As filed with the Commission on August , 1996
Registration No. __________
- --------------------------------------------------------------------------------
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ELEPHANT AND CASTLE GROUP INC.
(Name of Registrant as specified in its charter)
- --------------------------------------------------------------------------------
Province of British Columbia
(State or jurisdiction of incorporation or organization)
- --------------------------------------------------------------------------------
701 W. Georgia Street, Ste. 303
P.O. Box 10240 - Pacific Centre
Vancouver, BC V7Y 1E7 CANADA
(604) 684-6451
- --------------------------------------------------------------------------------
(Address and telephone number of principal
executive offices, and address of principal place of
business or intended principal place of business)
Daniel DeBou With copies to:
Elephant and Castle Group Inc. D. David Cohen, Esq.
701 W. Georgia Street, Ste. 303 Jericho Atrium - Suite 133
P.O. Box 10240 - Pacific Centre 500 North Broadway
Vancouver, BC V7Y 1E7 CANADA Jericho, New York 11753
(604) 684-6451 (516) 933-1700
(Name, address and telephone number of agent Robert T. Montague, Esq.
for service) Robins, Kaplan, Miller &
Ciresi
2800 LaSalle Plaza
800 LaSalle Avenue
Minneapolis, MN 55402
(612) 349-8463
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective and all other conditions to
the acquisition ALAMO GRILL, INC. by ELEPHANT AND CASTLE GROUP INC., pursuant to
the transaction described in the enclosed Prospectus have been satisfied or are
waived.
If the only securities being registered on this form are being offered
in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box /_/.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each Proposed Proposed
class of maximum maximum Amount of
securities to Amount to be offering price aggregate registration
be registered registered per share offering price fee
- ------------- ---------- --------- -------------- ---
<S> <C> <C> <C> <C>
Common stock, 147,059 $6.80 $1,000,000 $393.00
no par value shares
</TABLE>
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Cross-Reference Sheet
Between Items in Form S-4 and Prospectus/Proxy Statement
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Item No. Form S-4 Caption Heading in Prospectus
-------- ---------------- ---------------------
A. Information About The Transaction
<S> <C> <C>
1. Forepart of Registration Statement Outside Front Cover
and Outside Front Cover Page of Page of Prospectus
Prospectus
2. Inside Front and Outside Back Cover Pages of Available information;
Prospectus Incorporation of Documents
by Reference; Table of
Contents
3. Risk Factors; Ratio of Earnings Summary; Risk Factors
to Fixed Charges and Other
Information
4. Terms of the Transaction The Agreement; Interest of Certain
Persons; Certain Relationships and
Related Transactions; Certain Federal
Income Tax Consequences;
Description of E&C Securities
5. Pro Forma Financial Information Summary; Unaudited Pro Forma
Combined Condensed Financial
Statements
6. Material Contacts with the Summary; The Agreement; Interests of
Company being Acquired Certain Persons, Certain Relationships
and Related Matters
7. Additional Information Required Not Applicable
for Reoffering by Persons and
Parties Deemed to be Underwriters
8. Interests of Named Experts and Legal Matters; Experts
Counsel
9. Disclosure of Commission Position Not Applicable
on Indemnification for Securities
Act Liabilities
<PAGE>
<CAPTION>
B. Information About The Registrant
10. Information with Respect to S-3 Not Applicable
Registrants
11. Incorporation of Certain Incorporation of
Information by Reference Documents by Reference
12. Information with Respect to S-2 Additional Information
or S-3 Registrants
13. Incorporation of Certain Incorporation of
Information by Reference Documents by Reference
14. Information with Respect The Company; Business
to Registrants Other Than of Elephant & Castle; Risk Factors
S-2 or S-3 Registrants Relating to the Transaction
C. Information About The Company Being Acquired
15. Information with Respect to S-3 Not Applicable
Companies
16. Information with Respect to S-2 Not Applicable
or S-3 Companies
17. Information with Respect to The Special Meeting of Alamo
Companies Other Than S-2 or Shareholders; Risk Factors
S-3 Companies Relating to the Transaction;
The Agreement
D. Voting and Management Information
18. Information if Proxies, Consents Outside Front Cover Page of
or Authorizations are to be Prospectus; Available
Solicited Information; Incorporation
of Documents by Reference;
The Special Meeting; The
Agreement
19. Information if Proxies, Consents Not Applicable
or Authorizations are not to be
Solicited, or in an Exchange Offer
</TABLE>
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION
INCORPORATION OF DOCUMENTS BY REFERENCE
SUMMARY
RISK FACTORS RELATING TO THE TRANSACTION
Risks Relating to E&C
Risks Relating to Grill Continuing
to Operate Independently
THE SPECIAL MEETING OF ALAMO SHAREHOLDERS
Purpose of the Meeting
Distribution of E&C Common Stock
Approval
Date, Time and Place; Record Date
Voting Rights
Proxies
Security Ownership of Certain Beneficial Owners
and Management
Rights of Dissenting Shareholders
Costs of Solicitation
No Fractional Shares
THE AGREEMENT
Background
Recommendation of the Board
E&C's Reasons for the Agreement
Terms and Conditions
Interests of Certain Persons,
Certain Relationships and
Related Transactions
Certain Federal Income Tax Consequences
Federal Securities Law Consequences
Closing: Effective Time
BUSINESS OF ELEPHANT & CASTLE
Introduction
Principal Operations
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF E&C
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
LEGAL OPINIONS
EXPERTS
ADDITIONAL INFORMATION
EXPERTS
ANNEX A - Agreement Relating to Sale of
Capital Stock of Subsidiary with Exhibits
ANNEX B - Rights of Dissenting Shareholders
(Text of Sections 302A.471 and 302A.473 of the Minnesota
Business Corporation Act)
<PAGE>
Subject to Completion
Preliminary Prospectus dated June , 1996
ELEPHANT & CASTLE GROUP INC.
PROSPECTUS
ALAMO RESTAURANTS INC.
PROXY STATEMENT
This Prospectus/Proxy Statement ("Prospectus/Proxy Statement") is
being furnished by Alamo Restaurants Inc., a Minnesota corporation ("Alamo"), to
holders of its common stock, $.01 par value, of (the "Alamo Common Stock"), in
connection with the solicitation of proxies by the Board of Directors of Alamo
for use at the Special Meeting of Shareholders of Alamo to be held at the times
and places and for the purposes set forth in the accompanying Notice of Special
Meeting or any adjournment or postponement thereof the "Alamo Special Meeting."
This Prospectus/Proxy Statement and the accompanying form of
Proxy are first being mailed to shareholders of Alamo on __________, 1996.
At the Alamo Special Meeting, the shareholders of Alamo will
consider and vote upon a proposal to approve and adopt that certain Agreement
Relating to the Sale of all of the Capital Stock of Alamo Grill, Inc., an
Indiana corporation ("Grill"), in exchange for Capital Stock of Elephant &
Castle Group, Inc., a publicly owned British Columbia corporation ("E&C" or the
"Company"). A copy of the Agreement is attached to this Prospectus/Proxy
Statement as Exhibit A and is incorporated herein by reference.
Under the terms of the Agreement, Grill will become a direct or
indirect wholly owned subsidiary of E&C pursuant to the acquisition of all of
the issued and outstanding shares of Common Stock, $.01 par value of Grill, for
a purchase price of $1,536,000 consisting of (i) the assumption of liabilities
by E&C not in excess of $536,000 in the aggregate and (ii) the delivery of
147,059 shares of Common Stock, without par value of E&C (the "E&C Common
Shares"). Alamo is to distribute the E&C Common Shares to and among its
shareholders based upon a fraction determined by dividing the number of E&C
Common Shares to be delivered pursuant to the Agreement by the number of shares
of Alamo Common Stock, $.01 par value, issued and outstanding as of the Closing
Date. Thereafter, Alamo intends to cease doing business.
<PAGE>
This Prospectus/Proxy Statement also constitutes the prospectus
of E&C with respect to a maximum of 147,059 shares of E&C Common Stock to be
issued in exchange for the Common Stock, $.01 par value, of Grill in connection
with the Acquisition.
On July 30, 1996 the reported closing sales price of a share of
E&C Common Stock on The Nasdaq National Market was $7.75. Alamo shareholders are
urged to obtain current price information for E&C Common Stock in connection
with their consideration of the Agreement and the transactions contemplated
thereby.
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY STATEMENT/
PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus/Proxy Statement is August , 1996.
<PAGE>
AVAILABLE INFORMATION
Elephant & Castle Group Inc. ("E&C" or the "Company") is sub ject to
the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission")
relating to its business, financial position, results of operations and other
matters. Such reports and other information can be inspected and copied at the
Public Reference Section maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and its Regional Offices located at
The Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661, and 7
World Trade Center, 15th Floor, New York, New York 10048. Copies of such
material also can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Elephant & Castle Common Stock is listed on the Pacific Stock Exchange
("PSE") and the NASDAQ SmallCap Market. Such material can also be inspected at
the offices of PSE and NASDAQ. The offices of such exchange and NASDAQ are,
respectively: The Pacific Stock Exchange, 115 Sansome Street, Suite 1104, San
Francisco, California 94104 and the NASDAQ Stock Market, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on
Form S-4 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Common Stock offered hereby.
This Prospectus/Proxy Statement does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Reference is made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to Elephant & Castle and the Common Stock offered
hereby.
No person is authorized to give any information or to make any
representation not contained in this Prospectus/Proxy Statement and, if given or
made, such information or representation should not be relied upon as having
been authorized by the Company or any other person. This Prospectus/Proxy
Statement does not constitute an offer to sell or a solicitation of an offer to
buy any securi ties in any jurisdiction to any person to whom it is not lawful
to make any such offer or solicitation in such jurisdiction. Neither the
delivery of this Prospectus/Proxy Statement nor any distribu tion of the
securities made under this Prospectus/Proxy Statement shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date of this Prospectus/Proxy Statement.
However, if any material change occurs during the period that this
Prospectus/Proxy Statement is required to be delivered, this Prospectus/Proxy
Statement will be amended or supplemented accordingly. All information regarding
E&C in this Prospectus/Proxy Statement has been supplied by E&C, and all
information regarding Alamo in this Prospectus/Proxy Statement has been supplied
by Alamo.
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company
pursuant to the Exchange Act are incorporated by reference in this
Prospectus/Proxy Statement.
All documents and reports filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act whether before or after the date
of this Prospectus/Proxy Statement and prior to the date of the Special Meeting
shall be deemed to be incorporated by reference in this Prospectus/Proxy
Statement and to be a part hereof from the dates of filing of such documents or
reports. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus/Proxy Statement to the extent that a statement
contained herein or in any other subsequently filled document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Prospectus/Proxy Statement.
This Prospectus/Proxy Statement incorporates documents by
reference which are not presented herein or delivered herewith. Such documents
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference) are available without charge, to any person,
including any beneficial owner, to whom this Prospectus/Proxy Statement is
delivered, on written or oral request, in the case of documents relating to
Elephant & Castle Group Inc., 701 West Georgia Street, Suite 303, P.O. Box
10240, Pacific Centre, Vancouver, B.C. V7Y 1E7 CANADA (tele phone number (604)
684-6451, Attn: Daniel DeBou, Chief Financial Officer.
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Proxy Statement/ Prospectus.
Stockholders are urged to review the entire Prospec tus/Proxy Statement and the
Exhibits thereto. Capitalized terms used and not otherwise defined in this
summary have the meanings given to them elsewhere in this Prospectus/Proxy
Statement.
General
This Prospectus/Proxy Statement relates to the proposed acquisition by
Elephant & Castle Group Inc., a British Columbia corporation ("E&C" or the
"Company"), of all of the issued and outstanding Common Stock of Alamo Grill,
Inc., an Indiana corpora tion ("Grill") and a wholly owned subsidiary of Alamo
Restaurants Inc. ("Alamo"), a Minnesota corporation, pursuant to that certain
Agreement Relating to the Sale of All of the Capital Stock of a Subsidiary
Corporation in exchange for Capital Stock of the Acquiring Corporation dated as
of April 9, 1996 (the "Agreement"), by and among E&C, Alamo and Grill.
The Parties
E&C. E & C is a publicly owned company, the Common Stock of which is
traded on NASDAQ - Small Cap Market (PUBSF) and the Pacific Stock Exchange
("PUB"). The Company operates a chain of 14 full-service English-style dining
restaurants and pubs, 12 of which are located in Canada, one in the Bellingham,
Washington and one in Philadelphia, Pennsylvania. The Canadian restaurants are
operated under the name "The Elephant & Castle Pub & Restaurant" and are located
in major shopping malls and office complexes from Victoria, B.C. to Ottawa,
Ontario. The Bellingham restaurant is also operated under the name "The Elephant
& Castle Pub & Restaurant" and is located in a large suburban mall near the
United States/Canadian border. The Philadelphia Elephant & Castle and one
restaurant located in Winnipeg, Canada are located within Holiday Inn hotels.
In addition to the 14 traditional style Elephant & Castle restaurants,
the Company recently developed a newly-owned New York style deli restaurant
known as "Rosie's on Robson" at the Rosedale Hotel in Vancouver, British
Columbia and a "University" restaurant: "Elephant on Campus" at the British
Columbia Institute of Technol ogy in Vancouver, and has licensed an E&C Express
restaurant at the Vancouver International Airport.
E&C was incorporated in British Columbia on December 14, 1992, as a
holding corporation for is theretofore existing separate restaurant
corporations, which had been owned and operated by the founders of E&C for a
number of years. E&C's executive offices are located at 701 West Georgia Street,
Suite 303-701, Vancouver B.C., Canada V7Y 1E7; its telephone number is (604)
684-6451.
Alamo and Grill. Alamo is a privately owned company, which has agreed
to sell to E&C all of the capital stock of its only operating subsidiary, Grill.
Alamo was incorporated in Minnesota on July 16, 1992. Its principal offices are
located at 1465 East 84th Place, Merrillville, Indiana (219) 769-9000. Grill is
an Indiana corporation, which maintains its restaurant and place of business at
The Mall of America, Bloomington, Minnesota. The Mall of America is the largest
shopping mall in the United States, and a tourist destination which attracts
millions of visitors annually.
<PAGE>
Special Meeting of Alamo Shareholders
At a Special Meeting of Stockholders of Alamo, or any adjournment or
postponement thereof (the "Alamo Special Meeting", the shareholders of Alamo
will be asked to consider and vote upon a proposal to approve and adopt the
Agreement and the transactions contemplated thereby. The Alamo Special Meeting
is scheduled to be held at 9:00 a.m., local time, on Thursday, July ___, 1996,
at the offices of Robins, Kaplan, Miller & Ciresi, 2800 LaSalle Plaza, 800
LaSalle Avenue, Minneapolis, Minnesota, 55402. The Board of Directors of Alamo
(the "Alamo Board") has fixed the close of business on July , 1996 as the record
date (the "Alamo Record Date") for the determination of holders of Alamo Common
Stock entitled to notice of and to vote at the Alamo Special Meeting. See "The
Alamo Special Meeting."
The Alamo Board without dissent has approved the Agreement and the
transactions contemplated thereby and recommends that the Alamo Shareholders
vote "FOR" the proposal to approve and adopt the Agreement and the transactions
contemplated thereby. See "THE AGREEMENT - Recommendations of the Board of
Directors.
Required Vote
Alamo Shareholders. Pursuant to the Minnesota Business Corporation Act
("MBCA"), the affirmative vote of the holders of at least a majority of the
shares of Alamo Common Stock outstanding as of the Record Date is required to
approve and adopt the Agreement and the transactions contemplated thereby. At
the Record Date, there were 3,201,000 shares of Alamo Common Stock outstanding.
The presence, either in person or as represented by proxy, of the holders of a
majority of the shares of Alamo Common Stock out standing as of the Record Date
is necessary to constitute a quorum at the Alamo Special Meeting. As of the
Record Date, Alamo's directors and executive officers as a group held shares
represent ing approximately 25% of the votes entitled to be cast by Alamo s at
the Alamo Special Meeting. See "THE ALAMO SPECIAL MEETING Voting Rights."
Dissenting shareholders have appraisal rights under the MBCA. See "THE ALAMO
SPECIAL MEETING - Rights of Dissenting Shareholders".
Background of the Agreement
The terms of the Agreement resulted from arm's length negotiations
between representatives of E&C and Alamo. There was no pre-existing business
relationship between the parties prior to the commencement of negotiations which
resulted in the Agreement. See "THE AGREEMENT- Background of Negotiations."
Recommendations of the Alamo Board of Directors
On April 2, 1996, the Alamo Board approved the Agreement and the
transactions contemplated thereby. The Alamo Board recommends that the Alamo
Shareholders vote "FOR" approval and adoption of the Agreement and the
transactions contemplated thereby.
The recommendation of the Alamo Board is based upon its belief that the
terms of the Agreement are fair and in the best interests of Alamo and the Alamo
Shareholders and that the Acquisition will result in benefits to the Alamo
Shareholders. For a discussion of the factors considered by the Alamo Board in
making its recommenda tion, see "THE AGREEMENT - Recommendations of the Board of
Directors". An appraisal of the value of Alamo's 100% interest in Grill has not
been obtained.
<PAGE>
Conditions to the Agreement
The obligations of E&C and Alamo to consummate the Agreement are
subject to the satisfaction of a number of conditions, including the approval of
the Agreement and the transactions contemplated thereby by the holders of a
majority of the shares of Alamo Common Stock. See "THE AGREEMENT - Terms and
Conditions".
Rights to Terminate and Amendments
The Agreement may be terminated prior to the closing of the
transactions contemplated thereby under certain circumstances.
Subject to compliance with applicable law, the Agreement may be amended
by a written agreement executed by E&C, Alamo and Grill at any time prior to or,
subject to certain conditions after, its approval by the Alamo Shareholders. See
"THE AGREEMENT -Terms and Conditions."
Risk Factors
In addition to the other information contained in this Pro spectus,
shareholders of Alamo should carefully consider the following matters in
determining whether or not to approve the Agreement in exchange for E&C Common
Stock and its businesses before making any investment decision with respect to
the transac tions being considered, including that E&C incurred significant
losses during 1995 and the first quarter of 1996; that there is no assurance of
future growth of the enterprise; that E&C currently has a majority of its assets
and operations in Canada; that E&C publishes its consolidated financial
statements in Canadian dollars (CDN $), including the translation of results
from U.S. operations into Canadian currency and the exchange rate between
Canadian dollars and United States dollars varies from time to time based upon,
among other factors, economic conditions and interest rates in each country; and
that the Company has limited experience in the hotel and resort food catering
business insufficient to determine all the risks of retaining and controlling
the quality and costs of a potentially diverse set of food formats, including
the "red meat" food format of Alamo Grill, being acquired pursuant to the
Agreement.
Registration of E&C Common Stock
If the Agreement is approved, subsequent to the Closing of the sale of
Grill, Alamo shareholders will receive a distribution of the E&C Common Stock
being issued in exchange for the capital stock of Grill. Information concerning
the business and securities of E&C is included herein. See "BUSINESS OF E&C";
"DESCRIPTION OF E&C SECURITIES". The E&C Common Stock is quoted on The Nasdaq
Small-Cap Market under the symbol "PUBSF" and on the Pacific Stock Exchange
("PUB"). As of the recent date, the closing bid prices for E&C Common Stock was
$7.75. Alamo Shareholders are urged to obtain current price information for E&C
Common Stock in connection with their consideration of the Agreement and the
transactions contem plated thereby.
RISK FACTORS
In addition to the other information contained in this Prospectus and
in related materials being delivered herewith, shareholders of Alamo should
carefully consider the following matters in determining whether or not to
approve the Agreement and before making any investment decision with respect to
the transac tions being considered.
<PAGE>
Risks Relating to E&C
Losses
The Company incurred significant losses during 1995 and the first
quarter of 1996. For the year ended December 31, 1995, the Company's net loss
was CDN $1,581,955, compared to net income of CDN $213,166 for the corresponding
period in 1995. The 1995 figure includes a one-time reserve of CDN $900,000 for
closing costs and legal expenditures in connection with the closure of three
loca tions. The loss per share was CDN $0.63 (U.S. $0.46) or CDN $0.27 (U.S.
$0.20) excluding the reserve, compared to net income per Share of CDN $.09 per
Share in 1994. During the three months ended March 31, 1996, the Company's net
loss widened to CDN $381,093 from CDN $183,822 during the first quarter of 1995.
On a per-share basis, the quarterly loss in the first quarter was CDN $0.15
(U.S. $0.11), against CDN $0.07 (U.S. $0.05) in the prior period.
No Assurance of Future Growth
The Company currently operates fourteen (14) Elephant & Castle
restaurants. The Elephant & Castle chain has been developed and expanded
relatively slowly over a geographically wide and economi cally diverse area
principally in Canada during the last nineteen (19) years. The Company's ability
to grow sales at a relatively more rapid pace will depend to a substantial
extent on the Com pany's ability to build or acquire additional restaurants. The
Company's ability to open additional restaurants, in turn, will depend upon a
number of factors, including the availability of suitable locations, the hiring
and training of skilled restaurant management and personnel, and its ability to
generate funds from operations or to obtain adequate restaurant financing on
favorable terms from third parties such as hotel and resort operators. There can
be no assurance that the Company will be able to build or acquire new
restaurants at a selectively more rapid pace, or if such units are built or
acquired, that those additional restaurants can be operated profitably.
Limited Experience in Hotel and Resort Food and Beverage Operations
The Company intends to achieve growth in revenues in the immediate
future by continuing its development into new segments of the food service
business, particularly at hotel and resort opera tions. Although the Company's
management is broadly experienced in restaurant development and management, the
application of its operating and administrative skills to food and beverage
services at hotels and resorts presents certain new challenges, the risks of
which cannot be fully measured at this time. The Company's initial venture into
hotel operations, with the Shilo Hotel and resort operations in Yuma, Arizona
and Pomona, California, were unsuccess ful and resulted in termination of the
leases and litigation which is continuing. On the other hand, the Company's
initial two restaurants with Holiday Inn at facilities in Winnipeg, Canada and
Philadelphia, Pennsylvania have been successfully received, but it is still too
early for the elimination of uncertainties. Similar uncertainties are presented
by the Company's recent entry into university food provisions and airport
facilities.
Significant Assets in Canada
All but two (2) of the Elephant & Castle restaurants are currently
located in Canada. Changes in economic conditions in Canada have
disproportionately adversely affected the Company in the past. In addition,
since consumer tastes change from region to region and locale to locale, there
<PAGE>
is a risk that any new markets (whether in the United States or otherwise) may
not be as receptive to the Elephant & Castle format and menu as have existing
loca tions.
Exchange Rates
The Company publishes its consolidated financial statements in Canadian
dollars (CDN $), including the translation of results from U.S. operations into
Canadian currency. The exchange rate between Canadian dollars and United States
dollars varies from time to time based upon, among other factors, economic
conditions and interest rates in each country. Generally, so long as
substantially all of the Company's operations are located in Canada, if Canadian
dollars decline in relation to United States dollars, the Company's financial
statements, balance sheet resources, and opportunities for expansion in the
United States may be adversely affected. Although fluctuations in exchange rates
are not expected to be material to the Company's business in the future, such
fluctuations cannot be fully predicted or planned for with certainty.
New Food Formats
The Company's traditional menu at its Elephant & Castle restaurants has
emphasized popular English-style dishes with a broad range of typical North
American foods, such as burgers and pasta. As the Company undertakes additional
hotel and resort operations, it is facing business issues relating to food
formats. The Company only recently started a "deli"-concept restaurant: "Rosie's
at Rosedale on Robson". The "red meat" concept of Alamo would be a third
alternative for E&C management to promote. The Company does not yet have
sufficient experience in the hotel and resort food catering business to
determine all the risks of retaining and controlling the quality and costs of a
potentially widely diverse set of food formats.
Dependence on Founders
The Company believes that the development of its business has been, and
will continue to be, dependent on the special skills and services of the
founders. Jeffrey M. Barnett, the Chief Executive Officer, President and
Chairman of the Board of the Company, and his twin brother Peter J. Barnett and
George W. Pitman founded the Company in 1977. The loss of the services of one or
more of the founders could have a material adverse effect upon the Company's
business and development. Messrs. Jeffrey M. Barnett, Peter J. Barnett and
George W. Pitman have entered into five-year employment agreements with the
Company which expire in 1998. The Company is the beneficiary of certain life
insurance policies on the lives of the founders. See "Management - Employment
Agreements".
Need for Additional Management
The Company will need additional middle level managers and
administrators in order to accomplish its planned growth, whether through the
hotel and resort operations, the addition of satellite operations and/or the
establishment of new restaurants. The specific personnel necessary for the tasks
to be undertaken have not yet been identified, nor has any formal search been
commenced to find specific individuals. Experienced restaurant and hotel food
and beverage management personnel are in great demand and there is no assurance
that the necessary personnel will be available to the Company or will be
available on the right terms and conditions.
<PAGE>
Competition
The restaurant and food service industry is highly competitive and
fragmented. There are innumerable restaurants and other food service operations
that compete directly and indirectly with the Company. Many existing restaurant
chains have significantly greater financial resources and higher total sales
volume than does the Company. The restaurant business is often affected by
changes in consumer taste and discretionary spending priorities, local economic
conditions, demographic trends, traffic patterns in the vicinity of each
restaurant, employee availability, and the type, number and location of directly
competing restaurants.
Government Regulation
The Company's business is subject to extensive provincial, state and
local government regulation in the various jurisdictions in which its
restaurants and its licensed-outlet-type operations are located, including
regulations relating to alcoholic beverage control, public health and safety,
and fire codes. The failure to obtain or retain food and liquor licenses could
adversely affect the operation of the Company's restaurants. While the Company
has not experienced and does not anticipate any problems in obtaining required
licenses, permits or approvals, any difficulties, delays or failures in
obtaining such licenses, permits or approvals in the future could adversely
interfere with the operation of one or more restaurants in a particular area.
Control by Existing Management
Jeffrey M. Barnett, the Chairman of the Board, President and Chief
Executive Officer of the Company, Peter J. Barnett, Executive Vice President and
a director, and Jeffrey M. Barnett's brother, and George W. Pitman, a Vice
President and director of the Company, collectively own 47.5% of the outstanding
Common Shares of the Company, prior to the issuance of shares in connection with
this transaction See "Management" and "Principal Shareholders".
Risks Relating to Grill Continuing to Operate Independently
(In the event the Agreement is not approved)
The Grill is a single unit restaurant operation. As a single unit
enterprise, it has been unable, and is unlikely in the future to be able, to
attract the capital necessary for expansion.
Alamo and Grill are indebted to third parties, including lenders and
trade creditors in amounts aggregating $536,000. In the absence of a transaction
such as the one under consideration with E&C, Alamo and Grill currently lack the
resources to pay such indebtedness, and may be unable to raise the necessary
capital from third party sources on terms and conditions acceptable to the
profitable continuation of the business of Grill.
The shareholders of Alamo have no assurance of the acquisition of the
Grill by any party other than E&C. The Agreement with E&C was reached after an
extended period of negotiations, and an exhaustive and unsuccessful search for a
potential purchaser.
<PAGE>
THE SPECIAL MEETING OF ALAMO SHAREHOLDERS
This Prospectus/Proxy Statement is being provided to the Alamo
Shareholders in connection with a Special Meeting of holders of Alamo Common
Stock to consider the sale of the capital stock of Grill and the other matters
set forth herein. Although Alamo is a privately-held company, without any class
of securities registered under the Securities and Exchange Act of 1934 (the
"Exchange Act"), Alamo Common Stock is held of record by 128 persons and the
Alamo Board intends to solicit proxies from the shareholders for use at the
Alamo Special Meeting. A form of proxy is being provided to the Alamo
Shareholders with this Prospectus/Proxy Statement. Information with respect to
the execution and revocation of proxies is provided under "THE ALAMO SPECIAL
MEETING - Voting Rights."
Purpose of the Meeting
At the Alamo Special Meeting, the Alamo Shareholders will be asked to
consider and vote upon and approve a plan of reorganiza tion involving the sale
of substantially all of the assets consisting of 100% of the capital stock of
its only operating subsidiary, Grill, and such other matters as may properly be
brought before the Alamo special meeting or any postponements or adjournments
thereof.
The Alamo Board of Directors has unanimously approved the Agreement and
the transactions contemplated thereby and recommends that the Alamo Shareholders
vote "FOR" the proposal to approve and adopt the Agreement and the transactions
contemplated thereby. See "THE AGREEMENT - Recommendations of the Board of
Directors."
Distribution of Shares of E&C Common Stock
Upon approval of Alamo's shareholders of the sale of the shares of
Grill by Alamo to E&C, the total consideration to be received by Alamo at
Closing is $1,536,000 consisting of (i) the assumption of liabilities by E&C not
in excess of $536,000 in the aggregate and (ii) the delivery of 147,059 shares
of Common Stock, without par value, of E&C. Alamo will then cease doing business
and will distribute the shares of E&C stock to its shareholders based upon a
fraction determined by dividing the number of E&C common shares to be delivered
to Alamo under the Agreement [147,059 shares], by the number of shares of Alamo
Common Stock, $.01 par value, issued and outstanding as of the Closing date
[2,961,000] (3,161,000 less 200,000 shares to be relinquished by Jon P. Taffer,
see "Security Ownership of Certain Beneficial Owners and Manage ment"). Hence,
.0496 shares of E&C Common Stock will be distrib uted for each full share of
Alamo Common Stock issued and outstand ing, or 49.6 shares of E&C Common Stock
for each 1,000 shares of Alamo Common Stock owned.
Approval
The approval and adoption by Alamo Shareholders of the Sale of Grill
will require the affirmative vote of the holders of a majority of the
outstanding shares of Alamo Common Stock.
As of July 1, 1996, directors and executive officers of Alamo and their
affiliates may be deemed to be the beneficial owners of approximately 25% of the
outstanding shares of Alamo Common Stock. See "Security Ownership of Certain
Beneficial Owner and Manage ment."
<PAGE>
At the Alamo Special Meeting, in determining whether the proposal to
approve and adopt the Sale of Grill has received the requisite number of
affirmative votes, abstentions and broker non-votes will have the same effect as
a vote against either proposal. At the Alamo Special Meeting, abstentions and
broker non-votes will be counted for purposes of determining the presence or
absence of a quorum. A "broker non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a proposal because, for such proposal,
the nominee does not have discretionary power and has not received instructions
with respect to voting of such shares.
Date, Time and Place; Record Date
The Alamo Special Meeting is scheduled to be held at 9:00 a.m., local
time, on Thursday, August ___, 1996, in the Conference Center at the offices of
Robins Kaplan Miller & Ciresi, 2800 LaSalle Plaza, Minneapolis, Minnesota 55402.
The Alamo Board has fixed the Record Date as the close of business on August
___,1996 for the determination of Alamo Shareholders entitled to notice of and
to vote at the Alamo Special Meeting. Only holders of record of Alamo Common
Stock at the close of business on the Alamo Record Date will be entitled to
notice of and to vote at the Alamo Special Meeting.
Voting Rights
Pursuant to the Minnesota Business Corporation Act ("MBCA"), the
affirmative vote of the holders of at least a majority of the shares of Alamo
Common Stock outstanding as of the Alamo Record Date is required to approve and
adopt the Agreement and the transactions contemplated thereby. As of the Record
Date, there were 3,201,000 shares of Alamo Common Stock outstanding held by 128
holders of record. Holders of record of Alamo Common Stock outstanding as of the
Record Date are entitled to one vote per share at the Alamo Special Meeting. The
presence, either in person or represented by proxy, of the holders of a majority
of the shares of Alamo Common Stock outstanding as of the Record Date is
necessary to constitute a quorum at the Alamo Special Meeting.
The Alamo Board is soliciting proxies so that each Alamo Shareholder on
the Record Date has the opportunity to vote on the proposal to be considered at
the Alamo Special Meeting. When a proxy card is returned properly signed and
dated, the shares represented thereby will be voted in accordance with the
instruc tions on the proxy card. If an Alamo Shareholder does not return a
signed proxy card, his or her shares will not be voted and thus will have the
effect of a vote against the Agreement and the transactions contemplated
thereby.
Proxies
All shares of Alamo Common Stock which are entitled to vote
and are represented at the Alamo Special Meeting by properly executed proxies
received prior to at the Alamo Special Meeting, and not revoked, will be voted
at the Alamo special meeting in accordance with the instructions indicated on
such proxies. If no instructions are indicated, such proxies will be voted FOR
approval and adoption of the Agreement.
If any other matters are properly presented at the Alamo Special
Meeting for consideration, including, among other things, consideration of a
motion to adjourn the Alamo Special Meeting to another time and/or place
(including, without limitation, for the purpose of soliciting additional
proxies), persons named in the enclosed form of proxy in acting thereunder will
have discretion to vote on such matters in accordance with their best judgment.
<PAGE>
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (1)
filing with the President of Alamo at or before the taking of the vote at the
Alamo Special Meeting, a written notice of revocation bearing a later date than
the proxy, (2) duly executing a later dated proxy related to the same shares and
delivering it to the Secretary of Alamo for the taking of the vote at the Alamo
Special Meeting or (3) attending the Alamo Special Meeting and voting in person
(although attendance at the Alamo Special Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be sent as to be delivered to Alamo Restaurants, Inc.,
1465 East 84th Place, Merrillville, Indiana, 46410, Attention: President, or
hand delivered to the President of Alamo, at or before the taking of the vote at
the Alamo Special Meeting.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of July 30,
1996, with respect to the beneficial ownership of Alamo Common Stock by (i) each
director, (ii) Alamo's Chief Executive Officer, and (iii) all directors and
executive officers of ARI as a group. To Alamo's knowledge, based upon its
review of its stock ledger, no person other than those identified below
beneficially own 5% or more of the outstanding Alamo Common Stock.
<TABLE>
<CAPTION>
Shares of Alamo
Common Stock Percentage of Alamo
Name Beneficially Owned Common Stock Outstanding
- ---- ------------------ ------------------------
<S> <C> <C>
Jon P. Taffer 725,000* 22.64%
John P. Holdahl 50,000 1.56%
Martin J. O'Dowd 40,000 1.25%
All directors and
executive officers
as a group (3 persons) 815,000 25.45%
</TABLE>
*In order to facilitate approval of the Agreement, Mr. Taffer has agreed
with the Board of Alamo that, upon approval of the Agreement, he will
relinquish, without consideration, to Alamo Corporation for cancellation 200,000
shares of Common Stock, with the effect that the shares of E&C Common Stock that
otherwise would have been receivable solely by him will be distributed pro rata
to Mr. Taffer and the other shareholders of Alamo.
- ---------------------------
Rights of Dissenting Shareholders
Section 302A.471 of the MBCA entitles any holder of Alamo's Common
Stock who objects to the Agreement, in lieu of receiving the shares of E&C
Common Stock to which he or she would otherwise be entitled pursuant to the
Agreement, to dissent from the Agreement and obtain payment for the "fair value"
of his or her shares of Alamo Common Stock. Any shareholder contemplating the
exercise of these dissenters' rights should review carefully the provisions of
Sections 302A 471 and 302A.473 of the MBCA, particularly the procedural steps
required to perfect such rights. SUCH RIGHTS WILL BE LOST IF THE PROCEDURAL
REQUIREMENTS OF SECTION 3021.473 ARE NOT FULLY AND PRECISELY SATISFIED.
<PAGE>
Set forth below (to be read in conjunction with the full text of
Section 302A.471 and 302A.473 appearing in Annex B to this Proxy Statement) is a
brief description of the procedures relating to the exercise of dissenters'
rights. The following description does not purport to be a complete statement of
the provisions of Section 302A.473 and is qualified in its entirety by reference
thereto.
Under Section 302A.473, Subd.3, a shareholder who wishes to exercise
dissenters' rights (a "Dissenter") must file with the Company (the Company's
address set forth in this Proxy Statement/ Prospectus, Attention: President)
before the vote on the Agreement, a written notice of intent to demand the fair
value of the Company's shares owned by the shareholder. IN ADDITION, THE
SHAREHOLDER MUST NOT VOTE HIS OR HER SHARES IN FAVOR OF THE AGREEMENT. A VOTE
AGAINST THE AGREEMENT WILL NOT IN ITSELF CONSTITUTE SUCH A WRITTEN NOTICE AND A
FAILURE TO VOTE WILL NOT AFFECT THE VALIDITY OF A TIMELY WRITTEN NOTICE.
HOWEVER, THE SUBMISSION OF A BLANK PROXY WILL CONSTITUTE A VOTE IN FAVOR OF THE
AGREEMENT AND A WAIVER OF DISSENTERS' RIGHTS.
If the Agreement is approved by the shareholders of Alamo, Alamo will
send to all dissenters who filed in a timely manner the necessary notice of
intent to demand the fair value of their shares and who did not vote their
shares in favor of the Agreement, a notice containing the information required
by Section 302A.473, Subd.4, including, without limitation, the address to which
a dissenter must send a demand for payment and certificates repre senting shares
in order to obtain payment for such shares and the date by which they must be
received. In order to receive the fair value of the shares under Section
302A.473, a dissenter must demand payment and deposit certificates representing
shares within 30 (thirty) days after such notice from Alamo is given. Under
Minnesota law, notice by mail is given by Alamo when deposited in the United
States mail. A SHAREHOLDER WHO FAILS TO MAKE DEMAND FOR PAYMENT AND TO DEPOSIT
CERTIFICATES AS REQUIRED BY SECTION 302.A473, SUBD.4, WILL LOSE THE RIGHT TO
RECEIVE THE FAIR VALUE OF HIS OR HER SHARES UNDER SUCH SECTION NOTWITHSTANDING
THE TIMELY FILING OF NOTICE OF INTENT TO DEMAND PAYMENT UNDER SECTION 302A.473,
SUBD.3.
After the effective date of the Agreement, or after Alamo receives a
valid demand for payment, Alamo will remit, to each dissenter who has complied
with the provisions of Section 302A.473, Subd. 3 and 4, the amount Alamo
estimates to be the fair value of the shares, with interest from five days after
the effective date of the Agreement until the date of payment, calculated at the
rate provided in Minnesota Statutes, Section 549.09 for interest judgments and
awards, which in 1996 is five (5%) percent. Such remittance will be accompanied
by certain financial statements, an estimate of fair value, a description of the
method used by Alamo to reach such estimate, a copy of Sections 302A.471 and
302A.473, a brief description of the procedure to be followed in demanding
supplemental payment and, in the case of dissenters receiving an offer to remit,
a statement of the reason for withholding remit tance.
If a dissenter believes that the amount remitted or offered by Alamo is
less than the fair value of the shares, with interest, the dissenter may give
written notice to the Company of the dissenter's estimate of fair value, with
interest, with thirty (30) days after Alamo mails such remittance or offer, and
demand payment of the difference. UNLESS A DISSENTER MAKES SUCH A DEMAND WITHIN
SUCH 30- DAY PERIOD, THE DISSENTER WILL BE ENTITLED ONLY TO THE AMOUNT REMITTED
OR OFFERED BY ALAMO.
<PAGE>
Within sixty (60) days after Alamo receives such a demand from a
dissenter, it will be required to either pay the dissenter the amount demanded
or agreed to after discussion between the dissenter and Alamo or file in court a
petition requesting that the court determine the fair value of the shares, with
interest. All dissenters who have demanded payment for their shares, but have
not reached agreement with Alamo, will be made parties to the proceed ing. The
court will then determine whether the dissenters in question have fully complied
with the provisions of Section 302A.473, and will determine the fair value of
the shares, taking into account any and all factors the court finds relevant
(includ ing, without limitation, the recommendation of any appraisers which may
have been appointed by the court), computed by any method that the court, in its
discretion, sees fit to use, whether or not used by Alamo or a dissenter. The
fair value of the shares as deter mined by the court is binding on all
shareholders, but the dissenters will not be liable to Alamo for the amount, if
any, by which the payment remitted to the dissenters' exceeds the fair value of
the shares determined by the court, with interest. The costs and expenses of the
court proceeding will be assessed against Alamo, except that the court may
assess part or all of those costs and expenses against a dissenter whose action
in demanding payment is found to be arbitrary, vexatious or not in good faith.
Under Section 302A.471, Subd.2, a shareholder of Alamo may not assert
dissenters' rights with respect to less than all of the shares of Common Stock
registered in the shareholder's name, unless the shareholder dissents with
respect to all shares beneficially owned by another person and discloses the
name and address of such other person. The beneficial owner of shares of Common
Stock may assert dissenters' rights with respect to such shares, by following
the procedures described above, if the beneficial owner submits to Alamo at the
time of or before the assertion of dissenters' rights a written consent of the
shareholder in whose name the shares are registered. The fair value of Alamo's
shares means the value of the shares immediately before the effective date of
the Agreement.
Under the terms of the Agreement, in the event that sharehold ers of
Alamo owning ten (10%) percent or more of its Common Stock assert their
dissenters' rights under Minnesota law, either Alamo or E&C may elect to
terminate the Agreement.
No Fractional Shares
Alamo does not intend to distribute fractional shares of E&C Common
Stock, and, in order to do so, will round down to the nearest whole number that
number of shares to be distributed to Alamo shareholders. By so doing,
approximately 1,900 shares will remain undistributed. Alamo intends to sell such
shares in the open market and apply the proceeds thereof to any unliquidated
liabilities.
Costs of Solicitation
The costs of solicitation of Alamo Shareholder proxies will be borne by
Alamo. Alamo will reimburse the respective brokers, fiduciaries, custodians and
other nominees for reasonable out-of-pocket expenses incurred in sending this
Prospectus/Proxy Statement and other proxy materials to, and obtaining
instructions relating to such materials from, the respective beneficial owners
of Alamo Common Stock. Alamo Shareholder proxies may be solicited by directors,
executive officers or regular employees of Alamo, in person, by letter or by
telephone or telegram.
<PAGE>
THE AGREEMENT
Background
Grill is a wholly-owned subsidiary of Alamo. Grill operates the Alamo
Grill Restaurant at The Mall of America in Bloomington, Minnesota. It has no
other significant assets or business operations.
