<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: Commission file number:
March 31, 1996 0-20528
AUSTIN'S INTERNATIONAL, INC.
(Name of small business issuer in its charter)
DELAWARE 65-0322000
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2400 E. Commercial Boulevard, Suite 800, Fort Lauderdale, FL 33308
(305) 772-0980
(Address, including zip code, of principal executive offices and telephone
number, including area code of Issuer)
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK,
$.01 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 such filing requirements for the past 90 days.
[X] Yes [ ] No
Check if there is no 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: $7,447,591
On July 10, 1996 the bid and asked prices of the Issuer's common stock were
$.50 and $.63, respectively, according to NASDAQ SmallCap Market quotations
furnished by the National Quotation Bureau, Inc. The aggregate market value of
voting stock of the Issuer held by non-affiliates based on the average of the
bid and ask prices on July 10, 1996 was $2,240,795.
As of July 10, 1996, 10,003,550 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (check one): [X] Yes [ ] No
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Items 3 through 6 of Part I, and Item 11 of Part
III of this Report is incorporated by reference from the Issuer's definitive
proxy statement to be filed in accordance with Rule 14a-101 in connection with
its 1996 annual meeting of shareholders or from a subsequently filed amendment
to this Report.
<PAGE>
PART I/1/
ITEM I. DESCRIPTION OF BUSINESS
-------------------------------
Austin's International, Inc., a Delaware corporation ("Austin's" or the
"Company"), was incorporated in May 1988 to develop, own and operate a chain
of full-service restaurants specializing in Texas-style American cuisine.
Austin's restaurants currently offer a wide variety of appetizers, salads, and
award-winning signature items such as babyback ribs, a Texas cowboy steak, and
recent additions of Ostrich and Buffalo steaks. As a unique and special
service, Austin's steaks can be "branded" at tableside for patrons. The
Company prides itself on high-quality cuisine and excellent service. Austin's
International, Inc., a Florida corporation ("Austin's (Florida)"), formed in
May of 1988, is a wholly-owned subsidiary of the Company.
The Company, either directly or through its Florida subsidiary, owns and
operates the following restaurants:
FORT LAUDERDALE, FLORIDA--opened in October 1991, occupies 6,400 square
feet and seats approximately 225 customers. The Fort Lauderdale
restaurant also acts as an ongoing training facility for new restaurant
managers.
CORAL SPRINGS, FLORIDA--opened in January 1993, occupies 6,500 square
feet and seats approximately 210 customers.
ORLANDO, FLORIDA--opened in October 1993, occupies 6,500 square feet and
seats approximately 220 customers, and has facilities for outside dining.
PEMBROKE PINES, FLORIDA--opened in January 1994, occupies 4,800 square
feet and seats approximately 203 customers.
MERRIT ISLAND, FLORIDA--opened in June 1996, occupies 9,000 square feet
and seats approximately 245 customers.
The Company is actively searching for additional locations in Florida and
certain other states. In particular, the Company is considering placing a new
restaurant in Orlando and one in a prestigious location in South Florida.
The restaurant industry is highly competitive with respect to price,
service, food quality (including taste, freshness, healthfulness and
nutritional value) and location, and there are numerous well-established
competitors with financial, marketing, personnel and other resources
substantially greater than those of the Company. These competitors include
national, regional and local restaurant chains, many of which specialize in or
offer Texas-style and other similar menu items. Many of the Company's
competitors have achieved significant national, regional
- --------------
/1/ Items 1 and 2 of this Part I correspond to Items 6 and 7, respectively, of
Model B of Form 1-A.
2
<PAGE>
and local brand name and product recognition and engage in extensive
advertising and promotional programs, both generally and in response to
efforts by additional competitors to enter new markets or introduce new
products.
The Company is subject to various federal, state and local laws and
regulations affecting the operations of its restaurants. Difficulties or
failures in obtaining required licenses or other regulatory approvals could
delay or prevent the opening of a new restaurant. The suspension of, or
inability to renew, a license could interrupt operations at an existing
restaurant. In particular, the Company's restaurants will be subject to state
and local licensing and regulation with respect to the sale and service of
alcoholic beverages and to state and federal environmental laws and
regulations. The Company does not anticipate any undue hardship or expense in
complying with such licensing and environmental requirements, laws and
regulations.
Pursuant to a Stock Purchase Agreement dated December 7, 1995 ("Stock
Purchase Agreement") among Philip R. Connor, Jr. ("Connor"), Good Hope
Developments S.A., Miyako Management Pacific Corp., Voleon Shipping
Corporation, ICSOS S.A. (collectively, the "Buyers"), and the Company, on
December 13, 1995 Connor sold to the Company 1,000,000 unregistered shares of
the outstanding common stock, par value $.01 per share, of the Company
("Common Stock") for $170,166.90 cash, and sold to the Buyers an aggregate of
1,793,800 unregistered shares of Common Stock for $305,245.60 cash. The
Company simultaneously cancelled the 1,000,000 shares of Common Stock
purchased from Connor.
On March 21, 1996, $500,000 aggregate principal amount of the Company's
outstanding 8% convertible notes were converted, at the conversion price of
$.50 per share, into 1,000,000 newly-issued unregistered shares of Common
Stock. On May 10, 1996, the Company issued an additional $500,000 principal
amount of its 8% convertible notes, entitling the holders to convert such
notes into newly-issued shares of common stock of the Company at the stated
conversion price of $.50 per share, subject to certain adjustments. Also
effective May 10, 1996, holders of $1,645,000 aggregate principal amount of
the Company's outstanding 8% convertible notes (including those issued on May
10, 1996) converted such notes into a total of 3,290,000 newly-issued
unregistered shares of Common Stock at the stated conversion price of $.50 per
share.
Under the terms of an agreement dated as of April 14, 1996 between the
Company and Worrell Enterprises, Inc., a Delaware corporation with its
principal offices in Boca Raton, Florida ("Worrell"), Worrell is to provide
the following services to the Company: (a) to the extent requested by the
Company, financial and general advice and assistance; (b) suitable office
space in Worrell's Boca Raton offices sufficient to accommodate the executive
staff of the Company; and (c) the services of Edwin M. Freakley as Chairman of
the Board of Directors and Chief Executive Officer of the Company, to which
offices Mr. Freakley was appointed in March 1996. Under the agreement, Mr.
Freakley's responsibilities include, among other things, the development of a
growth strategy to increase the number of the Company's restaurant locations,
the development of plans for modifications of the Company's capital structure,
and identification of new sources of capital to fund the Company's future
expansion programs. Mr. Freakley, who is also President of Worrell, will
continue to provide services to Worrell during the term of the agreement,
which is perpetual subject to the right of either party to terminate at any
time upon 60 days prior written notice, and which terminates immediately upon
the death or disability of
3
<PAGE>
Mr. Freakley. In consideration of the services to be provided by Worrell to
the Company, the Company is to pay Worrell a fee in the amount of $10,000 per
month and grant Worrell non-qualified stock options to purchase 100,000 shares
of Common Stock during April of each year while the agreement is in effect,
beginning April 1996, at prices equal to the fair market value of the Common
Stock on the respective grant dates. The options are required to be exercised
within six years after the respective grant dates and each annual option vests
(i.e., becomes exercisable) on the first anniversary of its grant date. The
option rights are subject to customary anti-dilution provisions. In addition
to the above consideration, the Company is also required to reimburse Worrell
for all business expenses reasonably incurred.
ITEM 2. PROPERTIES.
------------------
The Company leases space for its office and restaurants and makes
leasehold improvements on the restaurant. The Company leases 4,784 square
feet for its executive offices in Fort Lauderdale, Florida for yearly rental
of $73,438. The restaurant lease in Fort Lauderdale covers 6,400 square feet,
initial leasehold improvements are valued at $394,000 and the annual rental is
$140,000 plus 5% of annual gross sales in excess of $2,800,000. The lease
term expires July 31, 2001. The restaurant lease in Coral Springs, Florida
covers 6,500 square feet, initial leasehold improvements are valued at
$656,700 and the annual rental is $104,640. The initial term expires December
12, 2002 and the Company has one 10-year option to extend the lease. The
Company's restaurant lease in Orlando covers 6,500 square feet. The Company
owns the building subject to a ground lease and the initial leasehold
improvements are valued at $1,244,250. The annual rental under the ground
lease is $150,000 plus 4.5% of annual gross sales in excess of $3,300,000.
The initial term of the ground lease expires August 18, 2022 and the Company
has one five-year option to extend the lease. The lease in Pembroke Pines,
Florida covers 4,800 square feet, initial leasehold improvements are valued at
$300,363, and the initial base annual rental in $62,524. The initial term
expires June 25, 2003, and the Company has two 10-year options to extend the
lease. The Merrit Island lease covers 9,000 square feet, the initial term of
the ground lease is for five years expiring on May 31, 2001, and the Company
has options to extend the lease for three additional five-year terms. Initial
leasehold improvements are valued at $220,000 and the initial rental is
$69,000 plus 4.5% of annual gross sales in excess of $2,000,000.
PART II/2/
ITEM 7. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
----------------------------------------------------------------
The Company's common stock is quoted on the NASDAQ SmallCap Market under
the trading symbol "AUST." The following table indicates the range of high
and low bid prices for the common stock for each full quarterly period within
the two most recent fiscal periods ended March 31, 1996 and March 31, 1995 as
such quotes were supplied by the NASDAQ SmallCap Market to the National
Quotation Bureau, Inc. and reported to the Company by the National
--------------
/2/ Items 7 through 12 of this Part II correspond to Items 1 through 6,
respectively, of Alternative Part II of Form 10-KSB.
4
<PAGE>
Quotation Bureau, Inc. The market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
Common Stock Bid Prices
Fiscal Year/1/ Quarter Ending High Low
- ---------------- ------------------ ----- -----
<S> <C> <C> <C>
1994-1995 June 30, 1994 $6.00 $4.25
September 30, 1994 4.50 2.00
December 31, 1994 2.88 1.50
March 31, 1995 1.75 0.75
1995-1996 June 30, 1995 $1.25 0.50
September 30, 1995 1.13 1.00
December 31, 1995 1.13 0.63
March 31, 1996 1.13 0.75
</TABLE>
- --------
/1/ The Company's fiscal year ends March 31 of each year.
The above prices represent inter-dealer quotations, without adjustment
for retail markups, markdowns or commissions and do not necessarily represent
actual transactions. Because of the limited trading activity in the Company's
common stock during the period indicated, the prices may not be representative
of the prices at which the shares would have been traded if there had been a
more active trading market in the shares.
As of July 10, 1996, there were approximately 550 holders of record of
Common Stock. On July 10, 1996, the closing bid and asked prices for the
Company's common stock were $.50 and $.63, respectively.
By letter dated March 21, 1996, The Nasdaq Stock Market, Inc. advised the
Company that effective the close of business on March 28, 1996, the Common
Stock would be delisted from the Nasdaq SmallCap Market as the result of the
Company's failure to meet certain minimum bid price or alternate capital and
surplus requirements. The Company subsequently requested certain exceptions
to such requirements. Following an April 30, 1996 hearing on the Company's
request, on May 2, 1996 the Company was advised that its request for
exceptions had been granted. As a result, the Common Stock traded under the
symbol "AUSTC" from May 3, 1996 until May 15, 1996, at which time the Company
was found by The Nasdaq Stock Market, Inc. to again be in compliance with all
requirements for continued listing on the Nasdaq SmallCap Market and,
effective May 17, 1996, the Company's stock resumed trading under the symbol
"AUST."
ITEM 8. LEGAL PROCEEDINGS.
-------------------------
None.
5
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-----------------------------------------------------------------------
FINANCIAL DISCLOSURE.
--------------------
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
------------------------------------------------------------
The Company held its 1995 annual meeting of shareholders (the "1995
Annual Meeting") on October 18, 1995. Proxies for the 1995 Annual Meeting
were solicited by the Company's management pursuant to Regulation 14A under
the Securities Exchange Act of 1934, there was no solicitation in opposition
to management's nominees for election of directors as listed in the Company's
September 15, Proxy Statement delivered in connection with the 1995 Annual
Meeting, and all of such nominees were elected. At the Annual Meeting, James
C. Sargent, Larry E. Graybill, Elie Sopas and Panayiotis C. Kontos were
elected to serve as directors of the Company until the next annual meeting.
The shareholders also approved the adoption of the Company's 1995 Employee
Incentive Plan, and ratified the appointment of Coopers & Lybrand, as
independent auditors of the Company for the March 31, 1996 fiscal year. The
number of votes cast for, against or withheld, as well as the number of
abstentions (including broker non-votes), as to each of such matters was as
follows:
<TABLE>
<CAPTION>
VOTES VOTES VOTES VOTES
FOR AGAINST WITHHELD ABSTAINING
--------- ------- -------- ----------
<S> <C> <C> <C> <C>
Larry E. Graybill 5,579,248 N/A 5,200 N/A
Panayiotis C. Kontos 5,579,248 N/A 5,200 N/A
James C. Sargent 5,579,248 N/A 5,200 N/A
Elie Sopas 5,579,248 N/A 5,200 N/A
Adoption of 1995 Employee
Incentive Stock Option Plan 4,641,429 163,846 N/A 286,050
Ratification of Appointment
of Coopers & Lybrand 5,583,148 800 N/A 500
</TABLE>
ITEM 12. REPORTS ON FORM 8-K.
----------------------------
Austin's International, Inc. Current Report on Form 8-K dated December
13, 1995 and filed with the Securities and Exchange Commission on January 3,
1996, with respect to the purchase by the Company and certain other persons of
a total of 2,793,800 shares of Common Stock from Philip R. Connor, Jr.
6
<PAGE>
PART F/S
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Report of Independent Accountants......................... F-1
Financial Statements:
Consolidated Balance Sheet - As of
March 31, 1995 and March 31, 1996......................... F-2
Consolidated Statements of Operations -
For the Fiscal Years Ended
March 31, 1995 and March 31, 1996......................... F-3
Consolidated Statements of Changes in
Shareholder's Equity - For the
Fiscal Years Ended March 31, 1995
and March 31, 1996....................................... F-4
Consolidated Statements of Cash Flows -
For the Fiscal Years Ended
March 31, 1995 and March 31, 1996........................ F-5
Notes to Consolidated Financial Statements............... F-6 - F-13
</TABLE>
PART III/3/
ITEM 13. INDEX TO EXHIBITS.
--------------------------
Exhibits included herein or incorporated by reference:
<TABLE>
<CAPTION>
<S> <C>
2 Certificate of Incorporation, as amended, and
Bylaws, as amended, of Austin's International, Inc./1/
3 Instruments defining the rights of security holders:
3(a) Specimen Stock Certificates/2/
10 Material Contracts:
10(a) Employment Agreement with Philip R. Connor, Jr.
dated March 4, 1993/1/
10(b) Escrow Agreement dated June 29, 1992/1/
10(c) Lease for Fort Lauderdale restaurant/2/
/3/ Items 13 and 14 of this Part III correspond to Items 1 and 2 of Alternative
Part III of Form 10-KSB.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10(d) Lease for Coral Springs restaurant/1/
10(e) Lease for Orlando restaurant/1/
10(f) Lease for Pembroke Pines Restaurant/3/
10(j) Austin's International, Inc. 1993 Employee Incentive
Stock Option Plan and Stock Option Plan Agreement
dated June 23, 1993/1/
10(k) Management Consulting Agreement and Escrow
Agreement dated July 1, 1993, with MDC Group
Inc./4/
10(l) Termination Agreement with MDC Group, Inc. dated
June 24, 19945/5/
10(m) Agreement with Philip R. Connor, Jr./6/
10(n) Lease for corporate office/6/
10(o) Stock Purchase Agreement dated December 7, 1995,
among Philip R. Connor, Jr., Good Hope
Developments S.A., Miyako Management Pacific
Corp., Voleon Shipping Corporation, ICSOS S.A.,
and Austin's International, Inc./7/
10(p) Form of Two-Year 8% Convertible Note/8/
10(q) Form of Subscription Agreement for Two-Year 8%
Convertible Note/8/
*10(r) Agreement dated April 4, 1996 between Austin's
International, Inc. and Worrell Enterprises, Inc.
*10(s) Austin's International, Inc. 1995 Employee Incentive
Stock Option Plan
*10(t) Lease for Merrit Island restaurant
* 27(1) Financial Data Schedule
99(a) Austin's International, Inc. Consolidated Balance
Sheet as of March 31, 1996 (unaudited), and Pro
Forma Consolidated Balance Sheet as of March 31,
1996/8/
</TABLE>
* Filed as exhibits to this Report.
8
<PAGE>
99(b) Austin's International, Inc. Consolidated Statements
of Operations for the three months and twelve
months ended March 31, 1996 (unaudited), and Pro
Forma Consolidated Statements of Operations for the
three months and twelve months ended March 31,
1996/8/
99(c) Notes to Pro Forma Financial Statements/8/
- --------------
/1/ Incorporated by reference from Registrant's Annual Report on Form 10-
KSB for its fiscal year ending March 31, 1993.
/2/ Incorporated by reference from Registrant's Registration Statement on
Form S-18 (No. 33-47357-A).
/3/ Incorporated by reference from Registrant's Annual Report on Form 10-
KSB for its fiscal year ending March 31, 1994.
/4/ Incorporated by reference from Registrant's Current Report on Form 8-K
dated July 27, 1993.
/5/ Incorporated by reference from Registrant's Annual Report on Form 10-
KSB for its fiscal year ending March 31, 1994.
/6/ Incorporated by reference from Registrant's Annual Report on Form 10-
KSB for its fiscal year ending March 31,1995.
/7/ Incorporated by reference from Registrant's Current Report on Form 8-K
dated December 13,1995.
/8/ Incorporated by reference from Registrant's Current Report on Form 8-K
dated May 10, 1996.
ITEM 14. DESCRIPTION OF EXHIBITS.
- --------------------------------
10(r) Agreement dated April 4, 1996 between Austin's International,
Inc. and Worrell Enterprises, Inc.
10(s) Austin's International, Inc. 1995 Employee Incentive Stock
Option Plan
10(t) Lease for Merrit Island restaurant
27(1) Financial Data Schedule
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
AUSTIN'S INTERNATIONAL, INC.
