SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number: 0-28704
CLASSIC RESTAURANTS INTERNATIONAL, INC.
(Name of small business issuer in its charter)
COLORADO 84-1122431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3500 PARKWAY LANE, SUITE 435, NORCROSS, GA 30092
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (770) 729-9010
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
Title of class: CLASS A COMMON STOCK, NO PAR VALUE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to the filing requirements for the past 90 days. Yes X No
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.[ ]
Issuer's revenues for its most recent fiscal year. $1,372,352
(for six months ended June 30, 1996)
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of September 13, 1996: $8,121,400
Number of shares outstanding of registrant's
Class A Common Stock, no par value: 3,218,592
Number of shares outstanding of registrant's
Class B Common Stock, no par value: 200,000
as of September 13, 1996
Documents incorporated by reference: NONE
Transitional Small Business Disclosure Format (check one): Yes No X
Exhibit index on consecutive __ Page 1 of Pages
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
FORMATION AND INITIAL PUBLIC OFFERING
Classic Restaurants International, Inc. (the "Company") was
incorporated under the laws of the State of Colorado on August 3, 1989 under the
name Regional Equities Corporation. In May 1990, the Company completed an
initial public offering of units consisting of its Class A Common Stock and
three separate classes of warrants. All of the warrants issued in connection
with the offering expired without any being exercised.
Effective upon the close of trading on July 12, 1994, the Company
effected a 1-for-10,000 reverse stock split of its Class A Common Stock.
Effective on the close of trading on November 7, 1994, the Company effected a
10-for-1 forward stock split of its Class A and Class B Common Stock. In
September 1995, the Company declared a 50% share dividend payable to the holders
of record of its Class A and Class B Common Stock on October 13, 1995. All per
share amounts herein have been adjusted to reflect the effects of the stock
splits and the share dividend.
GREAT AMERICAN RESORTS, INC.
In April 1993, the Company entered into an agreement to merge with and
into Great American Resorts, Inc. ("GAR"). In May 1994, the boards of directors
of GAR and the Company both voted to terminate the merger agreement.
In connection with the proposed merger with GAR, GAR paid a total of
$12,763 (the "Option Price") to obtain irrevocable options to purchase a total
of 67,260 shares of the Company's Class A Common Stock held by seven
shareholders for a total price of $127,632 (the "Purchase Price"). Under the
terms of the options, the Option Price was to be credited against the Purchase
Price when the options were exercised. In early 1994, GAR exercised all of the
options to acquire 67,260 shares of Class A Common Stock in the Company. In
addition, GAR purchased additional shares of Class A Common Stock of the Company
on the open market which resulted in GAR's owning approximately 78% of the
Company's Class A Common Stock. GAR later sold some of its shares which it
acquired on the open market. In addition, GAR acquired 7,500,000 shares of Class
A Common Stock and 150,000 shares of Class B Common Stock of the Company in
connection with the merger of a wholly-owned subsidiary with and into the
Company in October 1994. See "Merger with Casinos International, Inc." below.
Immediately prior to the share exchange with Classic Restaurants International,
Inc. in January 1996, GAR owned 7,567,260 shares of Class A Common Stock (93.2%
of the total outstanding) and 150,000 shares of Class B Common Stock (50% of the
total outstanding).
IRISH LAND TRANSACTION
On August 21, 1994, the Company entered into a contract to purchase two
tracts of land in Ireland from Caragh Holdings, Ltd. ("Caragh"), which the
Company intended to develop into a resort. The contract provided that one tract
of land would be purchased on or before December 31, 1994 for 27,500 Irish
Pounds and 270,000 shares of Class A Common Stock, and the other tract of land
would be purchased on or before December 31, 1996 for 150,000 Irish Pounds and
1,230,000 shares of Class A Common Stock. As an earnest money deposit, the
Company issued all of the stock to the seller, but the seller was prohibited
from selling the stock until the Company completed its purchase of the tract of
land to which the stock related. In the event a tract of land was not purchased,
the seller was obligated to return the stock to the Company, less 15,000 shares
as liquidated damages in the event closing did not occur due to a default by the
Company.
In October 1994, the Company purchased the first tract of land under
the contract for $334,800, consisting of $41,723 in cash and $293,077 in Class A
Common Stock which was valued at the appraised value of the land. Thereafter,
the Company assigned its rights in the first tract to GAR for $384,877, which
consisted of the purchase price originally paid by the Company plus a fee of
$50,077 to the Company as reimbursement for the time and expense incurred to
purchase the land. In July 1995, the Company and Caragh entered into an
agreement to terminate the
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contract to purchase the second tract of land. Under the agreement, as amended
in September 1995, Caragh agreed to return 1,230,000 shares, of which 1,050,000
were returnable immediately while the remaining 180,000 shares continue to be
held by Caragh pursuant to an option to acquired said shares for $2.67 per share
at any time until September 30, 1997.
MERGER WITH CASINOS INTERNATIONAL, INC.
On September 13, 1994, the Company entered into an Agreement and Plan
of Merger ("Merger Agreement") with Casinos International, Inc., a Georgia
corporation (" Casinos"), under which Georgia Casinos agreed to merge with and
into the Company. The Merger Agreement was approved by the shareholders of the
Company at a shareholders meeting held on September 30, 1994, and was
consummated in October 1994. Under the Merger Agreement, all nondissenting
holders of Class A Common Stock of Casinos were issued 1.5 shares of the
Company's Class A Common Stock for each share of Class A Common Stock of
Casinos. At the time of the merger, GAR held all 5,000,000 shares of Class A
Common Stock of Casinos which were outstanding, and therefore GAR acquired
7,500,000 shares of the Company's Class A Common Stock in the merger. All
nondissenting holders of Class B Common Stock of Casinos were issued 1.5 shares
of the Company's Class B Common Stock for each share of Class B Common Stock of
Casinos. At the time of the merger, there were 200,000 shares of Class B Common
Stock of Casinos outstanding, 100,00 of which were held by Edward L Bates and
100,000 of which were held by GAR. As a consequence of the merger, GAR and Mr.
Bates each acquired 150,000 shares of the Company's Class B Common Stock. Mr.
Bates was an officer and director of GAR at the time of the merger.
As part of the merger, the Company's shareholders also approved certain
amendments to the Company's Articles of Incorporation. The amendments divided
the Company's single class of common stock into two classes: Class A Common
Stock, of which 1,800,000,000 shares are authorized for issuance, and Class B
Common Stock, of which 200,000,000 shares are authorized for issuance. The Class
A Common Stock and the Class B Common Stock have an equal right to receive the
net assets of the Company upon dissolution and liquidation, but the Class A
Common Stock has only one (1) vote per share, while the Class B Common Stock has
forty (40) votes per share, on each matter voted upon by the shareholders,
except to the extent state or federal law provides otherwise. In addition, to
the extent there are any shares of Class B Common Stock outstanding, the holders
thereof have the right to elect a majority of the board of directors of the
Company. All of the Company's outstanding common stock before the amendment was
considered Class A Common Stock after the amendment. The name of the Company was
changed to Casinos International, Inc.
CHEERS HOTEL AND CASINO
On January 20, 1995, the Company purchased the Cheers Hotel and Casino
(the "Cheers Hotel") in Reno, Nevada, from Baylocq Nevada Corp., a nonaffiliated
entity. The Cheers Hotel is a ten-story, 113-room hotel, with a casino, cabaret,
restaurant, and bar facilities, which is located in the downtown section of
Reno, Nevada. The purchase price of the Cheers Hotel was $3,750,000 plus closing
costs and prorations.
A portion of the purchase price was paid by the assumption of an
existing first mortgage loan held by American Federal Savings Bank against the
Cheers Hotel in the amount of $1,944,804.12. The remainder of the purchase price
was paid $750,00 in cash and by executing a note payable to the seller in the
amount of $1,055,195.88, secured by a second mortgage on the Cheers Hotel.
Contemporaneous with the purchase of the Cheers Hotel, the Company
entered into a lease agreement with the seller under which the seller originally
leased approximately 7,600 square feet of space in the Cheers Hotel for two
years. The seller intended to use the leased space to operate a casino and
cabaret. Effective July 1, 1995, the Company reached an agreement with the
seller to eliminate the cabaret operations from the sublease and to reduce the
monthly rent.
Great American Casinos, Inc., a Nevada corporation, was formed by the
Company to own the Cheers Hotel.
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SHARE EXCHANGE WITH CLASSIC RESTAURANTS AND SPINOFF
Effective upon the close of business January 31, 1996, the Company
acquired (the "Share Exchange") all of the issued and outstanding capital stock
of Classic Restaurants International, Inc., a Florida corporation ("Classic-
Florida"), in exchange for 2,173,665 restricted shares of the Company's Class A
Common Stock and 200,000 restricted shares of the Company's Class B Common
Stock. Classic-Florida now operates as a wholly-owned subsidiary of the Company.
Simultaneous with the effectiveness of the Share Exchange, the Company
transferred all of the issued and outstanding shares of common stock of Great
American Casinos, Inc. to GAR. Great American Casinos, Inc. was a wholly-owned
subsidiary of the Company. The sole asset of Great American Casinos, Inc. is the
Cheers Hotel. The Company's common stock interest in Great American Casinos,
Inc. constituted substantially all of its assets. The consideration for the
transfer of the common stock of Great American Casinos, Inc. to GAR was (1) the
return for cancellation by GAR and by former officers of the Company of all of
their stock in the Company, which consisted of 7,578,075 shares of Class A
Common Stock and 300,000 shares of Class B Common Stock; (2) the cancellation of
any indebtedness owed by the Company to GAR, which was approximately $1,567,389
as of December 31, 1995; and (3) the mutual release of any claims between GAR
and the Company.
After the transfer of stock and assets described above and the Share
Exchange (giving effect to the exercise of dissenters' rights),
Classic-Florida's former shareholders and the Company's existing shareholders
owned 2,173,665 shares (80.1%) and 538,967 shares (19.9%) of the Company's
outstanding Class A Common Stock, respectively, and Classic-Florida's former
shareholder owned 200,000 shares (100%) of the Company's outstanding Class B
Common Stock.
The Company filed an amendment to its Articles of Incorporation which
changed its name to Classic Restaurants International, Inc. effective January
31, 1996.
All of the Company's former officers and directors resigned. Officers
and directors of Classic-Florida were appointed to fill the vacancies created by
the resignations.
There was no relationship between the Company and Classic-Florida prior
to the Share Exchange.
CLASSIC-FLORIDA
Classic-Florida was organized under the laws of the State of Florida on
April 7, 1992, for the purpose of developing and operating restaurants using a
dinner theater concept. On December 1, 1992, Classic-Florida opened Musicana
Supper Club in Boca Raton, Florida. Classic-Florida opened Musicana Dinner
Theater in Clearwater, Florida on May 14, 1994.
Classic-Florida also provides entertainment production services for a
dinner theater in Naples, Florida. Management hopes to increase this line of
business and provide entertainment production services for other restaurants and
cruise lines.
MUSICANA SUPPER CLUB OF BOCA RATON
This restaurant, which opened on December 1, 1992, seats 270 persons
and offers dinner and live entertainment for a price ranging from $21.95 to
$29.95, depending upon the menu item ordered. The Company uses the concept of
employing talented young performers to perform Broadway and nostalgic musical
revues. These performers also serve as waiters and waitresses. By using young
performers, management believes that it can keep its overhead costs lower, as
compared to using equity entertainers. Because the entertainers play a dual role
as performers/waiters, the majority of their compensation comes from a portion
of the service charge.
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The restaurant aspect of the business involves a menu offering a wide
variety of dinner selections starting from $21.95. There is no cover charge for
the show if customers dine at the restaurant. If customers come for the show
only, there is a $15.00 cover charge. All other revenues come from food and
drink purchases.
Musicana offers 7 performances per week. The show consists of two
40-minute acts, with dessert and coffee served during intermission. A live band,
which includes piano, bass and drums, plays instrumental back-up for the shows
and also plays before the show and during the intermission for listening and
dancing. Each show is considered to be a "musical review" from Broadway or
different eras, usually from the 1930's to the 1950's. Some of the shows in the
Musicana Library include: "Broadway Follies," "New York Times," "West of
Broadway," "Hurrah for Hollywood," "The Fabulous Forties (When Radio was King),"
"The Good Ole Summertime," and "The Fabulous Fifties."
Most of the customers for Musicana are over 50 years of age. Management
believes that it has carved a special niche in the market for this age group, as
evidenced by the popularity of the restaurant since its opening.
MUSICANA DINNER THEATER OF CLEARWATER
This restaurant, which opened May 14, 1994, seats 370. Management
believes that the location is easily accessible from the Tampa and St.
Petersburg area. The operation in Clearwater is substantially the same as in
Boca Raton.
FUTURE DEVELOPMENT
The Company intends to pursue other acquisition opportunities for
restaurant theme formats. Management believes that the Share Exchange with
Casinos having been consummated, management has been given the flexibility to
acquire assets or businesses using stock, as well as cash.
COMPETITION
The restaurant business is highly competitive and is often affected by
changes in the taste and eating habits of the public, local and national
economic conditions affecting spending habits, and population and traffic
patterns. The principal basis of competition in the industry is quality and
price of the food products offered. Site selection, quality and speed of
service, advertising, and the attractiveness of the facilities are also
important. Management of the Company believes that the Company's dinner theater
restaurant will be competitive in each of these respects.
EMPLOYEES
As of June 30, 1996, there were 64 full-time and 10 part-time employees
of the Company, including certain officers of the Company.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company leases approximately 10,000 square feet of space at 2200
N.W. 2nd Avenue, Boca Raton, Florida pursuant to the terms of a five-year lease
which expires in November 1997. The monthly lease payment is $7,000. The Company
has a renewal option for another five-year term.
The Company leases approximately 12,000 square feet of space at the
Bayside Bridge Plaza, Unit G, in Clearwater, Florida pursuant to the terms of a
five-year, six-month lease which expires August 31, 1999. Rent for the first six
months was waived. Rent is $6,000 for each of months 7 through 18, $6,500 for
each of months 19 through 30, and $7,000 for each of months 31 through 66.
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The temporary executive offices of the Company were located at 3091
Governors Lake Drive, Building 100, Suite 500, Norcross, Georgia, in
approximately 200 square feet of office space. The Company paid $1,187 per month
for this space.
Effective October 1, 1996, the Company relocated its executive offices
to 3500 Parkway Lane, Suite 435, Norcross, Georgia. The Company is leasing
approximately 938 square feet of office space for monthly rent of $1,521,
pursuant to the terms of a five-year lease which expires October 1, 2001.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Class A Common Stock is traded on the over-the-counter
market under the symbol "CRET". The range of high and low bid prices for each
fiscal quarter for the last two fiscal years, as reported by the OTC Bulletin
Board, and as adjusted to reflect all stock splits and dividends, is as follows:
<TABLE>
<CAPTION>
BID PRICES
1995 FISCAL YEAR HIGH LOW
<S> <C> <C>
Quarter Ending 09/30/94................................... $5.80 $4.33
Quarter Ending 12/31/94................................... $6.33 $4.67
Quarter Ending 03/31/95................................... $5.33 $4.67
Quarter Ending 06/01/95................................... $5.33 $3.33
1996 FISCAL YEAR
Quarter Ending 09/30/95................................... $3.67 $3.33
Quarter Ending 12/31/95................................... $5.25 $2.50
Quarter Ending 03/31/96................................... $4.88 $4.00
Quarter Ending 06/30/96................................... $4.75 $4.50
</TABLE>
The last reported high and low bid prices for the Company's Class A
Common Stock were both $3.00 as of September 13, 1996, as reported by the OTC
Bulletin Board.
The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission and may not necessarily represent actual
transactions.
As of September 10, 1996 there were 295 record holders of the Company's
Class A Common Stock.
During the last two fiscal years, no cash dividends have been declared
on the Company's Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
GENERAL
The Share Exchange transaction has been accounted for as a
recapitalization of Classic-Florida and the issuance of 538,967 shares of Class
A Common Stock for the net assets of the Company and the forgiveness of the
liability due to the Company by Classic-Florida. This method is similar to
accounting for a reverse acquisition, and accordingly, the financial statements
presented prior to the date of the Share Exchange are those of Classic-Florida.
No adjustment of assets of either company to "fair value" has been made.
Prior to the Share Exchange, the fiscal year end of Classic-Florida was
December 31. It elected to change its fiscal year end to June 30 (that of the
Company's). Accordingly, statements of operations and cash flows for the years
ended December 31, 1994 and 1995 are presented, together with a statement for
the six months ended June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
All of the capitalization of Classic-Florida has resulted from the sale
of stock and loans from its principal shareholder, Crown Resources, Inc., a
company controlled by the President of the Company. At present, the Company
still remains dependent upon proceeds from the sale of stock and loans to
provide sufficient cash to meet its needs. At June 30, 1996, $320,641 was owed
to Crown Resources, Inc. In addition, at June 30, 1996, $338,448 was owed to
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various shareholders of the Company pursuant to promissory notes that either
were in default or will be due by December 1996. See Item 12. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.
Through December 31, 1995, Classic-Florida lacked management personnel
who could implement proper financial and accounting controls to minimize
operating losses during the start-up/development phase. As of January 1, 1996,
Caroline Anderson assumed these responsibilities for the Company. Accordingly,
at June 30, 1996, the Company had a working capital deficit of $976,147, as
compared to a deficit of $1,415,432 at December 31, 1995.
Due to the working capital deficiency as well as the operating losses
described below, the notes to the financial statements express uncertainty about
the Company's ability to continue as a going concern. See Note 11. BASIS OF
PRESENTATION of the Notes to Consolidated Financial Statements. The Company
proposes to obtain additional cash during the current fiscal year through the
sale of its stock to provide sufficient liquidity for the Company's needs.
RESULTS OF OPERATIONS
For the year ended December 31, 1995, sales increased 38% over 1994
sales. The increase was due primarily to the opening of the Clearwater location.