Subsequent to the commencement of operations at The Mall of America,
Alamo formed two additional subsidiary corporations, one of which opened an
Alamo Grill Restaurant in Salt Lake City, Utah and the second which opened an
Alamo Grill Restaurant in Wichita, Kansas. Management of Alamo was executing a
business plan which contemplated a broad expansion of the Alamo Grill concept.
The restaurants in Salt Lake City and Wichita were unsuccess ful and
those subsidiaries terminated operations in 1994 and 1995, respectively.
Management subsequently determined that the site at The Mall of America was
unique in terms of a mall location and that in order for Alamo to expand
successfully, non-mall based, free-standing sites would be required. However,
Alamo lacked the capital required to expand on a free-standing basis and it
determined that in light of its unsuccessful ventures in Salt Lake City and
Wichita, it was not possible to raise new capital sufficient to expand on a
free-standing basis.
Hence, the Board of Directors concluded that, since the fundamental
expansion plan had been frustrated, Alamo should undertake an evaluation of
options which, under the circumstances, would maximize the return to Alamo
shareholders. Such evaluation resulted in the Board concluding that it was in
the best interests of the Alamo shareholders to seek a buyer for its Mall of
America location. Initially, Alamo retained a national restaurant brokerage for
the purpose of soliciting interest in the Mall of America site. Sales materials
were distributed by the broker to over 60 (sixty) national chains and
independent operators. The agreement with the broker expired by its terms
without having produced an offer for the Mall of America location satisfactory
to management.
Subsequently, management undertook its own direct efforts to find a
buyer for the Mall of America location. Martin J. O'Dowd, a director of Alamo,
is also a director of E&C and the President of a separate publicly-owned
restaurant chain not involved in this transaction: Rainforest Cafes. Mr. O'Dowd
was instrumental in introducing the Alamo concept to E&C for its analysis. Mr.
O'Dowd is not being compensated for his role, although he is a shareholder of
both Alamo and E&C. Following a substantial review and evalua tion by E&C,
negotiations commenced for the purchase of the stock of Grill from Alamo. Such
negotiations continued over a period of approximately 15 months, during which
time E&C was engaged in other expansion activities. Management of E&C and Alamo
met on several occasions in an attempt to reach an agreement, which was finally
approved by the respective Boards of Alamo (on April 2, 1996) and E&C (on May
14, 1996).
Recommendation of the Board of Directors of Alamo
Once the decision was made by the Board of Directors of Alamo that its
fundamental business purpose had been frustrated, the Alamo Board determined
that it would be in the best interests of the shareholders of Alamo to attempt
to find a buyer for its one remaining asset, The Mall of America location. The
Board undertook to negotiate a transaction with a publicly-held company in order
to provide shareholders of Alamo with some degree of liquidity and potential for
capital appreciation.
<PAGE>
The Board of Directors of Alamo concluded that the offer from E&C to
acquire the stock of Grill and to pay up to $536,000 in cash to satisfy
substantially all of the liabilities of Alamo and the Grill and to exchange
147,059 Common Shares of E&C for the capital stock of Grill represents the best
available potential opportunity for shareholders of Alamo to obtain fair value
for the business of Grill. The Board of Directors of Alamo unanimously approved
the Agreement at its meeting on April 2, 1996, with Mr. O'Dowd abstaining due to
his position as a director of both Alamo and E&C. The Board of Directors of
Alamo believes the consummation of the agreement is in the best interest of
Alamo.
Elephant & Castle's Reasons for the Agreement
E&C has advised Alamo that it is acquiring The Mall of America unit for
these principal purposes: (1) for the potentially profit able continuation of
the business and operations of the Grill located at The Mall of America; and (2)
for the use of the site as a test-market facility for potential use of a "red
meat" concept in the expansion of its hotel-based properties. E&C has further
advised Alamo that it has no intention to use the "Alamo" name at its hotel
properties, and that it has no intention of creating a chain of "Alamo" or
Alamo-type restaurants at malls or free standing locations.
Terms and Conditions
The following is a brief summary of certain provisions of the Agreement
and their effect. This summary is not intended to be a complete statement of all
material provisions of the Agreement and is qualified in its entirety by
reference to the full text of the Agreement, a copy of which is attached hereto
as Annex A hereto.
Representations and Warranties. The Agreement contains various
representations and warranties from each of E&C and Alamo relating to, among
other things, the capitalization, organization, conduct of business, material
events and contracts, the accuracy of SEC filings and financial statements and
compliance with law of, E&C, Alamo and Grill. The Agreement also contains
covenants relating to the conduct of Grill's business prior to the closing, the
agreement by Alamo not to solicit any other business combina tions, E&C's
obligations to file a Registration Statement and the delivery of the resignation
of the Grill's directors as specified by E&C, among other things.
Conditions to Closing. The conditions to closing set forth in the
Agreement include the effectiveness of the Registration Statement and receipt of
the necessary state and blue sky authorizations, approval of the majority of the
outstanding shares of Alamo Common Stock cast at the Alamo Special Meeting or
any adjournment thereof and the authorization for listing on NASDAQ and PSE of
the shares of Common Stock issuable pursuant to the terms of the Agreement.
Other conditions to the obligations to close include: the accuracy of each
party's representation's and warranties on the closing date; the performance by
each party of its obligations pursuant to the Agreement, the delivery of
officers' certificates and opinions of counsel, the absence of any proceedings
enjoining the consummation of transactions contemplated by the Agreement, the
receipt of consents and approvals, the absence of any material adverse change to
the business of Alamo and Grill, taken as a whole, and the execution of a
consulting agreement between E&C and Innovative Hospitality Corporation.
Termination of the Agreement. The Agreement may be terminated any time
prior to the Effective Time, whether before or after the approval by the Alamo
shareholders, by mutual consent of the Board of Directors of E&C and Alamo or by
<PAGE>
either party if, (i) the closing does not occur, without fault of the
terminating party, on or before June 30, 1996, (ii) any court of competent
jurisdiction in the U.S. or other governmental body shall have issued an order,
decree or ruling or taken any other action, restraining, enjoining or otherwise
prohibiting the sale of shares; or (iii) the approval of majority of the shares
of Alamo's outstanding Common Stock cast at the Special Meeting or any
adjournment thereof is not obtained. In addition, either party may terminate the
Agreement (i) if the other fails to comply with its obligations pursuant to
Articles 1 and 5 of the Agreement or(ii) if the other party has breached any of
its representations and warranties, and such breaches have not been cured with
15 days of written notice of such breach. E&C may terminate the Agreement if,
during the 30 trading days prior to Closing, E&C's Common Stock trades at an
average price of $8.50 or higher. Alamo may terminate the Agreement if, during
the 30 trading days prior to Closing, E&C's Common Stock trades at an average
price of $5.125 or less. Either Alamo or E&C may terminate the Agreement in the
event ten (10%) percent of the shareholders of Alamo elect to exercise their
dissenters rights under the MBCA.
Interests of Certain Persons; Certain Relationships and Related
Transactions
As of June 1, 1996, directors and executive officers of Alamo and their
affiliates may be deemed to be beneficial owners of approximately 25% of the
outstanding shares of Alamo Common Stock.
Jon P. Taffer, President of Alamo, is also President of Innovative
Hospitality Concepts ("IHC") which is in the business of providing management
and consulting operations to restaurant and food service businesses throughout
the United States. IHC has had a management agreement with Alamo pursuant to
which it managed the operations at The Mall of America facility through
November, 1995 when that management agreement expired and has continued
thereafter on a month-to-month, at-will arrangement by the parties thereto.
Under the terms of the Agreement, E&C required that IHC undertake to provide
certain ongoing management and administrative services to the Alamo Grill
operation at the Mall of America site following the closing of the transaction.
Under the terms of the proposed management agreement between E&C and IHC, IHC
will be compensated at the rate of $2,000 per month plus out-of-pocket expenses
for 24 months. Thereafter, IHC's fee will increase to $2,200 per month for up to
an additional 24 months. The service is terminable at any time by E&C on 60
days' notice to IHC.
In addition, as a condition to entering the Agreement, E&C required
that IHC enter a separate agreement pursuant to which IHC will provide
consulting re: menu revisions, product specifications, grand opening events,
administrative and accounting forms, landlord-tenant negotiations, and related
services in connection with the opening and expansion of the Alamo Grill concept
at hotel locations following closing of the Agreement. Under the terms of that
agreement, IHC will be compensated by payment of $10,000 per restaurant/hotel
location opening, payable one-third upon retainer, one-third upon completion of
substantive work, and one-third upon grand opening of each such restaurant/hotel
location. In addition, E&C may choose to utilize the consulting services of IHC
for man agement and employee location at any such given restaurant location. For
such optional training services, IHC may receive an additional fee of up to
$15,000 U.S. per restaurant location.
<PAGE>
Certain Federal Income Tax Consequences
The following discussion addresses the material federal income tax
consequences of the Agreement that are applicable to the holders of Alamo Common
Stock. This discussion reflects the opinion of counsel attached as an exhibit to
the Registration Statement of which this Prospectus/Proxy Statement is a part
(the "Exhibit Opinion"). The Exhibit Opinion includes an opinion to the effect
that the Agreement will constitute a "reorganization" within the meaning of
Section 368 of the Internal Revenue Code (the "Code"). The Exhibit Opinion,
which is based on certain assump tions and subject to certain limitations and
qualifications as noted in the opinion, will be delivered by Robins, Kaplan,
Miller & Ciresi, counsel for Alamo.
Alamo shareholders should be aware that the following discussion does
not deal with all federal income tax considerations that may be relevant to a
particular Alamo shareholder in light of his or her particular circumstances,
such as shareholders who are dealers in securities, or foreign persons or who
have acquired their Alamo Common Stock through stock option or in other compen
satory transactions. In addition, no foreign, state or local tax considerations
are addressed herein. Accordingly, Alamo sharehold ers are urged to consult
their own tax advisors as to specific tax consequences to them of the Agreement,
including the applicable federal, state, local and foreign tax consequences to
them.
The following discussion is based on Alamo's counsel's interpretation
of the Code, applicable Treasury regulations, judicial authority and
administrative ruling and practice, all as of the date hereof. The Internal
Revenue Service (the "IRS") is not precluded from adopting a contrary position.
In addition, there can be no assurance that future legislative, judicial or
administrative changes or interpretations will not adversely affect the accuracy
of the statements and the conclusions set forth herein. Any such changes or
interpretations could be applied retroactively and could affect the tax
consequences of the agreement to Alamo and its shareholders.
Subject to the limitations and qualifications referred to herein, and
as a result of the Agreement qualifying as a reorgani zation within the meaning
of Code Section 368, counsel for Alamo is of the opinion that:
(a) The transaction by which Alamo transfers substantially all of its
assets, being its stock in Grill to E&C in exchange for stock of E&C
which Alamo distributes to Alamo's shareholders, is a tax-free "type C"
reorganiza tion;
(b) No gain or loss will be recognized by the holders of Alamo Common Stock
upon their receipt of E&C common stock which will be distributed to
them prior to the dissolu tion of Alamo;
(c) The aggregate tax basis of the E&C Common Stock received
by the Alamo shareholders will be the same as the
aggregate tax basis of the Alamo common shares;
(d) The holding period of E&C Common Stock received by each Alamo
shareholder will include the period for which the Alamo Common Stock
was considered to be held, provided that the Alamo Common Stock is held
as a capital asset at the time of the transfer; and
(e) Alamo will not recognize gain or loss solely as a result
of the transactions contemplated by the Agreement.
<PAGE>
Alamo has not requested a ruling from the IRS in connection with the
Agreement. However, it is a condition of the respective obligations of E&C and
Alamo to consummate the Agreement that such parties received confirming tax
opinions from their respective legal counsel to the effect that for federal
income tax purposes, the Agreement will constitute a reorganization. The Exhibit
Opinion is not intended to satisfy this closing condition. These Closing
Opinions, which are collectively referred to herein as the "tax opinions"
neither bind the IRS nor preclude the IRS from adopting a contrary position. As
with the Exhibit Opinion, the tax opinions will be subject to certain
assumptions and qualifications and will be based on the truth and accuracy of
certain representa tions of E&C and Alamo, including representations in certain
certificates of the respective management of E&C and Alamo dated on or prior to
the date of this Prospectus/Proxy Statement.
A successful IRS challenge to the tax-free reorganization status would
result in an Alamo shareholder recognizing gain or loss with respect to each
share of Alamo stock surrendered equal to the difference between the
shareholder's basis in such share and the share market value of the E&C stock
ultimately received. In such event, an Alamo shareholder's aggregate basis in
the E&C Common Stock so received would equal its fair market and the
shareholder's holding period for such stock would begin the day after the
Agreement was consummated.
Even if the transaction qualifies as a reorganization, a recipient of
shares of E&C Common Stock would recognize gain to the extent such shares were
considered to be received in exchange for services or property (other than
solely Alamo Common Stock). All or a portion of such gain may be taxable as
ordinary income. Gain would also have to be recognized to the extent that an
Alamo shareholder was treated as receiving consideration other than the E&C
Common Stock in exchange for his or her Alamo Common Stock.
Federal Securities Law Consequences
All shares of E&C Common Stock received by the Alamo share holders
following the consummation of the Agreement, will be freely transferable, except
that shares of E&C Common Stock received by persons who are deemed to be
"affiliates" (as such term is defined under the Securities Act of 1933) of Alamo
prior to the Agreement may be resold by them only in transactions permitted by
the resale provisions of Rule 145 promulgated under the Securities Act (or Rule
144 in the case of such persons who become affiliates of E&C)) or as otherwise
permitted under the Securities Act. Persons who may be deemed to be affiliates
of Alamo or E&C generally include individuals or entities that control, are
controlled by, or are under common control with, such party, and may include
certain officers and directors of such party as well as the principal
shareholders of such party. The Agreement requires Alamo to use its best efforts
to cause each of its affiliates to execute a written agreement to the effect
that such person will not offer to sell or otherwise dispose of any of the
shares of E&C Common Stock issued to such person in or pursuant to the agreement
in violation of the Securities Act or the rules and the regulations promulgated
thereunder.
Closing; Effective Time
The closing of the transactions contemplated by the Agreement (the
"Closing") will take place on the first business day immedi ately following the
date on which the last of the conditions set forth in the Agreement is satisfied
or waived, or at such other time as E&C and Alamo may agree ("Closing Date").
<PAGE>
BUSINESS OF E&C
Introduction
E&C operates a chain of 14 full-service English-style dining
restaurants and pubs, 12 of which are located in Canada and one in the State of
Washington and one in Philadelphia, Pennsylvania. The Canadian restaurants are
operated under the name "The Elephant & Castle Pub & Restaurant" and are located
in major shopping malls and office complexes from Victoria, B.C. to Ottawa,
Ontario. The Philadelphia restaurant and one in Winnipeg, Canada are based
inside of Holiday Inn hotel operations. In addition, E&C currently operates a
"Rosie's" deli-style restaurant at the Rosedale-on-Robson Hotel in Vancouver,
B.C., Canada and an English style "Elephant on Campus" restaurant at the British
Columbia Institute of Technology.
The Company believes that it is in the early stages of a major
expansion/refocusing of its restaurant operations. The expansion/ refocusing
contemplates that the Company will ultimately operate a majority of its
restaurants at (i) major hotel locations; (ii) in the United States; and (iii)
with alternative menu formats, not limited to the Elephant & Castle English-pubs
concept. The acquisition of the Grill provides a prospective "red meat" format,
which E&C believes to be a potentially important ingredient in its expansion
formula.
The expansion/refocusing also includes alternative venues (sites) for
the Company's restaurant facilities. To that end, in 1995, the Company opened
its first on-campus "University" restau rant, and arranged for the licensing of
a restaurant at the new international terminal at Vancouver International
Airport.
During 1995, the Company arranged for an investment of $4,000,000
(U.S.), of which $1,000,000 has been invested as equity, and $3,000,000 by way
of Subordinated Convertible Notes, by a major United States-based pension money
manager, GEIPPP, II, with an anticipated placement of an additional $6,000,000
of such Notes in future periods. The closing of this financing significantly
enhances the Company's ability to achieve the expansion/refocusing which is, and
has been, the basis of its future plans.
During 1995, the Company also experienced financial losses. Such losses
resulted in part from the termination of two Shilo Hotel properties, in Yuma,
Arizona and Pomona, California, which properties had previously been occupied by
Elephant & Castle under arrangements which turned out to be unsuitable and
unprofitable; the close-down of a Toronto, Canada mall location which could not
be renewed on acceptable terms; and generally unfavorable business conditions
which prevailed in Canada, particularly Eastern Canada, due, in part, to the
economic uncertainty related to the political crisis concerning the separation
of Quebec. During 1995, the Company also incurred substantially increased
general and adminis trative costs relating inter alia to a decision not to build
a restaurant at a particular hotel site in San Francisco, after the investment
of significant management time, and funds.
Principal Operations
Elephant & Castle (Traditional Format). At the Elephant & Castle
restaurants, the Company seeks to distinguish itself from competitive
restaurants by its distinctive British style and Tudor decor, and by featuring a
wide variety of menu items including a large number of English-style dishes. The
Company's restaurants offer a broad menu at popular prices. The menu is
<PAGE>
regularly updated to keep up with current trends in customers' tastes. The
average check per customer, including beverage, was approximately CDN $14 during
1995. Although all of the Company's restaurants provide full liquor service,
alcoholic beverages are primarily served to complement meals. Sales of alcoholic
beverages accounted for approximately 40% of restaurant sales during 1995.
The Company's restaurants average approximately 5,500 square feet in
size, with a typical seating capacity of 225. The restaurants are open 7 days a
week for lunch, dinner and late-night dining. Due to their location at major
downtown and suburban malls and office complexes, the Elephant & Castle
restaurants cater to a consistently high traffic flow of both shoppers and
office workers. More than 34,000 customers a week are currently serviced at the
Elephant & Castle chain. Repeat clientele make up a significant portion of the
Company's restaurants' patrons.
Hotel Restaurants. During late 1993 and 1994 the Company signed
agreements with Holiday Inn for the renovation and redevel opment of restaurants
at Holiday Inn hotels in Winnipeg, Manitoba, Canada and Philadelphia,
Pennsylvania in the United States. The Winnipeg Crowne Plaza Holiday Inn
Elephant & Castle restaurant was opened on May 18, 1994, and the Philadelphia
Holiday Inn unit was opened on February 28, 1995. Both Holiday Inn restaurants
have thus far produced revenues and store-operating profits. As a result
thereof, the Company has an additional restaurant under construction at a
Holiday Inn site in San Diego, California, scheduled to open in the summer of
1996, and is considering building a substantial number of additional restaurant
units at Holiday Inns and other similar first-class hotels over the next five
years.
In the opinion of management, the three critical ingredients for the
strategy for expansion at major hotel sites are:
(1) the control of occupancy costs;
(2) the capacity to work synergistically with a hotel management
seeking to divorce itself from direct involve ment in food and
beverage operations; and
(3) Company control of the menu, kitchen and restaurant
amenities.
The Company is currently engaged in continuing discussions with Holiday
Inn and other hotel operators concerning additional locations.
In December of 1994, the Company entered into an agreement with an
international developer, the Chevalier Group of Hong Kong, to build a 200-seat,
5,000-square-foot restaurant in the develop er's $40,000,000 280 room
Rosedale-on-Robson all-suites hotel. The hotel was completed, and
Rosie's-on-Robson opened for operations in August of 1995. The Company's
arrangements with the Chevalier Group are similar to those at the Holiday Inn
locations, current and planned. The Company provides all of the hotel's room
services, off-premise catering, and branded specialty products.
The Company's restaurant at Rosedale is significantly different from
the traditional Elephant & Castle format. Manage ment operates "Rosie's" as a
New York-style deli and bar. "Rosie's" enables the Company to have a second
"branded" concept restaurant to provide to those hotel operators in locations or
with space requirements which may be unsuitable for the Elephant & Castle
traditional menu and decor.
<PAGE>
The Company's limited experience with "Rosie's" to date has been
favorable. With "Rosie's", the Company was committed to starting from fresh,
creating its own interior design and menu, under the direction of an
experienced, well-regarded staff, including an award-winning chef and design
consultants.
Previously, commencing in late 1992, the Company obtained the right to
operate all of the food and beverage services at the Shilo Hotel & Resort
complex in Yuma, Arizona. In addition, on July 1, 1993, the Company added the
food and beverage operations at a second Shilo Hotel in Pomona, California. The
style and menu at the Shilo Hotels was significantly different from that
followed at the traditional Elephant & Castle restaurants. The Company's
experience at the Shilo Hotels and with the management thereof was decisively
negative, resulting in termination and closing of those restaurants during 1995
and litigation which is continuing. See Legal Proceedings.
In its broadest terms, the Company's strategy for growth in the hotel,
food and beverage industry is as follows: Locations primarily at hotel sites
will be identified in chosen select markets. The Company has identified four
geographic pockets of potential growth for all corporate brands. The intention
is to cluster restaurants in select locations within the chosen geograph ic
regions. Key points for consideration would include a high level of occupancy at
a prospective hotel; a hotel which is part of a chain large and sophisticated
enough to join in combined marketing activities; potential unique traffic
generators; and the potential for non-seasonal activity. The addition of a "red
meat" menu format would, in the opinion of management, significantly add to the
Company's capacity to fulfill its growth objectives.
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The following selected financial information of Elephant and
Castle for each of the years ended December 31, 1995, 1994 and 1993 has been
derived from Elephant & Castle's audited financial statements contained in its
Annual Reports on Form 10-K for the years then ended and is qualified in its
entirety by such docu ments. The selected unaudited financial information of
Elephant & Castle as of and for the three months ended March 31, 1996, includes
all adjustments, deemed to be necessary for a fair presentation of such
information for the period then ended. The operating results for the three
months ended March 31, 1996 are not necessarily indicative of results for the
full year. This information should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements.
SELECTED HISTORICAL CONSOLIDATED
FINANCIAL DATA OF
ELEPHANT & CASTLE GROUP INC.
The following selected financial information of Elephant & Castle Group
Inc. for each of the years ended December 31, 1995, 1994 and 1993 has been
derived from Elephant & Castle Group Inc.'s audited financial statements
contained in its Annual Reports on Form 10-KSB for the years then ended and is
qualified in its entirety by such documents. The selected unaudited financial
information of Elephant & Castle Group Inc, as of and for the three months ended
March 31, 1996, includes all adjustments, deemed to be necessary for a fair
presentation of such information for the period then ended. The operating
results for the three months ended March 31, 1996 are not necessarily indicative
of results for the full year. This information should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements.
<PAGE>
ELEPHANT & CASTLE GROUP INC.
Selected Historical Consolidated Financial Data
(Canadian Dollars)
(CDN $ - Canadian dollars)
<TABLE>
<CAPTION>
Three Months
Ended
March 31, Fiscal Year Ended December 31,
-------------- -------------- ------------ ------------
1996 1995 1994 1993
(Unaudited)
<S> <C> <C> <C> <C>
Sales .................................................... $ 6,127,363 $ 25,764,339 $ 25,414,275 $ 22,445,883
Net Income (Loss), before Other Item ..................... ($ 381,093) (681,955) 213,166 163,789
Net Income (Loss), including Other ....................... (381,093) (1,581,955) 213,166 163,789
Item
Net Income (Loss) per Share, before Other Item ........... ($ 0.15) ($ 0.27) $ 0.09 $ 0.09
Net Income (Loss) per Share, including Other ............. ($ 0.15) ($ 0.63) $ 0.09 $ 0.09
Item
Total Assets ............................................. 14,966,283 15,888,100 10,328,981 10,005,206
Shareholders' Equity ..................................... $ 6,706,045 $ 7,087,138 $ 7,345,905 $ 7,307,236
Average Shares Outstanding ............................... 2,604,611 2,502,759 2,440,583 1,865,000
</TABLE>
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial
information give effect to the acquisition by Elephant & Castle of the capital
stock of the Grill on the basis described in the Agreement. This pro forma
information has been prepared utilizing the historical consolidated financial
statements of Elephant & Castle and the unaudited financial information relating
to Grill, provided by Alamo. This information should be read in conjunction with
the historical financial statements and notes thereto, which are incorporated
into this Prospectus/Proxy Statement. The pro forma financial data are provided
for comparative purposes only and do not purport to be indicative of the results
which would have been obtained if the acquisition had been effected during the
periods presented. The historical results of Grill are not being accounted for
as a significant subsidiary of E&C.
ELEPHANT & CASTLE GROUP INC.
Unaudited Pro Forma Condensed Combined Financial Statements
Acquisition of The Alamo Grill Inc.
(Canadian Dollars)
The following unaudited pro forma condensed combined financial statements and
explanatory notes reflect the acquisition of The Alamo Grill Inc. ("Alamo") by
Elephant & Castle Group Inc. ("E&C") for 147,059 shares of E&C's capital stock
at a deemed value of $CDN 9.32 ($U.S. 6.80) per share and cash of $CDN 734,320
($U.S. 536,000), under the purchase method of accounting.
The pro forma condensed combined balance sheet combines the historic
consolidated balance sheet of E&C as of December 31, 1995, as contained in its
Annual Report on Form 10-K SB, and the historic balance sheet of Alamo as of
January 28, 1996. The pro forma condensed combined statement of income combines
the historic consolidated statement of income of E&C for the year ended December
31, 1995, also as contained in its Annual Report, and the historic statement of
income of Alamo for the year ended January 28, 1996 assuming the acquisition was
made at the beginning of each of the respective years presented.
The following unaudited pro forma condensed combined financial statements are
not necessarily indicative of future results of operations of E&C or the results
which would have resulted had the operations and management of E&C and Alamo
been combined during the periods presented. In addition, the pro forma results
are not intended to be a projection of future results. The unaudited pro forma
condensed combined financial statements should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements.
<PAGE>
Elephant & Castle Group Inc.
Notes to Pro Forma Combined Condensed Financial Statements Adjusted for the
Acquisition of The Alamo Grill Inc.
December 31, 1995
(Canadian Dollars)
(Unaudited)
Pro Forma Adjustments
In preparing the accompanying pro forma condensed combined financial statements,
the following adjustments have been made:
1) Eliminates the share capital of Alamo.
2) Reflects the issuance of E&C's capital stock and repayment of certain
liabilities and long term debts of Alamo pursuant to the acquisition
agreement.
3) Reflects the additional amortization of intangible assets as a result of
the allocation of the purchase price.
4) Reflects the reduction of interest expense resulting from the repayment of
long term debt.
<PAGE>
<TABLE>
<CAPTION>
Elephant & Castle Group Inc.
Pro Forma Combined Condensed Income Statements
Elephant & Castle Group Inc. and The Alamo Grill Inc.
For the Twelve Months Ended December 31, 1995
Canadian Dollars
(unaudited)
E&C Alamo Combined Adjustments Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SALES .......................................... $25,764,339 $ 3,629,025 $29,393,364 $29,393,364
----------- ----------- ----------- -----------
RESTAURANT EXPENSES
Food and Beverage Costs ...................... 7,622,183 1,130,382 8,752,565 8,752,565
Restaurant operating expenses
Labour ..................................... 8,511,442 1,185,923 9,697,365 9,697,365
Occupancy and other ........................ 6,716,129 892,317 7,608,446 7,608,446
Depreciation and Amortization ................ 1,223,934 52,930 1,276,864 41,424(3) 1,318,288
----------- ----------- ----------- -----------
24,073,688 3,261,551 27,335,239 27,376,663
----------- ----------- ----------- -----------
INCOME FROM RESTAURANT OPERATIONS .............. 1,690,651 367,474 2,058,125 2,016,701
GENERAL AND ADMINISTRATIVE EXPENSES ............ 2,287,915 135,993 2,423,908 2,423,908
INTEREST ON LONG TERM DEBT ..................... 84,691 131,236 215,927 (129,617)(4) 86,310
----------- ----------- ----------- -----------
PROFIT (LOSS) BEFORE INCOME TAXES .............. (681,955) 100,244 (581,711) (493,518)
INCOME TAXES ................................... 0 0 0 0
----------- ----------- ----------- -----------
NET PROFIT (LOSS) BEFORE OTHER ITEMS ........... (681,955) 100,244 (581,711) (493,518)
OTHER ITEMS .................................... (900,000) 0 -900,000 (900,000)
----------- ----------- ----------- -----------
NET PROFIT (LOSS) FOR THE YEAR ................. (1,581,955) 100,244 (1,481,711) (1,393,518)
----------- ----------- ----------- -----------
Average number of shares outstanding 2,502,759 2,649,818 2,649,818
Earnings per share - before other items ($0.27) ($0.22) ($0.19)
Earnings per share - after other items ($0.63) ($0.56) ($0.53)
See notes to pro forma combined condensed financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Elephant & Castle Group Inc.
Pro Forma Combined Condensed Balance Sheets
Elephant & Castle Group Inc. and The Alamo Grill Inc.
As at December 31, 1995 and January 28, 1996
Canadian Dollars
(unaudited)
E&C Alamo Combined Adjustments Total
---------- --------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current
Cash and Term Deposits .......................... 5,031,758 58,583 5,090,341 -734,320 (2) 4,356,021
Accounts Receivable ............................. 540,749 208 540,957 540,957
Inventory ....................................... 501,699 26,349 528,048 528,048
Deposits and Prepaid Expenses ................... 509,543 84,373 593,916 593,916
---------- --------- ---------- ----------
6,583,749 169,513 6,753,262 6,018,942
Fixed Assets ...................................... 8,798,738 248,724 9,047,462 9,047,462
Other Assets ...................................... 505,613 820,520 1,326,133 796,350 (2,3) 2,122,483
---------- --------- ---------- ----------
15,888,100 1,238,757 17,126,857 17,188,887
---------- --------- ---------- ----------
LIABILITIES
Current
Accounts Payable ................................ 3,090,167 285,552 3,375,719 -452,936 (1,2,4) 2,922,783
Current Portion of Capital Leases ............... 71,382 2,859 74,241 74,241
Current Portion of Long Term Debt ............... 451,173 0 451,173 451,173
---------- --------- ---------- ----------
3,612,722 288,411 3,901,133 3,448,197
Obligation Under Capital Leases ................... 23,899 7,119 31,018 31,018
Long Term Debt .................................... 4,933,341 411,000 5,344,341 -411,000 (2) 4,933,341
Deferred Income Tax ............................... 231,000 0 231,000 231,000
---------- --------- ---------- ----------
8,800,962 706,530 9,507,492 8,643,556
---------- --------- ---------- ----------
SHAREHOLDERS' EQUITY
Capital Stock ..................................... 8,092,065 1 8,092,066 1,369,999 (1,2) 9,462,065
Retained Earnings ................................. (996,067) 532,226 -463,841 -444,033 (2,3,4) -907,874
Foreign Exchange Translation Adjustment ........... -8,860 0 -8,860 -8,860
---------- --------- ---------- ----------
7,087,138 532,227 7,619,365 8,545,331
---------- --------- ---------- ----------
15,888,100 1,238,757 17,126,857 17,188,887
---------- --------- ---------- ----------
</TABLE>
See notes to pro forma combined condensed financial statements
<PAGE>
LEGAL OPINIONS
The validity of the securities offered hereby will be passed upon for
the Company by D. David Cohen, Esq., 500 No. Broadway, Suite 133, Jericho, NY
11753 who has acted as special counsel to the Company in connection with this
Offering. Mr. Cohen is the owner of 74,500 shares of the Company's Common Stock,
and in connection with the purchase at 59,500 shares is indebted to the Company
to the extent of $300,000 plus interest accrued thereon. Such loan is secured by
securities other than securities of the Company.
Robins, Kaplan, Miller & Ciresi, Esqs. 2800 LaSalle Plaza, Minneapolis,
MN 55402 have acted as counsel to Alamo Restaurants, Inc. and Alamo Grill, Inc.
in connection with the transactions described herein.
EXPERTS
The financial statements and schedules of the Company, incorporated by
reference in the Registration Statement of which this Prospectus is a part have
been audited by Pannell Kerr Forster, chartered accountants, for the periods
indicated in their report thereon. Such financial statements and schedules have
been incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
For additional information concerning the Company, financial
statements, its operations, properties, facilities, employees, competitors,
management, executive compensation, legal proceedings, market for the Company's
Common Stock, security ownership of directors executive officers and certain
beneficial holders, this prospectus will be accompanied by the Company's Form
10-KSB for the fiscal year ended December 31, 1995, latest Form 10-Q and the
Company's proxy statement in connection with the election of directors at its
1996 Annual Meeting of Shareholders.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Article 21.1 of the Company's Articles of Association provides, with
respect to the indemnification of directors and officers, that the Company shall
indemnify, subject to the [Company Act], any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceed ing, whether or not brought by the Company or by a corporation or other
legal entity or enterprise and whether civil, criminal or administrative, by
reason of the fact that such person is or was a director, manager, or officer of
the Company, against all costs, charges and expenses, including legal fees and
any amount paid to settle the action or proceeding or satisfy a judgment, if
such person acted honestly and in good faith with a view to the best interests
of the Company, if such person exercised the care, diligence and skill of a
reasonably prudent person, and, with respect to any criminal or administrative
action or proceeding, such person had reasonable grounds for believing that his
or her conduct was lawful. The provisions of Article 21.1 are deemed to be a
term of every contract of employment or office of every director, manager, and
officer of the Company.
Article 21.2 of the Company's Articles of Association provides that,
subject to the Company Act, the Company may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or proceeding, whether or not brought by the Company or by a
corporation or other legal entity or enterprise and whether civil, criminal or
administrative, by reason of the fact that he is or was an employee or agent of
the Company or is or was serving in any other capacity on behalf of the Company
at its request including, but without limiting the generality of the foregoing,
serving at the request of the Company as a director, manager, officer, employee
or agent of another corporation, a partnership, joint venture, trust or other
enter prise, against all costs, charges and expenses, including legal fees and
any amount paid to settle the action or proceeding or satisfy a judgment, if he
acted honestly and in good faith with a view to the best interests of the
Company or other corporation or other legal entity or enterprise as aforesaid,
and, with respect to any criminal or administrative action or proceeding, if he
had reasonable grounds for believing that his conduct was lawful. The provisions
of Article 21.2 shall not be part of any contract or agreement between any
aforesaid person and the Company unless expressly made so by the terms of the
contract or agreement with the Company.
Article 21.4 provides that the Company may indemnify any person, other
than a director, in respect of any losses, damages, costs or expenses whatsoever
incurred by him while acting as an officer, employee or agent for the Company,
unless such losses, damages, costs or expenses shall arise out of failure to
comply with instructions, willful act or default or fraud by such person, and in
any of such events the Company shall only indemnify such person if the
directors, in their absolute discretion, so decide. The provisions of this
Article 21.4 shall not be part of any contract or agreement between any
aforesaid person and the Company unless expressly made so by the terms of the
contract or agreement with the Company.
<PAGE>
Article 21.6 provides that the Company may give indemnities, on such
terms and conditions as it deems appropriate, to any director, officer,
employee, agent or other person who has undertaken or is about to undertake any
liability on behalf of the Company or any corporation controlled by it. The
provisions of Article 21.6 shall not be part of any contract or agreement
between any aforesaid person and the Company unless expressly made so by the
terms of the contract or agreement with the Company.
Article 21.7 provides that, subject to the Company Act and other
applicable laws and statutes, no director, officer, employee or agent for the
time being of the Company shall be liable for the acts, receipts, neglects or
defaults of any other director, officer, employee or agent or for joining in any
receipt or act for conformity, or for any loss, damage or expense happening to
the Company through the insufficiency or deficiency of title to any property
acquired by order of the Board, or for the insufficiency or deficiency of any
security in or upon which any of the moneys of or belonging to the Company shall
be invested or for any loss or damages arising from the bankruptcy, insolvency,
or tortious act of any person, firm or corporation with whom or with which any
moneys, securities or effects shall be lodged or deposited or for any loss
occasioned by any error of judgment or oversight on his part or for any other
loss, damage or misfortune whatever which may happen in the execution of the
duties of his respective office or trust or in relation thereto unless the same
shall happen by or through his own willful act or omission, default, negligence,
breach of trust or breach of duty.
<PAGE>
Item 21. Exhibits and Financial Statements Schedules.
(a) Exhibits
Exhibit
Number Description of Exhibit
- ------- ----------------------
2.1 Agreement Relating to the Sale of All of the Capital
Stock of a Subsidiary Corporation in Exchange for
Capital Stock of the Acquiring Corporation dated as of
April 9, 1996 by and among Company, Alamo Restaurants,
Inc. and Alamo Grill, Inc. (included as Exhibit A to the
Joint Proxy Statement and Prospectus which forms a part
of the Registration Statement (the "Proxy Statement") +
2.2 Form of Proxy to be utilized at the meeting of Shareholders
of Alamo Restaurants, Inc. to approve the Agreement
+
3.1 Certificate of Incorporation and Certificate of Name
Change of Company *
3.2 Articles of Association of Company *
3.3 Certificate of Amalgamation, dated May 1, 1990, The
Elephant and Castle Canada Inc. *
4.1 Form of certificate evidencing shares of Common Stock *
4.2 Form of Underwriter's Warrant Agreement between Company
and Underwriter *
10.1 Bank Loan Agreement, dated September 13, 1990, with
Toronto Dominion Bank *
10.2 Letter Agreement dated June 26, 1991, regarding expansion
of facilities at Edmonton Eaton Centre food court
relocation *
10.3 Retailer Application dated May 23, 1992, and Specimen
Agreement for Alberta Lotteries and Alberta Gaming
Control *
10.4 License Agreement dated July 9, 1992, with Servomation
Inc. relating to B.C. Place Stadium *
10.5 Restaurant lease dated November 10, 1992, with Shilo
Management Corporation, relating to the Shilo Inn, Yuma,
Arizona *
10.6 Letter Agreement, with Shilo Management Corporation
relating to Shilo Hotel, Pomona,
California *
10.7 Restaurant Lease Agreement with Holiday Inns of Canada,
Ltd., relating to Holiday Inn
Crowne Plaza at Winnipeg, Manitoba **
<PAGE>
Exhibit
Number Description of Exhibit
- ------- ----------------------
10.8 Restaurant Lease Agreement relating to Holiday
Inn, Philadelphia, Pennsylvania ***
10.9 Alamo Grill, Inc. lease agreement made as of the 30th
day of April, 1993 +
10.10 Form of Accounting Services Agreement between Innovative
Hospitality Concepts, Inc. and Elephant & Castle Group,
Inc. +
10.11 Form of Consulting Services Agreement between Jon P.
Taffer, an individual Innovative Hospitality Concepts,
Inc. and Elephant & Castle, Inc. +
11.1 Statement of computation regarding per share earnings *
22.1 Subsidiaries of Company *
23.1 Consent of Pannell Kerr & Forster +
23.2 Consent of D. David Cohen, Esq. (x)
23.3 Consent and Tax Opinion of Robins, Kaplan, Miller
Ciresi (xy)
24.1 Power of Attorney (included on the signature page of Part
II of this Registration Statement)
99.1 Canadian Declaration as of May 11, 1990, claiming the
trade name "The Elephant and Castle" *
99.2 Filing receipt dated February 5, 1993, for U.S. service
mark application "E&C" *
99.3 Filing receipt dated February 5, 1993, for U.S. service
mark "Elephant Mug" *
- ---------------------------
* Incorporated by reference from the Exhibits filed with the
Company's Registration Statement on Form SB-2 (Registration
No. 33-60612). Modification of the numbering of the exhibits
is in accordance with Item 601 of Registration S-B
** Filed with Company's 10-K SB for the Fiscal year ended
December 31, 1993.
*** Filed with Company's 10-K SB for the Fiscal year ended
December 31, 1994.
+ Filed herewith.
(x) To be filed supplementally.
(xy) TO be filed supplementally; draft of opinion filed
herewith.
<PAGE>
(b) Financial Statement Schedules
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or not applicable, and therefore have
been omitted.
(c) Item 4(b) Information
Not applicable.
Item 22. Undertakings.
(a)
(1) The Company undertakes that prior to any public offering of
the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for
by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of
the applicable form; and
(2) The Company undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the
Securities Act, and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment of the Company of expenses incurred or
paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
regis tered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the questions
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
<PAGE>
(b) The undersigned Company hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(c) The undersigned Company hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Province of British Columbia,
Canada, on the 31st day of July, 1996.
ELEPHANT & CASTLE GROUP INC.
By: /s/Jeffrey M. Barnett
---------------------
Jeffrey M. Barnett, President
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jeffrey M. Barnett and Daniel DeBou, and
each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<PAGE>
Signature/
Title Date
- --------- ----
/s/Jeffrey M. Barnett July 31, 1996
- ----------------------
Jeffrey M. Barnett
Chairman of the Board
President and
Director (Principal
Executive Officer)
/s/Peter J. Barnett July 31, 1996
- ----------------------
Peter J. Barnett
Vice President
and Director
/s/George W. Pitman July 31, 1996
- ----------------------
George W. Pitman
Vice President
and Director
/s/Daniel DeBou July 31, 1996
Daniel DeBou
- ----------------------
Principal Financial
Officer and
Principal Accounting
Officer
/s/William McEwen July 31, 1996
- ----------------------
William McEwen
Director
/s/D. David Cohen July 31, 1996
- ----------------------
D. David Cohen
Director
/s/Martin O'Dowd July 31, 1996
- ----------------------
Martin O'Dowd
Director
______________________ _______, 1996
David Wiederech
Director
Anthony Mariani _______, 1996
Director
ANNEX A
AGREEMENT RELATING TO THE SALE OF ALL
OF THE CAPITAL STOCK OF A SUBSIDIARY
CORPORATION IN EXCHANGE FOR
CAPITAL STOCK OF THE ACQUIRING CORPORATION
AGREEMENT, dated as of April 9, 1996 (the "Agreement"), by and
among ELEPHANT & CASTLE GROUP INC., a company organized and existing under the
laws of British Columbia, Canada (" Purchaser"); and ALAMO RESTAURANTS, INC., a
Minnesota corporation (the "Company"); and ALAMO GRILL, INC., an Indiana
corporation and a wholly-owned subsidiary of the Company (the "Subsidiary" or
"Grill").
