November 18, 1996
OFIS Filer Support
SEC Operations Center
6842 General Green Way
Alexandria, VA 22312-2413
Dear Sirs:
Pursuant to regulations of the Securities and Exchange Commission,
submitted herewith for filing on behalf of Family Steak Houses of Florida,
Inc. is the Company's Quarterly Report on Form 10-Q for the Fiscal Quarter
ended October 2, 1996.
This filing is being effected by direct transmission to the Commission's
Edgar System.
Very truly yours,
Edward B. Alexander
Secretary/Treasurer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter ended October 2, 1996
Commission File No. 0-14311
FAMILY STEAK HOUSES OF
FLORIDA, INC.
Incorporated under the laws of IRS Employer Identification
Florida No. 59-2597349
2113 FLORIDA BOULEVARD
NEPTUNE BEACH, FLORIDA 32266
Registrant's Telephone No. (904) 249-4197
Indicate by check mark whether the registrant has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No_____
Title of each class Number of shares outstanding
Common Stock 10,920,700
$.01 par value As of November 11, 1996
FAMILY STEAK HOUSES OF FLORIDA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 2, 1996
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q,
and do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair
presentation of the results for the interim periods have been
included. Operating results for the thirteen and thirty-nine week
periods ended October 2, 1996 are not necessarily indicative of the
results that may be expected for the fiscal year ending January 1,
1997. Effective January 4, 1996 the Company adopted Statement of
Financing Accounting Standards No. 121 "Accounting For The Impairment
of Long Lived Assets and For Long Lived Assets To Be Disposed Of". The
adoption of this statement did not have a material effect on the
consolidated financial statements. For further information, refer to
the financial statements and footnotes included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 3, 1996.
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant
intercompany profits, transactions and balances have been eliminated.
Note 2. Earnings Per Share
Earnings per share for the thirteen and thirty-nine weeks ended
October 2, 1996 and September 27, 1995 were computed based on the
weighted average number of common and common equivalent shares
outstanding. Common equivalent shares are represented by shares under
option and stock warrants.
Note 3. Commitments
On September 18, 1996, the Company entered into a lease agreement with
CNL American Properties Fund, Inc. (CNL) obligating the Company to
construct, sell and lease back premises to be used to operate a Ryan's
Family Steak House Restaurant. The lease back will be accounted for as
a capital lease and no gain or loss will be recognized on the
transaction. Total costs to construct and occupy the premises is
estimated to be approximately $1,900,000 of which the Company has paid
approximately $916,000 and the Company has been reimbursed by CNL
approximately $774,000. The Company anticipates occupying the premises
during the month of December, 1996.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Quarter Ended October 2, 1996 versus September 27, 1995
The Company experienced a decrease in sales during the third
thirteen weeks of 1996 as compared to the same period in 1995. Third
quarter same-store sales decreased to $9,084,600 from $9,816,900 for
the same period in 1995.
Management believes that the decrease in same-store sales is
primarily due to the effects of increasing competition, including
several new or remodeled restaurants opened by competitors in areas
close to Company restaurants. Management is seeking to improve sales
trends by focusing on improved restaurant operations, increasing
marketing expenditures, and devising competitive strategies to offset
the effects of new competition.
Historically, the third and fourth quarters of each fiscal year
are less profitable for the Company than the first and second
quarters. If year-to-date sales trends continue, it is possible that
the Company will incur losses in the fourth quarter.
The costs and expenses of the Company's restaurants include food
and beverage, payroll and benefits, depreciation and amortization,
repairs, maintenance, utilities, supplies, advertising, insurance,
property taxes and rents. The Company's food, beverage, payroll and
benefit costs are believed to be higher than the industry average as a
percentage of sales as a result of the Company's philosophy of
providing customers with high value of food and service for every
dollar a customer spends. In total, food and beverage, payroll and
benefits, depreciation and amortization and other operating expenses
as a percentage of sales increased to 89.5% in the third quarter of
1996, from 89.4% in the same quarter of 1995.
Food and beverage costs as a percentage of sales increased to
40.4% in the third quarter of 1996 from 39.8% in the same period of
1995, primarily due to higher produce and dairy prices compared to the
same period in 1995.
Payroll and benefits as a percentage of sales decreased to 27.7%
in the third quarter of 1996 from 28.4% in the same quarter of 1995,
primarily due to a reduction in worker's compensation expense.
Other operating expenses as a percentage of sales increased to
17.0% in the third quarter of 1996 from 16.6% in 1995, primarily due
to higher utilities costs as a percentage of sales. Depreciation and
amortization remained constant as a percentage of sales in the third
quarter of 1996 compared to 1995.
General and administrative expenses as a percentage of sales were
5.7% in the third quarter of 1996, compared to 5.9% in the same
quarter of 1995. Interest expense decreased from $408,900 during the
third quarter of 1995 to $376,800 in 1996. The decrease was due
primarily to lower outstanding principal balances, resulting from
principal payments made throughout the last twelve months.
The effective income tax benefit rates for the quarters ended
October 2, 1996 and September 27, 1995 were 25.2% and 27.0%,
respectively.
Net loss for the third quarter of 1996 was $87,400, compared to
net earnings of $78,200 in 1995. Loss per share was $.01 for 1996,
compared to net earnings of $.01 in 1995.
Nine Months Ended October 2, 1996 versus September 27, 1995
For the nine months ended October 2, 1996, total sales decreased
9.1% compared to the same period of 1995, primarily due to increased
competition.
Food and beverage costs, as a percentage of sales, for the nine
month period ended October 2, 1996 was 39.8%, compared to 39.5% for
the same period in 1995, primarily due to higher produce and dairy
product costs. Payroll and benefits increased from 26.8% in 1995 to
27.4% in 1996. The increase was primarily due to the decrease in same-
store sales, which resulted in decreased efficiencies in labor
scheduling.
For the nine months ended October 2, 1996, other operating
expenses, as a percentage of sales, increased to 15.7% from 15.0% in
1995, primarily due to the decline in same store sales. Depreciation
and amortization increased as a percentage of sales for the nine month
period ended October 2, 1996, compared to the same period of 1995.
For the nine months ended October 2, 1996, general and
administrative expenses, as a percentage of sales, decreased to 5.5%
of sales from 5.6% for the same period in 1995. Interest expense
decreased for the first nine months of 1996 to $1,152,300 from
$1,273,400 for the same period in 1995, due to reduced principal
balances.
The effective income tax rates for the nine-month periods ended
October 2, 1996 and September 27, 1995 were 13.6% and 17.0%
respectively.
Net earnings for the nine months ended October 2, 1996 were
$366,000 or $.03 per share, compared to net earnings of $965,000 or
$.08 per share for the same period in 1995.
The Company's operations are subject to some seasonal
fluctuations. Revenues per restaurant generally increase from January
through April and decline from September through December. Operating
results for the quarter ended October 2, 1996 are not necessarily
indicative of the results that may be expected for the fiscal year
ending January 1, 1997.
Recent Developments
In April 1996, the Company began construction of a new Ryan's
restaurant in Spring Hill, Florida. The Company obtained sales-
leaseback financing to finance the new restaurant.
Liquidity and Capital Resources
Substantially all of the Company's revenues are derived from cash
sales. Inventories are purchased on credit and are converted rapidly
to cash. Therefore, the Company does not carry significant
receivables or inventories. As a result, working capital requirements
for continuing operations are not significant.
At October 2, 1996, the Company had a working capital deficit of
$2,244,900, compared to a working capital deficit of $3,284,900 at
January 3, 1996. The decrease in the working capital deficit during
the first nine months in 1996 was due primarily to proceeds from the
sale of a building previously owned by the Company's Wrangler's
Roadhouse subsidiary and to net earnings generated in the first nine
months of 1996.
Cash provided by operating activities decreased to $1,754,100 in
the first nine months of 1996 from $2,100,200 in the same period of
1995. This decrease is primarily due to lower net earnings in 1996.
The Company spent approximately $566,800 in the first nine months
of 1996 for restaurant renovation and equipment. Capital expenditures
for 1996 and 1997, based on present costs and plans for expansion, are
estimated to be $750,000 (not including the sales-leaseback financing
for the new restaurant as discussed above) and $1,500,000
respectively. The Company projects that cash generated from operations
will be sufficient to fund the 1996 capital expenditures. The level of
capital expenditure in 1997 will be dependent upon the Company's
ability to refinance its debt as discussed below.
In March 1995, the Company entered into an Amended and Restated
Note Agreement, dated as of February 1, 1995, with The Travelers
Insurance Company and certain of its affiliates (the "Note
Agreement"), pursuant to which existing notes of the Company were
renewed, amended and restated (as amended and restated, the "Notes").
In August 1995, the Note Agreement was sold to Cerberus Partners, L.P.
The Notes are due May 30, 1998 and provide for an interest rate of
9.0% and principal payments of $65,000 per month. As of October 2,
1996, the outstanding balance due under the Notes was $11,022,800.
The Note Agreement includes detachable Warrants for purchases of
up to 1,750,000 shares of the Company's common stock at an exercise
price of $.40 per share. The Notes are secured by second mortgages on
twenty-two Company restaurant properties. The Note Agreement provides
for various covenants including prepayment options, the maintenance of
prescribed debt service coverages, limitations on the declaration of
cash dividends, sale of assets, and certain other restrictions.
Also in March 1995 the Company entered into an Amended and
Restated Loan Agreement with The Daiwa Bank, Limited, and SouthTrust
Bank of Alabama, National Association (the "Bank Loan") which extends
the maturity date of the Bank Loan until May 30, 1998. The Bank Loan
bears interest at prime rate plus 0.50%, with monthly principal
payments of $41,250 beginning April 1, 1995 ($67,100 prior to April 1,
1995). The Bank Loan is secured by first mortgages on twenty-two of
the Company's restaurant properties, and provides for various
covenants substantially consistent with those of the Note Agreement.
As of October 2, 1996, the outstanding balance under the Bank Loan was
$3,791,800.
In October 1996 the Company received a commitment for long-term
financing from a prospective lender. The commitment is subject to
satisfactory resolution of several contingencies, including acceptable
environmental audits and appraisal values of the Company's restaurant
properties. If all contingencies are resolved to the prospective
lender's satisfaction, the Company plans to use proceeds of the new
loan to refinance its existing debt. In addition, the new loan would
provide capital for restaurant renovations and construction of new
restaurants.
Impact of Inflation
Costs of food, beverage, and labor are the expenses most affected
by inflation in the Company's business. Although inflation has not
had a significant impact on the Company in the past, there can be no
assurance that it will not in the future. A significant portion of
the Company's employees are paid at the federally established
statutory minimum wage. On August 8, 1996, President Clinton signed
into law a bill which raised the federally mandated minimum wage by
$.50 per hour on October 1, 1996, and by an additional $.40 per hour
on September 1, 1997.
The Company raised sales prices approximately 3% in order to
offset the effect of higher payroll and benefit costs. Sales prices
were increased approximately 2.5% in 1995.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report
on Form 10-Q, and this list comprises the Exhibit Index.
No. Exhibit
10.01 Employment agreement between the Company and Edward B.
Alexander, dated as of October 1, 1996.
10.02 Lease Agreement between the Company and CNL American
Properties Fund, Inc., dated as of September 18, 1996.
10.03 Construction Addendum between the Company and CNL
American Properties Fund, Inc., dated as of September 18,
1996.
10.04 Rent Addendum to Lease Agreement between the Company
and CNL American Properties Fund, Inc., dated as of
September 18, 1996.
27.01 Financial Data Schedule.
SIGNATURES
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.
FAMILY STEAK HOUSES OF FLORIDA, INC.
(Registrant)
/s/ Lewis E. Christman
Date: Lewis E. Christman, Jr.
November 18, 1996 President and CEO
/s/ Edward B. Alexander
Date: Edward B. Alexander
November 18, 1996 Secretary/Treasurer
(Principal Financial and Accounting
Officer)
/s/ Michael J. Walters
Date: Michael J. Walters
November 18, 1996 Controller
Financial Statements
<TABLE>
<CAPTION>
Family Steak Houses of Florida, Inc.
Consolidated Results of Operations
(Unaudited)
For The Quarters Ended
-----------------------
October 2, September 27,
1996 1995
------------ ------------
<S> <C> <C>
Sales $9,084,600 $9,816,900
Cost and expenses:
Food and beverage 3,665,800 3,909,600
Payroll and benefits 2,514,800 2,791,900
Depreciation and amortization 412,200 440,600
Other operating expenses 1,541,500 1,633,900
General and administrative expenses 515,900 574,900
Franchise fees 272,400 294,500
Loss on disposition of equipment 18,400 45,100
(Income) loss in joint venture -- (40,100)
Income from restaurant dispositions -- (217,900)
------------ ------------
8,941,000 9,432,500
Earnings from operations 143,600 384,400
Interest and other income 116,400 131,700
Interest expense (376,800) (408,900)
------------ ------------
Earnings before income taxes (116,800) 107,200
(Benefit) provision for income taxes (29,400) 29,000
------------ ------------
Net earnings ($87,400) $78,200
============ ============
Net earnings per common and equivalent share: ($0.01) $0.01
============ ============
Weighted average common shares and equivalents 11,728,000 11,819,000
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
Family Steak Houses of Florida, Inc.
