<PAGE> 1
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Thirteen Weeks Ended January 24, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-28930
ROADHOUSE GRILL, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0367604
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6600 NORTH ANDREWS AVENUE, SUITE 160, FT. LAUDERDALE, FLORIDA 33309
(Address of principal executive offices and zip code)
Registrant's telephone number (954) 489-9699
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. /X/ Yes No
The number of shares of the registrant's common stock outstanding as of
March 5, 1999 was 9,708,741.
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ROADHOUSE GRILL, INC.
FORM 10-Q
THIRTEEN WEEKS ENDED JANUARY 24, 1999
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS:
Condensed Balance Sheets as of January 24, 1999 (unaudited)
and April 26, 1998............................................................... 2
Condensed Statements of Operations for the Thirteen Weeks and
Thirty-Nine Weeks Ended January 24, 1999 and January 25, 1998
(unaudited)....................................................................... 3
Condensed Statement of Changes in Shareholders' Equity
for the Thirty-Nine Weeks Ended January 24, 1999 (unaudited) .................... 4
Condensed Statements of Cash Flows for the Thirty-Nine Weeks Ended
January 24, 1999 and January 25, 1998 (unaudited) ................................ 5
Notes to Condensed Financial Statements............................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS......................................................... 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..................................................................... 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................... 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................................... 16
SIGNATURES ...................................................................................... 17
EXHIBIT INDEX ...................................................................................... 18
</TABLE>
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
ROADHOUSE GRILL, INC.
CONDENSED BALANCE SHEETS
January 24, 1999 and April 26, 1998
($ in thousands, except per share data)
<TABLE>
<CAPTION>
January 24, April 26,
1999 1998
---------- ---------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents........................................... $ 1,198 $ 3,555
Accounts receivable................................................. 508 242
Inventory........................................................... 1,039 939
Due from related party.............................................. -- 1,000
Current portion of note receivable.................................. -- 183
Pre-opening costs, net.............................................. 756 967
Deferred tax assets, net............................................ 421 421
Prepaid expenses.................................................... 2,454 542
------------ ----------
Total current assets............................................. 6,376 7,849
Note receivable....................................................... 167 112
Property & equipment, net............................................. 73,626 66,898
Intangible assets, net of accumulated amortization of $189 and $121
at January 24, 1999 and April 26, 1998, respectively................ 2,069 615
Other assets.......................................................... 3,352 4,023
Investment in and advances to affiliates.............................. -- 612
------------ ----------
Total assets.................................................... $ 85,590 $ 80,109
============ ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable.................................................... $ 4,247 $ 4,858
Accrued expenses.................................................... 3,990 5,460
Due to related parties.............................................. -- 1,500
Current portion of long-term debt................................... 881 688
Current portion of capitalized lease obligations.................... 1,529 1,207
------------ ----------
Total current liabilities....................................... 10,647 13,713
Long-term debt........................................................ 17,050 16,907
Capitalized lease obligations......................................... 9,343 6,335
------------ ----------
Total liabilities................................................ 37,040 36,955
Shareholders' equity:
Common stock $.03 par value. Authorized 30,000,000 shares;
issued and outstanding 9,708,741 and 9,305,408 shares as of
January 24, 1999 and April 26, 1998, respectively................... 291 279
Additional paid-in-capital............................................ 50,039 48,536
Accumulated deficit................................................... (1,780) (5,661)
------------ ----------
Total shareholders' equity...................................... 48,550 43,154
Commitments and contingencies (Note 2)................................ -- --
------------ ----------
Total liabilities and shareholders' equity...................... $ 85,590 $ 80,109
============ ==========
</TABLE>
See accompanying notes to condensed financial statements.
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ROADHOUSE GRILL, INC.
CONDENSED STATEMENTS OF OPERATIONS
For the Thirteen Weeks and Thirty-Nine Weeks Ended January 24, 1999 and
January 25, 1998 ($ in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
--------------------------------- ---------------------------------
January 24, January 25, January 24, January 25,
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Total revenue......................... $ 28,749 $ 25,043 $ 85,970 $ 70,992
Cost of restaurant sales:
Food and beverage.................. 9,236 8,264 28,275 23,726
Labor and benefits................. 8,100 7,445 24,391 21,287
Occupancy and other................ 5,385 4,814 16,522 13,746
Pre-opening amortization........... 298 377 1,028 1,431
----------- ----------- ----------- ------------
Total cost of restaurant sales..... 23,019 20,900 70,216 60,190
Depreciation and amortization......... 1,894 1,426 5,450 4,021
General and administrative expenses 1,623 1,522 4,952 4,929
----------- ----------- ----------- ------------
Total operating expenses........... 26,536 23,848 80,618 69,140
----------- ----------- ----------- ------------
Operating income................... 2,213 1,195 5,352 1,852
Other income (expense):
Interest expense, net.............. (544) (529) (1,626) (1,393)
Equity in net income (loss) of
affiliates....................... -- 19 (3) 52
Loss on sale of investment in
affiliate........................ -- (611) -- (611)
Impairment of long-lived assets.... -- (1,120) -- (1,120)
Other, net......................... 97 47 292 235
----------- ----------- ----------- ------------
Total other (expense)......... (447) (2,194) (1,337) (2,837)
----------- ----------- ----------- ------------
Pretax income (loss)......... 1,766 (999) 4,015 (985)
Income tax............................ 50 74 134 166
----------- ----------- ----------- ------------
Net income (loss)............. $ 1,716 $ (1,073) $ 3,881 $ (1,151)
=========== =========== =========== ============
Basic net income (loss) per common
share............................ $ 0.18 $ (0.12) $ 0.41 $ (0.12)
=========== =========== =========== ============
Diluted net income (loss) per common
share............................ $ 0.18 $ (0.12) $ 0.40 $ (0.12)
=========== =========== =========== ============
Weighted-average common shares
outstanding...................... 9,708,741 9,305,408 9,480,894 9,305,408
=========== =========== =========== ============
Weighted-average common shares and
share equivalents outstanding -
assuming dilution................ 9,801,463 9,305,408 9,606,097 9,305,408
=========== =========== =========== ============
</TABLE>
See accompanying notes to condensed financial statements.
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ROADHOUSE GRILL, INC.
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Thirty-Nine Weeks Ended January 24, 1999
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additiional
-------------------- Paid-in- Accumulated
Shares Amount Capital Deficit Total
------ ------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance April 26, 1998 9,305,408 $279 $48,536 $(5,661) $ 43,154
Stock Options Exercised 3,333 -- 15 -- 15
Conversion of Debt to Equity 400,000 12 1,488 -- 1,500
Net income -- -- -- 3,881 3,881
--------- ---- ------- ------- --------
Balance January 24, 1999 9,708,741 $291 $50,039 $(1,780) $ 48,550
========= ==== ======= ======== =========
</TABLE>
See accompanying notes to condensed financial statements.
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ROADHOUSE GRILL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the Thirty-Nine Weeks Ended January 24, 1999 and January 25, 1998
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
January 24, January 25,
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income (loss)............................................................ $ 3,881 $ (1,151)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization.............................................. 6,478 5,452
Non-cash compensation expense.............................................. -- 81
Equity in net (income) loss of affiliate................................... 3 (52)
Impairment of long-lived assets............................................ -- 1,120
Loss on sale of restaurant................................................. -- 611
Changes in assets and liabilities:
(Increase) in accounts receivable......................................... (266) (225)
(Increase) in inventory................................................... (66) (144)
(Increase) in pre-opening costs........................................... (817) (1,265)
(Increase) decrease in prepaid expense.................................... (1,912) 51
Decrease (increase) in other assets....................................... 242 (439)
(Decrease) in accounts payable............................................ (611) (431)
(Decrease) increase in accrued expenses.................................... (1,476) 2,536
------- --------
Net cash provided by operating activities................................ 5,456 6,144
Cash flows from investing activities
Dividends received from affiliate............................................ 93 82
Advances to affiliates, net.................................................. 9 (51)
Payments for intangibles..................................................... (20) (21)
Acquisition of restaurant, net of cash acquired.............................. (1,359) --
Proceeds from payment on note receivable from affiliate...................... 1,000 --
Proceeds from payment on notes receivable.................................... 128 57
Proceeds from sale-leaseback transaction..................................... 861 4,503
Purchase of property and equipment........................................... (7,994) (10,348)
Capital contribution to affiliate............................................ -- (25)
------- --------
Net cash used in investing activities.................................... (7,282) (5,803)
Cash flows from financing activities
Decrease in cash overdraft................................................... -- (3,013)
Repayment of amount due to related party..................................... -- (3,500)
Issuance of common stock..................................................... 15 --
Proceeds from long-term debt................................................. 846 15,000
Repayments of long-term debt................................................. (510) (7,735)
Payments on capital lease obligations........................................ (882) (870)
------- --------
Net cash used in financing activities.................................... (531) (118)
(Decrease) increase in cash and cash equivalents................................ (2,357) 223
Cash and cash equivalents at beginning of period................................ 3,555 1,587
------- --------
Cash and cash equivalents at end of period...................................... $ 1,198 $ 1,810
------- ========
Supplementary disclosures:
Interest paid................................................................ $ 1,886 $ 1,857
======= ========
Income taxes paid............................................................ $ 1,793 $ 178
======= ========
</TABLE>
Non-cash investing and financing activities:
During the thirty-nine weeks ended January 24, 1999, the Company issued
400,000 shares of common stock to Berjaya Cayman. The transaction was
consummated pursuant to approval by the Board of Directors to convert $1.5
million of debt outstanding into common stock at a price of $3.75 per share.
During the thirty-nine weeks ended January 24, 1999, the Company entered
into three capital lease transactions for real estate in the amount of $3.4
million.
See accompanying notes to condensed financial statements.
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<PAGE> 7
ROADHOUSE GRILL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The financial statements of Roadhouse Grill, Inc. (the "Company") for the
thirteen weeks and thirty-nine weeks ended January 24, 1999 and January 25,
1998, are unaudited and reflect all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial statements for the interim periods. The financial
statements should be read in conjunction with the notes to condensed financial
statements included herein, together with management's discussion and analysis
of financial condition and results of operations, contained in the Company's
Annual Report on Form 10-K for the seventeen weeks ended April 26, 1998 (the
"transition period").
The Company operates on a fifty-two or fifty-three week fiscal year. Each
fiscal quarter consists of thirteen weeks, except in the case of a fifty-three
week year, in which the fourth fiscal quarter consists of fourteen weeks.
On December 11, 1997, the Company's Board of Directors voted to change the
Company's fiscal year to coincide with that of the majority shareholder, Berjaya
Group (Cayman) Limited ("Berjaya Cayman"). The new fiscal year ends on the last
Sunday in April. The Company filed a form 10-K for the transition period which
was from December 29, 1997 through April 26, 1998. This Form 10-Q is for the
third quarter of fiscal year 1999 (October 26, 1998 through January 24, 1999).
All previous year amounts have been recast to the new fiscal quarters.
The results of operations for the thirteen weeks and thirty-nine weeks
ended January 24, 1999 are not necessarily indicative of the results for the
entire fiscal year ending April 25, 1999.
Certain prior year balances have been reclassified to conform to the
current year presentation.
2. 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.
During the thirteen weeks ended July 26, 1998, the Company completed
construction and opened three new Company-Owned restaurants. No new restaurants
were opened during the thirteen weeks ended October 25, 1998. During the
thirteen weeks ended January 24, 1999, the Company completed construction and
opened two new Company-Owned restaurants and as of January 24, 1999,
construction was underway on seven sites which are expected to open during the
fourth quarter of fiscal year 1999. The estimated aggregate cost to complete
these restaurants is approximately $2.2 million. In addition, as of March 5,
1999, the Company had contracted to purchase or lease eight additional sites for
new restaurant development.
3. ACQUISITIONS
In August 1996, the Company entered into an agreement to purchase the
remaining 50 percent interest in Kendall Roadhouse Grill, L.C., a limited
liability company, that owned the Kendall, Florida Roadhouse Grill restaurant
("Kendall") from the joint venture partners for a purchase price of $2.3
million. The purchase price was to be paid from the proceeds of the Initial
Public Offering completed by the Company in December 1996 in which 2,500,000
shares were sold at $6.00 per share. During the first quarter of 1997, the
agreement was amended as follows: the purchase price was changed to $1.8 million
with a deposit of $400,000 paid in January 1997, and the remaining $1.4 million
payable by December 31, 1997, when the acquisition was expected to be closed and
consummated. The purchase price was negotiated further and on August 14, 1998,
the Company purchased the remaining 50 percent interest in Kendall Roadhouse
Grill, L.C. for a purchase price of $1.6 million.
The Company accounted for this transaction using the purchase method of
accounting. The purchase price was allocated based on the fair value of the
assets acquired at the time of acquisition. Approximately $716,000 was allocated
to property and equipment and approximately $53,000 allocated to inventory and
other assets. In connection with the acquisition, the Company also assumed
certain liabilities in the amount of $12,000. Prior to the purchase, the Company
had recorded its investment in Kendall using the equity method. This resulted in
an investment in
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<PAGE> 8
affiliate balance amounting to approximately $273,000. In addition, the Company
had recorded accounts receivable of approximately $232,000. These amounts were
eliminated in connection with the purchase of Kendall. The excess of the
purchase price over the net assets acquired was recorded as goodwill and will be
amortized over 16 years. Subsequent to the purchase, Kendall Roadhouse Grill,
L.C. ceased to exist as a legal entity.
The Company's unaudited pro forma results of operations assuming the above
acquisition had taken place on April 27, 1998 are as follows:
THIRTY-NINE WEEKS ENDED JANUARY 24, 1999
----------------------------------------
($ in thousands, except per share data)
Revenue $86,438
Net income 3,887
Basic EPS $ 0.41
Diluted EPS $ 0.40
4. ADOPTION OF NEW ACCOUNTING STANDARDS
In April 1998, the AICPA Accounting Standards Executive Committee issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"). SOP 98-5 defines start-up activities broadly (including
organizational costs) and requires that the cost of start-up activities be
expensed as incurred. SOP 98-5 amends provisions of a number of existing SOP's
and audit and accounting guides. SOP 98-5 is effective for fiscal years
beginning after December 15, 1998. The Company's current accounting policy is
to capitalize pre-opening costs and amortize them over a one-year period. The
effect of initially applying the provisions of SOP 98-5 will be reported as a
change in accounting principle at the beginning of the period of adoption and
thereafter all such costs will be expensed as incurred. Amounts capitalized as
pre-opening costs as of January 24, 1999 were $756,000.
5. CONVERSION OF LONG-TERM DEBT INTO SHARES OF COMMON STOCK
On February 6, 1998, the Company's Board of Directors approved the
issuance of 400,000 shares of Common Stock to Berjaya Cayman, the majority
shareholder of the Company, to convert $1.5 million of debt outstanding to
common equity at a price of $3.75 per share, based on the closing market price
as of February 6, 1998. The debt carried an interest rate of 8.5% and was
scheduled to be repaid during the first quarter of 1998. The transaction was
consummated on September 30, 1998.
6. LEASES
Pursuant to a $16.5 million funding commitment received from CNL Group,
Inc., the Company entered into sale-leaseback transactions for new Roadhouse
Grill restaurants in Pensacola, Florida during the first quarter of fiscal 1999;
Jacksonville, Florida during the second quarter of fiscal 1999 and; Brandon,
Florida and Clearwater, Florida during the third quarter of fiscal 1999. The
resulting lease term for these transactions is 13 years. These transactions were
recorded as financing-type leases with no deferred gain.
Pursuant to a $20.0 million funding commitment received from Franchise
Finance Corporation of America ("FFCA"), the Company entered into a lease for a
new Roadhouse Grill restaurant in Panama City, Florida during the second quarter
of fiscal 1999. The resulting lease term is 14 years for the Panama City
transaction. This transaction was recorded as a financing-type lease with no
deferred gain. The restaurant is expected to open during the last quarter of
fiscal 1999.
7. STOCK OPTION PLAN
The 1998 Omnibus Stock Option Plan (the "Plan") was adopted for employees,
key executives and directors of the Company, and 324,500 options were granted by
the Company. Each option entitles the holder to purchase one share of the
Company's common stock at an exercise price of $6.00 per share, pursuant to such
plan as of December 16, 1998. The Company issued 118,000 options which vest over
a three-year period from December 16, 1998 and are exercisable for a period of
ten years after grant. The Company also issued 206,500 options which vest over a
three-year period beginning on December 16, 1999, and are exercisable for a
period of ten years after grant. The Company did not recognize compensation
expense related to the issuance of these options.
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<PAGE> 9
8. NET INCOME (LOSS) PER COMMON SHARE ("EPS")
The calculation of Basic EPS excludes all dilution and is based upon the
weighted-average number of common shares outstanding during the year. Diluted
EPS reflects the potential dilution that would occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
The following is a reconciliation of the numerators (net income) and the
denominators (common shares outstanding) of the basic and diluted per share
computations for net income:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED JANUARY 24, 1999 THIRTY-NINE WEEKS ENDED JANUARY 24, 1999
------------------------------------- ----------------------------------------
NET INCOME SHARES AMOUNT NET INCOME SHARES AMOUNT
---------- ------ ------ ---------- ------ ------
($ in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS
Net income available
to common shareholders $1,716 9,708,741 $0.18 $3,881 9,480,894 $0.41
EFFECT OF DILUTIVE SECURITIES
Stock options -- 92,722 -- -- 78,019 --
Convertible debt -- -- -- -- 47,184 --
------ --------- ----- ------ --------- -----
DILUTED EPS $1,716 9,801,463 $0.18 $3,881 9,606,097 $0.40
====== ========= ===== ====== ========= =====
</TABLE>
Options to purchase 562,287 shares of common stock at a weighted-average
exercise price of $6.29 per share were outstanding during the thirteen weeks
and thirty-nine weeks ended January 24, 1999, but were not included in the
computation of diluted EPS because the options' exercise price was greater than
the average market price of the common shares. The options, which expire on
varying dates, were still outstanding as of January 24, 1999.
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED JANUARY 25, 1998 THIRTY-NINE WEEKS ENDED JANUARY 25, 1998
------------------------------------- ----------------------------------------
NET INCOME SHARES AMOUNT NET INCOME SHARES AMOUNT
---------- ------ ------ ---------- ------ ------
($ in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
BASIC AND DILUTED EPS
Net income (loss) available
to common shareholders $(1,073) 9,305,408 $(0.12) $(1,151) 9,305,408 $(0.12)
</TABLE>
Options to purchase 697,413 shares of common stock at a weighted-average
exercise price of $6.66 per share were outstanding during the thirteen weeks and
thirty-nine weeks ended January 25, 1998, but were not included in the
computation of diluted EPS because the Company recognized a net loss during the
thirteen week and thirty-nine week period, and inclusion of such options is
anti-dilutive. The options exercise price was greater than the average market
price of the common shares. The options, which expire on varying dates, were
still outstanding as of January 25, 1998.
-8-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the condensed financial statements and notes thereto, included elsewhere in
this Form 10-Q.
As of March 5, 1999, Roadhouse Grill, Inc. owns and operates 52
full-service, casual dining restaurants under the name "Roadhouse Grill",
(including Kendall Roadhouse Grill for which the Company purchased the
remaining equity interest outstanding during August 1998). In addition,
Roadhouse Grill, Inc. licenses one and franchises three full-service casual
dining restaurants. The Company was incorporated in October 1992 and opened the
first Company-Owned restaurant in Pembroke Pines, Florida in March of 1993.
Since then, the Company has opened 51 additional restaurants in 11 states. One
franchised location is located in Kuala Lumpur, capital city of Malaysia, and
two domestic franchises are located in Las Vegas, Nevada. The Company had a
franchise in Bangsar Baru, Malaysia, which ceased operations on December 19,
1998.
In May 1997, the Company entered into a licensing agreement with Sunshine
Roadhouse Group, Inc. for the licensing of the North Palm Beach, Florida
restaurant, a Roadhouse Grill restaurant that was previously operated by the
Company.
On December 11, 1997, the Company's Board of Directors voted to change the
Company's fiscal year to the last Sunday in April to coincide with that of the
majority shareholder, Berjaya Cayman.
The Company's revenues are derived primarily from the sale of food and
beverages. Sales of alcoholic beverages accounted for approximately 11.0% and
10.7% of total revenues for the thirteen weeks and thirty-nine weeks ended
January 24, 1999, respectively. Franchise and management fees have accounted
for less than 1% 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 with the first full accounting period after the restaurant opens.
Two new Company-Owned restaurants were opened during the thirteen weeks ended
January 24, 1999 and pre-opening expenses incurred in connection with the
opening of these two restaurants averaged approximately $115,000.
The average cash investment, excluding real estate costs and pre-opening
expenses, required to open each of the Roadhouse Grill restaurants opened by
the Company prior to January 24, 1999 was approximately $1.4 million. The
average real estate acquisition cost for the 13 restaurant sites owned by the
Company was approximately $911,000. 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 average
annual occupancy cost for the restaurant sites leased by the Company is
approximately $103,000 per site. The Company expects that the average cash
investment required to open its prototype restaurants, including pre-opening
expenses but excluding real estate costs, will be between $1.1 million and $1.6
million, depending upon whether the Company converts an existing building or
constructs a new restaurant.
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<PAGE> 11
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain selected
statements of operations data expressed as a percentage of total revenues.
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
----------------------------------- ----------------------------------
January 24, 1999 January 25, 1998 January 24, 1999 January 25, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Total revenues.................... 100.0% 100.0% 100.0% 100.0%
Cost of restaurant sales:
Food and beverage............. 32.1 33.0 32.9 33.4
Labor and benefits............ 28.2 29.7 28.4 30.0
Occupancy and other........... 18.7 19.2 19.2 19.4
Pre-opening amortization..... 1.0 1.5 1.2 2.0
------ ------ ------ ------
Total cost of restaurant sales 80.0 83.4 81.7 84.8
Depreciation and amortization..... 6.6 5.7 6.3 5.7
General and administrative........ 5.7 6.1 5.8 6.9
------ ------ ------ ------
Total operating expenses....... 92.3 95.2 93.8 97.4
------ ------ ------ ------
Operating income ............. 7.7 4.8 6.2 2.6
Other income (expense):
Interest expense, net......... (1.9) (2.1) (1.9) (1.9)
Equity in net income (loss) of
affiliates.................. 0.0 0.1 0.0 0.1
Loss on sale of investment in
affiliate 0.0 (2.4) 0.0 (0.9)
Impairment of long-lived
assets...................... 0.0 (4.5) 0.0 (1.6)
Other, net.................... 0.3 0.2 0.3 0.3
------ ------ ------ ------
Total other (expense)....... (1.6) (8.7) (1.6) (4.0)
------ ------ ------ ------
Pretax income (loss)........ 6.1 (3.9) 4.6 (1.4)
Income tax....................... 0.2 0.3 0.2 0.2
------ ------ ------ ------
Net income (loss)........... 5.9% (4.2)% 4.4% (1.6)%
====== ====== ====== ======
</TABLE>
This Form 10-Q contains forward-looking statements, including statements
regarding, among other things (i) the Company's growth strategies, (ii)
anticipated trends in the economy and the restaurant industry and (iii) the
Company's future financing plans. In addition, when used in this Form 10-Q, the
words "believes," "anticipates," "expects" and similar words often are intended
to identify certain forward-looking statements. These forward-looking
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, many of which are beyond the Company's
control. Actual results could differ materially from these forward-looking
statements as a result of changes in trends in the economy and the restaurant
industry, reductions in the availability of financing, increases in interest
rates and other factors. In light of the foregoing, there is no assurance that
the forward-looking statements contained in this Form 10-Q will in fact prove
correct or occur. The Company does not undertake any obligation to revise these
forward-looking statements to reflect future events or circumstances.
THIRTEEN WEEKS ENDED JANUARY 24, 1999 ("FISCAL YEAR 1999 THIRD QUARTER")
COMPARED TO THIRTEEN WEEKS ENDED JANUARY 25, 1998 ("FISCAL YEAR 1998 THIRD
QUARTER")
RESTAURANTS OPEN. At January 24, 1999 there were 49 Company-Owned
restaurants open, including the Kendall Roadhouse Grill restaurant.
On August 14, 1998, the Company purchased the remaining 50% equity interest
outstanding in Kendall. At January 25, 1998, there were 42 Company-Owned
restaurants, excluding Kendall and Boca Roadhouse Grill, L.C., which
were owned by limited liability companies in which the Company held 50%
ownership interest. (In December 1997, the Company sold its ownership interest
in Boca Roadhouse Grill, L.C.). This represents a 16.7% increase in the number
of Company-Owned restaurants.
TOTAL REVENUES. Total revenues increased $3.7 million, or 14.7%, from
$25.0 million for the fiscal year 1998 third quarter to $28.7 million for the
fiscal year 1999 third quarter. This increase is primarily attributable to
sales generated at the seven new restaurants opened by the Company since the
end of fiscal year 1998 third quarter. Sales at comparable stores for the
fiscal year 1999 third quarter were even with sales in the prior year
comparable period. This was due in part to the late start of the tourist season
in Florida. At the end of fiscal year 1999 third quarter, the Company operated
27 restaurants in Florida.
-10-
<PAGE> 12
FOOD AND BEVERAGE. Food and beverage costs as a percentage of sales
decreased by 0.9 percentage points to 32.1% for the fiscal year 1999 third
quarter from 33.0% for the fiscal year 1998 third quarter. This decrease is
primarily due to improved management of such costs in field operations as well
as corporate management and to recently developed food and bar cost models to
improve margins through reduced costs and improved operating efficiencies. In
addition, the Company expanded and regionalized the distribution network that
delivers products and supplies to the Company's restaurants, resulting in
better logistics and lower costs.
LABOR AND BENEFITS. Labor and benefits costs increased $655,000 to $8.1
million in the fiscal year 1999 third quarter, or 8.8%, from $7.4 million in
the fiscal year 1998 third quarter. The increase is primarily due to the
operation of seven new restaurants opened since the end of the fiscal year 1998
third quarter. However, as a percentage of sales, labor and benefits costs
decreased by 1.5 percentage points to 28.2% for the fiscal year 1999 third
quarter from 29.7% for the fiscal year 1998 third quarter. This decrease is
primarily due to the restructuring of the restaurant level management team,
improved productivity of the Company's in-store meat operation and including
hostesses as tipped employees eligible for the tip credit. Previously,
hostesses were paid a higher rate per hour.
OCCUPANCY AND OTHER. Occupancy and other costs increased $571,000 to $5.4
million in the fiscal year 1999 third quarter, or 11.9%, from $4.8 million in
the fiscal 1998 third quarter. The increase is primarily due to the operation
of seven new restaurants opened since the end of the fiscal year 1998 third
quarter. However, as a percentage of sales, occupancy and other costs decreased
by 0.5 percentage points from 19.2% for the fiscal year 1998 third quarter to
18.7% for the fiscal year 1999 third quarter. This decrease is primarily due to
improved management of such costs, resulting in reductions in direct operating
costs, utilities and other costs of operating the restaurants.
PRE-OPENING AMORTIZATION. Pre-opening amortization decreased $79,000 to
$298,000 in the fiscal year 1999 third quarter, or 21.0%, from $377,000 in the
fiscal year 1998 third quarter. The decrease is primarily due to lower
expenditures on pre-opening for new restaurants during fiscal year 1999 than
was expended on pre-opening for restaurants opened in fiscal year 1998.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
$468,000 to $1.9 million in the fiscal year 1999 third quarter, or 32.8%, from
$1.4 million in the fiscal year 1998 third quarter. The increase is primarily
due to the operation of seven new restaurants opened since the end of the
fiscal year 1998 third quarter. As a percentage of sales, depreciation and
amortization increased by 0.9 percentage points from 5.7% for the fiscal year
1998 third quarter to 6.6% for the fiscal year 1999 third quarter.
GENERAL AND ADMINISTRATIVE. General and administrative costs increased
$100,000 to $1.6 million in the fiscal year 1999 third quarter, or 6.6%, from
$1.5 million in the fiscal year 1998 third quarter. As a percentage of sales,
general and administrative costs decreased 0.4 percentage points from 6.1% for
the fiscal year 1998 third quarter to 5.7% for the fiscal year 1999 third
quarter.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) decreased $1.7
million in expense to $447,000 in the fiscal year 1999 third quarter, or 79.6%,
from $2.2 million in the fiscal year 1998 third quarter. During the fiscal year
1998 third quarter the Company recognized an impairment loss of $1.1 million
relating to the write-down of assets of two Company-Owned restaurants. The
write-down was calculated according to the provisions of Financial Accounting
Standards SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of". In addition, during fiscal year 1998
third quarter, the Company incurred a loss of $611,000 on the sale of the Boca
Raton, Florida restaurant. The decrease is offset by additional interest expense
on additional debt incurred due to the development and opening of seven new
restaurants since the end of the fiscal year 1998 third quarter.