RECITALS
WHEREAS, the Subsidiary is the sole operating business of the
Company;
WHEREAS, the Company is willing to sell all of the capital
stock of the Subsidiary;
WHEREAS, Purchaser desires to acquire all of the capital stock
of the Subsidiary, in exchange for the capital stock of
Purchaser and the assumption by Purchaser of certain of the
liabilities of the Company;
WHEREAS, it is contemplated that the affirmative vote of
holders of a majority of the voting stock of the Company will
be required to approve the sale of the capital stock of Grill;
and
WHEREAS, Purchaser, Subsidiary and the Company desire to make
certain representations, warranties, covenants and agreements,
each to the other, with the transactions contemplated
hereunder.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants, agreements and conditions
contained herein, the parties hereto agree as follows:
1. SALE AND TRANSFER
1.1 Sale and Transfer
At the Closing, as hereinafter defined, the Company shall
sell, transfer and deliver to Purchaser, and Purchaser shall purchase, accept
and pay for all of the issued and outstanding capital stock of the Subsidiary
(the "Sale"). The Company shall further transfer and deliver any and all
tangible and intangible assets held by the Company relating to the business and
operations of the Subsidiary, including recipes, accounting policies and
procedures, computer records, (including without limitation, with respect to
staff training, schedules, cash management records, engineering and technical
data) menus, plans of operations, employee lists, property rights and other such
intangible property. In exchange for the assets of the Subsidiary held by the
Company, Purchaser will assume and cause to be paid at Closing the specified
liabilities of the Company up to but not in excess of $536,000 in the aggregate
as set forth in Exhibit A.
<PAGE>
1.2 Stockholders' Meeting
The Company will take all action necessary in accordance with
applicable law and its Restated Certificate of Incorporation and By-Laws to
convene a special meeting of its stockholders (the "Special Meeting") as soon as
practicable to consider and vote upon the approval of this Agreement. The
Company, through its Board of Directors, shall recommend to its stockholders
approval of this Agreement (which recommendation shall be contained in the Proxy
Statement (as hereinafter defined)) and shall use all commercially reasonable
efforts to solicit from its stockholders proxies in favor of approval and
adoption of this Agreement. Subject to the foregoing, the transactions provided
for herein shall be subject to, and contingent upon, such stockholder approval.
1.3 Further Assurances
If, at any time after the Effective Time, Purchaser shall
advise the Company that any deeds, bills of sale, assignments, assurances or any
other actions or things are necessary or desirable to vest, perfect or confirm
of record or otherwise in Purchaser its right, title or interest in, to or under
any of the rights, properties or assets of the Subsidiary to be acquired as a
result of, or in connection with, the sale or otherwise to carry out this
Agreement, the officers and directors of the Company shall be authorized to
execute and deliver, in the name and on behalf of each of the Company and the
Subsidiary all such deeds, bills of sale, assignments and assurances, and to
take and do, in the name and on behalf of the Company all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
Purchaser, or otherwise to carry out this Agreement.
1.4 Assets/Liabilities Not Included
It is understood and agreed that this transaction related
solely to the business and assets of the Subsidiary, and does not affect, relate
to or impinge upon any specific assets, tangible or intangible, at the Company
which are unrelated to the business and assets of the Subsidiary.
2. THE PURCHASE PRICE
2.1 The shares of the capital stock of the Subsidiary shall be acquired
by Purchaser hereunder solely in exchange for Common Shares, par value $.01 per
share ("Purchaser Common Shares"). The purchase price shall be $1,536,000
payable as follows:
(a) Purchaser shall pay (or assume) the liabilities referred
to in Section 1.1 above (up to but not in excess of $536,000 in the aggregate);
and
(b) The remaining balance, after deducting the amount paid or
assumed as (a) above, $1,000,000, by delivery of 147,059 shares of the Common
Stock of Purchaser.
2.2 Company shall distribute the Purchaser Common Shares to and among
its shareholders based upon a fraction determined by dividing the number of
Purchaser Common Shares to be delivered hereunder by the number of shares of
Company Common Stock, par value $.01 (the "Company Common Stock") issued and
outstanding as of the Closing Date (except for shares of the Company Common
<PAGE>
Stock held in treasury or otherwise owned, directly or indirectly, by the
Company). The aforesaid ratio is hereinafter referred to as the "Exchange
Ratio."
2.3 The Company Common Stock shall not be affected by the distribution
of the Purchaser Common Shares to and the holders of such Company Common Stock
shall continue to have any and all rights of shareholders with respect thereto.
2.4 The Purchaser Common Shares are hereinafter sometimes called the
"Closing Consideration." In the event of any change in Purchaser Common Shares
by reason of any stock split, readjustment, stock dividend, exchange of shares,
reclassification, recapitalization or otherwise, subject to the date hereof and
prior to Closing, the Closing Consideration, and the Exchange Ratio shall be
correspondingly adjusted.
2.5 Purchaser shall not have any liability or responsibility for the
distribution of the Purchaser. Common Shares to any holder of shares of Company
Common Stock.
2.6 Fractional Shares
Notwithstanding any other provisions of this Agreement, each
holder of shares of Company Common Stock who would be entitled by the
application of the Exchange Ratio, to receive a fraction of a Purchaser Common
Share shall not be entitled to receive a fractional share, and shall receive, in
lieu thereof, scrip representing rights to acquire, without further
consideration, a fraction of one whole share/nearest to one-one hundredth (.00)
of a share. The shareholders may trade the scrip only as between themselves in
order to collect sufficient scrip for a whole share. The scrip shall have no
cash value. Scrip not exchanged for a whole share shall expire and be of no
further value as of the sixtieth (60th) day following the effective date
hereunder.
2.7 Shareholder Approval
This Agreement provides that the shareholders of the Company
shall be entitled to notice of and the right to vote upon the transaction at a
Special Meeting of such shareholders, and is subject to such approval.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company as follows:
3.1 Organization
Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of British Columbia.
3.2 Capitalization
The authorized capital stock of Purchaser consists of
10,000,000 shares of Purchaser Common Stock. As of the date hereof, there are
2,604,611 shares of Purchaser Common Stock issued and outstanding. As of the
date hereof, there were 220,000 shares of Purchaser Common Stock reserved for
issuance upon the exercise of outstanding options and options which may be
granted under the stock option plans of Purchaser (the "Purchaser Plans"),
595,000 shares of Purchaser Common Stock reserved for issuance upon the exercise
of certain warrants; 171,110 shares reserved for issuance without further
<PAGE>
consideration in connection with the placement of $9,000,000 of Convertible
Subordinated Notes due 2004 of Purchaser (the "Convertible Notes"), and
1,250,000 shares of Purchaser Common Stock reserved for issuance upon the
conversion of the outstanding aggregate principal amount of the Convertible
Notes. All issued and outstanding shares of Purchaser Common Stock are, and all
shares of Purchaser Common Stock to be issued at the Effective Time shall be,
when issued, duly authorized and validly issued, fully paid, nonassessable and
free of preemptive rights with respect thereto.
3.3 Authority Relative to this Agreement
Purchaser has full corporate power and authority to execute
and deliver this Agreement and to consummate the Sale and the other transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the Sale and the other transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Purchaser. No
other corporate proceedings on the part of Purchaser are necessary to authorize
this Agreement or to consummate the Sale or the other transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Purchaser and, assuming the due authorization and delivery hereof by the Company
and Subsidiary, constitutes a valid and binding agreement of Purchaser,
enforceable against it in accordance with the terms hereof, except to the extent
that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
3.4 No Violations, Etc.
(a) Assuming that all filings, permits, authorizations,
consents and approvals have been duly made or obtained as contemplated by this
Section 3.4, the execution and delivery of this Agreement and the consummation
by Purchaser of the Sale and the other transactions contemplated hereby will not
(i) violate any provision of the Certificate of Incorporation or By-Laws of
Purchaser, (ii) violate any statute, rule, regulation, order or decree of any
public body or authority by which Purchaser or any of its properties is bound,
or (iii) result in a violation of breach of, or constitute (with or without due
notice or lapse of time or both) a default under, any license, franchise,
permit, indenture, agreement or other instrument to which Purchaser is a party,
or by which Purchaser or any of its properties is bound, excluding from the
foregoing clauses (ii) and (iii) violations, breaches and defaults (x) which,
either individually or in the aggregate, would not materially impair or preclude
the ability of Purchaser to consummate the Sale or the other transactions
contemplated hereby or not have a material adverse effect on the business,
operations, assets, condition (financial or otherwise) or results of operations
of Purchaser taken as a whole ("Purchaser Material Adverse Effect") or (y) for
which Purchaser prior to the Sale shall have received appropriate consents or
waivers.
(b) No filing or registration with, or authorization, consent
or approval of, any governmental entity is required by Purchaser in connection
with the execution and delivery of this Agreement or the consummation by
Purchaser of the Sale and the other transactions contemplated hereby, except (i)
in connection, or in compliance, with the provisions of the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act"), (ii) filings with, and approval of, NASDAQ and the Pacific
Stock Exchange ("PSE") in connection with the listing of common stock of
Purchase issuable to the shareholders of the Company, (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings, if
<PAGE>
any as may be required under the corporation, takeover or blue sky laws of
various states, and (iv) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made, either individually or in the aggregate, would not either materially
impair or preclude the ability of Purchaser to consummate the transactions
contemplated hereby.
3.5 Registration Statement; Proxy Statement
None of the information supplied by Purchaser for inclusion or
incorporation by reference in (i) the registration statement registering under
the Securities Act the Purchaser Common Stock to be issued at the Effective Time
(such registration statement as amended by any amendments thereto being referred
to herein as the "Registration Statement") or (ii) the proxy statement to be
sent to the shareholders of the Company in connection with the Special Meeting,
including all amendments and supplements thereto (the "Proxy Statement") shall,
in the case of the Registration Statement at the time the Registration Statement
becomes effective and the Effective Time, and in the case of the Proxy
Statement, on the date the Proxy Statement is first mailed to stockholders, at
the time of the Special Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event with respect to
Purchaser shall occur which is required to be described in the Registration
Statement or Proxy Statement, such event shall be so described, and an amendment
or supplement shall be promptly filed with the Securities and Exchange
Commission (the "SEC") and, as required by law, disseminated to the stockholders
of the Company. The Registration Statement will (with respect to Purchaser)
comply as to form in all material respects with the applicable provisions of the
Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act"), as the case
may be.
3.6 SEC Filings
Purchaser has filed with the SEC all required forms, reports
and documents required to be filed by it with the SEC since January 1, 1994
(collectively, the "Purchaser SEC Reports"), all of which complied as to form
when filed in all material respects with the applicable provisions of the
Securities Act and the Exchange Act, as the case may be. As of their respective
dates, the Purchaser SEC Reports (including all exhibits and schedules thereto
and documents incorporated by reference therein) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.7 Financial Statements
The audited consolidated financial statements and unaudited
consolidated interim financial statements of Purchaser included or incorporated
by reference in Purchaser's forms, reports and documents filed with the SEC
since January 1, 1994, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto), and fairly present the
consolidated financial position of Purchaser as of the dates thereof and the
consolidated results of operations and consolidated cash flows for the periods
then ended (subject, in the case of any unaudited interim financial statements,
to normal year-end adjustments and to the extent they may not include footnotes
or may be condensed or summary statements) , and such audited consolidated
<PAGE>
financial statements have been certified as such (without exception by
Purchaser's independent accountants.
3.8 Absence of Material Adverse Change
Since the date of Purchaser's 10-K for the fiscal year ended
December 31, 1995, except as set forth in the Purchaser's SEC Reports, there has
been no change, or any development involving a prospective change, in the
business, operations, assets, financial condition or results of operations of
Purchaser taken as a whole that would have a Purchaser Material Adverse Effect.
3.9 Disclosure
No representation or warranty by Purchaser and no statement or
information relating to Purchaser contained herein, or in any certificate
furnished by or on behalf of Purchaser in connection herewith, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements made herein or therein,
in light of the circumstances under which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that:
4.1 Organization and Qualification
(a) Each of the Company and the Subsidiary is a corporation
duly organization, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
(b) The Subsidiary is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except for failures to be so qualified or in
good standing which would not, individually or in the aggregate, have a material
adverse effect on the management, business, operations, assets, condition
(financial or otherwise) or prospects of the Subsidiary (a "Material Adverse
Effect").
(c) Neither the Company nor the Subsidiary is in violation of
any of the provisions of its Restated Certificate of Incorporation (or other
applicable charter document) or By-Laws. Set forth in Section 4.1 of the
Disclosure Statement previously delivered by the Company to Purchaser (the
"Disclosure Statement") are accurate and complete copies of the Restated
Certificate of Incorporation (or other applicable charter document) and By-Laws,
as currently in effect, of each of the Company and the Subsidiary.
4.2 Authority Relative to this Agreement
The Company has full corporate power and authority to execute
and deliver this Agreement and to consummate the Sale and the other transactions
contempt hereby. The execution and delivery of this Agreement and the
consummation of the Sale and the other transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company or the Subsidiary are
necessary to authorize this Agreement or to consummate the other transactions
contemplated hereby (other than, with respect to the Sale, the approval by the
<PAGE>
holders of a majority of the outstanding shares of Company Common Stock at the
Special Meeting or any adjournment thereof). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Purchaser, constitutes a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable or fiduciary principles.
The transaction will require the written consent of the Simon
Property Group, Lessor of the Mall of America location. In the absence of such
consent, Purchaser shall have no obligation hereunder.
4.3 No Violations, Etc.
No filing with, notification to and no permit, authorization,
consent or approval of, any public body is necessary for the consummation by the
Company of the Sale or the other transactions contemplated hereby. Neither the
execution and delivery of this Agreement nor the consummation of the Sale or the
other transactions contemplated hereby nor compliance by the Company with any of
the provisions hereof will (i) subject to obtaining the approval of a majority
of the outstanding shares of Company Common Stock at the Special Meeting or any
adjournment thereof, conflict with or result in any breach of any provision of
the Certificate of Incorporation (or other comparable charter documents) or
By-Laws of the Company or its Subsidiary, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, acceleration,
redemption or repurchase) under, any of the terms, conditions or provisions of
any (x) note, bond, mortgage, indenture or deed of trust, or (y) license, lease
(except as set forth in Section 4.3 of the Disclosure Statement), agreement or
other instrument or obligation to which the Company or the Subsidiary is a party
or by which either of them or any of their properties or assets may be bound, or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its Subsidiary or any of their properties or
assets.
4.4 Board Recommendation
The Board of Directors of the Company has, by a unanimous vote
at a meeting of such Board duly held on, or by unanimous written consent of such
Board dated April 2, 1996, approved and adopted this Agreement, the Sale and the
other transactions contemplated hereby, and recommended that the holders of such
shares approve and adopt this Agreement, the Sale and the other transactions
contemplated hereby.
4.5 Affiliates
The Company has delivered to Purchaser a letter identifying
all persons who, as of the date hereof, may be deemed to be "affiliates" of the
Company for purposes of Rule 145 under the Securities Act ("Affiliates") and the
written agreement of each such person, substantially in the form of Exhibit B
hereto.
4.6 Registration Statement; Proxy Statement
None of the information supplied in writing by the Company or
Subsidiary for inclusion or incorporation by reference in the (i) Registration
Statement or (ii) Proxy Statement shall, in the case of the Registration
<PAGE>
Statement, at the time the Registration Statement becomes effective and the
Effective Time, and in the case of the Proxy Statement, at the date the Proxy
Statement is first mailed to stockholders, at the time of the Special Meeting
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. If at any time prior to the Effective Time any
event with respect to the Company or the Subsidiary shall occur which is
required to be described in the Registration Statement or Proxy Statement, such
event shall be so described, and an amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the stockholders of
the Company. The Registration Statement will (with respect to the Company and
the Subsidiary) comply as to form in all material respects with the applicable
provisions of the Securities Act and Exchange Act, as the case may be.
4.7 Finders or Brokers
Neither the Company nor its Subsidiary has employed any
investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or any
commission the receipt of which is conditioned upon consummation of the Sale.
4.8 Financial Statements
The financial statements of the Subsidiary to be included or
incorporated by reference in the Proxy Statement have been prepared, or will
have been prepared, in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved, and shall fairly
present the consolidated financial position of the Company and its Subsidiary as
of the dates thereof and the consolidated results of operations and consolidated
cash flows for the periods then ended (subject, in the case of any unaudited
interim financial statements, to normal year-end adjustments and to the extent
they may not include footnotes or may be condensed or summary statements).
4.9 Absence of Undisclosed Liabilities
The Subsidiary has no liabilities or obligations of any
nature, whether absolute, accrued, unmatured, contingent or otherwise, or any
unsatisfied judgments or any leases of personalty or realty or unusual or
extraordinary commitments, except the liabilities recorded on the balance sheet
of the Subsidiary, annexed hereto as Exhibit C hereof (the "Balance Sheet") and
the notes thereto, and except for liabilities or obligations incurred in the
ordinary course of business and consistent with past practice since the date of
the Balance Sheet, that would not individually or in the aggregate have a
Material Adverse Effect.
4.10 Absence of Changes or Events
Since January 29, 1994, except as set forth in Section 4.10 of
the Disclosure Statement:
(a) there has not been any direct or indirect redemption,
purchase or other acquisition of any shares of capital stock of the Company or
the Subsidiary, or any declaration, setting aside or payment of any dividend or
other distribution by the Company or any of its Subsidiary in respect of their
capital stock;
<PAGE>
(b) except in the ordinary course of business and consistent
with past practice, neither the Company nor the Subsidiary has incurred any
indebtedness for borrowed money, or assumed, guaranteed, endorsed or otherwise
as an accommodation become responsible for the obligations of any other
individual, firm or corporation, made any loans or advances to any other
individual, firm or corporation or entered into any commitment or transaction
material to the Company and its Subsidiary taken as a whole;
(c) there has not been any change in accounting methods,
principles or practices of the Company;
(d) except in the ordinary course of business and consistent
with past practice and in amounts that are immaterial, there has not been any
revaluation by the Company or any of its Subsidiary of any of their respective
assets, including, without limitation, writing down the value of inventory or
writing off notes or accounts receivables;
(e) there has not been any damage, destruction or loss,
whether covered by insurance or not, except for such as would not individually
or in the aggregate, have a Material Adverse Effect on the business and affairs
of the Subsidiary;
(f) there has been no material change, or any development
involving a prospective change, in the general affairs, management, business,
operations, condition (financial or otherwise) or prospects of the Subsidiary;
and
(g) there has not been any agreement by the Company or its
Subsidiary to (i) do any of the things described in the preceding clauses (a)
through (f) other than as expressly contemplated or provided for in this
Agreement or (ii) take, whether in writing or otherwise, any action which, if
taken prior to the date of this Agreement, would have made any representation or
warranty in this Article 4 untrue or incorrect in any material respect.
4.11 Capitalization of the Company
The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock, without par value. As of the date
hereof, there are 3,146,000 shares of Company Common Stock outstanding and -0-
shares of Company Common Stock held in the Company's treasury. As of the date
hereof, 454,232 shares of Company Common Stock were reserved for issuance upon
the exercise of outstanding warrants and options.
4.12 Capital Stock of Subsidiary
The Company is directly or indirectly the record and
beneficial owner of all of the outstanding shares of capital stock of such
Subsidiary. Other than as set forth in Section 4.12 of the Disclosure Statement,
all of such shares so owned by the Company are duly authorized and validly
issued, fully paid, nonassessable and free of preemptive rights with respect
thereto and are owned by the Company free and clear of any claim, lien or
encumbrance of any kind with respect thereto. Except as disclosed in Section
4.12 of the Disclosure Statement, the Company does not directly or indirectly
own any interest in any other corporation, partnership, joint venture, business
association or entity.
<PAGE>
4.13 Litigation
There is no (i) claim, action, suit or proceeding pending or,
to the best knowledge of the Company, threatened against or relating to the
Company or its Subsidiary before any court or governmental or regulatory
authority or body or arbitration tribunal, or (ii) outstanding judgment, order,
writ, injunction or decree, or application, request or motion therefor, of any
court, governmental agency or arbitration tribunal in a proceeding to which the
Company, the Subsidiary, or any of their respective assets was or is a party
except, in the case of clauses (i) and (ii) above, such as would not,
individually or in the aggregate, either materially impair or preclude the
Company's ability to consummate the Sale or the other transactions contemplated
hereby or have a Material Adverse Effect.
4.14 Insurance
Section 4.14 of the Disclosure Statement lists all material
insurance policies in force on the date hereof covering the businesses,
properties and assets of the Subsidiary and all claims against such policies.
All such policies are currently in effect, and true and complete copies of all
such policies have been delivered to Purchaser. Except as set forth in Section
4.14 of the Disclosure Statement, the Company has not received notice of the
cancellation of any of such insurance in effect on the date of this Agreement.
4.15 Title to and Condition of Properties
Except as set forth in Section 4.15 of the Disclosure
Statement, the Subsidiary has good title to all of the personal property which
is reflected on the Subsidiary's Balance Sheet for the period ended 1/28/96 (the
"Balance Sheet"), except for such property since sold or otherwise disposed of
in the ordinary course of business and consistent with past practice. Except as
set forth in Section 4.15 of the Disclosure Statement, no such personal property
is subject to claims, liens or encumbrances, whether by mortgage, pledge, lien,
conditional sale agreement, charge or otherwise, except for those which would
not, individually or in the aggregate, either materially impair or preclude the
Company's ability to consummate the Sale and the other transactions contemplated
hereby or have a Material Adverse Effect.
Copies of UCC search for filings against Subsidiary have been
provided.
4.16 Leases
There have been delivered to Purchaser true and complete
copies of each lease requiring the payment of rentals pursuant to which real or
personal property is held under lease by the Subsidiary. A true and complete
list of all such leases is set forth in Section 4.16 of the Disclosure
Statement. All of the leases so listed are valid and subsisting and in full
force and effect with respect to the Subsidiary, as the case may be, and, to the
Company's knowledge, with respect to any other party thereto, and the leased
real property is in good and satisfactory condition.
4.17 Contracts and Commitments
Except as are listed in Section 4.17 of the Disclosure
Statement, the Company is not a party to any existing contract, obligation or
commitment of any type in any of the following categories:
<PAGE>
(a) any sales contract, including any open bid or quotation,
which is of an open-end or blanket nature or contains warrants in excess of
those consistent with industry practice, or contains unusual penalty provisions
for late performance, or was incurred other than in the ordinary course of
business and consistent with past practice;
(b) contracts for the purchase of materials, supplies or
equipment which have not been entered into in the ordinary course of business
and consistent with past practice or which provide for purchase prices
substantially greater than those presently prevailing for such materials,
supplies or equipment, or contracts for capital expenditures;
(c) contracts with distributors, manufacturers'
representatives or sales agents, except those which are terminable at the option
of the Company or its assignees on 60 days' notice or less without incurring any
liability thereby;
(d) contracts under which the Company has, except by way of
endorsement of negotiable instruments for collection in the ordinary course of
business and consistent with past practice, become absolutely or contingently or
otherwise liable for (i) the performance of any other person, firm or
corporation under a contract, or (ii) the whole or any part of the indebtedness
or liabilities of any other person, firm or corporation;
(e) powers of attorney outstanding from the Company other than
as issued in the ordinary course of business and consistent with past practice;
(f) contracts under which any amount payable by or to the
Company is dependent upon the revenues or profits of the Company;
(g) contracts with any director, officer or employee of the
Company other than in such person's capacity as a director, officer or employee
of the Company;
(h) contracts which limit or restrict where the Company or any
of its Subsidiary may conduct its or their business or the type or line of
business which the Company or any of its Subsidiary may engage in;
(i) contracts containing any material agreement with respect
to any change of control of the Company;
(j) contracts with any party for the loan of money or
availability of credit to or from the Company or any of its Subsidiary (except
credit extended by the Company or any of its Subsidiary to its or their
customers in the ordinary course of business and consistent with past practice;
or
(k) any hedging, option, derivative or other similar
transaction.
True and complete copies of all contracts, obligations and
commitments listed in Section 4.17 of the Disclosure Statement have been
delivered to Purchaser.
4.18 Labor Matters
The Subsidiary is not a party to any union contract or other
collective bargaining agreement. The Subsidiary is in compliance in all material
respects with all applicable laws respecting employment and employment
<PAGE>
practices, terms and conditions of employment and wages and hours. The
Subsidiary has not engaged in any unfair labor practice. There is no labor
strike, slowdown or stoppage pending (or, to the best knowledge of the Company,
any labor strike or stoppage threatened) against or affecting the Subsidiary. No
petition for certification has been filed and is pending before the National
Labor Relations Board with respect to any employees of the Subsidiary.
4.19 Compliance with Law
The Subsidiary has not violated, or failed to comply with, any
statute, law, ordinance, regulation, rule or order of any foreign, federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to its business or
operations, except where any such violation or failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
Subsidiary has all permits, licenses and franchises from governmental agencies
required to conduct its businesses as now being conducted.
4.20 Employment and Labor Contracts
Neither the Company nor the Subsidiary is a party to any
employment, management services, consultation or other contract or agreement
with any past or present officer, director or executive employee or, to the best
of the Company's knowledge, any entity affiliated with any past or present
officer, director or executive employee other than those set forth in Section
4.20 of the Disclosure Statement, in each case true and complete copies of which
contracts have been delivered to Purchaser.
4.21 Intellectual Property Rights
The Subsidiary owns or has the right to use all Intellectual
Property Rights ("Intellectual Property Rights") necessary and appropriate for
the operation of the business of the Subsidiary as the same currently exits.
Intellectual Property Rights shall mean and include rights relating to patents,
trademarks, service marks, trade names, copyrights, mask works, inventions,
processes, trade secrets, know-how, confidentiality agreements, consulting
agreements, software and any documentation relating to the manufacture,
marketing and maintenance of products) necessary to the conduct of their
respective businesses. Except as listed in Section 4.21 of the Disclosure
Statement, to the knowledge of the Company, there have been no claims or
assertions made by others that the Subsidiary has infringed upon any
Intellectual Property Rights of others in the preceding six-year period. Except
as listed in Section 4.21 of the Disclosure Statement, the Company has no
knowledge of any infringement of Intellectual Property Rights of the Company by
others. True and complete copies of all material listed in Section 4.21 of the
Disclosure Statement have been delivered to Purchaser.
4.22 Taxes
Except as disclosed in Section 4.22 of the Disclosure
Statement, (i) the Subsidiary has prepared and timely filed or will timely file
with the appropriate governmental agencies all material franchise, income and
all other material Tax (as hereinafter defined) returns and reports (hereinafter
collectively referred to as "Tax Returns") required to be filed for any period
on or before the Effective Time, taking into account any extension of time to
file granted to or obtained on behalf of the Company and/or its Subsidiary
(copies of which for the past three fiscal years have been delivered to
Purchaser); and (ii) all material Taxes of the Subsidiary through Closing Date
<PAGE>
have been paid in full to the proper authorities or fully accrued for with
respect to all fiscal periods for which there are available financial
statements, other than such Taxes as are being contested in good faith by
appropriate proceedings and are adequately reserved for in accordance with
generally accepted accounting principles.
"Tax" or "Taxes" shall mean all federal, state, local and
foreign taxes, duties, levies, charges and assessments of any nature, including
social security payments and deductibles relating to wages, salaries and
benefits and payments to subcontractors (to the extent required under applicable
Tax law), and also including all interest, penalties and additions imposed with
respect to such amounts.
4.23 Employee Benefit Plans; ERISA
(a) Except as set forth in Section 4.23 of the Disclosure
Statement, there are no "employee pension benefit plans" as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), covering employees (or former employees) employed in the United
States, maintained or contributed to by the Subsidiary or any of their ERISA
Affiliates (as hereinafter defined), or to which the Subsidiary or any of their
ERISA Affiliates contributes or is obligated to make payments thereunder or
otherwise may have any liability ("Pension Benefits Plans"). For purposes of
this Agreement, "ERISA Affiliate" shall mean any person (as defined in Section
3(9) of ERISA) that is a member of any group of persons described in Section
414(b), (c), (m) or (o) of the Code of which the Company or a Subsidiary is a
member.
(b) The Company has delivered to Purchaser true and complete
copies of all "welfare benefits plans" (as defined in Section 3(l) of ERISA)
covering employees (or former employees) of the Subsidiary.
(c) The Company and its Subsidiary, and each of the Pension
Benefit Plans and Welfare Plans, are in compliance with the applicable
provisions of ERISA and other applicable laws except where the failure to comply
would not, individually or in the aggregate, have a material adverse effect.
(d) All contributions to, and payments from, the Pension
Benefit Plans which are required to have been made in accordance with the
Pension Benefit Plans and, when applicable, Section 302 of ERISA or Section 412
of the code have been timely made.
(e) The Pension Benefit Plans intended to qualify under
Section 401 of the Code have been determined by the Internal Revenue Service
("IRS") to be so qualified and nothing has occurred with respect to the
operation of such Pension Benefit Plans which would cause the loss of such
qualification or exemption or the imposition of any material liability, penalty
or tax under ERISA or the Code.
(f) There are (i) no investigations pending, to the best
knowledge of the Company, by any governmental entity involving the Pension
Benefit Plans or Welfare Plans, (ii) no termination proceedings involving the
Pension Benefit Plans, and (iii) no pending or, to the best of the Company's
knowledge, threatened claims (other than routine claims for benefits), suits or
proceedings against any Pension Benefit or Welfare Plan, against the assets of
any of the trusts under any pension Benefit or Welfare Plan or against any
fiduciary of any Pension Benefit or Welfare Plan with respect to the operation
of such plan or asserting any rights or claims to benefits under any pension
Benefit Plan or against the assets of any trust under such plan, except for
<PAGE>
those which would not, individually or in the aggregate, give rise to any
liability which would have a Material Adverse Effect, nor, to the best of the
Company's knowledge, are there any facts which would give rise to any liability
except for those which would not, individually or in the aggregate, either
materially impair or preclude the Company's ability to consummate the Sale and
the other transactions contemplated hereby or have a Sale Material Adverse
Effect in the event of any such investigation, claim, suit or proceeding.
(g) Neither the Company nor its Subsidiary or any employee of
the foregoing, nor any trustee, administrator, other fiduciary or any other
"party in interest" or "disqualified person" with respect to the Pension Benefit
Plans or Welfare Plans, has engaged in a "prohibited transaction" (as such term
is defined in Section 4975 of the Code or Section 406 of ERISA) which would be
reasonably likely to result in a tax or penalty on the Company or any of its
Subsidiary under Section 4975 of the Code or Section 502(I) of ERISA.
(h) Neither the Pension Benefit Plans subject to Title IV of
ERISA nor any trust created thereunder has been terminated nor have there been
any "reportable events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect to either thereof.
(i) Neither the Company nor the Subsidiary nor any ERISA
Affiliate has incurred any currently outstanding liability to the Pension
Benefit Guaranty Corporation (the "PBGC") or to a trustee appointed under
Section 4042(b) or (c) of ERISA other than for the payment of premiums, all of
which have been paid when due.
(j) Neither the Company nor the Subsidiary nor any of their
ERISA Affiliates has any liability (including any contingent liability under
Section 4204 of ERISA) with respect to any multi employer plan, within the
meaning of Section 3(37) of ERISA, covering employees (or former employees)
employed in the United States.
(k) Except as disclosed in Section 4.23of the Disclosure
Statement, with respect to each of the Pension Benefit and Welfare Plans, true,
correct and complete copies of the following documents have been delivered to
Purchaser: (i) the current plans and related trust documents, including
amendments thereto, (ii) any current summary plan descriptions, (iii) the most
recent Forms 5500, financial statements and actuarial reports, if applicable,
and (iv) the most recent IRS determination letter, if applicable.
4.24 Environmental Matters
(a) The Subsidiary and the properties and assets used in
businesses are in full compliance with all applicable Environmental Laws (as
hereinafter defined), which compliance includes, without limitation, the
possession of all licenses, permits, registrations and other governmental
authorizations (collectively, "Environmental Authorizations") required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof, and there are no circumstances currently in existence which, to the
knowledge of the Company, may materially prevent or interfere with compliance in
the future.
4.25 For purposes of this Agreement:
(a) "Environment" shall mean any surface water, ground water,
or drinking water supply, land surface or subsurface strata, or ambient air, and
includes, without limitation, any indoor location.
<PAGE>
(b) "Environmental Laws" shall mean all federal, state, local
and foreign laws, codes, regulations, ordinances, requirements, directives,
orders, common law, and administrative or judicial interpretations thereof that
may be enforced by any Governmental Authority or court, relating to pollution,
the protection of human health, the protection of the Environment, or the
emission, discharge, disposal or other release or threatened release of
Hazardous Materials in or into the Environment.
4.26 Directors, Officers and Compensation of Employees
There is set forth in Section 4.26 of the Disclosure Statement
a true and complete list showing (a) the names and addresses of all directors
and officers of the Company and the Subsidiary and (b) the names of all salaried
persons whose aggregate compensation for purposes of tax reporting from the
Company and its Subsidiary in the fiscal year ended January 28, 1996, was, or in
the calendar year ending December 31, 1996 is expected (excluding product sales
commissions) to be, U.S. $60,000 or more per year, together with a statement of
the full amount expected to be paid to such person for services in all
capacities to be rendered in the calendar year ending December 31, 1995, and the
basis thereof, separately including the amounts paid or payable, or expected to
be paid or payable, under bonus or incentive arrangements, if any.
4.27 Disclosure
No representation or warranty by the Company and no statement
or information relating to the Company or the Subsidiary contained herein, or in
any certificate furnished by or on behalf of the Company or the Subsidiary to
Purchaser or Newco in connection herewith contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
5. COVENANTS
5.1 Conduct of Business of the Company
Except as contemplated by this Agreement, during the period
from the date of this Agreement to the Effective Time, the Subsidiary will
conduct its operations according to its ordinary and usual course of business
consistent with past practice, and will use all commercially reasonable efforts
to preserve intact its business organization, to keep available the services of
its officers and employees and to maintain satisfactory relationships with
suppliers, distributors, customers and others having business relationships with
it and will take no action which would materially impair or preclude the
operation of the business of the Subsidiary. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Effective Time, the Subsidiary will not without the prior written
consent of Purchaser:
(a) except in the ordinary course of business and consistent
with past practice (i) create, incur, assume, maintain or permit to exist any
long-term debt or any short-term debt for borrowed money other than under
existing loans, lines of credit or replacements thereof on terms no less
favorable than, and in amounts not exceeding, existing loans or lines of credit;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person except in the ordinary course of business and consistent with past
practices; or (iii) make any loans, advances or capital contributions to, or
investments in, any other person;
<PAGE>
(b) (i) except pursuant to written agreements existing on the
date of execution of this Agreement, increase in any manner the compensation of
any of its directors or officers; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required; (iii) grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any of its past or present employees; or (iv) enter into any
contract, agreement or understanding with any of its past or present directors
or officers;
(c) except in the ordinary course of business and consistent
with past practice or as otherwise expressly contemplated hereby, sell,
transfer, lease, license, pledge, mortgage, or otherwise dispose of, or
encumber, or agree to sell, transfer, lease, license, pledge, mortgage or
otherwise dispose of or encumber, any material properties, real personal or
mixed;
(d) except as otherwise expressly contemplated hereby, enter
into any other agreements, commitments or contracts, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services in
the ordinary course of business and consistent with past practice and having a
term of no more than one year;
(e) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into any agreement in principle or an
agreement with respect to, any plan of liquidation or dissolution, any
acquisition of a material amount of assets or securities, any disposition of a
material amount of assets or securities or any material change in its
capitalization, or any entry into a material contract or any amendment or
modification of any material contract or any release or relinquishment of any
material contract rights not in the ordinary course of business and consistent
with past practice except as expressly contemplated by this Agreement;
(f) except as previously identified to Purchaser prior to the
date hereof, authorized or commit to make any capital expenditures, except as
Purchaser shall consent to;
(g) knowingly undertake any act, or suffer to exist any
condition, causing any insurance policy naming it as a beneficiary or a loss
payee to be canceled or terminated, except in the ordinary course of business
and consistent with past practice and following written notice to Purchaser;
(h) maintain its books and records in a manner otherwise than
in the ordinary course of business and consistent with past practice;
(i) enter into any hedging, option, derivative or other
similar transaction;
(j) change any assumption underlying, or method of
calculating, any bad debt, contingency, provision or other reserve;
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction of liabilities (including accounts payable)
in the ordinary course of business and consistent with past practice, or
collect, or accelerate the collection of, any amounts owed (including accounts
receivable) other than the collection in the ordinary course of business; or
(l) agree to do any of the foregoing.
<PAGE>
5.2 No Solicitation
The Company agrees that, prior to the Effective Time, it shall
not, and shall not give authorization or permission to any of its or its
Subsidiary's directors, officers, employees, agents or representatives to, and
shall use all commercially reasonable efforts to see that such persons do not,
directly or indirectly, solicit, initiate, facilitate or encourage (including by
way of furnishing or disclosing information) any merger, consolidation, other
business combination involving the Subsidiary, or the acquisition of all or any
substantial portion of the assets or capital stock of the Subsidiary or
inquiries or proposals concerning or which may reasonably be expected to lead to
any of the foregoing, or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Sale or any other
transactions expressly contemplated by this Agreement, or contemplated to be a
material part thereof. The Company shall immediately advise the Purchaser in
writing of any inquiries or proposals relating to any such transaction.
5.3 Access to Information
From the date of this Agreement until the Effective Time, the
Company will give Purchaser and their authorized representatives full access
during normal business hours to all facilities, personnel and operations and to
all books and records of the Subsidiary, will permit Purchaser to make such
inspections as they may reasonably require and will cause its officers and those
of its Subsidiary to furnish Purchaser with such financial and operating data
and other information with respect to the businesses and properties of the
Subsidiary as Purchaser may from time to time reasonably request.
5.4 Registration Statement and Proxy Statement
(a) Purchaser shall file with the SEC as soon as is reasonably
practicable after the date hereof but in no event later than forty-five (45)
days from the date hereof, the Registration Statement in which the Company's
Proxy Statement shall be included. Purchaser and the Company shall use all
commercially reasonable efforts to have the Registration Statement declared
effective by the SEC. Purchaser shall also take any action required to be taken
under applicable state blue sky or securities laws in connection with shares of
Purchaser Common Stock to be issued as Closing Consideration. Purchaser and the
Company shall promptly furnish to each other all information, and take such
other actions, as may reasonably be requested in connection with any action by
any of them in connection with the preceding sentences of this Section 5.4(a).
5.5 Commercially Reasonable Efforts: Other Actions
(a) Subject to the terms and conditions herein provided,
Purchaser, and the Company shall use all commercially reasonable efforts to
take, or cause to be taken, all other actions and do, or cause to be done, all
other things necessary, proper or appropriate under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
(b) Prior to the Effective Time, the Company shall cooperate
with Purchaser in taking such actions as are reasonably appropriate or necessary
in connection with any redemption, pre-payment, modification, satisfaction or
elimination of any outstanding indebtedness of the Company or its Subsidiary
which is required to be obtained to effectuate the Sale or other transactions
contemplated hereby; provided that any such restructuring shall become effective
at the Effective Time.
<PAGE>
(c) The Company shall cause its Directors to deliver proxies
to Purchaser with respect to all shares of the Company's Common Stock owned by
such directors, which proxies shall authorize the Purchaser to vote all such
shares in favor of the Sale.
5.6 Public Announcements
Before issuing any press release or otherwise making any
public statement with respect to the Sale or any of the other transactions
contemplated hereby, Purchaser, the Company and the Subsidiary will consult
with, and obtain the consent of, each other as to its form and substance and
shall not issue any such press release or make any such public statement prior
to obtaining such consent, except as may be required by law.
5.7 Notification of Certain Matters
(a) The Company and the Subsidiary shall give prompt notice to
Purchaser of any notice of or other communication asserting a default or event
which, with notice or lapse of time or both, would become a default received by
the Company or any of its Subsidiary subsequent to the date of this Agreement
and prior to the Effective Time, under any contract material to the general
affairs, management, business, operations, assets, condition (financial or
otherwise) or prospects of the Subsidiary.
(b) Each of the Company and Purchaser give prompt notice to
the other party of (a) any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the Sale or other transactions contemplated hereby, (b) any
material adverse change in their respective general affairs, management,
business, operations, assets, condition (financial or otherwise) or prospects or
the occurrence of any event which, so far as reasonably can be foreseen at the
time of its occurrence, is reasonably likely to result in any such change, or
(c) the occurrence or existence of any event which would, or could with the
passage of time or otherwise, make any representation or warranty contained
herein untrue.
5.8 Expenses
Except as set forth in Section 10.5, Purchaser, on the one
hand, and the Company, on the other hand, shall bear their respective expenses
incurred in connection with the Sale, including, without limitation, the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby and all fees and expenses of investment bankers, finders,
brokers, agents of the transaction.
5.9 Affiliates
The Company shall advise Purchaser in writing of any person
who becomes an Affiliate after the date hereof and prior to the Effective Time
and shall use all commercially reasonable efforts to have each such person
deliver to Purchaser, no later than the date such person becomes an Affiliate, a
agreement substantially in the form of Exhibit B hereto.
5.10 Stock Exchange Listings
Purchaser shall use all commercially reasonable efforts to
list on NASDAQ and the PSE, upon official notice of issuance, the Purchaser
Common Stock to be issued in connection with the Sale.
<PAGE>
5.11 Company and Subsidiary Actions
The Company shall not take or omit to take, and shall not
cause or permit its Subsidiary to take or omit to take, any action which would
cause a breach of any representation or warranty of the Company and/or the
Subsidiary contained in this Agreement, such that the Closing conditions set
forth in Section 7.1 would not be satisfied.
5.12 Environmental Matters
The Company shall make all filings and use all commercially
reasonable efforts to take all actions necessary to comply with the provisions
and requirements of all Environmental Laws.
5.13 Resignation of Directors
Prior to the Effective Time, the Company shall deliver to
Purchaser at no cost the resignation of and of the directors of the Subsidiary,
as Purchaser shall specify, effective at the Effective Time.