Consolidated Statements of Earnings
(Unaudited) For The Nine Months Ended
-------------------------
October 2, September 27,
1996 1995
------------ ------------
<S> <C> <C>
Sales $29,259,400 $32,193,200
Cost and expenses:
Food and beverage 11,640,800 12,719,800
Payroll and benefits 8,010,400 8,613,200
Depreciation and amortization 1,250,700 1,321,800
Other operating expenses 4,598,300 4,842,100
General and administrative expenses 1,622,700 1,817,600
Franchise fees 877,200 965,800
Loss on disposition of equipment 38,700 97,100
Equity loss in joint venture -- 5,400
Income from restaurant dispositions -- (217,900)
------------ ------------
28,038,800 30,164,900
Earnings from operations 1,220,600 2,028,300
Interest and other income 355,300 407,800
Interest expense (1,152,300) (1,273,400)
------------ ------------
Earnings before income taxes 423,600 1,162,700
Provision for income taxes 57,600 197,700
------------ ------------
Net earnings $366,000 $965,000
============ ============
Net earnings per common and equivalent share: $0.03 $0.08
============ ============
Weighted average common shares and equivalents 11,989,000 11,568,000
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
Family Steak Houses of Florida, Inc.
Consolidated Balance Sheets
(Unaudited) October 2, January 3,
1996 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $903,400 $711,400
Investments 1,154,300 600,300
Receivables 203,700 73,900
Current portion of note and mortgages receivable 128,400 155,700
Inventories 226,000 247,400
Prepaids and other current assets 445,000 256,600
------------ ------------
Total current assets 3,060,800 2,045,300
Note and mortgages receivable 1,109,900 1,262,700
Property and equipment:
Land 9,089,200 9,342,200
Buildings and improvements 18,569,500 18,774,500
Equipment 12,055,400 11,940,900
------------ ------------
39,714,100 40,057,600
Accumulated depreciation (14,277,700) (13,220,900)
------------ ------------
Net property and equipment 25,436,400 26,836,700
Property held for resale 552,800 552,800
Other assets, principally deferred charges,
net of accumulated amortization 493,800 562,200
------------ ------------
$30,653,700 $31,259,700
============ ============
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Accounts payable $1,296,700 $1,250,700
Accrued liabilities 2,604,000 2,494,100
Income taxes payable -- 5,400
Current portion of long-term debt 1,405,000 1,580,000
------------ ------------
Total current liabilities 5,305,700 5,330,200
Long-term debt 13,452,200 14,420,400
Deferred revenue 46,900 49,400
------------ ------------
Total liabilities 18,804,800 19,800,000
Commitments and contingencies
Shareholders' equity:
Preferred stock of $.01 par;
authorized 10,000,000 shares;
none issued -- --
Common stock of $.01 par;
authorized 20,000,000 shares;
outstanding 10,893,200 in 1996
and 10,845,000 shares in 1995 108,900 108,500
Additional paid-in capital 8,146,100 8,123,300
Retained earnings 3,593,900 3,227,900
------------ ------------
Total shareholders' equity 11,848,900 11,459,700
------------ ------------
$30,653,700 $31,259,700
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
Family Steak Houses of Florida, Inc.
Consolidated Statements of
Cash Flows
(Unaudited)
For the Nine Months End
-----------------------
October 2, September 2
1996 1995
----------- -----------
<S> <C> <C>
Operating activities:
Net earnings $366,000 $965,000
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 1,250,700 1,321,800
Directors' fees in the form of stock options 15,000 30,000
Loss from joint venture -- 5,400
Income from restaurant disposition -- (217,900)
Amortization of loan discount 41,700 60,800
Amortization of loan fees 67,400 60,300
Loss on disposition of equipment 38,700 97,100
Decrease (increase) in:
Receivables 2,700 (28,900)
Income tax receivable -- 332,200
Inventories 21,400 79,900
Prepaids and other current assets (188,400) 275,100
Other assets (9,100) (272,300)
Increase (decrease) in:.
Accounts payable 46,000 103,100
Accrued liabilities 109,900 (802,500)
Income taxes payable (5,400) 91,100
Deferred revenue (2,500) --
----------- -----------
Net cash provided by operating activities 1,754,100 2,100,200
----------- -----------
Investing activities:
Proceeds from sale of property and equipment 555,300 106,600
Proceeds from notes receivable 180,100 60,000
Purchase of investments (554,000) --
Capital expenditures (566,800) (2,204,900)
Net proceeds from sale of land held for resale -- 496,000
Proceeds from sale of investments -- 110,400
Proceeds from sale of interest in joint venture -- 48,600
----------- -----------
Net cash used by investing activities (385,400) (1,383,300)
----------- -----------
Financing activities:
Payments on long-term debt (1,184,900) (917,800)
Proceeds from the issuance of common stock 8,200 1,200
----------- -----------
Net cash used by financing activities (1,176,700) (916,600)
----------- -----------
Net increase (decrease) in cash
and cash equivalents 192,000 (199,700)
Cash and cash equivalents - beginning of period 711,400 1,603,100
----------- -----------
Cash and cash equivalents - end of period $903,400 $1,403,400
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $1,045,200 $1,178,600
=========== ===========
Cash paid during the period for income tax $38,000 $106,600
Non-cash transactions: =========== ===========
Mortgage receivable as partial
proceeds on property sale -- $835,000
=========== ===========
Warrants issued -- $81,000
=========== ===========
Accrued interest reclassed to long-term debt -- $100,000
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
EXHIBITS
EXHIBIT 10.01
************
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made and
entered into as of the 1st day of October, 1996 by and between
FAMILY STEAK HOUSES OF FLORIDA, INC., a corporation organized under
the laws of the State of Florida (hereinafter referred to as the
"Company") and EDWARD B. ALEXANDER (hereinafter referred to as
"Employee").
W I T N E S S E T H:
WHEREAS, Employee and the Company wish for Employee to serve in
the position of Chief Financial Officer, Secretary and Treasurer of
the Company; and
WHEREAS, the Company and Employee have agreed upon an
Employment Agreement and desire to reduce to writing its terms and
conditions as hereinafter set forth, intending that this Employment
Agreement will replace and supersede all prior agreements or
understandings concerning Employee's employment.
NOW, THEREFORE, in consideration of the premises, the parties
hereto do hereby agree as follows:
Section 1. Employment. Subject to the terms and conditions
contained herein, the Company hereby employs Employee effective upon
the date hereof, as the Chief Financial Officer, Secretary and
Treasurer of the Company and Employee hereby accepts such employment
and agrees to devote his best efforts and as much time as may be
necessary, during or after the regular working hours of the Company,
to perform his duties hereunder.
Section 2. Employment Duties. During the term of this
Agreement, the Employee shall perform the duties typically performed
by the Chief Financial Officer, Secretary and Treasurer of the
Company subject direction of the President according to such
policies and procedures as may be adopted from time to time by the
Board of Directors.
Section 3. Stock Option. In consideration of Employee's
agreement to serve as Chief Financial Officer, Secretary and
Treasurer, the Company may from time to time grant him options to
acquire shares of the Company's common stock. The award of any
options shall be evidenced by an agreement containing usual and
customary provisions.
Section 4. Compensation
4.1 Salary. Employee shall receive a salary from the Company
of Ninety Thousand Dollars ($90,000) per annum payable in bi-weekly
installments, subject to increase at any time as determined by the
Compensation Committee of the Board of Directors of the Company.
4.2 Reimbursement. Employee shall be entitled to receive
bi-weekly reimbursement for, or seek direct payment by the Company
of, such reasonable expenses incurred by Employee as are consistent
with specific policies of the Company in the performance of his
duties under this Agreement, provided that Employee accounts
therefor in writing and that such expenses are ordinary and
necessary business expenses of the Company for federal income tax
purposes.
4.3 Vacation and Certain Fringe Benefits. Employee shall be
entitled to reasonable paid vacation in accordance with the policies
of the Company, and such other employee benefits as the Board may
fix from time to time; provided, however, that, in the Employee's
case, such employee benefits shall include comprehensive medical,
hospitalization and disability insurance and other reasonable
medical benefits in accordance with the policies of the Company,
including the cost of an annual physical examination.
Section 5. Term.
5.1 Duration. Unless sooner terminated in accordance with
provisions for termination set forth under Subsections 5.2 or 5.3
below, this Agreement shall continue in full force and effect for a
term ending on October 1, 1998, and shall thereafter renew for
additional one year terms unless either party notifies the other at
least 10 days prior to the end of any term.
5.2 Termination for Cause. This Agreement may be terminated
for cause as follows:
(a) At the election of the Company, upon Employee's breach of
any material provision of this Agreement;
(b) At the election of Employee, upon the Company's breach of
any material provision of this Agreement;
(c) Upon the death of Employee;
(d) At the election of either party, upon the total disability
of Employee to perform his normal duties for a period of one hundred
eighty (180) consecutive days, but only after the Company provides
ten (10) days' prior written notice to Employee;
(e) At the election of the Company, upon the indictment of
Employee or upon Employee entering a plea of guilty or nolo
contendere to the alleged commission by Employee, as principal,
accomplice or accessory, of a crime involving moral turpitude, or an
act of fraud, embezzlement or dishonesty; or
(f) At the election of the Company, upon the occurrence of
gross or willful misconduct by Employee in the performance of his
responsibilities hereunder during the course of employment.
In the event that the Company or the Employee elects to terminate
this Agreement because of a breach of any material provision hereof
pursuant to paragraph (a) or (b) of this Subsection 5.2,
respectively, the party electing to terminate this Agreement shall
give at least five (5) days written notice to the other party or its
intention to terminate this Agreement, which notice shall specify
the breach of this Agreement upon which such termination is based,
and no such termination shall occur if the other party cures the
breach so specified within said five (5) day period, except that a
party shall only have the opportunity to cure a breach of a material
provision on two occasions and thereafter that party need not be
given the opportunity to cure any further material breaches.
All obligations of the Company under this Agreement, including
any unvested options under any stock option agreements, shall
immediately cease upon termination of this Agreement by the Company
for cause.
5.3 Termination Without Cause. Either party may terminate
this Agreement without cause upon giving 30 days written notice to
the other. If the Company elects to terminate this Agreement without
cause, then the parties agree that Employee shall be entitled to
receive, in a lump sum, the payments due him under Section 4.1 for
the remaining term of this Agreement, which amount shall be in full
satisfaction of any and all claims of Employee as a result of his
employment by the Company.
Section 6. Notice. All notices provided for herein shall be in
writing and shall be deemed to be given when delivered in person or
deposited in the United States Mail, first class, registered or
certified, return receipt requested, with proper postage prepaid and
addressed as follows:
(a) If to the Company:
Family Steak Houses of Florida, Inc.
2113 Florida Boulevard
Neptune Beach, Florida 32266
(b) If to the Employee:
Edward B. Alexander
2113 Florida Boulevard
Neptune Beach, Florida 32266
Section 7. Miscellaneous.
7.1 If any provision or any part of any provision of this
Agreement is found not to be valid for any reason, such provision
shall be entirely severable from, and shall have no effect upon the
remainder of this Agreement.
7.2 This Agreement shall inure to the benefit of the Company,
its successors and assigns, and be binding upon the Employee, his
executor, administrator, heirs and personal representatives.
7.3 This Agreement may be modified only by written instrument
signed by each of the parties hereto.
7.4 This Agreement shall be construed under and governed by
the laws of the State of Florida.
7.5 Any failure of either party, on one or more occasions, to
enforce and require the strict compliance with and performance of
any of the terms and conditions of this Agreement shall not
constitute a waiver of any such terms or conditions at any future
time and shall not prevent such party from insisting on the strict
compliance with and performance of such terms and conditions at any
later time.
7.6 This Agreement comprises the entire agreement between the
parties hereto with respect to the subject matter hereof and there
are no agreements, undertakings, covenants or conditions concerning
the subject matter hereof, whether oral or written, express or
implied, that are not merged herein or superseded hereby.
7.7 The captions or headings of the Sections or other
subdivisions hereof are inserted only as a matter of convenience or
for reference and shall have no effect on the meaning of the
provisions hereof.
7.8 All payments to be made or benefits to be provided
hereunder by the Company shall be subject to reduction for any
applicable payroll-related or withholding taxes.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
FAMILY STEAK HOUSES OF FLORIDA, INC.
By:
Lewis E. Christman, Jr.
President and Chief Executive Officer
EMPLOYEE:
Edward B. Alexander
EXHIBIT 10.02
*************
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into as of this
18th day of September, 1996, by and between:
(i) CNL AMERICAN PROPERTIES FUND, INC., a
Maryland corporation, with principal office and place of
business at 400 E. South Street, Suite 500, Orlando,
Florida 32801 ("Landlord"), and (ii) FAMILY STEAK HOUSES OF
FLORIDA, INC., a Florida corporation, with principal office
and place of business at 2113 Florida Boulevard, Neptune
Beach, Florida 32266 ("Tenant").
