<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1999
-----------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ --------------------
Commission file number 0-12226
----------------------
CALIFORNIA BEACH RESTAURANTS, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
CALIFORNIA 95-2693503
- -------------------------------------------------------------- ------------------------------------
<S> <C>
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
</TABLE>
17383 Sunset Boulevard, Suite 140, Pacific Palisades, CA 90272
--------------------------------------------------------------
(Address and zip code of Principal executive offices)
(310) 459-9676
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
<TABLE>
<CAPTION>
Number of Shares Outstanding
Class at March 12, 1999
- ---------------------------- ----------------------------
<S> <C>
Common Stock, $.01 par value 3,400,930
</TABLE>
<PAGE> 2
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
JANUARY 31, 1999
INDEX
<TABLE>
<CAPTION>
Part I - FINANCIAL INFORMATION Page Number
-----------
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at January 31, 1999
and April 30, 1998..................................................................3
Consolidated Statements of Operations for the
Three Months Ended and Nine Months Ended
January 31, 1999 and 1998...........................................................5
Consolidated Statements of Cash Flows for the
Nine Months Ended January 31, 1999 and 1998.........................................6
Notes to Consolidated Financial Statements..........................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................................9
Item 3. Quantitative and Qualitative Disclosures about Market Risk.........................13
Part II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................................13
Item 2. Changes in Securities and Use of Proceeds .........................................13
Item 3. Defaults Upon Senior Securities....................................................14
Item 4. Submission of Matters to a Vote of Security Holders................................14
Item 5. Other Information..................................................................14
Item 6. Exhibits and Reports on Form 8-K...................................................14
Signature Page..............................................................................15
</TABLE>
2
<PAGE> 3
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
January 31, 1999 April 30, 1998
---------------- --------------
(Unaudited) (1)
<S> <C> <C>
Current Assets:
Cash $ 257,000 $ 252,000
Trade and other receivables 25,000 39,000
Inventories 194,000 162,000
Prepaid expenses 138,000 321,000
---------- ----------
Total current assets 614,000 774,000
Fixed Assets (at cost) - net of accumulated
depreciation and amortization (Note C ) 1,282,000 946,000
Other Assets:
Goodwill, net of accumulated amortization
of $5,846,000 at January 31, 1999 and
$5,298,000 at April 30, 1998 879,000 1,427,000
Other 192,000 174,000
---------- ----------
$2,967,000 $3,321,000
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
(1) The April 30, 1998 amounts have been extracted from the Company's Annual
Report on Form 10-K for the year ended April 30, 1998.
3
<PAGE> 4
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
January 31, 1999 April 30, 1998
---------------- --------------
(Unaudited) (1)
<S> <C> <C>
Current Liabilities:
Accounts payable $ 612,000 $ 568,000
Accrued liabilities 992,000 895,000
Line of credit - related party (Note D) 600,000 700,000
------------ ------------
Total current liabilities 2,204,000 2,163,000
Deferred rent 257,000 207,000
Other liabilities 137,000 167,000
Stockholders' Equity:
Common stock, $.01 par value, authorized 25,000,000
shares, issued and outstanding, 3,401,000 shares at
January 31, 1999 and at April 30, 1998 34,000 34,000
Additional paid-in capital 13,175,000 13,175,000
Deficit in retained earnings (12,840,000) (12,425,000)
------------ ------------
Total stockholders' equity 369,000 784,000
------------ ------------
$ 2,967,000 $ 3,321,000
============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
(1) The April 30, 1998 amounts have been extracted from the Company's Annual
Report on Form 10-K for the year ended April 30, 1998.
4
<PAGE> 5
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
January 31, January 31,
--------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 3,475,000 $ 3,469,000 $ 10,613,000 $ 11,267,000
Costs and expenses:
Cost of goods sold 3,362,000 3,404,000 9,267,000 9,596,000
Selling, general and administrative 280,000 330,000 700,000 1,202,000
Legal and litigation settlement 23,000 62,000 73,000 423,000
Depreciation 80,000 92,000 204,000 230,000
------------ ------------ ------------ ------------
(270,000) (419,000) 369,000 (184,000)
Other income (expenses):
Interest expense (78,000) (20,000) (222,000) (21,000)
Amortization of intangible assets (216,000) (221,000) (548,000) (553,000)
Other, net -- 40,000 -- 57,000
------------ ------------ ------------ ------------
Loss before income taxes (564,000) (620,000) (401,000) (701,000)
Provision for income taxes 5,000 -- 14,000 7,000
------------ ------------ ------------ ------------
Net loss $ (569,000) $ (620,000) $ (415,000) $ (708,000)
============ ============ ============ ============
Net loss per common share
(Basic and Diluted): $ (.17) $ (.18) $ (.12) $ (.21)
============ ============ ============ ============
Weighted average number of
common shares outstanding: 3,401,000 3,401,000 3,401,000 3,401,000
============ ============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
5
<PAGE> 6
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JANUARY 31,
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (415,000) $ (708,000)
Adjustments to reconcile net loss
to cash provided by operations:
Depreciation and amortization 752,000 783,000
Changes in operating assets and liabilities:
Restricted cash -- 475,000
Trade and other receivables 14,000 14,000
Inventories (32,000) 10,000
Prepaid expenses 183,000 81,000
Other assets (18,000) --
Accounts payable 44,000 (160,000)
Accrued liabilities 97,000 (33,000)
Deferred rent 50,000 --
Other liabilities (30,000) 276,000
----------- -----------
Net cash provided by operations 645,000 738,000
----------- -----------
Cash flows used in investing activities:
Additions to fixed assets (540,000) (274,000)
----------- -----------
Net cash used in investing activities (540,000) (274,000)
----------- -----------
Cash flows from financing activities:
Borrowings from Line of credit 100,000 500,000
Principal payments on borrowings (200,000) (1,488,000)
----------- -----------
Net cash used in financing activities (100,000) (988,000)
----------- -----------
Net decrease in cash 5,000 (524,000)
Cash at beginning of period 252,000 626,000
----------- -----------
Cash at end of period $ 257,000 $ 102,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 78,000 $ 9,000
=========== ===========
Income taxes $ -- $ 12,000
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement
6
<PAGE> 7
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The unaudited consolidated financial statements presented herein include the
accounts of California Beach Restaurants, Inc., and its wholly-owned
subsidiaries (the "Company"). All significant intercompany accounts and
transactions have been eliminated.
The unaudited consolidated financial statements presented herein have been
prepared in accordance with generally accepted accounting principles and the
instructions to Form 10-Q and article 10 of Regulation S-X and do not include
all of the information and footnote disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the accompanying financial statements include all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
the Company's financial position and results of operations. The results of
operations for the nine month period ended January 31, 1999 may not be
indicative of the results that may be expected for the year ending April 30,
1999. These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-K for the
year ended April 30, 1998.
Certain amounts have been reclassified in the Fiscal 1998 financial statements
to conform to the Registrant's 1999 presentation.
NOTE B - ACCOUNTING PERIODS
The Company's restaurant operations are conducted through its wholly-owned
subsidiary, Sea View Restaurants, Inc. ("Sea View"). The Company's consolidated
financial statements for the three months and nine months ended January 31, 1999
and 1998 include Sea View's operations for the sixteen weeks and forty weeks
ended February 4, 1999 and February 5, 1998, respectively.
NOTE C - FIXED ASSETS
<TABLE>
<CAPTION>
January 31, 1999 April 30, 1998
---------------- --------------
<S> <C> <C>
Construction in progress $ 550,000 $ 74,000
Leasehold improvements 2,748,000 2,732,000
Furniture and equipment 1,051,000 1,003,000
----------- -----------
4,349,000 3,809,000
Less accumulated depreciation and amortization (3,067,000) (2,863,000)
----------- -----------
$ 1,282,000 $ 946,000
=========== ===========
</TABLE>
7
<PAGE> 8
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
NOTE D - LINE OF CREDIT - RELATED PARTY
On November 24, 1997, Sea View entered into a one year, $1,000,000 unsecured
line of credit agreement ("Line of Credit") with Outside LLC, an entity
affiliated with one of the Registrant's principal shareholders and with a member
of its board of directors. This agreement provides for interest of 10% on all
amounts borrowed, requires a commitment fee of 1.25% of the total line and is
guaranteed by the Registrant. The expiration date of the Line of Credit has been
extended to March 31, 1999. The Line of Credit is used by Sea View for seasonal
working capital needs as well as for certain renovations to Gladstone's. At
January 31, 1999, $600,000 was borrowed and outstanding under the line of
credit. An additional $400,000 was borrowed under the Line of Credit on February
9, 1999, and used for required renovations to Gladstone's. The entire
outstanding balance of the Line of Credit agreement will be paid off upon the
Registrant's receipt of funds pursuant to the private offering, to the extent
that such private offering is successfully completed. (see Item 2. Liquidity
and Capital Resources).
8
<PAGE> 9
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
RESTAURANT REVENUES
Restaurant operations include the results of Gladstone's 4 Fish ("Gladstone's")
in Pacific Palisades, California and RJ's - Beverly Hills in Beverly Hills,
California.
