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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 29, 1996
Commission file number 0-24982
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Silver Diner, Inc.
(Exact name of the registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
04-3234411
(I.R.S. employer identification no.)
11806 Rockville Pike
Rockville, Maryland 20852
301-770-0333
(Address and telephone number of the registrant's principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $.00074 Par Value None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
At December 29, 1996, the registrant had 11,520,473 shares of common
stock (the "Common Stock") outstanding, and the aggregate market value of the
Common Stock held by non-affiliates of the registrant was approximately
$23,775,182.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for its Annual Meeting of
Shareholders in 1997 are incorporated by reference into Part III.
<PAGE>
PART I
Item 1. Business.
The Merger
Silver Diner, Inc. (the "Company" or "Silver Diner") was incorporated
in Delaware in April 1994 under the name Food Trends Acquisition Corporation
("FTAC"). In March 1996, a subsidiary of the Company merged with Silver Diner
Development, Inc., a Virginia corporation ("SDDI"). As a result of the merger
("Merger"), SDDI became a wholly owned subsidiary of the Company and the Company
changed its name from Food Trends Acquisition Corporation to Silver Diner
Development, Inc., and in June 1996, to Silver Diner, Inc. In addition, the
Merger resulted in SDDI's stockholders owning 57% of the Company's common stock,
par value $.00074 per share ("Common Stock"), and SDDI's directors and officers
becoming the Company's directors and officers. Unless the context otherwise
requires, references to the Company or Silver Diner also include FTAC, SDDI and
their wholly owned subsidiaries.
Prior to the Merger, the Company was a publicly traded "blind pool" of
$14.2 million in cash which was raised essentially on the reputation of George
Naddaff, the former Chairman and Chief Executive Officer of Boston Chicken. This
infusion of capital resulted in a virtually debt-free balance sheet and cash for
the Company to fund growth.
The Company's executive offices are located at 11806 Rockville Pike,
Rockville, Maryland 20852 and its telephone number is (301) 770-0333. The
Company's Common Stock trades on the Nasdaq National Market under the symbol
"SLVR."
Acquisition of Minority Interest in Silver Diner Limited Partnership
Silver Diner Limited Partnership ("SDLP"), of which the Company was the
general partner, operated the first three Silver Diner restaurants. In June
1996, the Company acquired all of the limited partner interests in SDLP for a
purchase price of $2.472 million and 84,000 warrants to purchase shares of the
Common Stock at $8.00 per share and, subsequently, liquidated SDLP into SDDI.
The warrants are exercisable at any time on or before the earlier of January 31,
1998 or 30 days following the first public offering of Common Stock on or after
June 30, 1997.
Business
The Company currently operates eight Silver Diner restaurants in the
Washington/Baltimore Metropolitan Area serving breakfast, lunch, dinner and late
night meals. The Company targets the growing number of customers tired of
traditional fast food whose need for a quick, high-quality, reasonably priced
meal is not being adequately served by existing family or casual theme
restaurants; the Company capitalizes on the timeless diner theme to uniquely
address this need. By attracting a broad range of customer segments, maintaining
extended operating hours, a diverse menu and convenient locations, the Company
is able to compete effectively in the fast food, family and casual dining
segments of the restaurant industry, contributing to the significant sales
volumes of its units. The Company is introducing Silver Diner To Go, which
features a range of carry out options targeting the growing "home meal
replacement" market, as well as specialty coffee drinks and expanded bakery
selections.
The restaurants typically are open for business from 7:00 a.m. to
midnight on weekdays and from 7:00 a.m. to 3:00 a.m. on weekends. The Silver
Diner menu strategy is to "serve real home cooking at a real fair price" by
serving generous portions of made-from-scratch cooking at prices competitive
with traditional family dining restaurants. The average check per customer is
approximately $7.00 and the average dining time is approximately 30 minutes. For
the last fiscal year, the six Silver Diner restaurants open throughout the year
had sales ranging from $2.2 million to $4.0 million with average unit sales of
$2,741,000 on an average of 208 seats. Management attributes the significant
sales volumes of its units to its ability to attract a broad range of customer
segments,
<PAGE>
extended operating hours, diverse menu, and convenient locations. Management
believes it has established a strong company mission and culture by emphasizing
a sense of ownership and entrepreneurship in its employees and by providing
frequent training, recognition and development of its management. Each Silver
Diner is led by a general manager who lives, and participates, in the community
and, through an incentive-based bonus system which includes profit sharing and
stock ownership, has a long-term commitment to that restaurant's success.
Diners have been indigenous to the United States for more than 100
years. Since opening the first Silver Diner restaurant in 1989, the Company has
capitalized on the diner restaurant theme to uniquely address the customers'
need of where to go for quick, high quality meals at reasonable prices. Key
elements which differentiate Silver Diner restaurants from other restaurants
include:
o Broad and diverse menu combining "traditional diner" items with
contemporary regional specialties - The menu includes a broad range of
made-from-scratch meal choices featuring traditional home-style diner fare and
all-day breakfast, as well as more contemporary "heart healthy" selections and
regional specialty items. Each Silver Diner restaurant bakes from scratch all of
its cakes, pies and other baked goods on the premises and features a carry-out
section offering its full menu of home-meal replacement items.
o Classic, readily recognizable diner exterior, in combination with a
comfortable diner interior decor and atmosphere - The visually striking exterior
of the Silver Diner restaurants is both familiar and distinctive combining
polished stainless steel, glass block and neon lighting traditional to old-style
diners with more contemporary tile, accent colors and a 25-foot clock tower.
Similarly, the Silver Diner restaurant's interior combines traditional diner
motifs such as a counter area with seating, booths and tabletop old style juke
boxes with a contemporary open kitchen and ambient dining room lighting. The
result of these contrasting elements produces a high energy, fun, nostalgic
atmosphere which is also comfortable.
o Extended operating hours with four meal periods - Silver Diner's
breadth of entree selection, its beer and wine service and night time ambience
allow it to generate close to 50% of its business at dinner and late night, the
most profitable meal periods. Additionally, the Silver Diner's extended hours
and diverse menu afford it two extra meal periods - breakfast and late night.
Together, these four meal periods afford the Silver Diner the opportunity to
generate significantly greater customer counts per facility than traditional
two- or three-meal period full-service restaurants.
o Rapid meal service resulting in a table turnover rate significantly
above industry averages for full service restaurants - Silver Diner's menu, food
preparation techniques and kitchen engineering account for its rapid meal
service. The Silver Diner's physical plant and kitchen layout allow it to serve
meals in approximately 10 minutes, providing quick turnover and further
improving productivity. The Silver Diner employs a food preparation and storage
process which incorporates a type of "sous vide" production technique enabling
it to efficiently make a wide range of scratch-cooking recipes with reduced
labor hours, kitchen preparation and raw ingredient storage area. As a result,
Silver Diner restaurants are able to achieve high quality, consistency and
excellent productivity despite the broad menu.
o Generous portions and moderate prices with entrees ranging from $6.99
to $8.99 Management believes the Silver Diner delivers outstanding value by
providing generous portions of fresh, high quality food at affordable prices.
Appetizers range from $3.99 to $5.99, entrees range from $6.99 to $8.99, and
full meals are available at moderate prices including senior citizen meals at
$3.49, early bird specials at $4.99 and blue plate specials at $6.99.
- 2 -
<PAGE>
Restaurants. The following sets forth certain information regarding
the Company's existing restaurants.
<TABLE>
<CAPTION>
Approximate
Approximate Number
Operating Locations Date Opened Square Feet of Seats
------------------- ----------- ----------- -----------
<S><C>
Rockville, Maryland February 1989 5,500 256
Laurel, Maryland September 1990 4,680 153
Potomac Mills, Virginia October 1991 4,675 164
Towson, Maryland September 1992 5,250 194
Fair Oaks, Virginia April 1995 5,675 240
Tysons Corner, Virginia December 1995 5,675 240
Clarendon, Virginia December 1996 5,675 240
Merrifield, Virginia February 1997 5,675 240
</TABLE>
The Company leases its corporate offices at 11806 Rockville Pike,
Rockville, Maryland, which is the location of the original Silver Diner
restaurant.
Management believes the greater Washington/Baltimore area can support
fifteen to twenty Silver Diner restaurants and it will continue to penetrate
this market area in order to take advantage of increased name recognition and
economies of scale in advertising, management and overhead. Silver Diner
restaurants are currently under construction at locations in Springfield and
Reston, Virginia, and the Company has signed a letter of intent for a site in
Columbia, Maryland. Management believes that there are numerous other major
metropolitan areas throughout the United States that can support a similar
concentration of Silver Diner restaurants and intends to pursue expansion in
these markets in a manner similar to Washington/Baltimore. The Company has been
aggressively pursuing locations in new geographical markets, specifically the
Philadelphia-Southern New Jersey area and South Florida. To that end, the
Company has signed a lease agreement for a Silver Diner restaurant in Cherry
Hill, New Jersey, and a land purchase agreement for a Silver Diner restaurant in
Kendall, Florida, which pending successful completion of various site
contingencies, will allow the Company to open a new store in each of those
markets in 1997 and 1998, respectively. The Company expects that the Silver
Diner restaurants opened in the next two years will continue to be
company-owned; however, expansion into any markets outside of
Washington/Baltimore may include area joint-ventures or franchises. There is no
assurance that the Company's expansion plans will be realized or that future
Silver Diner restaurants will be favorably received.
Marketing. Management focuses on providing its customers with superior
food quality, service and perceived value in a distinctive atmosphere and has
relied primarily on its eye-catching appearance, customer satisfaction and word
of mouth to obtain repeat customers as well as to attract new clientele. As a
result, the Company has been able to maintain a minimal marketing budget for its
existing restaurants, with marketing funds primarily used for pre-opening
events, public relations and direct marketing for new Silver Diner openings. As
the Company achieves sufficient market penetration within a given market area
and economies of scale with respect to its discretionary marketing budget, other
mass marketing vehicles, including television advertising, will become viable
methods of further increasing average unit volume.
Menu. The Silver Diner menu includes a broad range of dining
alternatives featuring traditional diner fare, including soups, sandwiches,
burgers, Blue Plate Specials as well as more contemporary "Heart Healthy"
salads, grilled chicken, seafood, pasta and stir-fried regional specialties.
Silver Diner's full breakfast menu, including omelettes, pancakes and waffles,
is available throughout the day and night. The menu includes numerous entrees
which rotate on a seasonal basis, as well as signature homemade pies and cakes
baked on premises. High-quality
- 3 -
<PAGE>
ingredients are used for all menu items, including Silver Diner's own unique
gravies, sauces and dressings. Silver Diner's recipes are prepared for the way
management believes people eat today with an emphasis on fresh ingredients, low
salt and cholesterol-free oil. In addition, Silver Diner's "heart healthy" menu
features a dozen low- fat popular items formulated to exceed USDA "heart
healthy" dietary guidelines. Silver Diner restaurants also serve beer, wine and
non-alcoholic specialty beverages.
Purchasing. The Company purchases items on a centralized basis and
negotiates directly with suppliers for food and beverage products to ensure
consistent quality and freshness of products as well as to obtain competitive
prices. Food and supplies are shipped directly to the Silver Diner restaurants.
All shipments are inspected for quality and freshness by a kitchen manager upon
receipt. The Company does not maintain a central product warehouse or
commissary. The Company's food and supplies are available from a wide number of
suppliers. Therefore, Silver Diner is not dependent on any particular source of
supplies.
Customer Satisfaction/Quality Control. The Company has a variety of
programs to measure its customer satisfaction, including comment cards, a
mystery shopper program, and frequent visits by supervisory management. Through
the use of these techniques, senior management receives valuable feedback from
customers and through prompt action, demonstrates a continued interest in
meeting customer needs and desires. In addition, Silver Diner staff perform a
variety of quality checks and are authorized to not serve any products which do
not meet Silver Diner's quality standards.
Competition
The restaurant industry is intensely competitive with respect to price,
service, location and food quality. With respect to quality and cost of food,
size of food portions, decor and quality service, Silver Diner restaurants
compete with fast food and family style restaurants with ready to cook food and
take-out. Silver Diner restaurants are located in areas of high concentration of
such restaurants. There are many well established food service competitors with
substantially greater financial and other resources than the Company and with
substantially longer operating histories. These competitors will also compete
with the Company in obtaining premium locations for restaurants (e.g., shopping
malls and strip shopping centers) and in attracting and retaining employees. In
addition, one or more national food service chains or other companies could
introduce a multi-unit chain of food service establishments that use one or more
food service concepts which resemble one or more of the food service concepts
used by the Company.
The restaurant business is also affected by changes in consumer tastes
and eating patterns of the general public; national, regional or local economic
conditions; demographic trends; traffic patterns; as well as the type, number
and location of competitors. In addition, factors such as inflation, increased
food, labor and benefit costs and a lack of experienced management and hourly
employees may adversely affect the restaurant industry in general and the
Company in particular.
The Company believes that its distinctive diner concept, attractive
price-value relationship and quality of food and service and long-term appeal
enable it to differentiate itself from its competitors. While the Company
believes that its restaurants are distinctive in design and operating concept,
it is aware of restaurants that operate with similar concepts. The Company
believes that its ability to compete effectively will continue to depend upon
its ability to offer high-quality, moderately priced food in a full-service
distinctive dining environment.
Employees
As of December 29, 1996, the Company had approximately 665 employees,
13 of whom are corporate personnel, 42 of whom are restaurant management
personnel (including 4 managers-in-training), and the remainder of whom are
hourly restaurant personnel. None of the Company's employees is covered by a
collective bargaining agreement. The Company considers its employee relations to
be good.
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<PAGE>
The management staff of a typical Silver Diner restaurant consists of
one "owner operator" (general manager) and four assistant managers, including a
kitchen manager and a service manager. Each Silver Diner restaurant also employs
approximately 75 associates on a part-time and full-time basis.
Restaurant Personnel. The Company has established a strong company
mission focusing on culture and values and emphasizing a sense of ownership and
entrepreneurship that empowers its people to achieve professional and personal
excellence. Management believes that its people are its most valuable asset and
has a variety of programs to provide training, recognition and development of
its management and associates to their full potential. Non-management employees'
performance is tracked daily through productivity measurements that are
established as an integral part of a system of frequent incentive awards.
Restaurant Owner Operator Plan. To attract and retain talented
management, the Company's compensation plan is very competitive. Management
believes that a key component for long-term success is for each restaurant to be
led by a general manager who lives in the community and has a long-term
commitment to that restaurant's success. Accordingly, management has established
a Restaurant Owner Operator Plan whereby the general manager receives an annual
salary and a monthly cash profit sharing award which equals a percentage of the
restaurant's operating income. In addition, each general manager is required to
purchase $12,500 of Common Stock at a price equal to 50% of the Common Stock's
market value and receives an annual award of between $5,000 and $10,000 of
Common Stock.
Selection, Training and Supervision. Management has developed specific
profiles and protocols used to interview and select its management and associate
staff. Management personnel are required to participate in a 12- to 15-week
training program emphasizing the Company's operating procedures as well as
management development programs. Each associate also participates in a
standardized training program ranging from two to five days (depending on
position) which utilizes testing results to ensure all associates achieve a
specified standard of performance.
Government Regulations
The Company is subject to numerous federal, state and local laws
affecting health, sanitation and safety standards as well as to state and local
licensing regulation of the sale of alcoholic beverages. The Company has
appropriate licenses from regulatory authorities allowing it to sell beer and
wine, and has food service licenses from local health authorities. The Company's
licenses to sell alcoholic beverages must be renewed annually and may be
suspended or revoked at any time for cause, including violation by the Company
or its employees of any law or regulation pertaining to alcoholic beverage
control, such as those regulating the minimum age of patrons or employees,
advertising, wholesale purchasing and inventory control. The Company's failure
to obtain or retain liquor or food service licenses would have a material
adverse effect on its operation. To reduce this risk, each restaurant is
operated with procedures in accordance with complete compliance with applicable
code and regulations. There can be no assurance, however, that such approvals
and licenses for new restaurants will be obtained and, if obtained, will be
renewed or not revoked.
The Company is subject in certain states to "dram-shop" statutes, which
generally provide a person injured by an intoxicated person the right to recover
damages from an establishment that wrongfully served alcoholic beverages to the
intoxicated person. The Company carries liquor liability coverage as part of its
existing comprehensive general liability insurance. The Company has never been
named as a defendant in a lawsuit involving "dram-shop" statutes.
The development and construction of additional restaurants will be
subject to compliance with applicable zoning, land use and environmental
regulations. The Company's operations are also subject to federal and state
minimum wage laws governing such matters as working conditions, overtime and tip
credits and other employee matters.
- 5 -
<PAGE>
Management believes it is in compliance with all current applicable
regulations relating to restaurant accommodations for the disabled including the
Federal Americans With Disabilities Act of 1992.
Trademarks
Management believes that its trademarks and servicemarks are valuable
to the marketing of its restaurants and that it has substantial rights in such
trademarks and servicemarks for the Silver Diner name, based upon the Company's
actual usage and constructive usage derived from its U.S. trademark. The Company
intends to aggressively protect its marks from infringement and competing
claims. However, there can be no assurance that the Company's marks, even as,
and if, registered do not or will not violate the proprietary rights of others,
that the marks will be upheld if challenged, or that the Company will not be
prevented from using the marks, any of which could have a material adverse
effect on the Company. Management's policy is to pursue registration of its
marks whenever possible and to oppose vigorously any infringements of its marks,
the success of which cannot be assured.
Executive Officers of the Company
The name, age, period of service and position held of each of the
executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Served Since(1) Position(s) Held
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<S><C>
Robert T. Giaimo 45 1987 Chairman of the Board,
President and Chief Executive Officer
Ype Hengst 46 1987 Director, Vice President, Executive Chef and
Corporate Secretary
David Oden 36 1995 Chief Financial Officer and Senior Vice President
Patrick Meskell 43 1996 Senior Vice President, Human Resources
Daniel Brannan 27 1997 Vice President, Finance
</TABLE>
(1) Includes service with SDDI.
All of the officers have had the principal occupation indicated under
"Position(s) Held" for the previous five years except as follows: Mr. Oden was
Vice President, Chief Financial Officer, Treasurer and Assistant Secretary for
Pancho's Mexican Buffet, a public restaurant company with annual sales exceeding
$86 million; Mr. Meskell was an independent consultant to financial
institutions, specializing in the areas of risk management systems design and
implementation from 1988 to 1992 and Director of Organizational Development &
Management & Operations Training for the Student Loan Marketing Association from
1992 to 1995; and Mr. Brannan was the Company's controller from 1996 to
1997. Previously, Mr. Brannan was corporate controller for Greenstone
Industries, a public manufacturing company with annual sales exceeding $30
million from 1995 to 1996 and was an auditor with KPMG Peat Marwick LLP from
1991-1995.
Item 2. Property.
Information concerning the registrant's property is set forth under
"Restaurants" in Item 1 of Part I.
Item 3. Legal Proceedings.
On May 20, 1996, the Company was named as a defendant in a proceeding
instituted in the Circuit Court for Prince George's County, Maryland captioned
Laura Reese v. Roger Richardson and Silver Diner Development, Inc. The plaintiff
alleges that she was sexually assaulted by Roger Richardson, who was the general
manager of the Laurel Silver Diner restaurant. Mr. Richardson was terminated
promptly following occurrence of the event in November 1994. Plaintiff continues
to be an employee of the Company. The Complaint contains four counts
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<PAGE>
against the Company: failure to provide a reasonably safe and harassment free
working environment, negligently and unreasonably allowing alcoholic beverages
to be consumed at a Company sponsored event, negligently hiring and retaining
Richardson after knowing of his drinking problem and respondent superior.
Plaintiff seeks recovery of $500,000 for each count. It is not clear if the
counts are in the alternative or cumulative. The Company's insurance carrier is
currently defending the claim with reservation of rights. The Company is insured
up to $1,000,000 with respect to the above mentioned claims. The Company does
not believe that it is liable to the plaintiff and intends to vigorously defend
itself.
Item 4. Submission of Matters to a Vote of Security-Holders.
Not Applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Market Information. Since March 27, 1996, the Common Stock has been
quoted on the Nasdaq National Market under the symbol SLVR. Before that date,
the Common Stock was quoted on the OTC Bulletin Board under the symbol FDTR. The
following table sets forth the high and low closing prices for the Common Stock
for the periods indicated:
Quarter High Low
------- ---- ---
1995 First $4-3/8 $4-1/4
Second $4-1/2 $4-3/8
Third $4-15/16 $4-1/2
Fourth $5-1/16 $4-15/16
1996 First (to March 26) $6-11/16 $4-3/4
First (March 27 to March 31) $6-3/4 $6-1/8
Second $7-7/8 $5-5/8
Third $6 $4-1/2
Fourth $5-5/8 $3-1/2
Dividends. Since the Company's inception, no dividends have been paid
on the Common Stock.
Holders. As of December 29, 1996, there were approximately 400 record
holders of the Common Stock.
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<PAGE>
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
Fiscal Years Ended
-------------------------------------------------------------------------------------
December 31, December 31, January 1, December 31, December 29,
1992 1993 1995 1995 1996
<S><C>
Statement of Operations Data:
Net sales $9,912,161 $11,257,307 $10,896,682 $13,350,255 $16,550,468
Restaurant costs and expenses:
Cost of sales 2,951,033 3,179,552 3,036,995 3,655,254 4,526,286
Labor 3,161,115 3,519,484 3,525,472 4,452,134 5,464,896
Operating 1,410,686 1,660,515 1,642,039 2,015,668 2,536,609
Occupancy 1,103,606 1,316,757 1,293,842 1,588,527 1,931,866
Depreciation and amortization 508,525 860,126 382,082 715,426 882,843
--------------- --------------- --------------- --------------- ---------------
Total restaurant costs and expenses 9,134,965 10,536,434 9,880,430 12,427,009 15,342,500
--------------- --------------- --------------- --------------- ---------------
Restaurant operating income 777,196 720,873 1,016,252 923,246 1,207,968
General and administrative expenses 1,088,921 1,179,264 1,877,774 2,077,735 2,705,940
Depreciation and amortization 38,386 41,639 61,042 97,351 183,928
Development and abandoned site costs 22,622 746,026 98,637 - -
--------------- --------------- --------------- --------------- ---------------
Operating loss (372,733) (1,246,056) (1,021,201) (1,251,840) (1,681,900)
--------------- --------------- --------------- --------------- ---------------
Interest expense 289,224 382,291 254,810 334,086 180,293
Investment income (2,255) (16,759) 3,599 (83,021) (432,721)
--------------- --------------- --------------- --------------- ---------------
Loss before minority interest (659,702) (1,611,588) (1,279,610) (1,502,905) (1,429,472)
Minority interest in net loss of SDLP 144,020 137,224 332,977 180,175 -
--------------- --------------- --------------- --------------- ---------------
NET LOSS $ (515,682) $(1,474,364) $ (946,633) $(1,322,730) $(1,429,472)
=============== =============== =============== =============== ===============
Net loss per common share $ (0.15) $ (0.39) $ (0.19) $ (0.26) $ (0.15)
=============== =============== =============== =============== ===============
Weighted average common shares outstanding 3,364,839 3,755,038 4,982,414 5,013,319 9,545,681
=============== =============== =============== =============== ===============
As of
------------------------------------------------------------------------------------
December 31, December 31, January 1, December 31, December 29,
1992 1993 1995 1995 1996
Balance Sheet Data:
Working capital (deficiency) $(1,364,967) $1,697,475 $ (560,972) $ (5,201,102) $ 6,542,348
Total assets 6,427,155 8,947,195 7,078,679 10,794,469 25,864,375
Current liabilities 3,061,806 2,765,405 2,580,329 6,975,363 3,174,262
Long-term liabilities 3,364,569 2,726,974 2,205,695 2,584,832 749,396
Stockholders' equity (deficit) (675,478) 2,941,664 2,112,480 1,234,274 21,940,717
</TABLE>
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
At December 29, 1996, the Company operated seven diners in the
Washington/Baltimore metropolitan area and plans to operate 12 diners by the end
of 1997, including one in Cherry Hill, New Jersey, its first outside the
Washington/Baltimore area. The Company is also pursuing locations in the South
Florida market for 1998. Longer term, the Company plans to expand the Silver
Diner chain nationwide through additional openings of Company- owned restaurants
and possibly through the development of franchise or joint venture
relationships. One Silver Diner restaurant was opened during fiscal 1996, the
Company's seventh restaurant which opened in Arlington, Virginia on December 17,
1996. The eighth Silver Diner opened February 24, 1997 in the Merrifield area of
Fairfax County, Virginia. Additional Silver Diners are under construction in
Springfield and Reston, Virginia.
On March 27, 1996, FTAC Transition Corporation, a wholly owned
subsidiary of FTAC, merged with and into Silver Diner Development, Inc., a
Virginia Corporation, with SDDI surviving as a wholly owned subsidiary of FTAC.
In connection with the Merger, FTAC changed its name to Silver Diner
Development, Inc., then subsequently to Silver Diner, Inc. Pursuant to the
merger agreement, each outstanding share of SDDI common stock converted into
33.339 shares of the common stock of FTAC. Upon consummation of the Merger, the
stockholders of SDDI became the owners in the aggregate of approximately 57% of
the outstanding common stock of FTAC and the directors and officers of SDDI
became directors and officers of FTAC.
For accounting and financial reporting purposes, the Merger was treated
as a recapitalization of SDDI and as an issuance of SDDI common shares for
monetary assets and liabilities. The Company has reflected in its consolidated
financial statements the assets, liabilities and equity of SDDI and its
subsidiary Silver Diner Limited Partnership at their historical book values.
Accordingly, the consolidated results of operations and financial position of
the Company for periods and dates prior to the Merger are the consolidated
historical results of operations and financial position of SDDI and SDLP for
such periods and dates.
All historical shares of common stock and per share amounts for periods
prior to the Merger have been retroactively adjusted to reflect the FTAC shares
issued to the SDDI shareholders at the time of the Merger.
In connection with the Merger, on April 2, 1996, notes payable to
related parties totaling $1,236,811 were repaid by the offset of amounts due
from affiliates of $355,023 and the net outstanding balance was paid in full by
the Company. On April 1, 1996, the Company terminated its capital lease
obligation with a related party by purchasing the leased equipment at the
remaining lease obligation balance of approximately $148,000. In addition, the
Company repaid certain bank notes of SDDI in the approximate amount of $904,000
on April 4, 1996.
On June 13, 1996, the Company completed its purchase of the minority
interest in SDLP from the original investors for $2,472,000 in cash and 84,000
warrants to purchase common stock exercisable at $8.00 per share until the
earlier of 30 days following a public offering or January 31, 1998. The offer
was accepted by 100% of the limited partners. Because SDLP's financial
statements are included in the consolidated financial statements of the Company,
acquisition of the minority interest will not result in any change in the
Company's future reported net sales, restaurant costs and expenses or restaurant
operating income. The acquisition has been accounted for under the purchase
method and the entire cost of the transaction, totaling $2.8 million, has been
recorded as goodwill and is being amortized on a straight-line basis over 15
years.
On July 11, 1996, the Company completed a $8,250,000 private placement
of common stock through the sale of 1.5 million shares at $5.50 per share. Of
the $7.6 million net proceeds of the sale, $2.5 million was used to replace the
funds used for the acquisition of the minority interests in SDLP, approximately
$400,000 was used to repay the bank debt of SDLP and the remainder is available
to fund expansion. On August 7, 1996, the Company registered the shares with the
Securities and Exchange Commission pursuant to a Form S-3 Registration Statement
filed under the Securities and Exchange Act of 1933, as amended.
- 9 -
<PAGE>
Effective January 1, 1994, the Company adopted a 52 or 53-week fiscal
year which ends on the Sunday nearest December 31. Fiscal quarters consist of
accounting periods of 16, 12, 12 and 12 or 13 weeks, respectively.
As a result of the change, the year ended January 1, 1995 was a 366-day year.
In October, 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 123, Accounting for Stock-Based
Compensation ("SFAS No. 123 "). SFAS No. 123 is effective for financial
statements issued for fiscal years beginning after December 15, 1995. SFAS No.
123 addresses the accounting for awards of stock-based compensation to employees
and transactions in which an entity issues its equity instruments to acquire
goods and services from nonemployees. SFAS No. 123 allows an entity to continue
to measure compensation cost for awards of stock-based compensation to employees
using the intrinsic value based method of accounting prescribed by APB Opinion
No. 25. However, entities electing to remain with the accounting under APB
Opinion No. 25 must make pro forma disclosures of net income and earnings per
share, as if the fair value method of accounting defined within SFAS No. 123 had
been applied. The Company's management has elected to remain with the
accounting under APB Opinion No. 25 and to provide the pro forma disclosures as
required under SFAS No. 123.
- 10 -
<PAGE>
Results Of Operations
The following table sets forth the percentage of net sales of items
included in the consolidated statements of operations for the periods indicated:
<TABLE>
<CAPTION>
Fiscal Years Ended
-------------------------------------------------
December 29, December 31, January 1,
1996 1995 1995
--------------- --------------- --------------
<S><C>
Net sales 100.0% 100.0% 100.0%
Restaurant costs and expenses:
Cost of sales 27.4% 27.4% 27.9%
Labor 33.0% 33.3% 32.4%
Operating 15.3% 15.1% 15.1%
--------------- --------------- --------------
Restaurant operating margin 24.3% 24.2% 24.6%
Occupancy 11.7% 11.9% 11.8%
Depreciation and amortization 5.3% 5.4% 3.4%
--------------- --------------- --------------
Restaurant operating income 7.3% 6.9% 9.4%
General and administrative expenses 16.3% 15.6% 17.2%
Depreciation and amortization 1.1% 0.7% 0.6%
Development and abandoned site costs 0.0% 0.0% 0.9%
--------------- --------------- --------------
Operating Loss (10.1%) (9.4%) (9.3%)
Interest expense 1.1% 2.5% 2.4%
Investment (income) loss, net (2.6%) (0.6%) 0.0%
--------------- --------------- --------------
Loss before minority interest (8.6%) (11.3%) (11.7%)
Minority interest in net loss of SDLP 0.0% 1.4% 3.1%
--------------- --------------- --------------
Net loss (8.6%) (9.9%) (8.6%)
=============== =============== ==============
</TABLE>
Year Ended December 29, 1996 Compared to the Year Ended December 31, 1995.
Net sales for the fiscal year ended December 29, 1996 ("Fiscal 1996") increased
$3.2 million to $16,550,468 compared to $13,350,255 for the fiscal year ended
December 31, 1995 ("Fiscal 1995"). Silver Diner restaurants opened during Fiscal
1995 and Fiscal 1996 in Fair Oaks, Tysons Corner and Arlington, Virginia added
$3.3 million to net sales.
Comparable Company sales (sales for Silver Diner restaurants open
throughout both periods being compared, excluding the initial six months of
operations during which sales are typically higher than normal) decreased 1.2%.
Average net sales for Rockville and Tysons Corner, the Company's highest volume
stores, were $3,598,000 for Fiscal 1996, with the two diners aggregating
approximately 44% of net sales. Average net sales for the other four restaurants
open throughout Fiscal 1996 were approximately $2,312,000.
Cost of sales, primarily food and beverage cost, was unchanged at 27.4% of
net sales for Fiscal 1996 compared to Fiscal 1995. Management was able to offset
higher wholesale food costs during the year through improved purchasing as a
result of the Company's stronger financial condition.
Labor, which consists of restaurant management and hourly employee wages
and bonuses, payroll taxes, workers' compensation insurance, group health
insurance and other benefits, was 33.0% of net sales for the Fiscal 1996, a
decrease of 0.3% of net sales compared to Fiscal 1995. Fiscal 1996 was favorably
impacted by the maturing of the Fair Oaks and Tysons Corner Silver Diner
restaurants opened during 1995, as well as lower
- 11 -
<PAGE>
workers' compensation costs in the Company's Virginia stores.
Congress has passed legislation which increased the minimum wage effective
October 1, 1996. Many of the Company's employees are paid hourly wages, and any
increase in the minimum wage increases the Company's cost. Management estimates
that the minimum wage increase raised the Company's overall labor cost by
approximately 0.2% to 0.3% of net sales. The Company expects to recover this
increased cost through increased operating efficiencies, and to a lesser degree,
price increases to customers.
Operating expenses, which consist of all restaurant operating costs other
than labor and occupancy, including supplies, utilities, repairs and maintenance
and advertising, increased to 15.3% of net sales for Fiscal 1996, compared to
15.1% for Fiscal 1995. Lower comparable store sales, combined with slightly
above average operating expenses in new stores, resulted in the increase as a
percentage of net sales.
Restaurant operating margin, which consists of net sales minus cost of
sales, labor and operating expenses exclusive of occupancy, improved to 24.3% of
net sales for Fiscal 1996 from 24.2% for Fiscal 1995. Management believes
restaurant operating margin is the most consistent measure of store level
operating results because it focuses on unit level performance. The Fiscal 1996
improvement was due to better control of costs overall, and the maturing of the
Company's new stores at Fair Oaks and Tysons Corner.
In late 1996, the Company began testing a new menu designed to enhance
customer value and build sales, while reducing operational complexity.
Management believes that the new menu, which was implemented in all stores in
late January 1997, will increase cost of sales but decrease labor as a
percentage of net sales, with the result being no significant change in
restaurant operating margin. However, the implementation of the new menu is
expected to temporarily increase cost of sales, labor and operating expenses in
the first quarter of 1997 due to initial training and smallwares costs.
Occupancy, which is composed primarily of rent, property taxes and property
insurance, increased $343,339 for Fiscal 1996 compared to Fiscal 1995, due
primarily to the opening of new restaurants during 1995 and 1996.
Restaurant depreciation and amortization increased $167,417 for Fiscal 1996
compared to Fiscal 1995, primarily due to new restaurant openings. Depreciation
decreased approximately $75,000 overall in the first four diners, due in part to
a prospective reduction in the estimated useful life of smallwares, which
increased expense in Fiscal 1995. Fiscal 1996 and Fiscal 1995 include
approximately $240,000 and $153,000, respectively, of preopening amortization.
Preopening costs are amortized on a straight-line basis over twelve months from
the date of each new restaurant opening.
General and administrative expenses include the cost of corporate
administrative personnel and functions, multi-unit management and restaurant
management recruitment and initial training. Such expenses were $2,705,940 for
Fiscal 1996, an increase of $628,205 compared to Fiscal 1995. As a percentage of
net sales, general and administrative expenses increased to 16.3% in Fiscal 1996
from 15.6% in Fiscal 1995. Increased corporate salary costs, higher restaurant
management and recruitment costs, new menu costs and additional expenses related
to being a public company were the primary factors contributing to the
increases. The Company's administrative overhead as a percentage of net sales
remains above the industry average primarily due to the cost of building a
corporate management team to support the Company's intermediate and long-term
growth plans. Also, during Fiscal 1996, the Company began to incur expenses
related to the recruitment and training of restaurant management to support new
Silver Diner openings in late 1996 and early 1997. As revenues increase in 1997
with the addition of new Silver Diners, general and administrative expenses are
expected to decrease as a percentage of net sales.
Depreciation and amortization for Fiscal 1996 includes approximately
$100,000 for amortization of goodwill related to the acquisition of the SDLP
minority interest.
- 12 -
<PAGE>
In September 1995, the Company raised $2.5 million in a private placement
of subordinated notes and common stock warrants, and in October 1995 borrowed
$750,000 from a bank. Investment income, interest expense and amortization
expense (related to deferred loan costs) all initially increased during Fiscal
1996 compared to Fiscal 1995 as a result of these borrowings. Following
consummation of the Merger with FTAC, the subordinated notes were converted into
common stock, the common stock warrants were canceled and the Company's bank
debt and affiliate debt was repaid. The bank debt of SDLP was subsequently
repaid in late July 1996 following acquisition of the SDLP minority interest.
Interest expense and amortization of deferred loan costs were eliminated for
the remainder of Fiscal 1996 due to the repayment of debt. Interest income
increased significantly in Fiscal 1996 due to investment of the Merger and
private placement proceeds.
The limited partners' interest in the net loss of SDLP of $180,175 for
Fiscal 1995 depleted the remaining equity of the limited partners. Accordingly,
minority interest was not available in Fiscal 1996 prior to the acquisition of
the minority interest in SDLP to absorb SDLP losses, and SDLP's losses were
realized by the Company in their entirety.
Net loss for Fiscal 1996 was $1,429,472, or $0.15 per share, compared to
the net loss of $1,322,730, or $0.26 per share, for Fiscal 1995. Average shares
outstanding increased from 5,013,319 for Fiscal 1995 to 9,545,681 for Fiscal
1996. The increase in shares resulted from the Merger and the private placement.
Management expects that the Company will continue incurring relatively modest
quarterly losses until sufficient revenue is generated from new units to absorb
start-up expenses and the increased overhead put in place to support the
Company's growth plans.
Year Ended December 31, 1995 Compared to the Year Ended January 1, 1995.
Net sales for Fiscal 1995 increased $2,453,573 to $13,350,255, compared to
$10,896,682 for the year ended January 1, 1995 (Fiscal 1994). New restaurants
opened during Fiscal 1995 in Fair Oaks and Tysons Corner, Virginia were
primarily responsible for the increase, contributing $2,503,884 to sales.
Comparable Company sales increased 0.8% after adjustment for the additional two
days in Fiscal 1994 resulting from the change in the Company's fiscal year.
Cost of sales decreased 0.5% of net sales to 27.4% in Fiscal 1995, compared
to 27.9% for 1994. Fiscal 1995 reflected the full benefit of a change in the
Company's primary supplier in the spring of 1994, favorable poultry prices and
ongoing menu refinements.
Labor was 33.3% of net sales for Fiscal 1995, an increase of 0.9% of net
sales compared to Fiscal 1994. This increase resulted from higher initial labor
costs associated with the Fair Oaks and Tysons Corner openings, and, to a lesser
degree, increased restaurant management bonuses due to better than budgeted
store level financial performance. Labor costs for existing restaurants,
excluding Fair Oaks and management bonuses in both years, decreased 0.4% of net
sales.
Operating expenses were unchanged at 15.1% of net sales.
Occupancy increased $294,685 for Fiscal 1995 compared to Fiscal 1994. The
new restaurants in Fair Oaks and Tysons Corner had total occupancy cost of
approximately $243,000. The remainder of the increase was primarily due to
consumer price index related rent increases and expansion of the Rockville
diner.
Restaurant depreciation and amortization increased $333,344 for Fiscal 1995
compared to Fiscal 1994. Of this increase, $199,722 is associated with Fair Oaks
and Tysons Corner, including $153,029 of preopening cost amortization.
Depreciation and amortization also increased due to expansion of the Rockville
diner, improvements to other established Silver Diners and a prospective
reduction in the estimated useful life of smallwares.
General and administrative expenses increased $199,961 to $2,077,735 in
1995. As a percentage of net sales, general and administrative expenses fell
from 17.2% in 1994 to 15.6% in 1995. The Company's administrative
- 13 -
<PAGE>
overhead as a percentage of net sales is above the industry average, primarily
due to the Company's commitment to, and subsequent cost of, building a
management team to support its intermediate and long-term growth plans.
During Fiscal 1994, the Company abandoned a proposed site due to a legal
dispute and recorded a charge to operations of $98,637. No sites were abandoned
during Fiscal 1995.
In September 1995, the Company raised $2.5 million in a private placement
of subordinated notes and common stock warrants, and in October, 1995 borrowed
$750,000 from a bank. Investment income, interest expense and amortization
expense (related to deferred loan costs) all increased during Fiscal 1995 as a
result of these borrowings.
The limited partners' interest in the net loss of SDLP of $180,175 for
Fiscal 1995 depleted the remaining equity of the limited partners, resulting in
a decrease in minority interest in net loss of SDLP of $152,802 for Fiscal 1995
compared to Fiscal 1994.
Income Taxes. No current or deferred income tax benefit has been provided
in the Company's consolidated financial statements due to the Company's history
of net operating losses for income tax purposes. At December 29, 1996, the
Company has a net operating loss carryforward of approximately $4.9 million for
income tax purposes that expires in 2008 through 2011, which may be used to
reduce future taxable income and tax liabilities.
Liquidity and Capital Resources
The Company's current financial position is strong as a result of the
consummation of the Merger and the private placement. At December 29, 1996, cash
and cash equivalents were $8.3 million, short-term investments were $1.1
million, working capital was $6.5 million, the Company had no long-term debt and
stockholders' equity was $21.9 million. Cash and cash equivalents increased $6.7
million during Fiscal 1996, due primarily to net Merger proceeds of $11.9
million and net private placement proceeds of approximately $7.6 million, less
cash used to repay debt, finance the Fiscal 1996 operating cash flow deficit and
pay for purchases of property and equipment, including construction payables
associated with the Tysons Corner diner, which opened in December 1995.
The Company's principal future capital requirement is expected to be the
development of restaurants. The Company plans to open five new Company-owned
Silver Diner restaurants in 1997 and grow the number of Company-owned stores at
a rate of approximately 50% annually over the next several years. The typical
building, equipment (including smallwares) and site development cost of a new
Silver Diner prototype is expected to be approximately $1,625,000. Land
generally will be leased. When land is purchased, management intends to pursue a
sale leaseback or debt financing strategy following the restaurant's opening.
At December 29, 1996, the Company was under construction in the
Washington/Baltimore market on locations in Merrifield (opened in February
1997), Springfield and Reston, Virginia. Due to above average site costs, these
locations are expected to average approximately $1.7 million for building,
equipment and site costs. The Reston land is being purchased for approximately
$1.3 million. Management is continuing to negotiate to obtain other sites in the
Washington/Baltimore market.
The Company has been pursuing locations in new geographical markets,
specifically the Philadelphia-Southern New Jersey area and South Florida. To
that end, the Company has entered into a lease agreement and a land purchase
agreement that, pending successful completion of site plan contingencies, will
allow the Company to open a new store in Cherry Hill, New Jersey in 1997 and
Kendall, Florida in 1998.
Management believes that the Company's current capital resources will be
adequate to meet its planned capital requirements through 1997. Additional debt
or equity financing will be required to finance 1998 growth. Management is
currently evaluating financing alternatives. Should the Company be unable to
raise sufficient
- 14 -
<PAGE>
capital in 1997 to meet its 1998 requirements, management may be forced to limit
1998 growth.
Seasonality and Quarterly Results
Although the Company's limited operating history, geographic concentration
and small number of existing Silver Diners make future trends difficult to
predict, Silver Diner restaurants have generally experienced higher average
weekly net sales in the second and third quarters. The timing of new Silver
Diner restaurant openings and extreme weather, especially during the winter
months, may also affect sales and quarterly results. Accordingly,
quarter-to-quarter comparisons of the Company's results of operations may not be
meaningful, and results for any quarter are not necessarily indicative of the
results that may be achieved for a full fiscal year. The first fiscal quarter
includes 16 weeks of operations as compared to 12, 12 and 12 or 13 weeks for
each of the subsequent three quarters, respectively. As a result, despite higher
average weekly sales, net sales from comparable Silver Diners can be expected to
be lower in the second quarter as compared to the first quarter of each year.
Impact of Inflation
Management does not believe that inflation has materially affected the
Company's operating results. Substantial increases in costs and expenses,
particularly food, supplies, labor and operating expenses, could have a
significant impact on the Company's operating results to the extent that such
increases cannot be passed along to customers.
Item 8. Financial Statements and Supplementary Data.