INCOME TAX. The Company has a valuation allowance that offsets a portion
of its net deferred tax assets. Each quarter management determines, based on
projections, the realizability of the related deferred tax assets in future
years and reduces the allowance to the extent year-to-date income is available
to realize the benefit of the deferred tax assets. The reduction of the
valuation allowance currently minimizes income tax expense. Income tax expense
of $50,000 and $74,000 in the fiscal year 1999 third quarter and the fiscal
year 1998 third quarter, respectively, represent state income tax and
alternative minimum tax.
THIRTY-NINE WEEKS ENDED JANUARY 24, 1999 ("FIRST NINE MONTHS OF FISCAL YEAR
1999") COMPARED TO THIRTY-NINE WEEKS ENDED JANUARY 25, 1998 ("FIRST NINE MONTHS
OF FISCAL YEAR 1998")
TOTAL REVENUES. Total revenues increased $15.0 million, or 21.1%, from
$71.0 million in the first nine months of fiscal year 1998 to $86.0 million in
the first nine months of fiscal year 1999. This increase is primarily
attributable to sales generated at the seven new restaurants opened by the
Company since the end of the first nine months of fiscal year 1998 and
-11-
<PAGE> 13
sales from five new restaurants that were only open and operating part of the
first nine months of fiscal year 1998. To a lesser extent, sales also increased
due to an increase in comparable store sales of approximately 1% for the 35
Company-Owned stores opened for 18 months or longer.
FOOD AND BEVERAGE. Food and beverage costs as a percentage of sales
decreased by 0.5 percentage points to 32.9% for the first nine months of fiscal
year 1999 from 33.4% for the first nine months of fiscal year 1998. This
decrease was primarily due to improved management of such costs in field
operations as well as corporate management, and to recently developed food and
bar cost models to improve margins through reduced costs and improved operating
efficiencies. In addition, the Company expanded and regionalized the
distribution network that delivers products and supplies to the Company's
restaurants, resulting in better logistics and lower costs.
LABOR AND BENEFITS. Labor and benefits costs increased $3.1 million to
$24.4 million in the first nine months of fiscal year 1999, or 14.6%, from
$21.3 million in the first nine months of fiscal year 1998. The increase is
primarily due to the operation of seven new restaurants opened since the end of
the third quarter of 1998 and five new restaurants that were only open and
operating part of the first nine months of fiscal year 1998. However, as a
percentage of sales, labor and benefits costs decreased by 1.6 percentage
points to 28.4% for the first nine months of fiscal year 1999 from 30.0% for
the first nine months of fiscal year 1998. This decrease was primarily due to
the restructuring of the restaurant level management team, improved
productivity of the Company's in-store meat operation and including hostesses
as tipped employees eligible for the tip credit. Previously, hostesses were paid
a higher rate per hour.
OCCUPANCY AND OTHER. Occupancy and other costs increased $2.8 million to
$16.5 million in the first nine months of fiscal year 1999, or 20.2%, from
$13.7 million in the first nine months of fiscal year 1998. The increase is
primarily due to the operation of seven new restaurants opened since the end of
the first nine months of fiscal year 1998 and five new restaurants that were
only open and operating part of the first nine months of fiscal year 1998.
However, as a percentage of sales, occupancy and other costs decreased by 0.2
percentage points from 19.4% for the first nine months of fiscal year 1998 to
19.2% for the first nine months of fiscal year 1999.
PRE-OPENING AMORTIZATION. Pre-opening amortization decreased $403,000 to
$1.0 million in the first nine months of fiscal year 1999, or 28.2%, from $1.4
million in the first nine months of fiscal year 1998. The decrease is primarily
due to lower expenditures on pre-opening for new restaurants during fiscal year
1999 than was expended on pre-opening for restaurants opened in fiscal year
1998.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
$1.4 million to $5.4 million in the first nine months of fiscal year 1999, or
35.5%, from $4.0 million in the first nine months of fiscal year 1998. The
increase is primarily due to the operation of seven new restaurants opened
since the end of the first nine months of fiscal year 1998 and five new
restaurants that were only open and operating part of the first nine months of
fiscal year 1998. As a percentage of sales, depreciation and amortization
increased by 0.6 percentage points from 5.7% for the first nine months of
fiscal year 1998 to 6.3% for the first nine months of fiscal year 1999.
GENERAL AND ADMINISTRATIVE. General and administrative costs increased
$23,000 to $5.0 million in the first nine months of fiscal year 1999, or 0.5%,
from $4.9 million in the first nine months of fiscal year 1998. During the
first nine months of fiscal year 1998, the Company incurred $430,000 for
severance agreements due to the departure of several key executives of the
Company, including its President and Chief Executive Officer. As a percentage
of sales, general and administrative costs decreased 1.1 percentage points from
6.9% for the first nine months of fiscal year 1998 to 5.8% for the first nine
months of fiscal year 1999.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) decreased $1.5
million in expense to $1.3 million in the first nine months of fiscal year
1999, or 52.9%, from $2.8 million in the first nine months of fiscal year 1998.
During the first nine months of fiscal 1998, the Company recognized an
impairment loss of $1.1 million relating to the write-down of assets of two
Company-Owned restaurants. The write-down was calculated according to the
provisions of Financial Accounting Standards SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of". In
addition, during the first nine months of fiscal 1998, the Company incurred a
loss of $611,000 on the sale of the Boca Raton, Florida restaurant. The decrease
is offset by additional interest expense on additional debt incurred due to the
development and opening of seven new restaurants since the end of the fiscal
year 1998 third quarter.
INCOME TAX. The Company has a valuation allowance that offsets a portion
of its net deferred tax assets. Each quarter management determines, based on
projections, the realizability of the related deferred tax assets in future
years and has reduced the allowance to the extent year-to-date income is
available to realize the benefit of the deferred tax assets. The reduction of
the valuation allowance currently minimizes income tax expense. Income tax
expense of $134,000 and $166,000 in the first nine months of fiscal year 1999
and the first nine months of fiscal year 1998, respectively, represents state
income tax and alternative minimum tax.
-12-
<PAGE> 14
ADOPTION OF NEW ACCOUNTING STANDARDS
In April 1998, the AICPA Accounting Standards Executive Committee issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"). SOP 98-5 defines start-up activities broadly (including
organizational costs) and requires that the cost of start-up activities be
expensed as incurred. SOP 98-5 amends provisions of a number of existing SOP's
and audit and accounting guides. SOP 98-5 is effective for fiscal years
beginning after December 15, 1998. The Company's current accounting policy is
to capitalize pre-opening costs and amortize them over a one-year period. The
effect of initially applying the provisions of SOP 98-5 will be reported as a
change in accounting principle at the beginning of the period of adoption and
thereafter all such costs will be expensed as incurred. Amounts capitalized as
pre-opening costs as of January 24, 1999 were $756,000.
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, an Initial Public Offering, bank loans, leasing facilities and
loans from certain private parties, including present and former shareholders
of the Company.
During the fiscal year 1999 first quarter, the Company received financing
commitments of $36.5 million, which will be used for developing new restaurants.
These commitments of $16.5 million and $20.0 million were obtained from
Franchise Finance Corporation of America ("FFCA") and CNL Group, Inc.,
respectively. These commitments added substantial flexibility to the current
development plan allowing the Company to focus on development of sites
identified and on finding new sites for additional restaurants. There is no
guarantee that these additional financings will be completed.
Pursuant to the $16.5 million funding commitment received from CNL Group,
Inc., the Company entered into sale-leaseback transactions for new Roadhouse
Grill restaurants in Pensacola, Florida during the first quarter of fiscal
1999; Jacksonville, Florida during the second quarter of fiscal 1999; Brandon,
Florida and Clearwater, Florida during the third quarter of fiscal 1999.
Pursuant to the $20.0 million funding commitment received from FFCA, the
Company entered into a lease for a new Roadhouse Grill restaurant in Panama
City, Florida.
In June 1997 and July 1997, the Company entered into sale-leaseback
agreements with unaffiliated third parties for interior furniture, fixtures and
equipment located in 11 Company-Owned restaurants. The Company received
proceeds of approximately $1.8 million and $2.3 million, respectively, net of
fees and other costs. These proceeds were used for expansion of the Company.
These transactions were recorded as financing-type leases and no deferred gain
was recognized.
The Company's capital expenditures aggregated approximately $8.0 million
for the thirty-nine weeks ended January 24, 1999 and $10.3 million for the
thirty-nine weeks ended January 25, 1998, substantially all of which were
used to open Roadhouse Grill restaurants.
At December 28, 1997, the Company owed Berjaya Cayman, its majority
shareholder $3 million under a promissory note dated September 27, 1996 bearing
interest at 8.5%. In January 1998, the Company paid $1.5 million of the
outstanding balance on this promissory note. On February 6, 1998, the Company's
Board of Directors approved the issuance of 400,000 shares of Common Stock to
Berjaya Cayman to convert the remaining debt outstanding of $1.5 million to
common equity at a price of $3.75 per share based on the closing market price
as of February 6, 1998. The transaction was consummated on September 30, 1998.
The Company anticipates that it may require additional debt or equity
financing in order to continue to open new restaurants. There can be no
guarantee or assurance financing will be available on terms acceptable to the
Company, if at all. In the event the Company is unable to secure additional
financing sufficient to support continued growth, the Company's operating and
financial plans would require revision.
As is common in the restaurant industry, the Company has generally
operated with negative working capital ($4.3 million at January 24, 1999). The
Company does not have significant receivables or inventory and receives trade
credit on its purchases of food and supplies.
SEASONALITY AND QUARTERLY RESULTS
The Company's sales and earnings fluctuate seasonally. On December 11,
1997, the Company's Board of Directors voted to change the Company's fiscal
year to coincide with that of the majority shareholder, Berjaya Cayman. With
the new fifty-two or fifty-three week fiscal year structure, the Company's
highest earnings are expected to occur in the third and fourth fiscal quarters.
The new fiscal year ends on the last Sunday in April and consists of four
thirteen week quarters (except in
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<PAGE> 15
the case of a fifty-three week year in which the fourth quarter consists of
fourteen weeks) structured as follows:
o 1st Quarter - May, June, July
o 2nd Quarter - August, September, October
o 3rd Quarter - November, December, January
o 4th Quarter - February, March, April
The following is a recast summary (unaudited) of the quarterly results of
operations for the fifty-two weeks ended April 26, 1998 and the fifty-two weeks
ended April 25, 1997 with the quarters structured according to the new fiscal
year:
<TABLE>
<CAPTION>
1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL YEAR
------- ------- ------- ------- ----------
($ in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
FIFTY-TWO WEEKS ENDED APRIL 25, 1998:
Total revenues $ 23,083 $ 22,866 $ 25,043 $ 29,202 $ 100,194
Income prior to unusual or infrequent items 107 550 1,194 1,954 3,805
(Loss) from impairment of assets(1) -- -- (1,120) -- (1,120)
Operating income(2) 107 549 74 1,954 2,684
Pretax income (loss)(3) (106) 119 (999) 1,555 569
Net income (loss) (148) 69 (1,073) 1,505 353
Basic net income (loss) per common share (0.02) 0.01 (0.12) 0.16 0.04
Weighted-average common shares outstanding 9,305,408 9,305,408 9,305,408 9,305,408 9,305,408
Diluted net income (loss) per common share (0.02) 0.01 (0.12) 0.16 0.04
Weighted-average common shares and share
equivalents outstanding - assuming dilution 9,305,408 9,305,879 9,305,408 9,343,605 9,315,139
FIFTY-TWO WEEKS ENDED APRIL 26, 1997:
Total revenues $ 14,461 $ 16,667 $ 20,018 $ 23,502 $ 74,648
Operating income (loss) (390) (227) 369 1,599 1,351
Pretax income (loss) (569) (485) 105 1,451 502
Net income (loss) (569) (485) 95 1,412 453
Basic net income (loss) per common share (0.12) (0.10) 0.01 0.15 0.07
Weighted-average common shares outstanding 4,697,232 4,747,379 7,852,849 9,305,408 6,650,717
Diluted net income (loss) per common share (0.12) (0.10) 0.01 0.15 0.07
Weighted-average common shares and share
equivalents outstanding - assuming dilution 4,697,232 4,747,379 7,872,237 9,311,336 6,653,874
</TABLE>
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.
YEAR 2000
Many software applications and operational programs previously written
were not designed to recognize calendar dates beginning in the Year 2000. The
failure of such applications or programs to properly recognize the dates
beginning in the Year 2000 may result in miscalculations or system failures.
This could have an adverse effect on the Company's operations, if not
corrected.
The Company has developed a plan to prepare its computer systems and
communication systems for the Year 2000. The plan includes identification and
assessment of all software, hardware and equipment that could potentially be
affected
- --------
1 During the third quarter of fiscal 1998, the Company recognized an impairment
loss of $1.1 million, or $0.12 per share, relating to the write-down of two
under-performing Company-Owned restaurants.
2 During the first quarter of fiscal 1998, the Company recognized non-recurring
severance charges of $430,000, or $0.05 per share. These charges were incurred
for the departure of key executives of the Company.
3 During the third quarter of fiscal 1998, the Company incurred a loss on
divestiture of an under-performing joint venture of $611,000, or $0.07
per share.
-14-
<PAGE> 16
by the Year 2000 issue. If necessary, remedial action will be taken
and further testing will be performed. The Company intends to complete this
identification, assessment and testing by July of 1999. The Company believes
that the majority of its computer systems and communication systems will be
Year 2000 compliant with minimal modifications required for software
applications, hardware and equipment, and currently estimates that the total
cost of its Year 2000 plan will be approximately $150,000. This includes
approximately $100,000 which will be expensed as incurred and approximately
$50,000 of capital expenditures. The Company's aggregate cost estimate does not
include time and costs that may be incurred by the Company as a result of the
failure of any third parties, including suppliers, to become Year 2000
compliant or costs to implement any contingency plans.
The Company is currently in the process of contacting critical suppliers
of products and services to determine the extent to which the Company may be
vulnerable to such parties failure to resolve their own Year 2000 issues. The
Company will assess and attempt to mitigate its risks with respect to the
failure of these third parties to be Year 2000 compliant. The effect, if any,
on the Company's results of operations from the failure of third parties to be
Year 2000 compliant cannot be reasonably estimated.
Based on the Company's current assessment, no matters have been identified
with regard to the Year 2000 issue that will have a material adverse effect on
the Company's financial condition or results of operations. The Company
operates in a large number of geographically dispersed areas and has access to
a large supplier base. The Company believes this will mitigate any possible
adverse impact. The Company's beliefs and expectations, however, are based on
certain assumptions and expectations that may ultimately prove to be
inaccurate. Potential sources of risk include the inability of suppliers to be
Year 2000 compliant, which could result in delays in product deliveries from
suppliers, and disruption of the distribution channel.
The Company is in the process of establishing a contingency plan and
intends to develop a plan to mitigate the effects of problems experienced by
vendors or service providers in regard to the timely implementation of Year
2000 programs. This contingency plan is expected to be developed and in place
by July 1999.
IMPACT OF INFLATION
The Company does not believe that inflation has materially affected its
results of operations during the past five 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.
EMPLOYEES
The Company competes with other companies for qualified personnel,
especially management. A shortage of qualified personnel could materially
affect the Company. The Company has not experienced a shortage of qualified
personnel to date and believes that the risk of a shortage is minimal.
SITE LOCATION
The Company competes in the marketplace for qualified restaurant
locations. There is no assurance that the Company can find enough qualified
sites to continue its expansion plans.
CONSUMER TASTE
The restaurant industry is highly competitive and subject to changes in
consumer tastes. The Company believes that it has the ability to respond
quickly to changing taste and preferences because of its flexible format and
trade name.
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<PAGE> 17
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various legal actions arising in the normal
course of business. While the resolution of any of such actions may have an
impact on the financial results for the period in which it is resolved, the
Company believes that the ultimate disposition of these matters will not, in
the aggregate, have a material adverse effect upon its business or financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on December 9, 1998.
The following matters were submitted to votes of the Stockholders:
It was proposed that the five members of the board of directors be
re-elected to serve for a term of one year. Each director was re-elected to
serve for a term of one year. The results of the voting on the foregoing matter
were as follows:
<TABLE>
<CAPTION>
Affirmative Negative Broker
Director Votes Votes Abstentions Non-Votes
-------- ----------- -------- ----------- ---------
<S> <C> <C> <C>
Vincent Tan 9,010,807 51,659 -- 246,275
Ayman Sabi 9,010,757 51,709 -- 246,275
Philip Friedman 9,010,807 51,659 -- 246,275
Phillip Ratner 9,010,807 51,659 -- 246,275
Alain K.K. Lee 9,010,757 51,709 -- 246,275
</TABLE>
It was proposed that the selection of KPMG Peat Marwick, LLP as
independent auditors for the Company for the 1999 fiscal year be ratified. The
selection of KPMG Peat Marwick, LLP as independent auditors for the Company for
the 1999 fiscal year was ratified. The results of the voting on the foregoing
matter were as follows:
Affirmative Negative Broker
Votes Votes Abstentions Non-Votes
----------- -------- ----------- ---------
9,045,920 9,199 7,347 246,275
It was proposed that the 1998 Omnibus Stock Option Plan, which authorized
the issuance of options to purchase up to 236,000 shares of the Company's
Common Stock be approved by the Company's shareholders. The 1998 Omnibus Stock
Option Plan was approved. The results of the voting on the foregoing matter
were as follows:
Affirmative Negative Broker
Votes Votes Abstentions Non-Votes
----------- -------- ----------- ---------
9,001,815 47,754 12,897 246,275
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The Exhibits listed on the accompanying Exhibit Index are filed with or
incorporated by reference in this report.
(b) The Company filed no reports on Form 8-K during the period covered by this
Form 10-Q.
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<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf on March 10, 1999, by the undersigned, thereunto duly authorized.
ROADHOUSE GRILL, INC.
(Registrant)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Ayman Sabi President, Chief Executive Officer March 10, 1999
- -------------------------------- and Director
Ayman Sabi (Principal Executive Officer)
/s/ Glenn E. Glasshagel Chief Financial Officer March 10, 1999
- -------------------------------- (Principal Financial Officer
Glenn E. Glasshagel and Principal
Accounting Officer)
</TABLE>
-17-
<PAGE> 19
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
10.53 Roadhouse Grill, Inc. 1998 Omnibus Stock Option Plan, effective
July 1, 1998 (incorporated by reference from the Company's Proxy
Statement for the Notice of Annual Meeting of Shareholders to be
Held on December 9, 1998 Exhibit A, dated October 28, 1998).
10.54 Lease Agreement by and between the Company and FFCA Acquisition
Corporation, dated August 19, 1998.
10.55 Lease Agreement and Construction Addendum by and between the
Company and CNL APF Partners, L.P., dated September 15, 1998.
10.56 Master Security Agreement and Schedule No. 1 by and between the
Company and Pacific Financial Company, dated January 14, 1999.
21.0 Subsidiaries of the Registrant.
27 Financial Data Schedule.
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<PAGE> 1
Exhibit 10.54
LEASE
THIS LEASE (this "Lease") is made as of __________________________,
1998 (the "Effective Date"), by and between FFCA ACQUISITION CORPORATION, a
Delaware corporation ("Lessor"), whose address is 17207 North Perimeter Drive,
Scottsdale, Arizona 85255, and ROADHOUSE GRILL, INC., a Florida corporation
("Lessee"), whose address is 6600 North Andrews Avenue, Fort Lauderdale,
Florida 33309.
W I T N E S S E T H :
THAT, in consideration of the mutual covenants and agreements herein
contained, Lessor and Lessee hereby covenant and agree as follows:
1. CERTAIN DEFINED TERMS. The following terms shall have the following
meanings for all purposes of this Lease:
"ADDITIONAL RENT" has the meaning set forth in Section 4.D.
"ADJUSTMENT DATE" means the second anniversary of the Final
Disbursement Date, and every second anniversary thereafter during the Lease
Term (including the extension period if Lessee exercises its option pursuant to
Section 28).
"ADJUSTABLE RATE" means an annual interest rate equal to the sum of
the Adjustable Rate Basis plus the Applicable Margin, which Adjustable Rate
shall at no time be greater than 15.16% per annum or less than 7.16% per annum.
"ADJUSTABLE RATE BASIS" means, for any Interim Rental Period, the
annual interest rate (rounded upwards, if necessary, to the nearest 1/100th of
one percent) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in dollars at approximately 11:00
a.m. (London time) on the Adjustable Rate Reset Date for a term comparable to
such Interim Rental Period. If, for any reason, such rate is not available, the
term "Adjustable Rate Basis" shall mean, for any Interim Rental Period, the
annual interest rate (rounded upwards, if necessary, to the nearest 1/100th of
one percent) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in dollars at approximately 11:00 a.m. (London time)
on the Adjustable Rate Reset Date for a term comparable to such Interim Rental
Period; provided, however, if more than one rate is specified on the Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such
rates.
"ADJUSTABLE RATE RESET DATE" means the fifteenth day of each calendar
month, or the next succeeding Business Day if such day is not a Business Day,
prior to the next Interim Rental Period.
<PAGE> 2
"AFFILIATE" means any person or entity which directly or indirectly
controls, is under common control with, or controlled by any other person or
entity. For purposes of this definition "controls", "under common control with"
and "controlled by" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such person
or entity, whether through the ownership of voting securities or otherwise.
"APPLICABLE MARGIN" means an annual percentage equal to 3.50%.
"BASE ANNUAL RENTAL" means an amount equal to the product of (i) the
United States Treasury Rate plus the Applicable Margin, and (ii) Lessor's Total
Investment, as such Base Annual Rental shall be increased from time to time as
contemplated by Section 4.
"BASE MONTHLY RENTAL" means an amount equal to 1/12 of the applicable
Base Annual Rental.
"BUSINESS DAY" means a day on which banks located in Phoenix, Arizona
are not required or authorized to remain closed.
"CLOSING DATE" has the meaning set forth in the Sale-Leaseback
Agreement.
"CODE" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101, ET
SEQ., as amended.
"COMPLETION DATE" means the date of the opening of the Premises as a
Franchisor Restaurant.
"DE MINIMIS AMOUNTS" means, with respect to any given level of
Hazardous Materials or USTs, that level or quantity of Hazardous Materials or
USTs in any form or combination of forms which does not constitute a violation
of any Environmental Laws and is customarily employed in, or associated with,
similar businesses located in the state in which the Premises is located.
"DEFAULT RATE" means 18% per annum or the highest rate permitted by
law, whichever is less.
"DEVELOPMENT DOCUMENTS" has the meaning set forth in the Disbursement
Agreement.
"DEVELOPMENT PRICE" has the meaning set forth in the Disbursement
Agreement.
"DISBURSEMENT AGREEMENT" means that certain Disbursement Agreement of
even date herewith among Lessor, Lessee and Lawyers Title Insurance
Corporation, a Virginia corporation, as the same may be amended from time to
time.
"DISBURSEMENT DATE" means the date of a Disbursement.
"DISBURSEMENTS" has the meaning set forth in the Disbursement
Agreement.
"ENVIRONMENTAL INSURER" means such environmental insurance company as
Lessor shall select in its sole discretion.
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"ENVIRONMENTAL LAWS" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to Hazardous Materials, Regulated Substances or USTs
and/or the protection of human health or the environment by reason of a Release
or a Threatened Release of Hazardous Materials, Regulated Substances or USTs or
relating to liability for or costs of Remediation or prevention of Releases.
"Environmental Laws" includes, but is not limited to, the following statutes,
as amended, any successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and
the like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to USTs); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act;
the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors Appropriation Act.
"Environmental Laws" also includes, but is not limited to, any present and
future federal, state and local laws, statutes, ordinances, rules, regulations
and the like, as well as common law: conditioning transfer of property upon a
negative declaration or other approval of a Governmental Authority of the
environmental condition of the property; requiring notification or disclosure
of Releases or other environmental condition of the Premises to any
Governmental Authority or other person or entity, whether or not in connection
with transfer of title to or interest in property; imposing conditions or
requirements relating to Hazardous Materials, Regulated Substances or USTs in
connection with permits or other authorization for lawful activity; relating to
nuisance, trespass or other causes of action related to Hazardous Materials,
Regulated Substances or USTs; and relating to wrongful death, personal injury,
or property or other damage in connection with the physical condition or use of
the Premises by reason of the presence of Hazardous Materials, Regulated
Substances or USTs in, on, under or above the Premises.
"ENVIRONMENTAL POLICY" means that certain environmental insurance
policy issued by Environmental Insurer to Lessor with respect to the Premises,
which Environmental Policy shall be in form and substance satisfactory to
Lessor in its sole discretion.
"EVENT OF DEFAULT" has the meaning set forth in Section 24.
"FINAL DISBURSEMENT" has the meaning set forth in the Disbursement
Agreement.
"FINAL DISBURSEMENT DATE" means the date of the payment of the Final
Disbursement as provided in the Disbursement Agreement.
"FIRST AMENDMENT" means that certain First Amendment to Lease in the
form attached hereto as EXHIBIT B, to be executed by Lessor and Lessee as of
date of the Final Disbursement.
"FIRST DISBURSEMENT DATE" means the date of the payment of the First
Disbursement (as defined in the Disbursement Agreement) as provided in the
Disbursement Agreement.
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"FIRST INTERIM BASE RENTAL" means an amount equal to (i) the product
of (x) the Adjustable Rate and (y) the sum of the Purchase Price and, in the
event the Soft Costs Disbursement is made on the Closing Date, the amount of
the Soft Costs Disbursement, multiplied by (ii) a fraction, the numerator of
which is the actual number of days between the Effective Date and the First
Disbursement Date and the denominator of which is 365; provided, however, if
the Soft Costs Disbursement, if any, is made subsequent to the Closing Date,
the First Interim Base Rental amount shall equal the sum of (i) the product of
(x) the Adjustable Rate and (y) the Purchase Price multiplied by a fraction,
the numerator of which is the actual number of days between the Effective Date
and the First Disbursement Date and the denominator of which is 365, and (ii)
the product of (x) the Adjustable Rate and (y) the amount of the Soft Costs
Disbursement multiplied by a fraction, the numerator of which is the actual
number of days between the Soft Costs Disbursement Date and the First
Disbursement Date and the denominator of which is 365. The First Interim Base
Rental payment shall constitute base rent for the period commencing on the
Effective Date and ending on the date prior to the First Disbursement Date.
"FRANCHISE FINANCE" means Franchise Finance Corporation of America, a
Delaware corporation, and its successors.
"FRANCHISE Rights" has the meaning described in Section 6.E.
"FRANCHISOR RESTAURANT" means a Roadhouse Grill restaurant.
"GOVERNMENTAL AUTHORITY" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority of the United States, the state in which the
Premises are located or any political subdivision thereof.
"HAZARDOUS MATERIALS" means (i) any toxic substance or hazardous
waste, substance, solid waste or related material, or any pollutant or
contaminant; (ii) radon gas, asbestos in any form which is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
which contains dielectric fluid containing levels of polychlorinated biphenyls
in excess of federal, state or local safety guidelines, whichever are more
stringent, or any petroleum product; (iii) any substance, gas, material or
chemical which is or may be defined as or included in the definition of
"hazardous substances," "toxic substances," "hazardous materials," hazardous
wastes" or words of similar import under any Environmental Laws; and (iv) any
other chemical, material, gas or substance the exposure to or release of which
is or may be prohibited, limited or regulated by any Governmental Authority
that asserts or may assert jurisdiction over the Premises or the operations or
activity at the Premises, or any chemical, material, gas or substance that does
or may pose a hazard to the health and/or safety of the occupants of the
Premises or the owners and/or occupants of property adjacent to or surrounding
the Premises.
"IMPROVEMENTS" means the improvements and fixtures to be constructed
upon the Property as contemplated by the Disbursement Agreement (but excluding
trade fixtures), which Improvements shall at all times be owned by Lessor.
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"INDEMNIFIED PARTIES" means Lessor, Environmental Insurers and the
directors, officers, shareholders, partners, members, employees, lenders,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of Lessor and including, but
not limited to, any successors by merger, consolidation or acquisition of all
or a substantial portion of Lessor's assets and business and Environmental
Insurer.
"INTERIM BASE RENTAL" means, with respect to each Interim
Disbursement, an amount equal to (i) the product of (x) the Adjustable Rate and
(y) the sum of the Purchase Price and that portion of the Development Price
disbursed as of the Disbursement Date immediately prior to the Disbursement
Date of such Interim Disbursement, multiplied by (ii) a fraction, the numerator
of which is the actual number of days between the Disbursement Date immediately
prior to the Disbursement Date of such Interim Disbursement and the
Disbursement Date of such Interim Disbursement and the denominator of which is
365. Such Interim Base Rental amount shall constitute base rent for the period
commencing on the Disbursement Date immediately prior to the Disbursement Date
of such Interim Disbursement and ending on the date prior to the Disbursement
Date of such Interim Disbursement.
"INTERIM DISBURSEMENT" has the meaning set forth in the Disbursement
Agreement.
"INTERIM RENTAL PERIOD" means (i) initially, the period beginning on
the Effective Date and ending on the last day of the calendar month in which
such date occurs, and (ii) thereafter, the period beginning on the first day of
the calendar month and ending on the last day of such calendar month.
