SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 17, 2000
TUMBLEWEED, INC.
(Exact name of registrant as specified in charter)
Delaware 333-57931 61-1327945
(State or other (Commission File Number) (IRS Employer
jurisdiction or Identification No.)
incorporation)
1900 Mellwood Avenue
Louisville, Kentucky 40206
(Address of principal executive offices)
Registrant's telephone number, including area code: (502) 893-0323
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Item 5. Other Events
As referenced in the financial statements of Tumbleweed, Inc. (the "Company")
included under Item 8 in the December 31, 1999, Annual Report on Form 10K, in
February 1997 the Company invested a nominal amount in TW-Tennessee, LLC
("TW-Tennessee"), a newly formed Tennessee limited liability company, in
exchange for a 9.5% common member interest. On September 30, 1998, Tumbleweed
sold its interest in TW-Tennessee to certain members of TW- Tennessee for
$25,000. TW-Tennessee was organized to open and operate Tumbleweed full service
restaurants in Tennessee as a franchisee of Tumbleweed.
The Company guaranteed renewals of certain guaranteed indebtedness and any
replacement indebtedness of TW-Tennessee, to the extent and in amounts not to
exceed the amounts guaranteed as of September 30, 1998. As of December 31, 1999,
the Company had guaranteed certain TW-Tennessee obligations as follows: a) up to
$1,200,000 under a bank line of credit, b) approximately $2,800,000 of a lease
financing agreement with CNL American Properties Fund, Inc. (the "Landlord"),
and c) equipment leases with a bank totaling $831,500 jointly and severally with
TW-Tennessee common members. During 1999, the Landlord under the lease financing
agreement declared TW-Tennessee to be in default, and accelerated the rent
obligations under the leases. Negotiations ensued between the Landlord and the
principals of TW-Tennessee regarding the restructuring of the lease obligations,
and although dialogue continues between the Landlord and the principals of
TW-Tennessee, on May 8, 2000, the Landlord filed suit in the Chancery Court for
Davidson County, Tennessee, against TW-Tennessee and against certain guarantors
of the lease obligations, including the Company and David M. Roth, a Director of
the Company. The Landlord has demanded a judgment against TW-Tennessee in excess
of $21.8 million, and a judgment jointly and severally against the guarantors
named, including the Company and Mr. Roth, in the amount of $6,647,582.77
representing a portion of the amounts claimed against TW-Tennessee. Because the
action has only recently been filed and no answers have been filed by any of the
defendants in response thereto, and no applicable counterclaims, cross-claims,
claims of mitigation or affirmative defenses have been asserted by the
defendants in the action, and because the Company would be entitled to
contribution from the other guarantors named in the action and certain other
members of TW-Tennessee and will only be ultimately responsible for a portion of
any judgment against the guarantors of the leases, management of the Company is
unable to predict with any certainty whether and how much liability the Company
may ultimately incur due to the Company's guarantee of TW-Tennessee's leases
with the Landlord. Negotiations are continuing between the Landlord and the
principals of TW-Tennessee regarding the restructuring of the lease obligations,
and management of the Company believes that TW-Tennessee's default under the
leases will not ultimately have a material adverse impact on the Company's
financial position, results of operations or cash flows.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TUMBLEWEED, INC.
(Registrant)
Date: May 17, 2000 By: /s/James M. Mulrooney
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James M. Mulrooney
Executive Vice President
Chief Financial Officer
