<PAGE>
As filed with the Securities and Exchange Commission on November 12, 1997
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TAM RESTAURANTS, INC.*
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 5812 133905598
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification No.) Identification No.)
</TABLE>
1163 Forest Avenue
Staten Island, New York 10310
(718) 720-5959
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
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Frank Cretella
President and Chief Executive Officer
TAM Restaurants, Inc.
1163 Forest Avenue
Staten Island, New York 10310
(718) 720-5959
(Name, address and telephone number of agent for service)
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Copies of all communications to:
ROBERT J. MITTMAN, ESQ. ALAN H. ARONSON, ESQ.
Tenzer Greenblatt LLP Akerman, Senterfitt & Eidson, P.A.
The Chrysler Building One Southeast 3rd Avenue
405 Lexington Avenue Miami, Florida 33131-1704
New York, New York 10174-0208 Telephone: (305) 374-5600
Telephone: (212) 885-5000 Facsimile: (305) 374-5095
Facsimile: (212) 885-5001
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] __________
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
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================================================================================================================================
Proposed Proposed
Maximum Offering Maximum Amount of
Title of Each Class of Amount to Price Per Aggregate Offering Registration
Securities to be Registered be Registered Security (1) Price (1) Fee
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<S> <C> <C> <C> <C>
Common Stock, par
value $.0001 per share..... 1,150,000(2) $5.00 $5,750,000 $1,742.42
- --------------------------------------------------------------------------------------------------------------------------------
Warrants, each to
purchase one share of
Common Stock................ 575,000(2) $.10 $57,500 $17.42
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Common Stock, par
value $.0001 per share,
issuable upon exercise
of Warrants (3)............. 575,000 $6.00 $3,450,000 $1,045.45
- --------------------------------------------------------------------------------------------------------------------------------
Warrants, each to
purchase one share of
Common Stock(4)............. 310,000 $.10 $31,000 $9.39
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Common Stock, par
value $.0001 per share,
issuable upon exercise
of Warrants(3)(4)........... 310,000 $6.00 $1,860,000 $563.65
- --------------------------------------------------------------------------------------------------------------------------------
Total...................................................................................................... $3,378.33
================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Assumes the Underwriter's over-allotment option to purchase up to
150,000 additional shares of Common Stock and/or 75,000 Warrants is
exercised in full.
(3) Pursuant to Rule 416, the Company is also hereby registering such
indeterminable additional shares of Common Stock as may become issuable
upon exercise of the Warrants pursuant to anti-dilution provisions
contained in the Warrants.
(4) Registered on behalf of the Selling Securityholders.
* As disclosed on page 5 of the Prospectus included as part of this
Registration Statement, the Prospectus gives effect to a name change to
be effected on or prior to the effective date of this Registration
Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
TAM RESTAURANTS, INC.
Cross Reference Sheet Pursuant to Rule 404
<TABLE>
<CAPTION>
Registration Statement Item Number and Caption Prospectus Caption
<S> <C>
1. Front of the Registration Statement and Outside Front
Cover Page of Prospectus.................................... Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus.................................................. Inside Front and Outside Back Cover Pages of Prospectus
3. Summary Information and Risk Factors........................ Prospectus Summary; Risk Factors
4. Use of Proceeds............................................. Use of Proceeds
5. Determination of Offering Price............................. Outside Front Cover Page of Prospectus; Risk Factors;
Underwriting
6. Dilution.................................................... Risk Factors; Dilution
7. Selling Securityholders..................................... Selling Securityholders and Plan of Distribution
8. Plan of Distribution........................................ Outside Front Cover Page of Prospectus; Underwriting
9. Legal Proceedings........................................... Not Applicable
10. Directors, Executive Officers, Promoters and Control
Persons..................................................... Management
11. Security Ownership of Certain Beneficial Owners and
Management.................................................. Principal Stockholders
12. Description of Securities................................... Outside and Inside Front Cover Pages of Prospectus;
Prospectus Summary; Capitalization; Description of
Securities
13. Interest of Named Experts and Counsel....................... Legal Matters
14. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities.............................. Exculpatory Provisions and Indemnification Matters
15. Organization Within Last Five Years......................... Prospectus Summary; Management's Discussion and
Analysis of Financial Condition and Results of Operations
16. Description of Business..................................... Prospectus Summary; Risk Factors; Use of Proceeds;
Business
17. Management's Discussion and Analysis
or Plan of Operation........................................ Management's Discussion and Analysis of Financial
Condition and Results of Operations
18. Description of Property .................................... Business
19. Certain Relationships and Related Transactions.............. Certain Transactions
20. Market for Common Equity and Related Stockholder
Matters..................................................... Outside Front Cover Page; Risk Factors; Dividend Policy;
Description of Securities
21. Executive Compensation...................................... Management
22. Financial Statements........................................ Financial Statements
23. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure......................... Not Applicable
</TABLE>
<PAGE>
PRELIMINARY PROSPECTUS DATED NOVEMBER 12, 1997
SUBJECT TO COMPLETION
TAM RESTAURANTS, INC.
1,000,000 Shares of Common Stock and Redeemable Warrants
to Purchase 500,000 Shares of Common Stock
The Company is offering hereby 1,000,000 shares (the "Shares") of the
common stock of the Company (the "Common Stock") and redeemable warrants to
purchase 500,000 shares of Common Stock (the "Warrants"). The Shares and
Warrants may be purchased separately and will be separately transferrable
immediately upon issuance. Each Warrant entitles the registered holder thereof
to purchase one share of Common Stock at a price of $6.00, subject to adjustment
in certain circumstances, at any time commencing , 1999 (13 months
following the date of this Prospectus) (or on such earlier date as to which the
Underwriter consents) until , 2003. The Warrants are redeemable by the
Company at any time commencing , 1999 (13 months following the date of this
Prospectus) upon notice of not less than 30 days, at a price of $.10 per
Warrant, provided that the closing bid quotation of the Common Stock on all 20
trading days ending on the third trading day prior to the day on which the
Company gives notice (the "Call Date") has been at least 150% (currently $9.00,
subject to adjustment) of the then effective exercise price of the Warrants and
the Company obtains the written consent of the Underwriter to such redemption
prior to the Call Date. See "Description of Securities."
Prior to this offering there has been no public market for the Common Stock
or Warrants and there can be no assurance that any such market will develop. It
is anticipated that the Common Stock and Warrants will be quoted on the Nasdaq
SmallCap Market ("Nasdaq") under the symbols "TAMR" and "TAMRW," respectively.
The offering prices of the Shares and Warrants, and the exercise price of the
Warrants, were determined pursuant to negotiations between the Company and the
Underwriter and do not necessarily relate to the Company's book value or any
other established criteria of value. For a discussion of the factors considered
in determining the offering prices of the Shares and Warrants, see
"Underwriting."
This Prospectus also relates to the offer and sale by certain persons (the
"Selling Securityholders") of up to 310,000 warrants (the "Selling
Securityholders' Warrants"), which are identical to the Warrants and will be
issued to the Selling Securityholders upon the consummation of this offering
upon the conversion of outstanding warrants, and up to 310,000 shares (the
"Selling Securityholders' Shares") of Common Stock issuable upon exercise of the
Selling Securityholders' Warrants. The Selling Securityholders' Warrants are not
part of the underwritten offering, however, and may not be offered or sold prior
to the 15 months following the date of this Prospectus without the prior written
consent of the Underwriter. The Company will not receive any of the proceeds
from the sale of the Selling Securityholders' Warrants and Selling
Securityholders' shares. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Selling Securityholders and Plan of Distribution."
-------------------------------
<PAGE>
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD NOT BE PURCHASED BY
INVESTORS WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS" COMMENCING ON PAGE 8
AND "DILUTION" ON PAGE 18.
-------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
===============================================================================
Price Underwriting Proceeds
to Discounts and to
Public Commissions(1) Company(2)
- -------------------------------------------------------------------------------
Per Share ................... $5.00 $.50 $4.50
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Per Warrant.................. $.10 $.01 $.09
- -------------------------------------------------------------------------------
Total (3).................... $5,050,000 $505,000 $4,545,000
===============================================================================
(1) The Company has agreed to pay to the Underwriter a 3% nonaccountable
expense allowance, to sell to the Underwriter warrants (the "Underwriter's
Warrants") to purchase up to 100,000 shares of Common Stock and/or 50,000
warrants and to retain the Underwriter as a financial consultant. The
Company has also agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, including the
Underwriter's nonaccountable expense allowance in the amount of $151,500
($174,225 if the Underwriter's over-allotment option is exercised in full),
estimated at $595,000.
(3) The Company has granted to the Underwriter an option, exercisable within 45
days from the date of this Prospectus, to purchase up to 150,000 additional
shares of Common Stock and/or 75,000 additional Warrants on the same terms
set forth above, solely for the purpose of covering over-allotments, if
any. If the Underwriter's over-allotment option is exercised in full, the
total price to public, underwriting discounts and commissions and proceeds
to Company will be $5,807,500, $580,750 and $5,226,750, respectively. See
"Underwriting."
<PAGE>
----------
The Shares and Warrants are being offered, subject to prior sale, when, as
and if delivered to and accepted by the Underwriter and subject to approval of
certain legal matters by counsel and to certain other conditions. The
Underwriter reserves the right to withdraw, cancel or modify this offering and
to reject any order in whole or in part. It is expected that delivery of
certificates representing the Shares and Warrants will be made against payment
therefor at the offices of the Underwriter, 7 Hanover Square, New York, New York
10004, on or about , 1997.
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Paragon Capital Corporation
The date of this Prospectus is , 1997
<PAGE>
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS ON NASDAQ, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE, WHICH
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICES OF THE UNITS, COMMON STOCK
AND WARRANTS. SPECIFICALLY, THE UNDERWRITER MAY OVER-ALLOT IN CONNECTION WITH
THE OFFERING AND MAY BID FOR AND PURCHASE SHARES OF COMMON STOCK AND WARRANTS IN
THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety. Unless otherwise indicated, all share and per share
data and information in this Prospectus (i) gives retroactive effect to a 1 for
1.8135268 reverse split of the Common Stock to be effected on or prior to the
date of this Prospectus and (ii) assumes no exercise of the Underwriter's
over-allotment option to purchase up to 150,000 additional shares of Common
Stock and/or 75,000 additional Warrants. See "Underwriting" and Note Q to Notes
to Financial Statements.
This Prospectus contains forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
The Company
TAM Restaurants, Inc. (the "Company") operates Lundy Bros. Restaurant
("Lundy's"), a high-volume, casual, upscale seafood restaurant located in
Brooklyn, New York, and The Boathouse in Central Park ("The Boathouse"), a
multi-use facility which features an upscale restaurant and catering pavilion,
located on the lake in New York City's Central Park. Lundy's and The Boathouse
are high-profile locations which host many special events and receive extensive
press coverage. The Company is also constructing American Park at the Battery
("American Park"), which has been designed as a high-volume premium-quality
restaurant to be located at the water's edge in Battery Park, a New York City
landmark visited by approximately 4 million visitors during 1996. In addition,
the Company's restaurants offer high-quality professional, on-premise and
off-premise catering services.
The Lundy's concept is designed to appeal to a broad range of guests by
serving generous portions of premium-quality seafood and other menu items and by
combining a grand dining experience with friendly and efficient service in a
high-energy environment. Lundy's menu features a wide variety of fresh seafood
items, including lobster, crab, shrimp, oysters, clams and daily fish specials,
cooked to order in a variety of ways: steamed, sauteed, boiled, broiled,
grilled, blackened and fried. In addition, Lundy's offers a selection of steaks,
chicken dishes, pasta dishes, pizzas, appetizers, chowders, salads and desserts,
as well as full bar service. Dinner entrees range in price from $7.95 to $28.95
and the average dinner check is approximately $32.00 per person. Lundy's is open
for lunch and dinner seven days a week.
Lundy's interior has been designed with a contemporary decor, rich
polished woods and granite surfaces, accented with copper, pottery and
brushed-stainless steel and earth tones, to impart "Old World" elegance and
comfort. Lundy's commitment to offering its guests a casual, exciting dining
experience is highlighted by its "exhibition" kitchen where all meals are cooked
to order in view of its guests, a lobster pool from which guests can select
their lobsters, an experienced waitstaff uniformed in crisp white linen jackets,
a high waitstaff-to-customer ratio to assure attentive service and tables
covered with multiple layers of colored linens covered with pristine white
butcher paper.
Lundy's offers guests several seating selections in its multi-level
interior, which consists of an expansive, high-ceiling main dining area; a large
upstairs dining room which is also used for special events and to cater private
functions; a mezzanine-level cigar room which overlooks the main dining area;
and a 30 foot long oyster and beverage bar; as well as outdoor seating. Lundy's
also houses a seafood laboratory where seafood is tested to assure premium
quality and freshness, and a gift shop which carries a variety of "Lundy's" and
"Brooklyn" themed merchandise, such as T-shirts and other clothing items, hats,
books, plates and coffee and beer mugs, as well as Lundy's chowders and sauces
and seafood related products, such as lobster bibs, crackers and forks.
-3-
<PAGE>
The Boathouse is a multi-use, lakeside facility which features an
upscale restaurant with primarily al fresco (outdoor) seating and offers guests
a comfortable, relaxed and romantic atmosphere. The Boathouse serves eclectic
American cuisine that changes according to season and consumer trends,
emphasizing herbs grown fresh on site. The menu is limited in scope to permit
the greatest attention to quality while offering sufficient breadth to appeal to
a variety of taste preferences. Dinner entrees range in price from $19.00 to
$28.00 and the average dinner check is approximately $44.00 per person. Other
attractions of The Boathouse include a glass-enclosed, tented catering pavilion
for private functions; a cocktail area with a jazz band performing live five
nights a week; The Boathouse Express, a cafeteria-style convenience counter with
indoor and outdoor seating which serves specialty sandwiches, salads, baked
goods, and juices, as well as traditional fast-food, such as hamburgers, hot
dogs, french fries and sodas; carts and kiosks strategically located on the
facility's grounds offering a variety of food and beverage items, such as fresh
fruit drinks, New York-style pretzels, pita sandwiches and espresso and
cappuccino; rowboat and bicycle rentals and Venetian gondola rides; and a
merchandise counter. The restaurant is open for lunch and dinner on a seasonally
adjusted basis, while the catering pavilion and The Boathouse Express are open
year-round.
American Park has been designed with an urban mountain lodge motif,
incorporating natural fabrics, slate, stone, wood and brick with modern-style
furnishings, vibrant colors and designer lighting, and providing panoramic views
of the New York City harbor and downtown Manhattan skyline. American Park will
offer seating selections in its main dining room, second floor dining room and
bi-level outdoor patio. American Park is expected to serve contemporary American
cuisine featuring wood-burning menu selections, such as steaks, whole fish,
chicken and veal dishes. The lower-level outdoor patio will extend to the
water's edge and is expected to incorporate a separate kitchen which serves
selected items from the main restaurant menu and an expanded bar area. In
addition, the Company intends to operate a free-standing kiosk as part of
American Park which is expected to serve appetizers, sandwiches, cold beverages,
beer and wine.
The Company believes that providing friendly, courteous, efficient
service is critical to the long-term success of each location. The Company
maintains a guest service department which, among other things, contacts several
customers from each location's previous night's reservation list to inquire
about their dining experiences. The Company utilizes guest feedback to
continually improve its service, update its menu selections and otherwise
improve its operations. The Company also believes that the selection and
training of its employees result in friendly, courteous, efficient guest service
which contributes to a pleasurable dining experience for the guest.
Lundy's and The Boathouse are approximately 16,500 and 20,000 square
feet in size, respectively, and have a seating capacity of approximately 730 and
790 seats, respectively. American Park is approximately 18,300 square feet in
size and is expected to have a seating capacity of approximately 750 seats.
Sales for Lundy's and The Boathouse were $5,694,382 and $6,152,706,
respectively, during the fiscal year ended September 29, 1996, and $4,709,258
and $4,021,905, respectively, during the nine months ended June 29, 1997. The
Company's food and liquor sales accounted for 76.8% and 15.3% of revenues,
respectively, for the fiscal year ended September 29, 1996, and 76.8% and 15.3%
of revenues, respectively, for the nine months ended June 29, 1997.
The Company's strategy is to initially develop and operate a limited
number of additional Lundy's restaurants in the New York City metropolitan area
and other urban and upscale suburban areas, particularly those with a large
population of transplanted New Yorkers, such as Southern Florida, Los Angeles,
Chicago and Washington D.C. With a substantial portion of the proceeds of this
offering, projected cash flow from operations and anticipated financing,
including equipment and vendor financing and landlord development concessions
and rent allowances, the Company intends to open three additional Lundy's
restaurants during the 12 months following the consummation of this offering. In
addition, in connection with its expansion strategy, the Company may seek to
open additional high-volume landmark-type restaurants, as appropriate
opportunities arise. The Company, however, has no commitments or understandings
with respect to any proposed location or other sources of financing. The Company
has limited experience in expanding its operations and there can be no assurance
that it will be able to successfully do so.
The Company was formed to act as a holding company and was incorporated
under the laws of the State of Delaware in July 1996 under the name TAM
Restaurant Holding Corp. and changed its name to TAM
-4-
<PAGE>
Restaurants, Inc. Effective September 29, 1996, the Company acquired (the
"Acquisition") all of the outstanding capital stock of TAM Restaurant Group,
Inc. ("TAM"), Bay Landing Restaurant Corp. ("Bay Landing") and Shellbank
Restaurant Corp. ("Shellbank"). Unless the context requires otherwise, all
references to "the Company" include its wholly-owned subsidiaries, TAM, Bay
Landing and Shellbank, and Plum Third Street Corp., a wholly-owned subsidiary
of Bay Landing. The Company's executive offices are located at 1163 Forest
Avenue, Staten Island, New York 10310 and its telephone number is (718)
720-5959.
Recent Financing
In October 1997, Kayne Anderson Non-Traditional Investments, L.P. and
ARBCO Associates, L.P., affiliates of Kayne Anderson Investment Management, Inc.
(collectively, "Kayne Anderson"), loaned the Company an aggregate of $1,000,000.
The loans bear interest at the rate of 10% per annum, payable quarterly
commencing December 31, 1997, and are due May 31, 1999. Upon an event of default
under the loans, the interest rate increases to 15% per annum and the Company
would be required to pay to Kayne Anderson 25% of the operating profits from
American Park on a monthly basis until the loan is fully repaid. The loan is
guaranteed by Frank Cretella, President, Chief Executive Officer, a director and
a principal stockholder of the Company, and the guarantee is secured by a pledge
of 200,000 shares of Common Stock owned by Frank Cretella and Jeanne Cretella,
Vice President, a director and principal stockholder of the Company. As partial
consideration for the loans, the Company issued to Kayne Anderson warrants (the
"KA Warrants") to purchase 200,000 shares of Common Stock. The KA Warrants are
exercisable at a price of $5.00 per share (subject to adjustment under certain
circumstances) and are exercisable at any time commencing 90 days following the
date of this Prospectus. In connection with the loan, the Company agreed to use
its best efforts to cause a representative designated by Kayne Anderson to be
elected to the Company's Board of Directors. Kenneth L. Harris is Kayne
Anderson's initial designee.
The Offering
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<S> <C>
Securities offered ............................... 1,000,000 Shares and Warrants to purchase 500,000 shares of
Common Stock. The Shares and Warrants may be purchased
separately and will be separately transferable immediately upon
issuance. See "Description of Securities."
Common Stock to be outstanding
after this offering(1) ........................ 3,500,000 shares of Common Stock
Warrants(2):
Number to be outstanding
after this offering....................... 500,000 Warrants
Exercise terms .............................. Exercisable at any time commencing , 1999 (13 months
following the date of this Prospectus) (or on such earlier date
as to which the Underwriter consents), each to purchase one
share of Common Stock at a price of $6.00, subject to
adjustment in certain circumstances. See "Description of
Securities - Redeemable Warrants."
Expiration date ............................. , 2003
Redemption .................................. Redeemable by the Company at any time commencing ,
1999 (13 months following the date of this Prospectus), upon
notice of not less than 30 days, at a price of $.10 per Warrant,
provided that the closing bid quotation of the Common Stock
on all 20 trading days ending on the third trading day prior to
the day on which the Company gives notice (the "Call Date")
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C>
has been at least 150% (currently $9.00, subject to
adjustment) of the then effective exercise price of the Warrants
and the Company obtains the written consent of the
Underwriter with respect to such redemption prior to the Call
Date. The Warrants will be exercisable until the close of
business on the date fixed for redemption. See "Description of
Securities - Redeemable Warrants."
Use of Proceeds .................................. The Company intends to use the net proceeds of this offering
for the construction of new restaurants; and for working capital
and general corporate purposes. See "Use of Proceeds."
Risk Factors ..................................... The securities offered hereby are speculative and involve a
high degree of risk and immediate substantial dilution and
should not be purchased by investors who cannot afford the
loss of their entire investment. See "Risk Factors" and
"Dilution."
Proposed Nasdaq symbols .......................... Common Stock -- TAMR
Warrants -- TAMRW
</TABLE>
- ----------
(1) Does not include: (i) 500,000 shares of Common Stock reserved for issuance
upon exercise of the Warrants; (ii) an aggregate of 150,000 shares of
Common Stock reserved for issuance upon exercise of the Underwriter's
Warrants and the warrants included therein; (iii) an aggregate of 310,000
shares of Common Stock (the "Selling Securityholders' Shares") reserved for
issuance upon exercise of outstanding warrants which will be converted into
warrants (the "Selling Securityholders' Warrants") identical to the
Warrants; (iv) 203,000 shares of Common Stock reserved for issuance upon
exercise of other outstanding warrants; (v) 197,500 shares of Common Stock
reserved for issuance upon exercise of outstanding options granted under
the Company's 1997 Stock Option Plan (the "Option Plan"); and (vi) 327,500
shares of Common Stock reserved for issuance upon exercise of options
available for future grant under the Option Plan. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Management - 1997 Stock Option Plan," "Certain Transactions," "Description
of Securities" and "Underwriting."
(2) Does not include any of the warrants referred to in clauses (ii), (iii) or
(iv) of footnote 1 above.
-6-
<PAGE>
Summary Financial Information
The summary financial information set forth below is derived from and
should be read in conjunction with the financial statements, including the notes
thereto, appearing elsewhere in this Prospectus.
Statement of Operations Data:
<TABLE>
<CAPTION>
Nine Months Nine Months
Year Ended Ended June 30, Ended June 29,
September 29, 1996 1996 1997
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<S> <C> <C> <C>
Net Sales............................... $11,847,088 $7,261,892 $8,902,628
Gross Profit............................ 4,586,648 2,759,519 3,838,421
Income (loss) from operations........... (1,536,222) (994,680) 591,714
Net income (loss) from continuing
operations(1)........................... (2,637,226) (2,001,972) 109,100
Net income (loss) per share from
continuing operations (1)............... (1.22) .05
Weighted average number of shares
outstanding............................. 2,160,676 2,418,294
</TABLE>
Balance Sheet Data:
<TABLE>
<CAPTION>
September 29, 1996 June 29, 1997
------------------ -------------------------------------------------------------------
Actual Pro Forma(2) As Adjusted(3)
<S> <C> <C> <C> <C>
Working capital (deficit)...... $(2,026,787) $(2,131,423) $(420,798) $ 3,529,202
Total assets................... 4,728,868 6,323,596 7,323,596 11,273,596
Total liabilities.............. 4,620,113 5,670,741 6,670,741 6,670,741
Stockholders' equity........... 108,755 652,855 652,855 4,602,855
</TABLE>
- ----------
(1) Effective September 29, 1996, the Company transferred the assets of its
concession business to MAT Operating Corp. ("MAT"), a company
wholly-owned by Frank Cretella, President, Chief Executive Officer, a
director and a principal stockholder of the Company. For each of the
year ended September 29, 1996 and nine months ended June 30, 1996, net
income from such discontinued operations was $30,142 or $.01 per share.
See "Management's Discussion and Analysis of Financial Conditions and
Results of Operations," "Certain Transactions" and Consolidated
Financial Statements.
(2) Gives effect to (i) the reclassification of approximately $720,125 of
short-term indebtedness to long-term indebtedness, and (ii) the
issuance of the $1,000,000 principal amount of promissory notes in
October 1997 to Kayne Anderson and the receipt of the approximately
$990,500 of net proceeds therefrom. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity
and Capital Resources" and "Certain Transactions."
(3) Gives effect to the sale of the Shares and Warrants offered hereby and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds."
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RISK FACTORS
The securities offered hereby are speculative and involve a high degree
of risk. Prospective investors should carefully consider the following risk
factors before making an investment decision.
Operating Losses; Future Operating Results; Explanatory Paragraph in
Independent Auditors' Report. Although the Company has recently generated net
income, during the year ended September 29, 1996, the Company incurred a net
loss from continuing operations of $2,637,226 and, at June 29, 1997, had an
accumulated deficit of $2,480,194. The Company's operating expenses have
increased and can be expected to increase significantly in connection with the
Company's proposed expansion (including capital expenditures for construction of
and rental payments for new locations prior to their opening). The Company's
future profitability will depend upon, among other things, the Company's ability
to generate a level of revenues sufficient to offset its cost structure in
addition to reducing its operating costs on a per location basis. The Company
believes that generation of that level of revenues is dependent upon the timely
opening of additional restaurants and future restaurants achieving and
maintaining market acceptance. There can be no assurance that the Company will
achieve significantly increased revenues or maintain profitable operations. The
Company's independent auditors have included an explanatory paragraph in their
report on the Company's financial statements, stating that they have been
prepared assuming that the Company will continue as a going concern and that
significant prior losses from operations raise substantial doubt about the
Company's ability to continue as a going concern. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Consolidated
Financial Statements.
Significant Capital Requirements; Need for Additional Financing. The
Company's capital requirements have been and will continue to be significant and
its cash requirements have been exceeding its cash flow from operations (at June
29, 1997, the Company had a working capital deficit of $2,131,423) due to, among
other things, costs associated with development, opening and start-up costs of
Lundy's and American Park and building a corporate infrastructure sufficient to
support the Company's proposed expanded operations. As a result, the Company has
been substantially dependent upon sales of its equity securities, loans from
financial institutions and the Company's officers, directors and stockholders
and bartering transactions with member dining clubs to finance a portion of its
working capital requirements. The Company is dependent upon the proceeds of this
offering to finance a portion of its proposed expansion over the 12 months
following the consummation of this offering. Based on the Company's current
proposed plans and assumptions relating to the implementation of its expansion
strategy (including the timetable of opening American Park and new Lundy's
locations and the costs associated therewith), the Company anticipates that the
net proceeds of this offering, together with anticipated cash flow from
operations and equipment, vendor and landlord financing, will be sufficient to
satisfy its contemplated cash requirements for at least 12 months following the
consummation of this offering. In the event that the Company's plans change or
its assumptions prove to be inaccurate (due to unanticipated expenses,
construction delays or other difficulties) or the proceeds of this offering
otherwise prove to be insufficient to fund operations and implement the
Company's proposed expansion strategy, the Company could be required to seek
additional financing sooner than anticipated. Other than the ability to enter
into bartering transactions with member dining clubs, the Company has no current
arrangements with respect to, or potential sources of, additional financing, and
it is not anticipated that any officers, directors or stockholders will provide
any additional loans to the Company. Consequently, there can be no assurance
that any additional financing will be available to the Company when needed, on
commercially reasonable terms, or at all. Any inability to obtain additional
financing when needed would have a material adverse effect on the Company,
including requiring it to curtail its expansion efforts. In addition, any
additional equity financing may involve substantial dilution to the interests of
the Company's then existing stockholders. See "Use of Proceeds," "Dilution,"
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
Limited Restaurant Base; Dependence Upon Principal Restaurants; High
Restaurant Failure Rate. To date, all of the Company's revenues have been
derived from only two restaurants, one of which has been in operation only since
1995 and both of which are located in New York City. The results achieved to
date by the Company's small restaurant base may not be indicative of the
prospects or market acceptance of a larger number of restaurants or of
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more geographically dispersed restaurants, located in areas with more varied
demographic characteristics. Moreover, the opening of new restaurants is
characterized by a very high failure rate. Although The Boathouse has operated
successfully for many years, there can be no assurance that American Park or any
new Lundy's restaurants will be successful or operate profitably. In addition,
the Company expects that during the first several months of operation of a newly
opened restaurant, such restaurant could operate at a loss. In the event of a
prolonged period of unfavorable operating results for a restaurant, the Company
may be required to close such restaurant, which could have a material adverse
effect on the financial condition and results of operations of the Company. The
Company will remain dependent upon a limited number of high-volume restaurants
for substantially all of its revenues. The lack of success or closing of any of
the Company's existing restaurants, or the unsuccessful operation of a new
restaurant, would have material adverse effect upon the financial condition and
results of operations of the Company. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business."
Risks Relating to Proposed Expansion. The Company is currently
implementing a strategy to expand its operations and will seek to open American
Park and additional Lundy's restaurants. The Company has limited experience in
effectuating rapid expansion and in managing a large number of locations or
locations that are geographically dispersed. The Company intends to open
American Park by January 1998 and three Lundy's restaurants during the 12 months
following the consummation of this offering. The Company's proposed expansion
will be dependent on, among other things, the proceeds of this offering, the
availability of other sources of financing, achieving significant market
acceptance for its Lundy's concept, distinguishing the Lundy's concept from
other seafood restaurants, developing customer recognition and loyalty for the
Lundy's name, identifying a sufficient number of prime locations and entering
into lease arrangements for such locations on favorable terms, timely
development and construction of American Park and new Lundy's locations,
securing required governmental permits and approvals, hiring, training and
retaining skilled management and other personnel, the Company's ability to
integrate new restaurants into its operations and the general ability to
successfully manage growth (including monitoring restaurant operations,
controlling costs and maintaining effective quality controls). In the event that
cash flow from operations is insufficient or that the Company is unable to
obtain adequate equipment, vendor or landlord financing, or other unexpected
events occur, such as delays in identifying suitable locations, negotiating
leases, obtaining permits or design and construction delays, the Company may not
be able to open all of such locations in a timely manner, or at all. Moreover,
the Company believes that consumer recognition and perception of the Lundy's
name has contributed to the success of the existing Lundy's restaurant. Consumer
recognition of the Lundy's name outside of the New York City area is likely to
be significantly less and, therefore, the success of any future Lundy's
restaurant will be dependent upon the Company's ability to distinguish such
location from its competitors on bases, such as price, quality and service.
There can be no assurance that the Company will be successful in opening the
number of restaurants currently anticipated in a timely manner, or at all, or
that, if opened, those restaurants will operate profitably. See "Business --
Expansion Strategy."
Long Start-up Cycles; Fluctuations in Operating Results; Start-up
Expense. The Company's restaurant start-up cycle, which generally commences with
site selection and ends upon the opening of the restaurant to customers, will
vary by location and could extend for periods of six months or more.
Difficulties or delays in site selection or events over which the Company will
have no control, such as delays in construction due to governmental regulatory
approvals, shortage of or the inability to obtain labor and/or materials,
inability of the general contractor or subcontractors to perform under their
contracts, strikes or availability and cost of needed debt or lease financing,
could materially adversely affect the start-up costs and completion times of new
locations. The Company expects that future quarterly operating results will
fluctuate as a result of the timing of and expenses related to the openings of
new restaurants (as the Company will incur significant expenses during the
months preceding the opening of a restaurant), as well as due to various other
factors, including the seasonal nature of its business, weather conditions in
New York City, the health of New York City's economy in general and its tourism
industry in particular. Accordingly, the Company's sales and earnings may
fluctuate significantly from quarter to quarter and operating results for any
quarter will not necessarily be indicative of the results that may be achieved
for a full year. In addition, the capital resources required to construct each
new location are significant. The Company estimates that the costs of
constructing its future Lundy's locations will be approximately $1.5 million,
net of anticipated landlord contributions. The Company expects that it will
incur approximately $300,000 in additional pre-opening costs in
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connection with the opening of future sites. There can be no assurance that the
costs to construct and open any new location will not be significantly higher
than currently anticipated. See "Management's Discussion and Analysis of Results
of Operations" and "Business -- Site Selection."
Consumer Preferences; Factors Affecting the Restaurant Industry. The
restaurant industry is characterized by introduction of new concepts and is
subject to changing consumer preferences, tastes and eating and purchasing
habits. While the demand for premium quality seafood restaurants has grown
significantly over the past several years, there can be no assurance that such
demand will continue to grow or that these trends will not be reversed.
Moreover, since prices for seafood menu items are typically higher than those
for other menu items, unfavorable national, regional or local economic factors
could adversely affect consumer willingness to pay higher prices for the
Company's menu items. The Company's success will depend on its ability to
anticipate and respond to changing consumer preferences, tastes and eating and
purchasing habits, as well as other factors affecting the food service industry,
including new market entrants, demographic trends and unfavorable national,
regional and local economic conditions, inflation, increasing seafood and other
food and labor costs. Failure to respond to such factors in a timely manner
could have a material adverse effect on the Company. See "Business."
Geographic Concentration. Both of the Company's existing restaurants
are located in New York City and the restaurant currently under construction is
also located in New York City. Given the Company's present geographic
concentration, adverse publicity relating to the Company's restaurants could
have a more pronounced adverse effect on the Company's operating results than
might be the case if the Company's restaurants were more geographically
dispersed. A decline in tourism in New York City, or in general economic
conditions, which would likely affect the New York City economy or tourism
industry, particularly during the time of peak sales, could have a material
adverse effect on the Company's operations and prospects. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business"
Seasonality. The Company's business is seasonal. The restaurant and
bicycle and rowboat rentals at The Boathouse currently are open only March
through November, with dinner served in the restaurant from May 1 through
October 1. All of the seating of The Boathouse restaurant and a portion of the
seating at Lundy's is outdoors. In addition, since Lundy's is a waterside
location, it attracts more guests during the warmer weather months. As a result,
the Company's restaurant sales generally increase from May through September,
and decrease from November through March. See "Management's Discussion and
Analysis of Results of Operations -- Seasonality and Fluctuations in Quarterly
Operating Results" and "Business."
Menu Emphasis on Seafood; Seafood Quality. Lundy's currently has a
limited product offering which specializes in seafood. Sales of seafood
accounted for approximately 58% and 61% of the Company's net sales during the
year ended September 29, 1996 and the nine months ended June 29, 1997,
respectively. The Company anticipates that sales of seafood products will
continue to account for a substantial portion of the Company's revenues for the
foreseeable future, particularly as a result of the planned expansion of the
Lundy's concept. Accordingly, a rise in prices or decline in sales of such menu
items, due to evolving consumer preferences, industry trends, or other reasons,
could have an adverse effect on the Company. Moreover, some types of seafood
have been subject to adverse publicity because of claims of contamination by
lead, mercury or other chemicals disposed of in the oceans, which can adversely
affect both market demand and supply for such food products. Customer demand may
also be negatively impacted by reports of medical or other risks resulting from
the consumption of seafood. The Company maintains a continuous inspection
program for its food purchases and believes that it has not experienced any
adverse effect from contaminated seafood. Nevertheless, there can be no
assurance that food contamination or consumer perception of inadequate food
quality, in the industry in general or as to the Company in particular, will not
have a material adverse effect on the Company's operations and profitability.
See "Business -- Lundy's Concept - - Menu" and "-- Restaurant Operations."
Fluctuations in Food and Other Costs; Supply of Seafood. The Company's
profitability is dependent on its ability to anticipate and react to increases
in food, labor, employee benefits, and similar costs over which the Company has
limited control. Specifically, the Company's dependence on frequent deliveries
of seafood, meat and
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produce subjects it to the risk of possible shortages or interruptions in supply
caused by adverse weather, labor, transportation or other conditions which could
adversely affect the availability and cost of such items. In recent years, the
availability of certain types of seafood has fluctuated, resulting in
corresponding fluctuations in prices. The Company has been able to anticipate
and react to fluctuations in food costs through selected menu price adjustments,
purchasing seafood directly from numerous suppliers and promoting certain
alternative menu selections (in response to price and availability of supply).
However, there can be no assurance that the Company will be able to continue to
anticipate and respond to such supply and price fluctuations in the future or
that the Company will not be subject to significantly increased costs in the
future. Moreover, the Company does not maintain contracts with any of its
suppliers and purchases products pursuant to purchase orders placed from time to
time in the ordinary course of business. Although the Company believes that its
relationships with its suppliers are satisfactory and that alternative sources
are readily available, the loss of certain suppliers, or substantial price
increases, could have a material adverse effect on the Company. See "Business --
Restaurant Operations."
Operating License Requirements; Audit By New York City Comptroller. The
Boathouse and American Park are located in New York City's Central Park and
Battery Park, respectively. In order to operate these restaurants, the Company
obtained licenses from the New York City Department of Parks (the "Parks
Department") through an open bidding process. The license agreements impose
certain requirements and operating restrictions on the Company, such as minimum
hours of operation. Although certain aspects of the Company's operating
practices are not in full conformity with the terms of The Boathouse license,
the Company believes that the Parks Department is aware of its operating
practices and the Parks Department has not objected to the variances from the
terms of such license. The license agreement relating to The Boathouse expires
on June 29, 2000 and each license can be terminated by the Parks Department on
short notice. There can be no assurance that the Company will be able to obtain
an extension or a new license to operate The Boathouse or that either license
will not be terminated. In the event that a license is terminated or not renewed
(due to non-conformity with the terms of the license or otherwise), or a new
license is not obtained upon expiration of The Boathouse license, the Company
would be required to cease operating the location, which would have a material
adverse effect on the Company. In addition, the licenses require the Company to
pay a license fee based on the greater of a minimum annual fee or a percentage
of gross sales. The Company is subject to audit by the New York City Comptroller
to determine the accuracy of license fees paid by the Company. See "Business."
Significant Outstanding Indebtedness. In order to finance its capital
requirements, the Company has incurred significant indebtedness. At June 29,
1997, there was outstanding approximately $3,833,650 of current liabilities and,
in October 1997, the Company borrowed an additional $1,000,000. The Company has
not allocated any portion of the proceeds of this offering to repay a portion of
its outstanding indebtedness. There can be no assurance that cash flow from
operations will be sufficient to repay indebtedness, and the Company could be
required to use a portion of the proceeds of this offering to repay the amounts
then outstanding and would result in less funds available for proposed
expansion. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
Competition. The restaurant industry is intensely competitive with
respect to price, service, location and food quality and variety. There are many
well-established competitors with substantially greater financial and other
resources than the Company, as well as a significant number of new market
entrants. Such competitors include national, regional and local full-service
casual dining chains, many of which specialize in or offer seafood products, as
well as single location restaurants. Some of the Company's competitors have been
in existence for substantially longer periods than the Company, may be better
established in the markets where the Company's restaurants are or may be located
and engage in extensive advertising and promotional campaigns, both generally
and in response to efforts by competitors to open new locations or introduce new
concepts or menu offerings. The Company can also be expected to face competition
from a broad range of other restaurants and food service establishments which
specialize in a variety of cuisines. While the Company believes that it offers a
broad variety of quality menu items, there can be no assurance that consumers
will regard the Company's menu and concepts as sufficiently distinguishable from
competitive menus and restaurant concepts or that substantially equivalent menus
and restaurant concepts will not be introduced by the Company's competitors.
Moreover, the Company believes that the start-up
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costs associated with opening a seafood restaurant are not a significant
impediment to enter the seafood restaurant industry. See "Business --
Competition."
Litigation; Insurance and Potential Liability. The operation of
restaurants and rowboat and bicycle rentals subjects the Company to potential
claims from others, including consumers, employees and other service providers,
for personal injury (resulting from, among other things, contaminated or spoiled
food or beverages or accidents). The Company is a defendant in several lawsuits
arising in ordinary course of its business relating to personal injury claims by
plaintiffs which are seeking damages substantially in excess of the Company's
assets and insurance coverage. Although the Company is vigorously defending each
action, these matters are in the preliminary stages and there can be no
assurance that any such action will be resolved in favor of the Company or that
the outcome of any litigation or settlement will not have a material adverse
effect on the Company. The Company maintains personal injury and products
liability insurance (with coverage in amounts up to $1,000,000 per occurrence
and $5,000,000 of umbrella liability coverage), including insurance relating to
property insurance, in amounts which the Company currently considers adequate.
Nevertheless, a partially or completely uninsured claim against the Company, if
successful, could have a material adverse effect on the Company. See "Business
- -- Insurance" and "-- Legal Proceedings."
Potential Liability for Sale of Alcoholic Beverages. The Company is
subject to "dram-shop" statutes, which generally provide a person injured by an
intoxicated person the right to recover damages from an establishment that
wrongfully served alcoholic beverages to the intoxicated person. New York law
currently provides that a vendor of alcoholic beverages may be held liable in a
civil cause of action for injury or damage caused by or resulting from the
intoxication of a minor (under 21 years of age) if the vendor willfully,
knowingly and unlawfully sells or furnishes alcoholic beverages to the minor and
knows that the minor will soon thereafter be driving a motor vehicle. A vendor
can similarly be held liable if it knowingly provides alcoholic beverages to a
person who is in a noticeable state of intoxication, knows that person will soon
thereafter be driving a motor vehicle and injury or damage is caused by that
person. In addition, significant national attention is focused on the problem of
drunk driving, which could result in the adoption of additional legislation and
increased potential liability of the Company for damage or injury caused by its
customers. See "Business -- Government Regulation."
Government Regulation. The Company is subject to extensive state and
local government regulation by various governmental agencies, including state
and local licensing, zoning, land use, construction and environmental
regulations and various regulations relating to the sale of food and beverages,
sanitation, disposal of refuse and waste products, public health, safety and
fire standards. The Company's restaurants are subject to periodic inspections by
governmental agencies to assure conformity with such regulations. Difficulties
or failure in obtaining required licensing or other regulatory approvals could
delay or prevent the opening of a new restaurant, and the suspension of, or
inability to renew, a license at an existing restaurant would adversely affect
the operations of the Company. Restaurant operating costs are also affected by
other government actions which are beyond the Company's control, including
increases in the minimum hourly wage requirements, workers compensation
insurance rates, health care insurance costs and unemployment and other taxes.
The Federal Americans With Disabilities Act ("ADA") prohibits discrimination on
the basis of disability in public accommodations and employment. The Company's
restaurants are currently designed to be accessible to the disabled, and the
Company believes that it is in compliance with all current applicable
regulations relating to accommodations for the disabled. However, there can be
no assurance that the Company will not be deemed to violate the ADA, and could
be required to expend significant funds to provide service to or make reasonable
accommodations for disabled persons. See "Business -- Government Regulation."
Uncertainty of Protection of Proprietary Information. The Company's
business prospects will depend largely on the Company's ability to capitalize on
favorable consumer recognition of the Lundy's name. Although the Company holds a
trademark registration for use of the Lundy's name by the U.S. Patent and
Trademark Office, there can be no assurance that the Company's marks do not or
will not violate the proprietary rights of others or that the Company's marks
would be upheld, or that the Company would not be prevented from using its
marks, if challenged, any of which could have an adverse effect on the Company.
In addition, the Company relies on trade secrets and proprietary know-how, and
employs various methods, to protect its concepts and recipes. However, such
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methods may not afford complete protection and there can be no assurance that
others will not independently develop similar know-how or obtain access to the
Company's know-how, concepts and recipes. The Company does not maintain
confidentiality and non-competition agreements with all of its executives, key
personnel or suppliers. There can be no assurance that the Company will be able
to adequately protect its trade secrets. In the event competitors independently
develop or otherwise obtain access to the Company's know-how, concepts, recipes
or trade secrets, the Company may be adversely affected. See "Business --
Intellectual Property."
Control by Management. Upon the consummation of this offering, the
Company's current officers and directors will, in the aggregate, beneficially
own approximately 51.5% of the outstanding Common Stock of the Company.
Accordingly, such persons will be able to control the Company and generally
direct the Company's affairs, including electing a majority of the Company's
directors and causing an increase in the Company's authorized capital or the
dissolution, merger, or sale of the Company or substantially all of its assets.
See "Principal Stockholders."
Dependence Upon Key Personnel. The success of the Company will be
largely dependent upon the efforts of Frank Cretella, Chief Executive Officer
and President of the Company. Although the Company has entered into an
employment agreement with Mr. Cretella, Mr. Cretella is not required to devote
his full business time to the Company's business and affairs. The loss of the
services of Mr. Cretella or other key personnel would have a material adverse
effect on the Company's business and prospects. The Company maintains key-man
insurance on the life of Mr. Cretella in the amount of $500,000. The success of
the Company will also be dependent on its ability to attract and retain
experienced management and restaurant industry personnel. The Company faces
considerable competition from other food service businesses for such personnel,
many of which have significantly greater resources than the Company. There can
be no assurance that the Company will be able to attract and retain such
personnel, and the inability to do so could have a material adverse effect on
the Company. See "Management."
Conflicts of Interest. The Company has, from time to time, entered into
transactions with certain of its officers, directors and stockholders and/or
affiliates of such persons, which could result in potential conflicts of
interest. Although in connection with the Acquisition, the assets relating to
TAM's food concession operations were transferred to MAT and MAT assumed the
Company's obligations under its agreement to operate the concession in the
Central Park Zoo, the Company is still a party to such agreement and, in the
event that MAT fails to pay any amounts due under such agreement, the Company
will be responsible for such obligations. There can be no assurance that future
transactions or arrangements between the Company and its affiliates will be
advantageous to the Company, that conflicts of interest will not arise with
respect thereto, or that, if conflicts do arise, they will be resolved in a
manner favorable to the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Certain Transactions."
No Dividends. The Company has never paid any dividends on its Common
Stock and does not anticipate paying cash dividends in the foreseeable future.
The Company currently intends to retain all earnings for use in connection with
the expansion of its business and for general corporate purposes. The
declaration and payment of future dividends, if any, will be at the sole
discretion of the Company's Board of Directors and will depend upon the
Company's profitability, financial condition, cash requirements, future
prospects, and other factors deemed relevant by the Board of Directors. See
"Dividend Policy" and "Description of Securities -- Capital Stock."
Dilution. This offering involves an immediate and substantial dilution
of $3.68 per Share (or 73.6%) between the adjusted net tangible book value per
share of Common Stock after this offering and the initial public offering price
per Share in this offering. See "Dilution."
Shares Eligible for Future Sale. Upon consummation of this offering,
the Company will have 3,500,000 shares of Common Stock outstanding (assuming no
exercise of the Warrants), of which the 1,000,000 shares of Common Stock offered
hereby will be freely tradable without restriction or further registration under
the Securities Act of 1933, as amended (the "Securities Act"). All of the
remaining 2,500,000 shares of Common Stock outstanding are "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act
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and approximately 2,461,076 of such restricted shares will become eligible for
sale, pursuant to Rule 144, 90 days following the date of this Prospectus,
subject to the agreements set forth below. The holders of 267,325 shares of
Common Stock and the holders of the 310,000 Selling Securityholders' Warrants
and 3,000 other outstanding warrants have agreed not to sell such securities for
a period of 15 months from the date of this Prospectus without the Underwriter's
prior written consent; the holders of 253,002 shares of Common Stock and the
holders of 200,000 outstanding warrants have agreed not to sell such securities
for a period of 18 months from the date of this Prospectus without the
Underwriter's prior written consent; and the holders of 1,979,673 shares of
Common Stock have agreed not to sell such shares for a period of 24 months from
the date of this Prospectus without the prior written consent of the
Underwriter. No prediction can be made as to the effect, if any, that sales of
shares of Common Stock or even the availability of such shares for sale will
have on the market prices prevailing from time to time. The possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect the prevailing market price for the Common Stock and could
impair the Company's ability to raise capital through the sale of its equity
securities. See "Shares Eligible for Future Sale" and "Underwriting."
Possible Adverse Effect of Outstanding Warrants and Options. Upon the
consummation of this offering, there will be 500,000 shares reserved for
issuance upon exercise of the Warrants, approximately 310,000 shares reserved
for issuance upon the exercise of the Selling Securityholders' Warrants at an
exercise price of $6.00 per share, 3,000 shares reserved for issuance upon the
exercise of other outstanding warrants at an exercise price of $.01 per share,
200,000 shares reserved for issuance upon exercise of other outstanding warrants
at an exercise price of $5.00 per share, an aggregate of 150,000 shares of
Common Stock reserved for issuance upon exercise of the Underwriter's Warrants
and the warrants included therein and 197,500 shares reserved for issuance upon
exercise of options granted under the Option Plan at an exercise price of $5.00
per share. To the extent that any outstanding warrants or options are exercised,
dilution of the interests of the holders of the Company's Common Stock will
occur and any sales in the public market of the shares underlying such warrants
and options may adversely affect prevailing market prices for the Common Stock
and the Warrants. Moreover, the terms upon which the Company will be able to
obtain additional equity may be adversely affected since the holders of the
outstanding warrants and options can be expected to exercise them at a time when
the Company would, in all likelihood, be able to obtain capital on terms more
favorable to the Company than those provided by such securities. See
"Management" and "Description of Securities."
Indemnification and Exculpation of Officers and Directors. The
Company's Certificate of Incorporation provides for indemnification of officers
and directors to the fullest extent permitted by Delaware law. In addition,
under the Company's Certificate of Incorporation, no director shall be liable
personally to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that the Certificate of Incorporation
does not eliminate the liability of a director for (i) any breach of the
director's duty of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) acts or omissions in respect of certain unlawful
dividend payments or stock redemptions or repurchases; or (iv) any transaction
from which such director derives improper personal benefit. As a result of such
provisions in the Certificate of Incorporation and the By-Laws of the Company,
stockholders may be unable to recover damages against the directors and officers
of the Company for actions taken by them which constitute negligence, gross
negligence or a violation of their fiduciary duties, which may reduce the
likelihood of stockholders instituting derivative litigation against directors
and officers and may discourage or deter stockholders from suing directors,
officers, employees and agents of the Company for breaches of their duty of
care, even though such an action, if successful, might otherwise benefit the
Company and its stockholders. See "Management -- Indemnification and Exculpation
Provisions."
Delaware Anti-Takeover Statute; Possible Adverse Effects of
Authorization of Preferred Stock. As a Delaware corporation, upon the
consummation of this offering, the Company will become subject to prohibitions
imposed by Section 203 of the Delaware General Corporation Law ("DGCL"). In
general, this statute will prohibit the Company from entering into certain
business combinations without the approval of its Board of Directors and/or
stockholders and, as such, could prohibit or delay mergers or other attempted
takeovers or changes in control with respect to the Company. Such provisions may
discourage attempts to acquire the Company. In addition, the Company's
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Certificate of Incorporation authorize the Company's Board of Directors to issue
up to 1,000,000 shares of "blank check" preferred stock (the "Preferred Stock")
without stockholder approval, in one or more series and to fix the dividend
rights, terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges, and
restrictions applicable to each new series of Preferred Stock. The issuance of
shares of Preferred Stock in the future could, among other results, adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, could make it difficult for a third party to gain control of the
Company, prevent or substantially delay a change in control, discourage bids for
the Common Stock at a premium, or otherwise adversely affect the market price of
the Common Stock. See "Description of Securities."
No Assurance of Public Market; Arbitrary Determination of Offering
Prices; Possible Volatility of Market Price of Common Stock and Warrants;
Underwriter's Potential Influence on the Market. Prior to this offering, there
has been no public trading market for the Common Stock or Warrants. There can be
no assurance that a regular trading market for the Common Stock or Warrants will
develop after this offering or that, if developed, it will be sustained.
Moreover, the initial public offering prices of the Common Stock and the
Warrants and the exercise price of the Warrants have been determined by
negotiations between the Company and the Underwriter and, as such, are arbitrary
in that they do not necessarily bear any relationship to the assets, book value
or potential earnings of the Company or any other recognized criteria of value
and may not be indicative of the prices that may prevail in the public market.
The market prices of the Company's securities following this offering may be
highly volatile as has been the case with the securities of other emerging
companies. Factors such as the Company's operating results, openings of new
locations, announcements by the Company or its competitors and various factors
affecting the restaurant industry generally may have a significant impact on the
market price of the Company's securities. In addition, in recent years, the
stock market has experienced a high level of price and volume volatility and
market prices for the stock of many companies have experienced wide price
fluctuations which have not necessarily been related to the operating
performance of such companies. Although it has no obligation to do so, the
Underwriter intends to make a market in the Common Stock and Warrants and may
otherwise effect transactions in the Common Stock and Warrants. If the
Underwriter makes a market in the Common Stock or Warrants, such activities may
exert a dominating influence on the market and such activity may be discontinued
at any time. The prices and liquidity of the Common Stock and Warrants may be
significantly affected to the extent, if any, that the Underwriter participates
in such market. See "Underwriting."
Possible Delisting of Securities from Nasdaq System; Risks Relating to
Low-Priced Stocks. It is currently anticipated that the Company's Common Stock
and Warrants will be eligible for listing on Nasdaq upon the completion of this
offering. In order to continue to be listed on Nasdaq, however, the Company must
maintain $2,000,000 in net tangible assets (total assets, other than goodwill,
less total liabilities), and a $1,000,000 market value of the public float. In
addition, continued inclusion requires two market-makers, a minimum bid price of
$1.00 per share and adherence to certain corporate governance provisions. The
failure to meet these maintenance criteria in the future may result in the
delisting of the Company's securities from Nasdaq, and trading, if any, in the
Company's securities would thereafter be conducted in the non-Nasdaq
over-the-counter market. As a result of such delisting, an investor could find
it more difficult to dispose of, or to obtain accurate quotations as to the
market value of, the Company's securities.
In addition, if the Common Stock and Warrants were to become delisted
from trading on Nasdaq and the trading price of the Common Stock were to fall
below $5.00 per share, trading in the Common Stock would also be subject to the
requirements of certain rules promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market price
of less than $5.00 per share, subject to certain exceptions). Such rules require
the delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith and impose
various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors (generally
defined as an investor with a net worth in excess of $1,000,000 or annual income
exceeding $200,000 individually or $300,000 together with a spouse). For these
types of transactions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's
-15-
<PAGE>
written consent to the transaction prior to the sale. The broker-dealer also
must disclose the commissions payable to the broker-dealer, current bid and
offer quotations for the penny stock and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Such information must be provided to the
customer orally or in writing before or with the written confirmation of trade
sent to the customer. Monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. The additional burdens imposed upon
broker-dealers by such requirements could, in the event the Common Stock were
deemed to be a penny stock, discourage broker-dealers from effecting
transactions in the Common Stock which could severely limit the market liquidity
of the Common Stock and the ability of purchasers in this offering to sell the
Common Stock in the secondary market.
Potential Adverse Effect of Warrant Redemption. The Warrants are
subject to redemption by the Company at any time upon notice of not less than 30
days, at a price of $.10 per Warrant, provided that the closing bid quotation of
the Common Stock on all 20 trading days ending on the third trading day prior to
the day on which the Company gives notice (the "Call Date") has been at least
150% (currently $9.00, subject to adjustment) of the then effective exercise
price of the Warrants and the Company obtains the written consent of the
Underwriter to such redemption prior to the Call Date. Redemption of the
Warrants could force the holders to exercise the Warrants and pay the exercise
price at a time when it may be disadvantageous for the holders to do so, to sell
the Warrants at the then current market price when they might otherwise wish to
hold the Warrants, or to accept the redemption price, which is likely to be
substantially less than the market value of the Warrants at the time of
redemption. See "Description of Securities -- Redeemable Warrants. "
Possible Inability to Exercise Warrants. The Company intends to qualify
the sale of the securities offered hereby in a limited number of states.
Although certain exemptions in the securities laws of certain states might
permit the Warrants to be transferred to purchasers in states other than those
in which the Warrants are initially qualified, the Company will be prevented
from issuing Common Stock in such states upon the exercise of the Warrants
unless an exemption from qualification is available or unless the issuance of
Common Stock upon exercise of the Warrants is qualified. The Company may decide
not to seek or may not be able to obtain qualification of the issuance of such
Common Stock in all of the states in which the ultimate purchasers of the
Warrants reside. In such a case, the Warrants held by purchasers will expire and
have no value if such Warrants cannot be sold. Accordingly, the market for the
Warrants may be limited because of these restrictions. Further, a current
prospectus covering the Common Stock issuable upon exercise of the Warrants must
be in effect before the Company may accept Warrant exercises. There can be no
assurance the Company will be able to have a current prospectus in effect when
this Prospectus is no longer current, notwithstanding the Company's commitment
to use its best efforts to do so. See "Description of Securities -- Redeemable
Warrants."
Possible Restrictions on Market-Making Activities in the Company's
Securities. The Company believes that the Underwriter intends to make a market
in the Company's securities and may be responsible for a substantial portion of
the market making activities in the Company's securities. Regulation M of the
federal securities laws may prohibit the Underwriter from engaging in any
market-making activities with regard to the Company's securities for the period
from five business days (or such other applicable period as Regulation M may
provide) prior to any solicitation by the Underwriter of the exercise of
Warrants until the termination (by waiver or otherwise) of any right that the
Underwriter may have to receive a fee for the exercise of Warrants following
such solicitation; and for any period during which the Underwriter, or any
affiliated parties, participate in a distribution of any securities of the
Company for the account of the Underwriter or any such affiliate. As a result,
the Underwriter may be unable to provide a market for the Company's securities
during certain periods, including while the Warrants are exercisable. Any
temporary cessation of such market-making activities could have an adverse
effect on the liquidity and market price of the Company's securities. See
"Underwriting."
-16-
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,000,000 Shares
and 500,000 Warrants offered hereby are estimated to be $3,950,000 ($4,609,025
if the Underwriter's over-allotment option is exercised in full). The Company
expects to use the net proceeds over the next 12 months approximately as
follows:
<TABLE>
<CAPTION>
Approximate
Approximate Percentage of
Application of Proceeds Dollar Amount Dollar Amount
- ----------------------- ------------- -------------
<S> <C> <C> <C>
Construction of new restaurants(1).................................. $3,500,000 88.6%
Working capital and general corporate purposes(2)................... 450,000 11.4
---------- -----
Total...................................................... $3,950,000 100.0%
========== ======
</TABLE>
- --------------------
(1) Represents net proceeds allocated to construct three Lundy's restaurants.
The Company estimates that the cost to construct a Lundy's restaurant will
be approximately $1,500,000 per location (net of anticipated landlord
contributions) and that the cost, if any, to open such restaurants in
excess of the net proceeds of this offering allocated for such purpose
will be financed through cash flow from operations, equipment and vendor
financing and landlord development concessions and rent allowances. In
connection with its expansion strategy, to the extent appropriate
opportunities arise, the Company may use a portion of such proceeds to
open high-volume landmark-type restaurants. In the event that cash flow
from operations is insufficient or that the Company is unable to obtain
adequate equipment, vendor or landlord financing, or other unexpected
events occur, such as delays in identifying suitable locations,
negotiating leases, obtaining permits or design and construction delays,
the Company will not be able to open all of such locations in a timely
manner, or at all. See "Business -- Expansion Strategy" and "-- Site
Selection."
(2) Includes costs of general corporate overhead, capital expenditures for
existing restaurants and maintaining inventory.
If the Underwriter exercises its over-allotment option in full, the
Company will realize additional net proceeds of $659,025, which will be added to
the Company's working capital.
The allocation of the net proceeds from this offering set forth above
represents the Company's best estimate based upon its currently proposed plans
and assumptions relating to its operations and certain assumptions regarding
general economic conditions. If any of these factors change, the Company may
find it necessary or advisable to reallocate some of the proceeds within the
above-described categories or to use portions thereof for other purposes.
Based on the Company's current proposed plans and assumptions relating
to the implementation of its expansion strategy (including the timetable of
opening American Park and new Lundy's locations and the costs associated
therewith), the Company anticipates that the net proceeds of this offering,
together with anticipated cash flow from operations and equipment, vendor and
landlord financing, will be sufficient to satisfy its contemplated cash
requirements for at least 12 months following the consummation of this offering.
In the event that the Company's plans change or its assumptions prove to be
inaccurate (due to unanticipated expenses, construction delays or other
difficulties) or the proceeds of this offering otherwise prove to be
insufficient to fund operations and implement the Company's proposed expansion
strategy, the Company could be required to seek additional financing sooner than
anticipated. Because the Company's strategy is to open a limited number of
high-volume restaurants, the costs associated with opening any such restaurant
may vary substantially. Other than the ability to enter into bartering
transactions with member dining clubs, the Company has no current arrangements
with respect to, or potential sources of, additional financing, and it is not
anticipated that any officers, directors or stockholders will provide any
additional loans to the Company. Consequently, there can be no assurance that
any additional financing will be available to the Company when needed, on
commercially reasonable terms, or at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
Proceeds not immediately required for the purposes described above will
be invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest bearing
investments.
-17-
<PAGE>
DILUTION
The difference between the initial public offering price per Share and
the adjusted net tangible book value per share of Common Stock after this
offering constitutes the dilution to investors in this offering. Net tangible
book value per share of Common Stock on any given date is determined by dividing
the net tangible book value of the Company (total tangible assets less total
liabilities) on that date, by the number of shares of Common Stock outstanding
on that date.
As of June 29, 1997, the net tangible book value of the Company was
$652,855 or $.26 per share of Common Stock. The Pro Forma Adjustments (see
footnote 2 of "Prospectus Summary -Summary Financial Information") had no effect
on the Company's net tangible book value. After giving effect to the sale of the
1,000,000 Shares and 500,000 Warrants being offered hereby (less underwriting
discounts and commissions and estimated expenses of this offering), the adjusted
net tangible book value of the Company as of June 29, 1997 would have been
$4,602,855 or $1.32 per share, representing an immediate increase in net
tangible book value of $1.06 per share of Common Stock to existing stockholders
and an immediate dilution of $3.68 per share (or 73.6%) to new investors. The
following table illustrates this dilution to new investors on a per share basis:
Public offering price........................................... $5.00
Pro forma net tangible book value before this offering....... .26
Increase attributable to this offering....................... 1.06
----
Adjusted net tangible book value after this offering............ 1.32
-----
Dilution to investors in this offering.......................... $ 3.68
=====
The following table sets forth, with respect to existing stockholders
and new investors in this offering, a comparison of the number of shares of
Common Stock issued by the Company, the percentage of ownership of such shares,
the total cash consideration paid, the percentage of total cash consideration
paid and the average price per share.
<TABLE>
<CAPTION>
Total Cash
Shares Purchased Consideration Paid
--------------------------------------- ------------------------------------
Average
Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders............ 2,500,000 71.4% $2,420,000 32.6% $ .97
New Investors.................... 1,000,000 28.6 5,000,000 67.4 5.00
--------- ---- --------- ----
Total.................. 3,500,000 100.0% $7,420,000 100.0%
========= ====== ========== ======
</TABLE>
The above table assumes no exercise of the Underwriter's over-allotment
option. If such option is exercised in full, the new investors will have paid
$5,750,000 for 1,150,000 shares of Common Stock, representing approximately
70.4% of the total consideration for 31.5% of the total number of shares of
Common Stock outstanding.
In addition, the table assumes no exercise of other outstanding stock
options or warrants. As of the date of this Prospectus, there are also
outstanding Selling Securityholders' Warrants to purchase an aggregate of
310,000 shares of Common Stock at an exercise price of $6.00, warrants to
purchase 3,000 shares of Common Stock at an exercise price of $.01 per share,
warrants to purchase 200,000 shares of Common Stock at an exercise price of
$5.00 per share and outstanding stock options granted under the Option Plan to
purchase an aggregate of 197,500 shares of Common Stock at an exercise price of
$5.00 per share. To the extent that these options and warrants are exercised,
there will be further dilution to new investors. See "Management -- 1997 Stock
Option Plan," "Description of Securities" and "Underwriting."
-18-
<PAGE>
DIVIDEND POLICY
The Company has never paid any dividends on its Common Stock, and the
Board does not intend to declare or pay any dividends on its Common Stock in the
foreseeable future. The Board of Directors currently intends to retain all
available earnings (if any) generated by the Company's operations for the
development and growth of its business. The declaration in the future of any
cash or stock dividends on the Common Stock will be at the discretion of the
Board and will depend upon a variety of factors, including the earnings, capital
requirements and financial position of the Company and general economic
conditions at the time in question. Moreover, the payment of cash dividends on
the Common Stock in the future could be limited or prohibited by the terms of
financing agreements that may be entered into by the Company (e.g., a bank line
of credit or an agreement relating to the issuance of other debt securities of
the Company) or by the terms of any Preferred Stock that may be issued and then
outstanding. See "Description of Securities -- Capital Stock."
-19-
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and capitalization
of the Company as of June 29, 1997, (i) on an actual basis, (ii) on a pro forma
basis, giving effect to the Pro Forma Adjustments (see footnote 2 of "Prospectus
Summary - Summary Financial Information") and (iii) as adjusted to give effect
to the sale of the 1,000,000 Shares and 500,000 Warrants offered hereby and the
anticipated application of the estimated net proceeds therefrom:
<TABLE>
<CAPTION>
June 29, 1997
-----------------------------------------------------------------------------
Actual Pro Forma As Adjusted
------ --------- -----------
<S> <C> <C> <C>
Short-term debt (including current portion of
long-term debt and capitalized lease
obligations).................................. $ 838,659 $118,534 $ 118,534
=========== ========= =========
Long term debt and capitalized
lease obligations............................. $ 1,336,701 $3,056,826 $ 3,056,826
----------- --------- ---------
Stockholders' equity:
Common Stock, $.0001 par value,
19,000,000 authorized, 2,500,000
shares issued and outstanding
(actual), 2,500,000 shares issued
and outstanding (pro forma),
3,500,000 shares issued and
outstanding (as adjusted)(1)......... 250 250 350
Preferred Stock, $.0001 par value,
issuable in series: 1,000,000
shares authorized: no shares issued
and outstanding...................... --- --- ---
Additional paid-in-capital............. 3,132,799 3,132,799 7,082,699
Accumulated deficit.................... (2,480,194) (2,480,194) (2,480,194)
----------- ----------- -----------
Total stockholders' equity......... 652,855 652,855 4,602,855
----------- ---------- -----------
Total capitalization......... $ 1,989,556 $3,709,681 $7,659,681
============ ========== ==========
</TABLE>
- ----------
(1) Does not include (i) 500,000 shares of Common Stock reserved for
issuance upon exercise of the Warrants; (ii) an aggregate of 150,000
shares of Common Stock reserved for issuance upon exercise of the
Underwriter's Warrants and the warrants included therein; (iii) an
aggregate of 310,000 shares of Common Stock reserved for issuance upon
exercise of the Selling Securityholders' Warrants; (iv) 203,000 shares
of Common Stock reserved for issuance upon exercise of other
outstanding warrants; (v) 197,500 shares of Common stock reserved for
issuance upon exercise of outstanding options under the Option Plan;
and (vi) 327,500 shares of Common Stock reserved for issuance upon
exercise of options available for future grant
-20-
<PAGE>
under the Option Plan. See "Management -- 1997 Stock Option Plan,"
"Description of Securities" and "Underwriting."
SELECTED FINANCIAL DATA
The following table sets forth sets forth certain selected historical
and pro forma financial data of the Company as of and for the dates indicated.
The selected financial data as of September 29, 1996 and for the year ended
September 29, 1996 have been derived from the financial statements set forth
elsewhere in this Prospectus that have been audited by Maltese, Potter &
LaMarca, LLP, independent auditors. The selected financial data for the nine
months ended June 30, 1996 and June 29, 1997 are derived from the Company's
unaudited financial statements for such period set forth elsewhere in this
Prospectus, which reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a proper statement of the results for such period.
The financial data set forth below is qualified by reference to and should be
read in conjunction with the Company's financial statements, related notes and
other financial information contained in this Prospectus, as well as
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Statement of Operations:
<TABLE>
<CAPTION>
Year Ended Nine Months Nine Months
September 29, Ended June 30, Ended June 29,
1996 1996 1997
------------- -------------- --------------
<S> <C> <C> <C>
Sales............................................... $11,847,088 $7,261,892 $8,902,628
Cost of sales....................................... 7,260,440 4,502,373 5,064,207
Gross profit........................................ 4,586,648 2,759,519 3,838,421
Operating and administrative expenses............... 6,122,870 3,754,199 3,246,707
Income (loss) from operations....................... (1,536,222) (994,680) 591,714
Other expenses...................................... 1,199,592 1,105,880 482,614
Net income (loss) from continuing operations........ (2,637,226) (2,001,972) 109,100
Net income (loss)................................... (2,607,084) (1,971,830) 109,100
Net income (loss) per share from continuing
operations (1).................................... (1.22) .05
Net income (loss)................................... (1.21) .05
Weighted average number of shares
outstanding(1).................................... 2,160,676 2,418,294
</TABLE>
Balance Sheet Data:
<TABLE>
<CAPTION>
September 29, 1996 June 29, 1997
------------------ -------------
<S> <C> <C>
Working capital (deficit).............................. $(2,026,787) $(2,131,423)
Total assets........................................... 4,728,868 6,323,596
Total liabilities...................................... 4,620,113 5,670,741
Stockholders' equity................................... 108,755 652,855
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company operates Lundy's, a high-volume, casual, upscale seafood
restaurant located in Brooklyn, New York, and The Boathouse, a multi-use
facility featuring an upscale restaurant and catering pavilion, located on the
lake in New York City's Central Park. Lundy's and The Boathouse are high-profile
locations which host many special events and receive extensive press coverage.
The Company is also constructing American Park, which has been designed as a
high-volume premium-quality restaurant to be located at the water's edge in
Battery Park, a New York City landmark visited by approximately 4 million
visitors during 1996.
The Company's independent auditors have included an explanatory
paragraph in their report on the Company's financial statements, stating that
they have been prepared assuming that the Company will continue as a going
concern and that significant prior losses from operations raise substantial
doubt about the Company's ability to continue as a going concern.
Results of Operations
Nine Months Ended June 29, 1997 Compared to Nine Months Ended June 30,
1996
Sales for the nine months ended June 29, 1997 were $8,902,628, an
increase of $1,640,736, or 22.6%, as compared to $7,261,892 for the nine months
ended June 30, 1996. Sales for Lundy's and The Boathouse for the nine months
ended June 29, 1997 were $4,709,258 and $4,021,905, respectively, compared to
$3,758,239 and $3,503,653, respectively, during the nine months ended June 30,
1996. The increase in sales for Lundy's was primarily due to Lundy's being
opened for approximately seven months during the 1996 period, since Lundy's was
opened in December 1995. The increase in sales for The Boathouse were primarily
due to catering an increased number of special events. The Company's food,
liquor and other sales for each of the nine months ended June 30, 1996 and June
29, 1997 accounted for 76.8%, 15.3% and 7.9%, respectively, of sales. During the
nine months ended June 29, 1997, the Company also received $171,465 of income
from MAT. See "Certain Transactions."
Cost of sales for the nine months ended June 29, 1997 were $5,064,207,
an increase of $561,834 or 12.5%, as compared to $4,502,373 for the nine months
ended June 30, 1996. The increase in cost of sales was primarily attributable to
increased sales.
Gross profit for the nine months ended June 29, 1997 was $3,838,421, or
43.1% of sales, as compared to $2,759,519, or 38.0% of sales for the nine months
ended June 30, 1996. The increase in gross profit as a percentage of sales was
primarily attributable to reduced food and labor costs.
Operating and administrative expenses for the nine months ended June
29, 1997 were $3,246,707, a decrease of $507,492, or 13.5%, as compared to
$3,754,199 for the nine months ended June 30, 1996. The decrease in operating
and administrative expenses was primarily attributable to a restructuring of
management responsibilities to focus on controlling costs and economies of scale
and obtaining more favorable terms for supplies and services. During the nine
months ended June 29, 1997, operating and administrative expenses were reduced
by $71,670 of management income fee received under the Company's operating
agreement with MAT. See "Certain Transactions."
Other expenses for the nine months ended June 29, 1997 were $482,614, a
decrease of $623,266, or 56.4%, as compared to $1,105,880 for the nine months
ended June 30, 1996. Other expenses for the nine months ended June 29, 1997
consisted of $277,843 of interest expense and $204,771 of barter expense. Other
expenses for the
-22-
<PAGE>
nine months ended June 30, 1996 consisted of a write-off of an advance to an
affiliate of $542,463, $270,282 of interest expense and $293,135 of barter
expense. The write-off of an advance represents cash advances and equipment
transferred to Forest Avenue Corporation ("Forest") and deferred management fees
due from Forest, an affiliate of Mr. Cretella and Jeanne Cretella, Vice
President, a director and a principal stockholder of the Company, upon the sale
of the assets of Forest to an unrelated third party, as the Company determined
that such advances were uncollectible. See "Certain Transactions."
During the nine months ended June 30, 1996, the Company received an
income tax benefit of only 4% due to a deferred tax valuation allowance.
As a result of the foregoing, income from continuing operations for the
nine months ended June 29, 1997 was $109,100, as compared to a loss from
continuing operations of $2,001,972 for the nine months ended June 30, 1996.
Income from discontinued operations for the nine months ended June 30,
1996 were $30,142 (net of income taxes of $20,093). Discontinued operations were
TAM's concession business which were spun-off into MAT. See "Certain
Transactions."
Net income for the nine months ended June 29, 1997 was $109,100, as
compared to a net loss of $1,971,830 for the nine months ended June 30, 1996.
Year Ended September 29, 1996
Sales for the year ended September 29, 1996 were $11,847,088. Sales for
Lundy's and The Boathouse were $5,694,382 and $6,152,706, respectively. Food,
liquor and other sales accounted for 76.8%, 15.3% and 6.9%, respectively of the
Company's sales.
Cost of sales for the year ended September 29, 1996 were $7,260,440,
consisting of direct labor and food costs. As a result, gross profit for the
year ended September 29, 1996 was $4,586,648, or 38.7% of sales.
Operating and administrative expenses were $6,122,870 for the year
ended September 29, 1996.
Other expenses for the year ended September 29, 1996 were $1,199,592,
consisting of a write-off of an advance to an affiliate of $542,463, $363,994 of
interest expense and $293,135 of barter expense. See "Certain Transactions."
Net loss for the year ended September 29, 1996 was $2,607,084,
consisting of a loss from continuing operations of $2,637,226 which was
partially offset by income from discontinued operations of $30,142.
Liquidity and Capital Resources
The Company's capital requirements have been and will continue to be
significant and its cash requirements have been exceeding its cash flow from
operations (at June 29, 1997, the Company had a working capital deficit of
$2,131,423), due to, among other things, costs associated with development,
opening and start-up costs of Lundy's and American Park and building a corporate
infrastructure sufficient to support the Company's proposed expanded operations.
As a result, the Company has been substantially dependent upon sales of its
equity securities, loans from financial institutions and the Company's officers,
directors and stockholders and bartering transactions with member dining clubs
to finance a portion of its working capital requirements.
-23-
<PAGE>
During the nine months ended June 29, 1997, net cash increased by
$39,828. Net cash provided by operating activities was $394,727, net cash used
in investing activities was $984,450, relating to the acquisition of property
and equipment primarily for American Park, and net cash provided from financing
activities was $629,551, consisting primarily of long-term borrowings of
$435,000 and proceeds of $200,000 from sales of equity securities.
During the year ended September 29, 1996, net cash decreased by
$81,138. Net cash used in operating activities was $367,823, net cash used in
investing activities was $2,458,971, consisting primarily of the acquisition of
property and equipment for Lundy's in connection with its opening in December
1995, and net cash provided by financing activities was $2,745,656, consisting
primarily of proceeds of $1,638,936 from the sale of equity securities and
$1,215,470 of long-term borrowings.
The Company enters into bartering agreements with member dining clubs
whereby member dining clubs advance cash to the Company in exchange for the
Company's agreement to provide to the clubs' members food and beverages at a
designated Company restaurant. The restaurant must permit the clubs' members to
purchase food and beverages at rates between 160% and 200% of the amount
advanced. Upon entering into the agreement, the Company records its obligation
to provide food and beverages at the amount of the advance it receives. Upon a
guest purchasing food or beverages, the Company records revenue for the amount
of food and beverage purchased by the guest, and the barter discount as a barter
expense.
During 1995 and 1996, the Company borrowed an aggregate of $840,000
from Fleet Bank, N.A. Such loans were collateralized by the Company's principal
executive offices, which are owned by Mr. Cretella, the warehouse leased by the
Company and owned by Leisure Time Services, Inc. ("Leisure Time"), a company
owned by Jeanne Cretella, and Mr. and Ms. Cretella's personal residence, and
guaranteed by Mr. and Mrs. Cretella and Leisure Time. In June 1997, Mr. Cretella
agreed to pay to Fleet $640,000 as payment for the amount owed by the Company
($720,125 as of June 30, 1997). In August 1997, Mr. Cretella paid to Fleet
$140,000 as part of the settlement. Mr. Cretella paid the balance to Fleet in
October 1997. As consideration for entering into the settlement, the Company
issued to Mr. Cretella a promissory note in the principal amount of $720,125
which bears interest at the rate of 10% per annum, payable in monthly
installments of $6,102, with the outstanding principal payable in October 2001
upon maturity of the note.
During the year ended September 30, 1996, the Company issued and sold
an aggregate of 510,084 shares of Common Stock and warrants to purchase 181,600
shares of Common Stock to 31 investors for which it received gross proceeds of
approximately $1,980,000. Ernest and Madelina Cretella, the parents of Frank
Cretella, purchased 13,785 shares of Common Stock and warrants to purchase 1,379
shares of Common Stock for an aggregate purchase price of $50,000. The holders
of such warrants have agreed to convert such warrants into Selling
Securityholders' Warrants upon the consummation of this offering.
During the nine months ended June 29, 1997, the Company issued and sold
55,141 shares of Common Stock and warrants to purchase 27,571 shares of Common
Stock to one investor at a purchase price of $200,000 and issued 59,602 shares
of Common Stock and warrants to purchase 21,530 shares of Common Stock upon
conversion of $235,000 of indebtedness owed to three individuals. The holders of
such warrants have agreed to convert such warrants into Selling Securityholders'
Warrants upon the consummation of this offering.
In October 1997, Kayne Anderson Non-Traditional Investments, L.P. and
ARBCO Associates, L.P. affiliates of Kayne Anderson Investment Management, Inc.
(collectively, "Kayne Anderson"), loaned the Company an aggregate of $1,000,000.
The loans bear interest at the rate of 10% per annum, payable quarterly
commencing December 31, 1997, and are due May 31, 1999. Upon an event of default
under the loans, the interest rate increases to 15% per annum and the Company
would be required to pay to Kayne Anderson 25% of the operating profits from
American Park on a monthly basis until the loan is fully repaid. The loan is
guaranteed by Frank Cretella, President, Chief Executive Officer, a director and
a principal stockholder of the Company, and the guarantee is secured by a
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pledge of 200,000 shares of Common Stock owned by Frank Cretella and Jeanne
Cretella, Vice President, a director and principal stockholder of the Company.
As partial consideration for the loans, the Company issued to Kayne Anderson
warrants (the "KA Warrants") to purchase 200,000 shares of Common Stock. The KA
Warrants are exercisable at a price of $5.00 per share (subject to adjustment
under certain circumstances) and are exercisable at any time commencing 90 days
following the date of this Prospectus. In connection with the loan, the Company
agreed to use its best efforts to cause a representative designated by Kayne
Anderson to be elected to the Company's Board of Directors. Kenneth Harris is
Kayne Anderson's initial designee. See "Management."
Based on the Company's current proposed plans and assumptions relating
to the implementation of its expansion strategy (including the timetable of
opening American Park and new Lundy's locations and the costs associated
therewith), the Company anticipates that the net proceeds of this offering,
together with anticipated cash flow from operations and equipment, vendor and
landlord financing, will be sufficient to satisfy its contemplated cash
requirements for at least 12 months following the consummation of this offering.
In the event that the Company's plans change or its assumptions prove to be
inaccurate (due to unanticipated expenses, construction delays or other
difficulties) or the proceeds of this offering otherwise prove to be
insufficient to fund operations and implement the Company's proposed expansion
strategy, the Company could be required to seek additional financing sooner than
anticipated. Other than the ability to enter into bartering transactions with
member dining clubs, the Company has no current arrangements with respect to, or
potential sources of, additional financing, and it is not anticipated that any
officers, directors or stockholders will provide any additional loans to the
Company. Consequently, there can be no assurance that any additional financing
will be available to the Company when needed, on commercially reasonable terms,
or at all.
Seasonality and Fluctuations in Quarterly Operating Results.
The Company's business is seasonal. The restaurant and bicycle and
rowboat rentals at The Boathouse currently are open only March through November,
with dinner served in the restaurant May 1 through October 1. All of the seating
of The Boathouse restaurant and a portion of the seating at Lundy's is outdoors.
In addition, since Lundy's is a waterside location, it attracts more guests
during the warmer weather months. As a result, the Company's restaurant sales
generally increase from May through September, and decrease from November
through March. See "Business."
The Company also expects that future quarterly operating results will
fluctuate as a result of the timing of and expenses related to the openings of
new restaurants (as the Company will incur significant expenses during the
months preceding the opening of a restaurant), as well as due to various
factors, including the seasonal nature of its business, weather conditions in
New York City, the health of New York City's economy in general and its tourism
industry in particular. Accordingly, the Company's sales and earnings may
fluctuate significantly from quarter to quarter and operating results for any
quarter will not necessarily be indicative of the results that may be achieved
for a full year.
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BUSINESS
The Company operates Lundy's, a high-volume, casual, upscale seafood
restaurant located in Brooklyn, New York, and The Boathouse, a multi-use
facility featuring an upscale restaurant and catering pavilion, located on the
lake in New York City's Central Park. Lundy's and The Boathouse are high-profile
locations which host many special events and receive extensive press coverage.
The Company is also constructing American Park, which has been designed as a
high-volume premium-quality restaurant to be located at the water's edge in
Battery Park, a New York City landmark visited by approximately 4 million
visitors during 1996.
Lundy's
Lundy's is a high-volume, casual, upscale seafood restaurant located in
Brooklyn, New York. The Company opened Lundy's in December 1995, approximately
16 years after the original Lundy's restaurant closed. The original Lundy's, a
storied Brooklyn landmark, originally opened in 1934 and is believed to have
been the largest restaurant in the United States during the time it was open,
with seating capacity for approximately 2,400 guests. The building which Lundy's
occupies was declared a historic landmark building by the New York City
Landmarks Preservation Commission in 1992.
The Lundy' Concept
The Lundy's concept is designed to appeal to a broad range of guests by
serving generous portions of premium-quality seafood and other menu items and by
combining a grand dining experience with friendly and efficient service in a
high-energy environment. Lundy's commitment to offering its guests a casual,
exciting dining experience is highlighted by its "exhibition" kitchen where all
meals are cooked to order in view of its guests, a lobster pool from which
guests can select their lobsters, an experienced waitstaff uniformed in crisp
white linen jackets which are knowledgeable about the preparation of seafood and
the history of Lundy's, a high waitstaff-to-customer ratio to assure attentive
service and tables covered with multiple layers of colored linens covered with
pristine white butcher paper.
Menu
Lundy's menu features a wide variety of fresh seafood items, including
lobster, crab, shrimp, oysters, clams and daily fish specials, cooked to order
in a variety of ways: steamed, sauteed, broiled, grilled, blackened and fried.
In addition, Lundy's offers a selection of steaks, chicken dishes, pasta dishes,
pizzas, appetizers, chowders, salads and desserts. Lundy's also offers full bar
service, from which a variety of brand name alcohols, mixed drinks, wines and
beers, including selected micro-brewed beers, can be ordered, at the bar or with
table service. Lundy's feature menu selection is its "Shore Dinner," which
consists of a chowder or salad; steamed or baked clams, lobster and chicken;
fruit pie; and a beverage, for $21.95. The Company believes that Lundy's is
widely recognized for its "signature" biscuits, chowders and apple and blueberry
pies.
The menu mix has been carefully developed to balance the higher priced
items, such as lobster and fresh fish, with lower cost items, such as pizza and
pasta dishes. Dinner entrees range in price from $7.95 to $28.95 and the average
dinner check is approximately $32.00 per person.
Design, Decor and Atmosphere
Lundy's interior has been designed with a contemporary decor, rich
polished woods and granite surfaces, accented with copper, pottery,
brushed-stainless steel and earth tones, to impart "Old World" elegance and
comfort. Lundy's offers guests several seating selections in its multi-level
interior, which consists of an expansive, high-ceiling main dining area; a large
upstairs dining room which is also used for special events and to cater private
functions;
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a mezzanine level cigar room which overlooks the main dining area; and a 30-foot
long oyster and beverage bar; as well as outdoor seating.
Facility Operations
Lundy's occupies approximately 17,000 square feet and has a seating
capacity of approximately 730 seats. Lundy's is open for dinner from 5:00 P.M.
to 11:00 P.M. on weekdays (10:00 P.M. on Mondays) and for dining from 1:00 P.M.
to 12:00 midnight on Sunday. Lundy's oyster and beverage bar and outside bar are
also open during such hours and also from 12:00 noon to 5:00 P.M. on weekdays.
In addition to the restaurant operations, Lundy's also houses a seafood
laboratory where seafood is tested to assure quality and freshness, and a gift
shop which carries a variety of "Lundy's" and "Brooklyn" themed merchandise,
such as T-shirts and other clothing, hats, plates and coffee and beer mugs, as
well as Lundy's chowders and sauces and seafood related products, such as
lobster bibs, crackers and forks.
During the year ended September 30, 1996 and nine months ended June 30,
1997, Lundy's sales were $5,694,382 and $4,709,258, respectively.
The Boathouse
The Boathouse is a multi-use, lakeside facility which features an
upscale restaurant and catering pavilion, located on the lake in New York City's
Central Park.