By: /s/ Edwin M. Freakley
------------------------------
Edwin M. Freakley
Chief Executive Officer
July 12, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Edwin M. Freakley
- --------------------- Chairman, Chief Executive Officer July 12, 1996
Edwin M. Freakley and Director
/s/ Elie Sopas President, Chief Operating Officer, June 28, 1996
- --------------------- Secretary and Director
Elie Sopas
/s/ Larry E. Graybill Senior Vice President, Treasurer June 28, 1996
- --------------------- (Chief Financial Officer) and Director
Larry E. Graybill
/s/ Panayiotis Kontos Director July 1, 1996
- ---------------------
Panayiotis Kontos
Director ______, 1996
- --------------------
James C. Sargent
</TABLE>
10
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
Ft. Lauderdale, Florida
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1996 AND 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Pages
<S> <C>
Report of Independent Accountants F-1
Consolidated Financial Statements:
Balance Sheets F-2
Statements of Operations F-3
Statements of Changes in Shareholders' Equity F-4
Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6-F-13
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
of Austin's International, Inc.
Ft. Lauderdale, Florida
We have audited the accompanying consolidated balance sheets of Austin's
International, Inc. and Subsidiary as of March 31, 1996 and 1995, and the
related consolidated statements of operations, changes in shareholders' equity,
and cash flows for the years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Austin's
International, Inc. and Subsidiary as of March 31, 1996 and 1995 and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand LLP
Fort Lauderdale, Florida
May 29, 1996
F-1
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
----------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 446,497 $ 497,986
Accounts receivable 66,653 35,564
Inventories 137,789 130,113
Other current assets 135,457 204,486
------------ -----------
Total current assets 786,396 868,149
------------ -----------
Property, equipment and
leasehold improvements:
Leasehold improvements 2,867,874 2,832,425
Restaurant equipment 1,047,447 957,066
Other equipment 112,162 112,005
------------ -----------
4,027,483 3,901,496
Less: accumulated depreciation and
amortization (1,111,175) (749,999)
------------ -----------
2,916,308 3,151,497
------------ -----------
Security deposits and other assets 49,061 37,030
------------ -----------
Total assets $ 3,751,765 $ 4,056,676
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 356,598 $ 272,758
Notes payable - current portion 0 70,000
Accrued expenses 204,168 215,913
------------ -----------
Total current liabilities 560,766 558,671
------------ -----------
Notes payable 2,013,000 1,600,000
Other liabilities 137,409 130,999
------------ -----------
Total liabilities 2,711,175 2,289,670
------------ -----------
Commitments and contingencies (Notes 4
and 9)
Shareholders' equity:
Common stock, $.01 par value;
50,000,000 shares authorized;
6,713,550 and 6,713,550 shares
issued and outstanding,
respectively 67,135 67,135
Additional paid-in capital 6,859,453 6,529,620
Accumulated deficit (5,885,995) (4,829,749)
------------ -----------
Total shareholders' equity 1,040,590 1,767,006
------------ -----------
Total liabilities and
shareholders' equity $ 3,751,765 $ 4,056,676
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended March 31,
-------------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Net sales $ 7,447,591 $ 6,144,096
Other revenues 8,397 545
Interest 9,059 17,692
----------- -----------
7,465,047 6,162,333
----------- -----------
Costs and expenses:
Food and beverage 2,829,786 2,222,103
Payroll and related 2,450,539 2,547,600
Other restaurant operating 2,227,134 2,010,690
General and administrative 496,645 555,853
Depreciation and amortization 361,176 634,561
Interest 156,016 107,473
----------- -----------
8,521,296 8,078,280
----------- -----------
Net loss $(1,056,249) $(1,915,947)
=========== ===========
Net loss per share $ (0.16) $ (0.29)
=========== ===========
Weighted average common shares outstanding $ 6,458,765 $ 6,634,490
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
for the years ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
Additional
Par Paid-in Accumulated Shareholder
Shares Value Capital Deficit Equity
---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1994 6,492,000 $ 64,920 $6,305,285 $(2,913,802) $ 3,456,403
Exercise of options 221,550 2,215 219,335 0 221,550
Issuance of warrants 0 0 5,000 0 5,000
Net loss 0 0 0 (1,915,947) (1,915,947)
---------- -------- ---------- ----------- -----------
Balance, March 31, 1995 6,713,550 67,135 6,529,620 (4,829,749) 1,767,006
Retirement of stock (1,000,000) (10,000) (160,167) 0 (170,167)
Conversion of debt 1,000,000 10,000 490,000 0 500,000
Net loss 0 0 0 (1,056,249) (1,056,249)
---------- -------- ---------- ----------- -----------
Balance, March 31, 1996 6,713,550 $ 67,135 $6,859,453 $(5,885,998) $ 1,040,590
========== ======== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------
1996 1995
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,056,249) $ (1,915,947)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Write-off of pre-opening costs 0 23,009
Amortization of pre-opening cost 0 273,713
Depreciation and amortization of
property, equipment and leasehold
improvements 361,176 360,848
Changes in operating assets and
liabilities:
Accounts receivable (31,089) (4,104)
Inventories (7,676) (2,414)
Other current assets 69,029 (102,372)
Security deposits and other assets (12,031) 16,891
Accounts payable and accrued expenses 72,095 9,343
Other non-current liabilities 6,410 57,036
----------- -----------
Net cash used in operating activities (598,335) (1,283,997)
Cash flows from investing activities:
Expenditures for property, equipment
and leasehold improvements (125,987) (290,678)
Proceeds from sales of marketable
securities 0 131,679
----------- -----------
Net cash used in investing activities (125,987) (158,999)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of warrants 0 5,000
Proceeds from exercise of stock options 0 221,550
Proceeds from issuance of notes payable 843,000 1,070,000
Repayments of notes payable 0 (300,000)
Payments to retire common stock (170,167) 0
----------- -----------
Net cash provided by financing activities 672,833 996,550
----------- -----------
Net decrease in cash and cash equivalents (51,489) (446,446)
Cash and cash equivalents at beginning of year 497,986 944,432
----------- -----------
Cash and cash equivalents at end of year $ 446,497 $ 497,986
=========== ===========
Supplemental disclosures of cash
flow information:
Cash paid during the year for interest $ 156,109 $ 86,794
=========== ===========
Other noncash activities:
During 1995, the Company exchanged 600,000 of 11% convertible debt
for 8% convertible debt.
During 1996, noteholders converted $500,000 of convertible debt to
1,000,000 shares of common stock.
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS:
Austin's International, Inc. (the "Company") commenced operations on April
11, 1991. The Company owns and operates Austin's restaurants and plans
future development of Com pany-owned stores and joint ventures in the United
States, and through joint ventures outside the United States. There were
four restaurants open in the State of Florida as of March 31, 1996, all of
which are company-owned.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CONSOLIDATION POLICY
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary. All significant intercompany balances and
transactions have been eliminated.
CASH AND CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or less from
the date of purchase are considered cash equivalents.
INVENTORIES
Inventories, which consist of food, beverages and supplies, are stated at the
lower of cost (first-in, first-out method) or market.
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements are stated at cost.
Additions, major renewals and betterments are capitalized, while normal
repairs and maintenance are expensed as incurred. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets
ranging from three to seven years. Leasehold improvements are amortized on a
straight-line basis over the lease terms or useful lives of the assets,
whichever is shorter. When items are sold or otherwise disposed of, the
related costs and accumulated depreciation are removed from the accounts and
any resulting gains or losses are recognized.
PRE-OPENING COSTS
Costs incurred, prior to, and in connection with, the opening of certain
restaurant locations, consisting mainly of rent payments, payroll costs and
other pre-opening charges, are deferred and amortized on a straight-line
basis over twelve months from the date of opening. When pre-opening costs
are fully amortized, the related costs and accumulated amortization are
removed from the accounts.
F-6
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PRE-OPENING COSTS, CONTINUED
Deferred costs related to projected sites subsequently determined to be
unsatisfactory, and general site selection costs which cannot be identified
with a specific restaurant, are charged to operations.
INCOME TAXES
The Company utilizes the liability method of accounting for deferred income
taxes. This method requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the differences
between the financial and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets are also established for the future tax
benefits of loss and credit carryovers.
LOSS PER COMMON SHARE
Loss per common share has been computed by dividing the net loss by the
weighted average number of shares of common stock outstanding during the
period. The shares issuable upon the exercise of warrants or vested stock
options have been excluded from the computation since the effect of their
inclusion would be anti-dilutive. Shares issuable upon conversion of the 8%
convertible debt are considered potentially dilutive securities. They have
not been considered in the computation of loss per common share as the effect
would be anti-dilutive.
ADVERTISING AND PROMOTION EXPENSES
Production costs of future media advertising are deferred until the first
time the advertising takes place. Other advertising and promotion costs are
expensed as incurred.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
F-7
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
NEW ACCOUNTING PRONOUNCEMENTS
For the year ended March 31, 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 107, "Disclosures About Fair Value of
Financial Instruments," which requires disclosure of fair value information
relating to financial instruments, whether or not recognized in the balance
sheet. In the opinion of management, the fair values of the Company's
financial instruments approximate their respective carrying values.
For the year ended March 31, 1996, the Company also adopted Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which in
general, requires that such impaired assets be written down to a reduced
carrying value. In the opinion of management, no long-lived assets have
impaired values. Accordingly, this standard did not impact the Company's
financial statements.
SFAS No. 123, "Accounting for Stock-Based Compensation", must be implemented
by the Company in fiscal 1997. This pronouncement establishes financial
accounting and reporting standards for stock-based employee compensation
plans. It encourages, but does not require, companies to recognize
compensation expense for grants of stock, stock options and other equity
instruments to employees based on new fair value accounting rules. Companies
that choose not to adopt the new fair value accounting rules will be required
to disclose pro forma net income and earnings per share under the new method.
The Company anticipates adopting the disclosure provisions of SFAS No. 123,
although the impact of such disclosure has not been determined.
RECLASSIFICATIONS
Certain amounts in the 1995 financial statements have been reclassified to
conform with the 1996 presentation.
3. NOTES PAYABLE:
As of March 31, 1995, the Company's balance of one year 8% unsecured
convertible debt was $1,670,000. During fiscal 1995, no debt was converted
into common stock. The number of shares reserved for issuance of common
stock upon conversion of the convertible debt equaled the number of shares
that could have been converted (1,776,595 shares). The convertible debt does
not contain any restrictive covenants.
F-8
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. NOTES PAYABLE, CONTINUED:
During 1996, the Company issued an additional $843,000 in two year 8%
convertible notes payable and exchanged $600,000 of one year 8% convertible
debt for two year debt. As of March 31, 1996, the Company's balance of 8%
two year unsecured convertible debt was $2,013,000 and matures between
October 10, 1997 and February 26, 1998. All of the convertible notes can be
converted into unregistered common shares at a conversion price of the
greater of $.50 or 50% of the average bid and asked price of the Company's
common stock as quoted by NASDAQ.
During fiscal year 1996, $500,000 of notes payable were converted into
1,000,000 shares of common stock. The number of shares reserved for issuance
of common stock upon conversion of the convertible debt equals the number of
shares that may be converted. $1,145,000 of the balance of notes payable at
March 31, 1996, are held by related parties.
4. COMMITMENTS AND CONTINGENCIES:
The Company has entered into noncancelable operating lease agreements
involving land, buildings and equipment relating to its administrative
offices and restaurants. Certain leases include scheduled base rent
increases over the terms of the leases. The total amount of the base rent
payments is being charged to expense on a straight-line basis over the terms
of the respective leases. The Company has recorded a deferred credit to
reflect the excess of rent expense over cash payments since inception of the
leases. Certain leases also provide for contingency rentals based upon a
percentage of sales above specified levels. The following summarizes the
approximate future minimum lease commitments under these operating leases:
<TABLE>
<CAPTION>
Years ending March 31,
<S> <C>
1997 $ 540,665
1998 548,957
1999 556,893
2000 503,224
2001 491,581
Thereafter 3,852,893
----------
$6,494,213
==========
</TABLE>
Rent expense was approximately $667,000 and $621,000 for the years ended
March 31, 1996 and 1995, respectively.
F-9
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. INCOME TAXES:
A provision for income taxes was not required for the years ended March 31,
1996 and March 31, 1995 due to operating losses.
The significant components of the net deferred tax asset as of March 31, 1996
and 1995 were as follows:
<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
<S> <C> <C>
Deferred tax assets:
Prepaid and other assets $ 60,000 $ 0
Net operating loss carryforwards 2,482,000 1,968,000
---------- ----------
2,542,000 1,968,000
Valuation allowance (2,422,000) (1,858,000)
---------- ----------
Deferred tax asset 120,000 110,000
Deferred tax liability:
Depreciation and amortization (120,000) (110,000)
---------- ----------
Net deferred tax liability $ 0 $ 0
========== ==========
</TABLE>
The liability method of accounting for deferred income taxes requires a
valuation allowance against deferred tax assets if, based on the weight of
available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. The Company has established a
valuation allowance against deferred tax assets of $2,422,000 at March 31,
1996. It is management's belief that it is more likely than not that a
portion of the deferred tax assets will not be realized.
The reconciliation between the statutory provision (benefit) for income taxes
and the actual provision is as follows:
<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
<S> <C> <C>
Income tax benefit computed at federal
statutory rate (35%) $ (369,000) $ (670,000)
State tax net of federal benefit (38,300) (66,000)
Net increase in valuation allowance 564,000 671,200
Other, net (156,700) 64,800
----------- -----------
Income tax provision $ 0 $ 0
=========== ===========
</TABLE>
F-10
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
5. INCOME TAXES, CONTINUED:
The change in valuation allowance from 1995 to 1996 is primarily due to the
increase in the net operating losses for federal and state income tax
purposes.
As of March 31, 1996, the Company had a net operating loss carryforward of
approximately $6,200,000. This loss carryforward begins to expire in 2007.
6. COMMON STOCK:
The Company has sold warrants to purchase up to 95,000 shares of common stock
at an exercise price of $5.64 per share. The warrants expire on August 5,
1997. As of March 31, 1996, no warrants had been exercised.
In connection with two private placements, the Company issued 1,700,000 of
shares of common stock with one detachable warrant for every ten shares of
common stock. The warrants, which entitled the holders to purchase one share
of common stock at a price of $5.00, expired on January 2, 1996. 100,000
warrants issued in 1992 for financial and other services rendered also
expired on January 2, 1996.
During 1996, the Company purchased and subsequently retired 1,000,000 shares
of common stock from the former president. The purchase was effected with a
cash payment of $170,167.
7. STOCK OPTION PLANS:
The Company had previously instituted an employee stock option plan, as
amended on June 23, 1993, which provided for the granting of options to
purchase the Company's common stock to officers and other employees of the
Company. In June 1996, the Plan was terminated and all options were
canceled, and a new plan, Austin's Employee Institute Stock Option Plan, was
adopted.
F-11
<PAGE>
<TABLE>
<CAPTION>
AUSTIN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
7. STOCK OPTION PLANS, CONTINUED:
Austin's Employee Incentive
Option Plan (1993) Non-Plan Options
--------------------------------- ----------------------------------
Shares Under Option Price Shares Under Option Price
Option Per Share Option Per Share
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Outstanding March 31, 1994 978,400 $1.00 - $4.50 878,500 $1.00 - $7.00
Granted 405,100 $ 1.19 60,000 $ 1.19
Exercised (109,000) $ 1.00 (112,500) $ 1.00
Canceled or expired (430,700) $1.00 - $4.50 (500,000) $1.00 - $4.50
--------------- ------------- ------------- -------------
Outstanding March 31, 1995 843,800 $1.00 - $4.50 326,000 $1.00 - $4.50
--------------- ------------- ------------- -------------
Granted 0 $0 0 $0
Exercised 0 $0 0 $0
Canceled or expired (843,800) $1.00 - $4.50 (326,000) $1.00 - $4.50
--------------- ------------- ------------- -------------
Outstanding March 31, 1996 0 $0 0 $0
=============== ============= ============= =============
</TABLE>
The Company has instituted a new employee stock option plan, Austin's
Employee Incentive Stock Option Plan (the "Plan"), as adopted June 2, 1995.
The Plan provides for the granting of options to purchase the Company's
common stock to officers and other employees of the Company. The Plan, which
is administered by the Company's Board of Directors, permits the granting of
incentive stock options at an exercise price per share not less than the fair
market value per share of the Company's common stock on the date the option
is granted. The options, which expire six years from the date of grant,
become exercisable at the rate of twenty percent of the stock of each grant
per year. A maximum of 700,000 shares may be issued under the Plan during
the first consecutive twelve month period and 350,000 shares may be issued
during any subsequent consecutive twelve month period. Any options which are
authorized in a period, but not granted, may be granted in any subsequent
period in addition to the options authorized during that period. Options
granted vest at the rate of 20% per year, the first 20% of which vests on the
grant date. The Board of Directors may, however, designate different vesting
periods. The options are nontransferable and are canceled upon termination
of employment. In the event that an employee is terminated or resigns, to
the extent that the options have vested prior to termination of employment,
such options may be exercised within thirty days of termination or
resignation of employment. In addition to the Plan, the Board of Directors
has also granted options to certain other individuals who are not employees.
F-12
<PAGE>
AUSTIN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
7. STOCK OPTION PLANS, CONTINUED:
AUSTIN'S EMPLOYEE INCENTIVE
OPTION PLAN (1995) NON-PLAN OPTIONS
SHARES UNDER OPTION PRICE SHARES UNDER OPTION PRICE
OPTION PER SHARE OPTION PER SHARE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Granted 547,200 $.88 127,500 $.88
Exercised 0 $ 0 0 $ 0
Canceled or expired (17,000) $.88 0 $ 0
------------ ------------ ------------ ------------
Outstanding March 31, 1996 530,200 $.88 127,500 $.88
============ ============ ============ ============
</TABLE>
At March 31, 1996, 233,330 shares were exercisable under the Plan.
8. TERMINATION AGREEMENTS:
During fiscal 1995, the Company entered into a termination agreement with its
former president. According to the terms of the agreement, 500,000 options
at an exercise price of $4.50 and 100,000 warrants at an exercise price of
$5.00 were canceled.
In September 1994, the former president sold 500,000 of his restricted shares
to existing investors and placed 1,750,000 shares into a voting trust for two
years. In addition, his salary of $10,000 a month was paid through April
1995. Upon the former president's termination, his 338,000 unexercised
options were canceled.
During 1996, a stock purchase agreement was entered into with the former
president. Pursuant to the agreement, 1,000,000 of his shares were purchased
by the Company and retired. The remaining shares were purchased by existing
shareholders.