SILVER DINER, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page
<S><C>
Reports of Independent Auditors.................................................................................. 16
Consolidated Financial Statements:
Consolidated Balance Sheets as of
December 29, 1996 and December 31, 1995..................................................................... 18
Consolidated Statements of Operations for the
Fiscal Years Ended December 29, 1996, December 31, 1995 and January 1, 1995................................. 19
Consolidated Statements of Stockholders' Equity for the
Fiscal Years Ended December 29, 1996, December 31, 1995 and January 1, 1995................................. 20
Consolidated Statements of Cash Flows for the
Fiscal Years Ended December 29, 1996, December 31, 1995 and January 1, 1995................................. 21
Notes to Consolidated Financial Statements....................................................................... 23
</TABLE>
- 15 -
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders of Silver Diner, Inc.:
We have audited the accompanying consolidated balance sheet of Silver Diner,
Inc. and subsidiaries (the "Company") as of December 29, 1996 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year (52 weeks) then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The consolidated
financial statements of the Company as of December 31, 1995 and for each of the
years (52 weeks) ended December 31, 1995 and January 1, 1995 were audited by
other auditors whose report, dated April 2, 1996, expressed an unqualified
opinion on those combined statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Silver Diner, Inc. and subsidiaries
as of December 29, 1996 and the results of their operations and their cash flows
for the year (52 weeks) then ended in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
March 14, 1997
- 16 -
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders
Silver Diner, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Silver
Diner, Inc. and Subsidiaries (formerly Silver Diner Development, Inc., Silver
Diner Limited Partnership and Silver Diner Potomac Mills, Inc.), as of
December 31, 1995, and the related consolidated statements of operations,
stockholders' equity and partners' deficit and cash flows for each of the two
years in the period ended December 31, 1995. These consolidated financial
statements are the responsibility of the corporations' and partnership's
managements. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Silver
Diner Development, Inc., Silver Diner Limited Partnership and Silver Diner
Potomac Mills, Inc. as of December 31, 1995, and the results of their
operations, their stockholders' equity and partners' deficit and their cash
flows for each of the two years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ REZNICK FEDDER & SILVERMAN
______________________________
Bethesda, Maryland
April 2, 1996
- 17 -
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 29, December 31,
1996 1995
---------------- ----------------
ASSETS
<S><C>
Current assets:
Cash and cash equivalents $ 8,285,533 $ 1,584,716
Marketable securities available for sale 1,081,015 -
Inventory 147,981 117,393
Prepaid and other current assets 202,081 72,152
---------------- ----------------
Total current assets 9,716,610 1,774,261
Property, equipment and improvements, net 12,956,119 7,142,120
Due from affiliates 55,957 355,023
Preopening costs, net 127,413 239,750
Deferred issuance costs - 907,373
Goodwill, net 2,667,810 -
Deposits and other 340,466 375,942
---------------- ----------------
Total assets $ 25,864,375 $ 10,794,469
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,174,262 $ 3,582,238
Current maturities of notes to related parties - 200,000
Current maturities of long-term debt - 3,193,125
---------------- ----------------
Total current liabilities 3,174,262 6,975,363
Deferred rent liability 749,396 574,821
Notes to related parties, less current maturities - 1,036,811
Long-term debt, less current maturities - 973,200
---------------- ----------------
Total liabilities 3,923,658 9,560,195
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, at December 29, 1996, $.001 par value, 1,000,000 shares
authorized; none issued - -
Common stock, at December 29, 1996, $.00074 par value, 20,000,000 shares
authorized; 11,520,473 shares issued and outstanding; at December 31, 1995,
$.10 par value, 1,000,000 shares authorized, 150,947 pre-merger shares issued
and outstanding 8,526 15,095
Additional paid-in capital 30,297,290 8,154,806
Accumulated deficit (8,365,099) (6,935,627)
---------------- ----------------
Total stockholders' equity 21,940,717 1,234,274
---------------- ----------------
Total liabilities and stockholders' equity $ 25,864,375 $ 10,794,469
================ ================
</TABLE>
Accompanying notes are an integral part of these financial statements
- 18 -
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Fiscal Years Ended
---------------------------------------------------------------
December 29, December 31, January 1,
1996 1995 1995
------------------ ------------------ -----------------
<S><C>
Net sales $ 16,550,468 $ 13,350,255 $ 10,896,682
Restaurant costs and expenses:
Cost of sales 4,526,286 3,655,254 3,036,995
Labor 5,464,896 4,452,134 3,525,472
Operating 2,536,609 2,015,668 1,642,039
Occupancy 1,931,866 1,588,527 1,293,842
Depreciation and amortization 882,843 715,426 382,082
------------------ ------------------ -----------------
Total restaurant costs and expenses 15,342,500 12,427,009 9,880,430
------------------ ------------------ -----------------
Restaurant operating income 1,207,968 923,246 1,016,252
General and administrative expenses 2,705,940 2,077,735 1,877,774
Depreciation and amortization 183,928 97,351 61,042
Development and abandoned site costs - - 98,637
------------------ ------------------ -----------------
Operating loss (1,681,900) (1,251,840) (1,021,201)
Interest expense 180,293 334,086 254,810
Investment (income) loss, net (432,721) (83,021) 3,599
------------------ ------------------ -----------------
Loss before minority interest (1,429,472) (1,502,905) (1,279,610)
Minority interest in net loss of SDLP - 180,175 332,977
------------------ ------------------ -----------------
NET LOSS $ (1,429,472) $ (1,322,730) $ (946,633)
================== ================== =================
Net loss per common share $ (0.15) $ (0.26) $ (0.19)
================== ================== =================
Weighted average common shares outstanding 9,545,681 5,013,319 4,982,414
================== ================== =================
</TABLE>
Accompanying notes are an integral part of these financial statements
- 19 -
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Fiscal Years Ended December 29, 1996, December 31, 1995 and January 1, 1995
<TABLE>
<CAPTION>
Common Stock Additional
------------ Paid-in Accumulated
Shares Amount Capital Deficit Total
---------------- ---------------- ----------------- ---------------- ----------------
<S><C>
Balance at December 31, 1993 149,447 $ 14,945 $ 7,592,983 $ (4,666,264) $ 2,941,664
Stock options issued - - 117,449 - 117,449
Net loss - - - (946,633) (946,633)
---------------- ----------------- ----------------- ---------------- ----------------
Balance at January 1, 1995 149,447 14,945 7,710,432 (5,612,897) 2,112,480
Common stock offering 1,500 150 202,350 - 202,500
Stock options issued - - 242,024 - 242,024
Net loss - - - (1,322,730) (1,322,730)
---------------- ----------------- ----------------- ---------------- ----------------
Balance at December 31, 1995 150,947 15,095 8,154,806 (6,935,627) 1,234,274
Issuance of common stock in connection
with Merger 9,227,857 (8,155) 11,739,775 - 11,731,620
Debenture conversion 625,000 463 2,654,140 - 2,654,603
Common stock offering 1,500,000 1,111 7,555,427 - 7,556,538
Payments on notes receivable
from stockholders - - 41,669 - 41,669
Stock options exercised 16,669 12 38 - 50
Repurchase of outstanding options - - (30,348) - (30,348)
Amortization of unearned compensation - - 39,823 - 39,823
Warrants issued - - 141,960 - 141,960
Net loss - - - (1,429,472) (1,429,472)
---------------- ----------------- ----------------- ---------------- ----------------
Balance at December 29, 1996 11,520,473 $ 8,526 $ 30,297,290 $ (8,365,099) $ 21,940,717
================ ================= ================= ================ ================
</TABLE>
Accompanying notes are an integral part of these financial statements
- 20 -
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Fiscal Years Ended
----------------------------------------------------------------
December 29, December 31, January 1,
1996 1995 1995
---------------- ---------------- ---------------
<S><C>
Cash flows from operating activities
Net loss $ (1,429,472) $ (1,322,730) $ (946,633)
Adjustments to reconcile net loss to net cash used in operations
Depreciation and amortization 1,066,771 812,777 443,124
Compensation expense - stock options and deferred
compensation 81,489 368,505 78,240
Minority interest - (180,175) (332,977)
Changes in operating assets and liabilities
Inventory (30,588) (47,802) 7,711
Prepaid expenses and other assets (129,929) 41,294 54,453
Preopening expenses (128,287) (392,779) -
Deposits and other (78,696) (185,234) (33,386)
Accounts payable and accrued expenses (284,195) 628,798 240,851
Deferred rent liability 174,575 86,772 19,668
---------------- ---------------- ---------------
Net cash used in operating activities (758,332) (190,574) (468,949)
---------------- ---------------- ---------------
Cash flows from investing activities
Purchases of property and equipment (5,729,378) (2,691,826) (247,406)
Maturities of short-term investments - 1,529,543 1,231,262
Purchase of short term investments (1,081,015) (120,000) (2,760,805)
Advances to affiliates - (204,080) (472,083)
Payment of advances to affiliates - 84,371 285,580
---------------- ---------------- ---------------
Net cash used in investing activities (6,810,393) (1,401,992) (1,963,452)
---------------- ---------------- ---------------
</TABLE>
(continued)
Accompanying notes are an integral part of these financial statements
- 21 -
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Fiscal Years Ended
----------------------------------------------------------------
December 29, December 31 January 1,
1996 1995 1995
-------------------- -------------------- ------------------
<S><C>
Cash flows from financing activities
Loan Costs - (26,439) (3,469)
Net proceeds from merger 11,916,868 (167,764) -
Net proceeds from sale of stock 7,556,538 202,500 -
Net proceeds from sale of stock options to employees - 39,471 -
Acquisition of minority interest in Silver Diner Limited Partnership (2,625,453) - -
Proceeds from notes payable - 3,620,000 -
Payments on advances - affiliates - (13,000) -
Payments of principal - notes payable (1,666,325) (641,106) (1,290,165)
Payments of principal - capital leases (107,123) (168,547)
Payments of principal - notes payable - related party (881,788) - (55,604)
Repurchase of employee stock options (30,298) (10,720) -
-------------------- -------------------- ------------------
Net cash provided by (used in) financing activities 14,269,542 2,895,819 (1,517,785)
-------------------- -------------------- ------------------
Net increase (decrease) in cash and cash equivalents 6,700,817 1,303,253 (3,950,186)
Cash and cash equivalents at beginning of the period 1,584,716 281,463 4,231,649
-------------------- -------------------- ------------------
Cash and cash equivalents at end of the period $ 8,285,533 $ 1 ,584,716 $ 281,463
==================== ==================== ==================
Supplemental disclosure of cash flow information:
Interest paid $ 137,300 $ 334,086 $ 245,677
==================== ==================== ==================
Noncash investing and financing activities:
Construction payables included in accounts payable and
accrued expenses $ 1,054,652 $ 301,702 $ 746,142
==================== ==================== ==================
Recapitalization costs included in accounts payable and
accrued expenses $ - $ 722,128 $ -
==================== ==================== ==================
Repayment of notes payable - related party by offset amounts
due from affiliates $ 355,023 $ - $ -
==================== ==================== ==================
Conversion of senior subordinated convertible promissory
notes to 625,000 shares of common stock $ 2,500,000 $ - $ -
==================== ==================== ==================
Issuance of 84,000 warrants in conjunction with
SDLP purchase $ 141,960 $ - $ -
==================== ==================== ==================
</TABLE>
Accompanying notes are an integral part of these financial statements
- 22 -
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 29, 1996
1. Organization and Summary of Significant Accounting Policies
Silver Diner, Inc. and its subsidiaries develop and operate the Silver
Diner restaurant chain. At December 29, 1996, the Company owned and
operated seven diners in the Washington/Baltimore metropolitan area.
Basis of Presentation
The consolidated financial statements for the fiscal year ended December
29, 1996 include the accounts and operations of the Company and its wholly
owned subsidiaries, Silver Diner Development, Inc. and Silver Diner Limited
Partnership. All significant intercompany balances and transactions have
been eliminated in consolidation. Certain previously reported amounts have
been reclassified to conform to the 1996 presentation.
The financial statements for the years ended December 31, 1995 and January
1, 1995 reflect the combined financial statements of Silver Diner
Development, Inc., Silver Diner Limited Partnership and Silver Diner
Potomac Mills, Inc. During 1996, the Company acquired the minority interest
in SDLP (see Note 3), liquidated SDLP into SDDI and began presenting
results on a consolidated basis. Because SDLP's financial statements were
previously combined with the Company's, the change to a consolidated basis
did not have a material impact on the Company's financial statements.
Fiscal Year
Effective January 1, 1994, the Company adopted a 52 or 53-week fiscal year
which ends on the Sunday nearest December 31. The fiscal quarters for the
Company consist of accounting periods of 16, 12, 12 and 12 or 13 weeks,
respectively. Fiscal years 1996, 1995 and 1994 were comprised of 52 weeks
and ended on December 29, 1996, December 31, 1995 and January 1, 1995,
respectively. As a result of the change, the fiscal year ended January 1,
1995 was a 366-day year.
Cash and Cash Equivalents and Marketable Securities
All short-term investments are classified as available-for-sale. Those
investments that are part of the Company's cash management portfolio with a
remaining maturity of three months or less when purchased are reported as
cash equivalents. The balance of the short-term investments are classified
as marketable securities. At December 29, 1996, marketable securities
consists of investment grade commercial paper. Cash and cash equivalents
and marketable securities are stated at cost plus accrued interest, which
approximates fair value.
Inventory
Inventory consists of food and supplies and is valued at the lower of cost
(first-in, first-out) or market.
Property, Equipment and Improvements
Property, equipment and improvements are stated at cost. Buildings and
leasehold improvements are depreciated over the shorter of the estimated
useful lives of the assets or the respective anticipated lease period
including renewal options, ranging from 20 to 35 years, with a provision
for salvage value for the Rockville building. Furniture and equipment are
depreciated over the estimated useful lives of the related assets, ranging
from 2 to 10 years. Depreciation is computed using accelerated and
straight-line methods, and includes assets owned and those under capital
lease agreements.
Preopening Costs
Preopening costs, including payroll, employee recruitment and advertising,
incurred in the restaurant start-up and training period prior to the
opening of each restaurant, are amortized on the straight-line basis over
twelve months from the date of opening.
- 23 -
<PAGE>
Deferred Issuance Costs
Deferred issuance costs, primarily legal, accounting and investment banking
costs, incurred in connection with SDDI's merger with Food Trends
Acquisition Corporation (see Note 2) were deferred and offset against
contributed capital upon consummation of the merger. The substance of the
reverse acquisition is that of an initial public offering and the
acquisition costs incurred by the Company have therefore been treated as a
reduction in paid-in capital.
Goodwill
Cost in excess of fair value of net assets acquired related to the
acquisition of the minority interest in SDLP (see Note 3) is being
amortized on a straight-line basis over 15 years.
Deferred Rent
Deferred rent is recorded and amortized to the extent the total minimum
rental payments allocated to the current period on a straight-line basis
exceed or are less than the cash payments required.
Income Taxes
The provision for income taxes is based on earnings reported in the
financial statements. Deferred income taxes are provided for temporary
differences between financial assets and liabilities and those reported for
income tax purposes. Taxable losses reported by SDLP passed through to, and
were reportable by, its partners.
Net Loss Per Common Share
Net loss per common share is computed based upon the weighted average
number of common shares outstanding during the period. Fully diluted and
primary earnings per common share calculations reflecting the impact of
stock options and warrants are antidilutive and accordingly, are not
presented in the financial statements. In connection with the Merger (see
Note 2), the weighted average shares outstanding for purposes of presenting
net loss per common share on a comparative basis has been retroactively
restated to reflect the effect of the recapitalization that occured in the
reverse acquisition.
Evaluation of Long-Lived Assets
The Company evaluates the potential impairment of long-lived assets,
including goodwill, based upon projections of undiscounted cash flows
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be fully recoverable. Management believes no
material impairment of these assets exists at December 29, 1996.
Stock-Based Compensation
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, requires expanded disclosures of stock-based
compensation arrangements with employees and encourages (but does not
require) compensation cost to be measured based on fair value of the equity
instrument awarded (see Note 12). The Company has chosen to continue to
account for employee stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related Interpretations. Accordingly,
compensation costs for stock options is measured as the excess, if any, of
the quoted market price of the Company's stock at the date of the grant
over the amount the employee must pay to acquire the stock.
Reclassification
Certain prior year balances have been reclassified to conform with the 1996
presentation.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from those estimates.
- 24 -
<PAGE>
2. Merger
On March 27, 1996, FTAC Transition Corporation, a wholly owned subsidiary
of Food Trends Acquisition Corporation merged with and into SDDI with SDDI
surviving as a wholly owned subsidiary of FTAC. In connection with the
Merger, FTAC changed its name to Silver Diner Development, Inc., and in
June 1996, to Silver Diner, Inc. Pursuant to the Merger agreement, each
outstanding share of SDDI common stock converted into 33.339 shares of the
common stock of FTAC. Upon consummation of the Merger, the stockholders of
SDDI became the owners in the aggregate of approximately 57% of the
outstanding common stock of FTAC and the directors and officers of SDDI
became directors and officers of FTAC. Prior to the Merger, FTAC had no
operating activities.
For accounting and financial reporting purposes, the Merger was treated as
a recapitalization of SDDI and as an issuance of SDDI common shares for
monetary assets and liabilities. The transaction was in essence a reverse
acquisition with SDDI retaining the majority voting interest in the merged
entity. The reverse acquisition is a business combination accounted for by
the purchase method in which the continuing entity is not assumed to be the
acquirer. The substance of the reverse acquisition is that of an initial
public offering and the acquisition costs incurred by the Company have
therefore been treated as a reduction in paid-in capital. The Company has
reflected in its consolidated financial statements the assets, liabilities
and equity of SDDI at their historical book values. Accordingly, the
consolidated results of operations and financial position of the Company
for periods and dates prior to the Merger are the consolidated historical
results of operations and financial position of SDDI for such periods and
dates.
All historical shares of common stock and per share amounts for periods
prior to the Merger have been retroactively adjusted to reflect the FTAC
shares issued to the SDDI shareholders at the time of the Merger.
3. Acquisition of Minority Interest in Silver Diner Limited Partnership
On June 13, 1996 the Company completed its purchase of all of the limited
partnership interests in SDLP from the original investors for $2,472,000 in
cash and 84,000 warrants ("New Warrants") to purchase common stock
exercisable at $8.00 per share. The New Warrants are exercisable until the
earlier of 30 days following a public offering of common stock or January
31, 1998. The offer was unanimously accepted by all of the limited
partners. The acquisition was accounted for under the purchase method and
the entire cost of the transaction, totaling $2.8 million, has on a
preliminary basis been allocated to goodwill based on the Company's
estimate that the fair value of the tangible assets acquired approximates
book value. The goodwill is being amortized on a straight-line basis over
15 years and as a result, amortization expense related to goodwill totaled
$99,603 in fiscal year 1996.
4. Property, Equipment and Improvements
The major components of property and equipment are as follows:
<TABLE>
<CAPTION>
December 29, December 31,
1996 1995
---------------- -----------------
<S><C>
Land $ 1,090,470 $ -
Buildings and leasehold improvements 7,042,095 5,661,681
Furniture, fixtures and equipment 3,961,786 2,827,656
Deferred lease costs 599,790 395,499
Property under capital leases - 495,000
Construction in progress 3,168,023 -
---------------- -----------------
15,862,164 9,379,836
Less accumulated depreciation and amortization (2,906,045) (2,237,716)
---------------- -----------------
$ 12,956,119 $ 7,142,120
================ =================
</TABLE>
Deferred lease costs represent brokerage commissions, legal fees and zoning
related costs primarily related to those leases upon which the Company
constructed its restaurants.
- 25 -
<PAGE>
5. Accounts Payable & Accrued Expenses
Accounts payable and accrued expenses consists of the following:
<TABLE>
<CAPTION>
December 29, December 31,
1996 1995
---------------- -----------------
<S><C>
Trade payables $ 2,564,381 $ 2,879,286
Payroll and related taxes 427,584 360,015
Interest - 114,942
Sales and use taxes 92,628 69,216
Other 89,669 158,779
---------------- -----------------
$ 3,174,262 $ 3,582,238
================ =================
</TABLE>
6. Long-Term Obligations
Long-term debt includes the following:
<TABLE>
<CAPTION>
December 31,
1995
-----------------
<S><C>
Senior subordinated convertible promissory notes, bearing
interest at 10%, payable in one installment of principal plus
accrued interest on December 31, 1996. On March 27,
1996, the outstanding promissory notes, plus accrued
interest, were exchanged for 625,000 shares of the
Company's common stock. $ 2,500,000
Installment notes payable to a bank, bearing interest at the
prime rate plus 2%. These notes were fully paid on April 4,
1996. 903,596
Installment note payable to a bank, bearing interest at the
prime rate plus 2%. The note was fully paid on July 30,
1996. 346,488
Promissory notes with a bank, bearing interest at the prime
rate plus 1.5%. The notes were fully paid on July 31, 1996. 238,986
-----------------
3,989,070
Capital lease obligations (See Note 9) 177,255
-----------------
4,166,325
Less current installments (3,193,125)
-----------------
$ 973,200
=================
</TABLE>
7. Notes Payable - Related Party
At December 31, 1995, the Company had notes payable to its president
totaling $1,236,811 bearing interest at prime plus 2%. The entire balance
of related party notes payable, net of the balances due from affiliates as
discussed in Note 9 below, was paid off concurrent with the Merger.
Interest charged to operations relating to the notes amounted to $30,801,
$121,847 and $105,242 in fiscal years 1996, 1995 and 1994, respectively.
8. Private Placement
On July 11, 1996, the Company completed a $8,250,000 private placement of
common stock through the sale of 1.5 million shares at $5.50 per share.
Approximately $2.5 million of the approximately $7.6 million net proceeds
of the sale were used to replace the funds used for the acquisition of the
minority interests in SDLP, and the
- 26 -
<PAGE>
remainder is available to fund expansion. In connection with the sale, the
Company registered the shares with the Securities and Exchange Commission.
9. Related Party Transactions
Silver Diner Potomac Mills, Inc.
--------------------------------
The Company leases the diner at Potomac Mills pursuant to two lease
agreements with Silver Diner Potomac Mills, Inc., a corporation
wholly-owned by the president of the Company. The leases expire October
14, 2011 and include annual CPI adjustments to base rent and percentage
rent based on gross receipts. For the years ending December 29, 1996,
December 31, 1995 and January 1, 1995, occupancy costs include $389,000,
$391,000 and $391,000, respectively, in rent and related pass through costs
associated with the leases.
Robert Giaimo Leasing, Inc.
---------------------------
The Company leased the furniture and equipment at one of its diners under
terms of a capital lease expiring in 1999 from Robert Giaimo Leasing, Inc.
("RGLI"), a corporation established solely to purchase furniture and
equipment to be leased to the Company. RGLI is wholly-owned by the
president of the Company. At December 31, 1995, property and equipment
included $210,000 in capital leased assets, net of accumulated
depreciation, and long-term debt included $177,000 in capital lease
liability related to the lease with RGLI. In connection with the Merger, on
April 1, 1996, the Company terminated its capital lease obligation with
RGLI by purchasing the leased equipment at the remaining lease obligation
balance of approximately $148,000. For the years ending December 29, 1996,
December 31, 1995 and January 1, 1995, interest expense includes $3,931,
$22,000 and $38,000, respectively, in interest related to the lease with
RGLI.
Due From/To Affiliates
----------------------
At December 31, 1995, due from affiliates represented non-interest bearing
amounts due on demand from RTG Real Estate Limited Partnership, formerly
Silver Diner Real Estate Limited Partnership, an affiliate, RGLI and Robert
Giaimo Development, Inc., resulting from current and prior year cash
advances in the amounts of $157,696, $14,110 and $183,217, respectively, at
December 31, 1995. Balances due from affiliates were offset against amounts
paid to the president of the Company concurrent with the Merger, as
discussed in Note 7 above.
At December 29, 1996, the Company is paying premiums for three life
insurance policies owned respectively by two officers. Due from affiliates
represents non-interest bearing amounts due on demand from the two
officers, which are collateralized by the life insurance policies and are
equal to the amount paid by the Company on such life insurance
policies.
10. Commitments and Contingencies
Operating Leases
----------------
The Company leases restaurant land and buildings under various
noncancellable operating leases with terms expiring at various dates
through 2015. Certain of these leases are with related parties (see Note
9). These leases include minimum lease payments, reimbursable operating
costs and real estate taxes. Also, certain of these leases contain renewal
options for a maximum of 15 years beyond the original term, have provisions
for additional rent based on sales at the individual locations and annual
increases based on the consumer price index. The leases provide for certain
rent holidays and escalations in payments over the lease terms. The effect
of the holidays and escalations have been reflected in rent expense on a
straight-line basis over the initial lease terms. The excess of expense
over cash payments has been reflected in the consolidated financial
statements as deferred rent.
- 27 -
<PAGE>
Future minimum lease payments as of December 29, 1996 are:
1997 $ 1,857,000
1998 2,028,000
1999 2,144,000
2000 2,226,000
2001 2,271,000
Thereafter 21,620,000
Rent expense under the leases for fiscal 1996, 1995 and 1994
was approximately $1,622,000, $1,270,000 and $1,069,000, respectively,
inclusive of contingent rent of $9,000 and $14,000 for fiscal 1995
and 1994, respectively.
Employment Continuity Agreements
--------------------------------
SDDI has entered into employment continuity agreements with
certain executives. The agreements are generally three to five years in
length and provide for minimum salary levels, as adjusted for minimum
percentage increases and include incentive bonuses based on specified
management goals. The aggregate minimum commitment for future salaries,
excluding bonuses, as of December 29, 1996 is approximately $1.5 million.
Legal Matters
-------------
On May 20, 1996, the Company was named as a defendant in a proceeding
instituted in the Circuit Court for Prince George's County, Maryland. The
Company's insurance carrier is currently defending the claim with
reservation of rights. The Company does not believe that it is liable and
intends to vigorously defend itself.
11. Income Taxes
At December 29, 1996, the Company has a net operating loss carryforward of
approximately $4.9 million for income tax purposes, that expires in 2008
through 2011, which may be used to reduce future taxable income and tax
liabilities.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts reported for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
December 29, December 31,
1996 1995
---------------- ----------------
<S><C>
Net tax operating loss carryforwards $ 1,962,941 $ 452,059
Book over (under) tax depreciation/amortization 172,063 (106,829)
Accrued deferred compensation - 95,540
Deferred rent 302,697 36,707
---------------- ----------------
Deferred tax assets 2,437,701 477,477
Less: valuation allowance (2,437,701) (477,477)
---------------- ----------------
Net deferred tax asset $ - $ -
================ ================
</TABLE>
As a result of the Company's history of cumulative losses, a valuation
allowance equal to the calculated deferred tax benefit has been recorded at
December 29, 1996 and December 31, 1995.
12. Stock Compensation Plans
The Company has the following stock-based compensation plans:
1996 Employee Stock Purchase Plan
The 1996 Employee Stock Purchase Plan was adopted in September 1996 by the
Company's board of directors, subject to shareholder approval, and
continues in effect for a term of 10 years. The Company is authorized to
issue 300,000 shares under the plan to employees who customarily work at
least 20 hours per week and more than five months in a calendar year, and
who have been continuously employed by the Company for six months. Under
the terms of the plan, employees can choose each quarter to have up to 10
percent of their base
- 28 -
<PAGE>
earnings (not to exceed $21,250 annually) withheld to purchase the
Company's common stock. The purchase price of the stock is 85% of the
lower of its beginning-of-quarter or end-of-quarter market price. The
Company plans to implement the plan in the spring of 1997.
Incentive Stock Option Plan
The Incentive Stock Option Plan was adopted by the Company's board of
directors in September 1996 and continues in effect for 10 years. The plan
provides for incentive stock options and nonqualified stock options.
Options may be granted to any director, officer, key employee or outside
consultant of the Company. Terms of the options are set by the Company's
board of directors. The Company has reserved 350,000 shares of common stock
for issuance under the plan.
Restaurant Owner Operator Program
The Restaurant Owner Operator Program, which was adopted by the Company's
board of directors in December 1996 for implementation in fiscal year 1997,
provides for the general manager (Owner Operator) and the store manager
team (Store Managers) of each of the Company's restaurants to share in the
profits of their restaurant and to participate as equity owners of the
Company. To participate in the program, Owner Operators must make an
initial investment in discounted Company common stock, which may not be
sold or otherwise transferred by the Owner Operator for a period of five
years from the date of purchase. Should the Operating Partner's employment
terminate for any reason other than death or disability, the Company has
the right to repurchase the stock from the Owner Operator for the amount of
his or her investment. The plan also provides for annual restricted common
stock awards to Owner Operators and Store Managers. Stock awarded at the
end of the first year vests after the fourth anniversary of the award date.
For each year thereafter, stock awards vest after the third anniversary of
the award date. The Company has reserved 300,000 shares of common stock for
issuance under the plan.
1996 Consultant Stock Option and Stock Purchase Plan
The 1996 Consultant Stock Option and Stock Purchase Plan was adopted by the
Company's board of directors in December 1996, and continues in effect for
a term of 10 years. The plan provides for the Company's consultants to
purchase (i) options to purchase shares of common stock in the Company or
(ii) shares of common stock in the Company, and apply a portion of the fees
otherwise payable to them by the Company to pay the purchase price for such
options or common stock. Options under the plan are granted at the fair
market value of the common stock on the first day of each calendar quarter
at a price determined pursuant to Black- Scholes methodology, are
exercisable at any time in whole or in part for a period of three years
from date of grant and vest immediately. The Company has reserved 100,000
shares of common stock for issuance under the plan.
1996 Non-Employee Director Stock Option Plan
The 1996 Non-Employee Director Stock Option Plan was adopted by the
Company's board of directors in December 1996, subject to shareholder
approval, and continues in effect for 10 years. Under the plan, each
non-employee director shall be granted an option to purchase 1,000 shares
of the Company's common stock at fair market value on the first day of each
calendar quarter. Options granted under the plan are exercisable at any
time in whole or in part for a period of three years from date of grant,
and vest immediately. The Company has reserved 75,000 shares of common
stock for issuance under the plan.
Second Amended and Restated 1991 Stock Option Plan
The Second Amended and Restated 1991 Stock Option Plan for directors,
officers, key employees and consultants provides for incentive and
non-qualified stock options. The options generally expire 10 years from
- 29 -
<PAGE>
the date of grant and are exercisable over the period stated in each
option. The board of directors determines the option price (not to be less
than fair market value for incentive options) at the date of grant.
Excluding the effect of the Merger (see Note 2), options under the plan are
exercisable in full if the Company executes a merger agreement or
consolidates with another company, if more than 50% of the Company's voting
stock is acquired by another person or group in an other than capital stock
transaction, or if Robert T. Giaimo ceases to be President of the Company.
The plan expires in 2001. At December 29, 1996, no options were available
for future grant under the plan.
Second Amended and Restated Earned Ownership Plan
The Second Amended and Restated Earned Ownership Plan for key employees
provides for non-qualified stock options. The options generally expire 10
years from the date of grant, have an option price of $0.0003 and vest 20%
at date of grant and 20% on each of the next four anniversaries following
the grant date. Excluding the effect of the Merger (see Note 2), options
under the plan are exercisable in full if the Company executes a merger
agreement or consolidates with another company, if more than 50% of the
Company's voting stock is acquired by another person or group in an other
than capital stock transaction, or if Robert T. Giaimo ceases to be
President of the Company. The plan has no fixed expiration date. At
December 29, 1996, no options were available for future grant under the
plan.
The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its plans. The compensation cost that has been charged
against income under the Company's plans was $81,492, $227,989 and $76,162
for the years ended December 29, 1996, December 31, 1995 and January 1,
1995, respectively. Had compensation cost been determined in accordance
with FASB Statement No. 123, the Company's net loss and net loss per share
would have been the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Years Ended
---------------------------------------------------------------
December 29, December 31, January 1,
1996 1995 1995
<S><C>
Net loss:
As reported $ (1,429,472) $ (1,322,730) $ (946,633)
Pro forma $ (1,469,539) $ (1,421,642) $ (1,079,903)
Net loss per common share:
As reported $ (0.15) $ (0.26) $ (0.19)
Pro forma $ (0.15) $ (0.28) $ (0.22)
</TABLE>
All options granted during the year ended December 29, 1996 were issued
pursuant to the 1996 Non-Employee Director Stock Option Plan. The fair
value of each option grant under this plan is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions: dividend yield of 0.0%, expected volatility
of 27%, risk free interest rate of 6.2% and an expected life of two years.
Options granted during 1994 and 1995 were issued pursuant to the Second
Amended and Restated 1991 Stock Option Plan and the Second Amended and
Restated Earned Ownership Plan. During this period the Company was
privately held. The fair value of each option grant under these plans is
estimated on the date of grant using the Black-Scholes option pricing model
with the following weighted-average assumptions: dividend yield of 0.0%;
expected volatility of 1%; common stock fair market value of $4.05;
risk-free interest rates of 7.5% and 6.1% for 1994 and 1995, respectively;
and an expected life of seven years.
- 30 -
<PAGE>
A summary of the status of the Company's stock option plans as of December
29, 1996, December 31, 1995 and January 1, 1995 and changes during the
years ended on these dates is:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------- -------------------------- --------------------------
Weighted - Weighted - Weighted -
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
<S><C>
Options Outstanding,
beginning of year 784,959 $ 2.50 279,451 $ 1.49 171,409 $ 0.64
Granted 18,000 $ 5.83 563,251 $ 3.13 142,948 $ 2.57
Exercised (16,669) $ 0.00 - $ 0.00 - $ 0.00
Forfeited (82,081) $ 4.05 (53,276) $ 3.98 (33,339) $ 1.80
Repurchased (14,989) $ 0.00 (4,467) $ 0.00 (1,567) $ 0.00
------- ------- -------
Options outstanding,
end of year 689,220 $ 2.52 784,959 $ 2.50 279,451 $ 1.49
======= ======= =======
Options exercisable at
year end 313,260 284,382 154,170
Weighted-average fair
value of options granted
during the year $ 1.21 $ 1.98 $ 2.51
</TABLE>
The following table summarizes information about stock options outstanding at
December 29, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------- -------------------------------
Range Number Weighted-Avg. Weighted-Avg. Number Weighted-Avg.
of Outstanding Remaining Exercise Exercisable Exercise
Exercise Prices at 12/29/96 Contractual Life Price at 12/29/96 Price
<S><C>
Less than $0.01 263,417 7.5 years $ 0.00 180,473 $ 0.00
$2.25 to $3.60 16,670 6.7 years $ 2.93 16,670 $ 2.93
$4.05 to $6.50 409,133 8.8 years $ 4.13 116,117 $ 4.33
------------- -------------
$0.0003 to $6.50 689,220 8.0 years $ 2.52 313,260 $ 1.76
============= =============
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Previous Independent Accountants. Prior to the Merger, the Company's
certifying accountant was KPMG Peat Marwick LLP ("Peat Marwick"). Pursuant to
the Merger, and effective as of March 27, 1996, Reznick Fedder & Silver
("Reznick"), 4520 East-West Highway, Suite 300, Bethesda, Maryland, SDDI's
certifying accountant, became the Company's certifying accountant. Peat
Marwick's report on the financial statements for each of the past two years did
not contain an adverse opinion or disclaimer of opinion, and was not qualified
or modified as to uncertainty, audit scope or generally accepted accounting
principles. The decision to change accountants was approved by the Company's
board of directors and was reported in the Company's Current Report on Form 8-K
dated March 27, 1996, as amended.
During the Company's two most recent fiscal years and for any subsequent
interim period preceding such dismissal, there have been no disagreements with
Peat Marwick on any matter of generally accepted accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreement(s), if not resolved to the satisfaction of the former
accountant, would have caused it to make reference to the subject matter of such
disagreement(s) in connection with its report.
The Company's board of directors and audit committee subsequently
determined that it was in the Company's best interest to engage a new
independent auditor. The Company notified Reznick of its dismissal as
independent auditors on December 3, 1996 and reported the dismissal in a Current
Report on Form 8-K dated December 9, 1996.
- 31 -
<PAGE>
Reznick has not issued any reports on the Company's financial statements.
Reznick's report on the Combined Financial Statements of SDDI, SDLP and Silver
Diner Potomac Mills, Inc. ("SDPMI") for the years ended December 31, 1995 and
January 1, 1995 contained no adverse opinion or disclaimer of opinion, and was
not qualified or modified as to uncertainty, audit scope or accounting
principles. During the fiscal years ended December 31, 1995 and January 1, 1995,
and through the date of termination on December 3, 1996, neither the Company nor
SDDI had any disagreements with Reznick on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved, would have caused Reznick to make reference to the
subject matter of the disagreement in connection with its report.
New Independent Accountants. On December 3, 1996, the Company engaged
Deloitte & Touche LLP to audit the Company's financial statements for the year
ended December 29, 1996 and reported such engagement on a Current Report on form
8-K dated December 9, 1996.
Item 10. Directors and Executive Officers of the Company.
The information under "Election of Directors" in the Proxy Statement for
the Annual Meeting of Shareholders in 1997 is incorporated herein by reference.
Information concerning executive officers is set forth under "Executive Officers
of the Registrant" in Part I.
Item 11. Executive Compensation.
The information under "Executive Compensation" in the Proxy Statement for
the Annual Meeting of Shareholders in 1997 is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information under "Ownership of Common Stock by Directors and Executive
Officers" and Election of Directors" in the Proxy Statement for the Annual
Meeting of Shareholders in 1997 is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information under "Election of Directors" and "Executive Compensation"
in the Proxy Statement for the Annual Meeting of Shareholders in 1997 is
incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Lists of Documents Filed as Part of this Report
1. Financial Statements
<TABLE>
<CAPTION>
Page
<S><C>
Reports of Independent Auditors................................................................................ 16
Consolidated Financial Statements:
Consolidated Balance Sheets as of
December 29, 1996 and December 31, 1995................................................................... 18
</TABLE>
- 32 -
<PAGE>
<TABLE>
<S><C>
Consolidated Statements of Operations for the
Fiscal Years Ended December 29, 1996, December 31, 1995 and January 1, 1995............................... 19
Consolidated Statements of Stockholders' Equity for the
Fiscal Years Ended December 29, 1996, December 31, 1995 and January 1, 1995............................... 20
Consolidated Statements of Cash Flows for the
Fiscal Years Ended December 29, 1996, December 31, 1995 and January 1, 1995............................... 21
Notes to Consolidated Financial Statements..................................................................... 23
</TABLE>
2. Schedules
All Schedules are omitted because the required information is inapplicable or it
is presented in the Consolidated Financial Statements or the notes thereto.
3. Exhibits
Exhibit Number Description of Document
- -------------- -----------------------
2 Plan of acquisition, reorganization, arrangement, liquidation
or succession
2.1 Agreement and Plan of Reorganization dated August 29, 1995, as
amended January 25, 1996, by and among FTAC, FTAC Transition
Corporation and SDDI, incorporated by reference to Exhibits
2.1 and 2.7 of the registrant's Form S-4 (File No. 33-98844).
3 Articles of incorporation and bylaws
3.1 Registrant's Certificate of Incorporation as amended by
Certificates of Amendment incorporated by reference to Exhibit
3.01 of the registrant's Form 8-K dated March 27, 1996.
3.2 Registrant's Bylaws incorporated by reference to Exhibit 3.3
of the registrant's Form S-4 (File No. 33-98844).
4 Instruments defining the rights of security holders, including
indentures
4.1 Certificate of Designation, Preferences and Rights of the
class of the registrant's preferred stock to be designated
Special Convertible Preferred Stock and Warrant Agreement
between the registrant and Continental Stock Transfer & Trust
Company incorporated by reference to Exhibit 4.01 of the
registrant's Form 8-K dated March 27, 1996.
4.2 Form of the registrant's Special Convertible Preferred Stock
incorporated by reference to Exhibit 4.02 of the registrant's
Form 8-K dated March 27, 1996.
4.3 Form of the registrant's Common Stock Certificate incorporated
by reference to Exhibit 4.03 of the registrant's Form 8-K
dated March 27, 1996.
4.4 Form of the registrant's Warrant Certificate incorporated by
reference to Exhibit 4.04 of the registrant's Form 8-K dated
March 27, 1996.
9 Voting Trust Agreements
9.1 Form of Voting and Lockup Agreement with respect to Stock
Option Agreements incorporated by
- 33 -
<PAGE>
reference to Exhibit 9.01 of the registrant's Form 8-K dated
March 27, 1996.
9.2 Form of Lockup Agreement among SDDI and certain of its
shareholders, together with schedule of executed Lockup
Agreements incorporated by reference to Exhibit 9.02 of the
registrant's Form 8-K dated March 27, 1996.
9.3 SDDI Affiliate Lockup Agreement dated as of August 29, 1995 by
and among SDDI, Robert T. Giaimo, Ype Hengst, Clinton Clark,
Charles Steiner and Edward Kaplan incorporated by reference to
Exhibit 9.03 of the registrant's Form 8-K dated March 27,
1996.
9.4 Form of SDDI Voting and Lockup Agreement among SDDI, Robert T.
Giaimo and certain shareholders of SDDI, together with
Schedule of executed Voting and Lockup Agreements incorporated
by reference to Exhibit 9.04 of the registrant's Form 8-K
dated March 27, 1996.
9.5 FTAC Voting and Lockup Agreement dated as of September 15,
1995 by and among the registrant and George A. Naddaff,
Douglas M. Suliman, Jr., Ralph J. Guarino and Charles A.
Cocotas incorporated by reference to Exhibit 9.05 of the
registrant's Form 8-K dated March 27, 1996.
9.6 Assumption of SDDI Voting and Lockup Agreement, SDDI Affiliate
Lockup Agreement and Stockholder Lockup Agreement dated March
27, 1996, pursuant to Section 5.14(c) of merger agreement by
and among FTAC, FTAC Transition Corporation and SDDI,
incorporated by reference to Exhibit 9.06 of the registrant's
Form 8-K dated March 27, 1996.
9.7 GKN Voting and Lockup Agreement dated as of September 15, 1995
by and among the registrant, Robert T. Giaimo, GKN Securities
Corp., and certain additional signatories thereto incorporated
by reference to Exhibit 9.07 of the registrant's Form 8-K
dated March 27, 1996.
10 Material Contracts
Material Contracts - Real Property
Rockville, Maryland
10.1 Lease Agreement between Federal Realty Investment Trust
(Landlord) and SDLP (Tenant) dated July 13, 1988 as amended by
Lease Modification dated August 17, 1988, Second Lease
Modification dated February 3, 1989, Third Amendment to Lease
dated January 20, 1993, and Fourth Lease Modification
Agreement dated October 17, 1994 incorporated by reference to
Exhibit 10.01 of the registrant's Form 8-K dated March 27,
1996.
Laurel, Maryland
10.2 Lease between CG Beltsville Limited Partnership (Landlord) and
SDLP (Tenant) dated January 26, 1990, as amended by Letter
Agreement dated October 28, 1995 incorporated by reference to
Exhibit 10.02 of the registrant's Form 8-K dated March 27,
1996.
Dale City, Virginia (Potomac Mills)
10.3 Lease between RGDI (Landlord) and SDPMI (Tenant), dated June
10, 1991, as amended by First Amendment to Lease, dated
October 14, 1991, as amended by Second Amendment to Lease
dated October 30, 1995 incorporated by reference to Exhibit
10.03 of the registrant's Form 8-K dated March 27, 1996.
- 34 -
<PAGE>
Parking Lot (parcel 11-B-1A), Dale City, Virginia (located
adjacent to Silver Diner Restaurant at Potomac Mills)
10.4 Lease between Robert Giaimo Development, Inc. ("RGDI")
(Landlord) and SDPMI (Tenant) dated May 27, 1992, as amended
by Amendment to Lease dated October 30, 1995 incorporated by
reference to Exhibit 10.04 of the registrant's Form 8-K dated
March 27, 1996.
Towson, Maryland
10.5 Lease Agreement between Towson Town Center Associates
(Landlord) and the registrant (Tenant) effective January 30,
1992 incorporated by reference to Exhibit 10.05 of the
registrant's Form 8-K dated March 27, 1996.
Fair Lakes, Virginia (Fair Oaks)
10.6 Ground Lease Agreement between F.L. Promenade L.P. (Landlord)
and the registrant (Tenant) dated July 12, 1994, as amended by
First Amendment to Ground Lease Agreement dated February 15,
1995, and Second Amendment to Ground Lease Agreement dated
April 4, 1995 incorporated by reference to Exhibit 10.06 of
the registrant's Form 8-K dated March 27, 1996.
Tysons Corner, Virginia
10.7 Ground Lease between Lehndorff Tysons Joint Venture (Landlord)
and the registrant (Tenant) dated December 29, 1994), as
amended by First Amendment to Lease dated May 14, 1995
incorporated by reference to Exhibit 10.07 of the registrant's
Form 8-K dated March 27, 1996.
Springfield, Virginia
10.8 Springfield Mall Lease between Franconia Associates (Landlord)
and the registrant (Tenant) effective May 1, 1996 incorporated
by reference to Exhibit 10.08 of the registrant's Form 8-K
dated March 27, 1996.
Merrifield, Virginia
10.9 Agreement of Lease dated September 14, 1995 by and between
2909 Gallows LC (Landlord) and the registrant (Tenant)
incorporated by reference to Exhibit 10.09 of the registrant's
Form 8-K dated March 27, 1996.
Reston, Virginia
10.10 Purchase and Sale Agreement dated December 29, 1995 by and
between Reston Land Corporation (Seller) and the registrant
(Buyer) incorporated by reference to Exhibit 10.10 of the
registrant's Form 8-K dated March 27, 1996.
Clarendon, Virginia
10.11 Lease dated February 12, 1996 between Wilson Limited
Partnership (Landlord) and the registrant (Tenant)
incorporated by reference to Exhibit 10.11 of the registrant's
Form 8-K dated March 27, 1996.