WITNESSETH:
Landlord leases to Tenant, for the purpose of
developing, constructing and operating a Ryan's Family Steak
House Restaurant and for no other use or purpose whatsoever,
and subject to the terms and conditions of the Rent Addendum
and Construction Addendum attached hereto,and Tenant rents
from Landlord the following described premises, (hereinafter
"Premises") located in Spring Hill, Hernando County, Florida
and being more particularly described in Exhibit"A" attached
hereto and made a part hereof, together with all rights and
privileges in and about the Premises as may be necessary or
convenient to Tenant's business, inclusive of all easements
benefitting the real property described in Exhibit "A".
Premises shall include all improvements and structures
whether now existing or hereafter constructed thereon.
The following additional stipulations are hereby
declared to be covenants of this Lease and shall, unless
otherwise expressly stated, be applicable at all times
throughout the term of this Lease and any extension or
renewal thereof:
1. DEFINITIONS
For purposes of this Lease, the following terms are
hereby defined to mean:
"Effective Date" shall mean the first date set forth at
the beginning of this Lease.
"Landlord" shall mean CNL AMERICAN PROPERTIES FUND,
INC., a Maryland corporation, its successors and assigns.
"Lease" shall include this Lease Agreement and all
amendments hereto, if any, entered into from time to time
hereafter.
"Lease Year" shall mean a fiscal period beginning on the
Effective Date (and each anniversary thereof) and expiring
twelve (12) months thereafter.
"Rent" shall mean the Rent payable under this Lease as
set forth in the Rent Addendum attached hereto and
incorporated herein, and shall include Interim Rent, Annual
Rent and Percentage Rent (all as defined in the Rent
Addendum).
2. TERM AND RENT
(a) Term. The term of this Lease shall begin on the
Effective Date and shall expire on a date twenty (20) years
thereafter unless previously terminated or renewed or
extended as provided herein.
(b) Rent. Rent shall be due and payable as provided in
the Rent Addendum attached hereto and incorporated herein.
3. ALTERATIONS AND IMPROVEMENTS, INVESTMENT TAX CREDIT,
MECHANIC'S LIENS, LANDLORD'S DISCLAIMER
(a) Tenant shall be permitted to install, use on and
about, and remove from the Premises at any time and from
time to time all trade fixtures and other personal property
(exclusive of lighting, electrical, heating and air
onditioning improvements) which are not a component of the
building located or to be located on the Premises
hereinafter referred to as the "Tenant's Property"), all of
which at all times shall remain the property of Tenant with
the right of removal (subject to paragraph (d) below) at the
expiration of this Lease. Trade fixtures shall include: (1)
removable decor items and office equipment; (2) building
lettering, signs, sign posts and sign standards; (3)
unattached food and customer service equipment; and (4) food
and customer service equipment attached to the building by
bolts and screws and/or by utility connections, including
without limitation, walk-in refrigerators and freezers,
remote refrigeration systems, exhaust systems and hoods.
Tenant shall also have the right, at its option and expense,
to redecorate or otherwise remodel the Premises upon any
termination hereof or upon subletting or assignment in such
manner as will, without reducing the fair market value
thereof, avoid the appearance of the Ryan's Family Steak
House Restaurant operated under this Lease; provided,
however, Tenant shall not impair the structural condition of
the Premises or reduce the size thereof. Tenant shall have
the right to make any additions, alterations, changes and
improvements, structural and nonstructural, including but
not limited to construction of additional buildings and
additions to the then existing buildings, as Tenant shall
desire; provided, however, (i) Tenant shall submit plans of
all structural changes to Landlord at least thirty (30) days
in advance of the proposed construction date, (ii) Tenant
shall provide Landlord with evidence of Tenant's financial
ability to pay for such changes, (iii) if the cost of
structural changes exceeds TEN THOUSAND AND NO/100 DOLLARS
($10,000.00), Tenant shall post payment and performance
bonds for such work naming Landlord and Tenant as dual
obligees, (iv) all such construction shall be completed in
a workmanlike manner and in full compliance with all
building laws and ordinances applicable thereto, at Tenant's
expense, and (v) such additions, alterations, changes and
improvements shall not reduce the fair market value of the
Premises. All such structural additions, alterations,
changes and improvements (not constituting Tenant's
Property) shall be deemed to be a part of the Premises.
(b) Landlord hereby grants Tenant the right and
privilege of applying for and receiving all investment tax
credits, if any, under the Internal Revenue Code which may
be available with respect to the building and other
improvements to be constructed. To this end, Landlord
agrees to execute all such further documents and supply such
additional information as may be required to make such
election effective.
(c) Tenant shall not do or suffer anything to be done
whereby the Premises, or any part thereof, may be
encumbered by a mechanic's lien or similar lien, and, if,
whenever and as often as any mechanic's lien or similar lien
is filed against the Premises, or any part thereof,
purporting to be for or on account of any labor done,
materials or services furnished in connection with any work
in or about the Premises, done by, for or under the
authority of Tenant, or anyone claiming by, through or under
Tenant, Tenant shall discharge the same of record within ten
(10) days after service upon Tenant of notice of the filing
thereof; provided, however, Tenant shall have the right to
remove the lien by bonding same or transferring same to
other sufficient and valid security in accordance with
applicable law and to contest any such lien; provided
further that Tenant shall diligently prosecute any such
contest, at all times effectively staying or preventing any
official or judicial sale of the Premises under execution or
otherwise, and, if unsuccessful, satisfy any final judgment
against Tenant adjudging or enforcing such lien or, if
successful, procuring record satisfaction or release
thereof.
(d) All of Tenant's Property placed in or upon the
Premises by Tenant shall remain the property of Tenant with
the right to remove the same at any time during the term of
this Lease. Landlord, if requested by Tenant, agrees to
execute such documentation subordinating its lien rights
(vis a vis any equipment lender or landlord) to Tenant's
personalty and to all rights of levy for distraint for rent
against same as shall be reasonably required by any
equipment lender or lessor of Tenant; provided any damage
caused by, or resulting from the removal of any trade
fixtures, equipment or other personal property shall be
promptly repaired by Tenant or the party entitled to remove
same.
4. DESTRUCTION OF PREMISES; INSURANCE
(a) If the Premises are damaged or destroyed by fire,
flood, tornado or other element, or by any other casualty
and such damage or destruction does not occur within the
last twenty-four (24) months of the original or of any
extended or renewed term of this Lease, this Lease shall
continue in full force and effect and Tenant shall, as
promptly as possible, restore, repair or rebuild the
Premises to substantially the same condition as it existed
before the damage or destruction. Tenant shall for this
purpose use all, or such part as may be necessary, of the
insurance proceeds received from insurance policies carried
on the Premises under the provision of subparagraph 4(b)
hereinbelow. If such insurance proceeds are not sufficient
to pay such costs, Tenant shall pay such deficit. Should
the Premises be damaged or destroyed by any of the foregoing
described casualties within the last twenty-four (24) months
of the original term or of any extended or renewed term of
this Lease, to the extent that they are untenantable or
unsuitable, in Tenant's opinion for continued use in the
normal conduct of Tenant's business, Tenant shall have the
right, exercisable by written notice to Landlord given
within thirty (30) days after the date of such damage or
destruction, of terminating this Lease effective upon the
date of such damage or destruction. If Tenant terminates
this Lease as thus provided Landlord shall be entitled to
all of the insurance proceeds on the Premises, but not to
the proceeds of insurance carried by Tenant on Tenant's
Property; provided, however, Tenant shall not have the right
to terminate this Lease unless (i) the damage or destruction
of the Premises was caused by a peril which was insured
against by the provisions of subparagraph 4(b) of this
Lease; (ii) at the time of such damage and destruction the
said insurance policies to be carried by Tenant were in the
amount of the full replacement cost of such improvements
(without deduction or co-insurance) and in full force and
effect; and (iii) the insurer has confirmed coverage and its
obligation to pay. If Tenant defaults in its obligation to
carry insurance in the amount required under subparagraph
4(b), then Tenant shall be obligated to pay toward said
reconstruction or to Landlord, if this Lease is cancelled
but prior thereto, the difference between the amount
actually carried and the amount required to be carried under
this paragraph.
(b) Tenant, at its expense and as additional rent
hereunder, shall throughout the term of this Lease and any
extension or renewal thereof, keep the Premises insured with
"all risk" coverage, including builder's risk ("all risk" as
such term is used in the insurance industry) for the full
replacement value, with any deductible to be approved by
Landlord (and without any co-insurance provision (Agreed
Value endorsement)). If Tenant serves alcoholic beverages,
or if the Premises are located in a flood or earthquake
zone, then additional coverage shall be obtained by Tenant
in amounts and in forms acceptable to Landlord. Tenant
shall provide Landlord with copies of such policies or
certificates of such coverage, and the policy or policies
shall name Landlord and any mortgagee designated by Landlord
as an additional insured (or, if elected by Landlord, loss
payee) and shall provide that all losses shall be payable as
herein provided. All such policies of insurance shall
provide that the amount thereof shall not be reduced and
that none of the provisions, agreements or covenants
contained therein shall be modified or cancelled by the
insuring company or companies without thirty (30) days prior
written notice being given to Landlord; and that all
insurance proceeds shall be paid by check payable to
Landlord. Such policy or policies of insurance may also
cover loss or damage to Tenant's Property, and the insurance
proceeds applicable to Tenant's Property shall not be paid
to Landlord or any mortgagee but shall accrue and be payable
solely to Tenant. In the event of a casualty, Tenant shall
be responsible for any deficiency between the replacement
cost of the Premises and the amount actually paid by the
insurance company.
(c) Tenant shall maintain, at its own expense and as
additional Rent, public liability insurance covering the
Premises, for the joint benefit of and insuring Tenant and
Landlord, with coverage of not less than $2,000,000.00 per
occurrence, with any deductible to be approved by Landlord,
and with a general aggregate limit of not less than
$5,000,000.00. Landlord (and if Landlord is either a
general or limited partnership, all general partners) shall
be named as an additional insured (or, if elected by
Landlord, loss payee). All such policies of insurance shall
provide that the amount thereof shall not be reduced and
that none of the provisions, agreements or covenants
contained therein shall be modified or cancelled by the
insuring company or companies without thirty (30) days prior
written notice being given to all parties to this Lease. A
copy of the policy or certificate of such insurance shall be
delivered to Landlord and shall be issued by a company or
companies licensed to do business in the state where the
Premises are located.
(d) Tenant shall maintain, at its own expense, rental
value insurance covering risk of loss due to the occurrence
of any of the hazards insured against under Tenants' "all
risk" coverage insurance and providing coverage in an amount
sufficient to permit the payment of rents payable hereunder
for a period (in such case) of not less than six (6) months.
All such policies of insurance shall provide that Landlord
is additional insured; and that the amount thereof shall not
be reduced and that none of the provisions, agreements or
covenants contained therein shall be modified or cancelled
by the insuring company or companies without thirty (30)
days prior written notice being given to all parties to this
Lease. A copy of the policy or certificate of such
insurance shall be delivered to Landlord and shall be issued
by a company or companies licensed to do business in the
state where the Premises are located.
(e) All insurance companies providing the coverage
required under this Paragraph 4 shall be selected by Tenant
and shall be rated A minus (A-) or better by Best's
Insurance Rating Service, shall be licensed to write
insurance policies in the state in which the Premises is
located, and shall be acceptable to Landlord in Landlord's
reasonable discretion.
5. MAINTENANCE AND REPAIR
(a) Tenant shall maintain the Premises and all
buildings and improvements thereon (interior and exterior,
structural and otherwise) in good order and repair
and,subject to the provisions of paragraph 4(a) with respect
to damage within the last twenty-four (24) months of the
Lease, and paragraph 6 herein, return the Premises and all
buildings and improvements thereon at the expiration of the
term of this Lease or any extension thereof in as reasonably
as good condition as when received, ordinary wear and tear
excepted.
(b) Tenant agrees that Landlord shall have no
obligation under this Lease to make any repairs or
replacements (including the replacement of obsolete
components) to the Premises or the buildings or improvements
thereon, or any alteration, addition, change, substitution
or improvement thereof or thereto, whether structural or
otherwise. The terms "repair" and "replacement" include the
replacement of any portions of the Premises which have
outlived their useful life during the term of the Lease (or
any extensions thereof). Landlord and Tenant intend that
the rent received by Landlord shall be free and clear of any
expense to Landlord for the construction, care, maintenance
(including common area maintenance charges and charges
accruing under easements or other agreements relating to the
Premises), operation, repair, replacement, alteration,
addition, change, substitution and improvement of or to the
Premises and any building and improvement thereon. Upon the
expiration or earlier termination of this Lease, Tenant
shall remain responsible for, and shall pay to Landlord, any
cost, charge or expense for which Tenant is otherwise
responsible for hereunder attributable to any period
(prorated on a daily basis) prior to the expiration or
earlier termination of this Lease.