9. SUBSEQUENT EVENTS:
On April 4, 1996, the Company entered into an employment and consulting
agreement with an unrelated party. Other services provided in the agreement
include office space and legal services. According to the terms of the
agreement, the Company will pay the party $120,000 and grant 100,000 options
annually.
On May 10, 1996, the Company issued $500,000 of its two year 8% convertible
debt at a conversion price per share of $.50. Additionally, $1,645,000 of
convertible notes payable were converted to 3,290,000 shares of common stock
at the stated conversion price of $.50.
On June, 1, 1996, the Company opened a restaurant in Merritt Island, Florida.
In connection with this restaurant, the Company entered into a noncancelable
operating lease agreement for an initial term of five years with additional
renewal options.
F-13
<PAGE>
EXHIBIT 10(r)
AGREEMENT
This AGREEMENT is made as of this 4th day of April, 1996, by and between
---
AUSTIN'S INTERNATIONAL, INC., a Delaware corporation, with offices at 2400 East
Commercial Boulevard, Suite 800, Fort Lauderdale, Florida 33708 ("Austin's"),
and WORRELL ENTERPRISES, INC., a Delaware corporation, with offices at 1450
South Dixie Highway, Boca Raton, Florida 33432 ("Worrell").
BACKGROUND
Austin's wishes to engage Worrell to provide certain services to Austin's
pursuant to the terms and conditions of this Agreement. Worrell is willing to
accept such engagement on the terms and conditions of this Agreement.
TERMS
1. Engagement. Austin's hereby engages Worrell to provide certain
----------
services to Austin's as herein provided and Worrell hereby accepts such
engagement upon the terms and conditions set forth in this Agreement.
2. Term. The term ("Term") of this Agreement shall be perpetual;
----
provided, however, that either party may terminate the Agreement at any time,
with or without cause, upon sixty (60) days prior written notice to the other
party. Notwithstanding anything to the contrary in this Agreement, the Term
will terminate immediately upon the death or disability of Edwin M. Freakley
("Freakley").
3. Services to be Provided. During the Term, Worrell shall provide the
-----------------------
following services to Austin's:
(a) To the extent requested by Austin's, Worrell shall provide
financial and general advice and assistance to Austin's on a variety of
projects and activities.
(b) Worrell shall provide Austin's with suitable space in Worrell's
offices at 1450 South Dixie Highway, Boca Raton ("Location"), in an amount
sufficient to accommodate the executive office staff of Austin's which is
presently comprised of approximately five (5) persons at no additional cost
to Austin's, except as otherwise provided herein. Worrell will arrange for
and make available to Austin's dedicated telephone and facsimile lines in
the Location with the costs associated with any such lines to be paid by
Austin's. Austin's further agrees to reimburse Worrell for Austin's pro
rata share of the utilities costs for the Location promptly upon receipt of
a copy of the monthly statement from the utilities providers. Austin's pro
rata share of such utilities shall be calculated by multiplying the
percentage of the square footage of office space of the Location occupied
by Austin's by the total amount of the utilities bills for the Location.
At the end of the Term, Austin's will vacate the Location within sixty
(60) days.
1
<PAGE>
(c) Worrell shall provide the services of Freakley, who shall serve as
Chairman of the Board and Chief Executive Officer of Austin's and assume
the duties commensurate with such positions, including, without limitation,
the following:
(i) promotion of Austin's capital stock with the objective
of increasing market awareness and the share price of such stock.
As part of such promotion, Freakley will be responsible (either
by himself or through his representatives(s)) for (i)
communicating with the National Association of Securities Dealers
and the Securities and Exchange Commission on behalf of Austin's
and (ii) the appointment of market makers, public relations firms
and/or investment banks, as necessary in connection with the
stock of Austin's.
(ii) development of a growth strategy to increase the number
of Austin's restaurant locations and spread overhead expenses
over a larger number of outlets with the objective of doubling
Austin's sales over the next two years to $15,000,000 per year
while achieving a $1,500,000 -$2,000,000 pre-tax profit.
(iii) development of a strategic plan for Austin's which
shall include identification of new restaurant sites, plans for
alteration of Austin's current capital structure including the
conversion of $2,500,000 of existing convertible loan notes into
equity, and identification of appropriate sources of capital for
funding Austin's future expansion programs.
(iv) responsibility for the physical inspection of
appropriate sites for new restaurant locations, negotiation of
suitable real estate leases, supervision of build-out programs
and management of all legal matters in connection with such new
locations.
(v) negotiation of a suitable sublease of Austin's existing
Fort Lauderdale, Florida executive offices.
(vi) cooperation with Austin's existing President, Chief
Operating Officer, and Chief Financial Officer to achieve the
foregoing objectives; and
(vii) such other duties as the Board of Directors of
Austin's and Worrell may from time to time mutually agree.
Worrell shall cause Freakley to devote such time for such periods as
the efficient and conscientious discharge of the services hereunder shall
require. Austin's understands and acknowledges that Freakley is currently
President of Worrell and will continue to provide services to Worrell
during the Term hereof in addition to the services to be provided to
Austin's on behalf of Worrell pursuant to this Agreement.
-2-
<PAGE>
(d) Notwithstanding anything contained herein to the contrary, it is
understood and agreed that Worrell does not guarantee the results of the
advice or counsel to be provided to Austin's under this Agreement.
4. Fees and Expenses.
-----------------
(a) As compensation for all services to be rendered hereunder:
(i) Austin's shall pay to Worrell a fee in the amount of Ten
Thousand and No/100 Dollars ($10,000.00) per month, payable in arrears
on the fifteenth day of each month during the Term, the first such
payment to be made on April 15, 1996.
(ii) Austin's shall grant Worrell non-qualified stock options to
purchase One Hundred Thousand (100,000) shares of the common stock of
Austin's during the month of April of each year of the Term, beginning
in April, 1996 on the following terms:
(1) The purchase price of the shares of common stock under each
option shall be the Fair Market Value of the stock at the date on
which an option is granted (the "Date of Grant"). "Fair Market
Value" means the mean of the closing bid and asked prices of the
common stock as reported to the National Association of
Securities Dealer Automated Quotations on the last trading day
proceeding the Date of Grant, or, if the common stock is listed
on a stock exchange, the mean of the high and low sales prices of
the stock as reported in The Wall Street Journal on the last
trading day proceeding the Date of the Grant. If the common
stock is not publicly traded at the Date of the Grant, the Board
of the Directors of Austin's shall determine the fair market
value of the shares as of that date, using such factors as the
Board considers relevant, including the price at which recent
sales have been made, the book value of the common stock, and
Austin's current and projected earnings.
(2) Each such option granted must be exercised within six (6)
years after the Date of Grant. Any option not exercised within
this period will terminate. No option may be exercised until it
is vested. Options granted pursuant to this Agreement shall vest
in full upon the anniversary date of the Date of Grant for such
options (the "Date of Vesting"). In the event this Agreement is
terminated between a Date of Grant and a Date of Vesting such
options as have been granted but have not vested at the date of
termination shall thereafter be void for all purposes. Options
which have vested but which have not been exercised at the date
of termination as aforesaid must be exercised within six (6)
years of the Date of Grant. Any options not exercised within
this period will terminate.
-3-
<PAGE>
(3) Options granted pursuant to this Agreement must be exercised
by delivery of written notice signed by Worrell to Austin's at
its principal executive offices stating Worrell's election to
exercise an option and specifying the number of shares with
respect to which Worrell is exercising the option. Such notice
must be accompanied by payment in full of the exercise price for
the shares. Such payment may be rendered in cash or by check
made payable to Austin's.
(4) In the event that the shares being purchased are not subject
to an effective registration statement under the Securities Act
of 1933, the notice of exercise also must be accompanied by a
certificate executed by the optionholder certifying that it is
purchasing such shares without a view to distribution and that it
agrees that such shares will not be transferred in the absence of
such a registration statement unless such transfer is in
compliance with the requirements of Rule 144 promulgated under
the Securities Act of 1933 or it obtains an opinion of counsel
satisfactory to Austin's that such registration is not required.
All certificates of stock issued upon the exercise of an option
shall bear a legend on its face or back to this effect.
(5) Options granted under this Agreement may not be assigned and
may be transferred only by will or by laws of descent and
distribution.
(6) If at any time after the Date of Grant of an option Austin's
shall by stock dividend, split up, combination, reclassification
or exchange, or through merger or consolidation, or otherwise,
change its shares of common stock into a different number or kind
or class of shares or other securities or property, then the
number of shares covered by such option and the price per share
thereof shall be proportionately adjusted for any such change by
the Board of Directors whose determination thereof shall be
conclusive. In the event that a fraction of a share results from
the foregoing adjustment, said fraction shall be eliminated and
the price per share of the remaining shares subject to the option
adjusted accordingly.
(7) If Austin's is the surviving corporation in any merger or
consolidation, any option granted hereunder shall pertain to and
apply to the securities to which a holder of the number of shares
of common stock subject to the option would have been entitled.
A merger or consolidation in which Austin's is not the surviving
corporation shall cause every option which has not vested at that
date to terminate, but Worrell shall have the right immediately
prior to a merger or consolidation in which Austin's is not a
surviving corporation, to exercise the option in whole or in part
without regard to the vesting provisions in Section 4(a)(ii)(2)
above; provided, however, that if the surviving corporation
provides Worrell with options to purchase equivalent number of
shares at a similar price, subject to proportional adjustment
pursuant to the merger or consolidation
-4-
<PAGE>
agreement, then the options not vested at the date of such merger
or consolidation shall terminate. A dissolution or liquidation
of Austin's shall cause every option not vested at that date to
terminate.
(b) During the Term, Austin's shall reimburse Worrell for all business
expenses not otherwise provided for herein and reasonably incurred by
Worrell in the performance of services hereunder. Worrell shall submit to
Austin's a written accounting of such expenses no less frequently than
biweekly.
5. Representations and Warranties.
------------------------------
(a) Representations and Warranties of Austin's. Austin's represents
------------------------------------------
and warrants to Worrell that:
(i) Austin's is a corporation organized under the laws of the
State of Delaware, which is active.
(ii) Austin's has the requisite corporate authority to enter into
this Agreement and to incur and perform its obligations under this
Agreement. Austin's has all necessary corporate power to own, lease,
hold, and operate all of its properties and assets and to carry on its
business as it is now being conducted. The execution, delivery and
performance by Austin's of this Agreement has been authorized by all
necessary corporate action.
(iii) the execution, delivery and performance of this Agreement
(and the transactions contemplated by this Agreement) does not and
will not: (i) contravene any provision of the articles of
incorporation or bylaws of Austin's; (ii) result in a breach of,
constitute a default under, result in the modification or cancellation
of, or give rise to any right of termination, modification or
acceleration in respect of any indenture, loan agreement, mortgage,
lease or any other contract, or agreement to which Austin's is bound;
or (iii) violate any writ, order, injunction or decree of any court or
any federal, state, municipal or other domestic or foreign
governmental department, commission, board, bureau, agency or
instrumentality, which violation or default in any such case would
have a material adverse effect on Austin's business.
(iv) upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding agreement of Austin's,
enforceable against Austin's, in accordance with its terms, subject
only to applicable bankruptcy, moratorium and similar laws and to
equitable principles.
(b) Representations and Warranties of Worrell. Worrell represents and
-----------------------------------------
warrants to Austin's that:
(i) Worrell is a corporation organized under the laws of the
State of Delaware, which is active.
-5-
<PAGE>
(ii) Worrell has the requisite corporate authority to enter into
this Agreement and to incur and perform its obligations under this
Agreement. Worrell has all necessary corporate power to own, lease,
hold, and operate all of its properties and assets and to carry on its
business as it is now being conducted. The execution, delivery and
performance by Worrell of this Agreement has been authorized by all
necessary corporate action.
(iii) the execution, delivery and performance of this Agreement
(and the transactions contemplated by this Agreement) does not and
will not: (i) contravene any provision of the articles of
incorporation or bylaws of Worrell; (ii) result in a breach of,
constitute a default under, result in the modification or cancellation
of, or give rise to any right of termination, modification or
acceleration in respect of any indenture, loan agreement, mortgage,
lease or any other contract, or agreement to which Worrell is bound;
or (iii) violate any writ, order, injunction or decree of any court or
any federal, state, municipal or other domestic or foreign
governmental department, commission, board, bureau, agency or
instrumentality, which violation or default in any such case would
have a material adverse effect on Worrell's business.
(iv) upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding agreement of Worrell,
enforceable against Worrell, in accordance with its terms, subject
only to applicable bankruptcy, moratorium and similar laws and to
equitable principles.
6. Indemnification of Freakley. By virtue of his capacity as an officer
---------------------------
of Austin's, and so long as Freakley is such an officer, Freakley shall be
covered under Austin's existing director and officer liability insurance policy,
or any replacement thereof.
7. Binding Effect, Assignment. This Agreement shall inure to the benefit
--------------------------
of and be binding upon Austin's and Worrell, and their successors and permitted
assigns, including, without limitation, any person, partnership, company or
corporation which may acquire substantially all of Austin's or Worrell's assets
or business, or with or into which Austin's or Worrell may be liquidated,
consolidated, merged or otherwise combined. Worrell may not assign its rights
or obligations under this Agreement to any other person or entity without the
prior written consent of Austin's.
8. Expenses.
--------
(a) Expenses. Except as otherwise provided herein or agreed between
--------
the parties, each party hereto shall bear its own expenses and the expenses
of its counsel and other agents in connection with the transactions
contemplated hereby.
(b) Costs of Litigation. The parties agree that the prevailing party
-------------------
in any action brought with respect to or to enforce any right or remedy
under this Agreement shall be entitled to recover from the other party all
reasonable costs and expenses of any nature whatsoever incurred by the
prevailing party in connection with such action,
-6-
<PAGE>
including, without limitation, attorneys' fees, paralegal fees, expert
witness fees and prejudgment interest.
9. Waiver. The failure of either party to insist in any one or more
------
instances upon performance of any terms or conditions of this Agreement shall
not be construed as a waiver of future performance of any such term, covenant or
condition, and the obligations of any party with respect to such term, covenant
or condition shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11. Notices. Any notice given hereunder shall be in writing and
-------
personally delivered or sent by registered or certified mail, return receipt
requested, to the address for such party included in the heading of this
Agreement or at such other address subsequently provided by a party in writing
to the other party hereto.
12. Further Documents. The parties hereto agree to execute all other
-----------------
documents as may be necessary or desirable to carry out the terms hereof.
13. Entire Agreement, Modification. This Agreement supersedes all
------------------------------
previous agreements, negotiations or communications between the parties and
contains the entire understanding and agreement between the parties with respect
to its subject matter. This Agreement cannot be amended, modified or
supplemented in any respect except by a subsequent written agreement entered
into by both of the parties.
14. Headings. Headings in this Agreement are for convenience only and
--------
should not be used to interpret or construe its provisions.
15. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of Florida without reference to conflict
of law provisions.
16. Severability. If any provision of this Agreement is held to be
------------
invalid, illegal or unenforceable, in whole or in part, such invalidity shall
not affect any otherwise valid provision, and all other valid provisions shall
remain in full force and effect.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Witnesses: Company:
Worrell Enterprises, Inc.
By:
- ----------------------------- ----------------------------------
Printed Name: Its:
---------------- ----------------------------------
- -----------------------------
Printed Name:
----------------
Austin's International, Inc.
By:
- ----------------------------- ---------------------------------
Printed Name: Its:
--------------------------------
- -----------------------------
Printed Name:
----------------
-8-
<PAGE>
EXHIBIT 10(s)
AUSTIN'S 1995
EMPLOYEE INCENTIVE STOCK OPTION PLAN
------------------------------------
This 1995 Employee Incentive Stock Option Plan (the "Plan") of AUSTIN'S
INTERNATIONAL, INC., a Delaware corporation (the "Corporation"), is dated June
2, 1995. The purpose of this Plan is to help attract, keep and motivate
superior personnel. The Corporation intends that each option granted to its
employees under the Plan will qualify as an "incentive stock option" as defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE I
STOCK SUBJECT TO THE PLAN
-------------------------
An aggregate of 3,850,000 shares of the $.01 par value Common Stock of the
Corporation ("Stock") subject, however, to adjustment pursuant to Article X
hereof, shall be reserved for issuance upon the exercise of options which may be
granted from time to time in accordance with this Plan (herein called
"Options"). Such shares may be, in whole or in part, as the Board of Directors
shall from time to time determine, authorized but unissued shares or issued
shares which have been reacquired by the Corporation. If, for any reason, an
Option shall lapse, expire or terminate without having been exercised in full,
the unpurchased shares covered thereby shall again be available for the purposes
of the Plan.
ARTICLE II
EMPLOYEES ELIGIBLE TO RECEIVE OPTIONS
-------------------------------------
All employees of the Corporation, or subsidiary corporations (as defined in
Section 424(f) of the Code), if any, shall be eligible to receive options to
purchase Stock under this Plan. Members of the Board of Directors will be
eligible to participate in the Plan; provided that any Option granted to a
person who is not an employee of the Corporation or its subsidiaries will not
qualify as an "incentive stock option" pursuant to Section 422 of the Code.
Options may not be granted under the Plan to any employee who, at the time of
the grant, is the beneficial owner of more than 10% of the combined voting power
of all classes of voting securities then outstanding of the Corporation or any
parent or subsidiary of the Corporation (a "10% Beneficial Owner") unless such
Options are granted at a price equal to at least 110% of the fair market value
of the Stock at the date of grant. Also, Options held by 10% Beneficial
Owners may not be exercisable for more than five years from the date of grant.
In addition, if any employee is granted options exercisable for the first time
in any calendar year to purchase shares having an aggregate market value in
excess of $100,000 (determined at the time the option is granted), such options
shall not be treated as "incentive stock options."
ARTICLE III
OPTION PRICE
------------
The purchase price of the shares of Stock under each Option shall be
determined by the Board of Directors, which determination shall be conclusive
and not subject to review, but in no event shall be less than 100% of the fair
market value of the Stock (110% in the case of a 10% Beneficial Owner) at the
date of the grant of the said Option. In determining such fair market value,
the Board of Directors shall consider any recent bid and asked prices of the
Stock, known sales prices, and such other factors as the Board of Directors
shall deem appropriate. For purposes of the Plan, the date of grant of an
Option shall be
<PAGE>
the date on which the Board of Directors shall by resolution duly authorize such
Option.
The proceeds of the sale of Stock subject to any Option shall be added to
the working capital of the Corporation and be available for general corporate
purposes.