Total sales for the three months ended January 31, 1999 were $3,475,000 compared
with $3,469,000 for the same period last year, an increase of $6,000 or .2%. For
the nine months ended January 31, 1999, total sales were $10,613,000 compared
with $11,267,000 for the same period last year, a decrease of $654,000 or 5.8%.
Gladstone's is located on the beach in Pacific Palisades, California and is
dependent, to a certain extent, on favorable weather and tourism. Beginning in
December 1997, Gladstone's was impacted by severe storms caused by the "El Nino"
weather pattern. Although the storms concluded in May 1998, their aftermath,
including road closures that restricted access to Gladstone's and reduced
tourism, continued to adversely affect sales throughout the nine months ended
January 31, 1999. The improved sales for the three months ended January 31,
1999, as compared to the prior year, is due to the effect of favorable weather
in the three months ended January 31, 1999. The Registrant expects that sales
will be adversely affected in the three months ending April 30, 1999 as a result
of the construction of renovations to Gladstone's.
As a result of typically more favorable weather and higher tourism during the
summer months from May through September the Registrant's sales and operating
profits have historically been higher in the first and second quarters of its
fiscal year.
COST OF GOODS SOLD
Cost of goods sold includes all food, beverages, liquor, direct labor and other
operating expenses, including rent, of the Registrant's restaurant operations.
Cost of goods sold for the three months ended January 31, 1999 was $3,362,000
or, as a percentage of sales, 96.7% compared with $3,404,000, or, as a
percentage of sales, 98.1% during the same period last year. Cost of goods sold
for the nine months ended January 31, 1999 was $9,267,000, or, as a percentage
of sales, 87.3% compared with $9,596,000, or, as a percentage of sales, 85.2%
during the same period last year. The decrease in cost of goods sold as a
percentage of sales for the three months ended January 31, 1999 as compared to
the comparable period in the prior year is the result of improved efficiencies
in labor and other operating expenses. The increase in cost of goods sold as a
percentage of sales that occurred during the nine months ended January 31, 1999,
as compared to the comparable period in the prior year, is primarily the result
of increased rents attributable to the Concession Agreement for Gladstone's that
became effective November 1, 1997.
The Registrant entered into a new concession agreement for the lease of
Gladstone's, with the County of Los Angeles, that commenced on November 1, 1997.
Rents payable pursuant to the new concession agreement are significantly higher
than those attributable to the prior agreement. Minimum annual rent for the
first two years of the agreement is $1,531,250 per year, increasing to
$1,750,000 per year over the remaining eighteen years of the agreement. The
Registrant has recorded rent expense based on the average monthly payment due
9
<PAGE> 10
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
COST OF GOODS SOLD (CONT.)
over the life of the agreement. On February 9, 1999, the Registrant amended the
concession agreement for Gladstone's. Pursuant to the amended concession
agreement, the Registrant will be required to pay, in addition to the
aforementioned minimum annual rent obligations, "supplemental rent" equal to the
sum of $15,000 per year, plus an annual payment of 1% of the amount by which
Gladstone's annual gross revenues exceed $14,000,000. The terms of the
concession agreement afford the County of Los Angeles the opportunity to conduct
a valuation of Gladstone's at any time during the first 150 months of the
concession agreement in the event of a sale of Gladstone's or 100% of the stock
of Sea View or the Registrant, or at any time between the beginning of the 79th
month and the end of the 150th month of the concession agreement. If the County
elects to conduct a valuation, Sea View must thereafter pay the greater of (1)
the supplemental rent payments; or (2) an amount determined by amortizing the
greater of 5% of the gross concession value or 20% of the net concession value
(as determined pursuant to the concession agreement), less the aggregate amount
of supplemental rent payments paid through the date of the valuation, using an
interest rate of 9% and equal payments of principal and interest, over the
remaining term of the concession agreement.
Cost of goods sold will typically be slightly lower during the first and second
quarters due to additional economies of scale that can be achieved with labor
and certain other costs when sales levels are higher. For the fiscal year ended
April 30, 1998, cost of goods sold, as a percentage of sales, was 87.4%.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
For the three months ended January 31, 1999, selling, general and administrative
expenses were $280,000 compared with $330,000 for the same period last year, a
decrease of $50,000, or 15.2%. For the nine months ended January 31, 1999,
selling, general and administrative expenses were $700,000 compared with
$1,202,000 for the same period last year, a decrease of $502,000, or 41.8%. The
respective decreases in selling, general and administrative expenses experienced
during the three and nine months ended January 31, 1999 are primarily the result
of the inclusion of a non-recurring incentive bonus of $339,000 for two senior
executives and non-recurring consultant's fees of $79,000, relating to the
acquisition of the new concession agreement for Gladstone's Malibu, in the
operating results of the comparable periods in the prior year. The remaining
decrease in selling, general and administrative expenses is the result of
improved efficiencies in these costs in Fiscal 1999.
LEGAL AND LITIGATION SETTLEMENT
For the three months and nine months ended January 31, 1999, legal and
litigation settlement expenses were $23,000 and $73,000, respectively, compared
with $62,000 and $423,000, respectively, for the same periods last year.
The respective decreases are primarily due to the inclusion in the comparable
periods of Fiscal 1998 of legal expenses and settlement costs resulting from the
settlement of an employment related litigation matter (See Part II - Item I -
Legal Proceedings in the Registrant's Form 10-Q for the quarter ended October
31, 1997), and legal expenses relating to the negotiation and execution of the
Gladstone's concession agreement. These costs did not recur in the three and
nine month periods ended January 31, 1999.
10
<PAGE> 11
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
DEPRECIATION/AMORTIZATION OF INTANGIBLE ASSETS
For the three months and nine months ended January 31,1999, depreciation expense
was $80,000 and $204,000 respectively, compared with $92,000 and $230,000,
respectively, for the same periods last year. During the nine months ended
January 31, 1999, certain restaurant assets became fully depreciated, resulting
in a decrease in depreciation expense for the three months and nine months ended
January 31, 1999.
Amortization expense relates completely to the Registrant's Goodwill and other
intangible assets and will approximate $714,000 per year.
IMPACT OF YEAR 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Registrant's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
The Registrant has determined that it will be required to modify or replace
portions of its software so that its computer systems will function properly
with respect to dates in the year 2000 and thereafter. The Registrant also has
initiated formal communications with its significant suppliers and large
customers to determine the extent to which the Registrant's interface systems
are vulnerable to those third parties' failure to remediate their own year 2000
Issues. The Registrant presently believes that with modifications to existing
software and conversion to new software, the cost of which is not expected to be
material to the Registrant's results of operation or financial position, the
Year 2000 Issue will not pose significant operational problems for its computer
systems. The Registrant will use both internal and external resources to
reprogram, or replace, and test the software for Year 2000 modifications. The
Registrant anticipates completing the Year 2000 project prior to any anticipated
impact on its operating systems, and, accordingly, the Registrant has not
developed a Year 2000 contingency plan. However, if such modifications and
conversions are not made, or are not completed timely, the year 2000 Issue could
have a material adverse effect on the operations of the Registrant. Likewise,
there can be no assurance that the systems of other companies on which the
Registrant's systems rely will be timely converted and would not have a material
adverse effect on the Registrant.
LIQUIDITY AND CAPITAL RESOURCES
The terms of the Gladstone's concession agreement require Sea View to post a
$2,000,000 letter of credit as a security deposit for rental payments due to the
County. In the event that rents are not paid when due, the County may draw upon
the letter of credit. The face amount of the letter of credit will be reduced to
$437,500 upon Sea View's completion of at least $2,700,000 in renovations
required by the Concession Agreement and Sea View's maintenance of certain net
worth levels.
11
<PAGE> 12
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
The Registrant posted the letter of credit by utilizing cash collateral provided
by Overhead Partners, L.P. ("Overhead"), an entity affiliated with one of the
Registrant's principal shareholders and with a member of its board of directors.
The collateral support for the letter of credit has been extended through July
31, 1999. The cost to the Registrant of maintaining the letter of credit is
$16,667 per month. In the event that any amounts are drawn down on the letter of
credit, such amounts will automatically convert into a debt obligation of the
Registrant, payable with interest ninety days (or earlier under certain
circumstances) from the date of such conversion.
On March 11, 1999, the Registrant commenced a private offering to raise
approximately $1,800,000 of capital ("offering"). The terms of the offering
provide for the sale of subordinated, convertible notes ("Notes") to a limited
number of existing shareholders of the Registrant who are also "accredited
investors" within the meaning of Regulation D promulgated under the Securities
Act of 1933, as amended. The proceeds of the offering will be used to retire
existing indebtedness to Outside LLC and to finance the renovations at
Gladstone's. The Notes are immediately convertible into common stock of the
Registrant at a rate of $1 per share, and pay interest at 5% per annum. The
Registrant may pay the interest on the Notes in cash or in kind. Fifty percent
of the outstanding principal and interest of the Notes, at the option of the
Note purchasers, will mature in three years, and the balance of the Notes mature
in four years. The offering is scheduled to close on or about March 25, 1999.