6. CONDITIONS TO THE OBLIGATION OF PURCHASER AND THE COMPANY
The respective obligations of each party to effect the Sale shall be subject to
the fulfillment at or prior to the Closing of each of the following conditions:
6.1 Registration Statement
The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act. No stop order suspending
the effectiveness of the Registration Statement shall have been issued by the
SEC and remain in effect. All necessary state securities or blue sky
authorizations shall have been received.
6.2 Stockholders Approval
The approval of a majority of the outstanding shares of
Company Common Stock cast at the Special Meeting or any adjournment thereof
shall have been obtained.
6.3 Listings
The Purchaser Shares issuable in the Sale shall have been
authorized for listing on NASDAQ and the PSE subject to official notice of
issuance.
6.4 Dissenting shareholders
The shareholders of the Company owning 10% or more of its
Common Stock shall not have asserted their dissenters' rights under the
provisions of the Minnesota Business Corporation Law.
7. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND NEWCO
The obligation of Purchaser to effect the Sale and to perform
its other obligations to be performed at or subsequent to the Closing shall be
subject to the fulfillment at or prior to the Closing of the following
additional conditions, any one or more of which may be waived by Purchaser :
<PAGE>
7.1 Representations and Warranties
The representations and warranties of the Company contained
herein shall be true and correct in all respects on the date of this Agreement
and the Closing Date as though such representations and warranties were made at
and on such date.
7.2 Performance
The Company shall have performed and complied in all material
respects with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing Date
except for those failures to so perform or comply which individually or in the
aggregate would not either materially impair or preclude the Company's ability
to consummate the Sale and the other transactions contemplated hereby or have a
Material Adverse Effect.
7.3 Certificates
The Company shall furnish such certificates of its officers to
evidence compliance with the conditions set forth in Sections 7.1 and 7.2 as may
be reasonably requested by Purchaser .
7.4 Certain Proceedings
No writ, order, decree or injunction of a court of competent
jurisdiction or governmental entity shall have been entered against Purchaser or
the Company which, and no proceedings therefor shall have been threatened or
commenced by any governmental entity which seek to prohibit or enjoin the
consummation of the transactions contemplated hereunder.
7.5 Consents and Approvals
All necessary consents and approvals of any other governmental
authority or other third party required for the consummation of the Sale and the
other transactions contemplated hereby and any waiting period applicable to the
consummation of the Sale shall have expired or been terminated.
7.6 Material Adverse Change
There shall not have occurred since the date of the Balance
Sheet annexed hereto any material adverse change in the general affairs,
management, business, operations, assets, condition (financial or otherwise) or
prospects of the Company and its Subsidiary taken as a whole.
7.7 Opinion of Counsel
Purchaser shall have received the opinion of Robins, Kaplan,
Miller & Ciresi to the Company, substantially in the form of Exhibit D hereto.
7.8 Consulting and Services Agreement.
Purchaser shall have entered into an agreement with Innovative
Hospitality Corporation providing for the continuation of certain accounting and
administrative by IHC with respect to the opening of the Grill and further
providing for IHC's consulting services with respect to the operating of five
(5) new restaurants using the Grill concept substantially in the form of Exhibit
E hereto.
<PAGE>
7.9 Dissenting Shareholders
The shareholders of the Company owning 10% or more of its
Common Stock shall not have exercised their dissenters' rights under the
provisions of the Minnesota Business Corporation Law.
8. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement to effect
the Sale shall be subject to the fulfillment on or before the Closing Date of
each of the following additional conditions, any one or more of which may be
waived by the Company:
8.1 Representations and Warranties True
The representations and warranties of Purchaser contained
herein (without regard to any materiality exceptions or provisos therein) shall
be true and correct in all material respects on the date of this Agreement and
the Closing Date as though such representations and warranties were made at and
on such date, except (i) for those untruths or inaccuracies which individually
or in the aggregate would not either materially impair or preclude the ability
of Purchaser to consummate the Sale and the other transactions contemplated
hereby or have a Purchaser Material Adverse Effect, and (ii) for changes
permitted or contemplated by this Agreement.
8.2 Performance
Purchase shall have performed and complied in all material
respects with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing Date
except for those failures to so perform or comply which individually or in the
aggregate would not either materially impair or preclude the ability of
Purchaser to consummate the Sale and the other transactions contemplated hereby
or have a Purchaser Material Adverse Effect.
8.3 Certificates
Purchaser shall furnish such certificates of their respective
officers to evidence compliance with the conditions set forth in Sections 8.1
and 8.2 as may be reasonably requested by the Company.
8.4 Certain Proceedings
No writ, order, decree or injunction of a court of competent
jurisdiction or governmental entity shall have been entered against Purchaser or
the Company which prohibits the consummation of the Sale, and any waiting period
applicable to the consummation of the Sale shall have expired or been
terminated.
8.5 Opinion of Counsel
The Company shall have received the opinions of D. David
Cohen, Esq., counsel to Purchaser, substantially in the form of Exhibit E
hereto.
<PAGE>
9. CLOSING
9.1 Time and Place
Subject to the provisions of this Agreement, the closing of
the Sale (the "Closing") shall take place at the offices of Robins, Kaplan,
Miller & Ciresi, 2800 LaSalle Plaza, 800 LaSalle Avenue, Minneapolis, MN 55402,
as soon as practicable but in no event later than 9:30 A.M., local time, on the
first business day after the date on which each of the conditions set forth in
Articles 6, 7 and 8 have been satisfied or waived by the party parties entitled
to the benefit of such conditions; or at such other place, at such other time,
or on such other date as Purchaser and the Company may mutually agree. The date
on which the Closing actually occurs is herein referred to as the "Closing
Date." Either party may give five (5) business days' notice of Closing to the
other party.
10. TERMINATION AND ABANDONMENT
10.1 Termination
This Agreement may be terminated and the Sale may be abandoned
any time prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(a) by mutual consent of the Boards of Directors of the
Purchaser and the Company;
(b) by either Purchaser or the Company if, without fault of
such terminating party, the Sale shall not have been consummated on or before
June 30, 1996, which date may be extended by mutual consent of the parties
hereto;
(c) by either Purchaser or the Company, if any court of
competent jurisdiction in the United States or other governmental body in the
United States shall have issued an order (other than a temporary restraining
order), decree or ruling, or taken any other action restraining, enjoining or
otherwise prohibiting the Sale; or
(d) by either Purchaser or the Company, if the approval of a
majority of the outstanding shares of Company Common Stock cast at the Special
Meeting or any adjournment thereof is not obtained.
10.2 Termination by Purchaser
This Agreement may be terminated and the Sale may be
abandoned, by action of the Board of Directors of Purchaser, at any time prior
to the Effective Time, before or after the approval by the stockholders of the
Company, if (a) the Company shall have failed to comply in any material respect
with any of the covenants or agreements contained in Articles 1 and 5 of this
Agreement to be complied with or performed by the Company at or prior to such
date of termination, or (b) there exists a breach or breaches of any
representation or warranty of the Company and/or the Subsidiary contained in
this Agreement such that the Closing condition set forth in Section 7.1 would
not be satisfied; provided, however, that if such breach or breaches are capable
of being cured prior to the Effective Time, such breaches shall not have been
cured within 15 days of delivery to the Company of written notice of such breach
or breaches, or (c) if at anytime within the 30 trading days prior to Closing,
Purchaser's Common Stock trades at $8.50 or higher.
<PAGE>
10.3 Termination by the Company
This Agreement may be terminated and the Sale may be abandoned
at any time prior to the Effective Time, before or after the approval by the
stockholders of the Company, by action of the Board of Directors of the Company,
if (a) Purchaser shall have failed to comply in any material respect with any of
the covenants or agreements contained in Articles 1 and 5 of this Agreement to
be complied with or performed by Purchaser at or prior to such date of
termination, or (b) there exists a breach or breaches of any representation or
warranty of Purchaser contained in this Agreement such that the Closing
condition set forth in Section 8.1 would not be satisfied; provided, however,
that if such breach or breaches are capable of being cured prior to the
Effective Time, such breaches shall not be cured within fifteen (15) days of
delivery to Purchaser of written notice of such breach or breaches, or (c) if at
any time within the thirty (30) trading days prior to Closing, Purchasers Common
Stock trades at $5.125 or less.
10.4 Procedure for Termination
In the event of termination and abandonment of the Sale by
Purchaser or the Company pursuant to this Article 10, written notice thereof
shall forthwith be given to the other.
10.5 Effect of Termination
In the event of termination of this Agreement and abandonment
of the Sale pursuant to this Article 10, no party hereto (or any of its
directors or officers) shall have any liability or further obligation to
consummate the transactions contemplated by this Agreement, except that nothing
herein shall relieve any party from liability for damages, other than those
relating to future or projected profits, for any breach of this Agreement.
11. MISCELLANEOUS
11.1 Amendment and Modification
Subject to applicable law, this Agreement mal be amended,
modified or supplemented only by written agreement of Purchaser, the Company and
the Subsidiary at any time prior to the Effective Time with respect to any of
the terms contained herein; provided, however, that after this Agreement is
adopted by the stockholders of the Company, no such amendment or modification
shall change the amount or form of the Closing Consideration.
11.2 Waiver of Compliance; Consents
Any failure of Purchaser, on the one hand, or the Company or
Subsidiary, on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived by the Company or Subsidiary, or
Purchaser or Newco, respectively, only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
11.2.
<PAGE>
11.3 Survivability; Investigations
The respective representations and warranties of Purchaser,
Newco and the Company contained herein or in any certificates or other documents
delivered prior to or at the Closing shall not be deemed waived or otherwise
affected by any investigation made by any party hereto and shall not survive the
Closing.
11.4 Notices
All notices and other communications hereunder shall be in
writing and shall be delivered personally, by next-day courier, or mailed by
registered or certified mail (return receipt requested) first-class postage
prepaid, or telecopied with written confirmation of receipt, to the parties at
the addresses specified below (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof. Any such notice shall be effective upon
receipt, if personally delivered or telecopied, one day after delivery to a
courier for next-day delivery, or three days after mailing, if deposited in the
U.S. mail, first-class postage prepaid.
(a) If to the Company, to:
Alamo Restaurants, Inc.
1465 East 84th Place
Merrillville, IN 46410
with a copy to:
Robert T. Montague, Esq.
Robins, Kaplan, Miller & Ciresi
2800 LaSalle Plaza
800 LaSalle Avenue
Minneapolis, MN 55402-2015
Fax: (612) 339-4181
(b) If to Purchaser, or Newco, to:
Elephant & Castle Group, Inc.
P.O. Box 10240
Pacific Center
701 West Georgia Street
Suite 303-701
Vancouver, B.C. Y7Y1E7
CANADA
with a copy to:
D. David Cohen, Esq.
500 North Broadway - Suite 133
Jericho, NY 11753
Fax: (516) 933-8454
<PAGE>
11.5 Assignment
This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns (including, without limitation, any
wholly-owned Subsidiary of Purchaser incorporated under the laws of Delaware and
substituted for Newco as provided in Section 1.1), but neither this Agreement
nor any of the rights interests or obligations hereunder may be assigned by any
of the parties hereto without the prior written consent of the other parties,
nor is this Agreement intended to confer any rights or remedies hereunder upon
any other person except the parties hereto.
11.6 Arbitration
In the event of any dispute arising hereunder, the parties
hereby stipulate and agree that such dispute shall be resolved by binding
arbitration in accordance with the Rules of Commercial Arbitration of the
American Arbitration Association ("AAA") before a single arbitrator. If a claim
is made by Purchaser against Company or Subsidiary, arbitration shall be held in
Minneapolis, Minnesota. If a claim is made by Company or Subsidiary against
Purchaser, such arbitration shall be held in Vancouver, British Columbia,
Canada. Any arbitral order resulting such proceedings may be entered as a
judgment in any court of competent jurisdiction.
11.7 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.
11.8 Severability
In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect against a
party hereto, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
and such invalidity, illegality or unenforceability shall only apply as to such
party in the specific jurisdiction where such judgment shall be made.
11.9 Captions
The article and section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
parties, and shall not in any way affect the meaning or interpretation of this
Agreement.
11.10 Entire Agreement
This Agreement, including the exhibits hereto and the
documents and instruments referred to herein (including the Confidentiality
Agreement and Disclosure Statement), embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements and the understandings between the
parties with respect to such subject matter. There are no representations,
promises, warranties, covenants, or undertakings, other than those expressly set
forth or referred to herein and therein.
<PAGE>
IN WITNESS WHEREOF, Purchaser, and Newco and the Company and
Subsidiary each and all have caused this Agreement to be signed by their
respective duly authorized officers as of the date first above written.
ELEPHANT & CASTLE GROUP INC.
By:
Name:
Title:
ALAMO RESTAURANTS, INC.
By:
Name:
Title:
ALAMO GRILL, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT A
Company liabilities to be paid by Purchaser at Closing:
Barclay Bank Up to $326,000
Other Liabilities1 Up to $210,000
= ========
Total $536,000
- --------
* Specific payees and amounts to be provided prior to Closing to allow
for checks to be prepared evidencing payment. Liabilities of the
Company not paid or expressly assumed in writing by the Purchaser in
connection with this transaction shall remain the sole responsibility
of the Company.
<PAGE>
EXHIBIT B
Affiliate Letter
The undersigned is an officer, director, key employee or controlling
person of Alamo Restaurants, Inc. ("Alamo" or the "Company").
Alamo is prepared, subject to the approval of the shareholders of the
Company, to sell all of the capital stock of Alamo Grills, Inc. ("Subsidiary")
to E&C Acquisition Corp. ("Newco") for shares of the capital stock of Elephant &
Castle Group, Inc. ("Purchaser" and "Purchaser Shares").
The undersigned will receive an indeterminate number of such Purchaser
Shares at the closing of the transactions.
In order to induce the Purchaser to enter into the transaction, the
undersigned represents, warrants and agrees with Purchaser that:
1. He, she or it ("He") will engage in no transactions in the Purchaser
Shares prior to the expiration of thirty (30) days following the public
release of financial information of Purchaser, including not less than
thirty (30) days of combined operations of Subsidiary with Purchaser.
2. He will not sell, transfer, hypothecate or otherwise dispose of any of
the Purchaser Shares otherwise than pursuant to an effective
Registration Statement relative thereto, or, in the opinion of counsel
to the Purchaser, an exemption from registration applicable to any such
transaction.
3. He will permit the certificates representing the Purchaser Shares to be
endorsed with a legend restricting transfer, as provided by paragraphs
1 and 2 hereof.
<PAGE>
EXHIBIT C
Form of Opinion of D. David Cohen
Alamo Restaurants, Inc.
1465 East 64th Place
Merrillville, Indiana 46410
RE: Acquisition of the Common Stock of Alamo Grill, Inc.
Dear Ladies and Gentlemen:
We have acted as counsel for Elephant & Castle Group, Inc. ("E&C" or
"Purchaser"), a corporation organized under the laws of the Province of British
Columbia, Canada in connection with the purchase by Purchaser, or its
wholly-owned subsidiary, of all of the capital stock of Alamo Grill, Inc.
("Grill") in exchange for cash and capital stock of E&C pursuant to a certain
Agreement among Purchaser, Grill and Alamo Restaurants, Inc. (~Alamo") of all of
the dated April 9, 1996 (the "Agreement").
As such counsel, we have reviewed the corporate actions taken by the
Purchaser in connection with the Agreement. In addition, we have reviewed such
matters of law and examined copies of such corporate records of the Purchaser,
agreements and other instruments, certificates of public officials, certificates
and representations of public officials, certificates and representations of
officers of the Purchaser and other documents as we have deemed necessary as a
basis for the opinions hereinafter expressed. As to various matter of fact
material to such opinions, we have, when such facts were not independently
established, relied to the extent we deemed such reliance reasonable on
certificates of officers of the Purchaser and of public officials. We have
assumed the authenticity of all documents submitted to us as originals, that all
signature on executed documents we have examined are genuine, that all documents
submitted to us as copies conform to the originals thereof, and that all
certificates furnished to us as to relevant facts are correct.
Capitalized terms, unless otherwise defined herein, shall have the
meanings ascribed to them in the Agreement to which this Exhibit C is attached.
1. Purchaser is a corporation duly organized and validly existing under
the laws of the Province of British Columbia, Canada.
2. Purchaser has full corporate power and authority to execute and deliver
the Sale Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement and the consummation of the transactions
contemplated thereby have been duly and validly authorized and approved by the
Boards of Directors of Purchaser. No other corporate proceedings on the part of
Purchaser are necessary to authorize the Agreement or the consummation of the
transactions contemplated thereby. The Agreement has been duly and validly
executed and delivered by Purchaser, assuming the Agreement constitutes a legal,
valid and binding agreement of the Company, constitutes a legal, valid and
binding agreement of Purchaser, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent, conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
<PAGE>
3. No filing or registration with, or authorization, consent or approval
of, any governmental entity is required by Purchaser in connection with the
execution and delivery of the Agreement or the consummation of the transactions
contemplated thereby, other than those which have already been made and those
other filings, registrations, authorizations, consents or approvals the failure
of which to be obtained or made would not, individually or in the aggregate,
materially impair or preclude the ability of Purchaser to perform its respective
obligations under the Agreement or prevent the consummation of any of the
transactions contemplated thereby.
4. The execution and delivery of the Agreement and the consummation of the
transactions contemplated thereby will not (i) violate any provision of the
Certificate of Incorporation or ByLaws of Purchaser, (ii) to the best of our
knowledge, result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default under, any license, franchise,
permit, indenture, agreement or other instrument to which Purchaser is bound,
excluding from the foregoing clauses (ii) and (iii) violations, breaches or
defaults which, either individually or in the aggregate, would not materially
impair or preclude Purchaser's ability to consummate the transactions
contemplated by the Agreement or for which Purchaser has received appropriate
consents or waivers.
5. The Common Stock of E&C issuable in exchange for all of the shares of
Grill has been duly authorized, and, upon issuance as contemplated by the
Agreement, will be validly issued, fully paid and nonassessable.
6. The Registration Statement and Proxy Statement (with respect to
Purchaser comply as to form in all material respects with the applicable
provisions of the Securities Act and Exchange Act, as the case may be (except
that no opinion is expressed herein with respect to the financial statements and
the notes thereto, the financial statement schedules and the other financial,
statistical and accounting data included in the Registration Statement).
In addition, we have participated in conferences, in person or by
telephone, with officers and other representatives of Purchaser, representatives
of the independent public accountants for Purchaser and officers and other
representatives of the Company, at which the contents of the Registration
Statement and Proxy Statement and related matters were discussed, and although
we are not passing upon and do not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Proxy Statement, on the basis of the foregoing (relying as to
materiality to a large extent upon the opinion of officers and other
representatives of Purchaser), no facts have come to our attention which would
lead us to believe that the portions of the Registration Statement or Proxy
Statement with respect to Purchaser, in the case of the Registration Statement,
on the effective date of the Registration Statement or at the Effective Time
and, in the case of the Proxy Statement, at the date the Proxy Statement was
first mailed to shareholders, at the time of the Special Meeting or at the
Effective Time contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading.
<PAGE>
This opinion is being furnished to you pursuant to the Agreement, and may
not be provided to, or relied upon, by any other person, firm or entity, other
than you. This opinion may not be duplicated, distributed or republished without
the written consent of the undersigned.
Very truly yours,
D. David Cohen
<PAGE>
DRAFT
EXHIBIT D
, 1996
Elephant & Castle Group, Inc.
701 West Georgia St., Suite 303
P.O Box 10240, Pacific Centre
Vancouver, B.C. V7Y 1E7 Canada
Re: Acquisition of the Common Stock of Alamo Grill, Inc.
Dear Ladies and Gentlemen:
We have acted as counsel for Alamo Restaurants, Inc., a Minnesota
corporation (the "Company"), and Alamo Grill, Inc., an Indiana corporation,
which is a wholly owned subsidiary of the Company (the "Subsidiary"), in
connection with the sale of the Subsidiary's common stock to Elephant & Castle
Group, Inc. ("E&C) pursuant to that certain Agreement between the Company and
E&C, dated April 9, 1996 (the "Agreement").
As such counsel, we have reviewed the corporate actions taken by the
Company in connection with the Agreement. In addition, we have reviewed such
matters of law and examined copies of such corporate records of the Company and
the Subsidiary, agreements and other instruments, certificates of public
officials, certificates and representations of public officials, certificates
and representations of officers of the Company and the Subsidiary, and other
documents as we have deemed necessary as a basis for the opinions hereinafter
expressed. As to various matters of fact material to such opinions, we have,
when such facts were not independently established, relied to the extent we
deemed such reliance reasonable on certificates of officers of the Company and
the Subsidiary and of public officials. We have assumed the authenticity of all
documents submitted to us as originals, that all signatures on executed
documents we have examined are genuine, that all documents submitted to us as
copies conform to the originals thereof, and that all certificates furnished to
us as to relevant facts are correct.
As used in this opinion, the expression "to our knowledge" or similar
phrase with reference to matters of fact means that, in the course of our
representation of the Company and the Subsidiary, no information that would lead
us to believe that the opinions expressed herein are incorrect has come to our
attention. Further, the expression "to our knowledge" or similar phrase with
reference to matters of fact refers only to the current actual knowledge, after
due inquiry, of the attorneys of this firm who have worked on matters for the
Company and the Subsidiary in connection with the Agreement and the transactions
contemplated thereby Except to the extent expressly set forth herein, we have
not undertaken any independent investigation to determine the existence or
absence of any fact, and no inference as to our knowledge as to the existence or
absence of any fact should be drawn from our representation of the Company and
the Subsidiary or the rendering of the opinion set forth below.
<PAGE>
On the basis of such examination and our general familiarity with the
Company's and the Subsidiary's corporate affairs, we advise that, in our
opinion:
(a) Each of the Company and the Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted Each of the Company and the Subsidiary is duly qualified
to transact business and is in good standing as a foreign corporation in each
jurisdiction where, to our knowledge, the character of its activities requires
such qualification, except where the failure to be so qualified would not,
individually or in the aggregate, either materially impair or preclude the
ability of the Company to consummate the sale contemplated by the Agreement.
(b) The Company is directly or indirectly the record and, to our
knowledge, beneficial owner of all of the outstanding shares of capital stock of
the Subsidiary, all of such shares so owned by the Company are validly issued,
fully paid and non-assessable and are owned by it free and clear of any
perfected claim, lien or encumbrance and, to our knowledge, any other claim,
lien or encumbrance, except for UCC liens of record and liens disclosed or
described in the Disclosure Statement attached as an Exhibit to the Agreement.
To our knowledge, there are no other outstanding or authorized options,
warrants, calls, subscriptions, rights, commitments or any other agreements of
any character obligating the Subsidiary to issue, transfer or sell any shares of
capital stock of the Subsidiary or any other securities convertible into or
evidencing the right to purchase or subscribe for any shares of such stock.
(c) The Company has all requisite corporate power and authority to
execute and deliver the Agreement and to perform its obligations thereunder. The
execution and delivery of the Agreement by the Company has been duly and validly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company (assuming approval by the
Company's shareholders) are necessary to authorize the Agreement or the
consummation of the transactions contemplated thereby. The Agreement has been
duly and validly executed and delivered by the Company and constitutes the
legal, valid and binding agreement of the Company, enforceable against it in
accordance with its terms, except as enforceability may be limited by the
application of bankruptcy, insolvency, moratorium, or other laws of general
application affecting the rights of creditors generally and by judicial
limitations on the right of specific performance and other equitable remedies.
(d) The execution and delivery of the Agreement, the consummation of
the transactions contemplated thereby and compliance by the Company with any of
the provisions thereof will not conflict with, constitute a default under or
violate [i] any of the terms, conditions or provisions of the certificate of
Incorporation (or other applicable charter document) or By-laws of the Company,
[ii] any of the terms, conditions or provisions of any document, agreement or
other instrument of which we have knowledge to which the Company or any of its
Subsidiaries is a party or by which any of them is bound, [iii] any law or
regulation applicable to the Company or the Subsidiary, or [iv] any judgment,
writ, injunction, decree, order or ruling of any court or governmental authority
of which we have knowledge binding the Company or the Subsidiary, excluding from
the foregoing clauses [ii], [iii] and [iv] conflicts, defaults or violations
which, either individually or in the aggregate, would not have a material
adverse effect.
<PAGE>
(e) No consent, approval, waiver, license or authority or other action
by or filing with any governmental authority is required in connection with the
execution and delivery by the Company of the Agreement or the consummation by
the Company of the Agreement or other transactions contemplated thereby.
(f) Except for the persons listed on that attached Schedule (i), to our
knowledge, no person, for purposes of Rule 145 under the Securities Act, is an
affiliate of the Company.
(g) In addition, we have participated in conferences with directors,
officers and other representatives of the Company and E&C, at which conferences
the contents of the Registration Statement and Proxy Statement and related
matters were discussed and, although we have not independently verified and are
not passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or Proxy
Statement, on the basis of the foregoing (relying as to materiality to a large
extent upon the opinions of the officers and other representatives of the
Company and the Subsidiary) no facts have come to our attention which leads us
to believe that the portions of the Registration Statement or Proxy Statement
with respect to the Company and the Subsidiary, in the case of the Registration
Statement, on the effective date of the Registration Statement, or at the
Effective Time and, in the case of the Proxy Statement, at the date the Proxy
Statement was first mailed to shareholders, at the time of the Special Meeting
at the Effective Time, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading (it being understood that
we express no view with respect to information concerning E&C or the financial
statements and related notes, the financial statement schedules and other
financial, statistical and accounting data included or incorporated in the
Registration Statement or the Prospectus).
This opinion is furnished pursuant to Section 7 7 of the Sale Agreement
solely to you, and may not be provided to or relied upon by any other person,
firm or entity, other than you This opinion may not be duplicated, distributed
or furnished to any person, firm or entity, without the prior written consent of
the undersigned.
Very truly yours,
ROBINS, KAPLAN, MILLER & CIRESI
<PAGE>
Schedule (i) to
Opinion Letter of Robins, Kaplan, Miller & Ciresi
Affiliates of Alamo Restaurants, Inc.
Jon P. Taffer
John P. Holdahl
Martin J O'Dowd
<PAGE>
ANNEX B
302A.471. Rights of dissenting shareholders
Subdivision 1. Actions creating rights. A shareholder of a corporation
may dissent from, and obtain payment for the fair value of the shareholder's
shares in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects
the rights or preferences of the shares of the dissenting shareholder in that
it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption
of the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares
to acquire shares, securities other than shares, or rights to purchase shares or
securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter,
or to cumulate votes, except as the right may be excluded or limited through the
authorization or issuance of securities of an existing or new class or series
with similar or different voting rights; except that an amendment to the
articles of an issuing public corporation that provides that section 302A.671
does not apply to a control share acquisition does not give rise to the right to
obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the corporation, but no
including a transaction permitted without shareholder approval in section
302A.661, subdivision 1, or a disposition in dissolution described in section
302A.725, subdivision 2, or a disposition pursuant to an order of a court, or a
disposition for cash on terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the shareholders in accordance with
their respective interests within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B,
to which the corporation is a party, except as provided in subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter
322B, to which the corporation is a party as the corporation whose shares will
be acquired by the acquiring corporation, if the shares of the shareholder are
entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a shareholder vote
with respect to which the articles, the bylaws, or a resolution approved by the
board directs that dissenting shareholders may obtain payment for their shares.
Subd. 2. Beneficial owners. (a) A shareholder shall not assert
dissenters' rights as to less than all of the shares registered in the name of
the shareholder, unless the shareholder dissents with respect to all the shares
that are beneficially owned by another person but registered in the name of the
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter
shall be determined as if the shares as to which the shareholder has dissented
and the other shares were registered in the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may
assert dissenters' rights with respect to shares held on behalf of the
beneficial owner, and shall be treated as a dissenting shareholder under the
terms of this section and section 302A.473, if the beneficial owner submits to
the corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
Subd. 3. Rights not to apply. Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment
under this section does not apply to a shareholder of the surviving corporation
in a merger, if the shares of the shareholder are not entitled to be voted on
the merger.
Subd. 4. Other rights. The shareholders of a corporation who have a
right under this section to obtain payment for their shares do not have a right
at law or in equity to have a corporate action described in subdivision 1 set
aside or rescinded, except when the corporate action is fraudulent with regard
to the complaining shareholder or the corporation.
Laws 1981, c. 270, ss. 80, eff. July 1, 1981. Amended by Laws 1987, c. 203, ss.
2,3; Laws 1988, c. 692. ss. 10; Laws 1991, c. 49, ss. 16; Laws 1992, c. 517,
art. 1, ss. 15, eff. Jan. 1, 1993; Laws 1993, c.17, ss. 40: Laws 1994, c. 417,
ss. 5
Subdivision 1. Definitions. (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action referred to in section 302A.471, subdivision 1 or
the successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective
date of the corporate action referred to in section 302A.471, subdivision 1, up
to and including the date of payment, calculated at the rate provided in section
540.09 for interest on verdicts and judgments.
Subd. 2. Notice of action. If a corporation calls a shareholder meeting
at which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
Subd. 3. Notice of dissent. If the proposed action must be approved by
the shareholders, a shareholder who wishes to exercise dissenters' rights must
file with the corporation before the vote on the proposed action a written
notice of intent to demand the fair value of the shares owned by the shareholder
and must not vote the shares in favor of the proposed action.
Subd. 4. Notice of procedure; deposit of shares. (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the
corporation shall send to all shareholders who have complied with subdivision 3
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date by
which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or
the beneficial owner on whose behalf the shareholder dissents, acquired that
shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief description
of the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares or comply with
any restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all other
rights of a shareholder until the proposed action takes effect.
Subd. 5. Payment; return of shares. (a) After the corporate action
takes effect, or after the corporation receives a valid demand for payment,
whichever is later, the corporation shall remit to each dissenting shareholder
who has complied with subdivisions 3 and 4 the amount the corporation estimates
to be the fair value of the shares, plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of income for
a fiscal year ending not more than 16 months before the effective date of the
corporate action, together with the latest available interim financial
statements;
(2) An estimate by the corporation of the fair value of the shares and
a brief description of the method used to reach the estimate; and
(3) A copy of section 302A.471 and this section, and a brief
description of the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph
(a) from a person who was not a shareholder on the date the action dissented
from was first announced to the public or who is dissenting on behalf of a
person who was not a beneficial owner on that date. If the dissenter has
complied with subdivisions 3 and 4, the corporation shall forward to the
dissenter the materials described in paragraph (a), a statement of the reason
for withholding the remittance, and an offer to pay to the dissenter the amount
t listed in the materials if the dissenter agrees to accept that amount in full
satisfaction. The dissenter may decline the offer and demand payment under
subdivision 6. Failure to do so entitles the dissenter only to the amount
offered. If the dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the
deposit of certificates or the imposition of transfer restrictions on
uncertificated shares, it shall return all deposited certificates and cancel all
transfer restrictions. However, the corporation may again give notice under
subdivision 4 and require deposit or restrict transfer at a later time.
Subd. 6. Supplemental payment; demand. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
Subd. 7. Petition; determination. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition shall
be filed in the county in which the registered office of the corporation is
located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall names as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and a copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraiser, with powers and authorities the court deems proper, to receive
evidence on an recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and determine the fair value of
the shares, taking into account any and all factors the courts finds relevant,
computed by any method or combination of methods that the court, in its
discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount t by which the fair value of the shares as determined by the
court, plus interest, exceeds the about, if any, remitted under subdivision 5,
but shall not be liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
Subd. 8. Costs; fees; expenses. (a) The court shall determine the costs
and expenses of a proceeding under subdivision 7, including the reasonable
expenses and compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except that the court
may assess part or all of those costs and expenses against a dissenter whose
action in demanding payment under subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and expenses of
any experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and expenses to any
attorney for the dissenters out of the amount awarded to the dissenters, if any.
Laws 1981, c. 270, ss. 81, eff. July 1, 1981. Amended by Laws 1987, c. 104, ss.
30 to 33; Laws 1993, c 17, ss. 41, 42.
Proxy
Alamo Restaurants, Inc.
SPECIAL MEETING OF SHAREHOLDERS - SEPTEMBER______, 1996
The undersigned hereby appoints John P. Holdahl and Jon P. Taffer, and
each of them, with full power of substitution as proxies and agents (the "Proxy
Agents") in the name of the undersigned, to attend the Special Meeting of
Shareholders of Alamo Restaurants, Inc. (the "Company") to be held at the 28th
floor of the LaSalle Plaza, 800 LaSalle Avenue, Minneapolis, Minnesota 55402 on
______________, September _____, 1996 at 9:00 a.m. Central Time, or any
adjournment thereof, and to vote the number of shares of Common Stock of the
Common Stock of the Company that the undersigned would be entitled to vote, and
with all the power the undersigned would possess, if personally present, as
follows:
1. To approve the sale of all of the Capital Stock of Alamo Grill, Inc.
("Grill"), a wholly owned subsidiary of Alamo Restaurants, Inc. ("Alamo")
to Elephant & Castle Group, Inc. ("E&C"), in exchange for Capital Stock of
E&C pursuant to the terms and conditions set forth in that certain
Agreement Relating to the Sale of All of the Capital Stock of a Subsidiary
Corporation in Exchange for Capital Stock of the Acquiring Corporation
dated as of April 9, 1996 by and among E&C, Alamo and Grill.
_____FOR _____AGAINST _____ABSTAIN
2. In their discretion, the Proxy Agents are authorized to vote on such other
business as may properly come before the meeting or any adjournment
thereof.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED TO THE COMPANY WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDERS(S). IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
<PAGE>
PLEASE DATE AND SIGN exactly as the name(s) appears herein and return promptly
in the accompanying envelope. If the shares are held by joint tenants or as
community property, both shareholders should sign.
Receipt of Notice of Annual Meeting of Shareholders and Proxy Statement
dated_______________,1996, is hereby acknowledged by the undersigned.
Dated:________________________,1996.
____________________________________ ____________________________________
Signature of Shareholder Signature of Shareholder
____________________________________ ____________________________________
Name, typed or printed Name, typed or printed.
____________________________________ ____________________________________
Tax identification or Tax identification or
Social Security Number Social Security Number
MALL OF AMERICA
LEASE
THIS LEASE made this 30th day of April, 1992, by and between MALL OF
AMERICA COMPANY, a Minnesota General Partnership, ("Landlord"), and THE ALAMO
GRILL, INC., an Indiana corporation, ("Tenant");
WITNESSTH THAT, in consideration of the rents, covenants and agreements
hereinafter set forth, such parties enter into the following agreement:
ARTICLE 1
EXHIBITS
The exhibits listed below and attached to this Lease are incorporated
herein by this reference:
EXHIBIT "A" Legal description of real estate to be developed by
the Landlord as a mixed use project, consisting of a
retail mall and entertainment center ("Retail Space")
and a hotel ("Hotel Space"), as well as a parking
deck ("Parking Space") (hereinafter called "Total
Tract"). The Total Tract with existing and future
improvements being hereinafter called the "Center".
EXHIBIT "B" Plot Plan of that area of the Retail Space upon which
is located the space herein leased to Tenant. This
Exhibit is provided for informational purposes only,
and shall not be deemed to be a warranty,
representation or agreement by Landlord that the
Center or buildings and/or any stores will be exactly
as indicated on the Exhibit, or that the other
tenants which may be drawn on said Exhibit will be
occupants in the Center. Landlord reserves unto
itself the unlimited right to modify the
configuration of Total Tract at any time for the
purpose of incorporating additional department stores
and other buildings within the Center.
EXHIBIT "C" Description of Landlord's Work and Tenant's Work
EXHIBIT "D" Rules and Regulations applicable to Tenant.
EXHIBIT "E" Sign Criteria applicable to Tenant.
EXHIBIT "F" Food Court. INTENTIONALLY DELETED.
EXHIBIT "F-1" Tenant's Menu.
EXHIBIT "G" Agreement to Subordinate Lien for Labor and
Materials.
Notwithstanding Exhibits A or B or anything else in this Lease
contained, Landlord reserves the right to change or modify and add to or
subtract from the size and dimensions of the Center or any part thereof, the
number, location and dimensions of buildings and stores, the size and
configuration of the parking areas, entrances, exits and parking aisle
alignments, dimensions of hallways, malls and corridors, the number of floors in
any building, the location, size and number of tenants' spaces and kiosks which
may be erected in or fronting on any mall or otherwise, the identity, type and
location of other stores and tenants, and the size, shape, location and
arrangement of Common Areas (hereinafter defined), and to design and decorate
any portion of the Center as it desires, but the general character of the Center
and the approximate location of the Premises (as hereinafter defined) in
relation to the major department stores shall not be substantially changed.
ARTICLE II
LEASED PREMISES AND TERM
Section 2.1. Leased Premises.
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord
the space (in the Center) designated as Space S-396 outlined in red on Exhibit
"B" (hereinafter called "the Premises"), irregularly shaped, but measure to the
center line of all party or common walls, to the exterior faces of all other
walls and to the building line where there is no wall, containing approximately
6,749 square feet. When the Premises are completed, Landlord shall deliver to
Tenant a certificate stating Landlord's determination of the actual number of
square feet in the Premises (hereinafter called the "Store Floor Area"), and the
parties agree that, in the event Tenant does not dispute Landlord's
determination of the Store Floor Area in the Premises as hereinafter provided,
Landlord's determination shall be final, binding and conclusive. Notwithstanding
the foregoing, Tenant shall have the right to confirm Landlord's determination
of the Store Floor Area in the Premises provided Tenant does so no later than
thirty (30) days after the Commencement Date. In the event of a dispute as to
the Store Floor Area, the parties agree to employ a mutually acceptable
independent third party architect or engineer to remeasure the Premises and,
absent manifest error, such architect's or engineer's determination as to Store
Floor Area in the Premises shall be final, binding and conclusive. The fees
charged by such third party architect or engineer shall be shared equally by
Landlord and Tenant.
Section 2.2. Roof and Walls.
Landlord shall have the exclusive right to use all or any part of the
exterior of the roof, side and rear walls of the Premises for any purpose,
including but not limited to erecting signs or other structures on or over all
or any part of the same, erecting scaffolds and other aids to the construction
and installation of the same, and installing, maintaining, using, repairing and
replacing pipes, ducts, conduits and wires leading through, to or from the
Premises and serving other parts of the Center in locations which do not
materially interfere with Tenant's use of the Premises. Tenant shall have no
right whatsoever in the exterior of exterior walls or the roof of the Premises.
Section 2.3. Lease Term.
The term of this Lease (hereinafter called "Lease Term") shall commence
upon the earlier of (a) the day following the last day allowed herein to Tenant
for completion of Tenant's Work (hereinafter defined) hereinafter called
"Required Completion Date," or (b) the day on which Tenant opens for business,
the applicable date being hereinafter called "Commencement Date". The term of
this Lease shall end on the last day of the tenth (10th) Lease Year (hereinafter
defined) after the Commencement Date unless sooner terminated as herein
provided.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS LEASE TO THE CONTRARY,
TENANT IS REQUIRED TO OPEN FOR BUSINESS TO THE PUBLIC IN THE PREMISES ON OR
BEFORE AUGUST 11, 1992, PROVIDED LANDLORD HAS DELIVERED POSSESSION OF THE
PREMISES TO TENANT AT LEAST NINETY (90) DAYS PRIOR TO SUCH DATE WITH LANDLORD'S
WORK IN THE PREMISES SUBSTANTIALLY COMPLETE.
Section 2.4. Lease Year Defined.
"Lease Year", as used herein, means a period of twelve (12) consecutive
months during the Lease Term commencing on the Commencement Date. If the
Commencement Date is other than February 1, then the first Lease Year shall
commence on the Commencement Date and end on the last day of January which shall
be more than six (6) months but not more than eighteen (18) months after the
Commencement Date. "Partial Lease Year" means that portion of the Lease Term
prior to the first Lease Year.
Section 2.5. Joint Opening.
Tenant shall cooperate to effect a joint opening of the Retail Space
and at Landlord's request will delay opening for business. If Tenant delays at
Landlord's request, then, notwithstanding anything herein contained, the
Commencement Date shall occur upon the date of said opening. In the event
Landlord elects to delay the joint opening of the Retail Space beyond September
11, 1992, Landlord agrees that it shall give Tenant notice of such new joint
opening date no later than July 11, 1992. If Landlord fails to give Tenant such
notice in a timely manner, Landlord agrees to reimburse Tenant for all
reasonable and documented out-of-pocket expenses incurred by Tenant as a result
of such delayed opening.
Section 2.6. Relocation of Premises. INTENTIONALLY DELETED.
ARTICLE III
LANDLORD'S AND TENANT'S WORK
Section 3.1. Landlord's Work.
Landlord shall at its expense construct the Premises in substantial
accordance with plans and specifications prepared or to be prepared by
Landlord's architect, incorporation in such construction all work described in
Exhibit "C" hereto as being required of Landlord (hereinafter called "Landlord's
Work").
Section 3.2. Tenant's Work.
All work to be done by Tenant (hereinafter called "Tenant's Work")
shall be performed by Tenant including all work designated as Tenant's Work in
Exhibit "C" and the Tenant Handbook, and Tenant shall do and perform at its
expense all Tenant's Work diligently and promptly and in accordance with the
following provisions.
Section 3.3. Tenant's Obligations Before Commencement Date.
As soon as reasonably possible hereafter, Landlord shall deliver to
Tenant a drawing of the Premises and a copy of the Tenant Handbook prepared by
Landlord's architect (hereinafter referred to as "Tenant Handbook'). Within 45
days after the date of this Lease, Tenant will submit to Landlord one (1)
reproducible set (sepia) and 4 copies of plans and specifications, prepared by a
registered architect or engineer, of all Tenant's Work to be done within the
Premises (hereinafter called "Tenant's Plans"), prepared in conformity with
Exhibit "C" and the Tenant Handbook. Within fifteen (15) days after receipts of
Tenant's Plans, Landlord shall notify Tenant of any failures of Tenant's Plans
to conform to Exhibit "C", the Tenant Handbook or otherwise to meet with
Landlord's approval. Tenant shall within 15 days after receipt of any such
notice cause Tenant's Plans to be revised to the extent necessary to obtain
Landlord's approval and resubmitted for Landlord's approval. When Landlord has
approved the original or revised Tenant's Plans, Landlord shall initial and
return one (1) set of approved Tenant's Plans to Tenant and the same shall
become a part hereof by this reference as Exhibit "C-2". Approval of plans and
specifications by Landlord shall not constitute the assumption of any
responsibility by Landlord for their accuracy or sufficiency, or compliance with
applicable codes and Tenant shall be solely responsible for such plans and
specification. Tenant shall not commence any of Tenant's Work until Landlord has
approved Exhibit "C-2", unless prior Landlord approval has been obtained in
writing.