ARTICLE IV
OPTION LIFE
-----------
Section 4.1. Time of Grant. All Options granted under this Plan must be
----------- -------------
granted within ten years from the date the Board of Directors adopt this Plan,
or the date the Stockholders approve this Plan, whichever is earlier. The
Company may grant Options to purchase up to 350,000 shares of Stock (the
"Authorized Options") during any consecutive twelve month period following the
Effective Date of the Plan (a "Period"); provided that the Board of Directors
may grant options up to 700,000 shares of Stock in the first twelve-month period
following the Effective Date of this Plan. Any Options to purchase shares of
Stock which lapse, expire or terminate may be granted in any subsequent Period
in addition to the Authorized Options for that Period. Also, any Options which
are authorized for any Period which are not granted in that Period may be
granted in any subsequent Period in addition to the Authorized Options for that
Period.
Section 4.2. Time of Exercise. An Option granted under this Plan must be
----------- ----------------
exercised within six years after the date the Option is granted (five years in
the case of a 10% Beneficial Owner). Any Option not exercised within this
period will terminate.
Section 4.3. Vesting. No Option or any portion of an Option may be
----------- -------
exercised until it is vested. The vesting of any Option granted under this Plan
shall be determined by the Board of Directors at the time such Option is
granted. Unless otherwise determined by the Board of Directors upon the grant
of an Option, all Options under this Plan shall vest at the rate of 20% per
year, the first 20% of which vests immediately on the grant date and 20% upon
the anniversary date of each year thereafter, such that all of the Options
granted totally vest four years after the date of grant.
ARTICLE V
EMPLOYMENT STATUS
-----------------
All incentive stock options granted under this Plan must be granted in
connection with an optionee's employment status. Employment by the Corporation,
or subsidiaries, if any, must continue from the time of the grant until thirty
days before the Option is exercised. However, if an optionee dies or becomes
disabled, an Option may be exercised by a disabled employee, or the personal
representative or the beneficiary or heir of his estate, up to twelve months
after termination of employment. Options not exercised by the end of such
thirty-day or twelve-month periods, or at the normal expiration of such option,
if earlier, will terminate. Notwithstanding the foregoing, (i) in the event
employment of any optionholder is terminated for cause, including, but not
limited to, dishonesty or other acts detrimental to the Corporation's interests
or the interests of any parent or subsidiary corporation, as determined in the
sole discretion of the Board of Directors, or for the optionholder's breach of
any employment contract with the Corporation or any parent or subsidiary
corporation of the Corporation, as determined in the sole discretion of the
Board of Directors, or (ii) if after his employment is terminated, the
optionholder commits acts detrimental to the Corporation's interests, as
determined in the
2
<PAGE>
sole discretion of the Board of Directors, then any Options owned by such
optionholder, whether vested or not, shall thereafter be void for all purposes.
ARTICLE VI
HOLDING PERIOD
--------------
All shares of Stock purchased by an employee pursuant to the exercise of an
Option granted under this Plan shall be eligible for the preferential tax
treatment provided by Section 422 of the Code as "incentive stock options," only
if that employee does not dispose of those shares for at least two years after
the Option is granted and at least one year after the date the shares are
transferred to the employee. This holding period will not apply to Options
owned by the estate or beneficiaries of a deceased optionholder.
ARTICLE VII
EXERCISE OF THE OPTION
----------------------
An Option granted under the Plan will be evidenced by an Austin's 1995
Employee Incentive Stock Option Agreement (the "Option Agreement"), which will
set forth the terms and conditions governing such option, including the number
of shares to which it relates, the price at which such shares may be purchased
upon exercise of the Option, when the Option may be exercised, and when the
Option expires. An optionholder may exercise an Option only for the purchase of
whole shares; fractional shares will not be issued.
Options granted under the Plan may be exercised by the delivery of written
notice signed by the optionholder to the Corporation at its principal executive
offices stating the optionholder's election to exercise the Option and
specifying the number of shares with respect to which the optionholder is
exercising the Option. Such notice must be accompanied by payment in full of
the exercise price for the shares. Such payment may be rendered in cash or by a
check made payable to the Corporation. In the event that the shares being
purchased are not subject to an effective registration statement under the
Securities Act of 1933, the notice of exercise also must be accompanied by a
certificate executed by the optionholder certifying that he is purchasing such
shares without a view to distribution and that he agrees that such shares will
not be transferred in the absence of such a registration statement unless such
transfer is in compliance with the requirements of Rule 144 promulgated under
the Securities Act of 1933 or he obtains an opinion of counsel satisfactory to
the Corporation that such registration is not required. All certificates of
Stock issued upon the exercise of an Option shall bear a legend on its face or
back to this effect.
An optionholder will have no right with respect to the shares underlying an
option granted under the Plan until such Option is exercised in the manner
provided by the related Option Agreement and such shares are actually issued to
him. Accordingly, no adjustment will be made for dividends or other rights for
which the record date precedes the date of issuance of shares under the Option.
ARTICLE VIII
GOVERNMENTAL COMPLIANCE
-----------------------
This Plan, the granting of options and the issuance or transfer of shares
of Stock pursuant thereto are subject to all applicable federal and state laws,
rules and regulations and to such approvals by any regulatory or governmental
agency (including without limitation "no action" positions of the Securities and
3
<PAGE>
Exchange Commission) which may, in the opinion of counsel for the Corporation,
be necessary or advisable in connection therewith. Without limiting the
generality of the foregoing, no Option may be granted under this Plan, and no
shares shall be issued by the Corporation pursuant to or in connection with any
such grant, unless and until, in each such case, all legal requirements
applicable to such issuance in the opinion of counsel to the Corporation, have
been complied with.
ARTICLE IX
NONTRANSFERABILITY
------------------
Options granted under this Plan may not be assigned and may be transferred
only by will or by laws of descent and distribution. During the employee's
life, the Options are exercisable only by the employee.
ARTICLE X
ADJUSTMENTS UPON CHANGED IN CAPITALIZATION
------------------------------------------
Section 10.1. Capital Adjustment. If at any time after the date of grant
------------ ------------------
of an Option the Corporation shall by stock dividend, split-up, combination,
reclassification of exchange, or through merger or consolidation, or otherwise,
change its shares of Stock into a different number or kind of class of shares or
other securities or property, then the number of shares covered by such Option
and the price per share thereof shall be proportionately adjusted for any such
change by the Board of Directors whose determination thereof shall be
conclusive. In the event that a fraction of a share results from the foregoing
adjustment, said fraction shall be eliminated and the price per share of the
remaining shares subject to the Option adjusted accordingly.
Section 10.2. Mergers, etc. If the Corporation is the surviving
------------ ------------
corporation in any merger or consolidation, any Option granted under the Plan
shall pertain to and apply to the securities to which a holder of the number of
shares of Stock subject to the Option would have been entitled. A dissolution
or liquidation of the Corporation shall cause every Option outstanding hereunder
to terminate. A merger or consolidation in which the Corporation is not the
surviving corporation shall also cause every Option outstanding hereunder to
terminate, but each optionholder shall have the right immediately prior to a
merger or consolidation in which the Corporation is not the surviving
corporation, to exercise his Option in whole or in part without regard to
vesting as set forth in Section 4.3 or other conditions contained in his Option
Agreement; provided, however, that if the surviving corporation provides the
optionholder with Options to purchase an equivalent number of shares qualified
as being issued under an incentive stock option plan at a similar price as
afforded the optionholder under this Plan, subject to proportional adjustment
pursuant to the merger or consolidation agreement, then the Options outstanding
hereunder shall terminate.
ARTICLE XI
ADMINISTRATION OF PLAN
----------------------
This Plan shall be administered by the Board of Directors of the
Corporation or a Compensation Committee appointed by the Board of Directors.
The Directors of the Corporation or the Compensation Committee shall have the
exclusive power to select the employees to be granted Options, the time at which
4
<PAGE>
an Option may be granted, the number of shares for which an Option is granted,
the vesting of any Option and the term of any Option. In granting Options, the
Board of Directors or the Compensation Committee may take into consideration the
value of the services rendered by the employees, their present and potential
contributions to the Corporation's success, and such other factors deemed
relevant in accomplishing the purposes of this Plan. All decisions and
determinations made by the Board of Directors or the Compensation Committee
shall be final and binding upon all parties, including the Corporation, its
Stockholders and its employees. Whenever the term "Board of Directors" is used
herein, it shall also mean the Compensation Committee where appropriate.
ARTICLE XII
INDEMNIFICATION OF DIRECTORS
----------------------------
In addition to such other rights of indemnification as they may have, the
Board of Directors and the Compensation Committee shall be indemnified by the
Corporation against all costs and expenses reasonably incurred by them in
connection with any action, suit or proceeding to which they or any of them may
be a party by reason of any action taken or failure to act under or in
connection with the Plan or any rights granted hereunder and against all amounts
paid by them in settlement thereof or paid by them in satisfaction of a judgment
of any such action, suit or proceeding, except a judgment based upon a finding
of bad faith. Upon the institution of any such action, suit or proceeding, any
member of the Board of Directors or the Compensation Committee shall notify the
Corporation in writing, giving the Corporation an opportunity at its own cost to
defend the same before such member undertakes to defend the same on his own
behalf.
ARTICLE XIII
AMENDMENT OF PLAN
-----------------
This Plan may be amended at any time by the Board of Directors without the
approval of the Corporation's Stockholders, other than an amendment of the
provisions regarding the number of optionable shares, the class of eligible
employees, or the minimum Option prices. If any provision of this Plan is
determined to disqualify the Options or shares which may be purchased upon
exercise by an employee of the Options granted under this Plan so that the
special tax treatment provided by Section 422 of the Code is not available, then
this Plan shall be deemed to be automatically amended so as to delete the
disqualifying provision as if it had never been inserted in this Plan, and to
incorporate by reference the modification necessary to qualify the Options or
shares under Section 422 of the Code.
ARTICLE XIV
GOVERNING LAW/SEVERABILITY
--------------------------
The Plan shall be governed by, and all questions arising hereunder shall be
determined in accordance with, the laws of the State of Florida. If any
provisions of the Plan shall be held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions hereof shall continue to be
fully effective.
5
<PAGE>
ARTICLE XV
EFFECTIVE DATE
--------------
The Effective Date of the Plan is June 2, 1995, subject to approval by the
Stockholders of the Company within twelve months after approval by the Board of
Directors.
AUSTIN'S INTERNATIONAL, INC.
By: /s/ Larry E. Graybill
------------------------------
Larry E. Graybill, President
ATTEST:
/s/ Elie Sopas
- ----------------------------
Elie Sopas, Secretary
6
<PAGE>
EXHIBIT 10(t)
DEED OF LEASE
THIS DEED OF LEASE, executed as of the 9th day of April, 1996, between RAJ
AND RAJ PARTNERSHIP, a Florida general partnership ("Landlord"), and AUSTIN'S
INTERNATIONAL, INC., a ________________ corporation ("Tenant").
W I T N E S S E T H:
-------------------
1. Demised Premises and Use.
------------------------
A. The Landlord does hereby demise and lease unto the Tenant and the
Tenant does hereby lease and hire from the Landlord the following described
demised premises, which demised premises comprise a portion of certain property
owned by Landlord, with the improvements and appurtenances thereon, situate at
260 East Merritt Island Causeway, Merritt Island, Florida (the "Property"). The
demised premises consists of an approximately ____________ square foot existing
commercial restaurant building located at the Property as shown on Exhibit A
attached hereto, together with the non-exclusive use of the existing entrances,
exits and drives on the Property as shown on the drawing attached hereto as
Exhibit B as a means of ingress and egress to the demised premises
(collectively, the "Demised Premises"). Landlord and Tenant agree that changes
to such existing roadway entrances, exits and drives may be made at any time and
from time to time by Landlord without Tenant's prior written consent.
B. The Demised Premises shall be used for the purpose of operating an
Austin's Restaurant and providing room service and banquet facilities to the
guests of the hotel located on the Property and for no other purpose.
C. Landlord represents and warrants to Tenant that to the best of its
knowledge, the Demised Premises is in compliance with all governmental rules and
regulations and its current zoning permits the operation of a restaurant serving
alcoholic beverages.
2. Lease of Equipment and Personal Property. In addition to the Demised
----------------------------------------
Premises, as part of this Lease, Landlord agrees to lease to Tenant the
furniture, fixtures, equipment and personal property located on the Demised
Premises (collectively, the "Equipment"). Twenty-four (24) hours prior to the
beginning of the term of this Lease, Tenant and Landlord shall complete a fully
itemized inventory list of all Equipment located in the Demised Premises'
restaurant and commercial kitchen. The Equipment shall remain Landlord's
property and at the conclusion of the Lease shall be returned to Landlord in
good condition, ordinary wear and tear excepted; provided, however, that if any
of the Equipment wears out or is damaged or destroyed, it shall be replaced by
Tenant, at Tenant's expense and shall be considered part of the Equipment
1
<PAGE>
belonging to Landlord. Tenant shall be solely responsible for all repairs and
maintenance to the Equipment at Tenant's expense.
3. Purchase of Food and Beverage Stocks. In addition to the lease of the
------------------------------------
Demised Premises and Equipment, Tenant hereby agrees to purchase from Landlord
and Landlord hereby agrees to sell to Tenant all of Landlord's stocks of non-
perishable food and beverage and unopened alcoholic beverages presently stored
on the Demised Premises or the Property which Tenant can use in the operation of
its Austin's Restaurant on the Demised Premises (collectively, the "Food").
Twenty-four (24) hours prior to the beginning of the term of this Lease, Tenant
and Landlord shall complete a fully itemized inventory list of all Food. Tenant
shall pay to Landlord a sum equal to the lower of (i) Landlord's cost of
purchase of all of the Food, or (ii) replacement cost, which payment Tenant
shall remit to Landlord prior to the beginning of the term of this Lease. All
of the food shall be sold by Landlord to Tenant "AS IS", "WHERE IS" and "WITH
ALL FAULTS," without representation or warranty of any kind including, without
limitation, any warranty relating to fitness for a particular purpose or
merchantability of all or any part of the Food.
4. Term of Lease.
-------------
A. The initial term of this Lease shall be for a period of five (5) years.
The initial term shall commence upon the earlier to occur of (i) June 1, 1996 or
(ii) the date an occupancy license is issued to Tenant for the Demised Premises
and shall expire sixty (60) months later. The term shall be delayed if Tenant
is unable to occupy the Demised Premises due to a condition of the Demised
Premises which was in violation of government rules and regulations and which
existed at the date of execution of this Lease. In this later event, the term
of the Lease shall not begin until such time as Tenant is permitted to occupy
the Demised Premises. For purposes of this Lease, a "Lease Year" shall mean any
twelve (12) month period which shall commence upon the date the initial term of
this lease commences or any anniversary of such date.
B. Provided Tenant is not in default under any of the terms of this Lease,
Landlord grants Tenant an option to lease the Demised Premises for three (3)
consecutive additional renewal periods of five (5) years each on the same terms
and conditions as are contained herein. In order for Tenant's exercise of any
such option to be effective, notice of Tenant's intent to exercise its option
for each renewal period must be delivered to Landlord in writing, by certified
mail, no less than sixty (60) days prior to the expiration of the term preceding
the renewal period.
2
<PAGE>
5. Rent.
----
A. Minimum Rent. During the term of this Lease, the Tenant covenants to
------------
pay to Landlord annual minimum rent (the "Minimum Rent") for the Demised
Premises, which rent shall be payable by Tenant in equal consecutive monthly
installments of 1/12 of the Minimum Rent on or before the first day of each
month, in advance. The Minimum Rent and each of the monthly installments of
rent called for hereunder shall be payable to Landlord, without demand,
deduction, set-off or counterclaim, at 260 East Merritt Island Causeway, Merritt
Island, Florida 32952 or such other place as Landlord shall designate in
writing. The first installment of Minimum Rent shall be paid in advance upon
the date of Tenant's execution of this Lease. If the term of this Lease
commences on other than the first day of a month, the second installment of
Minimum Rent shall be prorated at a daily rate on the basis of a thirty (30) day
month. The Minimum Rent shall be calculated as follows:
(1) During the first twelve months of the lease term (the "First Lease
Year"), Tenant shall pay Landlord annual rent of Sixty-Nine Thousand and 00/100
Dollars ($69,000.00), payable in monthly installments of Five Thousand Seven
Hundred Fifty and 00/100 Dollars ($5,750.00), plus any applicable State of
Florida sales tax, document or stamp tax and any other taxes that may be levied
hereafter by the State of Florida on commercial leases.
(2) During the second twelve months of the lease term, Tenant shall pay
Landlord annual rent of Seventy-Three Thousand Two Hundred and 00/100 Dollars
($73,200.00), payable in monthly installments of Six Thousand One Hundred and
00/100 Dollars ($6,100.00), plus any applicable State of Florida sales tax,
document or stamp tax and any other taxes that may be levied hereafter by the
State of Florida on commercial leases.
(3) During the third twelve months of the lease term, Tenant shall pay
Landlord annual rent of Seventy-Seven Thousand Four Hundred and 00/100 Dollars
($77,400.00), payable in monthly installments of Six Thousand Four Hundred Fifty
and 00/100 Dollars ($6,450.00), plus any applicable State of Florida sales tax,
document or stamp tax and any other taxes that may be levied hereafter by the
State of Florida on commercial leases.
(4) Commencing on the first day of the thirty-seventh (37th) month of the
lease term, Tenant shall pay to Landlord annual rent for each remaining Lease
Year of the original term and any renewal term an annual amount computed as
follows: Effective as of the first day of the thirty-seventh (37th) month of the
lease term, and each subsequent Lease Year of the original term and any renewal
term, the annual Minimum Rent which is applicable to each such Lease Year shall
be increased by a percentage equal to
3
<PAGE>
the percentage increase from the Base Index to the Current Index of the Consumer
Price Index (as such terms are hereinafter defined). Landlord shall notify
Tenant of the adjustment hereunder to Minimum Rent following the determination
of same by Landlord, and Tenant shall pay such Minimum Rent as adjusted for the
applicable Lease Year in the manner set forth in this Section for payment of
Minimum Rent; provided, however, that Tenant shall pay on demand the difference,
if any, between the amount paid by Tenant for any period prior to the date of
Landlord's determination of the adjustment hereunder and the amount actually due
for such prior period. In no event shall the Minimum Rent be less than the
Minimum Rent for the preceding Lease Year.