Sales for the six months ended June 30, 1996, on an annualized basis, show a 4%
increase from 1995 sales. Management believes, without assurance, that its
efforts to hire the proper sales and marketing personnel will result in
increased sales for the 1997 fiscal year. In the past, Classic-Florida has not
focused its efforts on marketing to tours and other large groups.
Operating expenses, as a percentage of sales, were 90.6% for 1994,
94.9% for 1995, and 90.9% for 1996. Operating expenses were higher,
proportionately, for 1995 due to certain penalties and interest assessed for
unpaid payroll taxes. All of the taxes, penalties, and interest were paid in
1996. Management expects such expenses to decrease as a percentage of sale due
to its efforts to increase sales for fiscal 1997.
General and administrative expenses, as a percentage of sales, were
51.8% for 1994, 46.5% for 1995, and 35.0% for 1996. The decrease in these
expenses in 1996 is due to stronger management control over cash. Management
expects general and administrative expenses to maintain at the decreased level
for 1997.
ITEM 7. FINANCIAL STATEMENTS.
Please refer to pages beginning with page 16.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On July 1,1996, the Company and its Board of Directors approved the
engagement of Stark Tinter & Associates, LLC, of Englewood, Colorado, to audit
the Company's financial statements. During the Company's two most recent fiscal
years and the subsequent interim period preceding the engagement of this firm,
the Company did not consult this firm regarding any of the matters identified in
Item 304(a)(2) of Regulation S-K.
Stark Tinter & Associates, LLC was selected by new management of the
Company. As reported in the Form 8-K dated January 31, 1996, the Company
experienced a change of control.
The former accountants were Mitchell Finley and Company, P.C. The
report of Mitchell Finley and Company, P.C. on the financial statements for the
fiscal year ended June 30, 1995 contained an explanatory paragraph regarding the
Company's ability to continue as a going concern. The decision to change
accountants was approved by the Board of Directors on May 21, 1996. During the
Company's two most recent fiscal years and the subsequent interim period
preceding the resignation, there were no disagreements with Mitchell Finley and
Company, P.C. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Mitchell Finley and Company, P.C., would
have caused it to make reference to the subject matter of the disagreements in
connection with its report.
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Effective January 1, 1996, Mitchell Finley and Company, P.C. combined
its practice with BDO Seidman LLP. In addition, the license of Mitchell Finley
and Company, P.C. to practice accountancy with the Colorado Board expired on May
31, 1996. Accordingly, the firm can no longer practice under the name Mitchell,
Finley & Company, P.C.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table sets forth the names and ages of all directors and
executive officers of the Company as of the date of this report, indicating all
positions and offices with the Company held by each such person:
NAME AGE POSITION
James R. Shaw 43 President, Treasurer,
and Director
Caroline P. Anderson 45 Executive Vice President,
Secretary and Director
Jerry W. Carter 55 Director
Daniel Howell 45 Director
The holders of the Class B Common Stock have the right to elect a
majority of the board of directors of the Company. Cumulative voting for
directors is not permitted in either class of common stock. The term of office
of directors of the Company ends at the next annual meeting of the Company's
shareholders or when the successors are elected and qualify. The annual meeting
of shareholders is specified in the Company's bylaws to be held on a date and at
a time and place to be determined by resolution of the Board of Directors. The
Company has tentatively scheduled the annual meeting for January 1997. The term
of office of each officer of the Company ends at the next annual meeting of the
Company's Board of Directors, expected to take place immediately after the next
annual meeting of shareholders, or when his successor is elected and qualifies.
Except as otherwise indicated below, no organization by which any officer or
director previously has been employed is an affiliate, parent, or subsidiary of
the Company.
JAMES R. SHAW has been the President, Treasurer, and a director of the
Company since February 1, 1996, and the President, Treasurer, and a director of
Classic-Florida since December 1993. Mr. Shaw also served as a director of
Classic-Florida from its inception to July 1992. He was the executive vice
president, co-manager, and co-franchise owner of a Schneider Securities, Inc.
office in Atlanta, Georgia, from April 1992 to February 1994. Schneider
Securities, Inc. is a securities broker-dealer firm. From January 1990 to April
1992, he was the manager and franchise owner of a Pacific Southern Securities
office in Atlanta, Georgia. From 1986 to January 1990, Mr. Shaw was a
stockbroker with several other broker-dealer firms. He received a Bachelor of
Music degree from Carson-Newman College in 1979 and a Master of Music degree
from Southern Baptist Theological Seminary in 1986.
CAROLINE P. ANDERSON has been the Executive Vice President, Secretary
and a director of the Company since February 1, 1996, and the Executive Vice
President, Secretary, and a director of Classic-Florida since October 1995. From
July 1991 to June 1995, Ms. Anderson was a financial planner for Forth Financial
Securities Corp./Life of Virginia. She was a stockbroker with Pacific Southern
Securities Corp. in Atlanta, Georgia, from April 1991 to July 1991. From April
1990 to April 1991, Ms. Anderson was an auditor during the merger of C&S/Sovran
Trust Co. in Atlanta, Georgia, auditing institutional trust accounts. She
received a Bachelor of Science degree in accounting from the University of
Cincinnati in 1978.
JERRY W. CARTER has been a director of the Company since February 1,
1996. He has been a director of Classic- Florida since its inception in 1992.
Since 1968, Mr. Carter has been self-employed as an artist. He has had solo
exhibitions in Moscow, Helsinki, Munich, and Cologne, sponsored by the Moscow
Artists Union, United States Information Agency, and the American Ambassador to
what was formerly the Soviet Union. Mr. Carter is the project manager and
director of the Human Rights Center and Monument to be constructed in Moscow. He
has also served as culture chairman of the Finlandia Foundation and has served
on the board of directors of the Washington Music Ensemble. Mr. Carter has a
Master degree in Fine Arts from Antioch University and studied in Finland,
France, and Italy.
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DANIEL HOWELL has been a director of the Company since February 1, 1996
and a director of Classic-Florida since February 1995. Mr. Howell has been
self-employed as a private investor since February 1993. From February 1988 to
February 1993, he was the president of a subsidiary of Helen of Troy
Corporation, a beauty products company located in El Paso, Texas.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company's Class A Common Stock was registered under Section 12(g)
of the Exchange Act on June 28, 1996, and thereby became subject to the
reporting requirements of Section 16(a) on that date. Initial Statements of
Beneficial Ownership of Securities on Form 3 were required to be filed by the
directors, officers, or beneficial owners of more than ten percent of securities
of the Company by June 28, 1996. Form 3's were filed as follows: James R. Shaw -
July 5, 1996; Carolyn A. Shaw - July 5, 1996, Caroline P. Anderson - July 5,
1996, Jerry S. Carter - July 2, 1996; and Daniel Howell - July 9, 1996.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information for the current Chief
Executive Officer ("CEO") of the Company, James R. Shaw from February 1, 1996
through June 30, 1996, and for former CEOs. The former CEOs, Edward L. Bates,
served as such from October 1994 through January 31, 1996, and M. James Herbic
served from the Company's inception through October 25, 1994. No disclosure need
be provided for any executive officer, other than the CEO, whose total annual
salary and bonus for the last completed fiscal year did not exceed $100,000.
Accordingly, no other executive officers of the Company are included in the
table.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
OTHER RESTRICTED
NAME AND ANNUAL STOCK OP LTIP ALL OTHER
PRINCIPAL COMPEN AWARD(S) TIONS/SARS PAYOUTS ($) COMPEN
POSITION YEAR SALARY BONUS SATION ($) ($) ($) SATION ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. 1996 -0- -0- -0- -0- -0- -0- -0-
Shaw,
President
Edward L. 1996 -0- -0- -0- -0- -0- -0- -0-
Bates, 1995 -0- -0- -0- -0- -0- -0- -0-
President
M. James 1995 -0- -0- -0- -0- -0- -0- -0-
Herbic, 1994 -0- -0- -0- -0- -0- -0- -0-
President
</TABLE>
There are no outstanding stock options.
There are no employment agreements with any of the Company's executive
officers.
The Company does not pay non-officer directors for their services as
such nor does it pay any director's fees for attendance at meetings. Directors
are reimbursed for any expenses incurred by them in their performance as direc
tors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information, as of September 10, 1996,
with respect to the beneficial ownership of the Company's Class A Common Stock
and Class B Common Stock by each person known by the Company to be the
beneficial owner of more than five percent of the outstanding Class A Common
Stock and Class B Common Stock, by each of the Company's officers and directors,
and by the officers and directors of the Company as a group:
11
<PAGE>
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK EFFECTIVE VOTING POWER
NUMBER OF PERCENT OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS (1)<F1> SHARES CLASS (1)<F1> VOTES (2)<F2> VOTES (1)<F1>
<S> <C> <C> <C> <C> <C> <C>
James R. Shaw 522,469 (3)<F3> 16.2% 200,000 100.0% 8,522,469 76.0%
1817 Ballybunion Drive
Duluth, Georgia 30136
Diversified Corporate 400,000 (4)<F4> 11.4% -- -- 400,000 3.5%
Consulting Group, LLC
237 Main Street
Tannersville, New York 12485
James Buford Salmon 238,723 7.4% -- -- 238,723 2.1%
1525 Lakesite Drive
Birmingham, Alabama 35285
Crown Resources, Inc. 172,469 5.4% -- -- 172,469 1.5%
1817 Ballybunion Drive
Duluth, Georgia 30136
Caroline P. Anderson 75,000 2.3% -- -- 75,000 0.7%
Jerry W. Carter 40,000 1.2% -- -- 40,000 0.4%
Daniel Howell 22,000 0.7% -- -- 22,000 0.2%
Officers and Directors as a 659,469 20.5% 200,000 100.0% 8,659,469 77.2%
group (4 persons)
- ---------------
<FN>
<F1>
(1) Based on 3,218,592 shares of Class A Common Stock and 200,000 shares of
Class B Common Stock outstanding on September 10, 1996. Where the
persons listed on this table have the right to obtain additional shares
of common stock within 60 days from September 10, 1996, these
additional shares are deemed to be outstanding for the purpose of
computing the percentage of class owned by such persons, but are not
deemed to be outstanding for the purpose of computing the percentage of
any other person.
<F2>
(2) Class A Common Shares have 1 vote per share while Class B Common Shares
have 40 votes per share.
<F3>
(3) Includes 172,469 shares owned of record by Crown Resources, Inc.
<F4>
(4) Includes 300,000 shares issuable pursuant to stock options. The shares
and stock options were issued pursuant to the terms of a consulting
agreement. In September 1996, the Company and Diversified Corporate
Consulting Group, LLC mutually terminated the consulting agreement. The
shares and stock options will be returned to the Company for
cancellation.
</FN>
</TABLE>
The Company is not aware of any arrangement which could result in a
change in control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
From time to time, Crown Resources, Inc. has loaned funds to
Classic-Florida. Crown Resources, Inc. is owned and controlled by James R. Shaw,
the President, director, and principal shareholder of the Company. In September
1994, Crown Resources, Inc. was issued 93,750 shares of Class A Common Stock at
a price of $3.20 per share as partial repayment of amounts due to Crown. At June
30, 1996, the Company owed Crown Resources, Inc. $320,641. The balance due to
Crown Resources is unsecured and has no set interest or repayment terms. To
comply with Internal Revenue Service requirements and financial accounting
standards, $10,000 of interest was accrued and charged to operations during
1996.
At June 30, 1996, Classic-Florida owed $113,948 to stockholders
pursuant to 8% convertible promissory notes due December 31, 1995. The notes are
in default. Interest on the notes is due monthly and the notes are convertible
at anytime into Class A Common Stock at $3.20 per share. Payment of the notes is
guaranteed personally by the Company's president, James R. Shaw.
12
<PAGE>
On February 2, 1996, the Company borrowed $31,000 from a shareholder of
the Company. The promissory note is due December 31, 1996, bears interest at
10%, and is personally guaranteed by Mr. Shaw.
From April 1996 through May 1996, the Company borrowed an aggregate of
$188,500 from various shareholders of the Company. The promissory notes are due
at various times from July 1996 to November 1996 and bear interest at 18.25% per
annum. Repayment of the notes is personally guaranteed by Mr. Shaw.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
(a) Exhibits:
<CAPTION>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
2.1 Agreement and Plan of Share Exchange among Casinos International, Inc., N/A
Great American Resorts, Inc. and Classic Restaurants International, Inc.
dated June 30, 1995, as amended (1)<F1>(2)<F2>
3.1 Articles of Incorporation, as amended (2)<F1>(3)<F3>(4)<F4> N/A
3.2 Bylaws (3) N/A
10.1 Amendment to Real Estate Purchase Agreement dated July 17, 1995 (2)<F2> N/A
10.2 Amendment to Real Estate Purchase Agreement dated September 29, 1995 N/A
(2)<F2>
10.3 Lease for Boca Raton restaurant ___
10.4 Lease for Clearwater restaurant P ___
10.5 Convertible promissory notes ___
10.6 Promissory note to Carl Simpson ___
10.7 Robert B. Farrow loan agreement ___
10.8 Promissory note to BMI & Associates ___
10.9 18.25% Promissory notes ___
16 Letter from Mitchell Finley and Company, P.C. re change in certifying N/A
accountant (5)<F5>
21 List of Subsidiaries ___
27 Financial Data Schedule ___
- ----------------------------
<FN>
<F1>
(1) Incorporated by reference to the Exhibits filed with the Company's
Current Report on Form 8-K dated June 30, 1995, Commission file number
033-33556-D.
<F2>
(2) Incorporated by reference to the Exhibits filed with the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995,
Commission file number 033-33556-D.
<F3>
(3) Incorporated by reference to the Exhibits filed with the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1994,
Commission file number 033-33556-D.
13
<PAGE>
<F4>
(4) Incorporated by reference to the Exhibits filed with the Company's
Current Report on Form 8-K dated January 31, 1996, Commission file
number 033-33556-D.
<F5>
(5) Application has been made under Rule 437 to waive this letter.
</FN>
</TABLE>
(b) The following reports on Form 8-K were filed during the last
quarter of the period covered by this report: None
14
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CLASSIC RESTAURANTS INTERNATIONAL, INC.
Dated: October 15, 1996 By:/s/James R. Shaw
James R. Shaw, President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
President and Treasurer (Prin-
cipal Executive Officer) and
/s/James R. Shaw Director October 15, 1996
James R. Shaw Date
Executive Vice President,
Secretary (Principal Financial
/s/Caroline P. Anderson Officer) and Director October 15, 1996
Caroline P. Anderson Date
/s/Jerry W. Carter Director October 15, 1996
Jerry W. Carter Date
Director
Daniel Howell Date
1:1996.10K
15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Classic Restaurants International, Inc.
We have audited the accompanying balance sheet of Classic Restaurants
International, Inc. as of June 30, 1996, and the related statements of
operations, stockholders' equity, and cash flows for the six months then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Classic Restaurants
International, Inc. as of June 30, 1996, and the results of its operations, and
its cash flows for the six months then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 11 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 11. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/Stark Tinter & Associates, LLC
Stark Tinter & Associates, LLC
Certified Public Accountants
Englewood, Colorado
August 28, 1996
16
<PAGE>
[Letterhead of James Moore & Co.]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Classic Restaurants International, Inc.:
We have audited the accompanying balance sheet of Classic Restaurants
International, Inc. as of December 31, 1995, and the related statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 1995 and 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the finanacial statements are free of
material mistatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Classic Restaurants
International, Inc. as of December 31, 1995, and the results of its operations
and its cash flows for the years ended December 31, 1995 and 1994, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the accompanying financial
statements, the Company incurred a net loss of $1,247,695 for 1995 and has
incurred substantial net losses since inception. At December 31, 1995, current
liabilities exceed current assets by $1,415,432 and total liabilities exceed
total assets by $804,564. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
/s/James Moore & Co.
Gainesville, Florida
March 20, 1996
17
<PAGE>
<TABLE>
Classic Restaurants International, Inc.
Consolidated Balance Sheets
<CAPTION>
December 31, June 30,
1995 1996
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 19,666 $ 22,759
Inventory 15,971 16,080
Prepaid expenses 13,133 13,945
Due from officers and stockholders (Notes 4 and 10) 51,735 52,088
Other receivables 6,882 3,685
------ ------
Total current assets 107,387 108,557
Property and equipment - net of accumulated
depreciation (Note 2) 539,437 476,935
Other assets:
Intangibles net of accumulated amortization
of $6,167 and $7,167 23,833 22,833
Deposits 47,598 37,418
------- -------
$ 718,255 $ 645,743
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
<S> <C> <C>
Current liabilities:
Checks written against future deposits $ 35,035 $ -
Accounts payable 275,663 187,094
Accrued expenses 309,987 151,019
Notes payable-affiliates (Note 3) 441,455 338,448
Due to stockholder 351,911 320,641
Advance banquet deposits 31,591 34,433
Deferred revenue 41,175 19,521
Deferred rent 36,002 33,548
------ -------
Total current liabilities 1,522,819 1,084,704
Commitments and contingencies (Notes 4, 7, and 9)
Stockholders' equity (deficiency) (Note 6):
Common stock, Class A no par value,
1,800,000,000 shares authorized 2,173,665 and
3,018,592 shares issued and outstanding 1,751,087 2,563,157
Common stock, Class B no par value, 200,000,000
shares authorized, 200,000 shares issued
and outstanding 200 200
Accumulated deficit (2,555,851) (3,002,318)
---------- ----------
Total stockholders' deficit (804,564) (438,961)
--------- ---------
$ 718,255 $ 645,743
======== ========
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
<TABLE>
Classic Restaurants International, Inc.