There can be no assurance that the Registrant will successfully complete this
offering.
Additionally, the Registrant has secured a commitment for equipment financing
with Lyon Credit Corporation, subject to the satisfaction of certain conditions,
some of which are outside the control of the Registrant. Pursuant to the
commitment, approximately $1,200,000 of credit may be extended to Gladstone's,
secured by certain tenant improvements and equipment. The terms of the
commitment provide for a five year amortization period and interest at the rate
of the yield to maturity of the five year Treasury Note plus 400 basis points.
There can be no assurance that the Registrant will receive such financing.
On November 24, 1997, Sea View entered into a one year, $1,000,000 unsecured
line of credit agreement with Outside LLC, an entity affiliated with Overhead,
with one of the Registrant's principal shareholders and with a member of its
board of directors. This agreement provides for interest of 10% on all amounts
borrowed, requires a commitment fee of 1.25% of the total line and is guaranteed
by the Registrant. The expiration date of the Line of Credit was extended to
March 31, 1999. The Line of Credit is used by Sea View for seasonal working
capital needs as well as for certain renovations to Gladstone's. At January 31,
1999, $600,000 was borrowed and outstanding under the line of credit. An
additional $400,000 was borrowed under the Line of Credit on February 9, 1999,
and used for required renovations to Gladstone's. The entire outstanding balance
of the Line of Credit agreement will be paid off upon the Registrant's receipt
of funds pursuant to the offering, if such offering is successfully completed.
Funding for the renovations to Gladstone's must be secured in order to complete
the construction at Gladstone's. There can be no assurance that the Registrant
will be successful in completing the required financing. The failure to maintain
the letter of credit as required by the concession agreement or the failure to
substantially complete construction by August 9, 1999, unless such date is
extended as specifically provided in the concession agreement, are events of
default under such concession agreement.
12
<PAGE> 13
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
Capital expenditures for the nine months ended January 31, 1999 totaled
approximately $540,000. The Registrant estimates that renovation costs for
Gladstone's will approximate $2,700,000.
If the financings referred to above are successfully completed, the Registrant
anticipates possessing sufficient resources to meet its capital requirements for
the next 12 months. If such financings are not successful, the Registrant must
obtain alternative sources of capital which may not be available on terms and
conditions acceptable to the Registrant.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Except for the historical information contained herein, certain statements in
this Form 10-Q, including statements in this Item are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievement of the Registrant, or industry results, to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
the following: the Registrant's ability to secure adequate debt or equity
financing in order to comply with the terms of the Gladstone's concession
Agreement, including the maintenance of a $2,000,000 letter of credit, the
payment of significantly higher rental payments and completion of required
renovations; the Registrant's ability to generate an operating profit based on
the terms of the Gladstone's concession Agreement; the impact on the Registrant
of the Year 2000 Issue; that its principal source of cash is funds generated
from operations; that restaurants historically have represented a high risk
investment in a very competitive industry; general and local economic
conditions, which can, among other things, impact tourism, consumer spending and
restaurant revenues; weather and natural disasters, such as earthquakes and
fires, which can impact sales at the Registrant's restaurants; quality of
management; changes in, or the failure to comply with, governmental regulations;
unexpected increases in the cost of key food products, labor and other operating
expenses in connection with the Registrant's business; and other factors
referenced in this Form 10-Q and the Registrant's other filings with the
Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable as the Registrant is a small business issuer as defined
by SEC regulations.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities and Use of Proceeds.
None
13
<PAGE> 14
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.67 First Amendment to Concession Agreement For Will Rogers
State Beach Park Restaurant, by and between the County of
Los Angeles, and Sea View Restaurants, dated February 9,
1999.
27 Financial data schedule
Reports on Form 8-K
None
14
<PAGE> 15
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
Signature(s)
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
California Beach Restaurants, Inc.
(Registrant)
Dated: March 15, 1999 By: /s/ Alan Redhead
--------------------------------------
Alan Redhead
Chief Executive Officer
By: /s/ Samuel E. Chilakos
--------------------------------------
Samuel E. Chilakos
Chief Financial Officer
15
<PAGE> 16
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Item
Number Description
- ------ -----------
<S> <C>
10.67 First Amendment to Concession Agreement For Will Rogers State Beach
Park Restaurant, by and between the County of Los Angeles, and Sea
View Restaurants, dated February 9, 1999. (A)
27 Financial data schedule (A)
(A) FILED HEREWITH ELECTRONICALLY
</TABLE>
16
<PAGE> 1
EXHIBIT 10.67
FIRST AMENDMENT TO
CONCESSION AGREEMENT FOR
WILL ROGERS STATE BEACH PARK RESTAURANT
THIS FIRST AMENDMENT TO CONCESSION AGREEMENT
("Amendment") is made and entered into as of the 9th day of February, 1999, by
and between the COUNTY OF LOS ANGELES ("County"), and SEA VIEW RESTAURANTS,
INC., a California corporation ("Concessionaire").
W I T N E S S E T H
WHEREAS, County has been authorized to exercise the power
conferred by California Government Code Section 25907 to contract for
concessions and services that are consistent with public park and recreation
purposes within Will Rogers State Beach Park pursuant to the provisions of the
Joint Powers Agreement Between the City of Los Angeles and the County of Los
Angeles Providing for Lifeguard and Maintenance Services to be Rendered by the
County on Beaches Located Within the City, dated May 20, 1975 ("Joint Powers
Agreement");
WHEREAS, in the exercise thereof, County and Concessionaire
executed that certain Concession Agreement (the "Agreement") dated as of
November 1, 1997;
WHEREAS County and Concessionaire have agreed, as more
specifically provided herein, to amend certain terms and conditions contained in
the Agreement; and,
WHEREAS, Section 16.13 of the Agreement provides that it may
only be amended in writing executed by duly authorized officials of
Concessionaire and County.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants, agreements and conditions set forth herein, and of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto and each of them do agree as follows:
1. Defined Terms. All capitalized terms not defined in this Amendment shall have
the meanings ascribed to them in the Agreement.
2. Amendment of Agreement. Sections 4.6, 4.7 and 4.8 of the Agreement are hereby
amended as follows, with deleted text stricken through and added text double
underlined:
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"4.6. Changes of Ownership and Financing Events. [strike through
begin] {Except as otherwise provided in this Section 4.6, each} [strike
through end] [double underline begin] Each [double underline end] time
Concessionaire proposes either (a) a Change of Ownership or (b) a
Financing Event, County shall be paid [strike through begin] {(1)} [strike
through end] an Administrative Charge equal to the Actual Cost incurred by
County in connection with its review and processing of said Change of
Ownership or Financing Event, including without limitation the cost of
investigating the acceptability of the proposed transferee or lender as
well as any and all other reasonable administrative, financial, economic,
accounting and/or legal costs and fees (including without limitation the
reasonable value of services provided by in-house counsel, lease
administrators and/or lease auditors) incurred or expended in connection
with any such proposed Change of Ownership or Financing Event
("Administrative Charge") [strike through begin] {and (2) in the event
County approves such proposed Change of Ownership or Financing Event and
such transaction is consummated, a Net Proceeds Share; provided, however,
that in the event County disapproves a proposed Change of Ownership or
Financing Event, the Administrative Charge shall not exceed Thirty
Thousand and 00/100 Dollars ($30,000) and, in the event County approves a
Change of Ownership or Financing Event, that portion, if any, of the
Administrative Charge that exceeds Thirty Thousand and 00/100 Dollars
($30,000) shall be paid out of, and shall reduce, the Net Proceeds Share.
"Net Proceeds Share" shall mean the applicable amount determined pursuant
to Section 4.8 of this Agreement} [strike through end]. Changes of
Ownership and Financing Events are further subject to County approval as
provided in Articles 12 and 13 of this Agreement. [double underline begin]
A deposit of Fifteen Thousand and 00/100 Dollars ($15,000) toward the
Administrative Charge shall be due and payable upon Concessionaire's
notification to County of the proposed Change of Ownership or Financing
Event and request for County's approval thereof. [double underline end]
4.6.1.Change of Ownership. "Change of Ownership" shall mean
(a) any transfer by Concessionaire of a five percent (5%) or greater
direct ownership interest in this Agreement or in any Major
Sublease, (b) Concessionaire's granting of a Major Sublease [strike
through begin] {and} [strike through end] [double underline begin]
or [double underline end] (c) any transaction or series of related
transactions not described in subsections 4.6.1(a) or (b) which
constitute [strike through begin] {an Aggregate Transfer of fifty
percent (50%) or more of the beneficial interests in, or} [strike
through end] a Change of Control of [strike through begin] {,}
[strike through end] Concessionaire, this Agreement or a Major
Sublease. For the purposes of this Agreement, "Change of Control"
shall refer to a transaction whereby the transferee acquires a
beneficial interest in Concessionaire, this Agreement or a Major
Sublease which brings its cumulative beneficial interest in
Concessionaire, this Agreement or a Major Sublease, as appropriate,
to over fifty percent (50%).