(5) For purposes of this Section, the following terms shall have the
following meanings: (i) the term "Base Index" shall initially refer to the Index
published for the twenty-fifth (25th) month of the initial term of this Lease,
and following any increase in the Minimum Rent pursuant to this Section, the
Base Index shall refer to the Index published for the month during which
commenced the term of the Lease Year for which the Minimum Rent was last
adjusted pursuant to this Section; and, (ii) the term "Current Index" shall
refer to the Index published for the month during which commenced the term of
the Lease Year for which Minimum Rent is currently being adjusted. If the Index
is not published for any of the above described months, then the Index published
for the month closest, but prior, to the described month shall be used in its
place.
(6) As used herein, the term "Consumer Price Index" or "Index" shall refer
to the Consumer Price Index for all Urban Consumers (1982-84=100) U.S. City
Average, All Items, published by the United States Department of Labor, Bureau
of Labor Statistics (or such comparable index as may be utilized in substitution
for or as the successor to the stated Index). If such Index is not published by
the Bureau of Labor Statistics or by another governmental agency at any time
during the term of this Lease, then the most closely comparable statistics on
the purchasing power of the consumer dollar as published by a responsible
financial authority and selected by landlord shall be utilized in lieu of such
Index.
B. Percentage Rent.
---------------
(1) If during any Lease Year during the term of the Lease or any renewal
term of the Lease, Tenant's total Gross Sales (as hereinafter defined) resulting
from business conducted by Tenant in, on or from the Demised Premises is greater
than or equal to Two Million and 00/100 Dollars ($2,000,000.00) (the "Sales
Break Point"), then Tenant shall pay to Landlord, in addition to minimum Rent,
percentage rent ("Percentage Rent") for such Lease Year and for all subsequent
Lease Years in an amount equal to the amount of Tenant's Gross Sales in excess
of the Sales Break Point multiplied
4
<PAGE>
by four and one-half percent (4.5%). Percentage Rent for the first Lease Year in
which Tenant's Gross Sales are greater than or equal to the Sales Break Point
shall be due to be paid by Tenant to Landlord no later than thirty (30) days
after the end of such Lease Year. For Lease Years subsequent to the first Lease
Year in which Tenant's Gross Sales are greater than or equal to the Sales Break
Point, Tenant shall make payments to Landlord of Percentage Rent in monthly
installments equal to one-twelfth (1/12th) of the Percentage Rent for the Lease
Year prior to any such subsequent Lease Year. If, at the end of any Lease Year,
it is determined that there is a deficiency in Percentage Rent paid by Tenant to
Landlord for such Lease Year, Tenant shall pay any deficiency in Percentage Rent
owing to Landlord within thirty (30) days of the date Landlord provides written
notice to Tenant of such deficiency. Any excess Percentage Rent paid shall be
credited against Tenant's next due Percentage Rent payment, except for the final
Lease Year of the term for which any excess Percentage Rent shall be refunded to
Tenant, provided that Tenant is not in default under the terms of this Lease.
(2) "Gross Sales" is defined to mean the total amount of the actual sales,
whether for cash or otherwise, of all sales of merchandise ("merchandise"
including food and beverage) or services arising out of or payable on account of
(and all other receipts or amounts receivable whatsoever with respect to) all
the business conducted in, on, or from the Demised Premises by or on account of
Tenant or any sublessee, assignee or concessionaire of Tenant for cash or
otherwise, including without limitation all orders for merchandise or service
taken from or filled at or from the Demised Premises, including all deposits not
refunded to customers. A "sale" shall be deemed to have been consummated for
purposes of this Lease, and the entire amount of the sales price shall be
included in Gross Sales, at such time as (i) the transaction is initially
reflected in the books or records of Tenant, or any sublessee, assignee or
concessionaire of Tenant, or (ii) Tenant or such other entity receives all or
any portion of the sales price, or (iii) the applicable merchandise or services
are delivered to the customer, whichever first occurs, irrespective of whether
payment is made in installments, the sale is for cash or credit, or otherwise,
or all or any portion of the sales price has actually been paid at the time of
inclusion in Gross Sales or at any other time; provided, however, that at such
time as an account is written off by Tenant as uncollectible, then Tenant's
Gross Sales shall be reduced by such amount that is written off as
uncollectible. Tenant shall record at the time of each sale or transaction, in
the presence of the customer, all receipts from such sale or other transaction,
whether for cash, credit or otherwise, in a cash register or cash registers
having a cumulative total, which shall possess such features as shall be
approved by and required by Landlord in connection with the reporting of sales.
The term "Gross Sales" shall exclude proceeds from any sales tax, gross receipts
tax or similar tax, by whatever name called, which
5
<PAGE>
are separately stated and in addition to the purchase price, bona fide transfers
of merchandise from the Demised Premises to any other stores or warehouses of
Tenant, refunds given to customers for merchandise purchased at the Demised
Premises and returned or exchanged, and sales of Tenant's fixtures and equipment
not in the ordinary course of Tenant's business.
(3) Tenant shall keep at the Demised Premises or at Tenant's executive
offices a full and accurate set of books and records adequately showing the
amount of Gross Sales in each Lease Year. The books and records to be kept by
Tenant shall include, without limitation, (a) cash register tapes, including
tapes from temporary registers; (b) detailed original records of any exclusions
or deductions from Gross Sales; (c) sales tax records; and (d) such other
records, if any, which would normally be examined by an independent accountant
pursuant to accepted auditing standards in performing an audit of Tenant's
sales. Such books and records shall be kept in accordance with generally
accepted accounting principles and practices and shall be retained by Tenant for
a period of not less than three (3) years following the Lease Year to which such
records relate. When and as Landlord may reasonably require, Tenant shall also
furnish to Landlord any and all statements, information, and copies of sales and
income tax reports and returns which separately show financial data for the
Demised Premises, and inventory records and other data evidencing Gross Sales.
Within thirty (30) days following the end of each calendar month of the term
hereof Tenant shall submit to Landlord an unaudited statement of Gross Sales for
such calendar month. All Gross Sales statements to be supplied by Tenant to
Landlord shall be in the same form as submitted to the state or local taxing
authorities which receives sales tax from Tenant. Within thirty (30) days after
the close of each Lease Year, Tenant shall furnish to Landlord a statement
certified by an officer of Tenant setting forth the amount of Gross Sales during
such Lease Year. Landlord and/or Landlord's auditor shall have the right, at
any time and from time to time, to inspect and/or to audit the records of Tenant
relating to Gross Sales. If the Gross Sales exceed those reported, Tenant shall
immediately pay any deficiency in Percentage Rent owing to Landlord. If Gross
Sales vary from those reported by one percent (1%) or more, Tenant shall pay
Landlord's cost of inspection and audit. If Gross Sales vary from those
reported by (i) three percent (3%) or more in any one (1) Lease Year or (ii) two
percent (2%) or more for any two (2) Lease Years out of any five (5) Lease
Years, then Landlord shall have the right, at its sole option, to terminate this
Lease, with Tenant remaining liable for sums due and owing under this Lease for
the balance of the term as originally set forth herein. Tenant agrees in the
event Tenant shall fail to timely submit a Gross Sales statement as required by
this Section 5 that Tenant shall pay on demand a late fee of Fifty and 00/100
Dollars ($50.00) per late statement, as additional rent.
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(4) In the event that any Lease Year during the term hereof is less than
exactly twelve (12) full calendar months or if Tenant shall fail to operate its
business in the Demised Premises in the manner and on each day as required
pursuant to this Lease, then, for the purpose of computing the Percentage Rent
for any such short Lease Year, or such Lease Year affected by Tenant's failure
to operate, the Sales Break Point shall be multiplied by a fraction, the
numerator of which shall be the actual number of days in such short Lease Year
or the actual number of days in such Lease Year during which Tenant was open for
business and operating in accordance with this Lease, and the denominator of
which shall be "365."
C. Payments by Tenant. Throughout the term of this Lease, Tenant shall
------------------
pay to Landlord, without demand, deductions, set-offs or counterclaims, the
rent, which is hereby defined as the sum of the Minimum Rent, Percentage Rent
and all additional rent, when and as the same shall be due and payable
hereunder. Unless otherwise stated, all sums of money or charges of any kind or
nature in addition to Minimum Rent and Percentage Rent payable by Tenant to
Landlord pursuant to this Lease or the exhibits attached hereto are defined as
"additional rent" and are due ten (10) days after the rendering of an invoice
therefor, without any deductions, set-offs or counterclaims, and failure to pay
such sums of money or charges shall carry the same consequences as Tenant's
failure to pay rent. All payments are to be made at the address indicated in
Section 5.A of this Lease, unless otherwise specified by written notice from
Landlord to Tenant. No payment by Tenant or receipt by Landlord of a lesser
amount than the correct rent shall be deemed to be other than a payment on
account and no endorsement or statement on any check or other communication
accompanying a check for payment of any amounts payable hereunder shall be
deemed an accord and satisfaction, and Landlord may accept such check in payment
without prejudice to Landlord's right to recover the balance of any sums owed by
Tenant hereunder or to pursue any other remedy available in this Lease, or under
law, against Tenant.
D. Late Charge and Default. In the event any rent or sums required
-----------------------
hereunder to be paid are not received on or before the tenth (10th) calendar day
after the same are due, then, for each and every late payment, Tenant shall
immediately pay, as additional rent, a service charge equal to the greatest of
(i) Fifty Dollars ($50.00); (ii) Five Dollars ($5.00) per day for each day after
the due date of such payment that such payment has not been received by
Landlord; or (iii) five percent (5%) per month of the amount required to be
paid. In the event of Tenant's failure to pay the foregoing service charge,
Landlord may deduct said charge from the security deposit, if any, collected
pursuant to Section 6 hereof. The provisions herein for late payment service
charges shall not be construed to extend the date for payment of any sums
required to be paid by Tenant hereunder or to relieve Tenant of its obligation
to pay all such sums at the time or times
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herein stipulated. Notwithstanding the imposition of such service charges
pursuant to this Section, Tenant shall be in default under this Lease if any or
all payments required to be made by Tenant are not made on or before the time
due as stipulated herein (including any applicable cure periods), and neither
the demand for, nor collection by, Landlord of such late payment service charges
shall be construed as a cure of such default on the part of Tenant. It is
agreed that the said service charge is a fair and reasonable charge under the
circumstances and shall not be construed as interest on a debt payment. In the
event any charge imposed hereunder or under any other section of this Lease is
either stated to be or construed as interest, then no such, interest charge
shall be calculated at a rate which is higher than the maximum rate which is
allowed under the usury laws of the State of Florida, which maximum rate of
interest shall be substituted for the rate in excess thereof, if any, computed
pursuant to this Lease.
E. Rental Credit. Tenant shall be entitled to a rental credit for the
-------------
cost of build out, furniture, fixtures and equipment necessary to operate the
Demised Premises as an Austin's Restaurant. This credit shall not exceed fifty
percent (50%) of the Minimum Rent for the First Lease Year, and one-twelfth
(1/12th) of such credit shall be applied to each of the monthly installments of
Minimum Rent for the First Lease Year. For example, if the cost of tenant's
improvements is $100,000.00, then Tenant's rental credit shall be $34,500.00
(i.e., equal to the maximum rental credit permitted by this Section 5.E), and
Tenant shall receive a credit against each of its monthly installments of
Minimum Rent for the First Lease Year in the amount of $2,875.00.
F. Use of/Pavement for Banquet Facilities. Tenant agrees that the right
--------------------------------------
to use the banquet room (the "Banquet Room"), if any, which is located on the
Demised Premises belongs solely to Landlord. Tenant further agrees that if
requested by Landlord, Tenant will furnish quotes for the catering of banquets
booked by Landlord. Such quotes will include the preparation and furnishing of
food and drink for such banquets as well as the furnishing of all supplies for
the banquet, including but not limited to, linens, dishes, silverware and
glasses. The quote will also include the cost of cleaning the Banquet Room
after the banquet. Tenant further agrees to pay the Landlord seven percent (7%)
of the Tenant's charges for each banquet booked by Landlord. Provided the
Banquet Room is not rented, Tenant shall have the right to rent the Banquet Room
from Landlord at a rental rate and on terms and conditions selected by Landlord.
All revenues derived by Tenant from catering of banquets or the use of the
Banquet Room shall be included in the calculation of Tenant's Gross Sales.
6. Security Deposit. Upon the execution of this Lease, Tenant shall pay
----------------
to Landlord a security deposit (the "Deposit") in the amount of Six Thousand One
Hundred and 00/100 Dollars ($6,100.00). The Deposit may, at Landlord's option,
be applied by
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Landlord against any default by Tenant in any of the terms, provisions or
conditions of this Lease. Landlord shall not be obligated to keep the Deposit
in a separate fund but may commingle the Deposit with its own funds. The
Deposit shall not accrue interest. In the event Landlord applies the Deposit in
whole or in part against a default by Tenant, Tenant shall, upon demand by
Landlord, deposit sufficient funds to maintain the Deposit in the initial
amount. The failure by Tenant to maintain the Deposit in the initial amount as
stated shall constitute a failure to pay rent and shall be a default under this
Lease. If Tenant is not in default under this Lease, the Deposit shall be
applied by Landlord toward the payment of the thirteenth (13th)'s month rent due
under this Lease.
7. Construction of Improvements on Demised Premises.
------------------------------------------------
A. Tenant shall not make or cause to be made any alterations,
repairs, additions or improvements in or to the Demised Premises (for example,
but without limiting the generality of the foregoing, Tenant shall not install
or cause to be installed any exterior signs or interior signs visible from the
exterior except as permitted by Section 8 hereof, floor coverings, interior or
exterior lighting, plumbing fixtures, shades, canopies or awnings or make any
changes to storefront, mechanical, electrical or sprinkler systems) without the
prior written consent thereto by Landlord. Tenant shall submit to Landlord
plans and specifications for such work at the time consent is sought. In the
event Landlord grants such consent, such alterations, additions or improvements
shall be performed in good and workmanlike manner and in accordance with all
applicable legal and insurance requirements and all drawings or specifications
approved by Landlord and in accordance with the provisions of this Lease. Any
work performed by Tenant shall be subject to Landlord's inspection and approval
after completion to determine whether the same complies with the requirements of
this Lease. Prior to the commencement of any such work by tenant, Tenant shall
obtain the insurance required in Section 17 hereof and shall also furnish to
Landlord payment and performance bonds guaranteeing the completion of any
repairs, alterations, additions or improvements (structural or otherwise)
required or permitted to be performed by Tenant under any provision of this
Lease, such bonds to be issued by sureties acceptable to Landlord in its sole
and absolute discretion. As an alternative to furnishing payment and
performance bonds, Tenant shall have the right to escrow funds sufficient to pay
for the alterations, repairs, additions or improvements with an escrow agent
satisfactory to Landlord and pursuant to an escrow agreement providing for the
disbursement of said funds in a manner satisfactory to Landlord.
B. All repairs, alterations, decorations, additions and
improvements made by Tenant shall be deemed to be attached to the Demised
Premises and to have become the property of Landlord upon
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such attachment, and, upon the expiration or sooner termination of this Lease,
Tenant shall not remove any of such alterations, decorations, additions and
improvements; provided, however, that Landlord may designate by written notice
to Tenant those alterations, decorations, additions and improvements which shall
be removed by Tenant at the expiration or termination of this Lease and Tenant
shall promptly remove the same and repair any damage to the Demised Premises
cause by such removal.
C. Tenant shall exercise its best efforts to complete any and all
repairs, alterations, decorations, additions and improvements to the Demised
Premises necessary to outfit the Demised Premises as an Austin's Restaurant
prior to June 1, 1996.
8. Signs.
-----
A. Tenant is required to identify the Demised Premises by a sign at
the Property naming the Tenant and Landlord hereby grants to Tenant during the
term of this Lease and any renewals hereof, subject to the terms hereof, the
right to place a sign on Landlord's sign below the Holiday Inn sign which faces
Merritt Island Causeway. Costs incurred in design, construction and
installation, as well as maintenance, of Tenant's sign shall be the
responsibility of Tenant. The Tenant must obtain permits to erect and connect
Tenant's sign from all governmental authorities and agencies before the sign is
installed. Tenant's sign must also be inspected, as appropriate, by all
governmental authorities and agencies when it is installed.
B. Landlord shall have the right to approve or disapprove of the
proposed Tenant sign in Landlord's sole and absolute discretion, and Tenant must
submit all proposals for Tenant's signage in the form of working drawings before
such signage is manufactured or assembled. Submission shall be to Landlord, in
the form of shop drawings with all pertinent details necessary to construct and
install same included. Submission shall be to Landlord a minimum of thirty (30)
days before the proposed installation date, and Tenant is expected to have all
signage manufactured and ready for installation within forty-five (45) days of
approval by Landlord. Landlord reserves the right to reject signs not
conforming to approved drawings regardless of stage of completion or
installation. Landlord shall approve or disapprove of any sign within five (5)
days of the date it is submitted to Landlord for Landlord's approval.
C. All of Tenant's signs shall at all times be and remain the
property of Tenant and may be removed at Tenant's election, cost and expense at
any time and from time to time. Tenant shall remove Tenant's signs at the
expiration or earlier termination of this Lease at Tenant's sole cost and
expense and repair any damage caused by such removal.
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9. Taxes. Tenant shall pay to Landlord as additional rent twenty percent
-----
(20%) of all taxes and assessments of every nature which may be levied or
assessed by, or are payable to, any lawful authority during or with respect to
each fiscal tax year falling in whole or in part during the term of this Lease
against the land, buildings and improvements comprising the Property and/or the
Demised Premises. Tenant shall pay all taxes and assessments of whatever nature
which may be levied or assessed against the Equipment or arising out of the
Tenant's operation of its business at the Demised Premises. Tenant shall pay
such amount to Landlord within ten (10) days of the date Landlord submits the
amount to Tenant for payment.
10. Common Area Maintenance.
-----------------------
Tenant hereby agrees to be responsible for the routine maintenance and
clean up, at Tenant's expense, of that portion of the Property's common area
which comprises the parking area adjacent to the Demised Premises, as indicated
on Exhibit B (the "Restaurant Parking Area"). Additionally, Tenant agrees to
pay as additional rent twenty percent (20%) of the cost of repair of the parking
lots on the Property provided the Tenant is advised in advance of such repairs
and consents to such repairs, such consent not to be unreasonably withheld or
delayed. Tenant shall pay such amount to Landlord within ten (10) days of the
date Landlord submits the amount to Tenant for payment.
