN
1 GEM 120A S/N #12268
1 GEM 3 S/N #12574-3
1 GEM 5 S/N #4845-5
TOTAL EQUIPMENT COST: $43,669.00
and any duplicate parts, extras, mechanisms and devices relating thereto or used
in connection therewith or in connection with lessee's business at the above
location, now attached to or delivered with the designated equipment or that may
at any time hereafter be obtained from and financed by the Lessor or be added
thereto by or with the consent of the Lessor.
LESSOR LESSEE
CAPTEC NEW YORK ROASTERS, INC.
dba KENNY ROGERS ROASTERS
BY:/s/ GEORGE R. BEACH BY:/s/ PAUL L. SNYDER, III
------------------- -----------------------
George R. Beach Paul L. Snyder, III
TITLE: SECRETARY TITLE: PRESIDENT
---------------- --------------------
<PAGE>
PURCHASE OPTION ADDENDUM
On the termination date, or any extension thereof, of Lease No. 05776 between
CAPTEC ("Lessor") and NEW YORK ROASTERS, INC. dba KENNY ROGERS ROASTERS
("Lessee"), Lessee pursuant to Paragraph Five (5) of said Lease is hereby
granted the option upon at least ninety (90) days irrevocable notice to Lessor
to purchase on such date all (but not less than all) of the Equipment described
in said Lease for FOUR THOUSAND THREE HUNDRED SIXTY SIX AND 90/100 ($4,366.90)
plus all unpaid rentals and other amounts owing to Lessor.
Lessee shall close on the purchase of the Equipment no later than the expiration
date of the lease in immediately available funds and Lessor will thereupon
deliver to Lessee a bill of sale conveying title to said Equipment to Lessee,
without recourse or warranty on a WHERE IS, AS IS basis. Lessee shall continue
to pay all required monthly rentals until said funds are received by Lessor. All
costs of closing, without limitation, shall be paid by Lessee.
DATE: MARCH 29, 1995
LESSOR LESSEE
CAPTEC NEW YORK ROASTERS, INC.
dba KENNY ROGERS ROASTERS
BY:/s/ GEORGE R. BEACH BY:/s/ PAUL L. SNYDER, III
------------------- ------------------------
George R. Beach Paul L. Snyder, III
TITLE: SECRETARY TITLE: PRESIDENT
---------------- --------------------
<PAGE>
PREPAYMENT OPTION ADDENDUM
During the Base Lease Term or any renewal term in Lease #05776 between CAPTEC
("Lessor") and NEW YORK ROASTERS, INC. dba KENNY ROGERS ROASTERS ("Lessee"),
Lessee is hereby granted the option to prepay this Lease. A prepayment schedule
over the life of the lease is set forth below:
The following presents the percent of equipment cost necessary for prepayment
after each of the 60 lease payments.
PERIOD PERCENT PERIOD PERCENT PERIOD PERCENT
- ------ ------- ------ ------- ------ -------
1 118.10 21 85.52 41 48.93
2 116.56 22 83.79 42 46.99
3 115.01 23 82.05 43 45.03
4 113.45 24 80.30 44 43.06
5 111.88 25 78.54 45 41.08
6 110.30 26 76.77 46 39.09
7 110.30 27 74.99 47 37.09
8 108.71 28 73.20 48 35.08
9 107.11 29 71.40 49 33.05
10 105.50 30 69.59 50 31.01
11 103.89 31 67.77 51 28.96
12 102.27 32 65.94 52 26.90
13 100.64 33 64.09 53 24.83
14 99.00 34 62.23 54 22.74
15 95.69 35 60.36 55 20.64
16 94.02 36 58.48 56 18.53
17 92.34 37 56.59 57 15.41
18 90.65 38 54.69 58 14.28
19 88.95 39 52.78 59 12.13
20 87.24 40 50.85 60 10.00
LESSOR LESSEE
CAPTEC NEW YORK ROASTERS, INC.