- 35 -
<PAGE>
Kendall, Florida
10.12 Purchase Agreement dated October 4, 1996 by and between
Documentation Corp. And Bersin Development Corp. (Sellers) and
the registrant (Buyer).*
Cherry Hill, New Jersey
10.13 Lease Agreement dated September 30, 1996 by and between Cherry
Hill Associates L.P. (Landlord) and the registrant (Tenant).*
Material Contracts - Stock Plans
10.14 SDDI Second Amended and Restated 1991 Stock Option Plan,
together with forms of incentive stock option agreement and
non-qualified stock option agreement incorporated by reference
to Exhibit 10.14 of the registrant's Form 8-K dated March 27,
1996.
10.15 SDDI Second Amended and Restated Earned Ownership Plan,
together with form of non-qualified stock option agreement
incorporated by reference to Exhibit 10.15 of the registrant's
Form 8-K dated March 27, 1996.
10.16 Silver Diner, Inc. 1996 Non-employee Director Stock Option
Plan together with form of stock option agreement incorporated
by reference to Exhibit 4(a) of the registrant's Form S-8
filed December 20, 1996.
10.17 Silver Diner, Inc. 1996 Consultant Stock Option and Stock
Purchase Plan together with form of stock option agreement,
form of stock purchase agreement, form of election to purchase
common stock and form of election to purchase options,
incorporated by reference to Exhibit 4(b) of the registrant's
Form S-8 filed December 20, 1996.
10.18 Certificate and Agreement of Participation, Silver Diner, Inc.
Restaurant Owner Operator Program and Addenda incorporated by
reference to Exhibit 4 of the registrant's Form S-8 filed
February 14, 1997.
10.19 Silver Diner, Inc. Stock Option Plan together with form of
Stock Option Agreement.*
10.20 Silver Diner, Inc. Employee Stock Purchase Plan together with
form of Subscription Agreement and Notice of Withdrawal.*
Material Contracts - Agreements with Executive
Officers/Directors
10.21 Letter Agreement dated August 28, 1995, between the registrant
and James David Oden regarding terms of employment, as amended
by Letter Agreement dated March 26, 1996 incorporated by
reference to Exhibit 10.17 of the registrant's Form 8-K dated
March 27, 1996.
10.22 Letter Agreement dated December 31, 1995 between the
registrant and Daniel Brannan regarding terms of employment,
as amended by Letter Agreement dated March 26, 1996
incorporated by reference to Exhibit 10.18 of the registrant's
Form 8-K dated March 27, 1996.
10.23 Letter Agreement dated December 4, 1996 between the registrant
and Patrick Meskell regarding terms of employment, as amended
by Letter Agreement dated March 26, 1996 incorporated by
reference to Exhibit 10.19 of the registrant's Form 8-K dated
March 27, 1996.
- 36 -
<PAGE>
10.24 Founder's Employment Agreement dated August 28, 1995 by and
between the registrant and Robert T. Giaimo incorporated by
reference to Exhibit 10.20 of the registrant's Form 8-K dated
March 27, 1996.
10.25 Assumption of Founder's Employment Agreement dated March 27,
1996 pursuant to Section 5.14(b) of merger agreement by and
among FTAC, FTAC Transition Corporation and SDDI,,
incorporated by reference to Exhibit 10.21 of the registrant's
Form 8-K dated March 27, 1996.
10.26 Indemnity Agreement dated August 29, 1995 by and between
Robert T. Giaimo, as indemnitee, and the registrant
incorporated by reference to Exhibit 10.22 of the registrant's
Form 8-K dated March 27, 1996.
Material Contracts - Miscellaneous
10.27 1991 Management Agreement (undated in original) between SDPMI
(Owner) and SDLP (Manager) in connection with SDPMI Virginia
incorporated by reference to Exhibit 10.35 of the registrant's
Form 8-K dated March 27, 1996.
10.28 Option to Purchase dated January 26, 1990 between CG
Beltsville Limited Partnership (Optionor), and SDLP (Optionee)
regarding land parcel on which the Silver Diner Restaurant in
Laurel, Maryland, is located incorporated by reference to
Exhibit 10.36 of the registrant's Form 8-K dated March 27,
1996.
10.29 Amendment No. 1 to the Stock Escrow Agreement dated as of
March 26, 1996 among the Registrant, George A. Naddaff,
Douglas M. Suliman, Jr., Ralph J. Guarino, Charles A. Cocotas
and Continental Stock Transfer & Trust Company, together with
letter dated March 27, 1996 from the Registrant to Continental
Stock Transfer & Trust Company incorporated by reference to
Exhibit 10.37 of the registrant's Form 8-K dated March 27,
1996.
10.30 Affiliate Warrant Exchange and Custodial Agreement dated
September 15, 1996, by and among George A. Naddaff, Douglas M.
Suliman, Jr. and Charles A. Cocotas, as Warrant Holders, SDDI
and Douglas M. Suliman, Jr., as Custodian incorporated by
reference to Exhibit 10.38 of the registrant's Form 8-K dated
March 27, 1996.
10.31 Escrow Agreement dated as of February 1, 1996 by and between
GKN Securities Corp., certain affiliates thereof, the SDDI and
Arent Fox, as Escrow Agent incorporated by reference to
Exhibit 10.39 of the registrant's Form 8-K dated March 27,
1996.
10.32 Option Agreement dated March 27, 1996 by and between RGDI and
SDDI granting option to SDDI for the purchase of Potomac Mills
real estate parcels incorporated by reference to Exhibit 10.34
of the registrant's Form 8-K dated March 27, 1996.
21 Subsidiaries of the Registrant.*
23 Accountants Consents
23.1 Consent of Reznick Fedder & Silverman.*
23.2 Consent of Deloitte & Touche LLP.*
(b) The Company filed a Current Report on Form 8-K on December 9, 1996
to report a change in the Company's certifying accountant. See "Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure" in Item 9
of Part II.
* Filed herewith. All other exhibits have been previously filed as
indicated.
- 37 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Silver Diner, Inc.
By:/s/ Robert T. Giaimo
----------------------------------
Robert T. Giaimo
President and Chief Executive Officer
March 31, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and int he capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S><C>
/s/ Robert T. Giaimo President, Chief Executive March 31, 1997
- --------------------------- Officer and Director
Robert T. Giaimo
/s/ David Oden Senior Vice President and Chief March 31, 1997
- --------------------------- Financial Officer
David Oden
/s/ Catherine Britton Director March 31, 1997
- ---------------------------
Catherine Britton
/s/ Clinton Clark Director March 31, 1997
- ---------------------------
Clinton Clark
/s/ Ype Hengst Director March 31, 1997
- ---------------------------
Ype Hengst
/s/ Edward H. Kaplan Director March 31, 1997
- ---------------------------
Edward H. Kaplan
/s/ George A. Naddaff Director March 31, 1997
- ---------------------------
George A. Naddaff
/s/ Louis P. Neeb Director March 31, 1997
- ---------------------------
Louis P. Neeb
/s/ Charles Steiner Director March 31, 1997
- ---------------------------
Charles Steiner
/s/ Douglas M. Suliman Director March 31, 1997
- ---------------------------
Douglas M. Suliman
</TABLE>
- 38 -
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Document
- -------------- -----------------------
2 Plan of acquisition, reorganization, arrangement, liquidation
or succession
2.1 Agreement and Plan of Reorganization dated August 29, 1995, as
amended January 25, 1996, by and among FTAC, FTAC Transition
Corporation and SDDI, incorporated by reference to Exhibits
2.1 and 2.7 of the registrant's Form S-4 (File No. 33-98844).
3 Articles of incorporation and bylaws
3.1 Registrant's Certificate of Incorporation as amended by
Certificates of Amendment incorporated by reference to Exhibit
3.01 of the registrant's Form 8-K dated March 27, 1996.
3.2 Registrant's Bylaws incorporated by reference to Exhibit 3.3
of the registrant's Form S-4 (File No. 33-98844).
4 Instruments defining the rights of security holders, including
indentures
4.1 Certificate of Designation, Preferences and Rights of the
class of the registrant's preferred stock to be designated
Special Convertible Preferred Stock and Warrant Agreement
between the registrant and Continental Stock Transfer & Trust
Company incorporated by reference to Exhibit 4.01 of the
registrant's Form 8-K dated March 27, 1996.
4.2 Form of the registrant's Special Convertible Preferred Stock
incorporated by reference to Exhibit 4.02 of the registrant's
Form 8-K dated March 27, 1996.
4.3 Form of the registrant's Common Stock Certificate incorporated
by reference to Exhibit 4.03 of the registrant's Form 8-K
dated March 27, 1996.
4.4 Form of the registrant's Warrant Certificate incorporated by
reference to Exhibit 4.04 of the registrant's Form 8-K dated
March 27, 1996.
9 Voting Trust Agreements
9.1 Form of Voting and Lockup Agreement with respect to Stock
Option Agreements incorporated by reference to Exhibit 9.01 of
the registrant's Form 8-K dated March 27, 1996.
9.2 Form of Lockup Agreement among SDDI and certain of its
shareholders, together with schedule of executed Lockup
Agreements incorporated by reference to Exhibit 9.02 of the
registrant's Form 8-K dated March 27, 1996.
9.3 SDDI Affiliate Lockup Agreement dated as of August 29, 1995 by
and among SDDI, Robert T. Giaimo, Ype Hengst, Clinton Clark,
Charles Steiner and Edward Kaplan incorporated by reference to
Exhibit 9.03 of the registrant's Form 8-K dated March 27,
1996.
9.4 Form of SDDI Voting and Lockup Agreement among SDDI, Robert T.
Giaimo and certain shareholders of SDDI, together with
Schedule of executed Voting and Lockup Agreements incorporated
by reference to Exhibit 9.04 of the registrant's Form 8-K
dated March 27, 1996.
- 39 -
<PAGE>
9.5 FTAC Voting and Lockup Agreement dated as of September 15,
1995 by and among the registrant and George A. Naddaff,
Douglas M. Suliman, Jr., Ralph J. Guarino and Charles A.
Cocotas incorporated by reference to Exhibit 9.05 of the
registrant's Form 8-K dated March 27, 1996.
9.6 Assumption of SDDI Voting and Lockup Agreement, SDDI Affiliate
Lockup Agreement and Stockholder Lockup Agreement dated March
27, 1996, pursuant to Section 5.14(c) of merger agreement by
and among FTAC, FTAC Transition Corporation and SDDI,
incorporated by reference to Exhibit 9.06 of the registrant's
Form 8-K dated March 27, 1996.
9.7 GKN Voting and Lockup Agreement dated as of September 15, 1995
by and among the registrant, Robert T. Giaimo, GKN Securities
Corp., and certain additional signatories thereto incorporated
by reference to Exhibit 9.07 of the registrant's Form 8-K
dated March 27, 1996.
10 Material Contracts
Material Contracts - Real Property
Rockville, Maryland
10.1 Lease Agreement between Federal Realty Investment Trust
(Landlord) and SDLP (Tenant) dated July 13, 1988 as amended by
Lease Modification dated August 17, 1988, Second Lease
Modification dated February 3, 1989, Third Amendment to Lease
dated January 20, 1993, and Fourth Lease Modification
Agreement dated October 17, 1994 incorporated by reference to
Exhibit 10.01 of the registrant's Form 8-K dated March 27,
1996.
Laurel, Maryland
10.2 Lease between CG Beltsville Limited Partnership (Landlord) and
SDLP (Tenant) dated January 26, 1990, as amended by Letter
Agreement dated October 28, 1995 incorporated by reference to
Exhibit 10.02 of the registrant's Form 8-K dated March 27,
1996.
Dale City, Virginia (Potomac Mills)
10.3 Lease between RGDI (Landlord) and SDPMI (Tenant), dated June
10, 1991, as amended by First Amendment to Lease, dated
October 14, 1991, as amended by Second Amendment to Lease
dated October 30, 1995 incorporated by reference to Exhibit
10.03 of the registrant's Form 8-K dated March 27, 1996.
Parking Lot (parcel 11-B-1A), Dale City, Virginia (located adjacent to
Silver Diner Restaurant at Potomac Mills)
10.4 Lease between Robert Giaimo Development, Inc. ("RGDI")
(Landlord) and SDPMI (Tenant) dated May 27, 1992, as amended
by Amendment to Lease dated October 30, 1995 incorporated by
reference to Exhibit 10.04 of the registrant's Form 8-K dated
March 27, 1996.
Towson, Maryland
10.5 Lease Agreement between Towson Town Center Associates
(Landlord) and the registrant (Tenant) effective January 30,
1992 incorporated by reference to Exhibit 10.05 of the
registrant's Form 8-K dated March 27, 1996.
- 40 -
<PAGE>
Fair Lakes, Virginia (Fair Oaks)
10.6 Ground Lease Agreement between F.L. Promenade L.P. (Landlord)
and the registrant (Tenant) dated July 12, 1994, as amended by
First Amendment to Ground Lease Agreement dated February 15,
1995, and Second Amendment to Ground Lease Agreement dated
April 4, 1995 incorporated by reference to Exhibit 10.06 of
the registrant's Form 8-K dated March 27, 1996.
Tysons Corner, Virginia
10.7 Ground Lease between Lehndorff Tysons Joint Venture (Landlord)
and the registrant (Tenant) dated December 29, 1994), as
amended by First Amendment to Lease dated May 14, 1995
incorporated by reference to Exhibit 10.07 of the registrant's
Form 8-K dated March 27, 1996.
Springfield, Virginia
10.8 Springfield Mall Lease between Franconia Associates (Landlord)
and the registrant (Tenant) effective May 1, 1996 incorporated
by reference to Exhibit 10.08 of the registrant's Form 8-K
dated March 27, 1996.
Merrifield, Virginia
10.9 Agreement of Lease dated September 14, 1995 by and between
2909 Gallows LC (Landlord) and the registrant (Tenant)
incorporated by reference to Exhibit 10.09 of the registrant's
Form 8-K dated March 27, 1996.
Reston, Virginia
10.10 Purchase and Sale Agreement dated December 29, 1995 by and
between Reston Land Corporation (Seller) and the registrant
(Buyer) incorporated by reference to Exhibit 10.10 of the
registrant's Form 8-K dated March 27, 1996.
Clarendon, Virginia
10.11 Lease dated February 12, 1996 between Wilson Limited
Partnership (Landlord) and the registrant (Tenant)
incorporated by reference to Exhibit 10.11 of the registrant's
Form 8-K dated March 27, 1996.
Kendall, Florida
10.12 Purchase Agreement dated October 4, 1996 by and between
Documentation Corp. And Bersin Development Corp. (Sellers) and
the registrant (Buyer).*
Cherry Hill, New Jersey
10.13 Lease Agreement dated September 30, 1996 by and between Cherry
Hill Associates L.P. (Landlord) and the registrant (Tenant).*
- 41 -
<PAGE>
Material Contracts - Stock Plans
10.14 SDDI Second Amended and Restated 1991 Stock Option Plan,
together with forms of incentive stock option agreement and
non-qualified stock option agreement incorporated by reference
to Exhibit 10.14 of the registrant's Form 8-K dated March 27,
1996.
10.15 SDDI Second Amended and Restated Earned Ownership Plan,
together with form of non-qualified stock option agreement
incorporated by reference to Exhibit 10.15 of the registrant's
Form 8-K dated March 27, 1996.
10.16 Silver Diner, Inc. 1996 Non-employee Director Stock Option
Plan together with form of stock option agreement incorporated
by reference to Exhibit 4(a) of the registrant's Form S-8
filed December 20, 1996.
10.17 Silver Diner, Inc. 1996 Consultant Stock Option and Stock
Purchase Plan together with form of stock option agreement,
form of stock purchase agreement, form of election to purchase
common stock and form of election to purchase options,
incorporated by reference to Exhibit 4(b) of the registrant's
Form S-8 filed December 20, 1996.
10.18 Certificate and Agreement of Participation, Silver Diner, Inc.
Restaurant Owner Operator Program and Addenda incorporated by
reference to Exhibit 4 of the registrant's Form S-8 filed
February 14, 1997.
10.19 Silver Diner, Inc. Stock Option Plan together with form of
Stock Option Agreement.*
10.20 Silver Diner, Inc. Employee Stock Purchase Plan together with
form of Subscription Agreement and Notice of Withdrawal.*
Material Contracts - Agreements with Executive Officers/Directors
10.21 Letter Agreement dated August 28, 1995, between the registrant
and James David Oden regarding terms of employment, as amended
by Letter Agreement dated March 26, 1996 incorporated by
reference to Exhibit 10.17 of the registrant's Form 8-K dated
March 27, 1996.
10.22 Letter Agreement dated December 31, 1995 between the
registrant and Daniel Brannan regarding terms of employment,
as amended by Letter Agreement dated March 26, 1996
incorporated by reference to Exhibit 10.18 of the registrant's
Form 8-K dated March 27, 1996.
10.23 Letter Agreement dated December 4, 1996 between the registrant
and Patrick Meskell regarding terms of employment, as amended
by Letter Agreement dated March 26, 1996 incorporated by
reference to Exhibit 10.19 of the registrant's Form 8-K dated
March 27, 1996.
10.24 Founder's Employment Agreement dated August 28, 1995 by and
between the registrant and Robert T. Giaimo incorporated by
reference to Exhibit 10.20 of the registrant's Form 8-K dated
March 27, 1996.
10.25 Assumption of Founder's Employment Agreement dated March 27,
1996 pursuant to Section 5.14(b) of merger agreement by and
among FTAC, FTAC Transition Corporation and SDDI,,
incorporated by reference to Exhibit 10.21 of the registrant's
Form 8-K dated March 27, 1996.
- 42 -
<PAGE>
10.26 Indemnity Agreement dated August 29, 1995 by and between
Robert T. Giaimo, as indemnitee, and the registrant
incorporated by reference to Exhibit 10.22 of the registrant's
Form 8-K dated March 27, 1996.
Material Contracts - Miscellaneous
10.27 1991 Management Agreement (undated in original) between SDPMI
(Owner) and SDLP (Manager) in connection with SDPMI Virginia
incorporated by reference to Exhibit 10.35 of the registrant's
Form 8-K dated March 27, 1996.
10.28 Option to Purchase dated January 26, 1990 between CG
Beltsville Limited Partnership (Optionor), and SDLP (Optionee)
regarding land parcel on which the Silver Diner Restaurant in
Laurel, Maryland, is located incorporated by reference to
Exhibit 10.36 of the registrant's Form 8-K dated March 27,
1996.
10.29 Amendment No. 1 to the Stock Escrow Agreement dated as of
March 26, 1996 among the Registrant, George A. Naddaff,
Douglas M. Suliman, Jr., Ralph J. Guarino, Charles A. Cocotas
and Continental Stock Transfer & Trust Company, together with
letter dated March 27, 1996 from the Registrant to Continental
Stock Transfer & Trust Company incorporated by reference to
Exhibit 10.37 of the registrant's Form 8-K dated March 27,
1996.
10.30 Affiliate Warrant Exchange and Custodial Agreement dated
September 15, 1996, by and among George A. Naddaff, Douglas M.
Suliman, Jr. and Charles A. Cocotas, as Warrant Holders, SDDI
and Douglas M. Suliman, Jr., as Custodian incorporated by
reference to Exhibit 10.38 of the registrant's Form 8-K dated
March 27, 1996.
10.31 Escrow Agreement dated as of February 1, 1996 by and between
GKN Securities Corp., certain affiliates thereof, the SDDI and
Arent Fox, as Escrow Agent incorporated by reference to
Exhibit 10.39 of the registrant's Form 8-K dated March 27,
1996.
10.32 Option Agreement dated March 27, 1996 by and between RGDI and
SDDI granting option to SDDI for the purchase of Potomac Mills
real estate parcels incorporated by reference to Exhibit 10.34
of the registrant's Form 8-K dated March 27, 1996.
21 Subsidiaries of the Registrant.*
23 Accountants Consents
23.1 Consent of Reznick Fedder & Silverman.*
23.2 Consent of Deloitte & Touche LLP.*
* Filed herewith. All other exhibits have been previously filed as
indicated.
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EXHIBIT 10.12
Exhibit 10.12
Purchase Agreement - Kendall, Florida
<PAGE>
AGREEMENT TO PURCHASE REAL PROPERTY:
This Agreement to Purchase Real Property ("Agreement") is dated October
4, 1996 for reference purposes only, and is made by and between Documentation
Corp. and Bersin Development Corp., each a Florida corporation, each as to an
undivided 50% interest ("Seller"), and Silver Diner Development, Inc., a
Virginia corporation ("Buyer").
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 Closing. The term Closing shall mean the date and event
upon which title to the Property is transferred of record to Buyer.
1.2 Contemplated Use. The term "Contemplated Use" shall mean a full
service restaurant consistent with the prototypical design of Buyer's
restaurants, containing a minimum of 220 seats and with a liquor license
allowing the sale of beer, wine and alcoholic beverages for consumption on site.
1.3 Contemplated Improvements. The term "Contemplated Improvements"
shall mean a building containing not more than 8,000 square feet inclusive of
any outdoor or covered patio areas for outside dining, if any, plus, in addition
thereto, related screened exterior dumpster pad, walkways, landscaping, lighting
and other site improvements pertaining thereto, if any; provided however, that
the width (the east-west dimension) of any building constructed on the Property
at any time shall not exceed 100 lineal feet.
1.4 Effective Date of this Agreement. This Agreement shall be effective
on, and the term "Effective Date" shall mean, the date on which this Agreement
is executed by the last designated signatory to this Agreement and a fully
executed counterpart thereof, including all exhibits hereto, has been delivered
to the other party.
1.5 Environmental Law. The term "Environmental Law" or "Environmental
Laws" shall mean all applicable federal, state and local environmental laws,
regulations, rules, ordinances, statutes, licenses, permits, orders or
restrictions relating to or affecting the Property and/or the development, use
or operation thereof with respect to Hazardous Materials and/or the use and
control thereof.
1.6 Escrow Holder. The term "Escrow Holder" shall mean Rubin
Baum Levin Constant Friedman & Bilzin, 2500 First Union Financial Center, Miami,
Florida 33131.
<PAGE>
1.7 Government Approvals. The term "Government Approvals" shall mean
any and all permits, licenses, authorizations or consents of federal, state, and
municipal governmental or quasi-governmental authorities, agencies, boards or
offices having jurisdiction over the Property, duly issued in accordance with
applicable Laws to permit Buyer to construct the Contemplated Improvements and
utilize the same for the Contemplated Use, including specifically, but not
limited to subdivisions approval, compliance with zoning requirements (or
obtaining any necessary variances or special use permits thereto or changes
therefrom), site plan approval, highway department access and curb cut
approvals, satisfaction of environmental and traffic impact study requirements
and building permits.
1.8 Hazardous Materials. The term "Hazardous Materials" shall mean any
pollution or contaminants as defined by any applicable governmental regulatory
agency, including but not limited to, hazardous or toxic substances or materials
regulated under federal, state or local environmental laws, regulations, rules,
ordinances, statutes, licenses, permits, or orders; asbestos; radon and
polychlorinated biphenyls.
1.9 Kendall Drive Portion of the Product. The term "Kendall Drive
Portion of the Project" shall mean the trapezoidal portion of the Seller's
Project which borders Kendall Drive and consists of Parcels "E," "F," "G" and
"H," together with the parking field associated with such parcels (but excluding
the parking area located between parcels "H" and "I") all landscaping areas,
roadways and drives serving such parcels, and the grass set-back area between
such parking field and Kendall Drive, all as shown on the sketch attached hereto
as Exhibit "C".
1.10 Laws. The term "Laws" or "Law" shall mean all local, regional,
municipal, county, state, and federal statutes, regulations, ordinances, orders,
judgments, codes, rules or other laws applicable to or affecting the ownership,
operation or use of the Property or any portion thereof (including, without
limitation, health, safety, building, fire safety, liquor, subdivision,
environmental, and zoning laws).
1.11 Permitted Exceptions. The term "Permitted Exceptions"
shall mean the exceptions to title determined pursuant to paragraph
3.2.
1.12 Property. The term "Property" shall mean that certain real
property located (i) east of the northeast corner of the intersection of North
Kendall Drive and S.W. 124th Avenue in the unincorporated County of Dade, State
of Florida, as depicted in Exhibit A attached hereto and identified as Parcel F
on the Site Plan, as hereinafter defined, which Property shall be not less than
150 feet by 150 feet in size; (ii) all improvements and structures located on
the land; (iii) all easements, hereditaments and appurtenances in favor of
or benefitting the land or improvements, or any portion thereof, including
all rights, title and interest in
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<PAGE>
and to all streets abutting or serving the land or any portion thereof; and
(iv) any items of tangible and intangible personal property, located on
and/or attached to, used in connection with, or arising in connection with, the
ownership, operation, maintenance and management of said land and
improvements.
1.13 REA. The term "REA" shall mean the Reciprocal Easement Agreement
between the owner of Seller's Project and other tenants and occupants of
Seller's Project granting easements over the common roadway areas and utility
lines of Seller's Project including the Property and governing and restricting
the use of Seller's Project, as more particularly described in paragraph 2.4.
1.14 Seller's Project. The term "Seller's Project" shall mean the
overall mixed use parcel shown on Exhibit "B", of which the Property is a part,
and depicted in bold on the site plan attached as Exhibit B to the REA (the
"Site Plan").
ARTICLE 2
TERMS OF PURCHASE
2.1 Agreement to Purchase and Sell. Buyer agrees to purchase the
Property from Seller, and Seller agrees to sell the Property to Buyer, upon the
terms and conditions contained in this Agreement.
2.2 Purchase Price. The purchase price for the Property shall
be $1,350,000.00 (the "Purchase Price").
2.3 Terms of Payment. The Purchase Price shall be paid by
Buyer to Seller as follows:
(a) Deposit. Contemporaneously with the execution of this
Agreement by Buyer, Buyer will deposit with Escrow Holder as earnest money
deposit (the "Deposit") clear funds in the amount of $150,000. The Deposit shall
be held in an interest bearing repurchase agreement or similar account under
Buyer's Federal Identification Number which is 54-1439417, and disbursed as
herein provided. If this Agreement is terminated for any reason other than
Buyer's default in its obligations under this Agreement, then the Deposit, and
any interest thereon, shall be returned to Buyer. Upon Closing the Deposit shall
be disbursed to Seller and all interest thereon shall be paid to Buyer.
(b) Balance of Purchase Price. The balance of the
Purchase Price shall be paid to the order of Seller in clear funds
as follows:
(i) the sum of $1,175,000 shall be payable at
Closing; and
(ii) the sum of $25,000 shall be payable upon
Seller's obtaining (and providing evidence thereof to Buyer) all required
Governmental Approvals to permit a minimum of forty (40) additional parking
spaces to be constructed in the grass set-back
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<PAGE>
area currently existing in the front portion of the Kendall Drive Portion
of the Project, as same may be expanded to include land currently dedicated
for right of way, if applicable, such that there shall be a net increase of
forty (40) parking spaces within the Kendall Drive Portion of the Project
(including those in the grass set-back area, as same may be expanded as
aforesaid) above the minimum otherwise required by Section 3.9 hereof. If the
condition set forth in this subparagraph (ii) has been met as of the Closing,
then the sums required to be paid hereunder shall be due at Closing. If such
condition is not satisfied on or before December 31, 1998, then Buyer shall
be relieved of its obligation for the payment related to this condition. This
obligation shall survive Closing and be the joint and several obligation of
Buyer named herein and any assignee notwithstanding any assignment of Buyer's
rights hereunder.
2.4 Reciprocal Easement Agreement. Attached hereto as Exhibit "E" is
the form of the REA. The REA, subject to such changes as Seller may require
(whether to satisfy governmental requirements or otherwise), which changes shall
be subject to Buyer's prior written consent which shall not be unreasonably
withheld (Buyer hereby consents to the inclusion in the REA, at the sole and
absolute option of Seller, of the restriction contemplated in Section 8(c) of
the Buyer's Supplemental Declaration attached hereto and made a part hereof as
Exhibit "H"), shall, as a condition to Closing, be executed by all necessary
parties at or prior to Closing and shall be recorded in the public records
promptly thereafter. Additionally, Seller agrees that the unilateral right of
Seller to shift the north-south accessway in the middle of the parking area in
the event a direct entrance into the Center is permitted from Kendall Drive, as
contemplated in paragraph 2(a) and (c) of the REA, shall be conditioned upon
Seller's developing the Center in accordance with the alternative site plan
attached hereto as Exhibit "F," as same may be changed with Buyer's consent, not
unreasonably withheld (the "Alternative Site Plan"). Further, Seller agrees that
if such direct entrance from Rendall Drive is to be constructed and same is not
constructed (and completed) prior to the date Buyer completes construction of
its building and opens for business with the public (the "Opening Date"), then,
commencement of the construction of such entrance shall not occur until after
six (6) months from the Opening Date. Seller agrees that it will not commence
such construction activities prior to the Opening Date unless it has in good
faith determined that the construction of the entrance will be completed before
the Opening Date, as same may be reasonably projected by Buyer, and the
contract relating to the construction of such entrance requires that same be
completed prior to the Buyer's projected Opening Date. Seller shall give
Buyer not less than thirty (30) days' advance notice of the date on which
construction of the entrance is expected to commence.
ARTICLE 3
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
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<PAGE>
3.1 In General. All of Buyer's obligations pursuant to this Agreement
are expressly conditioned upon the satisfaction or waiver by Buyer of each of
the conditions precedent set forth in this Article 3, and if any are not so
satisfied or waived by Buyer on or before the date of Closing (or by the date
specified therein, if longer or shorter), this Agreement shall be deemed
terminated and Buyer shall receive the return of the Deposit.
3.2 Approval of Title. Within forty-five (45) days following the
Effective Date, Seller shall cause a proforma title commitment written on
Commonwealth Land Title Insurance Company to be delivered to Buyer (the "Title
Report") together with hard copies of all items shown as conditions or
exceptions thereto, and, which Title Report shall commit to insure, at Closing,
Buyer's title to the Property in fee simple and Buyer's rights in and to the
easements created by the REA, subject only to the Permitted Exceptions. Seller
hereby advises Buyer that the matters included on Exhibit "D" attached hereto
(the "Title Schedule") will likely be reflected in the Title Report as
exceptions and those matters may not be objected to by Buyer and shall be deemed
Permitted Exceptions. Buyer shall have the right to review Seller's title to the
Property and to object to any exception to title (other than those reflected on
the Title Schedule) that renders title unmarketable or unusable for Buyer's
Contemplated Use and (a) is reflected in the Title Report and disclosed to
Seller by Buyer within ten (10) days after its receipt of the Title Report or
(b) is otherwise disclosed to Seller by Buyer within ten (10) days after Buyer's
first discovering same. If Buyer timely objects to an exception to title, then
on or before the earlier of the tenth (10th) day following Buyer's notice of
exception or the date for Closing, but in no event prior to October 31, 1996,
Seller shall agree to remove the exception by Closing or notify Buyer that it is
unwilling or unable to remove the exception prior to Closing. Within ten (10)
business days following Buyer's receipt of Seller's notice that it is unable or
unwilling to remove an exception to title, Buyer may elect to either (i)
terminate this Agreement, whereupon the Deposit shall be returned to Buyer, or
(ii) continue this Agreement in effect, in which event Buyer will be deemed to
have approved the previously disapproved exception. Seller's failure to provide
written notice that it is unwilling or unable to remove an exception within the
time allowed for delivery of such notice shall be deemed to evidence the
willingness and ability of Seller to remove the exception prior to Closing.
All additional exceptions to title created or discovered by Buyer subsequent
to delivery of the Title Report to Buyer shall be subject to the ten-day time
frames for notice of disapproval by Buyer and removal by Seller as set forth
above. All exceptions to title to the Property which do not render title
unmarketable or unusable for Buyer's Contemplated Use which either are
disclosed by the Title Report or are subsequently discovered by Buyer
and, in either such case, to which Buyer does not timely object are referred
to herein as the "Permitted Exceptions." Notwithstanding the foregoing,
Buyer hereby objects to, and the term "Permitted Exceptions" shall not
include, (i) any lien for payment of delinquent real property
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<PAGE>
taxes, (ii) any item listed as a condition under Schedule B-I of the Title
Report (excluding items to be satisfied by Buyer such as payment or the
providing of evidence of its corporate status and/or authority), or any
"standard exceptions" reflected on the Title Report or Owners Title Policy
described in paragraph 5.1, and (ii) any deed of trust, mortgage, UCC financing
statement, mechanic's lien, judgment lien or other lien encumbering the
Property. Seller shall convey good and marketable title in fee simple to the
Property to Buyer at the Closing, subject only to the Permitted Exceptions.
Buyer acknowledges being advised that the Property and
adjacent lands are encumbered by financing presently held by General Motors
Acceptance Corporation ("GMAC"). It is a condition to the obligation to close of
Buyer under this Agreement that GMAC will have released its existing financing
as it affects the Property prior to or concurrently with the Closing and that
GMAC will have subordinated concurrently with the Closing the lien and effects
of its' financing to the easements to be granted in the REA, and Seller's
inability to do so regardless of the reason therefor, shall be subject to the
provisions set forth in Section 6.11(i), below.
Buyer acknowledges being advised of the Declaration of
Restrictive Covenants, item 3 of the Title Schedule (the "Declaration"), which
was imposed for the benefit of Kendall Federation of Homeowner Associations,
Inc. ("KFHA") and ties development of the Seller's Project, including the
Property, and other lands, to an approved site plan and sets forth limitations
on the use and development of the Property, Seller's Project and other lands.
Paragraph 4 of the Declaration described in item 3 of the Title Schedule
requires the provision of a community meeting area as more particularly provided
therein. Notwithstanding the fact that the Declaration is a Permitted Exception
that cannot be objected to as a title defect by Buyer, it is a condition to
Buyer's obligation to close that Seller shall have been successful in obtaining
from KFHA (i) a modification of the afore referenced paragraph of the
Declaration to provide that same is inapplicable to the Property; (ii) approval
of a revised site plan consistent with Exhibit B or F, as applicable (provided
that Seller can, in its absolute and sole discretion, make such changes
to the Site Plan or Alternative Site Plan that are wholly outside the
boundaries of Seller's Project so long as no such changes violate any
exclusive or restrictive covenant set forth for the benefit of Buyer in the
REA, Buyer's Supplemental Declaration or Exhibit "G", described below);
and (iii) an executed modification of the Declaration (which shall, as a
condition to Closing, also be executed by Seller) and (unless a substantial
compliance determination letter is received from Dade County) an amendment
executed by Dade County and Seller, amending Items No. 2 and 3 of the Title
Schedule to reflect the foregoing, which modification(s) shall specifically
provide that same supersedes any conflicting provisions of such Items 2 and 3
of the Title Schedule. Buyer agrees that any required or desired
communications with KFHA, pursuant to the Declaration or otherwise, both before
and after
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<PAGE>
Closing, shall be coordinated through Seller. Seller's inability,
regardless of the reasons therefor, to obtain the consents and/or amendments
required by this paragraph shall be subject to the provisions set forth in
Section 6.11(i), below.
The parties agree that, although the Declaration of
Restrictions disclosed at item 4 of the Title Schedule burdens the Property,
Buyer shall have no liability for the monetary school donation contemplated by
paragraph 3 thereof and Seller shall timely pay or cause to be paid the full
amount thereof in a manner that will not delay Buyer's obtaining of its building
permit or certificate of completion for its Contemplated Improvements.
Accordingly, Seller or its designee shall be entitled to any impact fee credit
contemplated by paragraph 10 thereof. Seller shall indemnify, defend (with
counsel reasonably acceptable to Buyer) and hold Buyer harmless from any and all
liabilities, claims, demands, attorneys' fees, costs, and expenses arising from
Seller's failure to timely pay the full amount of the monetary school donation
and this obligation shall survive Closing.
If any portion of the Property is located within that portion
of vacated Southwest 123rd Avenue that is included within Seller's Project, it
is a condition to Buyer's obligation to close that Seller shall have obtained
confirmation in writing from Florida Power and Light Company and BellSouth that
arrangements have been made for relocation of their existing facilities within
such vacated right-of-way to another location off of the Property. Such
relocation shall be accomplished as part of Seller's work under Section 3.8
below. The rights of Florida Power and Light Company and BellSouth to retain
their existing facilities in vacated Southwest 123rd Avenue and to utilize same
until the contemplated relocation is completed shall be a Permitted Exception.
3.3 Books and Records. Within five (5) days following the
Effective Date, Seller shall deliver to Buyer true and correct copies of
pertinent records and other documents then in Seller's possession or under
Seller's control relating to the Property, Seller's Project (excluding leases
or sales agreements) and its ownership and operation which are requested by
Buyer, to the extent not previously delivered. Such documents shall include, but
shall not be limited to, commission agreements, easements, service contracts,
management contracts, utility statements, tax bills, plans and
specifications for the Property and common areas of Seller's Project, and
improvements on the Property, surveys, environmental studies and reports, soil
and water tests, engineering studies, and any other test results or reports in
Seller's possession or under Seller's control.
3.4 Survey. At least ten (10) days prior to Closing, Seller at its sole
expense shall deliver to Buyer a survey of the Property, prepared by a certified
or registered surveyor acceptable to Buyer (Makowski & Wright, Inc. is hereby
approved) together with a certification to Buyer and the title insurance company
indicating the following information:
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<PAGE>
(a) Boundary lines and legal description of the
Property;
(b) The area of land in the Property expressed in square
feet [or acres];
(c) The location of all physical encroachments, if any,
by and upon the Property;
(d) The locations of all easements, encumbrances, and
title exceptions which can be shown and depicted on a survey map, and the
recording information of such easements, encumbrances and exceptions; and
(e) The location of all structures and abutting streets
with respect to the Property.
Buyer shall have 5 days from receipt of the survey to object
to any matters that preclude or adversely restrict or limit Buyer's ability to
use the Property for the Contemplated Use. Any timely raised survey objection(s)
shall be dealt with in the same manner as timely raised title defects. Any
survey matters that are not timely objected to shall be deemed Permitted
Exceptions.
3.5 Hazardous Materials. The Property shall be free from any Hazardous
Materials at the Closing. This condition shall be deemed satisfied unless Buyer
delivers to Seller, at least 15 days prior to Closing, an environmental audit
that discloses the presence of Hazardous Materials affecting the Property.
3.6 Utilities. At the Closing, the Property shall have available
(subject to extension from the perimeter of the Seller's Project to the Property
as contemplated below), permissible of connection, public water supply and
sewage disposal systems having sufficient capacity to serve the Contemplated
Improvements and the use of the Property for the Contemplated Use, and public
utilities providing sufficient electrical, gas, domestic and sprinkler
water, and sanitary sewer for the Contemplated Improvements and the use
of the Property for the Contemplated Use. Seller shall pay for all costs
associated with the connection of such utilities, subject only to the
contribution by Buyer of $150,000.00 as provided in Section 3.8 below and
subject to the third paragraph of Section 3.8 below. If necessary, Seller shall
grant easements over Seller's Project and/or other adjoining lands owned by
Seller or its affiliates and abutting Seller's Project, to serve the Property.
Buyer and the Property shall have the benefit of the easements granted in the
REA.
3.7 Governmental Approvals. At the Closing, Buyer shall have obtained
all Governmental Approvals which permit the construction of the Contemplated
Improvements and the use of the Property for the Contemplated Use. Buyer shall
diligently, continuously and in good faith pursue obtaining such Governmental
Approvals, including hiring G. Wright & Associates to process and expedite
obtaining
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<PAGE>
Governmental Approvals. Seller shall cooperate with Buyer and provide Buyer
with all information reasonably necessary for Buyer to complete the
application process for the Governmental Approvals, including without
limitation, a utility plan for the Property. Buyer shall deliver to Seller and
the Governmental Authorities within 45 days after the Effective Date, subject to
extension by reason of force majeure, working drawings for a prototypical Silver
Diner restaurant that are ready in all respects for submission for permitting;
provided, however, that Purchaser shall not be in default of this Agreement by
virtue of its failure to meet such 45- day time frame, provided that it meets
its obligations under this Section within seventy-five (75) days (without giving
effect to force majeure) and shall pay to Seller, within ten (10) days of
demand, the sum of $369.86 per diem for each day beyond said 45-day period that
Buyer has failed to deliver the working drawings as contemplated by the
foregoing. Buyer shall diligently, continuously and in good faith, subject to
extension by reason of force majeure, make and deliver such revisions to the
working drawings as may be required for permitting.
3.8 Site Improvements. Seller is responsible to complete, at Seller's
expense but subject to Buyer's obligation to contribute as hereinafter
described, the off-site and on-site development work specified below within 120
days after Closing, subject to extension by reason of force majeure. Seller
shall install all roadways depicted by the diagonal lines on Exhibit C of the
REA and complete all roadwork required, if any, to complete S.W. 124th Avenue
lying west of Seller's Project, and shall complete all necessary utility work
and site work within the Seller's Project and/or off-site therefrom, as
necessary to allow the Property to be usable by Buyer for the Contemplated Use
upon completion of Buyer's construction of its Contemplated Improvements, which
site work shall include, but not be limited to, land clearing, water, sewer,
paving, drainage, striping, site lighting and landscaping, and the burial of
all FP&L lines or Southern Bell lines as necessary to satisfy all
requirements (as imposed by governmental entities or the applicable utility
company) applicable to the site improvement work for Seller's Project.
Seller shall also be responsible to deliver, at the Closing and as a condition
thereto, a rough graded building pad to within 1/10 of a foot of final grade
with ninety percent (90%) compaction sufficient to support Buyer's
prototype building, and Seller shall further be responsible to bring all stubbed
utilities to the Property within five (5) feet inside the building pad at
points to be determined by Seller within sixty (60) days after Closing, each
subject to extension by reasons of force majeure. Seller shall further complete
the grading of the entire Seller's Project within one hundred and twenty (120)
days after the Closing (being at the same time as all other on and off-site
development work is required to be completed)subject to extension by reason of
force majeure. As a condition to Buyer's obligation to close, Seller shall
furnish at or prior to Closing a construction contract for the afore stated site
development work that requires completion within the time frame set forth herein
and a payment and performance bond securing such obligation, as well as provide
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reasonable evidence to Buyer of the availability of funds (through such
combinations of Seller's equity, occupant contributions and/or financing, as
applicable) required to perform the above-described on-site and off-site
development work.
Seller agrees to use good faith efforts to perform or caused
to be performed the above referenced site work in a manner that will not prevent
or unduly interfere with Buyer's construction of its Contemplated Improvements
in a continuous and uninterrupted manner following the Closing. If Buyer has (i)
completed construction of its Contemplated Improvements in a manner that would
permit it to obtain its certificate of completion therefor, but, is unable to
obtain same, or (ii) is unable to proceed with the next stages of the
construction of its building, in either event solely as a direct result of
Seller's failure to perform any of its obligations hereunder, including its
obligation to complete the site work or portions thereof as aforestated, then,
in such event, Buyer may, following five (5) days' advance written notice to
Seller specifying the nature of Seller's failure which is preventing Buyer from
obtaining its certificate of completion or proceeding with the next stage of its
construction, and provided Seller fails to cure such condition within such five
(5) day period, subject to extension by reason of force majeure, perform such
site work or comply with such obligation of Seller and the Escrow Holder shall
pay the amount of the reasonable costs thereof to Buyer from the escrow
established by Buyer pursuant to this Section. Additionally, Seller shall be
obligated to pay Buyer, and Buyer shall likewise be paid said sums from the
escrow funds held for disbursement pursuant to Section 3.8(b) below by the
Escrow Holder, a penalty of $1,000 per day for each day that Buyer is delayed
in (i) obtaining its certificate of completion for its Contemplated
Improvements or (ii) proceeding with the next stages of the construction of
its building, in each case solely as a direct result of the failure of
Seller to perform its obligations hereunder or complete its site work, or
portions thereof, as aforestated.