11. Dumpster. Tenant agrees to provide a dumpster to be used for the
--------
disposal of trash from the Demised Premises. Tenant, at its expense, shall pay
the cost of providing, maintaining and servicing such dumpster and the cost of
removal of trash therefrom. Tenant shall not use any dumpsters provided by the
Landlord for the use of the Landlord's hotel on the Property and the hotels
guests.
12. Utilities.
---------
A. Tenant shall have the option of having Landlord provide utility
service to the Demised Premises. If Landlord supplies utility service to the
Demised Premises, Tenant will, within ten (10) days after mailing by Landlord to
Tenant of statements pay to Landlord an amount equal to twenty percent (20%) of
the total utility charges which Landlord receives from utility companies
providing utility services to the Property. Landlord and Tenant hereby agree
that if Landlord supplies utility service to the Demised Premises pursuant to
this Section, Landlord shall have no liability for any damages or losses
incurred by Tenant as a result of any interruptions in such service.
B. If Tenant does not wish for Landlord to furnish utility service
to the Demised Premises, then Tenant shall have the right, at its sole cost and
expense, to have any utility service
11
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furnished directly to the Demised Premises. Tenant shall pay for all utility
services furnished directly to the Demised Premises.
C. Landlord in its sole discretion, shall have the right, from time
to time, to alter the method and source of supply of utility service to the
Demised Premises, and Tenant agrees to execute and deliver to Landlord such
documentation as may be required to effect such alteration, provided, however,
that Tenant shall not be required to bear any portion of the cost of such
alteration or to incur any additional financial obligation as a result of such
alteration, unless such alteration was effected at Tenant's request, in which
event Tenant shall pay the costs of such alteration.
D. Tenant shall not at any time overburden or exceed the capacity of
the mains, feeders, ducts, conduits, or other facilities by which utilities are
supplied to, distributed in or serve the Demised Premises. If Tenant desires to
install any equipment which shall require additional utility facilities or
utility facilities of a greater capacity than the facilities provided by
Landlord, such installation shall be subject to Landlord's prior written
approval of Tenant's plans and specifications therefor. If such installation is
approved by Landlord in writing and if Landlord provides such additional
facilities to accommodate Tenant's installation, Tenant agrees to pay Landlord,
on demand, the cost for providing such additional utility facilities or utility
facilities of greater capacity.
13. Repairs and Maintenance of Demised Premises.
-------------------------------------------
A. During the term of this Lease and any renewal terms of this
Lease, Tenant shall maintain the interior of the Demised Premises in good and
clean order and condition, and make all necessary non-structural repairs
thereto, ordinary and extraordinary, foreseen and unforeseen, it being the
intention of the parties that such repairs and maintenance shall be appropriate
for the maintenance of a high quality restaurant structure. When used in this
Section the term "repairs" shall include all necessary replacements, renewals,
alterations, additions, betterments and any work required as a condition to the
continued use of the Demised Premises or any work required by any order of any
governmental agency. All repairs made by Tenant shall be equal in quality and
class to the original work, and all work required by this Section shall be
performed in accordance with the terms of this Lease. If the necessity for any
structural repair is caused by Tenant, then Tenant shall be responsible for
paying the costs of such repairs.
B. Landlord shall not be required to furnish any services or
facilities, or to make any repairs, alterations, additions, replacements or
betterments in or to the Demised Premises, and Tenant hereby waives any and all
rights to such services, facilities, repairs, alterations, additions,
replacements
12
<PAGE>
or betterments, whether conferred by statute or otherwise, including, without
limitation, any right to make any repairs, replacements, alterations or
improvements at the expense of Landlord, and to obtain damages or reductions or
abatements of rent.
C. Landlord, upon the failure of Tenant to maintain the Demised
Premises in accordance with the provisions of this Section, may elect to
maintain the Demised Premises on Tenant's behalf and on the account of Tenant.
Any and all costs of such maintenance shall be an expense of the Tenant. Prior
to undertaking any maintenance, Landlord shall provide Tenant with written
notice of the manner in which Tenant has failed to maintain the Demised
Premises, and notwithstanding any other provision of this Lease to the contrary,
Tenant shall have a period of thirty (30) days after the receipt of such notice
to perform the maintenance specified in such notice, or to commence and continue
diligently thereafter such maintenance, if such maintenance by its nature cannot
be completed in thirty (30) days.
D. During the term of this Lease and any renewal terms of this
Lease, Landlord agrees to maintain the roof of the Demised Premises and the
exterior of the building of the Demised Premises in good condition (excluding
windows, doors, glass and canopies, the maintenance and repair of which shall be
Tenant's sole responsibility during the term of this Lease).
14. Heating Ventilating and Air-Conditioning and Plumbing.
-----------------------------------------------------
A. Tenant shall be solely responsible for the maintenance in good
condition, upkeep, repair and replacement of the heating, ventilating and air-
conditioning and plumbing systems of the Demised Premises, including, without
limitation, the roof top air conditioning units.
B. Landlord, in its sole discretion, shall have the right from time
to time, to alter the heating, ventilating and air conditioning systems and
equipment serving the Demised Premises, or any part thereof, and Tenant agrees
to execute and deliver to Landlord such documentation as may be required to
effect such alteration; provided, however, that Tenant shall not be required to
bear any portion of the cost of such alteration or to incur any additional
financial obligation as a result of such alteration unless such alteration was
effected at Tenant's request, in which event Tenant shall pay the costs of such
alteration.
15. Fire Protection Sprinkler System. Landlord shall provide and Tenant
--------------------------------
shall be solely responsible for the repair and maintenance in good condition of
the fire sprinkler protection system (the "Fire Protection System") in the
Demised Premises, which Fire Protection System shall remain the property of
Landlord.
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16. Tenant's Warranties.
-------------------
A. Tenant warrants, represents, covenants and agrees that, in the
operation of its business within the Demised Premises, Tenant shall: (i) pay
before delinquency any and all taxes, assessments and public charges levied,
assessed or imposed upon Tenant's business, or upon Tenant's fixtures,
furnishings or equipment in the Demised Premises, or upon any leasehold interest
or personal property of any kind, owned by or placed in or about the Demised
Premises by Tenant, including, without limitation, any transfer taxes, and pay
when and as due all license fees, permit fees and charges of a similar nature
for the conduct by Tenant or any subtenant or concessionaire of any business or
undertaking authorized hereunder to be conducted in or from the Demised
Premises; (ii) observe all reasonable requirements promulgated by Landlord at
any time and from time to time relating to delivery vehicles, the delivery of
merchandise, and the storage and removal of trash and garbage; (iii) not use any
space on the Property outside the Demised Premises for sale, storage or any
other undertaking; (iv) not use the plumbing facilities in the Demised Premises
for any purpose other than that for which they were constructed, nor dispose of
any foreign substances therein; (v) not use any advertising medium or sound
devices inside or adjacent to the Demised Premises which produce or transmit
sounds which are audible beyond the interior of the Demised Premises; (vi) not
permit any odor, other than those odors generated by the typical preparation of
food, which odors shall not be deemed to violate this Section, to emanate from
the Demised Premises which is objected to by Landlord or by any tenant or
occupant of Landlord's hotel on the Property (and, upon written notice from
Landlord, Tenant shall immediately cease and desist from causing such odor, and
failing of which Landlord may deem the same a material breach of this Lease);
(vii) keep the Demised Premises and any platform, loading dock or service area
used by Tenant in a neat, clean, safe and sanitary condition; (viii) promptly
comply with all present and future laws, ordinances, orders, rules, regulations
and requirements of all governmental authorities having jurisdiction, and
observe and comply with all covenants and restrictions of record and all notices
from Landlord's mortgagee or from Franchisor (provided such requirements from
Franchisor do not impose a substantial hardship or extraordinary expense on
Tenant) affecting or applicable to the Demised Premises or the cleanliness,
safety, occupancy and use of the same, whether or not any such law, ordinance,
order, rule, regulation, covenant, restriction, or other equipment is
substantial, or foreseen or unforeseen, or ordinary or extraordinary, or shall
necessitate structural changes or improvements, shall interfere with the use or
enjoyment of the Demised Premises, or shall be directed to or imposed upon
Tenant or Landlord, and Tenant shall hold Landlord harmless from any and all
cost or expense on account thereof (as used in this Lease, the term "legal
requirements" shall include the requirements set forth in this subparagraph);
(ix) not use the parking areas or sidewalks,
14
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common areas or any space on or about the Property (outside the Demised
Premises) for display, sale, handbilling, advertising, solicitation, or any
other similar undertaking; (x) maintain and operate the heating, ventilating and
air conditioning system and equipment servicing the Demised Premises so as to
adequately heat and cool the same; (xi) not to permit to be carried on, upon, in
or about the Demised Premises a public or private nuisance, or any activity
which may cause, by increasing the hazard of risk, the increase of insurance
premium rates of any kind upon the Demised Premises; and, (xii) be authorized to
do business in the State of Florida.
B. As a material inducement to the Landlord to enter into this
Lease, Tenant also represents, warrants and agrees to open the Demised Premises
for business within ten (10) days from the commencement of the initial term
hereof and to keep the Demised Premises open for business thereafter. Tenant
shall continuously use the Demised Premises for the purpose stated herein during
the term of this Lease, carrying on therein Tenant's business undertaking
diligently. Tenant shall keep the Demised Premises open and available for
business activity therein, during such days and hours as are customary except
when prevented by strikes, fire, casualty or other causes beyond Tenant's
control.
C. Tenant shall at all times maintain a contract for pest control
service to the Demised Premises with a reputable pest control service.
17. Insurance.
---------
A. Landlord's Insurance Obligations. Landlord agrees to obtain and
--------------------------------
maintain during the term hereof, to the extent the same is available, fire and
extended coverage insurance, in amounts and coverages and with such special
endorsements as Landlord shall determine from time to time, insuring the
building in which the Demised Premises are located and the improvements to the
Demised Premises provided by Tenant pursuant to this Lease (exclusive of
Tenant's merchandise, trade fixtures, furnishings, equipment, plate glass, signs
and personal property of Tenant).
B. Tenant's Insurance Obligations.
------------------------------
(1) Tenant, at Tenant's sole cost and expense, shall obtain and
maintain in effect commencing with the delivery of possession and continuing
throughout the term of this Lease, insurance policies providing for the
following coverage: (i) all risk property insurance against fire, theft,
vandalism, malicious mischief, sprinkler leakage and such additional perils as
now or hereafter may be included in a standard extended coverage endorsement
from time to time in general use in the State of Florida, insuring the
Equipment, Tenant's merchandise, trade fixtures, furnishings, equipment and all
items of personal property
15
<PAGE>
of Tenant located on or in the Demised Premises, in an amount equal to not less
than the full replacement value thereof. Any and all proceeds of such
insurance, so long as the Lease shall remain in effect, shall be used only to
repair or replace or pay for the items so insured; (ii) a comprehensive general
liability policy, including insurance naming Landlord, any mortgagee of the
Property and Franchisor as additional insureds, protecting against any and all
claims for injury to persons or property occurring in or about the Demised
Premises and protecting against,assumed or contractual liability under this
Lease with respect to the Demised Premises, with such policy to be in the
minimum amount of One Million Dollars ($1,000,000.00) per occurrence for
property damage, Two Million Dollars ($2,000,000.00) per occurrence for personal
injury and death to persons and "umbrella" coverage of Ten Million Dollars
($10,000,000.00). In addition, the minimum limit hereinbefore set forth may from
time to time be increased as reasonably required by Franchisor, (iii) products
liability insurance for merchandise offered for sale or lease from the Demised
Premises, including (if this Lease covers leased premises in which food and/or
beverages are sold and/or consumed) liquor liability coverage and coverage for
liability arising out of the consumption of food and/or alcoholic beverages on
or obtained at the Demised Premises, of not less than One Million Dollars
($1,000,000.00) per occurrence for property damage, Two Million Dollars
($2,000,000.00) per occurrence for personal injury and death to persons and
"umbrella" coverage of Ten Million Dollars ($10,000,000.00); (iv) worker's
compensation coverage as required by law; and (v) with respect to alterations,
improvements and the like required or permitted to be made by Tenant hereunder,
contingent liability and builders risk insurance in amounts satisfactory to
Landlord.
(2) All insurance policies herein to be procured by Tenant shall: (i)
be issued by insurance companies reasonably satisfactory to Landlord and
Franchisor and authorized to do business in the State of Florida; (ii) be
written as primary policy coverage and non-contributing with respect to any
coverage which Landlord may carry and that any coverage carried by Landlord
shall be excess insurance; (iii) insure and name Landlord, any mortgagee of the
Property, Franchisor and any other parties in interest designated by Landlord as
additional insureds, as their respective interests may appear (except with
respect to worker's compensation insurance) and (iv) shall contain an express
waiver of any right of subrogation by the insurance company against Landlord and
its agents, employees and representatives which arises or might arise by reason
of any payment under such policy or by reason of any act or omission of
Landlord, its agents, employees or representatives. Neither the issuance of any
insurance policy required hereunder, nor the minimum limits specified herein
with respect to Tenant's insurance coverage, shall be deemed to limit or
restrict in any way Tenant's liability arising under or out of this Lease. With
respect to each and every one of the insurance policies herein required to be
procured by Tenant, on or before the commencement of
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the initial term of this Lease and before any such insurance policy shall
expire, Tenant shall deliver to Landlord a duplicate original or certified copy
of each such policy or a certificate of the insurer, certifying that such policy
has been issued, providing the coverage required by this Section and containing
provisions specified herein, together with evidence of payment of all applicable
premiums. Any insurance required to be carried hereunder may be carried under a
blanket policy covering the Demised Premises and other locations of Tenant.
Each and every insurance policy required to be carried hereunder by or on behalf
of Tenant shall provide (and any certificate evidencing the existence of each
such insurance policy shall certify) that, unless Landlord shall first have been
given thirty (30) days' prior written notice thereof, the insurer will not
cancel, materially change or fail to renew the coverage provided by such
insurance policy. The term "insurance policy" as used herein shall be deemed to
include any extensions or renewals of such insurance policy. In the event that
Tenant shall fail to promptly furnish any insurance coverage hereunder required
to be procured by Tenant, Landlord, as its sole option, shall have the right to
obtain the same and pay the premium therefor for a period not exceeding one (1)
year in each instance, and the premium so paid by Landlord together with an
amount equal to fifteen percent (15%) of such premium shall be immediately due
and payable by Tenant to Landlord as additional rent.
(3) Tenant shall not do or permit to be done any act or thing upon the
Demised Premises that will invalidate or be in conflict with fire insurance
policies covering the building containing the Demised Premises or any part
thereof, including all common areas, or fixtures and property therein, or any
other insurance policies or coverage referred to above in this Section; and
Tenant shall promptly comply with all rules, orders, regulations, or
requirements relating to such insurance policies, and shall not do, or permit
anything to be done, in or upon the Demised Premises, or bring or keep anything
therein, which shall increase the rate of fire insurance on the building in
which the Demised Premises are located or on any property, including all common
areas, located therein, or increase the rate or rates of any other insurance
referred to hereinabove. If any act or omission of Tenant, its agents,
employees or contractors shall result in any increase in the premium rates
applicable to any such insurance policies carried by Landlord, or other
increased costs to Landlord in connection therewith, then Tenant shall reimburse
Landlord on demand as additional rent for the amount of any such increased rates
or costs.
C. Mutual Covenant. Landlord and Tenant each hereby releases the
---------------
other, its officers, directors, partners, employees and agents from any and all
liability or responsibility for any loss, damage or injury caused by fire or
other casualty for which insurance containing a waiver of subrogation is carried
by the
17
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injured party at the time of such loss, damage or injury to the extent of any
recovery by the injured party under such insurance. Both parties agree to carry
casualty insurance containing such waiver of subrogation.
D. Tenant's Covenant to Hold Harmless. Tenant hereby indemnities
----------------------------------
and agrees to save harmless Landlord, its partners, employees and agents, any
mortgagee of the Property and the Franchisor from and against any and all
claims, actions, damages, liability, cost and expense, including reasonable
attorney's fees, that (i) arise from or are in connection with Tenant's use and
occupancy of the Demised Premises, or any portion thereof, or (ii) arise from or
are in connection with any negligence or misconduct of Tenant or Tenant's
agents, employees, contractors, licensees or invitees (while such invitees are
physically present within the Demised Premises), or (iii) result from any
default, breach, violation or nonperformance of this Lease or any provision
hereof by Tenant, or (iv) result from injury to person or property or loss of
life sustained in or about the Demised Premises resulting directly or indirectly
from Tenant's negligence or misconduct. Tenant shall, at its own cost and
expense, defend any and all actions, suits and proceedings which may be brought
against Landlord, any mortgagee of the Property or Franchisor with respect to
the foregoing. Tenant shall pay, satisfy and discharge any and all judgments,
orders and decrees which may be entered against Landlord, any such mortgagee or
Franchisor in connection with the foregoing. In the event Landlord or any other
party so indemnified, shall, without fault, be made a party to any litigation
commenced by or against Tenant, or if Landlord or any such party shall, in its
sole discretion, intervene in such litigation to protect its interest hereunder,
then Tenant shall protect and hold them harmless and shall pay all costs,
expenses and attorney's fees incurred or paid by such party(ies) in connection
with such litigation.
E. Landlord's Covenant to Hold Harmless. Landlord hereby
------------------------------------
indemnities and agrees to save harmless Tenant from and against any and all
claims, actions, damages, liability, costs and expenses, including reasonable
attorney's fee that (i) arise from or in connection with Landlord's use and
occupancy of the Property (excluding the Demised Premises), or (ii) arise from
or in connection with any gross negligence or willful conduct of Landlord, or
(iii) result from any default, breach, violation or non-performance of this
Lease or any provision hereof by Landlord, or (iv) result from injury to person
or property or loss of life sustained in or about the Property (excluding the
Demised Premises) resulting directly or indirectly from Landlord's gross
negligence or willful acts. Landlord shall, at its own cost and expense, defend
any and all actions, suits and proceedings which may be brought against Tenant
with respect to the foregoing. Landlord shall pay, set aside and discharge any
and all judgments, orders and decrees which may be entered against Tenant in
connection with
18
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the foregoing. In the event Tenant shall, without fault, be made a party to any
litigation commenced by or against Landlord, or if Tenant intervenes in such
litigation to protect its interest hereunder, then Landlord shall pay all costs,
expenses, and reasonable attorney's fees incurred or paid by the Tenant in
connection with such litigation.