"INTERIM TERM" means the period described in Section 3.
"INTERIM TERM RENTAL" means the rent accruing during the Interim Term
described in Section 4.A.
"LAND" means the parcel or parcels of real estate legally described in
EXHIBIT A attached hereto, and all rights, privileges and appurtenances
therewith.
"LEASE TERM" has the meaning described in Section 3.
"LEASE YEAR" means the 12-month period commencing on the first day of
the year or any other 12-month period as may be approved in writing by Lessor
after the commencement of the Lease Term and each successive 12-month period
thereafter.
"LESSEE ENTITIES" means, collectively, Lessee and any Affiliate of
Lessee.
"LESSOR ENTITIES" means, collectively, Lessor, Franchise Finance and
any Affiliate of Lessor or Franchise Finance.
"LESSOR'S TOTAL INVESTMENT" means the sum of the Purchase Price and
the aggregate amount of all Disbursements, including Interim Term Rental, made
pursuant to the Disbursement Agreement.
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"LOSSES" means any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminutions in value, fines,
penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement and damages of whatever kind or nature (including, without
limitation, attorneys' fees and other costs of defense).
"OTHER AGREEMENTS" means, collectively, all agreements and instruments
now or hereafter entered into between, among or by (1) any of the Lessee
Entities, and, or for the benefit of, (2) any of the Lessor Entities,
including, without limitation, leases, promissory notes and guaranties but
excluding this Lease, the Disbursement Agreement and all other agreements
executed pursuant to the Sale-Leaseback Agreement.
"PREMISES" means, collectively, the Land and the Improvements.
"PURCHASE PRICE" has the meaning set forth in the Sale-Leaseback
Agreement.
"QUESTIONNAIRE" means that certain environmental questionnaire
completed by Lessee and submitted to Environmental Insurer in connection with
the issuance of the Environmental Policy.
"REGULATED SUBSTANCES" means "petroleum" and "petroleum-based
substances" or any similar terms described or defined in any of the
Environmental Laws and any applicable federal, state, county or local laws
applicable to or regulating USTs.
"RELEASE" means any presence, release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials,
Regulated Substances or USTs.
"REMEDIATION" means any response, remedial, removal, or corrective
action, any activity to cleanup, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Material, Regulated Substances or USTs, any actions to
prevent, cure or mitigate any Release, any action to comply with any
Environmental Laws or with any permits issued pursuant thereto, any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or any evaluation relating to any Hazardous
Materials, Regulated Substances or USTs.
"SALE-LEASEBACK AGREEMENT" means that certain Build-to-Suit
Sale-Leaseback Agreement dated as of the date hereof between Lessor and Lessee
with respect to the Premises.
"SOFT COSTS DISBURSEMENT" has the meaning set forth in the
Disbursement Agreement.
"SOFT COSTS DISBURSEMENT DATE" means the date of the payment of the
Soft Costs Disbursement as provided in the Disbursement Agreement.
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"SUBSTANTIAL COMPLETION DISBURSEMENT" has the meaning set forth in the
Disbursement Agreement.
"SUBSTANTIAL COMPLETION INTERIM BASE RENTAL" means an amount equal to
(i) the product of (x) the Adjustable Rate and (y) the sum of the Purchase
Price and that portion of the Development Price disbursed as of the
Disbursement Date of the Interim Disbursement immediately prior to the
Substantial Completion Disbursement, multiplied by (ii) a fraction, the
numerator of which is the actual number of days between the Disbursement Date
of the Interim Disbursement immediately prior to the Substantial Completion
Disbursement and the Completion Date and the denominator of which is 365. The
Substantial Completion Interim Base Rental payment shall constitute base rent
for the period commencing on the Disbursement Date of the Interim Disbursement
immediately prior to the Substantial Completion Disbursement and ending on the
date prior to the Completion Date.
"THREATENED RELEASE" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding the Premises which
may result from such Release.
"UNITED STATES TREASURY RATE" means the 10-year U.S. Treasury Rate in
effect as reported in the Western Edition of The Wall Street Journal on the
tenth calendar day preceding the Final Disbursement Date. In the event The Wall
Street Journal ceases to publish such Treasury information, Lessor shall select
an alternative publication which publishes comparable information most nearly
approximating such information.
"USTS" means any one or combination of tanks and associated product
piping systems used in connection with storage, dispensing and general use of
Regulated Substances.
2. DEMISE OF PREMISES. In consideration of the rentals and other sums
to be paid by Lessee and of the other terms, covenants and conditions on
Lessee's part to be kept and performed, Lessor hereby leases to Lessee, and
Lessee hereby takes and hires, the Premises.
3. INTERIM TERM; LEASE TERM. A. The Interim Term shall commence as of
the Effective Date and shall expire on the date immediately preceding the
Completion Date.
B. The Lease Term shall commence on the Completion Date and shall
expire on the fourteenth anniversary thereof, unless terminated sooner as
provided in this Lease and as may be extended for two periods of five years
each as set forth in Section 28 below. The time period subsequent to the
Interim Term during which this Lease shall actually be in effect is referred to
herein as the "Lease Term."
4. RENTAL AND OTHER PAYMENTS. A. The First Interim Base Rental shall
accrue as of the First Disbursement Date, Interim Base Rental shall accrue as
of the Disbursement Date of the applicable Interim Disbursement, and the
Substantial Completion Interim Base Rental shall accrue
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<PAGE> 8
as of the Completion Date. The Interim Term Rental shall not be paid by Lessee,
but shall be capitalized in the Base Annual Rental as of the date of accrual.
B. On or immediately prior to the Final Disbursement Date, Lessor and
Lessee shall execute the First Amendment which will set forth, among other
things, Lessor's Total Investment and the Base Annual Rental. Effective as of
the Completion Date, Lessee shall be obligated to pay Base Annual Rental in the
amount as set forth in the First Amendment. On the Final Disbursement Date,
Lessee shall pay Lessor Base Annual Rental prorated on the basis of the ratio
that the number of days from the Completion Date through the last day in the
month containing the Final Disbursement Date bears to the number of days in
such month. Thereafter, on or before the first day of each succeeding calendar
month, Lessee shall pay Lessor in advance the Base Monthly Rental.
C. Commencing on the first Adjustment Date and on each Adjustment Date
thereafter, the Base Annual Rental shall increase by an amount equal to four
percent (4%), which increases shall be compounded. On each Adjustment Date, the
Base Annual Rental then in effect shall be multiplied by 104%, with the
resulting product constituting the Base Annual Rental due and payable under
this Lease until the next Adjustment Date.
D. All sums of money required to be paid by Lessee under this Lease
which are not specifically referred to as rent ("Additional Rent") shall be
considered rent although not specifically designated as such. Lessor shall have
the same remedies for nonpayment of Additional Rent as those provided herein
for the nonpayment of Base Annual Rental.
5. REPRESENTATIONS AND WARRANTIES OF LESSOR. The representations and
warranties of Lessor contained in this Section are being made to induce Lessee
to enter into this Lease and Lessee has relied and will continue to rely upon
such representations and warranties. Lessor represents and warrants to Lessee
as follows:
A. ORGANIZATION AND STATUS OF LESSOR. (i) Lessor has been
duly organized and is validly existing and in good standing under the
laws of the State of Delaware. All necessary corporate action has been
taken to authorize the execution, delivery and performance by Lessor
of this Lease and the other documents, instruments and agreements
provided for herein.
B. AUTHORITY OF LESSOR. The person who has executed this
Lease on behalf of Lessor is duly authorized so to do.
C. ENFORCEABILITY. This Lease constitutes the legal, valid
and binding obligation of Lessor, enforceable against Lessor in
accordance with its terms.
6. REPRESENTATIONS AND WARRANTIES OF LESSEE. The representations and
warranties of Lessee contained in this Section are being made to induce Lessor
to enter into this Lease and Lessor has relied, and will continue to rely, upon
such representations and warranties. Lessee represents and warrants to Lessor
as follows:
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<PAGE> 9
A. ORGANIZATION, AUTHORITY AND STATUS OF LESSEE. (i) Lessee
has been duly incorporated, is validly existing and in good standing
under the laws of its state of incorporation and is qualified as a
foreign corporation to do business in any jurisdiction where such
qualification is required. All necessary corporate action has been
taken to authorize the execution, delivery and performance by Lessee
of this Lease and of the other documents, instruments and agreements
provided for herein. Lessee is not a "foreign corporation", "foreign
partnership", "foreign trust" or "foreign estate", as those terms are
defined in the Internal Revenue Code and the regulations promulgated
thereunder. Lessee's United States tax identification number is
correctly set forth on the signature page of this Lease.
(ii) The persons who have executed this Lease on behalf of
Lessee are duly authorized to do so.
B. ENFORCEABILITY. This Lease constitutes the legal, valid
and binding obligation of Lessee, enforceable against Lessee in
accordance with its terms.
C. LITIGATION. There are no suits, actions, proceedings or
investigations pending, or to the best of its knowledge, threatened
against or involving Lessee or the Premises before any arbitrator or
Governmental Authority which might reasonably result in any material
adverse change in the contemplated business, condition, worth or
operations of Lessee or the Premises.
D. ABSENCE OF BREACHES OR DEFAULTS. Lessee is not in default
under any other document, instrument or agreement to which Lessee is a
party or by which Lessee, the Premises or any of the property of
Lessee is subject or bound. The authorization, execution, delivery and
performance of this Lease and the documents, instruments and
agreements provided for herein will not result in any breach of or
default under any other document, instrument or agreement to which
Lessee is a party or by which Lessee, the Premises or any of the
property of Lessee is subject or bound.
E. FRANCHISE RIGHTS. Lessee owns all of the rights and
privileges relative to the franchise rights associated with Roadhouse
Grill restaurants, including, without limitation, any and all trade
secrets, tradenames and trademarks relative thereto (collectively, the
"Franchise Rights"), free and clear of any and all rights, liens,
interests, claims, and encumbrances, except for the rights and
privileges granted to Lessee's approved franchisees. Lessee has the
right to operate the Premises as a Roadhouse Grill restaurant during
the Lease Term.
F. LICENSES AND PERMITS. Lessee has obtained or will obtain
prior to the Completion Date all required licenses and permits, both
governmental and private, to use and operate the Premises in the
intended manner.
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<PAGE> 10
G. FINANCIAL CONDITION; INFORMATION PROVIDED TO LESSOR. The
financial statements, all financial data and all other documents and
information heretofore delivered to Lessor by or with respect to
Lessee and/or the Premises in connection with this Lease and/or
relating to Lessee and/or the Premises are true, correct and complete
in all material respects, and there have been no amendments to such
financial statements, financial data and other documents and
information since the date such financial statements, financial data,
documents and other information were prepared or delivered to Lessor,
and no material adverse change has occurred to any such financial
statements, financial data, documents and other information not
disclosed in writing to Lessor.
H. TRUE LEASE. Lessee intends for this Lease to be a "true
lease" and not a financing lease, capital lease, mortgage, equitable
mortgage, deed of trust, trust agreement, security agreement or other
financing or trust arrangement, and the economic realities of this
Lease are those of a true lease. The term of this Lease, including any
term extensions provided for in this Lease, is less than the remaining
economic life of the Premises. The option to purchase provided for in
this Lease may be exercised only by Lessee paying the greater of the
fair market value of the Premises (as determined pursuant to Section
23) and Lessor's Total Investment, which payment amount will not be
nominal. Lessee waives any claim or defense based upon the
characterization of this Lease as anything other than a true lease and
Lessee stipulates and agrees not to challenge the validity,
enforceability or characterization of the lease of the Premises as a
true lease and further stipulates and agrees that nothing contained in
this Lease creates or is intended to create a joint venture,
partnership, equitable mortgage, trust, financing device or
arrangement, security interest or the like. Lessee shall support the
intent of the parties that the lease of the Premises pursuant to this
Lease is a true lease and does not create a joint venture,
partnership, equitable mortgage, trust, financing device or
arrangement, security interest or the like, if, and to the extent
that, any challenge occurs.
7. RENTALS TO BE NET TO LESSOR. The Interim Term Rental and the Base
Annual Rental payable hereunder shall be net to Lessor, so that this Lease
shall yield to Lessor the rentals specified during the Interim Term and the
Lease Term and that all costs, expenses and obligations of every kind and
nature whatsoever relating to the Premises shall be performed and paid by
Lessee.
8. [Intentionally left blank.]
9. TAXES AND ASSESSMENTS. Lessee shall pay, prior to the earlier of
delinquency or the accrual of interest on the unpaid balance, all taxes and
assessments of every type or nature assessed against or imposed upon the
Premises during the Interim Term and the Lease Term which affect in any manner
the net return realized by Lessor under this Lease, including, without
limitation, the following:
A. All taxes and assessments upon the Premises or any part
thereof or and any personal property, trade fixtures or and
improvements located on the Premises, whether belonging to Lessor or
Lessee, or any tax or charge levied in lieu of such taxes and
assessments;
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<PAGE> 11
B. All taxes, charges, license fees and or similar fees
imposed by reason of the use of the Premises by Lessee; and
C. All excise, transaction, privilege, license, sales, use
and other taxes upon the rental or other payments hereunder, the
leasehold estate of either party or the activities of either party
pursuant to this Lease.
All taxing authorities shall be instructed to send all tax and
assessment invoices to Lessor. After recording the information on such
invoices, Lessor shall forward such invoices to Lessee for payment. Within 30
days after each tax and assessment payment is required by this Section to be
paid, Lessee shall provide Lessor with evidence satisfactory to Lessor that
such payment was made in a timely fashion. Lessee may, at its own expense,
contest or cause to be contested (in the case of any item involving more than
$1000.00, after prior written notice to Lessor), by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any item specified in
subsection A. or lien therefor, provided that (i) such proceeding shall suspend
the collection thereof from the Premises or any interest therein, (ii) neither
the Premises nor any interest therein would be in any danger of being sold,
forfeited or lost by reason of such proceedings, (iii) no Event of Default has
occurred, and (iv) Lessee shall have deposited with Lessor adequate reserves
for the payment of the taxes, together with all interest and penalties thereon,
unless paid in full under protest or Lessee shall have furnished the security
as may be required in the proceeding or as may be required by Lessor to insure
payment of any contested taxes.
10. UTILITIES. Lessee shall contract, in its own name, for and pay
when due all charges for the connection and use of water, gas, electricity,
telephone, garbage collection, sewer use and other utility services supplied to
the Premises during the Interim Term and the Lease Term. Under no circumstances
shall Lessor be responsible for any interruption of any utility service.
11. INSURANCE. Throughout the Interim Term and the Lease Term, and in
addition to the insurance requirements set forth in the Disbursement Agreement,
Lessee shall maintain with respect to the Premises, at its sole expense, the
following types and amounts of insurance (which may be included under a blanket
insurance policy if all the other terms hereof are satisfied), in addition to
such other insurance as Lessor may reasonably require from time to time:
A. Insurance against loss, damage or destruction by fire and
other casualty, including theft, vandalism and malicious mischief,
flood (if the Premises are in a location designated by the Federal
Secretary of Housing and Urban Development as a flood hazard area),
earthquake (if the Premises are in an area subject to destructive
earthquakes within recorded history), boiler explosion (if there is
any boiler upon the Premises), plate glass breakage, sprinkler damage
(if the Premises have a sprinkler system), all matters covered by a
standard extended coverage endorsement, special coverage endorsement
commonly known as an "all risk" endorsement and such other risks as
Lessor may reasonably require, insuring the Premises for not less than
100% of their full insurable replacement cost.
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<PAGE> 12
B. Comprehensive general liability and property damage
insurance, including a products liability clause, covering Lessor,
Franchise Finance and Lessee against bodily injury liability, property
damage liability and automobile bodily injury and property damage
liability, including without limitation any liability arising out of
the ownership, maintenance, repair, condition or operation of the
Premises or adjoining ways, streets or sidewalks and, if applicable,
insurance covering Lessor and Franchise Finance against liability
arising from the sale of liquor, beer or wine on the Premises. Such
insurance policy or policies shall contain a broad form contractual
liability endorsement under which the insurer agrees to insure
Lessee's obligations under Section 18 hereof to the extent insurable,
and a "severability of interest" clause or endorsement which precludes
the insurer from denying the claim of either Lessee, Lessor or
Franchise Finance because of the negligence or other acts of the
other, shall be in amounts of not less than $1,000,000.00 per injury
and occurrence with respect to any insured liability, whether for
personal injury or property damage, or such higher limits as Lessor
may reasonably require from time to time, and shall be of form and
substance satisfactory to Lessor. During the Interim Term such
insurance policy shall also contain a vacant land endorsement.
C. Business income insurance equal to 100% of the Base Annual
Rental for a period of not less than six months.
D. State Worker's compensation insurance in the statutorily
mandated limits, employer's liability insurance with limits not less
than $500,000 or such greater amount as Lessor may from time to time
require and such other insurance as may be necessary to comply with
applicable laws.
All insurance policies (including those required by the
Disbursement Agreement) shall:
(i) Provide for a waiver of subrogation by the
insurer as to claims against Lessor or Franchise Finance,
their employees and agents and provide that such insurance
cannot be unreasonably cancelled, invalidated or suspended on
account of the conduct of Lessee, its officers, directors,
employees or agents;
(ii) Provide that any "no other insurance" clause in
the insurance policy shall exclude any policies of insurance
maintained by Lessor or Franchise Finance and that the
insurance policy shall not be brought into contribution with
insurance maintained by Lessor or Franchise Finance;
(iii) Contain a standard without contribution
mortgage clause endorsement in favor of any lender designated
by Lessor;
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(iv) Provide that the policy of insurance shall not
be terminated, cancelled or substantially modified without at
least thirty (30) days' prior written notice to Lessor,
Franchise Finance and to any lender covered by any standard
mortgage clause endorsement;
(v) Provide that the insurer shall not have the
option to restore the Premises if Lessor elects to terminate
this Lease in accordance with the terms hereof;
(vi) Be issued by insurance companies licensed to do
business in the state in which the Premises is located and
which are rated A:VI or better by Best's Insurance Guide or
otherwise approved by Lessor; and
(vii) Provide that the insurer shall not deny a
claim because of the negligence of Lessee, anyone acting for
Lessee or any tenant or other occupant of the Premises.
It is expressly understood and agreed that the foregoing
minimum limits of insurance coverage shall not limit the liability of
Lessee for its acts or omissions as provided in this Lease. All
insurance policies (with the exception of worker's compensation
insurance to the extent not available under statutory law), including
those required by the Disbursement Agreement, shall designate Lessor,
any mortgagee of Lessor and Franchise Finance as additional insureds
as their interests may appear and shall be payable as set forth in
Section 20 hereof. All such policies shall be written as primary
policies, with deductibles not to exceed 10% of the amount of
coverage. Any other policies, including any policy now or hereafter
carried by Lessor or Franchise Finance, shall serve as excess
coverage. Lessee shall procure policies for all insurance for periods
of not less than one year and shall provide to Lessor and any lender
of Lessor certificates of insurance or, upon Lessor's request,
duplicate originals of insurance policies evidencing that insurance
satisfying the requirements of this Lease is in effect at all times.
12. TAX AND INSURANCE IMPOUND. Upon the occurrence of an Event of
Default, Lessor may require Lessee to pay to Lessor sums which will provide an
impound account (which shall not be deemed a trust fund) for paying up to the
next one year of taxes, assessments and/or insurance premiums. Upon such
requirement, Lessor will estimate the amounts needed for such purposes and will
notify Lessee to pay the same to Lessor in equal monthly installments, as
nearly as practicable, in addition to all other sums due under this Lease.
Should additional funds be required at any time, Lessee shall pay the same to
Lessor on demand. Lessee shall advise Lessor of all taxes and insurance bills
which are due and shall cooperate fully with Lessor in assuring that the same
are paid. Lessor may deposit all impounded funds in accounts insured by any
federal or state agency and may commingle such funds with other funds and
accounts of Lessor. Interest or other gains from such funds, if any, shall be
the sole property of Lessor. In the event of any default by Lessee, Lessor may
apply all impounded funds against any sums due from Lessee to Lessor. Lessor
shall give to Lessee an annual accounting showing all credits and debits to and
from such impounded funds received from Lessee.
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13. PAYMENT OF RENTAL AND OTHER SUMS. All rental and other sums which
Lessee is required to pay hereunder shall be the unconditional obligation of
Lessee and shall be payable in full when due without any setoff, abatement,
deferment, deduction or counterclaim whatsoever. Upon execution of this Lease,
Lessee shall establish arrangements whereby payments of the Base Monthly
Rental, any Additional Rent and impound payments, if any, are transferred by
wire or other means directly from Lessee's bank account to such account as
Lessor may designate. Any delinquent payment (that is, any payment not made
within five calendar days after the date when due) shall, in addition to any
other remedy of Lessor, incur a late charge of 10% (which late charge is
intended to compensate Lessor for the cost of handling and processing such
delinquent payment and should not be considered interest) and bear interest at
the Default Rate, such interest to be computed from and including the date such
payment was due through and including the date of the payment.
14. USE. At all times during the Lease Term, Lessee shall use the
Premises solely for the operation of a Franchisor Restaurant in accordance with
the standards of operations then in effect which are imposed by Lessee on its
franchisees on a system-wide basis and for no other purpose. Lessee shall at
all times during the Lease Term preserve and maintain the Franchise Rights,
free and clear of any and all rights, liens, interests, claims, and
encumbrances, except for the rights and privileges granted to Lessee's approved
franchisees. Except as set forth below, and except during periods when the
Premises are untenantable by reason of fire or other casualty or condemnation
(provided, however, during all such periods while the Premises are
untenantable, Lessee shall strictly comply with the terms and conditions of
this Lease), Lessee shall at all times during the Lease Term occupy the
Premises and shall diligently operate its business on the Premises. Lessee may
cease diligent operation of business at the Premises for a period not to exceed
90 days and may do so only once within any five-year period during the Lease
Term. If Lessee does discontinue operation as permitted by this Section, Lessee
shall (i) give written notice to Lessor within 10 days after Lessee elects to
cease operation, (ii) provide adequate protection and maintenance of the
Premises during any period of vacancy and (iii) pay all costs necessary to
restore the Premises to their condition on the day operation of the business
ceased at such time as the Premises is reopened for Lessee's business
operations or other substituted use approved by Lessor as contemplated below.
Lessee shall not, by itself or through any assignment, sublease or
other type of transfer, convert the Premises to an alternative use during the
Lease Term without Lessor's consent, which consent shall not be unreasonably
withheld. Lessor may consider any or all of the following in determining
whether to grant its consent, without being deemed to be unreasonable: (i)
whether the rental paid to Lessor would be equal to or greater than the
anticipated rental assuming continued existing use, (ii) whether the proposed
rental to be paid to Lessor is reasonable considering the converted use of the
Premises and the customary rental prevailing in the community for such use,
(iii) whether the converted use will be consistent with the highest and best
use of the Premises, and (iv) whether the converted use will increase Lessor's
risks or decrease the value of the Premises.
15. COMPLIANCE WITH LAWS, RESTRICTIONS, COVENANTS AND ENCUMBRANCES. A.
Lessee's use and occupation of the Premises, and the condition thereof, shall,
at Lessee's sole cost and expense, comply fully with (i) all applicable
statutes, regulations, rules, ordinances, codes, licenses,
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permits, orders and approvals of each Governmental Authority having
jurisdiction over the Premises, including, without limitation, all health,
building, fire, safety and other codes, ordinances and requirements and all
applicable standards of the National Board of Fire Underwriters and all
policies or rules of common law, in each case, as amended, and any judicial or
administrative interpretation thereof, including any judicial order, consent,
decree or judgment applicable to Lessee and (ii) all restrictions, covenants
and encumbrances of record with respect to the Premises.
B. Lessee will not permit any act or condition to exist on or about
the Premises which will increase any insurance rate thereon, except when such
acts are required in the normal course of its business and Lessee shall pay for
such increase.
C. Without limiting the generality of the other provisions of this
Section, Lessee agrees that it shall be responsible for complying in all
respects with the Americans with Disabilities Act of 1990, as such act may be
amended from time to time, and all regulations promulgated thereunder
(collectively, the "ADA"), as it affects the Premises, including, but not
limited to, making required "readily achievable" changes to remove any
architectural or communications barriers, and providing auxiliary aides and
services within the Premises. Lessee further agrees that any and all
alterations made to the Premises during the Lease Term will comply with the
requirements of the ADA. All plans for alterations which must be submitted to
Lessor under the provisions of Section 17 must include a statement from a
licensed Architect or Engineer certifying that they have reviewed the plans,
and that the plans comply with all applicable provisions of the ADA. Any
subsequent approval or consent to the plans by the Lessor shall not be deemed
to be a representation of Lessor's part that the plans comply with the ADA,
which obligation shall remain with Lessee. Lessee agrees that it will defend,
indemnify and hold harmless the Indemnified Parties from and against any and
all Losses caused by, incurred or resulting from Lessee's failure to comply
with its obligations under this Section.
D. Lessee represents and warrants to Lessor and Environmental Insurer
as follows:
(i) The Premises and Lessee are not in violation of or
subject to any existing, pending or threatened investigation or
inquiry by any Governmental Authority or to any remedial obligations
under any Environmental Laws, and this representation and warranty
would continue to be true and correct following disclosure to each
Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to the Premises. If any such
investigation or inquiry is subsequently initiated, Lessee will
promptly notify Lessor.
(ii) Lessee has not obtained and is not required to obtain
any permits, licenses or similar authorizations to construct, occupy,
operate or use any buildings, improvements, fixtures and equipment
forming a part of the Premises by reason of any Environmental Laws.
(iii) No Hazardous Materials, Regulated Substances or USTs
have been used, handled, manufactured, generated, produced, stored,
treated, processed transferred, disposed of or otherwise Released in,
on, under, from or about the Premises, except in De Minimis Amounts.
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<PAGE> 16
(iv) The Premises does not contain Hazardous Materials or
USTs other than in De Minimis Amounts and all USTs located on or about
the Premises, if any, are in compliance with all Environmental Laws.
(v) There is no threat of any Release migrating to the
Premises.
(vi) There is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in
connection with the Premises.
(vii) Lessee has not received, any written or oral notice or
other communication from any person or entity (including but not
limited to a Governmental Authority) relating to Hazardous Materials,
Regulated Substances or USTs or Remediation thereof, of possible
liability of any person or entity pursuant to any Environmental Law,
other environmental conditions in connection with the Premises, or any
actual or potential administrative or judicial proceedings in
connection with any of the foregoing.
(viii) Lessee has truthfully and fully provided to Lessor, in
writing, any and all information relating to environmental conditions
in, on, under or from the Premises that is known to Lessee and that is
contained in Lessee's files and records, including but not limited to
any reports relating to Hazardous Materials, Regulated Substances or
USTs in, on, under or from the Premises.
E. Lessee covenants to Lessor and Environmental Insurer during the
Lease Term that: (i) all uses and operations on or of the Premises, whether by
Lessee or any other person or entity, shall be in compliance with all
Environmental Laws and permits issued pursuant thereto; (ii) there shall be no
Releases in, on, under or from the Premises, except in De Minimis Amounts;
(iii) there shall be no Hazardous Materials, Regulated Substances or USTs in,
on, or under the Premises, except in De Minimis Amounts; (iv) Lessee shall keep
the Premises free and clear of all liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any act or omission of Lessee
or any other person or entity (the "Environmental Liens"); (v) Lessee shall, at
its sole cost and expense, fully and expeditiously cooperate in all activities
pursuant to subsection (i) below, including but not limited to providing all
relevant information and making knowledgeable persons available for interviews;
(vi) Lessee shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection
with the Premises as may be reasonably requested by Lessor (including but not
limited to sampling, testing and analysis of soil, water, air, building
materials and other materials and substances whether solid, liquid or gas), and
share with Lessor and Environmental Insurer the reports and other results
thereof, and Lessor, Environmental Insurer and other Indemnified Parties shall
be entitled to rely on such reports and other results thereof; (vii) Lessee
shall, at its sole cost and expense, comply with all reasonable written
requests of Lessor to (1) reasonably effectuate Remediation of any condition
(including but not limited to a Release) in, on, under or from the Premises;
(2) comply with any Environmental Law; (3) comply with any directive from any
Governmental Authority; and (4) take any other reasonable action necessary or
appropriate for protection of human health or the environment; (viii) Lessee
shall not do or allow any tenant or other user of the Premises to do any
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<PAGE> 17
act that materially increases the dangers to human health or the environment,
poses an unreasonable risk of harm to any person or entity (whether on or off
the Premises), impairs or may impair the value of the Premises, is contrary to
any requirement of any insurer, constitutes a public or private nuisance,
constitutes waste, or violates any covenant, condition, agreement or easement
applicable to the Premises; and (ix) Lessee shall immediately notify Lessor in
writing of (A) any presence of Releases or Threatened Releases in, on, under,
from or migrating towards the Premises; (B) any non-compliance with any
Environmental Laws related in any way to the Premises; (C) any actual or
potential Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating to the Premises; and (E) any written or oral
notice or other communication which Lessee becomes aware from any source
whatsoever (including but not limited to a Governmental Authority) relating in
any way to Hazardous Materials, Regulated Substances or USTs or Remediation
thereof, possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection with the
Premises, or any actual or potential administrative or judicial proceedings in
connection with anything referred to in this Section.