Landlord shall notify Tenant not less than 15 days in advance of the
time when Tenant can commence Tenant's Work' and Tenant shall commence such work
not later than the date specified in such notice (although Landlord may not have
completed Landlord's Work on such date and may be in the Premises concurrently
with Tenant), complete the same in strict accordance with Exhibits "C" and
"C-2", install all store and trade fixtures, equipment, stock in trade,
merchandise and inventory, and open for business therein not later than the
first to occur of (i) the 60th day after the earlier of(a) the date specified in
such notice as the date when Tenant can commence Tenant's Work or (b) the date
Landlord has notified Tenant that the Premises are ready for commencement of
Tenant's Work or (ii) August 11, 1992, which applicable day shall be the
Required Completion Date.
Section 3.4. Failure of Tenant to Perform.
Because of the difficulty or impossibility of determining Landlord's
damages resulting from Tenant's failure to open for business fully fixtured,
stocked and staffed on the Commencement Date, including, but not limited to,
damages from loss of Percentage Rent (hereinafter defined) from Tenant and other
tenants, diminished saleability, leaseability, mortgageability or economic value
of the Center, if Tenant fails to open for business fully fixtured, stocked and
staffed on or before the Commencement Date. Landlord may, without notice or
demand, in addition to the right to exercise any other remedies and rights
herein or at law provided, collect rent from the Commencement Date in an amount
equal to the Minimum Annual Rent (hereinafter defined) and other additional rent
and other amounts payable by Tenant hereunder. In addition, if Tenant has not
opened for business in the Premises as of the Commencement Date, Landlord may,
upon thirty (30) days prior written notice to Tenant and Tenant's failure to
open for business with such thirty (30) day period, terminate this Lease, in
which event Landlord shall have the right to recover, as liquidated damages and
not as a penalty, a sum equal to the Minimum Annual Rent payable for one (1)
Lease Year plus all expenses incurred by Landlord pursuant to this Section, plus
the cost of any alterations or repairs which Landlord in its sole discretion
deems advisable to relet the Premises. All remedies in this Lease or at law
provided shall be cumulative and not exclusive and shall survive the expiration
of the Lease Term or the earlier termination of this Lease.
Section 3.5. Condition of Premises.
Tenant's taking possession of the Premises shall be conclusive evidence
of Tenant's acceptance thereof in good order and satisfactory condition. Tenant
agrees that no representations respecting the condition of the Premises or the
existence or non-existence of Hazardous Materials (hereinafter defined) in, on
or about the Premises, no warranties or guarantees, expressed or implied, with
respect to workmanship or any defects in materials, and no promise to decorate,
alter, repair or improve the Premises either before or after the execution
hereof, have been made by Landlord or its agents to Tenant unless the same are
contained herein.
Landlord hereby covenants that as of the date possession of the
Premises is delivered to Tenant, Landlord's Work in the Premises shall be in
compliance with all building codes and fire codes applicable thereto. Further,
Landlord hereby warrants Landlord's Work in the Premises from any defect therein
for a period of one (1) year from the date possession of the Premises is
delivered to Tenant. Provided, however, the foregoing warranty shall not apply
to any damage to Landlord's Work caused by Tenant, its employees, agents or
contractors and Tenant agrees that it shall, at Tenant's cost and expense,
repair or cause to be repaired any damage to Landlord's Work caused by Tenant,
its employees, agents or contractors.
ARTICLE IV
RENT
Section 4.1. Minimum and Percentage Rent.
Tenant covenants and agrees to pay to Landlord, without notice or
demand, at Landlord's address for notice (Landlord's and Tenant's notice
addresses being the addresses specified in Section 24.7 hereof), as rent for the
Premises:
(i) A Minimum Annual Rent of $22.00 per square foot of
Store Floor Area, or One Hundred Forty Eight Thousand
Four Hundred Seventy Eight and no/100 Dollars
($148,478.00) per annum (based upon the approximated
Store Floor Area set forth in Section 2.1 hereof),
payable in equal monthly installments, in advance
upon the first day of each and every month commencing
upon the Commencement Date and continuing thereafter
through and including the last month of the third
(3rd) Lease Year of the Lease Term (such monthly
installment being hereinafter called "Minimum Monthly
Rent"); and
A Minimum Annual Rent of $28.00 per square foot of
Store Floor Area, or One Hundred Eighty Eight
Thousand Nine Hundred Seventy Two and no/100 Dollars
($188,972.00) per annum (based upon the approximated
Store Floor Area set forth in Section 2.1 hereof),
payable in equal monthly installments, in advance
upon the first day of each and every month commencing
upon the fourth (4th) Lease Year of the Lease term
and continuing thereafter through and including the
last month of the seventh (7th) Lease Year of the
Lease Term (such monthly installment being
hereinafter called "Minimum Monthly Rent"); and
A Minimum Annual Rent of $34.00 per square foot of
Store Floor Area, or Two Hundred Twenty Nine Thousand
Four Hundred Sixty Six and no/100 Dollars
($229,466.00) per annum (based upon the approximated
Store Floor Area set forth in Section 2.1 hereof),
payable in equal monthly installments, in advance
upon the first day of each and every month commencing
upon the eighth (8th) Lease Year of the Lease Term
and continuing thereafter through and including the
last month of the tenth (10th) Lease Year of the
Lease Term (such monthly installment being
hereinafter called "Minimum Monthly Rent");
(ii) The amount by which six percent (6%) of Gross Sales
(hereinafter defined) during each Lease Year or
Partial Lease Year exceeds the Minimum Monthly Rent
for such period (hereinafter called "Percentage
Rent").
When Store Floor Area is determined in accordance
with Section 2.1, the Minimum Annual Rent and Minimum
Monthly Rent shall be deemed automatically increased
or decreased based upon the Store Floor Area as thus
determined, and any overpayments or underpayments of
Minimum Monthly Rent to landlord shall be adjusted
accordingly.
Section 4.2. Miscellaneous Rent Provisions.
Any rent or other amounts to be paid by Tenant which are not paid when
due shall bear interest as of the first day of the month on which any sum is due
and owing at the maximum rate of interest permitted in the State of Minnesota,
or if there is no such maximum, at a rate equal to two percent (2%) over the
prime rate announced by Citibank, N.A. If the Commencement Date is other than
the first day of a month, Tenant shall pay on the Commencement Date a prorated
partial Minimum Monthly Rent for the period prior to the first day of the next
calendar month, and thereafter Minimum Monthly Rent payments shall be made not
later than the first day of each calendar month. For the purposes of this Lease,
a "Major Tenant" is herein defined as a single tenant occupying at least 40,000
contiguous square feet of floor area.
Section 4.3. Percentage Rent.
Tenant shall (i) not later than the fifteenth (15th) day after the
close of each calendar month, deliver to Landlord a written statement certified
under oath by Tenant or an officer of Tenant, showing Gross Sales made in such
calendar month' and (ii) not later than 60 days after the end of each Lease Year
or Partial Lease Year, deliver to Landlord a statement of Gross Sales for such
Lease Year or Partial Lease Year the correctness of which is certified to by an
independent certified public accountant. If Tenant fails to prepare and deliver
any statement of Gross Sales required hereunder, within the time or times
specified above, Landlord may elect to treat Tenant's failure as a breach of
this Lease, entitling Landlord to pursue the rights and remedies set forth in
Article XVIII herein or, in the alternative, Landlord may elect to make an audit
of all original books and records of Tenant as required to be preserved by
Tenant under this Section and which normally would be examined in performing an
audit of Tenant's Gross Sales and prepare the statement or statements which
Tenant has failed to prepare and deliver. The statement or statements shall be
prepared by Landlord or its agents and shall be conclusive and binding on
Tenant. Tenant shall pay all expenses of such audit and of the preparation of
any such statements and any and all such sums shown by such audit to be due as
Percentage Rent.
On or before the fifteenth (15th) day of each May, August, November and
February, Tenant shall pay Landlord the amount by which six percent (6%) of
Gross Sales of Tenant during the three (3) months (or less in a Partial Lease
Year) ending on the last day of the month preceding such payment date exceeds
the total Minimum Monthly Rent Tenant was obligated to pay for such period.
Within thirty (30) days after the later of (i) the due date for Tenant's annual
report of Gross Sales, or (ii) the date of Landlord's receipt of such annual
report, if Tenant has paid Landlord for such Lease Year or Partial Lease Year
Percentage Rent greater than Tenant is obligated to pay for such period,
Landlord shall refund such excess, and if Tenant has paid less than the
Percentage Rent required to be paid for such period, Tenant shall pay Landlord
such difference.
Tenant will preserve for a least three (3) years at Tenant's notice
address all original books and records disclosing information pertaining to
Gross Sales and such other information respecting Gross Sales as Landlord
required, including, but not limited to, cash register tapes, sales slips, sales
checks, gross income and sales tax returns, bank deposit records, sales journals
and other supporting data. Landlord and its agents shall have the right during
business hours to examine and audit such books and records preserved by Tenant.
If such examination or audit discloses a liability for Percentage Rent 3% or
more in excess of the Percentage Rent paid by Tenant for any period or if
Tenant's Gross Sales cannot be verified due to the insufficiency or inadequacy
of Tenant's records, Tenant shall promptly pay Landlord the cost of said audit.
Tenant shall, in any event, pay to Landlord the amount of any deficiency in
rents which is disclosed by such audit plus interest at two percent (2%) over
the prime rate announced by Citibank, N.A. as of the first day of the month on
which any sum was due and owing.
Section 4.4. Gross Sales Defined.
As used herein, Gross Sales means the sale prices of all goods, wares
and merchandise sold and the charges for all services performed by Tenant or any
other person or entity in, at, or from the Premises for cash, credit or
otherwise, without reserve or deduction for uncollected amounts, including but
not limited to sales and services (i) where the orders originate in, at or from
the Premises, regardless from whence delivery or performance is made, (ii)
pursuant to mail, telephone, telegraph or otherwise received or filled at the
Premises, (iii) resulting from transactions originating in, at or from the
Premises, and deposits not refunded to customers. Excluded from Gross Sales
shall be: (i) exchanges of merchandise between Tenant's stores made only for the
convenient operation of Tenant's business and not to consummate a sale made in,
at or from the Premises, (ii) returns to manufacturers, (iii) refunds to
customers (but only to the extent included in Gross Sales), (iv) sales of
fixtures, machinery and equipment after use in Tenant's business in the
Premises, (v) sales, excise or similar tax imposed by governmental authority and
collected from customers and paid out by Tenant. No other taxes shall be
deducted from Gross Sales.
Section 4.5. Real Estate Taxes.
A. Definition. Landlord shall pay or cause to be paid all Real Estate Taxes (as
hereinafter defined) assessed or imposed upon the Center and the Total Tract
which become due or payable during the Lease Term. As used in this Section 4.5
the term Real Estate Taxes shall mean and include all real estate taxes, public
and governmental charges and assessments, including all extraordinary or special
assessments, or assessments against any of Landlord's personal property now or
hereafter located in the Center, all costs, expenses and attorneys' fees
incurred by Landlord in contesting or negotiating with public authorities
(Landlord having the sole authority to conduct such a contest or enter into such
negotiations) as to any of the same and all sewer and other taxes and charges,
but shall not include taxes on Tenant's business in the Premises, machinery,
equipment, inventory or other personal property or assets of Tenant, Tenant
agreeing to pay, before delinquency, all taxes upon or attributable to such
excluded items without apportionment.
B. Tenant's Share. Tenant shall pay to Landlord, as Additional Rent, its
proportionate share of all Real Estate Taxes upon the Center and the Total Tract
which become due or payable during the Lease Term, such proportionate share to
be prorated for periods at the beginning and end of the Lease Term which do not
constitute full calendar months or years. Landlord shall endeavor to have the
Retail Space and Hotel Space separately assessed. If this cannot be accomplished
then Landlord, in its sole discretion, shall allocate Real Estate Taxes among
the Retail Space and Hotel Space based on its determination of the assessed
value of each such Space. This determination shall control except in case of
manifest error. Real Estate Taxes allocated by Landlord to the Retail Space are
referred to herein as "Retail Space Real Estate Taxes". Tenant's proportionate
share of any such Retail Space Real Estate Taxes shall be that portion of such
Retail Space Real Estate Taxes which bears the same ratio to the total Retail
Space Real Estate Taxes as the Store Floor Area bears to the Rentable Floor Area
rented or occupied in the Retail Space (hereinafter called "Retail Rentable
Floor Area") as of the Commencement Date or the first day of the calendar year
in which such taxes are due or payable. The floor area of (i) a Major Tenant,
(ii) any tenant in a free standing Premises who is obligated to pay real estate
taxes specifically upon specific improvements or specific parcel of land, and
(iii) Common Areas, as hereinafter defined, shall not be included in the Retail
Rentable Floor Area, and any contributions to Real Estate Taxes received by
Landlord from such tenants shall be deducted from Retail Space Real Estate Taxes
prior to the calculation of Tenant's proportionate share.
C. Payment by Tenant. Tenant's proportionate share of Retail Space Real Estate
Taxes shall be paid in monthly installments commencing with the Commencement
Date, in amounts initially estimated by Landlord, one(1) such installment being
due on the first day of each full or partial month of each full or partial
calendar year during the Lease Term. Such monthly installments shall increase or
decrease upon notice from Landlord given after the actual or anticipated amounts
of Real Estate Taxes due or payable in a particular calendar year are
determined. Following the close of each full or partial calendar year during the
Lease Term, the actual amount of Retail Space Real Estate Taxes due or payable
shall be computed by Landlord and any excess paid by Tenant during such calendar
year aver the actual amount Tenant is obligated to pay hereunder shall be
credited to Tenant, and within thirty (30) days after written notice from
Landlord any deficiency owed shall be paid in full by Tenant. Tenant
acknowledges and stipulates that Landlord has made no representation or
agreement of any kind as to the total dollar mount of such real estate taxes,
actual or estimated, or Tenant's dollar share thereof.
D. Other Taxes. Tenant's proportionate share of any governmental tax or charge
(other than income tax) levied, assessed, or imposed on account of the payment
by Tenant or receipt by Landlord, or based in whole or in part upon, the rents
in this Lease reserved or upon the Center or the value thereof shall be paid by
Tenant.
E. Larger Parcel. If the land under the Center is a part of a larger parcel of
land for assessment purposes (the "Larger Parcel"), the taxes and assessments
allocable to the land in the Center for the purpose of determining Real Estate
Taxes under this Section shall be deemed a fractional portion of the taxes and
assessments levied against the Larger Parcel, the numerator of which is the
acreage in the Center and the denominator of which is the acreage in the Larger
Parcel.
Section 4.6. Sprinkler System.
Landlord has installed and will maintain a sprinkler system in the
Premises and Tenant shall pay to Landlord as additional rent twenty-five cents
(25(cent)) per square foot of Store Floor Area per Lease Year, prorated for
Partial Lease Years, in equal monthly installments in advance on the first day
of each full calendar month during the Lease Term.
Section 4.7. Additional Rent.
All amounts required or provided to be paid by Tenant under this Lease
other than Minimum Annual Rent and Percentage Rent shall be deemed additional
rent and Minimum Annual Rent, Percentage Rent and additional rent shall in all
events be deemed rent.
Section 4.8. Landlord's Expenses.
If Landlord pays any monies or incurs any expense to correct a breach
of this Lease by Tenant or to do anything in this Lease required to be done by
Tenant, or incurs any expense (including, but not limited to, attorneys' fees
and court costs), as a result of Tenant's failure to perform any of Tenant's
obligations under this Lease, all amounts so paid or incurred shall, on notice
to Tenant, be considered additional rent payable in full by Tenant with the
first Minimum Monthly Rent installment thereafter becoming due and payable, and
may be collected as by law provided in the case of rent.
ARTICLE V
PARKING AND COMMON AREAS AND FACILITIES
Section 5.1. Common Areas.
All parking areas, access roads and facilities furnished, made
available or maintained by Landlord in or near the Center, including employee
parking areas, truck ways, driveways, loading docks and areas, delivery areas,
multi-story parking facilities, package pickup stations, elevators, escalators,
pedestrian sidewalks, malls, including the Enclosed Mall (as indicated for
identification purposes on Exhibit "B"), courts and ramps, landscaped areas,
retaining walls, stairways, bus stops, first-aid and comfort stations, lighting
facilities, sanitary systems, utility lines, water filtration and treatment
facilities and other areas and improvements provided by Landlord for the general
use in common of tenants and their customers and department stores in the Center
(all herein called "Common Areas") shall at all times by subject to the
exclusive control and management of Landlord, and Landlord shall have the right,
from time to time, to establish, modify and enforce reasonable rules and
regulations with respect to all Common Areas. Tenant agrees to comply with all
rules and regulations set forth in Exhibit "D" attached hereto and all
reasonable amendments thereto.
Landlord shall have the right from time to time to: change or modify
and add to or subtract from the sizes, locations, shapes and arrangements of
parking areas (provided, however, in no event shall Landlord reduce the number
of parking spaces in the Center to less than the number that is required by
applicable building code requirements), entrances, exits, parking aisle
alignments and other Common Areas; restrict parking by Tenant's employees to
designated areas; construct surface, sub-surface or elevated parking areas and
facilities; establish and from time to time change the level or grade of parking
surfaces; enforce parking charges (by meters or otherwise); add to or subtract
from the buildings in the Center; and do and perform such other acts in and to
said Common Areas as Landlord in its sole discretion, reasonably applied, deems
advisable for the use thereof by tenants and their customers.
Section 5.2. Use of Common Areas.
All parking areas, access roads and facilities furnished, made
available or maintained by Landlord in or near the Center, including employee
parking areas, truck ways, driveways, loading docks and areas, delivery areas,
multi-story parking facilities, package pickup stations, elevators, pedestrian
sidewalks, malls, including the Enclosed Mall (as indicated for identification
purposes on Exhibit "B"), courts and ramps, landscaped areas, retaining walls,
stairways, bus stops, first-aid and comfort stations, lighting facilities,
sanitary systems, utility lines, water filtration and treatment facilities and
other areas and improvements provided by Landlord for the general use in common
of tenants and their customers and department stores in the Center (all herein
called "Common Areas") shall at all times be subject to the exclusive control
and management of Landlord, and Landlord shall have the right, from time to
time, to establish, modify and enforce reasonable rules and regulations with
respect to all Common Areas. Tenant agrees to comply with all rules and
regulations set forth in Exhibit "D" attached hereto and all reasonable
amendments thereto.
Landlords shall have the right from time to time to: change or modify
and add to or subtract from the sizes, locations, shapes and arrangements of
parking areas (provided, however, in no event shall Landlord reduce the number
of parking spaces in the Center to less than the number that is required by
applicable building code requirements), entrances, exits, parking aisle
alignments and other Common Areas; restrict parking by Tenant's employees to
designated areas; construct surface, sub-surface or elevated parking areas and
facilities; establish and from time to time change the level or grade of parking
surfaces; enforce parking charges (by meters or otherwise); add to or subtract
from the buildings in the Center; and do and perform such other acts in and to
said Common Areas as Landlord in its sole discretion, reasonably applied, deems
advisable for the use thereof by tenants and their customers.
Section 5.2. Use of Common Areas.
Tenant and its business invitees, employees and customers shall have
the nonexclusive right, in common with Landlord and all others to whom Landlord
has granted or may hereafter grant rights, to use the Common Areas subject to
such reasonable regulations as Landlord may from time to time impose and the
rights of Landlord set forth above. Tenant shall pay Landlord, upon demand,
$10.00 for each day on which a car of Tenant, a concessionaire, employee or
agent of Tenant is parked outside any area designated by Landlord for employee
parking. Tenant authorizes Landlord to cause any such car to be towed from the
Center and Tenant shall reimburse Landlord for the cost thereof upon demand, and
otherwise indemnify and hold Landlord harmless with respect thereto. Tenant
shall abide by all rules and regulations and cause its concessionaires,
officers, employees, agents, customers and invitees to abide thereby. Landlord
may at any time close temporarily any Common Areas to make repairs or changes,
prevent the acquisition of public rights therein, discourage non customer
parking, or for other reasonable purposes. Tenant shall furnish Landlord license
numbers and description of cars used by Tenant and its concessionaires, officers
and employees. Tenant shall not interfere with Landlord's or other tenants'
rights to use any part of the Common Areas.
ARTICLE VI
COST AND MAINTENANCE OF COMMON AREAS
Section 6.1. Expense of Operating and Maintaining
the Common Facilities
Landlord will operate, manage, maintain and repair or cause to be
operated, managed, maintained or repaired, the Common Areas of the Center to the
extent the same is not done by any Major Tenant. "Landlord's Common Area Costs"
shall mean all costs of operating and maintaining the Common Areas in a manner
deemed by Landlord appropriate for the best interests of tenants and other
occupants in the Center. Included among the costs and expenses which constitute
Landlord's Common Area Costs, but not limited thereto, shall be, at the option
of Landlord, all costs and expenses of protecting, operating, managing
(including attorneys' fees and other professional fees), repairing, repaying,
lighting, cleaning, painting, striping, insuring (including but not limited to
fire and extended coverage insurance on Common Areas, insurance protecting
Landlord against liability for personal injury, death and property damage and
workers' compensation insurance), removing of snow, ice and debris, police
protection, security and security patrol, fire protection, regulating traffic,
inspecting, repairing and maintaining of machinery and equipment used in the
operation of the Common Areas, including heating, ventilating and air
conditioning machinery and equipment, depreciation of machinery and equipment,
providing heating, ventilating and air conditioning for the interior Common
Areas initially determined and thereafter adjusted in the manner described in
Section 7.2 herein, cost and expense of inspecting, maintaining, repairing and
replacing storm and sanitary drainage systems, sprinkler and other fire
protection systems, electrical, gas, water, telephone and irrigation systems,
cost and expense of maintaining and repairing the Enclosed Mall and the exterior
of the buildings in the Center, including, but not limited to floors, roofs,
skylights, escalators, elevators, walls, stairs and signs, cost and expense of
installing maintaining and repairing burglar or fire alarm systems on the Retail
Space, if installed, cost and expense of landscaping and shrubbery, expenses of
utilities, and administrative and overhead costs equal to fifteen percent (15%)
of all of the foregoing and all other of Landlord's Common Area Costs.
Section 6.2. Tenant to Bear Pro Rata Share of Expenses.
Tenant will pay Landlord, in addition to all other amounts in this
Lease provided, such portion of Landlord's Common Area Costs for each calendar
year during the Lease Term which bears the same ratio to the total of Landlord's
Common Area Costs as the Store Floor Area at the commencement of such calendar
year bears to all Rentable Floor Area rented or occupied by tenants in the
Retail Space. The floor area of (i) a Major Tenant, (ii) any tenant in a
freestanding Premises who is obligated to maintain specific areas or a specific
parcel of land, and (iii) Common Areas shall not included in Rentable Floor
Area, and any contributions to Landlord's Common Area Costs received by Landlord
from such tenants shall be deducted from Landlord's Common Area Costs prior to
the calculation of Tenant's proportionate share.
Tenant's share of Landlord's Common Area Costs shall be paid in monthly
installments in amounts estimated from time to time by Landlord, one (1) such
installment being due on the first day of each month of each calendar year.
After the end of each calendar year the total Landlord's Common Area Costs for
such year (and at the end of the Lease Term, the total Landlord's Common Area
Costs for the period since the end of the immediately next preceding calendar
year) shall be determined by Landlord and Tenant's share paid for such period
shall immediately, upon such determination, be adjusted by credit of any excess
or payment of any deficiency.
Notwithstanding anything herein in this Section 6.2 which may be to the
contrary, commencing on the Commencement Date and continuing thereafter through
and including the end of the first (1st) full calendar year of the Lease Term,
Tenant's annual share of Landlord's Common Area Costs shall be equal to Five
Dollars and no/100 ($5.00) per square foot of Store Floor Area in the Premises,
which amount shall be pro-rated accordingly for any partial calendar year at the
beginning of the Lease Term. Thereafter, for each full or partial calendar year
after the first (1st) full calendar year of the Lease Term, Tenant's pro rata
share of Landlord's Common Area Costs shall in no event exceed in the aggregate
the product obtained by multiplying Tenant's pro rata share of Landlord's Common
Area Costs payable during the immediately preceding calendar year by 105%.
ARTICLE VII
UTILITIES AND SERVICES
Section 7.1. Utilities.
Tenant shall not install any equipment which can exceed the capacity of
any utility facilities serving the Center and if any equipment installed by
Tenant required additional utility facilities, the same shall be installed at
Tenant's expense in compliance with all code requirements and plans and
specifications which must be approved in writing by Landlord. Tenant shall be
solely responsible for and promptly pay all charges for use or consumption of
sewer, gas, electricity, water and all other utility services. Landlord may
make electrical service available to the Premises as provided in Exhibit "C",
and so long as Landlord continues to provide such electrical service Tenant
agrees to purchase the same from Landlord and pay Landlord for the electrical
service (based upon Landlord's determination from time to time of Tenant's
consumption of electricity), as additional rent, on the first day of each month
in advance (and prorated for partial months), commencing on the Commencement
Date at the same cost as would be charged to Tenant from time to time by the
utility company which otherwise would furnish such services to the Premises if
it provided such services and metered the same directly to the Premises, but in
no event at a cost which is less than the cost Landlord must pay in providing
such electrical service. Landlord may supply water and other utilities to the
Premises, and so long as Landlord continues to provide water or such other
utilities Tenant shall pay Landlord for same at the same cost as would be
charged to Tenant by the utility company which otherwise would furnish such
service to the Premises if it provided such service and metered the same
directly to the Premises, but in no event at a cost which is less than the cost
Landlord must pay in providing such service, and in no event less than the
minimum monthly charge which would have been charged by the utility company in
providing such service. Subject to the applicable rules and regulations of the
Minnesota Public Service Commission, Landlord may provide a shared tenant
telecommunications service to the Premises and so long as Landlord continues to
provide such telecommunications service Tenant agrees to purchase the same from
Landlord and pay Landlord for the telecommunications service at the same costs
as would be charged to Tenant by the utility company which otherwise would
furnish such service to the Premises if it provided such service directly to the
Premises, but in no event at a cost which is less than the cost Landlord must
pay in providing such telecommunications service.
Landlord may make additional services, including but not limited to,
pest control, cleaning, and security, available to the Premises and, in such
event, Tenant shall utilize such services, at Tenant's expense.
Tenant shall operate its heating and air conditioning so that the
temperature in the Premises will be the same as that in the adjoining mall, and
set Tenant's thermostat at the same temperature as that thermostat in the mall
which is nearest the Premises. Tenant shall be responsible for the installation,
maintenance, repair and replacement of air conditioning, heating and ventilation
systems within and specifically for the Premises, including all components such
as air handling units, air distribution systems, motors, controls, grilles,
thermostats, filters and all other components. Tenant shall operate ventilation
so that the relative air pressure in the Premises will be the same as or less
than that in the adjoining mall as required by the Landlord.
Section 7.2. Air Conditioning of Premises.
Landlord will provide and maintain a central plant and a system of
chilled media to the Premises installed at a point determined by Landlord.
Tenant agrees to purchase the chilled media services from Landlord and pay
Landlord annually therefor as additional rent, in equal monthly installments, in
advance on the first day of each month the current Adjusted HVAC Plant Charge
(which shall consist of the Minimum Charge of $1.86 per square foot of Store
Floor Area per year, increased in the manner hereinafter provided).
The Adjusted HVAC Plant Charge shall be recalculated from time to time
on dates selected by the Landlord (but no less often than annually, each time
the Landlord's utility costs are changed, and/or each time field verification
indicates that Tenant's use of the system has changed.)
The current Adjusted HVAC Plant Charge shall be calculated by
multiplying the Minimum Charge by a series of adjusting multipliers as follows:
Adjusted HVAC Plant Charge = Minimum Charge x M1xM2xM3xM4
(a) M1 = Capacity Multiplier
The capacity multiplier shall be the greater of 1 or the
multiplier arrived at by applying the following formula:
M1 = 1 + [0.6[BTUH/33 -1]]
The factor "BTUH" shall mean BTUH/per Sq. Ft. of Store Floor Area and
shall be the calculated peak design total heat gain as determined in accordance
with ASHRAE procedures. Tenant's outdoor air or exhaust that is derived via the
Landlord's system, and total heat gain from the roof, lights, fan motors and
other items, shall be included in calculating the BTUH/per Sq. Ft. factor of
this section for purposes of determining the capacity multiplier. The peak total
heat gain shall be calculated using the same sun time hour as is used by
Landlord in determining the peak building heat gain. (Typically 1600 hours).
(b) M2 = Hours Multiplier
The hours multiplier shall be the greater of 1 or the multiplier
arrived at by applying the following formula:
M2 = 1 + [Extra Hours/Regular Hours]
The term "Extra Hours" shall mean Tenant's hours use of system during
times other than the originally established regular weekly hours of the Center.
The term "Regular Hours" shall mean originally established regular weekly hours
of the Center.
(c) M3 = Utility Cost Multiplier
The utility cost multiplier shall be the multiplier arrived at by
applying the following formula:
M3 = 1 + [0.5[Current Cost/Original Cost -1]]
The term "Current Cost" shall mean "Utility Cost" based on rates in
effect on the selected date. The term "original Cost" shall mean Utility Cost
based on rates in effect on February 1, 1991. The term "Utility Cost" shall mean
the cost to Landlord of the utilities necessary for furnishing chilled media to
the Premises, including all charges made to Landlord by the public utilities
furnishing the same and based on the original consumption and demands estimated
for the Central HVAC System and building.
(d) M4 = Maintenance Cost Multiplier
The Maintenance Cost Multiplier shall be the greater of 1 or the
multiplier arrived at by applying the following formula:
M4 = 1 + [0.1[Current CPI/Original CPI - 1]]
The term "Current CPI" shall mean the "Consumer Price Index" on the
selected date. The term "Original CPI" shall mean the "Consumer Price Index" for
February 1, 1991. The term "Consumer Price Index" as used in this Section 7.2
and in Section 14.1 herein shall mean the Consumer Price Index All Items for All
Urban Consumers (CPI-U, 1982-4 = 100)" published by the Bureau of Labor
Statistics of the U.S. Department of Labor. If the publication of the Consumer
Price Index of the U.S. Burear of Labor Statistics is discontinued, comparable
statistics on the purchasing power of the consumer dollar published by a
responsible financial periodical selected by Landlord shall be used for making
such computations.
Section 7.3. Enforcement and Termination
In the event of any default by Tenant, Landlord reserves the right, in
addition to all other rights and remedies available to Landlord, to cut off and
discontinue, without notice or liability to Tenant, any utilities or services
provided in accordance with the provisions of this Article VII. Landlord shall
not be liable to Tenant in damages or otherwise if any utilities or services,
whether or not furnished by Landlord hereunder, are interrupted or terminated
because of repairs, installation or improvements, or any cause beyond Landlord's
reasonable control, nor shall any such termination relieve Tenant of any of its
obligations under this Lease. Provided, however, if Landlord-supplied utilities
and/or services are unavailable to the Premises for more than three (3)
consecutive days as a result of the negligent act or omission of Landlord, its
employees, agents or contractors, and as a result of such interruption in
service Tenant is unable to reasonably operate its business in the Premises,
then rent shall abate on a per diem basis until such service is repaired or
restored and Tenant is again able to operate its business in the Premises.
Tenant shall operate the Premises in such a way as shall not waste fuel, energy
or natural resources. If Landlord provides any utilities or services under
Section 7.1 or 7.2 of this Lease to tenants, Landlord may, upon written
direction, require Tenant to obtain such services from a third party provider
without liability for the same. No discontinuance of any utilities or services
shall constitute a constructive eviction.
ARTICLE VIII
CONDUCT OF BUSINESS BY TENANT
Section 8.1. Use of Premises.
The Premises shall be occupied and used by Tenant solely for the
purpose of conducting therein the business of the retail sale of those items
specifically set forth on Exhibit "F-1" (Tenant's Menu) which exhibit is
attached hereto and fully incorporated herein by reference, and Tenant shall not
use or permit or suffer the use of the Premises for any other business or
purpose. Tenant shall be allowed to modify its menu from time to time provided
the general theme of Tenant's business as of the Commencement Date remains
substantially unchanged and provided further any items being added to Tenant's
Menu are offered at a majority of other restaurants owned or operated by Tenant
and doing business under Tenant's permitted trade name. Tenant is hereby
specifically prohibited from selling, offering for sale, giving away or
displaying Mall of America merchandise or any other merchandise or items that
bear the Mall of America name, trademark, service mark or logo thereon without
Landlord's prior written consent thereto which consent may be given or withheld
by Landlord in Landlord's sole and absolute discretion and Landlord's failure to
give such consent shall not be deemed unreasonable.
Section 8.2. Prompt Occupancy and Use.
Tenant will occupy the Premises upon the Commencement Date and
thereafter continuously operate and conduct in 100% of the Premises during each
hour of the entire Lease Term when Tenant is required under this Lease to be
open for business the business permitted under Section 8.1 hereof, with a full
staff and full stock of merchandise, using only such minor portions of the
Premises for storage and office purposes as are reasonably required. The parties
agree that: Landlord has relied upon Tenant's occupancy and operation in
accordance with the foregoing provisions; because of the difficulty or
impossibility of determining Landlord's damages which would result from Tenant's
violation of such provisions, including but not limited to damages from loss of
Percentage Rent from Tenant and other tenants, and diminished saleability,
mortgageability and economic value, Landlord shall be entitled to liquidated
damages it if elects to pursue such remedy; therefore for any day that Tenant
does not fully comply with the provisions of this Section 8.2 the Minimum Annual
Rent, prorated on a daily basis, shall be increased by 50%, such increased sum
representing the loss in Percentage Rent from Tenant and other tenants which the
parties agree Landlord will suffer by Tenant's noncompliance. In addition to all
other remedies, Landlord shall have the right to obtain specific performance by
Tenant upon Tenant's failure to comply with the provisions of this Section 8.2.
Section 8.3. Conduct of Business.
Such business shall be conducted (a) under the name THE ALAMO GRILL
unless another name is previously approved in writing by the Landlord; and (b)
in such manner as shall assure the transaction of a maximum volume of business
in and at the Premises. Tenant's store shall be and remain open from 10:00 A.M.
until 9:00 P.M. each day of the week except Sunday, on Sunday from 12:00 P.M.
until 6:00 P.M., and in addition, during all days, nights and hours (including
Sundays as permitted by law) that any Major jTenant in the Center (as referred
to in Section 4.2 above) is open for business, and such other days, nights and
hours as Landlord shall require or approve in writing. Tenant shall be allowed
to maintain such later hours of operation as are permitted by law. However,
should Landlord incur any extra cost or expense to provide security for the
Common Areasin order accommodate Tenant's extended hours of operation, Tenant
shall reimburse Landlord for such extra cost or expense as additional rent
hereunder, for such security required beyond the hours of 11:00 P.M. Monday
through Thursday, 1:00 A.M. on Saturday morning and Sunday morning and 9:00 P.M.
on Sunday night.
Section 8.4. Operation by Tenant.
Tenant covenants and agrees that it will: not place or maintain any
merchandise, vending machines or other articles in any vestibule or entry of the
Premises or outside the Premises; store garbage, trash, rubbish and other refuse
in rat-proof and insect-proof containers inside the Premises, and remove the
same frequently and regularly and, if directed by Landlord, by such means and
methods and at such times and intervals as are designated by Landlord, all at
Tenant's expense; not permit any sound system audible, or objectionable
advertising medium visible, outside the Premises; keep all mechanical equipment
free of vibration and noise and in good working order and condition; not commit
or permit waste or a nuisance upon the Premises, not permit or cause odors to
emanate or be dispelled from the Premises; not solicit business in the Common
Areas nor distribute advertising matter to, in or upon any Common Areas; not
permit the loading or unloading or the parking or standing of delivery vehicles
outside any area designated therefor, nor permit any use of vehicles which will
interfere with the use of any Common Areas; comply with all laws,
recommendations, ordinances, rules and regulations of governmental, public,
private and other authorities and agencies, including those with authority over
insurance rates, with respect to the use or occupancy of the Premises, and
including but not limited to the Williams-Steiger Occupational Safety and Health
Act; light the show windows of the Premises and all signs each night of the year
for not less than one (1) hour after the Premises is permitted to be closed; not
permit any noxious, toxic or corrosive fuel or gas, dust, direct or fly ash on
the Premises; not place a load on any floor in the Center which exceeds the
floor load per square foot which such floor was designed to carry.
Section 8.5. Storage.
Tenant shall store in the Premises only merchandise which Tenant
intends to sell at, in or from the Premises, within a reasonable time after
receipt thereof.
Section 8.6. Painting, Decorating, Displays, Alterations.
Tenant will not paint, decorate or change the architectural treatment
of any part of the exterior of the Premises nor any part of the interior of the
Premises visible from the exterior nor make any structural alterations,
additions or changes in the Premises without Landlord's written approval
thereto, and will promptly remove any paint, decoration, alteration, addition or
changes applied or installed without Landlord's approval and restore the
Premises to an acceptable condition or take such other action with respect
thereto as Landlord directs. Notwithstanding the foregoing, Tenant shall be
allowed to make interior, non-storefront, non-structural, non-mechanical and
non-utility alterations, changes, additions or decorations to the Premises
without Landlord's prior consent thereto provided the cost of the same does not
exceed $10,000.00 in any twelve (12) consecutive calendar month period.
Tenant will install and maintain at all times, subject to the other
provisions of this Section 8.6, merchandise displays in any show windows on the
Premises; the arrangement, style, color and general appearance thereof and of
displays in the interior of the Premises which are visible from the exterior,
including, but not limited to, window displays, advertising matter, signs,
merchandise and store fixtures, shall be maintained in keeping with the
character and standards of the Center.
Section 8.7. Other Operations.
If during the Lease Term Tenant directly or indirectly operates,
manages or has any interest whatsoever in any other store or business operated
for a purpose of business similar to or in competition with all or part of the
business permitted under Section 8.1 hereof within a radius of five (5) miles of
the Center, it will injure Landlord's ability and right to receive Percentage
Rent (such ability and right being a major consideration for this Lease and the
construction of the Center). Accordingly, if Tenant operates, manages or has
such interest in any such store or business within such radius, 100% of all
sales made from any such other store or business shall be included in the
computation of Gross Sales for the purpose of determining Percentage Rent under
this Lease as though said Gross Sales had actually been made at, in or from the
Premises. Landlord shall have all rights of inspection of books and records with
respect to such stores or businesses as it has with respect to the Premises; and
Tenant shall furnish to Landlord such reports with respect to Gross Sales from
such other store or business as it is herein required to furnish with respect to
the Premises.
Section 8.8. Emissions and Hazardous Materials.
Tenant shall not, without the prior written consent of Landlord, cause
or permit, knowingly or unknowingly, any Hazardous Material (hereinafter
defined) to be brought or remain upon, kept, used, discharged, leaded, or
emitted in or about, or treated at the Premises or the Center. As used in this
Lease, "Hazardous Material(s)" shall mean any hazardous, toxic or radioactive
substance, material, matter or waste which is or becomes regulated by any
federal state or local law, ordinance, order, rule, regulation, code or any
other governmental restriction or requirement, and shall include asbestos,
petroleum products and the terms "Hazardous Substance" and "Hazardous Waste" as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), as amended, 42 U.S.C. ss. 9601 et seq., and the Resource
Conservation and Recovery Act ("RCRA"), as amended, 42 U.S.C. ss. 6901 et seq.
To obtain Landlord's consent, Tenant shall prepare an "Environmental Audit" for
Landlord's review. Such Environmental Audit shall list" (1) the name(s) of each
Hazardous Material and a Material Safety Data Sheet 9MSDS0 as required by the
Occupational Safety and Health Act; (2) the volume proposed to be used, stored
and/or treated at the Premises (monthly); (3) the purpose of such Hazardous
Material; (4) the proposed on-premises storage locations(s); (5) the name(s) of
the proposed off-premises disposal entity; and (6) an emergency preparedness
plan in the event of a release. Additionally, the Environmental Audit shall
include copies of all required federal, state, and local permits concerning or
related to the proposed use, storage, or treatment of any Hazardous Material(s)
at the Premises. Tenant shall submit a new Environmental Audit whenever it
proposes to use, store, or treat a new Hazardous Material at the Premises or
when the volume of existing Hazardous Materials to be used, stored, or treated
at the Premises expands by ten percent (10%) during any thirty (30) day period.
If Landlord in its reasonable judgment finds the Environmental Audit acceptable,
then Landlord shall deliver to Tenant Landlord's written consent.
Notwithstanding such consent, Landlord may revoke its consent upon: (1) Tenant's
failure to remain in full compliance with applicable environmental permits
and/or any other requirements under any federal, state, or local law, ordinance,
order, rule, regulation, code or any other governmental restriction or
requirement (including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), as amended, 42 U.S.C. ss.
9601 et seq. and the Resource Conservation and Recovery Act ("RCRA"), as
amended, 42 U.S.C. ss. 6901 et seq.) related to environmental safety, human
health, or employee safety' (2) the Tenant's business operations pose or
potentially pose a human health risk to other Tenants; or (3) the Tenant expands
its use, storage, or treatment of any Hazardous Material(s) in a manner
inconsistent with the safe operation of a shopping center. Should Landlord
consent in writing to Tenant bringing, using, storing or treating any Hazardous
Material(s) in or upon the Premises or the Center, Tenant shall strictly obey
and adhere to any and all federal, state or local laws, ordinances, orders,
rules, regulations, codes or any other governmental restrictions or requirements
(including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as amended 42 U.S.C. ss. 9601 et
seq., and the Resource Conservation and Recovery Act ("RCRA"), as amended, 42
U.S.C. ss. et seq.) which in any way regulate, govern or impact Tenant's
possession, use, storage, treatment or disposal of said Hazardous Material(s).