Buyer shall be required to pay all impact fees (including,
without limitation, traffic impact fees, if any) and water and sewer connection
charges attributable to its development or use of the Property. In addition to
the purchase price, and the costs otherwise payable by Buyer pursuant to this
Agreement, Buyer shall contribute the sum of $150,000.00 toward the construction
of the site work, infrastructure and parking improvements to be completed by
Seller as described above, to be deposited in clear funds with Seller's attorney
at the Closing, with interest added to principal and disbursement to be made as
follows:
(a) the sum of $100,000 shall be disbursed by the Escrow
Holder to pay for site work improvements proportionately and to the extent that
said improvements are completed and in place as certified in writing by Seller's
architect to Escrow Holder and Buyer (e.g. if the total project cost is $500,000
and Seller's architect certifies that the site work improvements are completed
to a sufficient extent so as to entitle the contractor to $100,000
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(20% complete) and no monies had been previously disbursed from the escrow,
$20,000 may then be disbursed by Escrow Holder); provided that no mechanic's
liens are then filed against the Property or the easement area of Seller's
Project related to Seller's work, and if any such liens are then filed the
payment due hereunder shall, if sufficient for such purpose, be used to pay
or bond such liens as determined by Seller, and if insufficient, shall be held
and disbursed by Escrow Holder as appropriate to protect the Property from the
effect of such liens; and
(b) the sum of $50,000 plus interest accrued on the escrow
funds shall be disbursed by the Escrow Holder within five (5) days of the later
of the date that: (i) Seller completes all of its on-site and off-site
development work, as certified in writing by Seller's architect, receives the
final Governmental Approvals in connection therewith, and copies of such
certification and approvals are provided Escrow Holder and Buyer; or (ii) any of
the buildings constructed on Parcels E, F, G or H in the Seller's Project
receives its final certificate of completion such that there are then no
governmental impediments to the occupant's ability to open its premises for
business to the general public and a copy thereof is provided to Escrow Holder
and Buyer; provided that no mechanic's liens are then filed against the Property
or the easement area of Seller's Project related to Seller's work, and if any
such liens are then filed the payment due hereunder shall, if sufficient for
such purpose, be used to pay or bond such liens as determined by Seller, and if
insufficient, shall be held and disbursed by Escrow Holder as appropriate to
protect the Property from the effect of such liens. Notwithstanding the
provisions of Sections (a) and (b) hereof requiring copies of the architect's
certification to be given to Buyer, Buyer agrees that Seller will not be in
default if, notwithstanding Seller's request of the architect to do so, the
architect fails to send copies of such notices to Buyer.
Seller shall from time to time until its work under this
Section 3.8 is completed designate reasonable means for construction access and
reasonable construction staging areas for Buyer's use in connection with initial
construction of the Contemplated Improvements, which access shall be
continuously afforded Buyer from and after the Closing. Buyer shall use only
such designated areas for such purposes and each party shall take reasonable
steps to minimize interference with, disruption of and delay in the other
party's work.
The provisions of Section 3.8 shall survive Closing.
3.9 The Site Plan. Seller shall have obtained all Governmental
Approvals required to allow the Property to be developed in a manner consistent
with the Site Plan, with Buyer's Contemplated Improvements and the improvements
to be constructed on Parcels E, G and H to be located as reflected thereon.
Additionally, and notwithstanding any changes to the configuration of the
parking area that may be permitted by the REA, there shall
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be a minimum of 360 parking spaces (subject to the effects of any future
condemnation) within the Kendall Drive Portion of the Project (excluding
the spaces located between parcels "H" and "I"), and excluding any additional
parking spaces authorized to be built in the grass set-back area described in
paragraph 2.3(b)(ii) above. Further, Seller shall, on or before
Closing, record a declaration of restrictions substantially in form of
Exhibit "G". Seller agrees that should any contract to sell or lease any of
parcels affected by the foregoing be executed prior to the Closing, then,
Seller shall, as a condition to entry thereof and prior thereto, record or
reserve the right to subsequently record and render fully enforceable the
declaration imposing such restrictions on the applicable property.
3.10 Sale or Lease of Parcels "E," "G" and "H." The Seller shall have
entered into binding contracts to sell or lease two (2) of the three (3) parcels
shown on the Site Plan (or Alternative Site Plan, as applicable), as Parcels E,
G and H, and, if a sale, either the requisite number of transactions shall have
closed and the parcels shall have been conveyed to the purchasers thereof, or
such transactions shall be required to close pursuant to the terms of the
contracts applicable thereto within thirty (30) days following the date of
Closing hereunder, and Seller believes, in good faith, that all conditions
precedent thereto, if any, will be satisfied within such time frame as will
allow the closings thereof to occur within said thirty (30) day period, and
if leases, either the leases shall have become fully effective and enforceable
and rent (or a free rent period if applicable) shall have commenced, or
any pre-construction conditions shall have been satisfied such that the
landlord or tenant thereunder may, subject only to obtaining permits, commence
construction of the leased premises.
ARTICLE 4
SELLER'S COVENANTS AND REPRESENTATIONS
4.1 Preservation of the Property. At all times prior to the
Closing, Seller, at its sole expense, shall:
(a) Maintain the Property in the same condition existing on
the Effective Date, normal wear and tear and the site work contemplated by this
Agreement excepted;
(b) Not enter into any, sales or other contract, lease or
rental agreement affecting the Property without Buyer's prior written approval;
(c) Not further encumber the Property or assist or participate
in the placement of any encumbrance, lien or other claim which may affect title
to the Property or easement areas of Seller's Project and which cannot be
released (or appropriately subordinated to Buyer's easement rights if affecting
only the easement areas) at Closing;
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(d) Not enter into any management or service contract
affecting the Property or its operation which cannot be terminated or released
at Closing without Buyer's prior approval; and
(e) Observe and perform all obligations on Seller's part to
be performed under the terms of any agreement affecting the Property.
4.2 Cooperation with Buyer. Seller and Buyer shall cooperate with each
other, provide documents and timely and in good faith execute applications,
forms, instruments and other documents required to obtain any Governmental
Approvals or other authorizations enabling Buyer to proceed fully with its
development plans of the Contemplated Improvements and Contemplated Use of the
Property and to transfer the benefit of all such permits, licenses and
certificates issued to Seller to Buyer. Seller shall allow Buyer and its
authorized representatives and agents access to the Property to make tests,
surveys, or other studies of the Property, provided that Buyer pays for all such
tests and studies, keeps the Property free and clear of any liens, repairs all
damage to the Property, and indemnifies and holds Seller harmless from and
against all liability, claims, demands, damages, or costs (including reasonable
attorneys' fees at all tribunal levels) specifically related to performing
such tests, surveys, or studies. This paragraph shall survive Closing.
4.3 Seller's Representations. As of the Effective Date and as
of the Closing, Seller states, warrants and represents as follows:
(a) Valid Formation. Each of the entities comprising, Seller
is a corporation duly organized and validly existing and qualified to do
business under the laws of the State of Florida. Seller has the full power,
capacity, authority and legal right to execute and deliver this Agreement and to
perform its obligations hereunder (including, without limitation, the conveyance
of the Property to Buyer). This provision shall survive Closing.
(b) Due Execution. This Agreement and all other docu ments
executed and delivered by Seller shall constitute the legal, valid and binding
obligations of the Seller in accordance with the terms of each instrument. This
Agreement and all other instruments delivered to Buyer: (i) have been duly
authorized by all necessary action on the part of Seller's partners or officers
and directors, (ii) have received all required governmental approvals, (iii) do
not violate any law, (iv) do not conflict with or constitute a default under any
indenture, agreement or other instrument to which Seller is a party or by which
Seller, any partners or officers or directors of Seller, or the Property may be
bound, and (v) are not threatened with invalidity or enforceability by any
action, pro ceeding or investigation pending or threatened by or against Seller,
any partner or officer or director of Seller, or the Property. This provision
shall survive Closing.
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(c) Title. Seller has good and marketable fee title to the
Property, free and clear of all liens, claims, encumbrances, easements or rights
of way, covenants, conditions, restrictions and limitations, other than the
Permitted Exceptions.
(d) Claims. Seller has no knowledge of any pending or
threatened (in writing) condemnation or special assessments against the Property
(other than a street lighting special assessment district, which the Property
will be included in and be bound by, and the papers creating said district shall
be a Permitted Exception and Buyer shall, if requested, join in same), any
lawsuits which will affect the Property, nor any other claim, action, suit or
proceeding at law or in equity, by or before any administrative or governmental
authority affecting Seller or the Property.
(e) No Violation of Law. To Seller's knowledge, the
Property does not violate any Law and Seller has not received any notice of any
claimed violation of any Law from any administrative or governmental authority
or board of fire insurance underwriters. Seller is not aware of any legal
restriction which would interfere with Buyer's proposed construction of the
Contemplated Improvements or use of the Property for the Contemplated Use.
(f) Mechanics' Liens. No alteration, repair, improvement or
other work has been performed on the Property, for which payment has not been,
or will not be, made when due and in all events prior to delinquency in the
ordinary course. At Closing no such sum due shall prevent the title company from
deleting the exception for unrecorded liens and no liens shall be recorded
against the Property or Seller shall pay same, or transfer same to bond or other
acceptable security, prior to or at Closing. Seller shall likewise not permit
any lien to be placed on any other area of Seller's Project which would have the
effect of restricting Buyer's ability to freely use all easement areas thereof.
(g) Documents. All documents, information and other records
with respect to the Property, which Seller has or will give to Buyer in
connection with this Agreement, will be complete and correct in all material
respects and will accurately represent the condition of the Property, and its
ownership, operations and management, as of the date and for the period
identified in the document.
(h) Contracts. There are no contracts or other agree ments for
occupancy of the Property or the payment of leasing commissions, the rendering
of management or other services with respect to the Property, or the
construction of improvements on the Property, nor are there any other contracts
or agreements by which Buyer would become obligated or liable to any person or
entity, other than the Permitted Exceptions.
(i) Access. The rights of way for all roads necessary for the
full utilization of the Property have been acquired or
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dedicated to public use by the appropriate governmental authorities or
easements will be in effect therefor pursuant to the REA.
(j) Material Defects. Seller has no knowledge, either actual
or constructive, of any material defect in the Property which would prevent the
construction of the Contemplated Improvements or the use of the Property for the
Contemplated Use.
(k) Zoning. Seller warrants that at the present time and as of
the Closing the Property is and will be zoned to permit the Contemplated Use
under the laws of Dade County.
(l) Subdivision Map Act. Seller warrants that once platting as
contemplated by this Agreement is completed, the Property will comply with all
applicable subdivision requirements and no further subdivision map, parcel map,
or division of land is or will be required to validly transfer the Property to
Buyer.
(m) Insolvency. Seller has not (i) made a general assignment
for the benefit of creditors, (ii) filed any involuntary petition in bankruptcy
or suffered the filing of any involuntary petition by Seller's creditors, (iii)
suffered the appointment of a receiver to take possession of all or
substantially all of Seller's assets, (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of Seller's assets, (v) admitted
in writing its inability to pay its debts as they come due, or (vi) made an
offer of settlement, extension or composition to its creditors generally.
(n) Hazardous Materials. To Seller's knowledge there are not
now and never have been any underground storage tanks or Hazardous Materials
present in, on or under the Property or adjoining property, and there are not
now, and were no prior uses of the Property or adjoining area which would create
or release any Hazardous Materials upon or from the Property.
Seller shall notify Buyer of any changes in any of the foregoing
matters that occur between the Effective Date and Closing. Seller shall
endeavor to remedy any material changes in the foregoing matters, except where
such remediation would require litigation or the expenditure of more than
$5,000.00 by Seller in the aggregate. Notwithstanding the foregoing, in the
event any such changes materially adversely affect Buyer and were not the result
of Seller's willful act or misconduct, and Seller is unable or unwilling to
remedy such matters to Buyer's reasonable satisfaction within the afore stated
limitations, Buyer may, as its sole and exclusive remedy unless such change
results from actions of GMAC, KFHA, any utility company or any applicable
governing authority, in which case Section 6.11(i) will be applicable, terminate
this Agreement by written notice to Seller and receive the return of its Deposit
forthwith. If any of the representations were materially untrue on the Effective
Date hereof, or become materially untrue as a result of Seller's willful act or
misconduct and in either event Seller fails to remedy same, then Buyer may
terminate this
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Agreement by written notice to Seller and receive the return of its Deposit
without waiving Buyer's rights to compensation pursuant to Section 6.11,
below.
ARTICLE 5
CLOSING
5.1 Title. Seller shall (i) convey to Buyer fee title to the Property
at Closing by delivery of a Special Warranty Deed, free and clear of all liens,
encumbrances and exceptions other than the Permitted Exceptions, and free of all
tenants or other occupants, and (ii) cause to be issued an American Land Title
Association Owner's Policy -- Form B (or a marked up Commitment therefor) from
Commonwealth Land Title Insurance Company with coverage in the amount of the
Purchase Price, showing title to the Property vested in Buyer in fee simple and
insuring Buyer's interest in all of the easements provided in the REA, subject
only to the Permitted Exceptions, and without any "standard exceptions" or
exceptions for the "gap" period. The policy shall be issued by Seller's
attorneys.
5.2 Timing. Provided all conditions to Closing have been satisfied or
waived by Buyer, Closing shall occur within twenty (20) days after the Buyer has
received all Governmental Approvals and permits for construction of the
Contemplated Improvements on the Property and use of same for the Contemplated
Use; provided, however, that Seller may terminate this Agreement if Closing has
not occurred by February 28, 1997 (not subject to extension by reason of force
majeure), unless the reason the Closing has not then occurred is due to the fact
that one or more of the conditions to Closing (exclusive of the condition set
forth in Section 3.7 unless the reason for Buyer's failure to satisfy such
condition can be clearly shown to be as a result of Seller's failure to perform
any of its obligations hereunder) have not been fully satisfied or waived, in
which event the outside date for Closing shall be deemed extended for up to
ninety (90) days and thereafter may be, if such unsatisfied condition as is
under Seller's control has still not been satisfied, extended by Buyer or Seller
for one additional up to ninety (90) day period. If neither party elects to
extend the Closing for the second up to ninety (90) day period, this Agreement
shall then be terminated and the Deposit refunded to Buyer without waiving
Buyer's rights to compensation, if and as applicable pursuant to Section 6.11,
below. If the Closing has not occurred by the expiration of the second up to
ninety (90) day extension period, if applicable, then either party may terminate
this Agreement and the Deposit will be refunded to Buyer. Notwithstanding the
foregoing, if after February 28, 1997 all conditions to Closing have occurred
other than Buyer's having satisfied the condition precedent set forth in Section
3.7 above (for reasons other than Seller's failure to satisfy any of its
obligations), then, if Seller elects to terminate this Agreement as permitted
herein, Buyer may negate Seller's election to terminate this Agreement if, by
written notice to Seller given within five (5) business days of receipt of
notice from Seller terminating this
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Agreement, Buyer waives such condition to Closing and the Closing of this
transaction occurs within fifteen (15) days thereafter.
5.3 Prorations and Closing Costs.
(a) Taxes. Buyer acknowledges being advised that the Property
and other land are included as one tax parcel. Accordingly, an equitable
allocation of taxes and special or other assessments between the Property and
the remainder of the lands included in the tax parcel shall be made (taking into
consideration the assessment amounts per acre, relative acreages, and similar
factors) at the Closing. Ad valorem real estate taxes levied against the
Property for the year in which this transaction is closed shall be prorated as
of the date of the Closing, utilizing the maximum allowable discount, based upon
the millage rate and tax assessment of the Property for the current year, if
known, or for the prior year if the figures for the current year are not known.
In the later event, either party may require that the taxes be reprorated
based on the actual taxes due, utilizing maximum allowable discount, when
known. Buyer shall accept title to the Property subject to non-delinquent
taxes for the current year, but subject to the afore stated proration and
Seller's obligation.
(b) Assessments. All assessments (to the extent due or payable
at or prior to Closing) and encumbrances affecting the Property shall be paid by
Seller on or before the Closing.
(c) Operating Expenses. All utility, maintenance, service and
operating expenses paid by Seller, and applicable to services to be performed or
materials to be provided to the Pro perty after the Closing, shall be prorated
between the parties to the date of the Closing.
(d) Closing Costs. City, county and state real property
conveyance taxes, document taxes, surtax and transfer fees shall be paid by the
Seller. Recording fees and the minimum promulgated risk rate title insurance
premium shall be paid by the Buyer.
5.4 Possession. At the Closing, possession of the Property
shall be delivered to Buyer, free of all tenancies.
5.5 Risk of Loss. At all times prior to the Closing, the risk of loss
of the Property shall be with Seller. If prior to the Closing any condemnation
proceeding is commenced affecting the Pro perty or access to the Property, then
Seller shall immediately notify Buyer of such event. Upon receipt of such
notice, Buyer shall elect by written notification to Seller within ten (10) days
thereafter to either: (i) terminate this Agreement, whereupon all monies
deposited by Buyer shall be returned to Buyer and the parties shall have no
further rights or obligations with respect to this Agreement; or (ii) permit the
Closing, in accordance with this Agreement (which shall be deemed to have been
elected if timely notice has not been furnished by Buyer), whereupon Seller
shall
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assign and deliver to Buyer all condemnation awards payable as a result of the
condemnation.
5.6 Documents at Closing.
(a) Seller's Requirements. At the Closing, Seller shall
deliver to Buyer the following:
(1) A special warranty deed duly executed in
recordable form with all necessary federal, state, and local
tax stamps and surtax affixed at Seller's expense conveying
the Property to Buyer;
(2) The REA fully executed by all parties with any
interest in Seller's Project and containing all restrictions
required hereby, if same has not theretofore been recorded;
(3) The fully executed Supplemental Declaration
relating to the Property;
(4) An affidavit or certificate for the purpose of
establishing that Seller is not a foreign person and has no
foreign affiliations which would require withholding under
Section 1445 of the Internal Revenue Code or any other Laws;
(5) Such documents as may be required by the title
company to (i) satisfy all of Seller's Section B-I
requirements set forth in the Title Report, (ii) delete all
standard exceptions for mechanic's liens, matters of survey
and parties in possession and (iii) insure the "gap"; and
(6) The Owner's Title Insurance Policy or "marked
up commitment" in the form as required hereby.
(b) Buyer's Requirements. At the Closing, Buyer shall
deliver Clear funds in an amount sufficient to satisfy Buyer's Closing
obligations under this Agreement.
(c) At Closing, each party shall deliver such other
items as may be provided for herein or as may reasonably be requested by the
other in furtherance hereof.
ARTICLE 6
GENERAL PROVISIONS
6.1 Brokerage Commissions. Seller shall pay the total broker's
commission payable to Prime Sites, Inc. and Kendallgate Properties, Inc. (which
latter entity is affiliated with Seller and is the agent solely of Seller)
pursuant to separate agreement(s). Buyer and Seller hereby represent and warrant
to the other that they have not taken any action which would create any other
obligation for broker's commissions or finder's fees to be payable with regard
to this transaction other than as aforesaid. Buyer and Seller each agree to
indemnify and hold the other harmless from and
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against all liability, claims, demands, damages, or costs (including
reasonable attorneys' fees at all tribunal levels) of any kind arising from or
connected with any broker's commission or finder's fee or other charge
claimed to be due any person arising from the indemnifying party's conduct
with respect to this transaction (which indemnity from Buyer is acknowledged
to specifically include any commission or claim therefor asserted by Florida
Shopping Center Group, Inc.), other than the commissions authorized in this
paragraph. This provision shall survive Closing.
6.2 Notices. Any notice required or permitted to be given with respect
to the subject matter of this Agreement shall be in writing and shall be deemed
properly delivered, given or served (i) when personally served or when such
personal service is refused (including delivery by an overnight courier), or
(ii) on the date shown for delivery or rejection on a return receipt, if the
notice is deposited in the U.S. mail, certified or registered, return receipt
requested, postage prepaid, addressed as follows:
TO SELLER: Berkowitz Development Group
2665 S. Bayshore Drive
Suite 1200
Coconut Grove, FL 33133
Phone: (305) 854-2800
Fax: (305) 854-9795
With a copy to: Arnold A. Brown, Esq.
Rubin Baum Levin Constant
Friedman & Bilzin
2500 First Union Financial Center
Miami, FL 33131
Phone: (305) 374-7580
Fax: (305) 374-7593
TO BUYER: Silver Diner Development, Inc.
11806 Rockville Pike
Rockville, MD 20852
Attn: Robert T. Giaimo, President
Fax: (301) 770-2832
With a copy to: Arnold D. Shevin, Esq.
Stroock & Stroock & Lavan
3300 First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2385
Fax: (305) 789-9302
The above parties may change the address to which notices
shall thereafter be delivered by giving five (5) days' prior written notice to
all other parties in the manner set forth in this paragraph.
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6.3 Memorandum of Agreement. Neither this Agreement nor any
notice hereof shall be recorded in any public records.
6.4 Attorneys' Fees. If any legal action is commenced con cerning the
Property, this Agreement, or the rights and duties of any party in relation
thereto, the prevailing party in such liti gation shall be entitled to
reasonable attorneys' fees at all tribunal levels in an amount set by the
court. Should either party become the subject of any bankruptcy or
insolvency proceeding, the other party shall be entitled to all attorneys'
fees at all tribunal levels and costs incurred to establish any right
hereunder, or to obtain adequate assurances or relief from the effects of the
bankruptcy or insolvency proceeding.
6.5 Authority and Execution. Each person executing this Agreement on
behalf of a party represents and warrants that such person is duly and validly
authorized to do so on behalf of the party it purports to bind and, if such
party is a partnership, corporation or trust, that such partnership, corporation
or trust has full right and authority to enter into this Agreement and perform
all of its obligations hereunder. As to representations, warranties, covenants
or agreements made by Seller in this Agreement, each of Bersin Development Corp.
and Documentation Corp. shall be liable only for matters pertaining to it, in
the case of representations and warranties pertaining to the selling entities or
things within their knowledge, and for an undivided 50% of the obligations or
liabilities, in the case of other representations, warranties, covenants and
agreements.
6.6 Further Assurances. Each party shall act diligently and in good
faith with respect to all matters pertaining to this Agreement and shall perform
or cause to be performed all acts and execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, all instruments and documents as may
be reasonably required to carry out the intent and purpose of this Agreement.
This provision shall survive Closing.
6.7 Entire Agreement. This Agreement and the exhibits marked hereto
(all of which are by this reference incorporated herein) constitute the entire
agreement between the parties and supersede all other agreements, whether
written or oral, respecting the subject matter of this Agreement; no other
agreement, statement or promise made by either party hereto with respect to the
subject matter of this Agreement shall be binding or valid. This Agreement may
be executed simultaneously or in counterparts, each of which shall be deemed an
original but all of which together shall con stitute one and the same contract.
6.8 Amendments. This Agreement shall not be modified by either party by
oral representations made before or after the execution of this Agreement, and
all amendments to this Agreement must be in writing and signed by Buyer and
Seller.
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6.9 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of each party's assignees (to the extent assignable), heirs,
successors and legal representatives. None of the representations, warranties,
or covenants of Seller set forth herein shall survive the Closing and delivery
of the deed and the same shall be merged into the deed, except as and to the
extent specifically provided for herein.
6.10 Interpretation. Each party and its counsel have reviewed this
Agreement. Any rule of construction to the effect that ambiguities are to be
resolved against the drafting party shall not apply in the interpretation of
this Agreement. The captions of this Agreement are for convenience and reference
only, and the words contained therein shall not be deemed to explain, modify,
amplify or aid in the interpretation, construction or meaning of the provisions
of this Agreement. This Agreement shall be construed and interpreted under, and
governed and enforced according to, the laws of the State of Florida. If any
provisions of this Agreement are held to be unenforceable or invalid, it is the
specific intent of the parties that the remaining provisions shall be of full
force and effect.
6.11 Damages for Default or Seller's Inability to Close. If the Closing
fails to occur due to a default of Buyer, then Seller will sustain substantial
damages. Buyer and Seller agree that it would be impracticable or extremely
difficult to determine the actual damages sustained by Seller in the event of
such a default hereunder by Buyer, and therefore, Seller and Buyer agree that if
Buyer commits such a default, Seller shall, as its sole and exclusive remedies
and as agreed and liquidated damages, retain the Deposit and all interest
accrued thereon.
Except where a contrary remedy is specifically provided for elsewhere in
this Agreement, in the event that Seller fails to close this transaction
for any reason other than Buyer's default or failure of Buyer, through no
default on its part, to satisfy the condition to Closing set forth in Section
3.7 above, and in view of the parties acknowledgment that the actual losses
suffered by Buyer would be extremely difficult to ascertain with great
certainty, and in an effort to recognize that such losses of Buyer should be
compensable, the parties have agreed, as an inducement to Buyer to enter into
this Agreement, that Buyer shall, under such circumstances, be entitled to
terminate this Agreement and receive the return of its Deposit and, in addition
thereto, receive from Seller as compensation for its losses and expenses
hereunder, (i) the liquidated sum of $75,000 in the event Seller's failure or
inability to close is a result of the acts of third parties outside of Seller's
control, such as GMAC, KFHA, Dade County or any agency thereof, any utility
company, or the like; or (ii) the liquidated sum of $150,000 if Seller's failure
to close is a result of
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Seller's default hereunder and not as a result of the acts, or failure to
act, of any third party.
Notwithstanding and in addition to the foregoing limitations
on remedies, each of the parties shall be liable for the payment of attorneys'
fees and court costs (including expert witness fees whenever such term is used
in this Agreement) payable to the prevailing party in the event of litigation
by the parties hereunder or in connection herewith and shall also be liable
for the payment of any amounts due pursuant to any indemnification
provisions contained herein or in any document given pursuant hereto or in
furtherance hereof.
6.12 Time of Essence. Time is of the essence in the per
formance of Buyer's obligations under this Agreement.
6.13 Assignment. Buyer may assign this Agreement to any person or
entity provided that Buyer shall deliver to Seller an executed copy of any such
assignment and any assignee must assume all of the obligations of Buyer to the
extent provided hereunder and further provided that such assignment must occur
at least fifteen (15) days prior to Closing. No such assignment shall relieve
Buyer from liability hereunder.
6.14 Platting. Seller shall, as a condition to closing, plat the
Property (and, at Seller's option, adjacent lands owned or controlled by
Seller), at Seller's cost (the "Plat"), and in conjunction therewith, cause any
unities of title affecting the Property and adjacent lands to be released.
Seller agrees to use reasonable efforts (excluding litigation or the payment of
money, other than customary amounts for customary purposes associated with
platting) to accomplish the foregoing as expeditiously as possible. Buyer agrees
to fully cooperate with Seller in connection with the foregoing at no additional
cost to Buyer. Buyer acknowledges being advised that certain standard plat
restrictions will likely be required in connection with finalization of the
Plat, including restrictions on the use of well water and septic tanks, a
requirement for the installation of underground utility lines, and a requirement
for perimeter utility easements. Buyer shall not be entitled to object to any of
such matters and they shall be Permitted Exceptions, so long as they do not
unreasonably interfere with Buyer's Contemplated Improvements or Contemplated
Use. Buyer acknowledges being advised that the Plat will likely be a perimeter
plat, with a waiver of plat or declaration in lieu of unity of title being
obtained for the Property and adjacent lands, and Buyer approves of this
provided no restrictions or conditions required thereby adversely affect Buyer's
ability to construct its Contemplated Improvements or use the Property for its
Contemplated Use, or otherwise infringe upon the marketability of the Property,
and Buyer will promptly and in good faith cooperate with all
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reasonable requests pertaining to the effectuation of this, at no additional
cost to Buyer.
6.15 Escrow Holder Provisions. The Escrow Holder shall not be liable
for any acts taken in good faith, shall only be liable for its willful
misconduct or gross negligence, and may in its sole discretion, rely upon the
written notices, communications, orders or instructions jointly given by any
party hereto. Seller and Buyer, jointly and severally, indemnify and hold the
Escrow Holder harmless from and against any and all matters directly or
indirectly related to or in connection with the funds held by Escrow Holder
under this Agreement including, without limitation, attorneys' and
paralegals' fees at all tribunal levels and in connection with all
proceedings, accountant fees and any other costs or expenses (hereinafter
referred to as "Escrow Expenses"). In the event that any Escrow Expenses are
paid by Escrow Holder, Escrow Holder may recover such payments, at its
option, as follows: (i) as a first priority out of the funds held by Escrow
Holder, or (ii) from Seller or Buyer. If for any reason the Closing does not
occur and either party makes a written demand upon Escrow Holder for
payment of the Deposit, Escrow Holder shall give written notice to the other
party of such demand. If Escrow Holder does not receive a written objection
from the non-demanding party to the proposed payment within 7 days after the
giving of such notice, Escrow Holder is authorized, instructed and directed
to make such payment. If Escrow Holder does receive such written
objection within such 7-day period or if for any other reason Escrow Holder in
good faith shall elect not to make such payment, Escrow Holder shall continue to
hold such amount until otherwise directed by written instructions from the
Seller and Buyer or a final judgment of a court. Escrow Holder shall have the
right at any time to deposit the escrowed proceeds and interest thereon, if any,
with the clerk of the Court of the county in which the Property is located.
Escrow Holder shall give written notice of such deposit to Seller and Buyer.
Upon such deposit, Escrow Holder shall be relieved and discharged of all further
obligations and responsibilities hereunder. The fact that Seller's attorneys are
Escrow Holder hereunder shall not preclude them from representing Seller in the
event of litigation hereunder. The provisions of this paragraph shall survive
closing and any termination of this Agreement.
6.16 Permitted Delays By Reason of Force Majeure. Whenever performance
is required of any party hereunder, such party shall use all due diligence to
perform and take all necessary measures in good faith to perform; provided,
however, that if completion of performance shall be delayed at any time by
reason of acts of God, war, civil commotion, riots, strikes, picketing, or other
labor disputes, unavailability of labor or materials or damage to work in
progress by reason of fire or other casualty, then the time for
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<PAGE>
performance as herein specified shall be appropriately extended by the
time of the delay actually incurred.
6.17 Outside Date for Acceptance. The execution of this Agreement by
Buyer shall be deemed null and void and this Agreement will be revoked and of no
further force or effect if a counterpart hereof, fully executed by Seller and
with all exhibits appended thereto, is not delivered to Buyer on or before 5:00
p.m. on Monday, October 7, 1996.
[The balance of this page has been intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
respective dates set forth below.
SELLER: BUYER:
BERSIN DEVELOPMENT CORP., SILVER DINER DEVELOPMENT
a Florida corporation INC., a Virginia corporation
/s/ Jeffrey L. Berkowitz /s/ Robert T. Giaimo
By:_________________________ By:_________________________
Name: Jeffrey L. Berkowitz Name: Robert T. Giaimo
Title: President Title: President
Dated: October 9, 1996 Dated: October 4, 1996
DOCUMENTATION CORP.,
a Florida corporation
/s/ Alan H. Potamkin
By:_________________________
ALAN H. POTAMKIN
Name:_______________________
President
Title:______________________
October 7, 1996
Dated:______________________
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<PAGE>
ESCROW HOLDER'S RECEIPT
The undersigned, as Escrow Holder, does hereby acknowledge receipt of
Buyer's Deposit in the amount of $150,000 and agrees to hold and disburse same
as contemplated in the Agreement.
RUBIN BAUM LEVIN CONSTANT
FRIEDMAN & BILZIN
By:_____________________________
Name:___________________________
Title:__________________________
Dated:__________________________
<PAGE>
EXHIBIT "A"
General Description of the Property
<PAGE>
Exhibit A to Contract
[Property Plat Map appears here]
<PAGE>
EXHIBIT "B"
Site Plan of Seller's Project
<PAGE>
Exhibit "B" to Contract
[Property Plat Map appears here]
<PAGE>
EXHIBIT "C"
Sketch of Kendall Drive Portion of the Project
<PAGE>
Exhibit C to Contract
[Property Plat Map appears here]
<PAGE>
EXHIBIT "D"
KENDALL VILLAGE CENTER PERMITTED EXCEPTIONS
1. Covenants, conditions and restrictions contained in Covenants Running
with the Land (hazardous substances) recorded in Official Records Book
12177, Page 2601, in Official Records Book 12518, Page 447, and in
Official Records Book 14173, Page 1715, all of the Public Records of
Dade County, Florida.
2. Covenants, conditions and restrictions contained in Amended, Corrected
and Restated Declaration of Restrictions recorded in Official Records
Book 15543, Page 215, of the Public Records of Dade County, Florida.
3. Covenants, conditions and restrictions contained in Declaration of
Restrictive Covenants recorded in Official Records Book 15582, Page
1165, of the Public Records of Dade County, Florida.
4. Covenants, conditions and restrictions contained in Declaration of
Restrictions recorded in Official Records Book 15631, Page 2618, of the
Public Records of Dade County, Florida, as amended by instrument
recorded in Official Records Book 17320, Page 4299 of the Public
Records of Dade County, Florida.
5. Covenants, conditions and restrictions set forth in Agreement (WASA)
recorded in Official Records Book 16012, Page 3580, supplemented in
Official Records Book 16454, Page 1179, and Official Records Book
16765, Page 1712, all of the Public Records of Dade County, Florida.
6. Covenants, conditions and restrictions set forth in Declarations of
Restrictions (Barnes & Noble and Michaels) recorded in Official Records
Book 17150, Pages 822 and 834, respectively, both of the Public Records
of Dade County, Florida.
<PAGE>
EXHIBIT "E"
Current Form of REA
<PAGE>
This instrument prepared by and after recording, return to:
Arnold A. Brown, Esq.
Rubin Baum Levin Constant Friedman & Bilzin
2500 First Union Financial Center
Miami, Florida 33131
(Kendall Village Center)
DECLARATION OF RESTRICTIONS AND
RECIPROCAL EASEMENT AGREEMENT
This Declaration of Restrictions and Reciprocal Easement Agreement (the
("Agreement") is made and entered into as of this _____ day of __________, 199__
by Documentation Corp. and Bersin Development Corp., each a Florida corporation,
each as to an undivided 50% interest, whose address is 2665 South Bayshore
Drive, Suite 1200, Coconut Grove, Florida 33133, hereinafter collectively
referred to as "First Party".
WHEREAS, First Party is the owner of a certain parcel of real property
legally described on Exhibit "A" attached hereto and made a part hereof (the
"Center"), which is depicted in bold on Exhibit "B" attached hereto and made a
part hereof (the "Site Plan"); and
WHEREAS, First Party, in connection with its sale or financing of
portions of the Center separate and apart from other portions of the Center, is
desirous of (i) establishing certain easements in, to, over, across and through
portions of the Center for the benefit of other portions of the Center and (ii)
imposing certain restrictions in connection with the development and use of
portions of the Center, all as more particularly provided for herein and for the
purpose of facilitating the implementation of a unified development plan for the
lands included within the Center.
NOW, THEREFORE, for valuable consideration, First Party declares and
agrees as follows:
1. First Party does hereby establish, create and grant a perpetual
non-exclusive easement in, to, over, across and through those portions of the
Center (the "Easement Area") as may from time to time be used for the purposes
designated in paragraph 2 hereof, for the use and benefit of the respective
owners and tenants of the Center and their employees, agents, customers, guests,
licensees, invitees, mortgagees, successors and assigns.
Exhibit "E" to Contract
<PAGE>
2. The Easement Area described in paragraph 1 hereof shall include
the following property:
(a) Any property (but, in particular, the areas cross hatched
on the Site Plan attached hereto as Exhibit "C", which areas shall be available
for the purposes specified in this subparagraph 2(a) and shall not be subject to
the provisions of paragraph 7 below unless alternative means of access,
reasonably acceptable to all of the owners of Parcels E, F, G and H depicted on
the Site Plan attached hereto as Exhibit "C", are established) as may from time
to time be used as roadways, streets, driveways, entranceways or other
access ways within the Center for ingress and egress of persons and motor
vehicles on, over, across and through the Center and to and from adjacent public
streets and highways, together with the right to eliminate such curbing and
landscaping and replace same with paving as may reasonably be required to permit
unobstructed traffic flow. Notwithstanding the foregoing, however, First Party
may unilaterally shift the north/south accessway that is located in the middle
of the parking area shown on Exhibit "C" to the east or west (but only within
the Easement Area), so that it will line up with the continuation thereof to the
north and with any entrance into the Center from North Kendall Drive between
S.W. 124th Avenue and the Florida Turnpike; and
(b) Any property as may from time to time be used for or
reasonably necessary for the installation, maintenance, repair and replacement
of (i) public utilities (including water, sewer electric, gas and telephone) or
(ii) the drainage of surface water run-off to, from or within the Center;
provided that none of same shall ever be installed under any buildings and, to
the maximum extent possible, all of same shall be located within then existing
areas devoted to such purpose(s); and
(c) Any property (but, in particular, the areas noted by
diagonal lines on the Site Plan attached hereto as Exhibit "C", which areas
shall be available for the purposes specified in this subparagraph 2(c) and
shall not be subject to the provisions of paragraph 7 below unless alternative
means of parking, reasonably acceptable to all of the owners of Parcels E, F, G
and H depicted on the Site Plan attached hereto as Exhibit "C", are established)
as may from time to time be used as parking areas within the Center (including,
without limitation, any parking garage structure) for the parking of motor
vehicles. Notwithstanding the foregoing, however, First Party may unilaterally
make minor adjustments in the configuration of the parking spaces in order to
accommodate relocation of the portion of the roadway described at the end of
subparagraph 2(a) above to line up with any accessway that may be installed
along Kendall Drive between S.W. 124th Avenue and the Florida Turnpike, in order
to add additional parking in the area south of the diagonally lined area, if
permitted by applicable law, and in order to accommodate
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a minor reconfiguration of the Parcel G building to the west; provided, however,
that, except if reduced as a result of a future condemnation or deed in lieu
thereof, there will at no times be less than 360 parking spaces within the
diagonally lined area on the Site Plan attached hereto as Exhibit "C" and,
if permitted by applicable governing authorities, the area to the south thereof
in the aggregate (excluding, however, the parking area to the north of
Parcel H); and
(d) Any property as may from time to time be used for
landscaped areas or pedestrian walkways, and any property or facilities as may
from time to time be available for the common use of all owners within the
Center (whether or not actually used by all owners within the Center), but only
to the extent the items specified in this subparagraph (d) are so designated by
First Party.
3. No barriers will be erected within the Center which would have
the effect of limiting or restricting the easement rights granted hereinabove;
provided, however, that reasonable non-discriminatory rules and regulations may
be established by the owner(s) from time to time within the Center related to
the use of the Easement Area located on its property or by First Party related
to the use of any portion of the Easement Area, whether or not owned by First
Party (including, without limitation, First Party (but not other owners)
designating and posting reasonable portions of the Center with signs for short
term parking and/or designating and posting reasonable portions of the parking
areas within the Center with signs limiting their use for customers of the
businesses in the vicinity of such parking areas). Any improvements placed
within the Center or any portion thereof will provide for the free flow of
pedestrian and vehicular traffic between all portions of the Center in order to
effectuate the easement rights granted in this Agreement, and will fully comply
with all federal, state and local requirements for development and with all
matters of record. Anything in this paragraph 3 or elsewhere in this Agreement
to the contrary notwithstanding, all parties burdened by this Agreement
acknowledge being advised and agree that all or a portion of the parking areas
within the Center will, at the option of First Party, be comprised of controlled
parking and all of such parties approve of the foregoing, provided that a system
shall be implemented whereby the occupants of Parcels E, F, G and H (and any
other parcels designated in any supplemental declaration) will be entitled to
validate parking for their customers such that there will be no charge for
parking by their customers (but this no charge validation right shall not be
applicable to any garage or similar structured parking area located outside the
land described on Exhibit "A" attached hereto that may hereafter be added to the
effects of this Declaration). Such validation shall be subject to such
reasonable and non-discriminatory rules and regulations as may, from time to
time, be promulgated by First Party, including length of time with respect to
which validation is applicable and designation of specific areas in which
parking must
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<PAGE>
occur. The provisions of this paragraph shall not limit or restrict the
installation of temporary construction barricades to be utilized prior to and
during construction of the Center and adjacent lands; provided, however,
that any such barricades shall be installed and maintained in such a manner as
to minimize inconvenience to or disruption of the businesses within the Center.
4. (a) No portion of the Center shall be used for any
illegal use.
(b) In the event any portion of the Center is damaged or
destroyed by reason of casualty or condemnation, the owner thereof shall, within
a reasonable period of time after the occurrence thereof and with due diligence,
either (i) restore the damaged or destroyed portions to complete and useable
condition or (ii) raze the remaining improvements; provided, however, that all
access ways and parking within the cross hatched and diagonally lined areas
shown on the Site Plan attached hereto as Exhibit "C" shall be restored.
(c) Buildings may be constructed within the area legally
described on Exhibit "A" attached hereto only in those areas not cross-hatched
or diagonally lined on Exhibit "C" attached hereto. Each portion of the Center
on which buildings are permitted to be constructed shall contain gross square
footage of building area (including gross square footage of outdoor serving area
unless expressly provided to the contrary) and a maximum height above finish
grade that does not exceed the amount specified in a supplemental
declaration that is recorded by First Party prior to or at the time First Party
conveys the applicable portion of the Center to someone other than a successor
First Party, and shall be limited in use as specified in such supplemental
declaration. The area legally described on Exhibit "A" attached hereto (depicted
in bold on Exhibit "B" as aforestated) shall contain no more than 40,000 gross
square feet of building area (including outdoor serving area) in the aggregate.
(d) No loud speakers that can be heard outside of the
buildings located within the Center shall be operated, except to the extent
either operated by First Party or they can be heard solely within the outdoor
dining/serving area of the applicable building.
(e) (i) No building, fence, wall, structure, sign or other
improvements (including, without limitation, landscaping and both the interior
(to the extent visible from the exterior) and exterior of buildings and other
structures or improvements) of any nature shall be commenced, erected, placed,
altered or maintained within any portion of the Center, and no addition or
alteration to the interior (to the extent visible from the exterior) or exterior
of any structure or other improvements shall be made within any portion of
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<PAGE>
the Center, until the construction plans and specifications, including
elevations, and a plan showing the location of the structure(s) or other
improvements and any signs together with a landscaping plan have been
approved in writing by First Party. Any material change in the interior (to the
extent visible from the exterior), any change in the exterior appearance of any
building, fence, wall, structure, sign or other improvement, and any change
in the appearance of the landscaping as approved and installed initially
shall be deemed an alteration requiring approval as aforestated. The items or
matters to be submitted for approval as provided in this subparagraph (e)(i)
shall hereinafter collectively or individually, as the context may require
or permit, be referred to as the "Plans." Each building, fence, wall,
structure, sign or other improvement of any nature and all landscaping shall
be erected, placed, or altered only in accordance with the Plans as
approved. Refusal of approval of the Plans, or any portion thereof, may be
based on any ground, including purely aesthetic grounds, which, in the sole and
absolute discretion of First Party, shall be deemed sufficient.
(ii) First Party (which term, as used in this
subpara graph (e), shall include its respective officers, directors,
employees, partners, agents, contractors, consultants and attorneys, as
the context requires or permits) shall not be liable for damages to anyone
submitting any items (including, without limitation, Plans pursuant to
subparagraph (e)(i) for approval or to any owner or owners of property within
the Center or to any other party by reason of mistake in judgment, negligence
or non-feasance arising out of or in connection with the approval or
disapproval or failure to approve any such items or its enforcement or failure
to enforce against third parties any site maintenance or other requirements
hereof. Anyone submitting any items to First Party for approval, by the
submitting of such items, and any owner or other party, by acquiring an
interest in any portion of the Center, agrees not to seek any such damages
against First Party. Without limiting the generality of the foregoing, First
Party shall not be responsible for reviewing, nor shall its approval of any
Plans be deemed approval of any Plans from the standpoint of structural
safety, soundness, workmanship, materials, usefulness, conformance with
building or other codes or industry standards, or compliance with governmental
requirements.
(iii) First Party will respond to a request
for approval of Plans within twenty (20) business days from the time that
two (2) sets of such Plans are delivered to First Party with a written request
for approval. The party submitting the Plans shall promptly submit to First
Party any additional information or materials requested by First Party for the
purpose of aiding in its review of the original submission and the twenty (20)
business day approval period shall not commence until such additional
information or materials are received, so long as First Party requests such
5
<PAGE>
information within ten (10) business days of the original submission of Plans.
If First Party disapproves, First Party shall so notify the party submitting
the Plans in writing within said twenty (20) business day period stating the
specific reason or reasons for denying approval, whereupon the party
submitting the Plans shall revise the Plans accordingly and resubmit same, at
which time such resubmission will be treated hereunder as an original
submission. A failure by First Party to respond within such twenty (20)
business day period shall constitute an automatic approval.
(f) (i) No tents or trailers of any description, whether
readily movable or not, campers, motor homes, vans without side windows other
than in the front doors, shacks, tanks (excepting aboveground tanks) or
temporary or accessory buildings or structures shall be placed or permitted to
remain on any property within the Center except those needed during construction
(the location and exterior appearance of any construction trailers, and the
location or placement of any construction vehicles and staging areas shall be
subject to the prior reasonable written approval of First Party), and after the
completion of construction of the main structures and issuance of a certificate
of occupancy, all such tents, trailers of any description, campers, motor homes,
vans, shacks, tanks, temporary and accessory buildings or structures shall be
removed forthwith. Notwithstanding the foregoing, (A) permanent accessory
buildings or structures approve pursuant to subparagraph (e)(i) above may remain
after completion of the main structures and issuance of a certificate of
occupancy and (B) customer campers and recreation type vehicles shall not be
prohibited by the foregoing while the customer is patronizing business(es) at
the Center. The provisions of this subparagraph shall not be applicable to First
Party.