F. Lessor and any other person or entity designated by Lessor,
including but not limited to Environmental Insurer, any receiver, any
representative of a governmental entity, and any environmental consultant,
shall have the right, but not the obligation, to enter upon the Premises at all
reasonable times (including without limitation, in connection with the exercise
of any remedies set forth in this Lease or the other Development Documents, as
applicable) to assess any and all aspects of the environmental condition of the
Premises and its use, including but not limited to conducting any environmental
assessment or audit (the scope of which shall be determined in Lessor's sole
and absolute discretion) and taking samples of soil, groundwater or other
water, air, or building materials, and conducting other invasive testing.
Lessee shall cooperate with and provide access to Lessor, Environmental Insurer
and any person or entity designated by Lessor. Any such assessment or
investigation shall be at Lessee's sole cost and expense.
G. Lessee shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses (excluding Losses arising out of Lessor's gross negligence
or wilful misconduct) and costs of Remediation (whether or not performed
voluntarily), engineers' fees, environmental consultants' fees, and costs of
investigation (including but not limited to sampling, testing, and analysis of
soil, water, air, building materials and other materials and substances whether
solid, liquid or gas) imposed upon or incurred by or asserted against any
Indemnified Parties, and directly or indirectly arising out of or in any way
relating to any one or more of the following: (i) any presence of any Hazardous
Materials, Regulated Substances or USTs in, on, above, or under the Premises;
(ii) any past, present or Threatened Release in, on, above, under or from the
Premises; (iii) any activity by Lessee, any person or entity affiliated with
Lessee or any tenant or other user of the Premises in connection with any
actual, proposed or threatened use, treatment, storage, holding, existence,
disposition or other Release, generation, production, manufacturing,
processing, refining, control, management, abatement, removal, handling,
transfer or transportation to or from the Premises of any Hazardous Materials,
Regulated Substances or USTs at any time located in, under, on or above the
Premises; (iv) any activity by Lessee, any person or entity affiliated with
Lessee or any tenant or other user of the Premises in connection with any
actual or proposed Remediation of any Hazardous Materials, Regulated
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Substances or USTs at any time located in, under, on or above the Premises,
whether or not such Remediation is voluntary or pursuant to court or
administrative order, including but not limited to any removal, remedial or
corrective action; (v) any past, present or threatened non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with the Premises or operations thereon,
including but not limited to any failure by Lessee, any person or entity
affiliated with Lessee or any tenant or other user of the Premises to comply
with any order of any Governmental Authority in connection with any
Environmental Laws; (vi) the imposition, recording or filing or the threatened
imposition, recording or filing of any Environmental Lien encumbering the
Premises; (vii) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in this Section;
(viii) any past, present or threatened injury to, destruction of or loss of
natural resources in any way connected with the Premises, including but not
limited to costs to investigate and assess such injury, destruction or loss;
(ix) any acts of Lessee or any other tenant, subtenant or users of the Premises
in arranging for disposal or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous Materials, Regulated
Substances or USTs owned or possessed by such Lessee or such tenant, subtenant
or users, at any facility or incineration vessel owned or operated by another
person or entity and containing such or similar Hazardous Materials, Regulated
Substances or USTs; (x) any acts of Lessee or any other tenant, subtenant or
users of the Premises, in accepting any Hazardous Materials, Regulated
Substances or USTs for transport to disposal or treatment facilities,
incineration vessels or sites selected by Lessee or such tenant, subtenant or
users, from which there is a Release, or a Threatened Release of any Hazardous
Material or Regulated Substances which causes the incurrence of costs for
Remediation; (xi) any personal injury, wrongful death, or property damage
arising under any statutory or common law or tort law theory, including but not
limited to damages assessed for the maintenance of a private or public nuisance
or for the conducting of an abnormally dangerous activity on or near the
Premises; and (xii) any misrepresentation or inaccuracy in any representation
or warranty or material breach or failure to perform any covenants or other
obligations pursuant to this Section.
At its sole cost and expense, Lessee shall have the Premises inspected
as may be required by any Environmental Law for seepage, spillage and other
environmental concerns. Lessee shall maintain and monitor the USTs in
accordance with all Environmental Laws. Lessee shall provide Lessor with
written certified results of all inspections performed on the Premises. All
costs and expenses associated with the inspection, preparation and
certification of results, as well as those associated with any corrective
action, shall be paid by Lessee. All inspections and tests performed on the
Premises shall be in compliance with all Environmental Laws.
Lessee shall comply or cause the compliance with all applicable
federal, state and local regulations and requirements regarding USTs including,
without limitation, any of such regulations or requirements which impose (i)
technical standards, including, without limitation, performance, leak
prevention, leak detection, notification reporting and recordkeeping, (ii)
corrective action with respect to confirmed and suspected Releases, and (iii)
financial responsibility for the payment of costs of corrective action and
compensation to third parties for injury and damage resulting from Releases.
Lessee shall immediately notify Lessor, in writing, of (i) the presence on or
under the Premises, or the escape, seepage, leakage, spillage, discharge,
emission or release from any USTs
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on, above or under the Premises, of any Hazardous Materials or Regulated
Substances, apparent or real and (ii) any and all enforcement, clean-up,
remedial, removal or other governmental or regulatory actions threatened,
instituted or completed pursuant to any of the Environmental Laws affecting the
Premises.
Upon any such Release, escape, seepage, leakage, spillage, discharge,
emission or release from any USTs on, above or under the Premises of any
Hazardous Materials or Regulated Substances, Lessee shall immediately remedy
such situation in accordance with all Environmental Laws and any request of
Lessor. Should Lessee fail to remedy or cause the remedy of such situation in
accordance with all Environmental Laws, Lessor shall be permitted to take such
actions in its sole discretion to remedy such situation and any costs and
expenses incurred in connection therewith will be paid by Lessee.
H. The obligations of Lessee and rights and remedies of Lessor under
the foregoing subsections D through G shall survive the termination, expiration
and/or release of this Lease.
I. In addition to the other requirements of this Section, Lessee
shall, at all times throughout the Interim Term and the Lease Term, comply with
all federal, state or local statutes, laws, rules, regulations, ordinances,
codes, policies or rules of common law now or hereafter in effect and in each
case, as amended, and any judicial or administrative interpretation thereof,
including any judicial order, consent, decree or judgment, applicable to
Lessee.
16. CONDITION OF PREMISES; MAINTENANCE. Lessee has inspected, or had
the opportunity to inspect, the Premises and hereby accepts the Premises "AS
IS" and "WHERE IS" with no representation or warranty of Lessor as to the
condition thereof. The Premises shall be kept in good, clean, sanitary and
working condition; and Lessee shall at all times at its own expense maintain,
repair and replace, as necessary, the Premises, including all portions of the
Premises, whether or not the Premises were in such condition on the Effective
Date.
17. WASTE; ALTERATIONS AND IMPROVEMENTS. Lessee shall not commit
actual or constructive waste upon the Premises. During the Lease Term, Lessee
shall not alter the exterior, structural, plumbing or electrical elements of
the Premises in any manner without the consent of Lessor, which consent shall
not be unreasonably withheld or conditioned; provided, however, Lessee may
undertake nonstructural alterations to the Premises costing less than $5,000.00
without Lessor's consent. If Lessor's consent is required hereunder and Lessor
consents to the making of any such alterations, the same shall be made by
Lessee at Lessee's sole expense by a licensed contractor and according to plans
and specifications approved by Lessor and subject to such other conditions as
Lessor shall require. Any work at any time commenced by Lessee on the Premises
shall be prosecuted diligently to completion, shall be of good workmanship and
materials and shall comply fully with all the terms of this Lease. Upon
completion of any alterations, Lessee shall promptly provide Lessor with (i)
evidence of full payment to all laborers and materialmen contributing to the
alterations, (ii) an architect's certificate certifying the alterations to have
been completed in conformity with the plans and specifications, (iii) a
certificate of occupancy (if the alterations are of such a nature as would
require the issuance of a certificate of occupancy), and (iv) any other
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documents or information reasonably requested by Lessor. Lessee shall execute
and file or record, as appropriate, a "Notice of Non-Responsibility," or any
equivalent notice permitted under applicable law in the state where the
Premises is located. Any addition to or alteration of the Premises shall be
deemed a part of the Premises and belong to Lessor, and Lessee shall execute
and deliver to Lessor such instruments as Lessor may require to evidence the
ownership by Lessor of such addition or alteration.
18. INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold
harmless each of the Indemnified Parties from and against any and all Losses
(excluding Losses suffered by an Indemnified Party arising out of such
Indemnified Party's gross negligence or wilful misconduct) caused by, incurred
or resulting from Lessee's operations of or relating in any manner to the
Premises, whether relating to their original design or construction, latent
defects, alteration, maintenance, use by Lessee or any person thereon,
supervision or otherwise, or from any breach of, default under or failure to
perform any term or provision of this agreement by Lessee, its officers,
employees, agents or other persons. It is expressly understood and agreed that
Lessee's obligations under this Section shall survive the expiration or earlier
termination of this Lease for any reason.
19. QUIET ENJOYMENT. So long as Lessee shall pay the rental and other
sums herein provided and shall keep and perform all of the terms, covenants and
conditions on its part herein contained, Lessee shall have, subject and
subordinate to Lessor's rights herein, the right to the peaceful and quiet
occupancy of the Premises.
20. CONDEMNATION OR DESTRUCTION. A. In case of a taking of all or any
part of the Premises or the commencement of any proceedings or negotiations
which might result in a taking for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of condemnation or eminent
domain or by agreement between Lessor, Lessee and those authorized to exercise
such right ("Taking"), Lessee will promptly give written notice thereof to
Lessor, generally describing the nature and extent of such Taking and including
copies of any documents or notices received in connection therewith.
B. In case of a Taking of the whole of the Premises, other than for
temporary use ("Total Taking"), this Lease shall terminate as of the date of
such Total Taking and all rentals, sums of money and other charges provided to
be paid by Lessee shall be apportioned and paid to the date of such Total
Taking; provided, however, in the event of a Total Taking, if the net award or
payment, after deducting all costs, fees and expenses incident to the
collection thereof (the "Net Amount"), for such Total Taking is less than
Lessor's Total Investment, Lessee shall pay to Lessor within 10 days of
Lessor's receipt of the Net Amount an amount equal to the difference between
Lessor's Total Investment and the Net Amount, if any. Total Taking shall
include a taking of substantially all the Premises if, in the sole
determination of Lessor, the remainder of the Premises is not useable and
cannot be made useable for the purposes provided herein. Lessor shall be
entitled to receive the entire award or payment in connection with any taking
of the Premises without deduction for any estate vested in Lessee by this
Lease. Lessee hereby expressly assigns to Lessor all of its right, title and
interest in and to every such award or payment and agrees that Lessee shall not
be entitled to any award or payment for the value of Lessee's leasehold
interest in the Lease. Lessee shall be entitled
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to claim and receive any award or payment from the condemning authority
expressly granted for the taking of Lessee's personal property, the
interruption of its business and moving expenses, but only if such claim or
award does not adversely affect or interfere with the prosecution of Lessor's
claim for the Taking. Lessee shall promptly send Lessor copies of all
correspondence and pleadings relating to any such claim.
C. In case of a temporary use of all or any part of the Premises by a
Taking ("Temporary Taking"), this Lease shall remain in full force and effect
without any reduction of Base Annual Rental, Additional Rent or any other sum
payable hereunder. Except as provided below, Lessee shall be entitled to the
entire award for a Temporary Taking, whether paid by damages, rent or
otherwise, unless the period of occupation and use by the condemning
authorities shall extend beyond the date of expiration of this Lease, in which
case the award made for such Taking shall be apportioned between Lessor and
Lessee as of the date of such expiration. At the termination of any such
Temporary Taking, Lessee will, at its own cost and expense and pursuant to the
terms of Section 17 above, promptly commence and complete the restoration of
the Premises; provided, however, Lessee shall not be required to restore the
Premises if the term of this Lease shall expire prior to, or within one year
after, the date of termination of the Temporary Taking, and in such event
Lessor shall be entitled to recover all damages and awards arising out of the
failure of the condemning authority to repair and restore the Premises at the
expiration of such Temporary Taking.
D. In the event of a Taking of less than all of the Premises for other
than a temporary use ("Partial Taking") or of damage or destruction to all or
any part of the Premises, all awards, compensation or damages shall be paid to
Lessor, and Lessor shall have the option to (i) terminate this Lease by
notifying Lessee within 60 days after Lessee gives Lessor notice of such damage
or destruction or that title has vested in the taking authority or (ii)
continue this Lease in effect, which election may be evidenced by either a
notice from Lessor to Lessee or Lessor's failure to notify Lessee that Lessor
has elected to terminate this Lease within such 60-day period. Lessee shall
have a period of 60 days after Lessor's notice that it has elected to terminate
this Lease during which to elect to continue this Lease on the terms herein
provided. If Lessee does not elect to continue this Lease or shall fail during
such 60-day period to notify Lessor of Lessee's intent to continue this Lease,
then this Lease shall terminate as of the last day of the month during which
such period expired. Lessee shall then immediately vacate and surrender the
Premises, all obligations of either party hereunder shall cease as of the date
of termination (provided, however, Lessee's obligations to Lessor under Section
18 and Lessee's obligations to pay Base Annual Rental, Additional Rent and all
other sums (whether payable to Lessor or to a third-party) accruing under this
Lease prior to the date of termination shall survive such termination) and
Lessor may retain all such awards, compensation or damages. If Lessor elects
not to terminate this Lease, or if Lessor elects to terminate this Lease but
Lessee elects to continue this Lease, then this Lease shall continue in full
force and effect on the following terms: (i) all Base Annual Rental, Additional
Rent and other sums and obligations due under this Lease shall continue
unabated, and (ii) Lessee shall promptly commence and diligently prosecute
restoration of the Premises to the same condition, as nearly as practicable, as
prior to such partial condemnation, damage or destruction as approved by
Lessor. Lessor shall promptly make available in installments as restoration
progresses an amount up to but not exceeding the amount of any award,
compensation or damages received by Lessor, upon request
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of Lessee accompanied by evidence reasonably satisfactory to Lessor that such
amount has been paid or is due and payable and is properly a part of such costs
and that Lessee has complied with the terms of Section 17 above in connection
with the restoration. Lessor shall be entitled to keep any portion of such
award, compensation or damages which may be in excess of the cost of
restoration, and Lessee shall bear all additional costs, fees and expenses of
such restoration in excess of the amount of any such award, compensation or
damages.
E. Notwithstanding the foregoing, if at the time of any Taking or at
any time thereafter Lessee shall be in default under this Lease and such
default shall be continuing, Lessor is hereby authorized and empowered but
shall not be obligated, in the name and on behalf of Lessee and otherwise, to
file and prosecute Lessee's claim, if any, for an award on account of any
Taking and to collect such award and apply the same, after deducting all costs,
fees and expenses incident to the collection thereof, to the curing of such
default and any other then existing default under this Lease.
21. INSPECTION. Lessor and its authorized representatives shall have
the right, upon giving reasonable notice, to enter the Premises or any part
thereof and inspect the same and make photographic or other evidence concerning
Lessee's compliance with the terms of this Lease. Lessee hereby waives any
claim for damages for any injury or inconvenience to or interference with
Lessee's business, any loss of occupancy or quiet enjoyment of the Premises and
any other loss occasioned by such entry. Lessee shall keep and maintain at the
Premises full, complete and appropriate books of account and records of
Lessee's business activities conducted at the Premises in accordance with
generally accepted accounting principles consistently applied. The books and
records of Lessee shall at all times be open for inspection by Lessor, its
auditors or other authorized representatives.
22. [Intentionally left blank.]
23. OPTION TO PURCHASE PREMISES. Lessee shall have the option during
the 90 days immediately preceding the tenth, fifteenth and twentieth
anniversaries of this Lease and during the 90-day period immediately preceding
the end of the first and second optional extension terms set forth in Section
28 of this Lease, if applicable (as applicable, the "Window"), to elect to
purchase the Premises for the greater of (i) its fair market value (which fair
market value shall be determined in the manner set forth below) or (ii)
Lessor's Total Investment. Lessee shall elect such option by giving written
notice (the "Option Notice") to Lessor of its intention to do so, and the
closing of such purchase must occur during the first 90 days (the "Purchase
Price") following the end of the applicable Window for which the Option Notice
was given. Within 90 days of Lessor's receipt of the Option Notice, Lessor
shall, at Lessee's sole expense, retain an independent MAI appraiser to prepare
an appraisal of the fair market value of the Premises, including any additions
or renovations thereto. In determining the fair market value of the Premises,
the appraiser shall utilize the cost, income and sales comparison approaches to
value. In utilizing the income approach, the appraiser shall determine the
"leased fee" value of the Premises, which shall be arrived at by considering
(i) the income that would be produced by this Lease through the end of the
fully extended Lease Term, and (ii) any other factors relating to such approach
which the appraiser shall deem relevant in his sole discretion. The highest
amount which results from the calculation of each of the cost approach, the
income approach, and the sales comparison approach, all as determined in
accordance with the
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provisions of this Section, shall constitute the fair market value of the
Premises for purposes of this Section. If within 20 days after being notified
of the result of such appraisal Lessee elects to reject that appraisal, then
the first appraisal shall become null and void and Lessor shall nominate to
Lessee a list of not less than three independent MAI appraisers who are
experienced with appraising property similar to the Premises, and Lessee shall
select one such appraiser. Within 60 days of such selection, Lessor shall
retain such appraiser to prepare an appraisal of the Premises in the same
manner described above. Within 20 days after the results of that appraisal have
been delivered to Lessee, Lessee shall notify Lessor of its election to
exercise this option to purchase the Premises for the price set forth in such
appraisal. If such notice of exercise is not received by Lessor within such
20-day period, the option for such time period shall lapse and this Lease shall
remain in full force and effect.
Upon exercise of this option, Lessor and Lessee shall open an escrow
account with a recognized title insurance or trust company selected by Lessor.
Such escrow shall be subject to the standard escrow instructions of the escrow
agent, to the extent they are not inconsistent herewith. At or before the close
of escrow, Lessor shall deliver to the escrow agent its special warranty deed
conveying to Lessee all of Lessor's right, title and interest in the Premises
free and clear of all liens and encumbrances except liens for taxes and
assessments and easements, covenants and restrictions of record which were
attached to the Premises as of the date hereof, attached during the Interim
Term or the Lease Term through Lessee's action or inaction, as the case may be,
have been granted by Lessor in lieu of a taking by the power of eminent domain
or the like, have been approved by Lessee, or which do not materially adversely
affect the use of the Premises as a restaurant. In the event Lessor is unable
to convey title as required, Lessee shall have the right to accept such title
as Lessor can convey or elect not to consummate its exercise of the option, in
which case the option for such time period shall lapse and this Lease shall
remain in full force and effect. Both Lessor and Lessee agree to execute a
purchase agreement, escrow instructions and such other instruments as may be
necessary or appropriate to consummate the sale of the Premises in the manner
herein provided. All cost of exercise of the option, including, but not limited
to, escrow fees, title insurance fees, recording costs or fees, attorneys' fees
(including those of Lessor), appraisal fees, stamp taxes and transfer fees
shall be borne by Lessee. Lessee shall continue to pay and perform all of its
obligations under this Lease until the close of escrow which in no event shall
occur after the date of the expiration of the Lease Term or the expiration of
any extension thereof. The purchase price paid by Lessee in exercising this
option shall be paid to Lessor or to such person or entity as Lessor may direct
at closing in immediately available funds. Lessee shall not have the right to
exercise this option or consummate the exercise thereof if at the time of
exercise or consummation it shall be in default of any of the terms and
conditions of this Lease or if any condition shall exist which upon the giving
of notice or the passage of time, or both, would constitute a default by Lessee
under this Lease.
The failure of Lessee to consummate the purchase of the Premises as
contemplated herein shall not release Lessee from its obligations under this
Lease and the Lease shall remain in full force and effect until the expiration
of the Lease Term or applicable extension period. The escrow shall close within
the applicable Window, or Lessor, at its option, may terminate Lessee's option
to purchase the Premises during such time period. The closing date may be
extended for a reasonable
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<PAGE> 24
period of time to permit Lessor to cure title defects
or to permit either party to cure any other defects or defaults provided each
party is diligently seeking to cure such defect or default and Lessee continues
to perform its obligation hereunder.
Lessee may not sell, assign, transfer, hypothecate or otherwise
dispose of the option granted herein or any interest therein, except in
conjunction with a permitted assignment of Lessee's entire interest herein and
then only to the assignee thereof. Any attempted assignment of this option
which is contrary to the terms of this paragraph shall be deemed to be a
default under this Lease and the option granted herein shall be void.
24. DEFAULT, REMEDIES AND MEASURE OF DAMAGES. A. Each of the following
shall be an event of default under this Lease (each, an "Event of Default"):
(i) If any representation or warranty of Lessee set forth in
any of the Development Documents is false in any material respect, or
if Lessee renders any false statement or account;
(ii) If any rent or other monetary sum due under this Lease
or any other Development Document is not paid within five days from
the date when due; provided, however, notwithstanding the occurrence
of such an Event of Default, Lessor shall not be entitled to exercise
its remedies set forth below unless and until Lessor shall have given
Lessee notice thereof and a period of five days from the delivery of
such notice shall have elapsed without such Event of Default being
cured;
(iii) If Lessee fails to pay, prior to delinquency, any
taxes, assessments or other charges the failure of which to pay will
result in the imposition of a lien against the Premises pursuant to
the regulations of any applicable Governmental Authority;
(iv) If Lessee becomes insolvent within the meaning of the
Code, files or notifies Lessor that it intends to file a petition
under the Code, initiates a proceeding under any similar law or
statute relating to bankruptcy, insolvency, reorganization, winding up
or adjustment of debts (collectively, hereinafter, an "Action"),
becomes the subject of either a petition under the Code or an Action,
or is not generally paying its debts as the same become due;
(v) If Lessee vacates or abandons the Premises;
(vi) If Lessee fails to observe or perform any of the other
covenants, conditions, or obligations of this Lease; provided,
however, if any such failure does not involve the payment of any
monetary sum is not willful or intentional, does not place any rights
or property of Lessor in immediate jeopardy, and is within the
reasonable power of Lessee to promptly cure after receipt of notice
thereof, all as determined by Lessor in its reasonable discretion,
then such failure shall not constitute an Event of Default hereunder,
unless otherwise expressly provided herein, unless and until Lessor
shall have given Lessee notice thereof and a period of 30 days shall
have elapsed, during which period Lessee may correct
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<PAGE> 25
or cure such failure, upon failure of which an Event of Default shall
be deemed to have occurred hereunder without further notice or demand
of any kind being required. If such failure cannot reasonably be cured
within such 30-day period, as determined by Lessor in its reasonable
discretion, and Lessee is diligently pursuing a cure of such failure,
then Lessee shall have a reasonable period to cure such failure beyond
such 30-day period, which shall in no event exceed 90 days after
receiving notice of the failure from Lessor. If Lessee shall fail to
correct or cure such failure within such 90-day period, an Event of
Default shall be deemed to have occurred hereunder without further
notice or demand of any kind being required;
(vii) If there is a breach or default, after the passage of
all applicable notice and cure or grace periods, under any other
Development Document or any of the Other Agreements;
(viii) [Intentionally left blank];
(ix) If a final, nonappealable judgment is rendered by a
court against Lessee which has a material adverse effect on the
ability to conduct business at the Premises for its intended use, or
which does not have a material adverse effect on the ability to
conduct business at the Premises for its intended use but which is in
the amount of $100,000 or more, and in either event is not discharged
or provision made for such discharge within 60 days from the date of
entry thereof.
B. Upon the occurrence of an Event of Default, with or without notice
or demand, except the notice prior to default required under certain
circumstances by subsection A above or such other notice as may be required by
statute and cannot be waived by Lessee (all other notices being hereby waived),
Lessor shall be entitled to exercise, at its option, concurrently,
successively, or in any combination, all remedies available at law or in
equity, including without limitation any one or more of the following:
(i) To terminate this Lease, whereupon Lessee's right to
possession of the Premises shall cease and this Lease, except as to
Lessee's liability, shall be terminated.
(ii) To reenter and take possession of the Premises, any or
all personal property or fixtures of Lessee upon the Premises and, to
the extent permissible, all franchises, licenses, area development
agreements, permits and other rights or privileges of Lessee
pertaining to the use and operation of the Premises and to expel
Lessee and those claiming under or through Lessee, without being
deemed guilty in any manner of trespass or becoming liable for any
loss or damage resulting therefrom, without resort to legal or
judicial process, procedure or action. No notice from Lessor hereunder
or under a forcible entry and detainer statute or similar law shall
constitute an election by Lessor to terminate this Lease unless such
notice specifically so states. If Lessee shall, after default,
voluntarily give up possession of the Premises to Lessor, deliver to
Lessor or its agents the keys to the Premises, or both, such actions
shall be deemed to be in compliance with Lessor's rights and the
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<PAGE> 26
acceptance thereof by Lessor or its agents shall not be deemed to
constitute a termination of the Lease. Lessor reserves the right
following any reentry and/or reletting to exercise its right to
terminate this Lease by giving Lessee written notice thereof, in which
event this Lease will terminate as specified in said notice.
(iii) To seize all personal property or fixtures upon the
Premises which Lessee owns or in which it has an interest, in which
Lessor shall have a landlord's lien and/or security interest, and to
dispose thereof in accordance with the laws prevailing at the time and
place of such seizure or to remove all or any portion of such property
and cause the same to be stored in a public warehouse or elsewhere at
Lessee's sole expense.
(iv) To bring an action against Lessee for any damages
sustained by Lessor.
(v) To relet the Premises or any part thereof for such term
or terms (including a term which extends beyond the original term of
this Lease), at such rentals and upon such other terms as Lessor, in
its sole discretion, may determine, with all proceeds received from
such reletting being applied to the rental and other sums due from
Lessee in such order as Lessor, may, in it sole discretion, determine,
which other sums include, without limitation, all repossession costs,
brokerage commissions, attorneys' fees and expenses, employee
expenses, alteration, remodeling and repair costs and expenses of
preparing for such reletting. Except to the extent required by
applicable law, Lessor shall have no obligation to relet the Premises
or any part thereof and shall in no event be liable for refusal or
failure to relet the Premises or any part thereof, or, in the event of
any such reletting, for refusal or failure to collect any rent due
upon such reletting, and no such refusal or failure shall operate to
relieve Lessee of any liability under this Lease or otherwise to
affect any such liability. Lessor reserves the right following any
such reentry and/or reletting to exercise its right to terminate this
Lease by giving Lessee written notice thereof, in which event this
Lease will terminate as specified in said notice.
(vi) To accelerate and recover from Lessee all rent and other
monetary sums due and owing and scheduled to become due and owing
under the Lease both before and after the date of such breach for the
original scheduled term of this Lease.
(vii) To recover from Lessee all costs and expenses,
including attorneys' fees, court costs, expert witness fees, costs of
tests and analyses, travel and accommodation expenses, deposition and
trial transcripts, copies and other similar costs and fees, paid or
incurred by Lessor as a result of such breach, regardless of whether
or not legal proceedings are actually commenced.
(viii) To immediately or at any time thereafter, and with or
without notice, at Lessor's sole option but without any obligation to
do so, correct such breach or default and charge Lessee all costs and
expenses incurred by Lessor therein. Any sum or sums so paid by
Lessor, together with interest at the then existing maximum legal
rate, but not higher than 18% per annum, shall be deemed to be
additional rent hereunder and shall be immediately due from Lessee to
Lessor. Any such acts by Lessor in correcting Lessee's breaches or
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<PAGE> 27
defaults hereunder shall not be deemed to cure said breaches or
defaults or constitute any waiver of Lessor's right to exercise any or
all remedies set forth herein.
(ix) To immediately or at any time thereafter, and with or
without notice, except as required herein, set off any money of Lessee
held by Lessor under this Lease against any sum owing by Lessee
hereunder.
(x) To seek any equitable relief available to Lessor,
including, without limitation, the right of specific performance.
All powers and remedies given by this Section to Lessor, subject to
applicable law, shall be cumulative and not exclusive of one another or of any
other right or remedy or of any other powers and remedies available to Lessor
under this Lease or any other Development Document, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements of Lessee contained in this Lease, and no delay or omission of
Lessor to exercise any right or power accruing upon the occurrence of any Event
of Default shall impair any other or subsequent Event of Default or impair any
rights or remedies consequent thereto. Every power and remedy given by this
Section or by law to Lessor may be exercised from time to time, and as often as
may be deemed expedient, by Lessor, subject at all times to Lessor's right in
its sole judgment to discontinue any work commenced by Lessor or change any
course of action undertaken by Lessor.