Restaurant
The Boathouse restaurant provides customers a pleasurable dining
experience in a comfortable, relaxed and romantic atmosphere and primarily al
fresco seating. The restaurant serves eclectic American cuisine that changes
according to season and consumer trends, emphasizing herbs grown fresh on site.
The menu is limited in scope to permit the greatest attention to quality while
offering sufficient breadth to appeal to a variety of taste preferences. The
restaurant also offers full bar service. Dinner entrees range in price from
$19.00 to $28.00 and the average dinner check is approximately $44.00 per
person.
The dining area occupies approximately 6,000 square feet of space and
has a seating capacity of approximately 225 seats, most of which are covered,
expanding approximately 150 feet alongside the Central Park lake. The restaurant
is open from early March until the Sunday in early November on which the New
York City Marathon is held.
Catering Pavilion
The catering pavilion is glass-enclosed, tented and heated. The
catering pavilion occupies approximately 4,600 square feet of space, is
surrounded by an english garden on two sides and resides a few feet from the
Central Park lake. The catering pavilion hosts private functions for up to 500
persons year round.
Other Attractions
The Boathouse incorporates the following additional attractions:
o Cocktail Area. The cocktail area offers full bar service at an
approximately 21-foot long bar with waitress service and
features a jazz band performing five nights a week. The
cocktail area has a capacity of 150 persons, including 100
seats, and is open from March through early November.
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o The Boathouse Express. The Boathouse Express is a
cafeteria-style convenience counter which serves specialty
sandwiches, salads, baked goods and juices, as well as
standard fast-food, such as hamburgers, hotdogs, french fries
and sodas. The Boathouse Express has indoor and outdoor
seating available for approximately 75 persons year round.
o Carts and Kiosks. Approximately six to eight free standing
carts and kiosks are strategically located on the facility's
grounds offering a variety of food and beverage items, such as
fresh fruit drinks, New York-style pretzels, pita sandwiches
and espresso and cappuccino, from early March to early
November.
o Rowboat and Bicycle Rentals and Venetian Gondola Rides.
Approximately 110 rowboats are available for rental by the
hour on the Central Park lake and approximately 120 bicycles
are available for rental by the hour or day from early March
to early November. Additionally, Venetian gondola rides on the
lake are available from early March to early November.
o Merchandise Counter. The merchandise counter carries a variety
of The Boathouse and other Central Park and New York City
themed merchandised, including T-shirts, sweatshirts, hats and
coffee mugs, as well as sundry items.
o Shuttle Bus. The Boathouse operates a shuttle bus which
transports guests between the facility and the Fifth Avenue
and 72nd Street entrance to Central Park. The shuttle bus runs
when the restaurant is opened for dinner and during special
events at the catering pavilion.
The Company operates The Boathouse pursuant to a 15-year license
agreement with the City of New York Department of Parks and Recreation (the
"Parks Department"). Pursuant to the license agreement, the Company is required
to pay a fee to the Parks Department each license year (June 30 through the
following June 29) equal to the greater of (i) $85,000 (increasing to $90,000
per year on June 30, 1998) or (ii) the sum of 13% of gross revenue from food and
merchandise sales and 16% of gross revenues (increasing to 17% on June 30, 1999)
from rowboat and bicycle rentals. The Company is required to maintain certain
minimum levels of insurance with respect to the facility. The license agreement
expires on June 29, 2000, provided that the Parks Department may terminate the
license upon ten days written notice so long as the termination is not arbitrary
or capricious.
During the year ended September 29, 1996 and nine months ended June 29,
1997, The Boathouse's sales were $6,152,706 and $4,021,905, respectively.
American Park
American Park has been designed as a high-volume premium-quality
restaurant and is currently under construction in Battery Park, a New York City
landmark visited by approximately 4 million visitors in 1996. The Company
anticipates that American Park will open in January 1998.
American Park has been designed with an urban mountain lodge motif,
incorporating natural fabrics, slate, stone, wood and brick with modern-style
furnishings, vibrant colors and designer lighting. Guests will have panoramic
views of the New York City harbor and landmarks such as the Statute of Liberty,
Ellis Island, Governor's Island and the downtown Manhattan skyline. American
Park will offer seating selections in its main dining room, second floor dining
room and bi-level outdoor patios.
American Park is expected to serve contemporary American cuisine
featuring wood-burning menu selections, such as steaks, whole fish, chicken and
veal dishes. The lower-level outdoor patio will extend to the water's edge and
is expected to incorporate a separate kitchen which serves selected items from
the main restaurant menu and an
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expanded bar area. American Park will also feature a cigar lounge which will
offer waitress service, and personal humidors which can be leased on an annual
basis. The Company also intends to sell cigars and related paraphernalia in the
cigar lounge.
The Company intends to operate a free-standing kiosk as part of
American Park which is expected to serve appetizers, sandwiches, cold beverages,
beer and wine.
In December 1994, the Company entered into a license agreement with the
Parks Department to construct and operate a restaurant, American Park, in
Battery Park. The Company is required to pay to the Parks Department a fee each
license year (November 1 through the following October 31) equal to the greater
of (i) $50,000 and (ii) 8% of gross receipts from the restaurant and 10% of
gross receipts from merchandise sales (increasing to 12% on November 1, 1999).
For the license year ended October 31, 1996, the license fee was $50,000. The
Company anticipates that the license fee will increase substantially upon the
opening of American Park. The Company is required to maintain certain level of
insurance. The license agreement expires on October 31, 2015, provided, however,
that the Parks Department may terminate the license upon 30 days written notice.
American Park is approximately 18,300 square feet in size and is
expected to have a seating capacity of approximately 750 seats, as well as
capacity for approximately 75 persons standing in the bar area located on the
lower-level outdoor patio.
Expansion Strategy
The Company's strategy is to initially develop and operate a limited
number of additional Lundy's restaurants. The Company intends to focus its
expansion efforts in the New York City metropolitan area and other urban and
upscale suburban areas, particularly those with a large population of
transplanted New Yorkers, such as Southern Florida, Los Angeles, Chicago and
Washington D.C. With a substantial portion of the proceeds of this offering
(approximately $3,500,000), projected cash flow from operations and anticipated
financing, including equipment and vendor financing and landlord development
concessions and rent allowances, the Company intends to open three additional
Lundy's restaurants during the 12 months following the consummation of this
offering. The Company has limited experience in expanding its operations and
there can be no assurance that it will be able to successfully do so.
The Company's strategy is to capitalize on what it perceives to be a
high consumer recognition of the Lundy's name in markets where there is a
significant percentage of the population which remembers and had visited the old
Lundy's restaurant. The Company anticipates that future Lundy's restaurants will
incorporate the Lundy's concept into the existing building architecture to give
each location the atmosphere of a long-standing restaurant.
The Company's long-term plans include seeking to capitalize upon the
Lundy's name by marketing food and related products by mail, such as chowders
sauces, pies, cookbooks, lobster bibs, crackers and forks and "Lundy's" and
"Brooklyn" themed T-shirts and other clothing items, hats, plates and coffee and
beer mugs. In addition, in connection with its expansion strategy, the Company
may seek to open additional, high-volume landmark type restaurants as
appropriate opportunities arise.
Site Selection
The choice of site selection is critical to the potential success of a
particular restaurant. As a result, the Company devotes a significant amount of
time and resources to identifying and analyzing potential sites. The Company
seeks to identify locations in close proximity to upscale high-traffic, suburban
residential neighborhoods, hotel complexes and/or urban business or
entertainment centers. The Company also seeks to identify large spaces in
tourist centers, such as government buildings, concession stands and offices in
municipal parks which are not
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utilized to their potential. Additionally, to the extent opportunities arise,
the Company seeks to identify waterfront locations, which type of location the
Company believes has a synergy with the Lundy's concept and primarily seafood
menu. The Company, however, has no commitments or understandings with respect to
any proposed location.
The Company generally seeks to lease properties with 12,000 to 20,000
square feet of total space and seating capacity for 400 to 750 persons. The
Company anticipates that three to six months will typically be required to open
a new Lundy's restaurant from the time a location is identified and a lease is
negotiated.
The Company believes that future Lundy's restaurants, will be
destination restaurants, similar to its existing restaurants, and that customers
will travel by automobile up to 15 to 30 minutes to the location.
The Company anticipates that the cost of opening additional Lundy's
restaurants, other than lease expenses, will average approximately $1,500,000
(net of anticipated equipment and vendor financing and landlord contributions),
consisting of construction ($800,000), equipment ($350,000), smallwares
($100,000), furniture ($100,000), point-of-sales account and cash management
system ($75,000), inventory ($60,000), cash and deposits ($15,000). The Company
also anticipates that it will incur pre-opening expenses of approximately
$300,000 for each new Lundy's restaurant it opens, which it intends to finance
from working capital. Annual rental costs will vary significantly depending upon
the geographic market and square footage. The Company will seek to negotiate
landlord development concessions and rent allowances with respect to future
locations. The Company anticipates that leases relating to future locations will
be long-term (20 to 30 years) in duration.
Restaurant Operations
Management and Employees
Each location's operations is managed by a general manager and managers
for certain operations of the location, such as kitchen, dining room (waiters
and busboys), office (administration) and catering. Each location's staff
consists of approximately 160 employees. Because the restaurant and certain
other operations at The Boathouse are not open year round, the Company is
required to hire new personnel annually for The Boathouse. The Company is
currently refining its management bonus plan which will provide for bonuses
based on the financial results of the manager's particular location.
Service and Guest Satisfaction
The Company believes that providing friendly, courteous, efficient
service is critical to the long-term success of each location. The Company will
attempt to recruit managers for future locations with significant experience in
the restaurant industry. The Company is currently refining its training program
in anticipation of opening additional Lundy's restaurants to teach restaurant
managers to promote the Company's team-oriented atmosphere among restaurant
employees, with emphasis on preparing and serving food in accordance with strict
standards and providing friendly, courteous and attentive service. Each
location's staff is trained on site by location managers and other designated
employees. The Company believes that the selection and training of its location
managers and staff result in friendly, courteous, efficient guest service which
contributes to a pleasurable dining experience for the guest.
The Company monitors each location's service and guest satisfaction.
The Company maintains a guest service department which contacts several guests
from each location's previous night's reservation list to inquire about their
dining experiences. The guest service department also contacts each party which
utilizes the Company's catering services to obtain feedback about their
experiences. The Company also maintains a toll-free telephone line for guests to
call with complaints or suggestions about the Company's locations. All calls are
personally responded to by an executive officer of the Company. The Company
utilizes guest feedback to continually improve its service, update its menu
selections and otherwise improve its operations.
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Purchasing
Obtaining a reliable supply of quality seafood and other food and
beverage items at competitive prices is critical to the Company's success. The
Company has formed long-term relationships with several seafood suppliers, fish
markets and operators of fishing boats. Each restaurant purchases its own supply
of food and beverage items through a central purchasing department which
maintains a list of approved suppliers. The Company regularly sends buyers to
local seafood markets to purchase fresh seafood. In addition, the Company
regularly arranges to purchase a fishing boat's day catch of lobsters and select
fish, reducing its price per pound and ensuring superior quality. The Company
maintains a current database of suppliers and continuously updates supplier's
pricing to enable its restaurants to obtain the lowest prices available from
Company-approved suppliers.
The Company believes its diverse menu selection reduces the risk and
minimizes the effect of the shortage of any seafood products. The Company has
been able to anticipate and react to fluctuations in food costs through selected
menu price adjustments, purchasing seafood directly from numerous suppliers,
fish markets and fishing boats and promoting certain alternative menu selections
(in response to availability and price of supply). To date, the Company
generally has not experienced any significant delays in receiving its food and
beverage inventories, restaurant supplies or equipment.
Quality Control
The Company maintains a continuous inspection program for all of its
seafood purchases. Each shipment of seafood and other food items is inspected
for quality and weight by the restaurant steward. All food items must be
purchased from Company-approved suppliers. In addition, Lundy's houses a seafood
laboratory where shipments of seafood are randomly tested to assure quality.
The restaurants' management are responsible for properly training
employees and ensuring that the Company's restaurants are operated in accordance
with strict health and quality standards. Each restaurant employee is educated
as to the correct handling and proper characteristics of each product.
Compliance with the Company's quality standards are monitored by periodic
on-site visits and formal periodic inspections by management and third-party
food sanitation consultants. The Company believes that its inspection procedure
and its employee training practices assist the Company in maintaining high
standards of quality for the food and services it provides.
Restaurant Reporting
The Company maintains financial and accounting controls for each
restaurant through a central point-of-sale, accounting and cash management
systems. Sales data is collected daily, and store managers are provided with
daily sales, cash and inventory information for their respective restaurants.
The point-of-sale, accounting and cash management systems enables both
store-level management and senior management to quickly react to changing sales
trends, better manage food, beverage and labor costs, minimize theft and improve
the quality and efficiency of accounting and audit procedures.
Catering Operations
The Company's restaurants offer high-quality professional, on-premise
and off-premise catering services. Each restaurant provides its own catering
services and specially designs menus to the guests requirements. Lundy's
upstairs dinning room is used to cater private functions and has a capacity of
200 persons. In addition to catering private functions in the banquet area, The
Boathouse caters larger functions of up to 1,000 persons in the combined space
of the catering pavilion and restaurant. The Company anticipates offering
catering services at American Park in its upstairs dining room, as well as at
other restaurants opened in the future.
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In April 1997, the Company entered into a five-year agreement with Bay
Cruises LLC ("Bay Cruises") to act as exclusive caterer for all entertainment
cruises conducted by Bay Cruises from any location in the New York metropolitan
area. Bay Cruises conducts entertainment cruises aboard the Liberty I yacht. The
Company provides several breakfast, lunch and dinner menu selections and is paid
an amount based on the number of guests for catered cruises and based on the
number of meals served for non-catered cruises. The Company may terminate the
agreement upon sixty days notice.
During the year ended September 29, 1996 and nine months ended June 29,
1997, Lundy's catered 59 and 111 private functions, respectively, and The
Boathouse catered 284 and 208 private functions, respectively.
Advertising and Marketing
The Company employs a marketing strategy that seeks continuous
visibility and name recognition through the use of local radio, print and
billboard advertisements, as well as community events, for each restaurant. The
Company contracts with public relations and advertising agencies to more
effectively coordinate its advertising efforts. The Company also publishes and
distributes a quarterly newsletter which apprises readers of upcoming events at
the Company's restaurants and recent celebrity guests, answers guests' food,
wine and restaurant etiquette questions and provides recipes.
Each restaurant engages in community-based promotions designed to
promote the restaurant and foster goodwill within the community. Each restaurant
participates in the Company's "make a dent with 10%" program whereby 10% of the
proceeds from three designated tables from the restaurant are donated to local
charities.
Lundy's and The Boathouse are high-profile locations which host many
special events and receive extensive press coverage. Lundy's and The Boathouse
have been featured in several magazines, including Gourmet, Travel & Leisure and
The New York Times Magazine, and have been the subject of several television
news stories. As a result, these restaurants receive a great deal of publicity
in addition to the publicity obtained from the Company's advertising efforts.
Competition
The restaurant industry is intensely competitive with respect to price,
service, location and food quality and variety. There are many well-established
competitors with substantially greater financial and other resources than the
Company, as well as a significant number of new market entrants. Such
competitors include national, regional and local full-service casual dining
chains, many of which specialize in or offer seafood products, as well as single
location restaurants. Some of the Company's competitors have been in existence
for substantially longer periods than the Company, may be better established in
the markets where the Company's restaurants are or may be located and engage in
extensive advertising and promotional campaigns, both generally and in response
to efforts by competitors to open new locations or introduce new concepts or
menu offerings. The Company can also be expected to face competition from a
broad range of other restaurants and food service establishments which
specialize in a variety of cuisines.
Intellectual Property
The Company's business prospects will depend largely upon the Company's
ability to capitalize on favorable consumer recognition of the Lundy's name.
Although the Company holds a trademark registration for use of the Lundy's name
by the U.S. Patent and Trademark Office, there can be no assurance that the
Company's marks do not or will not violate the proprietary rights of others or
that the Company's marks would be upheld, or that the Company would not be
prevented from using its marks, if challenged, any of which could have an
adverse effect on the Company.
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The Company also relies on trade secrets and proprietary know-how, and
employs various methods, to protect its concepts and recipes. However, such
methods may not afford complete protection and there can be no assurance that
others will not independently develop similar know-how or obtain access to the
Company's know-how, concepts and recipes. The Company does not maintain
confidentiality and non-competition agreements with all of its executives, key
personnel or suppliers. There can be no assurance that the Company will be able
to adequately protect its trade secrets.
Government Regulation
The Company is subject to extensive state and local government
regulation by various governmental agencies, including state and local
licensing, zoning, land use, construction and environmental regulations and
various regulations relating to the sale of food and beverages, sanitation,
disposal of refuse and waste products, public health, safety and fire standards.
The Company's restaurants are subject to periodic inspections by governmental
agencies to assure conformity with such regulations. Difficulties or failure in
obtaining required licensing or other regulatory approvals could delay or
prevent the opening of a new restaurant, and the suspension of, or inability to
renew, a license at an existing restaurant would adversely affect the operations
of the Company. Restaurant operating costs are also affected by other government
actions which are beyond the Company's control, including increases in the
minimum hourly wage requirements, workers compensation insurance rates, health
care insurance costs and unemployment and other taxes.
The Federal Americans With Disabilities Act prohibits discrimination on
the basis of disability in public accommodations and employment. The Company's
restaurants are currently designed to be accessible to the disabled, and the
Company believes that it is in compliance with all current applicable
regulations relating to accommodations for the disabled.
The Company is subject to "dram-shop" statutes, which generally provide
a person injured by an intoxicated person the right to recover damages from an
establishment that wrongfully served alcoholic beverages to the intoxicated
person. New York law currently provides that a vendor of alcoholic beverages may
be held liable in a civil cause of action for injury or damage caused by or
resulting from the intoxication of a minor (under 21 years of age) if the vendor
willfully, knowingly and unlawfully sells or furnishes alcoholic beverages to
the minor and knows that the minor will soon thereafter be driving a motor
vehicle. A vendor can similarly be held liable if it knowingly provides
alcoholic beverages to a person who is in a noticeable state of intoxication,
knows that person will soon thereafter be driving a motor vehicle and injury or
damage is caused by that person.
Insurance
The operation of restaurants subjects the Company to possible liability
claims from others, including customers, employees and other service providers
for personal injury (resulting from, among other things, contaminated or spoiled
food or beverages, accidents or injuries caused by intoxicated persons served
alcoholic beverages by a restaurant). The Company maintains insurance (with
coverage in amounts up to $1,000,000 per occurrence and $5,000,000 of umbrella
liability coverage), including insurance relating to personal injury, in amounts
which the Company believes to be adequate. The Company also maintains property
insurance for each location it operates in amounts it believes to be adequate.
Nevertheless, a partially or completely uninsured claim against the Company, if
successful, could have a material adverse effect on the Company.
Properties
The Company leases approximately 2,500 square feet of space in Staten
Island, New York for its executive offices from Frank Cretella, Chief Executive
Officer, President, a director and a principal stockholder of the Company. The
current annual rent payable under the lease is currently $37,500 and increases
by 1.5% per annum
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<PAGE>
commencing January 1998. The lease expires December 31, 2001. The Company
believes that this lease is on commercially reasonable terms. See "Certain
Transactions."
The Company leases 16,505 square feet of space in Sheepshead Bay,
Brooklyn, New York, where Lundy's is located pursuant to a lease which expires
in 2014. The current annual rent payable under the lease is $300,000 during
1997. Upon the expiration of the lease, the Company has two 10-year renewal
options.
The Company leases an approximately 6,000 square feet warehouse in
Bayonne, New Jersey, from Leisure Time Services, Inc., a company wholly-owned by
Jeanne Cretella, Vice President, a director and a principal stockholder of the
Company. The annual rent payable under the lease is currently $30,000 and
increases by 1.5% per annum commencing January 1998. The Company believes that
this lease is on commercially reasonable terms. See "Certain Transactions."
The Company operates The Boathouse in Central Park, New York City
pursuant to a license from the Parks Department which expires in June 2000.
The Company has a license from the Parks Department to operate American
Park in Battery Park, New York City. The license expires in 2015.
Employees
As of September 1, 1997, the Company employed 554 persons, of whom 26
were in management and 528 were in non-management restaurant operations.
Approximately 34 of those individuals were employed on a salary basis. The
Company believes its employee relations to be good. None of the Company's
employees is covered by a collective bargaining agreement.
Legal Proceedings
The operation of restaurants and rowboat and bicycle rentals subjects
the Company to potential claims from others, including customers, employees and
other service providers for personal injury (resulting from, among other things,
contaminated or spoiled food or beverages and accidents). The Company is a
defendant in several lawsuits arising in the ordinary course of its business
relating to personal injury claims by plaintiffs which are seeking damages
substantially in excess of the Company's assets and insurance coverage. The
lawsuits are being handled by the Company's insurance carriers. Although the
Company is vigorously defend each lawsuit, since each lawsuit is in an early
stage, the Company is unable at this time to evaluate the likelihood of an
unfavorable outcome or to estimate the range of potential loss with respect to
any of such lawsuits. There can be no assurance that any of such actions will be
resolved in favor of the Company or that the outcome of any litigation or
settlement will not have a material adverse effect on the Company.
In the ordinary course of business, the Company is a party to other
legal proceedings, the outcome of which, either singly, or in the aggregate, is
not expected to be material.
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<PAGE>
MANAGEMENT
Directors and Executive Officers
The following are the directors and executive officers of the Company:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Frank Cretella 39 President, Chief Executive Officer and Director
Jeanne Cretella 39 Vice President and Director
Anthony B. Golio 37 Vice President
Kenneth L. Harris 55 Chairman of the Board
</TABLE>
Frank Cretella co-founded the Company's predecessor in 1981 and has
been President, Chief Executive Officer and a director of the Company since
inception.
Jeanne Cretella co-founded the Company's predecessor in 1981, and has
been Vice President, Secretary and a director of the Company since inception.
Ms. Cretella is the wife of Frank Cretella.
Anthony B. Golio has been Vice President of the Company since October
1997. In June 1996, Mr. Golio founded The Pineapple Group Inc., a consulting
company to the restaurant industry. From February 1994 until October 1996, Mr.
Golio was director of operations of Whiskey River Restaurant Group, a restaurant
holding company. From January 1991 through February 1994, Mr. Golio was Vice
President - Operations and Marketing of HMG, Inc., a restaurant holding company.
From 1988 to 1991, Mr. Golio was manager of guest services in the food service
division of the New York Zoological Society. From 1984 to 1988, Mr. Golio was
area manager of Chi-Chi's Restaurants, Inc.
Kenneth L. Harris has been Chairman of the Board since June 1997. Since
January 1995, Mr. Harris has been President and Chief Executive Officer of
Platinum Restaurant Group, a management consulting firm. From February 1994
through January 1995, Mr. Harris was Chief Operating Officer of HOB
Entertainment, Inc., a theme restaurant company. From January 1975 through
January 1994, Mr. Harris was employed by W.R. Grace & Co. ("Grace") and its
subsidiary, Restaurant Enterprises Group, Inc. ("REGI"), most recently as
President and Chief Executive Officer of REGI's Dinnerhouse division. In 1994,
REGI filed for bankruptcy under Chapter 11 in the United States Bankruptcy
Court, as part of a pre-packaged plan in connection with Grace's sale of such
subsidiary. Mr. Harris is the designee of Kayne Anderson.
The Company intends to appoint two independent directors prior to the
date of this Prospectus.
All directors currently hold office until the next annual meeting of
stockholders and until their successors are duly elected and qualified.
Executive officers of the Company serve at the direction of the Board and until
their successors are duly elected and qualified. The Company reimburses
directors for reasonable travel expenses incurred in connection with their
activities on behalf of the Company but does not pay its directors any fees for
Board participation.
In connection with this offering, the Company has agreed that it will,
for a period of three years following the date of this Prospectus, upon the
request of the Underwriter, nominate and use its best efforts to elect a
designee of the Underwriter (which designee may change from time to time) as a
director of the Company or, at the Underwriter's option, appoint such designee
as a non-voting advisor to the Company's Board of Directors. The Underwriter has
not yet exercised its rights to designate such a person. See "Underwriting."
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<PAGE>
Executive Compensation
The following table sets forth certain compensation paid by the Company
during the fiscal year ended September 29, 1996 to Frank Cretella, its President
and Chief Executive Officer. No other officer of the Company received
compensation in excess of $100,000 for the fiscal year ended September 29, 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------
Other Annual
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Frank Cretella
President and Chief Executive Officer.............. 1996 $168,000 $ 0 $2,000
</TABLE>
During the fiscal year ended September 28, 1997, Frank Cretella received
compensation of $150,000. The Company did not grant any options to its executive
officers during the years ended September 29, 1996 and September 28, 1997.
Employment Agreements
The Company has entered into three-year employment agreements with
Frank Cretella and Jeanne Cretella, effective as of the date of this Prospectus,
which is automatically renewable and provides for an annual base compensation of
$175,000 and $75,000, respectively, and such bonuses as the Board of Directors
may from time to time determine. Each of the employment agreements requires the
officer to devote a majority of such officer's business time to the Company's
business and affairs and contains a provision that such officer will not compete
or engage in a business competitive with the current or anticipated business of
the Company during the term of the employment agreement and for a period of one
year thereafter. Each of the agreements also provides that if the officer is
terminated without cause (including as a result of a change in control), such
officer will be entitled to receive severance pay equal to the base compensation
through the term of the agreement, provided that if such officer is terminated
during the third year or the last year of any renewal term, such officer will be
entitled to receive additional compensation equal to the base compensation
received from the Company during the one-year period prior to the date of
termination.
Consulting Agreement
In July 1996, the Company entered into a two-year consulting agreement
with Kenneth L. Harris, Chairman of the Board of the Company, pursuant to which
Mr. Harris (through Platinum Restaurant Group, a company wholly owned by Mr.
Harris) has provided strategic planning, restaurant operations, marketing and
site evaluation consulting services for a fee equal to $2,500 per month through
December 1997 and $5,000 per month thereafter. The agreement is automatically
renewable for successive one-year periods, unless either party gives written
notice of its intention not to renew the agreement at least 30 days prior to the
end of the term or renewal term. In addition, pursuant to the consulting
agreement, the Company agreed to pay to Mr. Harris $50,000 as payment for
consulting services rendered to the Company prior to entering into the
consulting agreement. Such payment is due July 1998.
1997 Stock Option Plan
In October 1997, the Company's stockholders approved a stock option
plan (the "Option Plan") pursuant to which 525,000 shares of Common Stock have
been reserved for issuance upon the exercise of options designated
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<PAGE>
as either (i) incentive stock options ("ISOs") under the Internal Revenue Code
of 1986, as amended (the "Code") or (ii) nonqualified options. ISOs may be
granted under the Option Plan to officers and employees of the Company.
Non-qualified options may be granted to consultants, directors (whether or not
they are employees), employees or officers of the Company.
The purpose of the Option Plan is to encourage stock ownership by
certain directors, officers and employees of the Company and other persons
instrumental to the success of the Company. The Option Plan is intended to
qualify under Rule 16b-3 under the Exchange Act, and is administered by the
Board of Directors. The Board, within the limitations of the Option Plan,
determines the persons to whom options will be granted, the number of shares to
be covered by each option, whether the options granted are intended to be ISOs,
the duration and rate of exercise of each option, the option purchase price per
share and the manner of exercise, and the time, manner and form of payment upon
exercise of an option.
ISOs granted under the Option Plan may not be granted at a price less
than the fair market value of the Common Stock on the date of grant (or 110% of
fair market value in the case of persons holding 10% or more of the voting stock
of the Company). The aggregate fair market value of shares for which ISOs
granted to any employee are exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Company and any
related corporation) may not exceed $100,000. Non-qualified options granted
under the Option Plan may not be granted at a price less than the fair market
value of the Common Stock on the date of grant. Options granted under the Option
Plan will expire not more than ten years from the date of grant (five years in
the case of ISOs granted to persons holding 10% or more of the voting stock of
the Company). All options granted under the Option Plan are not transferable
during an optionee's lifetime but are transferable at death by will or by the
laws of descent and distribution. In general, upon termination of employment of
an optionee, all options granted to such person which are not exercisable on the
date of such termination immediately terminate, and any options that are
exercisable terminate 90 days following termination of employment.
The Company has granted options under the Option Plan, effective as of
the date of this Prospectus, to purchase an aggregate of 197,500 shares. Of such
options, options to purchase 50,000, 50,000, 35,000 and 15,000 shares were
granted to Mr. Cretella, Ms. Cretella, Mr. Harris and Mr. Golio, respectively,
at an exercise price of $5.00 per share. All of such options vest as to 50%, 25%
and 25% of the shares covered thereby on the first, second and third anniversary
of the date of this Prospectus, respectively, are exercisable upon vesting and
expire ten years from the date of grant, subject to earlier expiration upon
termination.
The Company also intends to grant options under the Option Plan to
purchase 5,000 shares of Common Stock to each non-employee director of the
Company upon their re-election by the Company's stockholders at each annual
meeting of the Company's stockholders. All of such options will be exercisable
at the market value of the Common Stock on the date of grant.
Indemnification and Exculpation Provisions
The Company's Certificate of Incorporation provides for indemnification
of officers and directors to the fullest extent permitted by Delaware law. In
addition, under the Company's Certificate of Incorporation, no director shall be
liable personally to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director; provided that the Certificate of
Incorporation does not eliminate the liability of a director for (i) any breach
of the director's duty of loyalty to the Company or its stockholders; (ii) acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) acts or omissions in respect of certain unlawful
dividend payments or stock redemptions or repurchases; or (iv) any transaction
from which such director derives improper personal benefit. The Company has also
obtained directors and officers insurance.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, immediately prior
to the consummation of this offering and as adjusted to reflect the sale by the
Company of the 1,000,000 Shares offered hereby (based on information obtained
from the persons named below), relating to the beneficial ownership of shares of
Common Stock by: (i) each person or entity who is known by the Company to own
beneficially five percent or more of the outstanding Common Stock, (ii) each of
the Company's directors and (iii) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Percentage of Shares
Beneficially Owned(2)
------------------------------
Number of Shares
Name and Address of Beneficial Beneficially Before After
Owners(1) Owned Offering Offering
- --------- ----- -------- --------
<S> <C> <C> <C>
Frank Cretella................................. 1,679,235(3) 67.2% 48.0%
Jeanne Cretella................................ 1,679,235(3) 67.2 48.0
Peter J. Salvatore(4).......................... 176,371(5) 7.0 5.0
Kenneth L. Harris.............................. 110,282(6) 4.4 3.2
All directors and executive officers as a
group (four persons)........................... 1,803,302(7) 72.1% 51.5%
</TABLE>
- ----------
(1) Unless otherwise indicated, the address for each named individual or
group is in care of TAM Restaurants, Inc., 1163 Forest Avenue, Staten
Island, New York 10310.
(2) Unless otherwise indicated, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them. A person is deemed
to be the beneficial owner of securities that can be acquired by such
person within 60 days from the date of this Prospectus upon the
exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
options, warrants or convertible securities that are held by such
person (but not those held by any other person) and which are
exercisable within 60 days of the date of this Prospectus have been
exercised and converted. Assumes a base of 2,500,000 shares of Common
Stock outstanding prior to this offering and a base of approximately
3,500,000 shares of Common Stock outstanding immediately after this
offering, before any consideration is given to other outstanding
options or warrants. See "Description of Securities."
(3) Represents shares held jointly by Frank Cretella and Jeanne Cretella.
Does not include (i) options to purchase 50,000 shares of Common Stock
held by Frank Cretella, (ii) options to purchase 50,000 shares of
Common Stock held by Jeanne Cretella and (iii) 4,724 Selling
Securityholders' Warrants held by Jeanne Cretella.
(4) The address for Mr. Salvatore is 35 Seagate Road, Staten Island, New
York 10310.
(5) Includes 6,082 shares of Common Stock held by Peter and Gail Salvatore
Foundation, Inc., a trust of which by Mr. and Mrs. Salvatore are the
beneficiaries. Does not include Selling Securityholders' Warrants to
purchase 88,191 shares of Common Stock.
(6) Does not include options to purchase 25,000 shares of Common Stock.
(7) Does not include options to purchase an aggregate of 135,000 shares of
Common Stock.
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<PAGE>
CERTAIN TRANSACTIONS
Prior to January 1994, Ernest Cretella, father of Frank Cretella,
President, Chief Executive Officer, a director and a principal stockholder of
the Company, loaned the Company $100,000. In January 1994, Ernest Cretella
borrowed $125,000 from a bank and secured the loan by mortgaging his personal
residence. Ernest Cretella loaned the Company the proceeds of the bank loan,
from which the Company repaid $50,000 of the outstanding indebtedness owed to
Ernest Cretella, and the Company agreed to make Ernest Cretella's mortgage
payments to the bank. In September 1995, Ernest Cretella converted the
additional $50,000 principal amount of indebtedness owed to him into 25,000
shares of Common Stock and 2,500 warrants. Upon consummation of this offering,
the warrants will convert into New Warrants. In July 1996, Ernest Cretella,
loaned the Company an additional $55,000. Such loan bears interest at the rate
of 10% per annum, payable quarterly, and is due June 30, 1998.
In March 1994, the Company entered into a lease agreement to sublease
the space where Lundy's is located. Frank Cretella personally guaranteed the
Company's obligations to pay rent during the time which it occupies the leased
premises.
During 1994, Frank Cretella loaned the Company $12,500. In September
1996, Mr. Cretella borrowed $65,000 from the Company. During the nine months
June 29, 1997, Mr. Cretella repaid the $52,500 owed to the Company.
During 1995 and 1996, the Company borrowed an aggregate of $840,000
from Fleet Bank, N.A. Such loans were collateralized by the Company's principal
executive offices, which are owned by Mr. Cretella, the warehouse leased by the
Company and owned by Leisure Time Services, Inc. ("Leisure Time"), a company
owned by Jeanne Cretella, Vice President, director and a principal stockholder
of the Company, and Mr. and Ms. Cretella's personal residence, and guaranteed by
Mr. and Mrs. Cretella and Leisure Time. In June 1997, Mr. Cretella agreed to pay
to Fleet $640,000 as payment for the amount owed by the Company ($720,125 as of
June 30, 1997). In August 1997, Mr. Cretella paid to Fleet $140,000 as part of
the settlement. Mr. Cretella paid the balance to Fleet in October 1997. As
consideration for entering into the settlement, the Company issued to Mr.
Cretella a promissory note in the outstanding principal amount of $720,125 which
bears interest at the rate of 10% per annum, payable in monthly installments of
$6,102, with the outstanding principal payable in October 2001 upon maturity of
the note.
Prior to his employment by the Company, from October 1996 through
September 1997, Anthony Golio, Vice President of the Company, provided
consulting services to the Company through The Pineapple Group, Inc., a
restaurant consulting firm, wholly-owned by Mr. Golio, for which he was paid an
aggregate of $88,000. Such consulting services included organizational and
managerial training, labor and cost management, negotiating with vendors and
creating and refinancing management programs.
In June 1996, the Company borrowed $88,000 from Joseph De Giulio,
father of Jeanne Cretella. Interest is payable in monthly installments of $733
and the principal is due on June 22, 2001.
As of September 1996, the Company had made advances and transferred
equipment to Forest Avenue Corporation ("Forest") and deferred management fees
due from Forest in the aggregate of $542,463. In September 1996, the assets of
Forest were sold to an unrelated third party, and since the proceeds from the
sale of such assets were insufficient to repay the amounts due to the Company,
the Company deemed such amount to be uncollectible and wrote off such amount.
Effective September 29, 1996, the Company acquired all of the
outstanding capital stock of TAM, Bay Landing and Shellbank (the "Acquisition").
Frank and Jeanne Cretella were officers, directors and sole stockholders
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<PAGE>
of TAM, Bay Landing and Shellbank prior to the Acquisition. In connection with
the Acquisition, Mr. and Mrs. Cretella received 1,679,235 shares of Common
Stock. Immediately prior to the Acquisition, Frank Cretella formed MAT Operating
Corp. ("MAT") and, in connection with the Acquisition, the assets relating to
TAM's food concession operations were transferred to MAT.
In October 1996, the Company entered into a 10-year operating agreement
with MAT, a company wholly-owned by Frank Cretella, to manage the food
concessions at the Central Park Zoo and the Staten Island Zoo in New York City
for which the Company receives a management fee equal to 5% of gross sales.
During the nine months ended June 29, 1997, the Company received $171,465 in
fees from MAT, consisting of an initial fee of $125,000 relating to the
formation of MAT and establishment of operations relating to the operating
agreement, $35,862 of management fees and $10,603 of interest and other income.
Since October 1, 1996, MAT has advanced to the Company an aggregate of $117,922
which is being offset against future management fees.
In October 1996, the Company loaned to Leisure Time $153,863, pursuant
to a note which is payable in monthly installments of $1,996.01, that bears
interest at a rate of 9.56% per annum and expires on October 1, 2006. The
Company loaned to Leisure Time an additional $20,670, which was repaid during
the nine months ended June 29, 1997.
In October 1996, the Company entered into a lease agreement with Mr.
Cretella, pursuant to which the Company leases its executive offices in Staten
Island, New York. Annual rent under the lease is $37,500 per year, increasing by
1.5% each year commencing January 1, 1998. The lease expires on December 31,
2001. The Company believes that this lease is on commercially reasonable terms.
In October 1996, the Company entered into a lease agreement with
Leisure Time, pursuant to which the Company leases a warehouse in Bayonne, New
Jersey. Annual rent under the lease is $30,000 per year, increasing by 1.5% each
year commencing January 1, 1998. The lease expires on December 31, 2001. The
Company believes that this lease is on commercially reasonable terms.
From time to time the Company has entered into equipment financing
leases which have been guaranteed by Mr. Cretella and/or Leisure Time.
Any future transactions with affiliates will be on terms no less
favorable to the Company than could be obtained from unaffiliated parties and
will be approved by a majority of the independent and disinterested members of
the Board of Directors, outside the presence of any interested directors and, to
the extent deemed appropriate by the Board of Directors, the Company will obtain
stockholder approval or fairness opinions in connection with any such
transaction.
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<PAGE>
DESCRIPTION OF SECURITIES
Capital Stock
General
The Company is authorized to issue 19,000,000 shares of Common Stock,
par value $.0001 per share, and 1,000,000 shares of Preferred Stock, par value
$.0001 per share. As of the date of this Prospectus, there are 2,500,000 shares
of Common Stock outstanding, held by approximately 51 stockholders of record,
and no shares of Preferred Stock outstanding.
Common Stock
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders. There is no cumulative vote
with respect to the election of directors, with the result that the holders of
50% or more of the shares vote for the election of directors can elect all of
the directors then up for election. The holders of Common Stock, subject to
preferences that may be applicable to any Preferred Stock outstanding at the
time, are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. In the event of liquidation or dissolution of the Company, the holders
of Common Stock are entitled to receive all assets available for distribution to
the stockholders, subject to any preferential rights of any Preferred Stock then
outstanding. The holders of Common Stock have no preemptive or other
subscription rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to the Common Stock. All outstanding shares of
Common Stock are, and the shares of Common Stock offered hereby upon issuance
and sale will be, fully paid and non-assessable. The rights, preferences and
privileges of the holders of Common Stock are subject to, and may be adversely
affected by, the right of the holders of any shares of Preferred Stock which the
Company may designate in the future.
Preferred Stock
The Company is authorized to issue 1,000,000 shares of Preferred Stock
from time to time in one or more series upon authorization by the Company's
Board of Directors. The Board of Directors, without further approval of the
stockholders, is authorized to fix the dividend rights and terms, conversion
rights, voting rights, redemption rights and terms, liquidation preferences, and
other rights, preferences, privileges and restrictions applicable to each series
of Preferred Stock. The issuance of Preferred Stock, while providing flexibility
in connection with possible acquisitions and other corporate purposes could,
among other things, adversely affect the voting power of the holders of Common
Stock and, under certain circumstances, make it more difficult for a third party
to gain control of the Company, prevent or substantially delay a change of
control, discourage bids for the Company's Common Stock at a premium or
otherwise adversely affect the market price of the Common Stock.
Redeemable Warrants
Each Warrant offered hereby entitles the registered holder thereof (the
"Warrant Holders") to purchase one share of Common Stock at a price of $6.00,
subject to adjustment in certain circumstances, at any time commencing
_________, 1999 (13 months following the date of this Prospectus) (or on such
earlier date as to which the Underwriter consents) until 5:00 p.m., Eastern Time
on_______, 2003. The Warrants will be separately transferable immediately upon
issuance.
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<PAGE>
The Warrants are redeemable by the Company at any time commencing
______________, 1999 (13 months following the date of this Prospectus) upon
notice of not less than 30 days, at a price of $.10 per Warrant, provided that
the closing bid quotation of the Common Stock on all 20 trading days ending on
the third trading day prior to the day on which the Company gives notice (the
"Call Date") has been at least 150% (currently $9.00 subject to adjustment) of
the then effective exercise price of the Warrants and the Company obtains the
consent of the Underwriter to such redemption prior to the Call Date. The
Warrant Holders shall have the right to exercise their Warrants until the close
of business on the date fixed for redemption. The Warrants will be issued in
registered form under a warrant agreement by and among the Company, Continental
Stock Transfer & Trust Company, as warrant agent, and the Underwriter (the
"Warrant Agreement"). The exercise price and number of shares of Common Stock or
other securities issuable on exercise of the Warrants are subject to adjustment
in certain circumstances, including in the event of a stock dividend,
recapitalization, reorganization, merger or consolidation of the Company.
However, the Warrants are not subject to adjustment for issuances of Common
Stock at prices below the exercise price of the Warrants. Reference is made to
the Warrant Agreement (which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part) for a complete description of the
terms and conditions therein (the description herein contained being qualified
in its entirety by reference thereto).
The Warrants may be exercised upon surrender of the Warrant certificate
during the exercise period at the offices of the warrant agent, with the
exercise form on the reverse side of the Warrant certificate completed and
executed as indicated, accompanied by full payment of the exercise price (by
certified check or bank draft payable to the Company) to the warrant agent for
the number of Warrants being exercised. The Warrant Holders do not have the
rights or privileges of holders of Common Stock.
No Warrant will be exercisable unless at the time of exercise the
Company has declared effective a current registration statement with the
Commission covering the shares of Common Stock issuable upon exercise of such
Warrant and such shares have been registered or qualified or deemed to be exempt
from registration or qualification under the securities laws of the state of
residence of the holder of such Warrant. The Company will use its best efforts
to have all such shares so registered or qualified on or before the exercise
date and to maintain a current prospectus relating thereto until the expiration
of the Warrants, subject to the terms of the Warrant Agreement. While it is the
Company's intention to do so, there can be no assurance that it will be able to
do so.
No fractional shares will be issued upon exercise of the Warrants.
However, if a Warrant Holder exercises all Warrants then owned of record by him,
the Company will pay to such Warrant Holder, in lieu of the issuance of any
fractional share which is otherwise issuable, an amount in cash based on the
market value of the Common Stock on the last trading day prior to the exercise
date.
Other Existing Warrants
There are currently outstanding warrants to purchase an aggregate of
310,000 shares of Common Stock all of which are being converted into Selling
Securityholders' Warrants. The Selling Securityholders' Warrants will be
identical to the Warrants. There are other outstanding warrants to purchase (i)
3,000 shares at an exercise price of $.01 which are exercisable until October
23, 2002 and (ii) 200,000 shares at an exercise price of $5.00 per share which
are exercisable commencing 90 days from the date of this Prospectus until
October 31, 2002. The Company granted certain registration right to the holder
of the warrants to purchase 200,000 shares of Common Stock.
Delaware Anti-Takeover Law
The Company is subject to certain anti-takeover provisions under
Section 203 of the Delaware General Corporation Law. In general, under Section
203, a Delaware corporation may not engage in any business
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<PAGE>
combination with any "interested stockholder" (a person that owns, directly or
indirectly, 15% or more of the outstanding voting stock of a corporation or is
an affiliate of a corporation and was the owner of 15% or more of the
outstanding voting stock), for a period of three years following the date such
stockholder became an interested stockholder, unless (i) prior to such date the
board of directors of the corporation approved either the business combination
or the transaction which resulted in the stockholder becoming an interested
stockholder, or (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, or (iii) on or subsequent to such date, the business
combination is approved by the board of directors and authorized at an annual or
special meeting of stockholders by at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder. The restrictions imposed
by Section 203 will not apply to a corporation if the corporation's initial
certificate of incorporation contains a provision expressly electing not to be
governed by this section or the corporation by action of its stockholders
holding a majority of outstanding stock adopts an amendment to its certificate
of incorporation or by-laws expressly electing not to be governed by Section
203.
The Company has not elected out of Section 203, and upon consummation
of this offering and the listing of Common Stock on Nasdaq. Such provision could
have the effect of discouraging, delaying or preventing a takeover of the
Company, which could otherwise be in the best interest of the Company's
stockholders, and have an adverse effect on the market price for the Company's
Common Stock.
Transfer Agent and Warrant Agent
The transfer agent for the Common Stock and the warrant agent for the
Warrants is Continental Stock Transfer & Trust Company, Two Broadway, New York,
New York 10004.
Reports to Stockholders
The Company intends to file a registration statement with the
Securities and Exchange Commission to register its Common Stock and Warrants
under the provisions of Section 12(g) of the Exchange Act prior to the date of
this Prospectus and has agreed with the Underwriter that it will use its best
efforts to continue to maintain such registration. Such registration will
require the Company to comply with periodic reporting, proxy solicitation and
certain other requirements of the Exchange Act.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this offering, the Company will have 3,500,000
shares of Common Stock outstanding (assuming no exercise of the Warrants). All
1,000,000 of the Shares being offered hereby will be immediately tradable
without restriction or further registration under the Securities Act. The
remaining 2,500,000 shares of Common Stock outstanding are deemed to be
"restricted securities," as that term is defined under Rule 144 promulgated
under the Securities Act, in that such shares were acquired by the stockholders
of the Company in transactions not involving a public offering, and, as such,
may only be sold pursuant to a registration statement under the Securities Act,
in compliance with the exemption provisions of Rule 144, or pursuant to another
exemption under the Securities Act. Approximately 2,461,076 of the restricted
shares will become eligible for sale under Rule 144, subject to the volume
limitations prescribed by the Rule, 90 days following the date of this
Prospectus and the balance of such restricted shares will become eligible for
sale under Rule 144, subject to the volume limitations presented by the Rule, in
May 1998.
-43-
<PAGE>
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated with an affiliate), who has
owned restricted shares of Common Stock beneficially for at least one year is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class or, if the common stock is quoted on Nasdaq, the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the Company for at least three months immediately
preceding the sale and who has beneficially owned shares of Common Stock for at
least two years is entitled to sell such shares under Rule 144 without regard to
any of the limitations described above.
The holders of 267,325 shares of Common Stock and the holders of the
310,000 Selling Securityholders' Warrants and 3,000 other outstanding warrants
have agreed not to sell, assign, transfer, pledge, hypothecate or otherwise
dispose of any of such securities for a period of 15 months from the date of
this Prospectus without the Underwriter's prior written consent. The holders of
253,002 shares of Common Stock and the holders of 200,000 outstanding warrants
have agreed not to sell, assign, transfer, pledge, hypothecate or otherwise
dispose of any of such shares for a period of 18 months from the date of this
Prospectus without the Underwriter's prior written consent. The holders of
1,979,673 shares of Common Stock (including the officers and directors of the
Company) have agreed not to sell, assign, transfer, pledge, hypothecate or
otherwise dispose of any of such shares for a period of 24 months from the date
of this Prospectus without the Underwriter's prior written consent.
Prior to this offering, there has been no market for the Common Stock
or Warrants and no prediction can be made as to the effect, if any, that public
sales of shares of Common Stock or the availability of such shares for sale will
have on the market prices of the Common Stock and the Warrants prevailing from
time to time. Nevertheless, the possibility that substantial amounts of Common
Stock may be sold in the public market may adversely affect prevailing market
prices for the Common Stock and the Warrants and could impair the Company's
ability in the future to raise additional capital through the sale of its equity
securities.
UNDERWRITING
Paragon Capital Corporation (the "Underwriter") has agreed, subject to
the terms and conditions contained in the Underwriting Agreement, to purchase
the 1,000,000 Shares and 500,000 Warrants offered hereby from the Company. The
Underwriter is committed to purchase and pay for all of the Shares and Warrants
offered hereby if any of such securities are purchased. The Shares and Warrants
are being offered by the Underwriter, subject to prior sale, when, as and if
delivered to and accepted by the Underwriter and subject to approval of certain
legal matters by counsel and to certain other conditions.
The Underwriter has advised the Company that it proposes to offer the
Shares and Warrants to the public at the public offering prices set forth on the
cover page of this Prospectus. The Underwriter may allow to certain dealers who
are members of the National Association of Securities Dealers, Inc. (the "NASD")
concessions, not in excess of $ per Share and $ per Warrant, of which not in
excess of $ per Share and $ per Warrant may be reallowed to other dealers
who are members of the NASD.
The Company has granted to the Underwriter an option, exercisable for
45 days from the date of this Prospectus, to purchase up to 150,000 additional
shares of Common Stock and/or 75,000 additional Warrants at the public offering
prices set forth on the cover page of this Prospectus, less the underwriting
discounts and commissions. The Underwriter may exercise this option in whole or,
from time to time, in part, solely for the purpose of covering over-allotments,
if any, made in connection with the sale of the Shares and/or Warrants offered
hereby.
-44-
<PAGE>
The Company has agreed to pay the Underwriter a nonaccountable expense
allowance of 3% of the gross proceeds of this offering, of which $50,000 has
been paid as of the date of this Prospectus. The Company has also agreed to pay
all expenses in connection with qualifying the Shares and Warrants offered
hereby for sale under the laws of such states as the Underwriter may designate,
including expenses of counsel retained for such purpose by the Underwriter.
The Company has agreed to sell to the Underwriter and its designees for
an aggregate of $105, warrants (the "Underwriter's Warrants") to purchase up to
100,000 shares of Common Stock at an exercise price of $6.00 per share (120% of
the public offering price per share) and up to 50,000 Warrants (each exercisable
to purchase one share of Common Stock at a price of $7.25 per share) at an
exercise price of $.12 per Warrant (120% of the public offering price per
Warrant). The Underwriter's Warrants may not be sold, transferred, assigned or
hypothecated for one year from the date of this Prospectus, except to the
officers and partners of the Underwriter and members of the selling group and
are exercisable at any time and from time to time, in whole or in part, during
the four-year period commencing one-year from the date of this Prospectus (the
"Warrant Exercise Term"). During the Warrant Exercise Term, the holders of the
Underwriter's Warrants are given, at nominal cost, the opportunity to profit
from a rise in the market price of the Common Stock. To the extent that the
Underwriter's Warrants are exercised, dilution to the interests of the Company's
stockholders will occur. Further, the terms upon which the Company will be able
to obtain additional equity capital may be adversely affected since the holders
of the Underwriter's Warrants can be expected to exercise them at a time when
the Company would, in all likelihood, be able to obtain any needed capital on
terms more favorable to the Company than those provided in the Underwriter's
Warrants. Any profit realized by the Underwriter on the sale of the
Underwriter's Warrants, the underlying shares of Common Stock or the underlying
warrants, or the shares of Common Stock issuable upon exercise of such
underlying warrants may be deemed additional underwriting compensation. The
Company has agreed, at the request of the holders of a majority of the
Underwriter's Warrants, at the Company's expense, to register the Underwriter's
Warrants, the shares of Common Stock and warrants underlying the Underwriter's
Warrants, and the shares of Common Stock issuable upon exercise of the
underlying warrants under the Securities Act on one occasion during the Warrant
Exercise Term and to include the Underwriter's Warrants and all such underlying
securities in any appropriate registration statement which is filed by the
Company during the seven years following the date of this Prospectus.
The Company has also agreed, for a period of three years from the date
of this Prospectus, if so requested by the Underwriter, to nominate and use its
best efforts to elect a designee of the Underwriter as a director of the
Company, or, at the Underwriter's option, as a non-voting advisor to the
Company's Board of Directors. The Company's officers, directors and stockholders
have agreed to vote their shares of Common Stock in favor of such designee. The
Underwriter has not yet exercised its right to designate such a person.
In addition, the Company has agreed to enter into a consulting
agreement to retain the Underwriter as a financial consultant for a period of
two years from the consummation of this offering at an annual fee of $30,000,
the entire $60,000 payable in full, in advance. The consulting agreement will
not require the consultant to devote a specific amount of time to the
performance of its duties thereunder. In the event that the Underwriter
originates a financing or a merger, acquisition, joint venture or other
transaction to which the Company is a party, the Underwriter will be entitled to
receive a finder's fee in consideration for origination of such transaction.
The Company has agreed, in connection with the exercise of the Warrants
pursuant to solicitation (commencing one year from the date of this Prospectus),
to pay to the Underwriter a fee of 5% of the exercise price for each Warrant
exercised; provided, however, that the Underwriter will not be entitled to
receive such compensation in Warrant exercise transactions in which (i) the
market price of Common Stock at the time of exercise is lower than the exercise
price of the Warrants; (ii) the Warrants are held in any discretionary account;
(iii) disclosure of compensation arrangements is not made, in addition to the
disclosure provided in this Prospectus, in
-45-
<PAGE>
documents provided to holders of Warrants at the time of exercise; (iv) the
exercise of the Warrants is unsolicited by the Underwriter; or (v) the
solicitation of exercise of the Warrants was in violation of Regulation M
promulgated under the Exchange Act.
Regulation M may prohibit the Underwriter from engaging in any market
making activities with regard to the Company's securities for the period from
nine business days (or such other applicable period as Regulation M may provide)
prior to any solicitation by the Underwriter of the exercise of Warrants until
the later of the termination of such solicitation activity or the termination
(by waiver or otherwise) of any right that the Underwriter may have to receive a
fee for the exercise of Warrants following such solicitation. As a result, the
Underwriter may be unable to continue to provide a market for the Company's
securities during certain periods while the Warrants are exercisable.
The holders of 267,325 shares of Common Stock and the holders of the
310,000 Selling Securityholders' Warrants and 3,000 other warrants have agreed
not to sell, assign, transfer, pledge, hypothecate or otherwise dispose of any
of such securities for a period of 15 months from the date of this Prospectus,
without the Underwriter's prior written consent. The holders of 253,002 shares
of Common Stock and the holders of 200,000 outstanding warrants have agreed not
to sell, assign, transfer, pledge, hypothecate or otherwise dispose of any of
such securities for a period of 18 months, without the prior written consent of
the Underwriter. The holders of 1,979,673 shares of Common Stock (including the
officers and directors of the Company), have agreed not to sell, assign,
transfer, pledge, hypothecate or otherwise dispose of any of such securities of
the Company for a period of 24 months from the date of this Prospectus, without
the prior written consent of the Underwriter.
The Underwriter has advised the Company that it does not expect sales
made to discretionary accounts to exceed 1% of the securities offered hereby.
The Company has agreed to indemnify the Underwriter against certain
civil liabilities, including liabilities under the Securities Act.
Prior to this offering, there has been no public trading market for the
Common Stock or Warrants. Consequently, the initial public offering price of the
Common Stock and Warrants and the exercise price of the Warrants have been
determined by negotiations between the Company and the Underwriter. Among the
factors considered in determining these prices were the Company's financial
condition and prospects, market prices of similar securities of comparable
publicly-traded companies and the general condition of the securities market.
In order to facilitate the offering, the Underwriter may engage in
transactions that stabilize, maintain or otherwise affect the prices of the
Common Stock and Warrants. Specifically, the Underwriter may over-allot in
connection with the offering, creating a short position in the Common Stock
and/or Warrants for its own account. In addition, to cover over-allotments or to
stabilize the price of the Common Stock and Warrants, the Underwriter may bid
for, and purchase, shares of Common Stock and Warrants in the open market. The
Underwriter may also reclaim selling concessions allowed to a dealer for
distributing the Common Stock and Warrants in the offering, if the Underwriter
repurchases previously distributed Common Stock and Warrants in transactions to
cover short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Common stock and
Warrants above independent market levels. The Underwriter is not required to
engage in these activities, and may end any of these activities at any time.
-46-
<PAGE>
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
The Company has agreed to register the public offering of the Selling
Securityholders' Warrants and Selling Securityholders' Shares under the
Securities Act concurrently with this offering and to pay all expenses in
connection therewith. An aggregate of 310,000 Selling Securityholders' Warrants
and/or Selling Securityholders' Shares may be offered and sold pursuant to this
Prospectus by the Selling Securityholders. None of the Selling Securityholders'
Warrants nor Selling Securityholders' Shares may be sold by the Selling
Securityholders prior to 15 months after the date of this Prospectus, without
the prior written consent of the Underwriter. None of the Selling
Securityholders has ever held any position or office with the Company or had any
other material relationship with the company. The Company will not receive any
of the proceeds from the sale of the Selling Securityholders' Warrants and/or
Selling Securityholders' Shares by the Selling Securityholders. The following
table sets forth certain information with respect to the Selling
Securityholders:
<TABLE>
<CAPTION>
Percentage
Beneficial Comon Beneficial Beneficial
Beneficial Warrants Beneficial Ownership Stock Ownership Ownership
Ownership Being Ownership of Common Being of Common After Sale
of Warrants Registered of Warrants Stock Prior Registered Stock After (Common
Selling Securityholder Prior to Sale For Sale After Sale(1) to Sale (2) For Sale Sale(2) Stock)
---------------------- ------------- -------- ------------- ----------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
[To be supplied]
</TABLE>
The Selling Securityholders' Warrants and Selling Securityholders'
Shares may be offered and sold from time to time as market conditions permit in
the over-the-counter market, or otherwise, at prices and terms then prevailing
or at prices related to the then-current market price, or in negotiated
transactions. The Selling Securityholders' Warrants and Selling Securityholders'
Shares may be sold by one or more of the following methods, without limitation:
(i) a block trade in which a broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (ii) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus; (iii) ordinary brokerage transactions and transactions in which
broker solicits purchases; and (iv) transactions between sellers and purchasers
without a broker/dealer. In effecting sales, brokers or dealers engaged by the
Selling Securityholders may arrange for other brokers or dealers to participate.
Such brokers or dealers may receive commissions or discounts from selling
Securityholders in amounts to be negotiated. Such brokers and dealers and any
other participating brokers and dealers may be deemed to be "underwriters"
within the meaning of the Securities Act, in connection with such sales.
LEGAL MATTERS
The legality of the securities offered by this Prospectus will be
passed upon for the Company by Tenzer Greenblatt LLP, New York, New York.
Akerman, Senterfitt and Eidson, P.A., Miami, Florida, has acted as counsel to
the Underwriter in connection with this offering.
EXPERTS
The financial statements of the Company included in this Prospectus
have been audited by Maltese, Potter & LaMarca, LLP, independent auditors as
stated in their report appearing herein and have been included herein in
reliance upon the report of said firm given upon their authority as experts in
accounting and auditing. Our report contains an explanatory paragraph regarding
uncertainties as to the Company's ability to continue as a going concern.
-47-
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (the "Registration
Statement") under the Securities Act with respect to the securities offered by
this Prospectus. This Prospectus, filed as a part of such Registration
Statement, does not contain all of the information set forth in, or annexed as
exhibits to, the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulation of the Commission. For further
information with respect to the Company and this offering, reference is made to
the Registration Statement, including the exhibits filed therewith, which may be
inspected without charge at the Office of the Commission, 450 Fifth Street,
N.W., Washington D.C. 20549; and at the following regional offices: Midwest
Regional Office, Northwestern Atrium Center, 500 West Madison, Suite 1400,
Chicago, Illinois 60661-2511, and the Northeast Regional Office, 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Commission at its principal office upon
payment of prescribed fees. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete and,
where the contract or other document has been filed as an exhibit to the
Registration Statement, each statement is qualified in all respects by reference
to the applicable document filed with the Commission. The Commission maintains
an Internet web site that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the
Commission. The address of that site is http://www.sec.gov.
Upon consummation of this offering, the Company will become subject to
the reporting requirements of the Securities Exchange Act of 1934 and in
accordance therewith will file reports, proxy statements and other information
with the Commission. The Company intends to furnish to its stockholders with
annual reports containing audited financial statements and such other reports as
the Company deems appropriate or as may be required by law.
-48-
<PAGE>
TAM RESTAURANT HOLDING CORP.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page(s)
<S> <C>
Report of Independent Certified Public Accountants F-2
Financial Statements
Consolidated Balance Sheets F-3 to F-5
Consolidated Statements of Income F-6
Consolidated Statements of Changes in Stockholders' Equity F-7
Consolidated Statements of Cash Flows F-8 to F-9
Notes to Consolidated Financial Statements F-10 to F-26
</TABLE>
F-1
<PAGE>
Report of Independent Certified Public Accountants
(This is the form of opinion we will be able to render upon
completion of the stock split as described in Note Q)
To the Board of Directors and Stockholders
of TAM Restaurant Holding Corp. and Subsidaries
Staten Island, New York
We have audited the accompanying consolidated balance sheet of TAM Restaurant
Holding Corp., as of September 29, 1996, and the related consolidated statements
of income, consolidated statements of changes in stockholders' equity, and
consolidated statements of cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of TAM
Restaurant Holding Corp., as of September 29, 1996, and the results of its
operations and cash flows for the year then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note N to the
financial statements, the Company's significant operating losses and negative
working capital raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Maltese, Potter & LaMarca LLP
July 31, 1997
F-2
<PAGE>
TAM RESTAURANT HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
September 29, June 29,
1996 1997
------------- -----------
(Unaudited)
Current Assets
Cash $ 66,616 $ 106,444
Accounts receivable (net of allowance
for doubtful accounts of $15,546) 264,948 987,242
Inventory 207,978 228,819
Prepaid and other expenses 270,216 356,206
Loan receivable-officer 53,602 23,516
---------- ----------
Total Current Assets 863,360 1,702,227
Property and Equipment-Net 3,551,303 4,327,920
Loans Receivable-Affiliate 177,438 156,682
Other Assets 136,767 136,767
---------- ----------
TOTAL ASSETS $4,728,868 $6,323,596
========== ==========
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
TAM RESTAURANT HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
LIABILITIES
<TABLE>
<CAPTION>
September 29, June 29,
1996 1997
------------- -----------
(Unaudited)
<S> <C> <C>
Current Liabilities
Revolving credit line payable $ 130,000 $ 130,000
Current portion of long-term debt 518,938 630,063
Current portion of capitalized lease obligations 81,081 78,596
Accounts payable 934,995 754,750
Contract deposits payable 238,329 485,992
Accrued expenses 986,804 1,754,249
---------- ----------
Total Current Liabilities 2,890,147 3,833,650
---------- ----------
Long-term Liabilities
Deferred rent expense 148,084 220,140
Deferred expenses 237,250 237,250
Deferred income 43,000 43,000
Loans payable-related parties 236,000 178,000
Long-term debt-net of current portion 816,592 851,753
Capitalized lease obligations-net of current
portion 249,040 189,026
Loan payable-MAT Operating Corp. 0 117,922
---------- ----------
Total Long-term Liabilities 1,729,966 1,837,091
---------- ----------
TOTAL LIABILITIES 4,620,113 5,670,741
---------- ----------
Commitments and Contingencies
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
TAM RESTAURANT HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
September 29, June 29,
1996 1997
---- ----
(Unaudited)
STOCKHOLDERS' EQUITY
Stockholders' Equity
Preferred stock; .0001 per value; 1,000,000
shares authorized, 0 shares issued and
outstanding 0 0
Common stock; .0001 par value;
19,000,000 shares authorized; 2,385,257
and 2,500,000 shares issued and
outstanding as of September 29, 1996
and June 29, 1997, respectively, 238 250
Additional paid-in capital 2,697,811 3,132,799
Accumulated deficit (2,589,294) (2,480,194)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 108,755 652,855
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,728,868 $ 6,323,596
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
TAM RESTAURANT HOLDING CORP.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
September 29, 1996 June 30, 1996 June 29, 1997
------------------ ------------- -------------
(Unaudited)
<S> <C> <C> <C>
Sales $ 11,847,088 $ 7,261,892 $ 8,902,628
Cost of Sales 7,260,440 4,502,373 5,064,207
------------ ------------ ------------
Gross Profit 4,586,648 2,759,519 3,838,421
Operating and Administrative Expenses 6,122,870 3,754,199 3,246,707
------------ ------------ ------------
Income (loss) from Operations (1,536,222) (994,680) 591,714
------------ ------------ ------------
Other Expense
Write-off of advance to affiliate (542,463) (542,463) 0
Interest expense (363,994) (270,282) (277,843)
Barter expense (293,135) (293,135) (204,771)
------------ ------------ ------------
Total Other Expense (1,199,592) (1,105,880) (482,614)
------------ ------------ ------------
Income (loss) from Continuing Operations
Before Income Tax Benefit (2,735,814) (2,100,560) 109,100
Income Tax Benefit 98,588 98,588 0
------------ ------------ ------------
Income (loss) from Continuing Operations (2,637,226) (2,001,972) 109,100
Income from Discontinued Operations (Net
of Income Taxes of $20,093) 30,142 30,142 0
------------ ------------ ------------
Net Income (loss) $ (2,607,084) $ (1,971,830) $ 109,100
============ ============ ============
Income (loss) per common share:
Income(loss) from continuing operations (1.22) (1.01) .05
Income from discontinued operations .01 .02 .00
------------ ------------ ------------
Net Income(loss) Per Common Share (1.21) (.99) .05
============ ============ ============
Weighted average number of
common shares outstanding 2,160,676 1,991,063 2,418,294
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
TAM RESTAURANT HOLDING CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
Paid In Accumulated
Shares Amount Capital Deficit
------ ------ ------- -------
<S> <C> <C> <C> <C>
Balance October 1, 1995 1,679,236 $ 168 $ 187,988 $ 17,790
Issuance of Common Stock 510,084 51 1,950,595
Issuance of Common Stock for Settlement 22,056 2 79,998
Common Stock Issued for Services 173,881 17 472,833
Transfer of Assets in Connection
with Reorganization (1,710)
Warrants Issued for Services 8,107
Net Loss for the Year (2,607,084)
----------- ----------- ----------- -----------
Balance at September 29, 1996 2,385,257 238 2,697,811 (2,589,294)
Issuance of Common Stock
(Unaudited) 55,141 6 199,994
Stock Issued for Debt (Unaudited) 59,602 6 234,994
Net Income (Unaudited) 109,100
----------- ----------- ----------- -----------
Balances at June 29, 1997 (Unaudited) 2,500,000 $ 250 $ 3,132,799 $(2,480,194)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
TAM RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
September 29, 1996 June 30, 1996 June 29, 1997
------------------ ------------- -------------
(Unaudited)
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ (2,607,084) $(1,971,830) $ 109,100
Adjustments to reconcile net income
(loss) to net cash used by operating
activities:
Depreciation and amortization
expense 359,969 142,650 207,833
Deferred rent expense 148,083 111,062 72,056
Deferred expenses 237,250 237,250 0
Deferred income (7,184) (7,184) 0
Special compensation expense 561,114 0 0
Write-off of advance to affiliate 542,643 542,643 0
(Increase) decrease in:
Accounts receivable (22,072) (459,418) (722,296)
Inventory (77,238) (135,060) (20,841)
Prepaid and other expenses (125,343) (125,343) (85,990)
Other assets (90,986) (90,986) 0
Increase (decrease) in:
Accounts payable 279,920 273,549 (180,243)
Contract deposits payable 62,476 209,764 247,663
Accrued expenses 370,629 526,258 767,445
-------------- -------------- -------------
Net Cash provided by (used in) Operating
Activities (367,823) (746,645) 394,727
-------------- -------------- -------------
Cash Flows from Investing Activities
Acquisition of property and equipment (2,458,971) (2,138,888) (984,450)
-------------- ------------- -------------
Net Cash used in Investing Activities (2,458,971) (2,138,888) (984,450)
------------ ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
TAM RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
September 29, 1996 June 30, 1996 June 29, 1997
------------------ ------------- -------------
(Unaudited)
<S> <C> <C> <C>
Cash Flows from Financing Activities
Net repayments of officers loans 60,545 114,147 30,086
Loans receivable 33,403 (20,199) 20,756
Proceeds from long-term debt 1,215,470 1,126,317 435,000
Principal payments on long-term debt (203,840) (72,040) (174,213)
Advances to affiliates and others 1,142 1,142 117,922
Proceeds from capital stock issue 1,638,936 1,674,336 200,000
------------ ------------- -------------
Net Cash provided by Financing Activities 2,745,656 2,823,703 629,551
------------ ------------- -------------
Net Increase (Decrease) in Cash (81,138) (61,830) 39,828
Cash, Beginning of Period 147,754 147,754 66,616
------------- -------------- --------------
Cash, End of Period $ 66,616 $ 85,924 $ 106,444
============= ============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Note A-Summary of Significant Accounting Policies
Nature of business
TAM Restaurant Holding Corp. ("The Company") was incorporated under the laws of
the State of Delaware in July 1996 under the name TAM Restaurant Holding Corp.
and changed its name to TAM Restaurants, Inc. Effective September 29, 1996, the
Company acquired all of the outstanding capital stock of TAM Restaurant Group,
Inc., Bay Landing Restaurant Corp. and Shellbank Restaurant Corp. The Company
operates Lundy Bros. Restaurant, a high-volume, casual, upscale seafood
restaurant located in Brooklyn, New York, and The Boathouse in Central Park, a
multi-use facility which features an upscale restaurant and catering pavilion,
located on the lake in New York City's Central Park. The Company is also
constructing American Park at the Battery, which has been designed as a
high-volume premium-quality restaurant to be located at the water's edge in
Battery Park. In addition, the Company's restaurants offer high-quality
professional, on-premise and off-premise catering services.
Corporate restructuring
Effective September 29, 1996, the Companies completed a corporate restructuring,
whereby, the concession business previously operated by TAM Restaurant Group
Inc., was spun-off to a new corporation, MAT Operating Corp. (MAT). These
concessions included the Central Park Zoo, the Staten Island Zoo, and the
Wollman Ice Rink at Central Park. MAT is owned by a principal shareholder, who
prior to the reorganization, was a principal shareholder of TAM Restaurant
Group, Inc. In addition, the stockholders of TAM Restaurant Group, Inc., Bay
Landing Restaurant Corp. and Shellbank Restaurant Corp., transferred all of the
stock owned by them in return for stock in the Company. This transaction has
been treated in a manner similar to a pooling of interest.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-10
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Accounting period
The Company reports their information using a 4-4-5 week quarter which ends on
the last Sunday of the month.
Revenue recognition
Revenues are recognized at the point of sale.
Inventory
Inventory is stated at the lower of cost, first-in, first-out, or market.
Inventory consists of items used in operations and items held for resale.
Property and equipment
Property and equipment are carried at cost. Depreciation of equipment, furniture
and fixtures, and amortization of leasehold improvements is provided using the
straight-line and double declining balance methods for financial reporting
purposes at rates based on the following estimated useful lives:
Years
-----
Transportation equipment 5
Furniture and fixtures 5-7
Equipment 5-7
Leasehold improvements Remaining life of lease
Expenditures for major renewals and betterments that extend the useful lives of
property and equipment are capitalized. Expenditures for maintenance and repairs
are charged to expense as incurred.
Trademarks
The name Lundy Bros. (registered July 9, 1996) and the logo F.W.I.L. (registered
December 17, 1996) are registered with the United States Patent and Technical
Office. Each registration will remain in force for 10 years, subject to the
filing of a Declaration of Continuing Use between the fifth and sixth
anniversaries of the registration date.
F-11
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Barter advances
The Company has entered into various barter agreements which they use as a
source of financing. Under the agreements, the Company is advanced cash in
exchange to provide food and beverage to the barter companies. For every dollar
advanced, the Company must return $1.60 to $2.00 in food and beverage sales.
Income taxes
The Company accounts for its income taxes using the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS No. 109), which requires the establishment of a deferred
tax asset or liability for the recognition of future deductible or taxable
amounts and operating loss carryforwards. Deferred tax expense or benefit is
recognized as a result of the changes in the assets and liabilities during the
year. Valuation allowances are established when necessary to reduce deferred tax
assets to amounts expected to be realized.
Deferred stock offering costs
Costs incurred in connection with the Company's proposed public offering of
common stock will be charged to capital in the period that the offering was
completed, or charged to operations if the offering is not successful.
Rent expense
The Company amortizes its rental space at Lundy's using the straight-line method
over the life of the lease.
Advertising expense
Advertising expenditures are charged to earnings when incurred.
Concentrations of credit risk
The Company extends credit based on an evaluation of the customer's financial
condition, generally without requiring collateral. Exposure to losses on
receivables is principally dependent on each customer's financial condition. The
Company monitors its exposure for credit losses and maintains allowances for
anticipated losses. No individual customer is considered to be significant.
F-12
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Net loss per share
Net loss per share of common stock is computed based on the weighted average
number of common stock and common stock equivalent shares outstanding during the
period. Common stock and warrants issued within twelve months of the IPO filing
for consideration below the proposed public offering price have been included as
if they had been outstanding for all periods presented.
Disclosure of fair value of financial instruments
The carrying amount of financial instruments including cash, accounts
receivable, accounts payable, accrued expenses and short-term debt approximated
fair value as of September 29, 1996 because of the relatively short maturity of
these instruments. Due to the unspecified payment terms, it was not practicable
to estimate the fair value of the loan to officer.
Interim financial information
The financial information presented as of June 29, 1997 and for the nine months
ended June 29, 1997 and June 30, 1996 is unaudited but, in the opinion of
management, reflects all adjustments (consisting of normal accruals) which the
Company considers necessary for a fair presentation of financial position at
such date and the operating results and cash flows for those periods. Results
for the nine month period ended June 29, 1997 are not necessarily indicative of
results that may be expected for the year ending September 29, 1997.
Recent accounting standards
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). SFAS No. 123 is effective for financial statements
issued for periods beginning after December 15, 1995 and encourages entities to
adopt the fair value method in place of the provisions for Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25),
for all arrangements under which employees receive shares of stock or other
equity instruments of the employer or the employer incurs liabilities to
employees in amounts based on the price of its stock. The Company does not
anticipate adopting the fair value method encouraged by SFAS No. 123 and will
account for such transactions in accordance with APB No. 25.
F-13
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (Statement 121), "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
Statement No. 121 requires, among other things, an impairment loss on assets to
be held and gains or losses from assets that are expected to be disposed of to
be included as a component of income from continuing operations before taxes on
income. The Company has adopted Statement No. 121 in fiscal 1997, and its
implementation has not had a material effect on the consolidated financial
statements.
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share" SFAS No. 128
is effective for financial statements issued for periods ending after December
15, 1997. SFAS No. 128 simplifies the computation of earnings per share by
replacing the presentation of primary earnings per share with a presentation of
basic earnings per share, as defined. The statement requires dual presentation
of basic and diluted earnings per share by entities with complex capital
structures. Basic earnings per share includes no dilution and is computed by
dividing income available to common stockholders by the weighted average number
of shares outstanding for the period. Diluted earnings per share reflects the
potential dilution of securities that could share in the earnings of an entity
similar to fully diluted earnings per share. SFAS No. 128 is not expected to
have a significant impact on the Company's financial statements.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information," were
issued. SFAS No. 130 addresses standards for reporting and display of
comprehensive income and its components and SFAS No. 131 requires disclosure of
reportable operating segments. Both statements are effective for the Company's
1998 fiscal year. The Company will be reviewing these pronouncements to
determined their applicability, if any.
Note B-Inventory
Inventory is comprised of the following:
9/29/96 6/29/97
--------- ---------
(Unaudited)
Food and beverage $ 63,480 $ 72,673
Liquor 61,645 71,782
Paper 4,353 2,869
Small wares, utensils, and supplies 78,500 81,495
----------- -----------
$ 207,978 $ 228,819
=========== ===========
F-14
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Note C-Prepaid and Other Expenses
Prepaid and other expenses include the following:
<TABLE>
<CAPTION>
9/29/96 6/29/97
------- -------
(Unaudited)
<S> <C> <C>
Refundable rent deposit $ 50,000 $ 50,000
Income taxes receivable 108,723 143,782
Prepaid expenses 60,028 162,424
Other receivables 51,465 0
----------- -----------
$ 270,216 $ 356,206
=========== ===========
Note D-Property and Equipment
Property and equipment is summarized as follows:
9/29/96 6/29/97
------- -------
(Unaudited)
Transportation equipment and trailers $ 158,406 $ 182,396
Furniture and fixtures 229,075 294,194
Equipment 1,308,098 1,479,624
Leasehold improvements 3,181,543 3,905,358
Assets acquired under capital leases 355,974 355,974
Computer software 35,469 35,469
----------- -----------
5,268,565 6,253,015
Less accumulated depreciation and amortization 1,717,262 1,925,095
----------- -----------
$ 3,551,303 $ 4,327,920
=========== ===========
</TABLE>
Depreciation and amortization expense totaled $359,969 and $207,833 for the year
ended September 29, 1996 and the nine months ended June 29, 1997, respectively.
Note E-Other Assets
Included in other assets are treasury bonds which were purchased on February 15,
1985 at a cost of $9,704, with a face value of $10,000. The bonds are held in
escrow by Chemical Bank in lieu of a security deposit for the Boathouse
concession.
F-15
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Note F-Accrued Expenses
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
9/29/96 6/29/97
------- -------
(Unaudited)
<S> <C> <C>
Sales tax payable $ 477,140 $ 556,471
Accrued rent expense and related taxes 353,498 370,037
Barter advances 0 449,227
Accrued payroll and payroll taxes 148,651 338,475
Accrued other expenses 7,515 40,039
------------ ----------
$ 986,804 $1,754,249
============ ==========
</TABLE>
Note G-Borrowings
The Company's loans outstanding are as follows:
<TABLE>
<CAPTION>
9/29/96 6/29/97
------- -------
(Unaudited)
<S> <C> <C>
Installment loan payable to Fleet Bank in 59 monthly
installments of $1,108 plus interest at a rate of 9.56%
with a balloon payment of $67,609 due in July 1999.
The loan is collateralized by New Jersey property
which is owned by an affiliated company. $ 105,291 $ 99,751
Installment loan payable to Fleet Bank in 83 monthly
installments of $2,372, plus interest of 9.76% with a
balloon payment of $230,124 due in 2001. The loan
is collateralized by the Companies' offices
which are located in Staten Island, New York. 362,956 351,096
Mortgage loan payable to Fleet Bank, bearing interest
at the bank's prime rate plus 2% which expired in
1996. Monthly installments of interest only are due on
this mortgage. The loan is secured by a collateral
mortgage held by two primary stockholders. 150,000 150,000
</TABLE>
F-16
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
<TABLE>
<S> <C> <C>
Installment loan payable in 18 equal monthly
installments of $2,952 to Central Laundry Services
Corp. including interest at a rate of 6% beginning
January 10, 1996. The loan is collateralized by a
security interest in equipment with a net book
value of $21,868. 25,728 0
Installment loan payable in 60 monthly payments of
$3,187 to Brooklyn Union Gas Company, including
interest at a rate of 10% beginning December 1, 1995.
The loan is collateralized by equipment with a net
book value of $127,500. 129,887 110,301
Unsecured loan payable to a private investor bearing
interest at 21%. During 1997, $40,000 was paid on
this note and the remaining balance $160,000 was
converted to capital. 200,000 0
Unsecured loans from private investors bearing
interest at from rates 12% to 15% per annum.
In fiscal 1997, $75,000 of these loans were
converted to capital. 361,668 770,668
------------ ------------
1,335,530 1,481,816
Less portion due within one year 518,938 630,063
------------ ------------
Long-term debt $ 816,592 $ 851,753
============ ============
Maturities of long-term debt are as follows:
For the year ending September, 1997 $ 518,938
For the year ending September, 1998 357,648
For the year ending September, 1999 139,430
For the year ending September, 2000 63,824
For the year ending September, 2001 255,690
------------
$ 1,335,530
</TABLE>
F-17
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
The Company has a credit line payable to Fleet Bank, bearing interest at the
bank's prime rate plus 2% which expired in December 1996. The loan is
collateralized by a security interest in all Company assets. (See Note Q also.)
Note H-Capital Lease Obligations
The Company leases equipment and various leasehold improvements under capital
leases. The assets acquired under capital leases have a cost of $355,974,
accumulated amortization of $51,168 and a net book value of $304,806.
Amortization of the leased assets is included in depreciation expense.
The following is a schedule by year of future minimum lease payments under
capitalized leases together with the present value of the net minimum lease
payments at September 29, 1996.
Payments for the year ending:
September, 1997 $ 126,058
September, 1998 126,058
September, 1999 101,840
September, 2000 59,096
September, 2001 9,329
------------
Total minimum lease payments 422,381
Less amount representing interest (92,260)
Present value of net minimum lease payments 330,121
Less current portion (81,081)
------------
Long-term lease obligation $ 249,040
============
F-18
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Note I-Commitments and Contingencies
The Companies have entered into various lease and licensing agreements which
expire through 2015.
All of the Companies license agreements require the payment of rent based on a
percentage of gross receipts. Future minimum rental payments are as follows:
Year Ending September 30,
1997 $ 415,338
1998 444,389
1999 455,842
2000 441,238
2001 381,831
Thereafter 6,440,649
-----------
$ 8,579,287
===========
Rent expense, real estate taxes and common area charges for the year ended
September 29, 1996 totaled $944,828, $46,914 and $7,200 respectively. TAM
Restaurant Group, Inc. has a license agreement with the Central Park Zoo. MAT
has assumed the operation of the concession granted by such license agreement as
a result of a restructuring (See Note A also). However, TAM Restaurant Group,
Inc. is still responsible as a primary concessionaire until October 1998 when
the license expires. The lease requires payment of 39% of total sales as a
licensing fee. Sales for the nine months ended June 29, 1997 relating to this
license amounted to $532,603.
TAM Restaurant Group, Inc. is currently being audited by New York State for
sales and use taxes for the period December 1, 1989 to June 28, 1993. Management
believes and the company has accrued $50,000 for additional taxes that may be
due, exclusive of interest and penalties, if any. As of July, 1997 this audit
has not been completed.
F-19
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Note J-Related Party Transactions
In April 1988, Perfect Parties, the catering division of TAM Restaurant Group,
Inc. was transferred to Forest Avenue Corporation which is owned by stockholders
of the Company. Forest Avenue Corporation utilized equipment of the Company at
no charge. Forest Avenue Corporation also received management services from the
Company. On September 3, 1996, the assets of Forest Avenue Corporation were sold
to an unrelated third party. As a result, the Company wrote-off $542,463
representing monies advanced as well as unpaid management fees and equipment
notes to Forest Avenue Corporation which are uncollectible.
In March 1994, Leisure Time Services, Inc. which is owned by a stockholder of
the Company was formed to purchase, repair and store equipment and supplies for
the company as well as to assist the company in the performance of special
catering events. Rent paid by the Company for the year ended September 29, 1996
for utilization of the warehouse was $28,300. All the income and expenses for
other operations of Leisure Time Services are absorbed by the Company and
reflected in the accompanying financial statements. In late 1994, the Companies
obtained long-term financing from Fleet Bank (see Note G also). The borrowings
are collateralized by a warehouse located in New Jersey and owned by Leisure
Time Services, Inc. In order to provide the bank with the proper title, some of
the funds borrowed were used to pay off the mortgages and other related costs on
the collateralized property. As of September 29, 1996, included in the
accompanying consolidated balance sheet under the caption loans
receivable-affiliate is $177,438 which was used to secure the title on the New
Jersey warehouse. This loan is being repaid in equal monthly installments of
$1,996 including interest at 9.6% through December, 2006.
Similarly, in obtaining long-term financing from Fleet Bank, the Company's
headquarters facility located in Staten Island, NY (owned by the Company's
stockholder) was used to collateralize the debt and to provide the bank with
proper title.
Additionally, the Company occasionally advanced monies to officers of the
Company. No terms of repayment or interest rate have been determined on these
advances. As of September 29, 1996 the balance in this account was $53,602. In
1997, repayments of $30,086 were made against this loan by the officer.
The Company is indebted to relatives of the principal stockholder in the amounts
of $236,000 and $178,000 for the periods ending September 29, 1996 and June 29,
1997, respectively. The notes are unsecured and bear interest from 12% to 15%
per annum.
F-20
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
For the year ending September 29, 1996, the Company has reduced operating
expenses by $71,670 representing management fee income from MAT. (See Note M)
Note K-Capital Stock and Warrants
During fiscal 1996, the Company issued 173,881 shares and granted 55,141
warrants with an original exercise price of $5.44 per share and 3,000 warrants
with an original exercise price of $.01 per share for services received. In
addition, the Company issued 4,724 of warrants with original exercise price of
$4.53 per share to an officer of the Company for prior compensation.
Additionally, during fiscal 1996, the Company sold units consisting of .5514
share of common stock and .05514 warrants for $2.00 per unit and .5514 share of
common stock, and .11028 warrants for $2.27 per unit. The warrants had an
original exercise price of $4.53 per share. The Company sold 925,050 units.
During the nine months ended June 29, 1997, the Company sold an additional
100,000 units at $2.27 per unit, and converted $240,000 of debt into 108,090
additional units.
At June 29, 1997, there were an aggregate of 307,486 warrants outstanding.
The Company has agreed with certain stockholders to repurchase 158,531 shares of
common stock at a original cost of $575,000 if the Company was not in process of
going public by certain specified dates or if the Initial Public Offering is not
successful. Such repurchase would be executed by utilizing interest bearing
notes. There have not been any requests by any shareholders to have their stock
repurchased. The Company is currently negotiating with these stockholders to
eliminate their right to require the Company to repurchase such shares.