Consolidated Statements of Operations
For The Years Ended December 31, 1994 and 1995 and
The Six Months Ended June 30, 1996
<CAPTION>
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Net sales $ 1,902,543 $ 2,632,151 $ 1,372,352
Operating expenses:
Operating and maintenance 1,724,435 2,497,044 1,247,567
General and administrative 985,134 1,223,793 480,960
Depreciation and amortization 99,535 142,291 71,711
-------- -------- -------
Total operating expenses 2,809,104 3,863,128 1,800,238
--------- --------- ---------
Loss from operations (906,561) (1,230,977) (427,886)
Other income (expense):
Other income 4,357 - 300
Interest expense (6,483) (16,718) (18,881)
------- -------- ---------
(2,126) (16,718) (18,581)
Net loss $ (908,687) $ (1,247,695) $ (446,467)
========= ============ =========
Per share information:
Weighted average shares
outstanding 1,744,964 2,042,036 2,799,791
========= ========== =========
Net loss per share $ (.52) $ (.61) $ (.16)
========= ========== =========
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
<TABLE>
Classic Restaurants International, Inc.
Consolidated Statements of Stockholders' Equity (Deficiency)
For The Two Years Ended December 31, 1995 and
The Six Months Ended June 30, 1996
<CAPTION>
COMMON STOCK CLASS A COMMON STOCK CLASS B Accumulated
SHARES AMOUNT SHARES AMOUNT DEFICIT
<S> <C> <C> <C> <C> <C>
Balance December 31, 1993 1,599,100 $ 782,974 200,000 $ 200 $ (399,469)
Issuance of shares for cash 78,852 221,688 - - -
Issuance of shares for no
consideration 39,013 - - - -
Issuance of shares for
repayment of shareholder
loan 93,750 300,000 - - -
Net loss for the year - - - - (908,687)
--------- --------- ------- -------- ------------
Balance December 31, 1994 1,810,715 1,304,662 200,000 200 (1,308,156)
Issuance of shares for cash 133,400 223,425 - - -
Issuance of shares for no
consideration 5,050 - - - -
Issuance of shares for
services 225,000 225,000 - - -
Shares canceled (500) (2,000)
Net loss for the year - - - - (1,247,695)
--------- --------- ------- -------- ------------
Balance December 31, 1995 2,173,665 1,751,087 200,000 200 (2,555,851)
Shares issued for services 150,000 150,000 - - -
Shares issued for cash 155,960 334,563 - - -
Shares issued for
reorganization (Note 9) 538,967 327,507 - - -
Net loss for the period - - - - (446,467)
--------- --------- ------- -------- ------------
Balance June 30, 1996 3,018,592 $2,563,157 200,000 $ 200 $ (3,002,318)
========= ========= ======= ======== ============
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
<TABLE>
Classic Restaurants International, Inc.
Consolidated Statements of Cash Flows
For The Years Ended December 31, 1994 and 1995 and
The Six Months Ended June 30, 1996
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (908,687) $ (1,247,695) $ (446,467)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 99,535 142,291 71,711
Common stock issued for services - 225,000 150,000
Changes in assets and liabilities:
(Increase) decrease in inventory (7,995) 1,854 (109)
(Increase) decrease in prepaid expenses 9,458 (12,507) (812)
(Increase) decrease in other receivables 15,333 (3,605) 3,197
(Increase) decrease in deposits 17,595 (11,168) 10,180
Increase (decrease) in accounts
payable and accrued expenses 259,139 230,859 (250,100)
Increase (decrease) in advance deposits (1,345) (891) 2,842
Increase (decrease) in deferred rent 36,910 (908) (2,454)
Increase in deferred costs 15,000 - -
Increase (decrease) in deferred revenue 40,777 (14,602) (21,654)
------- ------- -------
Total adjustments 484,407 556,323 (37,199)
-------- ------- --------
Net cash (used in) operating activities (424,280) (691,372) (483,666)
Cash flows from investing activities:
Purchase of fixed assets (672,691) (5,436) (8,209)
-------- -------- -------
Net cash (used in) investing activities (672,691) (5,436) (8,209)
-------- -------- -------
Cash flows from financing activities:
Net proceeds from issuance of common
stock 223,022 223,425 334,563
Gross proceeds from notes payable 93,949 347,506 222,063
Stockholder advances (repayments) 474,428 177,483 (26,270)
Advances to stockholders - (36,735) (353)
(Advances) repayments on note
receivable - stockholder 309,550 (15,000) -
Principal payments on notes payable (5,313) - -
Increase (decrease) in bank overdraft 959 19,901 (35,035)
Refund of canceled stock - (2,000) -
--- ------- --
Net cash provided by financing
activities 1,096,595 714,580 494,968
--------- ------- -------
Net increase (decrease) in cash and
and cash equivalents (376) 17,772 3,093
Beginning - cash and cash equivalents 2,270 1,894 19,666
------ ------ -------
Ending - cash and cash equivalents $ 1,894 $ 19,666 $ 22,759
======== ========= =========
<CAPTION>
See accompanying notes to financial statements.
21
<PAGE>
Classic Restaurants International, Inc.
Consolidated Statements of Cash Flows
For The Years Ended December 31, 1994 and 1995 and
The Six Months Ended June 30, 1996
<S> <C> <C> <C>
Supplemental cash flow information:
Cash paid for : Interest $ 3,698 $ 9,506 $ 8,881
Income taxes $ - $ - $ -
Non-cash investing and financing activities:
Common stock issued for the cancellation
of related party debt $ 300,000 $ - $ -
Common stock issued in reorganization $ - $ - $ 327,507
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
1. Summary of Significant Accounting Policies:
ORGANIZATION: Classic Restaurants International, Inc. (the Company) was
organized under the laws of the State of Florida on April 7, 1992, for the
purpose of developing and operating restaurants using a dinner theater concept.
On December 1, 1992, the Company opened Musicana Supper Club in Boca Raton,
Florida. The Company opened Musicana Dinner Theater in Clearwater, Florida on
May 14, 1994. The financial statements include the accounts of the Company and
its wholly owned subsidiary. All intercompany transactions have been eliminated
in consolidation.
Certain classifications from prior year financial statements have been changed
to conform to the current period presentation.
CASH AND CASH EQUIVALENTS: For the purpose of reporting cash flows, the Company
considers all highly liquid investments with an original maturity date of three
months or less to be cash equivalents.
PROPERTY AND EQUIPMENT: Property and equipment consists primarily of restaurant
equipment and leasehold improvements which are recorded at cost. Depreciation on
restaurant equipment is computed using the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are depreciated
using the straight-line method over the lesser of the term of the related lease
or the estimated useful lives of the assets. Depreciation expense charged to
operations was $140,291 and $97,535 for the years ended December 31, 1995 and
1994, and $70,878 for the six months ended June 30, 1996.
Periodically, management evaluates the estimated useful life of its property and
equipment to determine whether intervening economic events and circumstances
have affected the remaining useful lives. In light of the current conditions
noted in Note 12, it is reasonably possible that the Company's estimate that it
will recover the carrying amount of its property and equipment from future
operations will change in the near term.
INTANGIBLE ASSETS AND AMORTIZATION: Intangible assets include amounts paid for
the Musicana tradename and music library. Amortization is computed using the
straight-line method over fifteen years. Amortization expense charged to
operations was $2,000 for the years ended December 31, 1995 and
1994 and $1,000 for the six months ended June 30, 1996.
DEFERRED RENT: The lease agreement for a restaurant building contains provisions
for no initial monthly rent and for scheduled rent increases (see Note 7). The
deferred rent amount represents the difference between amounts paid and rental
expense computed on a straight-line basis over the entire lease term.
23
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
1. Summary of Significant Accounting Policies (continued):
REVENUE RECOGNITION: Revenues are recognized in the period when the customer
attends the dinner theater and receives the service. Revenues collected in
advance are recorded as advance banquet deposits and deferred revenue.
INVENTORY: Inventory is recorded at cost and consists of food and bar items.
Cost is determined on the first-in, first-out (FIFO) method.
ESTIMATES: Management uses estimates and assumptions in preparing financial
statements. These estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenues and expenses. Actual results could differ from those
estimates.
ADVERTISING: The Company expenses costs of advertising as incurred. The costs
related to brochures and other printed materials are amortized over their
estimated useful lives. Advertising costs charged to operations were $174,891,
$273,146, and $46,904 during 1994, 1995, and 1996 respectively.
2. Property and Equipment:
Property and equipment consists of the following:
December 31, June 30,
1995 1996
Leasehold improvements $ 519,946 $ 519,946
Equipment 251,987 260,196
Furniture 22,694 22,694
------- -------
794,627 802,836
Less: Accumulated depreciation 255,190 325,901
-------- --------
$ 539,437 $ 476,935
------- --------
24
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
3. Notes Payable-affiliates:
Notes payable consist of the following:
December 31, June 30,
1995 1996
Non-interest bearing loan from a
shareholder, due on demand,
unsecured $ - $ 5,000
8% convertible promissory notes to
stockholders, interest due
monthly, principal due December
31, 1995. Convertible at anytime
into Class A common stock at $3.20
per share by the holder. Payment
of notes is guaranteed personally
by the Company's president,
unsecured (in default) 113,948 113,948
Non-interest bearing loan payable
to Casino's International, Inc.
made in conjunction with agreement
and plan of share exchange,
unsecured (See Note 9) 327,507 -
10% promissory note due during
December, 1996, guaranteed by the
Company's president - 31,000
18.25% promissory notes due from
July, 1996 to November, 1996,
unsecured - 188,500
------- -------
$ 441,455 $ 338,448
======= =======
The weighted average interest rate for short-term borrowings was approximately
13% at June 30, 1996.
4. Concentrations of Credit Risk:
Significant concentrations of credit risk for all financial instruments owned by
the Company as of December 31, 1995, and June 30, 1996 are as follows:
25
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
4. Concentrations of Credit Risk (continued):
DEMAND DEPOSITS: The Company has demand deposits with local banks in Atlanta,
Georgia; Clearwater, Florida and Boca Raton, Florida, with bank balances of
$29,465 and $22,757 at December 31, 1995 and June 30, 1996. The Company has no
policy requiring collateral or other security to support its deposits although
all demand deposits with banks are federally insured up to $100,000 by the FDIC.
DEPOSITS: The Company's deposits are comprised of amounts held by various
lessors of real property for security, last month's rent and utilities. The
Company has no policy requiring collateral or other security to support its
deposits.
The Company has short-term receivables due from three stockholders totaling
$51,735 and $52,088 as of December 31, 1995. and June 30, 1996. These
receivables are uncollateralized. The Company's policy of requiring collateral
or other security on loans made to officers or stockholders is determined on a
case-by-case basis.
5. Income Taxes:
Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classifications of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current depending on
the periods in which the temporary differences are expected to reverse.
At June 30, 1996, the Company has a net operating loss carryforward totaling
approximately $3,000,000 that may be offset against future taxable income
through 2011. No tax benefit has been reported in the accompanying financial
statements, however, because the Company believes there exists a substantial
possibility that the carryforward will expire unused. Accordingly, the tax
benefit of the loss carryforward has been offset by a valuation allowance of the
same amount. The expected tax benefit that would result from applying federal
statutory tax rates to the pre-tax loss differs from amounts reported in the
financial statements because of the increase in the valuation allowance.
6. Stockholders' Equity:
During 1994, the Company issued 78,852 shares of its Class A common stock in
exchange for cash aggregating $221,688 net of related costs.
During 1994 the Company issued 39,013 shares of its Class A common stock for no
consideration.
26
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
6. Stockholders' Equity (continued):
During September 1994, the Company issued 93,750 shares of Class A common stock
valued at $300,000 to its majority shareholder, as partial repayment of amounts
due said shareholders.
During 1995, the Company issued 133,400 shares of its Class A common stock. Net
proceeds received for these shares was $223,425.
In December, 1995, the Company issued 200,000 shares of Class A common stock to
its President, and 25,000 shares of Class A common stock to its Executive Vice
President and Secretary, for services rendered. These shares were valued at
$225,000 based on other stock sales during the month of December, 1995.
During 1995 the Company issued 5,050 shares of its Class A common stock for no
consideration and canceled 500 shares of Class A common stock valued at $2,000.
During January, 1996 the Company issued 538,967 shares of its Class A common
stock in conjunction with the share exchange agreement described in Note 9.
During February, 1996 the Company issued 150,000 shares of its Class A common
stock in exchange for services valued at $150,000.
During March, 1996 through May, 1996 the Company issued 155,960 shares of its
Class A common stock for cash aggregating $334,563.
7. Leases:
The Company entered into a non-cancelable operating lease on a building in
November 1992. The lease expires in November 1997 with an option to renew for an
additional five years. The Company also had a nonrefundable $25,000 option to
purchase the building for $1,300,000 which expired June 1, 1994. The Company did
not exercise the option and recorded an expense of $25,000 in 1994.
In addition, the Company entered into a non-cancelable operating lease on a
building in December 1993. The lease expires in August, 1999, with an option to
renew for an additional five years. The lease provides that no rent is to be
paid in the initial six months. Thereafter, the monthly rental amount will be
$6,000, increasing to $6,500 and $7,000 in the nineteenth and thirty-first month
of the lease, respectively. The Company is also responsible for its share of
related property taxes and common area maintenance costs.
The Company also leases certain office equipment under various operating leases.
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7. Leases (continued):
Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of one year as of June 30, 1996, for the next five
years and thereafter are as follows:
Year ended June 30:
1997 $ 170,852
1998 130,852
1999 78,359
2000 31,744
2001 3,120
------
Total $ 414,927
--------
The Company also rents various apartments under one year operating leases
expiring through June, 1997 for total monthly rentals of $2,475.
Rent expense was $229,655, $256,922, and $126,732 during 1994, 1995, and 1996
respectively.
8. Related Party Transactions:
During 1994, the Company's majority shareholder, repaid $309,550 on a promissory
note owed to the Company. This shareholder also made $474,428 in advances to the
Company during 1994, of which $300,000 was repaid with the issuance of Common
stock (see Note 6). During 1995, this shareholder advanced the Company an
additional $177,483. During 1996 $31,270 was repaid. The balances due this
shareholder at December 31, 1995, and June 30, 1996 were $351,911 and $320,641,
are unsecured and have no set interest or repayment terms. In addition, another
shareholder made a $5,000 working capital advance to the Company during 1996
(see Note 3).
During 1996 $10,000 of interest was accrued and charged to operations related to
these advances.
28
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CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
9. Recapitalization:
In June 1995, the Board of Directors of the Company entered into an agreement
and plan of share exchange with two unrelated corporations, Casinos
International, Inc. (Casinos) and Great American Resorts, Inc. The parties
agreed that the Company will be merged with and into Casinos, with Casinos
continuing its corporate existence and being the corporation surviving the share
exchange. The effective date of the agreement was January 31, 1996. At the
effective date, the Company became a wholly owned subsidiary of Casinos, and
Casinos changed its name to Classic Restaurants International, Inc. and the
existing members of the Board of Directors of Casinos resigned and were replaced
by existing members of the Board of Directors of the Company. On the effective
date, Casinos issued shares of its Casinos common stock to all non-dissenting
shareholders of the Company in exchange for all of the issued and outstanding
Company stock at an exchange rate of: one share of Casino Class A common stock
for each one share of Company Class A common stock; one share of Casino Class B
common stock for each one share of Company Class B common stock; and one share
of Casino Class A common stock for each one share of Company Class A preferred
stock. Shareholders of the Company had the right to dissent from the share
exchange provided in this agreement and to obtain payment for their shares.
Pursuant to this agreement the shareholders of the Company received 2,173,665
shares of Class A common stock and 200,000 shares of Class B common stock in
exchange for its issued and outstanding common and preferred shares. In
addition, 538,967 shares of Class A common stock are held by the prior
shareholders of Casinos. This transaction has been accounted for as a
recapitalization of the Company and the issuance of 538,967 shares of Class A
common stock for the net assets of Casinos and the forgiveness of the liability
due to Casinos by the Company.
10. Fair Value of Financial Instruments:
The fair value of the Company's cash and cash equivalents, employee advances and
other receivables, deposits, accounts payable, accrued expenses and advance
banquet deposits, approximates carrying value due to the short-term maturity of
the instruments.
It was not practicable to estimate the fair value of the asset "Due from officer
and stockholders" since these instruments are with related parties and have no
set repayment terms. Additionally, it was not practicable to estimate the fair
value of the liabilities "Notes payable and "Due to stockholders for the same
reasons. See Note 3 for the terms of these liabilities.
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CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
11. Basis of Presentation:
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, the Company has sustained substantial
operating losses in recent years. In addition, the Company has used substantial
amounts of working capital in its operations. Further, at June 30, 1996, current
liabilities exceed current assets by $976,147 and total liabilities exceed total
assets by $438,961.
These factors create an uncertainty about the Company's ability to continue as a
going concern. Management is planning to raise additional equity capital by
undertaking a private offering of its common stock under Regulation D of the
Securities Act of 1933 and raising up to $5,000,000. Management also is
currently working on increasing revenues and reducing expenses.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements, and the success of its future operations. Management
believes that actions presently being taken to raise capital and improve
operating results provide the opportunity for the Company to continue as a going
concern.
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INDEX TO BUSINESS LEASE
PROPERTY: 2200 BUILDING
LANDLORD: MARION WENTWORTH
2200 N.W. 2nd Avenue
Boca Raton, FL
TENANT: CLASSIC RESTAURANTS INTERNATIONAL, INC.