4.6.2.Excluded Transfers. Notwithstanding anything to
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the contrary contained in this Agreement, Changes of Ownership
resulting from the following transfers shall not be deemed to create
an obligation to pay County an Administrative Charge [strike through
begin] {or a Net Proceeds Share} [strike through end], nor shall
County have any discretion under Articles 12 and 13 of this
Agreement to disapprove such transfers:
(1) a transfer to a spouse in connection with a property
settlement agreement or decree of dissolution of
marriage or legal separation;
(2) a transfer, directly or through any trust, by way of
gift, devise, intestate succession or operation of law
for the benefit of any member or members of the
transferor's immediate family (which for the purposes of
this subsection shall be limited to the transferor's
spouse, children, parents, siblings and grandchildren);
(3) a transfer of a beneficial interest resulting from
public trading in the stock or securities of an entity,
where such entity is a corporation whose stock is traded
publicly on a national stock exchange or is traded in
the over-the-counter market and whose price is regularly
quoted in recognized national quotation services;
provided, however, that this exclusion shall not apply
to a single transaction or series of related
transactions whereby fifty percent (50%) or more of the
beneficial interests in such entity are transferred, or
which otherwise effects a Change of Control in such
entity;
(4) a mere change [double underline begin] or conversion
[double underline end] in the form, method or status of
ownership; it shall not include a transfer between or
among individuals and/or entities controlled by such
individuals, provided that this exclusion shall not
apply to a single transaction or series of related
transactions whereby [strike through begin] {an
Aggregate Transfer of} [strike through end] fifty
percent (50%) or more of the beneficial interests in
Concessionaire, this Agreement or a Major Sublease has
[strike through begin] {occurred;} [strike through end]
[double underline begin] been transferred; or, [double
underline end]
(5) any transfer resulting from a Condemnation by County;
or,
(6) any transfer of the beneficial interest in Concessionaire
[double underline begin] which is consummated prior to May 1, 1999,
which results in no change in the management of Concessionaire or
the day-to-day
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operations of the Premises and where the transferee of such
beneficial interest is, as of January 1, 1999, a beneficial interest
holder in Concessionaire other than [double underline end] [strike
through begin] {currently held by} [strike through end] Bank of
America and its affiliates [strike through begin] {; provided,
however, that (1) such transfer is consummated prior to {November 1,
1997, (2) such transfer is effected at a net loss to Bank of America
and/or its affiliates (without taking into account prior writedowns
of any debt extended to Concessionaire by Bank of America or its
affiliates), and (3) the transfer of the beneficial interest is made
to one or more of the existing persons or entities currently holding
beneficial interests in Concessionaire} [strike through end].
[strike through begin] 4.6.3. Aggregate Transfer. "Aggregate
Transfer" shall refer to the total percentage of the shares of stock,
partnership interests, membership interests or any other equity interests
(which constitute beneficial interests in Concessionaire, this Agreement
or a Major Sublease, as appropriate) transferred in all transactions
(other than those enumerated in subsection 4.6.2) occurring since the
later of (a) the execution by Concessionaire of this Agreement or a Major
Sublease, as appropriate, or (b) the most recent Change of Ownership upon
which an Administrative Charge was paid to County [strike through end].
[strike through begin] 4.6.4 [strike through end] [double underline
begin] 4.6.3 [double underline end]. Beneficial Interest. As used in this
Agreement, the "beneficial interest," "beneficial interest in this
Agreement," or "beneficial interest in a Major Sublease" shall refer to
the interests of the natural persons who comprise the ultimate owner or
owners of Concessionaire's interest in this Agreement or a Major Sublease,
or a Major Sublessee's interest in a Major Sublease, whichever is
appropriate, regardless of the form of such ownership and regardless of
whether such interests are owned through corporations, trusts,
partnerships, limited liability companies or layers thereof; provided,
however, that if an entity with an ownership interest in the Agreement or
a Major Sublease is a partnership, corporation or limited liability entity
(a) whose beneficial interest in this Agreement or a Major Sublease,
whichever is appropriate, comprises less than fifteen percent (15%) of its
total assets or (b) in which no ten (10) shareholders, partners or members
together own more than thirty percent (30%) of the partnership interests,
shares, membership interests or other equity interests in the entity, then
for the purposes of Sections 4.6 through 4.8 hereof, the entity itself
shall be deemed to be the ultimate owner of the beneficial interest in
this Agreement or a Major Sublease, as appropriate, and the owners of such
entity shall not be treated as the ultimate owners of such beneficial
interest.
[strike through begin] {4.6.4.1} [strike through end] [double
underline begin] 4.6.4. [double underline end] Interests Held By
Entities. Except as otherwise provided herein, an interest in
Concessionaire, this
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Agreement or a Major Sublease held or owned by a partnership,
limited liability company, corporation or other entity shall be
treated as owned by the partners, members, shareholders or other
equity holders of such entity in proportion to their respective
equity interests, determined by reference to the relative values of
the interests of all partners, members, shareholders or other equity
holders in such entity. Where more than one layer of entities exists
between Concessionaire or a Major Sublessee, as appropriate, and the
ultimate owners, then the foregoing sentence shall be applied
successively to each such entity in order to determine the ownership
of the beneficial interests in Concessionaire, this Agreement or a
Major Sublease, as appropriate, and any transfers thereof.
[double underline begin] ** 1(text moved) 4.6.5. [double
underline end] Shareholder, Partner, Member, Trustee and Beneficiary
List. Prior to the execution of this Agreement by County, prior to
each subsequent Change of Ownership or Financing Event and upon the
request of County (which requests shall be no more frequent than
once per year), Concessionaire shall permit County to review an
updated schedule listing the names and mailing addresses of all
shareholders, partners, members and other holders of equity
interests in Concessionaire. In the event that such shareholder,
partner, member or other interest holder is a trust, Concessionaire
shall include in such schedule the name and mailing address of each
trustee of said trust, together with the names and mailing addresses
of each beneficiary of said trust with greater than a five percent
(5%) actuarial interest in distributions from, or the corpus of,
said trust; provided, however, that to the extent that
Concessionaire is prevented by Applicable Laws from obtaining such
information regarding the beneficiaries of said trust(s),
Concessionaire shall have complied with this provision if
Concessionaire uses its best efforts to obtain such information
voluntarily and provides County with the opportunity to review any
such information so obtained. Concessionaire agrees to use its best
efforts to provide County with any additional information reasonably
requested by County in order to determine the identities of the
holders of five percent (5%) or greater beneficial interests in
Concessionaire or its constituent shareholders, partners, members or
other interest holders, this Agreement or a Major Sublease.
[strike through begin] {4.6.4.2. Ownership of Multiple Assets.
The proceeds of any event constituting or giving rise to a Change of
Ownership shall be apportioned to this Agreement or a Major
Sublease, whichever is appropriate, and to any other assets
transferred in the same transaction in proportion to the relative
fair market values of the respective assets transferred. The Net
Proceeds Share shall be
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calculated only by reference to the amount of such proceeds
apportioned to this Agreement, a Major Sublease or the beneficial
interests therein, whichever is appropriate.[strike through end]
[strike through begin] 4.7. Calculation and Payment. A deposit of Fifteen
Thousand and 00/100 Dollars ($15,000) toward the Administrative Charge
shall be due and payable upon Concessionaire's notification to County of
the proposed Change of Ownership or Financing Event and request for
County's approval thereof. If the transaction is approved, the balance of
the Administrative Charge, if any, and the Net Proceeds Share shall be due
and payable concurrently with the Change of Ownership or Financing Event
giving rise to the obligation to pay such fee. If County disapproves the
proposed transaction then, within thirty (30) days after notice of its
disapproval, County shall deliver to Concessionaire a written notice
setting forth the Administrative Charge, together with a refund of the
amount, if any, of the deposit in excess of the Administrative Charge
otherwise allowable under Section 4.6. In the event that the
Administrative Charge exceeds the deposit, then Concessionaire shall pay
County the balance of the Administrative Charge otherwise allowable under
Section 4.6. within thirty (30) days after receipt of the notice from
County setting forth the Administrative Charge and any supporting
documentation reasonably requested by Concessionaire within five (5) days
after its receipt of such notice. Together with its request for County
approval of the proposed transaction, Concessionaire, a Major Sublessee or
the holder of a beneficial interest in this Agreement or a Major Sublease,
whichever is appropriate, shall present to County its calculation of the
Net Proceeds Share (if any) to be derived therefrom, which shall include
the adjustment to Improvement Costs, if any, which may result from the
payment of such Net Proceeds Share ("Calculation Notice"). Each
Calculation Notice shall contain such detail as may be reasonably
requested by County to verify the calculation of the Net Proceeds Share.
Within sixty (60) days after the receipt of the Calculation Notice, County
shall notify the party giving the Calculation Notice as to County's
agreement or disagreement with the amount of the Net Proceeds Share set
forth therein or the related adjustment of Improvement Costs, if any.