For the year ended September 29, 1997, the Company issued 22,056 shares of
Common Stock and .5514 warrants as part of a settlement, resulting in a
non-recurring charge of $80,000.
The Board of Directors is authorized to fix the rights, preferences, privileges
and restrictions of any series of preferred stock, including the dividend
rights, original issue price, conversion rights, voting rights, terms of
redemption, liquidation preferences and sinking fund terms thereof, and the
number of shares constituting any such series and the designation thereof and to
increase or decrease the number of shares subsequent to the issuance of shares
of such series (but not below the number of shares of such series then
outstanding.)
F-21
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Note L-Income Taxes
Income tax benefit has been calculated as follows:
9/29/96 6/30/96 6/29/97
------- ------- -------
(Unaudited)
Federal taxes $ 49,390 $ 49,390 $ 0
State and local taxes 49,198 49,198 0
---------- ---------- -------------
$ 98,588 $ 98,588 $ 0
========= ========= ============
The Company's deferred tax assets, deferred tax liabilities and deferred tax
asset valuation allowance at September 29, 1996 are as follows:
Deferred rent expense $ 50,593
Deferred expenses 80,665
Net operating loss carryforward 466,779
Depreciation 19,386
Vacation pay and officers' payroll accrual 13,017
----------
Total deferred tax assets 630,440
Less valuation allowance (630,440)
0
Total deferred tax liabilities 0
----------
Net deferred tax asset $ 0
==========
The tax benefit from a net operating loss carryback resulted in a income tax
receivable of $108,723 at September 29, 1996.
A valuation allowance of 100% is being recorded due to the uncertainty as to the
Company's ability to continue as a going concern.
For tax purposes, the Companies have approximately $1,845,114 of net operating
loss carryforwards as of September 29, 1996 which expire through 2011.
F-22
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
The difference between the amount of income tax expense that would result from
applying the federal statutory rate of 34% to pre-tax income and the provision
for federal income taxes are as follows:
<TABLE>
<CAPTION>
9/29/96 6/30/96 6/29/97
------- ------- -------
(Unaudited)
<S> <C> <C> <C>
Income tax (benefit) at statutory rate $(886,409) $(670,422) $ 37,094
Reduction in valuation allowance
relating to tax benefit due to net
operating loss limitation 787,821 571,834 0
Reduction of valuation allowance
due to utilization of net operating loss 0 0 (37,094)
---------- ----------- ----------
Net Tax (Benefit) $ (98,588) $ (98,588) $ 0
========== =========== ==========
</TABLE>
Note M-Discontinued Operations
As a result of a corporate restructuring (see Note A also), the concession
business previously operated by TAM Restaurant Group, Inc. was spun off to a new
corporation. The following is a summary of the financial information of the
concessions as of September 29, 1996:
Assets $ 90,239
Liabilities (88,529)
------------
Difference $ 1,710
============
Sales $1,433,409
Purchases 309,289
Gross Profit 1,124,120
Operating Expenses (1,073,885)
------------
Operating Income 50,235
Income Taxes (20,093)
------------
Net Income $ 30,142
============
The operations at Wollman Rink terminated in February 1996. The operations at
the Central Park Zoo and Staten Island Zoo are still being operated by MAT.
Operating expense included above reflect a 5% (of sales) management fee charged
to each location from TAM Restaurant Holding Corp.
F-23
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
As a result of the transfer of assets and liabilities, additional paid in
capital of the companies was reduced by $1,710.
Note N-Going Concern
As shown in the accompanying financial statements, the Company incurred a net
loss of $2,607,084 during the year ended September 29, 1996 and as of that date,
the Company's current liabilities exceeded its current assets by $2,026,787.
These factors raise substantial doubt as to the Company's ability to continue as
a going concern. The ability of the Company to continue as a going concern is
dependent upon the success of an initial public offering, or the ability of the
company to obtain debt financing from a bank or private lenders or, raising
additional capital through a private placement offering. The financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
Note O-Pending Litigation
TAM Restaurant Group Inc. and Bay Landing Restaurant Corp. have been named as
defendants and/or co-defendants in four separate personal injury lawsuits
arising in the ordinary course of business. These cases are in the preliminary
stages and, as such, the ultimate outcome of the litigation cannot presently be
determined. All the suits are being handled by the Company's insurance carriers.
Management believes the suits against the Company to be entirely without merit
and anticipates that the suits will have no material impact on the Company.
Accordingly, no provision for any liability that may result upon adjudication
has been made in the accompanying financial statements by the companies.
Note P-Cash Flow Disclosure
Cash paid for interest and income taxes is as follows:
9/29/96 6/30/96 6/29/97
------- ------- -------
(Unaudited)
Interest $ 312,366 $ 218,656 $ 277,843
============ ============= ============
Income taxes $ 0 $ 0 $ 2,800
============ ============= ============
F-24
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
Non-Cash Transactions included the following:
For the period ended June 29, 1997, the Company exchanged debt in the amount of
$235,000 and converted it to capital.
Note Q-Subsequent Events
In connection with a proposed initial public offering of its common stock, the
Company will effect a 1-for-1.8135268 reverse stock split. All shares and per
share data in the consolidated financial statements have been adjusted to give
retroactive effect to the reverse stock split.
In addition, effective as of the date of the IPO, the Company will enter into
three year employment agreements with Frank Cretella and Jeanne Cretella, which
is contractually renewable and provides for an annual base compensation of
$175,000 and $75,000, respectively, and such bonuses as the Board of Directors
may from time to time determine.
Also, effective as of the date of the IPO, the Company will initiate a stock
option plan (the "Option Plan") pursuant to which 525,000 shares of Common Stock
have been reserved for issuance upon the exercise of options designated as
either (i) options intended to constitute incentive stock options ("ISOs") under
the Internal Revenue Code of 1986, as amended (the "Code") or (ii) non-qualified
options. ISOs may be granted under the Option Plan to officers and employees of
the Company. Non-qualified options may be granted to consultants, directors
(whether or not they are employees), employees or officers of the Company.
F-25
<PAGE>
TAM RESTAURANT HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information relating to June 29, 1997
and June 30, 1996 is unaudited.)
During 1995 and 1996, the Company borrowed an aggregate of $840,000 from Fleet.
Such loans were collateralized by the Company's principal executive offices,
which are owned by Mr. Cretella, and the warehouse leased by the Company and
owned by Leisure Time Services, Inc., a company owned by Jeanne Cretella, Vice
President, Director and a principal stockholder of the Company, and Mr. and Mrs.
Cretella's personal residence. In June 1997, Mr. Cretella agreed to settle the
amounts owed to Fleet of $720,125 for $640,000 plus accrued interest through the
date of payment. In August 1997, Mr. Cretella paid to Fleet $140,000 as part of
the settlement, and the balance was paid in October, 1997. As consideration for
entering into the settlement, the Company has issued to Mr. Cretella a
promissory note in the principal amount of $720,125, which bears interest at a
rate of 10% per annum, payable in monthly installments of $6,102, with the
principal payable in October, 2001 upon the maturities of the note.
In October, 1997, the Company obtained $1,000,000 in a secured loan from an
outside investment firm. The loan bears interest at 10% per annum, payable
quarterly and matures nineteen months after the funding date, if the Company's
initial public offering becomes effective prior to April 15, 1998; otherwise,
the loan is due July 15, 1998. The loan is guaranteed by a principal stockholder
of the Company and the guarantee is secured by a pledge of 200,000 shares of
common stock held by such shareholder.
F-26
<PAGE>
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or the Underwriter. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, any security other than the securities offered by this Prospectus, or an
offer to sell or a solicitation of an offer to buy any securities by anyone in
any jurisdiction in which such offer or solicitation is not authorized or is
unlawful. The delivery of this Prospectus shall not, under any circumstances,
create any implication that the information contained herein is correct as of
any time subsequent to the date hereof.
----------
TABLE OF CONTENTS
Page
----
Prospectus Summary...........................................................3
Risk Factors.................................................................8
Use of Proceeds.............................................................17
Dilution....................................................................18
Dividend Policy.............................................................19
Capitalization..............................................................20
Selected Financial Data.....................................................21
Management's Discussion and Analysis of
Financial Condition and Results of Operations..............................22
Business....................................................................26
Management..................................................................35
Principal Stockholders......................................................38
Certain Transactions........................................................39
Description of Securities...................................................41
Shares Eligible for Future Sale.............................................43
Underwriting................................................................44
Selling Securityholders and Plan of Distribution............................47
Legal Matters...............................................................47
Experts.....................................................................47
Additional Information......................................................48
Index to Financial Statements..............................................F-1
----------
Until , 1997, (25 days after the date of this Prospectus), all
dealers effecting transactions in the shares of Common Stock or Warrants offered
hereby, whether or not participating in this distribution may be required to
deliver a Prospectus. This is in addition to the obligation of dealers to
deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
================================================================================
<PAGE>
================================================================================
TAM RESTAURANTS, INC.
1,000,000 Shares of Common Stock
and
Redeemable Warrants to Purchase
500,000 Shares of Common Stock
----------
PROSPECTUS
----------
Paragon Capital Corporation
, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorizes Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits a
corporation, by so providing in is certificate of incorporation, to eliminate or
limit director's liability to the corporation and its stockholders for monetary
damages arising out of certain alleged breaches of their fiduciary duty. Section
102(b)(7) provides that no such limitation of liability may affect a director's
liability with respect to any of the following: (i) breaches of the director's
duty of loyalty to the corporation or its stockholders; (ii) acts or omissions
not made in good faith or which involve intentional misconduct of knowing
violations of law; (iii) liability for dividends paid or stock repurchased or
redeemed in violation of the Delaware General Corporation law; or (iv) any
transaction from which the director derived an improper personal benefit.
Section 102(b)(7) does not authorize any limitation on the ability of the
corporation or its stockholders to obtain injunction relief, specific
performance or other equitable relief against directors.
Article Eighth of the Registrant's Certificate of Incorporation and the
Registrant's By-laws provide that all persons who the Registrant is empowered to
indemnify pursuant to the provisions of Section 145 of the General Corporation
Law of the State of Delaware (or any similar provision or provisions of
applicable law at the time in effect), shall be indemnified by the Registrant to
the full extent permitted thereby. The foregoing right of indemnification shall
not be deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
Article Ninth of the Registrant's Certificate of Incorporation provides
that no director of the Registrant shall be personally liable to the Registrant
or its stockholders for any monetary damages for breaches of fiduciary duty of
loyalty to the Registrant or its stockholders' (ii) for acts or omission not in
good faith or which involve intentional misconduct or knowing-violation of law;
(iii) under Section 174 of the General Corporation Law of the State of Delaware;
or (iv) for any transaction from which the director derived an improper personal
benefit.
Insofar as indemnification for liabilities under the Securities Act of
1933, as amended (the "Securities Act") may be permitted to directors, officers
or persons controlling the Registrant pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Reference is made to the Underwriting Agreement, the proposed form of
which is filed as Exhibit 1.1, pursuant to which the Underwriter agree to
indemnify the directors and certain officers of the Registrant and certain other
persons against certain civil liabilities.
II-1
<PAGE>
Item 25. Other Expenses of Issuance and Distribution.
The estimated expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered (other than
underwriting discounts and commissions and the Underwriter's nonaccountable
expense allowance) are as follows:
Securities and Exchange Commission registration fee............... $3,378.33
NASD filing fee................................................... 1,614.85
Nasdaq listing fee................................................ 10,000.00
Underwriter's consulting fee...................................... 60,000.00
Printing and engraving expenses................................... *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Blue sky fees and expenses (including legal fees)................. *
Transfer agent, warrant agent and registrar fees and expenses..... *
Miscellaneous..................................................... *
----------
Total.................................................... $443,500.00
===========
- -------------------
* To be filed by amendment.
Item 26. Recent Sales of Unregistered Securities
Since October 1995, the Registrant has issued securities without
registration under the Securities Act in the following transactions (in each
case giving retroactive effect to the subsequent stock splits):
1. From October 1995 to September 1996, the Registrant issued an
aggregate of 510,084 shares of Common Stock and warrants to purchase 181,600
shares of Common Stock to 31 investors for aggregate proceeds of $1,980,000.
2. In July 1996, the Registrant issued an aggregate of 173,881 shares
of Common Stock and warrants to purchase 3,000 shares of Common Stock to 7
persons and entities as consideration for services rendered to the Registrant.
3. In September 1996, the Registrant issued 22,056 shares of Common
Stock and warrants to purchase 5,514 shares of Common Stock to four persons as
settlement of a dispute.
4. In February 1997, the Registrant issued 55,141 shares of Common
Stock and warrants to purchase 27,571 shares of Common Stock to one investor for
$200,000.
5. During 1997, the Registrant issued 59,602 shares of Common Stock and
warrants to purchase 21,530 shares of Common Stock to three persons upon the
conversion of $235,000 of indebtedness.
6. In October 1997, the Registrant issued warrants to purchase 4,724
shares of Common stock to an officer and director as compensation.
7. In October 1997, the Registrant issued warrants to purchase 200,000
shares of Common Stock to three entities as partial consideration for making
loans to the Registrant.
The sales and issuances of the Common Stock and warrants described
above were deemed to be exempt from registration under the Securities Act in
reliance upon Section 4(2) thereof as transactions not involving a public
offering. The purchasers in such private offerings represented their intention
to acquire the securities for investment only and not with a view to the
distribution thereof and appropriate legends were affixed to the stock
certificates issued in such
II-2
<PAGE>
transactions. All purchasers had adequate access, through their employment or
other relationships, to sufficient information about the Registrant to make an
informed investment decision.
Item 27. Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C> <C>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation, as amended, of the Registrant.
3.2 Bylaws, as amended, of the Registrant.
*4.1 Form of Registrant's Common Stock Certificate.
4.2 Form of Underwriter's Warrant Agreement, including Form of Warrant Certificate.
4.3 Form of Public Warrant Agreement among the Registrant, Paragon Capital Corporation, as
Underwriter and Continental Stock Transfer & Trust Company, as Warrant Agent.
*4.4 Form of Registrant's Public Warrant Certificate.
*5.1 Opinion of Tenzer Greenblatt LLP.
10.1 License Agreement between TAM Restaurant Group, Inc. (formerly TAM Concessions, Inc.) and
City of New York Department of Parks and Recreation, dated February 8, 1995, as modified.
10.2 License Agreement between Shellbank Restaurant Corp. and City of New York Parks and Recreation
dated December 14, 1994.
10.3 Lease by and between Lundy's Management Corp. and Bay Landing Restaurant Corp. dated July 24,
1994, as amended.
10.4 Lease by and between Mr. Frank Cretella and the Registrant dated October 1, 1996.
10.5 Lease by and between Leasing Time Services and the Registrant dated October 1, 1996.
10.6 Management Agreement by and between the Registrant and MAT Operating Corp. dated October 1,
1996.
10.7 Loan Agreement by and between the Registrant and each of ARBCO Associates, L.P. and Kayne,
Anderson Non-Traditional Investments, L.P. dated as of October 31, 1997.
*10.8 Form of Employment Agreement between Registrant and Frank Cretella.
*10.9 Form of Employment Agreement between Registrant and Jeanne Cretella.
*10.10 1997 Stock Option Plan.
23.1 Consent of Maltese, Potter & LaMarca, LLP, Independent Certified Public Accountants.
*23.2 Consent of Tenzer Greenblatt LLP (will be contained in such firm's opinion filed as Exhibit).
24.1 A power of attorney relating to the signing of amendments hereto is incorporated in the signature
pages of this Registration Statement.
27.1 Financial Data Schedule.
</TABLE>
- ---------------------
* To be filed by amendment.
Item 28. Undertakings.
The undersigned registrant hereby undertakes to:
(1) file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) include any prospectus required by section 10(a)(3) of the
Securities Act.
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) include any additional or changed material information
on the plan of distribution;
II-3
<PAGE>
(2) for determining liability under the Securities Act, treat each such
post-effective amendment as a new registration of the securities offered, and
the offering of such securities at that time to be initial bona fide offering;
and
(3) file a post-effective amendment to remove from registration any of
the securities that remain unsold at the termination of the offering.
lnsofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the standby under writing agreement
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser; (2) that for the
purpose of determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act as part of this Registration Statement as of the time
the Securities and Exchange Commission declares it effective; and (3) that for
the purpose of determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of Prospectus as a new
Registration Statement for the securities offered in the Registration Statement
therein, and treat the offering of the securities at that time as the initial
bona fide offering of those securities.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the city of New
York, State of New York on November 11, 1997.
TAM RESTAURANTS, INC.
By: /s/ Frank Cretella
------------------------
President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below on this Registration
Statement hereby constitutes and appoints Frank Cretella and Jeanne Cretella,
and each of them, as his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities (until revoked in writing) to sign any and all
amendments (including pre-effective amendments and post-effective amendments and
amendments thereto) to this Registration Statement on Form SB-2 of TAM
Restaurants, Inc. and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone or his substitute, may lawfully do or cause to be done
by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signatures Title(s) Date
---------- -------- -----
<S> <C> <C>
/s/ Frank Cretella President, Chief Executive Officer November 11, 1997
- ------------------------------------- October and Director (Principal
Frank Cretella Financial Officer)
/s/ Jeanne Cretella Vice President and Director November 11, 1997
- -------------------------------------
Jeanne Cretella
/s/ Kenneth L. Harris Chairman of the Board November 11, 1997
- -------------------------------------
Kenneth L. Harris
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C> <C>
1.1 Form of Underwriting Agreement.
4.2 Form of Underwriter's Warrant Agreement, including Form of Warrant Certificate.
4.3 Form of Public Warrant Agreement among the Registrant, Paragon Capital Corporation, as
Underwriter and Continental Stock Transfer & Trust Company, as Warrant Agent.
10.1 License Agreement between TAM Restaurant Group, Inc. (formerly TAM Concessions, Inc.) and
City of New York Department of Parks and Recreation, dated February 8, 1995, as modified.
10.2 License Agreement between Shellbank Restaurant Corp. and City of New York Parks and Recreation
dated December 14, 1994.
10.3 Lease by and between Lundy's Management Corp. and Bay Landing Restaurant Corp. dated July 24,
1994, as amended.
10.4 Lease by and between Mr. Frank Cretella and the Registrant dated October 1, 1996.
10.5 Lease by and between Leasing Time Services and the Registrant dated October 1, 1996.
10.6 Management Agreement by and between the Registrant and MAT Operating Corp. dated October 1,
1996.
10.7 Loan Agreement by and between the Registrant and each of ARBCO Associates, L.P. and Kayne,
Anderson Non-Traditional Investments, L.P. dated as of October 31, 1997.
23.1 Consent of Maltese, Potter & LaMarca, LLP, Independent Certified Public Accountants.
</TABLE>
<PAGE>
TAM RESTAURANTS, INC.
1,000,000 Shares of Common Stock
($.0001 Par Value)
and
Warrants to Purchase 500,000 Shares of Common Stock
UNDERWRITING AGREEMENT
----------------------
Paragon Capital Corporation , 1998
7 Hanover Square - 2nd Floor
New York, New York 10004
Dear Sirs:
TAM Restaurants, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Paragon Capital Corporation (the "Underwriter") an
aggregate of one million (1,000,000) shares of common stock of the Company (the
"Common Stock"), par value $.0001 per share (the "Offered Shares"), which
Offered Shares are presently authorized but unissued shares of the common stock,
par value $.0001 per share (individually "Common Share" and collectively the
"Common Shares"), of the Company, at a price of Five Dollars ($5.00) per Offered
Share, and Five Hundred Thousand (500,000) Common Share purchase warrants (the
"Offered Warrants"), at a price of Ten Cents ($.10) per Offered Warrant,
entitling the holder of each Offered Warrant to purchase, during the period
commencing _________, 1999 (13 months following the Effective Date) or earlier
upon the consent of the Underwriter and ending at the close of business on
________, 2003 (the last day of the 60th month following the Effective Date),
one (1) Common Share, at an exercise price of Six Dollars ($6.00) (subject to
adjustment in certain circumstances). The Company shall have the right to call
each Offered Warrant for redemption upon not less than thirty (30) days' written
notice at any time at a redemption price of Ten Cents ($.10) per Offered
Warrant, provided that the closing bid quotation of the Common Stock has been at
least 150% (currently $9.00) of the then-effective exercise price of the Offered
Warrants on all twenty (20) of the trading days ending upon the third trading
day prior to the day on which the Company notice of redemption (the "Call Date")
and that the Company obtains the written consent of the Underwriter to such
redemption prior to the Call Date. In addition, the Underwriter, in order to
cover over-allotments in the sale of the Offered Shares and/or Offered Warrants,
may purchase an aggregate of not more than one hundred
<PAGE>
fifty thousand (150,000) Common Shares (the "Optional Shares") and/or
seventy-five thousand (75,000) Common Share purchase warrants (the "Optional
Warrants") entitling the holder of each Optional Warrant to purchase one (1)
Common Share on the same terms as the Offered Warrants. The Offered Shares and
the Optional Shares are hereinafter collectively referred to as the "Shares";
and the Offered Warrants and the Optional Warrants are hereinafter collectively
referred to as the "Warrants." The Warrants will be issued pursuant to a Warrant
Agreement (the "Warrant Agreement") to be dated as of the Closing Date (as
hereinafter defined) by and among the Company, the Underwriter and Continental
Stock Transfer & Trust Company, as warrant agent (the "Warrant Agent").
The Company also proposes to issue and sell to the Underwriter
for its own account and the accounts of its designees, warrants (the
"Underwriter's Warrants") to purchase an aggregate of one hundred thousand
(100,000) Common Shares (collectively, the "Underlying Shares") and fifty
thousand (50,000) warrants similar but not identical to the Warrants
(collectively, the "Underlying Warrants"), which sale will be consummated in
accordance with the terms and conditions of the form of Underwriter's Warrant
filed as an exhibit to the Registration Statement. The Underlying Shares and the
Common Shares issuable upon exercise of the Warrants and the Underlying Warrants
are hereinafter sometimes referred to as the "Warrant Shares". The Shares, the
Warrants, the Underwriter's Warrants, the Underlying Warrants and the Warrant
Shares (collectively, the "Securities") are more fully described in the
Registration Statement and the Prospectus, as defined below.
The Company hereby confirms its agreement with the Underwriter
as follows:
1. Purchase and Sale of Offered Shares and Offered Warrants.
On the basis of the representations and warranties herein contained, but subject
to the terms and conditions herein set forth, the Company hereby agrees to sell
the Offered Shares and Offered Warrants to the Underwriter and the Underwriter
agrees to purchase the Offered Shares and Offered Warrants from the Company, at
a purchase price of $4.50 per Offered Share and $.09 per Offered Warrant. The
Underwriter plans to offer the Offered Shares and Offered Warrants to the public
at a public offering price of $5.00 per Offered Share and $.10 per Offered
Warrant.
2. Payment and Delivery.
(a) Payment for the Offered Shares and Offered
Warrants will be made to the Company by certified or official bank check or
checks payable to its order in New York Clearing House, next day, funds, at the
offices of the Underwriter, 7 Hanover Square - 2nd Floor, New York, New York
10004, against delivery of
-2-
<PAGE>
the Offered Shares and Offered Warrants to the Underwriter. Such payment and
delivery will be made at _________________, New York City time, on the third
business day following the Effective Date (as hereinafter defined) or the fourth
business day following the Effective Date if the Shares and Warrants are
released for trading on the day immediately following the Effective Date, the
date and time of such payment and delivery being herein called the "Closing
Date." The certificates representing the Offered Shares and Offered Warrants to
be delivered will be in such denominations and registered in such names as the
Underwriter may request not less than three full business days prior to the
Closing Date, and will be made available to the Underwriter for inspection,
checking and packaging at the office of the Company's transfer agent or
correspondent in New York City, Continental Stock Transfer & Trust Company, Two
Broadway, New York, New York 10004 not less than one full business day prior to
the Closing Date.
(b) On the Closing Date, the Company will sell the
Underwriter's Warrants to the Underwriter or to its designees. The Underwriter's
Warrants will be in the form of, and in accordance with, the provisions of the
Underwriter's Warrant attached as an exhibit to the Registration Statement. The
aggregate purchase price for the Underwriter's Warrants is $105. The
Underwriter's Warrants will be restricted from sale, transfer, assignment or
hypothecation for a period of one year from the Effective Date, except to
officers and directors of the Underwriter and members of the selling group
and/or their officers or directors. Payment for the Underwriter's Warrants will
be made to the Company by check or checks payable to its order on the Closing
Date against delivery of the certificates representing the Underwriter's
Warrants. The certificates representing the Underwriter's Warrants will be in
such denominations and such names as the Underwriter may request prior to the
Closing Date.
3. Option to Purchase Optional Shares and/or Optional
Warrants.
(a) For the purposes of covering any over-allotments
in connection with the distribution and sale of the Offered Shares and Offered
Warrants as contemplated by the Prospectus, the Underwriter is hereby granted an
option to purchase all or any part of the Optional Shares and/or Optional
Warrants from the Company. The purchase price to be paid for the Optional Shares
and Optional Warrants will be the same price per Optional Share and Optional
Warrant as the price per Offered Share or Offered Warrant, as the case may be,
set forth in Section 1 hereof. The option granted hereby may be exercised by the
Underwriter as to all or any part of the Optional Shares and/or the Optional
Warrants at any time within 45 days after the Effective Date. The Underwriter
will not be under any obligation to purchase any
-3-
<PAGE>
Optional Shares or Optional Warrants prior to the exercise of such option.
(b) The option granted hereby may be exercised by the
Underwriter by giving oral notice to the Company, which must be confirmed by a
letter, telex or telegraph setting forth the number of Optional Shares and
Optional Warrants to be purchased, the date and time for delivery of and payment
for the Optional Shares and Optional Warrants to be purchased and stating that
the Optional Shares and Optional Warrants referred to therein are to be used for
the purpose of covering over-allotments in connection with the distribution and
sale of the Offered Shares and Offered Warrants. If such notice is given prior
to the Closing Date, the date set forth therein for such delivery and payment
will not be earlier than either two full business days thereafter or the Closing
Date, whichever occurs later. If such notice is given on or after the Closing
Date, the date set forth therein for such delivery and payment will not be
earlier than five full business days thereafter. In either event, the date so
set forth will not be more than 15 full business days after the date of such
notice. The date and time set forth in such notice is herein called the "Option
Closing Date." Upon exercise of such option, the Company will become obligated
to convey to the Underwriter, and, subject to the terms and conditions set forth
in Section 3(d) hereof, the Underwriter will become obligated to purchase, the
number of Optional Shares and Optional Warrants specified in such notice.
(c) Payment for any Optional Shares and Optional
Warrants purchased will be made to the Company by certified or official bank
check or checks payable to its order in New York Clearing House, next day,
funds, at the office of the Underwriter, against delivery of the Optional Shares
and Optional Warrants purchased to the Underwriter. The certificates
representing the Optional Shares and Optional Warrants to be delivered will be
in such denominations and registered in such names as the Underwriter requests
not less than two full business days prior to the Option Closing Date, and will
be made available to the Underwriter for inspection, checking and packaging at
the aforesaid office of the Company's transfer agent or correspondent not less
than one full business day prior to the Option Closing Date.
(d) The obligation of the Underwriter to purchase and
pay for any of the Optional Shares or Optional Warrants is subject to the
accuracy and completeness (as of the date hereof and as of the Option Closing
Date) of and compliance in all material respects with the representations and
warranties of the Company herein, to the accuracy and completeness of the
statements of the Company or its officers made in any certificate or other
document to be delivered by the Company pursuant to this Agreement, to the
performance in all material respects by the Company of its
-4-
<PAGE>
obligations hereunder, to the satisfaction by the Company of the conditions, as
of the date hereof and as of the Option Closing Date, set forth in Section 3(b)
hereof, and to the delivery to the Underwriter of opinions, certificates and
letters dated the Option Closing Date substantially similar in scope to those
specified in Section 5, 6(b), (c), (d) and (e) hereof, but with each reference
to "Offered Shares," "Offered Warrants" and "Closing Date" to be, respectively,
to the Optional Shares, Optional Warrants and the Option Closing Date.
4. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full power and authority, corporate and other, to own or lease and operate
its properties and to conduct its business as described in the Registration
Statement and to execute, deliver and perform this Agreement, the Warrant
Agreement, the Consulting Agreement (as hereinafter defined) and the
Underwriter's Warrant Agreement and to consummate the transactions contemplated
hereby and thereby. The Company has no subsidiaries other than the subsidiaries
listed on Schedule A hereto (each a "Subsidiary" and collectively, the
"Subsidiaries"), which are corporations duly organized and validly existing
under the laws of the respective jurisdictions set forth on Schedule A hereto.
Each of the Company and each Subsidiary is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company and the Subsidiaries taken as a whole. Each Subsidiary
has the corporate power and authority to own or lease and operate its properties
and to conduct its business as described in the Prospectus.
The Company owns all of the issued and outstanding shares of
capital stock of each Subsidiary, free and clear of any security interest,
liens, encumbrances, claims and charges, and all of such shares have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
options or warrants for the purchase of, or other rights to purchase, or
outstanding securities convertible into or exchangeable for, any capital stock
or other securities of any Subsidiary.
(b) Each of this Agreement and the consulting
agreement described in Section 5(q) hereof (the "Consulting Agreement") has been
duly executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, and each of the Warrant Agreement and the
Underwriter's Warrant Agree-
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<PAGE>
ment, when executed and delivered by the Company on the Closing Date, will be
the valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms. The execution, delivery and
performance of this Agreement, the Consulting Agreement, the Warrant Agreement
and the Underwriter's Warrant Agreement by the Company, the consummation by the
Company of the transactions herein and therein contemplated and the compliance
by the Company with the terms of this Agreement, the Consulting Agreement, the
Warrant Agreement and the Underwriter's Warrant Agreement have been duly
authorized by all necessary corporate action and do not and will not, with or
without the giving of notice or the lapse of time, or both, (i) result in any
violation of the Certificate of Incorporation or By-Laws of the Company; (ii)
result in a breach of or conflict with any of the terms or provisions of, or
constitute a default under, or result in the modification or termination of, or
result in the creation or imposition of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any
Subsidiary pursuant to any indenture, mortgage, note, contract, commitment or
other agreement or instrument to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary or any of their respective properties
or assets is or may be bound or affected, except for such breaches, conflicts or
defaults which do not, individually or in the aggregate, have a material adverse
effect on the Company and the Subsidiaries taken as a whole; (iii) violate any
existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their respective properties or business,
except for such violations which do not, individually or in the aggregate, have
a material adverse effect on the Company and the Subsidiaries taken as a whole;
or (iv) have any effect on any permit, certification, registration, approval,
consent, license or franchise (the "Permits") necessary for the Company or any
Subsidiary to own or lease and operate their properties and to conduct their
businesses or the ability of the Company to make use thereof, except for those
Permits which do not, individually or in the aggregate, have a material adverse
effect on the Company and the Subsidiaries taken as a whole.
(c) No authorization, approval, consent, order,
registration, license or permit of any court or governmental agency or body,
other than under the Securities Act of 1933, as amended (the "Act"), the
Regulations (as hereinafter defined) and applicable state securities or Blue Sky
laws, is required for the valid authorization, issuance, sale and delivery of
the Shares and Warrants to the Underwriter, and the consummation by the Company
of the transactions contemplated by this Agreement, the Consulting Agreement,
the Warrant Agreement or the Underwriter's Warrant Agreement.
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<PAGE>
(d) The conditions for use of a registration
statement on Form SB-2 set forth in the General Instructions to Form SB-2 have
been satisfied with respect to the Company, the transactions contemplated herein
and in the Registration Statement. The Company has prepared in conformity with
the requirements of the Act and the rules and regulations (the "Regulations") of
the Securities and Exchange Commission (the "Commission") and filed with the
Commission a registration statement (File No. 333-____) on Form SB-2 and has
filed one or more amendments thereto, covering the registration of the
securities under the Act, including the related preliminary prospectus or
preliminary prospectuses (each thereof being herein called a "Preliminary
Prospectus") and a proposed final prospectus. Each Preliminary Prospectus was
endorsed with the legend required by Item 501(a)(5) of Regulation S-K of the
Regulations, including, if applicable, Rule 430A of the Regulations. Such
registration statement including any documents incorporated by reference therein
and all financial schedules and exhibits thereto, as amended at the time it
becomes effective, and the final prospectus included therein are herein,
respectively, called the "Registration Statement" and the "Prospectus," except
that, (i) if the prospectus filed by the Company pursuant to Rule 424(b) of the
Regulations differs from the Prospectus, the term "Prospectus" will also include
the prospectus filed pursuant to Rule 424(b), and (ii) if the Registration
Statement is amended or such Prospectus is supplemented after the effective date
of the Registration Statement (the "Effective Date") and prior to the Option
Closing Date (as hereinafter defined), the terms "Registration Statement" and
"Prospectus" shall include the Registration Statement as amended or
supplemented.
(e) Neither the Commission nor, to the best of the
Company's knowledge, any state regulatory authority has issued any order
preventing or suspending the use of any Preliminary Prospectus or has instituted
or, to the best of the Company's knowledge, threatened to institute any
proceedings with respect to such an order.
(f) The Registration Statement when it becomes
effective, the Prospectus (and any amendment or supplement thereto) when it is
filed with the Commission pursuant to Rule 424(b), and both documents as of the
Closing Date or the Option Closing Date referred to below, will contain all
statements which are required to be stated therein in accordance with the Act
and the Regulations and will in all material respects conform to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, on such
dates, will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that
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<PAGE>
this representation and warranty does not apply to statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company in connection with the Registration Statement or Prospectus or any
amendment or supplement thereto by the Underwriter expressly for use therein.
(g) The Company had at the date or dates indicated in
the Prospectus a duly authorized and outstanding capitalization as set forth in
the Registration Statement and the Prospectus. Based on the assumptions stated
in the Registration Statement and the Prospectus, the Company will have on the
Closing Date referred to below the adjusted stock capitalization set forth
therein. Except as set forth in the Registration Statement or the Prospectus, on
the Effective Date and on the Closing Date referred to below, there will be no
options to purchase, warrants or other rights to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell shares of the Company's capital stock or any such warrants,
convertible securities or obligations. Except as set forth in the Prospectus, no
holders of any of the Company's securities has any rights, "demand," "piggyback"
or otherwise, to have such securities registered under the Act.
(h) The descriptions in the Registration Statement
and the Prospectus of contracts and other documents are accurate in all material
respects and present fairly the information required to be disclosed, and there
are no contracts or other documents required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement under the Act or the Regulations which have not been so described or
filed as required.
(i) Each of BDO Seidman LLP and Maltese, Potter & La
Marca, LLP, the accountants who have certified certain of the consolidated
financial statements filed and to be filed with the Commission as part of the
Registration Statement and the Prospectus, are independent public accountants
within the meaning of the Act and Regulations. The consolidated financial
statements and schedules and the notes thereto filed as part of the Registration
Statement and included in the Prospectus are complete, correct and present
fairly the financial position of the Company as of the dates thereof, and the
results of operations and changes in financial position of the Company for the
periods indicated therein, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved except
as otherwise stated in the Registration Statement and the Prospectus. The
selected financial data set forth in the Registration Statement and the
Prospectus present fairly the information shown therein and have been compiled
on a basis consistent with that of the audited and unaudited financial
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<PAGE>
statements included in the Registration Statement and the Prospectus.
(j) Each of the Company and each Subsidiary has filed
with the appropriate federal, state and local governmental agencies, and all
foreign countries and political subdivisions thereof, all tax returns, including
franchise tax returns, which are required to be filed or has duly obtained
extensions of time for the filing thereof; and, to the best of the Company's
knowledge, the provisions for income taxes payable, if any, shown on the
consolidated financial statements filed with or as part of the Registration
Statement are sufficient for all accrued and unpaid foreign and domestic taxes,
whether or not disputed, and for all periods to and including the dates of such
consolidated financial statements, other than such returns and taxes for which
the failure to file and pay can be remedied without adversely affecting the
Company. Except as disclosed in writing to the Underwriter, neither the Company
nor any Subsidiary has executed or filed with any taxing authority, foreign or
domestic, any agreement extending the period for assessment or collection of any
income taxes and is not a party to any pending action or proceeding by any
foreign or domestic governmental agency for assessment or collection of taxes;
and no claims for assessment or collection of taxes have been asserted against
the Company or any Subsidiary.
(k) The outstanding Common Shares and outstanding
options and warrants to purchase Common Shares have been duly authorized and
validly issued. The outstanding Common Shares are fully paid and nonassessable.
The outstanding options and warrants to purchase Common Shares constitute the
valid and binding obligations of the Company, enforceable in accordance with
their terms. None of the outstanding Common Shares, options or warrants to
purchase Common Shares has been issued in violation of the preemptive rights of
any shareholder of the Company. None of the holders of the outstanding Common
Shares is subject to personal liability solely by reason of being such a holder.
The offers and sales of the outstanding Common Shares and outstanding options
and warrants to purchase Common Shares were at all relevant times either
registered under the Act and the applicable state securities or Blue Sky laws or
exempt from such registration requirements. The authorized Common Shares and
outstanding options and warrants to purchase Common Shares conform to the
descriptions thereof contained in the Registration Statement and Prospectus.
Except as set forth in the Registration Statement and the Prospectus, on the
Effective Date and the Closing Date, there will be no outstanding options or
warrants for the purchase of, or other outstanding rights to purchase, Common
Shares or securities convertible into Common Shares.
(l) No securities of the Company have been sold by
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<PAGE>
the Company or by or on behalf of, or for the benefit of, any person or persons
controlling, controlled by, or under common control with the Company within the
three years prior to the date hereof, except as disclosed in the Registration
Statement.
(m) The issuance and sale of the Shares and the
Warrant Shares have been duly authorized and, when the Shares and the Warrant
Shares have been issued and duly delivered against payment therefor as
contemplated by this Agreement or by the Warrant Agreement, as the case may be,
the Shares and the Warrant Shares will be validly issued, fully paid and
nonassessable. The holders of the Securities will not be subject to personal
liability solely by reason of being such holders and none of the securities will
be subject to preemptive rights of any shareholder of the Company.
(n) The issuance and sale of the Warrants, the
Underwriter's Warrants and the Underlying Warrants have been duly authorized
and, when issued, paid for and delivered pursuant to the terms of this Agreement
or the Underwriter's Warrants, as the case may be, the Warrants, the
Underwriter's Warrants and the Underlying Warrants will constitute valid and
binding obligations of the Company, enforceable as to the Company in accordance
with their terms. The Warrant Shares have been duly reserved for issuance upon
exercise of the Warrants, the Underwriter's Warrants and the Underlying Warrants
in accordance with the provisions of the Warrants, the Underwriter's Warrants
and the Underlying Warrants. The Warrants, Underwriter's Warrants and Underlying
Warrants will conform to the descriptions thereof contained in the Registration
Statement and Prospectus.
(o) Neither the Company nor any Subsidiary is in
violation of, or in default under, (i) any term or provision of its Certificate
of Incorporation or By-Laws, each as amended, except where such violation or
default would not have a material adverse effect on the Company and the
Subsidiaries taken as a whole; (ii) any material term or provision or any
financial covenants of any indenture, mortgage, contract, commitment or other
agreement or instrument to which it is a party or by which it or any of its
property or business is or may be bound or affected except where such violation
or default would not have a material adverse effect on the Company and the
Subsidiaries taken as a whole; or (iii) any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any Subsidiary or
any of the Company's or any Subsidiary's properties or business. Each of the
Company and each Subsidiary owns, possesses or has obtained all governmental and
other (including those obtainable from third parties) Permits necessary to own
or lease, as the case may be, and to operate its properties, whether tangible or
intangible, and to
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<PAGE>
conduct any of the business or operations of the Company and the Subsidiaries as
presently conducted, except where such failure to do so does not, individually
or in the aggregate, have a material adverse effect on the Company and the
Subsidiaries taken as a whole, and all such Permits are outstanding and in good
standing, and there are no proceedings pending or, to the best of the Company's
knowledge, threatened, or any basis therefor, seeking to cancel, terminate or
limit such Permits.
(p) Except as set forth in the Prospectus, there are
no claims, actions, suits, proceedings, arbitrations, investigations or
inquiries before any governmental agency, court or tribunal, domestic or
foreign, or before any private arbitration tribunal, pending, or, to the best of
the Company's knowledge, threatened against the Company or any Subsidiary or, to
the best of the Company's knowledge involving the Company's or any Subsidiary's
properties or business which, if determined adversely to the Company or any
Subsidiary, would, individually or in the aggregate, result in any material
adverse change in the financial position, shareholders' equity, results of
operations, properties, business, management or affairs or business prospects of
the Company or any Subsidiary or which question the validity of the capital
stock of the Company or this Agreement or of any action taken or to be taken by
the Company pursuant to, or in connection with, this Agreement; nor, to the best
of the Company's knowledge, is there any basis for any such claim, action, suit,
proceeding, arbitration, investigation or inquiry. There are no outstanding
orders, judgments or decrees of any court, governmental agency or other tribunal
naming the Company or any Subsidiary and enjoining the Company or any Subsidiary
from taking, or requiring the Company or any Subsidiary to take, any action, or
to which the Company or any Subsidiary, or the Company's or any Subsidiary's
properties or businesses is bound or subject.
(q) Except as otherwise consented to by the
Underwriter in its sole discretion, (i) no other person or entity has any rights
to participate in any offer, sale or distribution of securities of the company:
(ii) no person is entitled, directly or indirectly, to compensation from the
Company for services as a finder or investment adviser in connection with the
transactions contemplated by this Agreement; (iii) other than as described in
the letter from the Company to the Underwriter attached hereto as Exhibit A, no
officer, director or Principal Stockholder (as hereinafter defined) of the
Company is a member of the NASD or is associated with a member of the NASD; and
(iv) the Company has not promised or represented to any person that any part of
the Shares, Warrants or the other securities contemplated herein will be
directed or otherwise made available to such person in connection with the
offering.
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<PAGE>
(r) Each of the Company and each Subsidiary owns or
possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, service marks, copyrights, rights, trade secrets,
confidential information, processes and formulations used or proposed to be used
in the conduct of their businesses as described in the Prospectus (collectively
the "Intangibles"), except where such failure to do so does not, individually or
in the aggregate, have a material adverse effect on the Company and the
Subsidiaries taken as a whole; to the best of the Company's knowledge, neither
the Company nor any Subsidiary has infringed and nor is infringing upon the
rights of others with respect to Intangibles; and neither the Company nor any
Subsidiary has received any notice of conflict with the asserted rights of
others with respect to Intangibles which could, singly or in the aggregate,
materially adversely affect its business as presently conducted or prospects,
financial condition or results of operations of the Company or any Subsidiary,
and the Company knows of no basis therefor; and, to the best of the Company's
knowledge, no others have infringed upon the Intangibles of the Company or any
Subsidiary.
(s) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus and the
Company's latest consolidated financial statements, neither the Company nor any
Subsidiary has incurred any material liability or obligation, direct or
contingent, or entered into any material transaction, whether or not in the
ordinary course of business, and has not sustained any material loss or
interference with its business from fire, storm, explosion, flood or other
casualty, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree; and since the respective dates as
of which information is given in the Registration Statement and the Prospectus,
there have not been, and prior to the Closing Date referred to below there will
not be, any changes in the capital stock or any material increases in the
long-term debt of the Company or any material adverse change in or affecting the
general affairs, management, financial condition, shareholders' equity, results
of operations or prospects of the Company or any Subsidiary, otherwise than as
set forth or contemplated in the Prospectus.
(t) Each of the Company and each Subsidiary has good
and marketable title in fee simple to all real property and good title to all
personal property (tangible and intangible) owned by it, free and clear of all
security interests, charges, mortgages, liens, encumbrances and defects, except
such as are described in the Registration Statement and Prospectus or such as do
not materially affect the value or transferability of the properties, as a
whole, of the Company and do not interfere with the use of such property made,
or proposed to be made, by the
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<PAGE>
Company or any Subsidiary. The leases, licenses or other contracts or
instruments under which the Company and each Subsidiary leases, holds or is
entitled to use any property, real or personal, are valid, subsisting and
enforceable only with such exceptions as are not material and do not interfere
with the use of the properties, as a whole, of the Company made, or proposed to
be made, by the Company or any Subsidiary, and all rentals, royalties or other
payments accruing thereunder which became due prior to the date of this
Agreement have been duly paid, and neither the Company nor any Subsidiary, nor,
to the best of the Company's knowledge, any other party is in default thereunder
except for such defaults which does not, individually or in the aggregate, have
a material adverse effect on the Company and the Subsidiaries taken as a whole
and, to the best of the Company's knowledge, no event has occurred which, with
the passage of time or the giving of notice, or both, would constitute a default
thereunder. Neither the Company nor any Subsidiary has received notice of any
violation of any applicable law, ordinance, regulation, order or requirement
relating to its owned or leased properties. Each of the Company and each
Subsidiary has insured its properties against loss or damage by fire or other
casualty and maintains such other insurance as is usually insured or maintained
by companies engaged in the same or similar businesses located in its
geographical area.
(u) Each contract or other instrument (however
characterized or described) which is filed as an exhibit to the Registration
Statement and to which the Company or any Subsidiary is a party or by which its
property or business is or may be bound or affected has been duly and validly
executed by the Company and, to the best of the Company's knowledge, by the
other parties thereto, is in full force and effect in all material respects and
is enforceable against the parties thereto in accordance with its terms, and
none of such contracts or instruments has been assigned by the Company or any
Subsidiary, and neither the Company nor any Subsidiary, nor, to the best of the
Company's knowledge, any other party is in default thereunder and, to the best
of the Company's knowledge, no event has occurred which, with the lapse of time
or the giving of notice, or both, would constitute a default thereunder.
None of the material provisions of such contracts or
instruments violates any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court having jurisdiction over the
Company or any Subsidiary or any of their respective assets or businesses,
including, without limitation, those relating to the sale of food and alcoholic
beverages, except for violations which do not, individually or in the aggregate,
have a material adverse effect on the Company and the Subsidiaries taken as a
whole.
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<PAGE>
(v) The employment, consulting, confidentiality and
non-competition agreements, if any, between the Company and between each
Subsidiary and its officers and employees, described in the Registration
Statement, are binding and enforceable obligations against the Company and, to
the best of the Company's knowledge of the other parties thereto, in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws or
arrangements affecting creditors' rights generally and subject to principles of
equity.
(w) Except as set forth in the Prospectus, the
Company has no employee benefit plans (including, without limitation, profit
sharing and welfare benefit plans) or deferred compensation arrangements that
are subject to the provisions of the Employee Retirement Income Security Act of
1974.
(x) To the best of the Company's knowledge, no labor
problem exists with any of the Company's or any Subsidiary's employees or is
imminent which could adversely affect the Company or any Subsidiary.
(y) The Company has not, directly or indirectly, at
any time (i) made any contributions to any candidate for political office, or
failed to disclose fully any such contribution in violation of law or (ii) made
any payment to any state, federal or foreign governmental officer or official,
or other person charged with similar public or quasi-public duties, other than
payments or contributions required or allowed by applicable law. The Company's
internal accounting controls and procedures are sufficient to cause the Company
to comply in all material respects with the Foreign Corrupt Practices Act of
1977, as amended.
(z) The Shares, Warrants and Warrant Shares have been
approved for listing on the Automated Quotation System of the National
Association of Securities Dealers, Inc. ("NASDAQ").
(aa) The Company's response to the Corporate Review
Memorandum of Tenzer Greenblatt LLP, counsel to the Underwriter ("Underwriter's
Counsel"), dated ________, 1997, is true, accurate and complete in all material
respects.
Any Certificate signed by an officer of the Company
or of the Subsidiary and delivered to the Underwriter or to Underwriter's
Counsel shall be deemed to be a representation and warranty by the Company to
the Underwriter as to the matters covered thereby.
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<PAGE>
5. Certain Covenants of the Company. The Company covenants
with the Underwriter as follows:
(a) The Company will not at any time, whether before
the Effective Date or thereafter during such period as the Prospectus is
required by law to be delivered in connection with the sales of the Shares and
Warrants by the Underwriter or a dealer, file or publish any amendment or
supplement to the Registration Statement or Prospectus of which the Underwriter
have not been previously advised and furnished a copy, or to which the
Underwriter shall reasonably object in writing.
(b) The Company will use its best efforts to cause
the Registration Statement to become effective and will advise the Underwriter
immediately, and, if requested by the Underwriter, confirm such advice in
writing, (i) when the Registration Statement, or any post-effective amendment to
the Registration Statement or any supplemented Prospectus is filed with the
Commission; (ii) of the receipt of any comments from the Commission; (iii) of
any request of the Commission for amendment or supplementation of the
Registration Statement or Prospectus or for additional information; and (iv) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
any Preliminary Prospectus, or of the suspension of the qualification of the
Shares and/or the Warrants for offering or sale in any jurisdiction, or of the
initiation of any proceedings for any of such purposes. The Company will use its
best efforts to prevent the issuance of any such stop order or of any order
preventing or suspending such use and to obtain as soon as possible the lifting
thereof, if any such order is issued.
(c) The Company will deliver to the Underwriter,
without charge, from time to time until the Effective Date, as many copies of
each Preliminary Prospectus as the Underwriter may reasonably request, and the
Company hereby consents to the use of such copies for purposes permitted by the
Act. The Company will deliver to each Underwriter, without charge, as soon as
practicable after the Registration Statement becomes effective, and thereafter
from time to time as requested, such number of copies of the Prospectus (as
supplemented, if the Company makes any supplements to the Prospectus) as the
Underwriter may reasonably request. The Company has furnished or will furnish to
the Underwriter one signed copy of the Registration Statement as originally
filed and of all amendments thereto, whether filed before or after the
Registration Statement becomes effective, one copy of all exhibits filed
therewith and one signed copy of all consents and certificates of experts.
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<PAGE>
(d) The Company will comply with the Act, the
Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder so as to permit the continuance
of sales of and dealings in the Offered Shares and Offered Warrants, in any
Optional Shares and Optional Warrants which may be issued and sold, and in the
Warrant Shares underlying such Warrants. If, at any time when a prospectus
relating to such Securities is required to be delivered under the Act, any event
occurs as a result of which the Registration Statement and Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, or if it shall
be necessary to amend or supplement the Registration Statement and Prospectus to
comply with the Act or the regulations thereunder, the Company will promptly
file with the Commission, subject to Section 5(a) hereof, an amendment or
supplement which will correct such statement or omission or which will effect
such compliance.
(e) The Company will furnish such proper informa-
tion as may be required and otherwise cooperate in qualifying the Securities for
offering and sale under the securities or Blue Sky laws relating to the offering
or for sale in such jurisdictions as the Underwriter may reasonably designate,
provided that no such qualification will be required in any jurisdiction where,
solely as a result thereof, the Company would be subject to service of general
process or to taxation or qualification as a foreign corporation doing business
in such jurisdiction.
(f) The Company will make generally available to its
security holders, in the manner specified in Rule 158(b) under the Act, and
deliver to the Underwriter as soon as practicable and in any event not later
than 45 days after the end of its fiscal quarter in which the first anniversary
date of the effective date of the Registration Statement occurs, an earning
statement meeting the requirements of Rule 158(a) under the Act covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement.
(g) For a period of three (3) years from the
Effective Date, the Company will deliver to the Underwriter and to Underwriter's
Counsel on a timely basis (i) a copy of each report or document, including,
without limitation, reports on Forms 8-K, 10-C, 10-K (or 10-KSB) and 10-Q (or
10-QSB) and exhibits thereto, filed or furnished to the Commission, any
securities exchange or NASD Regulation, Inc. (the " NASD") on the date each such
report or document is so filed or furnished; (ii) as soon as practicable, copies
of any reports or communications (financial or other) of the Company mailed to
its security holders; (iii) as soon as
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practicable, a copy of any Schedule 13D, 13G, 14D-1 or 13E-3 received or
prepared by the Company from time to time; (iv) to the extent provided by the
Company to any other third party, monthly statements setting forth such
information regarding the Company's results of operations and financial position
(including balance sheet, profit and loss statements and data regarding
outstanding purchase orders) as is regularly prepared by management of the
Company; and (v) to the extent provided by the Company to any other third-party,
such additional information concerning the business and financial condition of
the Company as the Underwriter may from time to time reasonably request and
which can be prepared or obtained by the Company without unreasonable effort or
expense. The Company will furnish to its shareholders annual reports containing
audited financial statements and such other periodic reports as it may determine
to be appropriate or as may be required by law.
(h) Neither the Company nor any person that con-
trols, is controlled by or is under common control with the Company will take
any action designed to or which might be reasonably expected to cause or result
in the stabilization or manipulation of the price of the Shares or Warrants.
(i) If the transactions contemplated by this
Agreement are consummated, the Underwriter shall retain the $50,000 previously
paid to it, and the Company will pay or cause to be paid the following: all
costs and expenses incident to the performance of the obligations of the Company
under this Agreement, including, but not limited to, the fees and expenses of
accountants and counsel for the Company, the preparation, printing, mailing and
filing of the Registration Statement (including financial statements and
exhibits), Preliminary Prospectuses and the Prospectus, and any amendments or
supplements thereto, the printing and mailing of the Selected Dealer Agreement,
the issuance and delivery of the Shares and Warrants to the Underwriter; all
taxes, if any, on the issuance of the Shares and Warrants; the fees, expenses
and other costs (including fees, up to a maximum of $20,000 and disbursements of
counsel) of qualifying the Shares and Warrants for sale under the Blue Sky or
securities laws of those states in which the Shares and Warrants are to be
offered or sold, the cost of printing and mailing the "Blue Sky Survey" and fees
and disbursements of counsel in connection therewith, including those of such
local counsel as may have been retained for such purpose; the filing fees
incident to securing any required review by the NASD; the cost of furnishing to
Underwriter copies of the Registration Statement, Preliminary Prospectuses and
the Prospectus as herein provided; the costs and expenses incurred in connection
with "road shows", the costs, not to exceed $15,000, of placing "tombstone
advertisements" in any publications which may be selected by the Underwriter,
and all other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section
5(i).
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In addition, at the Closing Date or the Option Closing Date, as
the case may be, the Underwriter will deduct from the payment for the Offered
Shares and Offered Warrants or any Optional Shares and/or Optional Warrants
purchased three percent (3%) of the gross proceeds of the offering (less the sum
of $50,000 previously paid to the Underwriter), as payment for the Underwriter's
non accountable expense allowance relating to the transactions contemplated
hereby, which amount will include the fees and expenses of Underwriter's
Counsel.
(j) If the transactions contemplated by this
Agreement or related hereto are not consummated for any reason, then the
Underwriter may receive (inclusive of amounts previously paid) and retain only
an amount equal to its accountable out-of-pocket expenses up to the sum of
$50,000 previously paid to it. In no event, however, will the Underwriter, in
the event the offering is terminated, be entitled to retain or receive more than
an amount equal to their actual accountable out-of-pocket expenses.
(k) The Company intends to apply the net proceeds
from the sale of the Shares and Warrants for the purposes set forth in the
Prospectus.
(l) During the eighteen (18) months following the
Effective Date, without the prior written consent of the Underwriter, (i) the
Company will not file any registration statement relating to the offer or sale
of any of the Company's securities, including any registration statement on Form
S-8; (ii) neither the Company nor any of its securityholders beneficially owning
greater than one percent (1%) and less than four percent (4%) of the Company's
Common Stock will sell or otherwise dispose of any securities of the Company's
and (iii) no holders of registration rights relating to securities of the
Company will exercise any such registration rights. In addition, without the
Underwriter's prior written consent, during the twenty-four (24) months
following the Effective Date, none of the Company's officers, directors or
securityholders beneficially owning four percent (4%) or more of the Company's
Common Stock, and, during the fifteen (15) months following the Effective Date,
none of the Company's securityholders beneficially owning one percent (1%) or
less of the Company's Common Stock, will sell or otherwise dispose of any
securities of the Company. Notwithstanding anything else contained herein, the
Exchange Warrants and the Bridge Warrants and the shares underlying such
warrants may be sold without the Underwriter's prior written consent commencing
fifteen (15) months following the Effective Date. The Company will deliver to
the Underwriter the agreements of its officers, directors, securityholders and
registration rights holders to such effect (the "Lock-Up Agreements") prior to
the IPO's Closing.
<PAGE>
(m) The Company maintains and will continue to
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary in order to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain
accountability for assets; and (iii) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(n) The Company will use its best efforts to maintain
the listing of the Shares and Warrants on NASDAQ for so long as the Shares and
Warrants are qualified for such listing.
(o) The Company will, concurrently with the Effective
Date, register the class of equity securities of which the Shares are a part
under Section 12(g) of the Exchange Act and the Company will maintain the
registration for a minimum of five years after the Effective Date.
(p) Subject to the provisions of applicable law, the
Underwriter shall be entitled to receive a warrant solicitation fee of five
percent (5%) of the aggregate exercise price of the Warrants for each Warrant
exercised during the period commencing one year after the Effective Date;
provided, however, that the Underwriter will not be entitled to receive such
compensation in Warrant exercise transactions in which (i) the market price of
the Common Shares at the time of exercise is lower than the exercise price of
the Warrants; (ii) the Warrants are held in any discretionary account; (iii)
disclosure of compensation arrangements is not made in the Registration
Statement and in documents provided to holders of Warrants at the time of
exercise; (iv) the holder thereof has not confirmed in writing that the
Underwriter solicited the exercise of the Warrants; or (v) the solicitation or
exercise of the Warrants was in violation of Regulation M promulgated under the
Exchange Act.
(q) The Company agrees to employ the Underwriter or a
designee of the Underwriter as a financial consultant on a non-exclusive basis
for a period of two (2) years from the Closing Date, pursuant to a separate
written Consulting Agreement between the Company and the Underwriter and/or such
designee, at an annual rate of Thirty Thousand Dollars ($30,000) (exclusive of
any accountable out-of-pocket expenses), payable in full, in advance, on the
Closing Date. In addition, the Consulting Agreement shall provide that the
Company will pay the Underwriter a finder's fee in the event that the
Underwriter originates a merger, acquisition, joint venture or other transaction
to which the Company is a party. The Company further agrees to deliver a duly
and validly executed
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copy of said Consulting Agreement, in form and substance acceptable to the
Underwriter, on the Closing Date.
(r) The Company shall retain a transfer agent for the
Common Shares and Warrants, reasonably acceptable to the Underwriter, for a
period of five years following the Effective Date. In addition, for a period of
five years from the Effective Date, the Company, at its own expense, shall cause
such transfer agent to provide to the Underwriter, if so reasonably requested in
writing, with copies of the Company's daily transfer sheets, and, when
reasonably requested by the Underwriter, a current list of the Company's
security holders, including, to the extent held by or reasonably available to
the Company, a list of the beneficial owners of securities held by a depository
trust company and other nominees.
(s) The Company hereby agrees, at its sole cost and
expense, to supply and deliver to the Underwriter, within a reasonable period
from the date hereof, four bound volumes, including the Registration Statement,
as amended or supplemented, all exhibits to the Registration Statement, the
Prospectus and all other underwriting documents.
(t) The Company shall, as of the date hereof, have
applied for listing in Standard & Poor's Corporation Records Service (including
annual report information) or Moody's Industrial Manual (Moody's OTC Industrial
Manual not being sufficient for these purposes) and shall us its reasonable best
efforts to have the Company listed in such manual and shall maintain such
listing for a period of five years from the Effective Date.
(u) For a period of three (3) years from the
Effective Date, the Company shall continue to retain BDO Seidman, LLP (or such
other nationally recognized accounting firm reasonably acceptable to the
Underwriter) as the Company's independent public accountants.
(v) For a period of three (3) years from the
Effective Date, the Company, at its expense, shall cause its then independent
certified public accountants, as described in Section 5(w) above, to review (but
not audit) the Company's financial statements for each of the first three fiscal
quarters prior to the announcement of quarterly financial information, the
filing of the Company's 10-Q (or 10Q-SB) quarterly report and the mailing of
quarterly financial information to shareholders.
(w) So long as any Warrants are outstanding, the
Company shall use its best efforts to cause post-effective amendments to the
Registration Statement to become effective in compliance with the Act as shall
be necessary to enable the sale of
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the Common Shares underlying the Warrants and cause a copy of each Prospectus,
as then amended, to be delivered to each holder of record of a Warrant as they
request and as otherwise required by law and, to furnish to the Underwriter and
dealers as many copies of each such Prospectus as each Underwriter or dealer may
reasonably request.
(x) For a period of twenty-five (25) days from the
Effective date, the Company will not issue press releases or engage in any other
publicity without the Underwriter's prior written consent, other than normal and
customary releases issued in the ordinary course of the Company's business or
those releases required by law.
(y) For a period of three (3) years from the
Effective Date, the Company will not offer or sell any of its securities
pursuant to Regulation S promulgated under the Act, without prior written
consent of the Underwriter.
(z) The Company will retain a transfer agent
reasonably acceptable to the Underwriter for the Common Stock and the Warrants
and continue to retain such transfer agent for a period of three (3) years
following the Effective Date.
(aa) The Company will not increase or authorize an
increase in the compensation of Frank or Jeanie Cretella greater than those
increases provided for in their employment agreements with the Company in effect
as of the Effective Date and disclosed in the Registration Statement or those
approved by the Underwriter, in writing, prior to the Effective Date, and will
not increase or authorize an increase greater than five percent (5%) per year in
the compensation of any employee earning an annual salary of One Hundred
Thousand Dollars ($100,0000) or more, in each case, without the Underwriter's
prior written consent, for a period of three (3) years following the Effective
Date.
(ab) For a period of three (3) years following the
Effective Date, the Company will retain a public relations firm reasonably
acceptable to the Underwriter.
(ac) For a period of one (1) year following the
Effective Date, the Company will not use any portion of the proceeds derived
from the Proposed IPO to repay any indebtedness, other than up to an aggregate
of One Million Dollars ($1,000,000), without the prior written consent of the
Underwriter.
(ad) For a period of three (3) years following the
Effective Date, the Company will provide to the Underwriter five (5) days
written notice prior to any issuance by the Company of any equity securities or
securities exchangeable for or convertible
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<PAGE>
into equity securities of the Company, except for (i) shares of Common Stock
issuable upon exercise or conversion of options, warrants or convertible
securities outstanding as of the Effective Date and (ii) options (and shares
issuable upon exercise of such options), available for future grant pursuant to
any stock option plan in effect on the Effective Date.
6. Conditions of the Underwriter's Obligation to Purchase
Shares from the Company. The obligation of the Underwriter to purchase and pay
for the Offered Shares and Offered Warrants which it has agreed to purchase from
the Company is subject (as of the date hereof and the Closing Date) to the
accuracy of and compliance in all material respects with the representations and
warranties of the Company herein, to the accuracy of the statements of the
Company or its officers made pursuant hereto, to the performance in all material
respects by the Company of its obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement will have become
effective not later than _________.M., New York City time, on the day following
the date of this Agreement, or at such later time or on such later date as the
Underwriter may agree to in writing; prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement will have been issued
and no proceedings for that purpose will have been initiated or will be pending
or, to the best of the Underwriter's or the Company's knowledge, will be
contemplated by the Commission; and any request on the part of the Commission
for additional information will have been complied with to the satisfaction of
Underwriter's Counsel.
(b) At the Closing Date, there will have been
delivered to the Underwriter a signed opinion of Tenzer Greenblatt LLP, counsel
for the Company ("Company Counsel"), dated as of the Closing Date (and any other
opinions of counsel referred to in such opinion of Company Counsel or relied
upon by Company Counsel in rendering their opinion), reasonably satisfactory to
Underwriter's Counsel, in substantially the form attached hereto as Exhibit A.
(c) At the Closing Date, there will have been
delivered to the Underwriter a signed opinion of Underwriter's Counsel, dated as
of the Closing Date, to the effect that the opinions delivered pursuant to
Section 6(b) hereof appear on their face to be appropriately responsive to the
requirements of this Agreement, except to the extent waived by the Underwriter,
specifying the same, and with respect to such related matters as the Underwriter
may reasonably require.
(d) At the Closing Date (i) the Registration State-
ment and the Prospectus and any amendments or supplements thereto
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will contain all material statements which are required to be stated therein in
accordance with the Act and the Regulations and will conform in all material
respects to the requirements of the Act and the Regulations, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there will not have been any
material adverse change in the financial condition, results of operations or
general affairs of the Company from that set forth or contemplated in the
Registration Statement and the Prospectus, except changes which the Registration
Statement and the Prospectus indicates might occur after the Effective Date;
(iii) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no material
transaction, contract or agreement entered into by the Company, other than in
the ordinary course of business, which would be required to be set forth in the
Registration Statement and the Prospectus, other than as set forth therein; and
(iv) no action, suit or proceeding at law or in equity will be pending or, to
the best of the Company's knowledge, threatened against the Company which is
required to be set forth in the Registration Statement and the Prospectus, other
than as set forth therein, and no proceedings will be pending or, to the best of
the Company's knowledge, threatened against the Company before or by any
federal, state or other commission, board or administrative agency wherein an
unfavorable decision, ruling or finding would materially adversely affect the
business, property, financial condition or results of operations of the Company,
other than as set forth in the Registration Statement and the Prospectus. At the
Closing Date, there will be delivered to the Underwriter a certificate signed by
the Chairman of the Board or the President or a Vice President of the Company,
dated the Closing Date, evidencing compliance with the provisions of this
Section 6(d) and stating that the representations and warranties of the Company
set forth in Section 4 hereof were accurate and complete in all material
respects when made on the date hereof and are accurate and complete in all
material respects on the Closing Date as if then made; that the Company has
performed all covenants and complied with all conditions required by this
Agreement to be performed or complied with by the Company prior to or as of the
Closing Date; and that, as of the Closing Date, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or, to the best of his knowledge, are
contemplated or threatened. In addition, the Underwriter will have received such
other and further certificates of officers of the Company as the Underwriter or
Underwriter's Counsel may reasonably request.
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<PAGE>
(e) At the time that this Agreement is executed and
at the Closing Date, the Underwriter will have received a signed letter from BDO
Seidman, LLP, dated the date such letter is to be received by the Underwriter
and addressed to it, confirming that it is a firm of independent public
accountants within the meaning of the Act and Regulations and stating that: (i)
insofar as reported on by them, in their opinion, the financial statements of
the Company included in the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the
applicable Regulations; (ii) on the basis of procedures and inquiries (not
constituting an examination in accordance with generally accepted auditing
standards) consisting of a reading of the unaudited interim financial statements
of the Company, if any, appearing in the Registration Statement and the
Prospectus and the latest available unaudited interim financial statements of
the Company, if more recent than that appearing in the Registration Statement
and Prospectus, inquiries of officers of the Company responsible for financial
and accounting matters as to the transactions and events subsequent to the date
of the latest audited financial statements of the Company, and a reading of the
minutes of meetings of the shareholders, the Board of Directors of the Company
and any committees of the Board of Directors, as set forth in the minute books
of the Company, nothing has come to their attention which, in their judgment,
would indicate that (A) during the period from the date of the latest financial
statements of the Company appearing in the Registration Statement and Prospectus
to a specified date not more than three business days prior to the date of such
letter, there have been any decreases in net current assets or net assets as
compared with amounts shown in such financial statements or decreases in net
sales or decreases increases] in total or per share net income [loss] compared
with the corresponding period in the preceding year or any change in the
capitalization or long-term debt of the Company, except in all cases as set
forth in or contemplated by the Registration Statement and the Prospectus, and
(B) the unaudited interim financial statements of the Company, if any, appearing
in the Registration Statement and the Prospectus, do not comply as to form in
all material respects with the applicable accounting requirements of the Act and
the Regulations or are not fairly presented in conformity with generally
accepted accounting principles and practices on a basis substantially consistent
with the audited financial statements included in the Registration Statement or
the Prospectus; and (iii) they have compared specific dollar amounts, numbers of
shares, numerical data, percentages of revenues and earnings, and other
financial information pertaining to the Company set forth in the Prospectus
(with respect to all dollar amounts, numbers of shares, percentages and other
financial information contained in the Prospectus, to the extent that such
amounts, numbers, percentages and information may be derived from the general
accounting records of the Company, and excluding any
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<PAGE>
questions requiring an interpretation by legal counsel) with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter,
and found them to be in agreement.
(f) There shall have been duly tendered to the
Underwriter on the Closing Date, certificates representing the Offered Shares
and the Offered Warrants to be sold on the Closing Date.
(g) The NASD shall have indicated that it has no
objection to the underwriting arrangements pertaining to the sale of the Offered
Shares and Offered Warrants by the Underwriter or the Optional Shares and
Optional Warrants by the Underwriter.
(h) No action shall have been taken by the Commission
or the NASD the effect of which would make it improper, at any time prior to the
Closing Date or the Option Closing Date, as the case may be, for any member firm
of the NASD to execute transactions (as principal or as agent) in the Shares or
Warrants, and no proceedings for the purpose of taking such action shall have
been instituted or shall be pending, or, to the best of the Under- writer's or
the Company's knowledge, shall be contemplated by the Commission or the NASD.
The Company represents at the date hereof, and shall represent as of the Closing
Date or Option Closing Date, as the case may be, that it has no knowledge that
any such action is in fact contemplated by the Commission or the NASD.
(i) All proceedings taken at or prior to the Closing
Date or the Option Closing Date, as the case may be, in connection with the
authorization, issuance and sale of the Shares or Warrants shall be reasonably
satisfactory in form and substance to the Underwriter and to Underwriter's
Counsel, and such counsel shall have been furnished with all such documents,
certificates and opinions as they may request for the purpose of enabling them
to pass upon the matters referred to in Section 6(c) hereof and in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements of the Company, the performance of any covenants of the Company,
or the compliance by the Company with any of the conditions herein contained.
If any of the conditions specified in this Section 6
have not been fulfilled, this Agreement may be terminated by the Underwriter on
notice to the Company.
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7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each of the Underwriter, each officer, director, partner, employee and agent of
the Underwriter, and each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several (and actions in respect thereof), to which they or any of them may
become subject under the Act or under any other statute or at common law or
otherwise, and, except as hereinafter provided, will reimburse the Underwriter
and each such person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions, whether or not resulting in any liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
(i) in the Registration Statement, in any Preliminary Prospectus or in the
Prospectus (or the Registration Statement or Prospectus as from time to time
amended or supplemented) or (ii) in any application or other document executed
by the Company, or based upon written information furnished by or on behalf of
the Company, filed in any jurisdiction in order to qualify the Shares and
Warrants under the securities laws thereof (hereinafter "application"), or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, in light of the circumstances under which
they were made, unless such untrue statement or omission was made in such
Registration Statement, Preliminary Prospectus, Prospectus or application in
reliance upon and in conformity with information furnished in writing to the
Company in connection therewith by the Underwriter or any such person through
the Underwriter expressly for use therein; provided, however, that the indemnity
agreement contained in this Section 7(a) with respect to any Preliminary
Prospectus will not inure to the benefit of the Underwriter (or to the benefit
of any other person that may be indemnified pursuant to this Section 7(a)) if
(A) the person asserting any such losses, claims, damages, expenses or
liabilities purchased the Shares and/or Warrants which are the subject thereof
from the Underwriter or other indemnified person; (B) the Underwriter or other
indemnified person failed to send or give a copy of the Prospectus to such
person at or prior to the written confirmation of the sale of such Shares and/or
Warrants to such person; and (C) the Prospectus did not contain any untrue
statement or alleged untrue statement or omission or alleged omission giving
rise to such cause, claim, damage, expense or liability.
(b) The Underwriter agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers
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who have signed the Registration Statement and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all losses, claims, damages, expenses or
liabilities, joint or several (and actions in respect thereof), to which they or
any of them may become subject under the Act or under any other statute or at
common law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer or controlling person for any legal or
other expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions, whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained (i) in the Registration Statement, in any
Preliminary Prospectus or in the Prospectus (or the Registration Statement or
Prospectus as from time to time amended or supplemented) or (ii) in any
application (including any application for registration of the Shares and
Warrants under state securities or Blue Sky laws), or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading, in light of the circumstances under which they were made, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by the Underwriter expressly for use therein.
(c) Promptly after receipt of notice ("Notice") of
the commencement of any action in respect of which indemnity may be sought
against any indemnifying party under this Section 7, the indemnified party will
notify the indemnifying party in writing of the commencement thereof, and the
indemnifying party will, subject to the provisions hereinafter stated, assume
the defense of such action (including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of expenses) insofar as
such action relates to an alleged liability in respect of which indemnity may be
sought against the indemnifying party. After notice from the indemnifying party
of its election to assume the defense of such claim or action, the indemnifying
party shall no longer be liable to the indemnified party under this Section 7
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if the indemnified party or parties
reasonably determine that there may be a conflict between the positions of the
indemnifying party or parties and of the indemnified party or parties in
conducting the defense of such action, suit, investigation, inquiry or
proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, the indemnified party or
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parties shall have the right to employ a single counsel to represent the
indemnified parties who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified parties thereof
against the indemnifying party, in which event the fees and expenses of such
separate counsel shall be borne by the indemnifying party. Any party against
whom indemnification may be sought under this Section 7 shall not be liable to
indemnify any person that might otherwise be indemnified pursuant hereto for any
settlement of any action effected without such indemnifying party's consent,
which consent shall not be unreasonably withheld. No indemnification provided
for in this Section 7 shall be available to any party who shall fail so to give
the Notice if the party to whom such Notice was not given was unaware of the
action, suit, investigation, inquiry or proceeding to which Notice would have
related and was prejudiced by the failure to give Notice, but the omission so to
notify such indemnifying party or parties of any such service or notification
shall not relieve such indemnifying party or parties from any liability which it
or they may have to the indemnified party for contribution or otherwise than on
account of such indemnity agreement.
8. Contribution. To provide for just and equitable
contribution, if (i) an indemnified party makes a claim for indemnification
pursuant to Section 7 hereof (subject to the limitations thereof) and it is
finally determined, by a judgment, order or decree not subject to further
appeal, that such claim for indemnification may not be enforced, even though
this Agreement expressly provides for indemnification in such case; or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the Exchange
Act, or otherwise, then the Company (including, for this purpose, any
contribution made by or on behalf of any director of the Company, any officer of
the Company who signed the Registration Statement and any controlling person of
the Company) as one entity and the Underwriter (including, for this purpose, any
contribution by or on behalf of each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each officer, director, partner, employee and agent of the
Underwriter) as a second entity, shall contribute to the losses, liabilities,
claims, damages and expenses whatsoever to which any of them may be subject, so
that the Underwriter is responsible for the proportion thereof equal to the
percentage which the underwriting discount per Share and per Warrant set forth
on the cover page of the Prospectus represents of the initial public offering
price per Share and per Warrant set forth on the cover page of the Prospectus
and the Company is responsible for the remaining portion; provided, however,
that if applicable law does not permit such allocation, then, if applicable law
permits, other relevant equitable considerations such as the relative fault of
the Company and the Underwriter in connection
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with the facts which resulted in such losses, liabilities, claims, damages and
expenses shall also be considered. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission or alleged omission, shall be
determined by, among other things, whether such statement, alleged statement,
omission or alleged omission relates to information supplied by the Company or
by the Underwriter, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement, alleged
statement, omission or alleged omission. The Company and the Underwriter agrees
that it would be unjust and inequitable if the respective obligations of the
Company and the Underwriter for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities, claims, damages and
expenses or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 8. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls the Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, partner, employee
and agent of the Underwriter will have the same rights to contribution as the
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who has signed the Registration Statement and each
director of the Company will have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 8. Anything in
this Section 8 to the contrary notwithstanding, no party will be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 8 is intended to supersede, to the
extent permitted by law, any right to contribution under the Act or the Exchange
Act or otherwise available.
9. Survival of Indemnities, Contribution, Warranties and
Representations. The respective indemnity and contribution agreements of the
Company and the Underwriter contained in Sections 7 and 8 hereof, and the
representations and warranties of the Company contained herein shall remain
operative and in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of the
Underwriter, the Company or any of its directors and officers, or any
controlling person referred to in said Sections, and shall survive the delivery
of, and payment for, the Shares and the Warrants.
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<PAGE>
10. Termination of Agreement.
(a) The Company, by written or telegraphic notice to
the Underwriter, or the Underwriter, by written or telegraphic notice to the
Company, may terminate this Agreement prior to the earlier of (i) 11:00 A.M.,
New York City time, on the first full business day after the Effective Date; or
(ii) the time when the Underwriter, after the Registration Statement becomes
effective, releases the Offered Shares and Offered Warrants for public offering.
The time when the Underwriter "releases the Offered Shares and Offered Warrants
for public offering" for the purposes of this Section 10 means the time when the
Underwriter releases for publication the first newspaper advertisement, which is
subsequently published, relating to the Offered Shares and Offered Warrants, or
the time when the Underwriter releases for delivery to members of a selling
group copies of the Prospectus and an offering letter or an offering telegram
relating to the Offered Shares and Offered Warrants, whichever will first occur.
(b) This Agreement, including without limitation, the
obligation to purchase the Offered Shares and the Offered Warrants and the
obligation to purchase the Optional Shares and/or Optional Warrants after
exercise of the option referred to in Section 3 hereof, are subject to
termination in the absolute discretion of the Underwriter, by notice given to
the Company prior to delivery of and payment for all the Offered Shares and
Offered Warrants or the Optional Shares and Optional Warrants, as the case may
be, if, prior to such time, any of the following shall have occurred: (i) the
Company withdraws the Registration Statement from the Commission or the Company
does not or cannot expeditiously proceed with the public offering; (ii) the
representations and warranties in Section 4 hereof are not materially correct or
cannot be complied with in all material respects; (iii) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange will
have been suspended; (iv) limited or minimum prices will have been established
on either such Exchange; (v) a banking moratorium will have been declared either
by federal or New York State authorities; (vi) any other restrictions on
transactions in securities materially affecting the free market for securities
or the payment for such securities, including the Offered Shares and Offered
Warrants or the Optional Shares and Optional Warrants, will be established by
either of such Exchanges, by the Commission, by any other federal or state
agency, by action of the Congress or by Executive Order; (vii) trading in any
securities of the Company shall have been suspended or halted by any national
securities exchange, the NASD or the Commission; (viii) there has been a
materially adverse change in the condition (financial or otherwise), prospects
or obligations of the Company; (ix) the Company will have sustained a material
loss, whether or not insured, by reason of fire, flood, accident or other
calamity; (x) any action has been taken by the government of the United States
or any department or agency thereof which, in the reasonable judgment of the
Underwriter, has had a material adverse effect upon the
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<PAGE>
market or potential market for securities in general; or (xi) the market for
securities in general or political, financial or economic conditions will have
so materially adversely changed that, in the reasonable judgment of the
Underwriter, it will be impracticable to offer for sale, or to enforce contracts
made by the Underwriter for the resale of, the Offered Shares and Offered
Warrants or the Optional Shares and Offered Warrants, as the case may be.
(c) If this Agreement is terminated pursuant to
Section 6 hereof or this Section 10 or if the purchases provided for herein are
not consummated because any condition of the Underwriter's obligations hereunder
is not satisfied or because of any refusal, inability or failure on the part of
the Company to comply with any of the terms or to fulfill any of the conditions
of this Agreement, or if for any reason the Company shall be unable to or does
not perform all of its obligations under this Agreement, the Company will not be
liable to the Underwriter for damages on account of loss of anticipated profits
arising out of the transactions covered by this Agreement, but the Company will
remain liable to the extent provided in Sections 5(j), 7, 8 and 9 of this
Agreement.
11. Information Furnished by the Underwriter to the Company.
It is hereby acknowledged and agreed by the parties hereto that for the purposes
of this Agreement, including, without limitation, Sections 4(f), 7(a), 7(b) and
8 hereof, the only information given by the Underwriter to the Company for use
in the Prospectus are the statements set forth in the last sentence of the last
paragraph on the cover page, the statement appearing in the last paragraph on
page __ with respect to stabilizing the market price of Shares and Warrants, the
information in the __ paragraph on page __ with respect to concessions and
reallowances, and the information in the ___ paragraph on page ___ with respect
to the determination of the public offering price, as such information appears
in any Preliminary Prospectus and in the Prospectus.
12. Notices and Governing Law. All communications hereunder
will be in writing and, except as otherwise provided, will be delivered at, or
mailed by certified mail, return receipt requested, or telegraphed to, the
following addresses: if to the Underwriter, to it at 7 Hanover Square - 2nd
Floor, New York, New York 10004, with a copy to Akerman, Senterfitt & Eidson,
P.A., Attention: Alan H. Aronson, Esq., One Southeast 3rd Avenue, Miami, Florida
33131; if to the Company, addressed to it at 1163 Forest Avenue, Staten Island,
New York 10310, with a copy to Tenzer Greenblatt LLP, Attention: Robert J.
Mittman, Esq., 405 Lexington Avenue, New York, New York 10174.
This Agreement shall be deemed to have been made and
delivered in New York City and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York. The Company (1) agrees
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that any legal suit, action or proceeding arising out of or relating to this
Agreement shall be instituted exclusively in New York State Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York, (2) waives any objection which the Company may have now or
hereafter to the venue of any such suit, action or proceeding, and (3)
irrevocably consents to the jurisdiction of the New York State Supreme Court,
County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. The Company further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company's address shall be deemed in
every respect effective service of process upon the Company, in any such suit,
action or proceeding.
13. Parties in Interest. This Agreement is made solely for the
benefit of the Underwriter, the Company and, to the extent expressed, any person
controlling the Company or the Underwriter, each officer, director, partner,
employee and agent of the Underwriter, the directors of the Company, its
officers who have signed the Registration Statement, and their respective
executors, administrators, successors and assigns, and, no other person will
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" will not include any purchaser of the Shares or
Warrants from the Underwriter, as such purchaser.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between the Company and the
Underwriter in accordance with its terms.
Very truly yours,
TAM RESTAURANTS, INC.
By_______________________________
Name:
Title:
Confirmed and accepted in
New York, N.Y., as of the
date first above written:
PARAGON CAPITAL CORPORATION
By:__________________________________
Name:
Title:
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<PAGE>
WARRANT AGREEMENT dated as of ____________, 1998 between TAM
Restaurants, Inc., a Delaware corporation (the "Company"), and Paragon Capital
Corporation (hereinafter referred to as the "Underwriter").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to issue to the Underwriter
warrants (the "Warrants") to purchase up to 100,000 shares (as such number may
be adjusted from time to time pursuant to Article 8 of this Warrant Agreement)
(the "Shares") of Common Stock of the Company, par value $.0001 per share (the
"Common Stock", of the Company, and up to 50,000 (as such number may be adjusted
from time to time pursuant to Article 8 of this Warrant Agreement) Common Stock
purchase warrants (the "Underlying Warrants"); and
WHEREAS, the Underwriter has agreed, pursuant to the
underwriting agreement (the "Underwriting Agreement") dated _____________, 1998
between the Underwriter and the Company, to act as the underwriter in connection
with the Company's proposed public offering (the "Public Offering") of 1,150,000
(including overallotments) shares of Common Stock (the "Public Shares") at an
initial public offering price of $5.00 per Public Share and 575,000 (including
overallotments) warrants (the "Public Warrants") at an initial public offering
price of $.10 per Public Warrant; and
<PAGE>
WHEREAS, the Warrants issued pursuant to this Agreement are
being issued by the Company to the Underwriter or its designees who are
directors, officers and partners of the Underwriter or to members of the selling
group participating in the distribution of the Public Shares and Public Warrants
to the public in the Public Offering and/or their respective directors, officers
or partners (collectively, the "Designees"), in consideration for, and as part
of the Underwriter's compensation in connection with, the Underwriter acting as
the Underwriter pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment
by the Underwriter or its designees to the Company of One Hundred Five Dollars
($105.00), the agreements herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant. The Underwriter, and/or the Designees are hereby
granted the right to purchase, at any time from ___________, 1999 until 5:00
P.M., New York time, on ______________, 2003 (the "Warrant Exercise Term"), up
to 160,000 fully-paid and non-assessable Shares at an initial exercise price
(subject to adjustment as provided in Articles 6 and 8 hereof) of $6.00 per
Share and up to 150,000 Underlying Warrants at an initial exercise price
(subject to adjustment as provided in Articles 6 and 8 hereof) of $.12 per
Underlying Warrant. The
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<PAGE>
Underlying Warrants are each exercisable to purchase one (1) fully-paid and
non-assessable share of Common Stock at a price of $7.25 per share (the
"Underlying Warrant Shares"). The Underlying Warrants are exercisable commencing
________________, 1999 (or such earlier date as the Underwriter consents to the
exercise of the warrants issued pursuant to the Public Warrant Agreement (as
hereinafter defined)) until 5:00 P.M., New York City time on ________________,
2003. The Holder may purchase, upon exercise of this Warrant, either the Shares
or the Underlying Warrants or both. Except as provided in Article 13 hereof, the
Shares and the Underlying Warrants are in all respects identical to the Public
Shares and Public Warrants being sold to the public pursuant to the terms and
provisions of the Underwriting Agreement.
2. Warrant Certificates. The warrant certificates delivered
and to be delivered pursuant to this Agreement (the "Warrant Certificates")
shall, for the Warrants exercisable for the purchase of Shares, be in the form
set forth in Exhibit A attached hereto and made a part hereof, and, for the
Warrants exercisable for the purchase of Underlying Warrants, in the form of
Exhibit B attached hereto and made a part hereof, each with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
-3-
<PAGE>
3. Exercise of Warrant.
-------------------
3.1. Cash Exercise. The Warrants initially are
exercisable at a price of $6.00 per Share purchased and $.12 per Underlying
Warrant purchased, payable in cash or by check to the order of the Company, or
any combination thereof, subject to adjustment as provided in Article 8 hereof.