(ii) At all times during the course of
construction of improvements and landscaping upon any portion of the
Center, the owner(s) thereof will remove construction debris of all kinds
from such portion of the Center and all adjoining streets and premises and,
when such construction is substantially completed, the owner(s) thereof shall
promptly and properly clear and remove all debris, equipment and excess,
surplus or remainder of construction materials, of whatever nature, from
such portion of the Center and all adjoining streets and premises.
(iii) No weeds, underbrush or other unsightly
growths shall be permitted to grow or remain upon any portion of the Center, and
no waste paper, trash, refuse pile or unsightly objects shall be allowed to
be placed or suffered to remain anywhere thereon.
(g) No portion of the Center shall be used for any of the
following purposes, which are hereby declared to be prohibited uses: (i) head
shop, massage parlor (excluding therapeutic massage by
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licensed massage therapists), adult book store or any other store
involved in the sale, distribution, lease or exhibition of pornographic
materials, or any other business restricted by law to "adults" only,
(ii) except to the extent specifically permitted by First Party at its sole
discretion by a supplemental declaration, cocktail lounge or establishment
which sells alcoholic beverages for on the premises consumption, except as a
part of the operation of a sit down restaurant, (iii) a fast food restaurant,
except to the extent specifically permitted by First Party at its sole
discretion by a supplemental declaration, (iv) a drive-in restaurant or any
facility with a drive thru feature (including a fast food restaurant with such a
feature), except to the extent specifically permitted (but only within lands
that may hereafter be added to the effects of this Agreement) by First
Party at its sole discretion by a supplemental declaration, (v) for
industrial or warehouse purposes (except for the incidental storage of
merchandise or other items in conjunction with the conduct of business
within the Center), (vi) funeral parlor, (vii) automobile, truck, trailer,
recreation vehicle or motorcycle show room or repair facility, (viii) school or
training facility (except for training of the workers employed by the
establishments operating within the Center as an incident to their employment),
(ix) a "second hand" or "surplus store" (provided, however, that this
prohibition shall not apply to a high quality consignment shop that is operated
in a first-class manner), (x) a mobile home park, trailer park, junk yard or
stock yard (except as and to the extent permitted elsewhere in this Agreement,
if at all), (xi) any fire sale, bankruptcy sale (unless pursuant to a court
order) or auction house operation, (xii) any use which creates vibrations or
offensive odors which are noticeable outside of the premises initiating or
generating such vibrations or odors, (xiii) any use (excluding one expressly
permitted by a Supplemental Declaration and provided, however, that this shall
not permit First Party to approve any competing use that is in violation of any
then effective exclusive use or restrictive covenant granted by this Agreement,
any supplemental declarations or any other recorded instruments) that competes
with any (A) exclusive use or restricted use provision contained in any
supplemental declaration (regardless of whether or not the beneficiary of such
exclusive or restricted use provision owns or leases property within the Center,
and any such supplemental declaration may be imposed unilaterally by First Party
on all or portions of the Center without the joinder of any other owner and all,
or the applicable, portions of the Center shall be bound thereby) or (B) then
existing use within any portion of the Center or any lands in the vicinity of
the Center designated by First Party in a supplemental declaration (whether or
not exclusive use protection for such use is contained in a supplemental
declaration) unless, in the case of (B) only, First Party approves of such
competing use in its absolute and sole discretion (and, in such event, subject
to such terms as First Party may impose) or (xiv) any use which, under
applicable law, requires a greater parking ratio for the applicable
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portion of the Center than the initial use for such portion of the Center
required.
(h) First Party may from time to time establish, and
thereafter modify, reasonable, customary, and nondiscriminatory rules and
regulations for the operation and use of the Easement Area (whether or not owned
by First Party), or portions thereof, and all parties burdened by this Agreement
shall comply with same.
(i) No owner or occupant of any portion of the real property
legally described on Exhibit "A" attached hereto (depicted in bold on Exhibit
"B" as aforestated), other than First Party, shall be entitled to install any
free-standing signage in the Center. First Party shall have the exclusive right
to install free-standing signage, including pylon signs and monument signs,
within said Exhibit "A" property, which signage may be utilized for
identification of the Center and/or adjacent lands generally or for
identification of the occupants designated from time to time by First Party.
This provision shall not be deemed to limit the installation of signage on the
buildings within the Center, to the maximum extent permitted by applicable law.
5. In connection with the development from time to time of portions of
the Center, the following guidelines shall be observed: (i) development shall be
performed in such a manner that surface water runoff within the Center will not
materially adversely affect any portion of the Center or result in the
accumulation of standing water on any portion of the Center, (ii) all work
performed shall be accomplished so as to not interrupt any existing services to
the improvements within the Center, and in a manner so as to minimize
inconvenience and interruption of access to the owners and occupants of the
Center, (iii) in connection with any work performed by an owner, its successors
or assigns on any portion of the Easement Area, after completion of such work
the Easement Area shall be restored to the condition in which it was prior to
the performance of such work, at the cost of the owner causing such work to be
performed; (iv) all public utility and drainage facilities shall, to the maximum
extent permissible, be located underground, (v) all garbage and trash containers
(other than those installed or approved by First Party for placement in the
Easement Area and intended to be used by pedestrians/customers) shall be located
either within a service area designated by First Party or inside an enclosed
building or be enclosed on all sides by a wall, fence or other screening, the
height of which exceeds the height of the container(s) and the color of which
blends with the color of the building located on the applicable portion of the
Center, and all garbage and trash generated from the Center shall be disposed of
in such container(s) or otherwise as required by law, and (vi) any service area
that will be visible to the public other than solely from a service drive shall
be enclosed on all
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sides by a wall, fence or other screening that totally blocks the service area
from public view, the color of which blends with the color of the building
located on the applicable portion of the Center.
6. To the extent portions of the Center owned by different parties have
installed thereon improvements that abut each other along their common boundary
or boundaries, they shall be totally self-contained and shall not be constructed
so that there is a common party wall. Notwithstanding the foregoing, the
underground support/foundation may be jointly utilized provided same is
accomplished in full compliance with applicable law and shall not adversely
affect the structural integrity of the building first erected on the applicable
common boundary. Any future construction on portions of the Center in the
vicinity of a common boundary or boundaries thereof shall be performed in
such a manner that will permit joint utilization of the underground
support/foundation without the need for performing additional support or similar
work. First Party hereby grants non-exclusive perpetual easements for the
installation, maintenance and repair of underground foundations and other
support, for minor/unintentional encroachments and for joint use of any
underground support/foundations, which easements are for the benefit of those
portions of the buildings that are from time to time erected on the respective
portions of the Center along a common boundary or boundaries thereof, to the
extent reasonably required.
7. Subject to the provisions contained herein and in any supplemental
declaration or other matters of record, each owner from time to time of the
Center, or any portion thereof, reserves the right at any time and from time to
time, without the need for obtaining consent or approval from the owner(s) of
any other portions of the Center, to change, rearrange, alter, modify, build
upon or otherwise reduce the non-exclusive Easement Area created hereby. In the
event any of same are accomplished with respect to the non-exclusive Easement
Area located on any owner's property, same shall automatically release the area
which is so changed, rearranged, altered, modified, built upon or otherwise
reduced from this Agreement. In addition to the foregoing, each owner from time
to time of the Center, or any portion thereof, specifically reserves the right,
without the need for obtaining consent or approval from the owner(s) of any
other portions of the Center, to replace, alter or add to any existing buildings
or structures located on their respective properties or to build any new
buildings or structures on their respective properties as they may from time to
time desire, regardless of whether or not the additions or replacements are
constructed wholly or partly upon the nonexclusive Easement Area, subject to
applicable governmental requirements, matters of record and the provisions
contained herein (including architectural review and approval as herein
provided). If the foregoing requires relocation of any then existing utility or
drainage facilities, the owner that is so changing, rearranging,
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altering, modifying, building upon or otherwise reducing the easement
area shall be responsible, at its cost, for relocating such utility or
drainage facilities, but same shall be accomplished without interruption of
service and in a manner so as to minimize inconvenience to the owners and
occupants of the remaining portions of the Center. Nothing set forth on the
Site Plan regarding potential uses, potential users, height limitations,
square foot limitations, general configuration or otherwise shall be deemed a
limitation on any portion of the Center; all of same appear on the Site Plan
solely to indicate the present anticipated and non-binding development scheme
for the Center and adjacent lands owned or controlled, or potentially to be
owned or controlled, by First Party. No lands depicted on the Site Plan shall
be burdened by this Agreement unless and until same are added to the effects
of this Agreement in accordance with the terms of this Agreement.
8. (a) Each owner from time to time of each portion of the
Center (including First Party) agrees to fully maintain, repair and, when
necessary, replace, at its cost and expense, all portions of the Center located
on its property so that same are at all times in good working order,
condition and repair. The foregoing obligation to maintain, repair and,
when necessary, replace, shall include, without limitation: (i) keeping
all portions of the Center in a clean, unlittered, orderly and sanitary
condition; (ii) removing, to the extent practicable, surface waters;
(iii) keeping all marking and directional signs, if any, within the Center
clear, distinct and legible; (iv) maintaining, mowing, weeding, trimming
and watering all landscaped areas; (v) maintaining and operating exterior
lighting at reasonable levels during hours of darkness; and (vi) maintaining
and replacing the exterior finish materials of improvements from time to time
located within the Center (such as painting building surfaces and sealing
driveways and parking areas). Notwithstanding the foregoing, prior to initial
construction, portions of the Center may remain in their present, unimproved
condition; provided, however, that the owner(s) thereof shall cause same
to at all times be kept free of vegetation and overgrowth exceeding one
foot in height. Each owner from time to time of the Center, or any portion
thereof, further agrees to maintain comprehensive public liability insurance
with respect to the portion of the Center located on its property throughout
the term of this Agreement in an amount no less than $1,000,000.00,
combined single limit, which names the other(s) (and its mortgagee(s),
if so requested by such other(s)) as additional insured(s), and to furnish to
the other(s) written proof thereof promptly upon request.
(b) If the owner of any portion of the Center shall fail to
maintain, repair and, when necessary, replace the portions thereof that are
located on its property as required hereunder or shall fail to provide proof of
insurance as required hereunder, the owner(s) of
10
<PAGE>
any other portion of the Center may send written notice to such defaulting
party and, if such obligations are not performed by the defaulting party
within 30 days from receipt of such notice, then the party or parties giving
notice shall have the right (without limiting any other rights that may be
available) to perform such obligations and bill the defaulting party for
the actual out-of-pocket costs of such performance. If the defaulting
party shall not pay such bill within 30 days of receipt, then interest shall
accrue on the unpaid amount from the time it was expended until paid at the
lower of 18% per annum or the highest lawful rate permitted by law (the
"Interest Rate"). In the event First Party is the party who performs the
obligations of the defaulting party, the amount of the bill, together with
interest and costs of collection, shall be a lien on all property owned by the
defaulting party within the Center, which lien shall be effective upon, and
have priority as of the date of, the recording in the Public Records of Dade
County, Florida, of a claim of lien, which claim of lien shall specify the
legal description of the property liened and the amount claimed, and may be
foreclosed in the same manner as a mortgage.
(c) Each owner from time to time of the Center, or any portion
thereof, hereby indemnifies and saves harmless all other owners of portions of
the Center from any and all liability, damage, expense, causes of action, suits,
claims or judgments arising from the portion of the Center that is owned by it,
except to the extent caused by the act or negligence of another owner and in
such event only as to such other owner whose act or negligence is excepted.
(d) (i) The present plans for development of the Center
contemplate that First Party will own substantially all of the Easement Area
within the Center and, in accordance with subparagraph 8(a) above, First Party
will be obligated to maintain, repair, and, when necessary, replace same. All
costs incurred by First Party in maintaining, repairing, and replacing the
Easement Area, as well as for insuring same (liability coverage of no less than
$1,000,000 combined single limit, casualty coverage for full replacement cost,
and any other coverage customary for similar facilities) and paying taxes and
assessments (real, personal or otherwise) in connection with same, shall be
deemed a "Common Expense" of the Center. Common Expense shall include, without
limitation, all payroll and benefit costs for employees and independent
contractors to the extent that such benefit costs are reasonable and customary,
costs of supplying and cleaning uniforms and work clothes, all charges for
electricity, water, sewer, other utilities and rubbish removal, the cost of all
supplies, tools, materials and equipment acquired for maintaining, repairing and
replacing the Easement Area, the cost of any security or roving patrol provided
for the Easement Area, the cost for
11
<PAGE>
maintaining, repairing, replacing and manning any controlled access for the
parking area of the Center, the costs of resealing, restriping and
resurfacing (when necessary) parking areas and roadways, professional
expenses (such as attorneys' and accountants' fees) incurred in connection
with the Easement Area and a management fee or administrative fee not
to exceed 15% of the other Common Expenses, excluding taxes and insurance.
Any parking fees generated for use of the parking areas within the Easement
Area (excluding those generated from any garage or similar structured parking
located on land not included in Exhibit "A" attached hereto that may hereafter
be added to the effects of this Declaration, so long as the costs for such
garage or similar structured parking is not included in the calculation of
Common Expenses) shall be applied to reduce Common Expenses.
(ii) Each owner of a portion of the Center
shall, from and after the date of its acquisition thereof, be responsible for
payment of its "Pro Rata Share" of Common Expenses based on a fraction, the
numerator of which is the gross square footage of building area (including
outdoor dining/serving area unless expressly provided to the contrary in a
supplemental declaration, but excluding building area which constitutes
Easement Area) within the applicable portion of the Center that is owned by
such owner and the denominator of which is the total gross square footage of
building area (including outdoor dining/serving area unless expressly
provided to the contrary in a supplemental declaration, but excluding building
area which constitutes Easement Area) within the entire Center. Until the
initial building(s) contemplated to be constructed on any portion of the
Center are constructed, the maximum permitted square footage set forth in
recorded supplemental declarations for portions of the Center (and where no
such supplemental declarations are recorded, First Party's then contemplated
maximum permitted square footage) shall be used to calculate Pro Rata Share of
Common Expenses. Following construction, the owner of each applicable
portion of the Center shall provide First Party with a certification of square
footage from its architect or engineer and, subject to verification thereof by
First Party, the square footage so certified shall thereafter be utilized
until the square footage increases, if ever, due to additional
construction, at which time a new certificate shall be furnished as aforestated
and the above procedure shall govern in respect of same. In the event a
certificate as aforestated is not provided, the maximum permitted square
footage set forth in a recorded supplemental declaration pertaining to the
applicable portion of the Center shall be utilized until same is so
provided. After casualty or condemnation and prior to restoration, the
square footage that existed immediately prior to the casualty or condemnation
shall be used to calculate Pro Rata Share of Common Expenses. First Party shall,
from time to time but at least once a year, establish a budget for Common
Expenses and each owner of property within the Center shall pay to First
Party, on the first day of each month in advance, its Pro Rata Share of Common
12
<PAGE>
Expenses based on the aforestated budget. At least once per year, First Party
shall reconcile the budget with actual Common Expenses incurred and
furnish such reconciliation to all owners of property within the Center
within 90 days after the end of the applicable year. If excess monies were
collected by First Party, a pro rata refund shall accompany the
reconciliation. If the reconciliation reflects additional sums owed to First
Party, each owner of property within the Center shall pay its Pro Rata Share of
the excess within 30 days of receipt of the reconciliation.
(iii) Recognizing that the present plans for
development of the Center may change, all parties burdened by this Agreement
agree that, to the extent Easement Area is located on any portion of the
Center not owned by First Party, the party owning same shall be entitled to an
equitable adjustment of its Pro Rata Share of Common Expense to take into
account the costs of maintaining, repairing and, when necessary, replacing
the Easement Area on its property, all in furtherance of the concept that no
owner of property within the Center should be paying more than its Pro Rata
Share of maintaining, repairing and, when necessary, replacing all of the
Easement Area within the Center, regardless of the ownership thereof.
Absent manifest error, First Party's determination of the equitable
adjustment to be made pursuant to this subparagraph shall be final and
binding. Anything in this Agreement to the contrary notwithstanding,
First Party may unilaterally, by supplemental declaration, provide from
time to time that the obligations set forth in subparagraph 8(a) above,
as they relate to portions of the Easement Area not owned by First Party,
shall be undertaken by First Party and the determination so made by First Party
shall be binding upon the owner from time to time of the applicable Easement
Area; and during such time as First Party has undertaken such obligation, the
owner of the applicable Easement Area shall not have such obligation and shall
not be entitled to any adjustment of its Pro Rata Share of Common Expenses as
aforestated (a supplemental declaration as contemplated by the foregoing
sentence may be filed by First Party from time to time as often as First Party
deems appropriate, regardless of whether or not it then owns the Easement
Area in question, and such supplemental declaration shall not require the
joinder of the owner of the applicable portion of the Easement Area to which it
applies).
(iv) Any payment required under this
subparagraph 8(d) that is not paid when due shall bear interest at the Interest
Rate from the date invoiced until paid. First Party shall have a lien on all
property within the Center owned by a party who defaults in the payment of the
amounts provided to be paid in this subparagraph 8(d), together with costs of
collection, which lien shall be evidenced by a claim of lien that is recorded in
the public records of Dade County, Florida, shall be effective and take
priority as of the date of recording of this Agreement, shall specify the legal
description of
13
<PAGE>
the property liened and the amount claimed, and may be foreclosed in the same
manner as a mortgage may be foreclosed. Before instituting foreclosure
proceedings, however, First Party shall provide the applicable owner, and
any mortgagee of such owner who has furnished First Party notice pursuant to
paragraph 16 of this Agreement, notice (in the manner provided in paragraph
16 of this Agreement) of the amount due and of First Party's right to institute
foreclosure proceedings if payment is not received within 15 days after such
notice.
(v) First Party agrees that all Common
Expenses for which reimbursement is sought as provided in subparagraph 8(d) of
this Agreement shall be reasonable in amount and competitive with costs
incurred for similar items at similar properties in the vicinity of the Center.
Each owner, within one year after the date it receives a reconciliation
as contemplated by subparagraph 8(d)(ii) of this Agreement, shall have the
right to audit First Party's books and records related to Common Expenses for
the applicable year (and First Party agrees to maintain such records until
expiration of such time period), upon 15 days' prior written notice, during
business hours, at the business offices of First Party (or at such other
location as First Party may reasonably designate within Dade County, Florida).
Such audit shall be conducted by an accountant or other operating expense
auditing professional selected by the applicable owner and reasonably
acceptable to First Party and only one audit shall be conducted by any owner
for any given year. In the event such audit discloses items included in
Common Expenses that are purportedly improperly included in Common Expenses
or are purportedly unreasonable in amount, First Party and the applicable
owner(s) conducting the audit shall attempt to resolve the disagreement among
themselves, in the absence of which the dispute shall be resolved through
judicial proceedings. No audit or disagreement regarding the results of such
audit shall relieve any owner of its obligation to timely pay its Pro Rata
Share of Common Expenses based on the figures established by First Party;
provided, however, that upon final resolution of any disagreement (either by
mutual consent or final judicial determination), First Party shall refund any
excess sums that are determined to have been collected by it, together with
interest thereon at the Interest Rate from the date received until the date
refunded.
(e) Anything in this Agreement to the contrary
notwithstanding, all parties burdened by this Agreement agree that, in
connection with the development of, construction upon and use of portions of the
Center, they shall take every reasonable precaution to avoid damaging any
portion of the Easement Area and, in the event any portion of the Easement Area
is damaged as a result of their acts, or the acts of those claiming by, through
or under them (collectively or individually, as the context requires or permits,
a "Damaging Party"),
14
<PAGE>
the owner of the applicable Easement Area may (but shall not be obligated to,
at the cost of the Damaging Party, and if such owner does not, the Damaging
Party shall, at its sole cost, promptly repair, replace and restore all
portions of such Easement Area to their condition prior to such damage and
shall indemnify and hold the owner of such Easement Area, its successors
and assigns, harmless from and against all costs and expenses incurred by such
owner, its successors or assigns, in repairing, replacing or restoring any
such portion of the Easement Area that is damaged as aforestated.
9. No one other than First Party may use the name or "logo" of "Kendall
Village Center" or any other name or "logo" used by First Party at or in
connection with the Center in any way whatsoever including, but not limited to,
any signage, advertising, sales material or commercials without the prior
written consent of First Party (which may be given or withheld in First Party's
absolute and sole discretion and with or without cause and, if given, may be
subject to such terms and conditions as First Party deems appropriate). However,
occupants of portions of the Center may identify the Center in their
advertising, promotion, sales material or commercials by reference to the
Center's location "at Kendall Village Center" (subject, however, to such
reasonable terms and conditions as First Party may impose in order to protect
its registered trade names and service marks as hereinbelow provided); provided,
however, that reference to the Center's location "at Kendall Village Center" may
not be used in the name of any owner or occupant or any of its component
entities. If so requested by First Party, and as a condition to utilizing any
name whose use is restricted as aforestated, a party utilizing any such name
shall sign a license agreement(s) (at no charge by either) which is intended to
protect First Party's registered trade names and service marks from unauthorized
use by others. Such license agreement(s) shall be non-exclusive,
non-transferable and in form and substance reasonably acceptable to First Party.
10. (a) No portion of the Center or any interest therein shall be sold,
transferred or leased (which term shall include sublease and any other occupancy
arrangement whenever used) unless and until the owner (which term shall include
lessor whenever used, to the extent applicable) of the applicable portion
thereof shall have first offered to sell, transfer or lease the applicable
portion thereof or interest therein to First Party and First Party has waived,
in writing, its right to purchase or lease the applicable portion thereof or
interest therein. In the event the owner is a corporation, partnership or
trustee, the sale, assignment or other transfer of any controlling interest of
the stock of, partnership interest of or beneficial interest in the owner
(whether accomplished all at once or over time), as the case may be, shall
constitute a transfer to which the
15
<PAGE>
provisions of this paragraph shall apply, except in the case of a publicly
traded entity or wholly owned subsidiary thereof.
(b) Any owner(s) intending to sell, transfer or lease as
aforestated shall give to First Party notice of such intention, together with a
fully executed copy of the proposed contract of sale or lease (the "Proposed
Contract"). Within fifteen (15) days after receipt of such notice and Proposed
Contract, First Party shall either exercise, or waive exercise of, its right of
first refusal. If First Party exercises its right of first refusal, it shall,
within fifteen (15) days after receipt of such notice and Proposed Contract,
deliver to the applicable owner an agreement to purchase or lease the applicable
portion of the Center or interest therein upon the terms set forth in the
Proposed Contract (and the applicable owner shall promptly execute and return to
First Party a counterpart of such agreement to purchase or lease); provided,
however, that if the Proposed Contract contemplates a property exchange, First
Party may tender the cash value of the property contemplated to be
exchanged or a parcel of property having substantially similar value. If
First Party shall fai1 to exercise or waive exercise of its right of first
refusal within the said fifteen (15) day period, then First Party's right
of first refusal shall be deemed to have been waived as to that particular
Proposed Contract and First Party shall furnish a certificate of waiver as
hereinafter provided (although failure to so provide a certificate shall not
abrogate the effects of the waiver). Notwithstanding and in addition to the
foregoing, if First Party exercises its right of first refusal, it shall not be
bound by any use restrictions contained in the Proposed Contract and shall
not be bound by any limitations on further transfer, assignment or
subletting of its interests, the parties specifically recognizing that First
Party's exercise of its right of first refusal will likely be for the purpose of
preserving its investment in the Center and adjacent lands and not, necessarily,
to operate the business located on the property that is the subject matter of
the Proposed Contract.
(c) If First Party shall waive its right of first refusal or
shall fail to exercise said right within fifteen (15) days after receipt of the
aforestated notice and the Proposed Contract, First Party's waiver shall be
evidenced by a certificate executed by First Party in recordable form, which
shall be delivered to the applicable owner (although the failure to obtain or
record any such certificate shall not abrogate the effects of any waiver that
may exist). In the event First Party elects not to proceed with the purchase or
lease as provided for in this paragraph, the applicable owner may proceed with
the transaction contemplated by the Proposed Contract; provided, however, that
First Party's right of first refusal provided herein shall also apply to (i) any
subsequent proposed contracts to purchase or lease and (ii) any material changes
to the terms or conditions of
16
<PAGE>
the Proposed Contract (any change in the economic terms shall be deemed
material) or any subsequent proposed contracts or leases.
(d) Any sale, lease or other transfer of any portion of the
Center or any interest therein without notice to First Party and waiver of First
Party's right of first refusal as aforesaid shall be void.
(e) This paragraph shall not apply to (i) any property owned
by First Party or acquired from First Party through foreclosure or deed in lieu
thereof or (ii) the acquisition of title by any bank, life insurance company,
federal or state savings and loan association, real estate investment trust or
other institutional lender which acquires its title as a result of owning a
mortgage upon all or a portion of the Center, and this shall be so whether the
title is acquired through foreclosure proceedings or by deed in lieu thereof,
but this paragraph shall apply to a sale, lease or other transfer by any such
institution which so acquires title. Anything herein contained to the contrary
notwithstanding, if (and only if) required in order for the provisions of this
paragraph to be effective and enforceable under applicable law, the provisions
of this paragraph shall terminate twenty-one (21) years after the date of
recording of this instrument; otherwise, the provisions of this paragraph shall
continue in full force and effect until the date this Agreement is terminated.
11. (a) Anything to the contrary contained in this Agreement
notwithstanding, specific performance and/or injunctive relief shall
specifically be available for breach or violation of, or default under, any
provision contained in paragraphs 3, 4, 5, 9 or 10 above, it being expressly
acknowledged and agreed that damages may, at best, be difficult to ascertain and
would be an inadequate remedy in any event.
(b) The prevailing party in any action in connection with this
Agreement shall be entitled to the award of court costs and a reasonable
attorneys' and paralegals' fees at all tribunal levels and in connection with
all proceedings, whether or not suit is instituted. Whenever in this Agreement
the term "costs of collection" or words of similar import are used, same shall
include sums awarded pursuant to this subparagraph.
12. Each owner from time to time of the Center, or any portion thereof,
agrees, promptly upon request, to furnish from time to time to any other such
owner in writing such truthful estoppel information and/or one or more
confirmatory easements (confirmatory of the general easements granted hereby) as
may be reasonably requested.
17
<PAGE>
13. In the event any portion of the Center is condemned or taken
through eminent domain, the owner of the property so taken shall be entitled to
the full award therefor as if this Agreement were not in existence and the other
owner(s) shall not be entitled to share in any portion of the award as a result
of the existence of this Agreement; provided, however, that the foregoing shall
not prevent an award to any other owner(s) for the diminution in value of the
property of the other owner(s), provided same does not reduce the award payable
to the owner whose property was condemned or taken.
14. Nothing contained herein shall be construed as a dedication of
the easements granted herein to the general public.
15. (a) This Agreement shall be a covenant running with the land and
shall be binding upon and inure to the benefit of, and may be enforced by, the
owners from time to time of every portion of the Center, their successors,
assigns, employees, agents, customers, tenants, guests, licensees, invitees and
mortgagees. Notwithstanding the foregoing, this Agreement may be abrogated,
modified, terminated, rescinded or amended in whole or in part by an instrument
executed by the then owners of all portions of the Center, joined by their
respective mortgagees (if any); and the joinder of any tenants, guests,
licensees or invitees of any such owner (or anyone else) shall specifically not
be required in connection with any of the foregoing.
(b) Anything in this Agreement to the contrary
notwithstanding, the rights of First Party under this Agreement may only be
assigned by a written instrument of assignment, a counterpart of which is
recorded in the Public Records of Dade County, Florida. Any party receiving such
an assignment shall be deemed a successor First Party and shall be entitled to
all of the rights and shall be deemed to have assumed all of the obligations of
First Party under this Agreement. Any such assignment shall include the address
of the assignee for notice purposes and, in conjunction with such assignment,
the assignor shall furnish the assignee with the then current Notices Schedule
(as hereinafter defined).
(c) First Party shall have the unilateral right by
supplemental declaration to add to the lands comprising a part of the Center any
lands owned by First Party (or owned by a third party, provided such third party
joins in such supplemental declaration). First Party shall have the unilateral
right by supplemental declaration to withdraw from the effects of this Agreement
any land owned by First Party (or by a third party, provided such third party
joins in such supplemental declaration); provided, however, that the areas cross
hatched and diagonally lined on the Site Plan attached hereto as Exhibit "C" may
not be withdrawn from the effects of this Agreement without the consent of all
owners of property within the Center.
18
<PAGE>
(d) Anything in this Agreement to the contrary
notwithstanding, but in addition to more expansive rights granted to First Party
elsewhere in this Agreement (such as, without limitation, the right to
unilaterally impose exclusive or restricted use provisions or to permit
otherwise prohibited uses on all or portions of the Center under section 4(g)
without the joinder of any other owners), First Party may, from time to time,
unilaterally file one or more supplemental declarations solely affecting
portions of the Center that it owns (or that a third party owns, provided such
third party joins in the supplemental declaration), which supplemental
declarations reconfigure the Site Plan as it relates to the land legally
described in such supplemental declarations or otherwise deals with such land or
its owner (such as, by way of example and not by way of limitation, by limiting
gross square footage of building area, height, use or other matters pertaining
to such land that do not affect other land within the Center, or limiting First
Party's rights, as to such owner or land only, in respect of matters under this
Agreement that are within First Party's control). Any such supplemental
declaration may be unilaterally amended or terminated by First Party, joined by
the owner(s) of the land legally described in the supplemental declaration that
is the subject matter of such amendment or termination and joined by any other
party, if any, specified in such supplemental declaration (or in a subsequently
filed supplemental declaration) as having to join in any such amendment or
termination for it to be effective. Notwithstanding the foregoing, use of the
areas cross hatched and diagonally lined on the Site Plan attached hereto as
Exhibit "C" for the purposes specified in subparagraphs 2(a) and 2(c) may not be
changed except as therein provided.
16. Any notices required to be given hereunder shall be given by
certified mail, return receipt requested, by hand delivery, by facsimile machine
or by Federal Express or similar overnight courier service, postage prepaid, to
the address set forth in the introductory paragraph of this Agreement, in a
supplemental declaration, or in the Notice Schedule, as hereinafter defined.
Except as and to the extent expressly provided for below with respect to notices
of change of address, notices that are given in the manner aforestated shall be
effective (regardless of whether or not they are actually received) upon mailing
or depositing with Federal Express or similar overnight courier service, if
mailed or deposited with Federal Express or similar overnight courier service,
upon transmission if sent by facsimile machine or upon receipt if hand
delivered. Any party hereto may change its address for notice by notifying the
other parties hereto in the manner provided for above; provided, however,
that notices of change of address shall not be effective unless and until they
are actually received, delivery is refused or they are returned because the
address to which they were sent is no longer a current address and the party
sending such notice was not properly furnished a
19
<PAGE>
notification of change of address. First Party shall at all times maintain a
list of the most current addresses that have been furnished to First Party for
owners and mortgagees of portions of the Center (the "Notice Schedule") and
shall, upon request, make such Notice Schedule available to those requesting
same. Copies of any notices required to be given to another party hereto shall
also be given to the holder of any mortgage encumbering the property owned by
such party if the holder of any such mortgage has notified (in the manner
provided for above for giving notice of change of address) the party giving
notice of such holder's address and requested that notices be furnished to such
holder. Notice given by the attorney for any party shall be as effective as if
given by that party.
17. This Agreement shall be governed by the laws of the State of
Florida. If any portion of this Agreement shall be or become illegal or
unenforceable for any reason, the remaining portions shall remain in full force
and effect and shall be enforceable to the fullest extent permitted by law. Any
failure to enforce any restriction, covenant, condition, obligation,
reservation, right, power or charge herein contained shall in no event be deemed
a waiver of the right to thereafter enforce any of same. Upon sale of any
portion of the Center, the transferor thereof shall be relieved of personal
liability hereunder related to the time period subsequent to such transfer with
respect to the portion so transferred. This instrument may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same document.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed as of the day and year first above written.
Witnesses: DOCUMENTATION CORP., a Florida
corporation
Sign Name:_________________________ By:_______________________________
Print Name:________________________ Alan H. Potamkin, President
Sign Name:_________________________
Print Name:________________________
BERSIN DEVELOPMENT CORP., a
Florida corporation
Sign Name:_________________________ By:_______________________________
Print Name:________________________ Jeffrey L. Berkowitz,
President
Sign Name:_________________________
Print Name:________________________
20
<PAGE>
STATE OF ______________)
) SS.
COUNTY OF______________)
The foregoing instrument was acknowledged before me this ___
day of __________, 199__ by Alan H. Potamkin, as President of Documentation
Corp., a Florida corporation, in the capacity aforestated; such person is
personally known to me or has produced a driver's license as identification.
Sign Name:________________________
Print Name:_______________________
Notary Public
My Commission Expires:
_____________________
STATE OF FLORIDA )
) SS.
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__ by Jeffrey L. Berkowitz, as President of Bersin Development
Corp., a Florida corporation, in the capacity aforestated; such person is
personally known to me or has produced a driver's license as
identification.
Sign Name:_________________________
Print Name:________________________
Notary Public
My Commission Expires:
_____________________
21
<PAGE>
JOINDER
The undersigned, General Motors Acceptance Corporation, Mortgagee under
those certain Mortgages recorded in Official Records Book ______, Pages ______
and ______, of the Public Records of Dade County, Florida, as modified
(the "Mortgages"), encumbering lands which include the lands covered by the
foregoing Declaration, hereby joins in the foregoing Declaration for the
purpose of binding the lands encumbered by its Mortgages to the effects of
foregoing Declaration.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed as of the ___ day of ____________, 199__.
GENERAL MOTORS ACCEPTANCE
CORPORATION, a New York corporation
By:_________________________________
Print Name:_________________________
Title:______________________________
STATE OF_______________)
) SS.
COUNTY OF______________)
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__, by ____________________________ as _____________________ of
General Motors Acceptance Corporation, a New York corporation, in the
capacity aforestated; such person is personally known to me or has produced
a driver's license as identification.
Sign Name:___________________________
Print Name:__________________________
My Commission Expires: Notary Public
Serial No. (none if blank):__________
[NOTARIAL SEAL]
<PAGE>
EXHIBIT "A" TO THE REA
Legal Description of the Center
<PAGE>
Exhibit "B" to REA
[Property Plat Map appears here]
<PAGE>
Exhibit "C" to REA
[Property Plat Map appears here]
<PAGE>
EXHIBIT "F"
Alternative Site Plan
<PAGE>
Exhibit F to Contract
[Property Plat Map appears here]
<PAGE>
EXHIBIT "G"
Declaration of Restrictions
<PAGE>
This instrument prepared by
and after recording return to:
Arnold A. Brown, Esq.
Rubin Baum Levin Constant
Friedman & Bilzin
2500 First Union Financial Center
Miami, Florida 33131
(Silver Diner)
DECLARATION OF RESTRICTIONS
This Declaration of Restrictions is entered into by Bersin Development
Corp. and Documentation Corp., each a Florida corporation, each as to an
undivided 50% interest ("First Owner"), and Preparation, Inc. and Jeffrey A.
Berkowitz, each as to an undivided 50% interest ("Second Owner", and
collectively with First Owner, "Owners"), whose address is c/o Berkowitz
Development Group, 2665 South Bayshore Drive, Suite 1200, Coconut Grove, Florida
33133, for the benefit of Silver Diner Development, Inc., a Virginia corporation
("Beneficiary"), whose address is 11806 Rockville Pike, Rockville, Maryland
20852.
WHEREAS, First Owner is contemporaneously herewith, conveying to
Beneficiary the Property legally described on Exhibit "A" attached hereto and
made a part hereof (the "Outparcel");
WHEREAS, Owner currently owns lands in the vicinity of the Outparcel,
which lands (including the Outparcel) are legally described on Exhibit "B"
attached hereto and made a part hereof (the "Kendall Village Center Lands");
WHEREAS, as a material inducement for Beneficiary to purchase the
Outparcel, Owner has agreed to impose the following restrictions on Kendall
Village Center Lands:
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Owner agrees as follows:
1. For so long as the Outparcel is used as a family style restaurant
with the word "diner" in its name, no other business operated on any portion of
the Kendall Village Center Lands can use the word "diner" in its name or logo.
2. In the event the portion of the Kendall Village Center Lands
designated as Parcel I on the site plan attached hereto as Exhibit "C" is used
for restaurant purposes, there shall be constructed, on or
<PAGE>
before the date such restaurant opens for business, parking spaces within
all or portions of the boldly highlighted area surrounding said Parcel I for no
less than 110 cars.
3. This Declaration is given for the benefit of Beneficiary and its
successors and assigns, and may be enforced by Beneficiary and such successors
and assigns, by injunction or otherwise, Owner hereby recognizing that damages
may be an insufficient remedy in the event of violation of the provisions of
this Declaration.
4. If enforcement of the terms of this Declaration becomes necessary,
the prevailing party in any action pertaining thereto shall be entitled to an
award of court costs and reasonable attorneys' fees at all tribunal levels from
the party or parties causing the violation.
5. Beneficiary, by joining herein, agrees to provide, from time to time
to time upon request, an estoppel letter containing such truthful information as
Owner, its successors or assigns may, from time to time, reasonably request.
6. This Declaration shall be a covenant running with the land and shall
be binding upon and inure to the benefit of the owner from time to time of all
of the applicable portions of the Kendall Village Center Lands, and also shall
be binding upon and inure to the benefit of Beneficiary, its successors and
assigns.
7. This Declaration may be modified, terminated, rescinded or amended
in whole or in part by an instrument executed by the owner(s) of the applicable
portions of the Kendall Village Center Lands, and by the owner of the Outparcel,
joined by their respective mortgagees, if any, and joinder by no other party
shall be required.
8. Any notices required to be given hereunder shall be given by
certified mail, return receipt requested, postage prepaid, or by overnight
delivery service and shall be deemed effective upon receipt or upon refusal or
delivery or inability to deliver by virtue of an unnoticed change of address or
similar cause. Notices shall be forwarded to the addresses set forth in the
introductory paragraph of this Declaration, or to such other addresses as the
parties may furnish by notice as provided in this paragraph.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed as of the day and date first above written.
2
<PAGE>
Witnesses: DOCUMENTATION CORP., a Florida
corporation
Sign Name:_________________________ By:______________________________
Print Name:________________________ Alan Potamkin,
President
Sign Name:_________________________
Print Name:________________________
(as to Documentation)
BERSIN DEVELOPMENT CORP., a
Florida corporation
Sign Name:_________________________ By:______________________________
Print Name:________________________ Jeffrey L. Berkowitz,
President
Sign Name:_________________________
Print Name:________________________
(as to Documentation)
PREPARATION, INC., a
Florida corporation
Sign Name:_________________________ By:______________________________
Print Name:________________________ Alan Potamkin,
President
Sign Name:_________________________
Print Name:________________________
(as to Preparation)
Sign Name:_________________________ _________________________________
Print Name:________________________ Jeffrey L. Berkowitz
Sign Name:_________________________
Print Name:________________________
(as to Berkowitz)
SILVER DINER DEVELOPMENT, INC.,
a Virginia corporation
Sign Name:_________________________ By:______________________________
Print Name:________________________ Print Name:______________________
Title:___________________________
Sign Name:_________________________
Print Name:________________________
(as to Silver Diner)
3
<PAGE>
STATE OF FLORIDA )
) SS.
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__ by Alan Potamkin, as President of Documentation Corp., a
Florida corporation, in the capacity aforestated; such person is
personally known to me or has produced a driver's license as identification.
Sign Name:____________________________
Print Name:___________________________
Notary Public
My Commission Expires:
_____________________
STATE OF FLORIDA )
) SS.
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__ by Jeffrey L. Berkowitz, both individually and as President
of Bersin Development Corp., a Florida corporation, in the capacity
aforestated; such person is personally known to me or has produced a driver's
license as identification.
Sign Name:___________________________
Print Name:__________________________
Notary Public
Serial No. (none if blank):__________
My Commission Expires:
_____________________
4
<PAGE>
STATE OF FLORIDA )
) SS.
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__ by Alan Potamkin, as President of Preparation Inc., a
Florida corporation, in the capacity aforestated; such person is personally
known to me or has produced a driver's license as identification.
Sign Name:____________________________
Print Name:___________________________
Notary Public
My Commission Expires:
_____________________
STATE OF FLORIDA )
) SS.
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__ by ___________________________ as _________________________
of Silver Diner Development, Inc., a Virginia corporation, in the capacity
aforestated; such person is personally known to me or has produced a driver's
license as identification.
Sign Name:____________________________
Print Name:___________________________
Notary Public
My Commission Expires:
_____________________
5
<PAGE>
JOINDER
The undersigned, General Motors Acceptance Corporation, Mortgagee under
those certain Mortgages recorded in Official Records Book ______, Pages ______
and ______, of the Public Records of Dade County, Florida, as modified
(the "Mortgages"), encumbering lands which include the lands covered by the
foregoing Declaration, hereby joins in the foregoing Declaration for the
purpose of binding the lands encumbered by its Mortgages to the effects of
foregoing Declaration.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed as of the ___ day of ____________, 199__.
GENERAL MOTORS ACCEPTANCE
CORPORATION, a New York
corporation
By:_____________________________
Print Name:_____________________
Title:__________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__, by __________________________ as _________________________
of General Motors Acceptance Corporation, a New York corporation, in the
capacity aforestated; such person is personally known to me or has produced a
driver's license as identification.
Sign Name:__________________________
Print Name:_________________________
Notary Public
Serial No. (none if blank):_________
[NOTARIAL SEAL]
My Commission Expires:
_____________________
6
<PAGE>
EXHIBIT "A" TO THE
DECLARATION OF RESTRICTIONS
Legal Description of the Silver Diner Property
<PAGE>
LESS AND EXCEPT the portion thereof dedicated for public purposes on the plat of
KV Center West, according to the plat thereof recorded in Plat Book 148, Page
33, of the Public Records of Dade County, Florida.
PLUS the following two parcels:
Hernandez Parcel: South 1/2 of Southeast 1/4 of Southeast 1/4 of Northeast 1/4
of Southwest 1/4 of Section 36, Township 54 South, Range 39 East, Dade County,
Florida, less the East 35 feet thereof for right-of-way.
USMS Sliver: All that portion of the South 3/4 of the Southeast 1/4 of Section
36, Township 54 South, Range 39 East, Dade County, Florida, lying Northwesterly
of the Northwesterly line of the right-of-way of State Road 821 and South of the
North line of the Southwest 1/4 of the Southeast 1/4 of said
Section 36, lying and being in Dade County, Florida.
Exhibit "B" (2 of 3)
<PAGE>
KENDALL VILLAGE CENTER
Exhibit "B" (3 of 3)
[Property Plat Map appears here]
For Informational
purposes only.
Legal description
governs.
Improvements are
subject to change
by the owners of
the applicable
portions of the
property.
<PAGE>
Exhibit "C" to Silver Diner Restrictions
[Property Plat Map appears here]
<PAGE>
EXHIBIT "H"
Supplemental Declaration
<PAGE>
This instrument prepared by
and after recording return to:
Arnold A. Brown, Esq.
Rubin Baum Levin Constant
Friedman & Bilzin
2500 First Union Financial Center
Miami, Florida 33131
SUPPLEMENTAL DECLARATION
(SILVER DINER)
This Supplemental Declaration is made and entered into as of the ___
day of ____________, 199__ by Documentation Corp. and Bersin Development
Corp., each a Florida corporation, each as to an undivided 50% interest,
whose address is 2665 South Bayshore Drive, Suite 1200, Coconut Grove,
Florida 33133, hereinafter collectively referred to as "First Party".
WHEREAS, First Party is the owner of a certain parcel of real property
legally described on Exhibit "A" attached hereto and made a part hereof (the
"Property"), which is labeled Parcel F on Exhibit "B" attached hereto and made a
part hereof; and
WHEREAS, First Party has heretofore burdened the Property, and
additional lands, with a Declaration of Restrictions and Reciprocal Easement
Agreement recorded in Official Records Book ______, Page ______, of the Public
Records of Dade County, Florida (the "Declaration"); and
WHEREAS, the Declaration contemplates the entering into of a
Supplemental Declaration in conjunction with sale of the Property, which is to
occur on or about the date hereof;
NOW, THEREFORE, for valuable consideration, First Party declares and
agrees as follows:
1. All terms capitalized but not defined herein shall have the
meanings ascribed to such terms in the Declaration.