A Delaware Corporation
dba KENNY ROGERS ROASTERS
BY:/s/ GEORGE R. BEACH BY:/s/ PAUL L. SNYDER, III
------------------- -----------------------
George R. Beach Paul L. Snyder, III
TITLE: SECRETARY TITLE: PRESIDENT
---------------- --------------------
<PAGE>
FORM OF AUTHORIZING RESOLUTION
(Assignee)
WHEREAS, New York Roasters, Inc. (the "Assignor") is the tenant under
that certain lease dated April 17, 1995 (the "Lease"), by and between Assignor
and Captec Net Lease Realty, Inc., (the "Landlord"), with respect to certain
real property located at 1449 French Road, Cheektowaga, New York; and
WHEREAS, Assignor desires to assign its obligations under the Lease to
ROADHOUSE GRILL BUFFALO, L.L.C. (the "Company") pursuant to an Assignment and
Assumption Agreement among Assignor, Landlord and the Company substantially in
the form of Exhibit A attached hereto (the "Assignment"); and
WHEREAS, the members of the Company desire to approve the Assignment
and authorize certain persons to execute and deliver the Assignment and all
documents and instruments required by the Landlord in connection therewith.
NOW, THEREFORE, the members of the Company do hereby adopt the
following resolutions as of December 31, 1995:
RESOLVED, that the Assignment is hereby approved.
RESOLVED FURTHER, that J. DAVID TOOLE III (collectively the
"Authorized Persons" and, individually, an "Authorized
Person") are, and each Authorized Person is, hereby
authorized, empowered and directed for and on behalf of the
Company, and in its name, to enter into, execute and deliver
the Assignment, and to execute and deliver such other
documents and instruments, and to do such other acts or
things, as any such Authorized Person shall deem necessary or
appropriate to effect the Assignment. The execution and
delivery by any Authorized Person of any such other document,
and the doing by any Authorized Person of any such act or
thing shall conclusively evidence such Authorized Person's
authority therefor, and the approval and ratification by the
Company of the documents so executed and delivered and the
actions so take and done.
RESOLVED FURTHER, that nothing in this resolution shall be
construed to require that more than one (1) Authorized Person
to execute the Assignment or any other document or instrument
necessary to effect the Assignment.
RESOLVED FURTHER, that CHARLES D. BARNETT be and is hereby
authorized to attest, on behalf of the Company, the Assignment
or any other such documents as may be necessary to effect the
Assignment.
The resolutions set forth above remain in full force and effect as of
the 31st day of December, 1995.
ROADHOUSE GRILL, INC.
By:/s/ ILLEGIBLE
-------------------
Member of
Roadhouse Grill Buffalo, L.L.C.
AFFIRMED:/s/ CHARLES D. BARNETT
<PAGE>
FORM OF AUTHORIZING RESOLUTION
(Assignor)
WHEREAS, New York Roasters, Inc. (the "Corporation") is the tenant
under that certain lease dated April 17, 1995 (the "Lease"), by and between
Corporation and Captec Net Lease Realty, Inc., (the "Landlord"), with respect to
certain real property located at 1449 French Road, Cheektowaga, New York; and
WHEREAS, the Corporation desires to assign its obligations under the
Lease to ROADHOUSE GRILL BUFFALO, L.L.C. (the "Roadhouse") pursuant to an
Assignment and Assumption Agreement among the Corporation, the Landlord and
Roadhouse substantially in the form of Exhibit B attached hereto (the
"Amendment"); and
WHEREAS, the Landlord has agreed to release the Corporation from its
obligations under the Lease and to enter into a First Amendment to the Letter of
Credit Agreement between the Corporation and the Landlord substantially in the
form of Exhibit B attached hereto (the "Amendment"); and
WHEREAS, the Corporation desire to approve the Assignment and the
Amendment, and to authorize certain of its officers to execute and deliver the
Assignment, the Amendment and all documents and instruments required in
connection therewith.