3833 South Banana River Boulevard, Suite 403
Cocoa Beach, FL 32931
ARTICLE I -DEFINITION 2
ARTICLE II -EXHIBITS 3
ARTICLE III -PREMISES 3
ARTICLE IV -COMMON AREAS 4
ARTICLE V -IMPROVEMENTS 4
ARTICLE VI -PLANS 6
ARTICLE VII -USE 6
ARTICLE VIII -TERM 7
ARTICLE IX -RENTAL COMMENCEMENT DATE 8
ARTICLE X -RENTAL 9
ARTICLE XI -SECURITY DEPOSIT 9
ARTICLE XII -ADDITIONAL RENT 10
ARTICLE XIII -SIGNS 11
ARTICLE XIV -REPAIRS AND ALTERATIONS 12
ARTICLE XV -LIENS 13
ARTICLE XVI -INDEMNITY AND INSURANCE 14
ARTICLE XVII -GENERAL RULES AND REGULATIONS 17
ARTICLE XVIII -SUBORDINATION AND ATTORNMENT
BY TENANT 18
ARTICLE XIX -RIGHTS OF LANDLORD 19
ARTICLE XX -ASSIGNMENT AND SUBLETTING 20
ARTICLE XXI -DAMAGE OR DESTRUCTION 21
ARTICLE XXII -CONDEMNATION 22
ARTICLE XXIII -DEFAULT 24
ARTICLE XXIV -NOTICES 26
ARTICLE XXV -MISCELLANEOUS 26
EXHIBIT "A" -RADON 33
EXHIBIT "B" -GUARANTY 34
ADDENDUM "A" -OPTION TO PURCHASE 35
ADDENDUM "B" -OPTION TO RENEW 36
1
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LEASE
THIS INDENTURE OF LEASE MADE AND ENTERED INTO AT Palm
Beach, Florida, this 7TH day of OCTOBER, 1992, by and between
MARION WENTWORTH, hereinafter called "LANDLORD", and CLASSIC
RESTAURANTS INTERNATIONAL, INC., a Florida corporation,
hereinafter called "TENANT", whose mailing address is: 3833 SOUTH
BANANA RIVER BOULEVARD, SUITE 403, COCOA BEACH, FL 32931.
W I T N E S S E T H
Section 1.1 - DEFINED TERMS
Wherever used in this Lease, the following terms shall
be construed to mean as follows:
(a) "PROPERTY" shall mean those buildings, land and
common areas which are owned by the landlord and known as the
2200 Property located at 2200 N.W. 2nd Avenue, Boca Raton,
Florida, consisting of a two story multi use facility.
(b) "PREMISES" shall mean the entire first floor of the
building.
(c) "COMMON AREAS" shall mean all that vacant, landscape
or improved area in said Property provided for by the Landlord
for the common or joint use and benefit of the tenants and
occupants of the Property, their employees, agents, servants,
customers, and other invitees, including without limitation, the
parking areas, driveways, aisles, sidewalks, loading docks,
passageways, stairs, ramp, and other common service areas subject
to the conditions hereinafter set forth.
(d) "LEASE YEAR" as used herein shall mean each
consecutive twelve-month period beginning with the 1ST day of
DECEMBER, 1992, and each anniversary date thereof. The First
Lease Year shall also include any period of time for which Tenant
is obligated to pay rent between the Rental Commencement Date and
the commencement date of the Term. Said period of time shall be
known as the "FIRST PARTIAL LEASE YEAR."
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ARTICLE II
EXHIBITS
Section 2.1 - EXHIBITS
The following exhibits are attached hereto and made a
part of this Lease:
EXHIBIT "A" - RADON GAS
EXHIBIT "B" - GUARANTY
ADDENDUM "A" - OPTION TO PURCHASE
ADDENDUM "B" - OPTION TO RENEW [check mark]
ARTICLE III
PREMISES
Section 3.1 - PREMISES
In consideration of the payment of all Rentals and the
performance of the covenants as hereinafter set forth, the
Landlord demises unto Tenant, and Tenant leases form Landlord,
subject to all conditions, easements and encumbrances of record,
for the Term and upon the terms and conditions set forth in this
Lease, the Premises described as follows:
(a) Address 2200 N.W. 2ND AVENUE, BOCA RATON, FLORIDA
(b) The entire first floor of the building containing
approximately 8,500 square feet plus Patio area of approximately [check mark]
2,000 square feet.
Section 3.2 - LANDLORD'S RESERVATION
Landlord reserves to itself the roof and exterior walls
of the building containing the Premises and of the Premises, and
reserves the right to place, maintain, repair and replace utility
lines, pipes, ducts, conduits, wires and tunneling and the like
in, over, under and through the Premises as are reasonably
necessary or advisable for the servicing of the Premises or of
other portions of the Property development in locations which
will not materially interfere with Tenant's use of its Premises.
3
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ARTICLE IV
COMMON AREAS
Section 4.1 - USE COMMON AREAS
(a) Landlord grants to Tenant and its agents, employees
and customers, a non-exclusive licence to use the common areas in
common with other tenants, their agents, employees and customers
during the Term of this Lease and any renewal period thereof,
subject to the exclusive control and management thereof at all
times by Landlord and subject further to the rights of Landlord
as set forth in Section 4.2 herein.
(b) No tenant, organization, individual, or any other
entity shall use the Common Areas for any other purpose than
herein designated, nor shall anyone have the right to authorize
the use of any of the Common Areas except the Landlord herein.
Section 4.2 - MANAGEMENT AND OPERATION OF COMMON AREAS
(a) Landlord will operate and maintain or will cause to
be operated and maintained, the Common Areas in a manner deemed
by Landlord to be reasonable and appropriate and in the best
interest of the Property. Landlord will have the right to (1)
establish, modify and enforce reasonable and uniform rules and
regulations with respect to the Common Areas; (2) to enter into,
modify and terminate easements and other agreements pertaining to
the use and maintenance of the parking areas and other Common
Areas; (3) to provide for employee parking and formulate rules
and regulations for the same; (4) to close all or any portion of
said parking areas or other Common Areas to such extent as may in
the opinion of the Landlord be necessary to prevent a dedication
thereof or the accrual of any right to any person or to the
public thereof; (5) to close temporarily any or all portions of
the Common Areas for repair or refurbishing; (6) to discourage
non-customer parking; (7) to do such other acts in and to said
areas and improvements as in the exercise of good business
management, Landlord shall deem to be advisable.
(b) All expenses in connection with the said maintenance
and operation of the Common Areas shall be charged to and paid
for by the Landlord.
ARTICLE V
IMPROVEMENTS
Section 5.1 - TENANT'S IMPROVEMENT
(a) Tenant shall at its own expense:
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(i) Construct the remainder of said Premises
and installations therein as shown in Tenant's Plan and/or
Specifications as approved by the Landlord, or Landlord's
Architect. Any installation to be made or work to be performed by
the Tenant on or for the Premises shall be first approved in
writing by the Landlord prior to commencement of any work by
Tenant.
(ii) Secure all permits and licenses necessary
for the construction of any its installations and the prosecution
of its work, and Tenant shall comply with all laws and
regulations relating to the conduct of said work. However, in the
event that it is necessary for the Landlord to secure such [check mark]
building or remodeling permits, Landlord shall do the same with [marking]
all costs to be borne by Tenant.
(iii) Provide and pay for all water, sewer,
electricity, heat and other utility used by Tenant or its agents
for construction work on its Premises.
(iv) From the commencement of construction to
the termination thereof, Tenant shall obtain on behalf of itself,
or any of its contractors or subcontractors, all necessary
insurance protection including, but not limited to, Builder's
Risk Insurance in an amount equal to the contract price of
Tenant's improvements, Workmen's Compensation, as required by
State statute, Employers Liability Insurance, in the amount of
$100,000.00, or any other employee benefit insurance required by
State or Federal law. The Landlord shall be named a party
beneficiary in any of said policies.
(v) All materials, equipment and appliances
used in construction and all trade fixtures installed shall be
new and first quality items.
Section 5.2 - TENANT'S TRADE FIXTURES
All trade fixtures, signs and apparatus (as
distinguished from leasehold improvements) owned by tenants and
installed in the Premises shall remain the property of Tenant and
shall be removable at any time, including upon the expiration of
the term; provided Tenant shall not at such time be in default of
any terms or covenants of this Lease; and provided further that
Tenant shall repair any damage to the Premises caused by the
removal of said fixtures. If Tenant is in default, Landlord shall
have the benefit of any applicable lien on Tenant's property
located in or on the Premises as may be permitted under the laws
of Florida, and in the event such lien is asserted by Landlord in
any manner or by operation of law, Tenant shall not remove or
permit the removal of said property until the lien has been
removed and all defaults have been cured.Any of Tenant's property
not removed by Tenant may be
5
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construed by Landlord as abandoned by Tenant or Landlord may
order Tenant to remove said items or have the same removed at
Tenant's expense.
Section 5.3 - CONSTRUCTION LIEN
Nothing in this Lease contained shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied by interference or otherwise, to any
contractor, subcontractor, laborer or materialman for the
specific performance of any labor or the furnishing of any
materials or equipment for any specific improvement, alteration
to or repair of the Premises or any part thereof, nor as giving
Tenant any right, power or authority to contract for or permit
the rendering of any services or the furnishing of any materials
on behalf of the Landlord that would give arise to the filing of
any lien against the Premises or the Property.
ARTICLE VI
SUBMISSION OF PLANS
Tenant shall prepare, at its sole cost and expense,
complete plans and specifications for all of Tenant's work and
shall submit such Plans and Specification to Landlord or
Landlord's designated representative for approval prior to
commencement of any work.
ARTICLE VII
USE
Section 7.1 - USE
Tenant shall use and occupy the Premises solely for
restaurant, lounge, supper club, and\or dinner theater.
Section 7.2 - PROHIBITIONS ON USE
(a) Tenant shall not use or permit or suffer the
Premises, or any part thereof, to be used by anyone else or for
any other business or purpose than that specifically defined and
permitted by this Section.
(b) Tenant shall not permit the Premises to be used in
any way which will injure the reputation of, be a nuisance,
annoyance, or do damage to, the other tenants of the Property or
the Landlord, including, without limitation, the sale of material
and merchandise objectional to Landlord and the use of audio
devices, machinery and equipment creating noise or the committing
of acts which will disturb, impair or interfere with the use and
enjoyment of the other tenants of their respective Premises
within the Property.
6
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(c) Tenant agrees not to use or allow said Premises to
be used for any auction, fire, bankruptcy or "going out of
business" sales therein.
(d) Tenant shall not use the Premises in violation of
any State law, County or City Ordinances.
Section 7.3 - HOURS OF OPERATION
Tenant will operate the business during the normal hours
of Dinner Theater operation in accordance with City, County, and [check mark]
State laws governing such operation. The business will operate at
least five days each week based on seasonal trends.
Section 7.4 - MANNER OF OPERATION OF BUSINESS
(a) Tenant agrees that the above business is to be
conducted in a reputable manner, in keeping with good practices
as established in the trade. Tenant shall keep upon said Premises
an adequate staff of employees and a full and complete stock of
merchandise during business hours throughout the Term of this
Lease so as to insure a maximum volume of business in and from
its Premises.
(b) Tenant agrees to assume full responsibility at its
own cost to keep and maintain the Premises neat, clean, in proper
repair and decor, and free from waste and offensive odors, and in
an orderly and sanitary condition, free of vermin, rodents, bugs
and other pests. Tenant shall daily insure that the parking lot
and common areas are free of trash and\or debris CAUSED BY [check mark]
TENANT'S CUSTOMERS at Tenant's expense. If Tenant fails to
properly maintain the parking lot, Landlord shall have the right
to engage said service as is reasonably required to insure
compliance with the cost to be reimbursed by Tenant as Additional
Rent.
ARTICLE VIII
TERM
Section 8.1 - TERM
The Term of this lease shall be for a period of FIVE (5)
years, commencing on DECEMBER 1, 1992, and expiring on NOVEMBER [check mark]
31, 1997.
Section 8.2 - HOLDING OVER
If, at the expiration of the Term of this Lease or any
renewal thereof, Tenant continues to occupy the Premises with or
without the Landlord's consent, the tenancy under this Lease
shall become month-to-month terminable by either party on thirty
(30) days written notice. The Tenant shall be subject to all the
conditions
7
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of the previous Lease excepting the Term thereof, and shall be
further subject to any changes which Landlord has given Tenant,
in writing, during any thirty (30) day period for the following
thirty (30) day period.
Section 8.3 - TERMINATION
(a) This Lease shall terminate at the end of the Term
without the necessity of any notice from either Landlord or
Tenant to terminate the same, and Tenant hereby waives notice to
vacate or quit the Premises and agrees that Landlord shall be
entitled to the benefit of all provisions under this Lease
respecting the summary recovery of possession of the Premises
from a tenant holding over to the same extent as if statutory
notice has been given.
(b) For the period of three (3) months prior to the
Term, Landlord shall have the right to display on the exterior of
the Premises the customary sign "For Rent" and during such
period, Landlord may show the Premises and all parts thereof to
prospective Tenants during normal business hours.
(c) Tenant shall deliver and surrender to Landlord
possession of the Premises upon the expiration of this Lease or
its termination in any way, in as good condition and repair as
the same shall be at the commencement of said Lease, except
ordinary wear and tear and casualty loss covered by insurance
proceeds.
(d) The Tenant shall have no right to quit the Premises,
cease to operate its business, cancel or terminate this Lease
except as said right is expressly granted to the Tenant herein.
(e) This Lease shall terminate in the event that the
business operated by Tenant shall be closed for a period of [check mark]
sixteen (16) consecutive days, whereupon such continuous closing
shall be deemed an abandonment of the Premises.
ARTICLE IX
RENTAL COMMENCEMENT DATE
Section 9.1 - COMMENCEMENT DATE
(a) The date upon which the Tenant shall be obligated to
commence the payment of rent and all additional charges shall be
known as the "Rental Commencement Date" and such "Rental
Commencement Date" shall be November 15, 1992.
(b) Should Tenant's obligation to pay rent commence on a
day other than the first day of a calendar month, the Rental
Commencement Date for the purpose of this Section shall be the
first day of the calendar month next following and the Tenant
shall be liable for rent and all other charges due for said
previous
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partial month on a Per Diem basis. Payment of said rent and
charges shall be due and payable on the Rental Commencement Date.
ARTICLE X
RENTAL
Section 10.1 - FIXED RENT
(a) Tenant hereby covenants and agrees to pay to the
Landlord, without deduction or set-off and without demand, at its
office or such other place as Landlord may, from time to time,
designate, as Fixed Rent for the Premises, the sum of $ 84,000.00
per annum, payable in equal monthly installments of $ 7,000.00
(plus 1\24th of the Real Estate Taxes, 1\2 of the electricity,
1\2 of Waste Disposal, and 1\2 of water as hereinafter set
forth).
(b) A late charge of ten (10%) of the payment due will
be payable by Tenant on all payments received later that ten (10)
days after the payment is due. [check mark]
(c) Should any government taxing authority acting under
any present or future law, ordinance, or regulation, levy,
assess, or impose a tax excise and/or assessment (other than an
income or franchise tax) upon the Tenant for rentals payable by
Tenant to Landlord, either by way of substitution for or in
addition to any existing tax on land and buildings or otherwise,
Tenant shall be responsible for and shall pay such tax, excise
and/or assessment, or shall reimburse the Landlord for the amount
thereof, as the case may be. In addition, Tenant shall pay any
tax now or hereafter levied on said rent such as the presently
existing sales tax.
(d) The Landlord by execution hereof, hereby
acknowledges the receipt of the sum of Twenty Thousand Three
Hundred Two and 60\100 Dollars ($20,302.60) plus the sum of Seven
Thousand and no\100 Dollars ($7,000.00) as set forth for the
Security Deposit in Section 11.1 below which represents the first
and last months' rents along with the rent for the period of
November 15, 1992 to November 30, 1992 together with one and one
half (1 1\2) months of real estate taxes ($1,752.60).
ARTICLE XI
SECURITY DEPOSIT
Section 11.1 - DEPOSIT
Tenant, concurrently with the execution of this Lease,
has deposited with Landlord the sum of $7,000.00 receipt of which
is hereby acknowledged by the Landlord, as a "Security Deposit".
Said deposit shall be held by Landlord without liability for
interest
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as security for the faithful performance by Tenant of all the
terms of this Lease.
Section 11.2 - USE AND RETURN OF DEPOSIT
If any of the rents herein reserved or any other sum
payable by Tenant to Landlord shall be overdue and unpaid or
should Landlord make payment on behalf of the Tenant or Tenant
shall fail to perform any of the terms of this Lease, then
Landlord may, at its option and without prejudice to any other
remedy which Landlord may have on account thereof, appropriate
and apply said entire deposit or so much thereof as may be
necessary to compensate Landlord toward the payment of Fixed Rent
or loss or damage sustained by Landlord due to such breach on the
part of Tenant and Tenant shall forthwith upon demand restore
said security to the original sum deposited. Should Tenant comply
with all of said terms and promptly pay all of the rentals as
they fall due and all other sums payable by Tenant to Landlord,
said deposit shall be returned in full to Tenant at the end of
the Term.
Section 11-3 - BANKRUPTCY
In the event of Bankruptcy or other debtor-creditor
proceedings against Tenant such security deposit shall be deemed
to be applied first to the payment of rent and other charges due
Landlord for all periods prior to filling of such proceedings.
Section 11.4 - TRANSFER OF DEPOSIT
Landlord may deliver the funds deposited hereunto by
Tenant to the purchaser of Landlord's interest in the Premises in
the event that such interest be sold and thereupon shall be
discharged from any further liability with respect to such
deposit. This provision shall also apply to any subsequent
transferees.
ARTICLE XII
ADDITIONAL RENT
Section 12.1 - STATUS OF CHARGES
In addition to all rentals provided for by this Lease,
the Tenant agrees to pay to Landlord as hereinafter provided, the
additional charges as described in this Section for the purposes
as hereinafter set forth and shall be subject to all provisions
of this Lease and of law as to default in the payment of rent.
Section 12.2 - UTILITIES AND OTHER OPERATING CHARGES
(a) Tenant shall pay one half of the electricity, water,
trash removal and one hundred percent (100%) of any additional
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trash pickups on a monthly basis. Landlord shall invoice Tenant
for such sums. [check mark]
Section 12.3 - DAMAGES
The Landlord shall not be liable to Tenant in damages or
otherwise if any one or more of said utility services or
obligations hereunder is interrupted or terminated because of
necessary repairs, installations, construction and expansion, [check mark]
[notation]5.1 or by reason of governmental regulation, statute,
ordinance, restriction or decree, or any other cause beyond
Landlord's reasonable control. No such interruption or
termination of utility service shall relieve Tenant from any of
its obligations under this Lease.