Failure of County to approve the Calculation Notice in writing within such
sixty (60) day period shall be deemed to constitute County's disapproval
thereof. Failing mutual agreement within thirty (30) days after the
expiration of said sixty (60) day period, the dispute shall be resolved by
arbitration as set forth in Section 16.15 of this Agreement in a manner
similar to that prescribed herein for the resolution of disputes
concerning Fair Market Rental Value. In the event County approves a Change
of Ownership or Financing Event but a dispute exists as to the Net
Proceeds Share in respect thereof or the related adjustment, if any, in
Improvement Costs, then the transaction may be consummated; provided,
however, that (i) Concessionaire shall remit to County as otherwise
required
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<PAGE> 7
hereunder the undisputed portion of the Net Proceeds Share and (ii)
Concessionaire shall deposit the disputed portion of the Net Proceeds
Share into an escrow at the closing of the transaction, which portion
shall be distributed in accordance with the arbitration of the dispute
pursuant to Section 16.15 of this Agreement, in a manner similar to that
prescribed herein for the resolution of disputes concerning Fair Market
Rental Value. [strike through end]
[strike through begin] 4.7.1. Transfer of Less Than Entire Interest.
Where a Change of Ownership has occurred by reason of the transfer
of less than all of an owner's beneficial interest in
Concessionaire, this Agreement or a Major Sublease, the Net Proceeds
Share shall be due and payable with respect to those portions of
such beneficial interest that have been acquired by the transferee
since the later of (a) the date of the execution of this Agreement
(or a Major Sublease) by Concessionaire, (b) the most recent payment
of an Administrative Charge with respect to this Agreement (or a
Major Sublease), or (c) the date which is twelve (12) months prior
to the transfer which constitutes the Change of Ownership. [strike
through end]
[strike through begin] 4.7.2. Purchase Money Notes. If the
transferor of an interest accepts a note made by the transferee of
such interest in payment of all or a portion of the acquisition cost
(a "Purchase Money Note"), such note shall be valued at its face
amount. [strike through end]
[strike through begin] 4.7.3. Obligation to Pay Net Proceeds Share
and Administrative Charge. With respect to a Change of Ownership
giving rise to the Administrative Charge and Net Proceeds Share, the
obligation to pay the Administrative Charge and Net Proceeds Share
shall be the joint and several obligation of the transferor and
transferee. In the event that the Administrative Charge or Net
Proceeds Share is not paid when due with respect to the beneficial
interest in this Agreement, then County shall have the remedies set
forth in Section 14.3 hereof. [strike through end]
[strike through begin] 4.8. Net Proceeds Share. In the event of a Change
of Ownership, the Net Proceeds Share shall be a sum equal to the greater
of (a) five percent (5%) of the gross sale or transfer proceeds or other
consideration given for the interests transferred (but in the case of a
transfer to a party affiliated with or otherwise related to the
transferor, such consideration shall in no event be deemed to be less than
the fair value of the interests transferred), and (b) twenty percent (20%)
of the Net Transfer Proceeds from such transfer. With respect to a
Financing Event, the Net Proceeds Share (if any) shall be equal to twenty
percent (20%) of the Net Refinancing Proceeds from such Financing Event.
[strike through end]
[strike through begin] 4.8.1. Transaction by Original
Concessionaire. In the case of a
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transfer by Concessionaire (but not a successor or assignee of
Concessionaire) constituting a Change of Ownership, "Net Transfer
Proceeds" shall mean the total cash and other consideration received
(but in the case of a transfer to a party affiliated with or
otherwise related to the transferor, such consideration shall in no
event be deemed to be less than the fair value of the interests
transferred), less the following costs with respect to
Concessionaire (but not its successors or assignees):
(1) The} [strike through end] [double underline begin] Supplemental Rent. In
addition to the Annual Minimum Rent, Percentage Rent and other monetary
obligations of Concessionaire to County as set forth more specifically in this
Agreement, Concessionaire shall pay to County "Supplemental Rent" as follows:
4.7.1. Monthly and Annual Payments. Supplemental Rent shall
consist of "Monthly Supplemental Rent" and "Annual Supplemental
Rent" or, if and as applicable, "Valuation Participation" and
"Excess Valuation Participation Payments".
4.7.2. Monthly Supplemental Rent. "Monthly Supplemental Rent"
shall consist of a monthly payment of one thousand two hundred fifty
dollars ($1,250.00), due and payable at the time and in the manner
set forth for Monthly Minimum Rent in the Agreement. Monthly
Supplemental Rent payments shall not be credited toward Annual
Supplemental Rent payments.
4.7.3. Annual Supplemental Rent. In addition to
Concessionaire's obligation to pay County Percentage Rent and
Monthly Supplemental Rent as set forth in this Agreement,
Concessionaire's Gross Receipts shall be measured for each twelve
month period commencing on the first day of the first calendar month
following County's execution of this Amendment and on each
anniversary thereafter (each a "Supplemental Rent Year"). "Annual
Supplemental Rent" for each Supplemental Rent Year shall consist of
a payment equal to one percent (1%) multiplied by the amount by
which Concessionaire's Gross Receipts for said Supplemental Rent
Year exceeded fourteen million dollars ($14,000,000). The amount of
Annual Supplemental Rent due and payable shall be documented by
Concessionaire and confirmed by County in the manner set forth in
this Agreement for Percentage Rent, including without limitation
those provisions in the Agreement concerning accounting procedures
and County audits. Annual Supplemental Rent payments shall be in
addition to the Monthly Supplemental Rent described above, and
Monthly Supplemental Rent payments shall in no event be credited
toward the Annual Supplemental Rent payments.
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4.7.4. Partial Year at End of Term. For the final Supplemental
Rent Year which ends upon the expiration of the Term, the Gross
Receipts threshold for the Annual Supplemental Rent payment shall be
calculated by multiplying fourteen million dollars ($14,000,000) by
a fraction, the numerator of which shall be the sum of the total
Gross Receipts reported by Concessionaire in those same calendar
months (prorated daily for partial months) over the two then most
recent Lease Years, and the denominator of which shall be the sum of
the total Gross Receipts reported by Concessionaire for the two then
most recent Lease Years.
4.7.5. Valuation Participation. As provided below, County may
cause Concessionaire to pay County a "Valuation Participation" and,
if applicable, "Excess Valuation Participation Payments" (as defined
herein below). "Valuation Participation" shall mean, as of the
"Valuation Date", the greater of (a) five percent (5%) of the "Gross
Concession Value" or (b) twenty percent (20%) of the "Net Concession
Value".
4.7.5.1. Valuation Date. The "Valuation Date" may be
designated by County (a) prior to the end of the seventy
eighth (78th) month of the Term, within ten (10) days after
receipt by County of notice from Concessionaire that an
"Outright Sale" has occurred, in which event the Valuation
Date shall be deemed to be the date upon which the Outright
Sale transaction occurred, or (b) at any time from the first
day of the seventy ninth (79th) month of the Term until the
expiration of the one hundred fiftieth (150th) month of the
Term, provided that County delivers to Concessionaire written
notice of County's election to establish the Valuation Date
within ten (10) days after such election by County.
4.7.5.2. Outright Sale. An "Outright Sale" shall consist
of any one or more of the following: (a) a transfer by
Concessionaire of one hundred percent (100%) of its interest
in the Agreement or the Premises to a non-affiliated entity,
(b) a transfer by California Beach Restaurants, Inc.,
Concessionaire's parent company, of one hundred percent (100%)
of its beneficial interest in Concessionaire, the Agreement or
the Premises in a single transfer to a non-affiliated entity,
or (c) the sale of one hundred percent (100%) of the
outstanding common stock of California Beach Restaurants, Inc.
in a single transfer to a non-affiliated entity.
4.7.6. Gross and Net Concession Value. The "Gross
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Concession Value" shall be determined by an appraiser selected by County.
The scope of the valuation conducted by the appraiser shall be limited to
determining the value of the concession which is the subject of the
Agreement (with the appraiser assuming that the concessionaire has the
right to use the Gladstone's name for the Premises for the balance of the
Term), together with the commercial and retail operations conducted on and
from the Premises, taking into account the uniqueness of the location of
the Premises and the character of the physical asset and operations there.