25. MORTGAGE, SUBORDINATION, NONDISTURBANCE AND ATTORNMENT. Lessor's
interest in this Lease and/or the Premises shall not be subordinate to any
encumbrances placed upon the Premises by or resulting from any act of Lessee,
and nothing herein contained shall be construed to require such subordination
by Lessor. Lessee shall keep the Premises free from any liens for work
performed, materials furnished or obligations incurred by Lessee. EXCEPT AS
OTHERWISE CONSENTED TO BY LESSOR PURSUANT TO SECTION 27, NOTICE IS HEREBY GIVEN
THAT LESSEE IS NOT AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY LIEN,
MORTGAGE, DEED OF TRUST OR ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF THE
PREMISES OR LESSEE'S LEASEHOLD INTEREST THEREIN, AND ANY SUCH PURPORTED
TRANSACTION SHALL BE VOID. FURTHERMORE, ANY SUCH PURPORTED TRANSACTION SHALL BE
DEEMED A TORTIOUS INTERFERENCE WITH LESSOR'S RELATIONSHIP WITH LESSEE AND
LESSOR'S FEE OWNERSHIP OF THE PREMISES.
This Lease at all times shall automatically be subordinate to the lien
of any and all ground leases, mortgages and trust deeds now or hereafter placed
upon the Premises by Lessor, and Lessee covenants and agrees to execute and
deliver, upon demand, such further instruments subordinating this Lease to the
lien of any or all such ground leases, mortgages or trust deeds as shall be
desired by Lessor, or any present or proposed mortgagees or trustees under
trust deeds, upon the condition that Lessee shall have the right to remain in
possession of the Premises under the terms of this Lease, notwithstanding any
default in any or all such mortgages or trust deeds, or after foreclosure
thereof, so long as Lessee is not in default under any of the covenants,
conditions and agreements contained in this Lease.
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If any mortgagee or trustee elects to have this Lease and the interest
of Lessee hereunder be superior to any such interest or right and evidences
such election by notice given to Lessee, then this Lease and the interest of
Lessee hereunder shall be deemed superior to any such mortgage or trust deed,
whether this Lease was executed before or after such mortgage or trust deed and
in that event such mortgagee or trustee shall have the same rights with respect
to this Lease as if it had been executed and delivered prior to the execution
and delivery of the mortgage or trust deed and has been assigned to such
mortgagee or trustee.
Although the foregoing provisions shall be self-operative and no
future instrument of subordination shall be required, upon request by Lessor,
Lessee shall execute and deliver whatever instruments may be required for such
purposes, and in the event Lessee fails so to do within 10 days after demand,
Lessee does hereby make, constitute and irrevocably appoint Lessor as its agent
and attorney-in-fact and in its name, place and stead so to do, which
appointment shall be deemed coupled with an interest.
In the event any collateral assignee or purchaser at a foreclosure
sale acquires title to the Premises pursuant to the exercise of any remedy
provided for in the collateral assignment, mortgage or trust deed or otherwise,
Lessee shall attorn to such purchaser and recognize such purchaser as Lessor
under this Lease, which shall continue in full force and effect as a direct
lease between such purchaser and Lessee. The foregoing provision shall be self
operative and effective without the execution of any further instruments.
Lessee shall give written notice to any lender of Lessor having a
recorded lien upon the Premises or any part thereof of which Lessee has been
notified of any breach or default by Lessor of any of its obligations under
this Lease and give such lender at least 60 days beyond any notice period to
which Lessor might be entitled to cure such default before Lessee may exercise
any remedy with respect thereto. Upon request by Lessor, Lessee shall also
provide Lessee's most recent audited financial statements to Lessor or any such
lender and certify the continuing accuracy of such financial statements in such
manner as Lessor or such lender may request.
26. ESTOPPEL CERTIFICATE. A. At any time, and from time to time,
Lessee agrees, promptly and in no event later than 10 days after a request from
Lessor, to execute, acknowledge and deliver to Lessor or any present or
proposed mortgagee or purchaser designated by Lessor a certificate in the form
supplied by Lessor, certifying: (i) that Lessee has accepted the Premises (or,
if Lessee has not done so, that Lessee has not accepted the Premises, and
specifying the reasons therefor); (ii) that this Lease is in full force and
effect and has not been modified (or if modified, setting forth all
modifications), or, if this Lease is not in full force and effect, the
certificate shall so specify the reasons therefor; (iii) the commencement and
expiration dates of the Interim Term and the Lease Term and the terms of any
extension options of Lessee; (iv) the date to which the rentals have been paid
under this Lease and the amount thereof then payable; (v) whether there are
then any existing defaults by Lessor in the performance of its obligations
under this Lease, and, if there are any such defaults, specifying the nature
and extent thereof; (vi) that no notice has been received by Lessee of any
default under this Lease which has not been cured, except as to defaults
specified in
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<PAGE> 29
the certificate; (vii) the capacity of the person executing such certificate,
and that such person is duly authorized to execute the same on behalf of
Lessee; and (viii) any other information reasonably requested by Lessor, or its
present or proposed purchaser or mortgagee.
B. If Lessee shall fail or refuse to sign a certificate in accordance
with the provisions of this Section within 10 days following a request by
Lessor, Lessee irrevocably constitutes and appoints Lessor as its
attorney-in-fact to execute and deliver the certificate to any such third
party, it being stipulated that such power of attorney is coupled with an
interest and is irrevocable and binding.
27. ASSIGNMENT. Lessor shall have the right to sell or convey the
Premises subject to this Lease or to assign its right, title and interest as
Lessor under this Lease in whole or in part. In the event of any such sale or
assignment other than a security assignment, Lessee shall attorn to such
purchaser or assignee and Lessor shall be relieved, from and after the date of
such transfer or conveyance, of liability for the performance of any obligation
of Lessor contained herein, except for obligations or liabilities accrued prior
to such assignment or sale.
Lessee acknowledges that Lessor has relied both on the business
experience and creditworthiness of Lessee and upon the particular purposes for
which Lessee intends to use the Premises in entering into this Lease. Without
the consent of Lessor (i) Lessee shall not assign, transfer, convey, pledge or
mortgage this Lease or any interest therein, whether by operation of law or
otherwise; (ii) no interest in Lessee shall be assigned, transferred, conveyed,
pledged or mortgaged, whether by operation of law or otherwise, including,
without limitation, dissolution of Lessee or, if Lessee is a corporation, a
transfer (by one or more transactions) of a majority of the voting stock of
Lessee, or if Lessee is a partnership, a transfer of the controlling interest
in Lessee (including the admission of new partners or withdrawal of existing
partners having a controlling interest), regardless of whether the transfer is
made by one or more transactions, or whether one or more persons hold the
controlling interest prior to the transfer or afterwards; and (iii) Lessee
shall not sublet all or any part of the Premises. It is expressly agreed that
Lessor may withhold or condition such consent based upon such matters as Lessor
may in its reasonable discretion determine, including, without limitation, the
experience and creditworthiness of any assignee, the assumption by any assignee
of all of Lessee's obligations hereunder by undertakings enforceable by Lessor,
payment to Lessor of any rentals owing under a sublease which are in excess of
the rentals owing hereunder, the transfer to any assignee of all necessary
licenses and franchises to continue operating the Premises for the purposes
herein provided, receipt of such representations and warranties from any
assignee as Lessor may request, including such matters as its organization,
existence, good standing and finances and other matters, whether or not similar
in kind. At the time of any assignment of this Lease which is approved by
Lessor, the assignee shall assume all of the obligations of Lessee under this
Lease pursuant to Lessor's standard form of assumption agreement. No such
assignment nor any subletting of the Premises shall relieve Lessee of its
obligations respecting this Lease. Any assignment, purported transfer,
conveyance, pledge or mortgage in violation of this paragraph shall be voidable
at the sole option of Lessor.
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28. OPTION TO EXTEND. Lessee, provided it is not in default hereunder
at the time of exercise or at the expiration of the Lease Term or, if
applicable, the first extension of the Lease Term, shall have the option to
continue this Lease in effect for up to two additional successive periods of
five years each in accordance with the terms and provisions of this Lease then
in effect except for the following:
A. In the event the annual fair market rental value of the
Premises (to be determined as set forth below) is greater than the
Base Annual Rental then the annual fair market rental value of the
Premises shall be substituted for the Base Annual Rental and all other
provisions shall remain the same; or
B. In the event the annual fair market rental value of the
Premises is less than the Base Annual Rental the provisions of this
Lease shall remain the same.
Lessee shall exercise such extension option by giving notice to Lessor
of Lessee's intention to do so not more than 270 days or less than 210 days
prior to the expiration of the Lease Term or the first extension of the Lease
Term and upon receipt of such notice Lessor shall within 90 days, at Lessee's
expense, cause an appraisal of the fair market rental value of the Premises to
be made by an independent MAI appraiser. If within 20 days after being notified
of the result of such appraisal Lessee elects to reject that appraisal, then
Lessor shall nominate to Lessee a list of not less than three independent MAI
appraisers who are experienced with appraising property similar to the
Premises, and Lessee shall select one such appraiser. Within 60 days of such
selection an appraisal shall be made of the Premises by that appraiser and
within 20 days after the results of that appraisal shall have been delivered to
Lessee, Lessee shall notify Lessor of Lessee's election to exercise its option
to extend this Lease and shall pay the rental so established above which shall
be absolutely net to Lessor as provided in Section 7 hereof. If such notice of
exercise is not received by Lessor within the 20-day period then this Lease
shall terminate on the last day of the Lease Term or, if applicable, the last
day of the first extension of the Lease Term.
29. NOTICES. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this Lease shall
be in writing and given by (i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered mail, return receipt
requested, and shall be deemed to have been delivered upon (a) receipt, if hand
delivered, (b) transmission, if delivered by facsimile, (c) the next business
day, if delivered by express overnight delivery service, or (d) the third
business day following the day of deposit of such notice with the United States
Postal Service, if sent by certified or registered mail, return receipt
requested. Notices shall be provided to the parties and addresses (or facsimile
numbers, as applicable) specified below:
If to Lessee: Mr. Dennis Jones
Executive Vice President and
Chief Financial Officer
6600 North Andrews Avenue
Fort Lauderdale, Florida 33309
Telephone: (954) 489-9699
Telecopy: (954) 489-1485
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<PAGE> 31
If to Lessor: Dennis L. Ruben, Esq.
Executive Vice President and
General Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above.
30. HOLDING OVER. If Lessee remains in possession of the Premises
after the expiration of the term hereof, Lessee, at Lessor's option and within
Lessor's sole discretion, may be deemed a tenant on a month-to-month basis and
shall continue to pay rentals and other sums in the amounts herein provided,
except that the Base Monthly Rental shall be automatically doubled, and to
comply with all the terms of this Lease; provided that nothing herein nor the
acceptance of rent by Lessor shall be deemed a consent to such holding over.
Lessee shall defend, indemnify, protect and hold Lessor harmless from and
against any and all claims, losses and liabilities for damages resulting from
Lessee's failure to surrender possession upon the expiration of the Lease Term,
including, without limitation, any claims made by any succeeding lessee.
31. LANDLORD'S LIEN/SECURITY INTEREST. Lessee agrees that Lessor shall
have a landlord's lien, and additionally hereby separately grants to Lessor a
first and prior security interest, in, on and against all personal property,
appliances, furniture and equipment of Lessee from time to time situated on or
used in connection with the Premises, which lien and security interest shall
secure the payment of all rental and other charges payable by Lessee to Lessor
under the terms hereof and all other obligations of Lessee to Lessor under this
Lease. Lessee further agrees to execute and deliver to Lessor from time to time
such financing statements and other documents as Lessor may then deem
appropriate or necessary to perfect and maintain said lien and security
interest, and expressly acknowledges and agrees that, in addition to any and
all other rights and remedies of Lessor whether hereunder or at law or in
equity, in the event of any default of Lessee hereunder, Lessor shall have any
and all rights and remedies granted a secured party under the Uniform
Commercial Code then in effect in the State in which the Premises is located.
If Lessee shall fail for any reason to execute any such financing statement or
document within 10 days after Lessor's request therefor, Lessor shall have the
right to execute the same as attorney-in-fact of Lessee, coupled with an
interest, for, and on behalf, and in the name of Lessee. Lessee covenants to
promptly notify Lessor of any changes in Lessee's name and/or organizational
structure which may necessitate the execution and filing of additional
financing statements (provided, however, the foregoing shall not be construed
as Lessor's consent to such changes). Notwithstanding the foregoing, Lessor
agrees that upon Lessee's request, Lessor will without charge subordinate its
landlord's lien and security interest in any personal property owned by Lessee
to the purchase money security interest of any unaffiliated lender.
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<PAGE> 32
32. REMOVAL OF LESSEE'S PROPERTY. At the expiration of the term of
this Lease, and if Lessee is not then in breach hereof, Lessee may remove from
the Premises all personal property belonging to Lessee. Lessee shall repair any
damage caused by such removal and shall leave the Premises broom clean and in
good and working condition and repair inside and out. Any property of Lessee
left on the Premises on the tenth day following the expiration of the Lease
Term shall automatically and immediately become the property of Lessor.
33. FINANCIAL STATEMENTS. Within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Lessee, Lessee
shall deliver to Lessor (i) complete financial statements of Lessee including a
balance sheet, profit and loss statement, statement of changes in financial
condition and all other related schedules for the fiscal period then ended; and
(ii) income statements for the business at the Premises. All such financial
statements shall be prepared in accordance with generally accepted accounting
principles, consistently applied from period to period, and shall be certified
to be accurate and complete by Lessee (or the Treasurer or other appropriate
officer of Lessee). Lessee understands that Lessor is relying upon such
financial statements and Lessee represent that such reliance is reasonable. In
the event that Lessee's property and business at the Premises is ordinarily
consolidated with other business for financial statement purposes, such
financial statements shall be prepared on a consolidated basis showing
separately the sales, profits and losses, assets and liabilities pertaining to
the Premises with the basis for allocation of overhead of other charges being
clearly set forth. The financial statements delivered to Lessor need not be
audited, but Lessee shall deliver to Lessor copies of any audited financial
statements of Lessee which may be prepared, as soon as they are available.
34. FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, acts of God, enemy or hostile governmental action, civil commotion,
fire or other casualty beyond the control of the party obligated to perform
shall excuse the performance by such party for a period equal to any such
prevention, delay or stoppage, except the obligations imposed with regard to
rental and other monies to be paid by Lessee pursuant to this Lease.
35. DOCUMENT REVIEW. In the event Lessee makes any request upon Lessor
requiring Lessor or its attorneys to review and/or prepare (or cause to be
reviewed and/or prepared) any document or documents in connection with or
arising out of or as a result of this Lease, then, except as expressly stated
elsewhere herein, Lessee shall reimburse Lessor or its designee promptly upon
Lessor's demand therefor a reasonable processing and reviewing fee for each
such request.
36. TIME IS OF THE ESSENCE. Time is of the essence with respect to
each and every provision of this Lease in which time is a factor.
37. LESSOR'S LIABILITY. Notwithstanding anything to the contrary
provided in this Lease, it is specifically understood and agreed, such
agreement being a primary consideration for the execution of this Lease by
Lessor, that (i) there shall be absolutely no personal liability on the part of
Lessor, its successors or assigns and its officers, directors, employees and
agents to Lessee with respect to any of the terms, covenants and conditions of
this Lease, (ii) Lessee waives all claims, demands and causes of action against
Lessor's officers, directors, employees and agents in the event of any breach
by Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, and (iii) Lessee shall look solely to the Premises for the
satisfaction of each and every remedy of Lessee in the event
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<PAGE> 33
of any breach by Lessor of any of the terms, covenants and conditions of this
Lease to be performed by Lessor, or any other matter in connection with this
Lease or the Premises, such exculpation of liability to be absolute and without
any exception whatsoever.
38. CONSENT OF LESSOR. Unless specified otherwise herein, Lessor's
consent to any request of Lessee may be conditioned or withheld in Lessor's
sole discretion. Lessor shall have no liability for damages resulting from
Lessor's failure to give any consent, approval or instruction reserved to
Lessor, Lessee's sole remedy in any such event being an action for injunctive
relief.
39. WAIVER AND AMENDMENT. No provision of this Lease shall be deemed
waived or amended except by a written instrument unambiguously setting forth
the matter waived or amended and signed by the party against which enforcement
of such waiver or amendment is sought. Waiver of any matter shall not be deemed
a waiver of the same or any other matter on any future occasion. No acceptance
by Lessor of an amount less than the monthly rent and other payments stipulated
to be due under this Lease shall be deemed to be other than a payment on
account of the earliest such rent or other payments then due or in arrears nor
shall any endorsement or statement on any check or letter accompanying any such
payment be deemed a waiver of Lessor's right to collect any unpaid amounts or
an accord and satisfaction.
40. SUCCESSORS BOUND. Except as otherwise specifically provided
herein, the terms, covenants and conditions contained in this Lease shall bind
and inure to the benefit of the respective heirs, successors, executors,
administrators and assigns of each of the parties hereto.
41. NO MERGER. The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not result in a merger of
Lessor's and Lessee's estates, and shall, at the option of Lessor, either
terminate any or all existing subleases or subtenancies, or operate as an
assignment to Lessor of any or all of such subleases or subtenancies.
42. CAPTIONS. Captions are used throughout this Lease for convenience
of reference only and shall not be considered in any manner in the construction
or interpretation hereof.
43. SEVERABILITY. The provisions of this Lease shall be deemed
severable. If any part of this Lease shall be held unenforceable by any court
of competent jurisdiction, the remainder shall remain in full force and effect,
and such unenforceable provision shall be reformed by such court so as to give
maximum legal effect to the intention of the parties as expressed therein.
44. CHARACTERIZATION. A. It is the intent of the parties hereto that
the business relationship created by this Lease and any related documents is
solely that of a long-term commercial lease between landlord and tenant and has
been entered into by both parties in reliance upon the economic and legal
bargains contained herein. None of the agreements contained herein, is
intended, nor shall the same be deemed or construed, to create a partnership
between Lessor and Lessee, to make them joint venturers, to make Lessee an
agent, legal representative, partner, subsidiary or
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<PAGE> 34
employee of Lessor, nor to make Lessor in any way responsible for the debts,
obligations or losses of Lessee.
B. Lessor and Lessee acknowledge and warrant to each other that each
has been represented by independent counsel and has executed this Lease after
being fully advised by said counsel as to its effect and significance. This
Lease shall be interpreted and construed in a fair and impartial manner without
regard to such factors as the party which prepared the instrument, the relative
bargaining powers of the parties or the domicile of any party. Whenever in this
Lease any words of obligation or duty are used, such words or expressions shall
have the same force and effect as though made in the form of a covenant.
45. EASEMENTS. During the Interim Term and the Lease Term, Lessor
shall have the right to grant utility easements on, over, under and above the
Premises without the prior consent of Lessee, provided that such easements will
not materially or unreasonably interfere with Lessee's use of the Premises.
46. BANKRUPTCY. A. As a material inducement to Lessor executing this
Lease, Lessee acknowledges and agrees that Lessor is relying upon (i) the
financial condition and specific operating experience of Lessee and Lessee's
obligation to use the Premises specifically in accordance with the terms and
provisions of this Lease, (ii) Lessee's timely performance of all of its
obligations under this Lease notwithstanding the entry of an order for relief
under the Code for Lessee, and (iii) all defaults under the Lease being cured
promptly and the Lease being assumed within 60 days of any order for relief
entered under the Code for Lessee, or the Lease being rejected within such 60
day period and the Premises surrendered to Lessor.
Accordingly, in consideration of the mutual covenants contained in
this Lease and for other good and valuable consideration, Lessee hereby agrees
that:
(i) All obligations that accrue under this Lease (including
the obligation to pay rent), from and after the date that an Action is
commenced shall be timely performed exactly as provided in this Lease
and any failure to so perform shall be harmful and prejudicial to
Lessor;
(ii) Any and all rents that accrue from and after the date
that an Action is commenced and that are not paid as required by this
Lease shall, in the amount of such rents, constitute administrative
expense claims allowable under the Code with priority of payment at
least equal to that of any other actual and necessary expenses
incurred after the commencement of the Action;
(iii) Any extension of the time period within which the
Lessee may assume or reject the Lease without an obligation to cause
all obligations under the Lease to be performed as and when required
under the Lease shall be harmful and prejudicial to Lessor;
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<PAGE> 35
(iv) Any time period designated as the period within which
the Lessee must cure all defaults and compensate Lessor for all
pecuniary losses which extends beyond the date of assumption of the
Lease shall be harmful and prejudicial to Lessor;
(v) Any assignment of the Lease must result in all terms and
conditions of the Lease being assumed by the assignee without
alteration or amendment, and any assignment which results in an
amendment or alteration of the terms and conditions of the Lease
without the express written consent of Lessor shall be harmful and
prejudicial to Lessor;
(vi) Any proposed assignment of the Lease to an assignee: (1)
that will not use the Premises specifically in accordance with the
terms and provisions of this Lease, or (2) that does not possess
financial condition, operating performance and experience
characteristics equal to or better than the financial condition,
operating performance and experience of Lessee as of the Effective
Date, shall be harmful and prejudicial to Lessor; and
(vii) The rejection (or deemed rejection) of the Lease for
any reason whatsoever shall constitute cause for immediate relief from
the automatic stay provisions of the Code, and Lessee stipulates that
such automatic stay shall be lifted immediately and possession of the
Premises will be delivered to Lessor immediately without the necessity
of any further action by Lessor.
B. No provision of this Lease shall be deemed a waiver of Lessor's
rights or remedies under the Code or applicable law to oppose any assumption
and/or assignment of this Lease, to require timely performance of Lessee's
obligations under this Lease, or to regain possession of the Premises as a
result of the failure of Lessee to comply with the terms and conditions of this
Lease or the Code.
C. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as such, shall constitute "rent" for the purposes of the
Code.
D. For purposes of this Section addressing the rights and obligations
of Lessor and Lessee in the event that a Action is commenced, the term "Lessee"
shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as
debtor in possession or other responsible person.
47. NO OFFER. No contractual or other rights shall exist between
Lessor and Lessee with respect to the Premises until both have executed and
delivered this Lease, notwithstanding that deposits may have been received by
Lessor and notwithstanding that Lessor may have delivered to Lessee an
unexecuted copy of this Lease. The submission of this Lease to Lessee shall be
for examination purposes only, and does not and shall not constitute a
reservation of or an option for Lessee to lease or otherwise create any
interest on the part of Lessee in the Premises.
48. OTHER DOCUMENTS. Each of the parties agrees to sign such other and
further documents as may be necessary or appropriate to carry out the
intentions expressed in this Lease.
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<PAGE> 36
49. ATTORNEYS' FEES. In the event of any judicial or other adversarial
proceeding between the parties concerning this Lease, to the extent permitted
by law, the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to which it may
be entitled. In addition, Lessor shall, upon demand, be entitled to all
attorneys' fees and all other costs incurred in the preparation and service of
any notice or demand hereunder, whether or not a legal action is subsequently
commenced. References in this Lease to Lessor's attorneys' fees and/or costs
shall mean both the fees and costs of independent counsel retained by Lessor
with respect to the matter and the fees and costs of Lessor's in-house counsel
incurred in connection with the matter.
50. ENTIRE AGREEMENT. This Lease, the First Amendment, the Development
Documents between Lessor and Lessee and any other instruments or agreements
referred to herein constitute the entire agreement between the parties with
respect to the subject matter hereof, and there are no other representations,
warranties or agreements except as herein provided. Without limiting the
foregoing, Lessee specifically acknowledges that neither Lessor nor any agent,
officer, employee or representative of Lessor has made any representation or
warranty regarding the projected level of profitability of the business to be
conducted on the Premises. Furthermore, Lessee acknowledges that Lessor did not
prepare or assist in the preparation of any of the projected figures used by
Lessee in analyzing the economic viability and feasibility of the business to
be conducted by Lessee at the Premises.
51. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Lessee
acknowledges that this Lease was substantially negotiated in the State of
Arizona, the executed Lease was delivered in the State of Arizona, all payments
under the Lease will be delivered in the State of Arizona and there are
substantial contacts between the parties and the transactions contemplated
herein and the State of Arizona. For purposes of any action or proceeding
arising out of this Lease, the parties hereto expressly submit to the
jurisdiction of all federal and state courts located in the State of Arizona.
Lessee consents that it may be served with any process or paper by registered
mail or by personal service within or without the State of Arizona in
accordance with applicable law. Furthermore, Lessee waives and agrees not to
assert in any such action, suit or proceeding that it is not personally subject
to the jurisdiction of such courts, that the action, suit or proceeding is
brought in an inconvenient forum or that venue of the action, suit or
proceeding is improper. The creation of this Lease and the rights and remedies
of Lessor with respect to the Premises, as provided herein and by the laws of
the state in which the Premises is located, shall be governed by and construed
in accordance with the internal laws of the state in which the Premises is
located without regard to principles of conflict of law. With respect to other
provisions of this Lease, this Lease shall be governed by the internal laws of
the State of Arizona. Nothing contained in this Section shall limit or restrict
the right of Lessor to commence any proceeding in the federal or state courts
located in the state in which the Premises is located to the extent Lessor
deems such proceeding necessary or advisable to exercise remedies available
under this Lease.
52. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original.
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<PAGE> 37
53. JOINT AND SEVERAL LIABILITY. If Lessee consists of more than one
individual or entity, each such individual and/or entity shall be jointly and
severally liable for all obligations of Lessee under this Lease.
54. MEMORANDUM OF LEASE. Concurrently with the execution of this
Lease, Lessor and Lessee are executing Lessor's standard form memorandum of
lease in recordable form, indicating the names and addresses of Lessor and
Lessee, a description of the Premises, the Interim Term, the Lease Term and the
terms of any options to extend the Lease Term or purchase the Premises, but
omitting rent and such other terms of this Lease as Lessor may not desire to
disclose to the public. Further, upon Lessor's request, Lessee agrees to
execute and acknowledge a termination of lease and/or quit claim deed in
recordable form to be held by Lessor until the expiration or sooner termination
of the Lease Term.
55. NO BROKERAGE. Lessor and Lessee represent and warrant to each
other that they have had no conversation or negotiations with any broker
concerning the leasing of the Premises. Each of Lessor and Lessee agrees to
protect, indemnify, save and keep harmless the other, against and from all
liabilities, claims, losses, costs, damages and expenses, including attorneys'
fees, arising out of, resulting from or in connection with their breach of the
foregoing warranty and representation.
56. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES. LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT
TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE, THE RELATIONSHIP OF LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY
REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM LESSOR WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LESSEE AGAINST LESSOR OR ITS
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY
LESSEE OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL
ASPECT OF THEIR BARGAIN.
57. RELIANCE BY ENVIRONMENTAL INSURER. Lessee acknowledges and agrees
that Environmental Insurer may rely on the representations, warranties and
covenants set forth in this
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<PAGE> 38
Lease, that Environmental Insurer is an intended third-party beneficiary of
such representations, warranties and consents and that Environmental Insurer
shall have all rights and remedies available at law or in equity as a result of
a breach of such representations, warranties and covenants, including to the
extent applicable, the right of subrogation.
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as
of the date first above written.
LESSOR:
FFCA ACQUISITION CORPORATION, a
Delaware corporation
By:
-------------------------------
Printed Name: Robin L. Roach
Its: Senior Vice President
Signed, sealed and delivered Corporte Finance
in the presence of:
- -------------------------------- --------------------------------
Witness Signature Witness Signature
LESSEE:
LESSEE'S FEDERAL TAX IDENTIFICATION ROADHOUSE GRILL, INC., a Florida
NUMBER: corporation
----------------------------
By:
------------------------------
Printed
Name:
------------------------------
Signed, sealed and delivered Its:
in the presence of: ------------------------------
- -------------------------------- --------------------------------
Witness Signature Witness Signature
STATE OF FLORIDA
COUNTY OF
-----------------------
The foregoing instrument was acknowledged before me this
_____ day of ___________, 1998, by _____________________________, the
___________________________ of ROADHOUSE GRILL, INC., a Florida corporation, on
behalf of the corporation.
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<PAGE> 39
---------------------------------------------
Signature of Notary Public - State of Florida
----------------------------------------------------
Print, type or stamp commissioned name of Notary
Personally known _________ OR Type of Identification
Produced:__________________
-39-
<PAGE> 40
STATE OF ARIZONA
COUNTY OF MARICOPA
The foregoing instrument was acknowledged before me _____ day of
___________, 1998, by Robin L. Roach, Senior Vice President, Corporate Finance
of FFCA ACQUISITION CORPORATION, a Delaware corporation, on behalf of the
corporation.