In addition, Tenant represents and warrants to Landlord that (1) Tenant shall
apply for and remain in compliance with any and all federal, state or local
permits in regard to Hazardous Materials; (2) Tenant shall report to any and all
applicable governmental authorities any release of reportable quantities of any
Hazardous Material(s) as required by any and all federal, state or local laws,
ordinances, orders, rules, regulations, codes or any other governmental
restrictions or requirements; (3) Tenant, within five (5) days of receipt, shall
send to Landlord a copy of any notice, order, inspection report, or other
document issued by any governmental authority relevant to the Tenant's
compliance status with environmental or health and safety laws; and, (4) Tenant
shall remove from the Premises all Hazardous Materials at the termination of
this Lease.
In addition to, and in no way limiting, Tenant's duties and obligations
as set forth in Section 11.6 of this Lease, should Tenant breach any of its
duties and obligations as set forth in this Section 8.8 of this Lease, or if the
presence of any Hazardous Material(s) on the Premises results in contamination
of the Premises, the Center, any land other than the Center, the atmosphere, or
any water or waterway (including groundwater), or if contamination of the
Premises or of the Center by any Hazardous Material(s) otherwise occurs for
which Tenant is otherwise legally liable to Landlord for damages resulting
therefrom, Tenant shall indemnify, save harmless and, at Landlord's option and
with attorneys approved in writing by Landlord, defend Landlord, and its
contractors, agents, employees, partners, officers, directors, and mortgagees,
if any, from any and all claims, demands, damages, expenses, fees, costs, fines,
penalties, suits, proceedings, actions, causes of action, and losses of any and
every kind and nature (including, without limitation, diminution in value of the
Premises or the Center, damages arising from any adverse impact on marketing
space in the Center, and sums paid in settlement of claims and for attorney's
fees, consultant fees and expert fees, which may arise during or after the Lease
Term or any extension thereof as a result of such contamination), This includes,
without limitation, costs and expenses, incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of the presence of Hazardous Material(s) on or
about the Premises or the Center, or because of the presence of Hazardous
Material(s) anywhere else which came or otherwise emanated from Tenant or the
Premises. Without limiting the foregoing, if the presence of any Hazardous
Material(s) on or about the Premises or the Center caused or permitted by Tenant
results in any contamination of the Premises or the Center, Tenant shall, at its
sole expense, promptly take all actions and expense as are necessary to return
the Premises and/or the Center to the condition existing prior to the
introduction of any such Hazardous Material(s) to the Premises or the Center;
provided, however, that Landlord's approval of such actions shall first be
obtained in writing.
Section 8.9. Sales and Dignified Use.
No public or private auction or any fire, "going out of business,"
bankruptcy or similar sales or auctions shall be conducted in or from the
Premises and the Premises shall not be used except in a dignified and ethical
manner consistent with the general high standards of merchandising in the Center
and not in a disreputable or immoral manner or in violation of national, state
or local laws.
ARTICLE IX
MAINTENANCE OF LEASED PREMISES
Section 9.1. Maintenance by Landlord.
Landlord shall keep or cause to be kept the foundation, roof and
structural portions of the walls of the Premises in good order, repair and
condition except for damage thereto due to the acts or omissions of Tenant, its
agents, employees or invitees. Landlord shall commence required repairs as soon
as reasonably practicable after receiving written notice from Tenant thereof.
This Section 9.1 shall not apply in case of damage or destruction by fire or
other casualty or condemnation or eminent domain, in which events the
obligations of Landlord shall be controlled by Article XVI and XVII. Except as
provided in this Section 9.1 Landlord shall not be obligated to make repairs,
replacements or improvements of any kind upon the Premises, or to any equipment,
merchandise, stock in trade, facilities or fixtures therein, all of which shall
be Tenant's responsibility, but Tenant shall give Landlord prompt written notice
of any accidenct, casualty, damage or other similar occurrence in or to the
Premises or the Common Areas of which Tenant has knowledge.
Section 9.2. Maintenance by Tenant.
Tenant shall at all times keep the Premises (including all entrances
and vestibules) and all partitions, window and window frams and mouldings,
glass, store fronts, doors, door openers, fixtures, equipment and appurtenances
thereof (including lighting, heating, electrical, plumbing, ventilating and air
conditioning fixtures and systems and other mechanical equipment adn
appurtenances) and all part of the Premises, and parts of Tenant's Work not on
the Premises, not required herein to be maintained by Landlord, in good order,
condition and repair and clean, orderly, sanitary and safe, damage by
unavoidable casualty excepted, (including but not limited to doing such things
as are necessary to cause the Premises to comply with applicable laws,
ordinances, rules, regulations and orders of governmental and public bodies and
agencies, such as but limited to the Williams-Steiger Occupational Safety and
Health Act). If replacement of equipment, fixtures and appurtenances thereto is
necessary, Tenance shall replace the same with new or completely reconditioned
equipment, fixtures and appurtenances, and repair all damages done in or by such
replacement. If Tenant fails to perform its obligations hereunder, Landlord
without notice may, but shall not be obligated to, perform Tenant's obligations
or perform work resulting from Tenant's acts, actions or omissions and add the
cost of the same to the next installment of Minimum Monthly Rent due hereunder
to be repaid in full.
Section 9.3. Surrender of Premises.
At the expiration of earlier termination of the Lease Term, Tenant
shall surrender the Premises in the same condition as they were required to be
in on the Required Completion Date, reasonable wear and tear and damage by
unavoidable casualty excepted, and deliver all keys for, and all combinations on
locks, safes and vaults in, the Premises to Landlord at Landlord's notice
address as specified in Section 24.7 or, at Landlord's option, to the office of
the Center's general manager.
ARTICLE X
SIGNS, AWNINGS, CANOPIES, FIXTURES, ALTERATIONS
Section 10.1. Fixtures.
All fixtures installed by Tenant shall be new or refurbished to a good
quality and condition and meeting applicable code requirements.
the Premises so that the furnishings, furniture, flooring, wall fixtures and
coverings, equipment and other appurtenances in the Premises shall be in keeping
with the image of the Center.
Section 10.2. Removal and Restoration by Tenant.
All alterations, changes and additions and all improvements, including
leasehold improvements, made by Tenant, or made by Landlord on Tenant's behalf,
whether part of Tenant's Work or not and whether or not paid for wholly or in
part by Landlord, shall remain Tenant's property for the Lease Term. Any
alterations, changes, additions and improvements shall immediately upon the
termination of this Lease become Landlord's property, be considered part of the
Premises, and not be removed at or prior to the end of the Lease Term without
Landlord's written consent unless Landlord requests Tenant to remove same. If
Tenant fails to remove any shelving, decorations, equipment, trade fixtures or
personal property from the Premises prior to the end of the Lease Term, they
shall become Landlord's property and Tenant shall repair or pay for the repair
of any damage done to the Premises resulting from removing same but not for
painting or redecorating the Premises.
Section 10.3. Tenant's Liens.
A. Tenant shall not suffer any mechanics' or materialmen's lien to be
filed against the Premises or the Center by reason of work, labor, services or
materials performed or furnished to Tenant or anyone holding any part of the
Premises under Tenant. If any such lien shall at any time be filed as aforesaid,
Tenant may contest the same in good faith, but, notwithstanding such contest,
Tenant shall, within 15 days after the filing thereof, cause such lien to be
released of record by payment, bond, order of a court of competent jurisdiction,
or otherwise in a manner satisfactory to Landlord and its mortgagee. In the
event of Tenant's failure to release of record any such lien within the
aforesaid period, Landlord, any affiliate of Landlord or any party who delivered
a guaranty with respect to any financing of the Center or the Premises may
remove said lien by paying the full amount thereof or by bonding or in any other
manner Landlord, any affiliate of Landlord or any party who delivered a guaranty
with respect to any financing of the Center or the Premises deems appropriate,
without investigating the validity thereof, and irrespective of the fact that
Tenant may contest the propriety or the amount thereof, and Tenant, upon demand,
shall pay Landlord the amount so paid out by Landlord in connection with the
discharge of said lien, together with interest thereon at the rate set forth in
Section 4.2 herein and reasonable expenses incurred in connection therewith,
including reasonable attorneys' fees, which amounts are due and payable in full
to Landlord as additional rent on the first day of the next following month.
Nothing contained in this Lease shall be construed as a consent on the part of
Landlord to subject Landlord's estate in the Premises to any lien or liability
under the lien laws of the State of Minnesota. Tenant's obligation to observe
and perform any of the provisions of this Section 10.3 shall survive the
expiration of the Lease Term or the earlier termination of this Lease.
B. Tenant shall not create or suffer to be created a security interest
or other lien against any improvements, additions or other construction made by
Tenant in or to the Premises or against any equipment or fixtures installed by
Tenant therein (other than Tenant's property), and should any security interest
be created in breach of the foregoing, Landlord, any affiliate of Landlord or
any party who delivered a guaranty with respect to any financing of the Center
or the Premises shall be entitled to discharge the same by exercising the rights
and remedies afforded it under paragraph A of this Section.
Section 10.4. Signs, Awnings and Canopies.
Tenant will not place or permit on any exterior door or window or any
wall of the Premises of otherwise, any sign, awning, canopy, advertising matter,
decoration, lettering or other thing of any kind which does not comply with the
Sign Criteria set forth in Exhibit "E" attached hereto.
ARTICLE XI
INSURANCE
Section 11.1. By Landlord.
Landlord shall carry public liability insurance on those portions of
the Common Areas included in the Total Tract providing coverage of not less than
$5,000,000.00 against liability for bodily injury including death and personal
injury for any one (1) occurrence and $1,000,000.00 property damage insurance,
or combined single limit insurance in the amount of $5,000,000.00
Landlord shall also carry insurance for fire, extended coverage,
vandalism, malicious mischief and other endorsements deemed advisable by
Landlord, insuring all improvements on the Total Tract, including the Premises
and all leasehold improvements thereon and appurtenances thereto (excluding
Tenant's merchandise, trade fixtures, furnishings, equipment, personal property
and excluding plate glass) for the full insurable value thereof, with such
deductibles as Landlord deems advisable, such insurance coverage to include
improvements provided by Tenant as set forth in Exhibit "C" and "C-2" as
Tenant's Work (excluding wall covering, floor covering, carpeting and drapes)
and Landlord's Work as defined in Exhibit "C"; Tenant agrees to pay Landlord, as
additional rent, 25(cent) per year for each square foot of Store Floor Area
payable in equal installments on the first day of every calendar month during
the Lease Term, as Tenant's share of the cost of the premiums for such insurance
described above in this sentence. At the end of the first Partial Lease Year and
each Lease Year thereafter, the amount thus to be paid by Tenant shall be
adjusted upward or downward (but shall never be less than the above amount) in
direct ratio to the increase or decrease in the cost of the premiums paid by
Landlord for such insurance coverage.
Section 11.21 By Tenant.
Tenant agrees to carry public liability insurance on the Premises
during the Lease Term, covering the Tenant and naming the Landlord, Melvin Simon
& Associates, Inc. and M.S. Management Associates, Inc. as an additional named
insured with terms and companies satisfactory to Landlord, for limits of not
less than $5,000,000.00 for bodily injury, including death, and personal injury
for any one (1) occurrence, $1,000,000.00 property damage insurance or a
combined single limit of $5,000,000.00 Tenant's insurance will include
contractual liability coverage recognizing this Lease, products and completed
operations liability and providing that Landlord and Tenant shall be given a
minimum of sixty (60) days written notice by the insurance company prior to
cancellation, termination or change in such insurance. Tenant also agrees to
carry insurance against fire and such other risks as are from time to time
required by Landlord, including, but not limited to, a standard "all-Risk"
policy of property insurance protecting against all risk of physical loss or
damage, including without limitation, sprinkler leakage coverage and plate glass
insurance covering all plate glass in the Premises (including store fronts), in
amounts not less than the actual replacement cost, covering all of Tenant's
merchandise, trade fixtures, furnishing, wall covering, floor covering,
carpeting, drapes, equipment and all items of personal property of Tenant
located on or within the Premises. Tenant shall provide Landlord with
certificates or, at Landlord's request, copies of the policies, evidencing that
such insurance is in full force and effect and stating the terms thereof. The
minimum limits of the comprehensive general liability policy of insurance shall
in no way limit or diminish Tenant's liability under Section 11.6 hereof and
shall be subject to increase at any time, and from time to time. Within ten (10)
days after demand therefor by Landlord, Tenant shall furnish Landlord with
evidence that it has complied with such demand.
Section 11.3 Mutual Waiver of Subrogation Rights.
Landlord and Tenant and all parties claiming under them mutually
release and discharge each other from all claims and liabilities arising from or
caused by any casualty or hazard covered or required hereunder to be covered in
whole or in part by insurance on the Premises or in connection with property on
or activities conducted on the Premises, and waive any right of subrogation
which might otherwise exist in or accrue to any person on account thereof and
evidence such waiver by endorsement to the required insurance policies, provided
that such release shall not operate in any case where the effect is to
invalidate or increase the cost of such insurance coverage (provided, that in
the case of increased cost, the other party shall have the right, within thirty
(30) days following written notice to pay such increased cost, thereby keeping
such release and waiver in full force and effect).
Section 11.4. Waiver.
Except for the gross negligence or intentional acts or omissions of
Landlord, its agents or employees, Landlord, its agents and employees, shall not
be liable for, and Tenant waives all claims for, damage, including but not
limited to consequential damages, to person, property or otherwise, sustained by
Tenant or any person claiming through Tenant resulting from any accident or
occurrence in or upon any part of the Center including, but not limited to,
claims for damage resulting from: (a) any equipment or appurtenances becoming
out of repair; (b) Landlord's failure to keep any part of the Center in repair;
(c) injury done or caused by wind, water, or other natural element; (d) any
defect in or failure of plumbing, heating or air conditioning equipment,
electric wiring or installation thereof, gas, water, and steam pipes, stairs,
porches, railings or walks; (e) broken glass; (f) the backing up of any sewer
pipe or downspout; (g) the bursting, leaking or running of any tank, tub,
washstand, water closet, waste pipe, drain or any other pipe or tank in, upon or
about the Premises; (h) the escape of steam or hot water; (i) water, snow or ice
upon the Premises; (j) the falling of any fixture, plaster or stucco; (k) damage
to or loss by theft or otherwise of property of Tenant or others; (l) acts or
omissions of persons in the Premises, other tenants in the Center, occupants of
nearby properties, or any other persons; and (m) any act or omission of owners
of adjacent or contiguous property. All property of Tenant kept in the Premises
shall be so kept at Tenant's risk only and Tenant shall save Landlord harmless
from claims arising out of damage to the same, including subrogation claims by
Tenant's insurance carrier.
Section 11.5. Insurance - Tenant's Operation.
Tenant will not do or suffer to be done anything which will contravene
Landlord's insurance policies or prevent Landlord from procuring such policies
in amounts and companies selected by Landlord. If anything done, omitted to be
done or suffered to be done by Tenant in, upon or about the Premises shall cause
the rates of any insurance effected or carried by Landlord on the Premises or
other property to be increased beyond the regular rate from time to time
applicable to the Premises for use for the purpose permitted under this Lease,
or such other property for the use or uses made thereof, Tenant will pay the
amount of such increase promptly upon Landlord's demand and Landlord shall have
the right to correct any such condition at Tenant's expense. In the event that
this Lease so permits and Tenant engages in the preparation of food or packaged
foods or engages in the use, sale or storage of inflammable or combustible
material, Tenant shall install chemical extinguishing devices (such as ansul)
approved by Underwriters Laboratories and Factory Mutual Insurance Company and
the installation thereof must be approved by the appropriate local authority.
Tenant shall keep such devices under service as required by such organizations.
If gas is used in the Premises, Tenant shall install gas cut-off devices (manual
and automatic).
Section 11.6. Indemnification.
Tenant shall save harmless, indemnify, and at Landlord's option, defend
Landlord, its agents and employees, and mortgagee, if any, from and against any
and all liability, liens, claims, demands, damages, expenses, fees (including
attorneys' fees), costs, fines, penalties, suits, proceedings, actions and
causes of action of any and every kind and nature arising or growing out of or
in any way connected with Tenant's use, occupancy, management or control of the
Premises or Tenant's operations, conduct or activities in the Center.
Section 11.7. Dramshop Insurance.
The Tenant agrees that it will purchase and maintain so-called
"dramshop" insurance insuring both Landlord and Tenant with adequate limits in
the event the State of Minnesota now has, or hereafter enacts a statue which
provides that a judgment obtained against a retailer, or any other person or
entity, who dispenses alcoholic beverages to unauthorized persons, as defined by
said statute, shall be a lien against the real estate from which said alcoholic
beverages were illegally dispensed (sometimes referred to as a dram shop act).
ARTICLE XII
OFFSET STATEMENT, ATTORNMENT, SUBORDINATION
Section 12.1. Offset Statement.
Within ten (10) days after Landlord's written request Tenant shall
deliver, executed in recordable form a declaration to any person designed by
Landlord (a) ratifying this Lease; (b) stating the commencement and termination
dates; and (c) certifying (i) that this Lease is in full force and effect and
has not been assigned, modified, supplemented or amended (except by such
writings as shall be stated), (ii) that all conditions under this Lease to be
performed by Landlord have been satisfied (stating exceptions, if any), (iii)
that no defenses or offsets against the enforcement of this Lease by Landlord
exist (or stating those claimed): (iv) as to advance rent, if any, paid by
Tenant, (v) the date to which rent has been paid, (vi) as to the amount of
security deposited with Landlord, and such other information as Landlord
reasonably required Persons receiving such statements shall be entitled to rely
upon them.
Section 12.2. Attornment.
Tenant shall, in the event of a sale or assignment of Landlord's
interest in the Premises or the building in which the Premises is located or
this Lease or the Total Tract, or if the Premises or such building comes into
the hands of a mortgagee, ground lessor or any other person whether because of a
mortgage foreclosure, exercise of a power of sale under a mortgage, termination
of the ground lease, or otherwise, attorn to the purchaser or such mortgagee or
other person and recognize the same as Landlord hereunder. Provided Landlord is
not in material default of this Lease beyond any applicable grace period, Tenant
shall execute, at Landlord's request, any attornment agreement required by an
mortgagee, ground lessor or other such person to be executed, containing such
provisions as such mortgagee, ground lessor or other person requires.
Section 12.3. Subordination.
A. Mortgage. This Lease shall be secondary, junior and inferior at all
times to the lien of any mortgage and to the lien of any deed of trust or other
method of financing or refinancing (hereinafter collectively referred to as
"mortgage") now or hereafter existing against all or a part of the Total Tract,
and to all renewals, modifications, replacements, consolidations and extensions
thereof, and Tenant shall execute and deliver all documents requested by any
mortgagee or security holder to effect such subordination. If Tenant fails to
execute and deliver any such document requested by a mortgagee or security
holder to effect such subordination, Landlord is hereby authorized to execute
such documents and take such other steps as are necessary to effect such
subordination on behalf of Tenant as Tenant's duly authorized irrevocable agent
and attorney-in-fact.
B. Construction, Operation and Reciprocal Easement Agreements. This
Lease is subject and subordinate to one (1) or more construction, operation,
reciprocal easement or similar agreements (hereinafter referred to as "Operating
Agreements") entered into or hereafter to be entered into between Landlord and
other owners or lessees of real estate (including but not limited to owners and
operators of department stores) within or near the Center (which Operating
Agreements have been or will be recorded in the official records of the County
wherein the Center is located) and to any and all easements and easement
agreements which may be or have been entered into with or granted to any persons
heretofore or hereafter, whether such persons are located within or upon the
Center or not, and Tenant shall execute such instruments as Landlord requests to
evidence such subordination.
Section 12.4. Failure to Execute Instruments.
Tenant's failure to execute instruments or certificates provided for in
this Article XII within fifteen (15) days after the mailing by Landlord of a
written request shall be a default under this Lease.
ARTICLE XIII
ASSIGNMENT, SUBLETTING AND CONCESSIONS
Section 13.1. Consent Required.
Tenant shall not sell, assign, mortgage, pledge or in any manner
transfer this Lease or any interest therein, nor sublet all or any part of the
Premises, nor license concessions nor lease departments therein, without
Landlord's prior written consent in each instance. Consent by Landlord to any
assignment or subletting shall not waive the necessity for consent to any
subsequent assignment or subletting. This prohibition shall include a
prohibition against any subletting or assignment by operation of law. I this
Lease is assigned or the Premises or any part sublet or occupied by anybody
other than Tenant, Landlord may collect rent from the assignee, subtenant or
occupant and apply the same to the rent herein reserved, but no such assignment,
subletting, occupancy or collection of rent shall be deemed a waiver of any
restrictive covenant contained in this Section 13.1 or the acceptance of the
assignee, subtenant or occupant as tenant, or a release of Tenant from the
performance by Tenant of any covenants on the part of Tenant herein contained.
Any assignment (a) as to which Landlord has consented; or (b) which is required
by reason of a final order of a court of competent jurisdiction; or (c) which is
made by reason of and in accordance with the provisions of any law or statute,
including, without limitation, the laws governing bankruptcy, insolvency or
receivership shall be subject to all terms and conditions of this Lease, and
shall not be effective or deemed valid unless, at the time of such assignment:
1. Each assignee or sublessee shall agree, in a written agreement
satisfactory to Landlord, to assume and abide by all of the
perms and provisions of this Lease, including those which
govern the permitted uses of the Premises described in Article
VIII herein; and
2. Each assignee or sublessee has submitted a current f financial
statement, audited by a certified public accountant, showing a
net worth and working capital in amounts determined by
Landlord to be sufficient to assure the future performance by
such assignee or sublessee of Tenant's obligations hereunder;
and
3. Each assignee or sublessee has submitted, in writing, evidence
satisfactory to Landlord of substantial retailing experience
in shopping centers of comparable size to the Center and in
the sale of merchandise and services permitted under Article
VIII of this Lease; and
4. The business reputation of each assignee or sublessee shall
meet or exceed generally acceptable commercial standards; and
5. The use of the Premises by each assignee or sublessee shall
not violate, or create any potential violation of applicable
laws, codes or ordinances, nor violate any other agreements
affecting the Premises, Landlord or other tenants in the
Center.
6. Tenant shall pay Landlord the sum of One Thousand Dollars
($1,000.00) as reimbursement to Landlord for administrative
and legal expenses incurred by Landlord in connection with any
such assignment or subletting.
In the event of any assignment of subletting as provided above, there
shall be paid to Landlord, in addition to the Minimum Annual Rent and other
charges due Landlord pursuant to this Lease, such additional consideration as
shall be attributable to the right of use and occupancy of the Premises,
whenever the same is receivable by Tenant, together with, as additional rent,
the excess, if any, of the rent and other charges payable by the assignee or
sublessee over the Minimum Annual Rent and other charges payable under the Lease
to Landlord by Tenant pursuant to this Lease. Such additional rent shall be paid
to Landlord concurrently with the payments of Minimum Annual Rent required under
this Lease, and Tenant shall remain primarily liable for such payments.
Notwithstanding any assignment or subletting, Tenant shall remain fully liable
on this Lease and for the performance of all terms, covenants and provisions of
this Lease.
Anything contained in the foregoing provisions of this Section to the
contrary notwithstanding, neither Tenant nor any other person having an interest
in the possession, use, occupancy or utilization of the Premises shall enter
into any lease, sublease, license, concession or other agreement for use,
occupancy or utilization of space in the Premises which provides for rental or
other payment for such use, occupancy or utilization based, in whole or part, on
the net income or profits derived by any person from the Premises leased, used,
occupied, or utilized (other than an amount based on a fixed percentage or
percentages of receipts or sales), and any such purported lease, sublease,
license, concession or other agreement shall be absolutely void and ineffective
as a conveyance of any right or interest in the possessions, use, occupancy or
utilization of any part of the Premises.
Section 13.2. Change in Ownership.
If Tenant or the guarantor of this Lease, if any, is a corporation the
stock of which is not traded on any national securities exchange (as defined in
the Securities Exchange Act of 1934, as amended), then the national securities
exchange (as defined in the Securities Exchange Act of 1934, as amended), then
the following shall constitute an assignment of this Lease for all purposes of
this Article XIII: (i) the merger, consolidation or reorganization of such
corporation' and/or (ii) the sale, issuance, or transfer, cumulatively or in one
transaction, of any voting stock, by Tenant or the guarantor of this Lease or
the stockholders of record of either as of the date of this Lease, which results
in a change in the voting control of Tenant or the guarantor of this Lease,
except any such transfer by inheritance or testamentary disposition. If Tenant
or the guarantor of this Lease, if any, is a joint venture, partnership or other
association, then for all purposes of this Article XIII, the sale, issuance or
transfer, cumulatively or in one transaction, of either voting control or of a
twenty-five percent (25%) interest, or the termination of any joint venture,
partnership or other association, shall constitute an assignment, except any
such transfer by inheritance or testamentary disposition.
ARTICLE XIV
MARKETING FUND AND ADVERTISING
Section 14.1. Provisions Relating to Marketing Fund.
Landlord may, at its option, create and maintain a marketing fund
(hereinafter referred to as the "Fund"), the primary purpose of which is to
provide sums necessary for professional marketing services which benefit the
tenants in the Center. In the event Landlord does create and maintain the Fund,
Tenant agree to contribute to such Fund, beginning upon the later to occur of
(a) the Commencement Date, or (B) the date the Fund is created, the greater of
(a) $1.00 per square foot of Store Floor Area, or (b) $1,500.00 during each
calendary year of the Lease Term (hereinafter referred to as "Fixed
Contribution"), payable in equal monthly installments, in advance, on the first
day of each and every month (pro rated for partial months). Landlord shall
contribute an amount equal to 1/4 of the monies collected from all tenants in
the Center during each calendar year, which sum may be paid in whole or in part
by Landlord, at its option, by providing the services of a Marketing Director or
other person or persons under Landlord's exclusive control to help organize and
implement marketing programs using assets from the Fund. Any overpayment or
underpayment of such amount by Landlord shall be adjusted annually. The Fixed
Contribution shall be increased annually commencing with the creation of the
Fund based upon the increase of the Consumer Price Index (as defined in Section
7.2 above) during the preceding twelve (12) month period. In addition, within no
more than thirty (30) days after Landlord bills Tenant for the same, Tenant
shall pay an initial contribution to the Fund in a sum equal to the greater of
(a) $2.00 per square foot of Store Floor Area, or (b) $2,000.00. In addition to
its other obligations contained herein, Tenant agrees that it shall participate
and cooperate in all special sales and promotions sponsored by the Fund. The
failure of any other tenant or any department store to contribute to the Fund
shall not affect Tenant's obligations hereunder.
Section 14.2. Advertising. INTENTIONALLY DELETED.
Section 14.3. Media Fund
Landlord may, at its option, create and maintain a Media Fund, the
exclusive purpose of which shall be to pay all costs and expenses associated
with the purchase of electronic, print or outdoor advertising for the promotion
of the Center. In the event Landlord does create and maintain the Media Fund,
Tenant agrees to contribute to such Fund, beginning upon the later to occur of
(a) the Commencement Date or (b) the date the Media Fund is created, a sum equal
to the greater of (a) $1.00 per square foot of Store Floor Area or (b)
$1,000.00, during each calendar year of the Lease Term (hereinafter referred to
as "Media Fund Charge"), payable in equal monthly installments, in advance, on
the first day of each and every month (pro rated for partial months).
The Media Fund Charge shall be adjusted annually by a percentage equal
to the percentage increase or decrease in the electronic, print and outdoor
advertising rates of the media used for advertising and promotions in the
preceding calendar year in the media market in which the Center is located,
provided, however that said charge shall not be less than originally set forth
herein. Within ninety (90) days following the close of each calendar year,
Landlord shall furnish Tenant a statement for the preceding calendar year
showing the amounts expended by Landlord for media advertising. Tenant hereby
authorizes Landlord to use Tenant's trade name and a brief description of
Tenant's business in connection with any media advertising purchased pursuant to
this Section.
ARTICLE XV
SECURITY DEPOSIT
Section 15.1 Amount of Deposit. INTENTIONALLY DELETED.
ARTICLE XVI
DAMAGE AND DESTRUCTION
If the Premises are hereafter damaged or destroyed or rendered
partially untenantable for their accustomed use by fire or other casualty
insured under the coverage which Landlord is obligated to carry pursuant to
Section 11.1 hereof, Landlord shall promptly repair the same to substantially
the condition which they were in immediately prior to the happening of such
casualty (excluding stock in trade, fixtures, furniture, furnishings, carpeting,
floor covering, wall covering, drapes, ceiling and equipment), and from the date
of such casualty until the Premises are so repaired and restored, the Minimum
Monthly Rent payments payable hereunder shall abate in such proportion as the
part of said Premises thus destroyed or rendered untenantable bears to the total
Premises; provided, however, that Landlord shall not be obligated to repair and
restore if such casualty is not covered by the insurance which Landlord is
obligated to carry pursuant to Section 11.1 hereof or is caused directly or
indirectly by the negligence of Tenant, its agents, employees and invitees and
no portion of the Minimum Monthly Rent and other payments payable hereunder
shall abate, and provided, further, that Landlord shall not be obligated to
expend for any repair or restoration an amount mount in excess of the insurance
proceeds recovered by Landlord therefor, and provided, further, that if the
Premises be damaged, destroyed or rendered untenantable for their accustomed
uses by fire or other casualty to the extent of more than fifty percent (50%)
of the cost to replace the Premises during the last three (3) years of the Lease
Term, then Landlord or Tenant shall have the right to terminate this Lease
effective as of the date of such casualty by giving to the other party, within
sixty (60) days after the happening of such casualty, written notice of such
termination. If such notice be given, this Lease shall terminate and Landlord
shall promptly repay to Tenant any rent theretofore paid in advance which was
not earned at the date of such casualty. Any time that Landlord repairs or
restores the Premises after damage or destruction, then Tenant shall promptly
repair or replace its stock in trade, fixtures, furnishings, furniture,
carpeting, wall covering, floor covering, drapes, ceiling and equipment to the
same condition as they were in immediately prior to the casualty, and if Tenant
has closed its business, Tenant shall promptly reopen for business upon the
completion of such repairs.
Notwithstanding anything to the contrary set forth herein, in the event
all or any portion of the Center shall be damaged or destroyed by fire or other
cause (notwithstanding that the Premises may be unaffected thereby), to the
extent the cost of restoration thereof would exceed fifteen percent (15%) of the
amount it would have cost to replace the Center in its entirety at the time such
damage or destruction occurred, then Landlord may terminate this Lease by giving
Tenant thirty (30) days prior notice of Landlord's election to do so, which
notice shall be given, if at all, within ninety (90) days following the date of
such occurrence. In the event all or any portion of the Center shall be damaged
or destroyed by fire or other cause (notwithstanding that the Premises may be
unaffected thereby), to the extent that the cost of restoration thereof would
exceed thirty-five (35%) of the amount it would have cost to replace the Center
in its entirety at the time such damage or destruction occurred, then Tenant may
terminate this Lease by giving Landlord thirty (30) days prior written notice of
Tenant's election to do so, which notice shall be given, if at all, within
ninety (90) days following the date of such occurrence. In the event of the
termination of this Lease as aforesaid, this Lease shall cease thirty (30) days
after such notice is given, and the rent and other charges hereunder shall be
adjusted as of that date.
Notwithstanding anything here in this Article XVI which may be to the
contrary, in the event Landlord fails to commence its repair obligations to the
Premises within ninety (90) days of the date of such casualty and complete such
repairs promptly and diligently after commencing the same or if such casualty is
not covered, in whole or in part, by the insurance which Landlord is obligated
to carry and Landlord elects not to repair and restore the Premises as a result
of the lack of such insurance proceeds, then Tenant may terminate this Lease by
giving Landlord thirty (30) days prior written notice of Tenant's election to do
so, which notice shall be given, if at all, prior to the completion of
Landlord's repair and restoration work in the Premises. In the event of Tenant's
termination of this Lease as aforesaid, this Lease shall cease thirty (3) days
after such notice is given, and the rent and other charges hereunder shall be
adjusted as of the date of such casualty.
ARTICLE XVII
EMINENT DOMAIN
Section 17.1. Condemnation.
If ten percent (10%) or more of the Store Floor Area or fifteen percent
(15%) or more of the Center shall be acquired or condemned by right of eminent
domain for any public or quasi public use or purpose, or if an Operating
Agreement is terminated as a result of such an acquisition or condemnation, then
Landlord at its election may terminate this Lease by giving notice to Tenant of
its election, and in such event rentals shall be apportioned and adjusted as of
the date of termination. If twenty-five percent (25%) or more of the Store Floor
Area or thirty-five percent (35%) or more of the Center shall be acquired or
condemned by right of eminent domain for any public or quasi public use or
purpose, or if an Operating Agreement is terminated as a result of such an
acquisition or condemnation, then Tenant at its election may terminate this
Lease by giving notice to Landlord of its election, and in such event rentals
shall be apportioned and adjusted as of the date of termination. If the Lease
shall not be terminated as aforesaid, then it shall continue in full force and
effect, and Landlord shall within a reasonable time after possession is
physically taken (subject to delays due to shortage of labor, materials or
equipment, labor difficulties, breakdown of equipment, government restrictions,
fires, other casualties or other causes beyond the reasonable control of
Landlord) repair or rebuild what remains of the Premises for Tenant's occupancy;
and a just proportion of the Minimum Annual Rent shall be abated, according to
the nature and extent of the injury to the Premises until such repairs and
rebuilding are completed, and thereafter for the balance of the Lease Term.
Section 17.2. Damages.
Landlord reserves, and Tenant assigns to Landlord, all rights to
damages on account of any taking or condemnation or any act of any public or
quasi public authority for which damages are payable. Tenant shall execute such
instruments of assignment as Landlord requires, join with Landlord in any action
for the recovery of damages, if requested by Landlord, and turn over to Landlord
any damages recovered in any proceeding. If Tenant fails to execute instruments
required by Landlord, or undertake such other steps as requested, Landlord shall
be deemed the duly authorized irrevocable agent and attorney-in-fact of Tenant
to execute such instruments and undertake such steps on behalf of Tenant.
However, Landlord does not reserve any damages payable for trade fixtures
installed by Tenant at its own cost which are not part of the realty or for
moving expenses of interruption in Tenant's business provided such claim is made
against the condemning authority and not against the Landlord or Landlord's
mortgagee and provided further any award made to Landlord or Landlord's
mortgagee is not thereby diminished.
ARTICLE XVIII
DEFAULT BY TENANT
Section 18.1. Right to Re-Enter.
The following shall be considered for all purposes to be defaults under
and breaches of this Lease: (a) any failure of Tenant to pay any rent or other
amount when Due hereunder; (b) any failure by Tenant to perform or observe any
other of the terms, provisions, conditions and covenants of this Lease for more
then ten (10) days after written notice of such failure or such longer period of
time as may be reasonable required to cure or correct the same provided Tenant
has commenced to cure or correct such breach or default with such ten (10) day
period and is diligently pursuing such action to completion; (c) a determination
by Landlord that Tenant has submitted any false report required to be furnished
hereunder; (d) anything done by Tenant upon or in connection with the Premises
or the construction of any part thereof which directly or indirectly interferes
in any way with, or results in a work stoppage in connection with, construction
of any part of the Center or any other tenant's space and Tenant shall
immediately, upon oral or written direction from Landlord or Landlord's
authorized representative, take such action as Landlord shall specify in order
to promptly prevent, avoid or terminate such interference or work stoppage (or
the threat thereof) in connection with construction of any part of the Center or
any other tenant's space; (e) the bankruptcy or insolvency of Tenant or the
filing by or against Tenant of a petition in bankruptcy or for reorganization or
arrangement or for the appointment of a receiver or trustee of all or a portion
of Tenant's property, or Tenant's assignment for the benefit of credits; (f) if
Tenant abandons or vacates or does not do business in the Premises when required
to do so under this Lease, or (g) this Lease or Tenant's interest herein or in
the Premises of any improvements thereon or any property of Tenant are executed
upon or attached; or (h) the Premises come into the hands of any person other
than expressly permitted under this Lease (i) repetition or continuation of any
failure to pay rent or other sums due hereunder where such failure shall
continue or be repeated for two consecutive months or a total of four months in
any period of twelve consecutive months. In any such event, and without grace
period, demand or notice (the same being hereby waived by Tenant), Landlord, in
addition to all other rights or remedies it may have, shall have the right
thereupon or at any time thereafter to terminate this Lease by giving notice to
Tenant stating the date upon which such termination shall be effective, and
shall have the right, either before or after any such termination, to re-enter
and take possession of the Premises, remove all persons and property from the
Premises, store such property at Tenant's expense, and sell such property if
necessary to satisfy any deficiency in payments by Tenant as required hereunder,
all with notice and resort to legal process but without being deemed guilty of
trespass or constructive eviction or becoming liable for any loss or damage
occasioned thereby. Nothing herein shall be construed to require Landlord to
give any notice before exercising any of its rights and remedies provided for in
Section 3.4 of this Lease.
Section 18.2. Right to Relet.
If Landlord re-enters the Premises as above provided, or if it takes
possession pursuant to legal proceedings or otherwise, it may either terminate
this Lease or it may, from time to time, without terminating this Lease make
such alterations and repairs as it deems advisable to relet the Premises and
relet the Premises or any part thereof for such term or terms (which may extend
beyond the Lease Term) and at such rentals and upon such other terms and
conditions as Landlord in its sole discretion deems advisable;upon each such
reletting all rentals received by Landlord therefrom shall be applied, first, to
any indebtedness other than rent due hereunder from Tenant to Landlord; second,
to pay any costs and expenses of reletting, including without limitation,
brokers and attorneys' fees and costs of advertising, alteration and repairs;
third, to rent due hereunder, and the residue, if any, shall be held by Landlord
and applied in payment of future rent as it becomes due hereunder.
If rentals received from such reletting during any month are less than
that to be paid during that month by Tenant hereunder, Tenant shall immediately
pay any such deficiency to Landlord, No re-entry or taking possession of the
Premises by Landlord shall be construed as an election to terminate this Lease
unless a written notice of such termination is given by Landlord.
Notwithstanding any such reletting without termination, Landlord may at
any time thereafter terminate this Lease for any prior breach or default. If
Landlord terminates this Lease for any breach, or otherwise takes any action on
account of Tenant's breach or default hereunder, in addition to any other
remedies it may have, it may recover from Tenant all damages incurred by reason
of such breach or default, including attorneys' fees at the trial and appellate
levels, all costs of retaking the Premises and including the excess, if any, of
the total rent and charges reserved in this Lease for the remainder of the Lease
Term over the then reasonable rental value of the Premises for the remainder of
the Lease Term, all of which shall be immediately due and payable by Tenant to
Landlord, In determining the rent payable by Tenant hereunder subsequent to
default, the Minimum Annual Rent for each year of the unexpired portion of the
Lease Term shall equal the average Minimum Annual and Percentage Rents which
Tenant was obligated to pay from the commencement of the Lease Term to the time
of default, or during the preceding three (3) full calendar years, whichever
period is shorter.
Section 18.3. Counterclaim.
If Landlord commences any proceedings for non-payment of rent (Minimum
Annual Rent, Percentage Rent or additional rent), Tenant will not interpose any
counterclaim of any nature or description in such proceedings. This shall not,
however, be construed as a waiver of Tenant's right to assert such claims in a
separate action brought by Tenant. The covenants to pay rent and other amounts
hereunder are independent covenants and Tenant shall have no right to hold back,
offset or fail to pay any such amounts for default by Landlord or any other
reason whatsoever, it being understood and acknowledged by Tenant that Tenant's
only recourse is to seek an independent action against Landlord.
Section 18.4. Waiver of Rights of Redemption.
To the extent permitted by law, Tenant waives any and all rights of
redemption granted by or under any present or future laws if Tenant is evicted
or dispossessed for any cause, or if Landlord obtains possession of the Premises
due to Tenant's default hereunder or otherwise.
Section 18.5. Waiver of Trial by Jury.
To the extent permitted by applicable law, Tenant hereby waives trial
by jury in any summary action or proceedings brought by Landlord against Tenant
for the non-payment of rent.
Section 18.6. Bankruptcy.
A. Assumption of Lease. In the event Tenant shall become a Debtor under
Chapter 7 of the Bankruptcy Code ("Code") or a petition for reorganization or
adjustment of debts is filed concerning Tenant under Chapters 11 or 13 of the
Code, or a proceeding is filed under Chapter 7 and is transferred to Chapters 11
or 13, the Trustee or Tenant, as Debtor and as Debtor-In-Possession, may not
elect to assume this Lease unless, at the time of such assumption, the Trustee
or Tenant has:
1. Cured or provided Landlord "Adequate Assurance" (as defined below)
that:
(a) Within ten (10) days from the date of such assumption the
Trustee or Tenant will cure all monetary defaults under this
Lease and compensate Landlord for any actual pecuniary loss
resulting from any existing default, including without
limitation, Landlord's reasonable costs, expenses, accrued
interest as set forth in Section 4.2 of the Lease, and
attorneys' fees incurred as a result of the default;
(b) Within thirty (30) days from the date of such assumption the
Trustee or Tenant will cure all non- monetary defaults under
this Lease; and
(c) The assumption will be subject to all of the provisions of
this Lease.