2. The gross square footage of building area on the Property, including
any outdoor serving area, shall be no more than 8,000 square feet; provided
however, that the width (the east-west dimension) of any building constructed on
the Property at any time shall not exceed 100 lineal feet.
3. The height of any improvements located on the Property at any time
shall have a maximum height above finish grade that does not exceed 22 feet in
height as to all portions of the
<PAGE>
building with the exception of decorative facades, which facades may be
placed on any of the sides of the building and may extend up to a maximum height
above finish grade of 28 feet; provided however, that no facade shall be wider
than 20% of the length of the side of the building on which said facade is
located.
4. The Property shall be used solely for a full service
restaurant. However, notwithstanding and in addition to the foregoing, no
portion of the Property may be used as a restaurant serving primarily either
Mexican cuisine or seafood. Only a restaurant which derives more than (a) 10% of
its gross sales from the sale of Mexican food shall be deemed to violate the
foregoing restriction respecting Mexican cuisine or (b) 25% of its gross
sales from the sale of seafood shall be deemed to violate the foregoing
restriction respecting seafood.
5. For as long as the Property is used as a family style restaurant
with the word "diner" in its name, no other portion of the Center, as defined in
the Declaration on the date hereof (which shall include any subsequent additions
thereto (but only to the extent within the lands burdened by that certain
Declaration of Restriction naming ________________________ as beneficiary, as
beneficiary, which is being recorded contemporaneously herewith) and shall also
include any subsequent withdrawals therefrom), shall use the word "diner" in its
name or logo. This provision may be enforced by specific performance by the
occupant from time to time of the Property, it being recognized that remedies at
law may be inadequate. This provision shall supplement, but is not intended to
supersede, the provisions of any separate recorded instrument pertaining to the
same subject matter.
6. No business located on Parcel G depicted on the site plan attached
to the Declaration as Exhibit "C" shall be operated as a restaurant; provided,
however, that food/beverage service businesses containing not more than 2,500
square feet such as, but not limited to, a doughnut shop (such as Dunkin'
Donuts), bagel shop, cocktail lounge and/or coffee shop (such as StarBucks),
shall be permitted, regardless of whether or not sit down service is provided
therein, provided further that such permitted food/beverage service businesses
shall not occupy more than 5,000 square feet of Parcel G in the aggregate. This
provision may be enforced by specific performance by the occupant from time to
time of the Property, it being recognized that remedies at law may be
inadequate.
7. For so long as the Property is used as a family style restaurant
which has a significant breakfast component, no other portion of the Center, as
defined in the Declaration on the date hereof (which shall not include any
subsequent additions thereto, but shall include any subsequent withdrawals
therefrom), shall be
2
<PAGE>
used as a family style restaurant which has a significant breakfast component,
such as, but not limited to, Denny's, IHOP or Perkins. The foregoing is not
intended to restrict restaurants such as, but not limited to, Chevy's, Hops or
Monty's from serving breakfast. This provision may be enforced by specific
performance by the occupant from time to time of the Property, it being
recognized that remedies at law may be inadequate.
8. (a) Notwithstanding anything contained in the Declaration to the
contrary, the right of first refusal set forth in Section 10 of the Declaration
shall not apply to a transfer, sale or lease to (i) any entity into which or
with which the owner of the Property may merge or consolidate, (ii) any
subsidiary of such owner, (iii) any commonly controlled affiliate of such owner,
(iv) any franchisee of such owner or (v) any party or entity as part of any
transfer, sale or lease of any of owner's assets if such transfer, sale or lease
includes, or is of, substantially all of the assets of the owner's Dade and
Broward County operations; provided in each such event that the operation and
use of the Property after such event remains substantially the same as existed
prior thereto; and provided, further, however, that nothing herein contained
shall diminish or in any way affect any other provision of the Declaration or
this Supplemental Declaration.
(b) Notwithstanding anything contained in the Declaration to
the contrary, the right of first refusal set forth in Section 10 of the
Declaration shall not apply to a transfer, acquisition, sale or lease to or by
(i) any party involved in a sale/leaseback transaction with the owner (lessee)
of the Property, or (ii) any mortgagee (or an affiliated entity of any
mortgagee) that acquires title to the Property; provided in each such event that
nothing herein contained shall diminish or in any way affect any other provision
of the Declaration or this Supplemental Declaration.
(c) Notwithstanding the foregoing paragraphs (a) or (b) of
this Section, a sale, transfer or lease otherwise exempted from the right of
first refusal provided for in the Declaration shall nonetheless be subject to
such right if the party acquiring or leasing the Property intends to utilize
same for the operation of an establishment that features nude (male or female)
dancing or that utilizes scantily clad men or women as waiters, dancers, hosts
or otherwise in connection with its operations (such as for example, Hooters,
Melons or Porkys); provided, however, that if First Party elects, in its sole
and absolute discretion, to make the foregoing use a prohibited use throughout
the Center (as same may be constituted from time to time), by including same in
Section 4(g) of the Declaration, then in such event, in lieu of a
3
<PAGE>
transfer, sale or lease to party engaged in such activities being subject to the
right of first refusal as aforesaid, any transfer, sale or lease to a party
seeking to engage in such activities shall be prohibited unless expressly
approved in writing by First Party in its sole and absolute discretion;
provided that nothing herein contained shall diminish or in any way affect
any other provision of the Declaration or this Supplemental Declaration.
(d) Notwithstanding anything contained in the Declaration to
the contrary, the right of first refusal set forth in Section 10 of the
Declaration shall not apply to any transfer, sale, acquisition or lease of the
Property to or by any party from and after the date that is fifteen (15) years
following the date of this Supplemental Declaration; provided that the foregoing
is not intended to diminish or otherwise affect any other provision of the
Declaration (including, but not limited to, the use restrictions set forth in
Section 4 thereof) or this Supplemental Declaration.
9. Notwithstanding the provisions of paragraph 2 of the Declaration
that grant the First Party the right to construct a direct entrance into the
Center from Kendall Drive, First Party agrees that if such direct entrance is
not fully constructed and completed prior to the date that the operations to be
conducted in the building and improvements constructed on the Property are
opened for business with the public (the "Opening Date"), then, construction of
such entrance shall not be commenced prior to a date that is less than six (6)
months after the Opening Date. First Party further agrees that it will not
commence such construction activities prior to the Opening Date unless it has in
good faith determined that the construction of the entrance will be completed
before the Opening Date, as same may be reasonably projected by the then owner
(or contract purchaser) of the Property, and the contract relating to the
construction of such entrance requires that same be completed prior to the
projected Opening Date. First Party shall give owner not less than thirty (30)
days' advance notice of the date on which construction of the entrance is
expected to commence.
10. Notwithstanding the provisions of paragraph 3 of the Declaration
that grant to First Party the unilateral right to install controlled parking
within the lands that are from time to time included within the Center, First
Party agrees that, as to the diagonally lined portions of the Center as depicted
on Exhibit "C" to the Declaration as it exists on the date hereof, excluding the
portion thereof located north of Parcel H, controlled parking will not be
installed without the approval of the then owner of the Property, which approval
shall not be unreasonably withheld.
4
<PAGE>
11. Notwithstanding the provisions of paragraph 3 of the Declaration
that grant to First Party the unilateral right to install certain signage
limiting parking rights, in the event a movie theater is constructed north of
the Center (as defined on the date hereof), within any of the lands depicted on
Exhibit "B" to the Declaration as it exists on the date hereof, First Party
shall, at the request of the then owner of the Property, install signs at the
entrances to the diagonally lined portions of the Center as depicted on Exhibit
"C" to the Declaration as it exists on the date hereof, excluding the portion
thereof located north of Parcel H, which disclose that such portions of the
Center are not to be utilized for parking by patrons of the movie theater.
12. The name and address for the owner of the Property, from and after
the date hereof until changed as provided in the Declaration, is ______________.
13. This Supplemental Declaration is intended to supplement the
Declaration and, in the event of a conflict, to supersede same. Except as and to
extent supplemented hereby, the Declaration shall remain in full force and
effect according to its terms.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed as of the day and date first above written.
Witnesses: DOCUMENTATION CORP., a Florida
corporation
Sign Name:________________________ By:___________________________
Print Name:_______________________ Print Name:___________________
Title:________________________
Sign Name:________________________
Print Name:_______________________
(as to Documentation)
BERSIN DEVELOPMENT CORP., a
Florida corporation
Sign Name:_________________________ By:________________________
Print Name:________________________ Jeffrey L. Berkowitz,
President
Sign Name:_________________________
Print Name:________________________
(as to Bersin)
STATE OF )
) SS.
COUNTY OF )
5
<PAGE>
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__ by __________________________, as _________________________
of Documentation Corp., a Florida corporation, in the capacity
aforestated; such person is personally known to me or has produced a driver's
license as identification.
Sign Name:____________________________
Print Name:___________________________
Notary Public
My Commission Expires:
_____________________
STATE OF FLORIDA )
) SS.
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ___ day of
____________, 199__ by Jeffrey L. Berkowitz, as President of Bersin Development
Corp., a Florida corporation, in the capacity aforestated; such person is
personally known to me or has produced a driver's license as
identification.
Sign Name:__________________________
Print Name:_________________________
Notary Public
Serial No. (none if blank):__________
My Commission Expires:
_____________________
6
<PAGE>
JOINDER
The undersigned, General Motors Acceptance Corporation, Mortgagee under
those certain Mortgages recorded in Official Records Book ______, Pages ______
and ______, of the Public Records of Dade County, Florida, as modified
(the "Mortgages"), encumbering lands which include the lands covered by the
foregoing Supplemental Declaration, hereby joins in the foregoing
Supplemental Declaration for the purpose of binding the lands encumbered by
its Mortgages to the effects of foregoing Supplemental Declaration.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed as of the ___ day of ____________, 199__.
GENERAL MOTORS ACCEPTANCE
CORPORATION, a New York
corporation
By:_____________________________
Print Name:_____________________
Title:__________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
___________, 199__, by _________________________ as _________________________ of
General Motors Acceptance Corporation, a New York corporation, in the capacity
aforestated; such person is personally known to me or has produced a driver's
license as identification.
Sign Name:____________________________
Print Name:___________________________
Notary Public
Serial No. (none if blank):___________
[NOTARIAL SEAL]
My Commission Expires:
_____________________
<PAGE>
EXHIBIT "A" TO THE
SUPPLEMENTAL DECLARATION
Legal Description of the Property
<PAGE>
EXHIBIT "B" TO THE
SUPPLEMENTAL DECLARATION
Site Plan Reflecting Property
EXHIBIT 10.13
Exhibit 10.13
Lease Agreement - Cherry Hill, New Jersey
<PAGE>
Lease
-----
Cherry Hill Associates L.P.,
Landlord
and
Silver Diner Development, Inc.,
Tenant
September __, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION PAGE
----
1. Demised Premises................................................... 1
2. Term; Renewal Options.............................................. 1
3. Base Rent; Additional Rent; Percentage Rent........................ 2
4. Operating Costs; Real Estate Taxes................................. 6
5. Taxes on Rental.................................................... 9
6. Use of Demised Premises............................................ 10
7. Assignment or Subletting........................................... 10
8. Repairs and Maintenance............................................ 11
9. Initial Site Work.................................................. 12
10. Signs.............................................................. 12
11. Inspection......................................................... 12
12. Insurance.......................................................... 12
13. Indemnification.................................................... 14
14. Liability of Landlord.............................................. 14
15. Alterations, Landlord Cooperation.................................. 15
16. Mechanic's Liens................................................... 16
17. Services and Utilities............................................. 17
18. Damage by Fire or Casualty......................................... 17
19. Default of Tenant.................................................. 19
(a) Defaults...................................................... 19
(b) Remedies...................................................... 19
(1) Continue Lease................................... 19
(2) Terminate Lease.................................. 20
(3) Reimbursement of Landlord's Costs in
Exercising Remedies.............................. 20
(4) Damages.......................................... 21
(5) Remedies Are Cumulative.......................... 21
(6) Waiver of Rights of Redemption................... 21
(c) Effect of Cure................................................ 22
- i -
<PAGE>
20. Waiver............................................................. 22
21. Subordination and Attornment....................................... 22
22. Condemnation....................................................... 23
(a) Total Condemnation............................................ 23
(b) Taking - Parking Area......................................... 24
(c) Partial Taking - Improvements................................. 24
(d) Termination for Partial Taking................................ 24
(e) Condemnation Award............................................ 25
(f) Rent Abatement for Partial Taking............................. 26
23. Covenant of Quiet Enjoyment........................................ 26
24. Sale or Transfer................................................... 26
25. No Partnership..................................................... 27
26. No Other Rights Acquired........................................... 27
27. Brokers............................................................ 27
28. Notices............................................................ 27
29. Estoppel Certificates.............................................. 27
30. Surrender; Holding Over............................................ 28
31. Right of Landlord to Cure Tenant's Default......................... 29
32. Tenant's Trade Fixtures............................................ 29
33. Tenant's Personal Property......................................... 29
34. Benefit and Burden................................................. 30
35. Memorandum of Lease................................................ 30
36. Leasehold Mortgages................................................ 30
37. Landlord or Tenant as an Individual or Partnership................. 35
38. Mortgagee Protection............................................... 35
39. Non-Competition.................................................... 35
40. Excuse for Nonperformance.......................................... 36
41. Environmental Matters.............................................. 36
42. Landlord's Representations, Warranties and Covenants............... 37
43. Miscellaneous...................................................... 38
- ii -
<PAGE>
TABLE OF EXHIBITS
-----------------
Exhibit A The Demised Premises
Exhibit B Construction Responsibilities
Exhibit C Improvements to be Constructed by Tenant
Exhibit D Form of First Amendment to Lease
Exhibit E Subordination, Nondisturbance and Attornment
Agreement
Exhibit F Existing Title Exceptions
- iii -
<PAGE>
BASIC LEASE INFORMATION
-----------------------
LANDLORD: Cherry Hill Associates L.P.,
a New Jersey limited partnership
LANDLORD'S ADDRESS
FOR NOTICES: The Rubin Organization, Inc.
The Bellevue
200 South Broad Street, Suite 300
Philadelphia, Pennsylvania 19102
Attn: General Counsel
TENANT: Silver Diner Development, Inc.,
a Virginia corporation
TENANT'S ADDRESS
FOR NOTICES: Silver Diner
c/o Silver Diner Development, Inc.
Corporate Office (Rear Entrance)
11806 Rockville Pike
Rockville, Maryland 20852
Attn: Mr. Robert T. Giaimo
Telecopy No. (301) 770-4521
and a copy to: Silver Diner
c/o Silver Diner Development, Inc.
Corporate Office (Rear Entrance)
11806 Rockville Pike
Rockville, Maryland 20852
Attn: Controller
Telecopy No. (301) 770-4521
BUILDING: The Silver Diner restaurant building to
be located at the Shopping Center
(the "Building")
LAND: The building pad on which the
Building will be situated together
with protected ingress and egress
and benefit of restricted
surrounding area as shown on Exhibit
A and Exhibit A-1.
DEMISED PREMISES: The Land
EFFECTIVE DATE: Sept. 30, 1996
________________
TARGET LEASE
COMMENCEMENT DATE: April 1, 1997
- i -
<PAGE>
TARGET RENT
COMMENCEMENT DATE: 270th day after Lease Commencement Date
RENT COMMENCEMENT
DATE: The later of (A) the 270th day after the
Lease Commencement Date or (B) the
date on which a Kohl's store is open
for business in the Shopping Center
LEASE EXPIRATION DATE: The last day of the calendar month in
which the twentieth anniversary of the
Rent Commencement Date occurs subject to
three five-year extensions
SHOPPING CENTER: Hillview Shopping Center
Cherry Hill, New Jersey
TERM: Twenty years plus three five-year
options
BASE RENT: The base rental for each Lease Year (a
"Lease Year" being defined as each
consecutive 12-month period beginning on
the first day of the calendar month next
following the month in which the Rent
Commencement Date occurs) during the
Term (hereinafter referred to as the
"Base Rent"), shall be as follows:
Annual Monthly
Lease Years Base Rent Base Rent
----------- --------- ---------
1 - 5 $160,000 $13,333.00
6 - 10 175,000 14,583.33
11 - 15 192,500 16,041.67
16 - 20 211,750 17,645.83
Option 1 21 - 25 232,925 19,410.42
Option 2 26 - 30 256,218 21,351.50
Option 3 31 - 35 281,839 23,486.58
PERCENTAGE RENT: See Section 3(c)
BREAKPOINT AMOUNT: Applicable Base Rent divided by Three
Percent (3%) except that the Breakpoint
- ii -
<PAGE>
Amount shall be the applicable Base
Rent divided by Four Percent (4%) when
Tenant is permitted to sell alcoholic
beverages at the Demised Premises
PERCENTAGE RENT
MULTIPLIER: Three percent (3%)
INTEREST RATE: The prime rate of interest charged from
time to time by Citibank, New York
City, plus two percent (2%) per annum
RETAIL USE OF
DEMISED PREMISES: Full service sit-down restaurant
LANDLORD'S BROKER: Legend Properties, Inc.
OEA: Operation and Easement Agreement
between Dayton Hudson Corporation and
Landlord dated May 28, 1996
The foregoing Basic Lease Information is hereby incorporated and made a part of
the Lease. Each reference in the Lease to any information and definitions
contained in the Basic Lease Information shall mean and refer to the information
and definitions hereinabove set forth. References in this document to the
"Lease" shall mean the Basic Lease Information, the body of the Lease, and any
Exhibits, Addenda, or Riders thereto. The provisions of the body of Lease shall
be read to implement the Basic Lease Information.
- iii -
<PAGE>
LEASE
THIS LEASE is made and entered into on the date set forth on the cover
page hereof by Landlord and Tenant.
1. Demised Premises. Landlord hereby leases the Demised
Premises to Tenant, and Tenant hereby leases the Demised Premises from
Landlord, for the Term and upon the conditions hereinafter provided. The
Demised Premises are located in the Hillview Shopping Center (the
"Shopping Center"). It is understood and agreed that Landlord will not make,
and is under no obligation to make, any structural or other alterations,
decorations, additions or improvements in or to the Demised Premises except
as set forth in Exhibit B.
2. Term; Renewal Options.
(a) Lease Commencement Date. The Term shall commence on the
Lease Commencement Date and expire at midnight on the Lease Expiration Date
unless extended or earlier terminated pursuant to the provisions contained
herein. The Lease Commencement Date shall be the date Landlord delivers the
Demised Premises to Tenant ready for Tenant to construct its Building which date
shall not be earlier than March 1, 1997. Landlord shall give Tenant at least
fifteen (15) days advance notice of the Lease Commencement Date. Landlord or
Tenant may terminate this Lease by notice to the other if the Lease Commencement
Date has not occurred by July 1, 1997, provided the party exercising the
termination right has proceeded diligently to fulfill all of its obligations
hereunder. The Landlord shall complete the Demised Premises in accordance with
Exhibit B. The Phase One Work (as defined in Exhibit B) shall be substantially
complete as of the Lease Commencement Date.
(b) Rent Commencement Date. The Rent Commencement Date shall
be the later of (i) the 270th day after the Lease Commencement Date, or (ii) the
date a Kohl's store is open for business in the Shopping Center. If the Building
is not "substantially completed" by the Target Rent Commencement Date as a
result of Force Majeure (as defined in Section 40), then the Rent Commencement
Date shall be postponed by the total number of days of Force Majeure, not to
exceed thirty (30) days. For purposes of this Lease, the term "substantially
completed" shall mean that either a temporary or permanent certificate of
occupancy for the Building has been issued by the applicable governmental
authority.
(c) First Amendment to Lease. Within thirty (30) days after
the Rent Commencement Date, Landlord and Tenant shall execute a First Amendment
to Lease (substantially in the form of Exhibit D attached hereto) setting forth
the Rent Commencement Date and Lease Expiration Date.
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(d) Renewal Options. Tenant shall have the right, at its
option, to extend the Term of this Lease for three additional periods ("Renewal
Terms") of five years each on all of the same terms and conditions herein set
forth, except that the Base Rent payable by Tenant during each Renewal Term
shall be as set forth in the Base Lease Information. Each renewal option shall
be deemed to have been exercised by Tenant unless Tenant, not later than six (6)
months prior to the expiration of the Term (as it may previously have been
extended) in the absence of such exercise, gives notice to Landlord that Tenant
will not exercise its renewal option.
3. Base Rent; Additional Rent; Percentage Rent.
(a) (1) "Base Rent" is the amount set forth in the Basic Lease
Information as adjusted from time to time pursuant to the terms of this Lease.
"Additional Rent" is any and all Percentage Rent (as defined in Section
3(c)(1)), and any and all other payments or charges payable by Tenant hereunder,
other than Base Rent, whether due and payable immediately or in monthly
installments. Throughout the Lease, Base Rent and Additional Rent are sometimes
collectively referred to as the "Rent."
(2) Base Rent and Additional Rent (where applicable
pursuant to the terms of the Lease) shall be due and payable, in advance, in
equal monthly installments. If the Rent Commencement Date is a date other than
the first day of a month, Rent for the month in which the Rent
Commencement Date occurs shall be prorated on a daily basis based upon a thirty
(30)-day month and shall be paid in advance on or before the Rent Commencement
Date. All payments of Base Rent shall be due on the first day of each and every
calendar month during the Term after the Rent Commencement Date. All payments of
Additional Rent (other than Percentage Rent) shall be due on the first day of
each and every calendar month (except as expressly required herein). All
payments of Rent shall be made to Landlord at Landlord's Address for Notices as
set forth in the Basic Lease Information, or to such other party or at such
other office as Landlord may designate from time to time by written notice to
Tenant. All payments of Rent shall be made without demand, notice or invoice
(except as expressly required herein) and without deduction, set-off or
counterclaim. Except as speci fically provided in Section 22(f) and for
applications of Percentage Rent under Section 3(c) of this Lease, no abatement,
diminution, reduction of Rent, charges or other compensation shall be claimed by
or allowed to Tenant, or any persons claiming under Tenant, under any
circumstance, whether for inconvenience, discomfort, interruption of business,
or otherwise. If Landlord shall at any time or times accept Rent after it shall
become due and payable, such acceptance shall not excuse delay upon subse quent
occasion.
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(b) Tenant shall pay any installment of Base Rent and any
Additional Rent (whether such Additional Rent is being paid on an installment or
other basis) by check made payable to Landlord and postmarked on or before the
due date.
(c) (1) In addition to Base Rent and any other Additional Rent
payable hereunder, Tenant shall pay as percentage rent ("Percentage Rent"), an
amount equal to the Percentage Rent Multiplier multiplied by the amount, if any,
by which Gross Receipts (as defined below) for such Lease Year exceed the
Breakpoint Amount for such Lease Year.
(2) Statements and payments in respect of Percentage Rent
shall be made by Tenant as follows:
(i) Within thirty (30) days after the end
of each four week accounting period of each Lease Year during the Term,
beginning with the accounting period first ending after the Rent Commencement
Date, Tenant shall submit to Landlord (i) an accurate written statement,
certified as true, complete and correct by the chief financial officer of
Tenant, setting forth the amount of Gross Receipts for such accounting period
and (ii) the Percentage Rent payment for such accounting period. The Percentage
Rent payable for such accounting period shall be an amount equal to (A) the
Percentage Rent Multiplier times the amount, if any, by which (i) the Gross
Receipts for such Lease Year through such accounting period exceeds (ii) the
applicable Breakpoint Amount prorated for the portion of such Lease Year through
such accounting period, less (B) Percentage Rent actually paid for prior
accounting periods for such Lease Year. The Breakpoint Amount shall be pro-rated
on an accounting period basis. The Breakpoint Amount shall be the applicable
Base Rent divided by Three Percent (3%) except that during such Accounting
Periods as Tenant is at all times permitted to sell alcoholic beverages at the
Demised Premises the Breakpoint Amount shall be the Applicable Base Rent divided
by Four Percent (4%). The Percentage Rent shall be separately computed for those
accounting periods of a Lease Year during which Tenant is permitted to sell
alcoholic beverages and those accounting periods of a Lease Year when Tenant is
not permitted to sell alcoholic beverages, but the results shall be netted
together to determine the actual Percentage Rent payable for any Lease Year or
portion of a Lease Year.
(ii) Within ninety (90) days after the end
of each Lease Year during the Term, Tenant shall submit to Landlord a written
statement (the "Annual Statement"), certified by Tenant's auditor and chief
financial officer as true, complete and correct and in accordance with Tenant's
books and records, showing in reasonable detail the full amount of the Gross
Receipts during the immediately preceding Lease Year (broken down between
accounting periods during which Tenant was permitted to
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sell alcoholic beverages and accounting periods during which Tenant was not
permitted to sell alcoholic beverages) and the Percentage Rent payable and
paid for such Lease Year. If the Percentage Rent for such Lease Year shall
exceed the Percentage Rent theretofore paid in respect of such Lease Year,
the balance due with interest on such balance at the Interest Rate shall be
paid by Tenant with the Annual Statement. Any overpayment of Percentage Rent
disclosed by the Annual Statement shall be applied to the next payment of
Base Rent. Each Annual Statement shall include and reflect data necessary for
an accurate computa tion of the Percentage Rent due under this Lease for
the period covered by such Annual Statement.
(iii) Throughout the Term, Tenant shall
maintain and keep, or cause to be maintained and kept, at its general offices a
full, complete and accurate record and account of all sales of food, beverages,
merchandise and services and all sums of money paid or payable for or on account
of or arising out of the business transactions conducted at or from the Demised
Premises. Tenant shall maintain its books and records substan tially in
accordance with generally accepted accounting principles. Tenant shall keep and
preserve, or cause to be kept and preserved, the records applicable to any
12-month period for not less than thirty-six (36) months after the Annual
Statement in respect of such 12-month period is delivered to Landlord. Tenant
agrees that Landlord may inspect Tenant's records relating to the calculation of
Gross Receipts (including daily register reports, credit card receipts, all
sales tax returns, and portions of income tax returns relating to sales) at the
office of Tenant (which shall be located at the Demised Premises or at a
location within the Washington, D.C. metropolitan area) upon reasonable advance
notice during normal business hours, provided that, with respect to any
particular Annual Statement, such inspection is made within thirty-six (36)
months after the Annual Statement is delivered to Landlord and is limited to the
period covered by such Annual Statement. Any claim made by Landlord for revision
of any Annual Statement or for additional Percentage Rent, which claim is not
made to Tenant within thirty-six (36) months after the date when the Annual
Statement is delivered to Landlord, shall be and hereby is waived by Landlord.
If it is ultimately determined that there was an error in any of Tenant's
statements prejudicial to Landlord's receipt of Percentage Rent, Tenant shall
pay any differential, plus interest at the Interest Rate from the time such
Percentage Rent was to have been paid until actually paid, on demand as
Additional Rent and if such difference is in an amount equal to more than five
percent (5%) of the amount of Percentage Rent reported by the Annual Statement
for the period covered by the Annual Statement, the expenses of Landlord's audit
shall be paid on demand as Additional Rent by Tenant. Otherwise, the expenses of
Landlord's audit shall be paid by Landlord. In the event of any disagreement in
regard to any claimed revisions, the parties shall submit the disagreement
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to a certified public accountant chosen mutually whose judgment shall be
binding, with the costs of this procedure to be borne equally by the parties.
(3) For purposes of this Lease, the term "Gross Receipts"
shall mean all amounts charged by Tenant and by all licensees,
concessionaires and sublessees of Tenant, arising from all business conducted
upon or from the Demised Premises, whether such business be conducted by Tenant
or by any licensee, concessionaire or sublessee of Tenant, whether such sales
shall be credit or cash sales or otherwise and shall include, but not be limited
to, the amounts received from the sale of food, liquor, goods, wares,
merchandise and services at or on the Demised Premises. Landlord acknowledges
that Tenant's organiza tional structure is such that there may be inventory
transfers between Tenant and any Affiliate of Tenant. For purposes of this
Lease, an "inventory transfer" is a transfer of inventory to an Affiliate made
solely for the convenience of Tenant's business and not for the purpose of
consummating a sale which has been made at, in or from the Demised Premises. For
purposes of this Lease, an "Affiliate" of any entity is any other entity that
controls, is controlled by or is under common control with the first entity or
any successor of the first entity. Any and all inventory transfers between
Tenant and any Affiliate of Tenant shall be excluded from the term "Gross
Receipts." Each sale upon credit shall be treated as a sale for the full price
in the month in which such sale shall be made, irrespective of the time when
Tenant or its licensee, concessionaire or sublessee shall receive complete or
partial payment from its customer. "Gross Receipts" shall not include: (i) sales
of merchandise for which cash has been refunded or allowances made on
merchandise claimed to be defective or unsatisfactory or on exchanged
merchandise or allow ances made on merchandise in connection with promotions
and/or discounts; (ii) discounts on the stated sales price which are not
actually charged to the customer or employee; (iii) any and all sums collected
and actually paid out for any sales or excise tax imposed by any federal, state,
municipal or other governmental authority based upon all sales included within
the definition of Gross Receipts as required by law, whether now or hereafter in
force, to be paid by Tenant or collected from its customers; (iv) any tips
collected by employees; and (v) any amounts deposited in pay phones, the jukebox
system (including selector boxes at tables), vending machines, and charitable
collection boxes.
(d) If Tenant fails to pay in the time and manner provided in
Section 3(b) any Rent due hereunder, and such failure to pay continues for ten
(10) days after Tenant receives notice from Landlord thereof, then such Rent
shall bear interest at a rate per annum equal to the Interest Rate from the date
such Rent became due to the date of the payment thereof by Tenant, but in no
event in excess of the highest rate allowed by law. In addition, if Tenant
fails to pay any Rent due hereunder after
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receipt of notice and the expiration of any applicable cure period with
respect thereto, then Landlord shall be entitled to collect a late payment
charge in the amount of Two Hundred Dollars ($200.00) ("Late Payment Charge").
Any written notice to Tenant of a failure to pay Rent timely shall state the
amount of Rent and the per diem interest due. No payment by Tenant of any
interest or Late Payment Charge shall relieve Tenant from the obligation to
make any other payments due under this Section 3 or any other provision of the
Lease. Such interest and Late Payment Charge shall constitute Additional
Rent due and payable with the next monthly installment of Rent following
Tenant's receipt of written notice thereof from Landlord. If Landlord does
not bill Tenant for any interest or Late Payment Charge within ninety (90)
days of its accrual, such fact shall be deemed a waiver by Landlord of its
right to such interest or Late Payment Charge.
4. Operating Costs; Real Estate Taxes.
(a) Commencing on the Rent Commencement Date and ending on the
last day of the Term, Tenant shall pay Landlord, as additional rent, an annual
charge representing its contribution to the costs of the maintenance and
operation of the Common Areas. Such annual charge (hereinafter called the
"Common Areas Charge") shall be computed as follows: the Common Areas Expenses
(as hereinafter defined) in each calendar year of the Term shall be multiplied
by a fraction ("Tenant's Pro Rata Share"), the numerator of which shall be the
Floor Area of the Building and the denominator of which shall be the total Floor
Area of all buildings in the Shopping Center except that if any other tenant(s)
exercise a right to take over the maintenance of their tracts, the Floor Area of
their buildings shall be excluded for so long as such tenant(s) perform such
maintenance. Landlord from time to time shall estimate the Common Areas Charge
for the remainder of the applicable calendar year and Tenant shall pay the
estimated amount in equal monthly installments over the remaining portion of the
calendar year. Within ninety (90) days after the expiration of each calendar
year, Landlord shall notify Tenant of the actual Common Areas Charge due from
Tenant for such calendar year and such statement shall be binding upon Landlord
and Tenant, subject to Tenant's right to audit the same pursuant to Paragraph
(c) of this Section 4. If the Common Areas Charge for such calendar year shall
be more than the estimated payments by Tenant, Tenant shall promptly pay the
difference to Landlord within thirty (30) days after demand. If the Common Areas
Charge for the applicable calendar year is less than the estimated payment paid
by Tenant for such calendar year, Landlord shall credit Tenant an amount equal
to the difference between the estimated payments made by Tenant and the actual
Common Areas Charge or refund such overpayment within thirty (30) days in the
case of the last year in the Term. If the Rent Commencement Date shall be a day
other than the first day of a calendar month, payment for the first month shall
be made on a pro rata basis and
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if the term of this Lease shall end on a day other than the last day of a
calendar month, payment for the last month shall likewise be made on a pro rata
basis.
(b) As used herein, the term "Common Areas Expenses" shall
mean the reasonable costs and expenses actually incurred by Landlord in the
repair, replacement, maintenance and operation of the Common Areas, as
determined, on a consistent basis, in accordance with generally accepted
accounting principles and shall include, without limit, the following costs and
expenses: charges for electricity for lighting of the Common Areas; the cost of
repairing, maintaining, replacing and operating the Common Areas, including
electrical and storm sewer systems; the cost of general public liability
insurance for the Common Areas; the wages of nonmanagement personnel employed in
cleaning sidewalks and parking areas, snow removal, the removal of trash and
similar work; the cost of maintaining landscaping, if any, in the Common Areas,
including replacement of trees, shrubs, and plants where necessary; the costs of
repairing and replacing sidewalks and parking areas (including parking lot
striping) after the completion of the Landlord's work to be performed pursuant
to Exhibit B; the wages of non-management personnel employed as security
personnel and parking area attendants; the cost of snow removal services; the
cost of miscellaneous repairs to the Common Areas and to signs and fountains, if
any, located therein; the cost of general supplies consumed in the maintenance
and operation of the Common Areas; and a general administrative fee (in lieu of
any other management fees or administrative overhead) equal to five percent (5%)
of the total of all other Common Areas Expenses. There shall be deducted from
the Common Areas Expenses proceeds from insurance and warranty claims. In any
event, the Common Areas Expenses shall not include (i) the cost of the original
site improvements to the Shopping Center, (ii) debt service on indebtedness of
Landlord, (iii) Landlord's cost of any utility or other services, if any,
separately sold by Landlord to Tenant and/or other occupants in the Shopping
Center, (iv) costs incurred by Landlord for alterations, if any, for other
tenants, (v) depreciation of the Shopping Center buildings and major components,
(vi) the cost of any maintenance or services with respect to tracts which are
excluded from the computation of Tenant's Pro Rata Share, (vii) real estate
taxes which are subject to subsection 4(d), and (viii) costs for capital
improvements and/or replacements to upgrade existing facilities, but capital
costs for replacement of the curbs, sidewalks, drainage, lighting and similar
systems and repaving of parking areas and access drives shall be included,
except that, if under generally accepted accounting principles, such expenditure
is not a current expense, then, the cost thereof shall be amortized over a
period equal to the useful life of such improvement, determined in accordance
with generally accepted accounting principles, and the amortized cost allocated
to each calendar year during the Term, together with an imputed interest
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amount calculated on the unamortized portion thereof using an interest rate
which is two percent (2%) below the Interest Rate at the time of the
expenditure, shall be treated as a Common Area Expense.
(c) Tenant shall have the right to audit the Common Areas
Expenses and Tenant's Real Estate Tax Share for any calendar year at any time
within 360 days after the date on which Tenant receives the statement of Common
Areas Expenses. Such audit must be performed either by Tenant's own employees or
by independent contractors who are being paid on a fixed (as opposed to
contingent) fee basis. The cost of any such audit shall be paid by Tenant,
except that, if it is ultimately determined that the Common Areas Charge for any
calendar year was overstated by more than five percent (5%), then the cost of
the audit shall be paid by Landlord. Landlord shall pay to Tenant any
overpayment of Common Areas Charge for the calendar year in question within 30
days after the amount of the overpayment has ultimately been established by the
audit. If Tenant fails to exercise its right of audit within the 360-day period,
the amount of the Common Areas Charge for the calendar year shall be
conclusively established as the amount set forth in the statement of Common
Areas Expenses for such calendar year delivered by Landlord to Tenant pursuant
to subsection (b). If, however, Tenant timely exercises its right of audit, the
amount of Common Areas Charge for such calendar year shall be conclusively
established as the amount determined as a result of such audit unless, within
180 days after receipt of a report of the same from the auditors selected by
Tenant, Landlord shall contest the amount thereof.
(d) Tenant shall also pay its share ("Tenant's Real Estate Tax
Share") of all taxes, assessments, and other govern mental fees and charges
applicable to the Land and the Building, whether federal, state, county,
municipal, or other authority, and whether assessed by taxing districts or
authorities presently taxing the Land or the Building or the operation thereof
or by other taxing authorities subsequently created or otherwise. Real estate
taxes for the year in which the Rent Commencement Date occurs and for subsequent
calendar years shall be deemed to be the taxes paid in the respective calendar
years, even though the levy or assessment thereof may be for a different fiscal
year; provided, however, that real estate taxes levied for any period prior to
the Rent Commencement Date or after the Lease Expiration Date shall be excluded
from Operating Costs. Real estate taxes for each calendar quarter during the
Term shall be paid by Tenant at least fifteen (15) days prior to the date such
taxes are due to be paid to the applicable governmental body, based upon
Landlord's reasonable estimate of such taxes. Tenant's Real Estate Tax Share
shall be the taxes for the portions of the Shopping Center not separately
assessed times the Floor Area of the Building divided by the Floor Area of all
buildings in the Shopping Center which are not separately assessed. Landlord
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covenants that taxes attributable to parking areas and open space will be
equitably apportioned among those portions of the Shopping Center which are
separately assessed and those portions of the Shopping Center as to which
Tenant's Real Estate Tax Share is computed.
5. Taxes on Rental.
(a) In addition to the component of Operating Costs respecting
taxes, assessments, etc., Tenant shall pay to the appropriate agency any sales,
excise, public space rentals and other tax (not including, however, Landlord's
income taxes) levied, imposed or assessed on Tenant by any applicable
governmental or other taxing authority upon any rental payable hereunder. Tenant
shall also pay, prior to the time the same shall become delinquent or payable
with penalty, all taxes imposed on its inventory, furniture, trade fixtures,
apparatus, equipment, leasehold improvements installed by Tenant (except to the
extent such leasehold improvements shall be covered by those taxes referred to
in subsection 4(d) hereof), and any other property of Tenant.
(b) Tenant may contest the amount or validity of any real
estate taxes or any taxes referenced in Section 5(a) by appropriate legal
proceeding. However, Tenant shall promptly pay the full amount of such
imposition unless such proceeding shall operate to prevent or stay the
collection or the imposition so contested without payment of the imposition
being required. If such proceeding shall not operate to prevent or stay the
collection of the imposition so contested, Tenant shall deposit with Landlord
the amount so contested and unpaid, which Landlord shall be entitled to utilize
to pay any such assessment or in such other fashion as Landlord may reasonably
deem necessary or appropriate to protect the Demised Premises from attachment,
levy, or other legal proceeding by any tax authority because of Tenant's failure
to pay any such assessment, imposition or charges. Upon the termination of such
proceeding, Tenant shall deliver to Landlord proof of the amount of the
imposition and any such charges as finally determined, and thereupon Landlord
shall, out of the sum so deposited with it by Tenant, pay such imposition and
any such charges and shall refund any balance to Tenant. If the sums deposited
with Landlord are insufficient to pay the full amount of such imposition and
other charges, Tenant shall forthwith pay any deficiency as Additional Rent upon
ten (10) days' written notice by Landlord to Tenant. Landlord, at Tenant's sole
expense, shall join in any such proceeding if any law shall so require.
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6. Use of Demised Premises.
(a) Tenant will use and occupy the Demised Premises solely for
use as a full service sit down restaurant (which shall initially be a Silver
Diner) and in accordance with the use permitted under applicable zoning
regulations. Tenant will not use or occupy the Demised Premises for any unlawful
purpose or in any way which will violate the OEA. Tenant will comply with all of
the obligations of the OEA applicable to the Demised Premises except that
Landlord shall be responsible for all maintenance and other obligations for the
parking and common areas.
(b) In regard to the use and occupancy of the Demised
Premises, Tenant shall, at its sole cost and expense, (i) maintain the Demised
Premises in a clean and orderly condition, and (ii) comply with all laws,
ordinances, rules, and regulations of governmental authorities and all
reasonable recommendations of Tenant's casualty insurer(s) and other applicable
insurance rating organizations now or hereafter in effect.
7. Assignment or Subletting.
(a) Tenant shall have no right to assign this Lease or sublet
all or any portion of the Demised Premises without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, Landlord's consent shall not be withheld provided that Tenant is not
in monetary default beyond applicable notice and cure periods and that (i) the
assignee has a verifiable net worth of at least Fifteen Million Dollars, (ii)
the assignee is operating at least six sit down family style restaurants having
total Gross Receipts (for all such restaurants as a group) of at least Ten
Million Dollars per year, and (iii) Tenant continues as an obligor under the
Lease for two (2) years after the assignment.
(b) Except as provided in Section 7(e) below, if Tenant
desires to assign this Lease or sublet all or any portion of the Demised
Premises, Tenant shall give Landlord written notice of Tenant's desire to do so
at least thirty (30) days prior to the effective date thereof. At such time,
Tenant shall also submit to Landlord with the notice such financial statements
and other information to show the then-current net worth and business experience
of the assignee or sublessee. Landlord shall have twenty (20) days from the
receipt of Tenant's notice to notify Tenant whether it consents to the proposed
assignment or sublease. If Landlord fails to respond within such twenty (20)-
day period Tenant shall send Landlord a reminder notice and if Landlord fails to
respond within five (5) days from the receipt of the reminder notice, such
failure shall be deemed Landlord's approval of the proposed assignment or
sublease. The reminder notice shall set forth the deemed approval consequence of
failure to respond. Landlord expressly agrees and acknowledges that it
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may not withhold its consent to any proposed assignment or sublet unless it
specifically explains its reasons for withholding consent.
(c) Except as otherwise specifically provided herein, upon the
assignment of this Lease by Tenant, Tenant shall not be released from any of its
obligations under the Lease. Upon an assignment complying with Section 7(a),
Tenant shall, after such two year period, be released from any and all of its
obligations under this Lease except for any obligations accruing prior to such
assignment. Except as otherwise specifically provided here in, Landlord and
Tenant acknowledge and agree that Landlord shall look primarily to the assignee
for relief upon breach of any of the obligations contained in this Lease
subsequent to any permitted assignment.
(d) Except as otherwise specifically provided herein, neither
Tenant nor Tenant's successors or permitted assigns, shall assign, mortgage,
give as security, pledge or encumber this Lease, in whole or in part, by
operation of law or otherwise, or sublet the Demised Premises in whole or in
part, or permit the Demised Premises or any portion thereof to be used or
occupied by others, without the prior written consent of Landlord in each
instance; provided, however, that upon the request of Silver Diner Development,
Inc. or an Affiliate of Silver Diner Development, Inc., Landlord shall not
unreasonably withhold its consent to a leasehold mortgage (or collateral
assignment of leasehold to a lender) for Silver Diner Development, Inc. or an
Affiliate of Silver Diner Development, Inc.
(e) Notwithstanding any provision to the contrary contained in
this Lease, provided that Tenant is not in monetary default beyond applicable
notice and cure periods hereunder, Tenant shall have the right at any time
during the Term, without Landlord's consent, to assign the Lease to any
Affiliate, franchisee or licensee of Tenant or to any entity with which Tenant
merges or consolidates or to any entity which acquires all or substantially all
of Tenant's assets provided that no such assignment shall be valid if it is a
device to circumvent the restrictions on assignment of this section.
8. Repairs and Maintenance.
Tenant shall, throughout the Term, at its sole cost and
expense, keep and maintain the Demised Premises and Building and all fixtures
and personalty located thereon or appurtenant thereto (including, without
limitation, the Building roof, foundation, structure and the Building
mechanical, electrical, HVAC and plumbing systems) in good order and condition
and shall make all necessary and desirable repairs and replacements thereof and
shall use all reasonable precaution to prevent waste, damage or injury thereto.
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9. Initial Site Work.
Landlord shall complete the Demised Premises as set forth on
Exhibit B. Landlord and Tenant agree that Landlord may complete its work with
respect to the Demised Premises after the Lease Commencement Date so long as
such work does not interfere with the construction of the Building by Tenant. In
this connection, Landlord shall provide reasonable means for construction access
and reasonable construction staging areas for Tenant's use in connection with
construction of the Building. In the event that Landlord interferes with, or
delays, Tenant's construction and completion of the Building, Landlord shall
give Tenant a credit of $500 for each day by which Tenant is delayed due to acts
or failures of Landlord. In addition, the Rent Commencement Date shall be
extended by one day for each such day of delay.