Section 12.4 - REAL ESTATE TAXES
(a) For each Calendar Year or part thereof, during the
Term of this Lease, or any renewal term thereof, Tenant shall pay
to Landlord one half (1\2) of the real estate taxes and
assessments levied and assessed for any such calendar year upon
the, building, and all other improvements (Real Estate Taxes) of
the Property as previously defined. Such payments shall be made
monthly representing 1\24th of the existing Real Estate Taxes
assessed.
(b) Within forty-five (45) days after the end of each
Calendar Year, the Landlord shall furnish Tenant with a written
statement of the actual amount of said Real Estate Taxes and of
Tenant's proportionate share thereof for the preceding Calendar
Year. Landlord shall, upon request of Tenant, furnish to Tenant a
copy of the Real Estate Tax bill upon which such statement is
based. Within fifteen (15) days after receipt of said statement
by the Tenant, the Tenant shall pay to the Landlord any
deficiency due the Landlord.
ARTICLE XIII
SIGNS
Section 13.1 - TENANT'S OBLIGATIONS
Tenant shall only erect such signs that have been
reasonably approved by the Landlord and shall satisfy the
requirements of all governmental authorities. Said signs shall be
maintained in good condition by the Tenant. Tenant shall obtain
all permits and licenses for its sign. Tenant shall not exhibit
or affix any other type of sign, decal, advertisement, notice,
other writing, awning, antenna or other projection to or on the
roof or the outside walls or windows of the Premises or the
building of which the Premises are a part, without Landlord's
written approval.
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ARTICLE XIV
REPAIRS AND ALTERATIONS
Section 14.1 - REPAIRS BY LANDLORD
(a) Landlord shall keep the roof, structural portions,
the exterior of the Premises, parking lot and other Common Areas,
in good and tenable condition and repair during the Term of this
Lease. However, if the need for such repair is directly or
indirectly attributable to or results from the Tenant or its
agents operation or acts, or is Tenant's responsibility, then, in
such case, Tenant does hereby agree to and shall reimburse
Landlord for all costs and expenses incurred by Landlord in
respect to such repairs.
(b) As used in this Section, the expression "structural
portion and exteriors of the Premises" shall not be deemed to
include store front or store fronts, plate glass, window cases or
window frames, doors or door frames. It is understood and agreed
that Landlord shall be under no obligation to make any repairs,
alterations, renewals, replacements or improvements to and upon
the Premises or the mechanical equipment exclusively serving the
Premises at any time except as this Lease expressly provides.
(c) Landlord shall not in any way be liable to Tenant
for failure to make repairs as herein specifically required of
Landlord unless Tenant has previously notified Landlord in
writing of the need for such repairs and Landlord has failed to
commence said repairs within a reasonable period of time,
following receipt of the Tenant's written notification, and has
not diligently pursued said repairs to completion.
(d) The costs of maintaining the HVAC system for the
Premises shall be borne equally by the Landlord and the Tenant.
Section 14.2 - REPAIRS BY TENANT
(a) It shall be Tenant's sole responsibility, at its own
expense, to keep and maintain the interior of its Premises in
good condition and repair. All repairs to the Premises or any
installation, equipment or facilities therein or thereabout,
other than those repairs required to be made by Landlord pursuant
to Section 15.1, shall be made by Tenant. Said repairs shall
include, but not be limited to, all necessary painting and
decorating, the maintenance, repair and replacement of the
heating, electrical and air conditioning systems, plumbing and
sewer systems, under the slab and elsewhere which exclusively
serves the subject Premises, store fronts, window and other
glass, entrance and service doors and window frames, and any
other mechanical or operational installations, exclusively
serving the Premises.
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(b) All repairs and replacements required as a result of
damage caused by fire and other casualty covered by the insurance
of the parties hereto shall be made by the respective parties.
All such repairs and replacements shall be in quality and class
equal to the original work or item.
(c) Notwithstanding anything contained herein, the
Tenant shall, at Tenant's sole cost, repair or replace all glass
contained in Tenant's Premises, including but not limited to,
glass in doors, storefronts and windows.
Section 14.3 - ALTERATIONS AND REMODELING
(a) The Tenant, at its own expense, shall have the right
during the Term of this Lease, or any renewal thereof, to make
such interior alterations, changes and improvements to the
Premises as the Tenant may deem necessary for its use and
business, provided, however, that any major building or changes
in the heating, ventilating and air conditioning systems shall
not be made without Landlord's consent and such consent shall not
be unreasonably delayed or withheld. All such alterations,
changes and improvements, except trade fixtures, shall become the
property of the Landlord upon installation and shall remain upon
and be surrendered with the Premises upon termination of this
Lease.
(b) Tenant further agrees not to make any alterations,
additions or changes to any storefront or sign, the exterior
walls or roof of the Premises, nor shall Tenant erect any
mezzanine or increase the size of the same if one is initially
constructed or increase the size of the Premises unless and until
the written consent of Landlord shall first have been obtained,
said consent shall not be unreasonably delayed or withheld.
Tenant shall be directly responsible for any and all damages
resulting from any violation of the provisions of this Section.
ARTICLE XV
LIENS
Section 15.1 - INDEMNIFICATION BY TENANT
Tenant shall indemnify and save harmless the Landlord
against all loss, liability, costs, attorney's fees, damages or
interest charges as a result of any Mechanic's Lien or any other
lien caused to be filed against the Property, the Premises or
Tenant's Leasehold estate herein as a result of acts or omissions [check mark]
of the Tenant or its agents, contractors and employees, and the
Tenant shall, within thirty (30) days of the filing of any such
Lien and written notice given to Tenant, remove, pay or cancel
said Lien or secure the payment of any such Lien or Liens by bond
or other acceptable security.
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Section 15.2 - TENANT'S RIGHT OF CONTEST
Tenant shall have the right at all times and at its own
expense to contest and defend on behalf of the Tenant or Landlord
any action involving the collection, validity or removal of such
Lien or Liens, upon giving adequate security to the Landlord for
payment of such Lien.
ARTICLE XVI
INDEMNITY AND INSURANCE
Section 16.1 - MUTUAL INDEMNIFICATION
Landlord and Tenant shall indemnify and save each other
harmless from legal action, damages, loss, liability and any
other expense in connection with loss of life, bodily or personal
injury or property damage arising from or out of the use or
occupancy of their respective Premises or the Property occasioned
wholly or in part by any contractors, employees or persons
claiming through them.
Section 16.2 - TENANT'S INSURANCE
Tenant covenants and agrees that from and after the date
of delivery of the Premises from Landlord to Tenant, and during
the term of this Lease or any renewal thereof, Tenant will carry
and maintain, at its sole cost and expense, the following types
of insurance, in the amounts specified and in the form
hereinafter provided for:
(a) PUBLIC LIABILITY INSURANCE - Tenant shall keep in
full force and effect Public Liability Insurance and Products
Liability Insurance in respect to the use and occupation of its
Premises, naming both Landlord and Tenant as insured in the
amount of $500,000.00 per person and $1,000,000.00 per occurrence
on account of personal injury to or death of one or more persons
and $100,000.00 on account of damage to property, and shall
deposit a copy of the policy or policies of such insurance, or a
certificate or certificates thereof, with Landlord. [check mark]
(b) TENANT'S IMPROVEMENTS AND BETTERMENTS - Tenant shall
at all times during the Term hereof maintain in full force and
effect, All Risk Coverage policy or policies of insurance naming
both Landlord and Tenant as insured parties as their interests
shall appear, covering all of Tenant's improvements and
betterments in Tenant's Premises now existing or to be added, to
the extent of ninety percent (90%) of their full replacement
costs as updated from time to time during the Term of this Lease.
In the event that Landlord has made a contribution to Tenant's
improvements and betterments, then Landlord's insured interest
shall not be less than the amount of said contribution.
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Said policy or policies shall provide protection against
any peril included within the classification "All Risk Coverage",
together with insurance coverage against sprinkler damage (if the
Premises are sprinklered), vandalism and malicious mischief.
The proceeds of Tenant's policy to the extent of the
cost of any damage or loss to the Premises shall be used for the
repair and replacement of the property damaged or destroyed.
Landlord shall have the right to approve the plans and
specifications. In the event Tenant's failure to commence, within
fourteen (14) days after Landlord's approval of the plans for
repair, and to diligently proceed to reconstruct or repair its
portion of the damaged or destroyed Premises to its former
condition prior to said casualty, then Landlord shall have the
full control of the insurance proceeds and has a right to make
all necessary repairs and if the proceeds are not sufficient to
cover the repairs, the Tenant shall be liable for all additional
costs.
(c) TENANT ALTERATIONS - In the event that Tenant shall
make alterations, additions or improvements to the Premises,
Tenant agrees to keep and maintain such All Risk Insurance
necessary to cover any such alteration, addition or improvement.
It is expressly understood and agreed that none of such
alterations, additions or improvements shall be insured by
Landlord under Landlord's insurance nor shall Landlord be
required under any provisions for reconstruction of the Premises
to either reinstall, repair or replace any such alterations,
improvements or additions.
(d) ADDITIONAL HAZARDS - Tenant agrees it will not keep,
use, sell or offer for sale in or upon the Premises any article
which may be prohibited by the Standard Form of All Risk
Insurance Policy. IF TENANT'S BUSINESS IS RESPONSIBLE FOR ANY [check mark]
INCREASE in premiums for All Risk Coverage Insurance, Tenant
agrees to pay any increase that may be charged during the Term of
this Lease or renewal period thereof on the amount of any
Insurance which may be carried by the Landlord on said Premises.
Said additional premiums shall be payable by Tenant to Landlord
upon ten (10) days written notice to Tenant.
(e) Tenant may maintain any of its required Insurance
under Blanket Policies of Insurance covering said Premises and
any other Premises of Tenant, or companies affiliated with
Tenant.
(f) The above mentioned Insurance Certifications are to
be provided by Tenant, for a period of not less than one (1)
year, and that thirty (30) days prior to the expiration of any
said policy of Insurance, the Tenant will deliver to the Landlord
notice of any change or cancellation or renewal or new policy to
take the place of the policy expiring, with the further
understanding that should the Tenant fail to furnish said notice
or policies as is provided in this Lease, and at the times herein
provided, the Landlord may
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obtain such insurance and the premiums on such insurance shall be
paid by the Tenant to the Landlord upon demand. Tenant shall
notify Landlord forthwith in the event of any damage to persons
or property occurring on the Premises from fire, accident, or any
other casualty. The deductible portions of Insurance shall be
first approved by Landlord as to the "amount of deductible"
insurance carried by the Tenant.
Section 16.3 - LANDLORD'S INSURANCE
Landlord covenants and agrees that from and after the
date of delivery of the Premises, from Landlord to Tenant, and
during the term of this Lease or any renewal thereof, Landlord
will carry and maintain, subject to Section 16.3 (c) hereof, the
following types of insurance, in the amounts specified and in the
form hereinafter provided for.
(a) PUBLIC LIABILITY INSURANCE - Landlord shall keep and
maintain in full force and effect Public Liability Insurance with
minimum limits of $500,000.00 per person and $1,000,000.00 per
occurrence on account of bodily injury to or death of one or more
persons and $100,000.00 on account of damage to property.
(b) ALL RISK COVERAGE - Landlord shall, at all times,
keep and maintain in full force and effect All Risk Coverage
policy or policies of insurance covering the roof, structural
portions and perimeter walls of the Premises (excluding Tenant's
fixtures, merchandise, personal property, wall coverings and
betterments and any other item included in Tenant's insurance) in
an amount not less than ninety percent (90%) of full replacement
cost (exclusive of the cost of excavations, foundations and
footings) updated from time to time during the term of this Lease
or the amount of such insurance which Landlord's mortgage lender
may require Landlord to maintain, whichever is the greater,
providing protection against any peril generally included within
the classification "All Risk Coverage", together with insurance
against sprinkler damage, (if Premises are sprinklered),
vandalism and malicious mischief.
(c) Landlord's obligation to carry the insurance
provided for herein may be brought with the coverage of a
so-called blanket policy or policies of insurance carried and
maintained by Landlord, provided that the coverage afforded will
not be reduced or diminished by reason of the use of such blanket
policy of insurance. In the event the insurance rates shall
increases during the term hereof, Tenant shall pay fifty percent
(50%) of any such increase. exception: IF INCREASE CAUSED By
UPSTAIRS TENANTS, LESSEE SHALL NOT BE LIABLE.
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Section 16.4 - WAIVER OF SUBROGATION
(a) Neither party shall be liable to the other party or
to any insurance company (by way of subrogation or otherwise)
insuring the other party for any loss or damage to any building,
structure, or other tangible property even though such loss and
damage may have been occasioned by the negligence of such party,
its agents or employees, except to the extent of the lower of any
deductible amount, if any, of the All Risk Casualty Insurance
policy required of either of the parties herein.
(b) If, by reason of the foregoing, either party shall
be unable to obtain any such insurance, such waiver shall be
deemed not to have been made by such party and, provided further,
that if either party shall be unable to obtain such insurance
without the payment of any additional premium therefore, then,
unless the party claiming the benefit of such waiver shall agree
to pay such party for the cost of such additional premium within
thirty (30) days after notice setting forth such requirement and
the amount of the additional premium, such waiver shall be of no
force and effect between such parties.
(c) This waiver shall be in full force and effect only
with respect to loss or damage occurring during such times as
each party's respective policies and the right to remain insured
shall not be invalidated by this waiver.
Section 16.5 - LANDLORD NOT RESPONSIBLE FOR ACTS OF OTHERS
Landlord shall not be responsible or liable to Tenant,
or those claiming by, through or under Tenant, for any loss or
damage to their person or property resulting from the acts or
omissions of persons occupying space adjoining or adjacent to the
Premises or connected to the Premises or any other part of the
Property caused by the following acts, which include, but are not
limited to, breaking, bursting, stoppage or leaking of electrical
cables and wires, water, gas, sewer or steam pipes.
ARTICLE XVII
GENERAL RULES AND REGULATIONS
Section 17.1 - UNIFORMITY
Tenant, as a covenant and condition of this Lease agrees
to comply with and perform the rules and regulations of the
Landlord. Furthermore, Tenant agrees that Landlord has the right
at any time to change and/or impose reasonable rules and
regulations governing the conduct desirable to protect the
general welfare and safety of the people, property, and business
within the Property. In addition, the Tenant agrees to comply
with the rules and regulations set forth herein.
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Section 17.2 - EXTRA HAZARDOUS CONDITIONS
Tenant agrees not to use the Premises in a manner which
will create extra hazardous conditions nor use said Premises in
violation of any law, ordinance or regulation.
Section 17.3 - OBSTRUCTION OF PASSAGEWAYS
Tenant agrees not to obstruct the passageways,
driveways, approachways, walks, roadways, exits and entries in,
to, from and through the Common Areas and all other parts of the
Property used in common with other tenants.
ARTICLE XVIII
SUBORDINATION AND ATTORNMENT BY TENANT
Section 18.1 - SUBORDINATION BY TENANT TO THIRD PARTIES
Tenant agrees that upon the request of Landlord, in
writing, it will subordinate this Lease and the lien hereof to
any present or future ground lease or mortgage to a bank,
insurance company, similar financial institution or other entity,
public or private, that may become necessary or desirable from
time to time irrespective of the time of execution of said Lease
or the time of recording of any such mortgage or mortgages.
Tenant shall subordinate this Lease, provided that the holder of
any such mortgage or ground lease, shall enter into an agreement
with Tenant in recordable form, that in the event of foreclosure
or other right asserted under the mortgage or ground lease by the
holder or any assignee thereof, this Lease and the right of
Tenant hereunder shall continue in full force and effect and
shall not be terminated or disturbed unless the Tenant is in
default under this Lease.
Section 18.2 - ATTORNMENT TO TENANT
(a) Tenant agrees that if the mortgagee or the holder of
any ground lease or any person claiming under said Mortgage or
ground lease, shall succeed to the interest of Landlord in this
Lease, the Tenant shall recognize and attorn to said mortgage or
person as Landlord under the terms of this Lease.
(b) Tenant agrees that it will, upon the request of
Landlord, execute, acknowledge and deliver any and all
instruments necessary or desirable to give effect or notice of
such subordination and failure of the Tenant to execute any such
document or instrument on demand shall constitute a default by
Tenant under the terms of this Lease. The word "mortgage" as used
herein includes mortgages, deeds of trust or other similar
instruments and modifications,
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consolidations, extensions, renewals, replacements and
substitutes thereof.
Section 18.3 - LANDLORD AS ATTORNEY-IN-FACT FOR TENANT
If Tenant within ten (10) days after submission of such
instrument fails to execute the same, Landlord is hereby
authorized to execute the same as attorney-in-fact for Tenant.
ARTICLE XIX
RIGHTS OF LANDLORD
Section 19.1 - LANDLORD'S RIGHT TO REPAIR
Landlord, or its authorized agents, after reasonable
written notice to Tenant, may go upon and inspect the Premises or
any portion of the Property, and, if necessary shall, after ten
(10) days written notice to Tenant, make those needed repairs
which are the Tenant's obligation to perform and which Tenant has
failed to do. Said work performed shall be chargeable to the
Tenant and shall be due and payable forthwith upon notice of said
costs.
Section 19.2 - LANDLORD'S RIGHT TO AFFIX SIGN
Landlord has a right to install or place upon, or affix
to the roof and exterior walls of the Premises, equipment,
non-competitive signs, displays, antennas and other object or
structure of any kind, provided the same shall not materially
impair the structural integrity of the building or interfere with
Tenant's occupancy.
Section 19.3 - LANDLORD'S RIGHT TO MAKE PAYMENT ON
BEHALF OF TENANT
Landlord has a right to make payments on behalf of the
Tenant where Tenant defaults in its payments or obligations under
the terms of this Lease. Said payments by the Landlord shall be
considered as an "Additional Charge" and be payable on demand.