2. For purposes of this Section 18.6, Landlord and Tenant acknowledge
that, in the context of a bankruptcy proceeding of Tenant, at a
minimum "Adequate Assurance" shall mean:
(a) The Trustee of Tenant has and will continue to have sufficient
unencumbered assets after the payment of all secured
obligations and administrative expenses to assure Landlord
that the Trustee or Tenant will have sufficient funds to
fulfill the obligations of Tenant under this Lease, and to
keep the Premises stocked with merchandise and properly
staffed with sufficient employees to conduct a fully-
operational, actively promoted business in the Premises; and
(b) The Bankruptcy Court shall have entered an Order segregating
sufficient cash payable to Landlord and/or the Trustee or
Tenant shall have granted a valid and perfected first lien and
security interest and/or mortgage in property of Trustee of
Tenant acceptable as to value and kind to Landlord, to secure
to Landlord the obligation of the Trustee or Tenant to cure
the monetary and/or non-monetary defaults under this Lease
within the time periods set forth above; and
(c) The Trustee or Tenant at the very least shall deposit a sum,
in addition to the Security Deposit, equal to one (1) month's
rent to be held by Landlord (without any allowance for
interest thereon) to secure Tenant's future performance under
the Lease.
B. Assignment of Lease. If the Trustee or Tenant has assumed the Lease
pursuant to the provisions of the Section 18.6 for the purpose of assigning
Tenant's interest hereunder to any other person or entity, such interest may be
assigned only after the Trustee, Tenant or the proposed assignee have complied
with all of the terms, covenants and conditions of Section 13.1 herein,
including, without limitation, those with respect to additional rent and the use
of the Premises only as permitted in Article VIII herein; Landlord and Tenant
acknowledging that such terms, covenants and conditions are commercially
reasonable in the context of a bankruptcy proceeding of Tenant. Any person or
entity to which this Lease is assigned pursuant to the provisions of the Code
shall be deemed without further act or deed to have assumed all of the
obligations arising under this Lease on and after the date of such assignment.
Any such assignee shall upon request execute and deliver to Landlord an
instrument confirming such assignment.
C. Adequate Protection. Upon the filing of a petition by or against
Tenant under the Code, Tenant, as Debtor and as Debtor-in-Possession, and any
Trustee who may be appointed agree to adequately protect Landlord as follows:
(1) To perform each and every obligation of Tenant under this Lease
until such time as this Lease is either rejected or assumed by
Order of the Bankruptcy Court; and
(2) To pay all monetary obligations required under this Lease,
including without limitation, the payment of Minimum Monthly Rent,
and such other additional rent charges payable hereunder which is c
considered reasonable compensation for the use and occupancy of the
Premises; and
(3) Provide Landlord a minimum 30 days prior written notice, unless a
shorter period is agreed to in writing by the parties, of any
proceeding relating to any assumption of this Lease or any intent
to abandon the Premises, which abandonment shall be deemed a
rejection of this Lease; and
(4) To perform to the benefit of Landlord otherwise required under the
Code.
The failure of Tenant to comply with the above shall result in an
automatic rejection of this Lease.
D. Accumulative Rights. The rights, remedies and liabilities of
Landlord and Tenant set forth in this Section 18.6 shall be in addition to those
which may now or hereafter be accorded, or imposed upon, Landlord and Tenant by
the Code.
ARTICLE XIX
DEFAULT BY LANDLORD
Section 19.1 Default Defined, Notice.
Landlord shall in no event be charged with default in any of its
obligations hereunder unless and until Landlord shall have failed to perform
such obligations within thirty (30) days (or such additional time as is
reasonably required to correct any such default) after written notice as set
forth in Section 24.7 to Landlord by Tenant, specifically describing such
failure.
Section 19.2. Notice to First Mortgagee.
If the holder of the first mortgage covering the Premises shall have
given written notice to Tenant of the address to which notices to such holder
are to be sent, Tenant shall give such holder written notice simultaneously with
any notice given to Landlord of any default of Landlord, and if Landlord fails
to cure any default asserted in said notice within the time provided above,
Tenant shall notify such holder in writing of the failure to cure, and said
holder shall have the right but not the obligation, within thirty (30) days
after receipt of such second notice, to cure such default before Tenant may take
any action by reason of such default.
ARTICLE XX
TENANT'S PROPERTY
Section 20.1. Taxes on Leasehold.
Tenant shall be responsible for and shall pay before delinquent all
municipal, county, federal or state taxes whether enacted now or in the future
coming due during or after the Lease Term against Tenant's interest in this
Lease or against personal property of any kind owned or placed in, upon or about
the Premises by Tenant.
Section 20.2. Assets of Tenant. INTENTIONALLY DELETED.
ARTICLE XXI
ACCESS BY LANDLORD
Section 21.1. Right of Entry.
Landlord, its agents and employees shall have the right to enter the
Premises from time to time at reasonable times to examine the same, show them to
prospective purchasers and other persons, and make such repairs, alterations,
improvements or additions as Landlord deems desirable without Tenant's consent,
which consent shall not be unreasonably withheld. Rent shall not abate while any
such repairs, alterations, improvements, or additions are being made. During the
last six (6) months of the Lease Term, Landlord may exhibit the Premises to
prospective tenants and maintain upon the Premises notices deemed advisable by
Landlord, In addition, during any apparent emergency, Landlord or its agents may
enter the Premises forcibly without liability therefore and without in any
manner affecting Tenant's obligations under this Lease. Nothing herein
contained, however, shall be deemed to impose upon Landlord any obligation,
responsibility or liability whatsoever, for any care, maintenance or repair
except as otherwise herein expressly provided.
ARTICLE XXII
HOLDING OVER, SUCCESSORS
Section 22.1. Holding Over.
If Tenant holds over or occupies the Premises beyond the Lease Term (it
being agreed there shall be no such holding over or occupancy without Landlord's
written consent), Tenant shall pay Landlord for each day of such holding over a
sum equal to the greater of (a) twice the Minimum Monthly Rent prorated for the
number of days of such holding over, or (b) Minimum Annual Rent plus Percentage
Rent prorated for the number of days of such holding over, plus, whichever of
(a) or (b) is applicable, a prorata portion of all other amounts which Tenant
would have been required to pay hereunder had this Lease been in effect. If
Tenant holds over with or without Landlord's written consent Tenant shall occupy
the Premises on a tenancy at sufferance but all other terms and provisions of
this Lease shall be applicable to such period.
Section 22.2. Successors.
All rights and liabilities herein given to or imposed upon the
respective parties hereto shall bind and inure to the several respective heirs,
successors, administrators, executors and assigns of the parties and if Tenant
is more than one (1) person, they shall be bound jointly and severally by this
Lease except that no rights shall inure to the benefit of any assignee or
subtenant of Tenant unless the assignment or sublease was approved by Landlord
in writing as provided in Section 13.1 hereof. Landlord, at any time and from
time to time, may make an assignment of its interest in this Lease and, in the
event of such assignment, Landlord and its successors and assigns (other than
the assignee of Landlord's interest in this Lease) shall be released from any
and all liability thereafter accruing hereunder.
ARTICLE XXIII
QUIET ENJOYMENT
Section 23.1. Landlord's Covenant.
If Tenant pays the rents and other amounts herein provided, observes
and performs all the covenants, terms and conditions hereof, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Lease Term without
interruption by Landlord or any person or persons claiming by, through or under
Landlord, subject, nevertheless, to the terms and conditions of this Lease.
ARTICLE XXIV
MISCELLANEOUS
Section 24.1. Waiver.
No waiver by Landlord or Tenant of any breach of any term, covenant or
condition hereof shall be deemed a waiver of the same or any subsequent breach
of the same or any other term, covenant or condition. The acceptance of rent by
Landlord shall not be deemed a waiver of any earlier breach by Tenant of any
term, covenant or condition hereof, regardless of Landlord's knowledge of such
breach when such rent is accepted. No covenant, term or condition of this Lease
shall be deemed waived by Landlord or Tenant unless waived in writing.
Section 24.2. Accord and Satisfaction.
Landlord is entitled to accept, receive and cash or deposit any payment
made by Tenant for any reason or purpose or in any amount whatsoever, and apply
the same at Landlord's option to any obligation of Tenant and the same shall not
constitute payment of any amount owed except that to which Landlord has applied
the same. No endorsement or statement on any check or letter of Tenant shall be
deemed an accord and satisfaction or otherwise recognized for any purpose
whatsoever. The acceptance of any such check or payment shall be without
prejudice to Landlord's right to recover any and all amounts owed by Tenant
hereunder and Landlord's right to pursue any other available remedy.
Section 24.3. Entire Agreement.
There are no representations, covenants, warranties, promises,
agreements, condition or undertakings, oral or written, between Landlord and
Tenant other than herein set forth. Except as herein otherwise provided, no
subsequent alteration, amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant unless in writing, signed by them and approved
by Landlord's mortgagee.
Section 24.4. No Partnership.
Landlord does not, in any way or for any purpose, become a partner,
employer, principal, master, agent or joint venture of or with Tenant.
Section 24.5. Force Majeure.
If either party hereto shall be delayed or hindered in or prevented
from the performance of any act required hereunder by reason of strikes,
lockouts, labor troubles, inability to procure material, failure of power,
restrictive governmental laws or regulations, riots, insurrection, war or other
reason of a like nature not the fault of the party delayed in performing work or
doing acts required under this Lease, the period for the performance of any such
act shall be extended for a period equivalent to the period of such delay.
Notwithstanding the foregoing, the provisions of this Section 24.5 shall at no
time operate to excuse Tenant from the obligation to open for business on the
Commencement Date, except in the event of an industry wide strike, nor any
obligations for payment of Minimum Annual Rent, Percentage Rent, additional rent
or any other payments required by the terms of this Lease when the same are due,
and all such amounts shall be paid when due.
Section 24.6. Submission of Lease.
Submission of this Lease to Tenant does not constitute an offer to
lease; this Lease shall become effective only upon execution and delivery
thereof by Landlord and Tenant. Upon execution of this Lease by Tenant, Landlord
is granted an irrevocable option for sixty (60) days to execute this Lease
within said period and thereafter return a fully executed copy to Tenant. The
effective date of this Lease shall be the date filled in on Page 1 hereof by
Landlord, which shall be the date of execution by the last of the parties to
execute the Lease.
Section 24.7. Notices.
All notices from Tenant to Landlord required or permitted by any
provision of this agreement shall be directed to Landlord as follows:
MALL OF AMERICA COMPANY
c/o M.S. Management Associates Inc.
One Merchants Plaza
P.O. Box 7033
Indianapolis, Indiana 46207
Prior to the Commencement Date such notices shall only be effective if
given to Landlord at the address shown above and to Landlord at the address
shown below:
MALL OF AMERICA COMPANY
c/o M.S. Management Associates Inc.
Construction Department
One Merchants Plaza
P.O. Box 7033
Indianapolis, Indiana 46207
All notices from Landlord to Tenant required or permitted hereunder
shall be directed as follows, namely:
The Alamo Grill, Inc.
10971 Four Seasons Place
Suite 218
Crown Point, Indiana 46307
All notices to be given hereunder by either party shall be written and
sent by registered or certified mail, return receipt requested, postage pre-paid
or by an express mail delivery service, addressed to the party intended to be
notified at the address set forth above. Either party may, at any time, or from
time to time, notify the other in writing of a substitute address for that above
set forth, and thereafter notices shall be directed to such substitute address.
Notice given as aforesaid shall be sufficient service thereof and shall be
deemed given as of the date received, as evidenced by the return receipt of the
registered or certified mail or the express mail delivery receipt, as the case
may be. A duplicate copy of all notices from Tenant shall be sent to any
mortgagee as provided for in Section 19.2.
Section 24.8. Captions and Section Numbers.
This Lease shall be construed without reference to titles of Article
and Sections, which are inserted only for convenience of reference.
Section 24.9. Number and Gender.
The use herein of a singular term shall include the plural and use of
the masculine, feminine or neuter genders shall include all others.
Section 24.10. Objection to Statements. INTENTIONALLY DELETED
Section 24.11. Representation by Corporate Tenant.
If Tenant is or will be a corporation, the persons executing this Lease
on behalf of Tenant hereby covenant and warrant that Tenant is a duly qualified
corporation authorized to do business in the State of Minnesota, that all
franchise and corporate taxes have been paid to date and all future forms,
reports, fees and other documents necessary to comply with applicable laws will
be filed when due, and the person signing this Lease on behalf of the
corporation is an officer of Tenant, and is duly authorized to sign and execute
this Lease.
Section 24.12. Joint and Several Liability.
If Tenant is a partnership or other business organization the members
of which are subject to personal liability, the liability of each such member
shall be deemed to be joint and several.
Section 24.13. Limitation of Liability.
Anything to the contrary herein contained, notwithstanding, there shall
be absolutely no personal liability on persons, firms or entities who constitute
Landlord with respect to any of the terms, covenants, conditions and provision
of this Lease, and Tenant shall, subject to the rights of any first mortgagee,
look solely to the interest of Landlord, its successors and assigns, in
Landlord's Tract for the satisfaction of each and every remedy of Tenant in the
event of default by Landlord hereunder; such exculpation of personal liability
is absolute and without any exception whatsoever.
Section 24.14. Broker's Commission.
Each party represents and warrants that it has caused or incurred no
claims for brokerage commissions or finder's fees in connection with the
execution of this Lease, and each party shall indemnify and hold the other
harmless against and from all liabilities arising from any such claims caused or
incurred by it (including without limitation, the cost of attorneys' fees in
connection therewith).
Section 24.15. Partial Invalidity.
If any provision of this Lease or the application thereof to any person
or circumstance shall to any extent be invalid or unenforceable, the remainder
of this Lease, or the application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby and each provision of this Lease shall be valid and enforceable
to the fullest extent permitted by law.
Section 24.16. Recording.
The parties agree not to place this Lease of record but each party
shall, at the request of the other, execute and acknowledge so that the same may
be recorded a Short Form Lease or Memorandum of Lease, indicating the Lease
Term, but omitting rent and other terms and an Agreement specifying the date of
commencement and termination of the Lease Term; provided, however, that the
failure to record said Short Form Lease, Memorandum of Lease or Agreement shall
not affect or impair the validity and effectiveness of this Lease. Tenant shall
pay all costs, taxes, fees and other expenses in connection with or prerequisite
to recording.
Section 24.17. Applicable Law.
This Lease shall be construed under the laws of the State of Minnesota.
Section 24.18. Mortgagee's Approval.
If any mortgagee of the Center requires any modification of the terms
and provisions of this Lease as a condition to such financing as Landlord may
desire, then Landlord shall have the right to cancel this Lease if Tenant fails
or refuses to approve and execute such modification(s) within thirty (30) days
after Landlord's request therefor, provided said request is made at least thirty
(30) days prior to delivery of possession. Upon such cancellation by Landlord,
this Lease shall be null and void and neither party shall have any liability
either for damages or otherwise to the other by reason of such cancellation. In
no event, however, shall Tenant be required to agree, and Landlord shall not
have any right of cancellation. In no event, however, shall Tenant be required
to agree, and Landlord shall not have any right of cancellation for Tenant's
refusal to agree, to any modification of the provisions of this Lease relating
to: the amount of rent or other charges reserved herein; the size and/or
location of the Premises; the duration and/or Commencement Date of the Lease
Term; or reducing the improvements to be made by Landlord to the Premises prior
to delivery of possession.
Section 24.19. Reservation of Air Rights.
There has been no representation or warranty by the Landlord and Tenant
acknowledges that there is no inducement or reliance to lease the Premises on
the basis that the existing access to light, air and views from the Premises
would continue unabated. Tenant acknowledges and understands that it shall have
no rights to the airspace above the Retail Space and those rights shall be the
sole property of Landlord.
Section 24.20. Landlord's Contribution Toward Tenant's Work.
Landlord agrees that it shall, in accordance with the following
provisions, pay to Tenant as Landlord's Contribution toward Tenant's Work a sum
equal to $105.00 per square foot of Store Floor Area and no more. Landlord's
Contribution shall be used only for alterations, improvements, fixtures and
equipment that become part of or attached or affixed to the Premises including
trade fixtures, furniture and furnishings or other personal property.
Within ten (10) days prior to the date Tenant commences Tenant's Work
in the Premises, and in any event prior to requesting payment hereunder, Tenant
shall deliver to Landlord a schedule of values in a form acceptable to Landlord,
consisting of a complete and accurate list of all contractors, subcontractors,
materialmen, suppliers or other persons who will furnish work, labor, materials,
equipment or supplies in connection with Tenant's Work, showing quantities and
the dollar amounts of Tenant's or its general contractor's contract with said
parties in connection with Tenant's Work, which amounts shall represent Tenant's
costs figures upon which the cost of Tenant's Work is based. Such schedule of
values shall be updated by Tenant with each Application for Payment.
Based upon standard AIA Contractor's Application for Payment forms
(herein "Application for Payment") submitted by Tenant to Landlord, the Landlord
shall make progress payments on account of the Landlord's Contribution as
follows: Once Tenant completes approximately one-fourth (1/4) of Tenant's Work,
Tenant shall submit to Landlord an itemized written Application for Payment
supported by Tenant and general contractor affidavits, releases and waivers of
liens, and a certificate from Tenant's architect or general contractor as to the
percentage of completion of Tenant's Work, and that bills for such labor and
materials have been paid (subject to hold-back for deficiencies). Once the
aforesaid documentation has been received by Landlord by the tenth (10th) day of
a month, Landlord shall pay Tenant by the fifteenth (15th) day of the following
month one-fourth (1/4) of the total Landlord's contribution less a ten percent
(10%) retainage. Once Tenant completes approximately one-half (1/2) of Tenant's
Work, Tenant shall submit to Landlord a second Application for Payment in the
form, and supported by the same documentation, described above. Once the
aforesaid documentation has been received by Landlord by the tenth (10th) day of
a month, Landlord shall pay Tenant by the fifteenth (15th) day of the following
month an amount which, when added to the prior disbursement, equals one-half
(1/2) of Landlord's contribution less a ten percent (10%) retainage. Once Tenant
completes approximately three-fourths (3/4's) of Tenant's Work, Tenant shall
submit to Landlord a third Application for Payment in the form, and supported by
the same documentation, described above. Once the aforesaid documentation has
been received by Landlord by the tenth (10th) day of a month, Landlord shall pay
Tenant by the fifteenth (15th) day of the following month an amount which, when
added to the prior disbursement, equals three-fourths (3/4's) of Landlord's
contribution less a ten percent (10%) retainage. Once Tenant completes the final
one-fourth (1/4) of Tenant's Work, Tenant shall submit to Landlord a fourth
Application for Payment in the form, and supported by the same documentation,
described above. Once the aforesaid documentation has been received by Landlord
by the tenth (10th) day of a month, Landlord shall pay Tenant by the fifteenth
(15th) day of the following month an amount which, when added to the prior
disbursement, equals the final one-fourth (1/4) of Landlord's contribution less
a ten percent (10%) retainage. Landlord's obligation to make such payments and
Tenant's right to receive such payment shall be subject to Landlord's right to
withhold payment on account of (1) the filing of any claims or liens on account
of Tenant's Work or (2) failure of Tenant to make payments properly to its
subcontractors for labor, materials, or equipment.
When Tenant has completed all of Tenant's Work in substantial
accordance with Exhibit "C" and the Design Criteria by the Required Completion
Date, and furnishes evidence reasonably satisfactory to Landlord of such
completion and that all of Tenant's Work has been paid for in full (subject to
hold-backs for deficiencies) and no liens have attached or may attach as the
result thereof, as evidenced by affidavits, lien releases and final lien
waivers, and no default in, breach of, or failure to perform, this Lease exists
and Tenant has opened it store for business, Landlord shall pay to Tenant the
remainder of Landlord's contribution not otherwise paid to Tenant by the terms
hereof.
Not withstanding anything to the contrary herein contained, if at any
time and from time to time, during the course of Tenant's Work, Landlord shall
determine, in good faith, that Tenant or Tenant's general contractor is not
promptly and properly paying all or any of the bills for work, labor, materials,
equipment and services used in connection with Tenant's Work, Landlord may, but
shall not be obligated or required to, make direct payment of any part or all of
such bills on behalf of Tenant or Tenant's general contractor, not to exceed the
Landlord's Contribution, or payment by joint check to Tenant, Tenant's general
contractor, not to exceed the Landlord's Contribution, or payment by joint check
to Tenant, Tenant's general contractor and any subcontractor, materialmen or
supplier, charging all such direct or joint payments for labor, materials,
equipment and services against the Landlord's Contribution and the monthly
progress payments provided for herein.
Section 24.21. Parties to Have No Liability if Shopping Center Not Opened.
If the Shopping Center is not open by August 31, 1993, this Lease shall
thereupon cease and terminate and the parties shall be released and discharged
from any and all liability hereunder. Provided, however, if this Lease shall
cease and terminate pursuant to this Section 24.21, Landlord agrees that it
shall reimburse Tenant for Tenant's reasonable and documented out-of-pocket
expenses incurred by Tenant in performing Tenant's Work in the Premises.
Section 24.22. Unrelated Business Income.
A. Landlord shall have the right at any time and from time to time to
unilaterally amend the provisions of this Lease, if Landlord is advised by its
counsel that all or any portion of the monies paid by Tenant to Landlord
hereunder are, or may be deemed to be, unrelated business income within the
meaning of the United States Internal Revenue Code or regulations issued
thereunder, and Tenant agrees that it will execute all documents or instruments
necessary to effect such amendment or amendments, provided that no such
amendment shall result in Tenant having to pay in the aggregate more money on
account of its occupancy of the Premises under the terms of this Lease, as so
amended, and provided further that no such amendment shall result in Tenant
receiving fewer services or services of a lesser quality than it is presently
entitled to receive under this Lease.
B. Any services which Landlord is required to furnish pursuant to the
provisions of this Lease may, at Landlord's option, be furnished from time to
time, in whole or in part, by employees of Landlord or the managing agent of the
Project or its employees or by one or more thirds persons hired by Landlord or
the managing agent of the Project. Tenant agrees that upon Landlord's written
request it will enter into direct agreements with the managing agent of the
Project or other parties designated by Landlord for the furnishing of any such
services required to be furnished by Landlord hereunder, in form and content
approved by Landlord, provided however that no such contract shall result in
Tenant having to pay in the aggregate more money on account of its occupancy of
the Premises under the terms of this Lease and provided further that no such
contract shall result in Tenant receiving fewer services or services of a lesser
quality than it is presently entitled to receive under this Lease.
Section 24.23. Special Construction Provision; Waiver of
Construction Chargebacks.
Notwithstanding anything herein in this Lease, any exhibits attached
hereto or any other documents incorporated herein, Tenant shall not be required
to pay or reimburse Landlord for any work performed by Landlord at Tenant's
expense (commonly referred to as "Construction Chargebacks") and Landlord hereby
waives all Construction Chargebacks therefor except for the following: (i)
temporary utility services and facilities, including, but not limited to,
service elevators used by Tenant or Tenant's contractor during Tenant's
construction and merchandising period which charge for such temporary utilities
and services shall be equal to One Dollar and no/100 ($1.00) per square foot of
Store Floor Area; (ii) removal of construction and/or merchandising rubbish and
debris resulting from Tenant's Work and/or merchandising in the Premises in the
event Tenant or Tenant's contractor fails to remove the same and Landlord
removes such construction and/or merchandising rubbish on Tenant's behalf; (iii)
a temporary storefront or barricade if Tenant fails to open for business in the
Premises on the Grand Opening Date for the Center and Landlord installs such
temporary storefront or barricade therein, the charge therefor to Tenant not
exceed Thirty Dollars and no/100 ($30.00) per linear foot of storefront
barricade; (iv) any roof cuts or roof openings (and directly related ancillary
labor and materials necessary to re-seal or otherwise weatherproof the roof as a
result of such roof cuts or roof openings) required to be made by Landlord's
roofing contractor in order to accommodate Tenant's Work; (v) any structural
changes to the Premises or the Center necessitated by Tenant's Work or Tenant's
use of the Premises; (vi) any upgrade in Landlord's standard Work requested by
Tenant or required by Tenant's approved Plans and specifications; and/or (vii)
any work performed by Landlord at Tenant's request, such work not being part of
Landlord's standard Work in the Premises or the Center.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this
Lease as of the day and year first above written.
(LANDLORD)
MALL OF AMERICA COMPANY,
A Minnesota General Partnership
By: SI-MINN DEVELOPERS LIMITED PARTNERSHIP,
an Indiana Limited Partnership, its
General Partner
By: SI-MINN, INC., an Indiana
Corporation, its General Partner
By:
----------------------------------------
Herbert Simon, President
(TENANT)
If Corporation THE ALAMO GRILL, INC., an Indiana corporation
By:
----------------------------------------
Attest:
----------------------------------------
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
MALL OF AMERICA
LOTS 1 through 5, Block 1, Mall of America - 3rd Addition according to the plat
thereof on file as of record as Document No. 2211073 in the office of the
Registrar of Titles for County, Minnesota.
<PAGE>
EXHIBIT "B"
Level 3
[GRAPHIC -- MAP OF MALL OF AMERICA -- Level 3]
<PAGE>
EXHIBIT "C"
DESCRIPTION OF LANDLORD'S WORK AND OF TENANT'S WORK
I. LANDLORD'S WORK - The following work is to be performed exclusively by
Landlord and, except where otherwise indicated, shall be at Landlord's sole
expense:
A. COMMON AREA
1. Parking Areas, Roads and Sidewalks.
Landlord will provide paved, drained and lighted parking areas,
together with access roads, sidewalks, directional signs, and
markers.
2. Utilities: Subject to the provisions of Article VII of the Lease
to which this Exhibit is attached:
a. Sanitary Sewer, Domestic Water - If requested, Landlord will
install sanitary sewer stub and domestic water stub to the
premises at a point to be determined by the Landlord.
Landlord may, at its option, at any time submeter domestic
water and Tenant's use of the sanitary sewer system.
b. Electrical Service - Landlord will install disconnecting
means in Landlord's switchboard and electrical conduit or
tray (without writing) to the premises at a point determined
by Landlord. Electrical service shall be 277/480 volt, three
phase, four wire, for Tenant's combined power and lighting
requirement. Conduit shall be sized to accommodate a service
of 7 watts per square foot of floor area of the premises
except that in the case of Food Court tenants the conduit
shall be sized to accommodate a service of 40 watts per
square foot of floor area of the premises. Landlord may, at
its option, install an "all-electric" system.
c. Telecommunication Service - Landlord will install conduit
for telecommunication services to the Premises at a point
determined by Landlord.
d. Gas - Gas service will be available to Food Court,
restaurant and cafe tenants only for process loads.
e. Sprinkler System - Landlord will install a fire sprinkler
system throughout the Premises in compliance with the
requirements of Factory Mutual Engineering, local and state
agencies. Such sprinkler system will be based on a standard
grid approved by Factory Mutual Engineering as well as the
local and state agencies. Any modifications of the sprinkler
system within the Premises shall be performed by Landlord's
sprinkler contractor at the Tenant's expense.
f. HVAC System - Landlord will provide and maintain a system
chilled air to the premises installed at a point determined
by Landlord. Tenant agrees to adapt to Landlord's system and
provide a complete air distribution system connected to the
supply system provided by Landlord to the Premises. The air
volume control unit and thermostat will be furnished and
installed by the Tenant, at Tenant's expense and purchased
from a vendor designated by Landlord and sized to
accommodate the design conditions as defined in Paragraph
1.A.2.f.(1), or upgrade design conditions if the same are
required by Tenant's approved plans and specifications.
(1) Central system Design - The Landlord's system of
chilled air supply will be designed to provide the
following capacities per square foot of floor area of
the tenant's leased premises:
a. Design Total Cooling 30 BTU/Hr.Sq.Ft.
b. Design Air Delivery 0.80CFM/Sq. Ft.
c. Available Air Pressure
(Downstream of Air Volume
Control Unit) 0.25 Inches of
Water
d. Air Supply Temperature:
Summer 54oF DB & 53.5oFWB
Winter 57oF DB
(2) Operation - Landlord will make chilled air available to
the premises at such times and days as the Center is
normally open for business to the public.
3. Public Spaces
a. Malls and Courts - The Malls and Courts shall be hard
surfaced or carpeted, lighted, heated and cooled.
b. Public Spaces and Facilities - The following public spaces
and facilities shall be provided:
(1) Access from the Premises to the service court where
possible.
(2) Public Toilet facilities shall be located outside of
the premises at such locations as the Landlord shall
determine.
B. BUILDINGS
1. Structure
a. Frame, etc. - The structural frame, columns, beams, and roof
deck shall be constructed of non-combustible framing and the
floor s slabs shall be designed to carry live and dead loads
in accordance with the governing building codes.
b. Space Heights - The minimum clear heights, measured between
the floor slab and the ceiling when finished as hereinafter
provided, shall be not less than 12'-0".
c. Roof - The roof shall be built-up asphalt, or single ply
membrane and insulation to provide a "U" factor of 0.06
minimum.
d. Exterior Walls - Exterior walls shall be of non- combustible
construction and a finish of suitable nature and of
appropriate materials having a finished appearance and
decorative quality designed by Landlord's architect.
e. Partitions - Partitions shall be provided between the
premises and other areas, as well as between public spaces
and the premises. These partitions shall extend from
finished floor to the underside of the structure, shall be
of exposed masonry or exposed studs at Landlord's option.
f. Floor slab for all tenants shall be installed by Landlord
(except where specifically identified on Tenant's shell
package documents and except for all first floor tenants
where a 5' pour strip has been left for Tenant's contractor
to complete final plumbing connections). No penetrations
shall be allowed for electrical outlets in upper level floor
slabs unless prior written approval of Landlord is obtained.
2. Interior Finishes
Neutral Pier - A vertical neutral pier will be installed by
Landlord at the store front line between stores; the center line
of said pier to coincide with the line defining the premises.
3. Ventilation
a. A plumbing vent stub and toilet exhaust stub for all tenant
spaces will be installed at a point determined by Landlord.
4. General
a. Landlord, Landlord's agent, an independent contractor, or an
authorized utility company, as the case may be, shall have
the right, subject to Landlord's written approval, to run
utility lines, pipes, wiring, conduits or duct work, where
necessary or desirable, through plenum space or other parts
of the premises, and to repair, alter, replace or remove the
same, all in a manner which does not interfere unnecessarily
with Tenant's use thereof.
b. Tenant will be responsible for removal of construction
rubbish resulting from Tenant's Work. Containers for such
removal shall be provided by Landlord at Tenant's expense.
In the event that Tenant does not remove such rubbish, the
same shall be removed by Landlord at Tenant's expense.
c. Any additional structural support necessitated by Tenant's
equipment, fixtures or inventory shall be provided by
Landlord at Tenant's expense. Structural review and design
shall be by Landlord's structural engineer at Tenant's
expense.
<PAGE>
II. TENANT'S WORK - The following work required to complete and place the
premises in finished condition ready to open for business is to be
performed by the Tenant at the Tenant's own expense and shall be in
addition to any work described in the Tenant Handbook and Tenant
Contractor's Handbook. In the event there is any conflict between the
provisions of this Exhibit "C" and the Tenant Handbook or the Tenant
Contractor's Handbook, the provisions of the Tenant Handbook and Tenant
Contractor's Handbook shall control. Tenant's Work includes, but is not
limited to, the following:
A. GENERAL PROVISIONS
All work done by Tenant shall be governed in all respects by, and be
subject to, the following:
1. Landlord will be held harmless from payment of any claim either
by way of damages or liens on account of bills for labor or
material in connection with Tenant's Work. Tenant's Work shall at
all times be conducted consistent with the Project Labor
Agreement for the Center and in such manner so that Tenant shall
not be in violation of Section 18.1 of the Lease.
2. It is understood and agreed between Landlord and Tenant that
costs incurred by Landlord, if any, as a result of Tenant's
failure or delay in providing the information as required in this
Exhibit and in the Lease to which this Exhibit is attached, shall
be the sole responsibility of Tenant and he will pay such costs,
if any, promptly upon Landlord's demand.
3. All Tenant's Work shall conform to applicable statues,
ordinances, regulations and codes and the requirements of Factory
Mutual Insurance Company and all rating bureaus and the Tenant
Handbook which contains the basic architectural, electrical and
mechanical information necessary for the preparation of Tenant's
Plans, and which by this reference is incorporated into and made
a part of this Lease. Tenant shall obtain and convey to Landlord
all approvals with respect to electrical, water, sewer, heating,
cooling and telephone work, all as may be required by any agency
or utility company.
4. No approval by Landlord shall be deemed valid unless in writing
and signed by Landlord.
5. Prior to commencement of Tenant's Work and until completion
thereof, or commencement of the Lease Term, whichever is the last
to occur, Tenant shall effect and maintain Builder;s Risk
Insurance covering Landlord, Tenant, Tenant's contractors and
Tenant's subcontractors, as their interest may appear, against
loss or damage by fire, vandalism and malicious mischief and such
other risks as are customarily covered by a standard "All Risk"
policy of insurance protecting against all risk of physical loss
or damage to all Tenant's Work in place and all materials stored
at the site of Tenant's Work, and all materials, equipment,
supplies and temporary structures of all kinds incidental to
Tenant's Work, and equipment, all while forming a part of or
contained in such improvements or temporary structures, or while
on the premises or within the Total Tract, all to the actual
replacement cost thereof at all times on a completed value basis.
In addition, Tenant agrees to indemnify and hold Landlord
harmless against any and all claims for injury to persons or
damage to property by reason of the use of the premises for the
performance of Tenant's Work, and claims, fines, and penalties
arising out of any failure of Tenant or its agents, contractors
and employees to comply with any law, ordinance, code
requirement, regulations or other requirement applicable to
Tenant's Work and Tenant agrees to require all contractor and
subcontractors engaged in the performance of Tenant's Work to
effect and maintain and deliver to Tenant and Landlord,
certificates evidencing the existence of, and covering Landlord,
City of Bloomington, Minnesota, Port Authority of the City of
Bloomington, Melvin Simon & Associates, Inc., M.S. Management
Associates, Inc., Tenant and Tenant's contractors, prior to
commencement of Tenant's Work and until completion thereof, the
following insurance coverages:
a. Workmen's Compensation and Occupational Disease Insurance in
accordance with the laws of the State in which the property
is located, including Employer's Insurance to the limit of
$100,000.
b. Comprehensive or Commercial General Liability insurance
affording limits of not less than $3,000.000 per occurrence
for bodily injury, personal injury and death, and for not
less than $1,000,000 per occurrence for property damage, or
not less than $3,000,000 per occurrence, Combined Single
Limit. Such insurance shall include protection arising from
contractual liability, completed operations, independent
contractors, as well as for the hazards of underground,
collapse and explosion.
c. Comprehensive Automobile Insurance, including "non-owned"
automobiles, against bodily injury, including death
resulting therefrom, in the limits of $1,000,000 for any one
occurrence and $250,000 property damage or a combined single
limit of $1,000,000.
d. Owners and contractors protective liability coverage for an
amount not less than $3,000,000.
6. Tenant agrees that the contract of every contractor,
subcontractor, mechanic, journeyman, laborer, material supplies
or other person or entity performing labor upon, or furnishing
materials or equipment to, the Premises in connection with
Tenant's Work shall contain the following provision:
"Contractor acknowledges that this provision is required under
Tenant's lease of the premises to be improved under this Contract
(Lease Premises) from Mall of America Company (Lease). In
consideration of Tenant's engagement of Contractor to perform the
work hereunder, and as an inducement to Tenant to enter into this
Contract with Contractor, Contractor acknowledges, covenants and
agrees that any mechanic's lien which it may hereafter file,
claim, hold or assert with respect to the work hereunder (i)
shall attach only to Tenant's interest in the Lease Premises
under the Lease and (ii) shall be subject, subordinate and
inferior to the lien of any mortgage(s) now or hereafter held
upon and against the Mall of America by any lender(s) now or
hereafter providing funds for the financing for the Mall of
America, notwithstanding that any such mortgage(s). For such
purposes, Contractor also shall execute, acknowledge and deliver
a separate subordination agreement upon request by Tenant, Mall
of America Company, or any such lender(s), prior to making any
application or request for payment hereunder and as a condition
precedent to Contractor's right to receive any payment hereunder.
Contractor likewise shall cause the liens and lien rights of all
subcontractors, sub-subcontractors, materialmen, suppliers,
laborers and all other persons furnishing work, labor, materials,
equipment and services on or in connection with the Lease
Premises to be limited to the Tenant's interest in the Lease
Premises under the Lease and to be subordinated to such
mortgage(s), and Contractor shall obtain and deliver to Tenant a
similar subordination agreement duly executed and acknowledged by
each such subcontractor, sub-subcontractor, materialman,
supplier, laborer and other person prior to making any
application or request for payment hereunder and as a condition
precedent to Contractor's right to receive any payment hereunder.
Contractor shall indemnify, defend and hold harmless Tenant, Mall
of America Company, and such lender(s) from and against any and
all loss, costs, damage, expense (including, without limitation,
reasonable attorney fees), liability, suits, actions and
judgments arising or resulting from Contractor's failure to cause
all such mechanic's and materialmen's liens to be limited to
Tenant's interest in the Lease Premises under the Lease and to be
subordinated to said mortgage(s) as herein provided, in addition
to all other indemnities contained herein with respect to such
liens."
Tenant shall indemnify, defend and hold harmless Landlord and
such lender(s) from and against any and all loss, costs, damage,
expense (including, without limitation, reasonable attorney
fees), liability suits, action and judgments arising or resulting
from Tenant's failure to cause all such mechanic's and
materialmen's liens to be limited to Tenant's interest in the
Premises under this Lease and to be subordinated to said
mortgage(s) as herein provided, in addition to all other
indemnities contained herein with respect to such liens.
Tenant also agrees that each contractor, subcontractor, mechanic
journeyman, laborer, material supplier or other person or entity
performing labor upon, or furnishing materials or equipment to,
the Premises in connection with Tenant's Work shall execute a
subordination agreement in the form set forth in Exhibit "G".
From the commencement of Tenant's Work through the date Tenant
obtains its certificate of occupancy, Tenant shall submit and
Landlord shall receive lien waivers no later than the fifth (5th)
day of each month for all work, material, services or machinery
furnished by Tenant's general contractor, subcontractors,
materialmen or suppliers in connection with Tenant's Work during
the preceding month. The failure of Tenant to submit such lien
waivers in accordance with this provision shall constitute a
default under Section 18.1 of this Lease.
B. FLOOR SLAB
Landlord shall install 4" reinforced concrete floor slab. Concrete to
be 3000 PSI concrete with 6 x 6 10/10 wire mesh reinforcement. No
penetrations shall be allowed for electrical outlets in floor slabs.
All tenants with restroom facilities or food preparation areas shall
install a floor slab waterproofing membrane in the Premises. All floor
penetrations must be sleeved and waterproofed.
C. SECURITY SCREEN OR MALL FRONTAGE
1. Mall frontages shall be designed and constructed in accordance
with the requirement outlined in the Tenant Handbook. Security
for "open fronts" shall be by means of anodized aluminum roll up
grilles or anodized aluminum sliding and/or sliding glass doors.
No mall frontage shall be constructed without the written
approval of Landlord.
2. All materials employed in the construction of mall frontage shall
be as approved by Landlord and as defined by applicable building
codes.
3. Mall Frontage Colors - It is the desire of the Landlord to give
Tenant the greatest practicable freedom in the choice of mall
frontage colors; but:
a. Colors must harmonize with the color scheme of the Center
itself.
b. Colors must harmonize with the color scheme of the
surrounding stores. To assist Tenant, a general color range
will be developed, with a sufficiently large selection to
permit a reasonable latitude for individual expression.
4. All swinging entrance doors must be recessed in such a manner
that the door, when open, will not project beyond the lease line.
5. Tenants with exterior glazing must install show window or
display.
D. CEILING
1. All ceilings and coves shall not exceed 12'0" above the finished
floor unless otherwise specifically approved by Landlord on
Tenant's Plans.
2. Tenant's ceiling shall be suspended by adequate suspension
systems to conform to final requirements of governing authorities
and Landlord.
3. The space above the ceiling line, which is not occupied or
allotted to Landlord's Work (structural members, duct work,
piping, etc.) may be used for the installation of suspended
ceiling, recessed lighting fixtures and duct work. Under no
circumstances will Tenant's Work be hung or suspended from
non-structural construction. Any Tenant Work involving the
hanging or suspension of construction shall be accomplished only
by methods, in locations and by use of assemblies approved by
Landlord.
4. Tenant shall provide ceiling access panels in the ceiling of the
Premises as required by Landlord to service Landlord equipment.
E. WALLS
All interior walls and curtain walls within the premises, including
all interior lath and plastering and gypsum board thereon, and
including lath and plastering, and/or dry wall on Landlord's exposed
masonry or stud party wall partitions. Dividing wall between premises
shall meet Code requirements and be continuous from floor the
underside of the roof or floor deck. Tenant shall provide and install
bracing and/or studs and/or blocking as necessary to support wall
mounted fixtures. Cracks, joints and openings in walls to be filled
with appropriate fire resistant materials. Return air openings shall
be provided in the dividing walls between premises as required for
proper air movement. Tenant shall install insulation on the exterior
walls of the Premises.
F. DOORS
Doors and vestibules to Service Courts and Corridors - where required,
a vestibule and a door 3' 0" in width, with hardware, shall be
provided and installed by Tenant at Tenant's expense, between the
Premises and the service courts or between the Premises and a public
corridor or mall leading to the service courts.
G. INTERIOR PAINTING
All interior painting and decoration.
H. FLOOR COVERINGS
All floor coverings and floor finishes including recesses for special
floor finishes. It is Tenant's responsibility to join neatly to the
mall finish.
Floor Tile and Base - Tenant will install floor tile and base in
accordance with the materials and applications specified in the Tenant
Handbook along the storefront of the Premises, the width of which
shall be determined by Landlord.
I. SHOW WINDOW BACKGROUNDS
All show window backgrounds, show windows, show window floors and
ceilings, and show window lighting installations. All show windows
shall be adequately ventilated.
J. FURNITURE, FIXTURES AND SIGNS
All furnishings, trade fixtures, signs, and related parts, i
including installation. Location and design of all signs subject to prior
written consent of Landlord.
K. PLUMBING
All plumbing and plumbing fixtures as required by applicable codes
except utility service to the area, including a properly sized water
meter if the same is required by Landlord, in which latter event
Tenant shall make any required utility deposits.
L. HOT WATER HEATER
Domestic electric hot water heater, where required, including final
connections.