10. Signs. Tenant shall have the exclusive right to place and
maintain signs and other advertising matter upon the Demised Premises
subject to applicable law and the OEA. Tenant shall, at its sole cost and
expense, maintain such signs and other advertising matter in good condition and
repair. Landlord agrees to cooperate with Tenant in Tenant's efforts to
secure any required OEA and/or governmental approvals for any such signs and
other advertising matter. Tenant's initial signs will be substantially as
depicted on the plans referenced in Exhibit C.
11. Inspection. Tenant will permit Landlord, or its
representative, upon reasonable prior notice (except in the case of an
emergency when no such notice shall be required), to enter the Demised Premises
at any reasonable time and from time to time, without charge to Landlord and
without diminution of the Rent payable by Tenant, to examine, inspect and
protect the same or to exhibit the same to prospective lenders or purchasers.
Landlord shall use reasonable efforts to minimize any interference with
Tenant's business in connection with such entry.
12. Insurance.
(a) Tenant, at its sole cost and expense, shall obtain and
maintain in effect, throughout the Term, insurance policies providing at least
the following coverage:
(1) A commercial general liability insurance policy, with
broad form property damage endorsement (or a substantially similar policy),
naming Landlord and any mortgagees of the Demised Premises as
additional insureds and protecting Landlord, Tenant and the mortgagees against
any liability for bodily injury, personal injury, death or property damage
occurring upon the Demised Premises, with such policy (together with "umbrella"
policies) to afford protection with a combined
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single limit of not less than $5,000,000 per occurrence. The policy
shall contain cross-liability and contractual liability endorsements.
(2) A policy of fire and extended coverage and additional
broad perils insurance (i.e., an "all risk" policy) (or a
substantially similar policy) covering all of Tenant's personal property,
including contents, furniture, fixtures, and equipment not permanently attached
to the Building, for not less than one hundred percent (100%) of the full
replacement cost.
(3) A policy providing workers' compensation insurance as
required by law.
(4) A policy of fire and extended coverage and additional
broad perils insurance (i.e., an "all risk" policy) (or a
substantially similar policy) covering the Building and the improvements and
betterments thereto, in an amount not less than one hundred percent (100%) of
the full replacement cost of the Building and the improvements and betterments
thereto.
(b) All insurance policies required to be maintained under the
terms of this Lease (i) shall be issued in a form reasonably acceptable to
Landlord by a company or companies licensed to do business in the jurisdiction
in which the Demised Premises is located; (ii) shall be procured by Tenant for
periods of not less than one (1) year; (iii) shall be non-assessable; (iv) shall
require thirty (30) days' prior written notice to Landlord of any cancellation
or material change affecting Landlord's coverage under such policy; and (v)
shall not be prejudiced if the insureds thereunder have waived in whole or in
part the right of recovery from any person or persons prior to the date and time
of loss or damage, if any, and/or the insurer waives any rights of subrogation
against Landlord. Upon Land lord's written request, Tenant shall submit a
Certificate of Insurance (or binders) and evidence of payment therefor on or
prior to the Rent Commencement Date.
(c) Tenant shall pay the premiums of all insurance policies
required to be maintained by Tenant hereunder directly to the appropriate
insurance companies. Upon Landlord's written request, Tenant shall submit
receipts evidencing payment for such insurance policies.
(d) Landlord and Tenant hereby each waive and release the
other from any and all claims against each other for loss or damage to the
Building and other buildings owned by Landlord, and the fixtures, equipment
and/or other personal property arising from a risk insured under "all risk"
coverage, but only to the extent of such party's actual recovery of losses or
damages under such policy.
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(e) If at any time the type of insurance required to be
maintained hereunder becomes generally unavailable (for reasons other than the
gross negligence or willful misconduct of Tenant), then Landlord and Tenant will
agree on an appropriate substitute whether by insurance, self-insurance or other
alternative.
(f) Neither the issuance of any policy required hereunder nor
the minimum limits specified herein shall be deemed to limit or restrict
Tenant's liability under this Lease.
13. Indemnification.
(a) Tenant shall indemnify and defend Landlord and hold
Landlord harmless from and against all loss, cost, expense, claims, damages or
liability for or on account of any injury (including death) or damage received
or sustained by any person or persons (including Landlord and any employee,
agent or invitee of Landlord) to the extent that such loss or liability is
caused by reason of any default by Tenant hereunder, or any negligent act,
omission or willful misconduct on the part of the Tenant or any agent,
contractors, servants or employees.
(b) Landlord shall indemnify and defend Tenant and hold Tenant
harmless from and against all loss, cost, expense, claims, damages or liability
for or on account of any injury (including death) or damage received or
sustained by any person or persons (including any employee, agent or invitee of
Tenant) to the extent that such loss of liability is caused by reason of any
default by Landlord hereunder, or any negligent act, omission or willful
misconduct on the part of Landlord or any agent, contractors, servants or
employees.
(c) If either Landlord or Tenant (the "Indemnitee") is made a
party to any litigation commenced against the Indemnitee which falls within the
scope of the foregoing indemnities, then the other party (the "Indemnitor")
shall pay all costs and expenses, including reasonable attorneys' fees and court
costs, incurred by or imposed upon Indemnitee because of any such litigation,
and the amount of such costs and expenses, including reasonable attorneys' fees
and court costs, shall be a demand obligation owing by Indemnitor to Indemnitee.
14. Liability of Landlord. Except for damages caused by the
negligence or the intentionally wrongful acts or omissions of Landlord,
Landlord shall not be liable to Tenant, its employees, agents, invitees, or
customers for any damage, compensation or claim arising from (i) any
interruption in the use of the Demised Premises, (ii) the termination of
this Lease by reason of the destruction of the Building or a taking or sale
in lieu thereof by eminent domain, (iii) any fire, robbery, theft, criminal
act and/or any other casualty, or (iv) any damage caused by other
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persons or occupants of adjacent property, or caused by operations in
construction of any private, public or quasi-public work. All personal property
of Tenant or others kept or stored on the Demised Premises shall be kept or
stored at the risk of Tenant. Notwithstanding anything to the contrary
contained in this Lease, the liability of Landlord hereunder shall be limited
to its interest in the Demised Premises, and Tenant agrees to look solely to
such interest for the satisfaction of any liability of Landlord under this
Lease, it being specifically agreed that in no event shall Landlord (or any
of the officers, trustees, directors, partners, beneficiaries, joint
venturers, members, stockholders, principals or other representatives of
Landlord) ever be personally liable for any such liability.
15. Alterations, Landlord Cooperation.
(a) After the Lease Commencement Date, promptly upon obtaining
all required governmental licenses and approvals, Tenant shall commence and
diligently prosecute to completion the construction on the Land of a Silver
Diner restaurant substantially in accordance with Exhibit C. During the Term,
Tenant shall have the right, at its sole cost and expense, to make or cause to
be made any alterations, betterments or improve ments in or to the Demised
Premises ("Alterations") without Landlord's consent, provided that such
Alterations do not have a material adverse impact upon the value of the Demised
Premises. All Alterations must be constructed in a first class, workmanlike
manner. Tenant may, as part of any Alterations, expand the Building by not more
than 2,000 square feet of floor area provided that, at the time such expansion
is proposed, such floor area has not been previously leased or committed to
others by Landlord and is available under applicable zoning, the OEA, and any
other applicable restrictions. Tenant will not be required to pay any
additional Base Rent due to any such expansion(s) of not more than 2,000 square
feet total. The term "Alterations" does not include any furniture, fixtures and
equipment, any personal property, or any other similar items. Tenant shall not
make any Alterations to the exterior of the Building which (i) are not in good
taste, (ii) materially detract from the aesthetically pleasing appearance of the
Building, or (iii) violate the OEA or any applicable law, ordinance, regulation
or order of a public authority. Tenant will comply with, at its sole cost and
expense, and make any Alterations to the Demised Premises (including structural
alterations and alterations to the Building systems) as may be necessary to
effect compliance with all present and future laws, ordinances, regulations, and
orders of any public authority having jurisdiction over the Demised Premises.
All Alterations to the Demised Premises, made or installed in or about the
Demised Premises by either party shall be surrendered to Landlord with the
Demised Premises as a part thereof upon the expiration or earlier termination of
the Term.
(b) Landlord agrees, within fifteen (15) days after receipt of
a written request therefor from Tenant, to execute, acknowledge and deliver (or
join with Tenant in the execution, acknowledgement and delivery of), at Tenant's
sole cost and
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expense, any and all (i) applications for licenses, permits, vault space or
other authorizations of any kind or character required by any governmental
authority in connection with the construction, alteration or repair of any
buildings or improvements located on the Demised Premises, (ii) grants or deeds
of easements and/or rights of way for public utilities or similar public
facilities, which, in Tenant's sole discretion, may be useful and/or
necessary in the proper economic and orderly development of the Demised
Premises, and (iii) grants or deeds of dedication where such dedication is
required by any governmental authority in connection with the construction of
buildings or improvements on the Demised Premises. If Landlord fails to
execute, acknowledge and deliver (or fails to join with Tenant in the
execution, acknowledgement and delivery of) any application, deed or other
instrument referred to in this Section 15, within fifteen (15) days after
receipt of a written request from Tenant therefor, Tenant shall have the right
to execute, acknowledge and deliver any such application, deed or other
instrument in the name and on behalf of Landlord, and for that purpose, Landlord
hereby irrevocably appoints Tenant as Landlord's attorney-in-fact to execute,
acknowledge and deliver any such application, deed or other instrument in the
name and on behalf of Landlord. Landlord and Tenant hereby expressly declare
that the foregoing power-of- attorney granted by Landlord to Tenant is intended
to be, and shall be construed for all purposes as, a power coupled with an
interest, shall be and remain in full force and effect throughout the entire
term of this Lease, and shall not be revoked or impaired by Landlord's
dissolution, bankruptcy, or incapacity or for any other reason. In addition,
Tenant shall have the right to seek specific performance of the obligations of
Landlord, injunctive relief or other equitable remedies. Tenant agrees to
indemnify and hold harmless Landlord from and against all liability and
obligation in connection with, or resulting from, the signing of any such
document or instrument.
16. Mechanic's Liens. No work performed by Tenant pursuant to
this Lease, whether in the nature of erection, construction, alteration or
repair, shall be deemed to be for the immediate use and benefit of Landlord,
nor shall Tenant be deemed to be the agent of Landlord in performing such work,
so that no mechanic's or other lien shall be allowed against the estate of
Landlord by reason of any consent given by Landlord to Tenant to improve
the Demised Premises. Tenant shall pay promptly all persons furnishing labor
or materials with respect to any work performed by Tenant or its contractor on
or about the Demised Premises. If any mechanic's or other lien shall at any
time be filed against the Demised Premises by reason of work, labor, services
or materials performed or furnished, or alleged to have been performed or
furnished, to Tenant or to anyone holding the Demised Premises through or under
Tenant, Tenant shall, within thirty (30) business days after receiving notice
thereof, cause the same to be discharged of record or bonded to the
satisfaction of Landlord, at Tenant's sole cost and expense. If Tenant shall
fail to cause such lien to be so discharged or bonded within such thirty
(30)-day period, then, in addition to any other right or
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remedy of Landlord, Landlord may bond or discharge the same by paying the
amount claimed to be due, and the amount so paid by Landlord, including
reasonable attorneys' fees, incurred by Landlord either in defending against
such lien or in procuring the bonding or discharge of such lien, together with
interest thereon at the Interest Rate shall be due and payable by Tenant to
Landlord as Additional Rent within ten (10) days after Tenant's receipt of
notice thereof from Landlord.
17. Services and Utilities.
(a) Landlord shall, at no cost to Tenant, cause utilities, as
specified on Exhibit B, to be constructed to within five feet of the Building.
Such utilities shall include water, sanitary sewer, electricity, natural gas,
and telephone. Land lord shall cooperate with Tenant and execute such
documentation as may be necessary to permit water, sewer, gas and electric
utility services to be provided to the Demised Premises with meters to measure
Tenant's use of such services.
(b) Tenant shall pay for all utilities directly to the
appropriate utility company. Landlord shall not be liable in any way to Tenant,
and Tenant's obligation to pay Rent shall not be affected, for any failure,
interruption, curtailment, stoppage, suspension or defect in the supply or
character of the utilities furnished to the Demised Premises by reason of any
requirement, act or omission of the public utility serving the Demised Premises
or otherwise, except as may be the result of the negligence or the intentionally
wrongful acts or omissions of Landlord.
(c) In the event natural gas service is unavailable or cannot
reasonably be obtained by Tenant, then Landlord hereby consents to the
installation of a liquified petroleum gas system (i.e., bottled gas) to service
the Demised Premises. Tenant may install such tanks and pipes as are necessary
in conjunction with such system at a location to be mutually agreed upon by
Landlord, Tenant and the appropriate governmental authorities. Any cost and
expenses associated with the installation and use of a liquified petroleum gas
system, including any increase in insurance premiums for fire and extended
coverage, shall be borne solely by Tenant.
18. Damage by Fire or Casualty.
(a) In the event any improvements on or forming part of the
Demised Premises or Building are damaged or destroyed, partially or totally,
from any cause whatsoever at any time during the Term of this Lease, Tenant
shall, at its own cost and expense, restore and repair the damaged or destroyed
portions of the Demised Premises or Building in conformity with the
provisions of this Lease. In restoring and repairing the damaged
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portions of the Demised Premises, Tenant shall repair, restore, and rebuild the
improvements to at least as good condition as existed immediately prior to
such damage or destruction and this Lease shall continue in full force and
effect. Such repair, restoration and rebuilding (all of which are herein
called "repair") shall be commenced within a reasonable time after such
damage or destruction (not to exceed ninety (90) days after the casualty)
and shall be subject to all the provisions of this Lease relating to
construction work by Tenant and shall be pursued diligently to completion.
There shall be no abatement of Rent or of any other obligation of Tenant
hereunder by reason of such damage or destruction.
(b) (1) If at any time during the last two (2) Lease Years of
the Initial Term of this Lease or during any Renewal Term the buildings and
improvements constructed on the Demised Premises are damaged or destroyed to the
extent that it would not reasonably be repaired or restored within ninety (90)
days after such damage occurs, then Tenant may elect to terminate this Lease by
giving written notice to Landlord within ninety (90) days after the occurrence
of such damage or destruction provided Tenant pays to Landlord that portion of
the insurance proceeds which are received by reason of such casualty which do
not exceed the value of the Building prior to the casualty. For the purposes of
the preceding sentence, such insurance proceeds shall not include any business
interruption insurance proceeds.
(2) In the event this Lease is terminated pursuant to
this Section, Tenant will raze and remove all of the damaged improvements
and restore such areas to a clean, level and grassed area. If the Lease is not
terminated, Tenant shall be obligated to rebuild, restore and repair the
damaged or destroyed portions of the Demised Premises as set forth in Section
18(a).
(3) The effective date of termination of this Lease shall
be the date that Tenant surrenders to Landlord the Demised Premises in
conformity with the provisions of this Lease, and pays in full all Rent
accrued and due under the Lease as of such date. If Tenant shall terminate this
Lease pursuant to this Section, all Rent payable by Tenant to Landlord hereunder
shall be prorated as of the termination date, and Landlord shall make an
equitable refund of any Rent paid by Tenant in advance and not yet earned.
(c) Except as otherwise provided in Section 18(b), Tenant
hereby waives any and all rights provided by law to Tenant to terminate this
Lease upon the partial or total destruction of the Demised Premises, whether now
existing or hereinafter enacted.
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19. Default of Tenant.
(a) Defaults.
(1) If (i) Tenant shall fail to pay in the manner provided
in Section 3 any installment of Base Rent or any Additional Rent (whether such
Additional Rent is being paid on an installment or other basis) payable
hereunder, or any other charge due hereunder (although no demand has been
made therefor except as expressly required herein), or (ii) Tenant shall
breach, violate or otherwise fail to perform any of the other conditions,
covenants, agreements or obligations contained herein to be performed by Tenant,
or (iii) Tenant shall be liquidated or dissolved (if a corporation or other
entity), or (iv) Tenant should cease to operate as a viable restaurant for any
consecutive six (6)-month period (other than (A) in order to renovate or
refurbish the Demised Premises, (B) in the event of a Force Majeure (as defined
in Section 40), or (C) to permit a permitted transferee, pursuant to Section 7,
to renovate or refurbish the Demised Premises), then such failure, breach,
violation, occurrence or condition shall constitute a default of the Lease.
(2) It shall be an Event of Default if a default pursuant
to Section 19(a)(1)(i) continues for a period of ten (10) days after written
notice thereof to Tenant by Landlord, or a default pursuant to Section
19(a)(1)(ii) or (iv) shall continue for a period of thirty (30) days after
written notice thereof to Tenant by Landlord, provided that if such a default
under Section 19(a)(1)(ii) or (iv) will take longer than this thirty (30)-day
period to cure, Tenant shall have such longer period as may be reasonably
required to effectuate such cure, as long as such cure is commenced within such
thirty (30)-day period, and such cure is prosecuted diligently to completion.
(b) Remedies.
(1) Continue Lease. The Landlord may, at its option,
continue this Lease in full force and effect, without terminating the Tenant's
right to possession of the Demised Premises, in which event the Landlord
shall have the right to collect rent and other charges when due. In the
alternative, the Landlord shall have the right to peaceably re-enter the Demised
Premises on the terms set forth in subparagraph (b)(2) below, without such
re-entry's being deemed a termination of the Lease or an acceptance by the
Landlord of a surrender thereof. The Landlord shall also have the right, at its
option, from time to time, without terminating this Lease, to relet the Demised
Premises, or any part thereof, with or without legal process, as the agent, and
for the account, of the Tenant upon such terms and conditions as the Landlord
may deem advisable, in which event the rents received on such reletting shall
be applied (i) first to
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the reasonable and actual expenses of such reletting and collection,
including without limitation necessary renovation and alterations of the
Demised Premises, reasonably determined by the Landlord to be desirable,
reasonable and actual attorneys' fees, and any reasonable and actual
leasing commissions paid (including leasing commissions payable to a partner,
officer or shareholder of the Landlord), and (ii) thereafter toward payment of
all sums due or to become due the Landlord hereunder. If a sufficient sum to
pay such expenses and sums shall not be realized or secured in the Landlord's
exercise of its reasonable efforts to mitigate its damages, then the Tenant
shall pay the Landlord any such deficiency monthly, and the Landlord may, at
the sole cost and expense of the Tenant, including attorney's fees, bring an
action therefor as such monthly deficiency shall arise. Nothing herein,
however, shall be construed to require the Landlord to re-enter and relet
in any event, except as provided by applicable law. The Landlord shall
not, in any event, be required to pay the Tenant any sums received by the
Landlord on a reletting of the Demised Premises in excess of the rent provided
in this Lease. The Landlord's re-entry and reletting of the Demised
Premises without termination of this Lease shall not preclude the Landlord
from subsequently terminating this Lease as set forth below.
(2) Terminate Lease. The Landlord may terminate this
Lease by written notice to the Tenant specifying a date therefor, which
shall be no sooner than ten (10) days following receipt of such notice by the
Tenant, and this Lease shall then terminate on the date so specified as if such
date had been originally fixed as the expiration date of the Term. In the event
this Lease shall be terminated as provided above, by summary proceedings or
otherwise, the Landlord, its agents, employees or representatives may
immediately or at any time thereafter peaceably re-enter and resume possession
of the Demised Premises and remove all persons and property therefrom, either by
summary dispossession proceedings or by other suitable action or proceeding at
law without liability for damages therefor. Upon such termination, the Tenant
shall remain liable for all rent that would be due hereunder but for such
termination, and at the Landlord's option, subject to applicable law, the
Landlord may accelerate all amounts of rent due hereunder or that would have
been due hereunder but for the occurrence of the event of default; provided,
however, that damages shall be computed in accordance with the provisions of
Section 19(b)(4) below.
(3) Reimbursement of Landlord's Costs in Exercising
Remedies. Landlord may recover from the Tenant, and the Tenant shall pay to the
Landlord upon demand, such reasonable and actual expenses as the Landlord
may incur in recovering possession of the Demised Premises, placing the same in
good order and condition and repairing the same for reletting, all other
reasonable and actual out of pocket expenses, commissions
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and charges incurred by the Landlord in exercising any remedy provided herein or
as a result of any event of default by the Tenant hereunder (including without
limitation reasonable attorneys' fees).
(4) Damages. If this Lease is terminated by Landlord
pursuant to Section 19(b)(2), the Tenant nevertheless shall remain liable
for any Annual Base Rent and Additional Rent and damages which may be due or
sustained by Landlord and all reasonable costs, fees and expenses including,
but not limited to, attorney's fees, costs and expenses incurred by Landlord in
pursuit of its remedies hereunder, or in renting the Premises to others from
time to time (all such Annual Base Rent and Additional Rent, damages, costs,
fees and expenses being referred to herein as "Termination Damages") and
additional damages (the "Liquidated Damages"), which, at the election of
Landlord, shall be an amount equal to the present worth (as of the date of such
termination) of Annual Base Rent and Additional Rent which, but for termination
of this Lease, would have become due during the remainder of the Term, less the
fair rental value of the Demised Premises, as determined by an independent real
estate appraiser named by Landlord, in which case such Liquidated Damages shall
be payable to Landlord in one lump sum on demand and shall bear interest at the
Default Rate until paid. For purposes of this paragraph, "present worth" shall
be computed by discounting such amount to present worth at a discount rate then
in effect at the Federal Reserve Bank nearest to the location of the Shopping
Center.
If this Lease is terminated pursuant to Section 19(b)(2),
Landlord may relet the Demised Premises or any part thereof, alone or together
with other premises, for such term or terms (which may be greater or less than
the period which otherwise would have constituted the balance of the Term) and
on such terms and conditions (which may include concessions of free rent and
alterations of the Demised Premises) as Landlord, in its absolute
discretion, may determine, but Landlord shall not be liable for, nor shall the
Tenant's obligations hereunder be diminished by reason of, any failure by
Landlord to relet the Demised Premises or any failure by Landlord to collect any
rent due upon such reletting.
(5) Remedies Are Cumulative. The various rights and
remedies reserved to the Landlord herein, including those not specifically
described by law in force and effect at the time of the execution hereof, are
cumulative, and the Landlord may pursue any and all rights and/or remedies,
whether at the same time or otherwise.
(6) Waiver of Rights of Redemption. To the extent
permitted by law, the Tenant waives any and all right of redemption granted by
or under any present or future laws if the
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Tenant is evicted or dispossessed for any cause or if the Landlord obtains
possession of the Demised Premises due to an Event of Default hereunder or
otherwise.
(c) Effect of Cure. Notwithstanding any provision in this
Lease to the contrary, in the event that Tenant cures a default with respect to
any matter prior to the institution of litigation by Landlord with respect to
such default, whether or not such cure is completed prior to the expiration of
any applicable notice and cure periods, the default shall be deemed cured as if
it had been cured prior to the expiration of such applicable notice and cure
periods, and Landlord shall not have the right to terminate the Lease as a
result of such default.
20. Waiver. If under the provisions hereof Landlord or Tenant
shall institute proceedings and a compromise or settlement thereof shall be
made with respect to any matter, the same shall not constitute a waiver of
any covenant herein contained nor of any of Landlord's or Tenant's rights
hereunder with respect to any other matter. No waiver by Landlord or Tenant
of any breach of any covenant, condition or agreement herein contained shall
operate as a waiver of such covenant, condition or agreement itself, or of
any subsequent breach thereof. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly installment of Base Rent or any Additional
Rent shall be deemed to be other than on account of the earliest stipulated
Base Rent and Additional Rent nor shall any endorsement or statement on any
check or letter accompanying a check for payment of any Base Rent or
Additional Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such Base Rent or Additional Rent or to pursue any other remedy
provided in this Lease, except as otherwise provided herein. Tenant hereby
expressly waives any and all rights of redemption it may have under applicable
law.
21. Subordination and Attornment.
(a) Landlord warrants and represents that there are no holders
of any deeds of trust, mortgages or other security interests (collectively, the
"Superior Instruments") covering the Building and/or Land or any interest of
Landlord therein (collectively, the "Holders of Superior Instruments"). Landlord
shall obtain and deliver to Tenant a non-disturbance agreement substantially in
the form of Exhibit E hereto from Key Bank or such other construction lender as
Landlord may borrow from within thirty (30) days after the later of (i) the date
of this Lease, or (ii) the date of such loan. If Tenant has not received such
non-disturbance agreement by such date, Tenant may at its option terminate this
Lease by notifying Landlord of such election in writing. In the event of such
termination neither party shall have any further rights, obligations or
liabilities hereunder.
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(b) This Lease shall be subject and subordinate to any future
Superior Instruments which may from time to time during the Term cover the
Building and/or the Land, or any interest of Landlord therein, and to any
advances made on the security thereof, and to any refinancings, increases,
renewals, modifications, consolidations, replacements, and extensions of any of
such future Superior Instruments, provided that, if Tenant is not in default
beyond any applicable cure period, then as a condition of such subordination
being effective, the Holder of such Superior Instrument shall have executed,
acknowledged and delivered to Tenant a non-disturbance agreement substantially
in the form of Exhibit E. Upon execution and delivery of such non-disturbance
agreement, this Section 21(b) shall be self-operative and no further instrument
shall be required to effect such subordination of this Lease. Upon demand,
however, Tenant shall execute, acknowledge, and deliver to Landlord any further
instruments and certificates evidencing such subordination as Landlord, or such
Holder of the Superior Instrument may reasonably request.
(c) Subject to the provisions of Section 22(a), any Holder of
a Superior Instrument shall have the right, unilaterally, at any time to
subordinate fully or partially any such Superior Instrument to this Lease. Upon
request Tenant shall execute an instrument confirming any such subordination by
any Holder of a Superior Instrument. At any time, before or after the
institution of any proceedings for the foreclosure of any such Superior
Instrument, or sale of the Building under any such Superior Instrument, Tenant
shall attorn to such purchaser upon any such sale or the grantee under any deed
in lieu of such foreclosure and shall recognize such purchaser or grantee as
Landlord under this Lease. Tenant hereby waives the right, if any, to elect to
terminate this Lease or to surrender possession of the Demised Premises in the
event of the judicial or non-judicial foreclosure of any deed of trust,
mortgage, or security agreement (or any transfer in lieu thereof). The foregoing
agreement of Tenant to attorn shall survive any such foreclosure sale, trustee's
sale, or conveyance in lieu thereof. Tenant shall upon demand at any time,
before or after any such foreclosure sale, trustee's sale, or conveyance in lieu
thereof, execute, acknowledge, and deliver to Landlord's mortgagee or any
successor thereof, any written instruments and certificates evidencing such
attornment as such Holder of a Superior Instrument may reasonably require.
22. Condemnation.
(a) Total Condemnation. If during the Term of this
Lease, fee title to all of the Demised Premises or to all of the improvements,
or the entire leasehold estate of Tenant is taken under the power of eminent
domain by any public or quasi-public agency or entity (a "Total Taking"), this
Lease shall terminate
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as of 12:01 A.M. on the date legal title becomes vested in the agency or entity
exercising the power of eminent domain. Thereafter, both Landlord and Tenant
shall be released from all obligations under this Lease, except those
specified elsewhere herein.
(b) Taking - Parking Area. If, at any time during the Term of
this Lease, a taking occurs that is less than a Total Taking and said taking
affects the Demised Premises' Parking Areas (as identified on the Site Plan),
all compensation and damages payable on account of such taking of the Parking
Areas shall be paid to Landlord but used, to the extent reasonably needed, to
repair any portion of the remaining Parking Areas damaged by the taking and to
replace the Demised Premises' Parking Areas taken with other new parking areas
for the benefit of Tenant on the portion of the Shopping Center not taken,
provided that replacement is then permitted by existing law. Plans and
specifications for the replacement parking areas must be first approved in
writing by Tenant which approval shall not be unreasonably withheld.
(c) Partial Taking - Improvements. If at any time during the
Term of this Lease a taking occurs that is less than a Total Taking and said
taking affects the Building, all compensation and damages payable for that
taking (excluding any portion payable for a taking of parking areas) shall be
paid to Tenant but will be used to the extent reasonably needed by Tenant to
repair the Building or replace the portion taken with other new improvements on
the portion of the Demised Premises not taken, provided that replacement is then
permitted by existing law. Plans and specifications for replacing the restaurant
must be compatible, in terms of architecture and quality of construc tion, with
the portion of the restaurant not taken and must be first approved in writing by
Landlord which approval shall not be unreasonably withheld. Notwithstanding
anything to the contrary in this paragraph, if any taking renders the remainder
of the Demised Premises, in Tenant's good faith judgment, unusable for Tenant's
business operations, Tenant may terminate this Lease in the manner prescribed in
Section 22(d) of this Lease.
(d) Termination for Partial Taking. Tenant may terminate this
Lease for the reasons stated in either Section 22(a) or 22(c) of this Lease, or
both, by serving written notice of termination on Landlord within sixty (60)
days after Tenant has received from Landlord or from the condemning authority
written notice of a definite taking setting forth the date of the taking, and/or
a copy of the condemnation proceedings as filed in the appropriate court and the
extent and scope of such taking. If Tenant elects to terminate this Lease
pursuant to this Section 22, the effective date of termination shall be the
earlier of the date of termination specified in the Tenant's notice to Landlord
or the date the condemning authority takes physical possession of
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the portion of the Demised Premises taken by eminent domain. On termination of
this Lease pursuant to this paragraph, all subleases and subtenancies in or on
the Demised Premises, if any, or any portion or portions of the Demised Premises
created by Tenant under this Lease shall also terminate and the Demised Premises
shall be delivered to Landlord free and clear of all such subleases and
subtenancies. Tenant shall demolish the remainder of the Building and remove all
debris from the Demised Premises, but shall not be required to remove site
improvements or to landscape the Demised Premises. On termination of this Lease
pursuant to this paragraph, both Landlord and Tenant shall be released from all
obligations to the other under this Lease except those specified elsewhere in
this Lease.
(e) Condemnation Award. Any compensation or damages
awarded or payable because of the taking of all or any portion of the Demised
Premises by eminent domain shall be allocated between Landlord and Tenant and
paid in the following priority:
(1) All compensation or damages awarded or payable for the
taking by eminent domain of any land that is part of the Demised Premises shall
be paid to and be the sole property of Landlord, free and clear of any claim of
Tenant or any person claiming rights to the Demised Premises through or
under Tenant.
(2) Improvements constructed or located on the portion of
the Demised Premises taken by eminent domain when only a portion of the
Demised Premises is taken by eminent domain and Tenant is not entitled to or
does not terminate this Lease shall be applied in the manner specified in
Section 22(b) or Section 22(c) toward the replacement of those improvements with
equivalent new improvements on the remaining portions of the Demised Premises.
(3) All compensation or damages awarded or payable because
of the Demised Premises taken by eminent domain when this Lease is terminated
because of the taking by eminent domain, whether all or only a portion of the
Demised Premises is taken by eminent domain, shall be allocated between Tenant
and Landlord as follows:
(i) Tenant shall be entitled to recover
from any award up to an amount equal to the unamortized cost of the portion of
the improvements taken which were constructed by Tenant at the time of the
taking.
(ii) The balance of any award after
deducting the amount described in (i) above shall be the sole property of
Landlord.
(iii) The term "time of taking" as used in
this subparagraph shall mean 12:01 A.M. of whichever of the
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following shall first occur: the date that title, or the date that physical
possession of the portion of the Demised Premises on which the improvements
are located is taken by the agency or entity exercising the eminent domain
power.
(4) Any damages awarded or payable for relocation due to
Tenant's termination of the Lease as permitted hereunder shall be the sole and
separate property of Tenant.
(f) Rent Abatement for Partial Taking. If title and possession
of only a portion of the Demised Premises is taken under the power of eminent
domain by any public or quasi-public agency or entity during the term of this
Lease and Tenant does not or cannot terminate this Lease, then this Lease shall
terminate as to the portion of the Demised Premises taken under eminent domain
as of 12:01 A.M. on whichever of the following first occurs: the date title is
taken, or the date actual physical possession of the portion taken by eminent
domain is taken, by the agency or entity exercising the eminent domain power.
Furthermore, the Rent payable under this Lease shall, as of that time, be
reduced in the same proportion that the area of the portion of the Demised
Premises taken by eminent domain bears to the full area of the Demised Premises
at that time. Nothing contained herein shall require Tenant to pay any amount
out of pocket for the replacement of any improvement; provided, however, there
shall be no abatement in the event the taking covers a portion of the Demised
Premises that does not adversely affect the improvements.
23. Covenant of Quiet Enjoyment. Landlord covenants that it has
the right to make this Lease for the Term and that Tenant, upon paying Rent
and complying with its other obligations set forth in this Lease, shall during
the Term freely, peaceably and quietly occupy and enjoy the full possession of
the Demised Premises without molestation or hindrance by Landlord or any
party claiming through or under Landlord.
24. Sale or Transfer. Landlord may freely sell, assign or
otherwise transfer all or any portion of its interest in this Lease or in
the Demised Premises, the Building or the Land, and in the event of any
such sale or transfer the landlord whose interest is thus sold or transferred
(the "Selling Landlord") shall be and hereby is completely released and
forever discharged from and in respect of all covenants, obligations and
liability as Landlord hereunder, except for any obligations accruing
prior to such transfer. Thereafter, Tenant shall attorn and be bound to
such purchaser with the same effect as though the latter had been the original
Landlord hereunder, provided that such purchaser assumes and agrees to carry
out the obligations of Landlord hereunder.
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25. No Partnership. Nothing contained in this Lease shall be
deemed or construed to create a partnership or joint venture of or between
Landlord and Tenant, or to create any other relationship between the parties
hereto other than that of landlord and tenant.
26. No Other Rights Acquired. No rights, privileges,
easements or licenses are acquired by Tenant pursuant to this Lease
except as herein expressly set forth. This Lease shall not be binding on the
parties until and unless this Lease is fully executed and delivered by the
parties hereto.
27. Brokers. Landlord shall pay Legend Properties, Inc. a
brokerage commission pursuant to a separate agreement. Landlord and Tenant each
represents and warrants one to the other that if either has engaged any other
broker or agent in carrying on the negotiations relating to this Lease, it
will pay any brokerage commission payable to said broker or agent. Any such
broker or agent is identified in the Basic Lease Information. Landlord shall
indemnify and hold Tenant harmless, and Tenant shall indemnify and hold Landlord
harmless, from and against any claim or claims for brokerage or other
commissions arising from or out of any breach of the foregoing representation
and warranty by the respective indemnitors.
28. Notices. All notices or other communications hereunder shall
be in writing and shall be deemed duly given if delivered by hand, or by
overnight courier, or by telecopier (with telephonic confirmation and
follow-up hard copy), or when received (or when delivery is refused) if sent
by certified mail return receipt requested, (i) if to Landlord, to Landlord's
Address for Notices set forth in the Basic Lease Information, and (ii) if to
Tenant, at Tenant's Address for Notices set forth in the Basic Lease
Information, unless notice of a change of address is given pursuant to the
provisions of this Section 28. Notice shall be deemed to have been given upon
receipt or at the time delivery is refused.
29. Estoppel Certificates. Landlord and Tenant agree at any time
and from time to time (but not more than three (3) times in any twelve
(12)-month period), upon not less than ten (10) business days' prior written
notice from Tenant or Landlord, as the case may be, to execute, acknowledge
and deliver to the other party a statement in writing (i) certifying that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that the Lease is in full force and effect as modified
and stating the modifications), (ii) stating the dates to which the rentals
and other charges hereunder have been paid by Tenant or Landlord, (iii)
stating whether or not to the best knowledge of Tenant or Landlord, the other
party has failed to fulfill any of its obligations under this Lease, and, if so,
specifying each such failure of which Tenant or Landlord may have
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knowledge, (iv) stating the address to which notices to Tenant or Landlord
should be sent, and (v) providing such other information as may reasonably be
requested.
30. Surrender; Holding Over.
(a) In the event Tenant gives Landlord notice not more than
one hundred twenty (120) days nor less than ninety (90) days prior to the Lease
Expiration Date that Tenant, or anyone (including a sublessee) claiming under
Tenant, will not immediately surrender the Demised Premises on the expiration of
the Term, Landlord, within thirty (30) days of receipt of such notice, shall
provide Tenant with written consent (which Tenant expressly agrees may be
withheld for any reason) or shall in its sole and absolute discretion notify
Tenant that it does not consent to holding over by Tenant or anyone claiming
under Tenant beyond the Lease Expiration Date.
(b) Tenant agrees that it will not occupy or retain or allow
occupancy or retention by any subtenant of possession of the Demised Premises at
any time after the expiration of the Term, without the prior written consent of
Landlord. In the event that Tenant shall hold over after the expiration of the
Term without Landlord's prior written consent, Landlord shall have the right to
regain possession of the Demised Premises by any legal process in force at such
time. Furthermore, in the event Tenant continues to occupy the Demised Premises
after the expiration of the Term without Landlord's prior written consent,
Tenant shall then be liable to pay to Landlord, as liquidated damages, an amount
equal to one and one-half (1 1/2) times the total Base Rent being paid
immediately prior to the Lease Expiration Date, divided by 365, for each day or
part of a day that Tenant occupies the Demised Premises after the date of
expiration of the Term, plus any other Additional Rent or charges due,
reasonable attorneys' fees, costs, and expenses incurred by Landlord in
regaining possession of the Demised Premises and to recover said liquidated
damages. Holdover occupancy by Tenant shall be subject to all of the terms,
covenants, and conditions of this Lease.
(c) If, pursuant to the prior written consent of Landlord,
Tenant, or anyone (including a sublessee) claiming under Tenant, does not
immediately surrender the Demised Premises on the date of the expiration of this
Lease, then Tenant shall, by virtue of the provisions hereof, become a Tenant by
the month at a monthly rental equal to one hundred fifty percent (150%) of the
Rent in effect at the termination of the Lease but otherwise on the same terms
and provisions of this Lease. Said monthly tenancy shall commence with the first
day next after the Lease Expiration Date. Tenant, as a monthly Tenant, shall be
subject to all of the terms, covenants, and conditions of this Lease. In
the event Tenant becomes a monthly Tenant under the provisions of
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this Section 30, such tenancy shall be terminable by Landlord upon thirty (30)
days' written notice to Tenant, except in the event of non-payment of Base
Rent, Additional Rent, or any other charge or cost, in which case, Tenant shall
be deemed to have waived its right to receive any notice to quit.
(d) At the expiration or earlier termination of the Term,
Tenant shall surrender the Demised Premises, including all Alterations, to
Landlord in the same condition as on the Lease Commencement Date, ordinary wear
and tear and damage by fire or other casualty excepted.
31. Right of Landlord to Cure Tenant's Default. If Tenant
defaults in the making of any payment or in the doing of any act herein
required to be performed by Tenant (other than the payment of Base Rent and
Percentage Rent), Landlord may, but shall not be required to, make such
payment or do such act, and the amount of the expense thereof, if made or
done by Landlord, with interest thereon at the Interest Rate from the date
paid by Landlord, shall be paid by Tenant to Landlord and shall constitute
Additional Rent hereunder due and payable with the next monthly installment
of Base Rent after Tenant's receipt of notice thereof from Landlord; but the
making of such payment or the doing of such act by Landlord shall not operate to
cure such default or to estop Landlord from the pursuit of any remedy to which
Landlord would otherwise be entitled, except as otherwise provided herein.
32. Tenant's Trade Fixtures. All trade fixtures and apparatus
leased or owned (whether under an installment sales contract or otherwise) by
Tenant and installed in or about the Demised Premises by Tenant shall remain
the property of Tenant and shall be removed upon the expiration or earlier
termination of the Term, provided that Tenant shall not at such time be
in default beyond applicable notice and cure periods of any terms or
covenants of this Lease. Tenant retains the right to replace any and all
equipment and fixtures in or about the Demised Premises. Tenant shall
repair any damage to the Demised Premises caused by the removal of said trade
fixtures and apparatus at its sole expense.
33. Tenant's Personal Property. Landlord shall have a lien (which
shall be junior to any equipment financing obtained by Tenant) upon all the
personal property of Tenant moved into the Demised Premises as and for
security for the payment by Tenant of Rent and the performance by Tenant of the
other obligations set forth hereunder as provided by applicable law. Provided
that Tenant is not then in default beyond any applicable notice and cure
periods, Tenant shall have the right to remove its personal property from the
Demised Premises at any time and from time to time. Any personal property of
Tenant or any other person which is left at the Demised Premises after the date
the Lease has expired or terminated shall be deemed to have been abandoned, and
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Landlord shall have the right to declare itself owner and to dispose of it in
whatever manner Landlord deems appropriate and Tenant shall not have any
right to compensation or claim against Landlord as a result.
34. Benefit and Burden. Subject to the provisions of Sections 7
and 24 hereof, the provisions of this Lease shall be binding upon, and shall
inure to the benefit of, the parties hereto and each of their respective
representatives, successors and permitted assigns.
35. Memorandum of Lease.
(a) Landlord and Tenant shall, at the request of either party,
execute, acknowledge and deliver to the other party a memorandum of this Lease
(the "Lease Memorandum") in recordable form, setting forth the date of this
Lease, the names of the parties hereto, the Lease Commencement Date and
describing the Demised Premises and Tenant's right to renew this Lease. Said
Lease Memorandum shall not in any circumstances be deemed to modify or to change
any of the provisions of this Lease. Either party may elect, at the equal
expense of Landlord and Tenant, to record the Lease Memorandum.
(b) In the event that Landlord and Tenant execute such Lease
Memorandum, each party shall after the expiration or termination of the Term, at
the request of the other party, execute, acknowledge and deliver a memorandum in
recordable form evidencing the expiration or termination of this Lease, and if
such party fails to execute such memorandum within fifteen (15) days after the
date of such request, such party hereby irrevocably appoints the requesting
party its attorney-in-fact to execute and deliver such memorandum on behalf of
such party. The requesting party may elect, at its sole expense, to record said
memorandum.
36. Leasehold Mortgages.
(a) The term "Leasehold Mortgage" shall include a mortgage, a
deed of trust, a deed to secure debt, or other security instrument by which
Tenant's leasehold estate is mortgaged, conveyed, assigned, or otherwise
transferred, to secure a debt or other obligation.
(b) The term "Leasehold Mortgagee" shall refer to a
holder of a Leasehold Mortgage.
(c) Notwithstanding anything in Section 7 to the contrary,
Tenant shall have the right from time to time, subject to the terms and
conditions hereinafter set forth in this Section, to encumber the leasehold
estate created by this Lease by one or more Leasehold Mortgages provided
that (i) there only
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be one such Leasehold Mortgage in effect at any one time, (ii) that any such
Leasehold Mortgage be granted to an institutional lender, and (iii) that the
face amount of any such Leasehold Mortgage may not exceed Tenant's cost (hard
and soft) of the Building including all site work and improvements. In no event,
and under no circumstances, is the Landlord to be required to subordinate
Landlord's interest in this Lease or the Demised Premises. No Leasehold
Mortgage shall encumber Landlord's fee or reversionary interest in the
Demised Premises. Any Leasehold Mortgage granted by Tenant and secured by its
leasehold estate created by this Lease shall comply with the following
conditions:
(i) all rights acquired thereunder shall
be subject to each and all of the covenants, conditions, restrictions and
provisions of this Lease and to all of the rights and interests of Landlord
under the Lease; and
(ii) upon the expiration of this Lease or
the sooner termination of this Lease for any reason whatsoever, both the Demised
Premises and all improvements now or hereafter located thereon is and shall be,
except as specifically provided in this Lease, the property of Landlord free and
clear of any rights, claims, liens, encumbrances, security interests or charges
of the Leasehold Mortgagee.
(d) Concurrently with the execution of the Leasehold Mortgage,
Leasehold Mortgagee or Tenant shall notify Landlord, in writing of the Leasehold
Mortgage, giving the name and address of the Leasehold Mortgagee, together with
true and complete copies of the Leasehold Mortgage, and the note or other
obligations secured by such Leasehold Mortgage and any other documents pertinent
to the Leasehold Mortgage. Thereafter, Tenant, at Tenant's expense, shall
provide Landlord a copy, from time to time, of each amendment or other
modification or supplement to the Leasehold Mortgage documents.
(e) Provided Landlord has been notified of the existence of a
Leasehold Mortgage, Landlord, when giving notice to Tenant with respect to any
default hereunder, or with respect to a matter which may predicate or claim a
default, shall also mail a copy of such notice to any such Leasehold Mortgagee
at the most recent address given to Landlord pursuant to subsection 36(d)
hereof. No notice of default shall be effective against Leasehold Mortgagee
unless a copy thereof has been delivered to Leasehold Mortgagee pursuant to the
provisions of this subsection 36(d). All notices by Landlord to the Mortgagee
pursuant to this Section shall be in writing and shall be given pursuant to the
provisions of Section 28 of this Lease.