Upon surrender of the Warrant Certificate(s) with the annexed Form of Election
to Purchase duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the Shares and Underlying Warrants purchased, at the
Company's principal offices in Washington (currently located at 1163 Forest
Avenue, Staten Island, New York 10310) the registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to receive a certificate
or certificates for the Shares so purchased and/or a certificate or certificates
for the Underlying Warrants so purchased. The purchase rights represented by
each Warrant Certificate are exercisable at the option of the Holder thereof, in
whole or in part (but not as to fractional Shares or fractional Underlying
Warrants). In the case of the purchase of less than all the Shares or Underlying
Warrants purchasable under any Warrant Certificate, the Company shall cancel
said Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the Shares or
Underlying Warrants purchasable thereunder.
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<PAGE>
3.2. Cashless Exercise. At any time during the
Warrant Exercise Term, the Holder may, at the Holder's option, exchange, in
whole or in part, the Warrants represented by such Holder's Warrant Certificate,
which are exercisable for the purchase of Shares (a "Warrant Exchange"), into
the number of Shares and Underlying Warrants determined in accordance with this
Section 3.2, by surrendering such Warrant Certificate at the principal office of
the Company or at the office of its transfer agent, accompanied by a notice
stating such Holder's intent to effect such exchange, the number of Warrants to
be so exchanged and the date on which the Holder requests that such Warrant
Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall take place
on the date specified in the Notice of Exchange or, if later, the date the
Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new Warrant Certificate of like tenor representing Warrants which
were subject to the surrendered Warrant Certificate and not included in the
Warrant Exchange, shall be issued as of the Exchange Date and delivered to the
Holder within three (3) days following the Exchange Date. In connection with any
Warrant Exchange, the Holder shall be entitled represent the right to subscribe
for and acquire (i) the number of Shares (rounded to the next highest integer)
which would, but for such Warrant Exchange, then be issuable pursuant to the
provisions of Section
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<PAGE>
3.1 above upon the exercise of the Warrants specified by the
Holder in its Notice of Exchange (the "Total Share Number") less (ii) the number
of Shares equal to the quotient obtained by dividing (a) the product of the
Total Share Number and the existing Exercise Price per Share (as hereinafter
defined) by (b) the Market Price (as hereinafter defined) of a Public Share on
the day preceding the Warrant Exchange. "Market Price" at any date shall be
deemed to be the last reported sale price prior to the Exchange Date or, in case
no such reported sales takes place on such day, the average of the last reported
sale prices for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Common Stock is
listed or admitted to trading or as reported in the NASDAQ National Market
System, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the NASDAQ National Market System, the
closing bid price as furnished by (i) the National Association of Securities
Dealers, Inc. through NASDAQ or (ii) a similar organization if NASDAQ is no
longer reporting such information.
4. Issuance of Certificates.
------------------------
Upon the exercise of the Warrants, the issuance of
certificates for the Shares purchased and certificates for the Underlying
Warrants purchased, and upon the exercise of the Underlying Warrants, the
issuance of certificates for the Underlying Warrant Shares purchased shall be
made forthwith (and
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<PAGE>
in any event within three (3) business days thereafter) without charge to the
Holder thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Article 5 hereof) be issued in the name of, or in such names as
may be directed by, the Holder thereof; provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates and the certificates representing the
Shares and the Underlying Warrants shall be executed on behalf of the Company by
the manual or facsimile signature of the present or any future Chairman or Vice
Chairman of the Board of Directors or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates and certificates representing the
Underlying Warrants shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
-7-
<PAGE>
Upon exercise, in part or in whole, of the Warrants,
certificates representing the Shares and the Underlying Warrants purchased, and
upon exercise, in whole or in part, of the Underlying Warrants, certificates
representing the Underlying Warrant Shares purchased (collectively, the "Warrant
Securities"), shall bear a legend substantially similar to the following:
"The securities represented by this certificate and the other
securities issuable upon exercise thereof have not been
registered for purposes of public distribution under the
Securities Act of 1933, as amended (the "Act"), and may not be
offered or sold except (i) pursuant to an effective
registration statement under the Act, (ii) to the extent
applicable, pursuant to Rule 144 under the Act (or any similar
rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the
Company of an opinion of counsel, reasonably satisfactory to
counsel to the Company, stating that an exemption from
registration under such Act is available."
5. Restriction on Transfer of Warrants.
-----------------------------------
The Holder of a Warrant Certificate, by the Holder's
acceptance thereof, covenants and agrees that the Warrants are being acquired as
an investment and not with a view to the distribution thereof, and that the
Warrants may not be sold, transferred, assigned, hypothecated or otherwise
disposed of, in whole or in part, for a period of one (1) year from the date
hereof [the Effective Date], except to the Underwriter or to the Designees.
-8-
<PAGE>
6. Price.
-----
6.1. Initial and Adjusted Exercise Price. The Warrant's
initial exercise price of each Warrant shall be $6.00 per Share and $.12 per
Underlying Warrant. The adjusted exercise price per Share and the adjusted
exercise price per Underlying Warrant shall be the prices which shall result
from time to time from any and all adjustments of the initial exercise price per
Share or per Underlying Warrant, as the case may be, in accordance with the
provisions of Article 8 hereof.
6.2. Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price, depending upon
the context.
7. Registration Rights.
-------------------
7.1. Registration Under the Securities Act of 1933. None of
the Warrants, the Shares, the Underlying Warrants, or the Underlying Warrant
Shares have been registered for purposes of public distribution under the
Securities Act of 1933, as amended (the "Act").
7.2. Registrable Securities. As used herein the term
"Registrable Security" means each of the Warrants, the Shares, the Underlying
Warrants, the Underlying Warrant Shares and any shares of Common Stock issued
upon any stock split or stock dividend in respect of such Shares or Underlying
Warrant Shares; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a
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<PAGE>
Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Act and disposed of pursuant thereto, (ii)
registration under the Act is no longer required for subsequent public
distribution of such security, or (iii) it has ceased to be outstanding. The
term "Registrable Securities" means any and/or all of the securities falling
within the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be made in
the definition of "Registrable Security" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Article 7.
7.3. Piggyback Registration. If, at any time during the seven
years following the effective date of the Public Offering, the Company proposes
to prepare and file one or more post-effective amendments to the registration
statement filed in connection with the Public Offering or any new registration
statement or post-effective amendments thereto covering equity or debt
securities of the Company, or any such securities of the Company held by its
shareholders (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form) (for purposes of this
Article 7, collectively, the "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least thirty
-10-
<PAGE>
(30) business days prior to the filing of each such Registration Statement, to
all holders of the Registrable Securities. Upon the written request of such a
holder (a "Requesting Holder"), made within twenty (20) business days after
receipt of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the Company
shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Act of the Registrable Securities which it has been so
requested to register ("Piggyback Registration"), at the Company's sole cost and
expense and at no cost or expense to the Requesting Holders; provided, however,
that if, in the written opinion of the Company's managing underwriter, if any,
for such offering, the inclusion of all or a portion of the Registrable
Securities requested to be registered, when added to the securities being
registered by the Company or the selling shareholder(s), will exceed the maximum
amount of the Company's securities which can be marketed (i) at a price
reasonably related to their then current market value, or (ii) without otherwise
materially adversely affecting the entire offering, then the Company may exclude
from such offering all or a portion of the Registrable Securities which it has
been requested to register.
If securities are proposed to be offered for sale
pursuant to such Registration Statement by other security holders
of the Company and the total number of securities to be offered
-11-
<PAGE>
by the Requesting Holders and such other selling security holders is required to
be reduced pursuant to a request from the managing underwriter (which request
shall be made only for the reasons and in the manner set forth above) the
aggregate number of Registrable Securities to be offered by Requesting Holders
pursuant to such Registration Statement shall equal the number which bears the
same ratio to the maximum number of securities that the underwriter believes may
be included for all the selling security holders (including the Requesting
Holders) as the original number of Registrable Securities proposed to be sold by
the Requesting Holders bears to the total original number of securities proposed
to be offered by the Requesting Holders and the other selling security holders.
If, subsequent to exercise of the demand registration right
referred to in Section 7.4 below, any Registrable Securities requested to be
included in a Piggyback Registration are not so included because of the
operation of the proviso of the first paragraph of this Section 7.3, then the
holders of such excluded Registrable Securities shall have the right to require
the Company, at its expense, to prepare and file another Registration Statement
under the Act covering such Registrable Securities, provided that, if the
underwriter so requests, such Registrable Securities shall not be sold until the
expiration of 90 days from the effective date of the offering that gave rise to
the piggyback registration rights that are the subject of this
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<PAGE>
Section 7.3. Nothing contained in the foregoing sentence shall require the
Company to undergo an audit, other than in the ordinary course of business.
Notwithstanding the provisions of this Section
7.3, the Company shall have the right at any time after it shall have given
written notice pursuant to this Section 7.3 (irrespective of whether any written
request for inclusion of Registrable Securities shall have already been made) to
elect not to file any such proposed Registration Statement, or to withdraw the
same after the filing but prior to the effective date thereof.
7.4. Demand Registration.
-------------------
(a) At any time during the Warrant Exercise Term, any
"Majority Holder" (as such term is defined in Section 7.4(d) below) of the
Registrable Securities shall have the right (which right is in addition to the
piggyback registration rights provided for under Section 7.3 hereof),
exercisable by written notice to the Company (the "Demand Registration
Request"), to have the Company prepare and file with the Securities and Exchange
Commission (the "Commission") on one occasion, at the sole expense of the
Company (except as provided in Section 7.5(b) hereof), a Registration Statement
and such other documents, including a prospectus, as may be necessary (in the
opinion of both counsel for the Company and counsel for such Majority Holder) in
order to comply with the provisions of the Act, so as to permit a public
offering and sale of the Registrable
-13-
<PAGE>
Securities by the holders thereof. The Company shall use its best efforts to
cause the Registration Statement to become effective under the Act, so as to
permit a public offering and sale of the Registrable Securities by the holders
thereof. Once effective, the Company will use its best efforts to maintain the
effectiveness of the Registration Statement until the earlier of (i) the date
that all of the Registrable Securities have been sold, or (ii) the date that the
holders thereof receive an opinion of counsel to the Company that all of the
Registrable Securities may be freely traded without registration under the Act,
under Rule 144(k) promulgated under the Act or otherwise. Nothing herein
contained shall require the Company to undergo an audit, other than in the
ordinary course of business.
(b) The Company covenants and agrees to give written
notice of any Demand Registration Request to all holders of the Registrable
Securities within ten (10) business days from the date of the Company's receipt
of any such Demand Registration Request. After receiving notice from the Company
as provided in this Section 7.4(b), holders of Registrable Securities may
request the Company to include their Registrable Securities in the Registration
Statement to be filed pursuant to Section 7.4(a) hereof by notifying the Company
of their decision to have such securities included within ten (10) days of their
receipt of the Company's notice.
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<PAGE>
(c) The term "Majority Holder" as used in
Section 7.4 hereof shall mean any holder or any combination of holders of
Registrable Securities, if included in such holders' Registrable Securities are
that aggregate number of shares of Common Stock (including Shares already
issued, Shares issuable pursuant to the exercise of outstanding Warrants,
Underlying Warrant Shares already issued and Underlying Warrant Shares issuable
pursuant to the exercise of outstanding Underlying Warrants) as would constitute
a majority of the aggregate number of shares of Common Stock (including Shares
already issued, Shares issuable pursuant to the exercise of outstanding
Warrants, Underlying Warrant Shares already issued and Underlying Warrant Shares
issuable pursuant to the exercise of outstanding Underlying Warrants) included
in all the Registrable Securities.
7.5. Covenants of the Company With Respect to Registration. The
Company covenants and agrees as follows:
(a) In connection with any registration under Section 7.4
hereof, the Company shall file the Registration Statement as expeditiously as
possible, but in any event no later than twenty (20) days following receipt of
any demand therefor, shall use its best efforts to have any such Registration
Statement declared effective at the earliest possible time, and shall furnish
each holder of Registrable Securities such number of prospectuses as shall
reasonably be requested.
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<PAGE>
(b) The Company shall pay all costs, fees and expenses
(other than indemnity fees, discounts and nonaccountable expense allowance
applicable to the Registrable Securities and fees and expenses of counsel
retained by the holders of Registrable Securities) in connection with all
Registration Statements filed pursuant to Sections 7.3 and 7.4(a) hereof
including, without limitation, the Company's legal and accounting fees, printing
expenses, and blue sky fees and expenses.
(c) The Company will take all necessary action which may
be required in qualifying or registering the Registrable Securities included in
the Registration Statement, for offering and sale under the securities or blue
sky laws of such states as are requested by the holders of such securities;
provided that the Company shall not be obligated to execute or file any general
consent to service of process to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(d) The Company shall indemnify any holder of the
Registrable Securities to be sold pursuant to any Registration Statement and any
underwriter or person deemed to be an underwriter under the Act and each
person, if any, who controls such holder or underwriter or person deemed to be
an underwriter within the meaning of Section 15 of the Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended
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<PAGE>
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement to the same extent and with the same effect as the provisions pursuant
to which the Company has agreed to indemnify the Underwriter as set forth in
Section 7 of the Underwriting Agreement and to provide for just and equitable
contribution as set forth in Section 8 of the Underwriting Agreement.
(e) Any holder of Registrable Securities to
be sold pursuant to a registration statement, and such Holder's successors and
assigns, shall severally, and not jointly, indemnify, the Company, its officers
and directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
all loss, claim, damage or expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which they may become subject under the Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of such holder, or
such Holder's successors or assigns, for specific inclusion in such Registration
Statement to the same extent and with the same effect as the provisions pursuant
to which the
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Underwriter has agreed to indemnify the Company as set forth in Section 7 of the
Underwriting Agreement and to provide for just and equitable contribution as set
forth in Section 8 of the Underwriting Agreement.
(f) Nothing contained in this Agreement
shall be construed as requiring any holder to exercise the Warrants or the
Underlying Warrants held by such Holder prior to the initial filing of any
registration statement or the effectiveness thereof.
(g) If the Company shall fail to comply
with the provisions of this Article 7, the Company shall, in addition to any
other equitable or other relief available to the holders of Registrable
Securities, be liable for any or all incidental, special and consequential
damages sustained by the holders of Registrable Securities, requesting
registration of their Registrable Securities.
(h) The Company shall promptly deliver
copies of all correspondence between the Commission and the Company, its counsel
or auditors and all memoranda relating to discussions with the Commission or its
staff with respect to the Registration Statement to each holder of Registrable
Securities included for such registration in such Registration Statement
pursuant to Section 7.3 hereof or Section 7.4 hereof requesting such
correspondence and memoranda and to the managing underwriter, if any, of the
offering in connection with which
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such Holder's Registrable Securities are being registered, and shall permit each
holder of Registrable Securities and such underwriter to do such reasonable
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the Registration Statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. Such investigation shall include access
to books, records and properties and opportunities to discuss the business of
the Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such holder of
Registrable Securities or underwriter shall reasonably request.
(i) Upon the written request therefor by any
holders of Registrable Securities, the Company shall include in the Registration
Statement covering any of the Registrable Securities any other securities of the
Company held by such holders of Registrable Securities as of the date of filing
of such Registration Statement, including, without limitation, restricted shares
of Common Stock, options, warrants or any other securities convertible into
shares of Common Stock.
8. Adjustments of Exercise Price and Number of Securities.
The following adjustments apply to the Exercise Price of the Warrants with
respect to the Shares and the number of Shares purchasable upon exercise of the
Warrants. In the
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event the Exercise Price per Share and/or the number of Shares so purchasable is
adjusted, then the Exercise Price of the Warrants relating to the Underlying
Warrants and the number of underlying Warrants purchasable hereunder shall, be
adjusted in the same proportion.
8.1. Computation of Adjusted Price. In case the
Company shall at any time after the date hereof pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, then upon such
dividend or distribution the Exercise Price per Share in effect immediately
prior to such dividend or distribution shall forthwith be reduced to a price
determined by dividing:
(a) an amount equal to the total number of
shares of Common Stock outstanding immediately prior to such dividend or
distribution multiplied by the Exercise Price in effect immediately prior to
such dividend or distribution, by
(b) the total number of shares of Common
Stock outstanding immediately after such issuance or sale.
For the purposes of any computation to be
made in accordance with the provisions of this Section 8.1, the Common Stock
issuable by way of dividend or other distribution on any stock of the Company
shall be deemed to have been issued immediately after the opening of business on
the date following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution.
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8.2. Subdivision and Combination. In case the
Company shall at any time subdivide or combine the outstanding shares of Common
Stock, the Exercise Price shall forthwith be proportionately decreased in the
case of subdivision or increased in the case of combination.
8.3. Adjustment in Number of Securities. Upon
each adjustment of the Exercise Price pursuant to the provisions of this Article
8, the number of Shares issuable upon the exercise of each Warrant shall be
adjusted to the nearest full number by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of
Shares issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price
provided, however that if an event occurs that results in an adjustment of the
number and/or price of the shares of Common Stock issuable upon exercise of the
Public Warrants pursuant to Section 9 of the Warrant Agreement by and among the
Company, the Underwriter and Continental Stock Transfer & Trust Company dated as
of , 1997 ("Public Warrant Agreement"), resulting in automatic
adjustment in the number and/or price of the Underlying Warrant Shares issuable
upon exercise of the Underlying Warrants pursuant to Section 8.5 hereof, then
the adjustment provided for in this Section 8.3 shall not, in such instance,
result in any further adjustment in
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the aggregate number of shares of Common Stock ultimately issuable upon exercise
of the Underlying Warrants.
8.4. Reclassification, Consolidation, Merger, etc. In
case of any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of both the Shares
and the Underlying Warrant Shares immediately prior to any such events, at a
price equal to the product of (x) the number of shares of Common Stock issuable
upon exercise of the Holders' Warrants and the Underlying Warrants and (y) the
exercise prices for the Warrants and Underlying Warrants in effect immediately
prior to the record date for such reclassification, change,
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<PAGE>
consolidation, merger, sale or conveyance as if such Holders had exercised the
Warrants and the Underlying Warrants.
8.5. Determination of Outstanding Common Shares.
The number of Common Shares at any one time outstanding shall include the
aggregate number of shares issued and the aggregate number of shares issuable
upon the exercise of options, rights, warrants and upon the conversion or
exchange of convertible or exchangeable securities.
8.6. Adjustment of Exercise Price and Securities
Issuable Upon Exercise of Underlying Warrants. With respect to any of the
Underlying Warrants, whether or not the Warrants have been exercised and whether
or not the Warrants are issued and outstanding, the exercise price for, and the
number of, Underlying Warrant Shares issuable upon exercise of the Underlying
Warrants shall be automatically adjusted in accordance with Section 9 of the
Public Warrant Agreement, upon the occurrence of any of the events described
therein. Thereafter, until the next such adjustment or until otherwise adjusted
in accordance with this Section 8, the Underlying Warrants shall be exercisable
at such adjusted exercise price and for such adjusted number of Underlying
Warrant Shares.
8.7. Dividends and Other Distributions with
Respect to Outstanding Securities. In the event that the Company
shall at any time prior to the exercise of all Warrants make any
distribution of its assets to holders of its Common Stock as a
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<PAGE>
liquidating or a partial liquidating dividend, then the holder of the Warrants
who exercises its Warrants after the record date for the determination of those
holders of Common Stock entitled to such distribution of assets as a liquidating
or partial liquidating dividend shall be entitled to receive for the Warrant
Price per Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith) which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitle to such distribution. At the time of any such dividend or distribution,
the Company shall make appropriate reserves to ensure the timely performance of
the provisions of this Subsection 8.7.
8.8. Subscription Rights for Shares of Common
Stock or Other Securities. In the case that the Company or an affiliate of the
Company shall at any time after the date hereof and prior to the exercise of all
the Warrants issue any rights, warrants or options to subscribe for shares of
Common Stock or any other securities of the Company or of such affiliate to all
the shareholders of the Company, the Holders of unexercised Warrants on the
record date set by the Company or such affiliate in connection with such
issuance of rights, warrants or options
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<PAGE>
shall be entitled, in addition to the shares of Common Stock or other securities
receivable upon the exercise of the Warrants, to receive such rights, warrants
or options, in addition to the shares of Common Stock or other securities
receivable upon the exercise of the Warrants, to receive such rights at the time
such rights, warrants or options that such Holders would have been entitled to
receive had they been, on such record date, the holders of record of the number
of whole shares of Common Stock then issuable upon exercise of their outstanding
Warrants (assuming for purposes of this Section 8.8, that the exercise of the
Warrants is permissible immediately upon issuance).
9. Exchange and Replacement of Warrant Certificates.
------------------------------------------------
Each Warrant Certificate is exchangeable without expense, upon
the surrender thereof by the registered Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of
securities in such denominations as shall be designated by the Holder thereof at
the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the
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<PAGE>
Warrant Certificate, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests.
-----------------------------------
The Company shall not be required to issue certificates
representing fractions of Shares or fractions of Underlying Warrants upon the
exercise of the Warrants, nor shall it be required to issue scrip or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Shares and Underlying Warrants.
11. Reservation and Listing of Securities.
-------------------------------------
The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon the exercise of the Warrants and the Underlying Warrants, such
number of shares of Common Stock as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Warrants and payment
of the Exercise Price therefor, all Shares issuable upon such exercise shall be
duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any shareholder. The Company further covenants and agrees
that upon exercise of the Underlying Warrants and payment of the respective
Underlying Warrant exercise price therefor, all Underlying Warrant Shares
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the
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<PAGE>
preemptive rights of any shareholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Warrants and the Underlying
Warrants and all Underlying Warrants to be listed on or quoted by NASDAQ or
listed on such national securities exchange, in the event the Common Stock is
listed on a national securities exchange.
12. Notices to Warrant Holders.
--------------------------
Nothing contained in this Agreement shall be construed as
conferring upon the Holder or Holders the right to vote or to consent or to
receive notice as a shareholder in respect of any meetings of shareholders for
the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders
of its shares of Common Stock for the purpose of entitling
them to receive a dividend or distribution payable otherwise
than in cash, or a cash dividend or distribution payable
otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or
distribution on the books of the Company; or
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<PAGE>
(b) the Company shall offer to all the holders of
its Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for
shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property,
assets and business as an entirety shall be proposed; or
(d) reclassification or change of the
outstanding shares of Common Stock (other than a change in par
value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), consolidation of
the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result
in any reclassification or change of the outstanding shares of
Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as
aforesaid), or a sale or conveyance to another corporation of
the property of the Company as an entirety is proposed; or
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<PAGE>
(e) The Company or an affiliate of the
Company shall propose to issue any rights to subscribe for
shares of Common Stock or any other securities of the Company
or of such affiliate to all the shareholders of the Company;
then, in any one or more of said events, the Company shall give written notice
to the Holder or Holders of such event at least fifteen (15) days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, options or
warrants, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in connection
with the declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
13. Underlying Warrants.
-------------------
The form of the certificates representing the
Underlying Warrants (and the form of election to purchase shares of Common Stock
upon the exercise of the Underlying Warrants and the form of assignment printed
on the reverse thereof) shall be
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substantially as set forth in Exhibit "A" to the Public Warrant Agreement;
provided, however, (i) each Underlying Warrant issuable upon exercise of the
Warrants shall evidence the right to initially purchase one (1) fully paid and
non-assessable share of Common Stock in respect of the Underlying Warrant at an
initial purchase price of $7.25 per share commencing ______________, 1999 (or
such earlier date as the Underwriter consents to the exercise of the warrants
issued pursuant to the Public Warrant Agreement) until , 2003 and (ii) the
Target Redemption Price (as defined in the Public Warrant Agreement) of the
Underlying Warrants is 150% of the then effective exercise price of the
Underlying Warrants. As set forth in Section 8.5 of this Agreement, the exercise
price of the Underlying Warrants and the number of shares of Common Stock
issuable upon the exercise of the Underlying Warrants are subject to adjustment,
whether or not the Warrants have been exercised and the Underlying Warrants have
been issued, in the manner and upon the occurrence of the events set forth in
Section 9 of the Public Warrant Agreement, which is hereby incorporated herein
by reference and made a part hereof as if set forth in its entirety herein.
Subject to the provisions of this Agreement and upon issuance of the Underlying
Warrants, each registered holder of such Underlying Warrants shall have the
right to purchase from the Company (and the Company shall issue to such
registered holders) up to the number of fully paid and non-assessable Underlying
Warrant Shares (subject
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to adjustment as provided herein and in the Public Warrant Agreement), free and
clear of all preemptive rights of shareholders, provided that such registered
holder complies, in connection with the exercise of such holders' Underlying
Warrants, with the terms governing exercise of the Public Warrants set forth in
the Public Warrant Agreement, and pays the applicable exercise price, determined
in accordance with the terms of the Public Warrant Agreement. Upon exercise of
the Underlying Warrants, the Company shall forthwith issue to the registered
holder of any such Underlying Warrants, in such holder's name or in such name as
may be directed by such holder, certificates for the number of Underlying
Warrant Shares so purchased. The Underlying Warrants shall be transferable in
the manner provided in the Public Warrant Agreement, and upon any such transfer,
a new Underlying Warrant shall be issued promptly to the transferee. The Company
covenants to, and agrees with, each Holder that without the prior written
consent of all the Holders, the Public Warrant Agreement will not be modified,
amended, cancelled, altered or superseded, and that the Company will send to
each Holder, irrespective of whether or not the Warrants have been exercised,
any and all notices required by the Public Warrant Agreement to be sent to
holders of the Public Warrants.
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14. Notices.
-------
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3 of this Agreement or to such other address as the
Company may designate by notice to the Holders.
15. Supplements and Amendments.
--------------------------
The Company and the Underwriter may from time to time
supplement or amend this Agreement without the approval of any Holders of the
Warrants and/or Warrant Securities in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Underwriter may deem
necessary or desirable and which the Company and the Underwriter deem not to
adversely affect the interests of the Holders of Warrant Certificates.
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<PAGE>
16. Successors.
----------
All the covenants and provisions of this Agreement by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
17. Termination.
-----------
This Agreement shall terminate at the close of business on
, 2006. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date when all Warrants and Underlying Warrants have
been exercised and all Warrant Securities have been resold to the public;
provided, however, that the provisions of Section 7 shall survive any
termination pursuant to this Section 17 until the close of business on , 2009.
18. Governing Law.
-------------
This Agreement and each Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of New York
and for all purposes shall be construed in accordance with the laws of said
State.
19. Benefits of This Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the Underwriter and any other
registered holder or holders of the Warrant Certificates or Warrant Securities
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Under-
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<PAGE>
writer and any other holder or holders of the Warrant Certificates or Warrant
Securities.
20. Counterparts.
------------
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
TAM RESTAURANTS, INC.
By:_________________________________
Name:
Title:
Attest:
______________________________
PARAGON CAPITAL CORPORATION
By:________________________________
Name:
Title:
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<PAGE>
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR COMMENCING _________, 1999
UNTIL 5:00 P.M., NEW YORK TIME, _______, 2003
No. W- _______ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ________
_____________________________ or registered assigns, is the registered holder of
__________ Warrants to purchase, at any time from _______, 1999 until 5:00 P.M.
New York City time on _______, 2002 ("Expiration Date"), an aggregate of up to
_______ fully-paid and non-assessable shares (the "Shares") of the common stock,
par value $.0001 per share (the "Common Stock"), of TAM Restaurants, Inc., a
Delaware corporation (the "Company"), at an initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $____ per Share, upon
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the warrant agreement dated as of _______, 1997 between the Company and
Paragon Capital Corporation (the "Warrant Agreement"). Payment of the Exercise
Price may be made in cash, or by certified or official bank check in New York
Clearing House funds payable to the order of the Company, or any combination
thereof.
No Warrant may be exercised after 5:00 P.M., New York City
time, on the Expiration Date, at which time all Warrants evidenced hereby,
unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
<PAGE>
The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax, or
other governmental charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated: , 1998 TAM RESTAURANTS, INC.
By:__________________
Name:
Title:
Attest:
________________
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase _________ Shares of
Common Stock and herewith tenders in payment for such securities, cash or a
certified or official bank check payable in New York Clearing House Funds to the
order of TAM Restaurants, Inc. in the amount of $______, all in accordance with
the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of ____________________________, whose
address is _______________________________, and that such Certificate be
delivered to _________________________________, whose address is _____________.
Dated: Signature:_________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED____________________________________________
hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature:_________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate)
_______________________________
_______________________________
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE>
EXHIBIT B
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE COMMENCING _______, 1999
UNTIL 5:00 P.M., NEW YORK TIME, _______, 2003
No. W- _________ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that _____________
____________________, or registered assigns, is the registered holder of
___________________________ (_______) Warrants to purchase, at any time from
_______, 1999 until 5:00 P.M. New York City time on _______, 2003 ("Expiration
Date"), an aggregate of up to ___________________________ (_______) common stock
purchase warrants, each common stock purchase warrant entitling the holder
thereof to purchase one share of common stock, par value $.0001 per share
(collectively, the "Underlying Warrants"), of TAM Restaurants, Inc., a Delaware
corporation (the "Company"), at an initial exercise price, subject to adjustment
in certain events (the "Exercise Price"), of $____ per Underlying Warrant, upon
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the warrant agreement dated as of _______, 1997 between the Company and
Paragon Capital Corporation ("Paragon") (the "Warrant Agreement"). Payment of
the Exercise Price may be made in cash, or by certified or official bank check
in New York Clearing House funds payable to the order of the Company, or any
combination thereof.
The Underlying Warrants issuable upon exercise of the Warrants
will be exercisable at any time from _______, 1999 (or such earlier dates as to
which Paragon consent to the exercise of the Public Warrants (as defined in the
Warrant Agreement)) until 5:00 P.M. Eastern Time _______, 2003 each Underlying
Warrant entitling the holder thereof to purchase one fully-paid and
non-assessable share of common stock of the Company, at an initial
<PAGE>
exercise price, subject to adjustment in certain events, of $____ per share. The
Underlying Warrants are issuable pursuant to the terms and provisions of a
certain agreement dated as of _______, 1998 by and among the Company, Paragon
and _______________ (the "Public Warrant Agreement"). The Public Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to (except as otherwise provided in the
Warrant Agreement) for a description of the rights, limitations of rights,
manner of exercise, anti-dilution provisions and other provisions with respect
to the Underlying Warrants.
No Warrant may be exercised after 5:00 P.M., New York City
time, on the Expiration Date, at which time all Warrants evidenced hereby,
unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that, upon the occurrence of
certain events, the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
<PAGE>
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated: , 1998 TAM RESTAURANTS, INC.
By:__________________________
Name:
Title:
Attest:
________________________
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase _________ Underlying
Warrants and herewith tenders, in payment for such securities, cash or a
certified or official bank check payable in New York Clearing House Funds to the
order of TAM Restaurants, Inc. in the amount of $______, all in accordance with
the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of ___________________________, whose
address is __________________________________, and that such Certificate be
delivered to ________________________________, whose address is _____________.
Dated: Signature:
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED________________________________________
hereby sells, assigns and transfers unto ___________________________________
___________________ (Please print name and address of transferee) this Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _______________, Attorney, to transfer
the within Warrant Certificate on the books of the within-named Company, with
full power of substitution.
Dated: Signature: ________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE>
TAM RESTAURANTS, INC.
a Delaware corporation
and
[ ]
Warrant Agent
and
PARAGON CAPITAL CORPORATION
Underwriter
WARRANT AGREEMENT
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1 Appointment of Warrant Agent................................................................ 3
2 Form of Warrant............................................................................. 4
3 Countersignature and Registration........................................................... 5
4 Transfers and Exchanges..................................................................... 5
5 Exercise of Warrants; Payment of Warrant Solicitation
Fee......................................................................................... 6
6 Payment of Taxes............................................................................ 9
7 Mutilated or Missing Warrants............................................................... 10
8 Reservation of Common Stock................................................................. 11
9 Warrant Price; Adjustments.................................................................. 12
10 Fractional Interest......................................................................... 19
11 Notices to Warrantholders................................................................... 19
12 Disposition of Proceeds on Exercise of Warrants............................................. 21
13 Redemption of Warrants...................................................................... 22
14 Merger or Consolidation or Change of Name of Warrant
Agent....................................................................................... 22
15 Duties of Warrant Agent..................................................................... 23
16 Change of Warrant Agent..................................................................... 26
17 Identity of Transfer Agent.................................................................. 28
18 Notices..................................................................................... 28
19 Supplements and Amendments.................................................................. 29
20 New York Contract........................................................................... 30
21 Benefits of this Agreement.................................................................. 30
22. Successors.................................................................................. 30
Exhibit A - Form of Warrant
</TABLE>
-2-
<PAGE>
WARRANT AGENT AGREEMENT dated as of __________________, 1998,
by and among TAM Restaurants, Inc., a Delaware corporation (the "Company"),
Paragon Capital Corporation (the "Underwriter") and _________________________
_________________________________, as warrant agent (hereinafter
called the "Warrant Agent").
WHEREAS, the Company proposes to issue and sell to the public
up to 1,150,000 shares of the Common Stock of the Company, par value $.0001 per
share (hereinafter, together with the stock of any other class to which such
shares may hereafter have been changed, called "Common Stock"), and up to
575,000 Common Stock purchase warrants (the "Warrants");
WHEREAS, each Warrant will entitle the holder thereof to
purchase one (1) share of Common Stock;
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, transfer, exchange and exercise of the
Warrants;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as Warrant Agent for the Company in accordance
with the instructions hereinafter set forth in this Agreement, and the Warrant
Agent hereby accepts such appointment.
-3-
<PAGE>
Section 2. Form of Warrant. The text of the Warrants and of
the form of election to purchase Common Stock to be printed on the reverse
thereof shall be substantially as set forth in Exhibit A attached hereto. Each
Warrant shall entitle the registered holder thereof to purchase one share of
Common Stock at a purchase price of $6.00, at any time from ____________, 1999
(or such earlier date upon which the Underwriter consents to the exercise of the
Warrants) until 5:00 p.m. Eastern time, on , 2003 (the "Warrant Exercise
Period"). The warrant price and the number of shares of Common Stock issuable
upon exercise of the Warrants are subject to adjustment upon the occurrence of
certain events, all as hereinafter provided. The Warrants shall be executed on
behalf of the Company by the manual or facsimile signature of the present or any
future President or Vice President of the Company, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company.
Warrants shall be dated as of the issuance by the Warrant
Agent either upon initial issuance or upon transfer or exchange.
In the event the aforesaid expiration date of the Warrants
falls on a Saturday or Sunday, or on a legal holiday on which the New York Stock
Exchange is closed, then the Warrants shall expire at 5:00 p.m. Eastern time on
the next succeeding business day.
-4-
<PAGE>
Section 3. Countersignature and Registration. The Warrant
Agent shall maintain books for the transfer and registration of the Warrants.
Upon the initial issuance of the Warrants, the Warrant Agent shall issue and
register the Warrants in the names of the respective holders thereof. The
Warrants shall be countersigned manually or by facsimile by the Warrant Agent
(or by any successor to the Warrant Agent then acting as warrant agent under
this Agreement) and shall not be valid for any purpose unless so countersigned.
Warrants may, however, be so countersigned by the Warrant Agent (or by its
successor as Warrant Agent) and be delivered by the Warrant Agent,
notwithstanding that the persons whose manual or facsimile signatures appear
thereon as proper officers of the Company shall have ceased to be such officers
at the time of such countersignature or delivery.
Section 4. Transfers and Exchanges. The Warrant Agent shall
transfer, from time to time, any outstanding Warrants upon the books to be
maintained by the Warrant Agent for that purpose, upon surrender thereof for
transfer properly endorsed or accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant shall be issued to the
transferee and the surrendered Warrant shall be cancelled by the Warrant Agent.
Warrants so cancelled shall be delivered by the Warrant Agent to the Company
from time to time upon request. Warrants may be exchanged at the option of the
holder thereof, when surrendered at the office of the Warrant Agent, for another
Warrant, or other Warrants of different
-5-
<PAGE>
denominations of like tenor and representing in the aggregate the right to
purchase a like number of shares of Common Stock.
Section 5. Exercise of Warrants; Payment of Warrant
Solicitation Fee.
(a) Subject to the provisions of this Agreement, each
registered holder of Warrants shall have the right, which may be exercised
commencing at the opening of business on the first day of the Warrant Exercise
Period, to purchase from the Company (and the Company shall issue and sell to
such registered holder of Warrants) the number of fully paid and non-assessable
shares of Common Stock specified in such Warrants upon surrender of such
Warrants to the Company at the office of the Warrant Agent, with the form of
election to purchase on the reverse thereof duly filled in and signed, and upon
payment to the Company of the warrant price, determined in accordance with the
provisions of Sections 9 and 10 of this Agreement, for the number of shares of
Common Stock in respect of which such Warrants are then exercised. Payment of
such warrant price shall be made in cash or by certified check or bank draft to
the order of the Company. Subject to Section 6, upon such surrender of Warrants
and payment of the warrant price, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of such Warrants and in such name or names as such registered
holder may designate, a certificate or certificates for the number of full
shares of Common Stock so purchased upon the exercise of such Warrants. Such
certificate
-6-
<PAGE>
or certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
shares of Common Stock as of the date of the surrender of such Warrants and
payment of the warrant price as aforesaid. The rights of purchase represented by
the Warrants shall be exercisable, at the election of the registered holders
thereof, either as an entirety or from time to time for a portion of the shares
specified therein and, in the event that any Warrant is exercised in respect of
less than all of the shares of Common Stock specified therein at any time prior
to the date of expiration of the Warrants, a new Warrant or Warrants will be
issued to the registered holder for the remaining number of shares of Common
Stock specified in the Warrant so surrendered, and the Warrant Agent is hereby
irrevocably authorized to countersign and to deliver the required new Warrants
pursuant to the provisions of this Section and of Section 3 of this Agreement
and the Company, whenever requested by the Warrant Agent, will supply the
Warrant Agent with Warrants duly executed on behalf of the Company for such
purpose. Anything in the foregoing to the contrary notwithstanding, no Warrant
will be exercisable unless at the time of exercise the Company has filed with
the Securities and Exchange Commission a registration statement under the
Securities Act of 1933, as amended (the "Act"), covering the shares of Common
Stock issuable upon exercise of such Warrant and such shares have been so
registered or qualified or deemed to be exempt under the securities laws of the
state of residence
-7-
<PAGE>
of the holder of such Warrant. The Company shall use its best efforts to have
all shares so registered or qualified on or before the date on which the
Warrants become exercisable.
(b) If at the time of exercise of any Warrant after
___________, 1999 (i) the per share market price of the Company's Common Stock
is equal to or greater than the then exercise price of the Warrant, (ii) the
exercise of the Warrant is solicited by the Underwriter at such time while the
Underwriter is a member of the National Association of Securities Dealers, Inc.
("NASD"), (iii) the Warrant is not held in a discretionary account, (iv)
disclosure of the compensation arrangement is made in documents provided to the
holders of the Warrants; and (v) the solicitation of the exercise of the Warrant
is not in violation of Regulation M (as such regulation or any successor
regulation may be in effect as of such time of exercise) promulgated under the
Securities Exchange Act of 1934, then the Underwriter shall be entitled to
receive from the Company upon exercise of each of the Warrant(s) so exercised a
fee of five percent (5%) of the aggregate price of the Warrants so exercised
(the "Exercise Fee"). The procedures for payment of the warrant solicitation fee
are set forth in Section 5(c) below.
(c) (1) Within five (5) days of the last day of each month
commencing with ______________, 1999, the Warrant Agent will promptly notify the
Underwriter of each Warrant Certificate which has been properly completed for
exercise by holders of Warrants during the last month. The
-8-
<PAGE>
Company and Warrant Agent shall determine, in their sole and absolute
discretion, whether a Warrant Certificate has been properly completed. The
Warrant Agent will provide the Underwriter with such information, in connection
with the exercise of each Warrant, as the Underwriter shall reasonably request.
(2) The Company hereby authorizes and instructs the Warrant
Agent to deliver to the Underwriter the Exercise Fee promptly after receipt by
the Warrant Agent from the Company of a check payable to the order of the
Underwriter in the amount of the Exercise Fee. In the event that an Exercise Fee
is paid to the Underwriter with respect to a Warrant which the Company or the
Warrant Agent determines is not properly completed for exercise or in respect of
which the Underwriter is not entitled to an Exercise Fee, the Underwriter will
promptly return such Exercise Fee to the Warrant Agent which shall forthwith
return such fee to the Company.
The Underwriter and the Company may at any time, after
_________________, 1999, and during business hours, examine the records of the
Warrant Agent, including its ledger of original Warrant certificates returned to
the Warrant Agent upon exercise of Warrants. Notwithstanding any provision to
the contrary, the provisions of paragraphs 5(b) and 5(c) may not be modified,
amended or deleted without the prior written consent of the Underwriter.
Section 6. Payment of Taxes. The Company will pay
any documentary stamp taxes attributable to the initial issuance
-9-
<PAGE>
of Common Stock issuable upon the exercise of Warrants; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of any certificates of shares
of Common Stock in a name other than that of the registered holder of Warrants
in respect of which such shares are issued, and in such case neither the Company
nor the Warrant Agent shall be required to issue or deliver any certificate for
shares of Common Stock or any Warrant until the person requesting the same has
paid to the Company the amount of such tax or has established to the Company's
satisfaction that such tax has been paid or that such person has an exemption
from the payment of such tax.
Section 7. Mutilated or Missing Warrants. In case any of the
Warrants shall be mutilated, lost, stolen or destroyed, the Company may, in its
discretion, issue and the Warrant Agent shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but only
upon receipt of evidence satisfactory to the Company and the Warrant Agent of
such loss, theft or destruction and, in case of a lost, stolen or destroyed
Warrant, indemnity, if requested, also satisfactory to them. Applicants for such
substitute Warrants shall also comply with such other reasonable regulations and
pay such reasonable charges as the Company or the Warrant Agent may prescribe.
-10-
<PAGE>
Section 8. Reservation of Common Stock. There have been
reserved, and the Company shall at all times keep reserved, out of the
authorized and unissued shares of Common Stock, a number of shares of Common
Stock sufficient to provide for the exercise of the rights of purchase
represented by the Warrants, and the transfer agent for the shares of Common
Stock and every subsequent transfer agent for any shares of the Company's Common
Stock issuable upon the exercise of any of the rights of purchase aforesaid are
irrevocably authorized and directed at all times to reserve such number of
authorized and unissued shares of Common Stock as shall be required for such
purpose. The Company agrees that all shares of Common Stock issued upon exercise
of the Warrants shall be, at the time of delivery of the certificates of such
shares, validly issued and outstanding, fully paid and nonassessable and listed
on any national securities exchange upon which the other shares of Common Stock
are then listed. So long as any unexpired Warrants remain outstanding, the
Company will file such post-effective amendments to the registration statement
(Form SB-2, Registration No. 333-_______) (the "Registration Statement") filed
pursuant to the Act with respect to the Warrants (or other appropriate
registration statements or post-effective amendment or supplements) as may be
necessary to permit it to deliver to each person exercising a Warrant, a
prospectus meeting the requirements of Section 10(a)(3) of the Act and otherwise
complying therewith, and will deliver such a prospectus to each such person. To
the extent that during any period it is not
-11-
<PAGE>
reasonably likely that the Warrants will be exercised, due to market price or
otherwise, the Company need not file such a post-effective amendment during such
period. The Company will keep a copy of this Agreement on file with the transfer
agent for the shares of Common Stock and with every subsequent transfer agent
for any shares of the Company's Common Stock issuable upon the exercise of the
rights of purchase represented by the Warrants. The Warrant Agent is irrevocably
authorized to requisition from time to time from such transfer agent stock
certificates required to honor outstanding Warrants. The Company will supply
such transfer agent with duly executed stock certificates for that purpose. All
Warrants surrendered in the exercise of the rights thereby evidenced shall be
cancelled by the Warrant Agent and shall thereafter be delivered to the Company,
and such cancelled Warrants shall constitute sufficient evidence of the number
of shares of Common Stock which have been issued upon the exercise of such
Warrants. Promptly after the date of expiration of the Warrants, the Warrant
Agent shall certify to the Company the total aggregate amount of Warrants then
outstanding, and thereafter no shares of Common Stock shall be subject to
reservation in respect of such Warrants which shall have expired.
Section 9. Warrant Price; Adjustments.
(a) The warrant price at which Common Stock shall be
purchasable upon the exercise of the Warrants shall be $6.00 per share or after
adjustment, as provided in this
-12-
<PAGE>
Section, shall be such price as so adjusted (the "Warrant Price").
(b) The Warrant Price shall be subject to
adjustment from time to time as follows:
(i) In case the Company shall at any time
after the date hereof pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock, then upon such dividend or distribution
the Warrant Price in effect immediately prior to such dividend or distribution
shall forthwith be reduced to a price determined by dividing:
(A) an amount equal to the total
number of shares of Common Stock outstanding immediately prior to such dividend
or distribution multiplied by the Warrant Price in effect immediately prior to
such dividend or distribution, by
(B) the total number of shares of
Common Stock outstanding immediately after such dividend or distribution.
For the purposes of any computation to be made in accordance
with the provisions of this Section 9(b)(i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) In case the Company shall at any time
subdivide or combine the outstanding Common Stock, the Warrant
-13-
<PAGE>
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination to the nearest one cent. Any such
adjustment shall become effective at the time such subdivision or combination
shall become effective.
(iii) Within a reasonable time after the
close of each quarterly fiscal period of the Company during which the Warrant
Price has been adjusted as herein provided, the Company shall
(A) file with the Warrant Agent a
certificate signed by the President or Vice President of the Company and by the
Treasurer or Assistant Treasurer or the Secretary or an Assistant Secretary of
the Company, showing in detail the facts requiring all such adjustments
occurring during such period and the Warrant Price after each such adjustment;
and
(B) the Warrant Agent shall have no
duty with respect to any such certificate filed with it except to keep the same
on file and available for inspection by holders of Warrants during reasonable
business hours, and the Warrant Agent may conclusively rely upon the latest
certificate furnished to it hereunder. The Warrant Agent shall not at any time
be under any duty or responsibility to any holder of a Warrant to determine
whether any facts exist which may require any adjustment of the Warrant Price,
or with respect to the nature or extent of any adjustment of the Warrant Price
when made, or with respect to the method employed in making any such adjustment,
or with respect to the nature or extent of the
-14-
<PAGE>
property or securities deliverable hereunder. In the absence of a certificate
having been furnished, the Warrant Agent may conclusively rely upon the
provisions of the Warrants with respect to the Common Stock deliverable upon the
exercise of the Warrants and the applicable Warrant Price thereof.
(iv) Notwithstanding anything contained herein to the
contrary, no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $.05, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time and together with the next subsequent adjustment which, together
with any adjustment so carried forward, shall amount to not less than $.05.
(v) In the event that the number of outstanding
shares of Common Stock is increased by a stock dividend payable in Common Stock
or by a subdivision of the outstanding Common Stock, then, from and after the
time at which the adjusted Warrant Price becomes effective pursuant to
Subsection (b) of this Section by reason of such dividend or subdivision, the
number of shares of Common Stock issuable upon the exercise of each Warrant
shall be increased in proportion to such increase in outstanding shares. In the
event that the number of shares of Common Stock outstanding is decreased by a
combination of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to this Section 9(b)
of this Section by reason of such combination, the number of shares of Common
Stock issuable upon the exercise of
-15-
<PAGE>
each Warrant shall be decreased in proportion to such decrease in the
outstanding shares of Common Stock.
(vi) In case of any reorganization or
reclassification of the outstanding Common Stock (other than a change in par
value, or from par value to no par value, or as a result of a subdivision or
combination), or in case of any consolidation of the Company with, or merger of
the Company into, another corporation (other than a consolidation or merger in
which the Company is the continuing corporation and which does not result in any
reclassification of the outstanding Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, the holder of each Warrant then outstanding
shall thereafter have the right to purchase the kind and amount of shares of
Common Stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of such Warrant
shall then be entitled to purchase; such adjustments shall apply with respect to
all such changes occurring between the date of this Warrant Agreement and the
date of exercise of such Warrant.
(vii) Subject to the provisions of this Section
9, in case the Company shall, at any time prior to the exercise of the Warrants,
make any distribution of its assets to holders of its Common Stock as a
liquidating or a partial liquidating dividend, then the holder of Warrants who
exercises its Warrants
-16-
<PAGE>
after the record date for the determination of those holders of Common Stock
entitled to such distribution of assets as a liquidating or partial liquidating
dividend shall be entitled to receive for the Warrant Price per Warrant, in
addition to each share of Common Stock, the amount of such distribution (or, at
the option of the Company, a sum equal to the value of any such assets at the
time of such distribution as determined by the Board of Directors of the Company
in good faith), which would have been payable to such holder had he been the
holder of record of the Common Stock receivable upon exercise of its Warrant on
the record date for the determination of those entitled to such distribution.
(viii) In case of the dissolution, liquidation
or winding up of the Company, all rights under the Warrants shall terminate on a
date fixed by the Company, such date to be no earlier than ten (10) days prior
to the effectiveness of such dissolution, liquidation or winding up and not
later than five (5) days prior to such effectiveness. Notice of such termination
of purchase rights shall be given to the last registered holder of the Warrants,
as the same shall appear on the books of the Company maintained by the Warrant
Agent, by registered mail at least thirty (30) days prior to such termination
date.
(ix) In case the Company shall, at any time
prior to the expiration of the Warrants and prior to the exercise thereof, offer
to the holders of its Common Stock any rights to subscribe for additional shares
of any class of the
-17-
<PAGE>
Company, then the Company shall give written notice thereof to the last
registered holder thereof not less than thirty (30) days prior to the date on
which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
the Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(x) Any adjustment pursuant to the aforesaid
provisions of this Section 9(b) shall be made on the basis of the number of
shares of Common Stock which the holder thereof would have been entitled to
acquire by the exercise of the Warrant immediately prior to the event giving
rise to such adjustment.
(xi) Irrespective of any adjustments in the
Warrant Price or the number or kind of shares purchasable upon exercise of the
Warrants, Warrants previously or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the similar Warrants
initially issuable pursuant to this Warrant Agreement.
(xii) The Company may retain a firm of
independent public accountants (who may be any such firm regularly employed by
the Company) to make any computation required under this Section 9, and any
certificate setting forth
-18-
<PAGE>
such computation signed by such firm shall be conclusive evidence of the
correctness of any computation made under this Section 9.
(xiii) If at any time, as a result of an
adjustment made pursuant to Section 9(b)(vi) above, the holders of a Warrant or
Warrants shall become entitled to purchase any securities other than shares of
Common Stock, thereafter the number of such securities so purchasable upon
exercise of each Warrant and the Warrant Price for such shares shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Section 9(b)(ii) through (v).
Section 10. Fractional Interest. The Warrants may only be
exercised to purchase full shares of Common Stock and the Company shall not be
required to issue fractions of shares of Common Stock on the exercise of
Warrants. However, if a Warrant holder exercises all Warrants then owned of
record by it and such exercise would result in the issuance of a fractional
share, the Company will pay to such Warrant holder, in lieu of the issuance of
any fractional share otherwise issuable, an amount of cash based on the market
value of the Common Stock of the Company on the last trading day prior to the
exercise date.
Section 11. Notices to Warrantholders.
(a) Upon any adjustment of the Warrant Price and
the number of shares of Common Stock issuable upon exercise of a Warrant, then
and in each such case the Company shall give written notice thereof to the
Warrant Agent, which notice shall
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<PAGE>
state the Warrant Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The Company
shall also mail such notice to the holders of the Warrants at their addresses
appearing in the Warrant register. Failure to give or mail such notice, or any
defect therein, shall not affect the validity of the adjustments.
(b) In case at any time:
(i) the Company shall pay dividends payable
in stock upon its Common Stock or make any distribution (other than regular cash
dividends) to the holders of its Common Stock; or
(ii) the Company shall offer for
subscription pro rata to the holders of its Common Stock any additional shares
of stock of any class or other rights; or
(iii) there shall be any capital
reorganization or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale or substantially all of its
assets to, another corporation; or
(iv) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company; then in any
one or more of such cases, the Company shall give written notice in the manner
set forth in Section 11(a) of the date on which (A) a record shall be taken for
such dividend, distribution or subscription rights, or (B) such reorganization,
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<PAGE>
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up as the case may be. Such notice shall be given at
least thirty (30) days prior to the action in question and not less than thirty
(30) days prior to the record date in respect thereof. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of any
of the matters set forth in this Section 11(b).
(C) The Company shall cause copies of all financial
statements and reports, proxy statements and other documents that are sent to
its stockholders to be sent by first-class mail, postage prepaid, on the date of
mailing to such stockholders, to each registered holder of Warrants at his
address appearing in the warrant register as of the record date for the
determination of the stockholders entitled to such documents.
Section 12. Disposition of Proceeds on Exercise of
Warrants.
(i) The Warrant Agent shall promptly forward to the
Company all monies received by the Warrant Agent for the purchase of shares of
Common Stock through the exercise of such
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<PAGE>
Warrants; provided, however, that the Warrant Agent may retain an amount equal
to the Exercise Fee, if any, until the Company has satisfied its obligations
under Section 5(c)(ii).
(ii) The Warrant Agent shall keep copies of this
Agreement available for inspection by holders of Warrants during normal business
hours.
Section 13. Redemption of Warrants. The Warrants are
redeemable by the Company, in whole or in part, on not less than thirty (30)
days' prior written notice at a redemption price of $.10 per Warrant at any time
commencing _____________, 1999; provided that (i) the closing bid quotation
price of the Common Stock on all twenty (20) trading days ending on the third
trading day prior to the day on which the Company gives notice (the "Call Date")
of redemption has been at least 150% of the then effective exercise price of the
Warrants (the "Target Redemption Price") and the Company obtains the written
consent of the Underwriter to such redemption prior to the Call Date and (ii)
the Warrants are currently exercisable. The redemption notice shall be mailed to
the holders of the Warrants at their addresses appearing in the Warrant
register. Holders of the Warrants will have exercise rights until the close of
business on the date fixed for redemption.
Section 14. Merger or Consolidation or Change of Name of
Warrant Agent. Any corporation or company which may succeed to the corporate
trust business of the Warrant Agent by any merger or consolidation or otherwise
shall be the successor to the Warrant Agent hereunder without the execution or
filing of
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<PAGE>
any paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible to serve as a successor Warrant Agent
under the provisions of Section 16 of this Agreement. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, any of the Warrants shall have been countersigned but not delivered,
any such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrants so countersigned.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrants shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrants so countersigned. In all such cases such Warrants
shall have the full force provided in the Warrants and in the Agreement.
Section 15. Duties of Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Warrants, by their acceptance thereof, shall be bound:
(a) The statements of fact and recitals contained
herein and in the Warrants shall be taken as statements of the Company, and the
Warrant Agent assumes no responsibility for the correctness of any of the same
except such as describe the Warrant Agent or action taken or to be taken by it.
The Warrant Agent assumes no responsibility with
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<PAGE>
respect to the distribution of the Warrants except as herein
expressly provided.
(b) The Warrant Agent shall not be responsible
for any failure of the Company to comply with any of the covenants in this
Agreement or in the Warrants to be complied with by the Company.
(c) The Warrant Agent may consult at any time
with counsel satisfactory to it (who may be counsel for the Company) and the
Warrant Agent shall incur no liability or responsibility to the Company or to
any holder of any Warrant in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability
or responsibility to the Company or to any holder of any Warrant for any action
taken in reliance on any notice, resolution, waiver, consent, order, certificate
or other instrument believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant
Agent reasonable compensation for all services rendered by the Warrant Agent in
the execution of this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and reasonable counsel fees, for anything done
-24-
<PAGE>
or omitted by the Warrant Agent in the execution of this Agreement except as a
result of the Warrant Agent's negligence, willful misconduct or bad faith.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expenses unless the Company or one or more registered holders
of Warrants shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred, but this provision
shall not affect the power of the Warrant Agent to take such action as the
Warrant Agent may consider proper, whether with or without any such security or
indemnity. All rights of action under this Agreement or under any of the
Warrants may be enforced by the Warrant Agent without the possession of any of
the Warrants or the production thereof at any trial or other proceeding, and any
such action, suit or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent, and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Warrants, as their respective
rights and interests may appear.
(g) The Warrant Agent and any stockholder,
director, officer, partner or employee of the Warrant Agent may buy, sell or
deal in any of the Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to or otherwise act as fully and
freely as though it were not the Warrant Agent under this Agreement. Nothing
herein
-25-
<PAGE>
shall preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely
as agent and its duties shall be determined solely by the provisions hereof.
(i) The Warrant Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys, agents or employees, and the
Warrant Agent shall not be answerable or accountable for any such attorneys,
agents or employees or for any loss to the Company resulting from such neglect
or misconduct, provided reasonable care had been exercised in the selection and
continued employment thereof.
(j) Any request, direction, election, order or
demand of the Company shall be sufficiently evidenced by an instrument signed in
the name of the Company by its President or a Vice President or its Secretary or
an Assistant Secretary or its Treasurer or an Assistant Treasurer (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Warrant Agent by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company.
Section 16. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement by giving to the
Company notice in writing, and to the holders of the Warrants notice by mailing
such notice to the holders at their addresses appearing on the Warrant register,
of
-26-
<PAGE>
such resignation, specifying a date when such resignation shall take effect. The
Warrant Agent may be removed by like notice to the Warrant Agent from the
Company and the like mailing of notice to the holders of the Warrants. If the
Warrant Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Warrant Agent or after the
Company has received such notice from a registered holder of a Warrant (who
shall, with such notice, submit his Warrant for inspection by the Company), then
the registered holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Any
successor Warrant Agent, whether appointed by the Company or by such a court,
shall be a bank or trust company, in good standing, incorporated under New York
or federal law. After appointment, the successor Warrant Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed and the former
Warrant Agent shall deliver and transfer to the successor Warrant Agent all
cancelled Warrants, records and property at the time held by it hereunder, and
execute and deliver any further assurance or conveyance necessary for the
purpose. Failure to file or mail any notice provided for in this Section,
however, or any defect therein,
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<PAGE>
shall not affect the validity of the resignation or removal of the Warrant Agent
or the appointment of the successor Warrant Agent, as the case may be.
Section 17. Identity of Transfer Agent. Forthwith upon the
appointment of any transfer agent for the shares of Common Stock or of any
subsequent transfer agent for the shares of Common Stock or other shares of the
Company's Common Stock issuable upon the exercise of the rights of purchase
represented by the Warrants, the Company will file with the Warrant Agent a
statement setting forth the name and address of such transfer agent.
Section 18. Notices. Any notice pursuant to this Agreement to
be given by the Warrant Agent, or by the registered holder of any Warrant to the
Company, shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another is filed in writing by the Company with the
Warrant Agent) as follows:
TAM Restaurants, Inc.
1163 Forest Avenue
Staten Island, New York 10310
Attention: Frank Cretella
Chief Executive Officer
and a copy thereof to:
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Attention: Robert J. Mittman, Esq.
Any notice pursuant to this Agreement to be given by
the Company or by the registered holder of any Warrant to the
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<PAGE>
Warrant Agent shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) as follows:
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Attention: Steve Nelson
Any notice pursuant to this Agreement to be given by the
Warrant Agent or by the Company to the Underwriter shall be sufficiently given
if sent by first-class mail, postage prepaid, addressed (until another address
if filed in writing with the Warrant agent) as follows:
Paragon Capital Corporation
7 Hanover Square
New York, New York 10004
Attention: George B. Levine, Chairman
and a copy thereof to:
Akerman, Senterfitt & Eidson
One Southeast 3rd Avenue
Miami, Florida 33131-1704
Attention: Alan H. Aronson, Esq.
Section 19. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement in order
to cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Warrant Agent may deem necessary or desirable and
which shall not be inconsistent with
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<PAGE>
the provisions of the Warrants and which shall not adversely
affect the interest of the holders of Warrants.
Section 20. New York Contract. This Agreement and each Warrant
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and shall be construed in accordance with the laws of New York
applicable to agreements to be performed wholly within New York.
Section 21. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered holders of the Warrants any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered holders of the Warrants.
Section 22. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company, the Warrant Agent or the
Underwriter shall bind and inure to the benefit of their respective successors
and assigns hereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
TAM RESTAURANTS, INC.
By:
-------------------------------------
Name:
Title:
[ ]
By:
-------------------------------------
Name:
Title:
PARAGON CAPITAL CORPORATION
By:
-------------------------------------
Name:
Title:
<PAGE>
[Logo] City of New York The Arsenal
Parks of Recreation Central Park
New York, New York 10021
Henry J. Stern
Commissioner
LICENSE
AGREEMENT
between
TAM Concessions, Inc.
and
CITY OF NEW YORK
DEPARTMENT OF PARKS AND RECREATION
Contract No. 025-M
<PAGE>
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
I Grant of License 2
II Term of License 3
III Commissioner's Representation 4
IV Payments 4
V Operations 6
VI Improvements 7
EXHIBITS
- --------
A General Provisions
B Floor Plan
C Floor Plan - Patio
D Licensed Premises
E Schedule of Equipment
F Stipulation
-i-
<PAGE>
AGREEMENT made this 8th day of February, 1985 between The City
of New York ("City") acting by and through Henry J. Stern, Commissioner of the
Department of Parks and Recreation ("Commissioner" and "Department"
respectively) whose address is The Arsenal, Central Park, New York, New York
10021 and TAM Concessions, Inc. ("Licensee"), a domestic corporation organized
under the laws of the State of New York with principal offices at 1163 Forest
Avenue, Staten Island, New York 10310.
W I T N E S S E T H :
WHEREAS, the Department, pursuant to law, has jurisdiction
over the parks of the City and desires to provide boat rental, bicycle rental
and refreshment facilities at the Loeb Memorial Boathouse in Central Park for
the accommodation and convenience of the public; and
WHEREAS, the Department received Concessions Review Committee
approval to award the refreshment and boat and bicycle rental concessions at the
Loeb Memorial Boathouse to TAM Concessions, Inc. on November 4, 1983; and
WHEREAS, The Department and Licensee entered into a Temporary
Permit agreement, dated January 9, 1984, authorizing Licensee's temporary
operation of the above mentioned concessions pending execution of a formal
license agreement authorizing Licensee's continued operation of said concessions
as well as renovation of the Loeb Memorial Boathouse; and
WHEREAS, the Department and Licensee have concluded
negotiations of a formal license agreement and deem it expedient
<PAGE>
to cancel said Temporary Permit and enter into a formal license agreement; and
WHEREAS, the Department shall hereby terminate and Licensee
shall hereby surrender said Temporary Permit upon execution of this license
agreement by both parties hereto;
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto agree as follows:
ARTICLE 1
GRANT OF LICENSE
1. The above mentioned Temporary Permit is hereby cancelled
and annulled effective upon execution of this License Agreement ("License") by
both parties hereto; and Commissioner hereby grants to Licensee and Licensee
hereby accepts from Commissioner a License to:
(a) operate the food, bicycle and boat rental concessions at
the Loeb Memorial Boathouse ("Licensed Premises," as more particularly described
in Article I(i) of General Provisions attached hereto as Exhibit A and made a
part hereof) located at 72nd Street in Central Park, New York, pursuant to the
terms and conditions herein. Additionally, Licensee shall have the right to
serve alcoholic beverages at the Licensed Premises upon securing a liquor
license for such purpose; however, no alcoholic beverages (with the exception of
wine and beer) may be sold before 5:00 p.m. at the Licensed Premises without the
prior written approval of the Commissioner.
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<PAGE>
(b) undertake renovation of the Boathouse and adjacent
property, pursuant to the terms and conditions herein and as set forth in
Article 6 and in accordance with the plans submitted to and approved by the New
York City Landmarks Commission in April, 1982 and subsequent amendments
submitted to and approved by the City Landmarks Commission on March 19, 1984 and
June 29, 1984.
(c) sell Park related merchandise and utilize the facility as
an informal information center for park visitors, subject to the Department's
approval.
2. Licensee shall purchase boats approved by the Department.
Additional boats shall be purchased by Licensee as necessary, subject to the
Department's approval.
3. Licensee's failure to operate the concessions in accordance
with the terms and conditions of this License shall be a material breach of this
License and shall result in its immediate termination.
ARTICLE 2
TERM OF LICENSE
The Term of this License shall commence upon completion of
improvements as provided in Article 6 herein or June 30, 1985 whichever occurs
sooner. This License is terminable at will by Commissioner upon ten (10) days
written notice to Licensee or as otherwise provided herein. Said termination
shall be neither arbitrary nor capricious. In the event such notice is not
given, the Term shall continue for a period of fifteen (15) years from
commencement thereof.
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<PAGE>
The Commissioner, the City and its employees shall not be
liable for damages to Licensee in the event that this License is revoked or
terminated by Commissioner.
ARTICLE 3
COMMISSIONER'S REPRESENTATION
Commissioner represents, to the best of his knowledge, that as
of the date hereof, no plans now exist for the use of Licensed Premises other
than its continued use as a concession as described in Article 1.
ARTICLE 4
PAYMENTS
(a) Licensee shall pay to City an annual fee for each of the
fifteen (15) years of operation authorized under this License according to the
following payment schedule, the greater of:
<TABLE>
<CAPTION>
75% OF SALE OF BICYCLE &
PREVIOUS FOOD AND BOAT
ANNUAL YEAR'S MERCHANDISE RENTALS
MINIMUM GROSS % OF GROSS % OF GROSS
TERM FEE or RECEIPTS or RECEIPTS plus RECEIPTS
- ---- --- -------- -------- --------
<S> <C> <C> <C>
Year 1 $40,000 8% 10%
2 $45,000 8% 10%
3 $50,000 9% 11%
4 $55,000 9% 11%
5 $60,000 10% 12%
6 $65,000 10% 12%
7 $70,000 11% 13%
8 $75,000 11% 13%
9 $75,000 11% 14%
10 $75,000 12% 14%
11 $80,000 12% 15%
12 $80,000 12% 15%
13 $85,000 13% 16%
14 $90,000 13% 16%
15 $90,000 13% 17%
</TABLE>
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<PAGE>
(b) Gross Receipts is defined in Article I(h) of Exhibit A.
(c) Upon commencement of this License, as provided in Article
2 herein, Licensee shall pay one-twelfth (1/12) of the Annual Minimum Fee. Each
month thereafter Licensee shall pay one/twelfth (1/12) of the Annual Minimum Fee
plus any percentage of Gross Receipts due, on or before the tenth (10th) of each
month. Except that when fees paid by Licensee pursuant to paragraph 4(a) herein
exceed the applicable Minimum Annual Fee then thereafter Licensee shall pay only
the annual percentage fee for the remainder of the operation year.
(d) A 2% late payment penalty will be assessed for any fee
payment not received by the Department on or prior to the payment dates
specified in this License. In addition, a 2% monthly interest charge shall be
applied to any unpaid balance.
(e) Licensee shall deposit all receipts from operations under
this License in a separate bank account maintained in the name of Licensee. No
receipts generated from any other business of Licensee shall be deposited in
this account, except as may be required for the operation of this License.
(f) Payments by Licensee to Department shall be made to the
City of New York at The Arsenal, Central Park, New York, New York 10021. Notice
from Licensee or Commissioner shall be sent by certified mail, return receipt
requested, or delivered to Commissioner at such address.
-5-
<PAGE>
ARTICLE 5
OPERATIONS
(a) A floor plan specifying the dimensions of the areas of the
Licensed Premises which will be designated for use as a seated fast food dining
area, fast food pick-up, terrace, cafe, ice cream and beverage area and sundries
counter is attached hereto as Exhibit B and hereby made a part of this License.
A floor plan specifying the dimensions of the area of the Licensed Premises
which will be designated for use as a patio is attached hereto as Exhibit C and
hereby made a part of this License. The cafe and patio areas shall not be
expanded or altered over the Term of this License from the dimensions specified
on Exhibits B&C without the prior written approval of the Commissioner.
(b) Minimum Hours of Operation
Fast Food Area:
Spring (April 1st - May 29th) 9:00 a.m. - 6:30 p.m. 7 Days
Summer (May 30th - Sept. 15th) 9:00 a.m. - 6:30 p.m. 7 Days
Fall (Sept. 16th - Nov. 16th) 9:00 a.m. - 6:00 p.m. 7 Days
Winter (Nov. 17th - March 31st) 9:00 a.m. - 4:30 p.m. 7 Days
Cafe:
Year-Round 11:30 a.m. -11:30 p.m. 6 Days
Lunch 11:45 a.m. - 3:00 p.m.
Dinner 7:30 p.m. -11:30 p.m.
Any change in the hours of operation from those set out above
shall be subject to the prior approval of Commissioner.
(c) Licensee shall personally operate this License or employ a
manager satisfactory to Commissioner and Licensee shall
-6-
<PAGE>
replace said manager or any employee whenever demanded by Commissioner.
(d) Licensee shall have sufficient personnel on duty at
Licensed Premises for the proper operation of this License.
(e) The locations of the bicycle rental and storage areas are
subject to the Department's prior approval.
(f) Licensee's staff shall wear uniforms of a design approved
by the Department.
(g) Both the menus and the prices listed thereon shall be
subject to the prior approval of the Commissioner.
(h) Rates charged by Licensee for boat and bicycle rentals
shall be subject to the prior approval of the Commissioner.
(i) The patio, as shown on Exhibit C,may be used by Licensee
to cater parties and special events.
ARTICLE 6
IMPROVEMENTS
(a) Licensee agrees to spend or cause to be expended a minimum
investment of Six Hundred Twenty Seven Thousand Dollars ($627,000) in value for
capital repairs, improvements, renovation and modification of Licensed Premises,
which construction shall be satisfactory to the Commissioner, and in accordance
with the provisions of Article l(b). The improvements shall include but not be
limited to, renovation of the public bathrooms and cafeteria kitchen. Licensee
shall, upon the completion of Construction, furnish the Commissioner with a
certified statement of the costs of Construction including a description of the
-7-
<PAGE>
Construction and detailing the actual costs of such Construction. Licensee shall
keep accurate books and records of account of Construction costs which shall be
segregated from other accounts to permit audit by the Department or the
Comptroller upon their request.
(b) Licensee has obtained the approval of the New York City
Landmarks Commission for all plans, designs and specifications for Construction
and has submitted the plans, designs and specifications to the Commissioner for
his review. On or before November 31, 1984, Licensee shall submit plans, designs
and specifications to the New York City Department of Buildings, and any other
municipal agency having regulatory authority over the renovation of Licensed
Premises for their review and approval. Licensee shall provide Commissioner with
copies of each of the above-mentioned approvals within ten (10) days of
Licensee's receipt of same.
(c) Licensee shall deliver to Commissioner, within ten (10)
days after all approvals have been obtained, an executed surety bond in the
amount of the total cost of the Construction required hereunder naming the City
as obligee, to secure License's full and satisfactory performance of its
obligation under this section, and having as surety thereunder a surety company
approved by the City of New York and authorized to do business in the State of
New York. It is expressly agreed between the parties hereto that failure to
comply with this provision is a material breach of this License.
-8-
<PAGE>
(d) Licensee shall provide Commissioner with evidence of its
financial ability to undertake Construction as described in Section (a) of this
Article prior to commencing any Construction hereunder. Such evidence shall
include proof of cash on hand, a commitment for a bank loan or other loans,
investment commitments evidenced by written agreements, or such other proof as
is acceptable to Commissioner. Failure to comply with this provision shall
constitute a material breach of this License and shall be grounds for
termination in the sole discretion of Commissioner.
(e) Licensee shall commence Construction upon the issuance of
a Construction permit from the Department, no later than thirty (30) days after
all approvals required herein have been obtained by Licensee, unless
Commissioner has consented in writing to an extension of said commencement date.
Licensee shall notify Commissioner of the specific date on which Construction
shall begin. Construction shall be deemed complete upon approval by Department.
During performance and up to the date of final completion, the Licensee shall
maintain fire, public liability, property damage and owner's protective
liability insurance of a type and amount set forth in Articles XXXII and XXXIII
of Exhibit A.
(f) Licensee shall proceed with diligence to complete all
Construction in an expeditious manner. All Construction shall be completed or
caused to be completed by the Licensee no later than one (1) year after
commencement of Construction. In the event of delays due to causes beyond the
control of the Licensee,
-9-
<PAGE>
the date set for completion of Construction may be extended for such reasonable
period, deemed necessary by the Department, upon notice from the Licensee to the
Department detailing the reasons for the delay and requesting an extension of
time for completion thereof.
(g) In the event that there is any conflict between this
Article and Article XV of the General Provisions, then the provisions of this
Article shall control.
IN WITNESS THEREFORE, the parties hereto have caused this
License to be signed and sealed the day and year first above written.
THE CITY OF NEW YORK
DEPARTMENT OF PARKS AND RECREATION
By: /s/ Henry J. Stern
------------------------------
Dated: 8 February 1985
---------------------------
APPROVED AS TO FORM:
/s/ Unintelligible
- --------------------------
Acting Corporation Counsel
Tam Concessions, Inc.
By: /s/ Frank Cretella, Pres.
------------------------------
Dated: January 28, 1985
---------------------------
-10-
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this 8th day of February, 1985 before me personally came
HENRY J. STERN, to me known to be the Commissioner of the Department of Parks
and Recreation of the City of New York, and the person described in and who
executed the foregoing instrument and he acknowledged that he executed the same
in his official capacity and for the purpose mentioned therein.
/s/ Randi Elliott
-------------------------------
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this 28th day of January, 1985 before me personally came
Frank Cretella, who, being duly sworn by me did depose and say that he resides
at Staten Island, NY, and that he is the President of TAM Concessions, Inc., the
corporation described in and which executed the foregoing instrument and that he
is authorized by the Board of Directors of said corporation to execute this
License and that he knows the seal affixed to this instrument is such corporate
seal, and that it was affixed by order of the Board of Directors of said
corporation.
/s/ Randi Elliott
-------------------------------
Notary Public
<PAGE>
Exhibit A
GENERAL PROVISIONS
TABLE OF CONTENTS
Article Page
- ------- ----
I DEFINITIONS........................................................ 1
Alteration.................................................... 1
City.......................................................... 1
Commissioner.................................................. 1
Comptroller................................................... 1
Department.................................................... 1
Expendable Equipment.......................................... 1
Fixed Equipment............................................... 1
Gross Receipts................................................ 2
Licensed Premises............................................. 3
II Not A Lease........................................................ 3
III Prohibition Against Transfer....................................... 3
IV Books and Records.................................................. 4
V Right to Audit..................................................... 7
VI Security Deposit................................................... 8
VII Creditor-Debtor Proceedings........................................ 9
VIII Use of Equipment................................................... 10
IX City's Title....................................................... 10
X Licensee's Acquisition of Fixed Equipment.......................... 11
XI Expendable Equipment............................................... 12
XII Obligation to Acquire.............................................. 12
XIII Maintenance of Equipment and Condition Upon
Surrender.......................................................... 12
XIV Surrender of Licensed Premises..................................... 13
XV Maintenance of Licensed Premises................................... 13
XVI Alterations........................................................ 13
XVII Improvement of Correction in Operations............................ 15
XVIII Merchandise and Prices............................................. 15
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XIX Advertising........................................................ 16
XX Utilities.......................................................... 16
XXI Public Telephone Service........................................... 16
XXII Inflammables....................................................... 17
XXIII Sanitation......................................................... 17
XXIV Access............................................................. 17
XXV Compliance With Laws............................................... 18
XXVI Non-Discrimination................................................. 18
XXVII No Waiver of Rights................................................ 19
XXVIII Assumption of Risk................................................. 19
XXIX Indemnification.................................................... 19
XXX Waiver of Compensation............................................. 21
XXXI Workers' Compensation and Public Liability
Insurance.......................................................... 22
XXXII Fire Insurance..................................................... 24
XXXIII Termination........................................................ 25
XXXIV Investigations..................................................... 26
XXXV Waiver of Trial by Jury............................................ 31
XXXVI Choice of Law, Consent to Jurisdiction and Venue................... 31
XXXVII Payments and Notices............................................... 33
XXXVIII Late Charges....................................................... 33
XXXIX Entire Agreement................................................... 34
XL Modification of Agreement.......................................... 34
XLI Paragraph and Other References..................................... 34
XLII Severability: Invalidity of Particular Provisions.................. 35
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GENERAL PROVISIONS
ARTICLE I
DEFINITIONS
As used throughout this License, the following terms shall have the
meaning set forth below:
(a) "Alteration" shall mean (excepting ordinary repair and
maintenance)
(1) any restoration, rehabilitation, modification, addition
or improvement to Licensed Premises; or
(2) any work affecting the plumbing, heating, electrical,
water, mechanical, ventilating or other systems of
Licensed Premises.
(b) "City" shall mean the City of New York, its departments and
political subdivisions.
(c) "Commissioner" shall mean the Commissioner of the New York City
Department of Parks and Recreation or his designee.
(d) "Comptroller" shall mean the Comptroller of the City of New York.
(e) "Department" shall mean the New York City Department of Parks and
Recreation.
(f) "Expendable Equipment" shall mean all equipment, other than Fixed
Equipment, provided by Licensee.
(g) "Fixed Equipment" shall mean any property affixed in any way to
Licensed Premises, whether or not removal of said equipment would damage
Licensed Premises.
(i) "Additional Fixed Equipment" shall mean Fixed Equipment
affixed to Licensed Premises subsequent to the date of
execution of this License.
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(ii) "Fixed and Additional Fixed Equipment" shall refer to
Fixed Equipment and Additional Fixed Equipment jointly
and severally.
(h) "Gross Receipts" shall include all sums received by Licensee
without deductions of any kind, from the sale of food, wares, merchandise or
services of any kind, resulting directly or indirectly from the operation of
this License, provided that gross receipts shall exclude the amount of any
federal, state or city sales taxes, excise taxes, cigarette or tobacco taxes or
other similar taxes which may now or hereafter be imposed upon or be required to
be paid by Licensee as against its sales. Gross receipts shall include any
orders directly or indirectly taken at Licensed Premises, although delivery of
the merchandise order may be from without said premises, and shall include all
receipts for services rendered or orders taken at Licensed Premises, for
services to be rendered outside thereof. All sales made or services rendered
directly or indirectly from Licensed Premises shall be construed as made and
completed therein even though payment of the amount may be made at some other
place, and although delivery of merchandise sold or services rendered directly
or indirectly upon Licensed Premises may be made other than at said premises.
Gross receipts shall also include all sales made by any other
operator or operators using the Licensed Premises. In the event that the use of
vending machines on said premises for the sale of cigarettes, food, drink and
other items is approved by the Department, sales from such vending machines
shall be included in gross receipts. Gross receipts shall include sales
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made for cash or credit (credit sales shall be included in gross receipts as of
the date of the sale) regardless of whether the sales are paid or uncollected,
it being the distinct intention and agreement of the parties that all sums
received by Licensee from all sources from the operation of this License shall
be included in gross receipts.
(i) "Licensed Premises" shall mean the parcel of land described in
Exhibit D, attached hereto and made a part hereof.
ARTICLE II
NOT A LEASE
It is expressly understood that no land, building, space,
improvement, or equipment is leased to Licensee, but that during the term of
License, Licensee shall have the use of the Licensed Premises for the purpose
herein provided and except as herein provided, Licensee has the right to occupy
the premises assigned to it and to operate the Licensed Premises, and to
continue in possession thereof only so long as each and every term and condition
in this License is strictly and properly complied with and so long as this
License is not terminated by Commissioner.
ARTICLE III
PROHIBITION AGAINST TRANSFER
Licensee shall not sell, transfer, assign, sublicense or
encumber in any way the License hereby granted or any equipment furnished as
provided herein, or any interest therein, or consent, allow or permit any other
person or party to use any part of the Licensed Premises, building, space or
facilities
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covered by this License, nor shall this License be transferred by operation of
law, unless approved in advance in writing by Commissioner, it being the purpose
and spirit of this agreement to grant this License and privilege solely to
Licensee herein named.
ARTICLE IV
BOOKS AND RECORDS
(a) Licensee, during the term of this License and any renewal thereof,
shall maintain adequate systems of internal control and shall keep complete and
accurate records, books of account and data, including daily sales and receipts
records, which shall show in detail the total business transacted by Licensee
and the Gross Receipts therefrom. Such books and records maintained pursuant to
this License shall be conveniently segregated from other business matters of
Licensee and shall include, but not be limited to: all federal, state and local
tax returns and schedules of the Licensee, records of daily bank deposits of the
entire receipts from transactions in, at, on or from the Licensed Premises,
sales slips, daily dated cash register receipts, sales books; duplicate bank
deposit slips and bank statements.
(b) All transactions shall be registered and recorded on accurate cash
registers, totaling or computing machines or on other income-recording devices
which shall register each transaction sequentially and contain locked-in
cumulative tapes with cumulative capacity satisfactory to the Department or
Comptroller. All such machines and devices shall be approved
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prior to the commencement of this License by the Department or the Comptroller
and the Licensee agrees to notify the Department of the name and serial numbers
of all such machines and devices used at the Licensed Premises and of any
changes or additions within five (5) days thereof. All records and data
generated from or by such machines and devices, including transactions, shall be
posted daily on books and records of accounts.
(c) Licensee shall use such accounting and internal control methods-and
procedures and keep such additional books and records as may be prescribed by
the Department or the Comptroller, and the Department or the Comptroller shall
have the right to examine the record-keeping procedures of the Licensee prior to
the commencement of the term of this License, and at any time thereafter, in
order to assure that the procedures are adequate to reveal the true, correct and
entire business conducted by the Licensee. Licensee shall maintain all records,
books of account and data for a minimum of six (6) years.
(d) Licensee shall furnish to the Department by the 10th day of each
succeeding month, monthly statements sworn to and verified by an officer of the
Licensee and in such form as may be requested by the Department or the
Comptroller, showing in detail the Gross Receipts of the Licensee for each day
of the monthly period. Licensee shall also furnish an annual financial
statement, prepared by a certified public accountant, within sixty (60) days
after the anniversary date of this License and each anniversary date thereafter.
All information to be furnished to the Department shall be accurate and correct
in all material
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respects and sufficient to give the Department a true and accurate picture of
the business conducted by the Licensee.
(e) The failure or refusal of the Licensee to furnish any of the
statements required to be furnished under this section within fifteen (15) days
after its due date, the failure or refusal of the Licensee to maintain adequate
internal controls or to keep any of the records as required by this section or
the existence of an unexplained discrepancy in the amount of fees required to be
due and paid hereunder, as disclosed by audit conducted by the Department or the
Comptroller, of more than five percent (5%) in any two out of three consecutive
months or more than ten percent (10%) in one month, shall be presumed to be a
failure to substantially comply with the terms and conditions of this License
and a default hereunder, which shall entitle the Department, at its option, on
five (5) days written notice, to terminate this License. In addition, the
failure or refusal of Licensee to furnish the required statements, to keep the
required records or to maintain adequate internal controls shall authorize the
Department or the Comptroller to make reasonable projections of the amount of
Gross Receipts which would have been disclosed had the required statements been
furnished or the required records maintained, based upon such extrinsic factors
as the auditors deem appropriate in making such projections. Licensee agrees to
pay any assessment based upon such reasonable projections within fifteen (15)
days after receipt thereof, and the failure to do so shall constitute an
additional substantial violation of this License and a default hereunder.
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ARTICLE V
RIGHT TO AUDIT
(a) The Department, the Comptroller and other duly authorized
representatives of the City shall have the right, at all reasonable times during
business hours, to examine or audit the records, books of accounts and data of
the Licensee to verify Gross Receipts as reported by the Licensee. Licensee
shall also permit the inspection by the Department, Comptroller or other duly
authorized representatives of the City of any equipment used by Licensee,
including, but not limited to, cash registers and recording machines, and all
reports or data generated from or by the equipment. Licensee shall cooperate
fully and assist the Department, the Comptroller or any other duly authorized
representative of the City in any examination or audit thereof. In the event
that the Licensee's books and records, including supporting documentation, are
situated at a location fifty (50) miles or more from the City, the records must
be brought to the City for examination and audit or Licensee must pay the food,
board and travel costs incidental to two auditors conducting such examination or
audit at said location.
(b) Notwithstanding any other provision of this License, the failure or
refusal of the Licensee to permit the Department, the Comptroller or any other
duly authorized representative of the City to audit and examine the Licensee's
records, books of account and data or the interference in any way by the
Licensee in such an audit or examination is presumed to be a failure to
substantially comply with the terms and conditions of this
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License and a default hereunder which shall entitle the Department, at its
option on five (5) days written notice, to terminate this License.
ARTICLE VI
SECURITY DEPOSIT
(a) Licensee has deposited with City the sum of Fifteen Thousand
Dollars ($15,000.00) as a security ("Security Deposit") for the full, faithful
and prompt performance of and compliance with all the terms and conditions of
this License. The Security Deposit shall consist of cash or a negotiable
instrument payable to bearer or the City of New York which the Comptroller shall
approve as being of equal market value with the sum so required. The Security
Deposit shall remain with the City throughout the term of this License.
(b) The Security Deposit shall be held by the City without liability
for interest thereon, as security for the full and faithful; performance by the
Licensee of each and every term and condition of this License on the part of the
Licensee to be observed and performed. The Licensee may collect or receive
annually any interest or income earned on bonds less any part thereof or amount
which the City is or may hereafter be entitled or authorized by law to retain or
to charge in connection therewith, whether as or in lieu of administrative
expense or custodial charge, or otherwise the City shall not be obligated by
this provision to place or to keep cash deposited hereunder in interest-bearing
bank accounts. The Security Deposit shall not be mortgaged, assigned,
transferred or encumbered by the Licensee
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without the prior consent of the Department in each instance and any such act on
the part of the Licensee shall be without force and effect and shall not be
binding upon the City.