ARTICLE XX
ASSIGNMENT AND SUBLETTING
Section 20.1 - LANDLORD'S CONSENT REQUIRED
(a) The Tenant, Tenant's legal representatives or
successors in interest to any part or the whole of the Premises,
shall not mortgage, pledge, encumber, franchise, assign or in any
manner transfer this Lease, voluntarily or involuntarily, by
operation of law or otherwise., nor shall the Tenant permit the
Premises or any part thereof to be sublet, used or occupied for
the conduct of any business by any third person or business
entity, or for any purpose
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other than is herein authorized, without the prior written
consent of the Landlord.
(b) It is expressly agreed between the parties hereto
that as a condition to granting any such consent, if such consent
is given, the assignee or subtenant shall agree to pay as Fixed
Rent for the Premises, any increase in the prevailing market
rental per square foot for similar Premises in commercial
shopping centers over the Fixed Rent set forth in this Lease.
(c) Any consent by Landlord to any assignment or
subletting, or other operation by a concessionaire, or licensee,
shall not constitute a waiver of the necessity for such consent
under any subsequent assignment of subletting or operation by a
concessionaire or licensee.
(d) Reference anywhere else in this Lease to an assignee
or subtenant shall not be considered as a consent by the Landlord
to such assignment or subletting nor as a waiver against the same
except as specifically permitted in this Section.
Section 20.2 - INSOLVENCY PROCEEDINGS
In the event an assignment of the Premises is caused
through the operation of law due to Tenant's voluntary or
involuntary entering into any type of insolvency proceedings
under the U.S. Bankruptcy Code, said assignment shall be subject
to any and all conditions contained in Section 365 of said Code
or any other section pertaining to the termination, assumption,
assignment and rejection of executory contracts for leases.
Section 20.3 - TRANSFER OF CORPORATE SHARES
A change in the control of a Tenant, other than a
corporation which is listed on a national security exchange as
defined in the Securities Exchange Act of 1934 and as amended,
whether said change of control shall consist of the transfer of
stocks, the sale of assets or any agreement creating a right in
anyone other than the original shareholders of said corporate
Tenant, excepting to members of the immediate family of said
original shareholders, to conduct the Tenant's business, without
the prior consent, in writing, of Landlord to said change in
control or operation, shall constitute an attempted assignment or
subletting in violation of this Section and shall be null and
void and of no effect. Such consent shall not be unreasonably
withheld and no changes shall be made in the Lease until the end
of Term.
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Section 20.4 - TRANSFER OF OTHER BUSINESS INTERESTS
If Tenant is a partnership, general or limited, or any
other type of business entity other than a corporation, and if at
any time during the term hereof of any extension or renewal [check mark]
thereof, the person or persons who at the time of the execution [markings]
of this Lease owns or own the general partners' interest, such
cessation of ownership shall constitute an assignment of this
Lease for all purposes of this Section (except as a result of
transfers by bequests or inheritance).
Section 20.5 - ACCEPTANCE OF RENT BY LANDLORD
If this Lease be assigned, or if the Premises, or any
part thereof, be subleased or occupied by anybody other than
Tenant with or without the Landlord's consent, Landlord may
collect from assignee, subtenant or occupant, any rent or other
charges payable by Tenant under this Lease and apply the amount
collected to the rent and other charges herein reserved, but such
collection by Landlord shall not be deemed a waiver of the
provisions of this Lease, nor an acceptance of this assignee,
subtenant or occupant, as a Tenant of the Premises.
Section 20.6 - NO RELEASE OF TENANT'S LIABILITY
No assignment or subletting or any other transfer by
Tenant, either with or without Landlord's consent, required or
otherwise, during the term of this Lease or any renewal period
thereafter shall release the Tenant from any liability under the
terms of this Lease nor shall the Tenant be relieved of the
obligation of performing any of the terms, covenants and
conditions of this Lease.
ARTICLE XXI
DAMAGE OR DESTRUCTION
Section 21.1 - LANDLORD'S OBLIGATION TO REPAIR AND
RECONSTRUCT
(a) If the Premises shall be damaged by fire or other
casualty insurable under standard extended coverage insurance but
are thereby rendered untenable in whole or in part, Landlord
shall cause the Premises to be repaired in accordance with
Section (d) herein and the rent shall not be abated. If, by
reason of such occurrence, the Premises shall be rendered
untenable only in part, Landlord shall cause the Premises to be
repaired in accordance with Section (d) herein, and only the
Fixed Rent shall be abated proportionately as to the portion of
the Premises rendered untenable until the Premises so repaired is
reopened for business.
(b) If the Premises shall be rendered wholly untenable
by reason of such occurrence and the remainder of the term of the
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Lease (hereinafter called the "residual term") is two (2) years
or more, Landlord shall cause the Premises to be repaired in
accordance with Section (c) herein (subject to reasonable delays
occasioned by adjustment of losses with insurance carriers or for
any cause beyond Landlord's control), and the Fixed Rent shall be
abated, and upon delivery of possession of the restored Premises
to Tenant, this Lease shall thereupon continued for the residual
term and any renewal or extension thereof.
(c) If Landlord is required or elects to repair or
reconstruct the Premises under the provisions of this Article 22,
its obligations shall be limited to those repairs to the Premises
which were Landlord's obligation to perform for Tenant at the
commencement date of this Lease. Tenant, at Tenant's expense,
shall promptly perform all repairs and restoration not required
to be done by Landlord and shall promptly refixture and
reconstruct the Premises and recommence business in all parts
thereof.
(d) Tenant shall not be entitled to any compensation or
damages, other than stated herein, from Landlord for the loss of
the use of the whole or any part of the Premises or damage to
Tenant's personal property or any inconvenience or annoyance
occasioned by such damage, repair, reconstruction or restoration.
Section 21.2 - LANDLORD'S OPTION TO TERMINATE
If the Premises are (1) rendered wholly untenable, or
(2) damaged as a result of any cause which is not covered by
Landlord's insurance or (3) damaged or destroyed in whole or in
part during the last two years of the Term, or if the Property is
damaged to the extent of fifty percent (50%) or more of the Gross
Leasable Area thereof, therein any of such events, Landlord may
elect to terminate this Lease by giving to Tenant notice of such
election within ninety (90) days after the occurrence of such
event. If such notice is given, the rights and obligations of the
parties shall cease as of the date of such notice, and Rental
(other than Rent due Landlord by reason of Tenant's failure to
perform any of its obligations hereunder) shall be adjusted as of
the date of such termination.
Section 21.3 - DEMOLITION OF LANDLORD'S PROPERTY
If the Property is so substantially damaged that it is
reasonably necessary, in Landlord's judgment, to demolish a
portion of the said Property, including the Premises for the
purpose of reconstruction, Landlord may demolish the Premises, in
which event Tenant's rent and other charges shall be abated until
Tenant's Premises are restored.
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ARTICLE XXII
CONDEMNATION
Section 22.1 - EFFECT OF TAKING
(a) In the event the whole or any part of the Premises,
Property or Common Areas shall be taken for public or
quasi-public use or condemnation under eminent domain, this Lease
shall terminate as to the part so taken on the date possession is
yielded to the condemning authority.
(b) In the event the portion of the Premises so taken
substantially impairs the usefulness of the Premises for the
purposes hereinbefore granted to the Tenant, either party may
terminate the Lease by written notice within thirty (30) days
prior to the actual physical taking.
(c) For the purpose of this Article, a voluntary sale or
conveyance in lieu of condemnation, but under threat of
condemnation, shall be deemed an appropriation or taking under
the power of eminent domain.
(d) If this Lease is not terminated as above provided
following any of such actual takings, then the Landlord shall, at
its expense make all necessary repairs or alterations to the
basic building and exterior work so as to constitute the
remaining Premises as complete architectural units and
proportionate allowance shall be made in the fixed rental and
additional changes based on proportion of the Premises remaining
as compared to the original Premises.
Section 22.2 - COMPENSATION AND AWARDS
All compensation awarded for any taking of the fee and
the leasehold, or any part thereof, shall belong to and be the
property of the Landlord. Tenant hereby assigns to the Landlord
all right, title and interest of Tenant in and to any award made
for leasehold damages and/or diminution in the value of Tenant's
leasehold estate. Tenant shall have the right to claim such
compensation as may be separately awarded or allocated by reason
of the cost or loss to which Tenant might be put in removing
Tenant's merchandise, fixtures, leasehold improvements and
equipment. Compensation as used in this Section shall mean any
award given to the Landlord for such taking in excess of, and
free and clear of, all prior claims of the holders of any
mortgages or other security interests.
Section 22.3 - CONDEMNATION OR BREACH OF LEASE
Any such appropriation or condemnation proceedings shall
not operate as or be deemed an eviction of Tenant or a breach of
Landlord's covenant for quiet enjoyment.
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ARTICLE XXIII
DEFAULT
Section 23.1 - ACTS OF DEFAULT
Landlord, in addition to all other remedies given to
Landlord in law or in equity may, be written notice to Tenant,
terminate this Lease, or without terminating this Lease, re-enter
the Premises by summary proceedings or otherwise, and may
dispossess the Tenant in any of the following circumstances:
(a) In the event Tenant shall be in default in the
payment of Fixed Rent, or any Additional Charge or Charges, or in
the payment of any other sums of money required to be paid by
Tenant to Landlord under this Lease, or as reimbursement to
Landlord for sums paid by Landlord on behalf of Tenant in the
performance of the covenants of this Lease, and said acts,
default or omissions are not cured within fifteen (15) days from [check mark]
due date. ----
(b) In the event Tenant shall be in default in the
performance of any other covenants, terms, conditions,
provisions, rules and regulations of this Lease excepting those
items listed in the above section (a) and if such default is not
cured within thirty (30) days after written notice thereof is
given by the Landlord, excepting such defaults that cannot be
cured completely within such thirty (30) day period and Tenant,
within said thirty (30) day period, promptly commences to proceed
with diligence and in good faith to remedy such default.
(c) Subject to Section 365 of the U.S. Bankruptcy Code,
the filing of a petition proposing the adjudication of Tenant or
Guarantor of Tenant's obligation hereunder as a bankrupt or
insolvent or the reorganization of Tenant or any such Guarantor
or an arrangement by Tenant or any such Guarantor with its
creditors, whether pursuant to the Federal Bankruptcy Code or any
similar federal or state proceeding and such action is dismissed
with thirty (30) days after the date of its filing.
(d) The sale of Tenant's interest in the Premises under
attachment, execution or similar legal process.
(e) The making by Tenant or any such Guarantor of an
assignment for the benefit of creditors.
(f) If the Tenant shall vacate the Premises or shall
fail to operate its business on the days and hours required, or
fails to continuously occupy and conduct Tenant's business in the
Premises.
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Section 23.2 - ABANDONMENT
Other than for the period that business shall close
annually for two weeks, in the event that the premises shall not
be occupied for fifteen (15) consecutive days, then such shall be
deemed an abandonment of the premises without any notice as may
be required under this section.
Section 23.3 - REMEDIES
Landlord, in addition to all other remedies given to
Landlord in law or in equity may, by written notice to Tenant,
terminate this Lease, or without terminating this Lease re-enter
the Premises by summary proceedings or otherwise, and may
dispossess the Tenant in any of the following circumstances.
(a) In the event of such re-entry, Landlord shall have
the right to remove all persons therefrom, to recover the
possession thereof by legal proceedings or otherwise, and to use
such force to enter and regain possession thereof as Landlord
shall deem proper without being liable to any civil action or
criminal prosecution therefore. No such re-entry by Landlord
shall be deemed a termination of this Lease or an acceptance of a
surrender of this Lease. In event of such re-entry the Landlord
shall have the right to relet or subdivide the Premises for any
period equal to or greater or less than the remainder of the
original Term of this Lease, for any rental which it may deem
reasonable, to any other Tenant which Landlord may select and for
any use and purpose which Landlord may designate.
(b) In the event of a default by Tenant, of any of the
terms, provisions, covenants, conditions, rules and regulations
of this Lease, Landlord shall have the right to an injunction and
the right to invoke any remedies available to Landlord, which
rights are declared to be cumulative and concurrent. No
termination of this Lease, nor any taking or recovering of
possession of the Premises shall deprive Landlord of any of its
remedies or actions against Tenant for past or future rent, nor
shall the bringing of any action for rent or other default be
construed as a waiver of the right to obtain possession of the
Premises.
Section 23.4 - DAMAGES
(a) If this Lease is terminated by Landlord pursuant to
this Article XXIV, Tenant nevertheless, shall remain liable for
any rental and additional charges which may be due or sustained
prior to such termination and reasonable costs, fees and expenses
incurred by Landlord in pursuant of its remedies hereunder.
(b) In the event of a reletting, Landlord may apply the
rent therefrom first to the payment of Landlord's reasonable
expenses
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<PAGE>
including but not limited to attorney's fees incurred, expense of
reletting, repairs, brokerage fees, subdividing, renovation or
alteration of the Premises and then to the payment of rent and
all other sums due from Tenant hereunder, Tenant shall remain
liable for any deficiency.
Section 23.5 - REPEATED DEFAULT
(a) Notwithstanding anything to the contrary set forth
in this Lease, if Tenant shall be in default in the timely
payment of any rent or any additional charges due Landlord from
Tenant or the payment of any other money due Landlord from Tenant
under the terms of this Lease, any such default shall be repeated
two (2) times in any period of twelve (12) consecutive months,
then, notwithstanding that such default shall have been cured
within the applicable periods, as provided in this Lease, any
further similar default within said twelve (12) month period
shall be deemed to be a repeated Event of Default.
(b) In the event of a Repeated Event of Default,
Landlord, without giving Tenant any notice and without affording
Tenant an opportunity to cure the default, may terminate this
Lease forthwith without notice to Tenant.
ARTICLE XXIV
NOTICES
Section 24.1 - NOTICES TO TENANT AND LANDLORD
Any notice or consent required to be give by or on
behalf of either party upon the other shall be in writing and
shall be given by mailing such notice or consent by Registered or
Certified Mail, Return receipt Requested, addressed to the
Landlord at 2200 N.W. 2ND AVENUE, BOCA RATON, FL
and either party may designate a substitute address at any later
time hereafter. Any such notice shall be deemed given when mailed
as in this Section provided, or delivered personally, or by
facsimile, to the Parties and Authorized Agents and/or Officers.
ARTICLE XXV
MISCELLANEOUS
Section 25.1 - ACCORD AND SATISFACTION
No payment by Tenant or receipt by Landlord of a lesser
amount than any payment of rent herein stipulated shall be deemed
to be other than on account of the earliest stipulated rent, nor
shall any endorsement or statement on any check or any letter
accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment
without
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<PAGE>
prejudice to Landlord's right to recover the balance of such rent
or pursue any other remedy provided for in this Lease or
available at law or in equity.
Section 25.2 - COMPLETE AGREEMENT
This Lease contains the entire agreement between the
parties hereto, and no agent, representative, salesman or
affiliate of Landlord hereto has authority to make or has made
any statement, agreement or representation, either oral or
written, in connection herewith, modifying, adding or changing
the terms and conditions herein set forth. No dealings between
the parties or custom shall be permitted to contradict various
additions to or modify the terms hereof. No modification of this
Lease shall be binding unless such modification shall be in
writing and signed by the parties hereto.
Section 25.3 - CONSENTS
Neither Landlord nor Tenant shall unreasonably withhold
approval, or consent when required from either party under the
terms of this Lease (except where otherwise stated herein)
provided, however, that Landlord shall not have deemed to have
unreasonably withheld such approval or consent if its Mortgagee
shall refuse to permit Landlord to grant such consent.
Section 25.4 - COMPLIANCE WITH GOVERNMENTAL AUTHORITIES
Tenant, at its own expense, shall comply with all valid
requirements of the Fire Underwriters Association and all duly
constituted governmental authority and further shall comply with
any Federal, State, County or local law or ordinance applicable
to the use and occupancy of the Premises for any repairs or work
performed on said Premises by the Tenant. The Tenant will
indemnify Landlord and save Landlord harmless from any against
any penalty, damage or charge imposed for any violation by
Tenant, its Assignees, subtenants, licensees, agent and employees
of any said requirements.
Section 25.5 - EFFECTIVE DATE OF LEASE
Submission of this instrument for examination or
execution by Tenant does not constitute a reservation of nor
option for Lease, and this instrument shall not become effective
as a lease or otherwise until execution by and delivery to both
Landlord and Tenant. This Lease shall only become effective and
binding upon the parties in establishing the relationship of
Landlord and Tenant as of the date first written above, but not
earlier than the date Landlord executes this Lease.
27
<PAGE>
Section 25.6 - ESTOPPEL CERTIFICATE BY TENANT
Tenant agrees at any time, upon not less than ten (10)
days prior written request by the Landlord, to execute,
acknowledge and deliver to Landlord a written statement
certifying that this Lease is unmodified and in full force and
effect (or, if there have been modifications, that the same is in
full force as modified and stating the modifications), the dates
to which the basic rent and other charges have been paid in
pursuance to this Lease and such other certification concerning,
the Lease as may be reasonably required by Landlord or Landlord's
Mortgagee. Tenant further agrees that said statement may be
relied upon by any prospective purchaser of the fee, mortgagee or
assignee of any mortgage on the fee of the Premises. If Tenant
within 10 days after submission of such instrument fails to
execute the same, Landlord is hereby authorized to execute the
same as attorney-in-fact for Tenant.
Section 25.7 - FORCE MAJEURE
Landlord and/or Tenant shall be excused for the period
of delay in the performance of any of their obligations
hereunder, except their respective obligation to pay any sums of
money due under the terms of this Agreement, and shall not be
considered in default, when prevented from so performing by cause
of causes beyond Landlord's or Tenant's control, including, but
not limited to, all labor disputes, civil commotion, war, fire,
or other casualty, governmental regulations, statutes,
ordinances, restrictions or decrees, or through acts of God.
Section 25.8 - INTERPRETATION
The law of the State of Florida shall govern the
validity, performance and enforcement of this Lease. If any part
of this Lease shall be adjudged by any court of competent
jurisdiction to be invalid, such judgment shall not affect or
impair any other provision.
The parties hereto confirm that all of the terms and
covenants contained herein were prepared by both parties hereto
and all negotiations, consideration, representations and
understandings between the parties are incorporated herein, and
may be modified or altered only by agreement, in writing, between
the parties.