---------------------------------------------
Signature of Notary Public - State of Arizona
----------------------------------------------------
Print, type or stamp commissioned name of Notary
Personally known _________ OR Type of Identification
Produced:__________________
-40-
<PAGE> 41
EXHIBIT A
LEGAL DESCRIPTION
<PAGE> 42
EXHIBIT B
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (the "Amendment") made as of
_______________, 1998, by and between FFCA ACQUISITION CORPORATION, a Delaware
corporation ("Lessor"), whose address is 17207 North Perimeter Drive,
Scottsdale, Arizona 85255, and ROADHOUSE GRILL, INC., a Florida corporation
("Lessee"), whose address is 6600 North Andrews Avenue, Fort Lauderdale,
Florida 33309, hereby amends that certain lease between Lessor and Lessee dated
as of ______________, 1998 (the "Lease"), with respect to certain real
property, together with all buildings, structures, fixtures and improvements
located thereon legally described on EXHIBIT A attached hereto (the
"Premises"). Any capitalized terms not herein defined shall have the meanings
ascribed thereto in the Lease.
W I T N E S S E T H :
WHEREAS, pursuant to Section 4.B of the Lease, Lessor and Lessee
agreed to execute a First Amendment to the Lease in the form hereof on the date
of the Final Disbursement Date; and
WHEREAS, Lessee has requested that Lessor make the Final Disbursement
and Lessor is prepared to make the Final Disbursement; and
WHEREAS, in connection with Lessor making the Final Disbursement to
Lessee, Lessor and Lessee desire to amend certain provisions of the Lease as
set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lessor and Lessee agree as follows:
1. The terms and provisions of this Amendment shall be deemed
effective on and as of _____________, 199__ (the "Effective Date").
2. Section 1 of the Lease shall be amended by deleting the
definitions of "Base Annual Rental," "Completion Date," and "Lessor's
Total Investment" and substituting in lieu thereof the following:
"BASE ANNUAL RENTAL" means, as of the date of this
Amendment, $___________________, as such Base Annual Rental shall be
increased from time to time as contemplated by Section 4 of the Lease.
"COMPLETION DATE" means _______________, 199__.
"LESSOR'S TOTAL INVESTMENT" means $_____________.
<PAGE> 43
3. Lessee warrants and represents to Lessor that (i) all
necessary actions have been taken to authorize the execution of this
Amendment by Lessee, (ii) the persons who have executed this Amendment
on behalf of Lessee are duly authorized to do so, and (iii) this
Amendment constitutes the legal, valid and binding obligation of
Lessee, enforceable against Lessee in accordance with its terms.
4. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original.
5. In all other respects the Lease shall remain unchanged and
in full force and effect. The Lease, as amended by this Amendment,
shall continue to be binding upon the Lessor and Lessee and their
permitted successors and assigns.
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Amendment
effective as of the Effective Date.
LESSOR:
FFCA ACQUISITION CORPORATION, a
Delaware corporation
By:
----------------------------------
Printed Name: Robin L. Roach
Signed, sealed and delivered Its: Senior Vice President
in the presence of: Corporate Finance
- -------------------------------- -------------------------------------
Witness Signature Witness Signature
LESSEE:
ROADHOUSE GRILL, INC., a Florida
corporation
By:
----------------------------------
Printed
Name:
---------------------------
Signed, sealed and delivered Its:
in the presence of: ---------------------------------
- -------------------------------- -------------------------------------
Witness Signature Witness Signature
-2-
<PAGE> 44
STATE OF FLORIDA
COUNTY OF
------------------
The foregoing instrument was acknowledged before me this
_____ day of ___________, 1998, by _____________________________, the
___________________________ of ROADHOUSE GRILL, INC., a Florida corporation, on
behalf of the corporation.
---------------------------------------------
Signature of Notary Public - State of Florida
----------------------------------------------------
Print, type or stamp commissioned name of Notary
Personally known _________ OR Type of Identification
Produced:__________________
-3-
<PAGE> 45
STATE OF ARIZONA
COUNTY OF MARICOPA
The foregoing instrument was acknowledged before me _____ day of
___________, 1998, by Robin L. Roach, Senior Vice President, Corporate Finance
of FFCA ACQUISITION CORPORATION, a Delaware corporation, on behalf of the
corporation.
---------------------------------------------
Signature of Notary Public - State of Arizona
----------------------------------------------------
Print, type or stamp commissioned name of Notary
Personally known _________ OR Type of Identification
Produced:__________________
-4-
<PAGE> 1
Exhibit 10.55
ROADHOUSE GRILL/Jacksonville, Duval County, Florida
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into as of September 15th, 1998, by
and between:
(i) CNL APF PARTNERS, LP, a Delaware limited partnership, with principal office
and place of business at 400 E. South Street, Suite 500, Orlando, Florida 32801
("Landlord"), and (ii) ROADHOUSE GRILL, INC., a Florida corporation, with a
mailing address of 6600 North Andrews Avenue, Suite 160, Ft. Lauderdale,
Florida 33309 ("Tenant").
WITNESSETH:
Landlord leases to Tenant, for the purpose of developing, constructing and
operating a ROADHOUSE GRILL Restaurant and for no other use or purpose
whatsoever and subject to the terms and conditions of the Rent Addendum and
Construction Addendum attached hereto, and Tenant rents from Landlord the
following described premises, (hereinafter "Premises") located at 9220
Baymeadows Road, Jacksonville, DuvaJ County, Florida and being more
particularly described in Exhibit "A" attached hereto and made a part hereof,
together with all rights and privileges in and about the Premises as may be
necessary or convenient to Tenant's business, inclusive of all easements
benefitting the real property described in Exhibit "A". Premises shall include
all improvements and structures whether now existing or hereafter constructed
thereon.
The following additional stipulations are hereby declared to be covenants of
this Lease and shall, unless otherwise expressly stated, be applicable at all
times throughout the term of this Lease and any extension or renewal thereof:
1. DEFINITIONS
For purposes of this Lease, the following terms are hereby defined to mean:
"Effective Date" shall mean the first date set forth at the beginning of this
Lease.
"Landlord" shall mean CNL APF PARTNERS, LP, a Delaware limited partnership, its
successors and assigns.
"Lease" shall include this Lease Agreement and all amendments hereto, if any,
entered into from time to time hereafter.
<PAGE> 2
"Lease Year" shall mean a fiscal period beginning on the Effective Date (and
each anniversary thereof) and expiring twelve (12) months thereafter.
"Rent" shall mean the Rent payable under this Lease as set forth in the Rent
Addendum attached hereto and incorporated herein, and shall include Interim Rent
and Annual Rent (all as defined in the Rent Addendum).
2. TERM AND RENT
(a) TERM. The term of this Lease shall begin on the Effective Date and shall
expire on a date thirteen (13) years thereafter unless previously terminated or
renewed or extended as provided herein.
(b) RENT. Rent shall be due and payable as provided in the Rent Addendum
attached hereto and incorporated herein.
3. ALTERATIONS AND IMPROVEMENTS, INVESTMENT TAX CREDIT, MECHANIC'S LIENS,
LANDLORD'S DISCLAIMER
(a) Tenant shall be permitted to install, use on and about, and remove from the
Premises at any time and from time to time all trade fixtures and other
personal property (exclusive of lighting, electrical, heating and air
conditioning improvements) which are not a component of the building located or
to be located on the Premises (hereinafter referred to as the "Tenant's
Property"), all of which at all times shall remain the property of Tenant with
the right of removal (subject to paragraph (d) below) at the expiration of this
Lease. Trade fixtures shall include: (1) removable decor items and office
equipment; (2) building lettering, signs, sign posts and sign standards; (3)
unattached food and customer service equipment; and (4) food and customer
service equipment attached to the building by bolts and screws and/or by
utility connections, including without limitation, walk-in refrigerators and
freezers, remote refrigeration systems, exhaust systems and hoods. Tenant shall
also have the right, at its option and expense, to redecorate or otherwise
remodel the Premises upon any termination hereof or upon subletting or
assignment in such manner as will, without reducing the fair market value
thereof, avoid the appearance of the ROADHOUSE GRILL Restaurant operated under
this Lease; provided, however, Tenant shall not impair the structural condition
of the Premises or reduce the size thereof. Tenant shall have the right to make
any additions, alterations, changes and improvements, structural and
nonstructural, including but not limited to construction of additional
buildings and additions to the then existing buildings, as Tenant shall desire;
provided, however, (i) Tenant shall submit plans of all structural changes to
Landlord at least thirty (30) days in advance of the proposed construction
date, (ii) Tenant shall provide Landlord with evidence of Tenant's financial
ability to pay for such changes, (iii) if the cost of structural changes
exceeds TEN THOUSAND AND NO/l00 DOLLARS ($l0,000.00), Tenant shall post payment
and performance bonds for such work naming Landlord and Tenant as dual
obligees, (iv) all such construction shall be completed in a workmanlike manner
and in full compliance with all building laws and ordinances applicable
thereto, at Tenant's expense, and (v) such additions, alterations, changes and
improvements shall not reduce the fair market value of the Premises. All such
additions, alterations, changes and improvements shall be deemed to be a part
of the Premises.
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(b) Landlord hereby grants Tenant the right and privilege of applying for and
receiving all investment tax credits, if any, under the Internal Revenue Code
which may be available with respect to the building and other improvements to
be constructed. To this end, Landlord agrees to execute all such further
documents and supply such additional information as may be required to make
such election effective.
(c) Tenant shall not do or suffer anything to be done whereby the Premises, or
any part thereof, may be encumbered by a mechanic's lien or similar lien, and,
if, whenever and as often as any mechanic's lien or similar lien is filed
against the Premises, or any part thereof, purporting to be for or on account
of any labor done, materials or services furnished in connection with any work
in or about the Premises, done by, for or under the authority of Tenant, or
anyone claiming by, through or under Tenant, Tenant shall discharge the same of
record within ten (10) days after service upon Tenant of notice of the filing
thereof; provided, however, Tenant shall have the right to remove the lien by
bonding same in accordance with applicable law and to contest any such lien;
provided further that Tenant shall diligently prosecute any such contest, at
all times effectively staying or preventing any official or judicial sale of
the Premises under execution or otherwise, and, if unsuccessful, satisfy any
final judgment against Tenant adjudging or enforcing such lien or, if
successful, procuring record satisfaction or release thereof.
(d) All of Tenant's Property placed in or upon the Premises by Tenant shall
remain the property of Tenant with the right to remove the same at any time
during the term of this Lease. Landlord, if requested by Tenant, agrees to
execute such documentation subordinating its lien rights (vis a vis any
equipment lender or landlord) to Tenant's personalty and to all rights of levy
for distraint for rent against same as shall be reasonably required by any
equipment lender or lessor of Tenant; provided any damage caused by, or
resulting from the removal of any trade fixtures, equipment or other personal
property shall be promptly repaired by Tenant or the party entitled to remove
same.
4. DESTRUCTION OF PREMISES; INSURANCE
(a) If the Premises are damaged or destroyed by fire, flood, tornado or other
element, or by any other casualty and such damage or destruction does not occur
within the last twenty-four (24) months of the original or of any extended or
renewed term of this Lease, this Lease shall continue in full force and effect
and Tenant shall, as promptly as possible, restore, repair or rebuild the
Premises to substantially the same condition as it existed before the damage or
destruction. Tenant shall for this purpose use all, or such part as may be
necessary, of the insurance proceeds received from insurance policies carried
on the Premises under the provision of subparagraph 4(b) hereinbelow. If such
insurance proceeds are not sufficient to pay such costs, Tenant shall pay such
deficit. Should the Premises be damaged or destroyed by any of the foregoing
described casualties within the last twenty-four (24) months of the original
term or of any extended or renewed term of this Lease, to the extent that they
are untenantable or
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unsuitable, in Tenant's opinion for continued use in the normal conduct of
Tenant's business, Tenant shall have the right, exercisable by written notice
to Landlord given within thirty (30) days after the date of such damage or
destruction, of terminating this Lease effective upon the date of such damage
or destruction. If Tenant terminates this Lease as thus provided Landlord shall
be entitled to all of the insurance proceeds on the Premises, but not to the
proceeds of insurance carried by Tenant on Tenant's Property; provided,
however, Tenant shall not have the right to terminate this Lease unless (i) the
damage or destruction of the Premises was caused by a peril which was insured
against by the provisions of subparagraph 4(b) of this Lease; (ii) at the time
of such damage and destruction the said insurance policies to be carried by
Tenant were in the amount of the full replacement cost of such improvements
(without deduction or co-insurance) and in full force and effect; and (iii) the
insurer has confirmed coverage and its obligation to pay. If Tenant defaults in
its obligation to carry insurance in the amount required under subparagraph
4(b), then, prior to a Tenant termination of this Lease, Tenant shall be
obligated to pay toward said reconstruction or to Landlord the difference
between the amount actually carried and the amount required to be carried under
this paragraph.
(b) Tenant, at its expense and as additional rent hereunder, shall throughout
the term of this Lease and any extension or renewal thereof, keep the Premises
insured with "all risk" coverage, including code changes, glass breakage,
vandalism and malicious mischief coverage, and builder's risk (if the Premises
are to be constructed) ("all risk" as such term is used in the insurance
industry) for the full replacement value, with any deductible to be approved by
Landlord (and without any co-insurance provision (Agreed Value endorsement)).
If Tenant serves alcoholic beverages, or if the Premises are located in a flood
or earthquake zone, then additional coverage shaI1 be obtained by Tenant in
amounts and in forms acceptable to Landlord. Tenant shall provide Landlord with
copies of such policies or certificates of such coverage, and the policy or
policies shall name Landlord and any mortgagee designated by Landlord as an
additional insured (or, if elected by Landlord, loss payee) and shall provide
that all losses shall be payable as herein provided. All such policies of
insurance shall provide that the amount thereof shall not be reduced and that
none of the provisions, agreements or covenants contained therein shall be
modified or cancelled by the insuring company or companies without thirty (30)
days prior written notice being given to Landlord; and that all insurance
proceeds shall be paid by check payable to Landlord. Such policy or policies of
insurance may also cover loss or damage to Tenant's Property, and the insurance
proceeds applicable to Tenant's Property shall not be paid to Landlord or any
mortgagee but shall accrue and be payable solely to Tenant. In the event of a
casualty, Tenant shall be responsible for any deficiency between the
replacement cost of the Premises and the amount actually paid by the insurance
company.
(c) Tenant shall maintain, at its own expense and as additional Rent, public
liability insurance and liquor liability insurance covering the Premises, for
the joint benefit of and insuring Tenant and Landlord, each with coverage of
not less than $2,000,000.00 per occurrence, with any deductible to be approved
by Landlord, and with a general aggregate limit of not less than
$10,000,000.00, per occurrence in excess of the general liability and liquor
liability coverages required above. Landlord (and if Landlord is either a
general or limited partnership, all general partners) shall be named as an
additional insured (or, if elected by Landlord, loss payee).
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All such policies of insurance shall provide that the amount thereof shall not
be reduced and that none of the provisions, agreements or covenants contained
therein shall be modified or canceled by the insuring company or companies
without thirty (30) days prior written notice being given to all parties to
this Lease. A copy of the policy or certificate of such insurance shall be
delivered to Landlord.
(d) Tenant shall maintain, at its own expense, business interruption insurance
for not less than six (6) months coverage for each occurrence, with any
deductible to be approved by Landlord. All such policies of insurance shall
provide that Landlord is additional insured (or, if elected by Landlord, loss
payee); and that the amount thereof shall not be reduced and that none of the
provisions, agreements or covenants contained therein shall be modified or
cancelled by the insuring company or companies without thirty (30) days prior
written notice being given to all parties to this Lease. A copy of the policy
or certificate of such insurance shall be delivered to Landlord.
(e) All insurance companies providing the coverage required under this
Paragraph 4 shall be selected by Tenant and shah be rated A minus (A-) or
better by Best's Insurance Rating Service, shall be licensed to write insurance
policies in the state in which the Premises is located, and shall be acceptable
to Landlord in Landlord's reasonable discretion.
5. MAINTENANCE AND REPAIR
(a) Tenant shall maintain the Premises and all buildings and improvements
thereon (interior and exterior, structural and otherwise) in good order and
repair and, subject to the provisions of paragraph 4(a) with respect to damage
within the last twenty-four (24) months of the Lease, and paragraph 6 herein,
return the Premises and all buildings and improvements thereon at the
expiration of the term of this Lease or any extension thereof in as reasonably
as good condition as when received, ordinary wear and tear excepted.
(b) Tenant agrees that Landlord shall have no obligation under this Lease to
make any repairs or replacements (including the replacement of obsolete
components) to the Premises or the buildings or improvements thereon, or any
alteration, addition, change, substitution or improvement thereof or thereto,
whether structural or otherwise. The terms "repair" and "replacement" include
the replacement of any portions of the Premises which have outlived their
useful life during the term of the Lease (or any extensions thereof). Landlord
and Tenant intend that the rent received by Landlord shall be free and clear of
any expense to Landlord for the construction, care, maintenance (including
common area maintenance charges and charges accruing under easements or other
agreements relating to the Premises), operation, repair, replacement,
alteration, addition, change, substitution and improvement of or to the
Premises and any building and improvement thereon. Upon the expiration or
earlier termination of this Lease, Tenant shall remain responsible for, and
shall pay to Landlord, any cost, charge or expense for which Tenant is
otherwise responsible for hereunder attributable to any period (prorated on a
daily basis) prior to the expiration or earlier termination of this Lease.
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<PAGE> 6
6. CONDEMNATION
(a) In the event that the whole or any material part of the building on the
Premises or such a material portion of the land (for purposes hereof,
"material" shall mean more than 20% of the building on the Premises or more
than 40% of the land) shall be taken during the term of this Lease or any
extension or renewal thereof for any public or quasi-public use under any
governmental law, ordinance, regulation or by right of eminent domain, or shall
be sold to the condemning authority under threat of condemnation with the
result that the Premises cannot continue to be operated as the type of
restaurant contemplated herein or if all reasonable access to the adjacent
roadways from the existing or comparable curb cuts shall be taken (any of such
events being hereinafter referred to as a "taking"), Tenant shall have the
option of terminating this Lease as of a date no earlier than the date of such
taking, such termination date to be specified in a notice of termination to be
given by Tenant to Landlord not fewer than fourteen (14) days prior to the date
on which possession of the Premises, or part thereof, must be surrendered to
the condemning authority or its designee.
(b) In the event of any taking which does not give rise to an option to
terminate or in the event of a taking which does give rise to an option to
terminate and Tenant does not elect to terminate, Landlord shall make its award
available to Tenant and Tenant shall, to the extent of the award from such
taking (which word "award" shall mean the net proceeds after deducting expenses
of any settlement, or net purchase price under a sale in lieu of condemnation
but shall exclude the value of Landlord's reversionary interest), promptly
restore or repair the Premises and all improvements thereon (except the items
which Tenant is entitled to remove) to the same condition as existed
immediately prior to such taking insofar as is reasonably possible. If the
estimated cost of restoration or repair shall exceed the amount of Landlord's
award, Tenant shall deposit with Landlord the amount of such excess. The award
and any excess shall be held in trust by Landlord and used, to the extent
required, for the purpose of such restoration or repair. A just and
proportionate part of the Rent payable hereunder shall be abated from the date
of such taking until ten (10) days after Tenant has restored same and
thereafter the Rent shall be reduced in proportion to the reduction in the then
rental value of the Premises after the taking in comparison with the rental
value prior to the taking. If the award shall exceed the amount spent or to be
spent promptly to effect such restoration, repair or replacement, such excess
shall unconditionally belong to Landlord and shall be paid to Landlord.
(c) In the event of any partial taking where this Lease is not terminated,
Tenant shall not be entitled (except for use in reconstruction) to any part of
the compensation or award given Landlord for the taking of the fee of the
Premises, but Tenant shall have the right to recover from the condemning
authority such compensation as is specifically awarded to Tenant (i) to
reimburse Tenant for any cost which Tenant may incur in removing Tenant's
Property from the Premises and (ii) for loss of Tenant's business.
(d) If this Lease is terminated by reason of a taking , then Landlord shall be
entitled to receive the entire award in any such condemnation or eminent domain
proceedings or purchase in lieu thereof and Tenant hereby assigns to Landlord
all of its right, title and interest in and to all and any part of such award,
provided, however, Tenant shall be entitled to receive any award specifically
made to reimburse Tenant.
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7. TAXES AND ASSESSMENTS
Tenant shall pay prior to delinquency all taxes and assessments which may be
levied upon or assessed against the Premises and all taxes and assessments of
every kind and nature whatsoever arising in any way from the use, occupancy or
possession of the Premises or assessed against the improvements situated
thereon, together with all taxes levied upon or assessed against Tenant's
Property. To that end, Landlord shall not be required to pay any taxes or
assessments whatsoever which relate to or may be assessed against this Lease,
the Rent and other amounts due hereunder, the Premises, improvements and
Tenant's Property. Provided, however, that any taxes or assessments which may
be levied or assessed against the Premises for a period ending after the
termination hereof shall be prorated between Landlord and Tenant as of such
date. Within thirty (30) days after Tenant receives the paid receipted tax
bills, Tenant shall furnish Landlord with copies of a paid receipt for such tax
bills. Upon demand by Landlord, Tenant shall deliver-and pay over to Landlord
such additional sums as are necessary to satisfy any deficiency in the amount
necessary to pay the taxes before the same become due. Tenant may, at its
option, contest in good faith and by appropriate and timely legal proceedings
any such tax and assessment; provided, however, that Tenant shall indemnify and
hold harmless Landlord from any loss or damage resulting morn any such contest,
and all expenses of same (including,, without limitation, all attorneys' fees,
court and other costs) are paid solely by Tenant.
8. COMPLIANCE, UTILITIES, SURRENDER
(a) Tenant at its expense shall promptly comply with all governmental
requirements, whether or not compliance therewith shall require structural
changes in the Premises; will procure and maintain all permits, licenses and
other authorizations required for the use of the Premises or any part thereof
then being made and for the lawful and proper installation, operation and
maintenance of all equipment and appliances necessary or appropriate for the
operation and maintenance of the Premises, and shall comply with all easements,
restrictions, reservations and other instruments of record applicable to the
Premises. Tenant shall indemnify and save Landlord harmless from all expenses
and damages by reason of any notices, orders, violations or penalties filed
against or imposed upon the Premises, or against Landlord as owner thereof,
because of Tenant's failure to comply with this paragraph.
(b) Tenant shall pay all charges for heat, water, gas, sewage, electricity and
other utilities used or consumed on the Premises and shall contract for the
same in its own name. Landlord shall not be liable for any interruption or
failure in the supply of any such utility service to the Premises.
(c) Tenant shall peacefully surrender possession of the Premises, the buildings
and other improvements thereon, to Landlord at the expiration, or earlier
termination, of the original term or any extended or renewed term of this
Lease.
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<PAGE> 8
9. QUIET ENJOYMENT
Landlord covenants and warrants that Landlord has full power and authority to
make this Lease, and that Tenant shall have and enjoy full, quiet and peaceful
possession of the Premises, their appurtenances and all rights and privileges
incidental thereto during the term hereof and any renewals or extensions,
subject to the provisions of this Lease and any easements, restrictions,
reservations and other instruments of record applicable to the Premises and in
existence at the time of the conveyance of the Premises to Landlord by Tenant.
10. OPTION TO RENEW
Tenant shall have two (2) successive ten (l0) year options to extend this Lease
for up to an additional twenty (20) years upon the same terms, covenants,
conditions and rental as setforth herein provided that Tenant is not in default
hereunder at the commencement of such option period. Tenant may exercise each
such ten (10) year option by giving written notice to Landlord not less than
six (6) months prior to the expiration of the then current term of this Lease.
Should Tenant fail to give Landlord such timely written notice during the
required period, all remaining rights of renewal shall automatically expire.
11. FIRST RIGHT OF REFUSAL TO PURCHASE; OPTION TO PURCHASE
(a) So long as Tenant is not in default under this Lease, Tenant shall have the
right to purchase the Premises in accordance with the terms of this paragraph.
If Landlord receives and desires to accept a bona fide offer to purchase
(excluding any transfer to an affiliate of Landlord) the Premises during the
term of this Lease or any extension or renewal thereof, Landlord shall serve a
notice on Tenant stating the name of such offeror with a copy of the terms and
conditions of such offer attached and Tenant shall have the right to purchase
the Premises on the same terms and conditions set forth in Landlords notice,
provided Tenant delivers written notice to Landlord of its election to do so
within twenty (20) days after receipt of such notice from Landlord. If Tenant
does not elect to exercise its right to purchase as aforesaid, Landlord may
sell the Premises, provided the sale is consummated with the offeror and on the
terms and conditions set forth in Landlord's notice to Tenant. The foregoing
preemptive right shall remain in existence notwithstanding its non-exercise in
respect to any sale and shall be binding upon Landlord's successors in title.
(b) Tenant shall have the option to purchase the Premises at any time after the
seventh (7th) Lease Year, as follows:
(i) Tenant shall exercise its option hereunder by giving written notice in
writing to Landlord in accordance with the requirements of paragraph 20 of this
Lease. At the time of the exercise of the option, Tenant shall also pay to
Landlord (or if required by Landlord, to the qualified intermediary described
in Paragraph 19(b) of this Lease Agreement) a non-refundable deposit of FIVE
HUNDRED AND NO/100 DOLLARS ($500.00).
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(ii) The purchase price to be paid by Tenant shall be the greater of (A) the
fair market value of the Premises as of the date of the exercise of the option,
as determined by an appraisal of an M.A.I. qualified appraiser selected by
Landlord, or (B) Landlord's cost for the Premises, plus Twenty percent (20%).
(iii) The closing pursuant to the option shall be held in the office of
Landlord's attorneys on or before a date which is thirty (30) days after
Landlord and Tenant have received the above-mentioned appraisal from the
appraiser, or at such other place as shall be acceptable to Landlord.
(iv) Tenant shall receive a credit for the deposit required under (i) above and
the balance of the purchase price shall be paid at closing in cash, by
cashier's check on cleared local funds or by wire transfer to Landlord's
account.
(v) All expenses of closing shall be paid by Tenant.
(vi) The option granted to Tenant pursuant to this subparagraph (b) may not be
exercised at any time while Tenant shall then be in default under any term or
condition of this Lease. The option granted to Tenant pursuant to this
subparagraph (b) shall terminate and become null and void in the event Tenant's
right of first refusal becomes operative, Tenant fails to exercise such right
of first refusal, and the offer triggering such right of first refusal closes.
(c) Tenant's rights and options granted in (a) and (b) above shall be subject
and subordinate to any rights or options currently of record or those existing
under Tenant's franchise agreement, if any.
12. NONCOMPETE
Tenant shall not own an interest in, or operate, another ROADHOUSE GRILL
Restaurant within a three (3) mile radius of the Premises. Violation of this
covenant shall constitute a default hereunder and, because the parties agree
that damages would not be an adequate remedy, Tenant hereby agrees that
Landlord shall be entitled to equitable relief, including injunctive relief and
specific performance in addition to any remedy available at law.
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13. DEFAULT
(a) If any one or more of the following events occur, said event or events
shall hereby be classified as a "Default":
(i) If Tenant fails to pay Interim Rent (if applicable), Annual Rent, any
additional rent, or any other charges required hereunder or under any other
lease with Landlord or an affiliate of Landlord when same shall become due and
payable, and such failure continues for ten (10) days after written notice from
Landlord.
(ii) If Tenant shall fail to perform or observe any term, condition, covenant,
agreement, or obligation of this Lease or any other lease with Landlord or an
affiliate of Landlord, and such failure continues for fifteen (15) days after
written notice from Landlord (except that such fifteen (15) day period shall be
automatically extended for such additional period of time as is reasonably
necessary to cure such Default, if such Default cannot be cured within such
period, provided Tenant is in the process of diligently curing the same).
(iii) If Tenant fails to continuously operate its business within the Premises
except for temporary periods of closure caused by casualty, or temporary and
reasonable periods of remodeling, not to exceed ninety (90) days in any Lease
Year without first obtaining Landlord's written approval, which shall not be
unreasonably withheld.
(iv) If Tenant shall make an assignment for the benefit of creditors or file a
petition, in any federal or state court, in bankruptcy, reorganization,
composition, or make an application in any such proceedings for the appointment
of a trustee or receiver for all or any portion of its property.
(v) If any petition shall be filed under federal or state law against Tenant in
any bankruptcy, reorganization, or insolvency proceedings, and said proceedings
shall not be dismissed or vacated within thirty (30) days after such petition
is tiled.
(vi) If a receiver or trustee shall be appointed under federal or state law for
Tenant, or any guarantor of Tenant's obligations hereunder, for all or any
portion of the property of either of them, and such receivership or trusteeship
shall not be set aside within thirty (30) days after such appointment.
(b) Upon the happening of any one or more of the aforementioned Defaults which
are not cured within the cure period applicable thereto, if any, Landlord shall
have the right, in addition to any other rights and remedies, to terminate this
Lease by giving written notice of same to Tenant. Upon such notice, this Lease
shall cease and expire, and Tenant shall surrender the Premises to Landlord.