(c) Use and Return of Deposit
If any fees or other charges or sums payable by Licensee to the City
shall be overdue and unpaid or should the City make payments on behalf of the
Licensee, or should the Licensee fail to perform any of the terms of this
License, then the Department may, at its option, and without prejudice to any
other remedy which the City may have on account thereof, appropriate and apply
the Security Deposit or as much thereof as may be necessary to compensate the
City toward the payment of License fees, charges, liquidated damages or other
sums due from the Licensee or towards any loss, damage or expense sustained by
the City resulting from such default on the part of Licensee. In such event, the
Licensee shall restore the Security Deposit to the original sum deposited within
five (5) days after written demand therefor. In the event Licensee shall fully
and faithfully comply with all of the terms, covenants and conditions of this
License and pay all License fees and other charges and sums payable by Licensee
to the City, the Security Deposit shall be returned to Licensee following the
date of the surrender of the Licensed Premises by the Licensee in compliance
with the provisions of this License.
ARTICLE VII
CREDITOR-DEBTOR PROCEEDINGS
In the event any bankruptcy, insolvency, reorganization or
other creditor-debtor proceedings shall be instituted by or
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against the Licensee or its successors or assigns, or the guarantor, if any, the
Security Deposit shall be deemed to be applied first to the payment of License
fees and/or other charges due the City for all periods prior to the institution
of such proceedings and the balance, if any, of the Security Deposit may be
retained by the City or in partial liquidation of the City's damages.
ARTICLE VIII
USE OF EQUIPMENT
Licensee shall have the use of all Fixed Equipment and other
equipment belonging to City found on Licensed Premises as of the commencement of
this License listed on Schedule of Equipment attached hereto and incorporated
herein as Exhibit E.
ARTICLE IX
CITY'S TITLE
(a) Title to all equipment, (except Fixed Equipment, Additional Fixed
Equipment, accessories thereto and other equipment belonging to City as listed
on the Schedule of Equipment attached to the Stipulation dated March 1, 1983
between the City of New York and the United States of America, attached hereto
and incorporated herein as Exhibit F), provided by Licensee shall remain in
Licensee and such equipment shall be removed by Licensee at the expiration or
sooner termination of this License. Should any property remain on the Licensed
Premises after such expiration or termination, Commissioner may treat same as
though abandoned and charge all costs and expenses incurred in the removal and
disposal thereof to Licensee.
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(b) The Department shall use a reasonable amount of secure space within
the Licensed Premises which is sufficient for the storage of property owned by
Democratic Provisions, Inc. which property is listed on an attachment to Exhibit
E attached hereto, and is subject to levy by the U.S. Internal Revenue Service
pursuant to the Ex Parte Order for Entry on Premises to Effect Levy, dated
February 14, 1983, signed by U.S. District Court Judge, Thomas, P. Griesa,
pending the sale or redemption of the property pursuant to law.
(c) Licensee shall abide by the terms of Exhibit E hereto.
(d) Licensee shall not dispose of or remove from Licensed
Premises any of the property listed on the attachments to Exhibit E without the
Department's prior approval.
ARTICLE X
LICENSEE'S ACQUISITION OF FIXED EQUIPMENT
In order to acquire and affix Fixed and Additional Fixed Equipment to
the Licensed Premises, Licensee shall:
(i) notify Commissioner of Licensee's intention to affix Fixed and
Additional Fixed Equipment so that Commissioner may, in his
sole discretion, inspect and approve such affixing; should
Commissioner fail to disapprove same within fifteen (15) days
of said notice, then his approval will be deemed granted; and
(ii) supply Commissioner within thirty (30) days of delivering
Fixed and Additional Fixed Equipment to Licensed Premises,
bills of sale or other evidence of purchase so that
Commissioner may amend the
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Department's schedule of Fixed Equipment and have complete
information regarding all inventory on Licensed Premises.
ARTICLE XI
EXPENDABLE EQUIPMENT
(a) Licensee shall supply at its own cost and expense, all Expendable
Equipment required for the proper operation of this License, and to replace
same, at its own cost and expense when requested by Commissioner.
(b) Title to all Expendable Equipment shall remain in Licensee and such
equipment shall be removed by Licensee at the termination or expiration of this
License. In the event such equipment remains in the Licensed Premises following
such termination or expiration, Commissioner may treat such property as
abandoned and charge all costs and expenses incurred in the removal thereof to
Licensee.
ARTICLE XII
OBLIGATION TO ACQUIRE
Licensee must acquire, replace, install or affix, at its sole
cost and expense, any equipment (excepting equipment listed on Exhibit D),
materials and supplies required for the proper operation of Licensed Premises as
described herein or as required by Commissioner.
ARTICLE XIII
MAINTENANCE OF EQUIPMENT AND CONDITION UPON
SURRENDER Licensee shall at its sole cost and expense and to
the satisfaction of Commissioner, put, keep, repair, preserve, and
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maintain in good order, all equipment found on, placed in, installed in or
affixed to Licensed Premises. Notwithstanding the aforementioned, at the
expiration or sooner termination of this License, Licensee shall surrender the
Fixed and Additional Fixed Equipment to which City holds title in the same
condition as said equipment was found by Licensee, reasonable wear and tear
excepted.
ARTICLE XIV
SURRENDER OF LICENSED PREMISES
At the expiration or sooner termination of this License,
Licensee shall surrender Licensed Premises in at least as good a condition as
said premises were found by Licensee at the beginning of this License term,
reasonable wear and tear excepted.
ARTICLE XV
MAINTENANCE OF LICENSED PREMISES
(a) Licensee shall, at its sole cost and expense and to the
satisfaction of Commissioner, put, keep, repair and maintain in good order
Licensed Premises, including snow removal.
ARTICLE XVI
ALTERATIONS
(a) "Alteration" shall mean (excepting ordinary repair and
maintenance):
(i) any restoration, rehabilitation, modification, addition
or improvement to Licensed Premises; or
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(ii) any work affecting the plumbing, heating, electrical,
water, mechanical, ventilating or other systems of Licensed Premises.
(b) Licensee may alter Licensed Premises only in accordance with the
requirements of subsection (c) of this Article. Alterations shall become
property of City upon their attachment, installation or affixing.
(c) In order to alter Licensed Premises pursuant to subsection (b) of
this Article, Licensee must:
(i) Obtain Commissioner's prior written approval for whatever
designs, plans, specifications, cost estimates, agreements and contractual
understandings that may pertain to contemplated purchases and/or work; except
that if Commissioner does not give Licensee written notice of his objection to
such designs, plans, specifications, cost estimates, agreements, and contractual
understandings within ninety (90) days of his receipt of same, then his approval
will be deemed granted; and
(ii) insure that work performed and alterations made on
Licensed Premises are undertaken and completed 1) in accordance
with submissions approved pursuant to section (i) of this
Paragraph and 2) in a good and workmanlike manner; and
(iii) notify Commissioner of completion of, and the making of
final payment for, any alteration within ten (10) days after the occurrence of
said completion of final payment.
(d) Commissioner may, in his sole discretion, make repairs,
alterations, decorations, additions or improvements to Licensed Premises at the
City's expense, but nothing herein shall be
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deemed to obligate or require Commissioner to make any repairs, alterations,
decorations, additions, or improvements, nor shall this provision in any way
affect or impair Licensee's obligations herein in any respect.
ARTICLE XVII
IMPROVEMENT OR CORRECTION IN OPERATIONS
Should Commissioner, in his sole judgment, decide that
Licensee is not operating License in a satisfactory manner, Commissioner may in
writing order Licensee to improve operations or correct such conditions as
Commissioner may deem unsatisfactory. In the event that Licensee fails to comply
with such written notice or respond in a manner satisfactory to Commissioner
within ten (10) days from the mailing of said notice, then this License shall be
deemed terminated, notwithstanding any other provisions herein, as of the
mailing of said notice.
ARTICLE XVIII
MERCHANDISE AND PRICES
Licensee warrants that all merchandise or supplies sold
pursuant to this License shall be pure and of good quality. Licensee shall
submit to Commissioner a list or schedule of the articles to be offered for sale
pursuant to this License and the prices to be charged for each article, and
Licensee shall offer for sale only such articles and at such prices as have been
approved by Commissioner. Such prices may be changed from time to time only with
the approval of Commissioner. The schedule of prices approved by Commissioner
shall be printed, framed and
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displayed at the expense of Licensee in a place and manner designated by
Commissioner.
ARTICLE XIX
ADVERTISING
Licensee shall not employ callers, criers, or use signs or any
other means of soliciting business without the approval of Commissioner, nor
advertise this License in any manner or form on or about Licensed Premises, or
elsewhere, or in any newspaper or otherwise, without such approval.
ARTICLE XX
UTILITIES
Licensee shall pay for all utility charges including, but not
limited to water, oil, electricity and gas, consumed within the Licensed
Premises and/or for the operation of this License. Licensee shall procure all
permits and licenses necessary for the operation of this License and procure,
install and maintain in good working order and repair all utility meters during
the term of this License.
ARTICLE XXI
PUBLIC TELEPHONE SERVICE
Commissioner may contract directly with the telephone company
for public telephone services at Licensed Premises if Commissioner deems such
service necessary, and all revenue therefrom shall belong to City.
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ARTICLE XXII
INFLAMMABLES
Licensee shall not use or permit the storage of any
illuminating oils, oil lamps, turpentine, benzine, naphtha, or similar
substances or explosives of any kind or any substances or things prohibited in
the standard policies of fire insurance companies in the State of New York.
ARTICLE XXIII
SANITATION
Licensee shall provide adequate waste receptacles adjacent to
or within fifty feet (50') of Licensed Premises. Licensee shall keep at all
times Licensed Premises and the surrounding area within the distance specified
herein and above clean, neat, fumigated, disinfected, deodorized and in every
respect sanitary. All waste material shall be collected and stored in closed
containers in a manner satisfactory to Commissioner. Licensee, at its sole cost
and expense, shall be responsible for the removal of all such material from the
Licensed Premises.
ARTICLE XXIV
ACCESS
Licensee shall provide at all times, free access to the
Licensed Premises to the Commissioner or his representatives and to other city,
state and federal officials having jurisdiction, for inspection purposes.
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ARTICLE XXV
COMPLIANCE WITH LAWS
(a) Licensee shall comply at its sole cost and expense, and
cause its employees and agents to comply with all rules, regulations and orders
now or hereafter prescribed by Commissioner, and to comply with all laws, rules,
regulations and orders of any agency or governmental entity having jurisdiction
over operations of the License and the Licensed Premises and/or Licensee's use
and occupation thereof.
(b) Licensee shall not use or allow Licensed Premises, or any
portion thereof, to be used or occupied for any unlawful purpose or in any
manner violative of a certificate pertaining to occupancy or use during the
License term.
ARTICLE XXVI
NON-DISCRIMINATION
(a) Licensee shall not discriminate against any employee or
applicant for employment because of race, creed, color, national origin, age,
sex, handicap, marital status, sexual orientation or affectional preference with
respect to all employment decisions including, but not limited to recruiting,
hiring, upgrading, demoting, promoting, selecting for training (including
apprenticeship), rates of pay and other forms of compensation, laying off,
terminating and all other terms and conditions of employment.
(b) All advertising for employment shall indicate that
Licensee is an Equal Opportunity Employer.
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ARTICLE XXVII
NO WAIVER OF RIGHTS
No acceptance by Commissioner of any compensation, fees,
charges or other payments in whole or in part for any period or periods after a
default of any terms and conditions herein shall be deemed as a waiver of any
right on the part of Commissioner to terminate this License. No waiver by
Commissioner of any default on the part of Licensee in performance of any of the
terms and conditions herein shall be construed to be a waiver by the
Commissioner of any other or subsequent default in the performance of any of the
said terms and conditions.
ARTICLE XXVIII
ASSUMPTION OF RISK
Licensee assumes all risk in the operation of this License and
shall comply at its own cost with all federal, state and local laws and
regulations, and all rules, regulations and orders of the Department affecting
the operation of this License, in regard to all matters.
ARTICLE XXIX
INDEMNIFICATION
(a) Licensee shall indemnify and save harmless Commissioner,
his agents and City against and from all losses, liabilities, suits,
obligations, fines, damages, penalties, claims, costs, charges, and expenses, of
any kind whatsoever including without limitation architects' and attorneys'
fees, costs and disbursements which may be imposed upon, incurred by or asserted
against Commissioner, his agents and City in whole or in
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part arising out of any violation of any law, rule, regulation or order, and
from any and all claims for loss, damage or injury (including death) to persons
or property of whatever kind or nature arising from the operation of this
License, or from the negligence or carelessness of employees, agents,
contractors, servants, sublicensees or invitees of Licensee. Licensee shall
indemnify any recoveries against Commissioner, his agents and City individually
and/or jointly arising from same and shall reimburse Commissioner and/or City
hereunder.
(b) The obligations of Licensee under this Article XXIX shall
not be affected in any way by the absence in any case of covering insurance or
by the failure or refusal of any insurance carrier to perform any obligation on
its part under insurance policies affecting the Licensed Premises.
(c) If any claim, action or proceeding is made or brought
against Commissioner, his agents or City by reason of any event to which
reference is made in subparagraph (a) hereof, then upon demand by Commissioner,
Licensee, at its sole cost and expense, shall resist or defend such claim,
action or proceeding in Commissioner's name, if necessary, by the attorneys for
Licensee's insurance carrier (if such claim, action or proceeding is covered by
insurance), otherwise by such attorneys as Commissioner shall approve, which
approval shall not be unreasonably withheld or delayed.
(d) The provisions of this Article XXIX and all other
indemnity provisions of this License shall survive the expiration date with
respect to any liability, suits, obligations, fines,
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damages, penalties, claims, costs, charges or expenses arising out of or in
connection with any action or failure to take action or any other matter
occurring prior to the expiration date of this License.
(e) Notwithstanding anything in this License to the contrary,
Licensee shall have no liability for any losses, damages or claims which arise
out of any act, omission or negligence of the City or its officers, agents,
employees, independent contractors or otherwise.
ARTICLE XXX
WAIVER OF COMPENSATION
(a) Licensee hereby expressly waives any and all claims for
compensation for any and all loss or damage sustained by reason of any defects,
including, but not limited to, deficiency or impairment of the water supply
system, gas mains, electrical apparatus or wires furnished for the Licensed
Premises, or by reason of any loss of any gas supply, water supply, heat or
current which may occur from time to time from any cause, or for any loss
resulting from fire, water, windstorm, tornado, explosion, civil commotion,
strike or riot, and Licensee hereby expressly releases and discharges
Commissioner, his agents, and City and its agents from any and all demands,
claims, actions and causes of action arising from any of the causes aforesaid.
(b) Licensee further expressly waives any and all claims for
compensation, loss of profit, or refund of its investment, if any, or any other
payment whatever, in the event
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this License is terminated by Commissioner sooner than the fixed Term because
the Licensed Premises are required for any park or other public purpose, or
because License was terminated or revoked for any reason as provided in the
License.
ARTICLE XXXI
WORKERS' COMPENSATION AND PUBLIC LIABILITY INSURANCE
(a) Licensee shall, at its own cost and expense, procure and
maintain such insurance for the term of this License as will protect Licensee
from claims under the Workers' Compensation Act; and shall take out and maintain
such public liability insurance including food products liability as will
protect and defend Licensee (including agents and sublicensees, if any), the
City and Commissioner from any claims for property damage and for personal
injuries, including death, arising out of, occurring, or caused by operations
under this License by Licensee or anyone directly or indirectly employed by said
Licensee, or otherwise arising out of this License. The policies shall provide
the amounts of insurance hereafter mentioned, and before delivery of the
License, all policies and certificates of insurance shall be submitted to
Commissioner for his approval and retention. Each policy and certificate shall
be marked "Premium Paid" and shall have endorsed thereon: "No cancellation of or
change in this policy shall become effective until after thirty (30) days notice
by Registered Mail to Commissioner, Department of Parks and Recreation, The
Arsenal, Central Park, New York, New York 10021. Each policy shall also provide
that the insurer is obligated to provide a legal defense in the event any claim
is
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made against knee City. If, at any time, any of said policies shall terminate or
become unsatisfactory to Commissioner as to form or substance, or if a company
issuing any such policies shall become unsatisfactory to Commissioner, Licensee
shall promptly obtain a new policy, and submit the same to Commissioner for
written approval, which shall not be unreasonably withheld, and for retention
thereof as hereinabove provided. Upon failure of Licensee to furnish, deliver
and maintain such insurance as above provided, this License may, at the election
of Commissioner, be suspended, discontinued or terminated and any and all
payments made by Licensee on account of this License shall thereupon be retained
by Commissioner as additional liquidated damages along with the Security
Deposit. Failure of Licensee to take out and/or maintain or the taking out or
maintenance of any required insurance shall not relieve Licensee from any
liability under the License, nor shall the insurance requirements be construed
to conflict with or limit the obligations of Licensee concerning
indemnification.
(b) All required insurance must be issued by companies
authorized to do business in the State of New York and must be in effect and
continue so during the life of the License in not less than the following
amounts:
Workers' Compensation Insurance............... Per Statute
Public Liability Insurance for ............... $1 Million for any one
one accident, not less than person; and 3 million
for any one accident
Property Damage Insurance, not less than ..... $50,000
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Food products liability shall be included in Public Liability Insurance. In the
event that claims in excess of these amounts are filed against the City, the
amount of excess of such claims, or any portion thereof, may be withheld from
any payment due or to become due Licensee until such time as Licensee shall
furnish such additional security covering such claims as may be determined by
Commissioner. All Public Liability and Property Damage policies shall name the
City of New York as an additional insured party.
ARTICLE XXXII
FIRE INSURANCE
Licensee shall, at its cost and expense, procure and maintain
fire insurance and extended coverage with companies authorized to do business in
the State of New York, acceptable to Commissioner, to cover fire loss to the
Licensed Premises or to Fixed Equipment belonging to City. Fire insurance shall
include coverage for equipment belonging to the City and acts of vandalism.
Licensee further agrees that if said Licensed Premises and/or
Fixed Equipment shall be damaged or destroyed by fire, or other covered cause,
such damage shall be promptly repaired or replaced in a manner satisfactory to
Commissioner at the sole cost and expense of Licensee. Upon the satisfactory
completion of such repairs or replacements, Licensee shall be repaid the
reasonable cost thereof except that such payments shall in no event exceed the
amount actually collected and received by
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Commissioner under the insurance policies. The amount of fire insurance and
extended coverage shall be as follows:
Fixed Equipment ....................................... $200,000
Licensed Premises...................................... Replacement value, but
not less than $600,000.
All fire insurance policies shall name the City of New York as the sole insured.
All fire insurance policies shall be marked "Premium Paid" and shall be
submitted to the Commissioner for his approval and retention before delivery of
this License.
ARTICLE XXXIII
TERMINATION
(a) Should Licensee breach or fail to comply with any of the
provisions of this License, any federal, state or local law, or any rule,
regulation or order of the Department affecting the License or the Licensed
Premises in regard to any and all matters, Commissioner may in writing order
Licensee to remedy such breach or to comply with such provision, law, rule,
regulation or order, and in the event that Licensee fails to comply with such
written notice to the City within ten (10) days from the mailing thereof subject
to unavoidable delays beyond reasonable control of Licensee and with written
notice to the City within such ten (10) day period, then this License shall
immediately terminate as though it were the time provided above for the
termination thereof. If said breach or failure to comply is corrected, and a
second or repeated violation of the same provision, law, rule, regulation or
order follows thereafter, Commissioner, by notice in writing, may revoke and
terminate this License, such revocation and termination to be immediately
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effective on the mailing thereof, the License to terminate as though it were the
time provided above for the termination thereof.
(b) Nothing contained in paragraph (a) above shall be deemed
to imply or be construed to represent an exclusive enumeration of circumstances
under which Commissioner may terminate the License without being arbitrary or
capricious.
(c) Upon expiration or sooner termination of the License by
Commissioner, all rights of the Licensee herein shall be forfeited without claim
for loss, damages, refund of investment or any other payment whatsoever against
Commissioner or City.
(d) In the event Commissioner terminates the License for
reasons related to the Licensee's breach of this License, any property of the
Licensee on the Licensed Premises may be held and used by Commissioner in order
to operate the License during the balance of the calendar year and may be held
and used thereafter until all indebtedness of the Licensee hereunder, at the
time of termination of the License, is paid in full.
ARTICLE XXXIV
INVESTIGATIONS
(a) The parties to this License shall cooperate fully and
faithfully with any investigation, audit or inquiry conducted by a State of New
York (hereinafter "State") or City governmental agency or authority that is
empowered directly or by designation to compel the attendance of witnesses and
to examine witnesses under oath, or conducted by the Inspector General of a
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governmental agency that is a party in interest to the transaction, submitted
bid, submitted proposal, contract, lease, permit, or license that is the subject
of the investigation, audit or inquiry.
(b) (i) If any person who has been advised that his or her
statement, and any information from such statement, will not be used against him
or her in any subsequent criminal proceeding refuses to testify before a grand
jury or other governmental agency or authority empowered directly or by
designation to compel the attendance of witnesses and to examine witnesses under
oath concerning the award of or performance under any transaction, agreement,
lease, permit , contract, or license entered into with the City, the State, or
any political subdivision or public authority thereof, or the Port Authority of
New York and New Jersey, or any local development corporation within the City,
or any public benefit corporation organized under the laws of the State of New
York, or;
(ii) If any person refuses to testify for a reason other
than the assertion of his or her privilege against self incrimination in an
investigation, audit or inquiry conducted by a City or State governmental agency
or authority empowered directly or by designation to compel the attendance of
witnesses and to take testimony concerning the award of, or performance under,
any transaction, agreement, lease, permit, contract, or license entered into
with the City, the State, or any political subdivision thereof or any local
development corporation within the City, then;
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(c) (i) The Commissioner or agency head whose agency is a
party in interest to the transaction, submitted bid, submitted proposal,
contract, lease, permit, or license shall convene a hearing, upon not less than
five (5) days written notice to the parties involved to determine if any
penalties should attach for the failure of a person to testify.
(ii) If any non-governmental party to the hearing requests
an adjournment, the Commissioner or agency head who convened the hearing may,
upon granting the adjournment, suspend any contract, lease, permit, or license
pending the final determination pursuant to paragraph (e) below without the City
incurring any penalty or damages for delay or otherwise.
(d) The penalties which may attach after a final determination
by the Commissioner or agency head may include but shall not exceed:
(i) The disqualification for a period not to exceed five
(5) years from the date of an adverse determination of any person or entity of
which such person was a member at the time the testimony was sought, from
submitting bids for, or transacting business with, or entering into or obtaining
any contract, lease, permit or license with or from the City and/or
(ii) The cancellation or termination of any and all
existing City contracts, leases, permits, or licenses that the refusal to
testify concerns and that have not been assigned as permitted under this
License, nor the proceeds of which pledged, to an unaffiliated and unrelated
institutional lender for fair value prior to the issuance of the notice
scheduling the
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hearing, without the City incurring any penalty or damages on account of such
cancellation or termination, monies lawfully due for goods delivered, work done,
rentals, or fees accrued prior to the cancellation or termination shall be paid
by the City.
(e) The Commissioner or agency head shall consider and address
in reaching his or her determination and in assessing an appropriate penalty the
factors in paragraphs (i) and (ii) below. He or she may also consider, if
relevant and appropriate, the criteria established in paragraphs (iii) and (iv)
below in addition to any other information which may be relevant and
appropriate.
(i) The party's good faith endeavors or lack thereof to
cooperate fully and faithfully with any governmental investigation or audit,
including but not limited to the discipline, discharge, or disassociation of any
person failing to testify, the production of accurate and complete books and
records, and the forthcoming testimony of all other members, agents, assignees
or fiduciaries whose testimony is sought.
(ii) The relationship of the person who refused to testify
to any entity that is a party to the hearing, including, but not limited to,
whether the person whose testimony is sought has an ownership interest in the
entity and/or the degree of authority and responsibility the person has within
the entity.
(iii) The nexus of the testimony sought to the subject
entity and its contracts, leases, permits or licenses with the City.
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(iv) The effect a penalty may have on an unaffiliated and
unrelated party or entity that has a significant interest in an entity subject
to penalties under (d) above, provided that the party or entity has given actual
notice to the Commissioner or agency head upon the acquisition of the interest,
or at the hearing called for in (c) (i) above gives notice and proves that such
interest was previously acquired. Under either circumstance the party or entity
must present evidence at the hearing demonstrating the potentially adverse
impact a penalty will have on such person or entity.
(f) (i) The term "license" or "permit" as used herein shall
be defined as a license, permit, franchise or concession not granted as a matter
or right.
(ii) The term "person" as used herein shall be defined
as any natural person doing business alone or associated with another person or
entity as a partner, director, officer, principal or employee.
(iii) The term "entity" as used herein shall be defined
as any firm, partnership, corporation, association, or person that receives
monies, benefits, licenses, leases, or permits from or through the City or
otherwise transacts business with the City.
(iv) The term "member" as used herein shall be defined
as any person associated with another person or entity as a partner, director,
officer, principal or employee.
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ARTICLE XXXV
WAIVER OF TRIAL BY JURY
The parties hereto waive trial by jury in any action,
proceeding, or counterclaim brought by either of the parties against the other
in any matter related to License. Any action taken by Commissioner relating to
License may only be challenged in a proceeding instituted in New York County
pursuant to CPLR Article 78.
ARTICLE XXXVI
CHOICE OF LAW, CONSENT TO JURISDICTION AND VENUE
This License shall be deemed to be executed in the City of New
York, State of New York, regardless of the domicile of the Licensee, and shall
be governed by and construed in accordance with the laws of the State of New
York.
Any and all claims asserted by or against the City arising
under this License or related thereto shall be heard and determined either in
the courts of the United States located in New York City ("Federal Courts") or
in the courts of the State of New York ("New York State Courts") located in the
City and County of New York. To effect this agreement and intent, the Licensee
agrees:
(a) If the City initiates any action against the Licensee in
Federal Court or in New York State Court, service of process may be made on the
Licensee either in person, wherever such Licensee may be found, or by registered
mail addressed to the Licensee at its address set forth in this License, or to
such
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other address as the Licensee may provide to the City in writing; and
(b) With respect to any action between the City and the
Licensee in New York State Court, the Licensee hereby expressly waives and
relinquishes any rights it might otherwise have (i) to move to dismiss on
grounds of forum non conveniens, (ii) to remove to Federal Court, and (iii) to
move for a change of venue to a New York State Court outside New York County.
(c) With respect to any action between the City and the
Licensee in Federal Court located in New York City, the Licensee expressly
waives and relinquishes any right it might otherwise have to move to transfer
the action to a United States Court outside the City of New York.
(d) If the Licensee commences any action against the City in a
court located other than in the City and State of New York, upon request of the
City, the Licensee shall either consent to a transfer of the action to a court
of competent jurisdiction located in the City and State of New York or, if the
court where the action is initially brought will not or cannot transfer the
action, the Licensee shall consent to dismiss such action without prejudice and
may thereafter reinstitute the action in a court of competent jurisdiction in
New York City.
If any provision(s) of this Article is held unenforceable for
any reason, each and all other provision(s) shall nevertheless remain in full
force and effect.
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ARTICLE XXXVII
PAYMENTS AND NOTICES
(a) Any License fees, charges or sums payable by Licensee to
City shall be made to the City of New York at The Arsenal, Central Park, New
York, New York 10021.
(b) Where provision is made herein for notice to be given in
writing, the same shall be given by hand delivery or by mailing a copy of such
notice by certified mail, return receipt requested, addressed to Commissioner or
Licensee at their respective addresses provided in this License, or such other
address as Licensee shall have filed with Commissioner.
ARTICLE XXXVIII
LATE CHARGES
In the event that payment of License fees, percentage fees or
other charges shall become overdue for ten (10) days beyond the date on which it
is due and payable as provided in this License agreement, a late charge of two
percent (2%) per month (computed on a thirty (30) day month) from the date it
was due and payable on the sums so overdue shall become immediately due and
payable to Commissioner as liquidated damages for the administrative costs and
expenses incurred by Commissioner by reason of Licensee's failure to make prompt
payment and said late charges shall be payable by Licensee without notice or
demand. In addition, a two percent (2%) per month interest charge shall be
applied to any unpaid balance. No failure by Commissioner to insist upon the
strict performance by Licensee of Licensee's obligations to pay late charges
shall constitute a waiver by
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Commissioner of his right to enforce the provisions of this Article. If any
local, state or federal law or regulation which limits the rate of interest
which can be charged pursuant to this Article is enacted, the rate of interest
set forth in this Article shall not exceed the maximum rate permitted under such
law or regulation.
ARTICLE XXXIX
ENTIRE AGREEMENT
This License constitutes the whole of the agreement between
the parties hereto, and no other representation made heretofore shall be binding
upon the parties hereto. Any changes, additions or amendments not otherwise
provided for herein shall be in writing and shall be signed by the parties
hereto.
ARTICLE XL
MODIFICATION OF AGREEMENT
This License may be modified from time to time by agreement in
writing, but no modification of this License shall be in effect until such
modification has been agreed to in writing and duly executed by the party or
parties affected by said modification.
ARTICLE XLI
PARAGRAPH AND OTHER REFERENCES
(a) All references herein to "Paragraph(s)",
"Sub-paragraph(s)", and "Section(s)" shall be understood to pertain to portions
of this License.
(b) The Table of Contents and division titles found herein are
inserted for reference only and in no way define,
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limit, describe or in any way affect the scope of intent or meaning of this
License.
ARTICLE XLII
SEVERABILITY: INVALIDITY OF PARTICULAR PROVISIONS
If any term or provision of this License or the application thereof to any
person or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this License, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this License shall be valid and enforceable to the fullest extent permitted by
law.
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[LOGO] CITY OF NEW YORK The Arsenal
PARKS & RECREATION Central Park
New York, New York 10021
Henry J. Stern
Commissioner
January 31, 1994
Frank Cretella, President
TAM Concessions, Inc.
1163 Forest Avenue
Staten Island, New York 10310
Re: Modification of License Agreement between TAM
Concessions, Inc. (Loeb Boathouse) and City of
New York Parks and Recreation M10(14)-BR,SB
Dear Mr. Cretella:
Effective July 1, 1994, Article 4c of the subject license
agreement shall be modified as follows, as it applies to payment of the annual
minimum fee:
Licensee shall pay one-twelfth (1/12) of either the Annual
Minimum Fee, or 75% of Licensee's Previous Year's Fee Payments, whichever is
greater, on or before the tenth (10th) of each month, except that for the months
of November, December, January and February the Licensee shall make partial
payments of $10,000, with 20% of the cumulative balance for such underpaid
months (November - February), to be added to the minimum payment for each of the
months of July, August, September, May and June.
For example, using the present annual minimum fee of
$340,556.06, the payment schedule would be calculated as follows:
CURRENT MODIFIED
MONTH MINIMUM FEE ADJUSTMENTS MINIMUM FEE
- ----- ----------- ----------- -----------
July $28,379.67 $14,703.74 $43,083.41
August $28,379.67 $14,703.74 43,083.41
September $28,379.67 $14,703.74 43,083.41
October $28,379.67 28,379.67
November $28,379.67 (18,379.67) 10,000.00
December $28,379.67 (18,379.67) 10,000.00
January $28,379.67 (18,379.67) 10,000.00
February $28,379.67 (18,379.67) 10,000.00
March $28,379.67 28,379.67
April $28,379.67 28,379.67
May $28,379.68 14,703.73 43,083.41
June $28,379.68 14,703.73 43,083.41
---------- --------- ---------
TOTALS $340,556.06 $0.00 $340,556.06
----------- ----- -----------
<PAGE>
This modification of the minimum fee payment schedule will
better accommodate the seasonal nature of the licensee's business operation.
All other terms and conditions of TAM Concessions, Inc.'s
license agreement dated February 8, 1985, shall remain in full force and effect.
Please indicate your agreement with this amendment by signing
and returning the original of this letter. The duplicate copy should be retained
with your records.
Sincerely,
/s/ Joanne Imohiosen
--------------------------
Joanne Imohiosen
Assistant Commissioner
Revenue Division
AGREED AND ACCEPTED:
TAM CONCESSIONS, INC.
BY: /s/ Frank Cretella
---------------------------
Frank Cretella Pres
- -------------------------------
Print Name & Title
DATE: 2/7/94
-------------------------
<PAGE>
[Logo] City of New York The Arsenal
Parks & Recreation Central Park
New York, New York 10021
Henry J. Stern
Commissioner
LICENSE AGREEMENT
BETWEEN
SHELLBANK RESTAURANT CORP.
AND
CITY OF NEW YORK
PARKS & RECREATION
BATTERY PARK RESTAURANT FACILITY
DATED: Dec '94
----------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1 GRANT OF LICENSE........................................ 2
SECTION 2 DEFINITIONS............................................. 5
SECTION 3 TERM OF LICENSE......................................... 11
SECTION 4 PAYMENT TO CITY......................................... 12
SECTION 5 CAPITAL IMPROVEMENTS.................................... 15
SECTION 6 UTILITIES AND PUBLIC TELEPHONE SERVICE.................. 26
SECTION 7 OPERATIONS.............................................. 27
SECTION 8 MAINTENANCE, SANITATION AND REPAIRS..................... 38
SECTION 9 APPROVALS............................................... 40
SECTION 10 RESERVATION FOR SPECIAL EVENTS.......................... 40
SECTION 11 ASSIGNMENTS AND SUBLICENSES............................. 42
SECTION 12 RESERVATION FOR PARKS CONSTRUCTION...................... 44
SECTION 13 GENERAL PROVISIONS INCORPORATED......................... 46
EXHIBIT A GENERAL PROVISIONS
EXHIBIT B SCHEDULE OF CAPITAL IMPROVEMENTS
EXHIBIT C SITE PLAN
EXHIBIT D EMPLOYEE UNIFORMS
EXHIBIT E APPROVED MENU, MERCHANDISE PRICE LIST AND
OPERATING HOURS
EXHIBIT F SIGNAGE
<PAGE>
LICENSE AGREEMENT made this ____ day of ____________ 1994,
between the City of New York (the "City") acting by and through Henry J. Stern,
Commissioner of the Department of Parks and Recreation ("Commissioner" and
"Parks", "Department" or "DPR" respectively), whose address is The Arsenal,
Central Park, New York, New York 10021, and Shellbank Restaurant Corp.
("Licensee") a corporation organized under the laws of the State of New York,
with principal office is 1163 Forest Avenue, Staten Island, NY 10310.
W I T N E S S E T H:
WHEREAS, Parks, pursuant to the City Charter, has jurisdiction
over parklands of the City of New York and facilities therein including Battery
Park and certain buildings therein, located in the Borough of Manhattan; and
WHEREAS, the Commissioner desires to provide food service in
Battery Park in the form of a restaurant (the "Restaurant") as well as the
provision of rest room facilities for the public and the relocation of a Parks
maintenance facility to a reconstructed facility in Battery Park; and
WHEREAS, the Licensee has expressed its willingness, intent
and capability to supply the services which the Commissioner desires to provide;
and
WHEREAS, Parks complied with the requirements of the Franchise
and Concession Review Committee ("FCRC") for the selection of concessionaires
including the issuance of a Request
<PAGE>
for Proposals (RFP) for the operation and maintenance of the Restaurant and the
conduct of a public hearing regarding the intent to award a license agreement
upon the terms and conditions contained herein.
NOW THEREFORE, in consideration of the premises and covenants
contained herein, the parties hereby do agree as follows:
SECTION 1
GRANT OF LICENSE
1.1 The Commissioner hereby grants to Licensee and Licensee
hereby accepts from Commissioner this License ("License") to reconstruct and
operate certain facilities including a restaurant in Battery Park in accordance
with the terms herein and to the satisfaction of the Commissioner.
1.2 Licensee is required to perform capital improvements with
a value of Eight Hundred Fifty-one Thousand dollars ($851,000,000) as described
on the Schedule of Capital Improvements annexed hereto as Exhibit B including,
but not limited to renovation to the following:
(a) Renovation of the restaurant building, identified
as Building A ("Building A") in Exhibit C, annexed hereto, including
improvements to the roof top to accommodate public dining;
(b) Renovation of the kiosk, identified as Building B
("Building B") in Exhibit C, annexed hereto, including
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improvements to accommodate the Licensee's merchandise shop, souvenir boutique
and/or food and beverage service operations;
(c) Reconstruction of the existing comfort station,
identified as Building C ("Building C") in Exhibit C, annexed hereto, including
construction on the site of a new facility to accommodate Parks offices and
Parks staff rest rooms and changing areas.
1.3 Licensee shall complete renovations to Building A and
operate, maintain and manage the Restaurant Facility in and adjacent to Building
A at its sole cost and expense. Operation, maintenance and management
obligations shall include the following:
(a) the operation and maintenance of a snack bar,
incorporating a fast food walk-away concession with merchandise sales on the
first floor of Building A, sit-down restaurant service on the second floor of
Building A and, weather permitting, sit-down patio restaurant service adjacent
to the first floor of Building A;
(b) the provision and ongoing maintenance of a large
rest room facility in Building A, which shall be directly accessible to the
members of the general public who are not restaurant customers;
(c) the maintenance and cleaning of all areas within
100' of the limit lines as illustrated in Exhibit C, Site Plan annexed hereto
and made a part hereof.
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1.4 At its sole cost and expense, Licensee shall complete
renovations to Building B and provide a merchandise shop, souvenir boutique,
tourist information center and/or food and beverage service operation in
Building B.
1.5 At its sole cost and expense, Licensee shall substantially
rehabilitate Building C and therein provide a reconstructed facility for the
Parks Department designed to accommodate office, equipment storage and training
rooms as well as separate staff restrooms, shower rooms and changing areas for
women and men Parks Department personnel.
1.6 Licensee shall maintain the entire Licensed Premises
within the limit line, as illustrated on Exhibit C, Site Plan, annexed hereto
and made a part hereof. Maintenance shall include any and all daily, regular or
routine maintenance or repair necessary, as required by the Commissioner, to
keep the premises clean and free of dirt and litter within a one hundred (100)
foot radius of Building A and Building B so that the Licensed Premises are
capable of being used by the public as a first class facility. Subject to the
provisions of Section 10 herein, Parks has not and will not issue other licenses
or permits for food and beverage service or merchandise sales within the
Licensee's maintenance and cleaning areas of responsibility, provided Licensee
performs its obligations under this License to the Commissioner's reasonable
satisfaction.
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1.7 This license is granted to Licensee provided Licensee
obtains any and all approvals, permits, and other licenses required by federal,
state and City laws, rules, regulations and orders and approvals necessary to
operate the facility in accordance with the terms of this License. In order to
be in compliance with this License Agreement, Licensee must fulfill the
obligations contained within this Section 1. Commissioner may deem as a default
Licensee's failure to provide said services for any reason within the control of
the Licensee.
SECTION 2
DEFINITIONS
2.1 As used throughout this License, the following terms shall
have the meanings set forth below:
(a) "Substantial Completion" or "Substantially
Complete" shall mean that the Commissioner certifies that the Restaurant or
maintenance facilities have been completed substantially in accordance with the
plans, specifications, schematics, working and mechanical drawings approved by
Parks, notwithstanding that minor work remains to be completed in accordance
with work schedule provided for herein and/or set forth as "Punch List" items as
provided for in Section 5.18 herein and that the Recreation Facility may be
opened to the public.
(b) "Final Completion" or "Finally Complete" shall
mean that the construction of the Recreation Facility has
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been completed to such an extent that the Commissioner of Parks certifies that
it has been finally completed and no further work is required by Licensee
pursuant to this Agreement in connection with the construction of said facility.
Notwithstanding the issuance of any such certification, Licensee shall be liable
for any claims related to such construction and shall be responsible for any
other responsibility (including maintenance, repair and indemnity) set forth in
this Agreement.
(c) "Year," or "Operating Year" shall mean the period
between the anniversary of the Fee Commencement Date of this License in any
calendar year and the day before the anniversary of the Fee Commencement Date of
this License in the following calendar year.
(d) "Licensed Premises" shall mean the areas denoted
on Exhibit C annexed hereto and made a part hereof, and shall be deemed to
extend to the limit lines surrounding Building A and Building B, Building C for
the purposes of completing the reconstruction work for Parks use, all sidewalks,
curbs, pathways, trees, landscaping, and other improvements within said limit
lines. The Licensed Premises are located in Battery Park, Block 3, Lot 1,
Borough of Manhattan, New York, New York. At its sole cost and expense, Licensee
shall maintain the entire Licensed Premises, provided that the Licensee shall
not maintain utility lines between the Licensed Premises and the main utility
trunk lines under the streets, except insofar as the Licensee may
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alter or connect to utility service lines in order to complete its Capital
Improvements program as provided in Section 5 of this License Agreement.
(e) "Capital Improvements" shall mean all
construction, reconstruction or renovation of the Licensed Premises whether
performed directly by the Licensee or by subcontractors or agents of the
Licensee. Capital Improvements shall not include routine maintenance and repair
of existing facilities required to be performed in the normal course of
management and operation of the Restaurant Facility or Parks Facility.
(f) "Restaurant Facility" shall mean both the main
building and the kiosk, Buildings A and B respectively. Notwithstanding any
rights to assign or sublicense the Restaurant Facility and operations pursuant
to Section 11 hereof, the Licensee shall design, operate and maintain the
Restaurant Facility as a unified business operation with common architectural
and aesthetic themes maintained throughout the Restaurant Facility and
operations.
(g) "Parks Facility" shall mean the existing comfort
station, Building C, which the Licensee shall completely renovate and in the
shell thereof shall construct a new facility to accommodate the needs of the
Parks Department.
(h) (i) "Gross Receipts" shall mean, except as
otherwise provided in this sub-section 2.1(h), all funds received
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by Licensee without deduction or set-off of any kind, from the sale of food and
beverages, wares, merchandise or services of any kind, resulting directly or
indirectly from the operation of this License, provided that Gross Receipts
shall exclude the amount of any federal, state or city taxes which may now or
hereafter be imposed upon or be required to be paid by Licensee as against its
sales. Gross Receipts shall include any orders, placed or made directly or
indirectly at Licensed Premises, although delivery of merchandise or services
may be made outside, or away from the Licensed Premises, and shall include all
receipts for services to be rendered or orders taken at the Licensed Premises
for services to be rendered outside thereof. Notwithstanding any provision
herein to the contrary, proceeds realized by other caterers in which the
principals of Licensee have an interest are excluded from Gross Receipts under
this License, notwithstanding the fact that a catered event customer originally
solicited Licensee at the Licensed Premises. Licensee is nonetheless required to
always act in good faith in its efforts to book catered events at the Licensed
Premises. All other sales made or services rendered directly or indirectly from
Licensed Premises shall be construed as made and completed therein even though
payment therefor may be made at some other place, and although delivery of
merchandise sold or services rendered directly or indirectly upon Licensed
Premises may be made other than at Licensed Premises.
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(ii) Gross Receipts shall also include all
sales made by any other operator or operators using the Licensed Premises,
provided that in the event that the use of vending machines on the Licensed
Premises for the sale of food, drink, and other items is approved by Parks,
Licensee's actual income realized from such vending machine operations shall be
included in Gross Receipts, and provided further that Gross Receipts shall be
limited to include Licensee's actual income realized from fees or commissions
from any third party vendors operating at the Licensed Premises, including but
not limited to florists, photographers, bands and equipment rental companies the
services or merchandise of which are provided to Licensee's customers of catered
events, and rental, sublicense or subcontracting fees in connection with all
services, including but not limited to such services as valet parking
operations, provided by Licensee's approved subcontractors or sublicensees.
(iii) Gross Receipts shall include sales
made for cash or credit (credit sales shall be included in gross receipts as of
the date of the sale) regardless of whether the sales are paid or uncollected,
it being the distinct intention and agreement of the parties that all sums
received by Licensee from all sources from the operation of this License shall
be included in Gross Receipts, provided however that any gratuities transmitted
by Licensee directly or indirectly to employees and staff shall not be included
within Gross Receipts. Licensee shall
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provide sufficient documentation to prove that such gratuities were paid to
employees and staff in addition to their regular salaries.
[Intentionally Left Blank]
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SECTION 3
TERM OF LICENSE
3.1 This License shall commence and become effective upon full
execution by the parties. This License shall be for an operating term of twenty
(20) years beginning on the earlier of the date the Commissioner certifies that
the Licensee's Capital Improvements to Building A are substantially complete or
November 1, 1995 ("Fee Commencement Date") and ending on the twentieth
anniversary of the Commissioner's certification or October 31, 2015, whichever
is earlier.
3.2 In addition to the rights to terminate as provided in
Section 13 herein and the General Provisions annexed hereto as Exhibit A, this
License is terminable at will by the Commissioner in his sole and absolute
discretion at any time and such termination shall be effective after thirty (30)
days written notice to Licensee. The Commissioner, the City, its employees and
agents shall not be liable for damages to Licensee in the event that this
License is terminated by Commissioner as provided for herein. In the event such
notice is not given, this License shall terminate on the twentieth anniversary
of the Commissioner's certification that Capital Improvements to Building A are
substantially complete or October 31, 2015, whichever is earlier.
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SECTION 4
PAYMENT TO CITY
4.1 Licensee shall pay to City, in equal installments on the
dates specified in Section 4.2 herein, License Fees for each Operating Year,
consisting of the higher of the Minimum Annual Fee versus the annual percentage
of Gross Receipts derived from operations under this License according to the
schedule below.
<TABLE>
<CAPTION>
OPERATING MINIMUM PERCENTAGE OF
YEAR NUMBER ANNUAL FEE vs. GROSS RECEIPTS
- ----------- ---------- --------------
<S> <C> <C>
1 $50,000 06% of restaurant gross receipts and 10%
of merchandise gross receipts.
2 $50,000 07% of restaurant gross receipts and 10%
of merchandise gross receipts.
3 $50,000 08% of restaurant gross receipts and 10%
of merchandise gross receipts.
4 $50,000 08% of restaurant gross receipts and 10%
or merchandise gross receipts.
5 $50,000 08% of restaurant gross receipts and 12%
or merchandise gross receipts.
6 $50,000 " " "
through
20 $50,000 " " "
</TABLE>
4.2 The Minimum Annual Fees for each Operating Year shall be
paid to the City in twelve (12) equal installments on or before the first day of
each month. Any additional amount resulting from the applicable Percentage of
Gross Receipts shall
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be paid on for before sixty days following the end of the applicable Operating
Year.
4.3 On or before the thirtieth (30th) day following each month
of each Operating Year, Licensee shall submit to Parks in a form satisfactory to
Parks, a statement, signed and verified by an officer of Licensee, reporting the
preceding months Gross Receipts broken down into the following categories: food
and beverage service at snack bar, food and beverage service at sit-down
restaurant, alcoholic beverage service, parking, vending machines, merchandise
sales, information and tour booth services and miscellaneous sources of income.
Licensee must indicate whether or not these amounts are inclusive of sales tax
collected.
4.4 On or before the thirtieth (30th) day following each
Operating Year, Licensee shall submit to Parks an income and expense statement,
in form satisfactory to Parks, signed and verified by an officer of Licensee.
The form of the statement annexed hereto as Exhibit G, Income and Expense
Statement, is approved as the initial Statement of Annual Income and Expenses.
Licensee may designate such income and expense statements or any part thereof
confidential and exempt from disclosure under applicable freedom of information
laws. Parks will consider such designation when making determinations for
disclosure under applicable freedom of information laws.
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4.5 Licensee shall keep books and records as set forth in
Article IV of the General Provisions, annexed hereto as Exhibit A, and shall
institute a revenue control system acceptable to Commissioner.
4.6 In the event Parks determines that Licensee or his/her
employees, agents, sublicenses, or subcontractors have breached sections 4.1
through 4.5, hereinabove or sections 7.1 through 7.5, herein, Licensee may be
subject to a charge of $100.00 as liquidated damages with respect to each
incident of such breach provided that Licensee has been given reasonable notice
of such breach and has failed to cure within thirty (30) days of such notice.
4.7 Prior to commencement of operations hereunder, Licensee
shall deposit with the City the sum of Twelve Thousand Five Hundred Dollars
($12,500) as a security deposit ("Security Deposit"). Pursuant to the terms of
Article VI of the General Provisions annexed hereto as Exhibit A, the Security
Deposit shall be held by the City without liability for interest thereon, as
security for the full, faithful and prompt performance of and compliance with
each and every term and condition of this License to be observed and performed
by the Licensee.
4.8 License fees to Parks, shall be made payable to the City
of New York Department of Parks and Recreation, Attention Revenue Division, The
Arsenal, Central Park, New York, NY 10021.
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SECTION 5
CAPITAL IMPROVEMENTS
5.1 Licensee shall spend or cause to be expended during the
term hereof, a minimum of Eight Hundred Fifty-One Thousand Dollars ($851,000)
for Capital Improvements as defined in Section 2 hereof. These Capital
Improvements shall include but are not limited to the following
(a) Complete renovation of Building A, including
improvements necessary to accommodate the operations of the Licensee's food and
beverage service and merchandise sales operations including the accommodation of
roof top dining, to provide a separately accessed comfort station/restroom area
for the general public with no fewer than 24 stalls in the women's room and no
fewer than 11 stalls and 10 urinals in the men's room, and to provide one
garbage compactor and one closed container equivalent in service capacity to the
McClain "MAG" 6-yard compactor and the "RP 2240B" 40-yard closed container
respectively, together with any required site work to make the compactor and
container functionally operable to the Commissioner's satisfaction;
(b) Renovation of Building B to accommodate the
Licensee's operation of a merchandise shop, tourist information center or food
and beverage service operations, subject to Parks approval;
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(c) Complete renovation of Building C, the existing
comfort station, and reconstruction of the facility so as to accommodate office,
equipment storage and training rooms as well as separate staff rest rooms,
shower rooms and changing areas for both female and male Parks Department
personnel; and
(d) Design and installation of appropriate barriers
to control access to the parking area adjacent to Building A.
5.2 All Capital Improvements shall be completed in accordance
with the attached schedule of Capital Improvements annexed hereto as Exhibit B,
which includes the following information:
(a) Capital Improvement items to be constructed;
(b) Capital Improvement cost commitments; and
(c) Capital Improvement completion schedule.
Licensee shall perform and complete such Capital Improvements at its sole cost
and expense. The Licensee shall make no other Capital Improvements or
alterations without the prior written consent of the Commissioner.
5.3 The value of the Capital Improvements and equipment
purchases shall be determined by the Commissioner based upon construction
documents, invoices, labor time sheets and such other supporting documents or
other data. Expenditures for ordinary repairs and maintenance shall not be
considered Capital Improvements. In making the determination of value,
Commissioner
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may request any information he reasonably believes would be helpful to make such
determination. Licensee shall forward such information to Commissioner upon
request by Commissioner.
5.4 A percentage of the total cost ("Total Cost") for all
Capital Improvements will be charged to the Licensee for the review of design
documents by DPR personnel (the "Design Review Fee"). Total Cost of the Capital
Improvements will be the total amount stipulated in Section 5.1 herein or the
total of the actual construction and design cost, whichever is greater.
DESIGN REVIEW FEE SCHEDULE
Cost of Capital Improvements Fee
Up to $1,000,000 1%
Above $1,000,000 .5%
The schedule for payment of the Design Review Fee is as follows:
(a) Upon execution of this License Agreement: $8,510.00
(b) Upon the Final Completion of Capital Improvements, the
Licensee shall made a supplementary payment based upon the amount of Capital
expenditures (including both construction and design) which exceeds the amount
of the Capital Improvements stipulated in the License Agreement.
5.5 Pursuant to any approved schedule of Capital Improvements,
Licensee shall pay all applicable fees and shall submit to Parks and all other
governmental agencies having jurisdiction, for their prior approval, all plans,
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specifications, schematics, working and mechanical drawings for such Capital
Improvements. All plans, specifications, schematics, and working and mechanical
drawings shall be in such detail as Parks shall require. All work shall be
undertaken in strict accordance with the plans, specifications, schematics, and
working and mechanical drawings approved in writing in advance by Parks. No
Capital Improvement project shall be deemed Finally Completed until the
Commissioner certifies in writing that the Capital Improvement project has been
completed to his satisfaction.
5.6 Upon certification by Parks of Final Completion of the
Capital Improvements performed by Licensee, as defined herein, Licensee shall
provide Parks with one complete set of final, approved plans in "camera-ready
wash-off mylar" or other medium acceptable to Parks.
5.7 For any Capital Improvements commenced subsequent to
execution of this License, Licensee shall obtain a permit from the construction
permit office located in the Olmsted Center, Flushing Meadows Corona Park prior
to commencement of work. Licensee shall commence Capital Improvements only after
the issuance of a construction permit from Parks construction permit office;
conceptual approval of plans does not authorize the Licensee to begin
construction. Once Licensee has obtained the required construction permit,
Licensee shall notify Commissioner of the specific date on which construction
shall begin.
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5.8 Licensee shall proceed in good faith and with due
diligence to complete all Capital Improvements in accordance with the schedule
of dates indicated in Exhibit B attached hereto unless such work cannot be
completed due to circumstances beyond the control of Licensee including acts of
God, war, enemies or hostile government actions, revolutions, insurrection,
riots, civil commotion, strikes, fire or other casualty, or the inability,
through no fault of Licensee to obtain either a Certificate of Occupancy, or
other permits, licenses, or certificates required by any agency having
jurisdiction thereof or other similar circumstances which the Commissioner has
determined to be beyond the control of Licensee. In such situations, Licensee
shall employ its "best efforts" to continue Capital Improvements.
5.9 Licensee shall spend or cause to be expended the entire
amount required to complete each Capital Improvement item listed in Exhibit B,
including any amount needed above any estimated cost shown. In the event that
Licensee performs all Capital Improvements for less than the amounts listed in
Exhibit B, any excess monies shall be remitted to the City as additional license
fees upon the expiration or sooner termination of this Agreement. If excess
monies become payable pursuant to this paragraph, the excess monies shall be
remitted to the City within thirty (30) days following the Commissioner's
determination of Final Completion of the last Capital Improvement to be
completed
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according to Exhibit B; in the alternative, the Licensee shall have the option
of applying such excess monies (savings) to additional Capital Improvements to
the Licensed Premises, provided its proposals for such work are approved by the
Commissioner and all Capital Improvement activity is completed by April 1, 2000.
5.10 In the event Licensee is delayed or prevented from
completing all Capital Improvements in accordance with Exhibit B due to the
conditions enumerated in section 5.8 above, then the Commissioner may extend any
dates for performance of any remaining Capital Improvements. The number of days
by which performance may be extended shall be determined by the Commissioner
after inspection of the Restaurant Facility and consultation with Licensee.
5.11 In the event the Licensee fails to complete a particular
Capital Improvement by the date specified for final completion, Licensee shall
pay the City liquidated damages of $100.00 per day until the outstanding
improvement is completed. Licensee's failure to comply with any phase of the
schedules for Capital Improvements for a period of thirty (30) days shall
constitute a default upon which Commissioner may terminate this License upon ten
(10) days notice as provided in Article XXX of the General Provisions, annexed
hereto as Exhibit A.
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5.12 Licensee shall perform all Capital Improvements in
accordance with all federal, state, and city laws, rules, regulations, orders,
and industry standards, and with materials as set forth in the plans,
specifications, schematics, working and mechanical drawings. All equipment and
materials installed as part of the Capital Improvements shall be new, free from
defects, of the best grade quality, suitable for the purpose intended and
furnished in ample quantities to prevent delays. Licensee shall obtain all
manufacturers warranties and guarantees for all such equipment and materials.
5.13 As required by Section 24-216 of the New York City
Administrative Code, devices and activities which will be operated, conducted,
constructed or manufactured pursuant to this License and which are subject to
the provisions of the New York City Noise Control Code (the "Code") shall be
operated, conducted, constructed or manufactured without causing a violation of
such Code. Such devices and activities shall incorporate advances in the art of
noise control developed for the kind and level of noise emitted or produced by
such devices and activities, in accordance with regulations issued pursuant to
federal, state, City laws, rules, regulations or orders.
5.14 Unless otherwise provided, Licensee shall choose the
means and methods of completing the Capital Improvements unless Commissioner
reasonably determines that such means and methods constitute or create a hazard
to the Capital Improvements
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or to persons or property or will not produce finished Capital Improvements in
accordance with the Schedule of Capital Improvements annexed hereto as
Exhibit B.
5.15 No temporary storage or other ancillary structures or
staging areas may be erected or maintained without a permit obtained from Parks
Department's Construction Division, Permit Office.
5.16 Licensee may not cut down, replant, or remove any trees
from the Licensed Premises without the prior written approval of the Parks
Department's Forestry Division.
5.17 During performance of the Capital Improvements and up to
the date of Final Completion, Licensee shall be responsible for the protection
of the finished and unfinished Capital Improvements against any damage, loss or
injury. In the event of such damage, loss or injury, Licensee shall promptly
replace or repair such Capital Improvements.
5.18 Licensee shall provide written notice to Commissioner
when the Capital Improvements of each phase are substantially completed. After
receiving such notice, Commissioner shall inspect such Capital Improvements.
After such inspection Commissioner and Licensee shall jointly develop a single
final "punch list" incorporating all findings of Commissioner and Licensee of
all work not completed or not completed to the satisfaction of the Commissioner.
Licensee shall
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proceed with diligence to complete all "punch list" items within a reasonable
time as determined by the Commissioner.
5.19 Licensee, within three (3) months of Certification of
Final Completion, shall furnish the Commissioner with a statement signed and
certified by an officer of Licensee, detailing the actual costs of construction.
Accompanying such statement shall be construction documents, bills, invoices,
labor time books, accounts payable, daily reports, bank deposit books, bank
statements, checkbooks and canceled checks. Licensee shall maintain accurate
books and records of account of construction costs which shall be segregated
from other accounts or shall itemize and specify those costs attributable to the
Licensed Premises to permit audit by Parks or the Comptroller upon request.
5.20 For any Capital Improvements commenced subsequent to full
execution of this License, Licensee at its sole cost and expense shall provide
Parks with payment and performance bonds, or upon the approval of the
Commissioner, irrevocable letters of credit naming the City of New York as
beneficiary, in a three-phased schedule, corresponding to the three phases of
the schedule of Capital Improvements, and in the amount of each respective phase
of the estimated cost of the Capital Improvements, as security for the faithful
completion of the Capital Improvements. Such surety company shall be licensed to
conduct surety business in the State of New York and subject to
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the prior approval of Commissioner. Such Bond shall remain in full force and
effect until Parks certifies construction as finally complete. The first such
performance bond or letter of credit, shall be in the amount of $220,000 for all
Capital Improvements to be completed by May 31, 1995. The second bond or letter
of credit shall be in the amount of $390,500 for all Capital Improvements to be
completed by May 31, 1996 and the third bond or letter of credit shall be in the
amount of $240,000 for all Capital Improvements to be completed by May 31, 1997.
The required bond or letter of credit shall be delivered to Parks prior to the
commencement of any work under this License.
5.21 Licensee shall promptly repair, replace, restore, or
rebuild, as the Commissioner reasonably may determine, items of Capital
Improvements in which defects of materials, workmanship or design may appear or
to which damages may occur because of such defects, during the two-year period
subsequent to the date of the Final Completion of such Capital Improvements.
Failure to comply with this section shall constitute a default and may result in
the termination of this License as provided in Article XXX of the General
Provisions annexed hereto as Exhibit A.
5.22 Neither Parks, nor the City, its agencies, officers,
agents, employees or assigns thereof, shall be bound, precluded or estopped by
any determination, decision, approval, order, letter, payment or certificate
made or given under or in
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connection with this License by the City, the Commissioner, or any other
officer, agent or employee of the City, before the Final Completion and
acceptance of the Capital Improvements, from showing that the Capital
Improvements or any part thereof does not in fact conform to the requirements of
this License Agreement and from demanding and recovering from the Licensee such
damages as Parks or the City may sustain by reason of Licensee's failure to
perform each and every part of this License Agreement in accordance with its
terms, unless such determination, decision, approval, order, letter, payment or
certificate shall be made pursuant to a specific waiver of this paragraph signed
by the Commissioner or his authorized representative.
5.23 Upon installation, title to all construction, renovation,
improvements, equipment and fixtures made to the Licensed Premises shall vest in
and thereafter belong to the City at the City's option, which may be exercised
at any time after the Substantial Completion of their construction, renovation,
improvement, affixing, placement or installation. To the extent the City chooses
not to exercise its option with respect to. any of the construction, renovation,
improvements, equipment or fixtures made to the Licensed Premises it shall be
the responsibility of Licensee to remove such items at its sole cost and
expense.
5.24 Licensee warrants that it is financially solvent and
sufficiently experienced and competent to perform, or cause
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to be performed, the Capital Improvements required pursuant to this License.
SECTION 6
UTILITIES AND PUBLIC TELEPHONE SERVICE
6.1 Except as provided in Section 6.2 and Section 2.1(d)
herein, Licensee, at its sole cost and expense, shall install or cause to be
installed, and maintain all utility lines, meters and supplies of power
necessary for the proper operation of this License as described herein and pay
all utility cost. Utilities may include, but shall not be limited to
electricity, gas, heat, coolant, water, sewer and rubbish removal. Parks does
not make representation or warranty that existing cables, meters or supplies of
power are adequate for Licensee's needs or that any entity can or will make such
service available.
6.2 Once Licensee has completed reconstruction of the existing
Building C and the Parks Facility is Finally Complete, Parks will accept ongoing
responsibility for payment of the cost of utilities to the Parks Facility
throughout the remainder of the term of this License Agreement. In no event will
Licensee become obligated to maintain the existing Building C prior to the time
that Licensee commences renovating construction. In addition, once Licensee has
completed installation of the garbage compactor and container as required under
this License Agreement, Parks will provide for the ongoing removal of compacted
garbage from the compactor. However, Licensee shall have continuous and
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ongoing responsibility for maintenance and servicing of the compactor and
container, as well as for utility costs associated with it. Parks will pay
utility costs for the public restroom portion of Building A, provided that
Licensee installs separate meters for measuring electricity and water
consumption at the restroom portion of Building A as part of its Capital
Improvements.
6.3 In the event that New York Telephone Company is unable to
supply telephone service to the Licensed Premises, Licensee may, at its option,
contract directly with any telephone company for public telephone services at
Licensed Premises, but nothing herein shall obligate City to contract with any
telephone company for such services in the event Licensee fails to do so. To the
extent that rates for such public telephone services are not otherwise regulated
by federal, state or local authorities, such rates shall be subject to Parks
approval.
SECTION 7
OPERATIONS
7.1 License, at its sole cost and expense, shall operate and
maintain the Restaurant Facility under authority of this License for the
accommodation of the public and in such manner as the Commissioner reasonably
shall prescribe and as permitted by federal, state, and City laws, rules,
regulations or orders. Licensee shall have the right to use the Restaurant
Facility only for the activities described herein as follows:
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(a) operation and maintenance of a snack bar with a concession
stand on the ground floor level of the main building, (Building A in Exhibit C,
annexed hereto) for fast-food and merchandise walk away purchases;
(b) operation and maintenance of a full service restaurant
with an interior dining room on the ground floor level of Building A featuring a
display kitchen on the back wall, glass doors leading to the outside patio and a
large spiral staircase leading to rooftop dining;
(c) operation and maintenance of a partially enclosed, outdoor
patio dining area adjacent to the interior dining room incorporating bench
seating and cafe tables, an outdoor bar with tables, umbrellas and chairs.
(d) operation and maintenance of a roof top dining area on the
second level of Building A;
(e) operation and maintenance of a valet parking concession in
the area adjacent to Building A to accommodate patrons of the Restaurant
Facility;
(f) operation and maintenance of a large rest room facility on
the ground floor level of Building A, part of which shall be directly accessible
to be public without entering through the interior dining room described above
and which shall be provided without charge to the public. No fewer than 24
stalls in the womens' rest room and 11 stalls and 10 urinals in the mens' rest
room shall be directly accessible to
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the public from outside the Restaurant Facility without entering the interior
dining area. The number of rest room stalls accessible through the interior
dining room shall not be fewer than the number of stalls required by City
Building Code for the number of seats at tables in the interior dining room and
roof top dining area combined;
(g) subject to the prior written approval of the Commissioner,
operation and maintenance of a merchandise shop and souvenir boutique and/or
food and beverage operation in the kiosk structure, Building B in Exhibit C,
annexed hereto.
7.2 Notwithstanding its obligations to maintain the Licensed
Premises, once Licensee has completed the Capital Improvements to the existing
comfort station, Building C in Exhibit C annexed hereto, as required pursuant to
Section 5 herein, and has turned the Parks Facility over to Parks as Finally
Complete, no continuing operational duties pertaining to Building C shall be
required of Licensee except for its warranty of construction.
7.3 Licensee may place chairs, tables and umbrellas in the
patio areas within the Limit Line of Building A on the Licensed Premises, as
illustrated on Exhibit C, annexed hereto, for the use of patrons of the
restaurant. Additionally, Licensee will be responsible for placing and
maintaining tables in a designated area adjacent to the walk-away food service
concession which will be made available for use by the general public.
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Licensee must operate, maintain and clean the entire seating area including the
public tables, whenever the outdoor patio or walk-away fast food concessions are
operating. Licensee must arrange the seating area so that pedestrian traffic
along the pathways is not impeded.
7.4 Licensee may store tables, chairs and equipment only in
the areas in the Restaurant Facility designated on the Design Plans.
7.5 Licensee's vendors and waiters/waitresses will be required
to wear uniforms that have been approved by the Department, which approval shall
not be unreasonably withheld or delayed. The description of uniforms annexed
hereto as Exhibit D is hereby approved by the Department.
7.6 In addition to a Parks permit, the Licensee must obtain a
Health Department License, and any other licenses, permits or authorizations
from any government agencies having jurisdiction and shall prominently display
said licenses, permits or authorizations, as required in accordance with
applicable federal, state and City rules, laws, statutes, regulations or orders.
In the event that Licensee is unable to obtain a liquor license for the
Restaurant Facility or licenses, permits or authorizations for Licensee to
operate the Restaurant Facility within one year of the execution date of this
License, Licensee shall have the right to terminate this License without penalty
or prejudice. In the event of such termination by Licensee the
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Department shall promptly refund to Licensee the security deposit held pursuant
to Section 4.7 herein.
7.7 Prices for all items and services to be sold at or from
the Licensed Premises, including but not limited to all prices charged for food,
beverages, merchandise, tour services or parking, must be uniform and approved
by the Commissioner. It is understood that all restaurant and snack bar pricing
will be competitive with all similar restaurant and snack bar pricing,
respectively, at facilities under similar licensing arrangements with Parks.
Exhibit E, annexed hereto, contains the pre-approved menu, merchandise, services
and parking price list, however Licensee shall have a liberal right to change
the items being served and sold, subject to approval of Parks which shall not be
unreasonably withheld or delayed, except that daily specials shall not require
Parks' prior approval.
7.8 Commencing on the Fee Commencement Date and thereafter
during the times the Restaurant Facility is in operation, Licensee will be
responsible for keeping the entire Licensed Premises clean and free of litter.
Licensee shall maintain umbrellas, canopies and other equipment utilized in the
operations under this License Agreement in good repair and order.
7.9 Throughout the term of this License Agreement, Licensee
shall operate the Restaurant Facility seven days per week for such hours as the
Commissioner shall approve. Annexed
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hereto as Exhibit E is the initial schedule of operating hours, food service
menu and merchandise price list, which is hereby approved. In regulating the
hours of operation, the Commissioner may consider the hours of operation of
other similar Parks facilities, the nature of the community and the environs of
the concession, the rules and regulations of Parks operations, the public health
and safety, and other similar considerations. Licensee may, subject to the prior
written consent of the Commissioner, suspend operation of the restaurant portion
of the Restaurant Facility during the period between January 1 and March 31 of
any Operating Year, if the Licensee determines that such operation is not
economically feasible; during any such period of restaurant suspended
operations, the Licensee shall continue operations of the snack bar portion of
the Restaurant Facility.
7.10 At its sole cost and expense, Licensee shall open and
maintain the rest rooms which are available to the general public in Building A,
during all hours when any food or beverage service is in operation on the
Licensed Premises. For all rest room space in Building A, including the area
available to the general public, the Licensee shall submit a cleaning schedule
for the prior approval of Parks and adhere to such schedule once it is approved.
Licensee shall provide all required cleaning supplies and services, including
but not limited to soap, towels (or hot air blowers) and toilet paper, paint,
removal of
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graffiti, repair broken stall doors, and toilet seats, and replacement of broken
lights and fixtures.
7.11 Umbrellas, canopies and other equipment shall be of a
design and color as set forth in the Design Plans, once said Design Plans have
been approved by the Department. No advertising of product brands will be
permitted unless approved in advance by the Department.
7.12 Licensee shall, at its sole cost and expense, print,
frame and prominently display in a place and manner designated by Commissioner,
the current approved schedule of hours, fees and rates as required by Section
7.9 herein.
7.13 Licensee shall not use any polystyrene foam packaging or
food containers in the operations under this License Agreement. Additionally,
Licensee will only be allowed to provide paper straws for the walk-away snack
bar concession; plastic straws will be permitted only in the interior restaurant
settings.
7.14 Licensee, at its sole cost and expense, shall provide any
lighting, music, music programming or sound equipment necessary for the proper
operation of the License. Licensee agrees to operate and play said sound
equipment and music only at a sound level reasonably acceptable to the
Commissioner. Any extraordinary musical programming (other than regular
background music, either recorded or live) by the Licensee shall be subject to
Department approval.
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7.15 Licensee warrants that all food, beverages and
merchandise shall be pure and of good quality. Licensee shall maintain adequate
inventory control to assure a constant supply of food, beverages and
merchandise. Licensee shall operate the snack bar in such a manner as to
maintain the highest health inspection rating.
7.16 Licensee shall personally conduct operations under this
License Agreement or employ an operations manager satisfactory to Commissioner.
The designated manager must be available by telephone during all hours of
operation. Licensee shall replace any manager, employee, subcontractor or
sublicensee whenever reasonably demanded by Commissioner.
7.17 Licensee at its sole cost and expense, shall provide
personnel with the requisite qualifications and appropriately train, supervise
and accept responsibility for their acts associated with the operation of this
License, including but not limited to:
(a) the collection of all monies;
(b) the maintenance of the Licensed Premises;
(c) the conduct and supervision of all activities
to be engaged in upon the Licensed Premises, including the provision of food
service personnel;
(d) the maintenance of security of the Licensed
Premises;
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7.18 Licensee shall at its sole cost and expense, provide a
twenty-four (24) hour per day security system at the Restaurant Facility.
7.19 Licensee shall prepare and provide to Parks, reports of
major accidents occurring on the Licensed Premises. Licensee shall promptly
notify Parks, in writing, of any claim for injury, death, property damage or
theft which shall be asserted against Licensee with respect to the Licensed
Premises. Licensee shall also designate a person to handle all such claims,
including all insured claims for loss or damage pertaining to the operations of
the Licensed Premises and Licensee shall notify Parks in writing, as to said
person's name and address.
7.20 Licensee shall promptly notify Parks personnel of any
unusual conditions that may develop in the course of the operation of this
License Agreement such as, but not limited to, fire, flood, vandalism, casualty
or substantial damage of any character.
7.21 Licensee shall maintain close liaison with the Parks
Enforcement Patrol and New York City Police and cooperate with all efforts to
remove illegal vendors from the Licensed Premises and surrounding areas.
Licensee shall not allow or permit illegal activity to occur on the Licensed
Premises. Although Parks will use its best efforts to remove non-licensed
vendors from the Licensed Premises, Parks makes no warranty that such illegal
vendors will not appear on the Licensed Premises.
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7.22 All deliveries to Licensee shall be made on such days and
at such times of day as Commissioner shall reasonably approve.
7.23 Licensee shall establish an appropriate advertising and
promotion program. Licensee shall have the right, subject to the prior approval
of the Commissioner, to print or to arrange for the printing of programs for
events containing any advertising matter, except advertising matter which in
sole discretion of the Commissioner demonstrates a lack of respect for public
morals or conduct, is otherwise unacceptable or which adversely affects the
reputation of the Restaurant Facility, the Parks Department or the City of New
York.
7.24 Licensee shall employ good faith efforts and cooperate
with any existing licensees operating nearby the Licensed Premises to secure
consent for the Licensee to erect and maintain suitable signs on the Licensed
Premises and in the other areas of Battery Park, as described on Exhibit F
annexed hereto. Such signs shall be informational in nature and direct patrons
to Licensee's facilities at the Licensed Premises, which shall include, for the
purposes of such signage, the rest rooms available to the general public in the
Main Building. Any advertisement used in connection with such facility, shall be
appropriately located and shall state that the Restaurant Facility is a City of
New York, Department of Parks and Recreation concession, operated by Shellbank
Restaurant Corp.
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7.25 If Licensee contemplates placing any signs off-site, such
as on nearby highways or streets for the purpose of directing patrons to the
Restaurant Facility or for any other purpose, it shall be Licensee's
responsibility to obtain any necessary approvals or permits from any
governmental agency having jurisdiction over such highways, streets or
locations. The design and content of all signs, whether on or off Parks
property, are subject to Commissioner's prior approval.
7.26 Licensee shall obtain equipment which will provide
security for all monies received. Licensee shall provide for the transfer of all
monies collected to the bank. Licensee shall bear the loss of any lost, stolen
or counterfeit monies derived from operations pursuant to this License.
7.27 Licensee shall have use of the Parking Area, ("Parking
Area") denoted on Exhibit C annexed hereto and made a part hereof, and may,
subject to the Licensee's obtaining the prior written approval of the
Commissioner and any other state or local authorities having jurisdiction, erect
a vehicular traffic control device at the entrance to the Parking Area nearest
to State Street and develop a parking control system for the use of the Parking
Area by its employees, agents, contractors and patrons. Any such parking control
system shall not impede pedestrian traffic through the Parking Area nor restrict
the access of official and emergency vehicles to the Parking Area and Battery
Park. Licensee agrees to allow and assist tour buses and
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similar vehicles requiring use of the Parking Areas as a turnaround area.
Licensee agrees to maintain the Parking Area in a clean and orderly manner, free
from refuse and litter.
SECTION 8
MAINTENANCE, SANITATION AND REPAIRS
8.1 Licensee, at its sole cost and expense and to the
reasonable satisfaction of Commissioner, shall put, keep, repair and preserve in
good order the Licensed Premises including the main building and kiosk
structures, walkways, curbs, pathways, trees, landscaping, parking lot and other
areas extending to and including the limit line as indicated on Exhibit C
annexed hereto. Licensee shall at all times keep Licensed Premises and the areas
within 100' of the Licensed Premises, clean, free of litter, neat and, with
respect to the food service areas, fumigated, disinfected, deodorized and in
every respect sanitary. Licensee shall provide regular cleaning and maintenance
services for Licensed Premises, including collection and removal of litter,
debris and snow. Licensee shall provide for ongoing maintenance and repair of
the garbage compacting equipment which it installs, as provided in Section 5.1
herein.
8.2 Parks will provide for the regular removal of compacted
material from the compactor supplied by the Licensee.
8.3 Licensee shall maintain and repair the Licensed
Premises in accordance with the standards set forth in this License Agreement.
All such maintenance shall be performed by
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Licensee in a good and worker like manner. Licensee shall submit with its annual
statement of income and expenses required pursuant to Section 4.4 herein, a
report detailing its annual expenditures for material needed for repairs and
maintenance in fulfillment of its obligation pursuant to this Section 8. The
Security Deposit required pursuant to Section 4.7 hereof and Article VI of the
General Provisions, annexed hereto as Exhibit A, shall secure Licensee's
obligation to maintain and repair the Licensed Premises.
8.4 Licensee shall provide adequate waste receptacles on the
Licensed Premises. All waste, garbage, refuse, rubbish and litter shall be
collected, bagged and placed in the compactor/container at the Licensee's sole
cost and expense; compacted garbage will be removed by Parks on a regular, as
needed basis.
8.5 Licensee shall be responsible for all snow removal on the
Licensed Premises.
8.6 Licensee, at its sole cost and expense and to the
reasonable satisfaction of Commissioner, shall provide (and replace if
necessary), all equipment necessary for the operation of this License, and put,
keep, repair, preserve and maintain in good order all equipment found on, placed
in, installed in or affixed to Licensed Premises.
8.7 At the expiration or sooner termination of this License,
Licensee shall turn over to Parks a Restaurant Facility
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with kiosk, parking lot and Parks Facility which are well maintained, in good
repair and in broom clean condition, ordinary wear and tear excepted.
SECTION 9
APPROVALS
9.1 Licensee is solely responsible for obtaining all
government approvals, permits and licenses required by federal, state and City
laws, regulations, rules or orders to fulfill this license.
9.2 Whenever any act, consent, approval or permission is
required of City or Commissioner under this license, the same shall be valid
only if it is, in each instance, in writing and signed by Commissioner or his
duly authorized representative. No variance, alteration, amendment, or
modification of this instrument shall be valid or binding upon City,
Commissioner or their agents, unless the same is, in each instance, in writing
and duly signed by the Commissioner or his duly authorized representative.
SECTION 10
RESERVATION FOR SPECIAL EVENTS
10.1 Commissioner represents to Licensee that the Commissioner
has not granted to any other person or entity any license, permit, or right of
possession or use which would prevent in any way Licensee from performing its
obligations and realizing its rights under this License. It is expressly
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understood that this Section 10.1 shall in no way limit Parks right to sponsor
or promote Special Events, as defined herein, in Battery Park, or to enter into
agreements with third parties to sponsor or promote such events; provided that
Parks will use its reasonable efforts to assure that such agreements shall not,
without the prior written consent of Licensee, prohibit the Licensee from use of
the parking lot or driveway adjacent to the Licensed Premises. For the purposes
of this Section 10.1 the term "Special Event(s)" shall mean any event for which
Parks has issued a Special Event Permit.
10.2 Commissioner shall use his best efforts to notify
Licensee of any Special Event to be held at Battery Park at least fifteen (15)
days in advance of such event.
10.3 Parks agrees to notify any third party operator or
sponsor of Special Events of Licensee's access rights to the Licensed Premises
and to provide same with the name and telephone number of Licensee's manager.
10.4 In the event that Licensee provides reasonably
satisfactory evidence to Parks that the use of the Restaurant Facility is
adversely affected by such Special Events, Licensee and the Commissioner agree
to meet and to discuss and consider a modification of this License to take into
account the affect of such Special Events on the revenues of the Restaurant
Facility.
10.5 Notwithstanding any other provision of this Section 10,
Licensee agrees to make Building A available to Parks
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for functions conducted and sponsored by Parks for Parks' personnel no more than
four (4) times per year. All Parks-sponsored functions shall be scheduled no
more than 120 days nor less than 30 days prior to the event. Licensee shall only
be obligated to make available the dining and catering space of Building A,
although Licensee shall have the right of first refusal to provide any
commercial food and beverage catering services, if such services are required
for the Parks sponsored functions. Parks may, without obligation to Licensee
supply food and beverage service to Parks' personnel. During such Parks
sponsored functions, Licensee shall, without cost to Parks, make Licensee's
managerial personnel available to assist with opening, closing and/or security
of the Licensed Premises. Parks personnel shall not have the right to use the
kitchen or bar during such Parks-sponsored functions.
SECTION 11
ASSIGNMENTS AND SUBLICENSES
11.1 Licensee may assign or sublicense its interest in whole
or in part in this License Agreement provided that Licensee obtains the
Commissioner's prior written approval, which shall not be unreasonably withheld
or delayed.
(a) No assignment or other transfer of any
interest in this License Agreement shall be permitted which, alone or in
combination with other prior or simultaneous transfers or assignments, would
have the effect of changing the
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ownership or control, whether direct or indirect, of more than forty-nine
percent (49%) of stock or voting control of Licensee in the Licensed Premises
without the prior written consent of Commissioner. Licensee shall present to
Commissioner the assignment or sublicense agreement for approval, together with
any and all information as may be required by the City for such approval,
including a statement prepared by a certified public accountant indicating that
the proposed assignee or sublicensee has a financial net worth acceptable to the
Commissioner together with a certification that its principal business activity
will consist of the management and operation of the Recreation Facility. The
constraints contained herein are intended to assure the City that the Licensed
Premises are operated by persons, firms and corporations which are experienced
and reputable operators and are not intended to diminish Licensee's interest in
the Licensed Premises or to create any rights to payment as a condition of the
granting of any required consent or approval.
(b) As used in this Section 11 the term
"assignment" shall be deemed to include any direct or indirect assignment,
sublet, sale, pledge, mortgage, transfer of or change of more than 49% in stock
or voting control of the Licensee, including any transfer by operation of law.
No sale or transfer of the stock owned by Licensee or its nominee may be made
under
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any circumstance if such sale will result in a change of control violative of
the intent of this Section.
11.2 Should Licensee choose to assign or sublicense the
management and operation of any element of the Recreation Facility to another
party, Licensee shall seek the approval of the Commissioner by submitting a
written request including proposed assignment documents as provided above. The
Commissioner may request any additional information he deems necessary and
Licensee shall promptly comply with such requests.
11.3 No consent to or approval of any assignment or
sublicensee granted pursuant to this Section 11 shall constitute consent to or
approval of any subsequent assignment or sublicense.
11.4 Failure to comply with this provision shall cause the
immediate termination of this license.
SECTION 12
RESERVATION FOR PARKS CONSTRUCTION
12.1 Parks reserves the right to perform construction or
maintenance work at its discretion on or through the Licensed Premises at any
time during the term of this License; however the City shall make reasonable
efforts to perform or have performed any repairs, alterations and/or other
construction work (the "Construction Work") in and to the Park and/or Licensed
Premises in such a manner as will not materially interfere with Licensee's
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operations at the Licensed Premises which for the purposes of this Section 12.1
shall refer to Building A and Building B only.
12.2 Notwithstanding anything contained herein to the
contrary, City reserves the right to, and anticipates that it may during the
term hereof, upon thirty (30) days written notice to Licensee, suspend
Licensee's Restaurant operations hereunder for any number of days in order to
accommodate City construction projects, including without limitation, the
anticipated reconstruction of the esplanade and landscaping in Battery Park.
During the period of any suspension of Restaurant Facility operations pursuant
to this subsection 12.2 whether or not the required notice has been given by
City, the Minimum Annual Fee and/or Percentage payments due, if any, shall be
suspended and upon resumption of Restaurant Facility operations, such fee
payments shall be resumed at the same levels which would have been in effect on
the date of the suspension of operations. In addition, the License term shall be
extended past its original expiration date for a period of time equal to such
suspension, it being the intention of the parties that the Licensee shall,
subject to the terms hereof, be entitled to operate the Licensed Premises for
twenty (20) full Restaurant Facility Seasons at the corresponding fee set forth
in Section 4.1 herein for each such season.
[intentionally Left Blank]
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SECTION 13
GENERAL PROVISIONS INCORPORATED
13.1 The General Provisions annexed hereto as Exhibit A are
hereby incorporated herein. In the event that there is any conflict between the
General Provisions annexed hereto as Exhibit A and this License Agreement, the
language of this License Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this
License Agreement to be signed and sealed on the day and year first above
written.
CITY OF NEW YORK
PARKS & RECREATION
By:/s/ Henry J. Stern
----------------------------------
Henry J. Stern, Commissioner
Dated: 23 December, 1994
-------------------------------
SHELLBANK RESTAURANT CORP.
By:/s/ Frank Cretella
----------------------------------
Frank Cretella Pres
-------------------------------------
Print Name and Title
Dated: December 14, 1994
-------------------------------
APPROVED AS TO FORM
CERTIFIED AS TO LEGAL AUTHORITY
Unintelligible
- ------------------------------------
ACTING CORPORATION COUNSEL
Dated: November 10, 1994
-------------------------------
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 23rd day of December, 1994 before me personally came
Henry J. Stern to me known, and known to be the Commissioner of the Department
of Parks and Recreation of the City of New York, and the said person described
in and who executed the forgoing instrument and he acknowledged that he executed
the same in his official capacity and for the purpose mentioned therein.
/s/ Marjorie A. Cadogan
------------------------------------------
Notary Public
STATE OF NEW YORK )
} ss.:
COUNTY OF NEW YORK )
On this 14th day of December, 1994 before me personally came
Frank Cretella, who, being duly sworn by me did depose and say that he resides
at 1113 Forest Ave. NY 10310 and that he is the President of the corporation
described in and who executed the foregoing instrument and he acknowledged that
the executed the same in his official capacity and for the purposes mentioned
therein.