Section 25.9 - MEMORANDUM OF LEASE
This Lease shall not be recorded, but a Memorandum of
Lease describing the property herein demised giving the term of
this Lease and renewal rights, if any, and referring to this
Lease, shall be executed by Landlord and Tenant in recordable
form at the request of either party, and may be recorded by
either party.
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Section 25.10 - QUIET ENJOYMENT
Landlord hereby covenants and agrees that if Tenant
shall perform all of the covenants and agreements herein
stipulated to be performed on Tenant's part, Tenant shall at all
times during the continuance hereof have the peaceful and quiet
enjoyment and possession of the Premises without any manner of
hindrance from Landlord or any person or persons lawfully
claiming the Premises, save and except in the event of the taking
of said Premises by public or quasi-public authority as
hereinbefore provided.
Section 25.11 - RENT DEMAND
Every demand for rent due wherever and whenever made
shall have the same effect as if made at the time if falls due
and at the place of payment, and after the service of any notice
or commencement of any suit, or final judgment therein, Landlord
may receive and collect any rent due, and such collection or
receipt shall not operate as a waiver or nor affect such notice,
suit or judgment.
Section 25.12 - SECTION HEADINGS
The Section Headings and Title Headings contained herein
are for convenience only and do not define, limit, or amplify the
contents of such Sections.
Section 25.13 - SUCCESSORS AND ASSIGNS
The conditions, covenants and agreements contained in
this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. All covenants
and agreements of this Lease shall run with the land.
Section 25.14 - TRANSFER OF LANDLORD'S INTEREST
The Landlord shall be liable under this Lease only while
the Owner of the Premises, and if Landlord should sell or
otherwise transfer Landlord's interest in the Premises upon an
undertaking by the purchaser, or transferee, to be responsible
for all of the covenants and undertakings of Landlord, Tenant
agrees that Landlord shall thereafter have no liability to Tenant
under this Lease or any Modification or Amendment thereof, or
extensions or renewals thereof, except for such liabilities which
might have occurred prior to the date of such sale or transfer of
Landlord's interest.
29
<PAGE>
Section 25.15 - WAIVER OF LANDLORD
(a) Landlord shall have the right at all times to
enforce the covenants, conditions and legal rights or remedies of
this Lease in strict accordance with the terms hereof,
notwithstanding any conduct or custom on the part of the Landlord
in refraining from so doing at any time or times. No failure by
the Landlord to insist upon the strict performance of any term or
condition of this Lease or to exercise any right or remedy
available, legal or equitable, or a breach thereof, and no
acceptance of full or partial rent during the continuance of any
such breach shall constitute a waiver of such breach or any such
term, condition or right.
(b) No term or condition of this Lease required to be
performed by the Tenant, and no breach thereof, shall be waived,
altered or modified except by a written instrument executed by
the Landlord.
(c) A waiver by Landlord in respect to any other tenant
of this Property in which the Premises are located shall not
constitute a waiver in favor of any other tenant, nor shall the
waiver of the breach of any condition be claimed, if pleaded to
excuse a future breach of the same condition or covenant or any
other condition, covenant, provision, rule and regulation of this
Lease.
Section 25.16 - BROKERAGE COMMISSION
Landlord (Optionor), by the execution of this Agreement,
hereby agrees to pay a fee to TENACE REALTY, INC. (60%) AND JOHN [check mark]
T. LASCHA (40%) as Broker/Agent, in the amount of six percent
(6%) of the first year's rent and annually thereafter unless
Tenant shall be in default herein. However, Landlord shall pay to
Broker six percent (6%) of all rent received after the first year
and, further, and in addition thereto, to pay a commission to
said Broker/Agent in the amount of Six Percent (6%) of the
purchase price, as hereinabove set forth, in the event that the
Option to Purchase is exercised, said commission to be paid at
the closing of the transaction and delivery of the Warranty Deed.
In the event that Lessee shall exercise said Option to Purchase
prior to the end of any lease year for which Broker has been paid
a Rental Commission Broker/Agent, by execution hereof, hereby
agrees that the rental fee paid in advance shall be prorated
accordingly and a credit shall be given against the commission to
be paid to Broker/Agent at closing, as herein set forth.
Section 25.17 - FURNITURE, FIXTURES, AND EQUIPMENT
An inventory is to be taken with ten (10) days of the
date of this Lease. The remaining furniture, fixtures, and
equipment on the property shall be the property of the Landlord
and Landlord
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<PAGE>
shall be responsible for removing the remaining furniture,
fixtures, and equipment which is not on the inventory.
ARTICLE XXVI
CONDITIONS PRECEDENT
This Lease, Option, and Sales Agreement are contingent
upon the premises and the property conforming to all City,
County, and State zoning, parking, health regulations and the
issuance of an occupational license for a 300 seat dinner
theater. If the license can not be obtained within fifteen (15)
days of the date of execution by both parties of this Lease,
unless otherwise agreed this Lease is null and void and all
deposits shall be returned. Such conditions shall be waived upon
the taking of possession of the Demised Premises.
IN WITNESS WHEREOF, the parties hereto have executed
these presents, the day and year first written above.
Signed in the presence of:
LANDLORD:
/s/Paul Janello /s/Marion Wentworth
MARION WENTWORTH
- -------------------------
TENANT:
CLASSIC RESTAURANTS
INTERNATIONAL, INC.
/s/Susan Robinson BY:/s/Jack Lascha
JACK LASCHA, President
- -------------------------
REALTORS:
_________________________ TENACE REALTY INC.
_________________________ BY:/s/William Ciano
WILLIAM CIANO, Broker
/s/Paul Janello J.T. LASCHA
_________________________ BY:/s/J.T. Lascha
J. T. Lascha
\work\ssr\wentwort\lease
/s/Steve L. Shaw
[markings] , SECT
31
<PAGE>
EXHIBIT "A"
RADON GAS
Radon gas is a natural occurring gas that, when it has
accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels
of radon that exceed federal and state guidelines have been found
in Florida. Additional information regarding radon and radon
testing may be obtained from you county public health unit.
32
<PAGE>
EXHIBIT "B"
GUARANTY BY PARENT CORPORATION
For value received and in consideration for and as an
inducement to Landlord making the within Lease with Tenant, the
undersigned, on behalf of itself, its legal representatives,
heirs, successors and assigns, jointly and severally, absolutely
and unconditionally guarantees to Landlord, Landlord's successors
and assigns, the full performance and observance of all the
provisions therein provided to be performed and observed by
Tenant, without requiring any notice of non-payment,
non-performance, or non-observance, or proof, or notice, or
demand, whereby to charge the undersigned therefore, all of which
the undersigned expressly agrees that the validity of this
agreement and the obligations of the undersigned guarantor
hereunder shall not be terminated, affected or impaired by reason
of the assertion by Landlord against Tenant of any of the rights
or remedies reserved to Landlord pursuant to the provisions of
the within Lease. The undersigned further agrees that this
guaranty shall remain and continue in full force and effect as to
any renewal, modification or extension of the Lease. As a further
inducement to Landlord to make this Lease and in consideration
thereof, Landlord and the undersigned agree that, in any action
or proceeding brought by either Landlord or the undersigned
against the other on any matters whatsoever arising out of, or by
virtue of the terms of this Lease or of this guaranty, Landlord
and the undersigned shall, and do hereby absolutely and
unconditionally, waive trial by jury. In the event the Landlord
incurs any expenses in the enforcement of this guaranty, whether
legal action be instituted or not, the undersigned agrees to be
liable for same (including without limitation, reasonable
attorney's fees) and to pay same promptly on demand by Landlord.
The undersigned acknowledges receipt of a complete copy of the
Lease with all Exhibits and other attachments, if any.
Date: _______________________
Witnesses: CROWN RESOURCES, INC., a
Georgia corporation
__________________________ By:________________________
, President
- --------------------------
33
<PAGE>
ADDENDUM "A"
OPTION TO PURCHASE
Landlord hereby grants to Tenant an Option to Purchase
the Premises at any time Tenant may elect prior to June 1, 1994,
at a price of One Million Three Hundred Thousand and no\100
($1,300,000.00), provided Tenant shall have fully performed all
of the terms and conditions of this Agreement and shall have made
all payments required hereunder to that time. Said Option to
Purchase may be exercised at any time before June 1, 1994 by the
giving of forty five (45) days prior written notice to Landlord
of such intention to exercise such Option; provided, however,
that shall Tenant not give notice to Landlord on or before June
1, 1994 of its intention to exercise such Option, then, in such
event, such Option to Purchase shall be deemed not to have been
exercised, all rights granted hereunder shall be forfeited.
In the event of Tenant's exercise of the Option to
Purchase, as herein provided, Landlord agrees to convey the
Premises to Tenant by statutory Warranty Deed, free and clear of
all encumbrances, excepting taxes and assessments accruing
subsequent to closing which, under the Agreement, are to be
prorated as of the date of closing and those matters of record,
including any existing mortgages. The closing shall occur
pursuant to the Standards of Real Estate Practice generally in
effect in Palm Beach County, Florida at the time of closing, in
accordance with the Deposit, Receipt and Contract for Sale and
Purchase as attached hereto as Exhibit "1":
As consideration for the granting of this Option to
Purchase by Landlord to Tenant, Tenant shall have paid to
Landlord the sum of Twenty Five Thousand and no\100 Dollars
($25,000.00), as set forth in said Contract.
Signed in the presence of:
LANDLORD:
/s/Paul Janello /s/Marion Wentworth
__________________________ MARION WENTWORTH
TENANT:
CLASSIC RESTAURANTS
INTERNATIONAL, INC.
/s/Susan Robinson By:/s/Jack Lascha
JACK LASCHA, President
- --------------------------
[marking] /s/Steven L. Shaw
34
<PAGE>
ADDENDUM "B"
OPTION TO RENEW
Provided Tenant shall not be in default herein, Landlord
hereby grants to Tenant an Option to Renew the Lease under the
same terms and conditions as this Lease with the exception of
rents for an additional five (5) years. The rent during this
additional five (5) year period shall be adjusted by applying the
cost of living index used by HUD to adjust rents. Said Option to
Renew must be exercised sixty (60) days prior to the expiration
date of this Lease by written notice to Landlord of such
intention to exercise such Option; provided, however, that should
Tenant not give notice to Landlord on or before October 2, 1997
of its intention to exercise such Option, then, in such event,
such Option to Renew shall be deemed not to have been exercised,
and all rights granted hereunder shall be forfeited.
Signed in the presence of:
LANDLORD:
/s/Paul Janello /s/Marion Wentworth
MARION WENTWORTH
- -----------------------------
TENANT:
CLASSIC RESTAURANTS
INTERNATIONAL, INC.
/s/Susan Robinson By:/s/Jack Lascha
JACK LASCHA, President
- -----------------------------
/s/Steven L. Shaw
35
<PAGE>
ADDENDUM "C"
This Addendum "C" to that certain Lease dated the 7th
day of October, 1992, therein MARION WENTWORTH, as Landlord, and
CLASSIC RESTAURANTS INTERNATIONAL, INC., as Tenant, amends and
modifies the same as hereinafter set forth:
1. That Article I, Definitions, Section 1.1 (a) be
modified to provide that the Property shall also include
furniture, fixtures, and equipment located in the Premises
excluding the bars and appurtenances thereto and the sound and
lighting and other electronic equipment. Such tangible personal
property shall remain the Property of the Landlord subject to the
Lease herein.
2. That Article XXV, Miscellaneous, Section 25.17 shall
be amended to provide that the requirement to take an inventory
is hereby moot and that the furniture, fixture and equipment
located in the Premises shall be part of the Property leased by
the Landlord to the Tenant excluding the bars and appurtenances
thereto and the sound, lighting and other electronic equipment.
3. Other than hereinabove set forth, said Lease
Agreement remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed
these presents this 15 day of OCTOBER, 1992.
Signed in the presence of:
LANDLORD:
_____________________________ /s/Marion Wentworth
MARION WENTWORTH
- -----------------------------
TENANT:
CLASSIC RESTAURANTS
INTERNATIONAL, INC.
_____________________________ BY:/s/Jack Lascha
JACK LASCHA, President
- -----------------------------
\ssr\wentwort\addendum.c
36
<PAGE>
IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT (LEASE FOR
CLEARWATER RESTAURANT) IS BEING FILED IN PAPER PURSUANT TO A CONTINUING HARDSHIP
EXEMPTION
THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS (THE
"STATE ACTS"), AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR
OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER EXCEPT
UPON THE ISSUANCE TO THE COMPANY OF A FAVORABLE OPINION OF ITS COUNSEL OR
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
COUNSEL FOR THE COMPANY, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN
VIOLATION OF THE ACT AND THE STATE ACTS.
$20,000.00/XX 7/31/95
CLASSIC RESTAURANTS INTERNATIONAL, INC.
CONVERTIBLE PROMISSORY NOTE
CLASSIC RESTAURANTS INTERNATIONAL, INC., a Florida corporation (the "Company"),
for value received, promises to pay to the order of Carl H. Simpson (the
"Holder"), residing at 1004 Burning Sprgs, Louisville, Ky 40223 on June 30 1995
(the "Due Date"), upon presentation of this Note, Twenty Thousand.00/100 Dollars
($20,000.) (the "Principal Amount") and to pay interest on the Principal Amount
at the rate of 8% per annum as provided herein.
Interest which shall accrue on the Principal Amount shall be payable in monthly
installments beginning 8/1/95 and continuing on the first day of each month
until the Principal Amount and all accrued and unpaid interest shall have been
paid in full. If this Note shall be issued on a date other than the first day of
a calendar month, the interest payable shall be prorated upon the number of days
of such calendar month period during which this Note shall have been issued and
outstanding. All accrued and unpaid interest shall be payable on the Due Date.
The Company may pay this Note in whole or in part prior to the Due Date at any
time and from time to time without penalty or premium. The Company may exercise
its right to pay this Note prior to maturity by giving notice thereof to the
Holder, which notice shall specify the terms of prepayment, the principal amount
of the Note to be repaid, and shall fix a date for prepayment, which date shall
not be less than 30 days nor more than 45 days after the date of the notice. On
the prepayment date, the Company shall pay all accrued and unpaid interest on
the Note up to and including the prepayment date and shall pay to the Holder a
dollar amount equal to the principal amount being repaid.
The Holder shall have the right, at such Holder's option, at any time, to
convert all, but not less than all, of this Note into such number of fully paid
and nonassessable shares of Class A Common Stock of the Company (the "Class A
Common Stock") as shall be the result of the Principal Amount divided by $3.20,
rounded to the nearest whole share. The Holder may exercise this conversion
right by giving written notice (the "Conversion Notice") to the Company of the
exercise of such right and stating the name or names in which the stock
certificate for the shares of Class A Common Stock is to be issued and the
address to which such certificate shall be delivered. The Conversion Notice
shall be accompanied by the Note. Conversion shall be deemed to have been
effected on the date the Conversion Notice is given (the "Conversion Date").
Within 10 business days after receipt of the Conversion Notice, the Company
shall issue and deliver by hand against a signed receipt therefor or by United
States registered mail, return receipt requested, to the address designated by
the Holder
<PAGE>
in the Conversion Notice, a stock certificate of the Company representing the
number of shares of Class A Common Stock to which such Holder is entitled and a
check in payment of all interest accrued and unpaid on the Note up to and
including the Conversion Date. The Company shall at all times reserve and keep
available, free from preemptive rights, unissued or treasury shares of Class A
Common Stock sufficient to effect the conversion of this Note.
The entire unpaid and outstanding balance of this Principal Amount and all
interest accrued and unpaid on this Note shall, at the election of this Holder,
be and become immediately due and payable upon the occurrence of any of the
following events:
(a) The non-payment of interest by the Company when due as provided in this
Note.
(b) If the Company (i) applies for or consents to the appointment of, or if
there shall be a taking of possession by, a receiver, custodian,
trustee, or liquidator for the Company or any of its property; (ii)
becomes generally unable to pay its debts as they become due; (iii)
makes a general assignment for the benefit of creditors or becomes
insolvent; or (iv) files or is served with any petition for relief
under the Bankruptcy Code or any similar federal or state statute.
(c) Any failure by the Company to issue and deliver shares of Class A
Common Stock as provided herein upon conversion of this Note.
This Note shall be transferred on the books of the Company only by the Holder
hereof by delivery to the Company of a duly executed assignment. The Company
shall be entitled to treat any holder of record of the Note as the holder in
fact thereof and shall not be bound to recognize any equitable or other claim to
or interest in this Note in the name of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by the
laws of Florida.
All notices and communications under this Note shall be in writing and shall be
either delivered in person or accompanied by a signed receipt therefor or mailed
first-class United States certified mail, return receipt requested, postage
prepaid, and addressed as follows: if to the Company, to 1817 Ballybunion Drive,
Duluth, Georgia 30136 and, if the Holder of this Note, to the address of such
holder as it appears in the books of the Company. Any notice of communication
shall be deemed given and received as of the date of such delivery or mailing.
Payment of this Note is guaranteed by James R. Shaw.
The Company and any guarantors hereof agree to pay all reasonable costs of
collection, including attorney's fees, paid or incurred by Holder in enforcing
this Note on default.
This Note shall be governed by and construed and enforced in accordance with the
laws of the State of Florida.
Attest: CLASSIC RESTAURANTS INTERNATIONAL, INC.
/s/Caroline P. Anderson By:/s/James R. Shaw
James R. Shaw, President
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Carl H. Simpson ("Note Holder"), and his
successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Florida corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment to Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Ballybunion Drive
Duluth, Georgia 30136
This Guarantee shall be construed and interpreted according to the laws of the
State of Florida.