Notwithstanding such termination, Tenant's liability and obligation under all
provisions of this Lease, including the obligation to pay Rent and any and all
other amounts due hereunder shall survive and continue. In addition, in the
event of Tenant's Default under this Lease, Landlord may, by notice to Tenant,
accelerate the monthly installments due hereunder for the remaining term of
this Lease, in which event such amount, together with any sums then in
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<PAGE> 11
arrears, shall immediately be due and payable to Landlord. Tenant hereby
expressly agrees that its occupation of the Premises after default constitutes
forcible detainer (or equivalent) as is defined by the law in force in the
jurisdiction in which the Premises are located.
(c) If this Lease shall terminate as provided hereinabove, Landlord may reenter
the Premises and remove Tenant, its agents and sub-tenants, together with all
or any of Tenant's Property, by suitable action at law, or by force. Tenant
waives any right to the service of any notice of Landlord's intention to
reenter and Landlord shall not be liable in any way in connection with any
action it takes pursuant to this paragraph. Notwithstanding such re-entry or
removal, Tenant's liability under the provision of this Lease shall survive and
continue.
(d) In case of re-entry, repossession or termination of this Lease, Tenant
shall remain liable for Rent, any additional rent and all other charges
provided for in this Lease for the otherwise remaining term of this Lease, and
any and all expenses which Landlord may have incurred in re-entering the
Premises including, but not limited to, allocable overhead, alterations to
building, leasing, construction, architectural, legal and accounting fees. In
addition, Tenant shall pay to Landlord any and all attorneys' fees, legal costs
and expenses incurred with respect-to enforcement of the provisions hereof.
Landlord shall have the right, but not the obligation, to relet the whole or
part of the Premises upon terms which Landlord, in its sole discretion, deems
appropriate and Tenant shall be responsible for all expenses incurred by
Landlord in re-letting or attempting to re-let and all rent collected for
reletting shall be credited against all of Tenant's obligations hereunder.
(e) The rights and remedies of Landlord set forth herein shall be in addition
to any other right and remedy now or hereinafter provided by law, and all such
rights and remedies shall be cumulative. No action or inaction by Landlord
shall constitute a waiver of a Default, and no waiver of Default shall be
effective unless it is in writing, signed by Landlord.
14. HOLDING OVER
In the event Tenant remains in possession of the Premises after the expiration
of this Lease, without executing a new lease, Tenant shall occupy the Premises
as a tenant from month to month subject to all the terms hereof, but such
possession shall not limit Landlord's rights and remedies by reason thereof nor
constitute a holding over.
15. WAIVER OF SUBROGATION
Notwithstanding anything in this Lease to the contrary, other than Tenant's
obligations to repair, restore or rebuild described in paragraph 4 hereinabove,
neither party shall be liable to the other for any damage or destruction of the
property of the other resulting from fire or other casualty covered by
insurance required of either party hereunder, whether or not such loss, damage
or destruction of property is caused by or results from the negligence of such
party (which term includes such party's officers, employees, agents and
invitees), and each party hereby expressly releases the other from all total
liability for or one account of any said loss, damage or destruction, whether
or not the party suffering the loss is insured against such loss, and if
insured
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<PAGE> 12
whether fully or partially. Each party shall procure all endorsements of
insurance policies carried by it necessary to protect the other from any right
of subrogation and/or liability in the event of such loss.
16. LIEN FOR RENTS
As security for Tenant's payment of Rent and all other payments required to be
made by Tenant hereunder (including, by way of illustration only, taxes, damage
to the Premises, court costs, and attorneys' fees) Tenant hereby grants to
Landlord a lien upon all of Tenant's Property now or hereafter located upon the
Premises. The lien herein provided shall be subordinate to the lien of any
chattel mortgage, collateral assignment or security interest given by Tenant to
any seller of such property. If default is made by Tenant in the payment of any
sum which may become due hereunder and said sum is not paid within ten (10)
days after written notice is given by Landlord to Tenant for Tenant's default,
Landlord may enter upon the Premises and take possession of Tenant's Property,
or any part thereof, and may sell all or any part of Tenant's Property at
public or private sale in one or successive sales, with or without notice, to
the highest bidder for cash and on behalf of Tenant. Landlord may sell and
convey Tenant's Property, or any part thereof, to such bidder, delivering to
such bidder all of Tenant's title and interest in such property sold to him.
The proceeds of such sale shall be applied by Landlord toward the costs thereof
and then toward the payment of all sums when due by Tenant to Landlord
hereunder.
17. ASSIGNMENT AND SUBLETTING
(a) The Tenant shall not have the right, without first obtaining Landlords
prior written consent which will not be unreasonably withheld, to assign or
sublet any part or all of the Premises to any party for any purpose. A change
in ownership of the controlling interest of Tenant shall also constitute an
assignment subject to this subparagraph. Landlord, without being deemed
unreasonable, may withhold its consent to any proposed assignment or subletting
where (i) the financial capacity of such assignee or subtenant is materially
less than that of Tenant or (ii) such assignee or subtenant does not intend to
operate a national or regionally recognized restaurant on the Premises or (iii)
even if such assignee or subtenant intends to operate a restaurant on the
Premises, the type of restaurant or the operating history of such assignee or
subtenant or the operating history of such type of restaurant reflects an
inability to generate Gross Sales (as such term is defined in the Rent
Addendum) and potential sales growth equal to or greater than that of the
Tenant. Even if such consent to assignment or subletting is given by Landlord,
such assignment or subletting shall not relieve Tenant of its liability for the
continued performance of all terms, covenants and conditions of this Lease,
including without limitation the payment of all rent, additional rent and other
charges thereunder. Likewise, as a condition of any such assignment by Tenant,
the assignee shall be required to execute and deliver to Landlord, upon the
effective date of such assignment, an agreement, in recordable form, whereby
such assignee assumes and agrees to discharge all obligations of Tenant under
this Lease.
(b) In the event of the subletting or assignment of this Lease, any monetary
consideration obtained from an assignee or transferee upon such subletting or
assignment shall be paid to Landlord. In the event of the subletting or
assignment of this lease, if Tenant derives funds or
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<PAGE> 13
rental income greater than what it is paying to Landlord under this Lease, the
Annual Rent provided for herein shall be increased to that amount received by
Tenant from sublessee or assignee of this Lease.
(c) Prior to any assignment allowed hereunder, Tenant shall deliver to Landlord
(i) a copy of the assignment documents (including copies of any recorded
documents), and (ii) the name, address and telephone number of such assignee
and a designated contact person for such assignee, and (iii) a new insurance
policy and binder complying with the terms of this Lease and naming such
assignee as the tenant of the Premises. Notwithstanding anything herein to the
contrary, in the event of any assignment of this Lease or subletting of the
Premises, Tenant shall not be released from its obligations under this Lease
unless specifically released by virtue of a separate written instrument
executed by Landlord, which may be withheld in Landlord's sole discretion.
(d) The Landlord shall have the right without limitation (subject to paragraph
11 hereof) to sell, convey, transfer or assign its interest in the Premises or
its interest in this Lease, and upon such conveyance being completed all
covenants and obligations of Landlord under this Leases accruing thereafter
shall cease, but such covenants and obligations shall run with the land and
shall be binding upon the subsequent landlord or owners of the Premises or of
this Lease.
18. SUBORDINATION, NON-DISTURBANCE, ATTORNMENT, ESTOPPEL CERTIFICATE.
(a) Upon written request of the holder of any mortgage (which term "mortgage"
shall also include deeds of trust) now or hereafter relating to the Premises,
Tenant will subordinate its rights under this Lease to the lien thereof and to
all advances made or hereafter to be made upon the security thereof, and Tenant
shall execute, acknowledge and deliver an instrument in the form customarily
used by such encumbrance holder to effect such subordination; provided,
however, as a condition of all such subordinations, the holder of such mortgage
shall be first required to agree with Tenant that, notwithstanding the
foreclosure or other exercises of rights under any such first or other
mortgage, Tenant's possession and occupancy of the Premises and the
improvements and its leasehold estate shall not be disturbed or interfered with
nor shall Tenant's rights and obligations under this Lease be altered or
adversely affected thereby so long as Tenant is not in default hereunder.
(b) Notwithstanding anything set out in subparagraph (a) above to the contrary,
in the event the holder of any such mortgage elects to have this Lease be
superior to its mortgage, then upon Tenant's being notified to that effect by
such encumbrance holder, this Lease shall be deemed prior to the lien of said
mortgage, whether this Lease is dated prior or subsequent to the date of said
mortgage, and Tenant shall execute, acknowledge and deliver an instrument, in
the form customarily used by such encumbrance holder, effecting such priority.
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(c) In the event proceedings are brought for then foreclosure of, or in the
event of the exercise of the power of sale under any mortgage made by Landlord
covering the Premises, or in the event of delivery of a deed in lieu of
foreclosure under such a mortgage Tenant will attorn to the purchaser upon any
such foreclosure or sale and recognize such purchaser as Landlord under this
Lease, and upon the request of the purchaser, Tenant shall execute, acknowledge
and deliver an instrument, in form and substance satisfactory to such
purchaser, evidencing such attornment.
(d) Each party agrees, within seven (7) days after written request by the
other, to execute, acknowledge and deliver to and in favor of any proposed
mortgagee or purchaser of the Premises, an estoppel certificate, in the form
customarily used by such proposed mortgagee or purchaser, stating, among other
things (i) whether this Lease is in full force and effect, (ii) whether this
Lease has been modified or amended and, if so, identifying and describing any
such modification or amendment, (iii) the date to which Rent and other charges
have been paid, and (iv) whether the party furnishing such certificate knows of
any default on the part of the other party or has any claim against such party
and, if so, specifying the nature of such default or claim.
(e) Upon written demand by the holder of any mortgage covering the Premises,
Tenant shall forthwith execute, acknowledge and deliver an agreement in favor
of and in the form customarily used by such encumbrance holder, by the terms of
which Tenant will agree to give prompt written notice to such encumbrance
holder in the event of any casualty damage to the Premises or in the event of
any default on the part of Landlord under this Lease, and will agree to allow
such encumbrance holder a reasonable length of time after notice to cure or
cause the curing of such default before exercising Tenant's rights under this
Lease, or terminating or declaring a default under this Lease.
19. COOPERATION
(a ) Landlord shall fully cooperate with Tenant throughout the term of this
Lease to secure or maintain proper zoning, building and other permits and
compliance with all applicable laws. Landlord shall execute any petitions,
requests, applications and the like as Tenant shall reasonably request in order
to obtain any permit, license, variances and approvals which, in the reasonable
judgment of Tenant, are necessary for the lawful construction and/or operation
of Tenant's business on the Premises, provided, however, that Tenant shall
indemnify and save Landlord harmless from any and all expenses, costs, charges,
liabilities, losses, obligations, damages and claims of any type which may be
imposed upon, asserted against or incurred by Landlord by reason of same.
(b) In the event that Tenant elects to purchase the Premises pursuant to the
terms and conditions of paragraph 11 hereof, Landlord shall have the right, in
Landlords sole discretion, to enter into an exchange agreement (the "Exchange
Agreement") with a qualified intermediary (the "Intermediary") in order to
effectuate a like-kind exchange of the Premises for one or more other
properties (the "Replacement Property"). In that event, Landlord shall assign
to the Intermediary all of Landlords right, title and interest in the written
contract for purchase and sale
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of the Premises entered into between Landlord and Tenant as required by
paragraph I1 hereof (the "Purchase Contract"), and any deposit paid by Tenant
in connection with the purchase of the Premises shall be placed directly with
the Intermediary, subject to the terms and conditions of the Purchase Contract
and the Exchange Agreement. Landlord and Tenant agree that, at Landlord's
option, Tenant shall cooperate with Landlord in effecting a like-kind exchange
of the Premises by Landlord pursuant to and in accordance with the provisions
of Section 1031 of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder, which cooperation shall include,
without limitation, Tenant's consent to Landlords assignment of its interest in
the Purchase Contract to the Intermediary and Tenant receiving or taking title
to the Premises from the Intermediary or another third party utilized in the
transaction in order to facilitate the like-kind exchange on behalf of
Landlord.
20. NOTICES
All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by a nationally recognized
overnight courier or mailed by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to Landlord: CNL APF PARTNERS, LP
400 East South Street
Suite 500
Orlando, Florida 32801
with copy to: Dale A. Burket, Esquire
Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
215 North Eola Drive
Post Office Box 2809
Orlando, Florida 32802
If to Tenant: ROADHOUSE GRILL INC., a Florida corporation
6600 North Andrews Avenue
Suite 160
Ft. Lauderdale, Florida 33309
Any party may change its address for notices by written notice in like manner
as provided in this paragraph and such change of address shall be effective
seven (7) days after the date notice of such change of address is given. Notice
for purposes of this Lease shall be deemed given when it shall have been
deposited in the mail, or with a nationally recognized over-night courier, by
the party who is giving such notice with sufficient postage prepaid.
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21. INDEMNIFICATION
Tenant does hereby indemnify and exonerate Landlord against and from all
liabilities, losses, obligations, damages, penalties, claims, costs, charges
and expenses, including reasonable architects' and attorneys' fees, which may
be imposed upon or asserted against or incurred by Landlord by reason of any of
the following occurring:
(a) any work or thing done in respect of construction of, in or to the Premises
or any part of the improvements now or hereafter constructed on the Premises;
(b) any use, possession, occupation, operation, maintenance or management of
the Premises or any part thereof;
(c) any failure to, or to properly, use, possess, occupy, operate, maintain or
manage the Premises or any part thereof;
(d) the condition, including environmental conditions, of the Premises or any
part thereof;
(e) any negligence on the part of Tenant or any of its agents, contractors,
servants, employees, licensees or invitees;
(f) any accident, injury or damage to any person or property occurring in, on
or about the Premises or any part thereof including any sidewalk adjacent
thereto; or
(g) any failure on the part of Tenant to perform or comply with any of the
covenants, agreements, terms or conditions contained in this Lease on its part
to be performed or complied with.
22. HOLD HARMLESS
Tenant agrees to hold Landlord harmless against any and all claims, damages,
accidents and injuries to persons or property caused by or resulting from or in
connection with anything in or pertaining to or upon the Premises during the
term of this Lease or while Tenant is occupying the Premises, except if such
claim, damage, accident or injury shall be caused by the negligence of Landlord
or its agents. Landlord shall not be liable to Tenant, Tenant's employees,
agents, invitees, licensees or any other person whomsoever for any injury to
person or damage to property on or about the Premises caused by the negligence
or misconduct of Tenant, its agents, servants or employees or of any other
person entering the building under expressed or implied invitation by Tenant or
due to any other cause whatsoever, unless caused by the negligence or neglect
of Landlord, its employees or its authorized representatives.
23. LANDLORD'S LIABILITIES
The term "Landlord" as used in this Lease means the owner from time to time of
the Premises. Neither Landlord nor any partner, shareholder or beneficiary
thereof shall have any personal
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liability with respect to any of the provisions of this Lease and if Landlord
is in default with respect to its obligations hereunder Tenant shall look
solely to the equity of Landlord in the Premises.
24. SUCCESSORS
The covenants, conditions and agreements contained in this Lease shall bind and
inure to the benefit of the Landlord and Tenant and their respective heirs,
legal representatives, successors and assigns.
25. ENTIRE AGREEMENT/MEMORANDUM OF LEASE
This Lease contains the entire agreement between the parties hereto and may not
be modified in any manner other than in writing signed by the parties hereto or
their successors in interest. A memorandum of this Lease shall be executed by
the parties and shall be recorded in the official records of the county where
the Premises are located.
26. GENDER
Whenever the context hereof permits or requires, words in the singular may be
regarded as in the plural and vice-versa, and personal pronouns may be read as
masculine, feminine and neuter.
27. BROKERAGE FEES
It is understood and agreed that neither party has incurred any real estate
brokerage fees or commissions arising out of this Lease and each party agrees
to hold the other harmless from and against all such fees and commissions
incurred, and costs related thereto including legal fees, as a result of its
own conduct or alleged conduct.
28. CAPTIONS
The captions of this Lease are for convenience only, and do not in any way
define, limit, disclose, or amplify terms or provisions of this Lease or the
scope or intent thereof.
29. LANDLORD'S RIGHT TO CURE
In the event Tenant shall fail, refuse or neglect to perform, observe or comply
with any term, condition, covenant, agreement or obligation contained in the
Lease on its part to be performed or complied with, then Landlord may, at its
sole option, enter upon the Premises, if deemed necessary by Landlord in its
sole discretion, and/or do whatever may be deemed necessary by Landlord in its
sole discretion to cure such failure by Tenant. Tenant shall pay to Landlord
within five (5) days of Landlord's request, all costs incurred by Landlord in
connection with Landlord's curing of such failure by Tenant including, but not
limited to, reasonable attorney and paralegal fees whether or not judicial
proceedings are involved. In addition to the above costs, in the event Landlord
does not receive payment from Tenant when due hereunder, interest at the
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rate of eighteen percent (18%) per annum or, if less, the highest rate
allowable by law shall be due and payable with respect to such payment from the
due date thereof until Landlord receives such payment.
30. COMMITMENT LETTER
That certain commitment letter dated April 23, 1998 is hereby incorporated
herein by reference and the terms and conditions thereof shall survive closing
with respect to the transaction contemplated by this Lease. In the event any
terms of the commitment letter are inconsistent with the terms contained in
this Lease, the terms of this Lease shall control.
31. NOT A SECURITY ARRANGEMENT
The parties hereto agree and acknowledge that this transaction is not intended
as a security arrangement or financing secured by real property, but shall be
construed for all purposes as a true lease.
32. NET LEASE
It is the intention of the parties hereto that this Lease is and shall be
treated as a triple net lease. Any present or future law to the contrary
notwithstanding, this Lease shall not terminate (except as expressly provided
in paragraph 4(a)) nor shall Tenant be entitled to any abatement, suspension,
deferment, reduction (except as expressly provided in paragraph 6(b) hereof),
setoff, counterclaim, or defense with respect to the rent, nor shall the
obligations of Tenant hereunder be affected by reason of: any damage to or
destruction of the Premises or any part thereof; any taking of any Premises or
any part thereof or interest therein by Condemnation or otherwise (except as
expressly provided in paragraph 6(b) hereof); any prohibition, limitation,
restriction or prevention of Tenant's use, occupancy or enjoyment of the
Premises or any part thereof, or any interference with such use, occupancy or
enjoyment by any person or for any other reason; any title defect or
encumbrance or any matter affecting title to the Premises or any part thereof;
any eviction by paramount title or otherwise; any default by Landlord
hereunder; any proceeding relating to Landlord; the impossibility or illegality
of performance by Landlord, Tenant or both; any action of governmental
authority; any breach of warranty or misrepresentation; any defect in the
condition, quality or fitness for use of the Premises or any part thereof; or
any other cause whether similar or dissimilar to the foregoing and whether or
not Tenant shall have notice or knowledge of any of the foregoing. The parties
intend that the obligations of Tenant hereunder shall be separate and
independent covenants and agreements and shall continue unaffected unless such
obligations shall have been modified or terminated in accordance with an
express provision of this Lease.
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33. WAIVER
No waiver by Landlord of any provision hereof shall be deemed a wavier of any
other provision hereof or of any subsequent breach by Tenant of the same or any
other provision. Landlords'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.
34. TIME OF THE ESSENCE
Landlord and Tenant agree that time shall be of the essence of all terms and
provisions of this Lease.
35. GOVERNING LAW
This Lease shall be construed in accordance with the laws of the state in which
the Premises is located.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Lease Agreement to be
executed the day and date first above written.
"LANDLORD"
Signed, Sealed and Delivered
in the presence of: CNL APF PARTNERS, LP, a
Delaware limited partnership
BY: CNL APF GP CORP., a
Delaware corporation, as general
partner
By: Robert A. Bourne, as President
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 3rd day of September,
1998, by Robert A. Bourne, as President of CNL APF GP CORP., a Delaware
corporation, as General Partner of CNL APF PARTNERS, LP, a Delaware limited
partnership, on behalf of the corporation and limited partnership. He is
personally known to me and did not take an oath.
Printed Name: Mary Lee Stallings
Notary Public, State of Florida
Commission Number: CC478289
My Commission Expires: July 6, 1999
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"TENANT"
ROADHOUSE GRILL, INC., a
Florida corporation
By: Dennis Jones
As its: CFO
The foregoing was executed before me on September 3, 1998, by Dennis Jones, as
CFO of ROADHOUSE GRILL, INC., a Florida corporation, on behalf of the
corporation. He/she is personally known to me or produced _________ as
identification and did not take an oath.
Printed Name: Christine Marie Saffran
Notary Public, State of Florida
Commission Number: CC746620
My Commission Expires: May 31, 2002
(NOTARY SEAL)
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ROADHOUSE GRILL/Jacksonville, Duval County, Florida
CONSTRUCTION ADDENDUM
THIS CONSTRUCTION ADDENDUM, executed as of September 15 1998, by and
between CNL APF PARTNERS, LP, a Delaware limited partnership with principal
office and place of business at 400 E. South Street, Suite 500, Orlando, Florida
32801 ("Landlord"), and ROADHOUSE GRILL, INC., a Florida corporation, with a
mailing address of 6600 North Andrews Avenue, Suite 160, Ft. Lauderdale, Florida
33309 ("Tenant"), is attached to and made a part of that certain Lease Agreement
by and between Landlord and Tenant of even date herewith (the "Lease").
PRELIMINARY STATEMENT
Landlord has acquired the real property described in Exhibit "A"
attached to the Lease which constitutes a portion of the Premises and has leased
the same to Tenant under the terms of the Lease. Landlord desires to construct
or have constructed certain improvements on the Premises and is entering into
this Construction Addendum with Tenant for the purpose of setting forth the
terms and conditions under which Tenant shall serve as developer in connection
with the Project (as that term is defined hereinbelow). NOW, THEREFORE, it is
agreed, by and between the parties hereto as follows:
1. DEFINITIONS. Capitalized terms used in the Lease shall have the
same meaning in this Construction Addendum unless otherwise defined. In addition
to those terms defined elsewhere in this Construction Addendum, as used herein
the following terms shall have the meaning indicated:
"Project" shall mean construction of the building- and all necessary
site improvements on the Premises for the initial use as a ROADHOUSE GRILL
Restaurant by Tenant who is Tenant under the Lease. Such building and
improvements shall be completed in accordance with the plans and specifications
approved by Landlord and Tenant prior to Landlord's acquisition of the Premises,
which approval shall not be unreasonably withheld, delayed or conditioned.
"Construction Period" shall mean the period beginning on the Effective
Date and ending on the earliest of (i) one hundred eighty (180) days after the
Effective Date; (ii) the date a certificate of occupancy for the Premises is
issued; (iii) the date the ROADHOUSE GRILL Restaurant opens for business on the
Premises; and (iv) the date Tenant receives from Landlord its final funding of
the construction costs for the Project under this Construction Addendum.
2. AUTHORIZATION. INDEPENDENT CONTRACTOR. Landlord hereby engages
Tenant as an independent contractor and authorizes Tenant to enter upon the
Premises and to undertake
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<PAGE> 23
responsibilities, duties, obligations, rights and authority expressly herein set
forth and, subject to the provisions hereof, Tenant hereby accepts such
appointment and agrees to perform and fully discharge all of its duties,
responsibilities and obligations herein set forth diligently, promptly and in
full compliance with the provisions hereof.
3. CO-TENANT AND SUB-AGENTS. Tenant may delegate the performance of any
of its responsibilities hereunder to one or more contractors, subcontractors,
consultants, co-developers or sub-agents; provided, however, that no such
delegation shall relieve Tenant of its duties, responsibilities and obligations
hereunder. responsibilities, responsibilities, duties, obligations, rights and
authority expressly herein set forth and, subject to the provisions hereof,
Tenant hereby accepts such appointment and agrees to perform and fully discharge
all of its duties, responsibilities and obligations herein set forth diligently,
promptly and in full compliance with the provisions hereof.
4. SPECIFIC DUTIES AND OBLIGATIONS. Tenant shall be responsible for the
complete development and construction of the Project and shall deliver a
turn-key facility to Landlord. In that connection, Tenant's duties, obligations
and responsibilities include, but shall not be limited to the following:
(a) PROJECT DESIGN. Procuring all necessary architectural and
engineering services related to the site work, design and engineering related to
the Project, any and all engineering and impact studies or reports related to
the development of the Project, and processing and obtaining all required
Governmental approvals.
(b) LICENSES AND PERMITS. Obtaining all licenses, permits and
approvals required to prepare the site for development, to permit construction
of the Project and to operate it for its intended purposes. Such licenses,
permits and approvals shall include, but shall not be limited to, water
management district approvals, approvals required under any franchise agreement,
financing agreement or any instrument of record, building, permits, certificates
of occupancy, and any other required Governmental consents or approvals. The
building permit must be obtained within one hundred eighty (180) days of the
Effective Date.
(c) GENERAL CONTRACTOR, CONSTRUCTION CONTRACTS AND PURCHASE
ORDERS. Negotiating, all necessary construction contracts, for the benefit of
Landlord, relating, to the development and construction of the Project. All
construction contracts and purchase orders for work, material or equipment shall
be entered into between Tenant and the contractors or vendors selected and shall
be satisfactory in form and substance to Landlord, Tenant and legal counsel for
Landlord and Tenant, including a payment and performance bond from the general
contractor by a surety company or companies which are acceptable to Landlord in
the amount of the general construction contract. The general construction
contract and construction/trade cost breakdown shall be approved by Landlord
prior to Landlord's purchase of the property. The general construction contract
shall contain provisions for a ten percent (10%) retainage and submission to
Landlord of all underlying contracts with and invoices (required only if a
cost-plus contract) from rnaterialmen and subcontractors. All change orders to
such contract must be approved in writing by Landlord. Tenant shall cause its
general contractor to submit (and the general construction contract shall so
provide) all subcontracts to Landlord prior to commencement of construction.
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<PAGE> 24
(d) CONSTRUCTION COORDINATION. Coordinating all aspects of
construction of the Project to completion. Tenant shall monitor the progress of
construction and the compliance by all contractors with the provisions of their
construction contracts, through periodic on-site visits and inspections and
through written and other reports from the architect, contractors and other
construction supervisory personnel. Tenant shall keep Landlord advised from time
to time of the progress of construction. Tenant shall review and approve all
contractor and other payment requests made from time to time and shall review
all such requests to ensure compliance with the construction contract and the
terms hereof. Tenant shall determine which, if any, contractor or subcontractor
is in default under the provisions of its applicable contract or subcontract,
and what measures should be taken in connection therewith.
(e) FUNDING. Financing to be provided by Landlord hereunder
shall be limited to all actual "hard" construction costs of the Project together
with approved "soft" costs (to the extent set forth herein), exclusive of any
developer's fee. "Soft" costs submitted by Tenant for inclusion in the Total
Cost shall not include any internal overhead cost of Tenant or internal profit,
but may include fees incurred in connection with the construction financing
costs and construction services provided by an entity unrelated to Tenant and
acceptable to Landlord. "Hard" construction costs are limited to site
improvement costs, building structure, doors, wall and floor tile, windows, drop
ceiling, plumbing, electrical and HVAC. "Hard" construction costs shall not
include signs, all covering, other than tile, counters, floor covering (other
than tile), or any other items which may be financed as "equipment." Landlord's
funding shall be disbursed to Tenant monthly against draw requests submitted by
Tenant to Landlord. Each such draw request shall be submitted on AIA, Forms
G-702 and G-703 (or other forms approved by Landlord), shall be prepared in
accordance with Landlord's instructions and shall be received by Landlord no
later than the twenty-fifth (25th) day of each month. Each draw request shall be
accompanied by all supporting documentation required by Landlord (including
partial lien waivers from the general contractor and all subcontractors waiving
all lien rights through the date of the last draw request, and copies of
invoices for "soft" costs which may be reimbursable). If properly prepared and
documented requests are received by the twenty-fifth (25th) day of a month,
Landlord shall pay proper amounts reflected in such request by the tenth (10th)
day of the following month. The funds to be advanced by Landlord pursuant to
this Construction Addendum shall at no time in the aggregate exceed
$1,811,746.89 (the "Funding Limitation"), minus the purchase price Landlord paid
at closing for the acquisition of the Premises, including Landlord's acquisition
costs and closing costs. Tenant shall be solely responsible for the full and
timely payment of any and all costs of developing the Project which exceed the
Funding Limitation determined hereinabove. If, at any time after the date
hereof, there exists any unpaid costs in excess of the Funding Limitation, then
Landlord shall have the right to immediately stop funding under this
Construction Addendum until such time as Tenant has funded such excess costs and
has provided Landlord with evidence that such excess costs have been paid in
fall by Tenant. Tenant shall obtain no construction financing for the Project
which is secured by a lien on the Project. Construction financing shall not
include equipment financing.
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(f) GENERAL CONSTRUCTION MATTERS. Tenant shall commence
construction as soon as practicable after the date hereof and, after
commencement and subject to Paragraph 8 hereinbelow, shall diligently complete
the Project within one hundred eighty (180) days thereafter in a first-class,
workmanlike manner and in conformity with all applicable governmental laws,
ordinances, rules, orders, regulations and other requirements and in substantial
compliance with the plans and specifications approved by Landlord, Tenant's
franchisor and the final working drawings. Notwithstanding the foregoing,
Landlord agrees to consider reasonable written requests from Tenant for
extensions of time to complete the Project beyond the one hundred eighty (180)
day period.