F. Loss and Damage. All Tenant's property of every kind and
---------------
description which may at any time be in the Demised Premises shall be kept at
Tenant's sole risk, and except with respect to the gross negligence or willful
misconduct of Landlord, its agents or employees unless covered by the insurance
Tenant is required to carry, Landlord shall not be liable to Tenant, its agents,
employees or customers, for any damage, loss, compensation, accident, or claims
whatsoever resulting to Tenant or its property; any interruption in the use of
the Demised Premises; the use or operation (by Landlord, Tenant, or any other
person or persons whatsoever) of any elevators, heating, cooling, electrical or
plumbing equipment or apparatus; the termination of this Lease by reason of the
destruction of the Demised Premises; any fire, robbery, theft, or any other
casualty; any leakage in any part or portion of the Demised Premises or the
Property; any water, wind, rain or snow that may leak into, or flow from part of
the Demised Premises or the Property; any acts or omissions of any occupant of
any space adjacent to or adjoining all or any part of the Demised Premises or
any part of the building of which the Demised Premises are a part; any
explosion, casualty, utility failure or malfunction, or falling plaster; the
bursting, stoppage or leakage of any pipes, sewer pipes, drains, conduits,
appliances or plumbing works; or any other cause whatsoever.
18. Compliance With Laws and Ordinances.
-----------------------------------
A. Compliance with Law. During the term of this Lease, Tenant
-------------------
represents and warrants that it shall comply promptly with all applicable
statutes, ordinances, rules, regulations, permits, orders and requirements in
effect during the term of this Lease or any part thereof, or thereafter, to the
extent applicable to Tenant's use of and operations at the Demised Premises
during the term of this Lease.
B. Hazardous Substances. Tenant shall not cause, permit or suffer
--------------------
any hazardous substance (except for customary supplies used in the maintenance
of the Demised Premises in a clean order and condition) to be stored or used in
or about, or Released (as defined below) from the Demised Premises, regardless
of whether the substance released was at the time of such Release, either
defined as a Hazardous Substance or Released in a manner or quantity which
violated legal restrictions then in effect. Landlord shall be entitled to
injunctive relief against Tenant with respect to any proposed Release of a
Hazardous Substance on, onto, from or under the Premises unless Landlord is
satisfied in its sole
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discretion that Tenant has complied with the foregoing requirements.
(1) The term "Hazardous Substance" shall include, regardless of
whether or not such substance is a raw material, finished product, building or
structural component, waste or any other type of material:
(a) any substance listed or defined as a hazardous substance pursuant
to 42 U.S.C. (S) 9601(14) or any successor law or statute and regulations that
are promulgated or may be promulgated in accordance therewith;
(b) any petroleum or fraction thereof, petroleum product, petroleum
byproduct or petroleum waste; and
(c) any substance that is or may be in the future regulated under, or
the presence of which requires or may in the future require investigation or
remediation under, any federal, state or local statute, regulation, ordinance,
requirement or policy.
(2) "Release" shall mean any intentional unintentional releasing,
spilling, leaking, pumping, pouring, storing, using, emitting, emptying,
discharging, injecting, escaping, leaching, disposing, removal or dumping.
Tenant shall be responsible for the submittal of all notices under any federal,
state or local statute, regulations or ordinance in connection with its Release
or threatened Release of any Hazardous Substances. Tenant shall also notify
Landlord of any Release or threatened Release of any Hazardous Substances or of
any investigation, inquiry, notice, claim, proceeding or action related to any
Hazardous Substance.
C. Indemnification of Landlord. Tenant shall indemnify and hold
---------------------------
harmless Landlord, its partners and any affiliated entities and the officers,
directors and employees of all such entities (collectively, the "Indemnities")
from any loss, damage, claim, cost, fine, penalty, or expense, including
reasonable attorneys' fees and costs suffered or incurred by any of the
Indemnities as a result of or arising out of a breach of any of the
representations or warranties contained in this Section. This indemnification
shall include the duty promptly and properly at Tenant's sole expense to perform
(and Tenant hereby agrees to perform) any remedial work necessary to eliminate
or mitigate the harmful effects resulting from the existence of any Hazardous
Substance in breach of the representations and warranties contained herein and
to remove and properly dispose of all Hazardous Substances in compliance with
all applicable governmental laws immediately upon the discovery thereof at the
Demised Premises. The representations, warranties and indemnities contained in
this Section shall survive the expiration or early termination of this
20
<PAGE>
Lease and are intended to supplement Landlord's rights and remedies against
Tenant at law or in equity. Notwithstanding the foregoing, Tenant shall not be
responsible and shall not indemnify Landlord for any Hazardous Substances
existing on the Demised Premises as of the date of the Lease or Releases upon
the Demised Premises by Landlord.
19. Subordination, Attornment, Financing and Estoppel Certificate.
--------------------------------------------------------------
A. Subordination. Tenant agrees that this Lease shall, at the
-------------
request of Landlord, be subordinate to any mortgages or deeds of trust that are
now, or may hereafter be, placed upon the Demised Premises and to any and all
advances to be made thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof, provided that the mortgagees or
beneficiaries named in said mortgages or trust deeds shall agree to recognize
the interest of Tenant under this Lease in the event of foreclosure, if Tenant
is not then in default. Tenant agrees that upon the request of Landlord, or any
mortgagee or beneficiary, Tenant shall execute whatever instruments may be
required to carry out the intent of this Section.
B. Attornment. In the event any proceedings are brought for the
----------
foreclosure of, or in the event of the conveyance by deed in lieu of foreclosure
of, or in the event of exercise of the power of sale under, any mortgage and/or
deed of trust made by Landlord covering the Demised Premises, or in the event
Landlord sells, conveys or otherwise transfers its interest in the Property or
any portion thereof containing the Demised Premises, this Lease shall remain in
full force and effect and Tenant hereby attorns to, and covenants and agrees to
execute an instrument in writing reasonably satisfactory to the new owner
whereby Tenant attorns to such successor in interest and recognizes such
successor as the Landlord under this Lease. Payment by or performance of this
Lease by any person, firm or corporation claiming an interest in this Lease or
the Demised Premises by, through or under Tenant without Landlord's consent in
writing shall not constitute an attornment or create any interest in this Lease
or the Demised Premises.
C. Financing. In the event any construction lender or permanent
---------
lender for all or any portion of the Property requires, as a condition to
financing, modifications to this Lease, then, provided such modifications do not
materially alter the approved working plans and do not increase the rent to be
paid hereunder and do not materially decrease Tenant's rights under this Lease
or materially increase Tenant's obligations under this Lease, Landlord shall
submit to Tenant a written amendment with such required modifications and if
Tenant fails to execute and return the same within ten (10) days after the
amendment has been submitted, then Landlord shall have the right to cancel this
Lease, upon written notice to Tenant, whereupon this Lease shall be immediately
21
<PAGE>
canceled and terminated, any money or security theretofore deposited by Tenant
with Landlord shall be returned to Tenant, and both Landlord and Tenant shall
thereupon be relieved from any and all further liability or obligation
hereunder.
D. Estoppel Certificate. Tenant shall, without charge therefor, at
--------------------
any time and from time to time, within ten (10) days after request therefor by
Landlord, execute, acknowledge and deliver to Landlord a written estoppel
certificate, in reasonable form, certifying to Landlord, any mortgagee, or any
purchaser of the Property or any other person designated by Landlord, as of the
date of such estoppel certificate: (i) that Tenant is in possession of the
Demised Premises and has unconditionally accepted the same; (ii) that this Lease
is unmodified and in full force and effect (or if there has been modification,
that the same is in full force and effect as modified and setting forth such
modifications); (iii) whether or not there are then existing any set-offs or
defenses against the enforcement of any right or remedy of Landlord, or any duty
or obligation of Tenant, hereunder (and, if so, specifying the same in detail);
(iv) that rent is paid currently without any offset or defense thereto, (v) the
dates, if any, to which any rent has been paid in advance; (vi) whether or not
there is then existing any claim of Landlord's default under this Lease and if
so, specifying the same in detail; and (vii) that Tenant has no knowledge of any
event having occurred that authorized the termination of this Lease by Tenant
(or if Tenant has such knowledge, specifying the same in detail); and (viii) any
other matters relating to the status of this Lease that Landlord or its
mortgagee may request be confirmed, provided that such facts are accurate and
ascertainable.
E. Remedies. Any failure by Tenant to execute any certificate,
--------
statement or instrument in accordance with the foregoing provisions of this
Section, within the time period provided or if no time period is specified,
then within ten (10) days after written request, shall constitute an irrevocable
power of attorney appointing and designating Landlord or its successors or
assigns as attorney-in-fact for Tenant to execute and deliver any such
certificate, statement or instrument. In addition, Landlord, at its option,
shall have the right by not less than ten (10) days' notice to Tenant to declare
such failure a default under this Lease, and Landlord shall have available to it
all remedies provided under Section 20 hereof.
20. Default and Remedies.
--------------------
A. Elements of Default. If any one or more of the following events
-------------------
occur, said event or events shall hereby the classified as a "default": (i) the
failure of Tenant to take possession of the Demised Premises at the delivery of
possession date, or the failure of Tenant to open its doors for business within
ten (10) days from the commencement date of the initial term
22
<PAGE>
hereof, or if Tenant vacates or abandons the Demised Premises and permits the
same to remain unoccupied and unattended, or the failure of Tenant to
continuously operate its business in compliance with this Lease for the purpose
specified herein, or in the event of the sale or removal of a substantial
portion of Tenant's property located in the Demised Premises in a manner which
is outside the ordinary course of Tenant's business; (ii) the failure of Tenant
to pay any rent when same shall become due or the failure of Tenant to pay any
other charges required to be paid by Tenant when same shall become due and
payable hereunder and either of such failure continues for ten (10) days after
such payment's due date; (iii) the failure of Tenant to perform or observe any
term or condition of this Lease (other than as set forth in subparagraphs (i),
(ii), (v), and (vi) of this Section 20.A), and such failure shall continue for
fourteen (14) days after written notice; (iv) if Tenant shall be given three (3)
notices of default under Sections 20.A(ii) or 20.A(iii) within any period of
eighteen (18) months, notwithstanding any subsequent cure of the failure to
perform or observe the terms or conditions of the Lease as identified in such
notices; (v) if any writ of execution, levy, attachment or other legal process
of law shall occur upon Tenant's assets, merchandise, fixtures, or Tenants'
estate or interest in the Demised Premises, and such writ of execution, levy,
attachment or other legal process is not bonded off or otherwise released within
sixty (60) days following the date of such attachment or other legal process;
and (vi) Tenant shall be liquidated or dissolved or shall begin proceedings
toward such liquidation or dissolution, or shall in any manner permit the
divestiture of all, or any substantial part of Tenant's assets. In the event of
default which shall not be remedied within the applicable grace period, if any,
by Tenant under this Lease, then Landlord may, upon notice in writing to Tenant,
declare such default to be a default of this Lease. Nothing contained herein
shall be deemed a limitation of the rights of Landlord as set forth in this
Lease.
B. Landlord's Remedies. Should a default occur under this Lease,
-------------------
Landlord may pursue any or all of the following:
(1) Landlord, in addition to other rights or remedies it may have,
shall have the right, by written notice to Tenant, to declare this Lease
terminated and the term ended, in which event this Lease and the term hereof
shall expire, cease and terminate with the same force and effect as though the
date set forth in the notice of termination were the date originally set forth
and fixed for the expiration of the term (or any renewal term, as the case may
be), and Tenant shall vacate and surrender the Demised Premises but shall remain
liable for all obligations arising during the balance of the stated term as if
this Lease had remained in full force and effect, provided that Tenant shall
receive a credit against such liability for the amount of any net rent received
by Landlord from a reletting of the Demised Premises. Tenant shall, however, be
responsible for the costs of any repairs
23
<PAGE>
and restoration of the Demised Premises and all of the costs of reletting the
Demised Premises.
(2) Landlord shall have the right to bring a special proceeding to
recover possession from Tenant holding over and/or Landlord may, in any such
events, without notice, re-enter the Demised Premises and dispossess, by summary
proceedings or otherwise, Tenant and the legal representatives of Tenant or
other occupant(s) of the Demised Premises and remove their effects and Tenant
shall have no further claim or right hereunder. To the extent permitted by law,
Tenant waives notice of re-entry or institution of legal proceedings to that end
and any right of redemption, re-entry or repossession. No re-entry or
commencement of any action for re-entry shall be construed as an election to
terminate this Lease and shall not absolve or release Tenant from any of its
obligations for the remainder of the term of this Lease. In the event of re-
entry, Landlord may remove all persons and property from the Demised Premises
and such property may be removed and stored in a public warehouse or elsewhere
at the expense and risk of Tenant, without notice or resort to legal process and
without Landlord being deemed guilty of trespass or becoming liable for any loss
or damage which may be occasioned thereby.
(3) If Landlord re-enters, or takes possession pursuant to legal
proceedings or otherwise, or of Tenant shall abandon, vacate or surrender the
Demised Premises before the expiration of the term of this Lease without having
paid the full rental for the remainder of such term, Landlord may either
terminate this Lease or it may from time to time, without terminating this
Lease, make such alternations and repairs as necessary in order to relet the
Demised Premises, and relet the Demised Premises or any part thereof for such
term or terms and for such rent and upon such other terms and conditions as
Landlord may determine advisable in its sole discretion. Upon each such
reletting all rentals and other sums received by Landlord from such reletting
shall be applied, first, to the payment of any indebtedness other than rent due
hereunder from Tenant to Landlord; second, to the payment of any costs and
expenses of such reletting, including brokerage fees and attorneys' fees and the
costs of any alterations and repairs; third, to the payment of rent and other
charges due and unpaid hereunder; and the residue, if any, shall be held by
Landlord and applied in payment of future rent as the same may become due and
payable hereunder. If such rentals and other sums received from such reletting
during any month be less than that to be paid during that month by Tenant
hereunder, Tenant shall pay such deficiency to Landlord; if such rentals and the
sums shall be more, Tenant shall have no right to, and shall receive no credit
for, the excess. Such deficiency shall be calculated and paid monthly.
Notwithstanding any such reletting without termination, Landlord may at any time
elect to terminate this Lease for such previous breach. Should Landlord at any
time terminate this Lease for any breach, in addition to any other remedies it
may have, it
24
<PAGE>
may recover from Tenant all damages it may incur by reason of such breach,
including the cost of recovering the Demised Premises, reasonable attorney's
fees, and including the worth at the time of such termination of the excess, if
any, of the amount of rent and charges equivalent to rent reserved in this Lease
for the remainder of the stated term over the then reasonable rental value of
the Demised Premises for the remainder of the stated term, all of which amounts
shall be immediately due and payable from Tenant to Landlord. In determining
the rent which would be payable by Tenant hereunder, subsequent to default, the
annual Minimum Rent for each year of the unexpired term shall be equal to the
applicable Minimum Rent for such years as provided for herein. The failure or
refusal of Landlord to relet the Demised Premises shall not affect Tenant's
liability.
(4) Any damage or loss of rent sustained by Landlord may be recovered
by Landlord, at Landlord's option, at the time of the reletting or termination,
in a single action or in separate actions, from time to time, as said loss of
rents or damages shall accrue, or in a single proceeding deferred by Landlord or
with jurisdiction reserved by the court, until the expiration of the term of the
Lease (in which event Tenant hereby agrees that, at Landlord's option, the cause
of action shall not be deemed to have accrued until the date of expiration of
said term). In case suit shall be brought for recovery of the Demised Premises,
for the recovery of rent or any other amount due under the provisions of this
Lease, or because of the breach of any other covenant herein contained on the
part of Tenant to be kept and performed, and of the breach of any other covenant
herein contained on the part of Tenant to be kept and performed, and a breach
shall be established, Tenant shall pay to Landlord all expenses incurred
therefor, including Landlord's reasonable attorneys' fees.
(5) Nothing contained herein shall prevent the enforcement of any
claim Landlord may have against Tenant for anticipatory breach of the unexpired
term of this Lease. In the event of an anticipatory breach by Tenant of any of
the covenants or provisions hereof or in the event of Tenant's default, Landlord
shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other remedies were not
provided for herein. Mention in this Lease of any particular remedy shall not
preclude Landlord from any other remedy, in law or in equity. Tenant hereby
expressly waives for itself and all persons claiming by or through Tenant, any
and all rights to redeem, reinstate or restore, or obtain relief from forfeiture
of this Lease granted by or under any present or future law in the event of
Tenant being evicted or dispossessed for any cause, or in the event of Landlord
obtaining possession of the Demised Premises by reason of the violation by
Tenant of any of the covenants and conditions of this Lease. if either party
shall bring an action against the other to enforce or interpret the terms of
this Lease or otherwise arising out of this
25
<PAGE>
Lease, the prevailing party in such action shall be entitled to recover its
costs of suit and reasonable attorneys' fees. The "prevailing party" shall be
the party whose position is substantially upheld in the final judgment rendered
in such action.
C. Additional Remedies and Waivers. The rights and remedies of
-------------------------------
Landlord set forth herein shall be in addition to any other right and remedy now
or hereinafter provided by law, and all such rights and remedies shall be
cumulative. No action or inaction by Landlord shall constitute a waiver of a
default or termination and no waiver of default or termination shall be
effective unless it is in writing, signed by Landlord.
D. Landlord's Cure of Default. If Tenant shall be in default
--------------------------
hereunder, Landlord shall have the option, but not the obligation, upon ten (10)
days' written notice to Tenant (except in the event of an emergency, in which
event no notice shall be required), to cure the act or failure constituting said
default for the account of and at the expense of Tenant. Landlord's cure or
attempt to cure any act or failure constituting the default by Tenant shall not
result in a waiver or release of Tenant.
21. Bankruptcy.
----------
A. Neither Tenant's interest in this Lease, nor any estate hereby
created in Tenant nor any interest herein or therein, shall pass to any trustee
or receiver or assignee for the benefit of creditors or otherwise by operation
of law, except as may specifically be provided pursuant to the 11 U.S.C. (S) 101
et. seq., as the same may be amended from time to time ("Bankruptcy Code").
- -- ---
B. Upon the filing of a petition by or against Tenant under the
Bankruptcy Code, Tenant, as debtor and as debtor-in-possession, and any trustee
who may be appointed with respect to the assets of or estate in bankruptcy of
Tenant, agree to pay monthly in advance on the first day of each month, as
reasonable compensation for the use and occupancy of the Demised Premises, an
amount equal to all Minimum Rent, Percentage Rent, additional rent and other
charges otherwise due pursuant to this Lease; payment of all such rent to be
made by the tenth (10th) day of the succeeding month.