Guarantor:
Date: 8/1/95 /s/James R. Shaw
James R. Shaw
Individually
6:guarantee.shw
<PAGE>
Schedule of Other Similar Convertible Notes
Begin
Note Payment
Amount Holder Address Date Date
$5,000 Dr. Sandra Clejon 1430 Tulane Ave. 10/12/94 11/1/94
New Orleans, LA 70112
$10,000 John Limb c/o A-bb Lummus Crest 10/14/94 11/1/94
12141 Wickchester
Houston, Tex 77079
$3,000 Arthur Ingalls 6731 Park Lane 10/5/94 11/1/94
Dallas, Tex 75225
$15,000 Michael Roach 19480 W. Belvidere Rd. 10/5/94 11/1/94
Grayslake, Il 60030
$3,000 Benjamin Silber 282 Shell Rd. 10/4/94 11/1/94
Carneys Point, NJ 08069-0665
$3,200 Kenneth Nettleton 1722 Laurette Lane 10/6/94 11/1/94
Belleville, Ill 62223
$1,600 Jerry Merkel 3083 Pheasant Run Dr 10/6/94 11/1/94
Apt. 719
Lafayette, Ind 47905
$5,000 Ned Ritchie 7101 Preston Ct 9/30/94 11/1/94
Charlotte, NC 28215
$7,500 Samson Hsia 2626 Steppington St 9/30/94 11/1/94
Grand Prairie, Tex 75052
$3,000 Frances O'Donald 210 Windswept Cir 9/29/94 10/1/94
Neptune Beach, Fla 32266
$7,000 Henry Fechtman Rt 4, Box 3750 9/28/94 10/1/94
Hawkinsville, GA 31036
$5,000 William S. Hoffer 1200 3rd St E 9/27/94 10/1/94
TR VA Lehigh Acres, Fla 33936
$7,148 Dr. Pat Pugh 9300 West Baltic Dr 9/29/94 10/1/94
Lakewood, Colorado 80227
$3,500 Kevin A. McIntyre 2522 Oakwood Way 9/26/94 10/1/94
Smyrna, Ga 30080
$5,000 Ernest Hansberger Jr. 3336 Winchester Rd 9/20/94 10/1/94
Birmingham, Alabama 35226-2620
$10,000 Ken Willinger 22 Laird Rd 09/26/94 10/1/94
Productions Inc. West Medford, Mass 02155-2126
<PAGE>
PROMISSORY NOTE
$31,000.00 DATED: FEBRUARY 6, 1996
------
PRINCIPAL AMOUNT: Thirty One Thousand Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of Carl H. Simpson the sum of Thirty One Thousand
Dollars ($31,000.00), together with interest thereon at the rate of 10% per
annum on the unpaid balance. Said sum shall be paid in the manner following:
March 2, 1996 - 258.33
April 2, 1996 - 258.33
May 2, 1996 - 258.33
June 2,1996 - 258.33
July 2,1996 - 258.33
August 2, 1996 - 258.33
September 2, 1996 - 258.33
October 2, 1996 - 258.33
November 2, 1996 - 258.33
December 31, 1996 - 31,258.33
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
Signed in the presence of:
/s/ Caroline P. Anderson /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Carl H. Simpson ("Note Holder"), and his
successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Colorado corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: 2/2/96 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
<PAGE>
AGREEMENT
AND NOW, come the parties to this Agreement, Robert B. Farrow, James R.
Shaw, individually, and Classic Restaurant's International, Inc., by its
President/CEO, James R. Shaw, and hereby agrees and stipulates as follows:
1. Robert B. Farrow will loan to Classic Restaurant's International,
Inc., the sum of $10,000.00, receipt of which is hereby acknowledged.
2. The loan will earn an interest at the rate of ten percent (10%)
until paid.
3. Classic Restaurant's International, Inc., is in the process of doing
a regulation as offering anticipated on or about June 15, 1996. Upon receiving
the funds from this offering, the balance of the loan, together with all
outstanding interest, shall be due and owing to Robert B.Farrow.
4. Unless otherwise repaid or unless the balance, together with
interest and other charges, is due and owing, the balance of this loan, together
with any outstanding interest and other charges will be due no later than July
15,, 1996.
5. As further for this loan, James R. Shaw and Classic Restaurant's
International, Inc., will issue to Robert B. Farrow three thousand (3,000) Class
A Common Shares of Section 144 stock. Certificates for these shares shall be
issued on or before June 15, 1996.
<PAGE>
6. Any failure on the part of James R. Shaw or Classic Restaurant's
International, Inc., to comply with the terms of this Agreement shall constitute
a default.
7. In the event of a default, James R. Shaw and Classic Restaurant's
International, Inc., appoint any attorney to appear on their behalf and on
behalf of each of them before any Court of record in the jurisdiction to confess
judgment against them in an amount equal to the balance of the obligations
contained herein, together with all costs and reasonable attorneys fees, but in
no case attorneys fees less than fifteen percent (15%) of the outstanding
balance. James R. Shaw and Classic Restaurant's International, Inc., further
waive any exemptions, errors, or stays of execution relating to any confession
of judgment contained herein. Further, Robert B. Farrow may exercise this clause
any number of times necessary to satisfy the obligations contained herein.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties have hereunto set their hands and seals this 19th day of April, 1996.
- --------------------------------- ---------------------------------
WITNESS ROBERT B. FARROW
/s/Kimberly Broach /s/James R. Shaw
- --------------------------------- ---------------------------------
WITNESS JAMES R. SHAW, Individually
/s/Kimberly Broach /s/James R. Shaw Pres./CEO
- --------------------------------- ---------------------------------
WITNESS CLASSIC RESTAURANT'S
INTERNATIONAL, INC., BY
JAMES R. SHAW, PRESIDENT/CEO
<PAGE>
BORROWER'S AFFIDAVIT
STATE OF FLORIDA :
: SS: ###-##-####
COUNTY OF :
AND, NOW, comes James R. Shaw, individually and as President/CEO of
Classic Restaurant's International, Inc., and deposes and says as follows:
1. James R. Shaw is an adult individual who is President/CEO of Classic
Restaurant's International, Inc.
2. Deponent, James R. Shaw, hereby acknowledges receipt of $10,000.00
in loan from Robert R. Farrow.
3. The purpose of this loan is to provide short term funding for
Classic Restaurant's International, Inc.
4. Classic Restaurant's International, Inc., is in the process of doing
a regulation as of offering on or about June 15, 1996, and upon receiving funds
from the offering, Classic Restaurant's International, Inc., will pay back to
Robert B. Farrow, the sum of $10,000.00, together with accrued interest at the
rate of ten percent (10%).
5. To the best of Deponent's knowledge or information and belief,
neither Deponent nor Classic Restaurant's International, Inc., are insolvent,
about to become insolvent, financially embarrassed, or about to become
financially embarrassed. Further, Deponent knows of no claim, either actual or
contingent that may be made against either him or Classic Restaurant's
International, Inc., (other than ordinary and usual debts incurred in the
running
<PAGE>
of Classic Restaurant's International, Inc.) that would impair the ability of
either Deponent or Classic Restaurant's International, Inc., to repay the loan
and to otherwise fulfill the commitments of the loan obligation.
IN WITNESS WHEREOF, Deponent, James R. Shaw, has set his hand and seal.
April 19, 1996 /s/ James R. Shaw L.S.
- ------------------------------- ---------------------------------
Date JAMES R. SHAW
Sworn to and subscribed
before me this 22 day
of April, 1996.
/s/Lisa Kelly Claibone
- --------------------------------------
Notary Public
My Commission Expires:
10/26/99
<PAGE>
PROMISSORY NOTE
$100,000.00 DATED: APRIL 29, 1996
------
PRINCIPAL AMOUNT: One Hundred Thousand Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of BMI & Assoc. the sum of Dollars ($100,000.00),
together with interest thereon at the rate of 20% per annum on the unpaid
balance. Said sum shall be paid in the manner following:
October 29, 1996 - $110,000.00
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
This note shall at the option of any holder hereof be immediately due
and payable upon the failure to make any payment due hereunder within 180 days
of its due date.
Signed in the presence of:
/s/Lisa Kelly Claibone /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Igor Kopmaw BMI ("Note Holder"), and his
successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Colorado corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: 4/29/96 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
/s/Lisa Kelly Claibone
<PAGE>
PROMISSORY NOTE
$10,000.00 DATED: MAY 15, 1996
------
PRINCIPAL AMOUNT: Ten Thousand Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of Mildred M. Gatti the sum of Dollars ($10,000.00),
together with interest thereon at the rate of 18.25% per annum on the unpaid
balance. Said sum shall be paid in the manner following:
June 15, 1996 - 152.08
July 15, 1996 - 152.08
August 15, 1996 - 152.08
September 15,1996 - 152.08
October 15,1996 - 152.08
November 15, 1996 - 10,152.08
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
Named beneficiary of this note as designated by the note holder shall
be Marchelle M. Nygard.
Signed in the presence of:
/s/ Caroline P. Anderson /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Mildred M. Gatti ("Note Holder"), and his
successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Colorado corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: May 14, 1996 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
<PAGE>
PROMISSORY NOTE
$10,000.00 DATED: MAY 15, 1996
------
PRINCIPAL AMOUNT: Ten Thousand Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of Helen Futch the sum of Dollars ($10,000.00),
together with interest thereon at the rate of 18.25% per annum on the unpaid
balance. Said sum shall be paid in the manner following:
June 15, 1996 - 152.08
July 15, 1996 - 152.08
August 15, 1996 - 152.08
September 15,1996 - 152.08
October 15,1996 - 152.08
November 15, 1996 - 10,152.08
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
Named beneficiary of this note as designated by the note holder shall
be Deborah Futch.
Signed in the presence of:
/s/ Caroline P. Anderson /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Helen Futch ("Note Holder"), and his
successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Colorado corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: May 14, 1996 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
<PAGE>
PROMISSORY NOTE
$8,000.00 DATED: MAY 14, 1996
------
PRINCIPAL AMOUNT: Eight Thousand Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of Marguerite A. Gilmore the sum of Dollars
($8,000.00), together with interest thereon at the rate of 18.25% per annum on
the unpaid balance. Said sum shall be paid in the manner following:
June 14, 1996 - 121.67
July 14, 1996 - 121.67
August 14, 1996 - 121.67
September 14,1996 - 121.67
October 14,1996 - 121.67
November 14, 1996 - 8,121.67
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
This note shall at the option of any holder hereof be immediately due
and payable upon the failure to make any payment due hereunder within 180 days
of its due date.
Signed in the presence of:
/s/ Caroline P. Anderson /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Marguerite A. Gilmore ("Note Holder"),
and his successors and assigns, the prompt payment of any and all indebtedness
which Classic Restaurants International, Inc., a Colorado corporation
("Debtor"), may now or at any time hereafter owe to Note Holder, together with
interest thereon and costs of collection thereof, including reasonable
attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: 5/23/96 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
<PAGE>
PROMISSORY NOTE
$40,000.00 DATED: MAY 15, 1996
------
PRINCIPAL AMOUNT: Forty Thousand Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of Evelyn A. Kuntz the sum of Dollars ($40,000.00),
together with interest thereon at the rate of 18.25% per annum on the unpaid
balance. Said sum shall be paid in the manner following:
June 15, 1996 - 608.33
July 15, 1996 - 608.33
August 15, 1996 - 608.33
September 15,1996 - 608.33
October 15,1996 - 608.33
November 15, 1996 - 40,608.33
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
This note shall at the option of any holder hereof be immediately due
and payable upon the failure to make any payment due hereunder within 180 days
of its due date.
Signed in the presence of:
5/23/96 /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
/s/ Caroline P. Anderson James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Evelyn A. Kuntz ("Note Holder"), and his
successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Colorado corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: 5/23/96 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
<PAGE>
PROMISSORY NOTE
$1,500.00 DATED: MAY 20, 1996
------
PRINCIPAL AMOUNT: Fifteen Hundred Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of Arthur L. Dutton the sum of Dollars ($1,500.00),
together with interest thereon at the rate of 18.25% per annum on the unpaid
balance. Said sum shall be paid in the manner following:
June 20, 1996 - 22.81
July 20, 1996 - 22.81
August 20, 1996 - 22.81
September 20,1996 - 22.81
October 20,1996 - 22.81
November 20, 1996 - 1,522.81
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
This note shall at the option of any holder hereof be immediately due
and payable upon the failure to make any payment due hereunder within 180 days
of its due date.
Signed in the presence of:
/s/ Caroline P. Anderson /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Arthur L. Dutton ("Note Holder"), and his
successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Colorado corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: 5/23/96 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
<PAGE>
PROMISSORY NOTE
$4,000.00 DATED: MAY 20, 1996
------
PRINCIPAL AMOUNT: Four Thousand Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of Arthur B. Ingalls the sum of Dollars ($4,000.00),
together with interest thereon at the rate of 18.25% per annum on the unpaid
balance. Said sum shall be paid in the manner following:
June 20, 1996 - 60.83
July 20, 1996 - 60.83
August 20, 1996 - 60.83
September 20,1996 - 60.83
October 20,1996 - 60.83
November 20, 1996 - 4,060.83
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
This note shall at the option of any holder hereof be immediately due
and payable upon the failure to make any payment due hereunder within 180 days
of its due date.
Signed in the presence of:
/s/ Caroline P. Anderson /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Arthur B. Ingalls ("Note Holder"), and
his successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Colorado corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: 5/23/96 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
<PAGE>
PROMISSORY NOTE
$5,000.00 DATED: MAY 25, 1996
------
PRINCIPAL AMOUNT: Five Thousand Dollars STATE OF: Georgia
- ---------------- --------
FOR VALUE RECEIVED, the undersigned hereby jointly and severally
promise to pay to the order of Kenneth E. Nettleton the sum of Dollars
($5,000.00), together with interest thereon at the rate of 18.25% per annum on
the unpaid balance. Said sum shall be paid in the manner following:
June 25, 1996 - 76.04
July 25, 1996 - 76.04
August 25, 1996 - 76.04
September 25,1996 - 76.04
October 25,1996 - 76.04
November 25, 1996 - 5,076.04
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid at any time, in whole or in part without
penalty. All prepayments shall be applied in reverse order of maturity.
This note shall at the option of any holder hereof be immediately due
and payable upon the failure to make any payment due hereunder within 180 days
of its due date.
Signed in the presence of:
/s/ Caroline P. Anderson /s/James R. Shaw
- ------------------------------ ---------------------------------
Witness Borrower - Classic Restaurants Int'l
James R. Shaw, President/CEO
<PAGE>
GUARANTEE
The undersigned hereby guarantees unto Kenneth E. Nettleton ("Note Holder"), and
his successors and assigns, the prompt payment of any and all indebtedness which
Classic Restaurants International, Inc., a Colorado corporation ("Debtor"), may
now or at any time hereafter owe to Note Holder, together with interest thereon
and costs of collection thereof, including reasonable attorney's fees.
Note Holder is hereby given full power to make advances and to cancel, release,
make any alterations, renewals, and extensions of, decrease or increase the
amount of principal or interest of such indebtedness as Note Holder and Debtor
may expressly or impliedly agree upon, or release, decrease, increase, make
substitutions of or otherwise alter any collateral or property securing such
indebtedness or any part thereof, and otherwise to deal with Debtor or any
endorser or co-guarantor as Note Holder may elect, without in any way
diminishing, releasing, or discharging the liability hereunder of the
undersigned. Such liability shall be continuing and shall only be affected by
the payment of Note Holder of the full amount of all indebtedness which may now
or any time hereafter be owing from Debtor to Note Holder; provided that no
payments made by or on behalf of the undersigned to Note Holder shall be held to
discharge or diminish the continuing liability of Debtor hereunder, unless and
until written notice is given to Note Holder that such payments are at the time
thereof being made for the purpose of liquidating such liability. The liability
of the undersigned is not in consideration or contingent upon the liability of
any person hereunder or under any similar instrument.
All notices or other communications provided for herein to be sent or given to
the undersigned shall be deemed validly and properly given or made if in writing
and delivered by hand or certified mail, return receipt requested, postage
prepaid, addressed as follows:
James R. Shaw
1817 Bally Bunion Drive
Duluth, Georgia 30155
This Guarantee shall be construed and interpreted according to the laws of the
State of Colorado.
GUARANTOR:
DATE: 5/28/96 /s/James R. Shaw
-------------------------- --------------------------
JAMES R. SHAW
INDIVIDUALLY
<PAGE>
LIST OF SUBSIDIARIES
The Company currently has two subsidiaries:
1. Classic Restaurants International, Inc. - a Florida corporation
Doing business under the name Classic Restaurants International, Inc.
2. Musicana - Clearwater, Inc. - a Florida corporation
Doing business under the name Musicana - Clearwater, Inc.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF OPERATIONS, CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY), CONSOLIDATED STATEMENTS OF CASH
FLOWS, AND THE NOTES THERETO, FOUND ON ON PAGES 18 TO 30 OF THE COMPANY'S F0RM
10-KSB FOR THE PERIOD OF JANUARY 1, 1996 TO JUNE 30, 1996, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> JUN-30-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> JUN-30-1996 DEC-31-1995
<EXCHANGE-RATE> 1 1
<CASH> 22,759 19,666
<SECURITIES> 0 0
<RECEIVABLES> 55,773 58,617
<ALLOWANCES> 0 0
<INVENTORY> 16,080 15,971
<CURRENT-ASSETS> 108,557 107,387
<PP&E> 802,836 794,627
<DEPRECIATION> 325,901 255,190
<TOTAL-ASSETS> 645,743 718,255
<CURRENT-LIABILITIES> 1,084,704 1,522,819
<BONDS> 0 0
0 0
0 0
<COMMON> 2,563,357 1,751,287
<OTHER-SE> (3,002,318) (2,555,851)
<TOTAL-LIABILITY-AND-EQUITY> 645,743 718,255
<SALES> 0 0
<TOTAL-REVENUES> 1,372,652 2,632,151
<CGS> 0 0
<TOTAL-COSTS> 1,800,238 3,863,128
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 18,881 16,718
<INCOME-PRETAX> (446,467) (1,247,695)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (446,467) (1,247,695)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (446,467) (1,247,695)
<EPS-PRIMARY> (.16) (.61)
<EPS-DILUTED> (.16) (.61)
</TABLE>