All of Tenant's records pertaining to the construction of the
Project shall be available for inspection and copying by Landlord and its agents
and employees during normal business hours. Following completion of the Project,
Tenant shall execute such documents and instruments as Landlord may request (in
form and substance reasonably satisfactory to Landlord and Tenant) to evidence
Landlord's ownership of and title to all improvements on the Premises
comprising, in the aggregate, the Project and shall assign to Landlord all
warranties relating to the work and/or materials performed at or incorporated
into the Project.
Tenant shall as part of the construction and development work
engage an inspecting architect or engineer suitable to Landlord to make monthly
inspections and to certify all draw requests to Landlord. Such certification
shall include a statement of work done if not reasonably ascertainable from the
draw request and shall be accompanied by color photographs in no less than 3
1/2" by 5" formats showing the construction work completed as of the inspection
date. Such photographs shall be taken from such vantage points as are required
to clearly show all work done and once vertical construction has commenced shall
show all elevations. The final draw request shall be accompanied by: (1) the
contractor's affidavit of completion and proof of payment of all subcontractors
and all materialmen; (2) an assignment of all manufacturer's warranties for any
material, equipment or workmanship installed as a part of the Project; (3) an
ALTA as-built survey of completed Project certified to Landlord and Tenant, and
any title company designated by Landlord; (4) Certificate(s) of Occupancy for
the Project issued by the appropriate regulatory agencies; and (5) a complete
certified final set of plans, specifications and working drawings for the
Project as completed. At the time such draw request is submitted to Landlord,
Landlord shall order or cause to be ordered an update search or endorsement to
its title insurance policy for the Premises, which must show no additional
matters of record through a then current date (except for matters which have
been previously accepted by Landlord).
No approvals or inspections made, given or conducted by Landlord shall
relieve Tenant of any duties, responsibilities, obligations or liabilities
hereunder.
5. DEVELOPMENT FEE. Neither Tenant nor any affiliate shall receive a
development or construction supervision fee for its services hereunder. A
licensed general contractor shall be entitled to reasonable, normal and
customary overhead and profit in connection with the performance
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of its services under a general construction contract. Said profit shall include
reasonable, normal and customary superintendent compensation.
6. GENERAL. With respect to matters not specifically related to the
Premises or its development, this Construction Addendum shall be governed by the
laws of the state where the Premises is located. All captions and section
headings used herein are for convenience and ease of reference only and do not
constitute part of this instrument. The Preliminary Statement set forth at the
beginning of this Construction Addendum is hereby incorporated herein by
reference and is deemed to constitute an integral part of this instrument.
7. LANDLORD'S RIGHT TO COMPLETE CONSTRUCTION ON TENANT'S DEFAULT.
Except for delays caused by events not within the control of Tenant, failure to
continuously prosecute to completion the construction of the Project within two
hundred seventy (180) days following the date hereof shall constitute a default
by Tenant hereunder. If, after ten (10) days notice to Tenant, any such default
shall not have been remedied, then Landlord may, if it elects to do so, either:
(a) take over construction of the Project and, at its option, complete such
construction or cause the same to be completed, or (b) terminate the Lease and
this Construction Addendum, in which case Tenant shall be required to purchase
the Premises from Landlord (subject to all liens, claims or encumbrances not
placed on the Premises by Landlord) at a price equal to Landlord's purchase
price of the Premises, plus all sums disbursed to Tenant pursuant to this
Construction Addendum, plus all Interim Rent due under the Lease, plus all fees,
costs and expenses paid by Landlord in connection with its purchase of the
Premises, plus interest on all such sums accruing, from the date of disbursement
thereof at the rate of ten percent (10%) per annum. Closing of such purchase and
sale shall take place within thirty (30) days following the date of Landlord's
notice of default to Tenant.
8. FORCE MAJEURE. The time for completion of the Project shall be
extended by the period of time, if any, that construction is delayed by virtue
of labor unrest, materials shortage, natural disaster, weather, Acts of God, and
other causes beyond the reasonable control of Tenant; provided, however, that no
such extension shall be permitted with respect to any delay unless written
notice of the delay specifying the cause of the delay and the expected time of
the delay is delivered to Landlord within fifteen (15) days after such delay is
encountered.
9. ENTIRE AGREEMENT. This Construction Addendum and the Lease of which
this Construction Addendum is a part constitute the entire agreement of Landlord
and Tenant with respect to the development of the Premises, and supersedes any
prior or contemporaneous agreement with respect thereto. No amendment or
modification of this Construction Addendum shall be binding, upon the parties
unless made in writing and signed by both Landlord and Tenant.
[Signatures on Next Page]
-26-
<PAGE> 27
IN WITNESS WHEREOF, Landlord and Tenant have caused this Construction
Addendum to be executed and sealed as of the date first above written.
"LANDLORD"
Signed, Sealed and Delivered CNL APF PARTNERS, LP, a Delaware
in the presence of: limited partnership
BY: CNL APF GP CORP., a Delaware
corporation, as general partner
By:
------------------------------------
ROBERT A. BOURNE, as President
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 3rd day of
September 1998, by ROBERT A. BOURNE, as President of CNL APF GP CORP., a
Delaware corporation, as General Partner of CNL APF PARTNERS, LP, a Delaware
limited partnership, on behalf of the corporation and limited partnership. He is
personally known to me and did not take an oath.
Notary Signature
Printed Name
Notary Public, State of Florida
Commission Number:_________________
My Commission Expires:_____________
Mary Lee Stallings
Commission Number CC478289
Expires July 6, 1999
-27-
<PAGE> 28
"TENANT"
ROADHOUSE GRILL, INC., a Florida
corporation
By:
------------------------------
Name: DENNIS JONES
As Its: CFO
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing was executed before me on September 3, 1998 by Dennis
Jones as CFO of ROADHOUSE GRILL, INC., a Florida corporation, on behalf of the
corporation. He/She is personally known to me or produced ________________ as
identification and did not take an oath.
(NOTARY SEAL)
Printed Name: CHRISTINE MARIE SAFFRAN
Notary Commission No. CC746620
Expires: MAY 31, 2002
-28-
<PAGE> 1
Exhibit 10.56
MASTER SECURITY AGREEMENT
NO. RG99
----------
1. GRANT OF SECURITY INTEREST; DESCRIPTION OF COLLATERAL.
Debtor grants to Secured Party a security interest in the property described in
the Schedules of indebtedness and Collateral now or hereafter executed by or
pursuant to the authority of the Debtor and accepted by Secured Party in
writing (collectively the "Schedules"), along with any present and future
attachments and accessories thereto and replacements and proceeds thereof,
including amounts payable under any insurance policy, all hereinafter referred
to collectively as "Collateral." Each Schedule shall be serially numbered.
Unless and only to the extent otherwise expressly provided in a schedule, no
Schedule shall replace any previous Schedule but shall be supplementary to al
previous Schedules.
2. WHAT OBLIGATIONS THE COLLATERAL SECURES.
EACH ITEM OF COLLATERAL SHALL SECURE NOT ONLY THE SPECIFIC AMOUNT WHICH DEBTOR
PROMISES TO PAY IN EACH SCHEDULE, BUT ALSO ALL OTHER PRESENT AND FUTURE
INDEBTEDNESS OR OBLIGATIONS OF DEBTOR TO SECURED PARTY OF EVERY KIND AND NATURE
WHATSOEVER.
3. PROMISE TO PAY; TERMS AND PLACE OF PAYMENT
Debtor promises to pay Secured Party the amounts set forth on each Schedule at
the rate and upon such terms as provided therein.
4. USE AND LOCATION OF COLLATERAL.
Debtor warrants and agrees that the Collateral is to be used primarily for:
X business or commercial purposes (other than agricultural),
X agricultural purposes (see definition on the final page), or
X both agricultural and business or commercial purposes
Location: 6379 RIDGEWOOD CT. RD. JACKSON HINDS MS 39211
---------------------------------------------------------------------
Address City County State Zip Code
Debtor and Secured Party agree that regardless of the manner of affixation, the
Collateral shall remain personal property and not become part of the real
estate. Debtor agrees to keep the Collateral at the location set forth above,
and will notify Secured Party promptly in writing of any change in the location
of the Collateral within such State, but will not remove the collateral from
such State without the prior written consent of Secured Party (except that in
the State of Pennsylvania, the Collateral will not be moved from the above
location without such prior written consent.
5. LATE CHARGES AND OTHER FEES.
Any payment not made when due shall, at the option of Secured Party, bear late
charges thereon calculated at the rate of 1 1/2% per month, but in no event
greater than the highest rate permitted by relevant law. Debtor shall be
responsible for and pay to Secured Party a returned check fee, not to exceed
the maximum permitted by law, which fee will be equal to the sum of (i) the
actual bank charges incurred by Secured Party plus (ii) all other actual costs
and expenses incurred by Secured Party. The returned check fee is payable upon
demand as indebtedness secured by the Collateral under this Security Agreement
1
<PAGE> 2
6. DEBTOR'S WARRANTIES AND REPRESENTATIONS.
Debtor warrants and represents:
(a) that Debtor is justly indebted to Secured Party for the full amount of the
indebtedness set forth on each Schedule;
(b) that except for the security interest granted hereby, the Collateral is
free from and will be kept free from all liens, claims, security Interests
and encumbrances;
(c) that no financing statement covering the Collateral or any proceeds
thereof is on file in favor of anyone other than Secured Party, but if
such other financing statement is on file, it will be terminated or
subordinated;
(d) that all information supplied and statements made by Debtor in any
financial, credit or accounting statement or application for credit prior
to, contemporaneously with or subsequent to the execution of this Security
Agreement with respect to this transaction are and shall be true, correct,
valid and genuine; and
(e) that Debtor has full authority to enter into this agreement and in so
doing it is not violating its charter or by-laws, any law or regulation or
agreement with third parties, and it has taken all such action as may be
necessary or appropriate to make this Security Agreement binding upon it.
7. DEBTOR'S AGREEMENTS.
Debtor agrees:
(a) to defend at Debtor's own cost any action, proceeding, or claim affecting
the Collateral;
(b) to pay reasonable attorneys' fees (at least 15% of the unpaid balance if
not prohibited by law) and other expenses incurred by Secured Party in
enforcing its rights against Debtor under this Security Agreement
(c) to pay promptly all taxes, assessments, license fees and other public or
private charges when levied or assessed against the Collateral or this
Security Agreement and this obligation shall survive the termination of
this Security Agreement;
(d) that if a certificate of title be required or permitted by law, Debtor
shall obtain such certificate with respect to the Collateral, showing the
security interest of Secured Party thereon and in any event do everything
necessary or expedient to preserve or perfect the security interest of
Secured Party;
(e) that Debtor will not misuse, fail to keep in good repair, secrete or
without the prior written consent of Secured Party, sell, rent, lend,
encumber or transfer any of the Collateral notwithstanding Secured Party's
right to proceeds;
(f) that Secured Party may enter upon Debtor's premises or wherever the
Collateral may be located at any reasonable time to inspect the Collateral
and Debtor's books and records pertaining to the Collateral, and Debtor
shall assist Secured Party In making such inspection; and
(g) that the security interest granted by Debtor to Secured Party shall
continue effective irrespective of any retaking or redelivery of any
Collateral and irrespective of the payment of the amount described in any
Schedule so long as there are any obligations of any kind, including
obligations under guaranties or assignments owed by Debtor to Secured
Party, provided, however, upon any assignment of this Security Agreement
the Assignee shall thereafter be deemed for the purpose of this Paragraph
the Secured Party under this Security Agreement
(h) Debtor shall indemnify and defend the Secured Party, its successors and
assigns, and their respective directors, officers and employees, from and
against any and all claims, actions and suits (including, without
limitation, related attorneys' fees) of any kind, nature or description
whatsoever arising, directly or indirectly, in connection with any of the
Collateral.
2
<PAGE> 3
8. INSURANCE AND RISK OF LOSS.
All risk of loss, damage to or destruction of the Collateral shall at all times
be on Debtor. Debtor will procure forthwith and maintain at Debtor's expense
insurance against all risks of loss or physical damage to the Collateral for
the full insurable value thereof for the life of this Security Agreement plus
breach of warranty Insurance and such other insurance thereon in amounts and
against such risks as Secured Party may specify, and shall promptly deliver
each policy to Secured Party with a standard long-form mortgagee endorsement
attached thereto showing loss payable to Secured Party; and providing Secured
Party with not less than 30 days written notice of cancellation; each such
policy shall be in form, terms and amount and with insurance carriers
satisfactory to Secured Party; Secured Party's acceptance of policies in lesser
amounts or risks shall not be a waive of Debtor's foregoing obligations. As to
Secured Party's interest in such policy, no act or omission of Debtor or any of
its officers, agents, employees or representatives shall affect the obligations
of the insurer to pay the full amount of any loss.
Debtor hereby assigns to Secured Party any monies which may become payable
under any such policy of insurance and irrevocably constitutes and appoints
secured Party as Debtor's attorney In fact (a) to hold each original insurance
policy, (b) to make, settle and adjust claims under each policy of Insurance,
(c) to make claims for any monies which may become payable under such and other
Insurance on the Collateral including returned or unearned premiums, and (d) to
endorse Debtor's name on any check, draft or other instrument received in
payment of claims or returned or unearned premiums under each policy and to
apply the funds to the payment of the indebtedness owing to Secured Party;
provided, however, Secured Party is under no obligation to do any of the
foregoing.
Should Debtor fail to furnish such insurance policy to Secured Party, or to
maintain such policy in full force, or to pay any premium in whole or in part
relating thereto, then Secured Party, without waiving or releasing any default
or obligation by Debtor, may (but shall be under no obligation to) obtain and
maintain insurance and pay the premium therefor on behalf of Debtor and charge
the premium to Debtor's indebtedness under this Security Agreement. The full
amount of any such premium paid by Secured Party shall be payable by Debtor
upon demand, and failure to pay same shall constitute an event of default under
this Security Agreement.
9. EVENTS OF DEFAULT; ACCELERATION.
A VERY IMPORTANT ELEMENT OF THIS SECURITY AGREEMENT IS THAT DEBTOR MAKE ALL ITS
PAYMENTS PROMPTLY AS AGREED UPON. IT IS ESSENTIAL THAT THE COLLATERAL REMAIN IN
GOOD CONDITION AND ADEQUATE SECURITY FOR THE INDEBTEDNESS. THE FOLLOWING ARE
EVENTS OF DEFAULT UNDER THIS SECURITY AGREEMENT WHICH WILL ALLOW SECURED PARTY
TO TAKE SUCH ACTION UNDER THIS PARAGRAPH AND UNDER PARAGRAPH 10 AS IT DEEMS
NECESSARY:
(a) any of Debtor's obligations to Secured Party under any agreement with
Secured Party is not paid promptly when due;
(b) Debtor breaches any warranty or provision hereof, or of any note or of any
other instrument or agreement delivered by Debtor to Secured Party in
connection with this or any other transaction;
(c) Debtor dies, becomes insolvent or ceases to do business as a going
concern;
(d) it is determined that Debtor has given Secured Party materially misleading
information regarding its financial condition,
(e) any of the Collateral is lost or destroyed;
(f) a complaint in bankruptcy or for arrangement or reorganization or for
relief under any insolvency law is filed by or against Debtor or Debtor
admits its inability to pay its debts as they mature;
(g) property of Debtor is attached or a receiver is appointed for Debtor;
3
<PAGE> 4
(h) whenever Secured Party in good faith believes the prospect of payment or
performance is impaired or in good faith believes the Collateral is
insecure;
(i) any guarantor, surety or endorser for Debtor dies or defaults in any
obligation or liability to Secured Party or any guaranty obtained in
connection with this transaction is terminated or breached.
IF DEBTOR SHALL BE IN DEFAULT HEREUNDER, THE INDEBTEDNESS DESCRIBED IN EACH
SCHEDULE AND ALL OTHER INDEBTEDNESS THEN OWING BY DEBTOR TO SECURED PARTY UNDER
THIS OR ANY OTHER PRESENT OR FUTURE AGREEMENT (COLLECTIVELY, THE
"INDEBTEDNESS") SHALL, IF SECURED PARTY SHALL SO ELECT BECOME IMMEDIATELY DUE
AND PAYABLE. After acceleration:
(a) the unpaid principal balance of the indebtedness described in any Schedule
in which interest has been precomputed shall bear interest at the rate of
18% per annum (or, if less, the maximum rate permitted by law) until paid
in full; and
(b) the unpaid principal balance of the indebtedness described in any Schedule
in which interest has not been precomputed shall bear interest at the same
rate as before acceleration until paid in full.
In no event shall the Debtor upon demand by Secured Party for payment of the
Indebtedness by acceleration of the maturity thereof or otherwise, be obligated
to pay any interest in excess of the amount permitted by law. Any acceleration
of the Indebtedness, if elected by Secured Party, shall be subject to all
applicable laws, including laws relating to rebates and refunds of unearned
charges.
10. SECURED PARTY'S REMEDIES AFTER DEFAULT; CONSENT TO ENTER PREMISES.
UPON DEBTOR'S DEFAULT AND AT ANY TIME THEREAFTER, SECURED PARTY SHALL HAVE ALL
THE RIGHTS AND REMEDIES OF A SECURED PARTY UNDER THE UNIFORM COMMERCIAL CODE
AND ANY OTHER APPLICABLE LAWS, INCLUDING THE RIGHT TO ANY DEFICIENCY REMAINING
AFTER DISPOSITION OF THE COLLATERAL FOR WHICH DEBTOR HEREBY AGREES TO REMAIN
FULLY LIABLE. DEBTOR AGREES THAT SECURED PARTY, BY ITSELF OR ITS AGENT MAY
WITHOUT NOTICE TO ANY PERSON AND WITHOUT JUDICIAL PROCESS OF ANY KIND, ENTER
INTO ANY PREMISES OR UPON ANY LAND OWNED, LEASED OR OTHERWISE UNDER THE REAL OR
APPARENT CONTROL OF DEBTOR OR ANY AGENT OF DEBTOR WHERE THE COLLATERAL MAY BE
OR WHEN SECURED PARTY BELIEVES THE COLLATERAL MAY BE, AND DISASSEMBLE, RENDER
UNUSABLE AND/OR REPOSSESS ALL OR ANY ITEM OF THE COLLATERAL, DISCONNECTING AND
SEPARATING ALL COLLATERAL FROM ANY OTHER PROPERTY AND USING ALL FORCE
NECESSARY. Debtor expressly waives all further rights to possession of the
Collateral after default and all claims for injuries suffered through or loss
caused by such entering and/or repossession. Secured Party may require Debtor
to assemble the Collateral and return it to Secured party at a place to be
designated by Secured Party which is reasonably convenient to both parties.
Secured Party may sell or Lease the Collateral at a time and location of its
choosing provided that the Secured Party acts In good faith and in a
commercially reasonable manner. Secured Party will give Debtor reasonable
notice of the time and place of any public sale of the Collateral or of the
time after which any private sale or any other intended disposition of the
Collateral is to be made. Unless otherwise provided by law, the requirement of
reasonable notice shall be met if such notice Is mailed, postage prepaid to the
address of Debtor shown herein at least ten days before the time of the sale or
disposition. Expenses of retaking, holding, preparing for sale, selling and the
like shall include reasonable attorneys' fees (at least 15% of the outstanding
principal balance if not prohibited by law) and other legal expenses. Debtor
understands that the Secured Party's rights are cumulative and not alternative.
11. WAIVER OF DEFAULTS; AGREEMENT INCLUSIVE.
Secured Party may in its sole discretion waive a default, or cure, at Debtor's
expense, a default. Any such waiver In a particular instance or of a particular
default shall not be a waiver of other defaults or the same kind of default at
another time. No modification or change in this Security Agreement or any
related note, instrument or agreement shall bind Secured Party unless in
writing signed Secured Party. No oral agreement shall be binding.
4
<PAGE> 5
12. FINANCING STATEMENTS; CERTAIN EXPENSES.
If permitted by law, Debtor authorizes Secured Party to file a financing
statement with respect to the Collateral signed only by Secured Party, and to
file a carbon, photograph or other reproduction of this Security Agreement or
of financing statement. At the request of Secured Party, Debtor will execute
any financing statements, agreements or documents, in form satisfactory to
Secured Party which Secured Party may deem necessary or advisable to establish
and maintain a perfected security interest in the Collateral and will pay the
cost of filing or recording the same In all public offices deemed necessary or
advisable by Secured Party. Debtor also agrees to pay all costs end expenses
incurred by Secured Party in conducting UCC, tax or other lien searches against
the Debtor or the Collateral and such other fees as may be agreed.
13. WAIVER OF DEFENSES ACKNOWLEDGMENT
If Secured Party assigns this Security Agreement to a third party (?Assignee?),
then after such assignment:
(a) Debtor will make all payments directly to such Assignee at such place as
Assignee may from time to time designate in writing;
(b) Debtor agrees that it will settle all claims, defenses, setoffs and
counterclaims it may have against Secured Party directly with Secured
Party and will not set up any such claim, defense, setoff or counterclaim
against Assignee, Secured Party hereby agreeing to remain responsible
therefor;
(c) Secured Party shall not be Assignee's agent for any purpose and shall have
no authority to change or modify this Security Agreement or any related
document or instrument; and
(d) Assignee shall have all of the rights and remedies of Secured Party
hereunder but none of Secured Party's obligations.
14. MISCELLANEOUS.
Debtor waives all exemptions. Secured Party may correct patent errors herein
and fill in such blanks as serial numbers, date of first payment and the like.
Any provisions hereof contrary to, prohibited by or invalid under applicable
laws or regulations shall be inapplicable and deemed omitted herefrom, but
shall not invalidate the remaining provisions hereof.
This Security Agreement shall be governed by and shall be interpreted
pursuant to the laws of the State of Utah. DEBTOR HEREBY UNCONDITIONALLY WAIVES
ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF, DIRECTLY OR INDIRECTLY. THIS SECURITY AGREEMENT, ANY OF THE
RELATED DOCUMENTS, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY (OR ANY
ASSIGNEE OF SECURED PARTY) RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION
OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED
BETWEEN DEBTOR AND SECURED PARTY (OR ITS ASSIGNEE). THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS
IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS SECURITY AGREEMENT, ANY RELATED DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS SECURITY AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Debtor shall have no right to prepay the indebtedness described in any
Schedule. DEBTOR ACKNOWLEDGES RECEIPT OF A TRUE COPY AND WAIVES ACCEPTANCE
HEREOF.
5
<PAGE> 6
If Debtor is a corporation, this Security Agreement is executed pursuant to
authority of its Board of Directors. Except where the context otherwise
requires, "Debtor" and "Secured Party" include the heirs, executors or
administrators, successors or assigns of those parties; nothing herein shall
authorize Debtor to assign this Security Agreement or its rights in and to the
Collateral. If more than one Debtor executes this Security Agreement, their
obligations under this Security Agreement shall be joint and several,
If at any time this transaction would be usurious under applicable law, then
regardless of any provision contained in this Security Agreement or in any
other agreement made in connection with this transaction, it is agreed that:
(a) the total of all consideration which constitutes interest under applicable
law that is contracted for, charged or received upon this Security
Agreement or any such other agreement shall under no circumstances exceed
the maximum rate of interest authorized by applicable law and any excess
shall be credited to the Debtor; and
(b) If Secured Party elects to accelerate the maturity of, or if Secured Party
permits Debtor to prepay the indebtedness described in Paragraph 3, any
amounts which because of such action would constitute interest may never
include more than the maximum rate of interest authorized by applicable
law and any excess interest, if any, provided for in this Security
Agreement or otherwise, shall be credited to Debtor automatically as of
the date of acceleration or prepayment.
15. SPECIAL PROVISIONS.
See Special Provisions Instructions.
DATED:
------------------------------------
DEBTORS:
----------------------------------
ROADHOUSE GRILL, INC.
- -----------------------------------------
By
---------------------------------------
Title
------------------------------------
SECURED PARTY:
PACIFIC FINANCIAL COMPANY BY PFR MANAGEMENT, INC. GENERAL PARTNER
- -----------------------------------------------------------------
420 E. South Temple, #240
Salt Lake City, UT 84111
By Title
-------------------------------------- ----------------------------
- -------------------------------------------------------------------------------
If Debtor is a partnership, enter:
PARTNERS' NAMES HOME ADDRESSES
- --------------- ---------------
- -------------------------------------------------------------------------------
NOTICE: DO NOT USE THIS FORM FOR TRANSACTIONS FOR PERSONAL, FAMILY OR HOUSEHOLD
PURPOSES. FOR AGRICULTURAL AND OTHER TRANSACTIONS SUBJECT TO FEDERAL OR STATE
REGULATIONS, CONSULT LEGAL COUNSEL TO DETERMINE DOCUMENTATION REQUIREMENTS.
6
<PAGE> 7
AGRICULTURAL PURPOSES generally means farming, including dairy farming, but it
also includes the transportation, harvesting, and processing of farm, dairy, or
forest products if what is transported, harvested, or processed is farm, dairy,
or forest products grown or bred by the user of the equipment itself. It does
not apply, for instance, to a logger who harvests someone else's forest, or a
contractor who prepares land or harvests products on someone else's farm.
- -------------------------------------------------------------------------------
SPECIAL PROVISIONS INSTRUCTIONS - THE NOTATIONS TO BE ENTERED IN THE SPECIAL
PROVISIONS SECTION OF THIS DOCUMENT FOR USE IN ALABAMA, FLORIDA, GEORGIA,
IDAHO, NEVADA, NEW HAMPSHIRE, OREGON, SOUTH DAKOTA AND WISCONSIN ARE SHOWN IN
THE APPLICABLE STATE PAGES OF THE LOANS AND MOTOR VEHICLES MANUAL.
7
<PAGE> 8
SCHEDULE NO. 1
Schedule of Indebtedness and Collateral
Attached to and made a part of Master Security Agreement No. RG99 dated _______,
between the undersigned Secured Party and Debtor.
The equipment listed on this Schedule will be located at:
6379 RIDGEWOOD CT. RD. JACKSON MS 39211
- -------------------------------------------------------------------------------
Address City State Zip Code
Debtor grants to Secured Party a security interest in the property described
below, along with all present and future attachments and accessories thereto
and replacements and proceeds thereof, including amounts payable under any
insurance policy, all hereinafter referred to collectively as "Collateral".
Collateral Description (Describe Collateral fully including make, kind of unit,
model and serial numbers and any other pertinent information,)
All Furniture, Fixtures and Equipment now owned, in existence or
hereafter acquired, located at 6379 Ridgewood Ct. Rd., Jackson, MS
39211, including but not limited to the property more fully described
on Exhibit A
attached hereto and
made a part hereof, together with all additions, attachments and
replacements thereto and proceeds thereof, including without
limitation, insurance proceeds.
Debtor promises to pay Secured Party the total sum $ 569,174.85 which
represents principal and interest precomputed over the term hereof, payable in
60 COMBINED PRINCIPAL AND INTEREST PAYMENTS of $ 8,750.56 each and a balloon
payment of $ 44,141.25 commencing on 1/15/99 and a like sum on a like date each
month thereafter until fully paid, provided however, that the final payment
shall be in the amount of the unpaid balance and interest. Payment shall be
made at the address of Secured Party shown on the Master Security Agreement or
such other place as Secured Party may designate from time to time.
See Special Provisions instructions below.
ACCEPTED
----------------------------------
SECURED PARTY:
Pacific Financial Company
by PFR Management, Inc. General Partner
By Title
------------------------------------ --------------------------
EXECUTED ON
---------------------------
DEBTOR:
ROADHOUSE GRILL, INC.
- ----------------------------------------------
Name of individual, corporation or partnership
By Title
----------------------------------- --------------------------
<PAGE> 1
Exhibit 21.0
Subsidiaries of the Registrant
- ------------------------------
None
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> APR-25-1999
<PERIOD-START> OCT-26-1998
<PERIOD-END> JAN-24-1999
<CASH> 1,198
<SECURITIES> 0
<RECEIVABLES> 508
<ALLOWANCES> 0
<INVENTORY> 1,039
<CURRENT-ASSETS> 6,376
<PP&E> 90,138
<DEPRECIATION> 16,603
<TOTAL-ASSETS> 85,590
<CURRENT-LIABILITIES> 10,647
<BONDS> 0
0
0
<COMMON> 291
<OTHER-SE> 48,259
<TOTAL-LIABILITY-AND-EQUITY> 85,590
<SALES> 28,749
<TOTAL-REVENUES> 28,749
<CGS> 23,019
<TOTAL-COSTS> 26,536
<OTHER-EXPENSES> (97)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 544
<INCOME-PRETAX> 1,766
<INCOME-TAX> 50
<INCOME-CONTINUING> 1,716
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,716
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