6. CONDEMNATION
(a) In the event that the whole or any material part of
the building on the Premises or such a material portion of
the land (for purposes hereof, "material" shall mean more
than 20% of the restaurant building on the Premises or more
than 20% of the parking on the Premises) shall be taken
during the term of this Lease or any extension or renewal
thereof for any public or quasi-public use under any
governmental law, ordinance, regulation or by right of
eminent domain, or shall be sold to the condemning authority
under threat of condemnation with the result that the
Premises cannot continue to be operated as the type of
restaurant contemplated herein, or if all reasonable access
to the adjacent roadways from the existing or comparable
curb cuts shall be taken (any of such events being
hereinafter referred to as a "taking"), Tenant shall have
the option of terminating this Lease by delivering a notice
of termination to Landlord not more than ninety (90) days
after the date on which possession of the Premises, or party
thereof, must be surrendered to the condemning authority or
its designee (the "Election Period"). In the event such
option is exercised by Tenant, the Lease shall be deemed
terminated as of the expiration of Election Period. The
failure on the part of Tenant to give Landlord the notice of
termination within the Election Period shall be deemed to be
an election by Tenant not to terminate the Lease.
(b) In the event of any taking which does not give rise
to an option to terminate, or in the event of a taking which
does give rise to an option to terminate pursuant to
subparagraph 6(a) hereof and Tenant does not elect to
terminate, Landlord shall make its award available to Tenant
and Tenant shall, to the extent of the award from such
taking (which word "award" shall mean the net proceeds after
deducting expenses of any settlement, or net purchase price
under a sale in lieu of condemnation but shall exclude the
value of Landlord's reversionary interest), promptly restore
or repair the Premises and all improvements thereon (except
the items which Tenant is entitled to remove) to the same
condition as existed immediately prior to such taking
insofar as is reasonably possible. Notwithstanding anything
in the preceding sentence to the contrary, in the event of a
taking which gives rise to an option to terminate pursuant
to subparagraph 6(a) hereof, Landlord shall retain its award
in trust until the earlier of (A) the expiration of the
Election Period referenced in subparagraph 6(a) above, at
which time Tenant shall be deemed to have elected not to
terminate the Lease and Landlord shall make its award
available for restoration or repair as provided in this
subparagraph 6(b); or (B) the date prior to the expiration
of the Election Period on which Tenant provides Landlord
with written notice of its election not to terminate the
Lease, at which time Landlord shall make its award available
for restoration or repair as provided in this subparagraph
6(b); or (C) the date prior to the expiration of the
Election Period on which Tenant provides Landlord with
written notice of its election to terminate the Lease, at
which time Landlord shall be entitled to receive and retain
the entire award pursuant to and subject to the terms and
conditions of subparagraph 6(d). If the estimated cost of
restoration or repair shall exceed the amount of Landlord's
award, Tenant shall deposit with Landlord the amount of such
excess. The award and any excess shall be held in trust by
Landlord and used, to the extent required, for the purpose
of such restoration or repair. A just and proportionate
part of the Rent payable hereunder shall be abated from the
date of such taking until ten (10) days after Tenant has
restored same and thereafter the Rent shall be reduced in
proportion to the reduction in the then rental value of the
Premises after the taking in comparison with the rental
value prior to the taking. If the award shall exceed the
amount spent or to be spent promptly to effect such
restoration, repair or replacement, such excess shall
unconditionally belong to Landlord and shall be paid to
Landlord.
(c) In the event of any partial taking where this Lease
is not terminated, Tenant shall not be entitled (except for
use in reconstruction) to any part of the compensation or
award given Landlord for the taking of the fee of the
Premises, but Tenant shall have the right to recover from
the condemning authority such compensation as is
specifically awarded to Tenant (i) to reimburse Tenant for
any cost which Tenant may incur in removing Tenant's
Property from the Premises; (ii) for loss of Tenant's
business; and (iii) for other matters which a court of
competent jurisdiction may award Tenant for its interest in
the Premises.
(d) If this Lease is terminated by reason of a taking
pursuant to the terms and conditions of this Lease and
paragraph 6(a) hereof, then Landlord shall be entitled to
receive the entire award in any such condemnation or eminent
domain proceedings or purchase in lieu thereof and Tenant
hereby assigns to Landlord all of its right, title and
interest in and to all and any part of such award, provided,
however, Tenant shall be entitled to receive any award
specifically made to reimburse Tenant (i) for any cost which
Tenant may incur in removing Tenant's Property from the
Premises; (ii) for loss of Tenant's business; and (iii) for
other matters which a court of competent jurisdiction may
award Tenant for its interest in the Premises.
7. TAXES AND ASSESSMENTS
Tenant shall pay prior to delinquency all taxes and
assessments which may be levied upon or assessed against the
Premises and all taxes and assessments of every kind and
nature whatsoever arising in any way from the use, occupancy
or possession of the Premises or assessed against the
improvements situated thereon, together with all taxes
levied upon or assessed against Tenant's Property. To that
end Landlord shall not be required to pay any taxes or
assessments whatsoever which relate to or may be assessed
against this Lease, the Rent and other amounts due
hereunder, the Premises, improvements and Tenant's Property.
Provided, however, that any taxes or assessments which may
be levied or assessed against the Premises for a period
ending after the termination hereof shall be prorated
between Landlord and Tenant as of such date. Within thirty
(30) days after Tenant receives the paid receipted tax
bills, Tenant shall furnish Landlord with copies of a paid
receipt for such tax bills. Upon demand by Landlord, Tenant
shall deliver and pay over to Landlord such additional sums
as are necessary to satisfy any deficiency in the amount
necessary to pay the taxes before the same become due.
Tenant may, at its option, contest in good faith and by
appropriate and timely legal proceedings any such tax and
assessment; provided, however, that Tenant shall indemnify
and hold harmless Landlord from any loss or damage resulting
from any such contest, and all expenses of same (including,
without limitation, all attorneys' fees, court and other
costs) are paid solely by Tenant.
8. COMPLIANCE, UTILITIES, SURRENDER
(a) Tenant at its expense shall promptly comply with
all governmental requirements, whether or not compliance
therewith shall require structural changes in the Premises;
will procure and maintain all permits, licenses and other
authorizations required for the use of the Premises or any
part thereof then being made and for the lawful and proper
installation, operation and maintenance of all equipment and
appliances necessary or appropriate for the operation and
maintenance of the Premises, and shall comply with all
easements, restrictions, reservations and other instruments
of record applicable to the Premises. Tenant shall indemnify
and save Landlord harmless from all expenses and damages by
reason of any notices, orders, violations or penalties filed
against or imposed upon the Premises, or against Landlord as
owner thereof, because of Tenant's failure to comply with
this paragraph.
(b) Tenant shall pay all charges for heat, water, gas,
sewage, electricity and other utilities used or consumed on
the Premises and shall contract for the same in its own
name. Landlord shall not be liable for any interruption or
failure in the supply of any such utility service to the
Premises.
(c) Tenant shall peacefully surrender possession of the
Premises, the buildings and other improvements thereon, to
Landlord at the expiration, or earlier termination, of the
original term or any extended or renewed term of this Lease.
9. QUIET ENJOYMENT
Landlord covenants and warrants that Landlord has full
power and authority to make this Lease, and that Tenant
shall have and enjoy full, quiet and peaceful possession of
the Premises, their appurtenances and all rights and
privileges incidental thereto during the term hereof and any
renewals or extensions, subject to the provisions of this
Lease and any easements, restrictions, reservations and
other instruments of record applicable to the Premises and
in existence at the time of the conveyance of the Premises
to Landlord by Tenant.
10. OPTION TO RENEW
Tenant shall have two (2) successive five (5) year
options to extend this Lease for up to an additional ten
(10) years upon the same terms, covenants, conditions and
rent as set forth herein provided that Tenant is not in
default hereunder at the commencement of such option period.
Tenant may exercise each such five (5) year option by giving
written notice to Landlord not less than six (6) months
prior to the expiration of the then current term of this
Lease. Should Tenant fail to give Landlord such timely
written notice during the required period, all remaining
rights of renewal shall automatically expire.
11. FIRST RIGHT OF REFUSAL TO PURCHASE; OPTION TO PURCHASE
(a) So long as Tenant is not in default under this
Lease, Tenant shall have the right to purchase the Premises
in accordance with the terms of this paragraph. If Landlord
receives and desires to accept a bona fide offer to purchase
(excluding any transfer to an affiliate of Landlord) the
Premises during the term of this Lease or any extension or
renewal thereof, Landlord shall serve a notice on Tenant
stating the name of such offeror with a copy of the terms
and conditions of such offer attached and Tenant shall have
the right to purchase the Premises on the same terms and
conditions set forth in Landlord's notice, provided Tenant
delivers written notice to Landlord of its election to do so
within thirty (30) days after receipt of such notice from
Landlord. If Tenant does not elect to exercise its right to
purchase as aforesaid, Landlord may sell the Premises,
provided the sale is consummated with the offeror and on the
terms and conditions set forth in Landlord's notice to
Tenant. The foregoing preemptive right shall remain in
existence for the term of the Lease notwithstanding its non-
exercise in respect to any sale and shall be binding upon
Landlord's successors in title.
(b) Tenant shall have the option to purchase the
Premises at any time after the tenth (10th) Lease Year, as
follows:
(i) Tenant shall exercise its option hereunder by
giving written notice in writing to Landlord in accordance
with the requirements of paragraph 20 of this Lease. At the
time of the exercise of the option, Tenant shall also pay to
Landlord (or if required by Landlord, to the qualified
intermediary described in Paragraph 19(b) of this Lease
Agreement) a non-refundable deposit of FIVE HUNDRED AND
NO/100 DOLLARS ($500.00).
(ii) The purchase price to be paid by Tenant shall
be the greater of (A) the fair market value of the Premises
as of the date of the exercise of the option, as determined
by an appraisal of an M.A.I. qualified appraiser selected by
Landlord, or (B) Landlord's cost for the Premises, plus
twenty percent (20%).
(iii) The closing pursuant to the option shall
be held in the office of Landlord's attorneys on or before a
date which is thirty (30) days after Landlord and Tenant
have received the above mentioned appraisal from the
appraiser, or at such other place as shall be acceptable to
Landlord.
(iv) Tenant shall receive a credit for the deposit
required under (i) above and the balance of the purchase
price shall be paid at closing in cash, by cashier's check
on cleared local funds or by wire transfer to Landlord's
account.
(v) The following expenses of closing shall be
paid equally by Tenant and Landlord: title insurance search
fees; title insurance premium for owner's policy; escrow
fees; transfer taxes; and recording fees/charges.
(vi) The option granted to Tenant pursuant to this
subparagraph (b) may not be exercised at any time while
Tenant shall then be in default under any term or condition
of this Lease. The option granted to Tenant pursuant to
this subparagraph (b) shall terminate and become null and
void in the event Tenant's right of first refusal becomes
operative, Tenant fails to exercise such right of first
refusal, and the offer triggering such right of first
refusal closes.
(c) Tenant's rights and options granted in (a) and (b)
above shall be subject and subordinate to any rights or
options currently of record or those existing under Tenant's
franchise agreement, if any.
12. NONCOMPETE
Tenant shall not own an interest in, or operate, another
Ryan's Family Steak House Restaurant within a five (5) mile
radius of the Premises. Violation of this covenant shall
constitute a default hereunder and, because the parties
agree that damages would not be an adequate remedy, Tenant
hereby agrees that Landlord shall be entitled to equitable
relief, including injunctive relief and specific performance
in addition to any remedy available at law.
13. DEFAULT
(a) If any one or more of the following events occur,
said event or events shall hereby be classified as a
"Default":
(i) If Tenant fails to pay Interim Rent (if
applicable), Annual Rent, Percentage Rent, any additional
rent, or any other charges required hereunder or under any
other lease with Landlord or an affiliate of Landlord when
same shall become due and payable, and such failure
continues for ten (10) days after written notice from
Landlord.
(ii) If Tenant shall fail to perform or observe any
term, condition, covenant, agreement, or obligation of this
Lease or any other lease with Landlord or an affiliate of
Landlord, and such failure continues for fifteen (15) days
after written notice from Landlord (except that such fifteen
(15) day period shall be automatically extended for such
additional period of time as is reasonably necessary to cure
such Default, if such Default cannot be cured within such
period, provided Tenant is in the process of diligently
curing the same).
(iii) If any default or event of default shall
occur and remain uncured under that certain Franchise
Agreement (the "Franchise Agreement") between Tenant and
Ryan's, Inc. following any cure period applicable thereto
and established in the Franchise Agreement, or if such
Franchise Agreement is terminated for any reason.
Notwithstanding the declaration of a default or event of
default by the franchisor under the Franchise Agreement,
Tenant shall have the right to engage in good faith disputes
with the franchisor under the Franchise Agreement without
such dispute constituting a default under this Lease,
provided that such dispute shall not prevent Tenant from
performing its obligation to continuously operate a Ryan's
Family Steak House Restaurant at the Premises.
(iv) If Tenant fails to continuously operate its
business within the Premises except for temporary periods of
closure caused by casualty, or temporary and reasonable
periods of remodeling not to exceed ninety (90) days in any
Lease Year without first obtaining Landlord's written
approval, which approval shall not be unreasonably withheld.
(v) If Tenant shall make an assignment for the
benefit of creditors or file a petition, in any federal or
state court, in bankruptcy, reorganization, composition, or
make an application in any such proceedings for the
appointment of a trustee or receiver for all or any portion
of its property.