The valuation shall not include the value of the name "Gladstone's" or any
other trademarks or service marks owned by Concessionaire or its parent
company and used at another site, nor shall it take into account those
revenues and expenses of Concessionaire or its parent company which do not
directly result from the concession, the Premises or the operations
thereon. In the event of any dispute concerning such revenues and
expenses, the burden shall be on Concessionaire to demonstrate the lack of
any such direct relationship. Concessionaire shall make available to
County's appraiser any and all information reasonably requested by the
appraiser in order to conduct the valuation. "Net Concession Value" shall
mean the Gross Concession Value less unamortized "Improvement Costs" (as
hereinafter defined) expended by Concessionaire as of the Valuation Date
and, in the event of an Outright Sale, "Documented Transaction Costs" (as
hereinafter defined) in connection with such Outright Sale. In the event
that County elects to designate a Valuation Date, County shall notify
Concessionaire of the Valuation Participation determined by its appraiser
within thirty (30) days after its receipt from such appraiser. Any
disputes regarding the Gross Concession Value or Net Concession Value
shall be resolved by arbitration as provided in the Agreement. Prior to
the arbitration, Concessionaire shall cause an appraiser to conduct a
valuation using the Valuation Date designated by County and the appraisal
standards set forth above. Concessionaire and County shall negotiate in
good faith, after Concessionaire has notified County of the Valuation
Participation as determined by Concessionaire's appraiser, for a period of
no less than thirty (30) days to resolve any disputes regarding Gross
Concession Value and Net Concession Value prior to initiating the
arbitration procedure. All appraisals or valuations submitted or otherwise
offered into evidence by County or Concessionaire in any such arbitration
procedure must meet the standards set forth herein for Written Appraisal
Evidence. Notwithstanding the foregoing, In the event that (whether before
or after the seventy ninth (79th) month of the Term), prior to the
occurrence of an Outright Sale County elects to designate a Valuation Date
upon the occurrence of the Outright Sale, the Gross Concession Value shall
be deemed to be the total consideration paid in connection with the
Outright Sale, and the Valuation Participation payments shall commence on
the first day of the first calendar month immediately following the
closing of the Outright Sale Transaction. County may elect to cause an
appraisal of the concession within nine (9)
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months after the occurrence of the Outright Sale as provided above, in
which event the remaining Valuation Participation payments may be
increased to reflect the Gross Concession Value as determined by the
appraiser. Disputes regarding the appraiser's conclusions shall be
resolved by arbitration as provided above.
4.7.7. Improvement Costs. "Improvement Costs" shall mean the
[double underline end] lesser of (i) book value or (ii) fair market
value of certain equipment installed and owned by Concessionaire and
existing on the Premises as of the commencement of the Term,
together with the final construction costs incurred by
Concessionaire in connection with the construction of the
Improvements as set forth in the Approved Final Plans,
Specifications and Costs, which costs shall be submitted to County
within thirty (30) days after the completion of the Improvements
described therein and which costs shall be approved in writing by
County, together with any subsequent expenditure incurred, whether
or not paid, by Concessionaire (but not a sublessee or other party),
for physical addition to or improvement or renovation of the
Premises [strike through begin] {(collectively, "Improvement
Costs")} [strike through end], provided that (a) with respect to
the book value or fair market value of such equipment installed and
owned by Concessionaire on the Premises [double underline begin] at
the commencement of the Term [double underline end], such costs,
which the parties agree shall in no event exceed three hundred
thousand and 00/100 dollars ($300,000), shall have been submitted to
County within ninety (90) days after the commencement of the Term
and are thereafter approved by Director in writing within sixty (60)
days after submission, (b) with respect to the construction of
improvements costing in excess of twenty five thousand dollars
($25,000), such costs have been submitted to County within thirty
(30) days after the completion of such addition, improvement or
renovation and approved by County in writing, and (c) with respect
to the construction of improvements costing less twenty five
thousand dollars ($25,000), such costs may be submitted in
accordance with (b) above, or submitted to County [strike through
begin] {as part of Concessionaire's Calculation Notice} [strike
through end] [double underline begin] or County's appraiser in
connection with County's election to establish a Valuation Date
[double underline end] and thereafter documented to County's
reasonable satisfaction, provided, however, that, if Concessionaire
elects to submit such costs in [strike through begin] {its
Calculation Notice,} [strike through end] [double underline begin]
connection with County's election to establish a Valuation Date,
[double underline end] such costs, taken cumulatively, shall not
exceed twenty five thousand dollars ($25,000).
[strike through begin] {(2) Commissions} [strike through end]
[double underline begin] 4.7.8. Documented Transaction Costs.
"Documented Transaction Costs" shall mean commissions [double
underline end], title and escrow costs, and other bona fide closing
costs actually paid
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to third parties and documented to the satisfaction of County, which
costs were directly attributable to the consummation of the
particular transaction giving rise to the obligation to pay County a
[strike through begin] {Net Proceeds Share (collectively,
"Documented Transaction Costs").} [strike through end] [double
underline begin] Valuation Participation. [double underline end]
[strike through begin] 4.8.2. Transfer by
Concessionaire's Successor. In the case of a transfer by a
Concessionaire other than the original Concessionaire, "Net
Transfer Proceeds" shall mean the total cash and other
consideration received by that successor Concessionaire (but
in the case of a transfer to a party affiliated with or
otherwise related to the transferor, such consideration shall
in no event be deemed to be less than the fair value of the
interests transferred), minus the following costs with respect
to such successor Concessionaire: [strike through end]
[strike through begin] (1) The purchase price such successor
paid to Concessionaire or such successor's seller for the
interest acquired; [strike through end]
[strike through begin] (2) Improvement Costs actually paid by
such successor Concessionaire, provided that such costs have
been submitted to and approved by County to the extent
provided in subsection 4.8.1.1 with respect to Concessionaire;
and, [strike through end]
[strike through begin] (3) Documented Transaction Costs with
respect to the transfer of the interest by the successor.
[strike through end]
[strike through begin] 4.8.3. Transfers of Major Sublessee's
Interest. With respect to any Change of Ownership described in
subsection 4.6.1(b), subsections 4.8.1 and 4.8.2 shall apply, except
that any rents or other amounts received by Concessionaire from the
Major Sublessee and passed through to County under any provision of
this Agreement (other than payment of Net Proceeds Share) shall be
disregarded in the computation of Net Transfer Proceeds. [strike
through end]
[strike through begin] 4.8.4. Other Transfers. With respect to any
Change of Ownership not described in subsections 4.8.1 through 4.8.3
(i.e., a transfer of an interest in an entity holding a direct or
indirect ownership interest in this Agreement or in a Major
Sublease), subsections 4.8.1 and 4.8.2 shall apply to such Change of
Ownership, except that in lieu of deducting Improvement Costs in
determining Net Transfer Proceeds, the cost to the transferor of the
interest being transferred shall be deducted. Furthermore, in the
event that any such Change of Ownership produces a Net Proceeds
Share, the then existing Improvement Costs shall be increased by an
appropriate amount to
-12-
<PAGE> 13
reflect such Net Proceeds Share, as if it had been realized by
Concessionaire upon a transfer of a comparable interest in this
Agreement or in a Major Sublease, as appropriate. [strike through
end]
[strike through begin] 4.8.5. Net Refinancing Proceeds. "Net
Refinancing Proceeds" shall mean the gross principal amount of any
Financing Event after the date of this Agreement, minus (i) the
principal amount of Concessionaire's existing financing, (ii)
Improvement Costs incurred by Concessionaire and not paid for or
repaid with the proceeds of any Financing Event and (iii) Documented
Transaction Costs with respect to such Financing Event [strike
through end].
[strike through begin] 4.8.6. Effect of Refinancing on Improvement
Costs. Upon payment to County of a Net Proceeds Share in connection
with a Financing Event, then the Improvement Costs incurred by
Concessionaire prior to such Financing Event shall be increased by
the amount of Net Refinancing Proceeds derived from such Financing
Event and the Documented Transaction Costs incurred with respect
thereto and} [strike through end] [strike through begin] {addition
to Improvement Costs incurred by Concessionaire after such Financing
Event. [strike through end]
[strike through begin] 4.8.7. Transfers to which Sections 4.6
through 4.8 Apply. The provisions of Sections 4.6 through 4.8 hereof
shall apply to all transfers of beneficial interests in this
Agreement or a Major Sublease which constitute a Change of
Ownership, unless such transfers are otherwise excluded pursuant to
subsection 4.6.2. Furthermore, the provisions of Sections 4.6
through 4.8 of this Agreement, and the principles set forth therein,
shall apply to any transfer or series of transfers which County can
demonstrate was primarily structured for the purpose of avoiding the
obligation to pay Net Proceeds Share set forth in Sections 4.6
through 4.8 of this Agreement and which, viewed together, would
otherwise constitute a Change of Ownership. [strike through end]
[strike through begin] 4.8.8. Payment. Net Proceeds Share shall be
due and payable concurrently with the transfer giving rise to the
obligation to pay such fees and shall be the joint and several
obligation of the transferee and transferor. In the event that the
proceeds of the transaction giving rise to the obligation to pay Net
Proceeds Share are comprised, in whole or in part, of assets other
than cash, then the cash payment of the Net Proceeds Share shall
reflect the fair market value of such non-cash assets as of the date
of the Change of Ownership, which shall be set forth in the
Calculation Notice} [strike through end]. Notwithstanding the
foregoing, [strike through begin] {in the case of a Change of
Ownership described in subsection 4.6.1(b), the Net Proceeds Share
shall be payable to County as and when the Net Transfer Proceeds
-13-
<PAGE> 14
are received, with the Net Proceeds Share being equitably
apportioned to the payments derived by Concessionaire from said
Change of Ownership (other than any payments passed through to
County under this Agreement).} [strike through end]
[double underline begin] 4.7.9. Payment of Valuation Participation.