C. Included within and in addition to any other conditions or
obligations imposed upon Tenant or its successor in the event of the assumption
and/or assignment of this Lease following the filing of a petition by or against
Tenant under the Bankruptcy Code are the following: (i) the cure of any monetary
defaults and reimbursement of pecuniary loss within not more than thirty (30)
days of assumption and/or assignment; (ii) the deposit of an additional sum
equal to not less than three (3) months' Minimum Rent, Percentage Rent, as the
case may be, and additional rent to be held pursuant to the terms of Section 6
of this Lease,
26
<PAGE>
which sum shall be determined by Landlord, in its sole discretion, to be a
necessary deposit to secure the future performance under the Lease of Tenant or
its assignee; (iii) the use of the Demised Premises as set forth in this Lease
and the quality and quantity of merchandise or services required to be offered
for sale are unchanged; and (iv) the prior written consent of any mortgage to
which this Lease has been assigned as collateral security.
22. Security. Tenant shall not allow any portion of the Demised Premises
--------
or the adjoining premises controlled by Landlord to be used for parking at any
time for any purpose other than by patrons of its businesses, nor shall any
loitering be allowed on such premises.
23. Tenant's Inspection of Demised Premises. Except as expressly set
---------------------------------------
forth elsewhere in this Lease, Tenant represents and warrants that, prior to the
commencement of the initial term of this Lease, Tenant fully inspected the
Demised Premises. Tenant acknowledges and agrees that it shall be deemed to
have accepted the Demised Premises in their present condition, "AS IS," "WHERE
IS" and "WITH ALL FAULTS," without any representation or warranty of any kind
from Landlord including, without limitation, warranty relating to the zoning,
structural integrity, physical condition, extent of construction, construction,
workmanship, materials, habitability, environmental condition, fitness for a
particular purpose or merchantability of all or any part of the Demised Premises
or the Property.
24. Menus and Promotions. Tenant's menus and promotional items will be
--------------------
placed in Landlord's hotel on the Property and no other restaurant shall be
permitted to advertise in the rooms of such hotel, with the exception of
advertisements in publications found in such hotel. Landlord agrees that an
Austin's Restaurants coupon/pamphlet package will be handed to each guest of
said hotel at check-in. The pamphlet packages will be furnished to Landlord by
Tenant.
25. Condemnation.
------------
A. If the whole or any part of the Demised Premises is taken (other
than a temporary taking) under the power of eminent domain or sold pursuant to
the threat thereof (collectively a ("Taking"), then this Lease will terminate as
to the portion of the Demised Premises so taken or sold on the date ("Taking
Date") when Tenant is required to yield possession. This Lease shall remain in
full force and effect as to the portion of the Demised Premises not taken,
except that Minimum Rent shall be reduced as provided in subparagraph 26.D
below. However, if any Taking of any material portion of the restaurant
building on the Demised Premises (the "Building") substantially impairs Tenant's
business by virtue of Tenant being unable to convert the portion of the Building
on the Demised Premises not taken for its use, and if Tenant notifies the
27
<PAGE>
Landlord in writing of such status within thirty (30) days after Tenant's
receipt of written notice of the proposed Taking, then this Lease shall
terminate as to the entire Demised Premises as of the Taking Date.
B. Tenant agrees that the entire condemnation award and/or proceeds
(collectively the "Award") shall belong to and be payable only to Landlord to be
applied in accordance with 26.C below, and Tenant waives all rights to the
Award, including without limitation any right to make any claim against Landlord
or the condemning authority for consequential damages or for loss of its
leasehold interest as to the portion of the Demised Premises so taken or sold.
Tenant hereby assigns to Landlord any Award that may be made to Tenant.
However, Tenant may apply for and receive a separate award for its trade
fixtures, moving expenses and loss of business.
C. In the event that this Lease does not terminate as to the entire
Demised Premises, Tenant shall promptly repair and/or restore the Demised
Premises, including the Building and other improvements, to the condition the
same were in prior to the Taking. Landlord shall make available to Tenant the
condemnation proceeds specifically awarded for the repair and/or restoration of
the Demised Premises. Any costs of repair or restoration that exceed the Award
shall be paid by Tenant.
D. If a portion of the Demised Premises is taken and this Lease is
not terminated pursuant to the provisions of this Section 26, the Minimum Rent
shall be proportionately reduced as of the Taking Date in the ratio that the
rental value of the portion of the Demised Premises taken (to the extent not
restored by application of the proceeds of the Award) bears to the rental value
of the entire Demised Premises at the time of the Taking. However, in no event
shall the reduction in Minimum Rent exceed a proportionate reduction based on
the total square footage of the Demised Premises taken (and not restored
compared to the total square footage of the Demised Premises) immediately before
the Taking.
26. Limitation of Landlord's Liability. Neither Landlord, Landlord's
----------------------------------
beneficiaries, any persons or entities comprising Landlord, nor any successor in
interest to Landlord (or to such persons or entities) shall have any personal
liability for any failure by Landlord to perform any term, covenant or condition
of this Lease. If Landlord shall fail to perform any covenant, term or
condition of this Lease upon Landlord's part to be performed, and if as a
consequence of such default Tenant shall recover a money judgment against
Landlord, such judgment shall be satisfied only out of the proceeds of sale
received upon execution of such judgment and levied thereon against the right,
title and interest of Landlord in the Property and out of rents or other income
from such property receivable by Landlord, or out of the consideration
28
<PAGE>
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title and interest in the Property, subject, nevertheless, to
the rights of Landlord's mortgagee, and neither Landlord nor any of the co-
partners comprising the partnership which is the Landlord herein shall be liable
for any deficiency.
27. Assignment. Tenant shall not be permitted to assign this Lease, or
any interest herein, or sublet the Demised Premises or any part thereof without
first obtaining the prior written consent of Landlord, which consent shall not
be unreasonably withheld.
28. Transfer of Liquor License. Landlord agrees to cooperate with Tenant
--------------------------
in effecting the transfer of Landlord's liquor license for the Demised Premises
(the "License") from Landlord to Tenant; provided, however, that Tenant shall be
responsible for obtaining all necessary governmental approvals for the transfer
of the License prior to Tenant's occupancy of the Demised Premises and that
Tenant shall reimburse Landlord for all of Landlord's costs and expenses in
connection with the transfer of the License to Tenant, including without
limitation, any attorneys' fees or other costs incurred by Landlord in
connection with such transfer. Tenant shall be solely responsible for all
governmental charges and fees associated with the transfer of the License.
29. Additional Tenant Agreements/Indemnifications.
---------------------------------------------
A. Tenant hereby agrees as follows in connection with the
preparation of food by Tenant in the Demised Premises: (i) Tenant shall have
grease traps of a type designated by the appropriate governmental agency
installed and maintained in a clean and sanitary condition and in good repair,
with all sinks and grease traps in the Demised Premises to be cleaned on a
monthly basis; and (ii) Tenant shall have the filters in the hoods for food
processing exhaust systems removed daily and washed, and shall have the hoods
scraped and cleaned and exhaust ducts cleaned a minimum of once every (6)
months, or as otherwise reasonably designated by Landlord. After each required
cleaning of the hoods and exhaust ducts, Tenant shall, upon request, deliver to
Landlord a receipt from the company performing such service stating that such
work has been performed and stating the date of such cleaning. Tenant agrees to
retain a dependable bonded decreasing service for the Demised Premises on a
minimum quarterly basis throughout the term of the Lease to clean and decrease
the entire kitchen area, ranges cooking equipment, broilers, stoves, hoods,
vents, exhaust and blower systems, filters and flue stack in the Demised
Premises. Additionally, Tenant agrees that its employees shall clean and
decrease the entire kitchen area, ranges, cooking equipment, broilers, stoves,
hoods, vents, exhaust and blower systems, filters and flue stack in the Demised
Premises on a minimum monthly basis throughout the term of the Lease.
29
<PAGE>
B. Tenant shall also comply with all other federal, state and local
laws and ordinances, and any rules and regulations promulgated hereunder,
relating to food service and sanitation as well as any requirements of
Franchisor (provided such requirements from Franchisor do not impose a
substantial hardship or extraordinary expense on Tenant), and shall comply with
all such sanitation inspections and orders entered in connection therewith.
Failure so to comply within a reasonable time or failure to pass three (3)
consecutive health or sanitation inspections shall be an event of default under
the Lease.
C. During such time as the Demised Premises shall be utilized for
the sale and/or consumption of alcoholic or such other beverages regulated by
the alcoholic beverage code as in effect in the State of Florida, as amended,
including, without limitation, the sale for on or off Demised Premises
consumption of alcohol, distilled spirits, beer, malt beverage, wine or
fortified wine (hereinafter sometimes referred to as "alcoholic beverages"), and
in the event the State of Florida or any other governmental agency or entity
enacts a "dram shop" or similar law, then Tenant shall obtain and maintain (by
endorsement to the general liability policy required to be maintained by Tenant
hereunder or by separate policy) throughout the term of the Lease insurance
coverage commonly referred to as "liquor legal liability" or "dram shop"
insurance (hereinafter sometimes referred to as "liquor legal liability
insurance"), causing Landlord, and such other entities as Landlord shall
designate from time to time, to be additional named insureds, in combined single
limit coverage per occurrence of not less than One Million Dollars
($1,000,000.00) per occurrence for property damage, Two Million Dollars
($2,000,000.00) per occurrence for personal injury and death to persons and
"umbrella" coverage of Ten Million Dollars ($10,000,000.00) (or such higher
amounts which Landlord may reasonably proscribe from time to time in its sole
judgment). Such liquor legal liability insurance shall (i) be written in form
reasonably acceptable to Landlord, and its counsel, by a licensed insurance
carrier in good standing in the State of Florida acceptable to Landlord, and
(ii) specifically include if reasonably available, without limitation, liability
coverage for the violation of any governmental statute, ordinance, regulation or
rule pertaining to the sale, gift, distribution, consumption or use of any
alcoholic beverages to a minor or to a person under the influence of alcohol, or
which causes or contributes to the intoxication of any persons. The
aforementioned liquor legal liability insurance policies shall be for the mutual
and joint benefit and protection of Landlord, Tenant, and such other entities as
Landlord shall designate from time to time, and executed copies of such policies
of insurance or certificates thereof shall be delivered to Landlord within ten
(10) days prior to the delivery of possession of the Demised Premises to Tenant,
and thereafter proof of insurance coverage shall be delivered by Tenant to
Landlord at least annually, and at such other times as Landlord may reasonably
require. As often as any such policy shall expire or terminate,
30
<PAGE>
renewal or additional policies shall be maintained and procured by Tenant in
like manner and like extend, subject at all times to the approval of Landlord
and its counsel. All such insurance policies shall likewise contain a provision
stating that the insurance carrier of said policies shall grant to Landlord
thirty (30) days' prior written notice of any cancellation or lapse or the
effective date of any reduction in the amounts of insurance. In the event
Tenant shall fail to procure and/or maintain any insurance required, or fails to
carry insurance required by law or governmental regulation, Tenant shall be
deemed in default under the Lease and Landlord may, but shall not be required or
obligated to, at any time (without the granting of notice) procure such
insurance and pay the premium therefor, in which event Tenant shall repay all
sums so paid by Landlord, together with interest and any and all other
incidental costs and expenses incurred by Landlord or its designated
representative or legal counsel.
D. In furtherance of the foregoing, Tenant hereby agrees and
covenants to indemnify and hold Landlord, its servants, agents, employees, and
representatives, wholly harmless from any and all claims, liabilities,
judgments, fines, fees, settlements, losses, damages and expenses of whatever
kind or nature, including, without limitation, court costs and attorney's fees
incurred by Landlord in connection with the sale, gift, distribution,
consumption or use of any alcoholic beverages in or from the Demised Premises,
including, without limitation, the violation by Tenant of any statute,
ordinance, regulation or rule of whatever kind or nature which shall be
established from time to time by any governmental agency or insurance carrier in
connection therewith.
E. Tenant shall also comply with all federal, state and local laws
and ordinances, and any rules or regulations promulgated thereunder, relating to
the sale, gift, distribution, consumption or use of alcoholic beverages,
including but not limited to any zoning, licensing, "dram shop" or tax laws,
ordinances or regulations.
30. Notices. All notices and other communications provided for hereunder
-------
shall, unless otherwise stated herein, be in writing and shall be sent or
delivered by hand delivery, telex, facsimile transmission, telegram, cable or
mail, as to each party hereto, at its address set forth below or to such other
address as shall be designated by such party in a written notice to the other
parties hereto in accordance with the requirements of this Section. All such
notices and communications shall be effective, in the case of hand delivery upon
delivery, in the case of mailed notice, three (3) days after the same are
deposited with the United States Postal Service, certified mail, postage
prepaid, and, in the case of notice (i) by facsimile transmission, when
transmitted to the specified facsimile number and confirmation of receipt is
received, and (ii) by telegram or cable, when delivered at the address of the
party specified below:
31
<PAGE>
As to Landlord: Raj and Raj Partnership
260 East Merritt Island Causeway
Merritt Island, Florida 32952
Facsimile No.: (407) 452-9462
As to Tenant: Austin's International, Inc. 2400 E. Commercial
Boulevard Suite 800
Fort Lauderdale, Florida 33308 Facsimile
No.
-------------------------
31. Binding on Assignees. The covenants and conditions herein contained
--------------------
shall apply to and bind the heirs, successors, executors, administrators and
assigns of all the parties hereto.
32. Franchisor Requirements. This Lease is entered into with the
-----------------------
understanding that Landlord has or will enter into franchise agreements with the
Franchisor for operation by Landlord of the hotel on the Property.
33. Liens. Tenant, at its own cost and expense, shall at all times keep
-----
the Demised Premises free of and from all liens, encumbrances, attachments,
levies, claims, charges and assessments, and shall pay and discharge prior to
delinquency, all fines, taxes and other charges levied or assessed against the
Demised Premises or Tenant.
34. Counterparts. This Lease may be executed in one or more counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
35. Governing Law. This Lease shall be governed by and construed in
-------------
accordance with the laws of the State of Florida.
36. Headings. The headings of the Sections and paragraphs of this Lease
--------
are solely for the convenience of the parties, and may not be used as aid in
interpretation of the terms and conditions thereof.
37. Conflict With Applicable Law. In the event that any one of the terms
----------------------------
or provisions of this Lease are in conflict with any statute or rule of law of
the state in which the Demised Premises is located or of any state or place
wherein it may be sought to be enforced, then such provision shall be deemed
null and void to the extent that it may conflict therewith, but without
invalidation of the remaining provisions thereof, and no such prohibition or
unenforceability in any jurisdiction shall invalidate such provision in any
other jurisdiction.
38. Holding Over. Any holding over after the expiration of any of the
------------
terms of this Lease, with the consent of the Landlord, shall be construed to be
a tenancy from month to month, at One Hundred Fifty percent (150%) of the last
prevailing Minimum Rent;
32
<PAGE>
otherwise, all terms and conditions as herein specified shall be in full force
and effect so far as applicable.
39. Covenant of Title and Quiet Enjoyment. Landlord covenants that for
-------------------------------------
and during the term of this Lease, and any extensions thereof, Landlord will not
cause or suffer anything to be done which will impair Tenant's leasehold
interests and rights hereunder. Furthermore, Landlord shall defend Tenant in
the enjoyment and peaceful possession of the Demised Premises during the term of
this Lease and any extensions thereof, and will indemnify Tenant against all
damage and expense which Tenant may suffer by reason of any lien, encumbrance,
restriction, or defect in the title or description herein of the Demised
Premises unless such shall have been caused by Tenant, in whole or in part.
40. Modification of Lease. Notwithstanding anything to the contrary
---------------------
elsewhere in the Lease, Landlord and Tenant agree that the terms and provisions
set forth in this Lease shall control and shall not be superseded, terminated or
modified without the prior written consent of both parties.
41. Inspection Period. Notwithstanding anything contained in this Deed of
-----------------
Lease to the contrary, Tenant shall have a period of three (3) days (the
"Inspection Period") from the date of this Deed of Lease to inspect the Demised
Premises. If Tenant is not reasonably satisfied with the condition of the
Demised Premises, it shall have the right to terminate this Lease by giving
Landlord written notice of such termination during the Inspection Period and
upon the giving of such notice this Lease shall terminate and be of no further
force and effect and Landlord shall refund the Security Deposit to the Tenant.
42. Entire Agreement. The foregoing constitutes the full and complete
----------------
Lease between the parties, and all other oral or written agreements in relation
to the subject matter of this Lease are hereby rescinded.
33
<PAGE>
43. Time Is Of The Essence. Time is of the essence as to performance of
----------------------
any of Tenant's or Landlord's obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this document as of
the date first written above.
LANDLORD:
RAJ AND RAJ PARTNERSHIP, a Florida general
partnership
By: /s/ Raj Rahil (SEAL)
---------------------
Raj Rahil, General Partner
Date Executed: ________________
By: /s/ Raj Rahil (SEAL)
---------------------
Raj Jain, General Partner
Date Executed: 4/12/96
----------------
TENANT:
AUSTIN'S INTERNATIONAL, INC., a
____________________ corporation
By: /s/ Elie Sopas (SEAL)
----------------------
Name: E. Sopas
---------------------------
Title: President
-------------------------
Date Executed: 4/15/96
------------------
34
<PAGE>
EXHIBIT A
[Attach drawing of Demised Premises]
A-1
<PAGE>
EXHIBIT B
[Attach drawing of Demised Premises with drives, walks, etc.]
B-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MARCH 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 446,497
<SECURITIES> 0
<RECEIVABLES> 66,653
<ALLOWANCES> 0
<INVENTORY> 137,789
<CURRENT-ASSETS> 786,396
<PP&E> 4,027,483
<DEPRECIATION> 1,111,175
<TOTAL-ASSETS> 3,751,765
<CURRENT-LIABILITIES> 560,766
<BONDS> 2,013,000
0
0
<COMMON> 67,135
<OTHER-SE> 973,455
<TOTAL-LIABILITY-AND-EQUITY> 3,751,765
<SALES> 7,447,591
<TOTAL-REVENUES> 7,465,047
<CGS> 2,829,786
<TOTAL-COSTS> 7,507,459
<OTHER-EXPENSES> 857,821
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 156,016
<INCOME-PRETAX> (1,056,249)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,056,249)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,056,249)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)<F1>
<FN>
<F1>See Notes to Consolidated Financial Statements for Fiscal Year ended March 31,
1996 - NOTE 2. - Loss Per Common Share.
</FN>
</TABLE>