(vi) If any petition shall be filed under federal
or state law against Tenant in any bankruptcy,
reorganization, or insolvency proceedings, and said
proceedings shall not be dismissed or vacated within thirty
(30) days after such petition is filed.
(vii) If a receiver or trustee shall be
appointed under federal or state law for Tenant, or any
guarantor of Tenant's obligations hereunder, for all or any
portion of the property of either of them, and such
receivership or trusteeship shall not be set aside within
thirty (30) days after such appointment.
(b) Upon the happening of any one or more of the
aforementioned Defaults which are not cured within the cure
period applicable thereto, if any, Landlord shall have the
right, in addition to any other rights and remedies, to
terminate this Lease by giving written notice of same to
Tenant. Upon such notice, this Lease shall cease and
expire, and Tenant shall surrender the Premises to Landlord.
Notwithstanding such termination, Tenant's liability and
obligation under all provisions of this Lease, including the
obligation to pay Rent and any and all other amounts due
hereunder shall survive and continue. In addition, in the
event of Tenant's Default under this Lease, Landlord may, by
notice to Tenant, accelerate the monthly installments due
hereunder for the remaining term of this Lease, in which
event such amount, together with any sums then in arrears,
shall immediately be due and payable to Landlord. Tenant
hereby expressly agrees that its occupation of the Premises
after default constitutes forcible detainer (or equivalent)
as is defined by the law in force in the jurisdiction in
which the Premises are located.
(c) If this Lease shall terminate as provided
hereinabove, Landlord may re-enter the Premises and remove
Tenant, its agents and sub-tenants, together with all or any
of Tenant's Property, by suitable action at law, or by
force. Tenant waives any right to the service of any notice
of Landlord's intention to re-enter and Landlord shall not
be liable in any way in connection with any action it takes
pursuant to this paragraph. Notwithstanding such re-entry
or removal, Tenant's liability under the provision of this
Lease shall survive and continue.
(d) In case of re-entry, repossession or termination of
this Lease, Tenant shall remain liable for Rent (with any
Percentage Rent described in the Rent Addendum to be paid at
the rate paid during the prior Lease Year), any additional
rent and all other charges provided for in this Lease for
the otherwise remaining term of this Lease, and any and all
expenses which Landlord may have incurred in re-entering the
Premises including, but not limited to, allocable overhead,
alterations to the building, leasing, construction,
architectural, legal and accounting fees. In addition,
Tenant shall pay to Landlord any and all attorneys' fees,
legal costs and expenses incurred with respect to
enforcement of the provisions hereof. Landlord shall have
the right, but not the obligation, to relet the whole or
part of the Premises upon terms which Landlord, in its sole
discretion, deems appropriate and Tenant shall be
responsible for all expenses incurred by Landlord in re-
letting or attempting to re-let and all rent collected for
reletting shall be credited against all of Tenant's
obligations hereunder.
(e) The rights and remedies of Landlord set forth
herein shall be in addition to any other right and remedy
now or hereinafter provided by law, and all such rights and
remedies shall be cumulative. No action or inaction by
Landlord shall constitute a waiver of a Default, and no
waiver of Default shall be effective unless it is in
writing, signed by Landlord.
14. HOLDING OVER
In the event Tenant remains in possession of the
Premises after the expiration of this Lease, without
executing a new lease, Tenant shall occupy the Premises as a
tenant from month to month subject to all the terms hereof,
but such possession shall not limit Landlord's rights and
remedies by reason thereof nor constitute a holding over.
15. WAIVER OF SUBROGATION
Notwithstanding anything in this Lease to the contrary,
other than Tenant's obligations to repair, restore or
rebuild described in paragraph 4 hereinabove, neither party
shall be liable to the other for any damage or destruction
of the property of the other resulting from fire or other
casualty covered by insurance required of either party
hereunder, whether or not such loss, damage or destruction
of property is caused by or results from the negligence of
such party (which term includes such party's officers,
employees, agents and invitees), and each party hereby
expressly releases the other from all total liability for or
on account of any said loss, damage or destruction, whether
or not the party suffering the loss is insured against such
loss, and if insured whether fully or partially. Each party
shall procure all endorsements of insurance policies carried
by it necessary to protect the other from any right of
subrogation and/or liability in the event of such loss.
16. LIEN FOR RENTS
As security for Tenant's payment of Rent and all other
payments required to be made by Tenant hereunder (including,
by way of illustration only, taxes, damage to the Premises,
court costs, and attorneys' fees) Tenant hereby grants to
Landlord a lien upon all of Tenant's Property now or
hereafter located upon the Premises. The lien herein
provided shall be subordinate to the lien of any chattel
mortgage, collateral assignment or security interest given
by Tenant to any seller of such property. If default is
made by Tenant in the payment of any sum which may become
due hereunder and said sum is not paid within ten (10) days
after written notice is given by Landlord to Tenant for
Tenant's default, Landlord may enter upon the Premises and
take possession of Tenant's Property, or any part thereof,
and may sell all or any part of Tenant's Property at public
or private sale in one or successive sales, with or without
notice, to the highest bidder for cash and on behalf of
Tenant. Landlord may sell and convey Tenant's Property, or
any part thereof, to such bidder, delivering to such bidder
all of Tenant's title and interest in such property sold to
him. The proceeds of such sale shall be applied by Landlord
toward the costs thereof and then toward the payment of all
sums when due by Tenant to Landlord hereunder.
17. ASSIGNMENT AND SUBLETTING
(a) The Tenant shall have the right, without first
obtaining Landlord's consent and after giving Landlord not
less than ten (10) days advance written notice, to sublet
the Premises or to assign this Lease to Tenant's franchisor
(Ryan's, Inc.), to a corporate affiliate or subsidiary of
Tenant, or to a franchisee or licensee of Tenant's
franchisor so long as such franchisor, affiliate,
subsidiary, franchisee or licensee continues to operate a
Ryan's Family Steak House Restaurant on the Premises. In the
event of any such assignment or subletting, Tenant shall
nevertheless remain liable for the performance of all terms,
covenants and conditions of this Lease, including without
limitation the payment of all rent, additional rent and
Percentage Rent and other charges hereunder; PROVIDED,
HOWEVER, as a condition of any such assignment by Tenant,
the assignee thereof shall be required to execute and
deliver to Landlord upon the effective date of such
assignment, an agreement, in recordable form, whereby such
assignee assumes and agrees to discharge all obligations of
Tenant under this Lease.
(b) In the event of a merger of Tenant with another
entity, Tenant shall have the right to assign its interest
in and to this Lease, without first obtaining Landlord's
consent and after giving Landlord not less than ten (10)
days advance written notice, to the surviving corporation
resulting from the merger (the "Merger Entity"), provided
that (i) the Merger Entity executes and delivers to the
Landlord, prior to the assignment, a written guaranty in
form acceptable to the Landlord whereby the Merger Entity
shall unconditionally guarantee the full and faithful
performance of all of Tenant's obligations under the Lease;
and (ii) the net worth of the Merger Entity at the time of
the assignment is not less than the net worth of Tenant as
of April 30, 1996. If the Merger Entity is owned by a
parent company (and if the parent company is owned by
another company), the Tenant shall provide notice of same to
Landlord prior to the assignment, and the unconditional
guaranty to be executed in connection with the assignment
shall, at Landlord's option, be executed by the Merger
Entity's parent company and, as the case may be, the
ultimate owner of the Merger Entity's parent company.
(c) Except as provided in subparagraphs 17(a) and 17(b)
above, Tenant shall not have the right, without first
obtaining Landlord's prior written consent which shall not
be unreasonably withheld, to assign or sublet any part or
all of the Premises to any other parties for any other
purposes. A change in ownership of the controlling interest
of Tenant shall constitute an assignment subject to this
subparagraph. Landlord, without being deemed unreasonable,
may withhold its consent to any proposed assignment or
subletting where (i) the financial capacity of such assignee
or subtenant is materially less than that of tenant or (ii)
such assignee or subtenant does not intend to operate a
national or regionally recognized restaurant on the Premises
or (iii) even if such assignee or subtenant intends to
operate a restaurant on the Premises, the type of restaurant
or the operating history of such assignee or subtenant or
the operating history of such type of restaurant reflects an
inability to generate Gross Sales and potential sales growth
equal to or greater than that of the Tenant. Even if such
consent to assignment or subletting is given by Landlord,
such assignment or subletting shall not relieve Tenant of
its liability for the continued performance of all terms,
covenants and conditions of this Lease, including without
limitation the payment of all rent, additional rent and
Percentage Rent and other charges thereunder. Likewise, as
a condition of any such assignment by Tenant, the assignee
shall be required to execute and deliver to Landlord, upon
the effective date of such assignment, an agreement, in
recordable form, whereby such assignee assumes and agrees to
discharge all obligations of Tenant under this Lease.
(d) In the event of the subletting or assignment of
this Lease, any monetary consideration obtained from an
assignee or transferee upon such subletting or assignment
shall be paid to Landlord. In the event of the subletting
or assignment of this Lease, if Tenant derives funds or
rental income greater than what it is paying to Landlord
under this Lease, the Annual Rent provided for herein shall
be increased to that amount received by Tenant from
sublessee or assignee of this Lease.
(e) Prior to any assignment allowed hereunder, Tenant
shall deliver to Landlord (i) a copy of the assignment
documents (including copies of any recorded documents), and
(ii) the name, address and telephone number of such assignee
and a designated contact person for such assignee, and (iii)
a new insurance policy and binder complying with the terms
of this Lease and naming such assignee as the tenant of the
Premises. Notwithstanding anything herein to the contrary,
in the event of any assignment of this Lease or subletting
of the Premises, Tenant shall not be released from its
obligations under this Lease unless specifically released by
virtue of a separate written instrument executed by
Landlord, which may be withheld in Landlord's sole
discretion.
(f) The Landlord shall have the right without
limitation (subject to paragraph 11 hereof) to sell, convey,
transfer or assign its interest in the Premises or its
interest in this Lease, and upon such conveyance being
completed all covenants and obligations of Landlord under
this Lease accruing thereafter shall cease, but such
covenants and obligations shall run with the land and shall
be binding upon the subsequent landlord or owners of the
Premises or of this Lease.
18. SUBORDINATION, NON-DISTURBANCE, ATTORNMENT, ESTOPPEL
CERTIFICATE.
(a) Upon written request of the holder of any mortgage
(which term "mortgage" shall also include deeds of trust)
now or hereafter relating to the Premises, Tenant will
subordinate its rights under this Lease to the lien thereof
and to all advances made or hereafter to be made upon the
security thereof, and Tenant shall execute, acknowledge and
deliver an instrument in the form customarily used by such
encumbrance holder to effect such subordination; provided,
however, as a condition of all such subordinations, the
holder of such mortgage shall be first required to agree
with Tenant that, notwithstanding the foreclosure or other
exercise of rights under any such first or other mortgage,
Tenant's possession and occupancy of the Premises and the
improvements and its leasehold estate shall not be disturbed
or interfered with nor shall Tenant's rights and obligations
under this Lease be altered or adversely affected thereby so
long as Tenant is not in default hereunder.
(b) Notwithstanding anything set out in subparagraph
(a) above to the contrary, in the event the holder of any
such mortgage elects to have this Lease be superior to its
mortgage, then upon Tenant's being notified to that effect
by such encumbrance holder, this Lease shall be deemed prior
to the lien of said mortgage, whether this Lease is dated
prior or subsequent to the date of said mortgage, and Tenant
shall execute, acknowledge and deliver an instrument, in the
form customarily used by such encumbrance holder, effecting
such priority.
(c) In the event proceedings are brought for the
foreclosure of, or in the event of the exercise of the power
of sale under any mortgage made by Landlord covering the
remises, or in the event of delivery of a deed in lieu of
foreclosure under such a mortgage Tenant will attorn to the
purchaser upon any such foreclosure or sale and recognize
such purchaser as Landlord under this Lease, and upon the
request of the purchaser, Tenant shall execute, acknowledge
and deliver an instrument, in form and substance
satisfactory to such purchaser, evidencing such attornment.
(d) Each party agrees, within seven (7) days after
written request by the other, to execute, acknowledge and
deliver to and in favor of any proposed mortgagee or
purchaser of the Premises, an estoppel certificate, in the
form customarily used by such proposed mortgagee or
purchaser, stating, among other things (i) whether this
Lease is in full force and effect, (ii) whether this Lease
has been modified or amended and, if so, identifying and
describing any such modification or amendment, (iii) the
date to which rent and other charge has been paid, and (iv)
whether the party furnishing such certificate knows of any
default on the part of the other party or has any claim
against such party and, if so, specifying the nature of such
default or claims.
(e) Upon written demand by the holder of any mortgage
covering the Premises, Tenant shall forthwith execute,
acknowledge and deliver an agreement in favor of and in the
form customarily used by such encumbrance holder and
reasonably acceptable to Tenant, by the terms of which
Tenant will agree to give prompt written notice to such
encumbrance holder in the event of any casualty damage to
the Premises or in the event of any default on the part of
Landlord under this Lease, and will agree to allow such
encumbrance holder a reasonable length of time after notice
to cure or cause the curing of such default before
exercising Tenant's rights under this Lease, or terminating
or declaring a default under this Lease.