M. TOILET ROOM FIXTURES
Furnishing and installation of wiring, lighting fixtures, mechanical
toilet exhaust systems, towel cabinets, soap dishes, hand dryers,
deodorizers, mirrors and other similar items in toilet rooms within
the premises or as additionally required by code.
N. HEATING, VENTILATING AND AIR CONDITIONING
1. Complete HVAC Systems shall be designed, furnished and installed
within the premises by the Tenant. The HVAC systems,
calculations, designs, and installations shall be as recommended
in ASHRAE Publications and the Landord's Tenant Finish Mechanical
Criteria. Tenant's systems and ventilation shall meet all codes
and ASHRAE standards. Tenant shall furnish Landlord with complete
load calculations indlucing information as to Tenant's lighting
load in watts and Tenant's estimated store population (employees
and customers).
2. Tenant's cooling system shall be adequate for cooling the
premises to 75oF DB and 50% RH based on the latest ASHRAE guide
outdoor design dry bulb and design wet bulb temperatures are the
area as tabulated in the 2-1/2% columns, with a rise of not more
than 3"F DB during peak periods.
3. Tenant's heating method shall be adequate for heating the
premises to 55oF DB during times other than regular business
hours based on the latest ASHRAE guide outdoor design temperature
for the area as tabulated in the 99% column. The Tenant's heating
method shall be independent of the central cooling system. The
Tenant's lighting system shall be used to heat the sales area
during regular business hours in the heating season. The Tenant's
lighting system may be used to maintain the required sales area
minimum temperature level during other than regular business
hours in the heating season.
4. Tenant's exhaust systems shall provide the required exhaust air
capacities and shall be independent of the central cooling
system. The Tenant's exhaust systems shall be inoperative during
other than regular business hours. Replacement air for the
Tenant's exhaust will be provided through the Tenant's air supply
system up to the design air supply quantity. Any additional
replacement air required will be drawn from the mall. Independent
air make-up air systems shall not be installed by the Tenant.
5. Tenant's HVAC systems shall be complete with air distribution
systems, ventilating systems, control systems, insulation and all
other components required to make a complete system. Tenant's
systems shall be specifically designed to coordinate with
variable air volume cooling temperature control. Tenant's HVAC
system components shall be installed in locations as designated
by the Landlord.
6. Tenant shall provide and install fire dampers, in accordance with
all codes, in the right hand side (as viewed when facing the rear
of the Premises) demising partition of its Premises if its
Premises adjoining another tenant space. Tenant shall also
provide and install fire dampers where the Tenant's ductwork
passes through service corridor walls or other fire separations.
Tenant's installation shall include complete access and access
panels to all valves, dampers and similar service devices
(including the Landlord's) required for testing, balancing and
servicing. Tenant shall utilize only fire damper products as
specified by the Tenant Handbook.
7. Tenant shall connect to Landlord's central cooling system and
shall use Landlord's Design Criteria in designing systems and
controls. Alterations to the Landlord's central system required
due to Tenant's design shall be done by Landlord at Tenant's sole
expense.
8. If directed to do so by Landlord, Tenant shall paint and/or
screen from ground level view by parapet walls or other
appropriate screening, all of Tenant's outdoor equipment. Any
such painting or screening must be done at Tenant's sole expense
and approved in advance by Landlord.
O. MECHANICAL EQUIPMENT
All mechanical equipment including dumb-waiters, elevators,
escalators, freight elevators, conveyors, and their shafts and doors,
located within the premises, including electrical work for these
items. Locations, size and design of roof vents, HVAC equipment,
units, hoods and caps shall be approved by Landlord. Landlord reserves
the right of disapproval of any equipment to be placed on the roof.
Tenant shall install equipment at locations where structural
reinforcements are provided. All changes in structural design caused
by Tenant's requipment shall be made by Landlord and paid for by
Tenant.
Any roof cuts or openings to be made pursuant to Tenant's Plans shall
be performed by a contractor designated by Landlord at Tenant's
expense. In addition, all cant strips, base furnishings and other work
necessary to complete permanent weather proofing of Landlord's roof as
a result of roof cuts or openings required by Tenant shall be
performed by a contractor designated by Landlord at Tenant's expense.
P. ELECTRICAL
1. All interior distribution panels, lighting panels, power panels,
conduits, outlet boxes, switches, outlets and wires within the
premises. Tenant shall provide electric conduit and goxes in the
ceiling and walls, including all electrical service panels, pull
boxes and equipment.
2. All electrical fixtures, including lighting fixtures and
equipment, and installation thereof. Lighting systems (except
security and emergency lighting) must be controlled by lighting
contactors. The lighting contactors will be inter-locked with the
Landlord's Energy Management System for automatic control during
other than regular business hours.
3. All systems, where required for intercommunication, music
antenna, material handling or conveyor, burglar alarm, vault
wiring, fire protection alarm, time clock and demand control.
4. All conduit for necessary telephone wires in the premises.
5. Feeder conductors from Landlord's facilities to the Premises,
including the connections to Tenant's equipment.
6. Final connection to the Landlord's switch gear shall be done by a
contractor designated by Landlord at Tenant's expense. Tenant's
contractor will be responsible for the feeder conductors and
connections to tenant's equipment and for supplying proper fuses
to Landlord's designated contractor at the time of final
connection.
Q. TEMPORARY SERVICES
Any temporary services required by Tenant during its construction
period, including heat, water or electrical service shall be secured
by the Tenant, at Tenant's sole cost and expense, which temporary
services share shall be equal to $1.00 per square foot of Store Floor
Area.
R. SUBSEQUENT REPAIRS AND ALTERATIONS
Landlord reserves the right to required changes in Tenant's Work when
necessary by reason of code requirements.
S. SIGNS
In order to assure orderly and aesthetically coordinated signing,
plans for all Tenant's signs must conform to Exhibit "E" hereto
attached and the applicable Mall criteria and before installation must
be approved by Landlord. No permission is granted, expressed or
implied to permit Tenant to erect an exterior sign of any type.
T. DOORS AND EXITING REQUIREMENTS
1. Tenant will be responsible for adherence to exiting codes.
2. Tenant will maintain a clear exiting path through the stockroom
to Tenant's rear door for those premises that contact a rear
door.
U. CONSTRUCTION ACTIVITIES
1. During premises interior construction, Tenant shall use rear
opening to premises for moving in/out of materials, for those
premises that contain a rear door.
2. If any roof cuts or penetrations are required by Tenant, all
curbs, supports, blocking, temporary flashing, counter flashing
or other work necessary for installation shall be provided and
installed by Tenant at its expense. Tenant shall promptly notify
Landlord, in advance, of the need for such cuts or penetrations
and shall utilize Landlord's designated roofing contractor for
this work. Tenant's contractor shall be responsible for
contracting with Landlord's roofing contractor to perform this
work.
3. During construction, Tenant's use of the service elevators shall
be at Tenant's expense.
4. Tenant shall be responsible for the installation and expense of
the temporary store front or barricade shielding the interior of
the Premises from the Mall. Construction shall be in accordance
with the specifications contained in the Tenant Contractor
Handbook.
5. Tenant acknowledges that its construction activities in the
Premises and the Center are subject to a certain Project Labor
Agreement for Construction of the Mall of America executed on or
about the 19th day of November, 1985, by and among Triple Five
Corporation, P.C.L. Construction Services, Inc., and The
Minneapolis Building and Construction Trades Council. Such
Project Labor Agreement is full incorporated herein by reference.
As a material consideration of Landlord entering into and
executing this Lease with Tenant, Tenant agrees to abide by the
terms, condition and provisions of the Project Labor Agreement as
such Project Labor Agreement effects Tenant's construction
activities in the Premises and the Center. Tenant's failure to
abide by the same may be deemed a default of this Lease if such
failure results, either directly or indirectly, in a work
stoppage or interference or the threat of the same in the
construction activities in the Center or any other tenant's
space. Landlord or Landlord's authorized representative may take
such action as Landlord or its authorized representative deems
necessary in order to immediately enforce the terms of the
Project Labor Agreement and in order to prevent, avoid or
terminate any interference or work stoppage (or the threat
thereof) in connection with the construction of any part of the
Center or any other tenant's space. Such action may include, but
shall not be limited to, the issuance of a cease and desist
directive to Tenant. Tenant shall reimburse Landlord or any other
tenant in the Center for any losses, fees, expenses or damages
suffered or incurred by Landlord or such other tenant in the
Center as a result of Tenant's failure to comply with the Project
Labor Agreement.
<PAGE>
EXHIBIT "D"
RULES AND REGULATIONS
1. Tenant shall advise and cause its vendors to deliver all merchandise before
noon on Mondays through Fridays, not at other times.
2. All deliveries are to be made to designated service or receiving areas and
Tenant shall request delivery trucks to approach their service or receiving
areas by designated service routes and drives.
3. Tractor trailers which must be unhooked or parked must use steel plates
under dolly wheels to prevent damage to the asphalt paving surface. In
addition, wheel blocking must be available for use. Tractor trailers are to
be removed from the loading areas after unloading. No paring or storing of
such trailers will be permitted in the Center.
4. Except for small parcel packages, no deliveries will be permitted through
the malls unless Tenant does not have a rear service door. In such event,
prior arrangements must be made with the Resident Mall Supervisor for
delivery. Merchandise being received shall immediately be moved into
Tenant's Premises and not be left in the service or receiving areas.
5. Tenant is responsible for storage and removal of its trash, refuse and
garbage. Tenant shall not dispose of the following items in drains, sinks
or commodes: plastic products (plastic bags, straws, boxes); sanitary
napkins; tea bags; cooking fats, cooking oils; any meat scraps or cutting
residue; petroleum products (gasoline, naphtha, kerosene, lubricating
oils); paint products (thinner, brushes); or any other item which the same
are not designed to receive. All Store Floor Area of Tenant, including
vestibules, entrances and returns, doors, fixtures, windows and plate
glass, shall be maintained in a safe, neat and clean condition.
6. Other then as permitted under the provisions of Section 10.4 or Exhibit
"E", Tenant shall not permit or suffer any advertising medium to be placed
on mall walls, on Tenant's mall or exterior windows, on standards in the
mall, on the sidewalks or on the parking lot areas or light poles. No
permission, expressed or implied, is granted to exhibit or display any
banner, pennant, sign, and trade or seasonal decoration of any size, style
or material within the Center, outside the Premises.
7. Tenant shall not permit or suffer the use of any advertising medium which
can be heard or experienced outside of the Premises, including, without
limiting the generality of the foregoing, flashing lights, searchlights,
loud speakers, phonographs, radios or television. No radio, television, or
other communication antenna equipment or devise is to be mounted, attached,
or secured to any part of the roof, exterior surface, or anywhere outside
the Premises, unless Landlord has previously given its written consent.
8. Tenant shall not permit or suffer merchandise of any kind at any time to be
placed, exhibited or displayed outside its Premises, nor shall Tenant use
the exterior sidewalks or exterior walkways of its Premises to display,
store or place any merchandise. No sale of merchandise by tent sale, truck
load sale or the like, shall be permitted on the parking lot or other
common areas.
9. Tenant shall not permit or suffer any portion of the Premises to be used
for lodging purposes.
10. Tenant shall not, in or on any part of the Common Area:
(a) Vend, peddle or solicit orders for sale or distribution of any
merchandise, device, service, periodical, book, pamphlet or other
matter whatsoever.
(b) Exhibit any sign, placard, banner, notice or other written material,
except for activities as approved in writing by Landlord.
(c) Distribute any circular, booklet, handbill, placard or other material,
except for activities as approved in writing by Landlord.
(d) Solicit membership in any organization, group or association or
contribution for any purpose.
(e) Create a nuisance.
(f) Use any Common Areas (including the Enclosed Mall) for any purpose
when none of the other retail establishments within the Center is open
for business or employment, except for activities as approved in
writing by Landlord.
(g) Throw, discard or deposit any paper, glass or extraneous matter of any
kind except in designated receptacles, or create litter or hazards of
any kind.
(h) Deface, damage or demolish any sign, light standard or fixture,
landscaping materials or other improvement within the Center, or the
property of customers, business invitees or employees situated within
the Center.
<PAGE>
EXHIBIT "E"
SIGN CRITERIA
Tenant will not erect any signs except in conformity with the following policy:
(a) Wording on storefront signs shall be limited to store or trade name only.
Each party's customary signature or logo, hallmark, insignia, or other
trade identification will be respected.
(b) Signs of the flashing, blinking, rotating, moving, or animated types or
audible type signs are not permitted except for portions of East Broadway.
(c) The size of all Tenant's signs shall be limited. The scale and concept of
the enclosed mall requires the use of signs which are not larger than
necessary to be legible from within the mall. Thus, except for department
store signs, Tenant's signs shall be located within the limits of its
storefront and shall not project more than 6 inches beyond the storefront
and shall conform to the following proportionate height criteria:
(1) 30' storefront: 18" capitals 12" body
(2) 30' to 60' storefront: 24" capital 18" body
(3) 60' and over storefront: 30" capital 24" body
In addition to complying with the above criteria, signs in the enclosed
malls shall be limited in length to 70% of Tenant's frontage on the mall,
and shall in no case exceed a length of 30 feet.
(d) Secondary blade signs may be installed at right angles to the mall
storefront(s) provided they are adjacent to the Tenant's premises and
otherwise conform to the provisions of the Tenant Handbook Criteria.
(e) Signs on the building's exterior are strictly prohibited.
(f) Public safety decals or artwork on glass in minimum sizes to comply with
applicable Code, subject to the approval of Landlord, may be used, as
required by building codes or other governmental regulations.
(g) Paper signs, stickers, banners or flags are prohibited.
(h) No exposed raceways, ballast boxes or electrical transformers will be
permitted except as required by Code.
(i) Sign company names or stamps shall be concealed (Code permitting).
(j) Except as otherwise approved in writing by Landlord and by a Major Tenant
with respect to stores within one hundred fifty feet (150') of the entrance
of such Major Tenant's Building, only one (1) primary sign and one (1)
secondary blade sign for a Tenant's location will be permitted within the
Enclosed Mall areas; provided, however, that if a Tenant has (a) more than
sixty feet (60') of storefront and (b) more than one (1) entrance, such
Tenant will be permitted one (1) primary sign and one (1) secondary blade
sign for each of its entrances. Corner Tenants may have one (1) primary
sign and one (1) secondary blade sign on each side of the corner Tenant's
location fronting the Mall.
(k) Signs and identifying marks shall be placed entirely within the boundaries
of Tenant's Premises except blade signs as specified in paragraph (d) above
with no part higher than 13 feet above the finished floor line, or lower
than 8 feet to the finished floor line.
(l) Sign letters may be back-lighted with lamps or tubes entirely concealed
within the depth of the letter or may be opaque or translucent plastic face
with no visible openings. Maximum brightness allowed for interior (enclosed
mall) signs will be 100 foot lamberts taken at the letter face and must
comply with all building and electrical codes.
(m) Exposed sign illumination or illuminated sign cabinets or modules are not
permitted.
(n) Tenant shall not install any roof top signs.
(o) Tenant shall not install any pylon signs.
(p) All signs shall be subject to the Landlord's written approval before
fabrication.
(q) Three (3) complete sets of sign drawings must be submitted to the Landlord
for written approval before fabrication. Tenant's sign drawing must include
the following:
1. Elevation view of storefront showing sign (drawn to accurate scale)
with dimensions of height of letters and length of sign.
2. Color sample of sign panel.
3. Color sample of sign letters.
4. Cross section view through sign letter and sign panel showing location
of sign relative to the storefront line and showing the dimensioned
projection of the face of the letter from the storefront face.
The Landlord shall not be responsible for the cost of refabrication of
signs fabricated, ordered or constructed, that do not conform to the Tenant
Handbook Signage Criteria.
<PAGE>
EXHIBIT "F-1"
Tenant's Menu
T H E A L A M O G R I L L
Entrees
20 oz. Charcoal Broiled Sirloin Steak
1-1/4 lb. Baby Back Ribs
2 lbs. Pit B.B.Q. Prime Rib Bones
Charbroiled Swordfish Steak
Charboiled Texas Gulf Red Snapper
1 1/2 lb Half Chicken with cornbread stuffing
Tex-Mex Specialities
Sizzling Fajitas
Steak, Chicken, Pork and Vegetarian
Smoked Duck Burrito
Pollo Chihuaha
6 oz. chicken breast stuffed with chihuaha cheese
and seasoned with fresh poblano and pepper.
Chuleta Rancheros
Medallions of pork tenderloin flavored with spices
from the Gulf Coast.
Accompaniments
Texas Size Baked Potato
House Salad
Texas Baked Beans
Vegetable of the Day
Bowl of Texas Chili
Fried Onion Loaf
Burgers and Sandwiches
Texas Size 9 oz. Char Burger
Charbroiled Ribeye Steak Sandwich
Texas Size Charbroiled Chicken Breast Sandwich
Texas Size Honey Smoked Ham Sandwich
Texas Size Smoked Turkey Sandwich
San Antonio Club Sandwich
Deserts
Fried Ice Cream
Hot Fudge Sundae
Homemade Root Beer Float
Assorted Homemade Pies
Hot Brownie and Ice Cream
Children's Menu
Charbroiled Chicken Breast
Chicken Tenders
Charbroiled Burger
Charbroiled Kosher Style Hot Dog
(The above children's items served with applesauce and potato chips.)
(Prototype menu - subject to slight revisions)
<PAGE>
EXHIBIT "G"
MALL OF AMERICA
AGREEMENT TO SUBORDINATE LIEN
FOR LABOR AND MATERIALS
THIS AGREEMENT made as of the ________day of ___________________, 19__,
by_______________________________________________________________ ("Contractor")
in favor of _______________________________________________________, ("Tenant"),
MALL OF AMERICA COMPANY ("Owner"), Lender (hereinafter described), and any title
insurance company or companies who provides title insurance coverage, including,
without limitation, mechanic's lien coverage, to the Lender (such entities
hereinafter referred to as "Title"). Tenant, Owner, Lender and Title hereinafter
are sometimes collectively referred to as "Benefited Parties".
RECITALS
A. Owner is the owner of certain real property located in the State of
Minnesota, County of Hennepin, hereinafter referred to as the "Property", and
legally described as Lot 1, Block 1, Mall of America.
B. Tenant is the lessee of certain space, as legally described in
Exhibit "A" attached hereto, )the "Premises") within the retail/entertainment
complex on the Property (the "Project") pursuant to that certain lease (the
"Lease") by and between Tenant and Owner, dated_______________________, 19___.
C. Pursuant to the Lease, Tenant is required to perform certain work on
the Premises (Tenant's Work") in accordance with the terms and provisions of the
Lease.
D. In connection with the Tenant's Work, Contractor has entered into a
contract with Tenant dated the __________day of ____________________, 19___,
calling for a provision of labor or materials to the Premises of the following
type:
________________________________________________________________________________
________________________________________________________________________________
("Contract") and has agreed pursuant to the Contract, to execute and deliver
this Agreement.
E. Pursuant to the Loan Agreement, dated the _________ day of
_____________________, 1990, entered into by and between (a) Owner and
Minntertainment Company, and (b) the Mitsubishi Bank, Limited, acting through
its New York Branch, The Mitsui Trust and Banking Company, Limited, acting
through its New York Branch and Teachers Insurance and Annuity Association of
America (collectively referred to as the "Lender"), Lender has agreed to provide
financing for construction of the Project (the "Construction Loan"). The
Construction Loan is secured by, among other things, the Mortgage and Security
Agreement and Fixture Financing Statement (the "Mortgage"), date the ___________
day of __________________, 19___, and filed in the office of the Recorder of
Hennepin County, Minnesota as Instrument #___________, Book__________________,
Page_______________. The Mortgage encumbers the Property and the Project. The
Construction Loan is in the amount of Six Hundred Twenty-Five Million Dollars
($625,000,000.00) and may bear interest at a variable rate on the outstanding
balance thereof and permits the Lender to make protective advances in the event
of any default in connection therewith.
F. Upon commencement of work or delivery of materials to the Premises
under the Contract as extras or pursuant to any other contract or agreement with
Tenant or any third party, Contractor shall be entitled to a statutory lien for
labor and materials as provided in Minnesota Statues, Chapter 514 ("Mechanic's
Lien").
G. As a condition to advancing funds under the Construction Loan,
Lender requires that the lien of the Mortgage be prior and superior to the
Mechanic's Lien held by Contractor. Lender requires that Owner and Title provide
a policy of title insurance protecting and indemnifying Lender against claims
for Mechanic's Liens which are alleged to be superior or prior to the Mortgage.
H. Contractor is willing to (a) subordinate its Mechanic's Lien rights
to the lien of the Mortgage, as it may be amended from time to time, and (b)
limit the filing of Mechanic's Liens to the Tenant's leasehold interest in the
Premises.
NOW, THEREFORE, in consideration of the foregoing and in consideration
of receiving its Contract, to allow Tenant to conform to the terms of the Lease,
to induce Lender to fund the Construction Loan and to induce Title to insure the
priority of the lien of the Mortgage over Contractor's Mechanic's Lien,
Contractor agrees as follows:
1. Any Mechanic's Lien shall be and hereby is made forever inferior,
subject and subordinate to the lien of the Mortgage as it may be amended from
time to time, and is the principal amount secured thereby, whether now or
hereafter disbursed, and all interest thereon and to any and all advances,
costs, and expenses now or hereafter made or incurred in connection therewith,
as fully and with the same effect as if the Mortgage had been duly executed,
acknowledged, and filed, and the indebtedness secured by the Mortgage had been
fully disbursed, prior to the commencement of any actual and visible beginning
of construction of the Project by any party, even though under the statue the
Mechanic's Lien may have been or is deemed prior to the lien of the Mortgage.
2. Contractor agrees that in the event Contractor does file a
Mechanic's Lien, the encumbered property listed in the Mechanic's Lien shall be
solely the Tenant's leasehold interest in the Premises and that Contractor shall
not list any of the other Property as encumbered property.
3. Contractor agrees and acknowledges that it has received full and
adequate consideration for this Agreement and that the Benefited Parties are
relying on the enforceability and validity of this Agreement.
Contractor warrants that this Agreement is valid and enforceable.
4. Contractor shall not in any action or proceeding brought to enforce
or foreclose its Mechanic's Lien (a) allege that the Mechanic's Lien is superior
or prior to the Mortgage, and (b) list as encumbered property any property other
then the Tenant's leasehold interest in the Premises in the action or
proceeding.
5. If requested by any of the Benefited Parties, Contractor shall
promptly execute and deliver any additional agreement or agreements as may be
required by the Benefited Parties to (a) confirm the subordination of
Contractor's Mechanic's Line to the Mortgage; and (b) confirm and insure that
any Mechanic's Lien shall attach only to the Tenant's leasehold interest in the
Premises.
6. Contractor shall include in every subcontract relating to the
Tenant's Work to which it is a party and in each and every lower tier
subcontract, provisions (1) that the person or entity doing work, performing
labor, or furnishing materials pursuant to each subcontract agrees to (a)
subordinate any Mechanic's Lien or any other claim against any part of the
property on account of any work done, labor performed, or materials furnished
under such subcontract, to the Mortgage and (b) limit the filing of any
Mechanic's Lien to the Tenant's leasehold interest in the Premises, (2) that the
required subordinations and limiting the filing of Mechanic's Liens to the
Tenant's leasehold interest in the Premises are made in consideration of and as
an inducement to the execution and delivery of the Contract and the subcontract
in which it appears, and shall be applicable despite any dispute between or
among Tenant, Contractor, or any subcontractor or any default by Tenant,
Contractor, or any subcontractor under the Contract or any other subcontract or
agreement and (3) that the Benefited Parties are express third party
beneficiaries who have supplied consideration for such subordinations and
limiting the filing of Mechanic's Liens to the Tenant's leasehold interest in
the Premises. Contractor shall save and keep the Property free form all
Mechanic's Liens arising out of work performed by Contractor or any
subcontractor or material supplier referenced above. In the event any Mechanic's
Lien is filed by anyone claiming by, through, or under Contractor, Contractor
shall remove and discharge the same within ten (10) days of the filing thereof.
7. Nothing contained in this Agreement including, without limitation,
the subordination provisions and the provisions limiting the filing of
Mechanic's Liens to the Tenant's leasehold interest in the Premises set forth
above, shall entitle any party including, without limitation, Contractor, to
rely on any provisions in any agreement between (a) Tenant and Owner, or (b)
Owner and any Lender(s) now or hereafter providing funds to Owner for the
financing of the Project. All conditions to the obligations of such Lender(s) to
make advances under such agreement(s) are imposed solely and exclusively for the
benefit of the Lender(s) and its and/or their assigns, and no other person
including, without limitation, Contractor, shall have standing to require
satisfaction of such conditions in accordance with their terms and shall assume
that the Lender(s) will refuse to make advances in the absence of strict
compliance with any or all such conditions, and no other person including,
without limitation, Contractor, shall, under any circumstances, be deemed to be
a beneficiary of such agreement(s) or of such conditions, any or all of which
may be freely waived, in whole or in part, by such Lender(s) at any time if, in
its and/or their sole discretion, it seems advisable to do so.
8. This agreement shall bind the Contractor, its successors and
assigns, and shall inure to the benefit of the Benefited Parties, their
successors and assigns.
IN WITNESS WHEREOF, the Contractor has executed this Agreement on the
day and year first above written.
CONTRACTOR:
By:__________________________
Its:__________________________
ACCOUNTING
SERVICES
AGREEMENT
Agreement Between:
Innovative Hospitality Concepts, Inc.
1465 East 84th Place
Merrillville, Indiana 46410
U.S.A.
(219) 769-9000
(hereinafter called "IHC")
AND
Elephant & Castle Group Inc.
701 West Georgia Street
Suite 303
Vancouver, British Columbia V7Y 1E7
CANADA
(604) 684-6451
(hereinafter called "Client")
Date: June 28, 1996
Project:
The Alamo Grill - Mall of America S-396 South Boulevard
Bloomington, Minnesota 55425
For and in consideration of the mutual promises set forth herein, the parties
hereto agree as follows:
I. IHC Services: As consideration for the Fee to be paid by Client, IHC
agrees to perform the following service(s):
A. Provide full accounting services for The Alamo Grill-Mall of
America, which includes, but is not limited to, the following:
1. Keep all books of account.
2. Supervise an audits and bookkeeping.
3. Assist property management in processing all payroll.
4. Assist property management in filing all worker's
compensation claims.
<PAGE>
5. Assist property management in all unemployment claims.
6. Prepare monthly financial statements showing details of
operations, and present same to Client.
7. Prepare monthly general ledger and present same to Client.
8. Prepare monthly Profit & Loss statement and prepare same to
Client.
Client has the discretion to make needed formatting changes in
accounting forms and financial statements, from time to time, as
business needs dictate.
II. IHC Fee: As consideration for the services to be performed by IHC
herein, Client agrees to pay IHC the following fee:
$2,000.00 U.S. per monthly accounting period
Due no later than ten (10) days after the issuance of financial
statements each accounting period.
TOTAL PROJECT FEE: $2,000 U.S. per monthly accounting period.
================== ======
Client further agrees to pay IHC "Reimbursable Expenses," as set
forth, but not limited to, the below:
a. overnight and/or shipping charges
b. long-distance phone and facsimile charges
c. photocopy charges for any photocopies in excess of 100 per month
Reimbursable expenses are billed as they occur and are due net 14
days.
IHC shall confer with Client before incurring any reimbursable
expenses over $500.00.
III. IHC Fee Schedule: The aforementioned Fee shall be paid to IHC as
follows:
The monthly fee of $2,000 U.S. is due no later than ten (10) days
after the issuance of financial statements by IHC to the Client each
monthly accounting period. Term to commence upon consummation by
Client, or its subsidiary, of the acquisition of all of the capital
stock and of the Alamo Grill, Inc. Fee to be pro rated for any period
of less than a full month.
<PAGE>
IV. Renewal of Agreement
This Agreement expires twenty-four months after the date of execution
stated herein. Client has the option to renew this Agreement with IHC
after this 24- month period for an additional 24 months for the
monthly fee of $2,200.00 U.S.
V. Attorney's Fees: In the event that an action is brought by Client or
IHC to enforce or interpret the provisions of this Agreement
(including, but not limited to, the payment of Fees), the prevailing
party shall be entitled to recover all costs, including attorney's
fees, which the prevailing party incurs in such action, as well as,
and in addition to, any other relief to which the prevailing party may
be entitled.
VI. Severability: If any term, covenant, or condition of this Agreement or
the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement
or such other documents, or the applications of such term, covenant or
condition, to persons or circumstances other than those as to which it
is help invalid or unenforceable shall not be affected thereby, and
each term, covenant or condition of this Agreement or such other
document shall be enforced to the fullest extent permitted by law.
This Agreement is severable by Client, with or without cause, with at
least 60 days' written notice to IHC.
This Agreement is immediately severable by Client at the termination
of the lease for The Alamo Grill, S-396 South Boulevard, Mall of
America, Bloomington, Minnesota.
VII. Applicable State Law: This Agreement shall be construed under and
governed by the laws of the State of Minnesota, in the United States,
and all actions brought to enforce any item of this Agreement shall be
so brought in the State of Minnesota.
VIII. Time: Time is the essence of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day first above written.
Elephant & Castle Group Inc. Innovative Hospitality Concepts, Inc.
By: ________________________________ By: ___________________________________
Jeffrey M. Barnett, President Jon P. Taffer, President
CONSULTING
SERVICES
AGREEMENT
Agreement Between:
Jon P. Taffer, an Individual
and
Innovative Hospitality Concepts, Inc.
1465 East 84th Place
Merrillville, Indiana 46410
U.S.A.
(219) 769-9000
(hereinafter called "IHC")
AND
Elephant & Castle Group Inc.
701 West Georgia Street
Suite 303
Vancouver, British Columbia V7Y 1E7
CANADA
(604) 684-6451
(hereinafter called "Client")
Date: June 28, 1996
Project:
Five (5) Restaurants To Be Determined
Location(s) To Be Determined
For and in consideration of the mutual promises set forth herein, the parties
hereto agree as follows:
I. IHC Services: As consideration for the Fee to be paid by Client, Jon
Taffer, as President of IHC, and his IHC staff agrees to perform the
following service(s):
A. Provide support and consulting services to Client, as needed, for
the development and Grand opening of five (5) Alamo Grill-type
concept restaurants, including, but not limited to the following
areas:
1. Provide consulting in menu revisions
2. Provide consulting and input in product specifications
<PAGE>
3. Provide consulting in Grand Opening Events, Promotions and
Schedules
4. Provide consulting in restaurant design review.
5. Provide consulting in formats for administrative and
accounting forms, as well as formats for financial
statements.
6. Provide consulting in landlord/tenant negotiations.
7. Provide all recipe specifications and computer diskettes
containing recipes.
8 Various consulting, review and support on restaurant issues,
as needed as defined by Client
B. Such services shall be performed on a "hands on" basis, with any
necessary support at the physical site of the restaurant under
development
II. IHC Fee: As consideration for the services to be performed by IHC
herein, Client agrees to pay IHC the following fee for the services
defined in Section I hereof:
Support and General Consulting Fee
For Each Restaurant
(Five [5] Restaurants Total): $10,000.00 U.S./Each Restaurant
Ten Thousand and no/100
Dollars (U.S. Funds),
payable upon commencement
of work for each
restaurant.
TOTAL PROJECT FEE: $50.000.00 U.S.
================== ==========
Client further agrees to pay IHC "Reimbursable Expenses," as set
forth, but not limited to, the below:
a. air and ground transportation
b. food and beverages
c. hotel accommodations
d. incidentals
e. overnight and/or shipping charges
f. long-distance phone and facsimile charges
g. photocopies
Reimbursable expenses are billed as they occur, with no administrative
mark-up, and are due net 14 days.
IHC shall confer with Client before incurring any reimbursable
expenses in excess of $500 and, wherever possible, will permit Client
to make, and pay directly for, all travel arrangements.
<PAGE>
Further Consideration: As further consideration for this Agreement,
Taffer personally agrees not to sell, transfer or otherwise dispose of
fifty percent (50%) of the Common Stock of Elephant & Castle Group
Inc. (the "Shares") received by him as distribution on his ownership
of Alamo Restaurants, Inc. until the sooner of eighteen (18) months
following the closing of the purchase of the capital stock of The
Alamo Grill, Inc. ("Closing"), provided that such restriction shall
lapse as to one-fifth (1/5) of the Shares so restricted each three (3)
months following such Closing provided that such restriction shall
lapse in the entirety upon the grand opening by E&C of any one (I)
additional Alamo Grill-type concept restaurant.
Optional Training: In addition to the services required under Section
I hereof, Client may determine to utilize consulting services of IHC
for management and employee training at any given restaurant location
in connection with pre-opening and grand opening of such location. In
such instance, IHC will provide and supervise employee and management
training, at the time of pre-opening and grand opening, as agreed upon
by Client and IHC, for a fee of fifteen thousand dollars ($15,000
U.S.) per restaurant location. Such fee shall be paid as follows:
One-third (I/a) of the fee, in the amount of $5,000.00 U.S. is due
upon written authorization by Client for such training, one-third
(1/3) of the fee, in the amount of $5,000.00 U.S. is due upon
commencement of the training, and one-third (1/3) of the fee, in the
amount of $5,000.00 is due upon completion of such training.
In the event Client determines to utilize optional consulting services
of IHC for management and employee training, Client may compensate IHC
by options, warrants or payment in shares to IHC from time to time,
subject to agreement by Client and IHC prior to the time any such
optional consulting services are utilized.
III. IHC Fee Schedule: The Fees required under Section 11 hereof shall be
paid to IHC as follows:
The consulting fee for each of the five restaurants, in the amount of
ten thousand dollars ($10,000.00 U.S.) for each restaurant, is due
one-third upon written authorization by Client of the assignment,
one-third upon completion of the assignment, and one-third upon grand
opening of the restaurant location.
Past due balances are subject to an interest rate of 11/2% per month
(18 percent annum).
IV. Attorney's Fees: In the event that an action is brought by Client or
IHC to enforce or interpret the provisions of this Agreement
(including, but not limited to, the payment of Fees), the prevailing
party shall be entitled to recover all costs, including attorney's
fees, which the prevailing party incurs in such action, as well as,
and in addition to, any other relief to which the prevailing party may
be entitled.
<PAGE>
V. Severability: If any term, covenant, or condition of this Agreement or
the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement
or such other documents, or the applications of such term, covenant or
condition, to persons or circumstances other than those as to which it
is help invalid or unenforceable shall not be affected thereby, and
each term, covenant or condition of this Agreement or such other
document shall be enforced to the fullest extent permitted by law.
This Agreement is severable by Client, with or without cause, with at
least 60 days' written notice to IHC.
VI. Applicable State Law: This Agreement shall be construed under and
governed by the laws of the State of Minnesota, in the United States,
and all actions brought to enforce any item of this Agreement shall be
so brought in the State of Minnesota.
VII. Time: Time is the essence of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day first above written.
CLIENT:
Elephant & Castle Group Inc. Innovative Hospitality Concepts, Inc.
By: ________________________________ By: ___________________________________
Jeffrey M. Barnett, President Jon P. Taffer, President
Jon P. Taffer, an Individual,
(as his interests appear)
By: ___________________________________
Jon P. Taffer, President
Pannell Kerr Forster [GRAPHIC - LOGO]
PKF
worldwide
7th Floor, Marine Building,
355 Burrard St.
Vancouver, B C,
Canada, V6C 2G8
Telephone: (604) 687-1231
Facsimile: (604) 688-4675
June 21, 1996
Board of Directors
Elephant & Castle Group Inc.
We consent to the incorporation by reference in the Registration Statement on
Form S-4 related to the issuance of 147,059 shares of Elephant & Castle Group
Inc. of our report dated April 9, 1996 relating to the consolidated balance
sheets of Elephant & Castle Group Inc. as at December 31, 1995 and 1994 and the
related consolidated statements of income, shareholders' equity and cash flows
for the years ended December 31, 1995, 1994 and 1993, which report appears in
the December 31, 1995 annual report on Form 10-K-SB of Elephant & Castle Group
Inc.
Our report included a paragraph titled "Comments by Auditors for U.S. Readers on
Canada - U.S. Reporting Conflict".
/s/Pannell Kerr Forster
Chartered Accountants
Vancouver, Canada
Draft of 6/27/96
_________________, 1996
Alamo Restaurants, Inc.
1465 East 84th Place
Merrillville, IN 46410
Re: Our File No. 027225-0000
Dear Gentlemen:
This opinion letter is being delivered to you in connection with the filing of a
registration statement ("the Registration Statement" on Form S-4 which includes
the Proxy Statement/Prospectus relating to the Agreement dated April 9, 1996,
(the "Agreement"), by and among Alamo Restaurants, Inc., a Minnesota corporation
(the "Company"), Alamo Grill, Inc, an Indiana corporation and wholly-owned
subsidiary of the Company ("Sub"), and Elephants Castle Group, Inc, a British
Columbia corporation ("E&C"), pursuant to which the Company will sell all of the
capital stock of Sub to E&C in exchange for shares of E&C common stock and the
assumption by E&C of certain liabilities.
Except as otherwise provided, capitalized terms referred to herein have the
meanings set forth in the Agreement. All section references, unless otherwise
indicated, are to the Internal Revenue Code of 1986, as amended (the "Code").
We have acted as legal counsel to the Company and Sub in connection with the
Agreement. As such, and for the purpose of rendering this opinion, we have
examined ( or will examine on or prior to the Effective Time of the Agreement)
and are relying (or will rely) upon (without any independent investigation or
review thereof) the truth and accuracy, at all relevant times of the statements,
covenants, representations and warranties contained in the following documents:
1. The Agreement (including Exhibits):
2. Representations made by the Company and Sub;
3. Representations made by E&C;
4. The Registrations Statement; and
5. Such other instruments and documents related to the
formation, organization and operation of the Company and Sub or to the
consummation of the Agreement and the transactions contemplated thereby as we
have deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed or
obtained representations (and are relying thereon, without any independent
investigation or review thereof) that:
1. Original documents (including signatures) are authentic,
documents submitted to us as copies conform to the original documents, and there
has been (or will be by the Effective Time of the Agreement) due execution and
delivery of all documents where due execution and delivery are prerequisites to
effectiveness thereof.
2. The Agreement will be effective under the applicable state
law.
3. The Capital Stock of the Sub owned by the Company
represents substantially all of the assets of the Company.
<PAGE>
Alamo Restaurants, Inc.
June 27, 1996
Page 2
4. The Company transfers to its shareholders in liquidation
all shares of E&C common stock received in consideration of its sale of all of
the capital stock of Sub and thereafter ceases doing business.
5. To the extent any expenses relating to the Agreement (or
the "plan of reorganization" within the meaning of Treas. Reg. Section
1.368-1(c) with respect to the Agreement) are funded directly or indirectly by a
party other than the incurring party, such expenses will be within the
guidelines established in Revenue Ruling 73-54, 1973-1 C.B. 187.
6. Any representation or statement made "to the best of
knowledge" or similarly qualified is correct without such qualification.
Based on our examination of the foregoing items and subject to
the assumption, exceptions, limitations and qualifications set forth herein, we
are of the opinion that for federal income tax purposes, the transaction carried
out pursuant to the Agreement will constitute a "reorganization" as defined in
Section 368(a) of the Code.
As a result of the Agreement constituting a reorganization, we
are further of the opinion that for federal income tax purposes:
a. No gain or loss will be recognized by the holders of the
Company's Common Stock upon the receipt of E&C Common Stock
solely in exchange for their Common Stock upon the liquidation
of the Company.
b. The aggregate tax basis of the E&C Common Stock so received by
the Company's shareholder will be the same as the aggregate
tax basis of the Company's Common Stock surrendered in
exchange therefor.
c. The holding period of the E&C Common Stock so received by each
of the Company's shareholders will include the period for
which the Company's Common Stock surrendered in exchange
therefor was considered to be held, provided that the Company
Common Stock so surrendered is held as a capital asset at the
Effective Time of the Agreement.
d. Neither the Company nor Sub will recognize gain or loss solely
as a result of the transactions contemplated by the Agreement.
In addition to the assumptions set forth above, this opinion
is subject to the exceptions, limitations and qualifications set forth below.
<PAGE>
Alamo Restaurants, Inc.
June 27, 1996
Page 3
1. This opinion represents and is based upon our best judgment
regarding the application of federal income tax laws arising under the Code,
existing judicial decisions, administrative regulations and published rulings
and procedures. Our opinion is not binding upon the Internal Revenue Service or
the courts, and the Internal Revenue Service is not precluded from successfully
asserting a contrary position. Furthermore, no assurance can be given that
future legislative, judicial or administrative changes, on either a prospective
or retroactive basis, will not adversely affect the accuracy of the conclusions
stated herein. Nevertheless, we undertake no responsibility to advise you of any
new developments in the application or interpretation of the federal income tax
laws.
2. This opinion addresses only the specific tax opinions set
forth above, and does not address any other federal, state, local or foreign tax
consequences that may result from the Agreement or any other transaction
(including any transaction undertaken in connection with the Agreement). In
particular, but not by way of limitation of the previous sentence, we express no
opinion regarding the tax consequences of the Agreement (including the opinions
set forth above) as applied to specific shareholders of the Company, foreign
persons, and holders of shares acquired upon exercise of stock options or in
other compensatory transactions.
3. No opinion is expressed as to any transaction other than
the transaction contemplated by the Agreement as described therein or to any
transaction whatsoever, including the Agreement, if all the transactions
described in the Agreement are not consummated in accordance with the terms of
such Agreement and without waiver or breach of any material provision thereof or
if all of the representations, warranties, statements and assumptions upon which
we relied are not true and accurate at all relevant times. In the event any one
of the statements, representations, warranties or assumptions upon which we have
relied to issue this opinion is incorrect, our opinion might be adversely
affected and may not be relied upon.
4. This opinion is intended solely for the purpose of
inclusion as an exhibit to the Registration Statements. It may not be relied
upon for any other purpose or by any other person or entity, and may not be made
available to any other person or entity without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statements and further consent to the use of our name wherever
appearing in the Registration Statement.
Very truly yours,
ROBBINS, KAPLAN, MILLER & CIRESI