Where County elects to designate a Valuation Date which is a date
upon which an Outright Sale occurs, whether before or after the
seventy ninth (79th) month of the term, the Valuation Participation
shall be payable by Concessionaire in equal monthly installments of
principal and interest beginning on the first calendar month after
the occurrence of such Outright Sale. In all other events, the
Valuation Participation shall be payable by Concessionaire in equal
monthly installments of principal and interest beginning on the
first calendar month after receipt by Concessionaire of notice of
the Valuation Participation determined by County or by agreement of
the parties or by arbitration and continuing through the expiration
of the Term. Each monthly installment [double underline end] shall
be in [double underline begin] an amount necessary to amortize the
Valuation Participation, with interest at nine percent (9%) per
annum in equal payments over the remaining months of the Term. In
addition, in the event that Concessionaire has not commenced making
Valuation Participation payments to County, interest on the
Valuation Participation shall accrue at the higher of (a) eight
percent (8%) per annum or (b) the County Pool Rate, from the first
day of the first month following notice to Concessionaire of the
Valuation Participation as determined by County. Accrued interest on
the Valuation Participation shall become due and payable together
with the first of the Valuation Participation payments.
4.7.10. Credit Toward Valuation Participation. In calculating
the Valuation Participation payments, Concessionaire shall be
credited with, and the Valuation Participation reduced by, the
cumulative amount of Monthly Supplemental Rent and Annual
Supplemental Rent paid by Concessionaire to County through the end
of the month prior to the first monthly Valuation Participation
payment. The foregoing credit shall be applied, without interest, to
the Valuation Participation which is amortized for the remainder of
the Term.
4.7.11. Greater of Supplemental Rent and Valuation
Participation. From and after the date upon which the Valuation
Participation is established, County shall receive the greater of
(1) the Valuation Participation payments as determined by subsection
4.7.7. above or (2) the Monthly Supplemental Rent and Annual
Supplemental Rent payments as set forth above. For and at the end
-14-
<PAGE> 15
of each Supplemental Rent Year, Concessionaire shall compare the
cumulative Supplemental Rent which would have been payable from the
execution of this Amendment by County to the sum of (a) the
Supplemental Rent payments actually made to County, (b) the
Valuation Participation payments actually made to County and (c)
"Excess Valuation Participation Payments" as defined herein below,
each through the end of said Supplemental Rent Year. If the
cumulative Supplemental Rent payments (including Monthly
Supplemental Rent and Annual Supplemental Rent), calculated from the
date of execution of this Amendment by County through the end of
said Supplemental Rent Year, exceed the aforementioned sum of
clauses (a), (b) and (c), Concessionaire shall pay such excess
amount (each such payment an "Excess Valuation Participation
Payment") to County within thirty (30) days following the end of
said Supplemental Rent Year.
4.7.12. Exclusion from Fair Market Rental Value.
Notwithstanding anything to the contrary in this Agreement,
Concessionaire's obligation to pay Supplemental Rent shall not be
taken into account in the renegotiation or adjustment of Annual
Minimum Rent and Percentage Rent or the determination of Fair Market
Rental Value as provided in Section 4.4 of this Agreement.
4.8. Supplemental Rent Commencement Date. Monthly Supplemental Rent
payments shall commence on the first day of the first calendar month
following execution of this Amendment by County and thereafter shall be
due and payable on the first day of each calendar month for the remainder
of the Term. Annual Supplemental Rent Payments, if any, shall be due and
payable on the first day of the second calendar month following the
expiration of each Supplemental Rent Year, with the final Annual
Supplemental Rent Payment becoming due and payable on the last day of the
Term for the final Supplemental Rent Year." [double underline end]
3. Subsection 4.2.2.9 is amended as follows, with deleted text stricken and
added text double underlined:
"4.2.2.9. Excess Payments Credit. If rent payments actually made by
Concessionaire in a particular Lease Year exceed the total rentals
actually due for that year as computed on an annual basis,
Concessionaire shall be permitted to credit that excess amount
("Excess Percentage Rent Payment") against the succeeding monthly
installments of [double underline begin] Monthly Minimum and [double
underline end] Percentage Rent otherwise due under this Section 4.2
until such time as the entire Excess Percentage Rent Payment has
been recouped. If Concessionaire makes an Excess Percentage
-15-
<PAGE> 16
Rent Payment in the final Lease Year of the Term, County shall
refund such amount to Concessionaire within ninety (90) days of the
expiration of the Term."
4. The first sentence of Subsection 5.6.4 of the Agreement is amended as
follows, with deleted text stricken through and added text double
underlined:
"5.6.4 Performance and Payment Bonds. [double underline begin] If
the two million dollar ($2,000,000) letter of credit required by Section 8
of this Agreement has been reduced as provided therein, [double underline
end] Concessionaire shall, at its own cost and expense, have furnished
County with the following separate corporate surety bonds not less than
ten (10) days prior to the [strike through begin] Construction
Commencement Date (as defined herein below) [strike through end] [double
underline begin] commencement of construction [double underline end],
which bonds must be in form and content reasonably satisfactory to County
or with other security for the construction of the Improvements as set
forth in subsection 5.6.5 below:"
5. Subsection 5.8.1 of the Agreement is amended as follows, with deleted text
stricken through and added text double underlined:
"5.8.1. Substantial [strike through begin] {Commencement} [strike
through end] [double underline begin] Completion [double underline end] of
Construction. It is a condition of this Agreement that, except to the
extent Concessionaire is prevented from so doing by the events identified
in subsection 5.8.3, Concessionaire shall cause the [strike through begin]
{Substantial Commencement of Construction} [strike through end] [double
underline begin] completion of construction of the Improvements [double
underline end] to have occurred in accordance with the Approved Final
Plans, Specifications and Costs no later than [strike through begin]
{December 31, 1998 ("Anticipated Commencement Date") and shall
substantially complete same by May 1, 1999} [strike through end] [double
underline begin] six (6) months after the execution of the First Amendment
to this Agreement by County [double underline end] ("Anticipated
Completion Date"). [strike through begin] {For the purposes of this
Agreement, "Substantial Commencement" or "Substantial Commencement of
Construction" shall mean that (1) all "Exterior Parking Lot Area and
Asphalt Concrete (AC) Beach Access" action items, as set forth in the
Proposal for Concession Agreement for the Renovation and Operation of a
Restaurant at Pacific Coast Highway at Sunset Boulevard, prepared by
Concessionaire and dated November 4, 1996, have been completed, and (2)
all demolition and excavation, including without limitation the removal of
the existing center steel structure on the north side of the Premises
which constitutes the covered patio area, has been completed in conformity
with the Approved Final Plans, Specifications and Costs. The Anticipated
Commencement Date and} [strike through end] [double underline begin] The
[double underline end] Anticipated Completion Date [strike through begin]
{will} [strike through end] [double underline begin] may [double underline
end] only be extended under the specific circumstances set forth in this
Section 5.8, and under no other circumstances. Notwithstanding the
foregoing, the parties hereto specifically agree that so long as
Concessionaire is otherwise
-16-
<PAGE> 17
diligently and in good faith attempting to satisfy such condition, and as
long as it would have been extremely unlikely that any other restaurant
operator could have caused the Improvements to be Substantially [strike
through begin] {Commenced and/or completed} [strike through end] [double
underline begin] Completed [double underline end] within such timeframe,
then Concessionaire will not be in breach of this subsection and not
subject to termination of this Agreement for its failure to achieve
[strike through begin] {Substantial Commencement or} [strike through end]
completion [double underline begin] of the Improvements [double underline
end] by the [strike through begin] {Anticipated Commencement Date or}
[strike through end] Anticipated Completion Date [strike through begin] {,
respectively} [strike through end]."
6. The second sentence of Subsection 5.8.2 of the Agreement is amended as
follows, with deleted text stricken through and added text double
underlined:
"During this period, delays due to fire, earthquake, [double underline
begin] unusually severe winter storms, [double underline end] flood,
tornado, civil disturbance, war, organized labor dispute or other
unforeseeable event reasonably beyond the control of Concessionaire
("Force Majeure") or a hidden condition relating to the foundation of the
Premises which is not known to Concessionaire as of the Anticipated
Commencement Date shall extend the time in which said construction must be
completed by the length of time of such delay, although Concessionaire
shall commence and complete the portions, if any, of the Improvements not
impacted by such delay within the timeframe set forth in this Agreement."