19. COOPERATION
(a) Landlord shall fully cooperate with Tenant
throughout the term of this Lease to secure or maintain
proper zoning, building and other permits and compliance
with all applicable laws. Landlord shall execute any
petitions, requests, applications and the like as Tenant
shall reasonably request in order to obtain any permit,
license, variances and approvals which, in the reasonable
judgment of Tenant, are necessary for the lawful
construction and/or operation of Tenants business on the
Premises, provided, however, that Tenant shall indemnify and
save Landlord harmless from any and all expenses, costs,
charges, liabilities, losses, obligations, damages and
claims of any type which may be imposed upon, asserted
against or incurred by Landlord by reason of same.
(b) In the event that Tenant elects to purchase the
Premises pursuant to the terms and conditions of paragraph
11 hereof, Landlord shall have the right, in Landlord's sole
discretion, to enter into an exchange agreement (the
"Exchange Agreement") with a qualified intermediary (the
"Intermediary") in order to effectuate a like-kind exchange
of the Premises for one or more other properties (the
"Replacement Property"). In that event, Landlord shall
assign to the Intermediary all of Landlord's right, title
and interest in the written contract for purchase and sale
of the Premises entered into between Landlord and Tenant as
required by paragraph 11 hereof (the "Purchase Contract"),
and any deposit paid by Tenant in connection with the
purchase of the Premises shall be placed directly with the
Intermediary, subject to the terms and conditions of the
Purchase Contract and the Exchange Agreement. Landlord and
Tenant agree that, at Landlord's option, Tenant shall
cooperate with Landlord in effecting a like-kind exchange of
the Premises by Landlord pursuant to and in accordance with
the provisions of Section 1031 of the Internal Revenue Code
of 1986, as amended, and the Treasury Regulations
promulgated thereunder, which cooperation shall include,
without limitation, Tenant's consent to Landlord's
assignment of its interest in the Purchase Contract to the
Intermediary and Tenant receiving or taking title to the
Premises from the Intermediary or another third party
utilized in the transaction in order to facilitate the like-
kind exchange on behalf of Landlord.
20. NOTICES
All notices and other communications required or
permitted to be given hereunder shall be in writing and
shall be delivered by a nationally recognized overnight
courier or mailed by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to Landlord: CNL AMERICAN PROPERTIES FUND, INC.
400 East South Street
Suite 500
Orlando, Florida 32801
with copy to: DALE A. BURKET, ESQUIRE
Lowndes, Drosdick, Doster, Kantor & Reed,
P.A.
215 North Eola Drive
Post Office Box 2809
Orlando, Florida 32802
If to Tenant: FAMILY STEAK HOUSES OF FLORIDA, INC.
2113 Florida Boulevard
Neptune Beach, Florida 32266
Attn: Edward Alexander
with copy to: GLEN ALAN HOWARD, ESQUIRE
Mahoney, Adams & Criser
50 N. Laura Street, Suite 3400
Jacksonville, Florida 32202
Any party may change its address for notices by written
notice in like manner as provided in this paragraph and such
change of address shall be effective seven (7) days after
the date notice of such change of address is given. Notice
for purposes of this Lease shall be deemed given when it
shall have been deposited in the mail by the party who is
giving such notice with sufficient postage prepaid.
21. INDEMNIFICATION
Tenant does hereby indemnify and exonerate Landlord
against and from all liabilities, losses, obligations,
damages, penalties, claims, costs, charges and expenses,
including reasonable architects' and attorneys' fees, which
may be imposed upon or asserted against or incurred by
Landlord by reason of any of the following occurring, except
to the extent that same are caused by or result from the
gross negligence or willful misconduct of Landlord, its
agents, employees or contractors:
(a) any work or thing done in respect of construction
of, in or to the Premises or any part of the improvements
now or hereafter constructed on the Premises;
(b) any use, possession, occupation, operation,
maintenance or management of the Premises or any part
hereof;
(c) any failure to, or to properly, use, possess,
occupy, operate, maintain or manage the Premises or any part
thereof;
(d) the condition, including environmental conditions,
of the Premises or any part thereof;
(e) any negligence on the part of Tenant or any of its
agents, contractors, servants, employees, licensees or
invitees;
(f) any accident, injury or damage to any person or
property occurring in, on or about the Premises or any part
thereof including any sidewalk adjacent thereto; or
(g) any failure on the part of Tenant to perform or
comply with any of the covenants, agreements, terms or
conditions contained in this Lease on its part to be
performed or complied with.
22. HOLD HARMLESS
Tenant agrees to hold Landlord harmless against any and
all claims, damages, accidents and injuries to persons or
property caused by or resulting from or in connection with
anything in or pertaining to or upon the Premises during the
term of this Lease or while Tenant is occupying the
Premises, except if such claim, damage, accident or injury
shall be caused by the negligence of Landlord or its agents.
Landlord shall not be liable to Tenant, Tenant's employees,
agents, invitees, licensees or any other person whomsoever
for any injury to person or damage to property on or about
the Premises caused by the negligence or misconduct of
Tenant, its agents, servants or employees or of any other
person entering the building under expressed or implied
invitation by Tenant or due to any other cause whatsoever,
unless caused by the negligence or neglect of Landlord, its
employees or its authorized representatives.
23. LANDLORD'S LIABILITIES
The term "Landlord" as used in this Lease means the
owner from time to time of the Premises. Neither Landlord
nor any partner, shareholder or beneficiary thereof shall
have any personal liability with respect to any of the
provisions of this Lease and if Landlord is in default with
respect to its obligations hereunder Tenant shall look
solely to the equity of Landlord in the Premises.
24. SUCCESSORS
The covenants, conditions and agreements contained in
this Lease shall bind and inure to the benefit of Landlord
and Tenant and their respective heirs, legal
representatives, successors and assigns.
25. ENTIRE AGREEMENT/MEMORANDUM OF LEASE
This Lease contains the entire agreement between the
parties hereto and may not be modified in any manner other
than in writing signed by the parties hereto or their
successors in interest. A memorandum of this Lease shall be
executed by the parties and shall be recorded in the
official records of the county where the Premises are
located.
26. GENDER
Whenever the context hereof permits or requires, words
in the singular may be regarded as in the plural and vice-
versa, and personal pronouns may be read as masculine,
feminine and neuter.
27. BROKERAGE FEES
It is understood and agreed that neither party has
incurred any real estate brokerage fees or commissions
arising out of this Lease and each party agrees to hold the
other harmless from and against all such fees and
commissions incurred, and costs related thereto including
legal fees, as a result of its own conduct or alleged
conduct.
28. CAPTIONS
The captions of this Lease are for convenience only, and
do not in any way define, limit, disclose, or amplify terms
or provisions of this Lease or the scope or intent thereof.
29. LANDLORD'S RIGHT TO CURE
In the event Tenant shall fail, refuse or neglect to
perform, observe or comply with any term, condition,
covenant, agreement or obligation contained in the Lease on
its part to be performed or complied with, then Landlord
may, at its sole option, enter upon the Premises, if deemed
necessary by Landlord in its sole discretion, and/or do
whatever may be deemed necessary by Landlord in its sole
discretion to cure such failure by Tenant. Tenant shall pay
to Landlord within five (5) days of Landlord's request, all
costs incurred by Landlord in connection with Landlord's
curing of such failure by Tenant including, but not limited
to, reasonable attorney and paralegal fees whether or not
judicial proceedings are involved. In addition to the above
costs, in the event Landlord does not receive payment from
Tenant when due hereunder, interest at the rate of eighteen
percent (18%) per annum or the highest rate allowable by law
shall be due and payable with respect to such payment from
the due date thereof until Landlord receives such payment.
30. COMMITMENT LETTER
That certain commitment letter dated April 19, 1996 and
accepted by Tenant on April 26,1996 is hereby incorporated
herein by reference and the terms and conditions thereof
shall survive closing with respect to the transaction
contemplated by this Lease. In the event any terms of the
commitment letter are inconsistent with the terms contained
in this Lease, the terms of this Lease shall control.
31. NOT A SECURITY ARRANGEMENT
The parties hereto agree and acknowledge that this
transaction is not intended as a security arrangement or
financing secured by real property, but shall be construed
for all purposes as a true lease.
32. NET LEASE
It is the intention of the parties hereto that this
Lease is and shall be treated as a triple net lease. Any
present or future law to the contrary notwithstanding, this
Lease shall not terminate (except as expressly provided in
paragraph 4(a)) nor shall Tenant be entitled to any
abatement, suspension, deferment, reduction (except as
expressly provided in paragraph 6(b) hereof), setoff,
counterclaim, or defense with respect to the rent, nor shall
the obligations of Tenant hereunder be affected by reason
of: any damage to or destruction of the Premises or any
part thereof; any taking of any Premises or any part thereof
or interest therein by Condemnation or otherwise (except as
expressly provided in paragraph 6(b) hereof); any
prohibition, limitation, restriction or prevention of
Tenant's use, occupancy or enjoyment of the Premises or any
part thereof, or any interference with such use, occupancy
or enjoyment by any person or for any other reason; any
title defect or encumbrance or any matter affecting title to
the Premises or any part thereof; any eviction by paramount
title or otherwise; any default by Landlord hereunder; any
proceeding relating to Landlord; the impossibility or
illegality of performance by Landlord, Tenant or both; any
action of governmental authority; any breach of warranty or
misrepresentation; any defect in the condition, quality or
fitness for use of the Premises or any part thereof; or any
ther cause whether similar or dissimilar to the foregoing
and whether or not Tenant shall have notice or knowledge of
any of the foregoing. The parties intend that the
obligations of Tenant hereunder shall be separate and
independent covenants and agreements and shall continue
unaffected unless such obligations shall have been modified
or terminated in accordance with an express provision of
this Lease.
33. WAIVER
No waiver by Landlord of any provision hereof shall be
deemed a wavier of any other provision hereof or of any
subsequent breach by Tenant of the same or any other
provision. Landlords's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act by
Tenant. The acceptance of rent hereunder by Landlord shall
not be a waiver of any preceding breach by Tenant of any
provision hereof, other than the failure of Tenant to pay
the particular rent so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of acceptance
of such rent.
34. ATTORNEYS' FEES
In any action arising out of or in connection with this
Lease, whether presented at trial, arbitration, or
otherwise, the prevailing party in any such action shall be
entitled to receive from the other party all expenses and
attorneys' fees incurred in connection with such action.
35. TIME OF THE ESSENCE
Landlord and Tenant agree that time shall be of the
essence of all terms and provisions of this Lease.
36. GOVERNING LAW
This Lease shall be construed in accordance with the
laws of the state in which the Premises is located.
[Signatures on Next Page]
IN WITNESS WHEREOF, the parties hereto have caused this
Lease Agreement to be executed the day and date first above
written.
Signed, Sealed and Delivered
in the presence of:
"LANDLORD"
CNL AMERICAN PROPERTIES FUND,
INC., a Maryland corporation
By:
Name: Robert A. Bourne, as President
Name:
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this
18th day of September, 1996 by Robert A. Bourne, as
President of CNL AMERICAN PROPERTIES FUND, INC., a Maryland
corporation, on behalf of the corporation. He is personally
known to me and did not take an oath.
Notary Signature
Printed Name
Notary Public, State of
Florida
Commission Number:
My Commission Expires:
"TENANT"
FAMILY STEAK HOUSES OF
FLORIDA, INC., a Florida
corporation
By:
Name: Name:
As Its:
Name:
STATE OF FLORIDA
COUNTY OF ____________________
The foregoing instrument was acknowledged before me this
18th day of September, 1996 by ___________________________,
as ____________________________ of FAMILY STEAK HOUSES OF
FLORIDA, INC., a Florida corporation, on behalf of the
corporation. He is personally known to me and did not take
an oath.
Notary Signature
Printed Name
Notary Public, State of
Florida
Commission Number:
My Commission Expires:
Exhibit "A" - Legal Description
Exhibit "A"
Legal Description of the Premises
Lots 1A and 1B, JOHN G. GRUBBS COMMERCIAL TRACTS, as
recorded in Plat Book 23, Page 7, of the Public Records of
Hernando County, Florida.
EXHIBIT 10.03
*************
CONSTRUCTION ADDENDUM
THIS CONSTRUCTION ADDENDUM, executed as of September
18, 1996, by and between CNL AMERICAN PROPERTIES FUND, INC.,
a Maryland corporation with principal office and place of
business at 400 E. South Street, Suite 500, Orlando, Florida
32801 ("Landlord"), and FAMILY STEAK HOUSES OF FLORIDA,
INC., a Florida corporation with a mailing address of 2113
Florida Boulevard, Neptune Beach, Florida 32266 ("Tenant").
PRELIMINARY STATEMENT
Landlord has acquired the real property which
constitutes a portion of the Premises described in Exhibit
"A" attached to the Lease Agreement and has leased the same
to Tenant under the terms of the Lease Agreement. Landlord
desires to construct or have constructed certain
improvements on the Premises and is entering into this
Construction Addendum with Tenant for the purpose of setting
forth the terms and conditions under which Tenant shall
serve as developer in connection with the Project (as that
term is defined hereinbelow).