/s/ Robert J. Scamardella
- ------------------------------------
Notary Public
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EXHIBIT A
GENERAL PROVISIONS
TABLE OF CONTENTS
Page
ARTICLE ----
I DEFINITIONS........................................... 1
II NOT A LEASE........................................... 2
III PROHIBITION AGAINST TRANSFER.......................... 2
IV BOOKS AND RECORDS..................................... 2
V RIGHT TO AUDIT........................................ 4
VI SECURITY DEPOSIT...................................... 4
VII CREDITOR-DEBTOR PROCEEDINGS........................... 5
VIII USE OF EQUIPMENT...................................... 6
IX TITLE................................................. 6
X LICENSEE'S ACQUISITION OF FIXED EQUIPMENT............. 6
XI EXPENDABLE EQUIPMENT.................................. 6
XII OBLIGATION TO ACQUIRE................................. 7
XIII MAINTENANCE OF LICENSED PREMISES, EQUIPMENT AND
CONDITION UPON SURRENDER.............................. 7
XIV ALTERATIONS........................................... 8
XV IMPROVEMENT OR CORRECTION IN OPERATIONS............... 9
XVI MERCHANDISE AND PRICES................................ 9
XVII ADVERTISING...........................................10
XVIII UTILITIES.............................................10
XIX PUBLIC TELEPHONE SERVICE..............................10
XX INFLAMMABLES..........................................10
XXI SANITATION............................................10
XXII ACCESS................................................11
XXIII COMPLIANCE WITH LAWS..................................11
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Page
----
XXIV NON-DISCRIMINATION .................................11
XXV NO WAIVER OF RIGHTS ................................12
XXVI ASSUMPTION OF RISK..................................12
XXVII INDEMNIFICATION.....................................12
XXVIII WAIVER OF COMPENSATION..............................13
XXIX WORKERS' COMPENSATION, PUBLIC LIABILITY
AND PROPERTY INSURANCE............................. 13
XXX TERMINATION.........................................17
XXXI INVESTIGATIONS......................................19
XXXII WAIVER OF TRIAL BY JURY............................ 21
XXXIII CHOICE OF LAW, CONSENT TO JURISDICTION AND
VENUE.............................................. 22
XXXIV PAYMENTS AND NOTICES................................23
XXXV LATE CHARGES........................................23
XXXVI ENTIRE AGREEMENT....................................24
XXXVII MODIFICATION OF AGREEMENT...........................24
XXXVIII PARAGRAPH AND OTHER REFERENCES......................24
XXXIX TRUST FUNDS.........................................24
XL PROCUREMENT OF AGREEMENT............................24
XLI CUMULATIVE REMEDIES - NO WAIVER.....................25
XLII SEVERABILITY: INVALIDITY OF PARTICULAR
PROVISIONS......................................... 25
XLIII CONFLICT OF INTEREST................................26
XLIV EMPLOYEES...........................................26
XLV INDEPENDENT STATUS OF LICENSEE......................26
XLVI ALL LEGAL PROVISIONS DEEMED INCLUDED................27
XLVII JUDICIAL INTERPRETATION.............................27
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EXHIBIT A
GENERAL PROVISIONS
<PAGE>
EXHIBIT A
GENERAL PROVISIONS
ARTICLE I
DEFINITIONS
As used throughout this License, the following terms shall
have the meanings set forth below:
(a) "City" shall mean the City of New York, its departments
and political subdivisions.
(b) "Commissioner" shall mean the Commissioner of the New York
City Department of Parks and Recreation or his designee.
(c) "Comptroller" shall mean the Comptroller of the City of
New York.
(d) "Consumer Price Index" ("C.P.I.") shall mean the Consumer
Price Index for all urban consumers; all items indexed (C.P.I.-U.) for the New
York, New York/Northeastern New Jersey area, by the United States Department of
Labor, Bureau of labor Statistics. In the event the index shall hereafter be
converted to a different standard reference base or otherwise revised, the
determination of the increase shall be made with the use of conversion factor,
formula or table for converting the index as may be published by the Bureau of
Labor Statistics. In the event the index shall cease to be published, then for
the purpose of this License Agreement there shall be substituted for the index
such other index as the Department and Licensee shall agree upon.
(e) "Department" shall mean the New York City Department of
Parks and Recreation.
(f) "Expendable Equipment" shall mean all equipment, other
than Fixed Equipment, provided by Licensee.
(g) "Fixed Equipment" shall mean any property affixed in any
way to Licensed Premises, whether or not removal of said equipment would damage
Licensed Premises.
(i) "Additional Fixed Equipment" shall mean Fixed
Equipment affixed to Licensed Premises subsequent to the date of
execution of this License.
(ii) "Fixed and Additional Fixed Equipment" shall
refer to Fixed Equipment and Additional Fixed Equipment
jointly and severally.
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(h) "Parks" shall mean the New York City Department of Parks
and Recreation.
ARTICLE II
NOT A LEASE
It is expressly understood that no land, building, space,
improvement, or equipment is leased to Licensee, but that during the Term of
license, Licensee shall have the use of the Licensed Premises for the purpose
herein provided and except as herein provided, Licensee has the right to occupy
the premises assigned to it and to operate the Licensed Premises, and to
continue in possession thereof only so long as each and every term and condition
in this license is strictly and properly complied with and so long as this
license is not terminated by Commissioner.
ARTICLE III
PROHIBITION AGAINST TRANSFER
Licensee shall not sell, transfer, assign, sublicense or
encumber in any way this License hereby granted, a majority of the shares of
Licensee, or any equipment furnished as provided herein, or any interest
therein, or consent, allow or permit any other person or party to use any part
of the Licensed Premises, building, space or facilities covered by this license,
nor shall this license be_transferred by operation of law, unless approved in
advance in writing by Commissioner, it being the purpose and spirit of this
License Agreement to grant this license and privilege solely to Licensee herein
named.
ARTICLE IV
BOOKS AND RECORDS
(a) Licensee, during the term of this license and any renewal
thereof, shall maintain adequate systems of internal control and shall keep
complete and accurate records, books of account and data, including daily sales
and receipts records, which shall show in detail the total business transacted
by Licensee and the Gross Receipts therefrom. Such books and records maintained
pursuant to this license shall be conveniently segregated from other business
matters of Licensee and shall include, but not be limited to: all federal, state
and local tax returns and schedules of the Licensee, records of daily bank
deposits of the entire receipts from transactions in, at, on or from the
Licensed Premises; sales slips, daily dated cash register receipts, sales books;
duplicate bank deposit slips and bank statements.
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(b) All transactions shall be registered and recorded on
accurate cash registers, totaling or computing machines or on other
income-recording devices which shall register each transaction sequentially and
contain locked-in cumulative tapes with cumulative capacity satisfactory to
Parks or Comptroller. All such machines and devices shall be approved prior to
the commencement of this license by Parks or the Comptroller and the Licensee
shall notify Parks of the name and serial numbers of all such machines and
devices used at the Licensed Premises and of any changes or additions within
five (5) days thereof. All reports and data generated from or by such machines
and devices, including transactions, shall be posted daily on books and records
of account.
(c) Licensee shall use such accounting and internal control
methods and procedures and keep such additional books and records as may be
prescribed by Parks or the Comptroller, and Parks or the Comptroller shall have
the right to examine the recordkeeping procedures of the Licensee prior to the
commencement of the term of this license, and at any time thereafter, in order
to assure that the procedures are adequate to reveal the true, correct and
entire business conducted by the Licensee. Licensee shall maintain each year's
records, books of account and data for a minimum of six (6) years.
(d) Licensee shall furnish to Parks, by the 30th day following
each year of operation, statements sworn to and verified by an officer of the
Licensee, prepared by a certified public accountant showing the Gross Receipts
of the Licensee for such operating year and the annual income and expenses of
the Licensee. All information to be furnished to Parks shall be accurate and
correct in all material respects and sufficient to give parks a true and
accurate picture of the business conducted by the Licensee.
(e) The failure or refusal of the Licensee to furnish any of
the statements required to be furnished under this Article within fifteen (15)
days after its due date, the failure or refusal of the Licensee to maintain
adequate internal controls or to keep any of the records as required by this
Article or the existence of any unexplained discrepancy in the amount of fees
required to be due and paid hereunder, as disclosed by audit conducted by Parks
or the Comptroller, of more than five percent (5%) in any two out of three
consecutive months or more than ten percent (10%) in one month, shall be
presumed to be a failure to substantially comply with the terms and conditions
of this license and a default hereunder, which shall entitle parks, at its
option, on five (5) days written notice, to terminate this license. In addition,
the failure or refusal of Licensee to furnish the required statements, to keep
the required records or to maintain adequate internal controls shall authorize
Parks or the Comptroller to make reasonable projections of the amount of Gross
Receipts which would have been disclosed had the required
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statements been furnished or the required records maintained, based upon such
extrinsic factors as the auditors deem appropriate in making such projections.
Licensee shall pay any assessment based upon such reasonable projections within
fifteen (15) days after receipt thereof, and the failure to do so shall
constitute an additional substantial violation of this license and a default
hereunder.
ARTICLE V
RIGHT TO AUDIT
(a) Parks, the Comptroller and other duly authorized
representatives of the City shall have the right, during business hours, to
examine or audit the records, books of account and data of the Licensee to
verify Gross Receipts as reported by the Licensee. Licensee shall also permit
the inspection by Parks, Comptroller or other duly authorized representatives of
the City of any equipment used by Licensee, including, but limited to, cash
registers and recording machines, and all reports or data generated from or by
the equipment. Licensee shall cooperate fully and assist Parks, the Comptroller
or any other duly authorized representative of the City in any examination or
audit thereof. In the event that the Licensee's books and records, including
supporting documentation, are situated at a location fifty (50) miles or more
from the City, the records must be brought to the City for examination and audit
or Licensee must pay the food, board and travel costs incidental to two auditors
conducting such examination or audit at said location.
(b) Notwithstanding any other provision of this License, the
failure or refusal of the Licensee to permit Parks, the Comptroller or any other
duly authorized representative of the City to audit and examine the Licensee's
records, books of account and data or the interference in any way by the
Licensee in such an audit or examination is presumed to be a failure to
substantially comply with the terms and conditions of this license and a default
hereunder which shall entitle Parks, at its option on fifteen (15) days written
notice, to terminate this license.
ARTICLE VI
SECURITY DEPOSIT
(a) Licensee has deposited with City the sum of Twelve
Thousand Five Hundred dollars ($12,500) as a security deposit ("Security
Deposit"), for the full, faithful and prompt performance of and compliance with
all the terms and conditions of this license. The Security Deposit shall consist
of cash or a negotiable instrument payable to bearer or the City of New York
which the Comptroller shall approve as being of equal market value with the sum
so required. The Security Deposit shall remain
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with the City throughout the Term of this license. Until the Security Deposit is
established, as described above, Parks shall retain Licensee's Bid Deposit.
(b) The Security Deposit shall be held by the City without
liability for interest thereon, as security for the full and faithful
performance by the Licensee of each and every term and condition of this license
on the part of the Licensee to be observed and performed. The Licensee may
collect or receive annually any interest or income earned on bonds less any part
thereof or amount which the City is or may hereafter be entitled or authorized
by law to retain or to charge in connection therewith, whether as or in lieu of
administrative expense or custodial charge, or otherwise the City shall not be
obligated by this provision to place or to keep cash deposited hereunder in
interest-bearing bank accounts.
(c) Use and Return of Deposit
If any fees or other charges or sums payable by
Licensee to the City shall be overdue and unpaid or should the City make
payments on behalf of the Licensee, or should the Licensee fail to perform any
of the terms of this License, then Parks may, at its option, and without
prejudice to any other remedy which the City may have on account thereof, after
five (5) days written notice, appropriate and apply the Security Deposit or as
much thereof as may be necessary to compensate the City toward the payment of
license fees, charges, liquidated damages or other sums due from the Licensee or
towards any loss, damage or expense sustained by the City resulting from such
default on the part of Licensee. In such event, the Licensee shall restore the
Security Deposit to the original sum deposited within five (5) days after
written demand therefor. In the event Licensee shall fully and faithfully comply
with all of the terms, covenants and conditions of this license and pay all
License fees and other charges and sums payable by Licensee to the City, the
Security Deposit shall be returned to Licensee following the date of the
surrender of the Licensed Premises by the Licensee in compliance with the
provisions of this license.
ARTICLE VII
CREDITOR-DEBTOR PROCEEDINGS
In the event any bankruptcy, insolvency, reorganization or
other creditor-debtor proceedings shall be instituted by or against the Licensee
or its successors or assigns, or the guarantor, if any, the Security Deposit
shall be deemed to be applied first to the payment of license fees and/or other
charges due the City for all periods prior to the institution of such
proceedings and the balance, if any, of the Security Deposit may be retained by
the City in partial liquidation of the City's damages. In the event of any
bankruptcy, insolvency, reorganization or other creditor-debtor proceedings,
Commissioner
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has to right to terminate this license upon one (1) day's notice.
ARTICLE VIII
USE OF EQUIPMENT
Licensee shall have the use of all Fixed Equipment located on
the Licensed Premises.
ARTICLE IX
TITLE
(a) Commissioner represents that City has title to all
Fixed Equipment.
(b) Any Additional Fixed Equipment, except that which is
enumerated Licensee's List of Additional Fixed Equipment, annexed hereto as
Exhibit C, shall vest in and belong to the City at the City's option, which
option may be exercised at any time after the substantial completion of the
affixing of said equipment. Licensee must acquire and affix Additional Fixed
Equipment as provided in Article X.
ARTICLE X
LICENSEE'S ACQUISITION OF FIXED EQUIPMENT
In order to acquire and affix Fixed and Additional Fixed
Equipment to the Licensed Premises, Licensee shall:
(a) notify Commissioner of Licensee's intention to affix Fixed
and Additional Fixed Equipment so that Commissioner may, in his sole discretion,
inspect and approve such affixing; should Commissioner fail to disapprove same
within fifteen (15) days of said notice, then his approval will be deemed
granted; and
(b) supply Commissioner within thirty (30) days of delivering
Fixed and Additional Fixed Equipment to Licensed Premises, bills of sale or
other evidence of purchase so that Commissioner may amend Parks' schedule of
Fixed Equipment and have complete information regarding all inventory on
Licensed
Premises.
ARTICLE XI
EXPENDABLE EQUIPMENT
(a) Licensee shall supply at its own cost and expense all
Expendable Equipment required for the proper operation of this license, and to
replace same, at its own cost and expense when requested by Commissioner.
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(b) Title to all Expendable Equipment obtained by Licensee
shall remain in Licensee and such equipment shall be removed by Licensee at the
termination or expiration of this license. In the event such equipment remains
in the Licensed Premises following such termination or expiration, Commissioner
may treat such property as abandoned and charge all costs and expenses incurred
in the removal thereof to Licensee.
(c) The equipment to be removed by Licensee pursuant to
subsection (b) above, shall be removed from the Licensed Premises in such a way
as shall cause no damage to the Licensed Premises. Notwithstanding its vacating
and surrender of the Licensed Premises, Licensee shall remain liable to City for
any damage it may have caused to the Licensed Premises.
ARTICLE XII
OBLIGATION TO ACQUIRE
Licensee must acquire, replace, install or affix, at its sole
cost and expense, any equipment, materials and supplies required for the proper
operation of Licensed Premises as described herein or as reasonably required by
Commissioner.
ARTICLE XIII
MAINTENANCE OF LICENSED PREMISES, EQUIPMENT
AND CONDITION UPON SURRENDER
(a) Licensee, at its sole cost and expense and to the
satisfaction of Commmissioner, shall put, keep, landscape, repair, preserve in
good order Licensed Premises, which shall include the Fixed and Additional Fixed
Equipment. Licensee shall keep at all times Licensed Premises and the
surrounding area within the distance specified herein, clean, litter free, neat,
fumigated, disinfected, deodorized and in every respect sanitary. Licensee shall
provide regular cleaning and maintenance services for Licensed Premises.
(b) Notwithstanding the foregoing, at the expiration or sooner
termination of this license, Licensee shall surrender the Licensed Premises, and
the Fixed and Additional Fixed Equipment to which City holds title, in at least
as good a condition as said Licensed Premises, and the Fixed and Additional
Fixed Equipment were found by Licensee, reasonable wear and tear excepted.
(c) Licensee acknowledges, that it is acquiring the Licensed
Premises and Fixed Equipment thereon solely on reliance on its own
investigation, that no representations, warranties or statements have been made
by the City concerning the fitness thereof, and that by taking possession of the
Licensed Premises
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and Fixed Equipment, Licensee accepts them in their present condition "as is."
ARTICLE XIV
ALTERATIONS
(a) "Alteration" shall mean (excepting ordinary repair
and maintenance):
(i) any restoration (to original premises or in the
event of fire or other cause), rehabilitation, modification, addition
or improvement to Licensed Premises; or
(ii) any work affecting the plumbing, heating,
electrical, water, mechanical, ventilating or other systems of Licensed
Premises.
(b) Licensee may alter Licensed Premises only in accordance
with the requirements of subsection (c) of this Article. Alterations shall
become property of City upon their attachment, installation or affixing.
(c) In order to alter Licensed Premises pursuant to subsection
(b) of this Article, Licensee must:
(i) Obtain Commissioner's written approval (which
shall not be unreasonably withheld) for whatever designs, plans,
specifications, cost estimates, agreements and contractual
understandings that may pertain to contemplated purchases and/or work;
except that if Commissioner does not give Licensee written notice of
his objection to such submitted designs, plans, specifications, cost
estimates, agreements, and contractual understandings within thirty
(30) days of his receipt of same, then his approval will be deem
granted; and
(ii) insure that work performed and alterations
made on Licensed Premises are undertaken and completed 1. in
accordance with submissions approved pursuant to section (i)
of this Article, 2. in a good and workmanlike manner, and 3.
within a reasonable time;
(iii) notify Commissioner of completion of, and the
making final payment for, any alteration within ten (10) days after the
occurrence of said completion or final payment.
(d) Commissioner may, in his reasonable discretion, make
repairs, alterations, decorations, additions or improvements to Licensed
Premises at the City's expense, but nothing herein shall be deemed to obligate
or require Commissioner to make any
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repairs, alterations, decorations, additions, or improvements, nor shall this
provision in any way affect or impair Licensee's obligation herein in any
respect.
ARTICLE XV
IMPROVEMENT OR CORRECTION IN OPERATIONS
(a) Should Commissioner, in his sole judgment, which shall not
be arbitrary or capricious, decide that Licensee is not operating license in a
satisfactory manner, Commissioner may in writing order Licensee to improve
operations or correct such conditions as Commissioner may deem unsatisfactory.
In the event that Licensee fails to comply with such written notice or respond
in a manner satisfactory to Commissioner within fifteen (15) days from the
mailing of said notice, notwithstanding any other provisions herein, then
Commissioner shall terminate this License. If Licensee is prevented from
complying with the written notice for reasons beyond its control, then
Commissioner may not terminate this License until Licensee had been given a
reasonable opportunity to comply and has failed to do so.
(b) Should Commissioner, in his sole judgment, decide that an
unsafe or emergency condition exists on the Licensed Premises, after written
notification, Licensee shall have forty-eight (48) hours to correct such unsafe
or emergency condition. If such unsafe or emergency condition cannot be
corrected within said period of time, the Licensee shall notify the Commissioner
in writing and indicate the period within such condition shall be corrected.
Commissioner, in his discretion, may extend such period of time in order to
permit Licensee to cure, under such terms and conditions as Commissioner deems
appropriate. This notwithstanding, Licensee shall at all times comply with all
laws, rules, regulations and orders pursuant to Article XXIII herein. At no
time, however, shall the City be obligated to make repairs, replacements, or
additions of any kind to the Licensed Premises or Equipment thereon.
ARTICLE XVI
MERCHANDISE AND PRICES
Licensee warrants that all food, merchandise or supplies sold
pursuant to this License shall be pure and of good quality. Licensee shall
submit to Commissioner a list or schedule of the articles to be offered for sale
pursuant to this License and the prices to be charged for each article, and
Licensee shall offer for sale only such articles and at such prices as have been
approved by Commissioner, which shall not be unreasonably withheld. The schedule
of prices approved by Commissioner shall be printed, framed and displayed at the
expense of Licensee in a place and manner such that it may be readily seen by
the public.
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ARTICLE XVII
ADVERTISING
Licensee shall establish an appropriate advertising and
promotion program. Licensee shall have the right to print or to arrange for the
printing of programs for events containing any advertising matter except
advertising matter which is indecent, or in obvious bad taste, or which
demonstrates a lack of respect for public morals or conduct. Licensee may
release news items to the media as it sees fit. If the Commissioner in his
discretion, however, finds any releases to be unacceptable, then Licensee shall
cease or alter such releases as directed.
ARTICLE XVIII
UTILITIES
Parks, at its sole cost and expense, shall install or cause to
be installed, maintain all utility lines, meters and supplies of power necessary
for the proper operation of this license as described herein and pay all utility
cost. Notwithstanding the foregoing sentence, Licensee shall bear the cost of
the utilities associated with operation of the snack bar. Utilities may include,
but shall not be limited to electricity, gas, heat, coolant, water and sewer.
Parks does not make representation or warranty that existing cables, meters, or
supplies of power are adequate for Licensee's needs or that any entity can or
will make such service available.
ARTICLE XIX
PUBLIC TELEPHONE SERVICE
Licensee shall contract directly with the telephone company
for public telephone services at Licensed Premises.
ARTICLE XX
INFLAMMABLES
Licensee shall not use or permit the storage of any
illuminating oils, oil lamps, turpentine, benzine, naphtha, or similar
substances or explosives of any kind or any substances or things prohibited in
the standard policies of insurance companies in the State of New York.
ARTICLE XXI
SANITATION
Licensee shall be responsible for keeping all litter baskets
within such areas supplied with plastic bags and shall
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tie each bag as it becomes full and place it next to the litter basket. Licensee
shall provide adequate waste receptacles adjacent to the Licensed Premises. All
waste, garbage, refuse, rubbish and litter shall be collected, bagged and
removed as necessary by a private carting company at the Licensee's sole cost
and expense.
ARTICLE XXII
ACCESS
Licensee shall provide at all times, free access to the
Licensed Premises to the Commissioner or his representatives and to other City,
State and Federal officials having jurisdiction, for inspection purposes.
ARTICLE XXIII
COMPLIANCE WITH LAWS
(a) Licensee shall comply at its sole cost and expense, and
cause its employees and agents to comply with all applicable laws, rules,
regulations and orders now or hereafter prescribed by Commissioner, and to
comply with applicable all laws, rules, regulations and orders of any City,
State or Federal agency or governmental entity having jurisdiction over
operations of the License and the Licensed Premises and/or Licensee's use and
occupation thereof.
(b) Licensee shall not use or allow the Licensed Premises, or
any portion thereof, to be used or occupied for any unlawful purpose or in any
manner violative of a certificate pertaining to occupancy or use during the term
of this license.
ARTICLE XXIV
NON-DISCRIMINATION
(a) Licensee shall not discriminate against any employee or
applicant for employment because of race, creed, color, national origin, age,
sex, handicap, marital status, sexual orientation or affectional preference with
respect to all employment decisions including, but not limited to recruiting,
hiring, upgrading, demoting, promoting, selecting for training (including
apprenticeship), rates of pay and other forms of compensation, laying off,
terminating and all other terms and conditions of employment.
(b) All advertising for employment shall indicate that
Licensee is an Equal Opportunity Employer.
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ARTICLE XXV
NO WAIVER OF RIGHTS
No acceptance by Commissioner of any compensation, fees,
penalty sums, charges or other payments in whole or in part for any periods
after a default of any terms and conditions herein shall be deemed as a waiver
of any right on the part of Commissioner to terminate this license. No waiver by
Commissioner of any default on the part of Licensee in performance of any of the
terms and conditions herein shall be construed to be a waiver by the
Commissioner of any other or subsequent default in the performance of any of the
said terms and conditions.
ARTICLE XXVI
ASSUMPTION OF RISK
Licensee assumes all risk in the operation of this license.
ARTICLE XXVII
INDEMNIFICATION
(a) Licensee shall indemnify and save harmless Commissioner,
his agents and City against and from all losses, liabilities, suits,
obligations, fines, damages, penalties, claims, costs, charges, and expenses, of
any kind whatsoever including without limitation architects' and attorneys'
fees, costs and disbursements which may be imposed upon, incurred by or asserted
against Commissioner, his agents and City in whole or in part arising out of any
violation of any law, rule, regulation or order, and from any and all claims for
loss, damage or injury (including death) to persons or property of whatever kind
or nature arising from the operation of this License, or from the negligence or
carelessness of employees, agents, contractors, servants, sublicensees or
invitees of Licensee. Licensee shall indemnify any recoveries against
Commissioner, his agents and City individually and/or jointly arising from same
and shall reimburse Commissioner and/or City hereunder.
(b) The obligation of Licensee under this Article 27 shall not
be affected in any way by the absence or lapse in any case of covering insurance
or by the failure or refusal of any insurance policies affecting the Licensed
Premises.
(c) If any claim, action or proceeding is made or brought
against Commissioner, his agents or City by reason of any event to which
reference is made in subparagraph (a) hereof, then upon demand by Commissioner,
Licensee, at its sole cost and expense, shall resist or defend such claim,
action or proceeding in Commissioner's name, if necessary, by the attorneys for
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Licensee's insurance carrier (if such claim, action or proceeding is covered by
insurance), otherwise by such attorneys as Commissioner shall approve, which
approval shall not be unreasonably withheld or delayed.
(d) The provisions of this Article XXVII and all other
indemnity provisions of this License shall survive the expiration date with
respect to any liability, suits, obligation, fine, damage, penalty, claim, cost,
charge or expense arising out of or in connection with any action or failure to
take action or any other matter occurring prior to the expiration date of this
license.
ARTICLE XXVIII
WAIVER OF COMPENSATION
(a) Licensee hereby expressly waives any and all claims for
compensation for any and all loss or damage sustained by reason of any defects,
including, but not limited to, deficiency or impairment of the water supply
system, gas mains, electrical apparatus or wires furnished for the Licensed
Premises, or by reason of any loss of any gas supply, water supply, heat or
current which may occur from time to time from any cause, or for any loss
resulting from fire, water, windstorm, tornado, explosion, civil commotion,
strike or riot, and Licensee hereby expressly releases and discharges
Commissioner, his agents, and City from any and all demands, claims, actions,
and causes of action arising from any of the causes aforesaid.
(b) Licensee further expressly waives any and all claims for
compensation, loss of profit, or refund of its investment, if any, or any other
payment whatsoever, in the event this license is terminated by Commissioner
sooner than the fixed term because the Licensed Premises are required for any
park or other public purpose, or because the license was terminated or revoked
for any reason as provided herein.
ARTICLE XXIX
WORKERS' COMPENSATION AND INSURANCE
(a) Licensee shall, at its own cost and expense, procure and
maintain such insurance for the Term of this license as will:
(1) protect Licensee from claims under the Workers'
Compensation Act;
(2) protect and defend Licensee (including agents and
sublicensees, if any), the City and Commissioner from any
claims for property damage and for personal injuries,
including death, arising out of, occurring,
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or caused by operations under this license by Licensee or
anyone directly or indirectly employed by said Licensee, or
otherwise arising out of this license; this coverage shall
include coverage for equipment belonging to the City and acts
of vandalism.
(b) The policies shall provide the amounts of insurance
hereafter mentioned, and before delivery of the license, all certificates of
insurance shall be submitted to Commissioner for his approval and retention.
Each certificate shall be marked "Premium Paid" and shall have endorsed thereon:
"No cancellation of or change in this policy shall become effective until after
thirty (30) days notice by Certified Mail to Commissioner, Department of Parks
and Recreation, The Arsenal, Central Park, New York, New York 10021. Each policy
shall also provide that the insurer is obligated to provide a legal defense in
the event any claim is made against the City. If, at any time, any of said
policies shall terminate or become unsatisfactory to Commissioner as to form or
substance, or if a company issuing any such policies shall become unsatisfactory
to Commissioner, Licensee shall promptly obtain a new policy, and submit the
same to Commissioner for written approval, which shall not be unreasonably
withheld, and for retention thereof as hereinabove provided. Upon failure of
Licensee to maintain, furnish and deliver such insurance as above provided, this
License may, at the election of Commissioner, be suspended, discontinued or
terminated and any and all payments made by Licensee on account of this license
shall thereupon be retained by Commissioner as additional liquidated damages
along with the Security Deposit. Failure of Licensee to take out and/or maintain
or the taking out or maintenance of any required insurance shall not relieve
Licensee from any liability under the license, nor shall the insurance
requirements be construed to conflict with or limit the obligations of Licensee
concerning indemnification.
(c) If the Licensed Premises and/or Fixed Equipment shall be
damaged or destroyed by fire, or other covered cause, such damage shall be
promptly repaired or replaced such that the Licensed Premises and/or Fixed
Equipment are in the same condition as prior to such damage. At Licensee's
request, the City shall advance insurance proceeds received by Commissioner to
cover such costs except that such payments shall in no event exceed the amount
actually collected and received by Commissioner under the insurance policies.
Licensee shall immediately commence and diligently prosecute to completion any
restoration or repair within six months (or such longer period as is reasonably
neccessary to complete such restoration and repairs) after Licensee is notified
by Commissioner that insurance proceeds have been received and are available for
such work. Any extension of time for the completion of Restoration shall be
granted at the reasonable discretion of Commissioner. Reimbursement under this
provision shall be made within 120 days of the Commissioner's
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actual collection and receipt of insurance proceeds under the insurance policy.
(d) All insurance money paid to the City on account of such
damage or destruction, less the reasonable costs of the City with the recovery
or adjustment of the losses, shall be applied by the City to the payment of the
cost of the restoration, repairs, replacements, rebuilding or alterations,
including the costs of temporary repairs, provided the same has been approved by
Commissioner in writing, for the protection of property pending the completion
of permanent restoration, repairs, replacements, rebuilding or alterations
(collectively referred to as the "Restoration"), and shall be paid out from time
to time as such restoration progresses upon the written request of the Licensee
which shall be accompanied by the following:
(i) A certificate signed by an executive officer of
Licensee and signed also in accordance with
Article XXIX (c) by the architect or engineer in
charge of Restoration (who shall be satisfactory
to the Commissioner) dated not more than 30 days
prior to such request, setting forth the
following:
a. that the sum then requested either has
been paid by Licensee, or if in the event
the Licensee is unable to pay for the
Restoration, and funds are to be advanced
by the City pursuant to section c, that
said sum is justly due or shall become
due to contractors, subcontractors,
material men, engineers, architects or
other persons who shall or have rendered
services or furnished materials for said
Restoration, and giving a brief
description of such services and
materials and the several amounts so paid
and/or due or to become due to each of
said persons in respect thereof and the
sum then requested does not exceed the
value of the services and materials
described in the certificate;
b. that except for the amount, if any,
stated in said certificate pursuant to
the foregoing section XXIX (d) i.e., to
be due for services or materials, there
is no outstanding indebtedness known to
Licensee, after due inquiry, which is
then due for labor, wages, materials,
supplies or services in connection with
Restoration;
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c. that the cost, as estimated by such
architect or engineer, of the Restoration
required to be done subsequent to the
date of such certificate in order to
complete the same does not exceed the
insurance money remaining in the hands of
the City after payment of the sum
requested in such certificate.
(ii) A Title Company search or other evidence
satisfactory to the Commissioner showing that
there has not been filed with respect to the
Licensed Premises any mechanic's or other lien
which has not been discharged of record.
(e) Upon compliance with the foregoing provisions of this
section, the City, shall, on behalf of the Licensee out of such insurance money,
pay or cause to be paid to the persons named in the certificate, pursuant to
section XXIX (d)(i), the respective amounts stated in said certificate to be due
to them and/or shall pay or cause to be paid to Licensee the amount stated in
said Certificate to have been paid by Licensee. Notwithstanding the foregoing in
the event that Licensee fails to undertake the Restoration of Licensed Premises
as a result of damage or destruction by fire or other casualty in accordance
with section XXIX (c) the Commissioner may but shall not be obligated to proceed
with such Restoration using insurance proceeds received for such purpose and may
terminate this License upon written notice to Licensee. However, if this license
is terminated as provided in this paragraph, Licensee shall be responsible for
the payment for any fees or other sums then due and owing to the City and the
City reserves any and all rights it may have against the Licensee in law or in
equity as a result of the termination of this License Agreement.
(f) Should Licensee fail, after notice from the City of the
need thereof, to perform its obligations required hereunder, City in addition to
all other available remedies may, but shall not be so obligated to enter upon
the Licensed Premises and perform Licensee's said failed obligations using any
equipment or materials on the premises suitable for such purposes. Licensee
shall forthwith on demand reimburse City for all costs and expenses so incurred.
(g) All required insurance must be issued by companies who are
rated "X-10" and are authorized to do business in the State of New York and must
be in effect and continue so during the life of the License in not less than the
following amounts:
Workmen's Compensation Insurance ...................... Per Statute
Employer's Liability for any one
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occurrence not less than.................................$ 500,000
Comprehensive General Liability Insurance
(with Broad Form Property Damage, Products/
Completed Operations Liability, Contractual
Liability, Independent Contractors, Fire/
Legal Liability, Liquor Liability, Property
Insurance Endorsements) for any one occurrence
not less than............................................$1,000,000
Any Auto, Hired Auto, and Non-Owned Auto
Insurance for any one occurrence
not less than ...........................................$1,000,000
Builders' Risk Insurance for any one
occurrence
not less than ....................................replacement value
of building and fixed equipment
which shall be reassessed every three
years or at parks's discretion
Property Insurance
for any one occurrence
not less than ....................................replacement value
of building and fixed equipment
which shall be reassessed every three
years or at parks's discretion
(h) In the event that claims in excess of these amounts are
filed against the City, the amount of excess of such claims, or any portion
thereof, may be withheld from any payment due or to become due Licensee until
such time as Licensee shall furnish such additional security covering such
claims as may be reasonably determined by Commissioner. All policies, other than
Workmen's Compensation, shall name the City of New York as an additional insured
party.
ARTICLE XXX
TERMINATION
(a) Should Licensee breach or fail to comply with any of the
provisions of this License, any federal, state or local law, rule, regulation or
order affecting the License or the Licensed Premises with regard to any and all
matters, Commissioner may in writing order Licensee to remedy such breach or to
comply with such provision, law, rule,regulation or order, and in the event that
Licensee fails to comply with such written notice within thirty (30) days from
the mailing thereof subject to unavoidable delays beyond reasonable control of
licensee, then this License shall immediately terminate as though it were the
time provided above for the termination thereof. If said material breach or
failure to comply is corrected, and a second or repeated violation of the same
provision, law, rule, regulation
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or order follows thereafter, Commissioner, by notice in writing, may revoke and
terminate this License, such revocation and termination to be immediately
effective on the mailing thereof, the License to terminate as though it were the
time provided above for the expiration thereof.
(b) The following shall constitute events of default for which
this License may be terminated on one (1) days notice: the filing of a petition
in bankruptcy; the adjudication of Licensee as a bankrupt; the appointment of
any receiver of Licensee's assets; the making of a general assignment for the
benefit of creditors; a petition or answer seeking an arrangement for the
reorganization of Licensee under any Federal Reorganization Act, including
petitions or answers under Chapter X or XI of the Bankruptcy Act; the occurrence
of any act which operates to deprive Licensee permanently of the rights, powers
and privileges necessary for the proper conduct and operation of the License;
the levy of any attachment or execution which substantially interferes with
Licensee's operations under this License and which attachment or execution is
not vacated, dismissed, stayed or set aside within a period of sixty (60) days.
(c) Nothing contained in paragraph (a) or (b) above shall be
deemed to imply or be construed to represent an exclusive enumeration of
circumstances under which Commissioner may terminate this License.
(d) Upon expiration or sooner termination of this License by
Commissioner, all rights of Licensee herein shall be forfeited without claim for
loss, damages, refund of investment or any other payment whatsoever against
Commissioner or City.
(e) In the event Commissioner terminates this License for
reasons related paragraphs (a) or (b) above any property of the Licensee on the
Licensed Premises may be held and used by Commissioner in order to operate the
License during the balance of the calendar year and may be held and used
thereafter until all indebtedness of the Licensee hereunder, at the time of
termination of this License, is paid in full.
(f) Notwithstanding anything herein to the contrary, Licensee
agrees that upon the expiration or sooner termination of this License, it shall
immediately cease all operations pursuant to this License and shall vacate the
Licensed Premises without any further notice by the City and without resort to
any judicial proceedings by the City. Upon expiration or sooner termination of
this License, City reserves the right to take immediate possession of the
Licensed Premises.
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ARTICLE XXXI
INVESTIGATIONS
(a) The parties to this license shall cooperate fully and
faithfully with any investigation, audit or inquiry conducted by a State of New
York (hereinafter "State") or City governmental agency or authority that is
empowered directly or by designation to compel the attendance of witnesses and
to examine witnesses under oath, or conducted by the Inspector General of a
governmental agency that is a party in interest to the transaction, submitted
bid, submitted proposal, contract, lease, permit, or license that is the subject
of the investigation, audit or inquiry.
(b) (i) If any person who has been advised that his or her
statement, and any information from such statement, will not be used against him
or her in any subsequent criminal proceeding refuses to testify before a grand
jury or other governmental agency or authority empowered directly or by
designation to compel the attendance of witnesses and to examine witnesses under
oath concerning the award of or performance under any transaction, agreement,
lease, permit, contract, or license entered into with the City, the State, or
any political subdivision or public authority thereof, or the Port Authority of
New York and New Jersey, or any local development corporation within the City,
or any public benefit corporation organized under the laws of the State of New
York, or;
(ii) If any person refuses to testify for a
reason other than the assertion of his or her privilege against self
incrimination in an investigation, audit or inquiry conducted by a City or State
governmental agency or authority empowered directly or by designation to compel
the attendance of witnesses and to take testimony concerning the award of, or
performance under, any transaction, agreement, lease, permit, contract, or
license entered into with the City, the State, or any political subdivision
thereof or any local development corporation within the City, then;
(c) (i) The Commissioner or agency head whose agency is a
party in interest to the transaction, submitted bid, submitted proposal,
contract, lease, permit, or license shall convene a hearing, upon not less than
five (5) days written notice to the parties involved to determine if any
penalties should attach for the failure of a person to testify.
(ii) If any non-governmental party to the hearing
requests an adjournment, the Commissioner or agency head who convened the
hearing may, upon granting the adjournment, suspend any contract, lease, permit,
or license pending the final determination pursuant to paragraph (e) below
without the City incurring any penalty or damages for delay or otherwise.
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(d) The penalties which may attach after a final determination
by the Commissioner or agency head may include but shall not exceed:
(i) The disqualification for a period not to
exceed five (5) years from the date of an adverse determination of any person or
entity of which such person was a member at the time the testimony was sought,
from submitting bids for, or transacting business with, or entering into or
obtaining any contract, lease, permit or license with or from the City; and/or
(ii) The cancellation or termination of any and
all existing City contracts, leases, permits, or licenses that the refusal to
testify concerns and that have not been assigned as permitted under this
license, nor the proceeds of which pledged, to an unaffiliated and unrelated
institutional lender for fair value prior to the issuance of the notice
scheduling the hearing, without the City incurring any penalty or damages on
account of such cancellation or termination; monies lawfully due for goods
delivered, work done, rentals, or fees accrued prior to the cancellation or
termination shall be paid by the City.
(e) The Commissioner or agency head shall consider and address
in reaching his or her determination and in assessing an appropriate penalty the
factors in paragraphs (i) and (ii) below. He or she may also consider, if
relevant and appropriate, the criteria established in paragraphs (iii) and (iv)
below in addition to any other information which may be relevant and
appropriate.
(i) The party's good faith endeavors or lack
thereof to cooperate fully and faithfully with any governmental investigation or
audit, including but not limited to the discipline, discharge, or disassociation
of any person failing to testify, the production of accurate and complete books
and records, ad the forthcoming testimony of all other members, agents,
assignees or fiduciaries whose testimony is sought.
(ii) The relationship of the person who refused
to testify to any entity that is a party to the hearing, including, but not
limited to, whether the person whose testimony is sought has an ownership
interest in the entity and/or the degree of authority and responsibility the
person has within the entity.
(iii) The nexus of the testimony sought to the
subject entity and its contracts, leases, permits or licenses with the City.
(iv) The effect a penalty may have on an
unaffiliated and unrelated party or entity that has a significant interest in an
entity subject to penalties under (d) above, provided that the party or entity
has given actual notice to the
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Commissioner or agency head upon the acquisition of the interest, or at the
hearing called for in (c) (i) above gives notice and proves that such interest
was previously acquired. Under either circumstance the party or entity must
present evidence at the hearing demonstrating the potentially adverse impact a
penalty will have on such person or entity.
(f) (i) The term "license" or "permit" as used herein shall be
defined as a license, permit, franchise or concession not granted as a matter of
right.
(ii) The term "person" as used herein shall be
defined as any natural person doing business alone or associated with another
person or entity as a partner, director, officer, principal or employee.
(iii) The term "entity" as used herein shall be
defined as any firm, partnership, corporation, association, or person that
receives monies, benefits, licenses, leases, or permits from or through the City
or otherwise transacts business with the City.
(iv) The term "member" as used herein shall be
defined as any person associated with another person or entity as a partner,
director, officer, principal or employee.
(g) (1) In addition to and notwithstanding any other provision
of this License the Commissioner or agency head may in his or her sole
discretion terminate this agreement upon not less than three (3) days written
notice in the event Licensee fails to promptly report in writing to the
Commissioner of Investigation of the City of New York any solicitation of money
goods requests for future employment or other benefit or thing of value, by or
on behalf of any employee of the City of other person, firm, corporation or
entity for any purpose which may be related to the procurement or obtaining of
this agreement by the Licensee, or affecting the performance or this License
Agreement.
ARTICLE XXXII
WAIVER OF TRIAL BY JURY
The parties hereto waive trial by jury in any action,
proceeding, or counterclaim brought by either of the parties against the other
in any matter related to this license. Any action taken by Commissioner relating
to this license may only be challenged in a proceeding instituted in New York
County pursuant to CPLR Article 78.
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<PAGE>
ARTICLE XXXIII
CHOICE OF LAW, CONSENT TO JURISDICTION AND VENUE
(a) This license shall be deemed to be executed in the City of
New York, State of New York, regardless of the domicile of the Licensee, and
shall be governed by and construed in accordance with the laws of the State of
New York.
(b) Any and all claims asserted by or against the City arising
under this license or related thereto shall be heard and determined either in
the courts of the United States located in New York City ("Federal Courts") or
in the courts of the State of New York ("New York State Courts") located in the
City and County of New York. To effect this License Agreement and intent,
Licensee agrees:
(c) If the City initiates any action against the Licensee in
Federal Court or in New York State Court, service of process may be made on the
Licensee either in person, wherever such Licensee may be found, or by registered
mail addressed to the Licensee at its address set forth in this license, or to
such other address as the Licensee may provide to the City in writing; and
(d) With respect to any action between the City and the
Licensee in New York State Court, the Licensee hereby expressly waives and
relinquishes any rights it might otherwise have (i) to move to dismiss on
grounds of forum non conveniens, (ii) to remove to Federal Court; and (iii) to
move for a change of venue to a New York State Court outside New York County.
(e) With respect to any action between the City and the
Licensee in Federal Court located in New York City, the Licensee expressly
waives and relinquishes any right it might otherwise have to move to transfer
the action to a United States Court outside the City of New York.
(f) If the Licensee commences any action against the City in a
court located other than in the City and State of New York, upon request of the
City, the Licensee shall either consent to a transfer of the action to a court
of competent jurisdiction located in the City and State of New York or, if the
court where the action is initially brought will not or cannot transfer the
action, the Licensee shall consent to dismiss such action without prejudice and
may thereafter reinstitute the action in a court of competent jurisdiction in
New York City.
(g) If any provision(s) of this Article is held unenforceable
for any reason, each and all other provision(s) shall nevertheless remain in
full force and effect.
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<PAGE>
ARTICLE XXXIV
PAYMENTS AND NOTICES
(a) Any license fees, charges or sums payable by Licensee to
City shall be made to the City of New York at The Arsenal, Central Park, New
York, New York 10021.
(b) Where provision is made herein for notice to be given in
writing, the same shall be given by hand delivery or by mailing a copy of such
notice by certified mail, return receipt requested, addressed to Commissioner or
to the attention of Licensee or to the General Counsel of Licensee at their
respective addresses provided in this License, or other address as Licensee
shall have filed with Commissioner.
ARTICLE XXXV
LATE CHARGES
In the event that payment of license fees, percentage fees or
other charges shall become overdue for fifteen (15) days beyond the date on
which it is due and payable as provided in this license, a late charge of two
percent (2%) per month (computed on a thirty (30) day month) from the date it
was due and payable on the sums so overdue shall become immediately due and
payable to Commissioner as liquidated damages for the administrative cost and
expenses incurred by Commissioner by reason of Licensee's failure to make prompt
payment and said late charges shall be payable by Licensee without notice or
demand. If the late fee and all arrears (including prior 2% charges) are not
paid in full by the 1Oth day of the month following the month in which it shall
be due, or is already past due, an additional charge of 2% of the total of such
fee and arrears shall be added thereto and shall be payable and collectable with
the next monthly license fee installment. Failure to abide by the terms of this
Article shall be presumed to be a failure to substantially comply with the
terms, conditions and covenants of this License: Agreement and shall be a
default hereunder. No failure by Commissioner to insist upon the strict
performance by Licensee of Licensee's obligations to pay late charges shal1
constitute a waiver by Commissioner of his right to enforce the provisions of
this Article. If any local, state or federal law or regulation which limits the
rate of interest which can be charged pursuant to this Article is enacted, the
rate of interest set forth in this Article shall not exceed the maximum rate
permitted under such law or regulation.
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<PAGE>
ARTICLE XXXVI
ENTIRE AGREEMENT
This license constitutes the whole of the agreement between
the parties hereto, and no other representation made heretofore shall be binding
upon the parties hereto. Any changes, additions or amendments not otherwise
provided for herein shall be in writing and shall be signed by the parties
hereto.
ARTICLE XXXVII
MODIFICATION OF AGREEMENT
This license may be modified from time to time by agreement in
writing, but no modification of this license shall be in effect until such
modification has been agreed to in writing and duly executed by the party or
parties affected by said modification.
ARTICLE XXXVIII
PARAGRAPH AND OTHER REFERENCES
(a) All references herein to "Paragraph(s)",
"Subparagraph(s)", and "Section(s)" shall be understood to pertain to portions
of this license.
(b) The Table of Contents and division titles found herein are
inserted for reference only and in no way define, limit, describe or in any way
affect the scope or intent or meaning of this license.
ARTICLE XXXIX
TRUST FUNDS
Immediately upon Licensee's receipt of monies from all
operations under this license, the percentage of paid monies belonging to the
City, as provided, shall immediately vest in and become the property of the City
and are hereby deemed to be trust funds and are to be held by Licensee as
trustee for the benefit of City until the said funds are paid over and delivered
to Commissioner.
ARTICLE XL
PROCUREMENT OF AGREEMENT
(a) Licensee represents and warrants that no person or selling
agency has been employed or retained to solicit or secure this license upon an
agreement or understanding for a commission, percentage, brokerage fee,
contingent fee or any other
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<PAGE>
compensation. Licensee further represents and warrants that no payment, gift or
thing of value has been made, given or promised to obtain this or any other
agreement between the parties. Licensee makes such representations and
warranties to induce the City to enter into this license and the City relies
upon such representations and warranties in the execution hereof.
(b) For a breach of violation of such representations or
warranties, the Commissioner shall have the right to annul this license without
liability, entitling the City to recover all monies paid hereunder, if any and
the Licensee shall not make any claim for, or be entitled to recover, any sum or
sums due under this license. This remedy, if effected, shall not constitute the
sole remedy afforded the City for the falsity or breach, nor shall it constitute
a waiver of the City's right to claim damages or refuse payment or to make any
other action provided for by law or pursuant to this license.
ARTICLE XLI
CUMULATIVE REMEDIES - NO WAIVER
The specific remedies to which the City may resort under the
terms of this license are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which it may be lawfully entitled in case
of any other default hereunder. The failure of the City to insist in any one or
more cases upon the strict performance of any of the covenants of this license,
or to exercise any option herein contained, shall not be construed as a waiver
or relinquishment for the future of such covenants or option. A receipt by the
City of any license fee or other monies with knowledge of the occurrence of a
default shall not be deemed a waiver thereof, and no waiver, change,
modification or discharge by either parties hereto of any provision of this
License shall be deemed to have been made or shall be effective unless expressed
in writing and signed by the party against whom such waiver, change,
modification or discharge is sought. In addition to the other remedies in this
license provided, the City shall be entitled to the restraint by injunction of
the violation, or attempted or threatened violation, of any of the covenants,
conditions or provisions of this license or to a decree compelling specific
performance of any of such covenants, conditions or provisions.
ARTICLE XLII
SEVERABILITY; INVALIDITY OF PARTICULAR PROVISIONS
If any term or provision of this license or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this license, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid
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<PAGE>
or unenforceable, shall not be affected thereby, and each term and provision of
this license shall be valid and enforceable to the fullest extent permitted by
law.
ARTICLE XLIII
CONFLICT OF INTEREST
Licensee represents and warrants that neither it nor any of
its directors, officers, members, partners or employees, has any interest nor
shall they acquire any interest, directly or indirectly which would or may
conflict in any manner or degree with the performance or rendering of the
services herein provided. Licensee further represents and warrants that in the
performance of this License no person having such interest or possible interest
shall be employed by it. No elected official or other officer or employee of the
City or Department, nor any person whose salary is payable, in whole or part,
from the City treasury, shall participate in any decision relating to this
license which affects his/her personal interest or the interest of any
corporation, partnership or association in which he/she is, directly or
indirectly, interested nor shall any such person have any interest, direct or
indirect, in this license or in the proceeds thereof.
ARTICLE XLIV
EMPLOYEES
All experts or consultants or employees of Licensee who are
employed by Licensee to perform work under this license are neither employees of
the City nor under contract to the City and Licensee alone is responsible for
their work, direction, compensation and personal conduct while engaged under
this license. Nothing in this license shall impose any liability or duty on the
City for acts, omissions, liabilities or obligations of Licensee or any person,
firm, company, agency, association, corporation or organization engaged by
Licensee as expert, consultant, independent contractor, specialist, trainee,
employee, servant, or agent or for taxes of any nature including but not limited
to unemployment insurance, workers' compensation, disability benefits and social
security.
ARTICLE XLV
INDEPENDENT STATUS OF LICENSEE
Licensee is not an employee of parks or the City and in
accordance with such independent status neither Licensee nor its employees or
agents will hold themselves out as, nor claim to be officers or employees of the
City, or of any department, agency, or unit thereof, they will not make any
claim, demand, or application to or for, any right or privilege applicable to an
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<PAGE>
officer of, or employee of, the City, including but not limited to, workers'
compensation coverage, unemployment insurance benefits, social security coverage
or employee retirement membership or credit.
ARTICLE XLVI
ALL LEGAL PROVISIONS DEEMED INCLUDED
Each and every provision of law required to be inserted in
this license shall be and is inserted herein. Every such provision is to be
deemed to be inserted herein, and if, through mistake or otherwise, any such
provision is not inserted, or is not inserted in correct form, then this license
shall, forthwith upon the application of either party, be amended by such
insertion so as to comply strictly with the law and without prejudice to the
rights of either party hereunder.
ARTICLE XLVII
JUDICIAL INTERPRETATION
Should any provision of this Permit require judicial
interpretation, it is agreed that the court interpreting or considering same
shall not apply the presumption that the terms hereof shall be more strictly
construed against a party by reason of the rule of conclusion that a document
should be construed more strictly against the party who itself or through its
agent prepared the same, it being agreed that all parties hereto have
participated in the preparation of this Permit and that legal counsel was
consulted by each responsible party before the execution of this Permit.
(END OF GENERAL PROVISIONS)
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<PAGE>
EXHIBIT B
SCHEDULE OF CAPITAL IMPROVEMENT ACTIVITIES
<PAGE>
EXHIBIT B
SCHEDULE OF CAPITAL IMPROVEMENT ACTIVITIES
BATTERY PARX RESTAURANT AND PARRS DEPARTMENT FACILITY
CAPITAL IMPROVEMENTS TO BE COMPLETED BY
LICENSEE, INCLUDING NEW CONSTRUCTION AND
IMPROVEMENTS TO EXISTING STRUCTURES
CONSTRUCTION ACTIVITIES
Renovation of Building "A" to accommodate the followina uses:
1. Concession Stand Improvements to include the following:
a. Install quarry tile floor.
b. Install ceramic tile walls.
c. Install interior gates.
d. Install front serving counters with sneeze quards.
e. Remove overhang presently attached to building.
f. Repair exterior granite and close up ticket booth
windows.
g. Provide and install necessary equipment to serve concession
menu in a quality manner.
These improvements shall be completed no later than May 31,
1995.
2. Interior Dining Room, Roof-top Dining Area and Display
Kitchen Improvements to include the following:
a. Complete renovation of entry to create reception area.
b. Provide and install all dining room furnishings.
c. Construct large spiral staircase leading to rooftop
dining for guests.
d. Construct roof-top dining area including bus stations, bar,
access to the kitchen through separate stairs leading to the
back of the house, wind shields, radiant heaters for patron
comfort and placement of planter boxes to aesthetic
improvement.
e. Construct display kitchen including a front counter with
painted raised paneled wood, a large copper clad exhaust hood,
remove existing drop ceiling and overhang and install wood
burning rotisseries and grills as the display kitchen's focal
point.
These improvements shall be completed no later than May 31,
1996.
3. Outdoor Patio Improvements to include the following:
a. Install continuous planter boxes incorporatlog bench
seating to define the area.
<PAGE>
b. Provide cafe tables and chairs, outdoor bar and other
furnishings for the area.
c. Replace existing benches around trees with a pipe railing to
protect trees' roots.
d. Install brick pavers in place of the current asphalt.
These improvements shall be completed no later than May 31,
1996.
4. Public Restroom Facility Improvements to include the following:
a. Construction of a separately accessible comfort
station/restroom facility for use by the general public with
no fewer than 24 stalls in the women's room and no fewer than
11 stalls and 10 urinaln in the men's room.
b. Installation of seperate metering capabilities fore
electrical and water service.
These improvements shall be completed no later than May 31,
1997.
5. Building Exterior Improvements to include the following:
a. Remove existing overhang from the structure and repair
the granite wall.
b. Cover openings in granite wall previously used for ticket
sales with matching granite.
c. Roll down gates will either be reversed or removed entirely
and will be made unobtrusive when the property is in
operation.
These improvements shall be completed no later than May 31,
1995.
Concerning Building "B" - Kiosk Improvements to include the
following:
a. Complete renovation of the existing kiosk to
accommodate merchandise shop, tourist information center
and/or food and beverage service operation.
These improvements shall be completed no later than May 31,
1995.
Concerning Building "C" - Parks Denartment Facility
Improvements to include the following:
a. Substantial rehabilitation including removal of
existing interior furnishings and reconstruction to
accommodate office, equipment storage and training rooms as
well as separate staff restrooms, shower rooms and changing
areas for women and men Parks Department personnel.
<PAGE>
These improvements shall be completed no later than May 31,
1997.
EXPENDITURE SCHEDULE
In accordance with the approval processes outlined in this License Agreement,
the Licensee is responsible for completing the Capital Improvement activities
listed above in accordance with the following expenditure schedule:
1. By May 31, 1995 : $220,500
2. By May 31, 1996 : 390,500
3. By May 31, 1997 : 240,000
TOTAL MINIMUM VALUE
OF CAPITAL IMPROVEMENTS: $851,000
<PAGE>
EXHIBIT C
SITE PLAN
<PAGE>
EXHIBIT C
SITE PLAN OF LICENSED PREMISES
[Diagram]
LIMIT LINE OF LICENSED PREMISES
Main Biliding: Building A, patio, adjacent landscaping
and parking.
Kiosk: 20' out from perimeter of Building
Parks Facility: Footprint of Building C.
Shellbank Restaurant Corp. - Battery Park Restaurant
Page 1 of 2
<PAGE>
EXHIBIT C
SITE PLAN OF LICENSED PREMISES
[Diagram]
Shellbank Restaurant Corp. - Battery Park Restaurant
Page 2 of 2
<PAGE>
EXHIBIT D
EMPLOYEE UNIFORMS
<PAGE>
EXHIBIT D
EMPLOYEE UNIFORMS
Uniforms for Snack Bar Serving Personnel
[Photograph]
Page 1 of 2
<PAGE>
EXHIBIT D
EMPLOYEE UNIFORMS
Uniforms for Restaurant Serving Personnel
To be supplied by Licensee at least 30 days
prior to opening restaurant for business.
Page 2 of 2
<PAGE>
EXHIBIT E
APPROVED MENU, MERCHANDISE PRICE LIST AND OPERATING HOURS
<PAGE>
EXHIBIT E
APPROVED MENU, MERCHANDISE PRICE LIST AND OPERATING HOURS
BATTERY PARK SNACK BAR MENU
Regular Frankfurter
No less than 2 oz. (eight to the pound) 1.75
Jumbo Frankfurter
No less than 2.66 oz. (six to the pound) 2.50
Hamburger served with lettuce, tomato and onion 3.50
Cheeseburger served with lettuce,
tomato and onion 4.00
Chicken Breast Sandwich served with lettuce,
tomato and onion 5.25
Nachos 2.75
Nacho Supreme 3.75
Soda Small 12 oz. (with ice) 1.00
Medium 16 oz. (with ice) 1.50
Large 20 oz. (with ice) 1.75
Beer Small 16 oz. 3.00
Large 20 oz. 4.00
Hot Chocolate 8 oz. 1.00
Special Tea 8 oz. 1.00
Mineral Water 11 oz. 1.50
Coffee/Decaf 8 oz. .75
Prices are maximum allowable and are exclusive of sales tax.
Operating hours to be supplied by Licensee at
least 30 days prior to opening snack bar for
business.
Page 1 of 3
<PAGE>
EXHIBIT E
APPROVED MENU, MERCHANDISE PRICE LIST AND OPERATING HOURS
BATTERY PARK KIOSK MERCHANDISE AND PRICE LIST
To be supplied by Licensee at least
30 days prior to opening kiosk for
business.
Page 2 of 3
<PAGE>
EXHIBIT E
APPROVED MENU, MERCHANDISE PRICE LIST AND OPERATING HOURS
BATTERY PARK RESTAURANT MENU
To be supplied by
Licensee at least 30 days
prior to opening
restaurant for business.
Page 3 of 3
<PAGE>
EXHIBIT F
SIGNAGE
[Diagram]
Information Signs
At five gangway entrances
<PAGE>
EXHIBIT F
SIGNAGE
F.1 The Licensee may, subject to the final approval of the Commissioner
as to specific locations, place and maintain informational signage, directing
the general public to services within Battery Park including the following:
Statue of Liberty/Ellis Island Ferry, Castle Clinton, restaurant, and restrooms.
Such signage may be located on the fence railing along the Promenade near each
gangway to the Statue of Liberty ferry, on the fence railing across from Castle
Clinton, and on the fence railing adjacent to Pier A. In addition, the Licensee
may, subject to the final approval of the Commissioner as to specific location
and design, place and maintain a sign, approximately 2' x 3,' bearing the name
of the restaurant, and located along State Street near an entrance to Battery
Park.
F.2 Any such signage shall be prepared at the sole cost of the Licensee
and located as depicted on the sketch on the next page.
Page 1 of 2
<PAGE>
EXHIBIT F
SIGNAGE
Page 2 of 2
<PAGE>
EXHIBIT G
INCOME AND EXPENSE STATEMENT
<PAGE>
SPACE LEASE INDEX
1. Premises Leased
2. Term and Rent
3. Utilities
4. Additional Rent and CPI
5. Use
6. Taxes
7. Utility Charges
8. Compliance N.Y. Laws
9. Force Majeure
10. Covenants Against Claims
11. Access to Premises
12. Fire Insurance Increases
13. Permits
14. Initial Tenant Improvements
15. Landlord's Work
16. Parking
17. Maintenance and Repairs
18. Charges
19. Indemnity and Public Liability Insurance
20. Insurance
21. Condemnation and Rejectables Offer
22. Removal of Tenant's Property
23. Subordination
24. Non-Waiver
25. Quiet Enjoyment
26. Assignment and Subletting
27. Entry by Landlord
28. Default
29. Bankruptcy or Insolvency
30. Tax Appeals and Contests
31. Signs
32. Surrender of Premises
33. Exculpation
<PAGE>
34. Tenant's Payments
35. Right to Cure Defaults
36. Covenants Against Liens
37. Landlord's and Tenants' Certificates
38. Waiver of Trial
39. Net Lease
40. Miscellaneous Provisions
41. Security
42. Brokers
43. Definitions
44. Option to Renew
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<PAGE>
LEASE
THIS LEASE entered into this 29th day of July, 1994, by and
between LUNDY'S MANAGEMENT CORP. having an office located at: 2770 Ocean Avenue,
Brooklyn, New York, (hereinafter called the "Landlord") and Bay Landing
Restaurant Corp., having an office located at 1163 Forest Avenue, Staten Island,
New York 10310, hereinafter called the "Tenant").
Upon the terms and subject to the conditions hereinafter set
forth, the Landlord leases to the Tenant and the Tenant leases from the
Landlord, the property hereinafter described:
1. THE LEASED PREMISES.
(a) The Premises hereby leased to the Tenant is
situated in the Borough of Kings, in the City of New York and State of New York,
known as 1901 Ocean Avenue, Brooklyn, New York, and more particularly described
in Schedule "A" annexed hereto and by this reference made a part hereof,
together with the buildings and other improvements now or hereafter located
thereon (collectively the "Improvements").
The Premises leased hereunder, together with all
appurtenances thereto, hereinafter sometimes collectively referred to as the
"Leased Premises", are demised and let subject to (a) the existing state of the
title thereof as of the commencement of the Term of this Lease, (b) any state of
facts which an accurate survey or physical inspection thereof might show, (c)
all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by any governmental authority having jurisdiction, and (d) with respect to the
Improvements, their conditions as of the commencement of the Term of this Lease,
without representation or warranty by Landlord. Tenant represents to Landlord
that Tenant has examined the title to and the physical condition of the Leased
Premises prior to the execution and delivery of this Lease and has found the
same to be satisfactory for all purposes hereof, and Tenant accepts the title
and condition of the Leased Premises in their respective, present condition "as
is."
Landlord makes no representation or warranty with respect to
the condition of the Leased Premises or its fitness or availability for any
particular use, nor does the Landlord represent that it has any certificate of
occupancy for the Leased Premises, and Landlord shall not be liable for any
latent or patent defect that may exist in or about the Leased Premises, however,
Landlord represents that the Premises are structurally sound.
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<PAGE>
Tenant has been allowed to review the ground lease herein and
understands that they are subject to the provisions contained therein as may
apply to them.
2. RENT. Tenant shall pay to Landlord as rental for the Premises, the
following:
a. Lease years (1) through (20), Tenant shall pay
$18.00 per square foot for the Premises based on certification as to actual
square footage of the Premises.
b. The amount stated to be paid in (a) above and
Article 17 shall not include any applicable sales taxes, if any, on the rents
paid hereunder nor commercial rent. Occupancy tax shall solely be the
responsibility of the Tenant.
c. The term "Floor Area" shall include all areas of
the Premises measured from the outside of exterior walls and the center of walls
dividing the Premises from other space in the Building. Tenant shall further
have the use of the permanent sidewalk adjourning the leased Premises for use as
an outdoor cafe, provided Tenant shall procure and maintain all permits and
observe all municipal laws and rules. Second floor exterior patio, as shown on
Exhibit A, shall not be included in floor area and no rent, additional rent or
common charge shall be due for Tenant's exclusive use thereof so long as Tenant
rents the adjacent space.
d. Rent as above determined is payable in advance on
the first day of every calendar month after the Lease Term Commencement date for
the term of this Lease in equal monthly installments, with adjustments for
fractional months.
e. For the purposes of this Paragraph 2, "lease year"
shall be defined as the twelve (12) month period commencing on the first day of
the month following the Lease Term Commencement date and each anniversary in the
next succeeding year.
Concession: Payment of rental as stated in Paragraph 2 of this
Agreement shall commence three (3) months from the lease commencement date,
which date shall be the later of the date Landlord has obtained a temporary
certificate of occupancy for the Premises or six months from the date of this
lease. Landlord shall act expeditiously to obtain a Certificate of Occupancy in
a reasonable time period.
f. In the event that the Term of this Lease does not
commence on the first day of a calendar month, the installment of Minimum Rental
for the partial calendar month at the commencement of the Term of this Lease
shall be prorated on the basis of the number of days of the Term within such
calendar
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<PAGE>
month. The first installment of Minimum Rental shall be paid simultaneously with
the execution of this Lease. Landlord, may at its option, direct Tenant to pay
all or any portion of the Minimum Rental directly to the holder of any mortgage
on the Leased Premises and to pay the balance of the Minimum Rental, if any, to
Landlord.
g. On each anniversary of the Lease commencement date
of this lease, the base rent shall be subject to being increased to compensate
the Landlord for increases in costs for the operation of the building in which
the demised Premises is located. The increases shall be in ratio to the
Consumers Price Index Cost published by the Bureau of Labor statistics of the
U.S. Department of Labor for New York City prior to the commencement date of
this Lease.
Such annual increases to rent caused by an increase in cost of
living shall be limited to 2.5 percent of the rent for the year in which the
computation is made. This shall not affect any other additional rent due by
Tenant for electricity, taxes, assessments or otherwise.
Illustration: Assuming annual rent of $10,000.00 for a
particular year, and a 4 percent cost of living raise (as decided by Consumer
Price Index published by Bureau of Labor Statistics of the U.S. Department of
Labor, New York City). Tenant shall be charged an additional rent of 2.5 percent
(maximum) or $250.00 that year.
Other additional rents shall not be considered in fixing the
"base rent" for the following year and accordingly, Tenant will be responsible
for an additional 2.5 percent (maximum) of cost of living increase on base rent
of $10,250.00. The following year (if maximum increase is reached), the base
rental shall be $10.506.25 ($10,250.00 plus $256.25 increase).
3. UTILITIES.
Tenant shall obtain, at its own expense, all
utilities of every type and nature required by it in its use of the Leased
Premises and shall pay or cause to be paid, when due, all bills for water,
sewerage, heat, gas, electricity and other utilities, if any, used on, in
connection with, or chargeable against the Leased Premises until the termination
of this Lease and all bills for utility charges relating to the Leased Premises
or the use thereof and imposed on users of utilities, whether or not such
charges shall relate to services or benefits available to the Tenant during the
Term of this Lease, and the Tenant shall indemnify and save harmless the
Landlord from and against any loss, cost and expense in connection therewith.
Landlord will not be liable to provide any services under this Article, nor
shall Landlord be liable for any disruption of said services.
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Landlord shall supply at its own cost and expense:
the necessary hookup for the supplying of electric, gas, water and sewer and
tempered water for HVAC and will run all utilities in adequate amounts to a
central distribution point in the demised Premises. Landlord will, at its own
cost and expense, provide rough openings as per exhibit. Landlord will make
separate charge to Tenant based upon his proportionate share of the square
footage for cooling tower/energy consumption.
Tenant shall maintain contract for services of a
professional exterminator at all times.
4. ADDITIONAL RENT.
(a) It is the purpose and intent of the Landlord and
Tenant that the Minimum Rental payable hereunder shall be absolutely net to the
Landlord so that this Lease shall yield, net to the Landlord, the rents
specified herein in each year during the Term of this Lease.
COMMON AREAS
(a) Common Areas. Landlord shall make available to Tenant all
common areas and other common facilities (hereinafter collectively called the
"common areas") in or about the Building, which common areas shall be subject to
the exclusive control and management of Landlord. Common areas shall be defined
as all interior areas, exterior space, and exterior facilities to the Premises,
but within the Building (including the parking facilities which is governed by a
separate paragraph 16 hereof, and any equipment, signs and exterior lighting and
special services rendered therein from time to time made available by Landlord
for the common and joint use and benefit of Landlord, the Tenant and other
Tenants and occupants of the Building and their respective employees, agents,
subtenants, concessionaires, licensees, customers and invites, which may include
(but shall not be deemed a representation as to their availability), loading
areas, pedestrian walkways, courts, ramps, and exits to the Building and parking
facilities. Notwithstanding the previous sentence, Common Areas, for purposes of
this Lease shall not include areas or facilities located on the floor of the
Building whereon the Premises are located nor dumpster charges or other trash
removal services for the benefit of other Tenants in the Building. Landlord
shall construct, maintain, operate, repair and clean the common areas, all in
such manner as shall be in keeping with first class commercial properties. This
shall include, without limitation, lighting on the common areas, cleaning of
common areas, and other facilities forming a part of said common areas; closing
temporarily portions of the common areas for the purpose of making repairs or
changes thereto establishing, modifying and enforcing reasonable rules and
regulations with respect to the common areas and the use to be made thereof.
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Landlord shall have the right and exclusive authority to employ and discharge
all personnel; with respect thereto.
(b) Use of Common Areas. Tenant is hereby given a nonexclusive
right and easement to use, during the initial term, or any extensions thereof,
the common areas of the Building as they may now or hereafter exist. Landlord
reserves the right to grant to third persons the non-exclusive right to cross
over and use in common with Landlord and all tenants of the Building for
maintenance and repairs the common areas as designated from time to time by
Landlord. The parties covenant and agree that all common areas of the Building,
including elevators and the parking facilities which service the Building, shall
remain lighted and available for public use during the time Tenant is open for
business. Any reference to parking facilities herein is subject to all the
provisions of paragraph 16.
(c) Charges for Common Area Maintenance. For the purposes of
this Lease "Operating Costs" shall mean the total costs and expenses incurred in
operating, maintaining and repairing the entire building including parking
garage, and including, without limitation, surcharges levied upon or assessed
against the cost and expense of cleaning and painting of the exterior building,
snow removal, and landscaping, (excluding painting for any tenant occupied space
in the building) decorating within the Building, lighting for upper floors,
interior and exterior, sanitary control trash, garbage and other refuse removal,
the costs of all types of insurance coverage carried by Landlord covering the
common areas, including, without limitation, public liability, personal and
bodily injury and property damage liability, fire and extended coverage,
vandalism and malicious mischief and all broad form coverage, sign insurance
that may be carried by Landlord covering the common areas, all in limits with
deductibles selected by Landlord, administrative costs attributable to the
common area and an overhead cost not to exceed ten (10%) percent of the total
Operating Costs of maintaining the common areas as such costs are defined in
this paragraph. Limits of insurance coverage shall be $3,000,000.00 for death
and injury to one person and not less than $5,000,000.00 for death and injuries
to two or more persons in one occurrence and not less than One Million Dollars
for property damage. Landlord may cause any or all of said services to be
provided by an independent contractor or contractors. There shall be excluded
from "Operating Costs" any original costs of construction and installation; any
items of expense properly chargeable to "Capital Account" under generally
accepted accounting principals; all real property taxes, assessments,
depreciation, interest amortization, overhead profit, all as determined in
accordance with generally accepted accounting principals. Tenant hereby agrees
to pay Landlord its proportionate share of the Operating Costs (as hereinafter
defined) of maintaining the common areas in the following manner:
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(d) This Tenant's agreed portion of the entire Premises for
all purposes shall be the percentage of the building that they occupy based on
an agreed 40,000 square feet for the entire building. Same shall be subject to
actual measurement and verification by architect or professional engineer. Such
square footage shall be termed the "floor area."
1. Within thirty (30) days following the end of each lease
year quarter, Landlord shall furnish Tenant a statement
covering the quarter just expired, certified as correct
by Landlord, showing the total operating costs and the
amount of Tenant's pro rata share of such operating
costs for such quarter. Tenant shall pay Landlord the
amount shown on said statement within thirty (30) days
after receipt thereof. Annually, Landlord shall submit
to Tenant, within sixty (60) days after the end of each
calendar year, a statement reconciling all Operating
Costs, as certified by a managing partner or officer of
Landlord. Tenant's pro rata share of the operating
costs for the previous quarter shall be that percentage
of all such costs which is agreed to be the percentage
allocated to this Tenant.
(e) Tenant shall have the right to return to Landlord in
increments of 1,000 square feet so much of the occupied premises on the second
floor which now totals approximately 5,000 square feet under the following
terms.
(I) the area returned shall be contiguous to the hallway at the
upper floor and available to the Landlord for rental.
(II) During the first four (4) years of occupancy, Tenant must give
Landlord ninety (90) days written notice and pay four and one
half (4 1/2) months of rent plus rent as would have been due
for such surrendered area (prorated) as liquidated damages in
advance and with the required notice. Such liquidated payment
shall be in addition to rent due until the vacature.
(III) After the first four (4) years above refers to, Tenant after
such ninety (90) days notice shall pay two (2) months of rent
in advance as liquidated damages in addition to rent due until
the vacature. (See above.)
(IV) Landlord warrants to Tenant that Landlord's Operating Costs
will be based on Landlord's actual cost incurred in operating
and maintaining the Common Areas and Landlord agrees to use
its best efforts, to keep charges reasonable and competitive
in accordance with standard and good shopping practices.
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(V) Tenant shall have the right, upon thirty (30) days
prior notice and at its own cost and expense, to audit
the records of Landlord to verify the actual costs
necessary to the operation and maintenance of the
Common Areas. Should Landlord's records indicate that
the amounts collected by Landlord from the Tenants of
the building exceed Landlord's actual costs, then
Landlord shall promptly refund to Tenant its
proportionate share of any excess or Tenant shall have
the right to deduct such excess from the next
installment of minimum rent due to Landlord.
(VI) Tenant's share of Operating Costs as hereinabove described
shall commence upon the date Tenant opens for business in the
Premises.
5. USE.
The Tenant intends to construct in the Premises
and operate a restaurant and cocktail lounge for the sale of food and beverages
(both alcoholic and non-alcoholic and related merchandise) on and in the
Premises and may include the sale of fresh and prepared food products intended
for on-Premises consumption and take out or preparation plus storage and
administrative services and catering on and off premises, subject to the use of
the Lundy's name as set forth in the ground lease in connection therewith,
according to plans and specifications prepared by Tenant's architect. It is
understood that Tenant shall use the name "Lundy's" in its signage and will
conduct its business as a first class restaurant in the tradition of "Lundy's."
(See Paragraph c below.)
(a) The Tenant will construct its improvements using
good workmanlike procedures and will continue the Restaurant with the use of the
name LUNDY' S.
(b) Tenant shall not use or occupy or permit the
Leased Premises to be used or occupied, nor do or permit anything to be done in
or on the Leased Premises or any part thereof, in a manner that would in any way
violate any certificate of occupancy affecting the Leased Premises or make void
or voidable any insurance then in force with respect thereto, or that may make
it impossible to obtain fire or other insurance thereon required to be furnished
hereunder by Tenant, or that will cause or be likely to cause structural injury
to any of the improvements, or that will constitute a public or private nuisance
or waste. Nothing contained in this Lease and no action or inaction by Landlord
shall be deemed or construed to mean that Landlord has granted to Tenant any
right, power or permission to do any act or to make any agreement that may
create, give rise to, or be the foundation for, any right, title, interest,
lien, charge or other encumbrance upon the estate of Landlord in the Leased
Premises.
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(c) Subject the ground lease and in particular,
Paragraph 32(s) Tenant shall use the name "Lundy's" in the operation of a
restaurant at the leased premises and no other place and for no other use.
(d) Tenant acknowledges that Landlord has rented
space within the building to two (2) additional restaurants however it is
agreed.
1. no restaurant exceeds 4,000 square feet.
2. Landlord shall never have more than
two (2) restaurants plus Tenant.
3. the total square feet of the other
restaurants shall not be more than 7,000
square feet.
4. the use of these restaurants shall be
limited to oriental restaurants
including:
(a) Japanese steak
(b) Chinese (mongolian)
(c) Sushi
5. these additional restaurants shall
maintain separate entrances, names,
kitchens, decor, signage and shall
not merge or otherwise enter into
any joint venture including but not
limited to joint advertising.
6. TAXES.
Tenant shall pay to Landlord during each Lease
year or partial Lease year its percentage share of all real estate taxes and
assessments levied and assessed and due and payable for and during any Lease
year upon the Building and the underlying realty. For any partial Lease year,
such amount shall be pro-rated on a time basis. Payment shall be made within
thirty (30) days after receipt of a written statement from Landlord setting
forth the amount of such tax showing in reasonable detail the manner in which it
has been computed, together with proof that said amount had been paid by
Landlord.
Landlord agrees to pay all taxes and assessments
over the longest available installment period, and that Tenant's obligation
hereunder shall be only as to such installments due and payable during the term
hereof. Tenant shall also pay, prior to delinquency, all taxes against and
levied upon fixtures, furnishings, equipment and all other personal property of
Tenant contained in the Premises.
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The Tenant shall have the right at its own cost
and expense to initiate and prosecute any proceedings permitted by law for the
purposes of obtaining an abatement or of otherwise contesting the validity or
amount of taxes assessed to or levied upon the Premises and, if required by law,
Tenant may take such action in the name of the Landlord who shall cooperate with
the Tenant to such extent as the Tenant may reasonably require to the end that
such proceedings may be brought to a successful conclusion; provided, however,
that the Tenant shall fully indemnify and hold Landlord harmless from all loss,
cost, damage and expense incurred.
Tenant shall also pay, prior to delinquency, all
taxes against and levied upon fixtures, furnishings, equipment and all other
personal property of Tenant contained in the Premises.
7. UTILITY CHARGES.
Tenant shall be responsible for and shall pay
promptly as and when the same becomes due and payable all rents, rates and
charges for water, sewer, electricity, gas, fuel, heat and power and other
utilities used by Tenant in connection therewith. All utilities shall be
separately metered to the Premises at the sole cost and expense of Tenant. In
the event a utility easement is necessary to provide utility service necessary
for the Tenant's use, the Landlord agrees to execute any utility easement grant,
so far as feasible.
Landlord will contract with one trash removal
company for the entire premises and Tenant shall pay for trash removal services
provided to them.
8. COMPLIANCE WITH LAWS AND AGREEMENTS.
(a) Tenant shall, throughout the Term of this Lease,
and at Tenant's sole cost and expense, promptly comply, or cause compliance: (i)
with all laws, whether present or future, foreseen or unforeseen, ordinary of
extraordinary, and whether or not the same shall be presently within the
contemplation of Landlord and Tenant or shall involve any change of governmental
policy, or require structural or extraordinary repairs, alterations, or
additions, and irrespective of the cost thereof, which may be applicable to the
Leased Premises, and (ii) with any agreements, contracts, easements and
restrictions affecting the Leased Premises or any part thereof or the ownership,
occupancy or use thereof existing on the date hereof or hereafter created by
Tenant, or consented to or requested by Tenant.
(b) Except as expressly provided in subsection 12(f)
of this Lease, no abatement, diminution or reduction in Minimum Rental,
additional rent or any other charges required to be paid by Tenant pursuant
hereto shall be claimed by or allowed
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to Tenant for any inconvenience or interruption, cessation, or loss of business
caused directly or indirectly, by any present or future laws, or by priorities,
rationing or curtailment of labor or materials, or by war, civil commotion,
strikes or riots, or any manner or thing resulting therefrom, or by any other
cause or causes beyond the control of Landlord or Tenant, nor shall this Lease
be affected by any such causes; and, except as expressly provided in subsection
12(f) of this Lease, no diminution in the amount of the space used by Tenant
caused by legally required changes in the construction, equipment, fixtures,
motors, machinery operation or use of the Leased Premises shall entitle Tenant
to any abatement, diminution or reduction of the rent or any other charges
required to be paid by Tenant pursuant to the Terms of this Lease.
(c) The Leased Premises have been landmarked by the
New York City Landmark Commission. The Tenant agrees that any plans for the
improvement of the exterior of the Leased Premises shall comply with the Rules
and Regulations of the Landmark Commission.
9. FORCE MAJEURE.
In the event either party hereto shall be delayed or hindered in
or prevented from the performance of any act under this Lease, including without
limitation in the performance of the site or off-site construction work, by
reason of strikes, lockouts, shortage of materials, labor troubles, failure of
power, restrictive governmental law or regulations, riots, insurrection, war or
other reasons of a like nature, not the fault of the party delayed in performing
work or doing acts required on the terms thereof, then performance of any such
act shall be excused for the period of the delay, and the period for the
performance of any such act shall be extended for a period of the delay, and the
period for the performance of any such act shall be extended for a period
equivalent to the period of such delay.
10. COVENANTS AGAINST CLAIMS.
Landlord hereby warrants and represents to Tenant that as of the
date hereof and as of the date of Lease Term Commencement that there are no
known pending or threatened condemnation matters, lawsuits, claims, or
administrative hearings, affecting the Premises or any portion thereof, written
or otherwise.
11. ACCESS TO PREMISES.
Landlord or Landlord's agents shall have the right (but shall
not be obligated) to enter the Premises in any emergency at any time, and, at
other reasonable times, but in no event during the hours of 11:00 a.m. to 2:00
p.m. and 5:00 p.m.
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to 8:00 p.m., except in the case of emergency, to examine the same and to make
such repairs, replacements and improvements as Landlord may deem necessary and
reasonably desirable to any portion of the building, or which owner may elect to
perform in the Premises after Tenant's failure to make repairs or perform any
work which Tenant is obligated to perform under this Lease, or for the purpose
of complying with laws, regulations and other directions of governmental
authorities. Landlord may, during the progress of any work in the Premises, take
all necessary materials and equipment into said Premises without the same
constituting an eviction nor shall the Tenant be entitled to any abatement of
rent while such work is in progress nor to any damages by reason of loss or
interruption of business or otherwise except that Landlord shall indemnify
Tenant for any negligent damage to the Premises. If Tenant is not present to
open and permit an entry into the Premises, Landlord or Landlord's agents may
enter the same whenever such entry may be necessary or permissible by master key
or forcibly and provided reasonable care is exercised to safeguard Tenant's
property, such entry shall not render Landlord or its agents liable therefor,
nor in any event shall the obligations of Tenant hereunder be affected.
12. FIRE INSURANCE INCREASES.
If the fire insurance rate shall at any time after
the commencement of this lease shall become higher than it otherwise would be
based on a course of conduct or change attributed to the Tenant, then Tenant
shall reimburse Landlord, as additional charges hereunder, for that portion of
all fire insurance premiums thereafter paid by Landlord which shall have been
charged by reason of the use made of the Premises by the Tenant. Tenant shall
have thirty (30) days from Landlord's notice of rate increase to cure any such
activity or circumstance giving rise thereto. In any action or proceeding
wherein Landlord and Tenant are parties a schedule or "make up" of rate for the
building or Premises, issued by a body making fire insurance rates applicable to
said Premises, shall be conclusive evidence of the facts therein stated and of
the several items and charges in the fire insurance rate then applicable to said
Premises.
13. PERMITS.
Tenant will obtain at its sole cost and expense,
prior to Lease Term Commencement, all necessary licenses, permits and other
authorizations to utilize the Premises for its contemplated USE as stated
herein. Such approvals shall be, without limiting same, the right to erect
signs, all building and necessary construction permits and alcoholic beverage
licenses and permits issued directly by the appropriate governmental authorities
at the fees set by statute, ordinance or regulation. Landlord agrees to
cooperate with Tenant and the state, county or
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municipal authorities to obtain such permits and will execute any documents
necessary in this regard.
14. INITIAL TENANT IMPROVEMENTS.
Tenant shall obtain Landlord's written approval of
Tenant's interior improvements, structural penetration and exterior signs on the
Building in which the Premises are located. Landlord shall approve or disapprove
Tenant's plans for such improvements within fifteen (15) days after receipt of
said plans by Landlord. In the event Landlord fails to approve or disapprove
said plans within the fifteen (15) day period, said plans shall be deemed
approved. Outside signs shall conform to those of the former LUNDY's RESTAURANT.
15. LANDLORD'S WORK.
Landlord, at Landlord's expense, shall perform all
installation and/or construction (hereinafter called Landlord's work) as set
forth on Exhibit "B" within the times stated thereon, which exhibit is attached
hereto and by this reference made a part hereof. Tenant shall have the right to
enter upon the Premises provided it is fully insured under the terms of this
agreement to commence interior renovations, provided, however, that it shall not
interfere with work being performed by Landlord and further provided that where
there is conflict between the parties as to work in a particular area, Tenant
shall defer to Landlord.
16. PARKING.
Notwithstanding that the present parking facility
is common area, patrons of Tenant shall pay parking pursuant to posted rates,
except that from Friday at 6 p.m. to Monday at 6 a.m. no charge shall be made to
its patrons. A system of verification of spaces by patrons shall be set up and
controlled by Landlord. The several restaurants shall be afforded exclusive use
of the parking area on weekends as above set forth.
Any net income received from parking fees shall be utilized to
offset common charge expenses as related to the parking facility.
Provided there is ample space for Tenant's customers on
weekends, if there is sufficient space available, Landlord may rent spaces to
others, always preferring and guarantying spaces to restaurant clients.
In the event that Landlord shall construct or cause to be
constructed, additional multi-level parking, then in such event Tenant's patrons
shall be charged a maximum of 50 percent of the posted fees for a period of five
(5) years from
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the completion of such additional parking spaces. Parking on the weekends shall
be exclusive to the first floor Tenants.
17. MAINTENANCE AND REPAIR.
(a) Tenant shall promptly throughout the Term of this Lease at
Tenant's cost and expense, take good care of and maintain the Leased Premises.
(b) Tenant shall not commit or suffer to be committed any
waste upon or about the Leased Premises, and shall promptly at its cost and
expense, make all necessary replacements, restorations, renewals and repairs to
the Leased Premises and appurtenances thereto, whether interior or exterior,
structural or non-structural, ordinary or extraordinary, and foreseen or
unforeseen, ordinary wear and tear excepted. Repairs, restorations, renewals and
replacements shall be at lease equivalent in quality to the original work or the
property replaced, as the case may be. Tenant shall not make any claim or demand
upon or bring any action against the Landlord for any loss, cost, injury, damage
or other expense caused by any failure or defect, structural or non-structural,
of the Leased Premises or any part thereof.
(c) Landlord shall be responsible for the structural
maintenance and to keep the roof in good repair. Other than the above, Landlord
shall not under any circumstances be required to build any improvements on the
Leased Premises, or to make any repairs, replacements, alterations or renewals
or any nature or description to the Leased Premises or to any of the
Improvements, whether interior or exterior, ordinary or extraordinary, or
nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever in
connection with this Lease or to inspect or maintain the Leased Premises in any
way. Tenant hereby waives the right to make repairs, replacements, renewals or
restorations at the expense of Landlord pursuant to any Laws.