7. Section 8.1 of the Agreement is amended as follows, with deleted text
stricken through and added text double underlined:
"8.1. Decrease in Deposit. [strike through begin] {Beginning on the third
anniversary of the commencement of the Term, and on each subsequent
anniversary date, the} [strike through end] [double underline begin] The
[double underline end] amount of the irrevocable [strike through begin]
{letter} [strike through end] [double underline begin] Letter [double
underline end] of [strike through begin] {credit} [strike through end]
[double underline begin] Credit [double underline end] may be decreased by
Concessionaire upon fifteen (15) days' advance notice to County if
Concessionaire has satisfied both of the following conditions: (1)
Concessionaire has completed construction of the improvements in
substantial conformity with the Approved Final Plans, Specifications and
Costs and the Premises, as improved, are open to the public; and, (2)
Concessionaire has provided County with audited financial statements
certified by a Certified Public Accountant [double underline begin],
together with quarterly reports, certifications by officers and principals
of Concessionaire and any additional information reasonably requested by
County, [double underline end] evidencing that Concessionaire has
maintained a net worth in excess of Three Million and 00/100 Dollars
($3,000,000.00) [strike through begin] {for the most recent twelve
consecutive months} [strike through end] [double underline begin] at all
times from and after April 30, 1999. [double underline end] If
Concessionaire has satisfied both of the foregoing conditions, the amount
of the [strike through begin] {letter} [strike through end] [double
underline begin] Letter [double underline end] of [strike through begin]
{credit} [strike through end] [double underline begin] Credit [double
underline end] may be reduced [strike through begin] {to} [strike through
end] [double underline begin] and thereafter maintained at [double
underline end] an amount which represents three (3) times the
Monthly Minimum Rent then in effect. If, at any time after the amount of
the [strike through begin] {letter} [strike through end] [double underline
begin] Letter [double underline end] of [strike through begin] {credit}
-17-
<PAGE> 18
[strike through end] [double underline begin] Credit [double underline
end] has been reduced as provided in this Section 8.1, Concessionaire's
net worth falls below Three Million and 00/100 Dollars ($3,000,000.00)
then, within ten (10) days after it receives notice of such fact,
Concessionaire shall reinstate the letter of credit to the amount of Two
Million and 00/100 Dollars ($2,000,000). Failure to so reinstate the
letter of credit shall constitute an Event of Default hereunder. For
purposes of computing Concessionaire's net worth hereunder, value may be
attributed to the undepreciated amount of the Improvements, inventory,
furniture and fixtures at the Premises, but no value shall be attributed
to the value of the name "Gladstones" or to "goodwill"."
8. Subsection 12.1.2 of the Agreement is amended as follows, with deleted text
stricken through and added text double underlined:
"12.1.2. Approval Required. At least thirty (30) days prior to the
proposed effective date of any Sublease that is not a Major Sublease or of
any amendment or assignment of such Sublease, Concessionaire shall submit
a copy of such Sublease, amendment or assignment to Director for approval,
which approval shall be given or withheld at Director's sole and absolute
discretion. To the extent practical, Director shall approve or disapprove
said proposed Sublease [double underline begin] or [double underline end]
amendment [double underline begin] thereof [double underline end]
amendment { [strike through begin] or assignment [strike through end] }
within thirty (30) days after receipt thereof. [double underline begin]
With respect to an assignment, including without limitation a Change of
Ownership and/or Outright Sale, Director shall give or withhold his
approval of said assignment, which approval shall take into account the
factors set forth in subsection 12.3.1 hereof and shall not be
unreasonably withheld or delayed, within thirty (30) days after receipt of
the materials set forth in subsection 12.2.3.1 hereof; if not given in
writing prior to the expiration of said thirty (30) day period, Director's
consent to the proposed assignment shall be deemed to be withheld. [double
underline end]
9. The final sentence of Section 12.3 of the Agreement is amended as follows,
with deleted text stricken through and added text double underlined:
"Any approved assignment of this Agreement shall release the assignor of
all liability arising on or after the effective date of such assignment,
provided the assignee assumes all of such liability. Provided, further,
the assignor shall not be relieved of any liability for the payment of the
Administrative Charge [strike through begin] {or the required portion of
any Net Proceeds Share or Net Refinancing Proceeds which arise upon}
[strike through end] [double underline begin] in connection with [double
underline end] such assignment as provided herein."
10. The final sentence of Section 13.1. is amended as follows, with deleted text
stricken through and added text double underlined:
-18-
<PAGE> 19
"For the purposes of this Agreement, including without limitation the
provisions of Sections 4.6 through 4.8 hereof, a "Financing Event" shall
mean [strike through begin] {any financing or refinancing consummated by
Concessionaire, whether with private or institutional investors or
lenders, where such financing or refinancing is (a) [strike through end] }
an Encumbrance (as defined below) [strike through begin] { or (b) has been
underwritten based upon, or is intended to be repaid from, the proceeds of
Concessionaire's operation of the Premises or the sale, assignment or
transfer of Concessionaire's interest as provided herein} [strike through
end]."
11. Section 13.1.3.3. is amended as follows, with deleted text stricken through
and added text double underlined:
"13.1.3.3. [double underline begin] No [double underline end]
[strike through begin] {(1) Neither an} [strike through end]
Administrative Charge [strike through begin] {nor any Net Proceeds Share}
[strike through end] shall be payable in respect of or charged against any
amount payable under the Encumbrance to or for the benefit of the
Encumbrance Holder in a foreclosure proceeding [double underline begin],
nor shall such foreclosure proceeding (or any deed in lieu of such
proceeding) be deemed an Outright Sale. [double underline end] "
12. Subsection 14.4.3 is amended as follows, with deleted text stricken through
and added text double underlined:
"14.4.3. Other Amounts. The amounts necessary to compensate County
for the sums and other obligations which under the terms of this Agreement
become due prior to, upon or as a result of the expiration of the Term or
sooner termination of this Agreement, including without limitation, those
amounts of unpaid taxes, insurance premiums and utilities for the time
preceding surrender of possession, the cost of removal of rubble, debris
and other above-ground improvements, attorney's fees, court costs, and
unpaid Administrative Charges [strike through begin] {, Net Proceeds
Shares and Net Refinancing Proceeds.} [strike through end]."
13. Section 15.1 is hereby amended as follows, with deleted text stricken
through and added text double underlined:
"15.1. Maintenance of Records. In order to determine the amount of
and provide for the payment of the rent, Administrative Charge, [strike
through begin] {Net Proceeds Share, Net Refinancing Proceeds and } [strike
through end] [double underline begin] Supplemental Rent, Valuation
Participation, Excess Valuation Participation Payments and any and all
[double underline end] other sums due under this Agreement, Concessionaire
and all Sublessees, if any, shall at all times during the Term of this
Agreement, and for thirty six (36) months thereafter, keep, or cause to be
kept, locally, to the reasonable satisfaction of Director, true, accurate,
and complete records and double-entry books of account for the current and
five (5) prior Accounting Years, such records to show all transactions
relative to the
-19-
<PAGE> 20
conduct of operations, and to be supported by data of original entry."
14. On or prior to June 30, 1999, Concessionaire shall provide County with
reasonably satisfactory written evidence that the State has consented to and
approved in writing the terms of this Amendment.
15. All other terms and conditions contained in the Agreement shall remain in
full force and effect and are hereby reaffirmed and ratified.
IN WITNESS WHEREOF, County has, by order of its Board of
Supervisors, caused this Amendment to be subscribed by the Chairman of said
Board and attested by the Clerk thereof, and Concessionaire has executed the
same on the day and year hereinbelow written.
THE COUNTY OF LOS ANGELES
By /s/ DON KNABE
------------------------------
Chairman, Board of Supervisors
APPROVED AS TO FORM: (CORPORATE SEAL)
LLOYD W. PELLMAN
County Counsel ATTEST: JOANNE STURGES
--------------------------------
By /s/ RICHARD WEISS EXECUTIVE OFFICER
------------------------- CLERK OF THE BOARD OF SUPERVISORS
ADOPTED By [SIG]
BOARD OF SUPERVISORS -----------------------------
COUNTY OF LOS ANGELES
SEA VIEW RESTAURANTS, INC.,
FEB 09, 1999 a California corporation
/s/ JOANNE STURGES By /s/ ALAN REDHEAD
- --------------------------- ------------------------------
JOANNE STURGES Its President
EXECUTIVE OFFICER
By /s/ SAMUEL E. CHILAKOS
-----------------------------
Its Secretary
Dated: 1/28/1999
-20-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF CALIFORNIA BEACH RESTAURANTS, INC., AS OF JANUARY
31, 1999, AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS AND CASH FLOWS
FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> JAN-31-1999
<CASH> 257,000
<SECURITIES> 0
<RECEIVABLES> 25,000
<ALLOWANCES> 0
<INVENTORY> 194,000
<CURRENT-ASSETS> 614,000
<PP&E> 4,349,000
<DEPRECIATION> (3,067,000)
<TOTAL-ASSETS> 2,967,000
<CURRENT-LIABILITIES> 2,204,000
<BONDS> 0
0
0
<COMMON> 34,000
<OTHER-SE> 335,000
<TOTAL-LIABILITY-AND-EQUITY> 2,967,000
<SALES> 3,475,000
<TOTAL-REVENUES> 3,475,000
<CGS> 3,362,000
<TOTAL-COSTS> 3,745,000
<OTHER-EXPENSES> 294,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,000
<INCOME-PRETAX> (564,000)
<INCOME-TAX> 5,000
<INCOME-CONTINUING> (569,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (569,000)
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