NOW, THEREFORE, it is agreed, by and between the parties
hereto as follows:
1. Definitions. Capitalized terms used in the Lease
Agreement shall have the same meaning in this Construction
addendum unless otherwise defined. In addition to those
terms defined elsewhere in this Construction Addendum, as
used herein the following terms shall have the meaning
indicated:
"Project" shall mean construction of the building
and all necessary site improvements on the Premises for the
initial use as a Ryan's Family Steak House Restaurant by
Tenant who is Tenant under the Lease Agreement between
Tenant and Landlord of even date herewith (the "Lease
Agreement"). Such building and improvements shall be
completed in accordance with the plans and specifications
approved by Landlord and Tenant prior to Landlord's
acquisition of the Premises, which approval shall not be
unreasonably withheld, delayed or conditioned.
"Construction Period" shall mean the period beginning on
the Effective Date and ending on the earliest of (i) one
hundred fifty (150) days after the Effective Date; (ii) the
date a certificate of occupancy for the Premises is issued;
(iii) the date the Ryan's Family Steak House Restaurant
opens for business on the Premises; and (iv) the date Tenant
receives from Landlord its final funding of the construction
costs for the Project under this Construction Addendum.
2. Authorization, Independent Contractor. Landlord
hereby engages Tenant as an independent contractor and
authorizes Tenant to enter upon the Premises and to
undertake responsibilities, duties, obligations, rights and
authority expressly herein set forth and, subject to the
provisions hereof, Tenant hereby accepts such appointment
and agrees to perform and fully discharge all of its duties,
responsibilities and obligations herein set forth
diligently, promptly and in full compliance with the
provisions hereof.
3. Co-Tenant and Sub-Agents. Tenant may delegate the
performance of any of its responsibilities hereunder to one
or more contractors, subcontractors, consultants, co-
developers or sub-agents; provided, however, that no such
delegation shall relieve Tenant of its duties,
responsibilities and obligations hereunder.
4. Specific Duties and Obligations. Tenant shall be
responsible for the complete development and construction of
the Project and shall deliver a turn-key facility to
Landlord. In that connection, Tenant's duties, obligations
and responsibilities include, but shall not be limited to
the following:
(a) Project Design. Procuring all necessary
architectural and engineering services related to the site
work, design and engineering related to the Project, any and
all engineering and impact studies or reports related to the
development of the Project, and processing and obtaining all
required governmental approvals.
(b) Licenses and Permits. Obtaining all licenses,
permits and approvals required to prepare the site for
development, to permit construction of the Project and to
operate it for its intended purposes. Such licenses,
permits and approvals shall include, but shall not be
limited to, water management district approvals, approvals
required under any franchise agreement, financing agreement
or any instrument of record, building permits, certificates
of occupancy, and any other required governmental consents
or approvals.
(c) General Contractor, Construction Contracts and
Purchase Orders. Negotiating all necessary construction
contracts, for the benefit of Landlord, relating to the
development and construction of the Project. All
construction contracts and purchase orders for work,
material or equipment shall be entered into between Tenant
and the contractors or vendors selected and shall be
satisfactory in form and substance to Landlord, Tenant, and
legal counsel for Landlord and Tenant. The general
construction contract and construction/trade cost breakdown
shall be approved by Landlord prior to Landlord's purchase
of the property. The general construction contract shall
contain provisions for a ten percent (10%) retainage and
submission to Landlord of all underlying contracts with and
invoices (required only if a cost-plus contract) from
materialmen and subcontractors. All change orders to such
contract must be approved in writing by Landlord. Tenant
shall cause its general contractor to submit (and the
general construction contract shall so provide) all
subcontracts to Landlord prior to commencement of
construction.
(d) Construction Coordination. Coordinating all
aspects of construction of the Project to completion. Tenant
shall monitor the progress of construction and the
compliance by all contractors with the provisions of their
construction contracts, through periodic on-site visits and
inspections and through written and other reports from the
architect, contractors and other construction supervisory
personnel. Tenant shall keep Landlord advised from time to
time of the progress of construction. Tenant shall review
and approve all contractor and other payment requests made
from time to time and shall review all such requests to
ensure compliance with the construction contract and the
terms hereof. Tenant shall determine which, if any,
contractor or subcontractor is in default under the
provisions of its applicable contract or subcontract, and
what measures should be taken in connection therewith.
(e) Funding. Financing to be provided by Landlord
hereunder shall be limited to all actual "hard" construction
costs of the Project together with approved "soft" costs (to
the extent set forth herein), exclusive of any developer's
fee. Landlord's funding shall be disbursed to Tenant
monthly against draw requests submitted by Tenant to
Landlord. Each such draw request shall be submitted on AIA
Forms G-702 and G-703 (or other forms approved by Landlord),
shall be prepared in accordance with Landlord's instructions
and shall be received by Landlord no later than the twenty-
fifth (25th) day of each month. Each draw request shall be
accompanied by all supporting documentation required by
Landlord (including partial lien waivers from the general
contractor and all subcontractors waiving all lien rights
through the date of the last draw request, and copies of
invoices for "soft" costs which may be reimbursable). If
properly prepared and documented requests are received by
the twenty-fifth (25th) day of a month, Landlord shall pay
proper amounts reflected in such request by the tenth (10th)
day of the following month. The funds to be advanced by
Landlord pursuant to this Construction Addendum shall at no
time in the aggregate exceed $1,881,818.00 (the "Funding
Limitation"), minus the purchase price Landlord paid at
closing for the acquisition of the Premises, including
Landlord's acquisition costs and closing costs. Tenant
shall be solely responsible for the full and timely payment
of any and all costs of developing the Project which exceed
the Funding Limitation determined hereinabove. If, at any
time after the date hereof, there exists any unpaid costs in
excess of the Funding Limitation, then Landlord shall have
the right to immediately stop funding under this
Construction Addendum until such time as Tenant has funded
such excess costs and has provided Landlord with evidence
that such excess costs have been paid in full by Tenant.
Tenant shall obtain no construction financing for the
Project which is secured by a lien on the Project.
Construction financing shall not include equipment
financing.
(f) General Construction Matters. Tenant shall
commence construction as soon as practicable after the date
hereof and, after commencement and subject to Paragraph 9
hereinbelow, shall diligently complete the Project within
one hundred fifty (150) days thereafter in a first-class,
workmanlike manner and in conformity with all applicable
governmental laws, ordinances, rules, orders, regulations
and other requirements and in substantial compliance with
the plans and specifications approved by Landlord, Tenant's
franchisor and the final working drawings. Notwithstanding
the foregoing, Landlord agrees to consider reasonable
written requests from Tenant for extensions of time to
complete the Project beyond the one hundred fifty (150) day
period.
All of Tenant's records pertaining to the
construction of the Project shall be available for
inspection and copying by Landlord and its agents and
employees during normal business hours. Following
completion of the Project, Tenant shall execute such
documents and instruments as Landlord may request (in form
and substance reasonably satisfactory to Landlord and
Tenant) to evidence Landlord's ownership of and title to all
improvements on the Premises comprising, in the aggregate,
the Project and shall assign to Landlord all warranties
relating to the work and/or materials performed at or
incorporated into the Project.
Tenant shall as part of the construction and
development work engage an inspecting architect or engineer
suitable to Landlord to make monthly inspections and to
certify all draw requests to Landlord. Such certification
shall include a statement of work done if not reasonably
ascertainable from the draw request and shall be accompanied
by color photographs in no less than 3.5" by 5" formats
showing the construction work completed as of the inspection
date. Such photographs shall be taken from such vantage
points as are required to clearly show all work done and
once vertical construction has commenced shall show all
elevations. The final draw request shall be accompanied by:
(1) the contractor's affidavit of completion and proof of
payment of all subcontractors and all materialmen; (2) an
assignment of all manufacturer's warranties for any
material, equipment or workmanship installed as a part of
the Project; (3) an ALTA as-built survey of completed
Project certified to Landlord and Tenant, and any title
company designated by Landlord; (4) Certificate(s) of
Occupancy for the Project issued by the appropriate
regulatory agencies; and (5) a complete certified final set
of plans, specifications and working drawings for the
Project as completed. At the time such draw request is
submitted to Landlord, Landlord shall order or cause to be
ordered an update search or endorsement to its title
insurance policy for the Premises, which must show no
additional matters of record through a then current date
(except for matters which have been previously accepted by
Landlord).
No approvals or inspections made, given or conducted by
Landlord shall relieve Tenant of any
duties,responsibilities, obligations or liabilities
hereunder.
5. Development Fee. Neither Tenant nor any affiliate
shall receive a development or construction supervision fee
for its services hereunder. A licensed general contractor
shall be entitled to reasonable, normal and customary
overhead and profit in connection with the performance of
its services under a general construction contract. Said
profit shall include reasonable, normal and customary
superintendent compensation.
6. General. With respect to matters not specifically
related to the Premises or its development, this
Construction Addendum shall be governed by the laws of the
state where the Premises is located. All captions and
section headings used herein are for convenience and ease of
reference only and do not constitute part of this
instrument. The Preliminary Statement set forth at the
beginning of this Construction Addendum is hereby
incorporated herein by reference and is deemed to constitute
an integral part of this instrument.
7. Landlord's Right to Complete Construction on
Tenant's Default. Except for delays caused by events not
within the control of Tenant, failure to continuously
prosecute to completion the construction of the Project
within one hundred fifty (150) days following the date
hereof shall constitute a default by Tenant hereunder. If
any such default shall not have been remedied within ten
(10) days notice to Tenant (which ten (10) day period shall
be automatically extended for such additional period of time
(not to exceed thirty (30) days) as is reasonably necessary
to cure such default, provided that such default cannot be
cured within the ten (10) day period and Tenant is in the
process of diligently curing the same), then Landlord may,
if it elects to do so, either: (a) take over construction of
the Project and, at its option, complete such construction
or cause the same to be completed, or (b) terminate the
Lease Agreement and this Construction Addendum, in which
case Tenant shall be required to purchase the Premises from
Landlord (subject to all liens, claims or encumbrances not
placed on the Premises by Landlord) at a price equal to
Landlord's purchase price of the Premises, plus all sums
disbursed to Tenant pursuant to this Construction Addendum,
plus all Interim Rent due under the Lease Agreement, plus
all fees, costs and expenses paid by Landlord in connection
with its purchase of the Premises, plus interest on all such
sums accruing from the date of disbursement thereof at the
rate of ten percent (10%) per annum. Closing of the
purchase and sale shall take place within thirty (30) days
following the date of Landlord's notice of default to
Tenant.
8. Force Majeure. The time for completion of the
Project shall be extended by the period of time, if any,
that construction is delayed by virtue of labor unrest,
materials shortage, natural disaster, weather, Acts of God,
and other causes beyond the reasonable control of Tenant;
provided, however, that no such extension shall be permitted
with respect to any delay unless written notice of the delay
specifying the cause of the delay and the expected time of
the delay is delivered to Landlord within fifteen (15) days
after such delay is encountered.
9. Building Permit. Tenant hereby covenants and
agrees that Tenant shall be required, within forty-five (45)
days from the date of this Construction Addendum and the
Lease Agreement, to (i) address and fully satisfy all
outstanding permitting contingencies related to the Project
set forth in that certain letter from Grant E. Tilbert of
the Hernando County Development Department addressed to
Tenant and dated September 9, 1996; (ii) obtain a building
permit and any other permits and approvals which are
necessary to enable Tenant to commence and fully complete
the construction of the Project on the Premises pursuant to
the terms and conditions hereof (the "Permit Documents");
and (iii) deliver copies of the Permit Documents to
Landlord. The Tenant's failure to satisfy the requirements
of this Paragraph 9 shall constitute a default under this
Construction Addendum and the Lease Agreement. In the event
of a default by Tenant under this Paragraph 9, Landlord may,
if it elects to do so, terminate the Lease Agreement and
this Construction Addendum, in which case Tenant shall be
required to purchase the Premises from Landlord (subject to
all liens, claims or encumbrances not placed on the Premises
by Landlord) at a price equal to Landlord's purchase price
of the Premises, plus all sums disbursed to Tenant pursuant
to this Construction Addendum, plus all Interim Rent due
under the Lease Agreement, plus all fees, costs and expenses
paid by Landlord in connection with its purchase of the
Premises, plus interest on all such sums accruing from the
date of disbursement thereof at the rate of ten percent
(10%) per annum. Closing of the purchase and sale shall
take place within thirty (30) days following the date of
Landlord's notice to Tenant of Tenant's default hereunder.
10. Entire Agreement. This Construction Addendum and
the Lease Agreement of which this Construction Addendum is a
part constitute the entire agreement of Landlord and Tenant
with respect to the development of the Premises, and
supersedes any prior or contemporaneous agreement with
respect thereto. No amendment or modification of this
Construction Addendum shall be binding upon the parties
unless made in writing and signed by both Landlord and
Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have caused this
Construction Addendum to be executed and sealed as of the
date first above written.