18. CHANGES, ALTERATIONS AND NEW CONSTRUCTION BY THE TENANT.
(a) Tenant, at its sole cost and expense, shall have the right
at any time and from time to time during the Term of this Lease to make changes
and alterations to the building interior of their premises subject, however, in
all cases, to the following:
(i) Landlord's prior written consent shall be
required in each instance of any Tenant's Change involving the structure or
interior or exterior of the building which consent shall not be unreasonably
withheld; provided that, without limiting the circumstances under which Landlord
may decline to give its consent, it shall not be deemed unreasonable for
Landlord to withhold such consent if the same shall be in
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violation of any Mortgage or if any Mortgagee shall not give its consent to the
same where its consent is required by the terms of its Mortgage.
(ii) [DELETED]
(iii) No Tenant Change shall be undertaken until the
Tenant shall have procured and paid for all required permits and authorizations
of all municipal departments and governmental subdivisions having jurisdiction,
including the City Landmark Commission; and, at Tenant's expense, the Landlord
shall join in the application for such permits and authorizations whenever such
action is necessary.
(iv) Any interior change for which a permit is
required shall be conducted under the supervision of a licensed architect or
engineer selected by Tenant and approved by Landlord (which consent shall not be
unreasonably withheld), and shall be made in accordance with detailed plans and
specifications (the "Plans and Specifications") and cost estimates prepared by
such architect or engineer and approved in writing by the Landlord, which
approval Landlord agrees not unreasonably to withhold.
(v) Any Tenant Change shall be made promptly and in a
good workmanlike manner and in compliance with all applicable permits and
authorizations and building and zoning laws and all Laws and in accordance with
the orders, rules and regulations of the Board of Fire Insurance Underwriters
and any other body hereafter exercising similar functions having or asserting
jurisdiction over the Leased Premises.
(vi) The cost of any Tenant Change shall be paid for
in cash or its equivalent by the Tenant, so that the Leased Premises shall at
all times be free of liens for labor or materials supplied or claimed to have
been supplied to the Leased Premises.
(vii) Any such Tenant Change shall immediately upon
incorporation into the Leased Premises be and become the property of the
Landlord, subject to the leasehold rights of the Tenant hereunder.
(viii) [DELETED]
(ix) No Tenant Change shall tie-in or connect the
Leased Premises or any Improvements thereon with any property outside the Leased
Premises without the prior written consent of the Landlord; and
(x) No Tenant Change shall reduce the value of the
Leased Premises or impair the structural integrity of any building comprising a
part of the Leased Premises.
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(b) Notwithstanding anything to the contrary contained in this
Lease, Tenant shall not, without Landlord's prior written approval, make any
alterations or change to the Leased Premises which would decrease the size of or
decrease the square foot floor area of any building comprising a part of the
Leased Premises.
(c) Notwithstanding anything to the contrary contained in this
Lease, Tenant is authorized to and shall make Tenant changes to the Leased
Premises in accordance with the plans and specifications previously submitted to
and approved by [DELETED].
19. INDEMNITY AND PUBLIC LIABILITY INSURANCE.
(a) Tenant shall at all times indemnify Landlord for, defend
Landlord against, and save Landlord harmless from, any liability, loss, cost,
injury, damage or other expense whatsoever that may occur or be claimed by or
with respect to any person(s) or property on or about the Leased Premises and
resulting directly or indirectly from the use, misuse, occupancy, or occupancy,
of the Leased Premises by Tenant or any or any concessionaires, subtenants or
other persons claiming through or under Tenant, or their respective agents,
employees, licensees, invitees, guests or other such persons, or from the
condition of the Leased Premises. Tenant shall, at its costs and expense, defend
against any and all such actions, claims and demands and shall indemnify
Landlord for all costs, expenses and liabilities it may incur in connection
therewith. Landlord shall not in any event whatsoever be liable for any injury
or damage to the Leased Premises or to the Tenant or to any concessionaires,
subtenants or other persons claiming through or under Tenant, or their
respective agents, employees, licensees, invitees, guests or other such persons
or to any property of any such persons. Tenant shall not make any claim or
demand upon or institute any action against the Landlord as a result of such
injury or damage. This section shall in no way grant Tenants right to sublease.
(b) Tenant, at its cost and expense, shall obtain and maintain
in force throughout the Term of this Lease, comprehensive general liability
insurance against any loss, liability or damage on, about or relating to the
Leased Premises, to such limits as Landlord may reasonably, from time to time,
require, provided that such insurance shall have minimum limits of one Million
($1,000,000 00) Dollars for death or injuries to one person and not less than
three Million ($3,000,000.00) Dollars for death or injuries to two or more
persons in one occurrence, and not less than One Million ($1,000,000.00) Dollars
for damage to property. Any such insurance obtained and maintained by Tenant
shall name the Landlord, its managing agent (if any), any mortgagee, as well as
the Tenant as the insured parties therein and shall be obtained and maintained
from and with a reputable and financially sound insurance company(ies)
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reasonably acceptable to Landlord, authorized to issue such insurance in the
State in which the Leased Premises is located.
(c) The policies of insurance required hereunder shall contain
an agreement by the insurer that it will not cancel or modify such policy except
after thirty (30) days prior written notice to Landlord by certified mail,
return receipt requested. Not less than thirty (30) days prior to the expiration
of any such insurance policy, Tenant shall deliver to Landlord a certificate
evidencing the replacement or renewal thereof.
(d) Tenant shall furnish Landlord with duplicate original(s)
or original certificate(s) of such insurance policies, including renewal and
replacement policies, together with written evidence that the premiums therefor
have been paid. It is understood and agreed that said policies may be blanket
policies covering other locations operated by Tenant, its affiliates or
subsidiaries, provided that such blanket policies otherwise comply with the
provisions of this Section 19.
(e) Subject to reasonableness and the provisions of this
Lease, Tenant shall comply with the requirements of any Mortgages relating to
the insurance and to the proceeds of insurance maintained and required to be
maintained by Tenant pursuant to the provisions of Section 19 and 20 of this
Lease.
20. INSURANCE FOR DAMAGE OR DESTRUCTION AND WORKER'S COMPENSATION
(a) The Tenant shall, throughout the Term of this Lease, at
its own cost and expense, obtain and maintain in full force and effect and in
the name of Tenant, Landlord and, if so requested by Landlord, or of any
Mortgagees (except that Landlord and any Mortgagee need not be named on any
Worker's Compensation policy):
(i) all risks insurance, including but not limited to
collapse, lose or damage occasioned by fire, the perils included in the
so-called extended coverage endorsement, vandalism and malicious mischief, and
water damage and containing Replacement Coat, Agreed Amount and Demolition and
Increased Cost due to Ordinance endorsements covering the Improvements and all
replacements and additions thereto, and all fixtures, equipment and other
personal property therein, the foregoing coverage shall be provided in amounts
sufficient to provide one hundred (100%) percent of the full replacement cost of
the Improvements and shall be determined from time to time, but not more
frequently than once in any thirty-six (36) calendar months, at Tenant's
expense, at the request of the Landlord, by any appraiser selected by Tenant and
approved by Landlord and the insurance carrier;
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(ii) if a sprinkler system shall be located in the
Leased Premises, sprinkler leakage insurance in amounts reasonably satisfactory
to Landlord and any Mortgagees;
(iii) such other insurance and in such amounts as may
from time to time reasonably be required by any Mortgagees;
(iv) Boiler and Machinery Broad Form policy covering
explosion insurance in respect of steam and pressure boilers and similar
apparatus, if any, located on the Leased Premises in an amount equal to one
hundred (100%) percent of the full replacement cost of the Improvements;
(v) War risk insurance as and when such insurance is
obtainable from the United States Government or any agency or instrumentality
thereof, and a state of war or national or public emergency exists or threatens,
and in an amount not less than the full insurable value of the Leased Premises;
(vi) Worker's Compensation insurance subject to
statutory limits or better in respect of any work or other operations on or
about the Leased Premises;
(vii) Tenant shall provide and maintain insurance
against loss of rental, under a rental value insurance policy covering risk of
loss due to the occurrence of any of the hazards described in Article 11 above,
in an amount equal to the aggregate of one (1) year's net rent as provided for
herein plus the amount of any real estate taxes that Tenant is required to pay
for the period of twelve (12) months next following the occurrence of the
insured casualty, the proceeds of such policies will be payable to Landlord and
Tenant as their interest may appear, if procurable in that form, and otherwise
payable to Landlord only. Said policies of insurance shall be deposited with
Landlord, and Tenant shall and does hereby assign to Landlord the proceeds of
such insurance, if, as and when collected, and said proceeds shall be held in
trust and applied by Landlord on account of the net rent or any additional rent
accruing under the terms of this lease, the balance, if any, to be paid to
Tenant. Tenant shall remain fully responsible for all net rent and additional
rents which exceeds the amount of the proceeds of such insurance. Tenants shall
pay the premium on all said policies as same become due and payable, from time
to time;
(viii) Such other insurance with respect to the
Leased Premises and in such amounts as Landlord from time to time may reasonably
request against such other insurable hazards which at the time in question are
commonly insured against in the case of property similar to the Leased Premises;
(ix) [DELETED]
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(x) During the performance of any construction, broad
form Builder's All-Risk insurance;
(b) All such insurance shall:
(i) be obtained from and maintained with reputable
and financially sound insurance company(ies) reasonably acceptable to Landlord
and any Mortgagees, authorized to issue such insurance in the State in which the
Leased Premises are located;
(ii) be reasonably satisfactory to Landlord and to
any Mortgagees;
(iii) contain an agreement by the insurer that it
will not cancel or modify such policy except after thirty (30) days prior
written notice to Landlord and any Mortgagees by certified mall, return receipt
requested; and
(c) Not less than thirty (30) days prior to the expiration of
any such insurance policy, Tenant shall deliver to Landlord a certificate
evidencing the replacement of renewal thereof.
(d) The Tenant shall furnish Landlord and any Mortgagees with
duplicate original(s) or original certificate(s) together with true copy(ies) of
all such insurance policies, including renewal and replacement policy(ies),
together with written evidence that the premiums therefor have been paid. It is
understood and agreed that said policies may be blanket policies covering other
locations operated by Tenant, its affiliates or subsidiaries, provided that such
blanket policies otherwise comply with the provisions of this Section 20.
(e) If any portion of the Leased Premises is damaged or
destroyed by fire or other casualty, Tenant shall forthwith give notice thereof
to Landlord and Tenant shall, at its cost and expense, forthwith repair,
restore, rebuild or replace the damaged or destroyed improvements, fixtures or
equipment, and complete the same as soon as reasonably possible, to the
condition they were in prior to such damage or destruction, except for such
changes in design or materials as may then be required by Law. The Landlord, in
such event, shall, to the extent and at the times the insurer and any Mortgagees
make the proceeds of the insurance available, reimburse the Tenant for the costs
of making such repairs, restoration, rebuilding and replacements, provided
further that said reimbursements need be made only under such conditions that
the Landlord and any Mortgagees are assured that at all times the Leased
Premises shall be free of liens or claims of liens by reason of such work, and
provided further that the portion of the proceeds paid out at any time shall not
exceed the value of the actual work and materials incorporated in the repaired,
restored,
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rebuilt or replaced Leased Premises less a customary retainage, and that the
conditions described in Section 18 are complied with. To the extent, if any,
that the proceeds of insurance made available as aforesaid are insufficient to
pay the entire cost of making such repairs, restoration, rebuilding and
replacements, and notwithstanding the expiration or termination of the Term of
this Lease, the Tenant shall pay the amount by which such costs exceed the
insurance proceeds made available as aforesaid. Any surplus of insurance
proceeds over the cost of restoration shall be the property of the Tenant and
only as it applies to losses related to the interior of restaurant.
(f) In the event of any damage to or destruction of the Leased
Premises, Tenant shall promptly notify Landlord and any Mortgagees and shall
file prompt proof of loss to the relevant insurance company(ies).
(g) The obligation to pay the rent provided for herein and to
otherwise perform Tenant's obligations hereunder shall continue unabated by
reason of such damage or destruction; that is, there shall be no abatement or
diminution of rent or release from any of Tenant's obligations hereunder by
reason of such damage or destruction regardless of the period of time, if any,
during which the Leased Premises or any part thereof remain untenantable, any
Laws to the contrary notwithstanding, except to the extent Landlord shall
actually receive the proceeds of rent insurance as its sole property.
(h) The provisions and requirements of Section 18 shall apply
with respect to any repairing, restoring, rebuilding or replacing made pursuant
hereto; and same shall be made in accordance with the Plans and Specifications
to the extent same is practicable.
(i) As to any loss or damage which may occur upon the property
of a party hereto and be collected under any insurance policy(ies), such party
hereby releases the other from any and all liability for such loss or damage to
the extent of such amounts collected.
(j) Tenant shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be furnished by
Tenant under Sections 19 and 20 of this Lease, unless Landlord, and with respect
to the insurance described in Section 20, any Mortgagees designated by Landlord,
are included therein as named insureds, with loss payable as in said Sections
provided. Tenant shall immediately notify Landlord whenever any such separate
insurance is taken out and shall deliver to Landlord duplicate original(s)
thereof, or original certificate(s) evidencing the same with true copies
thereof, as provided in this Lease.
21. CONDEMNATION AND REJECTABLE OFFER.
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(a) In the event that at any time during the Term of this
Lease, title to the whole or materially all of the Leased Premises shall be
taken by the exercise of the right of condemnation or eminent domain or by
agreement between the Landlord and those authorized to exercise such right, this
Lease shall terminate and expire on the date of such taking (herein called the
"Taking Date") and the rent provided to be paid by the Tenant shall be
apportioned and paid to the Taking Date.
(b) If (i) twenty-five (25%) percent or more of the Leased
Premises shall be taken, or (ii) all reasonable means of ingress and egress to
and from the Leased Premises are permanently eliminated by reason of such a
taking, then and in any of such events, Landlord and Tenant shall each have the
right to terminate this Lease on the next dated for payment of Minimum Rental
occurring at least one hundred twenty (120) days after notice to the other given
within ninety (90) days after the Taking Date.
(c) In the event of any taking of the Leased Premises and if
this Lease shall not terminate as provided in subsections 21(a) and 21(b) above,
then this Lease shall continue unaffected (except as hereinafter specifically
otherwise provided) and the Landlord shall be entitled to all awards, damages,
consequential damages and compensation for such taking and the Tenant shall not
be entitled to share in any such award or have any claim against Landlord for
any part thereof, provided: (i) Landlord shall, to the extent the Net Award paid
for the Improvements on the Leased Premises is made available to Landlord,
reimburse Tenant for its cost of demolition, repair, rebuilding and restoration
to return the Improvements to a tenantable condition, as and when expended, and
paid in like manner and subject to the provisions and conditions contained in
Section 18 above, which provisions and conditions shall be deemed to apply to
such demolition, repair, rebuilding and restoration; and (ii) the Minimum Rental
payable by Tenant to Landlord under Section 3 hereof, from and after the date of
restoration of the Leased Premises, shall be reduced in the ratio which the
square foot area of the building on the Premises taken has to the square foot
area of the Building prior to such taking. In the event of any taking which does
not result in a termination of this Lease, Tenant shall promptly make such
demolition, repair, rebuilding and restoration as are necessary to return the
Leased Premises to a tenantable condition (in accordance with the Plans and
Specifications, to the extent same is practicable), and in the event that the
cost of such demolition, repair, rebuilding and restoration shall exceed the Net
Award collected by the Landlord, the Tenant shall pay the deficiency.
(d) In the event Landlord is advised of an impending
condemnation, the Landlord shall give notice of such fact to the Tenant and the
Tenant, at its election, shall be entitled to participate in any negotiations or
litigations with
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the condemning authority.
(e) In case of any temporary acquisition of the Leased
Premises, the active Net Award received by Tenant shall be payable to the
Landlord.
(f) Notwithstanding the foregoing, Tenant, at its cost and
expense, shall be entitled to separately claim, in any condemnation proceeding,
any damages payable for movable trade fixtures paid for and installed by Tenant
(or any persons claiming under Tenant) without any contribution or reimbursement
therefor by Landlord, and for Tenant's loss of business, and for Tenant's
relocation costs; provided that Landlord's award is not reduced or otherwise
adversely affected thereby.
*21. (SEE BELOW).
22. REMOVAL OF TENANT'S PROPERTY.
Provided the Tenant is not then in default hereunder, the
Tenant shall have the right, at any time during the Term of this Lease, to
remove "Tenant's Property", consisting of machinery, trade equipment, business
and trade fixtures, and other trade equipment placed, installed, supplied or
made by it in or on the Leased Premises at Tenant's cost and expense (without
any contribution or reimbursement therefor by Landlord), and which may be
removed without material injury to the Leased Premises; provided, however, that
any damage to the Leased Premises or any part thereof occasioned by such removal
shall be repaired by the Tenant at Tenant's cost and expense. As used herein and
hereafter, the Term "Tenant's Property" shall not include or be deemed to
include any item now or hereafter installed in or on the Leased Premises that is
an integral part of the building, including, without limiting the generality of
the foregoing, heating, ventilating, and air conditioning plants and systems,
electrical and plumbing fixtures and systems and other like equipment and
fixtures, if any.
23. SUBORDINATION, NON-DISTURBANCE, NOTICE TO LESSORS AND MORTGAGEES.
(a) This Lease, and all rights of Tenant hereunder, are and
shall be subject and subordinate in all respects to all mortgage ground and
underlying leases of all or any portions of the Leased Premises, or which
hereafter affect all or any portions of the Leased Premises and/or any of such
leases, to each and every advance made or hereafter to be made under such
Mortgages, and to all renewals, modifications,
- --------
* Tenant shall share in any condemnation award on a prorate basis of his
square footage to any loss, after the payment of all expenses.
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replacements and extension of such leases and Mortgages and spreaders and
consolidations of such Mortgages; provided, that, as to any such leases and/or
Mortgages that become (i) the lessors and/or Mortgagees thereunder shall each
enter into a non-disturbance agreement, in favor of Tenant, to provide that in
the event its said Mortgage shall be foreclosed or its said lease shall be
terminated, as the case may be, and provided that Tenant is not then in default
hereunder, this Lease shall not terminate on account thereof so long as the
Tenant continues to pay the rents reserved in this Lease and otherwise performs
and observes all of the Terms, covenants, conditions and provisions of this
Lease to be performed and observed by or on behalf of Tenant thereunder, and
(ii) such leases and/or Mortgages shall provide (or the lessors thereunder
and/or the holders thereof, as the case may be, shall separately agree) that so
long as Tenant is not in default under this Lease beyond any period herein
permitted to cure same, the proceeds of any insurance on the Leased Premises
payable by reason of fire or other insured casualty and of any award for any
partial taking by eminent domain (not resulting in termination of this Lease as
herein provided), shall first be applied in payment of the cost of restoring the
Leased Premises after such injury or taking, before any part of such proceeds or
award shall be paid to any such lessors as its or their property and before any
part of such proceeds or award shall be applied on account of any part of such
mortgage debts. The lien of any Mortgages shall not cover any trade fixtures or
other personal property paid for and installed in the Leased Premises by Tenant
(or any persons claiming under Tenant) without any contribution or reimbursement
therefor by Landlord. The provisions of this subsection (a) shall be
self-operative and no further instrument of subordination shall be required. In
confirmation of such subordination, Tenant shall promptly execute and deliver
any instruments that Landlord, the lessor of any such lease or the holder of any
Mortgage, or any of their respective successors in interest, may reasonably
request to evidence such subordinations, and Tenant hereby irrevocably appoints
Landlord the attorney-in-fact of Tenant to execute and deliver such instrument
on behalf of Tenant, should Tenant refuse or fail to do so promptly after
request, such power being coupled with an interest. The lease(s) to which, at
the time in question, this Lease is subject and subordinate are hereinafter
sometimes called "Superior Lease(s)" and the Lessor(s) of a Superior Lease or
its (their) successor(s) in interest, at the time in question, is (are)
sometimes hereinafter called "Superior Lessor(s)".
(b) In the event of any act or omission of Landlord which
would give Tenant the right, immediately or after lapse of a period of time, to
cancel or terminate this Lease, or to claim a partial or total eviction, Tenant
shall not exercise such right (i) until it has given written notice of such act
or omission to each Mortgagee and each Superior Lessor whose name and address
shall previously have been furnished to Tenant in
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writing, and (ii) unless such act or omission shall be one which is not capable
of being remedied by Landlord or any Mortgagee or Superior Lessor within a
reasonable period of time, until a reasonable period for remedying such act or
omission shall have elapsed following the giving of such notice and following
the time when all such Mortgagees and Superior Lessors shall have become
entitled under such Mortgages or Superior Leases, as the case may be, to remedy
the same (which reasonable period shall in no event be less than the period to
which Landlord would be entitled under this Lease or otherwise, after similar
notice, to effect such remedy), provided that any such Mortgagee or Superior
Lessor shall with due diligence give Tenant written notice of its intention to
and shall commence and continue to remedy such act or omission, but nothing
herein contained shall obligate any Mortgage or Superior Lessor to do so unless
it so elects.
(c) If a Superior Lessor or a Mortgagee shall succeed to the
rights of Landlord under this Lease, whether through possession or foreclosure
action or delivery of a new lease or deed, then at the request of such party so
succeeding to Landlord's right (herein sometimes called "Successor Landlord")
and upon such Successor Landlord's written agreement to accept Tenant's
attornment Tenant shall attorn to and recognize such Successor Landlord as
Tenant's landlord under this Lease, and shall promptly execute and deliver any
instrument that such Successor Landlord may reasonably request to evidence such
attornment. Tenant hereby irrevocably appoints Landlord the attorney-in-fact of
Tenant to execute and deliver such instrument on behalf of Tenant, should Tenant
refuse or fail to do so promptly after request, such instrument on behalf of
Tenant, should Tenant refuse or fail to do so promptly after request, such power
being coupled with an interest. Upon such attornment this Lease shall continue
in full force and effect as, and as if it were, a direct lease between the
Successor Landlord and Tenant upon all of the terms, covenants and conditions
set forth in this Lease, and all such terms, covenants and conditions shall be
applicable after such attornment except that the Successor Landlord shall:
(i) not be liable for any previous act or omission of
Landlord under this Lease,
(ii) not be subject to any offset, not expressly
provided for in this Lease, which shall have theretofore accrued or which may
thereafter accrue to Tenant against Landlord, unless agreed with by Landlord in
writing.
(iii) not be bound by any previous modification of
this Lease, not expressly provided for in this Lease, other than a modification
of this Lease executed by Landlord and Tenant prior to the execution of any
Superior Lease or Mortgage, or by any previous prepayment of more than one
months Minimum Rental, unless such modification or prepayment
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shall have been expressly approved in writing by the Superior Lessor(s) or the
Mortgagee(s) through or by reason of which the Successor Landlord shall have
succeeded to the rights of Landlord under this Lease, unless agreed with by
Landlord in writing.
24. NON-WAIVER.
Neither a failure by the Landlord to exercise any
of its options hereunder, nor failure to enforce its rights or seek its remedies
upon any default, nor the acceptance by the Landlord of any rent accruing before
or after any default, shall effect or constitute a waiver of the Landlord's
right to exercise such option, to enforce such right, or to seek such remedy
with respect to that default or to any prior or subsequent default. The remedies
provided in this Lease shall be cumulative and shall not in any way abridge,
modify or preclude any other rights or remedies to which the Landlord may be
entitled either at law or in equity.
25. QUIET ENJOYMENT.
If the Tenant pays the rent it is obligated
hereunder to pay, and observes all other terms, covenants and conditions hereof,
it may peaceably and quietly have, hold and enjoy the Leased Premises during the
Term of this Lease, subject, however, to all the Terms of this Lease. No failure
by Landlord to comply with the foregoing covenant shall give Tenant any right to
cancel or terminate this Lease or to abate, reduce or make any deduction from or
offset against any rent or any other sum payable under this Lease, or to fail to
perform any other obligations of Tenant hereunder.
26. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not sublet the entire of the Leased Premises,
nor assign, or otherwise dispose of this Lease or any interest therein, or any
part thereof, without Landlord's prior written consent in each of the foregoing
cases, which consent, however, to an assignment of this Lease, or subletting of
the Leased Premises, shall not be unreasonably withheld, provided the following
conditions are complied with:
(i) Any assignment shall transfer to the assignee all
of the Tenant's rights in, and interests under, this Lease.
(ii) At the time of any assignment and/or subletting,
this Lease must be in full force and effect without any breach or default
thereunder on the part of the Tenant.
(iii) Any assignee shall assume, by written,
recordable instrument, in form and content satisfactory to Landlord, the due
performance of all of Tenant's obligations
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under this Lease including any accrued obligations at the time of the
assignment. A copy of the assignment and assumption agreement, both in form and
content satisfactory to Landlord, fully executed and acknowledged by the
assignee, together with a certified copy of a properly executed corporate
resolution (if the assignee be a corporation) authorizing such assumption
agreement, shall be sent to Landlord within ten (10) days from the effective
date of such assignment.
(iv) A copy of any sublease fully executed and
acknowledged by the Tenant and the sublessee, shall be mailed to Landlord within
ten (10) days from effective date of such subletting.
(v) Such assignment and/or subletting shall be
subject to all the provisions, terms covenants and conditions of this Lease and
the Tenant-assignor (and any guarantor(s) of this Lease) and such assignee(s)
shall continue to be and remain liable hereunder, it being expressly understood
and agreed that no assignment or subletting of the Leased Premises shall, in any
way, relieve Tenant or any subsequent assignee(s) from the performance of any of
the agreements, terms, covenants and conditions of this Lease.
(vi) Each sublease permitted under this Section shall
contain provisions to the effect that (A) such sublease is only for the actual
use and occupancy by the sublessee, and (B) such sublease is subject and
subordinate to all of the terms, covenants and conditions of this Lease and to
all of the rights of Landlord thereunder, and (C) in the event this Lease shall
terminate before the expiration of such sublease, the subtenant thereunder will,
at Landlord's option, attorn to Landlord and waive any rights the subtenant may
have to terminate the sublease or to surrender possession thereunder, as a
result of the termination of this Lease.
(b) Notwithstanding anything contained in this Lease to the
contrary and notwithstanding any consent by Landlord to any sublease of the
Leased Premises or to any assignment of this Lease, no subtenant shall assign
its sublease nor further sublease the Leased Premises, or any portion thereof,
and no assignee shall further assign its interest in this Lease nor sublease the
Leased Premises, or any portion thereof, without Landlord's prior written
consent in each of such cases, which consent shall not be unreasonably withheld.
(c) Tenant's failure to comply with all of the provisions and
conditions of this Section 26 and all of the subsections hereof shall (whether
or not Landlord's consent is required under this Section), at Landlord's option,
render any purported assignment or subletting null and void and of no force and
effect.
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(d) In the event that Tenant hereunder or any "Guarantors"
(hereinafter defined) shall, at any time, be a corporation, no change shall
occur in the majority ownership of and/or the power to vote the majority of the
outstanding capital stock of Tenant (or such Guarantors) without the prior
written consent of Landlord, which consent Landlord agrees not to unreasonably
withhold unless such transfer is to the Parent, Wife or children of FRANK
CRETELLA.
(e) Tenant may not mortgage, pledge or otherwise encumber its
leasehold estate hereunder, and any attempt to mortgage, pledge or otherwise
encumber such estate shall be null and void and of no force and effect.
(f) That Tenant may consolidate with or merge into any other
corporation, convey or transfer all or substantially all of its assets to any
other corporation, or permit any other corporation to consolidate with or merge
into it upon condition that:
(i) The corporation which results from such
consolidation or merger or the transferee to which such sale shall have been
made (the "Surviving Corporation") is a corporation organized under the laws of
any State of the United States, and the Surviving Corporation shall have a net
worth, computed in accordance with generally accepted accounting principles,
consistently applied at least equal to the net worth of Tenant on the day
immediately preceding such consolidation, merger or transfer; and
(ii) the Surviving Corporation shall expressly and
unconditionally assume by written agreement in recordable form to perform all
such obligations of the Tenant hereunder and shall be obligated to perform all
such obligations of the Tenant hereunder to the same extent as if the Surviving
Corporation had originally executed and delivered this Lease; and
(g) no rights of Landlord under this Lease shall be affected
or reduced by such consolidation, merger, conveyance or transfer. Tenant
covenants that it will not merge or consolidate or sell or otherwise dispose of
all or substantially all of its assets unless there shall be compliance with all
of the foregoing provisions of subsection 17(f) of this Lease and unless the
instrument referred to in subparagraph 17(a)(ii) above shall have been delivered
to Landlord.
27. ENTRY BY LANDLORD.
Landlord, any Superior Lessor(s) and any Mortgagee(s), and
their respective duly authorized representatives shall have the right to enter
the Leased Premises at all reasonable times for the purposes of:
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(a) inspecting the conditions of same, and making such
repairs, alterations, additions, or improvements thereto as may be necessary or
desirable if Tenant fails to do so as required hereunder (but neither the
Landlord, Superior Lessor(s), nor any Mortgagee shall have any duty whatsoever
to make any such inspections, repairs, alterations, additions, or improvements);
and
(b) exhibiting the same to persons who may wish to purchase or
lease the same, and, during the last six (6) months of the Term, of this Lease,
placing a notice of reasonable size on the Leased Premises offering the same or
any part thereof for sale or for rent.
28. TENANT'S DEFAULT.
The following shall be defined and deemed as an "Event of
Default": (a) if Tenant shall default in the payment of the Minimum Rental or
any additional rent and if Tenant shall fail to cure said default within fifteen
(15) business days after receipt of notice of such default from Landlord
(provided, however, that Landlord need give such notice and Tenant shall have
such times to cure not more than three (3) times in any calendar year); or, (b)
if Tenant shall default in the performance or observance of any other term,
covenant or condition to be performed or observed by Tenant under this Lease and
if Tenant shall fail to cure said default within twenty (20) days after receipt
of notice of said default from Landlord, or if said default shall reasonably
require longer than twenty (20) days to cure, if Tenant shall fail to commence
to cure said default within twenty (20) days after receipt of notice thereof and
continuously prosecute the curing of the same to completion with due diligence,
or (c) if there shall be a default on the tenant's part (x) under any other
lease covering other premises demised by Landlord to Tenant or to any Guarantor
hereof, or (y) under a lease which is guaranteed by Tenant or by any Guarantor
hereof, or (d) if Tenant shall make an assignment of its property for the
benefit of creditors or shall institute any proceedings relating to it or its
property under any bankruptcy or insolvency laws of any jurisdiction or shall
petition to any court for, or consent to, the appointment of a receiver, trustee
or assignee of it or any part of its property, or (e) if an order for relief
under any provisions of the Bankruptcy Reform Act of 1978 shall be entered
against tenant, or (f) if Tenant shall be declared bankrupt or insolvent
according to law, or (g) if any bankruptcy or insolvency proceedings shall be
commenced against Tenant and shall not be dismissed within sixty (60) days
thereafter, or (h) if a receiver, trustee, or assignee shall be appointed
without the consent of Tenant in any bankruptcy or insolvency proceedings of
Tenant or the property of Tenant and shall not be discharged within ninety (90)
days thereafter, or (i) if Tenant shall be liquidated or dissolved, or shall
begin proceedings toward its liquidation or dissolution, or shall, in any
manner, permit the
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divestiture of substantially all of its assets, or (j) if, as a result of any
failure by Tenant to perform or observe any of the terms, covenants or
conditions to be performed or observed by it under this Lease, a breach or
default shall have occurred and be continuing under any Superior Lease or
Mortgage. The word "Tenant" as used in subsections (d), (e), (f), (g), (h), (i)
and (j) of this Section 28 shall mean the then holder of the Tenant's interest
in this Lease hereunder and/or any Guarantor(s) and/or other persons who or
which are liable for Tenant's obligations under this Lease. The words "Landlord"
and "Tenant" as used in subparagraph (c) of this Section 28 shall mean any
person, firm or entity controlled by, under common control with, or controlling
the Landlord or the "Tenant" (as defined in the preceding sentence) under this
Lease, respectively; and for the purpose of interpreting this sentence the word
"control" shall be deemed to mean capable of directing the business activities
and direction of such person, firm or entity. Any defaults in Tenant's
liabilities or obligations under this Lease occasioned by any acts or failures
to act by any persons having or claiming any right, title and interest in or to
the Leased Premises by, through or under Tenant, shall be deemed the default of
Tenant hereunder. If this Lease is terminated pursuant to this Section, Tenant
waives (x) the benefit of any Laws exempting property from liability for rent or
for debt, and (y) the service of any notice which may be required by any Laws.
In case of the occurrence of any Event of Default hereinbelow
provided, the Landlord shall have the immediate right of reentry and may remove
all persons and property from the Leased Premises by summary proceedings, force
or otherwise. In addition, in the event of the occurrence of any Event of
Default (whether or not Landlord shall elect to reenter or to take possession
pursuant to legal proceedings or pursuant to any notice provided for by Laws)
Landlord shall have the right, at its option, to terminate this Lease on not
less than two (2) days notice to Tenant and upon the giving of said notice, this
Lease and the Term hereof shall cease and expire on the date set forth in said
notice as if said date were the expiration date originally set forth herein
and/or it may from time to time, whether or not this Lease be terminated, make
such alterations and repairs as may be reasonably necessary in order to relet
the Leased Premises or any part(s) thereof for such term or terms (which may
extend beyond the Term of this Lease) and at such rental(s) and upon such other
terms and conditions as Landlord in its sole discretion may deem advisable; upon
each such reletting all rentals received by the Landlord from such reletting
shall be applied, first, to the payment of any indebtedness (other than rents
due hereunder) of Tenant to Landlord, second, to the payment of any costs and
expenses of such reletting, including, without limitation, brokerage fees (at no
greater than customary rates in the area in which the Leased Premises is
located) and reasonable attorneys' fees and of the cost of such alterations and
repairs, third, to the payment of rents due and unpaid
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hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future rents and other payments required to be made by Tenant
hereunder as the same may become due and payable hereunder, with the right
reserved to Landlord to bring such action(s) or proceeding(s) for the recovery
of any deficits remaining unpaid without being obliged to await the end of the
Term for a final determination of Tenant's account; and the commencement of
maintenance of any one or more actions shall not bar Landlord from bringing
other or subsequent actions for further accruals pursuant to the provisions of
this Section. If such rentals received from such reletting during any month be
less than that to be paid during that month by Tenant hereunder, Tenant shall
pay any such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly subject to Landlord's right of action(s) or proceeding(s) as
aforesaid. No such reentry or taking possession of the Leased Premises by
Landlord shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention be given to Tenant or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect to terminate this Lease for such previous breach. Should
Landlord at any time terminate this Lease for any breach, in addition to any
other remedies it may have, it may recover from Tenant all damages it may incur
by reason of such breach as damages for loss of the bargain and not as a
penalty, including the cost of recovering the Leased Premises, reasonable
attorneys' fees, and including the worth, at the time of such termination, of
the excess, if any, of the amount of rental and charges equivalent to the rental
and charges reserved in this Lease for the remainder of the then Term of this
Lease, over the aggregate rental value of the Leased Premises for the remainder
of such Term, all of which shall be immediately due and payable from Tenant to
Landlord. If any Laws shall validly limit the amount of the damages provided for
in the immediately preceding sentence to less than the amount above agreed upon,
Landlord shall be entitled to the maximum amount allowable under such Laws. In
the event the Tenant does not comply with its obligations under this Lease,
Landlord shall also have the right to appropriate injunctive relief. The rights
and remedies whether herein or anywhere else in this Lease provided shall be
cumulative, and the exercise of any one right or remedy shall not preclude the
exercise of or act aa a waiver of any other right or remedy of Landlord
hereunder, or which may be existing at law, or in equity or by statute or
otherwise.
29. BANKRUPTCY OR INSOLVENCY.
(a) In the event that Tenant shall become a debtor under
Chapter 7 of the Bankruptcy Reform Act of 1978, 11 U.S.C. 1 et seq. ("Bankruptcy
Code") and Tenant's trustee or Tenant shall elect to assume this Lease for the
purpose of assigning the same or otherwise, such election and assignment may
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be made only if the provisions of this Section 29 are satisfied. If Tenant or
Tenant's trustee shall fail to assume this Lease within 60 days after the entry
of an order for relief, this Lease shall be deemed to have been rejected.
Immediately thereupon Landlord shall be entitled to possession of the Leased
Premises without further obligation to Tenant or Tenant's trustee and this
Lease, upon the election of Landlord, shall terminate, but Landlord's right to
be compensated for damages (including, without limitation, liquidated damages
pursuant to Section 19 or the exercise of any other remedies in any such
proceeding) shall survive, whether or not this Lease shall be terminated.
(b) In the event that a voluntary petition for the
reorganization is filed by Tenant, or an involuntary petition is filed against
Tenant under Chapter 11 of the Bankruptcy Code, or in the event of the entry of
an order for relief under Chapter 7 in a case which is then transferred to
Chapter 11, Tenant's trustee or Tenant, as debtor-in-possession, must elect to
assume this Lease within 60 days from the date of the filing of the petition
under Chapter 11 or the transfer thereto, or Tenant's trustee or the
debtor-in-possession shall be deemed to have rejected this Lease. Immediately
thereupon Landlord shall be entitled to possession of the Leased Premises
without further obligation to Tenant or Tenant's trustee and this Lease, upon
the election of Landlord, shall terminate, but Landlord's right to be
compensated for damages (including, without limitation, liquidated damages
pursuant to Section 19 or the exercise of any other remedies in any such
proceeding) shall survive, whether or not this Lease shall be terminated.
(c) No election by Tenant's trustee or the
debtor-in-possession to assume this Lease, whether under Chapter 7 or Chapter
11, shall be effective unless each of the following conditions has been
satisfied:
(i) Tenant's trustee or the debtor-in-possession has
cured all defaults under this Lease, or has provided Landlord with evidence
satisfactory to Landlord that it will cure all defaults susceptible of being
cured by the payment of money within 10 days from the date of such assumption
and that it will cure all other defaults under this Lease which are susceptible
of being cured by the performance of any act within 30 days after the date of
such assumption.
(ii) Tenant's trustee or the debtor-in-possession has
compensated, or has provided Landlord with evidence satisfactory to Landlord
that, within 10 days from the date of such assumption, it will compensate
Landlord for any actual pecuniary loss incurred by Landlord arising from the
default of Tenant, Tenant's trustee, or the debtor-in-possession as indicated in
any statement of actual pecuniary loss sent by Landlord to Tenant's trustee or
the debtor-in-possession.
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(iii) Tenant's trustee or the debtor-in-possession
(A) has provided Landlord with "Assurance", as hereinbelow defined, of the
future performance of each of the obligations under this Lease of Tenant,
Tenant's trustee or the debtor-in-possession, and (B) shall, in addition to any
other security deposits held by Landlord, deposit with Landlord, as security for
the timely payment of Minimum Rental and for the performance of all other
obligations of Tenant under this Lease, an amount equal to 3 monthly
installments of Minimum Rental and any additional rental payable under this
Lease (both at the rate then payable), and (C) pay in advance to Landlord on the
date each installment of Minimum Rental is due and payable, one-twelfth of
Tenant's annual obligations for Impositions and insurance premiums to be made by
Tenant pursuant to this Lease. The obligations imposed upon Tenant's trustee or
the debtor-in-possession by this Section 20 shall continue with respect to
Tenant or any assignee of this Lease, after the conclusion of proceedings under
the Bankruptcy Code,
(iv) Such assumption will not breach or cause a
default under any provision of any Mortgage, financing agreement or other
agreement by which Landlord or the Superior Lessor is bound, relating to the
Leased Premises or any larger development of which the Leased Premises is a
part.
(d) For purposes of subsection (c)(iii) of this Section 20,
Landlord and Tenant acknowledge that "Assurance" shall mean no less than that:
(x) Tenant's trustee or the debtor-in-possession has and will continue to have
sufficient unencumbered assets after the payment of all secured obligations and
administrative expenses to assure Landlord that sufficient funds will be
available to fulfill the obligations of Tenant under this Lease and (y) to
secure to Landlord the obligations of Tenant, Tenant's trustee or the
debtor-in-possession and to assure the ability of Tenant, Tenant's trustee or
the debtor-in-possession to cure the defaults under this Lease, monetary and/or
non-monetary, there shall have been: (A) sufficient cash deposited with
Landlord, or (B) the Bankruptcy Court shall have entered an order segregating
sufficient cash, payable to Landlord, and/or (C) Tenant's trustee or the
debtor-in-possession shall have granted to Landlord a valid and perfected first
lien and security interest and/or mortgage in property of Tenant, Tenant's
trustee or the debtor-in-possession, acceptable as to value and kind to
Landlord.
(e) In the event that this Lease is assumed in accordance with
subsection (b) of this Section 29 and thereafter Tenant is liquidated or files,
or has filed against it, a subsequent petition under any provision of the
Bankruptcy Code or any similar statute for relief of debtors, Landlord may, at
its option, terminate this Lease and all rights of Tenant hereunder,
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by giving Tenant notice of its election to so terminate within 30 days after the
occurrence of either of such events,
(f) If Tenant's trustee or the debtor-in-possession has
assumed this Lease pursuant to the terms and provisions of this Section 20 for
the purpose of assigning (or elects to assign) this Lease, this Lease may be so
assigned only if the proposed assignee has provided adequate assurance of future
performance of all of the terms, covenants and conditions of this Lease to be
performed by Tenant. Landlord shall be entitled to receive all consideration for
such assignment, whether cash or otherwise. As used in this subsection (f) of
this Section 20 "adequate assurance of future performance" shall mean at least
that clauses (B) and (C) of subsection (c)(iii) of this Section 29 and each of
the following conditions, has been satisfied:
(i) The proposed assignee has furnished Landlord with
a current financial statement audited by a certified public accountant
determined in accordance with generally accepted accounting principles
consistently applied indicating a credit rating, net worth and working capital
in amounts which Landlord reasonably determines to be sufficient to assure the
future performance of such assignee of Tenant's obligations under this Lease,
but in no event indicating a net worth less than the net worth of the Tenant and
any Guarantors of this Lease, on the date of execution hereof.
(ii) Such assignment will not breach nor cause a
default under any provision of any other lease, Mortgage, financing agreement or
other agreement by which Landlord or the Superior Lessor is bound, relating to
the Leased Premises or any larger development of which the Leased Premises is a
part.
(iii) The proposed assignment will not release or
impair any Guarantee under this Lease.
(g) When, pursuant to the Bankruptcy Code, Tenant's trustee or
the debtor-in-possession shall be obligated to pay reasonable use and occupancy
charges for the use of the Leased Premises, such charges shall not be less than
the Minimum Rental and all additional rent payable by Tenant under this Lease
and shall be paid at the times and when due as though such charges were Minimum
Rental and additional rent.
(h) Anything in this Lease to the contrary notwithstanding,
neither the whole nor any portion of Tenant's interest in this Lease or its
estate in the Leased Premises shall pass to any trustee, receiver, assignee for
the benefit of creditors, or any other similar person or entity, or otherwise by
operation of law under the Bankruptcy Code or any similar federal statute now or
hereinafter enacted, or under the laws of any state having Jurisdiction of the
person or property of Tenant
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unless Landlord shall have consented to such transfer in writing. No acceptance
by Landlord of rent or any other payments from any such trustee, receiver,
assignee, person or other entity shall be deemed a waiver of Landlord's right to
terminate this Lease for any transfer of Tenant's interest under this Lease
without such consent.
(i) Anything in this Lease to the contrary notwithstanding,
Tenant covenants and agrees that this Lease is an extension of financial
benefits and accommodations to Tenant which are uniquely personal in nature and
such financial benefits and accommodations are a material inducement for
Landlord's execution and delivery of this Lease and are an integral part of the
consideration for this Lease.
30. TAX APPEALS AND CONTESTS.
(a) Tenant shall have the right, at its cost and expense, to
contest the amount or validity, in whole or in part, of any Imposition of any
kind by appropriate proceedings diligently conducted in good faith, but no such
contest shall be carried on or maintained by Tenant after the time limit for the
payment of any Imposition unless the Tenant, at its option: (i) shall pay the
amount involved under protest; or (ii) shall procure and maintain a stay of all
proceedings to enforce any collection of any Imposition, together with all
penalties, interest, costs and expenses, by a deposit of a sufficient sum of
money, or by such undertaking, as may be required or permitted by law to
accomplish such stay; or (iii) shall deposit with Landlord or any Superior
Lessor or Mortgagee, as security for the performance by the Tenant of its
obligations hereunder with respect to such Impositions, such security in amounts
equal to such contested amount or such reasonable security as may be demanded by
the Landlord or any Superior Lessor or Mortgagee to insure payment of such
contested Imposition and all penalties, interest, costs and expenses which may
accrue during the period of the contest. Upon the termination of any such
proceedings, it shall be the obligation of Tenant to pay the amount of such
Imposition or part thereof, as finally determined in such proceedings, the
payment of which may have been deferred during the prosecution of such
proceedings, together with any costs, fees (including counsel fees), interest,
penalties or other liabilities in connection therewith, whereupon the Landlord
shall arrange to have returned to the Tenant, without interest thereon, all
amounts, if any, held by or on behalf of Landlord which were deposited by the
Tenant in accordance with the provisions hereof.
(b) Tenant shall have the right, at its cost and expense, to
seek a reduction in the valuation of the Leased Premises as assessed for tax
purposes and to prosecute any action or proceeding in connection therewith.
Provided Tenant is not in default hereunder, Tenant shall be authorized to
collect any tax
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refund of any tax paid by Tenant obtained by reason thereof and to retain the
same.
(c) Landlord agrees that whenever Landlord's cooperation is
required in any of the proceedings brought by Tenant as aforesaid, Landlord will
reasonably cooperate therein, provided same shall not entail any cost, liability
or expense to Landlord and Tenant will pay, indemnity and save Landlord harmless
of and from, any and all liabilities, losses, judgments, decrees, costs and
expenses (including all reasonable attorneys, fees and expenses) in connection
with any such contest and will, promptly after the final settlement, fully pay
and discharge the amounts which shall be levied, assessed, charged or imposed or
be determined to be payable therein or in connection therewith, and Tenant shall
perform and observe all acts and obligations, the performance of which shall be
ordered or decreed as a result thereof. No such contest shall subject Landlord
or any Superior Lessor or Mortgagee to the risk of any material civil liability
or the risk of any criminal liability, and Tenant shall give such reasonable
indemnity or security to Landlord, any Superior Lessor and any Mortgagee as may
reasonably be demanded by any of them to insure compliance with the foregoing
provisions of this Section 30.
31. SIGNS.
Tenant may, during the Term of this Lease, upon obtaining any
and all necessary approvals and permits from governmental authorities, erect and
maintain, at its costs and expense, signs of such dimensions and materials as it
may reasonably deem appropriate in or about the Leased Premises. Such signs
shall, at the option of the Landlord, be removed by Tenant upon the termination
of its occupancy of the Leased Premises. Prior to the installation of any such
sign the Tenant shall procure and deliver to the Landlord liability insurance
that will specifically insure both the Landlord and the Tenant against injuries
and damages that may be caused by the installation and maintenance of the sign.
Tenant is advised that the Premises form a part of property
which has landmark status and further that all signage for the building must be
uniform.
32. SURRENDER OF PREMISES.
Except in the case of condemnation described in subsection
21(a), at the expiration or sooner termination of the Term of this Lease, Tenant
shall surrender the Leased Premises in the same condition as the Leased Premises
were in upon delivery of possession thereto under this Lease, reasonable wear
and tear excepted, and shall surrender all keys for the Leased Premises to
Landlord at the place than fixed for the payment of rent and shall inform
Landlord of all combinations on locks, safes and
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vaults, if any, in the Leased Premises. Tenant shall at such time remove all
Tenant's Property, as well as any alterations or improvements, if requested to
do so by Landlord, and shall repair any damage to the Leased Premises caused
thereby, and any or all of such property not so removed shall, at Landlord's
option, become the exclusive property of Landlord or be disposed of by Landlord,
at Tenant's cost and expense, without further notice to or demand upon Tenant.
If the Leased Premises be not surrendered as and when aforesaid, Tenant shall
indemnify Landlord against loss or liability resulting from the delay by Tenant
in so surrendering the Leased Premises including, without limitation, any claims
made by any succeeding occupant founded on such delay. Tenant's obligation to
observe or perform this covenant shall survive the expiration or other
termination of the Term of the Lease.
33. EXCULPATION.
Notwithstanding anything contained herein to the contrary, it
is specifically understood and agreed that there shall be no personal liability
on Landlord in respect of any of the terms, covenants, conditions or provisions
of this Lease, and in the event of a breach or default by Landlord of any of its
liabilities and obligations under this Lease, Tenant and any persons claiming
by, through or under Tenant shall look solely to the equity of the Landlord in
the Leased Premises for the satisfaction of Tenant's and such persons' remedies
and claims for damages.
34. TENANT'S PAYMENTS.
Each and every payment and expenditure, other than Minimum
Rental and other than costs for any additions, alterations, repairs,
replacements and improvements to the Improvements, which are required to be paid
by Tenant under this Lease shall be deemed to be additional rent hereunder,
whether or not the provisions requiring payment of such amounts specifically so
state, and shall be payable, unless otherwise provided in this Lease, on demand
by Landlord and in the case of the non-payment of any such amount, Landlord
shall have, in addition to all of its other rights and remedies, all of the
rights and remedies available to Landlord hereunder or by Laws in the case of
nonpayment of Minimum Rental. Unless expressly otherwise provided in this Lease,
the performance and observance by Tenant of all the terms, covenants and
conditions of this Lease to be performed and observed by Tenant at Tenant's sole
cost and expense. Tenant agrees to pay or reimburse Landlord, on demand, for any
reasonable costs and expenses that may be incurred by Landlord in connection
with its review of any instruments or documents requested by Tenant pursuant to
this Lease or relating to the Leased Premises including but not limited to the
costs and expenses of making such investigations as the Landlord shall deem
appropriate and the reasonable legal fees and disbursements of
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Landlord's counsel. All payments of Minimum Rental hereunder shall be made to
Landlord by check or wire transfer of federal funds, as Landlord may direct, at
the address set forth in the beginning hereof unless otherwise provided herein
or at such other address as may be designated by Landlord.
35. RIGHT TO CURE DEFAULTS.
If Tenant shall fail to fully comply with any of its
liabilities or obligations under this Lease (including, without limitation, its
obligations to make repairs, maintain various policies of insurance, comply with
all Laws and pay all Impositions and bills for utilities), then ten (10) days
after the giving of written notice of such breach to Tenant (except that prior
written notice shall not be required in the event of an emergency) Landlord
shall have the right, at its option, to cure such breach at Tenant's cost and
expense. Tenant agrees to reimburse Landlord (as additional rent) for all
losses, costs, damages and expenses resulting therefrom or incurred in
connection therewith, together with interest thereon (at a rate equal to the
"Maximum Rate"), promptly upon demand.
36. COVENANT AGAINST LIENS.
(a) If, because of any act or omission (or alleged act or
omission) of Tenant, any mechanic's or other lien, charge or order for the
payment of money or other encumbrances shall be filed or imposed against
Landlord, any Superior Lessor, any Mortgagee and/or any portion of the Leased
Premises (whether or not such lien, charge, order or encumbrance is valid or
enforceable as such), Tenant shall, at its cost and expense, cause same to be
discharged of record or bonded within ten (10) days after notice to Tenant of
the filing or imposition thereof; and Tenant shall indemnify and defend Landlord
against and save Landlord harmless from all losses, costs, damages, expenses,
liabilities, suits, penalties, claims, demands and obligations, including,
without limitation, reasonable counsel fees, resulting therefrom. If Tenant
fails to comply with the foregoing provisions, Landlord shall have the option of
discharging or bonding any such lien, charge, order or encumbrance, and Tenant
agrees to reimburse Landlord (as additional rent) for all losses, costs,
damages, and expenses resulting therefrom or incurred in connection therewith,
together with interest thereon (at a rate equal to the "Maximum Rate"), promptly
upon demand.
(b) All materialmen, contractors, artisans, architects,
mechanics, laborers and any other persons now or hereafter furnishing any labor,
services, materials, supplies or equipment to Tenant with respect to any portion
of the Leased Premises, are hereby charged with notice that they must look
exclusively to Tenant to obtain payment for same. Notice is hereby given that
the Landlord shall not be liable for any labor, services, materials, supplies or
equipment furnished or to be
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furnished to the Tenant upon credit, and that no mechanic's or other lien for
any such labor, services, materials, supplies or equipment shall attach to or
affect the estate or interest of the Landlord in and to the Leased Premises.
37. LANDLORD'S AND TENANT'S CERTIFICATES.
Landlord and Tenant shall, each without charge at any time and
from time to time, within ten (10) days after request by the other party,
certify by written instrument, duly executed, acknowledged and delivered to any
ground lessor, Mortgagee, assignee of any Mortgagee or purchaser, or any
proposed Mortgagee, or proposed assignee or sub-tenant of the Tenant or any
other person, firm or corporation specified by Landlord or Tenant:
(a) That this Lease and all "Guarantees" (hereinafter defined)
are unmodified and in full force and effect (or, if there has been modification,
that the same is in full force and effect as modified and stating the
modifications);
(b) Whether or not there are then existing any breaches or
defaults by the other party under any of the Terms of this Lease and specifying
such breach or default or any setoffs or defenses against the enforcement of any
of the agreements, terms, covenants or conditions of this Lease or of any
Guarantees upon the part of the Landlord or Tenant or any said Guarantors, as
the case may be, to be performed or compiled with (and, if so, specifying the
same and the steps being taken to remedy the same); and
(c) The dates, if any, to which the rental(s) and other
charges under this Lease have been paid in advance.
Tenant shall cause any and all of its said certifications
which refer to any Guarantors or Guarantees to be executed and acknowledged by
the relevant Guarantors.
38. WAIVER OF TRIAL BY JURY AND WAIVERS BY GUARANTORS.
Landlord and Tenant do hereby waive trial by jury in any
action, proceeding or counterclaim brought by either against the other, upon any
matters whatsoever arising out of or in any way connected with this Lease,
Tenant's use or occupancy of the Leased Premises, and/or any claim of injury or
damage. It is further mutually agreed that in the event Landlord commences any
summary proceeding for non-payment of Minimum Rental or additional rent, Tenant
will not interpose any counterclaim of whatever nature or description in any
such proceeding. Each and every guarantor, if any, shall with respect to the
liabilities and obligations under its Guarantee, be deemed to have agreed to
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waive, with respect to its Guarantee and this Lease, all rights which are waived
by Tenant under this Lease.
39. NET LEASE; NON-TERMINABILITY.
This is an absolutely net lease, and, except as otherwise
specifically provided in Section 21 hereof, this Lease shall not terminate nor
shall Tenant have any right to terminate this Lease; nor shall Tenant be
entitled to any abatement, deduction, deferment, suspension or reduction of, or
setoff, defense or counterclaim against, any rentals, charges, or other sums
payable by Tenant under this Lease; nor shall the respective obligations of
Landlord and Tenant be otherwise affected by reason of damage to or destruction
of the Leased Premises from whatever cause, any taking by condemnation, eminent
domain or by agreement between Landlord and those authorized to exercise such
rights, the lawful or unlawful prohibition of Tenant's use of the Leased
Premises, the interference with such use by any persons, corporations or other
entities, or by reason of any eviction by paramount title, or by reason of
Tenant's acquisition of ownership of the Leased Premises otherwise than pursuant
to an express provision of this Lease, or by reason of any default or breach of
any warranty by Landlord and Tenant, or to which Landlord and Tenant are
parties, or for any other cause whether similar or dissimilar to the foregoing,
any Laws to the contrary notwithstanding; it being the intention that the
obligations of Landlord and Tenant hereunder shall be separate and independent
covenants and agreements and that the Minimum Rental, additional rent and all
other charges and sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease; and Tenant covenants and
agrees that it will remain obligated under this Lease in accordance with its
terms, and that it will not take any action to terminate, cancel, rescind or
void this Lease, notwithstanding the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee of, or successor to, Landlord,
and notwithstanding any action with respect to this Lease that may be taken by a
trustee or receiver of Landlord or any assignee of, or successor to, Landlord or
by any court in any such proceeding.
40. MISCELLANEOUS PROVISIONS.
(a) NOTICES. Any notice, exercise of option or election,
communication, request or other document or demand required or permitted under
this Lease shall be in writing and shall be given to Landlord or Tenant by first
class, certified or registered mail, return receipt requested.
(i) to the Landlord as follows: Lundy's Management
Corp.
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2770 Ocean Avenue Brooklyn,
New York 11229
and copy to:
HAMBURGER, GREEN & HABER, Esqs.
60 East 42nd Street, Suite 1405
New York, N.Y. 10165-1405
(ii) to the Tenant as follows:
Bay Landing Restaurant Corp.
1163 Forest Avenue
Staten Island, N.Y. 10310
with a copy to:
Russo, Fusco, Scamardella & D'Amato
1010 Forest Avenue
Staten Island, N.Y. 10310
Either party may, from to time, change the address at which such written
notices, exercise of options or elections, communications, requests, or other
documents or demands are to be mailed, by giving the other party(ies) written
notice of such changed address, pursuant to the terms hereinabove set forth. At
Landlord's option, which may be exercises at any time hereafter, Tenant shall
send copies of any and all said notices and other communications designated by
Landlord, to any Mortgages and Superior Lessors designated by Landlord, in the
same manner as notices are required to be sent to Landlord, and at such
address(es) as Landlord may from time to time designate by notice to Tenant.
The Landlord designates its attorney that it may from time to
time designate as its agent for giving such notices that the Landlord may elect
to give under this Lease
(b) RELATIONSHIP OF THE PARTIES. It is the intention of the
parties hereto to create the relationship of Landlord and Tenant, and no other
relationship whatsoever, and unless expressly otherwise provided herein, nothing
herein shall be construed to make the parties hereto liable for any of the
debts, liabilities or obligations of the other party.
(c) APPLICABILITY. Whenever a provision in this Lease is
stated to apply to the Term of this Lease, or words of similar import, the same
shall be deemed to mean and include any Extended Terms as well, unless specific
reference is made to such provision as having applicability only to all or any
portions of the Initial Term and/or any Extended Term or Extended Terms.
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(d) GOVERNING LAWS. This Lease shall be governed exclusively
by the provisions hereof and by the laws of the State in which the Leased
Premises is located as the same may from time to time exist.
(e) INVALIDITY OF PARTICULAR PROVISIONS. If any term or
provision of this Lease or the application thereof to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of this Lease,
or the application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term and provision of this Lease shall be valid and be
enforced to the fullest extent permitted by law.
(f) WAIVER. Failure on the part of either part to complain of
any action or non-action on the part of the other party, no matter how long the
same may continue, shall never be deemed to be a waiver by either party of any
of its rights hereunder. Acceptance by Landlord of Minimum Rental, additional
rent or any other charges paid by Tenant hereunder shall not be or be deemed to
be a waiver by Landlord of any default by Tenant, whether or not Landlord knows
of such default. No waiver at any time of any of the provisions hereof by either
party shall be construed as a waiver of any of the other provisions hereunder
and a waiver at any time of any of the provisions hereof shall not be construed
as a waiver at any subsequent time of the same provisions.
(g) COUNTERPARTS. This Lease may be executed in several
counterparts, each of which shall be deemed an original, and such counterparts
shall constitute but one and the same instrument.
(h) SOLE AGREEMENT. This Lease sets forth all the promises,
inducements, agreements, conditions and understandings between Landlord and
Tenant relative to the Leased Premises, and there are no promises, agreements,
conditions or understandings, either oral or written, express or implied between
them, other than as herein set forth. Except as herein otherwise provided, no
subsequent alteration, amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant, unless reduced to writing and signed by the
party(ies) to be charged therewith.
(i) SHORT FORM OF LEASE. A short form of Lease for recording
purposes only, in form satisfactory to the Landlord's counsel, may be executed
by Landlord and Tenant.
(j) CAPTIONS. The captions of the several Sections and
subsections of this Lease and table of contents are not a part of the context
hereof and shall be ignored in construing this Lease. They are intended only as
aids in locating various provisions hereof.
-42-
<PAGE>
(k) SUCCESSORS AND ASSIGNS. Except as may be expressly
otherwise provided herein, the terms, covenants and conditions hereof shall
inure to the benefit of and shall be binding upon Landlord and its successors
and assigns and the terms, covenants and conditions hereof shall inure to the
benefit of and shall be binding upon Tenant and its successors and permitted
assigns.
(l) NO MERGER. There shall be no merger of this Lease, or the
leasehold estate created by this Lease, with any other estate or interest in the
Leased Premises, or any part thereof, by reason of the fact that the same
person, firm, corporation or other entity may acquire or own or hold, directly
or indirectly, (i) this Lease or the leasehold estate created by this Lease, or
any interest in this Lease or in any such leasehold estate, and (ii) any such
other estate or interest in the Leased Premises or any part thereof, shall join
in a written instrument effecting such merger and shall duly record the same.
(m) RIGHTS OF SUPERIOR LESSOR. Any rights provided herein for
the benefit of any Mortgagees shall apply with equal force and effect for the
benefit of any Superior Lessors as if expressly so stated in each instance.
(p) ENCROACHMENTS, RESTRICTIONS, ETC. If any of the
Improvements shall, at any time, encroach upon any property, street or right of
way adjoining or adjacent to the Leased Premises, or shall violate the
agreements or conditions contained in any restrictive covenant or other
agreement affecting the Leased Premises, or any part thereof, or shall hinder or
obstruct any easement or right-of-way to which the Leased Premises are subject,
or shall impair the rights of others under such easement or right-of-way, then
promptly upon the request of the Landlord at the behest of any persons affected
by any such encroachment, violation, hindrance, obstruction or impairment,
Tenant shall, at its cost and expense, either (i) obtain valid and effective
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation, hindrance, obstruction or impairment, whether
the same shall affect Landlord or Tenant, or (ii) make such changes in the
Improvements and take such other actions as shall be necessary to remove such
encroachments, hindrances or obstructions and to end such violations or
impairments, including, if necessary, but only with Landlord's prior written
consent, the alteration or removal of any of the Improvements. Any such
alteration or removal consented to by Landlord shall be made by Tenant in
accordance with the requirements of Section 9, above. Tenant's obligations under
this subsection 33(p) shall survive the expiration or sooner termination of this
Lease.
(q) ACCEPTANCE OF SURRENDER. No surrender to Landlord of this
Lease or of the Leased Premises, or any part
-43-
<PAGE>
thereof, or of any interest therein, shall be valid or effective unless agreed
to and accepted in writing by Landlord and consented to in writing by any and
all Mortgagees and Superior Lessors, and no act or omission by Landlord or any
representative or agent of Landlord, other than such a written acceptance by
Landlord, consented to aforesaid, shall constitute an acceptance of any such
surrender.
(r) CONSENT BY LANDLORD. Wherever in this Lease Landlord
agrees not to unreasonably withhold its consent or approval, or words of like
import, Tenant agrees that it shall not be unreasonable for Landlord to withhold
such consent or approval (i) if by granting such consent or approval Landlord
shall be in violation of any Mortgage, or (ii) any Mortgagee shall not give its
consent or approval thereto where its consent or approval is required by the
terms of its Mortgage.
41. SECURITY:
1. The tenant will deposit $100,000.00 as security, $50,000.00
upon signing of lease and $50,000 upon our notification of receiving TCO.
2. Twelve (12) months after the Tenant begins paying rent on
the ground floor, the Landlord will return $50,000.00 of the security and
maintain $50,000.00 of the security.
42. BROKERS:
The parties represent to each other that the following were
the only brokers that they dealt with and who brought about this transaction.
NONE
43. DEFINITIONS:
For the purposes of this Lease, the following definitions
shall be applicable:
Acceptance Notice - as defined in Section 21 (d).
Assurance - as defined in Section 29 (d).
Closing Date - as defined in section 21 (e).
Control - as defined in Section 28.
Event of Default - as defined in Section 28.
Final Notice - as defined in Section 21 (e).
-44-
<PAGE>
First, Second, etc., Extended Terms - as defined in
Section 2(b).
Guarantee - any agreements or undertaking, written or
otherwise, by virtue of which any Guarantors guaranty the performance or
observance of any or all of the terms, covenants or conditions to be performed
or observed by Tenant under this Lease.
Guarantor - any persons, firms or entities who or which
guaranty the performance or observance of any or all of the terms, covenants or
conditions to be performed or observed by Tenant under this Lease.
Impositions - as defined in Section 5(b).
Improvements - as defined in Section 1.
Initial Term - as defined in Section 2(c).
Landlord - as defined in Section 25.
Laws - as defined in Section 2(a).
Lease Year - Any twelve (12) month period during the initial
Term of this Lease and any Extended Term commencing on the first day of the
first full calendar month of the Term of this Lease.
Leased Premises - as defined in Section 1.
Maximum Rate - an annual rate of interest equal to the Prime
Rate plus two (2%) percent but in no event in excess of the maximum lawful rate
permitted to be charged by a Landlord against a defaulting Tenant for monies
advanced by reason of a Tenant's default.
Minimum Rental - as defined in Section 3.
Mortgage - any Mortgage, deed of trust or other security
interest now existing or hereafter created on all or any portion of Landlord's
interest in this Lease and/or the Leased Premises, provided such Mortgage, deed
of trust or other security interest shall comply with the provisions of Section
14 hereof.
Mortgagee - the holder of any mortgage.
Net Award - as defined in Section 21(e).
Offer - as defined in Section 21(c).
Person-Persons - any individual(s), partnership(s), firm(s),
corporation(s), business trust(s),
-45-
<PAGE>
estate(s), legal representative(s) or other entities of any nature or
description whatsoever.
Plans and Specifications - as defined in Section
Successor Landlord - as defined in Section 23 (c).
Superior Lease - any lease of all or any portions of the
Leased Premises made by and between any persons, firms or entities, as lessor
and any Landlord hereunder, as lessee.
Superior Lessor - as defined in Section 23 (a).
Taking Date - as defined in section 21 (a).
Tenant's Change(s) - as defined in Section 18 (a).
Tenant's Property - as defined in Section 22.
44. OPTION TO RENEW
Tenant shall have the option to renew this Lease for two (2)
additional ten (10) year periods as follows:
In the nineteenth year of this Lease and at any time during
said eighteenth year, Tenant must advise Landlord of its intention to renew.
Notwithstanding anything contained herein to the contrary,
using the gross rent for the last month of the nineteenth (19) year, Tenant's
rent for the twentieth (20) year shall be increased by 5% in addition to any
other increase and with this increase, a new rent shall be determined for the
twentieth (20) year. Increases thereafter shall be as in the first nineteen (19)
years hereof. All of the above shall be in addition to rent increases heretofore
set forth.
If during the twenty-ninth (29) year Tenant desires to
exercise its option for ten (10) more years, it shall so notify Landlord. The
rent for the thirty-first (31) year and the nine (9) years thereafter shall the
greater of the rent paid in the last month of the thirty-first (31) years plus a
CPI increase capped at 2 1/2 percent, or an amount equal to 75 percent of what
the annual rent would be if all actual CPI increases (cumulatively) were applied
to the annual rent from year on.
-46-
<PAGE>
IN WITNESS HEREOF, the parties hereto have duly
executed this instrument under seal as of the day and year first
above written.
WITNESSES:
______________________________________ LUNDY'S MANAGEMENT CORP.
______________________________________ By:/s/ Steve Pappas
---------------------------------------
Steve Pappas, Secretary
Attest: _______________________________
BAY LANDING RESTAURANT CORP.
_______________________________________
By:/s/ Frank Cretella
_______________________________________ ---------------------------------------
Frank Cretella, Pres.
Attest: _______________________________
-47-
<PAGE>
STATE OF NEW YORK
COUNTY OF KINGS
The foregoing instrument was acknowledged before me this 1 day of
August, 1994 by * the Secretary of Lundy's Management Corporation, a New York
corporation on behalf of said Corporation.
* Steve Pappas
/s/ Anthony G. Capozzi
----------------------------
Notary Public
My Commission Expires: Anthony G. Capozzi
Notary Public,
State of New York
No. 24-4970162
Qualified in Kings County
Commission Expires
August 6, 1994
STATE OF NEW YORK
COUNTY OF KINGS
The foregoing instrument was acknowledged before me this 1 day of
August, 1994 by Frank Cretella, the President of Bay Landing Restaurant Corp.,
on behalf of said Corporation.
/s/ Anthony G. Capozzi
----------------------------
Notary Public
My Commission Expires:
Anthony G. Capozzi
Notary Public,
State of New York
No. 24-4970162
Qualified in Kings County
Commission Expires
August 6, 1994
-48-
<PAGE>
GUARANTY
Notwithstanding anything contained in this Agreement of Lease
dated 7/29/1994 by and between LUNDY'S MANAGEMENT CORP., as Lessor and Bay
Landing Restaurant Corp. as Lessee, or its assigns
It is agreed that as long as Tenant or its assigns is in
possession of the Premises, the principals below do personally guaranty the
payment of all rents and additional rents as may be due under the Lease.
THIS GUARANTY IS ONLY FOR THE PERIOD DURING WHICH THE TENANT
OR ITS ASSIGNS ARE IN POSSESSION.
Once the Tenant vacates the Premises whether or not rent is
still due under the Lease for any period thereafter, the guaranty ceases with
the removal of the Tenant and the amount of the guaranty is fixed at the amount
due on the removal of the Tenant.
/s/ Frank Cretella
--------------------------
Frank Cretella
-49-
<PAGE>
Lundy's Management Corp.
- -------------------------------------------------------------------------------
2770 OCEAN AVENUE
BROOKLYN, NEW YORK 11229
(718) 332-8600 FAX (718) 891-7317
March 10, 1995
Mr. Frank Cretella
Tam Restaurant Group, Inc.
1163 Forest Avenue
Staten Island, NY 10310
Re: Lundy's Project
1901 Emmons Avenue
Brooklyn, New York
------------------
Dear Mr. Cretella:
Upon reviewing the lease between us dated 7/29/94, we realize that the location
of the premises described in paragraph 1 is incorrect. Therefore, this letter
will serve as an amendment conforming the lease to the actual location.
Paragraph 1 - LEASE PREMISES, located on page 3 of the above lease, should read
that the premises is located at 1901 Emmons Avenue, Brooklyn, New York 11235 and
the reference made to Ocean Avenue is hereby deleted.
Kindly sign and return a copy of this letter for our records.
Very truly yours,
LUNDY'S MANAGEMENT CORP.
/s/ Donald Lentnek
- ------------------------------
Donald Lentnek
DL:lga
Accepted: /s/ Frank Cretella : Tam Restaurant Group, Inc.
---------------------
Frank Cretella
<PAGE>
COMMERCIAL LEASE
THIS LEASE is made on the 1st day of October 1996.
The Landlord hereby agrees to lease to the Tenant, and the Tenant hereby agrees
to hire and take from the Landlord, the Leased Premises described below pursuant
to the terms and conditions specified herein:
LANDLORD: Frank Cretella TENANT(S): TAM RESTAURANT Holding Corp.
Address: 81 Sharrots Road Address: 1163 Forest Avenue
Staten Island, NY 10309 Staten Island, NY 10310
1. Leased Premises. The Leased Premises are those premises described as:
Approximately 2500 sq. ft. of office space located at 1163 Forest
Avenue, Staten Island, NY 10310.
2. Term. The term of the Lease shall be for a period of 5 1/4 year(s) commencing
on the 1st day of October, 1996 ending on the 31st day of Dec., 2001 unless
sooner terminated as hereinafter provided. If Tenant remains in possession of
the Leased Premises with the written consent of the Landlord after the lease
expiration date stated above, this Lease will be converted to a month-to-month
Lease and each party shall have the right to terminate the Lease by giving at
least one months' prior written notice to the other party.
3. Rent. The Tenant agrees to pay the ANNUAL RENT of Thirty Seven Thousand Five
Hundred Dollars ($37,500) payable in equal installments $3,125 in advance on the
first day of each and every calendar month during the full term of this Lease.
4. [DELETED] See Addendum # 1
5. Security Deposit. The sum of Six Thousand Two Hundred Fifty Dollars ($6,250)
is deposited by the Tenant with the Landlord as security for the faithful
performance of all the covenants and conditions of the lease by the said Tenant.
If the Tenant faithfully performs all the covenants and conditions on his part
to be performed, then the sum deposited shall be returned to the Tenant.
6. Delivery of Possession. If for any reason the Landlord cannot deliver
possession of the leased property to the Tenant when the lease term commences,
this Lease shall not be void or voidable, nor shall the Landlord be liable to
the Tenant for any loss or damage resulting therefrom. However, there shall be
an abatement of rent for the period between the commencement of the lease term
and the time when the Landlord delivers possession.
7. Use of Leased Premises. The Leased Premises may be used only for the
following purpose:
All legal clerical and administrative purposes.
8. Utilities. Except as specified below, the Tenant shall be responsible for all
utilities and services that are furnished to the Leased Premises. The
application for and connecting of utilities, as well as all services, shall be
made by and only in the name of the Tenant: (List exceptions, if any)
None
9. Condition of Leased Premise; Maintenance and Repair. The Tenant acknowledges
that the Leased Premises are in good order and repair. The Tenant agrees to take
good care of and maintain the Leased Premises in good condition throughout the
term of the Lease.
The Tenant, at his expense, shall make all necessary repairs and replacements to
the Leased Premises, including the repair and replacement of pipes, electrical
wiring, heating and plumbing systems, fixtures and all other systems and
appliances and their appurtenances. The quality and class of all repairs and
replacements shall be equal to the original worth. If Tenant defaults in making
such repairs or replacements, Landlord may make them for Tenant's account, and
such expenses will be considered additional rent.
10. Compliance with Laws and Regulations. Tenant, at its expense, shall promptly
comply with all federal, state, and municipal laws, orders, and regulations, and
with all lawful directives of public officers, which impose any duty upon it or
Landlord with respect to the Leased Premises. The Tenant at its expense, shall
obtain all required licenses or permits for the conduct of its business within
the terms of this lease, or for the making of repairs, alterations,
improvements, or additions. Landlord, when necessary, will join with the Tenant
in applying for all such permits or licenses.
11. Alterations and Improvements. Tenant shall not make any alterations,
additions, or improvements to, or install any fixtures on, the Leased Premises
without Landlord's prior written consent. If such consent is given, all
alterations, additions, and improvements made, and fixtures installed, by Tenant
shall become Landlord's
<PAGE>
property upon the expiration or sooner termination of this Lease. Landlord may,
however, require Tenant to remove such fixtures, at Tenant's cost, upon the
termination hereof.
12. Assignment/Subletting Restrictions. Tenant may not assign this agreement or
sublet the Leased Premises without the prior written consent of the Landlord.
Any assignment. sublease or other purported license to use the Leased Premises
by Tenant without the Landlord's consent shall be void and shall (at Landlord's
option) terminate this Lease.
13. Insurance.
(i) [DELETED] See Addendum # 2
(ii) By Tenant. Tenant shall, at its expense, during the term
hereof, maintain and deliver to Landlord public liability and property damage
and plate glass insurance policies with respect to the Leased Premises. Such
policies shall name the Landlord and Tenant as insureds, and have limits of at
least $1 million for injury or death to any one person and $3 million for any
one accident, and $_____________ with respect to damage to property and with
full coverage for plate glass. Such policies shall be in whatever form and with
such insurance companies as are reasonably satisfactory to Landlord, shall name
the Landlord as additional insured, and shall provide for at least ten days'
prior notice to Landlord of cancellation.
14. Indemnification of Landlord. Tenant shall defend, indemnify, and hold
Landlord harmless from and against any claim, loss, expense or damage to any
person or property in or upon the Leased Premises, arising out of Tenant's use
or occupancy of the Leased Premises, or arising out of any act or neglect of
Tenant or its servants, employees, agents, or invitees.
15. Condemnation. If all or any part of the Leased Premises is taken by eminent
domain, this lease shall expire on the date of such taking, and the rent shall
be apportioned as of that date. No part of any award shall belong to Tenant.
16. Destruction of Premises. If the building in which the Leased Premises is
located is damaged by fire or other casualty, without Tenant's fault, and the
damage is so extensive as to effectively constitute a total destruction of the
property or building, this Lease shall terminate and the rent shall be
apportioned to the time of the damage. In all other cases of damage without
Tenant's fault, Landlord shall repair the damage with reasonable dispatch, and
if the damage has rendered the Leased Premises wholly or partially untenantable,
the rent shall be apportioned until the damaged is repaired. In determining what
constitutes reasonable dispatch, consideration shall be given to delays caused
by strikes, adjustment of insurance, and other causes beyond the Landlord's
control.
17. Landlord's Rights upon Default. In the event of any breach of this lease by
the Tenant, which shall not have been cured within TEN (10) DAYS, then the
Landlord, besides other rights or remedies it may have, shall have the immediate
right of reentry and may remove all persons and property from the Leased
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of, and for the account of, the Tenant. If the Landlord
elects to reenter as herein provided, or should it take possession pursuant to
any notice provided for by law, it may either terminate this Lease or may, from
time to time, without terminating this lease, relet the Leased Premises or any
part thereof, for such term or terms and at such rental or rentals and upon such
other terms and conditions as the Landlord in Landlord's own discretion may deem
advisable. Should rentals received from such reletting during any month be less
than that agreed to be paid during the month by the Tenant hereunder, the Tenant
shall pay such deficiency to the Landlord monthly. The Tenant shall also pay to
the Landlord, as soon as ascertained, the cost and expenses incurred by the
Landlord in such reletting.
<PAGE>
18. Quiet Enjoyment. The Landlord agrees that if the Tenant shall pay the rent
as aforesaid and perform the covenants and agreements herein contained on its
part to be performed, the Tenant shall peaceably hold and enjoy the said rented
premises without hindrance or interruption by the Landlord or by any other
person or persons acting under or through the Landlord.
19. Landlord's Right to Enter. Landlord may, at reasonable times, enter the
Leased Premises to inspect it, to make repairs or alterations, and to show it to
potential buyers, lenders or tenants.
20. Surrender upon Termination. At the expiration of the lease term the Tenant
shall surrender the leased property in as good condition as it was in at the
beginning of the term, reasonable use and wear excepted.
21. Subordination. This lease, and the Tenant's leasehold interest, is and shall
be subordinate, subject and inferior to any and all liens and encumbrances now
and thereafter placed on the Leased Premises by Landlord, any and all extensions
of such liens and encumbrances and all advances paid under such liens and
encumbrances.
22. Additional Provisions:
Rent shall increase by 1.5% starting Jan. 1, 1998 and every January
1st thereafter for the term of this lease. See attached schedule.
-2-
<PAGE>
23. Miscellaneous Terms.
(i) Notices. Any notice, statement, demand or other communication by one
party to the other, shall be given by personal delivery or by mailing the same,
postage prepaid, addressed to the Tenant at the premises, or to the Landlord at
the address set forth above.
(ii) Severability. If any clause or provision herein shall be adjudged
invalid or unenforceable by a court of competent jurisdiction or by operation of
any applicable law, it shall not affect the validity of any other clause or
provision, which shall remain in full force and effect.
(iii) Waiver. The failure of either party to enforce any of the provisions
of this lease shall not be considered a waiver of that provision or the right of
the party to thereafter enforce the provision.
(iv) Complete Agreement. This Lease constitutes the entire understanding of
the parties with respect to the subject matter hereof and may not be modified
except by an instrument in writing and signed by the parties.
(v) Successors. This Lease is binding on all parties who lawfully succeed to
the rights or take the place of the Landlord or Tenant.
IN WITNESS WHEREOF the parties have set their hands and seals on this 1st
day of October, 1996.
/s/ Frank Cretella /s/ John Amodio
- --------------------------------------- -----------------------------------
Landlord or Landlord's Authorized Agent Tenant TAM RESTAURANT HOLDING CORP.
-----------------------------------
-3-
<PAGE>
TAM Holding Corp.
1163 Forest Avenue
Staten Island, NY 10310
October 1, 1996
ADDENDUM #1
Tenant is responsible for 100% of real estate tax in base year as well as every
year for the term of this lease and any extension or renewal. Landlord will bill
tenant in writing for such additional rent.
ADDENDUM #2
Tenant shall at all times during the term of this Lease, at its expense, insure
and keep in effect on the building in which the Leased Premises is located fire
insurance with extended coverage. The Tenant shall not permit any use of the
Leased Premises which will make voidable any insurance on the property of which
the Leased Premises are a part, or on the contents of said property or which
shall be contrary to any law or regulation from time to time established by the
applicable fire insurance rating association.
The dollar amount for the above-mentioned insurance shall be for replacement
costs or $400,000 which ever is greatest.
10/1/96
----------------------------
/s/ Frank Cretella /s/ John J. Amodio
- -------------------------------- ----------------------------
Frank E. Cretella John J. Amodio, President
TAM Restaurant Holding Corp.
-1-
<PAGE>
TAM Holding Corp.
1163 Forest Avenue
Staten Island, NY 10310
RENT SCHEDULE
MONTHLY YEARLY
January 1, 1997 $3,125.00 $37,500.00
January 1, 1998 3,171.85 38,062.50
January 1, 1999 3,219.45 38,633.45
January 1, 2000 3,267.75 39,213.00
January 1, 2001 3,316.75 39,801.00
-2-
<PAGE>
COMMERCIAL LEASE
THIS LEASE is made on the 1st day of October 1996.
The Landlord hereby agrees to lease to the Tenant, and the Tenant hereby agrees
to hire and take from the Landlord, the Leased Premises described below pursuant
to the terms and conditions specified herein:
<TABLE>
<S> <C> <C> <C>
LANDLORD: Leisure Time Services TENANT(S): TAM RESTAURANT Holding Corp.
Address: 119 Linnet Street Address: 1163 Forest Avenue
Bayonne, NJ 07002 Staten Island, NY 10310
</TABLE>
1. Leased Premises. The Leased Premises are those premises described as:
The entire Parcel of land with 6000 sq. ft. structure known as
119 Linnet Street, Bayonne, NJ 07002
2. Term. The term of the Lease shall be for a period of 5 1/4 year(s) commencing
on the 1st day of October, 1996 ending on the 31st day of Dec., 1996 unless
sooner terminated as hereinafter provided. If Tenant remains in possession of
the Leased Premises with the written consent of the Landlord after the lease
expiration date stated above, this Lease will be converted to a month-to-month
Lease and each party shall have the right to terminate the Lease by giving at
least one months' prior written notice to the other party.
3. Rent. The Tenant agrees to pay the ANNUAL RENT of Thirty thousand
Dollars($30,000) payable in equal installments $ 2,500 in advance on the first
day of each and every calendar month during the full term of this Lease.
4. [DELETED] See Addendum # 1
5. Security Deposit. The sum of Five thousand Dollars ($5,000) is deposited by
the Tenant with the Landlord as security for the faithful performance of all the
covenants and conditions of the lease by the said Tenant. If the Tenant
faithfully performs all the covenants and conditions on his part to be
performed, then the sum deposited shall be returned to the Tenant.
6. Delivery of Possession. If for any reason the Landlord cannot deliver
possession of the leased property to the Tenant when the lease term commences,
this Lease shall not be void or voidable, nor shall the Landlord be liable to
the Tenant for any loss or damage resulting therefrom. However, there shall be
an abatement of rent for the period between the commencement of the lease term
and the time when the Landlord delivers possession.
7. Use of Leased Premises. The Leased Premises may be used only for the
following purpose:
storage
8. Utilities. Except as specified below, the Tenant shall be responsible for all
utilities and services that are furnished to the Leased Premises. The
application for and connecting of utilities, as well as all services, shall be
made by and only in the name of the Tenant: (List exceptions, if any)
None
9. Condition of Leased Premise; Maintenance and Repair. The Tenant acknowledges
that the Leased Premises are in good order and repair. The Tenant agrees to take
good care of and maintain the Leased Premises in good condition throughout the
term of the Lease.
The Tenant, at his expense, shall make all necessary repairs and
replacements to the Leased Premises, including the repair and replacement of
pipes, electrical wiring, heating and plumbing systems, fixtures and all other
systems and appliances and their appurtenances. The quality and class of all
repairs and replacements shall be equal to the original worth. If Tenant
defaults in making such repairs or replacements, Landlord may make them for
Tenant's account, and such expenses will be considered additional rent.
10. Compliance with Laws and Regulations. Tenant, at its expense, shall promptly
comply with all federal, state, and municipal laws, orders, and regulations, and
with all lawful directives of public officers, which impose any duty upon it or
Landlord with respect to the Leased Premises. The Tenant at its expense, shall
obtain all required licenses or permits for the conduct of its business within
the terms of this lease, or for the making of repairs, alterations,
improvements, or additions. Landlord, when necessary, will join with the Tenant
in applying for all such permits or licenses.
11. Alterations and Improvements. Tenant shall not make any alterations,
additions, or improvements to, or install any fixtures on, the Leased Premises
without Landlord's prior written consent. If such consent is given, all
alterations, additions, and improvements made, and fixtures installed, by Tenant
shall become Landlord's property upon the expiration or sooner termination of
this Lease. Landlord may, however, require Tenant to remove such fixtures, at
Tenant's cost, upon the termination hereof.
<PAGE>
12. Assignment/Subletting Restrictions. Tenant may not assign this agreement or
sublet the Leased Premises without the prior written consent of the Landlord.
Any assignment, sublease or other purported license to use the Leased Premises
by Tenant without the Landlord's consent shall be void and shall (at Landlord's
option) terminate this Lease.
13. Insurance.
(i) [DELETED] See Addendum # 2
(ii) By Tenant. Tenant shall, at its expense, during the term
hereof, maintain and deliver to Landlord public liability and property damage
and plate glass insurance policies with respect to the Leased Premises. Such
policies shall name the Landlord and Tenant as insureds, and have limits of at
least $1 million for injury or death to any one person and $3 million for any
one accident, and $_____________ with respect to damage to property and with
full coverage for plate glass. Such policies shall be in whatever form and with
such insurance companies as are reasonably satisfactory to Landlord, shall name
the Landlord as additional insured, and shall provide for at least ten days'
prior notice to Landlord of cancellation.