NOW, THEREFORE, the board of directors of the Corporation do hereby
adopt the following resolutions as of November 10, 1995:
RESOLVED, that the Assignment is hereby approved.
RESOLVED FURTHER, that the President, Chief Executive Officer
or any Vice President of the Corporation (collectively the
"Authorized Persons" and, individually, an "Authorized
Person") are, and each Authorized Person is, hereby
authorized, empowered and directed for and on behalf of the
Company, and in its name, to enter into, execute and deliver
the Assignment, and to execute and deliver such other
documents and instruments, and to do such other acts or
things, as any such Authorized Person shall deem necessary or
appropriate to effect the Assignment. The execution and
delivery by any Authorized Person of any such other document,
and the doing by any Authorized Person of any such act or
thing shall conclusively evidence such Authorized Person's
authority therefor, and the approval and ratification by the
Company of the documents so executed and delivered and the
actions so take and done.
RESOLVED FURTHER, that nothing in this resolution shall be
construed to require that more than one (1) Authorized Officer
to execute the Assignment or any other document or instrument
necessary to effect the Assignment and the Amendment.
RESOLVED FURTHER, that the Secretary of the Corporation be and
is hereby authorized to attest, on behalf of the Company, the
Assignment or any other such documents as may be necessary to
effect the Assignment.
The resolutions set forth above remain in full force and effect as of
the 3rd day of January, 1996.
ROADHOUSE GRILL, INC.
By:/s/ ILLEGIBLE
--------------------
ASST. SECRETARY OF
NEW YORK ROASTERS, INC.
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Roadhouse Grill, Inc.:
The audit referred to in our report dated June 28, 1996, included the related
financial statement schedules as of December 31, 1995, and for the fiscal year
ended December 31, 1995, included in the registration statement. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement schedules
based on our audit. In our opinion, such financial statement schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
We consent to the use of our report included herein and to the references to our
firm under the headings "Selected Financial Data" and "Experts" in the
prospectus.
/s/ KPMG Peat Marwick LLP
September 25, 1996
Miami, Florida
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of our
report dated March 10, 1995, on our audit of the financial statements of
Roadhouse Grill, Inc. We also consent to the reference to our firm under the
caption "Selected Financial Data" and "Experts."
Coopers & Lybrand L.L.P.
Miami, Florida
September 23, 1996
INDEPENDENT AUDITOR'S CONSENT
We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Data" and to the use of our report dated May 27, 1994 and
our statement dated September 25, 1996 in the Registration Statement (Form S-1)
and the related Prospectus of Roadhouse Grill, Inc. for the registration of its
Common Stock.
Plantation, Florida
September 25, 1996
/s/ STARK & BENNETT, P.A.
--------------------------------
Stark & Bennett, P.A.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,805,043
<SECURITIES> 0
<RECEIVABLES> 119,826
<ALLOWANCES> 0
<INVENTORY> 405,585
<CURRENT-ASSETS> 4,119,765
<PP&E> 38,017,641
<DEPRECIATION> 2,172,857
<TOTAL-ASSETS> 42,201,230
<CURRENT-LIABILITIES> 11,680,086
<BONDS> 0
58,750
0
<COMMON> 117,618
<OTHER-SE> 20,085,117
<TOTAL-LIABILITY-AND-EQUITY> 42,201,230
<SALES> 34,275,496
<TOTAL-REVENUES> 34,275,496
<CGS> 12,084,134
<TOTAL-COSTS> 37,804,784
<OTHER-EXPENSES> (284,241)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 244,857
<INCOME-PRETAX> (3,489,904)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,489,904)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> (0.21)
</TABLE>
The information set forth as "Statement of Operations Data" and "Balance
Sheet Data" in the "Selected Financial Data" for the year ended January 2, 1994
appearing on page 14 was derived from the Financial Statements which we
audited. In our opinion, the aforementioned information derived from the
Financial Statements is fairly stated in all material respects in relation to
those Financial Statements.
Stark & Bennett, P.A.
Plantation, Florida
September 25, 1996