Signed, Sealed and Delivered
in the presence of:
"LANDLORD"
CNL AMERICAN PROPERTIES FUND,
INC., a Maryland corporation
By:
Name: Robert A. Bourne, as President
Name:
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this
18th day of September, 1996 by Robert A. Bourne, as
President of CNL AMERICAN PROPERTIES FUND, INC., a Maryland
corporation, on behalf of the corporation. He is personally
known to me and did not take an oath.
Notary Signature
Printed Name
Notary Public, State of
Florida
Commission Number:
My Commission Expires:
"TENANT"
FAMILY STEAK HOUSES OF
FLORIDA, INC., a Florida
corporation
By:
Name: Name:
As Its:
Name:
STATE OF FLORIDA
COUNTY OF ___________________
The foregoing instrument was acknowledged before me this
____ day of September, 1996 by ___________________________,
as ____________________________ of FAMILY STEAK HOUSES OF
FLORIDA, INC., a Florida corporation, on behalf of the
corporation. He is personally known to me and did not take
an oath.
Notary Signature
Printed Name
Notary Public, State of
Florida
Commission Number:
My Commission Expires:
EXHIBITS ATTACHED
Exhibit "A" - Legal Description
REQUESTED BY:
AFTER RECORDATION RETURN TO:
Lowndes, Drosdick, et. al.
Post Office Box 2809
Orlando, Florida 32802
Attention: Dale A. Burket, Esquire
Phone: (407) 843-4600
RETURN BY: MAIL (X) PICK UP ( )
RYAN'S FAMILY STEAK HOUSE RESTAURANT/SPRING HILL, HERNANDO
COUNTY,
FLORIDA
EXHIBIT 10.04
*************
RENT ADDENDUM
to
LEASE AGREEMENT
THIS RENT ADDENDUM dated September 18, 1996, by and
between CNL AMERICAN PROPERTIES FUND, INC., a Maryland
corporation, as "Landlord", and FAMILY STEAK HOUSES OF
FLORIDA, INC., a Florida corporation, as "Tenant", for a
Ryan's Family Steak House Restaurant located in Spring Hill,
Hernando County, Florida, is attached to and made a part of
that certain Lease Agreement by and between Landlord and
Tenant of even date herewith (the "Lease"). Notwithstanding
any other provision to the contrary which may be contained
in said Lease, it is specifically agreed by and between
Landlord and Tenant as follows:
(a) Commencement of Rent.
On the date hereof, Landlord has simultaneously entered
into the Lease with Tenant pursuant to which Tenant has
agreed to lease from Landlord the Premises and all
improvements now or hereafter constructed thereon. Payment
of Interim Rent, Annual Rent and Percentage Rent shall
commence as of the Effective Date as provided herein,
notwithstanding that the improvements may not be constructed
or complete at that time.
(b) Interim Rent.
The terms and provisions of this paragraph (b) shall
apply only if a Construction Addendum is attached to and
incorporated in the Lease. From and after the Effective
Date until Annual Rent shall first become due and payable
pursuant to subparagraph (c) below, Interim Rent shall be
due and payable in advance monthly installments on the first
day of each month. For purposes of this Lease, the term
"Interim Rent" shall mean an amount equal to the product of
(i) ten and seven-eighths percent (10 7/8%) per annum,
multiplied by (ii) the amount theretofore funded by Landlord
under the terms of the Construction Addendum. Interim Rent
for partial months shall be prorated on a per diem basis.
(c) Annual Rent
(i) Definitions. Capitalized terms used in the
Lease and the Construction Addendum shall have the same
meaning in this Rent Addendum unless otherwise defined. In
addition to those terms defined elsewhere in this Rent
Addendum, as used herein the following terms shall have the
meaning indicated:
"Construction Period" shall mean the period beginning on
the Effective Date and ending on the earliest of (i) one
hundred fifty (150) days after the Effective Date; (ii) the
date a certificate of occupancy for the Premises is issued;
(iii) the date the restaurant opens for business on the
Premises; and (iv) the date Tenant receives from Landlord
its final funding of the construction costs for the Project
under this Construction Addendum.
"Annual Rent Commencement Date" shall mean the last day
of the Construction Period.
"Total Cost" shall mean the sum of (i) the purchase
price paid by Landlord for the land comprising a portion of
the Premises, plus (ii) all approved closing costs paid by
Landlord, plus (iii) all actual "hard" construction costs
and approved "soft" costs incurred by Tenant and funded by
Landlord during the Construction Period pursuant to the
terms and conditions of the Construction Addendum.
(ii) Initial Annual Rent. Beginning on the Annual
Rent Commencement Date, Tenant covenants and agrees to pay
to Landlord Annual Rent in an annual amount equal to ten and
seven-eighths percent (10 7/8%) multiplied by the Total
Cost, payable to Landlord in equal monthly installments in
advance, on the first (1st) day of each month. Landlord and
Tenant agree that prior to the Annual Rent Commencement Date
they will endeavor to establish the Total Cost so that rent
payable on the Annual Rent Commencement Date will be known
prior to such date. However, if the exact amount of the
Total Cost shall not have been finally ascertained prior to
the Annual Rent Commencement Date, Tenant shall as of the
Annual Rent Commencement Date pay Landlord rent based on an
annual rent under the Lease determined by multiplying ten
and seven-eighths percent (10 7/8%) times $1,881,818.00 (the
Funding Limitation set forth in the Construction Addendum),
and if, when the exact amount of the Total Cost shall have
been ascertained (the "Final Disbursement Date"), such Total
Cost is more or less than $1,881,818.00, Landlord or Tenant,
as the case may be, shall promptly refund or remit to the
other an amount equal to the excess rent paid or the
underpayment of rent due. On the Final Disbursement Date,
Landlord shall mail to Tenant a statement setting forth a
schedule of funds disbursed by Landlord to Tenant under the
Construction Addendum; shall compute the Annual Rent payable
hereunder; and shall state the excess rent paid or
underpayment of rent due. The Annual Rent set forth in such
statement shall constitute the Annual Rent due hereunder.
(ii) Increases in Annual Rent. Commencing at the
end of the fifth (5th) Lease Year after the Effective Date,
and on each fifth (5th) anniversary of such date thereafter
during the term of this Lease (and any renewal or extension
thereof), Annual Rent shall be increased by an amount equal
to twelve percent (12%) of the Annual Rent payable during
the immediately preceding Lease Year.
(iii) Partial Months. If the date on which
Annual Rent shall first be due and payable shall fall on a
day other than the first day of a calendar month, then rent
for the partial rental month shall be prorated on a per diem
basis on the first Annual Rent payment and shall be paid by
Tenant to Landlord for such month.
(d) Percentage Rent.
In addition to the Interim Rent and Annual Rent set
forth above, Tenant shall pay, as additional Rent,
percentage rent ("Percentage Rent") as follows: Within
thirty (30) calendar days after the expiration of each Lease
Year, Tenant shall pay, in one lump sum, an amount equal to
(i) five percent (5%) multiplied by Tenant's Gross Sales (as
hereinafter defined) for the Lease Year then ended, minus
(ii) the Annual Rent payable for such Lease Year. At such
time, Tenant shall also furnish Landlord a sworn statement
showing the Gross Sales made by Tenant during such Lease
Year then ended.
(i) Inspection of Records. Landlord or its duly
authorized representatives may on regular business days
within reasonable office hours, inspect Tenant's records of
Gross Sales and deductions made in the Premises, either at
the Premises or elsewhere as reasonably designated by
Tenant, provided such inspection is commenced within thirty-
six (36) months after a statement of Gross Sales is
furnished to Landlord by Tenant or should have been
delivered and is limited to the period covered by such
statement. Any claim by Landlord for revision of any
statement of Gross Sales or for additional Percentage Rent
must be made in writing to Tenant within thirty-six (36)
months after the date such statement of Gross Sales is
mailed to Landlord, or within thirty (30) days following
completion of its inspection, otherwise it shall be deemed
waived by Landlord.
(ii) Reporting Errors. If Landlord inspects
Tenant's records as permitted by this Rent Addendum and if
such inspection shows an error(s) in the statements
submitted by Tenant which results in an understatement of
Gross Sales by more than three percent (3%), then in
addition to paying the Percentage Rent due, Tenant shall pay
Landlord the reasonable cost of such inspection. In the
event such inspection shows an overstatement of Gross Sales,
then Landlord shall refund such overpayment to Tenant.
(iii) Sales and Other Financial Reports. In
addition to the above annual sworn statement of Gross Sales,
Tenant shall provide Landlord with (i) monthly reports of
its sales at the Premises within ten (10) days following the
last day of each of Tenant's monthly accounting periods,
together with a copy of all reports submitted to its
franchisor, (ii) quarterly sales tax reports for sales at
the Premises within ten (10) days of the date such reports
are submitted by Seller/Lessee to the applicable
governmental authorities, and (iii) Tenant and each
guarantor shall provide unaudited year end financial
statements including operating statements and balance sheets
and federal income tax returns within ten (10) days after
they are generated for Tenant or such guarantor. Further,
Tenant hereby authorizes its franchisor to release to
Landlord any and all inspection reports issued by franchisor
to Tenant relating to the Premises.
(iv) Gross Sales/Sales Tax Defined. As used in
this Rent Addendum, the term "Gross Sales" shall mean the
gross amount charged for all sales or services made from the
Premises by Tenant, for cash or credit, paid or unpaid, less
any sales taxes, returns, exchanges, allowances, discounts,
employee meals, and excluding sales of Tenant's Property or
Tenant's leasehold interest. Gross Sales shall include,
without limitation, gross Rents or other amounts received by
Tenant from the licensees or concessionaires owning and
operating coin operated machines and devices, such as
cigarette machines, but not the amount taken in by such
machines or devices. The term "sales tax" shall mean taxes
which by law (1) are not imposed on Tenant or any other
party prior to sale at retail by Tenant, but (2) are imposed
on purchasers from Tenant at retail and collectible by
Tenant from such purchasers.
(e) Sales/Use Tax.
Tenant shall also pay to Landlord any sales and use tax
imposed on any Rents payable hereunder from time to time by
state law or any other governmental entity, which sums are
due monthly as to monthly rental payments and annually as to
Percentage Rent on the due date of the rent payment under
this Lease.
(f) Late Charges.
In the event any installment of rent due hereunder
(including Interim Rent, Annual Rent and Percentage Rent) is
not received by Landlord within ten (10) days of its
respective due date, there shall be an automatic late charge
due to Landlord from Tenant in the amount of five percent
(5%) of such delinquent installment of rent. All such late
charges due hereunder shall be deemed additional Rent, and
are not penalties but rather are charges attributable to
administrative and collection costs arising out of such
delinquency. In addition to such late charge, in the event
Landlord does not receive Rent when due hereunder, interest
at the rate of the maximum rate allowable by law shall be
due and payable with respect to such payment from the due
date thereof until Landlord receives such payment.
(g) Payments of Rents.
Except as provided in the following sentence, all Rent
payments shall be made by check payable to the order of
Landlord and shall be sent to 400 East South Street, Suite
500, Orlando, Florida 32801, or to such other place or
places as Landlord or its successors or assigns,
respectively, may from time to time designate in writing. In
the event Tenant is late in the payment of Interim, Annual
or Percentage Rent on three (3) or more occasions, and if
Landlord shall so request, Tenant shall establish
arrangements whereby Rent is transferred by wire or other
means directly from Tenant's bank account to such account as
Landlord may designate.
(h) No Abatement.
Unless otherwise stated in the Lease, no abatement,
offset, diminution or reduction (a) of Rent, charges or
other compensation, or (b) of Tenant's other obligations
under this Lease shall be allowed to Tenant or any person
claiming under Tenant, under any circumstances or for any
reason whatsoever.
Initialed for Identification:
By Landlord By Tenant
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Company's
1996 3rd quarter 10-Q and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JAN-01-1997 JAN-01-1997
<PERIOD-END> OCT-02-1996 OCT-02-1996
<CASH> 903400 903400
<SECURITIES> 1154300<F1> 1154300
<RECEIVABLES> 203700 203700
<ALLOWANCES> 0 0
<INVENTORY> 226000 226000
<CURRENT-ASSETS> 3060800 3060800
<PP&E> 39714100 39714100
<DEPRECIATION> 14277700 14227700
<TOTAL-ASSETS> 30653700 30653700
<CURRENT-LIABILITIES> 5305700 5305700
<BONDS> 0 0
0 0
0 0
<COMMON> 108900 108900
<OTHER-SE> 11740000 11740000
<TOTAL-LIABILITY-AND-EQUITY> 30653700 30653700
<SALES> 9084600 29259400
<TOTAL-REVENUES> 9084600 29259400
<CGS> 3665800 11640800
<TOTAL-COSTS> 8941000 28038800
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 376800 1152300
<INCOME-PRETAX> (116800) 423600
<INCOME-TAX> (29400) 57600
<INCOME-CONTINUING> (87400) 366000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (87400) 366000
<EPS-PRIMARY> (.01) .03
<EPS-DILUTED> (.01) .03
<FN>
<F1>Represents investments in Certificates of Deposit with initial maturities
less than one year.
</FN>
</TABLE>