14. Indemnification of Landlord. Tenant shall defend, indemnify, and hold
Landlord harmless from and against any claim, loss, expense or damage to any
person or property in or upon the Leased Premises, arising out of Tenant's use
or occupancy of the Leased Premises, or arising out of any act or neglect of
Tenant or its servants, employees, agents, or invitees.
15. Condemnation. If all or any part of the Leased Premises is taken by eminent
domain, this lease shall expire on the date of such taking, and the rent shall
be apportioned as of that date. No part of any award shall belong to Tenant.
16. Destruction of Premises. If the building in which the Leased Premises is
located is damaged by fire or other casualty, without Tenant's fault, and the
damage is so extensive as to effectively constitute a total destruction of the
property or building, this Lease shall terminate and the rent shall be
apportioned to the time of the damage. In all other cases of damage without
Tenant's fault, Landlord shall repair the damage with reasonable dispatch, and
if the damage has rendered the Leased Premises wholly or partially untenantable,
the rent shall be apportioned until the damaged is repaired. In determining what
constitutes reasonable dispatch, consideration shall be given to delays caused
by strikes, adjustment of insurance, and other causes beyond the Landlord's
control.
17. Landlord's Rights upon Default. In the event of any breach of this lease by
the Tenant, which shall not have been cured within TEN (10) DAYS, then the
Landlord, besides other rights or remedies it may have, shall have the immediate
right of reentry and may remove all persons and property from the Leased
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of, and for the account of, the Tenant. If the Landlord
elects to reenter as herein provided, or should it take possession pursuant to
any notice provided for by law, it may either terminate this Lease or may, from
time to time, without terminating this lease, relet the Leased Premises or any
part thereof, for such term or terms and at such rental or rentals and upon such
other terms and conditions as the Landlord in Landlord's own discretion may deem
advisable. Should rentals received from such reletting during any month be less
than that agreed to be paid during the month by the Tenant hereunder, the Tenant
shall pay such deficiency to the Landlord monthly. The Tenant shall also pay to
the Landlord, as soon as ascertained, the cost and expenses incurred by the
Landlord in such reletting.
18. Quiet Enjoyment. The Landlord agrees that if the Tenant shall pay the rent
as aforesaid and perform the covenants and agreements herein contained on its
part to be performed, the Tenant shall peaceably hold and enjoy the said rented
premises without hindrance or interruption by the Landlord or by any other
person or persons acting under or through the Landlord.
19. Landlord's Right to Enter. Landlord may, at reasonable times, enter the
Leased Premises to inspect it, to make repairs or alterations, and to show it to
potential buyers, lenders or tenants.
20. Surrender upon Termination. At the expiration of the lease term the Tenant
shall surrender the leased property in as good condition as it was in at the
beginning of the term, reasonable use and wear excepted.
21. Subordination. This lease, and the Tenant's leasehold interest, is and shall
be subordinate, subject and inferior to any and all liens and encumbrances now
and thereafter placed on the Leased Premises by Landlord, any and all extensions
of such liens and encumbrances and all advances paid under such liens and
encumbrances.
22. Additional Provisions:
Rent shall increase by 1.5% starting Jan. 1, 1998 and every
January 1st thereafter for the term of this lease. See
attached schedule.
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<PAGE>
23. Miscellaneous Terms.
(i) Notices. Any notice, statement, demand or other communication by
one party to the other, shall be given by personal delivery or by mailing the
same, postage prepaid, addressed to the Tenant at the premises, or to the
Landlord at the address set forth above.
(ii) Severability. If any clause or provision herein shall be adjudged
invalid or unenforceable by a court of competent jurisdiction or by operation of
any applicable law, it shall not affect the validity of any other clause or
provision, which shall remain in full force and effect.
(iii) Waiver. The failure of either party to enforce any of the
provisions of this lease shall not be considered a waiver of that provision or
the right of the party to thereafter enforce the provision.
(iv) Complete Agreement. This Lease constitutes the entire
understanding of the parties with respect to the subject matter hereof and may
not be modified except by an instrument in writing and signed by the parties.
(v) Successors. This Lease is binding on all parties who lawfully
succeed to the rights or take the place of the Landlord or Tenant.
IN WITNESS WHEREOF the parties have set their hands and seals on this
1st day of October, 1996.
/s/ Frank Cretella /s/ John Amodio
- --------------------------------------- -----------------------------
Landlord or Landlord's Authorized Agent Tenant Tam Restaurant Corp.
-----------------------------
Tenant
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<PAGE>
MANAGEMENT AGREEMENT
AGREEMENT made as of the 1st day of October, 1996, between MAT
Operating Corp., a New York Corporation, (the "Owner"), with offices at 1163
Forest Avenue, Staten Island, NY 10310, and TAM RESTAURANT HOLDING CORP., INC.,
a Delaware corporation (the "Manager"), with offices at 1163 Forest Avenue,
Staten Island, New York, 10310.
W I T N E S S E T H:
WHEREAS, the Owner is the owner of certain concession business assigned
to it by TAM Restaurant Group, Inc. known as "Central Park Zoo", located at
Fifth Avenue and 64th Street (inside Central Park) and "Staten Island Zoo",
located at 614 Broadway, Staten Island, New York; and a Special Events business
which handles various Special Events at various locations and at various times.
WHEREAS, the Owner desires to retain the Manager, and the Manager
desires to be so retained, on the terms and conditions which are set forth
herein.
NOW THEREFORE, in consideration of the foregoing and the mutual
convenants and promises which are set forth herein, the parties hereby agree as
follows:
1. DESIGNATION OF MANAGER AS AGENT.
<PAGE>
A. The Manager is hereby designated as the agent and
representative of the Owner for the purpose of managing the Restaurant for the
account of the Owner.
B. (i) This Agreement shall remain in effect for a period
beginning on the date hereof and continuing for ten (10) years therefrom through
and including September 30, 2006, unless terminated earlier as provided below.
The period for which this Agreement remains in effect is referred to herein as
the "Term". The period of one (1) year beginning on the date hereof is referred
to as a "Term Year", and each successive period of one (1) year during the Term
(and any final period of one (1) year or shorter during the Term) shall also be
referred to as a "Term Year".
(ii) This Agreement may be terminated at any time
by the Owner for "cause". For purposes of this Agreement, "cause" shall be any
continuing or repeated failure by the Manager to perform its duties and
responsibilities set forth in this Agreement.
2. DUTIES OF MANAGER.
A. Subject to the other provisions of this Agreement, the
duties and responsibilities of the Manager in connection with the management of
the Concessions are to act on behalf of the Owner as follows:
(i) Collection of Revenue. The Manager shall
collect all revenues from the operations of the Concessions.
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(ii) Expenses. The Manager shall, from gross
revenues collected from the Concessions:
(a) pay all operating expenses (including
advertising and promotional expenses) and such other expenses of
the Concessions; and
(b) pay to any lenders designated by the
Owner all sums that may become due on loans affecting the Concessions and the
Owner.
(iii) Taxes. The Manager shall pay all taxes
levied and assessed against the Concessions prior to delinquency. The Manager
shall withhold from gross revenues an amount equal to the estimated annual taxes
on the Owner in connection with the Concessions, and the Manager shall pay such
taxes from such withheld amounts.
(iv) Maintenance, Upkeep and Repairs. The
Manager shall do everything reasonably necessary for the proper maintenance,
upkeep and repair of the Concessions, except to the extent that such items are
the responsibility of the person that owns the real property where the
Concession is located, in accordance with the lease or license for the
Concession premises. The Manager shall also cause all improvements, decorations
and alterations to the Concession as may be required in its reasonable
discretion, subject to the requirements of such lease/license.
(v) Employees The Manager shall have authority to
hire, supervise and terminate on behalf of the Owner all independent contractors
and employees, if any, reasonably
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<PAGE>
required in the operation of the Concession, but all such employees shall be
employees of the Owner and not employees of the Manager. Where applicable, the
Manager shall prepare for the Owner payroll tax returns and shall make payments
of such taxes to appropriate agencies out of gross revenues from the Concession.
(vi) Legal Assistance. Where legal assistance is
needed for matters involving the Concession, such action shall be taken through
counsel designated or approved by the Owner. The expenses for such counsel shall
be borne by the Owner.
(vii) Records. The Manager shall maintain
accurate records of all moneys received and disbursed in connection with its
management of the Concession, and such records shall be open for inspection by
the Owner at all times during regular business hours. The Manager shall also
render to the Owner a monthly statement showing all receipts and disbursements,
relating to the Concession.
(viii) Expenses of Manager. All of the following
expenses are part of the Manager's fee and are the sole expense of the Manager:
payroll processing fees, messenger service, money transport and change fees,
health plan and benefit plan maintenance fees, all operating expenses not
directly incurred at the unit level.
(ix) Payment of Owner. After the Manager deducts
all authorized expenses relating to the operation and management of the
Concession (including managers fee) from the funds collected for the account of
the Owner, as well as all reserves
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<PAGE>
set by the Owner for working capital and capital expenditures, the Manager shall
disburse any remaining funds as agreed between the manager and the Owner.
(x) Insurance. Upon the execution of this
Agreement, the Manager will review existing insurance coverage on the Concession
with its insurance broker to determine adequacy of coverage, and may place, on
behalf of the Owner and at the Owner's expense, such coverage as the Manager and
the Owner deem appropriate.
(xi) Compliance with Laws. The Manager shall
manage the Concession in full compliance with the requirements of
all applicable laws.
B. The parties acknowledge and agree that the services to be
provided by the manager will consist of services provided at the Concession
itself, as well as services to be provided at the offices of the Manager. The
compensation to be paid to the Manager as provided below will be the entire
payment to the Manager in connection with such services, and no additional
payment or amount will be charged by the Manager for any services or work which
may be performed by employees or other personnel of the Manager in connection
with the Manager's performance of its obligations hereunder.
3. RIGHTS OF CERTAIN PERSONS TO PARTICIPATE IN DECISIONS .
Notwithstanding anything to the contrary which may be
contained in this Agreement, the parties acknowledge and agree as follows in
connection with the Manager's duties hereunder:
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A. All decisions of the Manager will be subject to any other
policies (if any) which may be set by the Owner and communicated to the Manager.
B. The following actions or steps shall be subject to the
prior review and approval of the Owner:
(i) Any change in the name of the Concession or
any proposed new use of such name in any manner.
(ii) Preparation of an annual operating budget,
capital budget or business plan for the Concession.
(iii) All advertising and promotional expenses for
the Concession.
4. COMPENSATION.
As compensation for its services to be performed pursuant to
this Agreement, the Owner shall pay to the Manager a fee equivalent to five (5%)
percent of the annual gross sales less sales tax attributable. The amounts shall
be payable monthly based on revenues for each month.
5. INDEMNIFICATION OF MANAGER.
A. Except for the willful misconduct, recklessness or
negligence of the Manager, the Owner agrees to indemnify the Manager against all
claims from or connected with the management of the Concession by the Manager or
the performance or exercise of any of the duties, obligations or powers herein
or hereafter granted to the Manager, provided that the Manager gives the Owner
prompt written notice of each such claim, permits the Owner to
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contest such claim and cooperates with the Owner in any such contesting of the
claim.
B. The Owner agrees to carry at all times during the Term
comprehensive general liability insurance against any loss, liability or damage
on, about or relating to the Leased or Licensed Premises, to such limits as
Landlord may reasonably, from time to time, require, provided that such
insurance shall have minimum limits of One Million ($1,000,000.00) Dollars for
death or injuries to one person and not less than Three Million ($3,000,000.00)
Dollars for death or injuries to two or more persons in one occurrence, and not
less than Twenty Thousand Dollars ($20,000.00) for damage to property. All such
bodily injury, property damage and personal injury, property insurance, and any
other insurance coverage carried by the Owner on the Restaurant shall be
extended to insure and indemnify the Manager as well as the Owner, by the
appropriate endorsement of all policies evidencing such insurance, to name the
Manager as an additional insured.
6. DELIVERY UPON TERMINATION.
Upon termination of this Agreement, the parties shall account
to each other with respect to all uncompleted business hereunder, and the
Manager shall promptly deliver to the Owner all leases, books, records and other
documents and instruments relating to the Concessions and the Owner that may be
in the possession or custody of the manager.
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<PAGE>
7. MISCELLANEOUS.
A. Any disagreement, dispute, controversy or claim arising out
of or relating to this contract or the breach thereof, shall be settled by
arbitration in accordance with the Rules of the American Arbitration
Association. Judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having jurisdiction thereof.
B. This Agreement contains the entire agreement of the parties
concerning the subject matter hereof, and supersedes any and all prior
agreements among the parties hereto concerning the subject matter hereof, which
prior agreements, if any, are hereby canceled. This Agreement may not be
changed, modified, amended, discharged, abandoned or terminated orally, but only
by an agreement in writing, signed by the parties hereto.
C. If any of the provisions of this Agreement is held invalid,
such invalidity shall not affect the other provisions hereof that can be given
effect without the invalid provision, and to this end the provisions of this
Agreement are intended to be and shall be deemed severable.
D. Any and all notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed given if
delivered personally, sent via facsimile or overnight courier, or sent by
certified or registered mail, return receipt requested, to the parties at their
respective addresses set forth first above or to such addresses as may from time
to time be designated by them respectively in writing by notice similarly given
to all parties in accordance with this paragraph. A copy
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<PAGE>
of all such notices, requests, demands, or other communications hereunder to the
owner shall be forwarded to the following attorneys:
Russo, Fusco, Scamardella & D'Amato P.C.
1010 Forest Avenue
Staten Island, NY 10310
Attn: Robert Scamardella, Esq.
A copy of all such notices, requests, demands, or other communications hereunder
to the Manager shall be forwarded to the following attorneys:
Hofheimer, Gartlir & Gross
633 Third Avenue
New York, NY 10017
Attn: Donald Weisberg
or to such other address as such attorneys may designate by written notice to
the parties hereto and the other such attorneys. Notices under this Agreement
shall be deemed delivered on the date delivered personally or sent via
facsimile, the next business day after being sent via overnight courier, or
three (3) business days after being sent via certified mail, return receipt
requested, as the case may be.
E. Waiver by any party of any breach of this Agreement or failure to
exercise any right hereunder shall not be deemed to be a waiver of any other
breach or right. The failure of any party to take action by reason of any such
breach or to exercise any such right shall not deprive such party of the right
to take
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<PAGE>
action at any time while such breach or condition giving rise to such right
continues.
F. This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding the
above, however, the parties recognize that the services to be provided by the
Manager hereunder are unique, and accordingly, this Agreement may not be
assigned by the Manager, nor any obligation hereunder delegated by the Manager,
except to another entity in which Frank E. Cretella owns more than fifty (50%)
percent of the ownership interests or is otherwise (in the reasonable
determination of the Owner) in control of management.
G. This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MAT OPERATING CORP.
By: /s/ Frank Cretella
--------------------------------------
Frank Cretella, President
TAM RESTAURANT HOLDING CORP., INC.
By: /s/ John Amodio
-------------------------------------
John Amodio, President
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<PAGE>
T R A N S F E R O F R I G H T S
- -------------------------------------------------------------------------------
September 30, 1996
TAM Restaurant Group, Inc. (TAM) a New York Corporation located at 1163 Forest
Avenue, Staten Island, NY 10310 currently owned by Frank & Jeanne Cretella is
re-organizing its business and as such is distributing to MAT Operating Corp.
(MAT) a New York Corporation located at 1163 Forest Avenue, Staten Island, NY
10310, a company also owned by Frank & Jeanne Cretella, the assets, liabilities
and the rights of TAM pertaining to the operation of concessions at the Staten
Island Zoo and Central Park Zoo and any special events that may arise.
Effective immediately, MAT will assume all rights and responsibilities to
operate the concessions at the Staten Island Zoo and Central Park Zoo and any
special events that may arise.
/s/ John J. Amodio /s/ Frank Cretella
- --------------------------- -----------------------------
John J. Amodio, President Frank Cretella, President
TAM Restaurant Group, Inc. MAT Operating Corp.
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<PAGE>
TAM LOAN AGREEMENT (TERM)
Loan Agreement ("Agreement"), dated as of October 31, 1997, by and
between TAM RESTAURANT HOLDING CORP., a Delaware corporation ("Borrower"), and
each of ARBCO ASSOCIATES, L.P. and KAYNE, ANDERSON NON-TRADITIONAL INVESTMENTS,
L.P., each a California limited partnership (each a "Lender" and, together,
"Lenders").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1. DEFINITIONS. The definitions set forth in the Recitals are
incorporated herein by reference.
"Agreement" shall mean this Loan Agreement, either as
originally executed or as it may from time to time be supplemented, modified, or
amended.
"Affiliate" shall mean any person or business entity, directly
or indirectly, related to, in control of, controlled by or under the common
control of any other person, or of a successor thereof, whether through merger,
consolidation, transfer of assets or otherwise.
"American Park Restaurant Operating Profit" shall mean all
earnings of Borrower's American Park Restaurant (or as otherwise named) to be
opened in Battery Park, (Manhattan) New York City before any allocation thereto
of corporate overhead expense and before interest, taxes, depreciation and
amortization, all in accordance with GAAP.
"Assets" shall have the meaning usually given that term in
accordance with GAAP, but shall exclude sums due to Borrower from Affiliates
(other than subsidiaries) of Borrower.
"Business Day" shall mean a day of the year on which banks are
not required or authorized to close in California.
"Contingent Liabilities" shall mean all contingent liabilities
as determined and computed in accordance with GAAP.
"Current Assets" shall mean all current assets as determined
and computed in accordance with GAAP (excluding loans to officers and
employees).
<PAGE>
"Current Liabilities" shall mean all current liabilities as
determined and computed in accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time, and, unless the context
otherwise requires, the regulations thereunder.
"Event of Default" shall mean any of those events specified in
Article V hereof.
"Financial Statements" shall mean balance sheets, income
statements, reconciliation of capital structure, statements of sources and
applications of funds together with appropriate notes and footnotes in
accordance with GAAP. Quarterly Financial Statements provided each Lender in
accordance with this Agreement may be unaudited and annual Financial Statements
shall be audited.
"GAAP" shall mean generally accepted accounting principles
consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of Borrower, except for changes
mandated by the Financial Accounting Standards Board or any similar accounting
authority of comparable standing.
"Governmental Agency" or "Government Agency" shall mean any
federal, state or local governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality or public body, court,
administrative tribunal, or public utility.
"Guarantor" shall mean Frank Cretella, an individual.
"Guaranty" shall mean the Continuing Guaranty of Guarantor, in
the form attached hereto as Exhibit B.
"Insurance Policies" shall mean any of the policies of
insurance specified in Section 4.01.
"Laws" shall mean, collectively, all federal, state, and local
laws, rules, regulations, ordinances and codes.
"Liabilities" shall have the meaning usually given that term
in accordance with GAAP.
"Loan" shall mean the loan described in Article III of this
Agreement in a principal amount of $1,000,000.00.
"Loan Documents" shall mean the Note, the Guaranty, the Pledge
and Security Agreement, the Warrant, this Agreement, and such other documents as
Lenders may require Borrower to give or cause to be given to Lenders as evidence
of and/or security for the Loan and the Guaranty.
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<PAGE>
"Loan Proceeds" shall mean all funds advanced by Lenders as a
Loan to Borrower under this Agreement.
"Maturity Date" shall mean the date which is 19 months
following the date on which the Loan is made in the event that Borrower shall
have made an offering of its common stock to the public pursuant to the
Securities Act of 1933, as amended, prior to April 15, 1998; otherwise, the
Maturity Date shall mean July 15, 1998.
"Note" shall mean a Promissory Note in the form attached
hereto as Exhibit A, made by Borrower to the order of each Lender, evidencing
the Loan.
"Organizational Documents" shall mean:
(a) Articles of Incorporation, By-Laws and current Good
Standing Certificates of Borrower.
(b) Certified resolutions of Borrower's board of directors, in
form and substance satisfactory to Lender, affirming the authority of Borrower
to borrow and guarantee the Loan and enter into the Loan Documents, and
affirming the names and signatures of the officers of Borrower authorized to
execute documents in connection with the Loan.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor established under ERISA.
"Person" shall mean an individual, corporation, partnership,
joint venture, trust or unincorporated organization or a Government Agency.
"Plan" shall mean an employee benefit plan or other plan
maintained for employees of Borrower and covered by Title IV of ERISA.
"Pledge and Security Agreement" shall mean the Pledge and
Security Agreement between Guarantor and Lenders in the form attached hereto as
Exhibit C.
"Warrant" shall mean the Warrant to purchase shares of the
Borrower's common stock in the form attached hereto as Exhibit D.
1.2. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistent with those applied
in the preparation of the Financial Statements referred to in Section 4.10 and
all financial data submitted pursuant to this Agreement shall be prepared in
accordance with such principles.
1.3. USE OF DEFINED TERMS. Any defined terms used in the plural shall
include the singular and such terms shall encompass all members of the relevant
class.
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<PAGE>
1.4. SCHEDULES AND EXHIBITS. All schedules and exhibits to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by reference.
1.5. REFERENCES. Any reference to this Agreement or any other document
shall include such document both as originally executed and as it may from time
to time be supplemented and modified. References herein to Articles, Sections
and Exhibits shall be construed as references to this Agreement unless a
different document is named.
1.6. OTHER TERMS. The term "document" is used in its broadest sense and
encompasses agreements, certificates, opinions, consents, instruments and other
written material of every kind. Unless otherwise expressly stated, the terms
"including" and "include" shall mean "including (include), without limitation."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Borrower hereby represents and warrants to Lenders as of the date of
this Agreement, the date the Loan Proceeds are disbursed to Borrower, and each
and every date during the existence of the Loan, or any portion thereof, as the
context admits or requires, that:
2.1. BORROWER'S CAPACITY. Borrower is and shall continue to be a
corporation, duly organized and existing under the Laws of the State of
Delaware, and duly qualified to do business in any state in which the nature of
its business requires it to be so qualified.
2.2. VALIDITY OF LOAN DOCUMENTS. The Loan Documents are and shall
continue to be in all respects valid and binding on Borrower and, as applicable,
on Guarantor, according to their terms, subject to all Laws, including equitable
principles, insolvency laws, and other matters applying to creditors generally;
provided, however, that the implementation of such Laws do not and will not
affect the ultimate realization of the security afforded thereby. The execution,
delivery and performance by Borrower of the Loan Documents have been duly
authorized by all necessary action and do not and will not:
(a) Violate any provision of the Organizational Documents or
other agreements to which Borrower is a party or by which it is bound;
(b) Result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge, right
of others or other encumbrance of any nature (other than under the Loan
Documents) upon or with respect to any property now owned or leased or hereafter
acquired by Borrower;
(c) Violate any provision of any Laws or of any rule,
regulation, order, writ, judgment, injunction, decree, determination, or award;
or
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<PAGE>
(d) Result in a breach of or constitute a default under, cause
or permit the acceleration of any obligation owed under, or require any consent
under any indenture or loan or credit agreement or any other agreement, lease,
or instrument to which Borrower is a party or by which Borrower or any property
of Borrower is bound or affected.
2.3. BORROWER AND GUARANTOR NOT IN DEFAULT OR VIOLATION.
Neither Borrower nor Guarantor is, or prior to full repayment of the Loan will
be, in default under or in violation of any Laws, order, rule, regulation, writ,
judgment, injunction, decree, determination or award which in any way relate to
the Loan or the Guaranty. No event has occurred and is continuing, or would
result from the making of the Loan or an advance of funds hereunder, which
constitutes an Event of Default, or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.
2.4. NO APPROVALS REQUIRED. Borrower does not require any
authorization, consent, approval, order, license, exemption from, or filing,
registration, or qualification with, any Governmental Agency or any other party
in connection with the execution, delivery or performance by Borrower of the
Loan Documents.
2.5. TAX LIABILITY. Borrower has filed and shall file all tax returns
(federal, state, and local), if any, required to be filed and has paid and shall
pay all taxes shown thereon to be due and all property taxes due, including
interest and penalties, if any.
2.6. FINANCIAL STATEMENTS. All Financial Statements, tax returns and
other financial information of Borrower which have been provided to Lender
fairly present the financial position of Borrower at the respective dates of
their preparation. Since the dates of such Financial Statements, tax returns and
other financial information, there has been no material adverse change in the
financial condition of Borrower.
2.7. PENDING LITIGATION. Except as set forth on Schedule 2.07, there
are no actions, suits, or proceedings pending, or to the knowledge of Borrower
threatened, against or affecting the Borrower or Guarantor, or involving the
validity or enforceability of any of the Loan Documents or the priority of the
lien thereof, at Law or in equity, or before or by any Governmental Agency,
except actions, suits, and proceedings that are fully covered by insurance or
which, if adversely determined, would not substantially impair the ability of
Borrower and Guarantor to perform each and every one of its obligations under
and by virtue of the Loan Documents; and Borrower and Guarantor is not in
default with respect to any order, writ, injunction, decree, or demand of any
court or any Governmental Agency.
2.8. COMPLIANCE WITH ERISA. Borrower does not and shall not maintain
any employee benefit plan or other plan maintained for employees of Borrower
which is or might be deemed to be covered by Title IV of ERISA, except plans
that are or shall be in compliance with all applicable provisions of ERISA. No
Reportable Event has occurred or is continuing with respect to any Plan.
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2.9. SOLVENCY. Borrower is and shall continue to be able to pay its
debts as they mature and the realizable value of its Assets is, and at all times
that it may have obligations hereunder shall continue to be, sufficient to
satisfy any and all obligations hereunder.
2.10. PRINCIPAL PLACE OF BUSINESS. The principal place of business of
Borrower is, and will continue to be, as set forth underneath the signature of
Borrower at the end of this Agreement. In the event that Borrower hereafter
intends to move its principal place of business, it shall first give at least 30
days' prior written notice to Lender of its intention so to move, the date that
such move is anticipated, and its new address.
2.11. PERMITS. Borrower possesses all licenses, permits, franchises,
patents, copyrights, trademarks, and trade names, or rights thereto, that are
necessary to conduct its business substantially as now conducted and as
presently proposed to be conducted, and, except as set forth on Schedule 2.11,
Borrower is not in material violation of any valid rights of others with respect
to any of the foregoing.
ARTICLE III
THE LOAN
3.1. THE LOAN. Lenders agree, on the terms and conditions hereinafter
set forth, to make, or to cause one or more of its Affiliates to make, the Loan
provided for in this Article. Each Lender will participate equally in the Loan.
3.2. NOTE. The Loan shall be evidenced by a Note payable to each
Lender. Each payment under the Loan shall be evidenced and recorded by the
Lender to which such payment is made on such Lender's records, which recordation
shall be prima facie evidence of such payment; provided, however, that the
failure by a Lender to make any such recordation shall not limit or otherwise
affect the obligation of Borrower hereunder or under either Note.
3.3. INTEREST. Interest on the outstanding principal balances under the
Notes shall accrue at the rates provided for in the Notes and shall be paid as
provided for in the Notes.
3.4. USE OF PROCEEDS. The Loan Proceeds shall be used by Borrower for
the purpose of constructing and opening the American Park Restaurant in Battery
Park, New York City.
3.5. CONDITIONS PRECEDENT TO LOAN. The obligation of Lenders to make
the Loan is subject to and expressly conditioned on each of the following:
(a) Borrower, at its sole expense, shall deliver to each
Lender, at its office in Los Angeles, California, on or before the date of
advance of any Loan Proceeds, the following, in form and substance satisfactory
to such Lender, in Lender's sole opinion and judgment: (i) this Loan Agreement;
(ii) a Note; (iii) a Guaranty; (iv) a Pledge and Security Agreement; (v) a
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Warrant; (vi) certified copies of resolutions of Board of Directors of Borrower;
and (vii) such additional assignments, agreements, certificates, reports,
approvals, instruments, documents, financing statements, consents, and opinions
as such Lender may request.
(b) Review and approval by each Lender, its counsel, or both,
of true and correct copies of Borrower's Organizational Documents, and all other
Loan Documents;
(c) Review and approval by each Lender of true and correct
copies of Financial Statements of Borrower; and
(d) No suit, action, or other proceeding of material
consequence shall be pending or threatened which seeks to restrain or prohibit
the consummation of the transactions contemplated by this Agreement, or to
obtain damages or other relief in connection therewith;
3.6. LIMITATIONS ON ADVANCES AND PAYMENTS.
(a) The Loan Proceeds shall be disbursed to Borrower by wire
transferring the Loan Proceeds to or for the benefit of Borrower in accordance
with wire transfer instructions to be provided by Borrower to Lenders.
(b) The principal amount of the Notes may be prepaid upon and
subject to the terms and conditions of the Notes.
(c) Payments shall be as provided for in the Notes.
(d) Borrower hereby authorizes each Lender, if and to the
extent any payment of principal or interest or sum otherwise due hereunder is
not promptly made pursuant to such Lender's Note, and to the extent of any
obligation of Borrower to such Lender under this Agreement or any other
agreement, to charge against any account of Borrower with Lender an amount equal
to part or all of the principal costs and expenses, and accrued interest from
time to time due and payable to such Lender under the Note or otherwise. Such
Lender is under no obligation to charge such past due payments against any
account of Borrower, but may elect to do so in its sole and absolute opinion and
judgment.
3.7. GUARANTY. As further support for the payment of the Notes and
performance of this Loan Agreement, Guarantor shall guarantee payment of
interest and costs of collection pursuant to the Guaranty and, to secure its
obligations thereunder, shall enter into, together with his spouse, the Pledge
and Security Agreement, pledging to Lender as security 362,705 shares (which are
anticipated to become, pursuant to a planned reverse split of Borrower's common
stock, 200,000 shares) of common stock of Borrower.
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ARTICLE IV
BORROWER'S COVENANTS
In addition to anything else herein stated, Borrower agrees:
4.1. INSURANCE. To obtain and at all times maintain hazard and
liability insurance in amount, form and issued by a company or companies
satisfactory to Lender. The insurance is to include business interruption,
boiler and machinery and glass insurance. Said liability insurance is to
include, but not be limited to, worker's compensation and employer's liability
insurance. Upon a Lender's request, all policies or a certificate acceptable to
such Lender shall be delivered to it together with evidence of payment of
premium thereon and an agreement to give such Lender at least 30 Business Days'
prior notice of any material changes, termination, or expiration of the
policies.
4.2. RIGHT OF ENTRY. Each Lender and each Lender's employees or agents
shall have the right at all times to enter upon Borrower's premises for whatever
purpose such Lender deems appropriate, including, without limitation, inspection
of the premises and the posting of such notices and other written or printed
material thereon as such Lender may deem appropriate or desirable.
4.3. LENDER MAY EXAMINE BOOKS AND RECORDS. Each Lender shall have the
right, from time to time, acting by and through its employees or agents, to
examine the books, records, and accounting data of Borrower and Guarantor, and
to make extracts therefrom or copies thereof. Borrower shall, and shall cause
Guarantor to, promptly make such books, records, and accounting data available
to each Lender, as stated above, upon written request, and upon like request
shall promptly advise such Lender, in writing, of the location of such books,
records, and accounting data.
4.4. NO AUTOMATIC SET-OFF. The existence of the deposit or other
accounts of Borrower with either Lender and/or the fact of any sum or sums being
on deposit in any such account shall in no way constitute a set-off against or
be deemed to compensate the obligation of the Loan or any payment or performance
due under this Agreement or any of the other Loan Documents, unless and until
such Lender, by affirmative action, shall so apply said account or any portion
thereof and then only to the extent thereof so designated by such Lender.
4.5. PAYMENT OF TAXES. Borrower shall pay and discharge all taxes,
assessments, and governmental charges or levies imposed on Borrower or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid might
become a lien or charge of a material nature upon any of its properties,
provided that Borrower shall not be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it maintains adequate reserves with respect thereto, which
reserves shall be segregated and maintained in such accounts and upon such
conditions as may be designated by Lender from time to time.
4.6. PRESERVATION OF EXISTENCE. Borrower shall preserve and maintain
its corporate existence, right, franchises and privileges in the State of
Delaware and qualify and remain qualified as a foreign corporation, in any
jurisdiction in which such qualification is or may be necessary, in view of
Borrower's business and operations or the ownership of its properties.
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4.7. COMPLIANCE WITH LAWS AND CONTRACTS. Except as described on
Schedule 2.11, Borrower shall comply with the requirements of all applicable
Laws and orders of any Governmental Agency, provided that if Borrower has not so
complied by the date prescribed in any such Law or order, regulation, Borrower
shall comply therewith by the date set forth in any order of the Governmental
Agency charged with the enforcement of such Law, rule or regulation if such date
is later, and comply with all contracts, agreements, indentures or instruments
by which it is bound.
4.8. MAINTENANCE OF PROPERTY. Borrower shall maintain and preserve, or
cause to be maintained and preserved, its Assets and every part thereof, in good
working order and condition, ordinary wear and tear excepted.
4.9. LIMITATION OF DISPOSITION OF ASSETS. Except for personal property
sold, leased or otherwise disposed of in the ordinary course of business,
Borrower shall not, prior to repayment in full of the Loan, convey, sell, lease
or otherwise dispose of all or substantially all of its Assets without the prior
written consent of the general partner of Lenders.
4.10. REPORTING REQUIREMENTS. So long as Borrower shall have any
obligation to Lender under this Agreement, Borrower shall deliver to the Lenders
each of the following financial statements and reports:
(a) As soon as practicable and in any event within five days
after Borrower knows or should reasonably have known of the commencement of any
action or proceeding against it or Guarantor, which action or proceeding could
materially impact the payment or performance by Borrower or Guarantor under the
Loan Documents or the Guaranty, as applicable (except actions or proceedings
seeking money judgment that are fully insured or bonded), a report of the
commencement of such action or proceeding containing a statement signed by the
principal financial officer of Borrower or by Guarantor setting forth details of
such action or proceeding and any action Borrower or such Guarantor proposes to
take with respect thereto;
(b) Within five days of the occurrence of any Event of Default
or event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default, a report regarding such Event of Default or
event setting forth details and describing any action which Borrower proposes to
take with respect thereto, signed by an officer of Borrower;
(c) Any change in name of Borrower (other than to TAM
Restaurants, Inc.) or use of any trade names or trade styles not presently used;
(d) As soon as practicable and in any event within 60 days
after the end of each quarter of each fiscal year of Borrower, the balance sheet
and a statement of earnings and surplus of Borrower as of the end of and for
each such quarter, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the principal financial officer of Borrower as
having been prepared in accordance with GAAP consistent with those applied in
the preparation of the Financial Statements referred to in Section 4.10(e),
together with a certificate of said officer stating that he has no knowledge
that an Event of Default, or any event which, with notice
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or lapse of time, or both, would constitute an Event of Default or, if an Event
of Default or such event has occurred and is continuing, a statement as to the
nature thereof and the action which Borrower proposes to take with respect
thereto and a certificate of the said officer certifying Borrower's compliance
with all covenants contained herein;
(e) As soon as available and in any event within 120 days
after the end of each fiscal year of Borrower, a copy of the Financial
Statements for such year, certified by BDO Seidman LLP or such other independent
certified public accountants of recognized standing reasonably acceptable to the
general partner of Lenders;
(f) Within 60 days after the end of each fiscal year, a
certificate of the president and principal financial officer of Borrower stating
that neither such officer has any knowledge that an Event of Default or any
event which, with notice or lapse of time, or both, would constitute an Event of
Default, has occurred and is continuing, or if, in the opinion of either such
officer, an Event of Default or such an event has occurred and is continuing, a
statement as to the nature thereof;
(g) Promptly upon receipt thereof, one copy of any other
report submitted to Borrower by independent accountants in connection with any
annual, interim or special audit made by them of the books of Borrower;
(h) Within five business days of becoming aware of any
developments or other information which may materially and adversely affect
Borrower's or Guarantor's properties, business, prospects, profits or condition
(financial or otherwise) or Borrower's or Guarantor's ability to perform this
Agreement or the other Loan Documents, telephonic or telegraphic notice
specifying the nature of such development or information and such anticipated
effect, which shall be promptly confirmed in writing; and
(i) Such other information respecting the business, properties
or the condition or operations, financial or otherwise, of Borrower as either
Lender may from time to time reasonably request.
4.11. RESTRICTION ON SENIOR DEBT. Borrower shall not, without the prior
written consent of the general partner of Lenders, incur any additional
indebtedness not existing on the date hereof, unless (a) such indebtedness is
indebtedness to trade creditors incurred in the ordinary course of business, (b)
such indebtedness is expressly subordinated in right of payment to the Loan
pursuant to an instrument of subordination satisfactory in form and substance to
Lenders or (c) all of the proceeds of each indebtedness are used to prepay, in
whole or in part, the Loan.
4.12. DIRECTORSHIP. So long as the Loan or any portion thereof is
outstanding or Lenders (and their affiliates) hold, or have the right to require
upon exercise of Warrants or any other warrants, an aggregate of at least
362,705 shares (as such number shall be adjusted to account for the planned
reverse stock split, or any other stock split or similar action) of common stock
of Borrower, management of Borrower shall use its best efforts to assure that a
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representative designated by the general partner of Lenders is nominated and
elected to the Board of Directors of Borrower. Borrower acknowledges that
Guarantor (and his spouse) shall vote all of their shares of common stock of
Borrower in favor of the election of such designee. Kayne Anderson's initial
designee shall be Ken Harris and any subsequent designee shall be an individual
reasonably acceptable to Borrower.
ARTICLE V
EVENTS OF DEFAULT
An "Event of Default" shall be deemed to have occurred hereunder if:
5.1. DEFAULT UNDER LOAN DOCUMENTS. Borrower shall fail to pay principal
or interest, or both, when due under the terms of either Note; or Borrower shall
fail to perform or observe any term, covenant, or agreement contained in this
Agreement or in any of the other Loan Documents, which failure may be cured by
the payment of money, and, in any of such events, such failure shall continue
for a period of 10 days from the date such payment or performance was due; or
Borrower shall fail to perform or observe any term, covenant or agreement
contained in this Agreement or in any of the other Loan Documents, which failure
cannot be cured by the payment of money and, unless otherwise provided in this
Agreement, such failure shall continue for a period of 30 days after either
Lender shall have given written notice to Borrower specifying such default; or
5.2. BREACH OF WARRANTY. Any warranties or representations made or
agreed to be made in this Agreement or in any of the other Loan Documents shall
be breached in any material respect or shall prove to be false or misleading in
any respect when made; or
5.3. LITIGATION AGAINST BORROWER OR GUARANTOR. Any suit shall be filed
against Borrower or Guarantor, which, if adversely determined, could
substantially impair the ability of Borrower or Guarantor to perform any or all
of its obligations under and by virtue of this Agreement or any of the other
Loan Documents, unless Borrower or Guarantor furnishes to Lenders an officer's
certificate certifying a resolution of Borrower's Board of Directors or an
opinion of legal counsel, to the satisfaction of Lenders (and their counsel),
that, in the judgment of such Board of Directors or legal counsel, as
applicable, the suit is essentially without merit; or
5.4. BANKRUPTCY. Borrower or Guarantor shall fail to pay its debts as
they become due, or shall make an assignment for the benefit of its creditors,
or shall admit, in writing, its inability to pay its debts as they become due,
or shall file a petition under any chapter of the Federal Bankruptcy Code or any
similar law, now or hereafter existing, or shall become "insolvent" as that term
is generally defined under the Federal Bankruptcy Code, or shall in any
involuntary bankruptcy case commenced against it file an answer admitting
insolvency or inability to pay its debts as they become due, or shall fail to
obtain a dismissal of such case within 30 calendar days after its commencement
or convert the case from one chapter of the Federal
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Bankruptcy Code to another chapter, or be the subject of an order for relief in
such bankruptcy case, or be adjudged a bankrupt or insolvent, or shall have a
custodian, trustee, or receiver appointed for, or have any court take
jurisdiction of, its properties, or any part thereof, in any voluntary or
involuntary proceeding, including, but not limited to, those for the purpose of
reorganization, arrangement, dissolution, or liquidation, and such custodian,
trustee, or receiver shall not be discharged, or such jurisdiction shall not be
relinquished, vacated, or stayed within 30 days after the appointment; or
5.5. BORROWER STATUS. Without each Lender's prior written consent,
Borrower shall be liquidated, dissolved, or fail to maintain its status as a
going concern; or
5.6. ATTACHMENT. Any proceeding shall be brought, the object of which
is that any part of either Lender's commitment to make the advances of Loan
Proceeds hereunder shall at any time be subject or liable to attachment or levy
by any creditor of Borrower; or
5.7. MISREPRESENTATION AND/OR NON-DISCLOSURE. Any statements or
disclosures made by Borrower or Guarantor in order to induce either Lender to
make the Loan and enter into this Agreement shall have been material
misrepresentations or Borrower or Guarantor shall have failed to disclose any
material fact; or
5.8. ERISA. Any of the following events occur or exist with respect to
Borrower:
(a) Any Reportable Event with respect to any Plan;
(b) The filing under Title IV of ERISA of a notice of intent
to terminate any Plan or the termination of any Plan;
(c) Any event or circumstance that might constitute grounds
entitling the PBGC to institute proceedings for the termination of, or for the
appointment of a trustee to administrate any Plan, or the institution by the
PBGC of any such proceeding; or
5.9. FINANCIAL CONDITION. There shall be any material adverse changes
in Borrower's or Guarantor's financial condition.
ARTICLE VI
REMEDIES
6.1. CEASE PAYMENT AND/OR ACCELERATE. Upon, or at any time after, the
occurrence of an Event of Default or upon the occurrence of a default in any
other joint and/or several obligation or obligations of the Borrower or
Guarantor, to either Lender, Lenders shall have no obligation to make any
further advances of Loan Proceeds, all sums disbursed or advanced by Lenders and
all accrued and unpaid interest thereon shall, at the option of Lenders, become
immediately due and payable, Lenders shall be released from any and all
obligations to
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Borrower under the terms of this Agreement, and Lenders shall be entitled to
collect interest at the default rate specified in the Notes and to require
Borrower to make the monthly payments specified in the Notes.
6.2. RIGHTS AND REMEDIES NON-EXCLUSIVE. In addition to the specific
rights and remedies hereinabove mentioned, each Lender shall have the right to
avail itself of any other rights or remedies to which it may be entitled, at Law
or in equity, including, but not limited to, the right to realize upon any or
all of its security and/or the right to enforce the Guaranty, and to do so in
any order. Furthermore, the rights and remedies set forth above are not
exclusive, and each Lender may avail itself of any individual right or remedy
set forth in this Agreement, or available at Law or in equity, without utilizing
any other right or remedy. Notwithstanding the foregoing, Lender shall forbear
from availing itself of any remedies to which it may be entitled so long as the
Borrower continues to timely pay to both Lenders interest payments at the
default rate and the monthly payments referred to in Section 6.01.
ARTICLE VII
GENERAL CONDITIONS AND MISCELLANEOUS
7.1. NONLIABILITY OF LENDERS. Borrower acknowledges and agrees that by
accepting or approving anything required to be observed, performed, fulfilled,
or given to Lenders pursuant to this Agreement or the other Loan Documents,
including any certificate, Financial Statement, appraisal or insurance policy,
Lenders shall not be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision,
or condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation to anyone with respect thereto by
Lenders.
7.2. NO THIRD PARTIES BENEFITED. This Agreement is made for the purpose
of defining and setting forth certain obligations, rights, and duties of
Borrower and Lenders in connection with the Loan. It shall be deemed a
supplement to the Notes and the other Loan Documents, and shall not be construed
as a modification of the Notes or the other Loan Documents, except as provided
herein. It is made for the sole protection of Borrower and Lenders, and each
Lender's successors and assigns. No other person shall have any rights of any
nature hereunder or by reason hereof or the right to rely hereon. In the event
of a conflict between this Agreement and the Notes, the provisions of the Notes
shall control.
7.3. INDEMNITY BY BORROWER. Borrower hereby indemnifies and agrees to
hold harmless each Lender and its partners, directors, officers, agents and
employees (individually and collectively the "Indemnitee(s)") from and against:
(a) Any and all claims, demands, actions or causes of action
that are asserted against any Indemnitee by any person if the claim, demand,
action or cause of action, directly or indirectly, relates to a claim, demand,
action or cause of action that the person has or asserts against Borrower; and
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(b) Any and all liabilities, losses, costs or expenses
(including court costs and attorneys' fees) that any Indemnitee suffers or
incurs as a result of the assertion of any claim, demand, action or cause of
action specified in this Section 7.03.
7.4. TIME IS OF THE ESSENCE. Time is of the essence of this Agreement
and of each and every provision hereof. The waiver by either Lender of any
breach or breaches hereof shall not be deemed, nor shall the same constitute, a
waiver of any subsequent breach or breaches.
7.5. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on and
inure to the benefit of Borrower and Lenders and their respective successors and
assigns, except that Borrower may not assign its rights hereunder or any
interest herein without the prior written consent of each Lender. Each Lender
shall have the right to assign its rights under this Agreement or the other Loan
Documents and to grant participations in the Loan to others, but all waivers or
abridgements of Borrower's obligations that may be granted from time to time by
such Lender in writing, shall be binding upon such assignees or participants.
7.6. EXECUTION IN COUNTERPARTS. This Agreement and any other Loan
Document, except the Notes, may be executed in any number of counterparts, and
any party hereto or thereto may execute any counterpart, each of which, when
executed and delivered, will be deemed to be an original, and all of which
counterparts of this Agreement or any other Loan Document, as the case may be,
taken together will be deemed to be but one and the same instrument. The
execution of this Agreement or any other Loan Document by any party hereto or
thereto will not become effective until counterparts hereon or thereof, as the
case may be, have been executed by all the parties hereto or thereto.
7.7. INTEGRATION; AMENDMENTS; CONSENTS. This Agreement, together with
the documents referred to herein, constitutes the entire agreement of the
parties touching upon the subject matter hereof, supersedes any prior
negotiations or agreements on such matter, and, in particular, supersedes the
commitment letter or other correspondence or communication from Lenders (or
their general partner) to Borrower. No amendment, modification or supplement of
any provision of this Agreement or any of the other Loan Documents shall be
effective unless in writing, signed by Lenders and Borrower; and no waiver of
any of Borrower's or Guarantor's obligations under this Agreement or any of the
other Loan Documents or consent to any departure by Borrower or Guarantor
therefrom shall be effective unless in writing, signed by Lenders, and then only
in the specific instance and for the specific purpose given.
7.8. COSTS, EXPENSES AND TAXES. Borrower shall pay to each Lender, on
demand:
(a) The attorneys' fees and out-of-pocket expenses incurred by
such Lender in connection with the negotiation, preparation, execution, delivery
and administration of this Agreement and any other Loan Document and any matter
related thereto;
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(b) The costs and expenses of such Lender in connection with
the enforcement of this Agreement and any other Loan Document and any matter
related thereto, including the fees and out-of-pocket expenses of any legal
counsel (including those of in-house counsel), independent public accountants,
appraisers and other outside experts retained by such Lender; and
(c) All costs, expenses, fees, premiums and other charges
relating to or arising from this Agreement or any of the other Loan Documents or
any transactions contemplated hereby or thereby or the compliance with any of
the terms and conditions hereof or thereof.
All sums payable under this Section 7.08 may be deducted from the Loan
Amount in the discretion of Lenders.
7.9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Borrower contained herein or in any other Loan Document shall
survive the making of the Loan and the execution and delivery of the Notes, and
are material and have been or will be relied upon by Lenders, notwithstanding
any investigation made by Lenders or on behalf of Lenders. For the purpose of
this Agreement, all statements contained in any certificate, agreement,
Financial Statement, or other writing delivered by or on behalf of Borrower
pursuant hereto or to any other Loan Document or in connection with the
transactions contemplated hereby or thereby shall be deemed to be
representations and warranties of Borrower contained herein or in the other Loan
Documents, as the case may be.
7.10. NOTICES. All notices, requests, demands, directions, and other
communications provided for hereunder and under any other Loan Document (a
"Notice"), must be in writing and must be mailed, telegraphed, delivered or sent
by "fax," telex, cable or other form of electronic written communication to the
appropriate party at its respective address set forth below or, as to any party,
at any other address as may be designated by it in a written notice sent to the
other parties in accordance with this Section.
Any notice given by "fax," telegram, telex, cable or other form of
electronic written communication must be confirmed within 48 hours by letter
mailed or delivered to the appropriate party at its respective address. If any
notice is given by mail, it will be effective three (3) calendar days after
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being deposited in the mails with first-class or air mail postage prepaid; if
given by telegraph or cable, when delivered to the telegraph company with
charges prepaid; if given by "fax," telex or other form of electronic written
communication, when sent; or if given by personal delivery, when delivered.
Such notices will be given to the following:
To Lenders: c/o Kayne Anderson Investment Management, Inc.
1800 Avenue of the Stars, Second Floor
Los Angeles, California 90067
Attn: David Shladovsky, General Counsel
Fax: (310) 284-6444
To Borrower: TAM Restaurant Holding Corp.
1163 Forest Avenue
Staten Island, New York 10310
Attention: Frank Cretella
Fax: (718) 448-3872
7.11. FURTHER ASSURANCES. Borrower shall, at its sole expense and
without expense to Lenders, do, execute and deliver such further acts and
documents as Lender from time to time may reasonably require for the purpose of
assuring and confirming unto Lender the rights hereby created or intended, now
or hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Loan Documents, or for assuring the validity of
any security interest.
7.12. GOVERNING LAW. The Loan shall be deemed to have been made in
California, and this Agreement and the other Loan Documents shall be governed by
and construed and enforced in accordance with the Laws of the State of
California.
7.13. SEVERABILITY OF PROVISIONS. If any provision of this Agreement or
of any of the other Loan Documents is held to be inoperative, unenforceable or
invalid, such provision shall be inoperative, unenforceable or invalid without
affecting the remaining provisions; this Agreement and the other Loan Documents
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement or the other Loan
Documents; and to this end the provisions of this Agreement and the other Loan
Documents are declared to be severable, remaining in full force and effect.
7.14. JOINT AND SEVERAL OBLIGATIONS. If this Agreement is executed by
more than one person as Borrower, the obligations of each of such persons
hereunder shall be joint and several obligations.
7.15. CONSTRUCTION. Whenever the context of this Agreement requires,
the singular shall include the plural and the masculine gender shall include the
feminine and/or neuter.
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7.16. HEADINGS. Article and Section headings in this Agreement are
included for convenience of reference only and are not part of this Agreement
for any other purpose.
IN WITNESS WHEREOF, Borrower and Lenders have hereunto caused this
Agreement to be executed on the date first above written.
Lenders:
ARBCO ASSOCIATES, L.P., a California limited partnership KAYNE, ANDERSON
NON-TRADITIONAL INVESTMENTS, L.P., a California limited partnership
By: KAYNE ANDERSON INVESTMENT MANAGEMENT, INC., a Nevada corporation,
General Partner
By: /s/ Richard A. Kayne
------------------------
Name: Richard A. Kayne
Title: President
Borrower:
TAM RESTAURANT HOLDING CORP., a Delaware corporation
By: /s/ Frank Cretella
-----------------------
Name: Frank Cretella
Title: President and Chief Executive Officer
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SCHEDULE 2.07
In July 1996, Lisa Lea, on behalf of her infant daughter Monicea Lea,
and herself individually, filed a Notice of Claim against The City of New York
and New York City Department of Parks alleging personal injury caused to the
infant Monicea Lea resulting from a slip and fall on or near the premises of the
Loeb Boathouse. The claimant has stated a claim for damages of $10,000,000. This
matter is in the information gathering stage.
In February 1997, a lawsuit entitled Sharon Porto and Salvatore Porto
v. Bay Landing Restaurant Corp. and Lundy Bros. Restaurant, was filed in the
Supreme Court of New York, County of Kings. The plaintiffs allege personal
injury caused to Sharon Porto as a result of a slip and fall at Lundy Bros.
Restaurant in September 1996, and seek damages in the aggregate of $3,300,000.
The Company is vigorously defending the lawsuit which is in its preliminary
stages.
In June 1997, a lawsuit entitled Ralph Guiffre and Lisa Guiffre v.
Lundy's Management Corporation, Bay Landing Restaurant Corp., Sheepshead
Restaurant Associates, Inc., Ralph Attanasia and Showcase Contracting
Corporation, was filed in the Supreme Court of New York, County of Kings. The
plaintiffs allege personal injury caused to Ralph Guiffre while performing
construction work at the Lundy's Bros. Restaurant facility and seek damages in
the aggregate amount of $11,000,000. The Company is vigorously defending the
lawsuit which is in its preliminary stages.
In August 1997, a lawsuit entitled Gloria Gentile and Anthony Gentile
v. The City of New York and Tam Restaurant Group, Inc., was filed in the Supreme
Court of New York, New York County. The plaintiffs allege personal injury to
Gloria Gentile resulting from a slip and fall while attending an engagement at
the Loeb Boathouse and seek damages in the aggregate amount of $2,500,000. The
Company is vigorously defending the lawsuit which is in its preliminary stages.
The Company is unable at this time to evaluate the likelihood of an
unfavorable outcome or to estimate the range of potential loss with respect to
any of such lawsuits.
<PAGE>
SCHEDULE 2.11
The Company's license agreement with the New York City
Department of Parks (the "Parks Department") to operate The Boathouse imposes
certain requirements and operating restrictions on the Company, such as minimum
hours of operation. Although certain aspects of the Company's operating
practices are not in conformity with the terms of such license, the Company
believes that the Parks Department is aware of its operating practices and the
Parks Department has not objected to the variances from the terms of such
license.
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit Document
A Promissory Note
B Continuing Guaranty
C Pledge and Security Agreement
D Warrant
<PAGE>
EXHIBIT A
NOTE
$500,000 October 31, 1997
Los Angeles, CA
TAM RESTAURANT HOLDING CORP., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to the order of [Lender] (" ")
or its assignes, at its principal office at Los Angeles, California, the
principal sum of Five Hundred Thousand Dollars ($500,000) (or such lesser amount
as may result from any repayment thereof), in lawful money of the United States
and prior to noon, Los Angeles time, in funds which are immediately available in
Los Angeles, California, payable on the Maturity Date, as such term is defined
in the Loan Agreement, dated as of October 31, 1997, between the Company and
each of Arbco Associates, L.P. and Kayne, Anderson Non-Traditional Investments,
L.P. (the "Loan Agreement"), and to pay interest on the unpaid principal amount
of this Note from the date hereof, in like money and funds, at said office, on
the last day of each March, June, September and December commencing December 31,
1997, at a rate per annum (computed on the basis of a year of 365 days or 366
days, as the case may be) of ten percent (10%).
If any payment to be made by the Company under this Note shall become
due on a Saturday, Sunday or business holiday under the laws of the States of
New York or California, such payment shall be made on the next succeeding
business day, and any such extension of time shall be included in computing any
interest in respect of such payment. The Company may at its option make
prepayments on this Note before maturity as provided in the Loan Agreement.
This Note is made pursuant to the Loan Agreement, and is entitled to
the security and benefits therein provided.
Upon the occurrence of an Event of Default specified in the Loan
Agreement, as at any time amended, the principal hereof and accrued interest
hereon may be declared to be and shall thereupon forthwith become due and
payable, all as provided in the Loan Agreement, as at any time amended, and
following such an Event of Default, so long as it is continuing, Borrower shall
(a) pay to lender interest on the unpaid principal amount of this Note and any
accrued and unpaid interest thereon at the rate of fifteen percent (15%) per
annum on the regular interest payment dates and (b) pay to Lender on the first
day of each month an amount, to be applied to accrued interest and then to
principal, equal to twenty-five percent (25%) of its American Park Restaurant
Operating Profit for the previous month.
<PAGE>
This Note shall be construed and enforced in accordance with and
governed by the laws of the State of California. The Company agrees to pay costs
of collection and reasonable attorney's fees in case default is made in the
payment of this Note.
TAM RESTAURANT HOLDING CORP.
By:
--------------------------------------------
Name: Frank Cretella
Title: President & Chief Executive Officer
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<PAGE>
EXHIBIT D
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. __________ Number of Shares determined
as set forth herein
THIS WARRANT AND THE SHARES OF COMMON STOCK UNDERLYING THIS WARRANT
(COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE OR FOREIGN SECURITIES
LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE
LAWS, OR, IN THE WRITTEN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER OF THE SECURITIES, SUCH OFFER, SALE, OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
AS PARTIAL CONSIDERATION FOR LOAN PROCEEDS RECEIVED BY TAM
RESTAURANT HOLDING CORP., (THE "COMPANY") FROM KAYNE ANDERSON
INVESTMENT MANAGEMENT, INC. ("KAIM"), the Company hereby certifies that KAIM,
or its permitted assigns (the "Holder"), subject to and in accordance with the
terms and conditions of this Warrant, is or are entitled to purchase the
Underlying Common Shares from the Company at the Exercise Price.
OTHER TERMS AND CONDITIONS
1. Exercise of Warrant.
(a) Subject to the terms and conditions set forth herein, the
Warrant is exercisable on or after the Exercise Date at the Exercise
Price.
(b) This Warrant is exercisable other than on the Exercise
Date only upon the occurrence of a Triggering Event.
(c) The Warrant shall terminate and become void as of the
close of business on the Expiration Date.
(d) In order to exercise this Warrant, the Holder must
surrender this Warrant (with the subscription form at the end hereof
duly executed) at the address set forth in Section 10(a) hereof,
together with proper payment of the Aggregate Warrant Price, or the
proportionate part thereof if this Warrant is exercised in part.
Payment for the Underlying Common Shares shall be made by certified or
official bank check, payable to the order of the Company. If this
Warrant is exercised in part, this Warrant must be exercised for a
number of whole shares of the Common Stock, and the Holder is entitled
to receive a new Warrant covering the number of Underlying Common
Shares in respect
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<PAGE>
of which this Warrant has not been exercised and setting forth the
proportionate part of the Aggregate Warrant Price applicable to such
Underlying Common Shares. Upon such exercise and surrender of this
Warrant, the Company will (i) issue a certificate or certificates in
the name of the Holder for the number of whole shares of the Common
Stock to which the Holder shall be entitled and, if this Warrant is
exercised in whole, in lieu of any fractional share of the Common Stock
to which the Holder shall be entitled, pay cash equal to the fair value
of such fractional share (determined in such reasonable manner as the
Board of Directors of the Company shall determine), and (ii) deliver
the other securities and properties receivable upon the exercise of
this Warrant, or the proportionate part thereof if this Warrant is
exercised in part, pursuant to the provisions of this Warrant.
2. Certain Defined Terms
As used in this Warrant, the following terms shall have the following
meanings:
"Aggregate Warrant Price" means the aggregate purchase price payable
hereunder, being an amount equal to the product of the Exercise Price multiplied
by the number of Underlying Common Shares.
"Common Stock" means the Common Stock, par value $.0001 per share, of
the Company and any other capital stock of the Company into which such common
stock may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution of, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
"Exercise Price" means (i) if the Warrants are exercised prior to an
Initial Public Offering, $5.00 per share of Underlying Common Shares, provided,
however, if, thereafter, the Initial Public Offering Price of Common Shares is
less than $5.00 per share, then a holder of Underlying Common Shares shall be
entitled to receive from the Company at the time of the Initial Public Offering
an amount which equals the product of (A) the difference of $5.00 less the
Initial Public Offering Price multiplied by (B) the number of Underlying Common
Shares owned by such holder; or (ii) if the Warrants are exercised subsequent to
an Initial Public Offering, an amount per share of Underlying Common Shares
equal to the Initial Public Offering Price.
"Expiration Date" means the fifth anniversary of the Funding Date.
"Exercise Date" means the earliest of (i) 365 days following the
Funding Date, (ii) 90 days following an Initial Public Offering, or (iii) the
day on which a Triggering Event occurs.
"Funding Date" means the day on which the Company makes the loan
contemplated under the Loan Agreement.
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<PAGE>
"Initial Public Offering" means (i) the first time a registration
statement filed under the Securities Act with the SEC respecting an offering of
Common Stock (or securities convertible into, or exchangeable for, Common Stock
or rights to acquire Common Stock or such securities), is declared effective and
the securities so registered are issued and sold.
"Initial Public Offering Price" mean the price per share of Common
Stock paid to the Company in an Initial Public Offering.
"Loan Agreement" means the Loan Agreement dated as of October 31, 1997
between the Company and each of Arbco Associates, L. P. and Kayne, Anderson
Non-Traditional Investments, L.P.
"Planned Reverse Split" means the reverse split of Common Stock at a
rate of 1 to 1.8135268 shares expected to be effected by the Company at or about
the time of its Initial Public Offering.
"SEC" means the United States Securities and Exchange Commission.
"Triggering Event" means (i) the voluntary or involuntary bankruptcy or
insolvency of the Company or the approval by its stockholders of its
dissolution, liquidation or winding up; or (ii) any merger, consolidation,
statutory exchange, sale or conveyance described in Section 4(c) below.
"Underlying Common Shares" means a number of shares of Common Stock
equal to the quotient of $1 million divided by the Exercise Price.
3. Reservation of Underlying Common Shares.
The Company agrees that, prior to the Expiration Date, the Company will
at all times have authorized and in reserve, and will keep available, solely for
issuance or delivery upon the exercise of this Warrant, the Underlying Common
Shares of Common Stock and such amount of other securities and properties as
from time to time shall be deliverable to the Holder upon the exercise of this
Warrant, free and clear of all restrictions on sale or transfer (except such as
may be imposed under applicable federal and state securities laws) and free and
clear of all preemptive rights and all other rights to purchase securities of
the Company.
4. Protection Against Dilution.
(a) If, at any time or from time to time after the date of
this Warrant, the Company shall distribute to the holders of its
outstanding Common Stock, (i) securities, other than shares of Common
Stock, or (ii) property, other than cash dividends, without payment
therefor, with respect to Common Stock, then, and in each such case,
the Holder, upon the exercise of this Warrant, shall be entitled to
receive the securities and property which the Holder would have held on
the date of such exercise if, on the date of this Warrant, the Holder
had been the holder of record of the number of shares of the
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<PAGE>
Common Stock subscribed for upon such exercise and, during the period
from the date of this Warrant to and including the Exercise Date, had
retained such shares and the securities and properties receivable by
the Holder during such period. Notice of each such distribution shall
be forthwith mailed to the Holder.
(b) If, at any time or from time to time after the date of
this Warrant, the Company shall (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its
Common Stock any shares of capital stock of the Company, the Exercise
Price in effect immediately prior to such action shall be adjusted so
that the Holder of any Warrant thereafter exercised shall be entitled
to receive the number of shares of Common Stock or other capital stock
of the Company which he would have owned or been entitled to receive
immediately following the happening of any of the events described
above had such Warrant been exercised immediately prior thereto.
Notwithstanding the foregoing, no adjustment shall be made for the
Planned Reverse Split, which has been accounted for and is reflected in
the terms of this Warrant, provided, however, that if the Planned
Reverse Split is consummated at a ratio less favorable to the Holder,
an adjustment shall be made pursuant to this Section 4(b) to provide
Holder with economically equivalent rights. An adjustment made pursuant
to this Section 4(b) shall become effective immediately after the
record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this Section 4(b), the holder of any
Warrant thereafter surrendered for exercise shall become entitled to
receive shares of two or more classes of capital stock or shares of
Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be
described in a written notice to the Holder of any Warrant promptly
after such adjustment) shall determine the allocation between or among
shares of such classes of capital stock or shares of Common Stock and
other capital stock.
(c) In case of any consolidation or merger to which the
Company is a party other than a merger or consolidation in which the
Company is the continuing corporation, or in case of any sale or
conveyance to another entity of the property of the Company as an
entirety or substantially as an entirety, or in the case of any
statutory exchange of securities with another entity (including any
exchange effectuated in connection with a merger of any other
corporation with the Company), the Holder of this Warrant shall have
the right thereafter to convert such Warrant into the kind and amount
of securities, cash or other property which he would have owned or have
been entitled to receive immediately after such consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if
necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 4 with respect to the rights
and interests thereafter of the Holder of this Warrant to the end that
the provisions set forth in this Section 4 shall thereafter
correspondingly
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<PAGE>
be made applicable, as nearly as may reasonably be, in relation to any
shares of stock or other securities or property thereafter deliverable
on the exercise of this Warrant. In the event of a triangular merger in
which the Company is the surviving corporation, the right to purchase
Underlying Common Shares hereunder shall terminate on the date of such
merger and thereupon this Warrant shall become null and void but only
if the controlling corporation shall agree to substitute for this
Warrant its warrant which entitles the holder thereof to purchase upon
its exercise the kind and amount of shares and other securities and
property which the holder would have owned or been entitled to receive
had this Warrant been exercised immediately prior to such merger. The
above provisions only apply to successive consolidations, mergers,
statutory exchanges, sales or conveyances. Notice of any such
consolidation, merger, statutory exchange, sale or conveyance, and of
said provisions so proposed to be made, shall be mailed to the Holder
not less than 20 days prior to such event. A sale of all or
substantially all of the assets of the Company for a consideration
consisting primarily of securities shall be deemed a consolidation or
merger for the foregoing purposes.
(d) Anything in this Section 4 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Exercise Price as it in its discretion shall deem to be
advisable in order that any stock dividend, subdivision of shares or
distribution of rights to purchase stock or securities convertible or
exchangeable for stock hereafter made by the Company to its
shareholders shall not be taxable.
(e) Whenever the Exercise Price is adjusted as provided in
this Section 4 and upon any modification of the rights of the Holder of
this Warrant in accordance with Section 4, the Company shall, at its
own expense, within 10 days of such adjustment or modification, deliver
to the Holder of this Warrant a certificate of the Principal Financial
Officer of the Company setting forth the Exercise Price and the number
of Underlying Common Shares after such adjustment or the effect of such
modification, a brief statement of the facts requiring or permitting
such adjustment or modification and the manner of computing the same.
In addition, within thirty 30 days of the end of the Company's fiscal
year following any such adjustment or modification, the Company shall,
at its own expense, deliver to the Holder of this Warrant a certificate
of a firm of independent public accountants of recognized standing
selected by the Board of Directors (who may be the regular auditors of
the Company) setting forth the same information as required by such
Principal Financial Officer certificate.
(f) If the Board of Directors of the Company shall declare any
dividend or other distribution in cash with respect to the Common
Stock, other than out of earned surplus, the Company shall mail notice
thereof to the Holder not less than 10 days prior to the record date
fixed for determining shareholders entitled to participate in such
dividend or other distribution.
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<PAGE>
5. Fully Paid Stock; Taxes.
The Company agrees that the shares of the Common Stock represented by
each and every certificate for Underlying Common Shares delivered on the
exercise of this Warrant in accordance with the terms hereof shall, at the time
of such delivery, be validly issued and outstanding, fully paid and
non-assessable and not subject to preemptive rights or other contractual rights
to purchase securities of the Company, and the Company will take all such
actions as may be necessary to assure that the par value or stated value, if
any, per share of the Common Stock is at all times equal to or less than the
then Exercise Price. The Company further covenants and agrees that it will pay,
when due and payable, any and all federal and state stamp, original issue or
similar taxes which may be payable in respect of the issue of any Underlying
Common Shares or certificate therefor.
6. Registration Under Securities Act of 1933.
(a) (i) The Company agrees that if, at any time, the Company
proposes to file with the SEC a registration statement (other than a
registration statement for the Initial Public Offering or a
registration statement on Form S-4 or S-8 or any corresponding future
forms, or any other form for a limited purpose which excludes
registration of the Underlying Common Shares, or any registration
statement covering only securities proposed to be issued in exchange
for securities or assets of another corporation) in connection with the
registration of its Common Stock, the Company shall give written notice
of such proposed filing to all Holders of the Warrants and/or the
Underlying Common Shares and shall use its reasonable efforts to
include in such filing any proposed disposition of the Underlying
Common Shares upon receipt by the Company of a written request
therefor, given within 10 days after such notice is given by the
Company, setting forth the facts with respect to such proposed
disposition and all other information with respect to such person
necessary to be included in such registration statement; provided that
the Company shall have the right to postpone or withdraw any
registration of its Common Stock (and the corresponding registration
effected pursuant to this Section 5) without obligation to any such
Holder (the "Piggy-Back Registration").
(ii) From time to time, the Holder may make a written
request for registration under the Securities Act of its Underlying
Common Shares (a "Demand Registration"). Any such request will specify
the number of Underlying Common Shares proposed to be sold (the
"Included Shares") and will also specify the intended method of
disposition thereof. Upon receipt of such request for registration, the
Company shall use its reasonable best efforts to effect, at the
earliest possible date, such registration under the Securities Act of
the Included Shares.
(b) Notwithstanding the foregoing, the Company shall not be
required to include any Underlying Common Shares in an underwritten
public offering unless each such Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriter(s)
selected by it, and then only in such quantity, if any, as will not, in
the opinion of the managing underwriter, jeopardize or be detrimental
to the success
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<PAGE>
of the offering (including price) by the Company. In the event that the
managing underwriter advises the Company in writing that the total
amount of securities, including the Underlying Common Shares, requested
to be included in such offering by all persons having registration
rights with respect thereto exceeds the amount that the managing
underwriter believes can be offered without jeopardizing or being
detrimental to the success of such offering, the quantity of securities
that the managing underwriter believes can be offered without causing
such adverse effect shall be allocated first to the Company, then to
the requesting Holders of Warrants and/or Underlying Common Shares and
any other holders of Common Stock having registration rights with
respect thereto as of the date hereof, and thereafter pro rata among
other security holders of the Company possessing similar registration
rights in accordance with their relative holdings, it being agreed to
by the Company that no person who does not possess such registration
rights shall be allowed to participate in the offering to the exclusion
of any Underlying Common Shares requested to be included by any Holder,
and such Underlying Common Shares shall be offered and sold on the same
terms and conditions as the shares of Common Stock, if any, being
offered by the Company in such offering. In the event that any of the
Underlying Common Shares are registered in connection with the
registration of an underwritten public offering (other than the Initial
Public Offering) but are not included in such underwritten public
offerings which are excluded from the offering shall be withheld from
the market by each such Holder for a period, not to exceed 180 days,
which the managing underwriter reasonably determines is necessary in
order to effect the underwritten public offering. The Company shall use
its best efforts to keep effective any registration statement covering
any of the Underlying Common Shares not subject to or included in an
underwritten public offering for a period of 90 days after the later of
the effective date of such registration statement or the date, if any,
that the managing underwriter specifies to be the date upon which such
Underlying Common Shares may be distributed; provided that the Company
may keep such registration statement effective for a shorter period if
all the Holders whose Underlying Common Shares were included in such
registration statement have notified the Company in writing that the
distribution of their Underlying Common Shares has been completed.
(c) Whenever the Company is required pursuant to the
provisions of this Section 5 to include Underlying Common Shares in a
registration statement, the Company shall (i) furnish each Holder of
any such Underlying Common Shares and each underwriter of such
Underlying Common Shares with such copies of the prospectus, including
the preliminary prospectus, conforming to the Securities Act (and such
other documents as each such Holder or each such underwriter may
reasonably request) in order to facilitate the sale or distribution of
the Underlying Common Shares, (ii) use its best efforts to register or
qualify such Underlying Common Shares under the blue sky laws (to the
extent applicable) of such jurisdiction or jurisdictions as the Holders
of any such Underlying Common Shares and each underwriter of Underlying
Common Shares being sold by such Holders shall reasonably request and
(iii) take such other actions as may be reasonably necessary or
advisable to enable such Holders and such underwriters to consummate
the sale or distribution in such jurisdiction or jurisdictions in which
such Holders shall have reasonably requested that the Underlying Common
Shares be sold.
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<PAGE>
Notwithstanding the foregoing, the Company shall not be required to
register the Underlying Common Shares or perfect any exemption for the
offering and sale of the Underlying Common Shares under (i) the
securities laws of any foreign jurisdiction, (ii) the securities laws
of any State, territory or possession of the United States in the event
that registration or the perfection of any exemption under the law of
any such State, territory or possession would, in the opinion of the
Company, result in the imposition of unreasonable restrictions on the
Company or its shareholders, officers, directors or employees or (iii)
the securities laws of any state, territory or possession of the United
States which would require the Company to file a general consent to
service of process to qualify as a foreign corporation to do
businesterritory or possession.
(d) To the extent permitted by applicable law, the Company
shall pay all expenses incurred in connection with any registration or
other action pursuant to the provisions of this Section, including the
attorneys' fees (including those of in-house counsel) and expenses of
the Holder(s) of the Underlying Common Shares covered by such
registration incurred in connection with such registration or other
action, other than underwriting discounts, commissions and
non-accountable expense allowance and applicable transfer taxes
relating to the Underlying Common Shares.
7. Indemnification.
(a) To the extent permitted by applicable law, the Company
agrees to indemnify and hold harmless each selling holder of Underlying
Common Shares and each person who controls any such selling holder
within the meaning of Section 15 of the Securities Act, and each and
all of them, from and against any and all losses, claims, damages,
liabilities or actions, joint or several, to which any selling holder
of Underlying Common Shares or they or any of them may become subject
under the Securities Act or otherwise and to reimburse the persons
indemnified as above for any legal or other expenses (including the
cost of any investigation and preparation) incurred by them in
connection with any litigation or threatened litigation, whether or not
resulting in any liability, but only insofar as such losses, claims,
damages, liabilities or actions arise out of, or are based upon, (i)
any untrue statement or alleged untrue statement of a material fact
contained in any registration statement pursuant to which Underlying
Common Shares were registered under the Act (a "registration
statement"), any preliminary prospectus, the final prospectus or any
amendment or supplement thereto (or in any application or document
filed in connection therewith) or document executed by the Company
based upon written information furnished by or on behalf of the Company
filed in any jurisdiction in order to register or qualify the
Underlying Common Shares under the securities laws thereof or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, or (ii) the employment by the Company of any device, scheme
or artifice to defraud, or the engaging by the Company in any act,
practice or course of business which operates or would operate as a
fraud or deceit, or any conspiracy with respect thereto, in which the
Company shall participate, in connection Underlying Common Shares;
provided, however, that (i) the
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<PAGE>
indemnity agreement contained in this Section 7(a) shall not extend to
any selling holder of Underlying Common Shares in respect if any such
losses, claims, damages, liabilities or actions arising out of, or
based upon, any such untrue statement or alleged untrue statement, or
any such omission or alleged omission, if (a) such statement or
omission was based upon and made in conformity with information
furnished in writing to the Company by a selling holder of Underlying
Common Shares specifically for use in connection with the preparation
of such registration statement, any final prospectus, any preliminary
prospectus or any such amendment or supplement thereto or (b) such
selling holder fails to deliver the final prospectus in connection with
the transaction in conformity with the prospectus delivery requirements
under the Securities Act. The Company agrees to pay any legal and other
expenses for which it is liable under this Section 7(a) from time to
time (but not more frequently than monthly) within 30 days after its
receipt of a bill therefor.
(b) To the extent permitted by applicable law, each selling
holder of Underlying Common Shares, severally and not jointly, will
indemnify and hold harmless the Company, its directors, its officers
who shall have signed the registration statement and each person, if
any, who controls the Company within the meaning of Section 15 of the
Act and each agent and underwriter of the Company to the same extent as
the foregoing indemnity from the Company, but in each case to the
extent, and only to the extent, that any statement in or omission from
or alleged omission from such registration statement, any final
prospectus, any preliminary prospectus or any amendment or supplement
thereto was made in reliance upon information furnished in writing to
the Company by such selling holder specifically for use in connection
with the preparation of the registration statement, any final
prospectus or the preliminary prospectus or any such amendment or
supplement thereto; provided, however, that the obligation of any
holder of Underlying Common Shares to indemnify the Company under the
provisions of this Section 7(b) shall be limited to the product of the
number of Underlying Common Shares being sold by the selling holder and
the market price of the Common Stock on the date of the sale to the
public of these Underlying Common Shares. Each selling holder of
Underlying Common Shares agrees to pay any legal and other expenses for
which it is liable under this Section 7(b) from time to time (but not
more frequently than monthly) within 30 days after receipt of a bill
therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing Sections 7(a) or (b) (an
"indemnified party") in respect of which indemnity may be sought
against a person granting indemnification (an "indemnifying party")
pursuant to such Sections, such indemnified party shall promptly notify
such indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party of any such action shall
not release the indemnifying party from any liability it may have to
such indemnified party otherwise than on account of the indemnity
agreement contained in Sections 6(a) or (b). In case any such action is
brought against an indemnified party and it notifies an indemnifying
party of the commencement thereof, the indemnifying party against which
a claim is to be made will be entitled to participate therein at its
own expense and, to the extent that it may wish, to assume at its
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own expense the defense thereof, with counsel reasonably satisfactory
to such indemnified party; provided, however, that (i) if the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded based upon advice of counsel that there may be legal defenses
available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnified party shall have the right to select separate counsel to
assume such legal defenses and otherwise to participate in the defense
of such action on behalf of such indemnified party or parties and (ii)
in any event, the indemnified party shall be entitled to have counsel
chosen by such indemnified party participate in, but not conduct, the
defense at the expense of the indemnifying party. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by they
will not be liable to such indemnified party under this Section 7 for
any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified
party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with proviso (i) to the next
preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate
counsel), (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement
of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. An indemnifying party shall not be liable for any
settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just an equitable contribution in
circumstances in which the indemnity agreement provided for in Section
7(a) is unavailable to a selling holder of Underlying Common Shares in
accordance with its terms, the Company and the selling holder of
Underlying Common Shares shall contribute to the aggregate losses,
claims, damages and liabilities, of the nature contemplated by said
indemnity agreement, incurred by the Company and the selling holder of
Underlying Common Shares, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the selling
holder of Underlying Common Shares from any offering of the Underlying
Common Shares; provided, however, that if such allocation is not
permitted by applicable law or if the indemnified party failed to give
the notice required under Section 7(c), then the relative fault of the
Company and the selling holder of Underlying Common Shares in
connection with the statements or omissions which resulted in such
losses, claims, damages and liabilities and other relevant equitable
considerations will be considered together with such relative benefits.
(e) The respective indemnity and contribution agreements by
the Company and the selling holder of Underlying Common Shares in
Sections 7(a), (b), (c) and (d) shall remain operative and in full
force and effect regardless of (i) any investigation made by any
selling holder of Underlying Common Shares or by or on behalf of any
person who controls such selling holder or by the Company or any
controlling person of the Company
-12-
<PAGE>
or any director or any officer of the Company, (ii) payment for any of
the Underlying Common Shares or (iii) any termination of this
Agreement, and shall survive the delivery of the Underlying Common
Shares, and any successor of the Company, or of any selling holder of
Underlying Common Shares, or of any person who controls the Company or
of any selling holder of Underlying Common Shares, as the case may be,
shall be entitled to the benefit of such respective indemnity and
contribution agreements. The respective indemnity and contribution
agreements by the Company and the selling holder of Underlying Common
Shares contained in Sections 7(a), (b), (c) and (d) shall be in
addition to any liability which the Company and the selling holder of
Underlying Common Shares may otherwise have.
8. Limited Transferability.
(a) The Holder agrees that prior to making any transfer or
disposition of the Warrant or the Underlying Common Shares or any
interest therein, the Holder shall give written notice to the Company
describing briefly the manner in which any such proposed transfer or
disposition is to be made; and no such transfer or disposition shall be
made if the Company has notified the Holder that in the opinion of
counsel to the Company (i) a registration statement (or other
notification or post-effective amendment thereto) under the Securities
Act is required with respect to such transfer or disposition and no
such registration statement has been filed by the Company with, and
declared effective, if necessary, by, the Commission, or (ii)
unfulfilled requirements under any federal, state or foreign securities
laws prohibit or restrict the proposed transfer or disposition. The
Company shall not be required to cause the Warrant or the Underlying
Common Shares to be registered under any securities laws, except as
provided in Section 5 above.
The Company may treat the registered holder of this Warrant as
he or it appears on the Company's books at any time as the Holder for
all purposes. The Company shall permit any holder of a Warrant or his
duly authorized attorney, upon written request during ordinary business
hours, to inspect and copy or make extracts from its books showing the
registered holders of Warrants. All Warrants will be dated the same
date as this Warrant.
(b) By acceptance hereof, the Holder represents and warrants
that this Warrant is being acquired, and all Underlying Common Shares
to be purchased upon the exercise of this Warrant will be acquired, by
the Holder solely for the account of such Holder and not with a view to
the distribution thereof and will not be sold or transferred except in
accordance with the applicable provisions of the Securities Act and the
rules and regulations of the SEC promulgated thereunder, and the Holder
agrees that neither this Warrant nor any of the Underlying Common
Shares may be sold or transferred except under cover of a registration
statement under the Act which is effective and current with respect to
such Underlying Common Shares or pursuant to an opinion, in form and
substance reasonably acceptable to the Company's counsel, that
registration under the Act is not required in connection with such sale
or transfer. Any Underlying Common Shares issued upon exercise of this
Warrant shall bear the following legend:
-13-
<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND
ALL SUCH APPLICABLE LAWS OR, IN THE OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH."
9. Intentionally Left Blank
10. Loss, etc., of Warrant.
Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant, and of indemnity reasonably
satisfactory to the Company, if lost, stolen or destroyed, and upon surrender
and cancellation of this Warrant, if mutilated, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder a new Warrant of like date, tenor and denomination.
11. Warrant Holder Not Shareholders.
Except as otherwise provided herein, this Warrant does not confer upon
the Holder any right to vote or to consent to or receive notice as a shareholder
of the Company, as such, in respect of any matters whatsoever, or any other
rights or liabilities as a shareholder, prior to the exercise hereof.
-14-
<PAGE>
12. Communication.
No notice or other communication under this Warrant shall be effective
unless, but any notice or other communication shall be effective and shall be
deemed to have been given if, the same is in writing and is mailed by
first-class mail, postage prepaid, addressed to:
a) the Company at: TAM Restaurant Holding Corp.
1163 Forest Avenue
Staten Island, New York 10310
Attn: Frank Cretella
with a copy to: Tenzer Greenblatt LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174-0208
Attention: Robert J. Mittman, Esq.
or such other address as the Company has designated in writing to the
Holder; or
the Holder at: c/o Kayne Anderson Investment
Management, Inc.
1800 Avenue of the Stars, Second Floor
Los Angeles, California 90067
Attention: David Shladovsky, General Counsel
or such other address as the Holder has designated in writing to the
Company.
13. Headings.
The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.
14. Applicable Law.
This Warrant shall be governed by and construed in accordance with the
laws of New York.
-15-
<PAGE>
IN WITNESS WHEREOF TAM Restaurant Holding Corp. has caused this Warrant
to be signed by its Chairman of the Board and its corporate seal to be hereunto
affixed and attested by its Secretary this 31st day of October, 1997.
ATTEST: _________________________ TAM RESTAURANT HOLDING CORP.
By:
-------------------------
Chairman of the Board
[Corporate Seal]
-16-
<PAGE>
SUBSCRIPTION FORM
TAM RESTAURANT HOLDING CORP.
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
_______________ Shares of Common Stock provided for therein, and makes payment
therefor in full at the price per share provided by said Warrant.
Unless the Shares have been registered under the Securities Act of
1933, as amended, the undersigned hereby represents and warrants to TAM
Restaurant Holding Corp. that it is acquiring the Shares for its own account for
investment and not with a view to or for sale in connection with a distribution
thereof.
Dated:_____________________________
Name of Holder or Assignee:
___________________________________
(Please Print)
Address:___________________________
___________________________________
Signature:_________________________
Note: The above signature must correspond
with the name as it appears upon the
face of the within Warrant
certificate in every particular,
without alteration or enlargement or
any change whatever, unless these
Warrants have been assigned.
Signature Guaranteed:
__________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
<PAGE>
ASSIGNMENT
TAM RESTAURANT HOLDING CORP.
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
_______________________________________________________________________________
the within Warrant, hereby irrevocably constituting and appointing
____________________ Attorney to transfer said Warrants on the books of TAM
Restaurant Holding Corp., with full power of substitution in the premises.
Dated:______________________________
____________________________________
Signature of Registered Holder
Note: The above signature must correspond
with the name as it appears upon the
face of the within Warrant
certificate in every particular,
without alteration or enlargement or
any change whatever.
Signature Guaranteed:
__________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
<PAGE>
PARTIAL ASSIGNMENT
TAM RESTAURANT HOLDING CORP.
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
_______________________________________________________________________________
the right to purchase __________________ shares of the Common Stock of TAM
Restaurant Holding Corp. (the "Company") by the foregoing Warrant, and a
proportionate part of said Warrant and the rights evidenced thereby, and hereby
irrevocably constitutes and appoints ________________________ Attorney to
transfer said Warrants on the books of the Company with full power of
substitution in the premises.
Dated:________________________________
______________________________________
Signature of Registered Holder
Note: The above signature must correspond
with the name as it appears upon the
face of the within Warrant
certificate in every particular,
without alteration or enlargement or
any change whatever.
Signature Guaranteed:
_____________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TAM Restaurants Holding Corp. and subsidiaries
We hereby consent to the incorporation by reference of the Prospectus
constituting a part of this Registration Statement on Form SB-2 (No. 333- ) of
our report dated July 31, 1997 relating to the consolidated financial statements
of TAM Restaurants Holding Corp. and subsidiaries which is contained in that
Prospectus. Our report contains an explanatory paragraph regarding uncertainties
as to the Company's ability to continue as a going concern.
We also consent to the reference to us under the captions "Selected
Financial Data" and "Experts" in the Prospectus.
/s/ Maltese, Potter & La Marca LLP
MALTESE, POTTER & LA MARCA LLP
Staten Island, New York
November 10, 1997