(f) If Tenant shall default in the performance of any of the
terms, covenants, agreements and conditions of this Lease on the Tenant's part
to be performed or observed, any Leasehold
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Mortgagee shall have the right, within the same period available to Tenant under
this Lease for curing such default.
(g) Landlord shall not terminate this Lease because of any
default or breach hereunder on the part of Tenant if the Leasehold Mortgagee
under such Mortgage, within thirty (30) days after delivery of written notice
(the "Termination Notice") to the Leasehold Mortgagee by Landlord stating that
Tenant has failed to cure any default or breach hereunder within the applicable
cure period and notifying Leasehold Mortgagee of Landlord's intention to
terminate this Lease for such default or breach, has cured such default or
breach or, with regard to non-monetary defaults only, has commenced to perform
the necessary actions (in the event that the default or breach would take longer
than thirty (30) days to perform) to cure such default or breach and diligently
pursue them to completion. Notwithstanding the foregoing, if such default or
breach is not susceptible of being cured by Leasehold Mortgagee until it has
secured possession of the Demised Premises, Landlord shall not terminate this
Lease because of such default or breach on the part of Tenant if the Leasehold
Mortgagee, within sixty (60) days after delivery of the Termination Notice, has
notified Landlord, in writing (the "Foreclosure Notice"), that the Leasehold
Mortgagee has instituted, and will thereafter diligently pursue to completion,
steps and proceedings for the exercise of the power of sale under and pursuant
to the Leasehold Mortgage in the manner provided by law (or an assignment in
lieu thereof); agrees to keep and perform (and undertake in writing with
Landlord to keep and perform) all of Tenant's covenants and conditions of this
Lease (except for those which Leasehold Mortgagee cannot keep and perform
without obtaining possession of the Demised Premises but only during the time
and to the extent the same cannot be kept and performed by Leasehold Mortgagee)
until such time as Tenant's leasehold shall be sold upon foreclosure pursuant to
the Leasehold Mortgage or shall be released or reconveyed thereunder, but in no
event longer than twelve (12) months from the date of delivery of the
Foreclosure Notice to Landlord; provided, however, that if the holder of the
Leasehold Mortgagee shall fail to comply with any and all of the conditions of
this Section and such failure by Leasehold Mortgagee has not been cured within
thirty (30) days after delivery of written notice to the Leasehold Mortgagee by
Landlord, then and thereupon Landlord shall be released from the covenants of
forbearance herein contained; and provided further that Landlord shall be
required to forebear from terminating this Lease only so long as Leasehold
Mortgagee pays all Rent as and when it becomes due hereunder; and only so long
as Leasehold Mortgagee is keeping and performing all of Tenant's covenants and
conditions of this Lease (except for those which Leasehold Mortgagee cannot keep
and perform without obtaining possession of the Demised Premises but only during
the time and to the extent the same cannot be kept and performed by Leasehold
Mortgagee).
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(h) Landlord shall accept the performance by Leasehold
Mortgagee of its obligations under this Section as though the same has been done
or performed by Tenant.
(i) Landlord and Tenant agree that the making of a Leasehold
Mortgage, which complies with all of the terms and conditions of this Article,
shall not be deemed to constitute an assignment or transfer of this Lease or of
the leasehold estate created by this Lease, nor shall any Leasehold Mortgagee,
solely as the beneficiary of such Leasehold Mortgage, be deemed to be an
assignee or transferee of this Lease or of the leasehold estate created by this
Lease so as to require such Leasehold Mortgagee, as such, to assume the
performance of the terms, covenants, or conditions on the part of Tenant to be
performed, hereunder.
(j) Provided that this Lease has not theretofore been
terminated, Landlord and Tenant agree that if the Leasehold Mortgage shall be
foreclosed, or the leasehold estate created by this Lease otherwise acquired
under the Leasehold Mortgage (which foreclosure or acquisition may be in the
name of the Leasehold Mortgagee or in the name of Leasehold Mortgagee's nominee
such as the trustee under a deed of trust), the Leasehold Mortgagee shall be
deemed to be an assignee or transferee within the meaning of this Section and
shall be deemed to have agreed to perform and be bound to each and all of the
terms, covenants, conditions and obligations of this Lease which have accrued
and thereafter accrue under this Lease, but only for so long as Leasehold
Mortgagee (or its nominee) holds title to the leasehold created by this Lease.
In the event of a foreclosure:
(i) the written consent of Landlord shall
not be required to a transfer of the title to the leasehold created by this
Lease to the Leasehold Mortgagee (or its nominee);
(ii) Leasehold Mortgagee shall forthwith
give notice to Landlord in writing of any such transfer of title to Leasehold
Mortgagee (or its nominee) setting forth the name and address of the Leasehold
Mortgagee (or its nominee), the effective date of the transfer and the express
written agreement of the Leasehold Mortgagee (or its nominee) that, so long as
Leasehold Mortgagee (or its nominee) holds title to the Tenant's leasehold
estate under this Lease (but not thereafter), Leasehold Mortgagee (or its
nominee) shall assume and agree to perform and be bound by each and all of the
terms, covenants, conditions and obligations of this Lease which have accrued
and thereafter accrue under this Lease, together with a copy of the document by
which such transfer was made; and
(iii) the Landlord shall have the right to
acquire the Leasehold by paying the Leasehold Mortgagee the full unpaid amount
secured by the Leasehold Mortgage provided Landlord
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makes such payment within thirty (30) days after receiving notice of the
transfer of title.
If the Leasehold Mortgagee (or its nominee)
shall fail or refuse to comply with any and all of the conditions of this
Section and such failure continues for more than thirty (30) days after notice
to Leasehold Mortgagee, then and thereupon, and without further notice to the
Leasehold Mortgagee (or its nominee), Landlord may terminate this Lease in
accordance with its terms.
(k) Provided that this Lease has not theretofore been
terminated, and provided further that the Leasehold Mortgagee has performed its
obligations under subsection 36(g) hereof, in the event of a foreclosure of the
Leasehold Mortgage (or an assignment in lieu thereof) any assignment or transfer
of this Lease to a party other than the Leasehold Mortgagee (or its nominee)
shall not be effective or deemed valid unless, at or before the time of such
assignment or transfer, the transferee meets the criteria set forth in Section
7. Except as permitted by Section 7 and this Article hereof, neither Tenant nor
any Transferee shall further assign or transfer its interest in this Lease.
(l) For purposes of this Lease, a "Qualifying Mortgage" shall
mean a first Leasehold Mortgage which complies with the following requirements:
the Leasehold Mortgagee is an "Institutional Lender", or any affiliate, parent
or subsidiary of an Institutional Lender (for purposes of this Lease the term
"Institutional Lender" shall mean (1) a lender whose policies are subject to the
supervision of the Controller of the Currency, the Federal Reserve Board or any
state banking commission or department of insurance; or (2) with respect to
pension or profit sharing funds or trusts, such funds shall be deemed
Institutional Lenders if the fiduciary of the fund or trust is an institution
which qualifies as an Institutional Lender under subsection, or if the employer
for whose employees the fund or trust was established is a publicly held company
listed on any nationally recognized stock exchange). Upon the termination of
this Lease for any reason, excluding however a termination due to a breach by
Leasehold Mortgagee of its obligations under this Section and the Leasehold
Mortgagee of the Qualifying Mortgage shall have the right, in addition to the
rights contained in subsection 36(k), to demand a new lease of the Demised
Premises, exercisable by notice in writing to Landlord within sixty (60) days
after the giving of notice by Landlord to the Leasehold Mortgagee of such
termination, provided that on or before the delivery of such new lease the
Leasehold Mortgagee has paid to Landlord all Rent which (i) was unpaid prior to
the termination of this Lease, and (ii) would have accrued hereunder after the
termination of this Lease had this Lease remained in full force until the time
of such delivery. The new lease shall continue for the balance of the
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Term remaining as of the date of termination, at the rent and upon all of
the other terms, provisions, covenants and agreements set forth in this Lease
(including without limitation any unexecuted Renewal Options). Any new lease
may, at the option of Leasehold Mortgagee, name as tenant the Leasehold
Mortgagee or a nominee of Leasehold Mortgagee, provided that the nominee
meets the criteria set forth in Section 7. In the event of the election by a
Qualifying Mortgagee to enter into a new lease with Landlord, Tenant shall, and
does hereby waive all rights it may have to redeem its leasehold interest
under this Lease or to reinstate this Lease. It is the intent of Landlord and
any Qualifying Mortgagee that such new lease shall have the same priority as
this Lease, and Landlord covenants that it shall not take any affirmative
action on its part which would frustrate or defeat the foregoing intent;
provided, however, that nothing contained in this Section shall render
Landlord liable to the Leasehold Mortgagee of the Qualifying Mortgage
and/or the tenant under the new lease if Landlord is unable to deliver physical
possession of the Demised Premises by reason of the failure of Tenant, or
anyone holding the Demised Premises (or any part thereof) to surrender
possession thereof.
37. Landlord or Tenant as an Individual or Partnership. If
Landlord or Tenant or any successor in interest to Landlord or Tenant
shall be an individual, corporation, joint venture, tenancy in common, firm or
partnership, general or limited, there shall be no personal liability on
any employees, officers, directors or other individuals, of the Landlord
or Tenant, their successors, partners, or Affiliates with respect to any of
the provisions of this Lease, any obligation arising therefrom or in connection
therewith. Nothing in this Section 37 shall be construed to limit the
liability of Landlord or Tenant hereunder.
38. Mortgagee Protection. Tenant agrees to give any mortgagee(s)
and/or trust Landlord holder(s), by certified or registered mail, postage
prepaid, return receipt requested, a copy of any notice of any failure by
Landlord to fulfill any of its obligations under this Lease served upon the
Landlord by Tenant, provided that prior to such notice Tenant has been
notified in writing (by way of notice of assignment of rents and leases, or
otherwise) of the addresses of such mortgagee(s) and/or trust deed
holder(s). Tenant further agrees that the mortgagee(s) and/or trust deed
holder(s) shall have such time as may be reasonably necessary to cure such
failure as long as any mortgagee(s) and/or trust deed holder(s) has
commenced and is diligently pursuing the remedies necessary to cure such
failure.
39. Non-Competition. Subject to the rights of tenants under
leases executed prior to the date of this Lease, Landlord
shall not sell or lease to, and shall not permit the operation
of, another "diner" or "family-style" restaurant within the
Shopping Center during the period of time that Tenant operates a
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restaurant at the Demised Premises. Tenant shall have the right to seek
injunctive relief to enforce its rights under this Section 39.
40. Excuse for Nonperformance. Either party shall be excused
from performing any obligation or undertaking provided in this Lease for a
period of time equivalent to the delay caused by the items described below,
except the obligations of Tenant to pay Rent under the provisions of this
Lease (unless such obligation is abated or modified pursuant to the provisions
of Section 22), in the event and so long as the performance of any such
obligation is prevented or delayed, retarded or hindered by Act of God,
fire, earthquake, floods, explosion, actions of the elements, war,
invasion, insurance, riot, mob violence, sabotage, inability to procure
or general shortage of labor, equipment, facilities, materials or
supplies in the open market, failure of transportation, condemnation,
requisition, laws, orders of government or civil military or naval authorities,
or any other cause, whether similar or dissimilar to the foregoing not within
the reasonable control of such party ("Force Majeure"), excluding
however, the inability to obtain monies to perform or fulfill a party's
obligations and undertakings.
41. Environmental Matters.
(a) Landlord represents and warrants to Tenant that, as of the
date hereof, there are no Hazardous Materials on or about Demised Premises.
Neither Landlord nor Tenant, nor their agents and employees, shall violate or
cause to be violated any federal, state or local law, ordinance or regulation
relating to the environmental conditions on, under or about the Demised
Premises, including, but not limited to, soil and ground water conditions.
Neither Landlord nor Tenant, nor their agents and employees, shall introduce,
use, generate, store, accept or dispose of on, under or about the Demised
Premises or transport to or from the Demised Premises any hazardous wastes,
toxic substances or related materials, except normal and usual office and
cleaning supplies ("Hazardous Materials"). For the purposes of this Article,
Hazardous Materials shall include, but not be limited to substances defined as
"hazardous substances" or "toxic substances" in the Comprehensive Environmental
Response, Compen sation and Liability Act of 1980, as amended, 42 U.S.C. Section
9061 et seq.; Hazardous Materials Transportation Act, 49 U.S.C. Section 1802;
and Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et
seq., asbestos, petroleum hydrocarbons, and any other substances considered
hazardous, toxic or the equivalent pursuant to any other applicable laws and in
the regulations adopted and publications promulgated pursuant to said laws or
any future laws or regulations (collectively, the "Environmental Laws").
- 36 -
<PAGE>
(b) Landlord or Tenant, as the case may be, shall clean up and
remove or cause to be cleaned up and removed from, under or about the Demised
Premises any Hazardous Materials it or its agents or employees have or have
caused to be introduced, at its sole cost and expense, and shall ensure that
such removal is conducted in compliance with all applicable Environmental Laws.
(c) Landlord and Tenant shall and do indemnify, defend and
hold the other, its successors and assigns harmless from and against any losses
(including reasonable attorneys' fees and court costs) which Landlord or Tenant,
or their successors and assigns may sustain or which may arise by reason of
Tenant's or Landlord's failure to comply with the requirements of this Section.
(d) This Section 41 shall survive the expiration or earlier
termination of this Lease.
42. Landlord's Representations, Warranties and Covenants.
Landlord hereby warrants and represents to Tenant and covenants and agrees
with Tenant that (i) it has equitable title to the Demised Premises and,
on or before December 31, 1996, will acquire good and marketable fee
simple title to the Demised Premises free and clear of liens,
encumbrances, or other title exceptions except as shown on Exhibit F attached
hereto; (ii) the person signing on behalf of Landlord is authorized to do
so by any and all necessary partnership and corporate actions; (iii) no
litigation has been initiated or, to the knowledge of Landlord, threatened
against Landlord or against the Demised Premises which, if adversely
determined, would impair Landlord's ability to execute, deliver, and perform
this Lease; (iv) neither Landlord, any affiliate of Landlord, nor the Demised
Premises is subject to or otherwise bound by any legal requirement or
agreement (written or oral) which would be breached, or which would result
in the creation or imposition of any title exception applicable to the
Demised Premises, by Landlord's execution, delivery, or performance of
this Lease; (v) the attached site plan has been approved by all necessary
governmental bodies so that, except for building permits, no further
governmental approvals need be obtained before Tenant may construct its
Building; (vi) Landlord will not seek or consent to any street or alley closing
or other action that would eliminate or shut off light, air, or view to or from
the Demised Premises or which would infringe upon the No Build Zone surrounding
the Demised Premises as shown on Exhibit A (provided that Landlord shall not be
required to initiate judicial action to prevent others from so doing), and (vii)
although part of the No Build Zone is subject to the lease dated June 21, 1996
between Landlord and Kohl's Department Stores,Inc., (A) Landlord will use its
best efforts to assure that the No Build Zone is improved for parking
substantially as shown on Exhibit A, and (B) Tenant and its patrons and
employees will have the right, in common with patrons
- 37 -
<PAGE>
and employees of Kohl's, to park in the No Build Zone. Notwithstanding
anything to the contrary contained in this Lease, no alterations, renovations,
or additions made by Landlord to the Shopping Center shall materially
interfere in any way, whether on a temporary or permanent basis, with access
to the Demised Premises or the view of the Demised Premises from Route 38, or
from the access roads of the Shopping Center shown on Exhibit A, nor
shall any such alterations, renovations, or additions materially reduce the
number of parking spaces shown in the No Build Zone. Tenant recognizes that
Landlord intends to dedicate for highway purposes part or all of the 2.47
acres identified on the Site Plan as "To Be Dedicated." Landlord covenants
that it will seek to retain the right to maintain such area and that, if it does
retain such right, it will maintain and landscape the area in such a way that
the view of the Building is obstructed as little as is practicable. Landlord
further covenants that it will promptly seek the consent (pursuant to the OEA)
of Dayton Hudson Corporation to the plans of Tenant. If Dayton Hudson fails
to give such consent on or before the thirtieth day after the date hereof,
Tenant may, upon five days notice to Landlord, terminate this Lease. If
neither Landlord nor any affiliate of or successor in interest to Landlord
acquires title to the Demised Premises on or before December 31, 1996, this
Lease shall automatically terminate and be of no further force or effect.
43. Miscellaneous.
(a) Feminine or neuter pronouns shall be substituted for those
of the masculine form, and the plural shall be substituted for the singular
number, in any place or places herein in which the context may require such
substitution.
(b) Landlord and Tenant hereby waive their right to a trial by
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other in respect of any matter whatsoever arising out of or
in any way connected with this Lease, the relationship of Landlord and Tenant
hereunder, Tenant's use or occupancy of the Demised Premises, and any claim or
counterclaim of injury, damage or otherwise by Landlord and Tenant against or
with respect to each other.
(c) This Lease contains and embodies the entire agreement of
the parties hereto, and supersedes and revokes any and all negotiations,
arrangements, letters of intent, representations, inducements or other
agreements, oral or in writing. No representations, inducements or agreements,
oral or in writing, between the parties not contained in this Lease, shall be of
any force or effect. This Lease may not be modified, changed, amended, altered
or terminated in whole or in part in any manner other than by an agreement in
writing duly signed by both parties hereto.
- 38 -
<PAGE>
(d) If any provision of this Lease or the application thereof
to any person or circumstances shall to any extent be held by a court of
competent jurisdiction invalid or unenforce able, 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 be enforced to the fullest
extent permitted by law.
(e) Any references in the Lease to the term "day" shall be
deemed to mean "calendar day" unless expressly stated otherwise.
(f) This Lease shall become immediately binding upon the
parties hereto on the Effective Date, notwithstanding that the Term of this
Lease shall commence on a future date.
(g) The Table of Contents preceding this Lease and the
headings of the paragraphs and subparagraphs are inserted solely for conveyance
of reference and shall not constitute a part of this Lease, nor limit, define or
describe the scope or intent of any provision hereof.
(h) This Lease, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the state in which the Demised Premises
is located (but not including the choice of law rules thereof).
(i) Landlord and Tenant hereby represent and warrant that each
is a validly existing and duly created corporation, limited liability company,
or partnership in good standing under the laws of the jurisdiction in which it
is organized and qualified to do business in the state in which the Demised
Premises is located. Landlord and Tenant each hereby represents and warrants
that this Lease has been executed and delivered on its behalf pursuant to due
authority and that the Lease constitutes the valid and binding obligations of
each of them, enforceable against each of them in accordance with its terms.
- 39 -
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have each executed this Lease
under seal on the day and year hereinabove written.
TENANT
Silver Diner Development, Inc.,
a Virginia corporation
WITNESS:
By:
_________________________ __________________________________
Name: Name:
_________________________ __________________________________
Title: Title:
_________________________ __________________________________
LANDLORD
Cherry Hill Associates L.P.,
a New Jersey limited partnership
By: Cherry Hill Partner, Inc.,
general partner
WITNESS:
By: /s/ Eric M. Mallory
_________________________ __________________________________
Name: Name:
_________________________ __________________________________
Title: Title:
_________________________ __________________________________
- 40 -
<PAGE>
_________________________ )
) ss:
_________________________ )
Before me, a Notary Public in and for the jurisdiction
aforesaid, on this date personally appeared before me
, of Silver Diner Development,
Inc. personally well known to me and acknowledged that he executed the annexed
Lease as the corporate act and deed of Silver Diner Development, Inc.
WITNESS my hand and official seal on , 199__.
[SEAL]
-----------------
Notary Public
My commission expires:
_________________________ )
) ss:
_________________________ )
Before me, a Notary Public in and for the jurisdiction
aforesaid, on this date personally appeared before me
, of Cherry Hill Partner, Inc.,
general partner of Cherry Hill Associates L.P. personally well known to me and
acknowledged that he executed the annexed Lease as the act and deed of Cherry
Hill Partner, Inc. as general partner of Cherry Hill Associates L.P.
WITNESS my hand and official seal on , 199__.
[SEAL]
-----------------
Notary Public
My commission expires:
- 41 -
<PAGE>
EXHIBIT B
---------
CONSTRUCTION RESPONSIBILITIES
The following sets forth the respective construction responsibilities
of Landlord and Tenant with regard to Landlord's obligation to construct certain
Site Improvements (hereafter defined) with regard to the Shopping Center,
including certain designated work on the Demised Premises and Tenant's
responsibility to construct the Building.
1. Landlord's Work.
(a) Landlord agrees to provide for the design and construction
of the Building pad for Tenant's Building, the common pylon sign, detention
ponds, on and off site road work, parking areas, common utilities and other
common Site Improvements, including landscaping within the Common Areas, all
substantially as shown on the Site Plan attached to the Lease. All such work is
collectively referred to herein as the "Site Improvements".
(b) Landlord shall cause the preparation of plans and
specifications in sufficient detail so as to permit the construction of the Site
Improvements and shall provide same to Tenant's designated architect or
engineer. Landlord shall prepare such plans and specifications so as to be
consistent with plans given to Landlord by Tenant showing the location of the
utility lines to Tenant's Building.
(c) Landlord will apply for and use reasonable efforts to
obtain, at its own expense any and all necessary permits and variances that are
necessary to construct the Site Improvements, including, without limitation, any
such Permits pertaining to utilities, curb cuts, driveways (including ingress
and egress to public thoroughfares), and environmental controls. Landlord shall
pay all utility hook-up and connection fees required in connection with the
Building. Notwithstanding anything herein to the contrary, Landlord shall not be
responsible for or obligated to obtain a building permit for the Tenant's
Building and Tenant shall be responsible for obtaining the building permit for
Building or other improvements to be performed by Tenant at its own expense.
(d) Landlord shall provide to Tenant testing results relating
to work on the Demised Premises from licenses engineers and/or testing labs for
tests conducted by Landlord. All tests must meet or exceed the criteria
established in the plans and specifications. Test results, as completed, shall
be sent to Landlord and Tenant. Upon completion of the Tenant's building
- 1 - EXHIBIT B
<PAGE>
pad and site grading, Landlord shall provide a certification statement from
a licensed surveyor certifying to Tenant that the Demised Premises has been
graded to the elevation required in the plans and specifications.
(e) After the awarding of the construction contract(s) by
Landlord and receipt of the necessary Permits, Landlord shall cause the
commencement and diligent continuance of the construction of the Site
Improvements until completion. Landlord shall cause the construction of the Site
Improvements serving the Demised Premises (including all parking within the No
Build Zone) in two phases, the first phase being the delivery of Tenant's
Building pad, staging areas and an access road to such areas from Route 38 (the
"Phase One Work"). The Phase One Work shall be substantially completed by April
1, 1997, subject to ss. 40 of the Lease. The remaining Site improvements serving
the Demised Premises (the "Phase Two Work"), shall be completed in accordance
with the following schedule:
(i) Permanent Utilities to Tenant's Building
- April 30, 1997
(ii) Substantial completion of remaining Phase
Two Work - September 30, 1997,
in each case subject to (section mark) 40 of the Lease.
(f) Landlord shall be responsible for the supervision of the
construction of the Site Improvements, and shall use reasonable efforts to
advise and consult with Tenant as to material elements of the work and its
progress. Tenant and its designated architect and/or engineer, at its own
expense, may visit the job site to inspect the progress and performance of the
work and the materials being incorporated into the Site Improvements.
(g) In connection with the construction of the Site
Improvements by or on behalf of Landlord, Landlord shall not create or suffer to
be created or to remain, and shall discharge, any mechanic's, laborer's or
materialmen's lien which shall become a lien upon the Demised Premises or any
part thereof. If any mechanic's, laborer's or materialmen's lien shall at any
time be filed against the Demised Premises or any part thereof arising from work
performed on behalf of Landlord, Landlord, within thirty (30) days shall cause
such lien to be discharged of record by payment, deposit, bond, order of court
of competent jurisdiction or otherwise.
(h) The Site Improvements shall be deemed "completed" after
the completion of all work and certification of such completion by Landlord's
engineer. The Site Improvements shall be deemed "substantially completed" upon
the completion of all
- 2 - EXHIBIT B
<PAGE>
such work, except for minor items which do not materially detract from the
usability of such item or are of a seasonal nature (such as landscaping or
striping and the final coat of asphalt on the parking area and the interior
roads in the Shopping Center), commonly referred to as "punch list" items
and certification of such by Landlord's engineer. Landlord shall diligently
complete all punch list items.
(i) Landlord will perform the Site Improvements in a manner
reasonably designed to minimize any interference with the construction of the
Tenant's Building. In the event that during the construction of the Building,
the construction activities of Landlord, or the progress of the same, as
required by Section 1(e), interferes with or delays the construction activities
of the Tenant, Tenant shall notify the Landlord, in writing, of the same,
specifying exactly what construction activities of Landlord are the source of
the problem or what portion of Landlord's work needs to be performed to avoid
such delay. Landlord will have forty-eight (48) hours after its receipt of the
foregoing notice to stop or commence to diligently cure the matters raised by
Tenant in its notice. Should Landlord fail to do so, or should Landlord, having
commenced such cure, fail to diligently complete it, Tenant shall be entitled to
a credit against Rent of Five Hundred Dollars ($500) for each day or partial day
Tenant is delayed by Landlord.
2. Tenant's Work.
(a) Tenant has delivered to Landlord its general design
elevations which include Tenant's proposed general physical characteristics of
the Tenant's Building, exterior materials, exterior color scheme and building
heights. Landlord has approved the construction of a restaurant substantially in
accordance with the plans listed on Exhibit C. The Tenant's Building shall be a
one story sit down restaurant containing not more than 5,900 Gross Leasable
Floor Area, and having a maximum height of thirty (30) feet. Tenant has
delivered to Landlord a plan which depicts the location of all utilities
entering the Tenant's Building and will deliver detailed plans for the same
within fifteen (15) days after the date hereof.
(b) Tenant shall commence the construction of the Tenant's
Building no later than the 60th day after the last to occur of: (i) the Lease
Commencement Date, (ii) completion of the Phase One Work, and (iii) delivery of
possession of the Demised Premises. Tenant shall diligently pursue such
construction to timely completion and shall promptly fixture and open such
restaurant to the public under the initial trade name "Silver Diner". The
construction of the Tenant's Building shall be performed in a good and
workmanlike manner in accordance with sound professional standards and with the
provision of this Agreement, in compliance with all governmental authorities.
All
- 3 - EXHIBIT B
<PAGE>
materials used in the construction of the Tenant's store shall be of new,
commercial grade and first class quality.
(c) Tenant shall apply for and use all reasonable efforts to
obtain, at its own cost and expense, any and all necessary permits that are
necessary to construct the Tenant's Building except those that Landlord must
obtain to construct the Site Improvements. Landlord must obtain the permits to
construct the Site Improvements as a precondition to Tenant commencing
construction of the Tenant's Building.
(d) All contracts of Tenant shall provide for the coordination
and cooperation of such contractor with Landlord in completing the Site
Improvements and other construction work on the Shopping Center, including any
space to be erected by Landlord or its tenants. Tenant shall perform its
construction in a manner reasonably designed to minimize any interference with
the construction taking place simultaneously on the balance of the Shopping
Center or the operation of stores then open for business. In the event that
during the construction of the Building, the construction activities of Tenant,
or the progress of the same, interferes with or delays the construction
activities of the Landlord, Landlord shall notify the Tenant, in writing,
specifying exactly what construction activities of Tenant are the source of the
problem or what portion of Tenant's work needs to be performed to avoid such
delay. Tenant will have forty-eight (48) hours after its receipt of the
foregoing notice to stop or commence to diligently cure the matters raised by
Landlord in its notice. FURTHER, IN CONSTRUCTING THE TENANT'S BUILDING, TENANT
SHALL ONLY UTILIZE SUCH LABOR AS SHALL WORK IN HARMONY WITH AND WITHOUT CAUSING
LABOR DISPUTES OR STRIKES WITH ANY OTHER CONTRACTORS AND LABOR THEN BEING USED
IN THE SHOPPING CENTER AND TENANT SHALL, WITHIN FIVE (5) DAYS AFTER LANDLORD'S
REQUEST, CAUSE THE REMOVAL FROM THE DEMISED PREMISES OF ANY CONTRACTORS AND
LABOR UTILIZED BY TENANT WHICH RESULTS IN ANY LABOR STOPPAGE, STRIKE, LOCKOUT,
OR LABOR DISPUTE AFFECTING THE SHOPPING CENTER. Notwithstanding the foregoing,
in no event shall Tenant be expected or obligated to engage in any conduct which
is in conflict with or violates any federal, state or local law including,
without limitation, the National Labor Relations Act or the regulations thereto.
(e) Tenant's construction work shall be properly protected
with lights and barricades and secured against accident, storm or any other
hazard. Staging for the construction of the Tenant's restaurant shall be
confined to the area designated "staging" on the Site Plan. Tenant shall keep
all other portions of the Shopping Center substantially free from and
unobstructed by debris, equipment materials or supplies related to Tenant's
construction work and will use its best good faith commercially reasonable
efforts to keep obstruction to a minimum. Tenant shall patch and repair asphalt
and cement, if
- 4 - EXHIBIT B
<PAGE>
necessary, in its staging areas upon demobilization of construction and leave
same clean and free of debris. During such construction work, Tenant shall
store all trash, debris and rubbish as reasonably directed by Landlord and upon
the completion of Tenant's construction work, Tenant shall remove all temporary
structures, surplus materials, debris and rubbish of whatever kind remaining
on the Demised Premises, the staging areas or other portions of the Shopping
Center. Landlord shall be responsible for the removal of rubbish and trash
from the Shopping Center caused by Landlord. Landlord and Landlord's
architect or engineer shall be given notice of, and may attend any meetings with
Tenant's contractors and may visit the job site to observe the progress and
performance of the construction work.
(f) In connection with the construction of the
Tenant's Building, Tenant shall not create or suffer to be created or to remain,
and shall discharge, any mechanic's, laborer's or materialmen's liens which
shall become a lien upon Demised Premises or Shopping Center or any part
thereof. If any mechanic's, laborer's or materialmen's liens shall at any time
be filed against the Demised Premises, the Shopping Center or any part thereof
arising from work performed on behalf of Tenant, Tenant within thirty (30) days
shall cause such lien to be discharged of record by payment, deposit, bond,
order of court of competent jurisdiction or otherwise.
3. Indemnity and Insurance.
(a) Landlord shall indemnify, defend and save Tenant and its
agents, servants, employees, officers and directors harmless from any and all
loss, damages, liability, costs and expenses including but not limited to
reasonable attorney's fees, and al other sums which Tenant, its agents,
servants, employees, officers and directors may pay or become obligated to pay
on account of any claim or assertion of liability arising or alleged to have
arisen out of any act or omission of Landlord, its agents, contractors,
subcontractors, servants, employees, licensees or invitees in connection with
construction of the Site Improvements to be performed by or at the direction of
Landlord under this Exhibit; provided, however, Landlord shall not be
responsible for any such loss, damages, liability, costs or expenses which arise
from the act or omission of Tenant, its agents, servants, employees or officers.
Notwithstanding the foregoing, in no event shall Landlord be responsible for any
lost profits or consequential damages. Tenant shall indemnify, defend and save
Landlord and its agents, servants, employees, officers and directors harmless
from any and all loss, damages, liability, costs and expenses including but not
limited to reasonable attorneys fees, and al other sums which Landlord, its
agents, servants, employees, officers and directors may pay or become obligated
to pay, on account of any claim or assertion of liability arising or alleged
to have arisen out of any act or
- 5 - EXHIBIT B
<PAGE>
omission of Tenant, its agents, contractors, subcontractors, servants,
employees, licensees or invitees in connection with the construction of the
Tenant's Building on the Demised Premises; provided, however, Tenant shall
not be responsible for any loss, damage, liability, cost or expenses which
arise from the act or omission of Landlord, its agents, servants, employees or
officers. Notwithstanding the foregoing, in no event shall Tenant be
responsible for any lost profits or consequential damages.
(b) Landlord and Tenant shall each maintain or cause to be
maintained in force a general comprehensive public liability policy or policies
of insurance written by one or more responsible insurance carriers licensed to
do business in New Jersey insuring against liability for injury to and/or death
of any person and/or damage to property of any person or persons in connection
with the construction of the Site Improvements to be performed by landlord
pursuant to this Agreement, and as to Tenant, the construction of the Tenant's
Building, in each case with single limit liability coverage of not less than
$1,000,000.00 (plus umbrella coverage for an additional $1,000,000.00). Such
policy or policies shall name the other party as an additional insured. Each
party agrees to deliver to the other a certificate of insurance evidencing the
existence of such policy or policies of insurance. Such certificate will provide
that such insurance will not be canceled or materially amended unless thirty
(30) days' prior written notice of such cancellation or amendment is given to
the other.
- 6 - EXHIBIT B
<PAGE>
EXHIBIT C
---------
IMPROVEMENTS TO BE CONSTRUCTED BY TENANT
Tenant shall construct a Silver Diner restaurant substantially in
accordance with the plans and specifications identified as follows:
<TABLE>
<S><C>
Cover Sheet Helbing-Lipp, Ltd. September 4, 1996
Sheet 1 of 3 CaptiveAire March 8, 1996
Sheet 2 of 3 CaptiveAire March 12, 1996
Sheet 3 of 3 CaptiveAire March 8, 1996
A-0 Architectural Site Details Helbing-Lipp, Ltd. September 4, 1996
A-1 Floor Plan Helbing-Lipp, Ltd. September 4, 1996
A-2 Finish and Equipment Plan Helbing-Lipp, Ltd. September 4, 1996
A-3 Reflected Ceiling Plan Helbing-Lipp, Ltd. September 4, 1996
A-4 Building Sections Helbing-Lipp, Ltd. September 4, 1996
A-5 Wall Sections Helbing-Lipp, Ltd. September 4, 1996
A-6 Elevations Helbing-Lipp, Ltd. September 4, 1996
A-7 Roof Plan/Details Helbing-Lipp, Ltd. September 4, 1996
ID-1 Interior Plan and Details Helbing-Lipp, Ltd. September 4, 1996
ID-2 Interior Elevations Helbing-Lipp, Ltd. September 4, 1996
ID-3 Interior Design Details Helbing-Lipp, Ltd. September 4, 1996
ID-4 Helbing-Lipp, Ltd. September 4, 1996
FS-1.1 Foodservice Equipment Plan
and Schedule Cini-Little Int'l., Inc. August 27, 1996
FS-1.1D Foodservice Equipment
Dimensioned Plan Cini-Little Int'l., Inc. August 27, 1996
FS-1.1M Foodservice Equipment
Mechanical Spot Connection Plan Cini-Little Int'l., Inc. August 27, 1996
FS-1.1E Foodservice Equipment Electrical
Spot Connection Plan Cini-Little Int'l., Inc. August 27, 1996
FS-1.1SC Foodservice Equipment Special
Conditions Plan Cini-Little Int'l., Inc. August 27, 1996
FS-2.1 Foodservice Equipment Elevations
& Details Cini-Little Int'l., Inc. August 27, 1996
FS-2.2 Foodservice Equipment Elevations
& Details Cini-Little Int'l., Inc. August 27, 1996
FS-3.1 Foodservice Equipment Utility
Loan Schedule Cini-Little Int'l., Inc. August 27, 1996
FS-3.2 Foodservice Equipment Utility
Loan Schedule Cini-Little Int'l., Inc. August 27, 1996
FS-3.3 Foodservice Equipment Utility
Loan Schedule Cini-Little Int'l., Inc. August 27, 1996
FS-3.4 Foodservice Equipment Utility
Loan Schedule Cini-Little Int'l., Inc. August 27, 1996
S-1 Foundation Plan Helbing-Lipp, Ltd. September 4, 1996
S-2 Roof Framing Plan Helbing-Lipp, Ltd. September 4, 1996
M-1 Floor Plan - HVAC Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
M-2 Mechanical Notes & Schedules Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
P-1 Floor Plan - Plumbing Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
P-2 Riser Diagrams Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
P-3 Notes, Schedules and Details Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
E-1 Electrical Notes Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
E-2 Floor Plan - Lighting Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
E-3 Floor Plan - Power Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
E-4 Site Plan and Electrical Panels Helbing-Lipp, Ltd./
AJ Engineers September 4, 1996
</TABLE>
<PAGE>
EXHIBIT D
---------
FORM OF FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "Amendment") is made this ______
day of ______________, 1997 between CHERRY HILL ASSOCIATES L. P., a New Jersey
limited partnership ("Landlord"), and SILVER DINER DEVELOPMENT, INC., a Virginia
corporation ("Tenant").
R E C I T A L S
A. Landlord and Tenant executed that certain Lease dated September __,
1996 (collectively referred to herein with all amendments and agreements
regarding that certain Lease as the "Lease") with respect to certain Demised
Premises located in the Hillview Shopping Center, Cherry Hill, New Jersey, all
as more particularly described in the Lease. All terms and definitions used in
this Amendment not herein defined are to be given the definition of the term as
provided in the Lease, unless specifically stated otherwise.
B. Section 2(c) of the Lease requires that the Landlord and Tenant
execute this Amendment to establish the Rent Commencement Date and the Lease
Expiration Date.
NOW, THEREFORE, in consideration of the foregoing, TEN AND NO/100
DOLLARS ($10.00) and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged and confessed, Landlord and Tenant
hereby agree as follows:
i. The Rent Commencement Date is the ___ day of __________, 199__ and
the Lease Expiration Date is the ___ day of __________, 201__.
ii. Except as hereby amended, the Lease shall remain unchanged in full
force and effect. If there is any conflict between the terms and provisions of
the Lease and the terms and provisions of this Amendment, this Amendment shall
control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TENANT
Silver Diner Development, Inc.,
a Virginia corporation
WITNESS:
By:
_________________________ __________________________________
Name: Name:
_________________________ __________________________________
Title: Title:
_________________________ __________________________________
LANDLORD
Cherry Hill Associates L.P.,
a New Jersey limited partnership
By: Cherry Hill Partner, Inc.,
general partner
WITNESS:
By:
_________________________ __________________________________
Name: Name:
_________________________ __________________________________
Title: Title:
_________________________ __________________________________
<PAGE>
_________________________ )
) ss:
_________________________ )
Before me, a Notary Public in and for the jurisdiction
aforesaid, on this date personally appeared before me
, of Silver Diner Development,
Inc. personally well known to me and acknowledged that he executed the annexed
Lease as the corporate act and deed of Silver Diner Development, Inc.
WITNESS my hand and official seal on , 199__.
[SEAL]
-----------------
Notary Public
My commission expires:
_________________________ )
) ss:
_________________________ )
Before me, a Notary Public in and for the jurisdiction
aforesaid, on this date personally appeared before me
, of Cherry Hill Partner, Inc.,
general partner of Cherry Hill Associates L.P. personally well known to me and
acknowledged that he executed the annexed Lease as the act and deed of Cherry
Hill Partner, Inc. as general partner of Cherry Hill Associates L.P.
WITNESS my hand and official seal on , 199__.
[SEAL]
-----------------
Notary Public
My commission expires:
<PAGE>
EXHIBIT E
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT is made
and entered into as of the day of , 199__, by and among Cherry
Hill Associates L.P., a New Jersey limited partnership ("Landlord"); __________
_____________________________________, a _______________ corporation ("Tenant");
_____________________, a _____________________ ("Mortgagee"); and _____________
_____________________ and _______________________ ("Trustees").
RECITALS:
---------
A. Landlord is the owner in fee simple of the real property in Cherry
Hill, New Jersey described in Exhibit A attached hereto ("Land").
B. Mortgagee is the owner of the beneficial interest under that
certain deed of trust dated _____________, 199__, encumbering the Land to the
Trustees, and recorded in the records of the Clerk of the Circuit Court of
____________________, _______________ in Deed Book _______ at Page _____ (the
"Mortgage").
C. Pursuant to that certain Lease dated ___________________, 1996 the
"Lease"), Tenant has leased from Landlord the Land (the Land, together with all
improvements now or hereinafter situated thereon are collectively referred to as
the "Premises"). The Premises are more particularly described in the Lease, a
true copy of which as executed by Landlord and Tenant has been delivered to
Mortgagee.
D. Tenant and Mortgagee desire to confirm certain understandings with
respect to the Lease and the Mortgage, and Landlord desires to join herein to
evidence its agreement to the provisions hereof.
NOW, THEREFORE, in consideration of the covenants herein contained,
the parties hereby agree as follows:
1. Approval of Lease. Mortgagee hereby approves the execution of the
Lease by Landlord and Tenant.
2. Nondisturbance; No Joinder. So long as Tenant is not in default
(beyond any period granted to Tenant to cure such default) in the payment of
rent or additional rent or in the performance of any of the other terms,
covenants or conditions of the Lease on Tenant's part to be performed:
- 1 - EXHIBIT E
<PAGE>
(a) Tenant's possession of the Premises and Tenant's rights,
options and privileges under the Lease, or under any extensions thereof effected
in accordance with any option therefor in the Lease, shall not be diminished or
interfered with by Mortgagee, and Tenant's occupancy of the Premises shall not
be disturbed by Mortgagee for any reason whatsoever during the term of the Lease
or any such extensions or renewals thereof; and
(b) Mortgagee will not join Tenant as a party defendant in
any action or proceeding for the purpose of terminating Tenant's interest and
estate under the Lease because of any default under the Mortgage.
3. Attornment. If Mortgagee succeeds to the interest of Landlord in
the Lease by reason of foreclosure, dispossession or other proceedings brought
by Mortgagee, or by any other manner, Tenant shall be bound to Mortgagee under
all of the terms, covenants and conditions of the Lease for the balance of the
term thereof and any extensions thereof effected in accordance with any option
therefor in the Lease, with the same force and effect as if Mortgagee were the
landlord under the Lease, and Tenant does hereby attorn to Mortgage as its
landlord. Such attornment shall be effective and self-operative, without the
execution of any further instruments on the part of any of the parties hereto,
immediately upon Mortgagee's succeeding to the interest of Landlord under the
Lease. In confirmation of such attornment, Tenant shall execute and deliver
promptly any certificate or other instrument which Mortgagee may request;
provided, that Tenant shall be under no obligation to pay Minimum Rent,
additional rent or other sums payable under the Lease until Tenant receives
written notice from Mortgagee that Mortgagee has succeeded to the interest of
Landlord under the Lease or that Mortgagee has exercised any right under the
Mortgage to collect such payments directly from Tenant. The respective rights
and obligations of Tenant and Mortgagee upon such attornment shall be the same
as set forth in the Lease.
4. Mortgagee's Succession. If Mortgagee shall succeed to the interest
of Landlord in the Lease, Mortgagee shall be bound to Tenant under all the
terms, covenants and conditions of the Lease, and Tenant shall, from and after
Mortgagee's succeeding to the interest of Landlord in the Lease, have the same
remedies against Mortgagee for the breach of any agreement contained in the
Lease that Tenant might have had under the Lease against Landlord if Mortgagee
had not succeeded to the interest of Landlord; provided, that Mortgagee shall
not be --
(i) bound by any termination, amendment,
modification or surrender of the Lease without Mortgagee's written consent;
- 2 - EXHIBIT E
<PAGE>
(ii) bound by any payment in advance of Minimum Rent
or additional rent for more than one month to any prior landlord (including
Landlord), unless such advance payment is specifically required under the Lease;
and
(iii) liable for any act, omission or default of any
prior landlord.
5. Subordination. Subject to the provisions hereof, the Lease now is
and shall continue to be subject and subordinate to the Mortgage, to any and all
renewals and modifications thereof and to all advances made and to be made
thereunder, so long as no such renewal or modification shall increase any
obligation of Tenant or shall diminish any obligation of Mortgagee or Landlord
hereunder or under the Lease. Any such renewal or modification shall
nevertheless be subject to and entitled to the benefits of the terms of this
Agreement and no further instrument of subordination shall be required. Such
subordination shall be effective and self-operative, without the execution of
any further instruments on the part of any of the parties hereto.
6. No Oral Modifications. This Agreement may not be modified orally
or in any manner other than by an agreement in writing signed by the parties
hereto or their respective successors in interest.
7. Benefit and Burden. All provisions and covenants in this Agreement
shall be deemed to touch and concern and run with the Land. This Agreement shall
inure to the benefit of, be enforceable by and be binding upon the parties
hereto and their respective successors and assigns, including as a successor in
the case of Mortgagee any purchaser at a foreclosure sale. The word "Mortgagee"
shall include the original Mortgagee named herein and any of its successors and
assigns, including any person or entity succeeding to Landlord's interest in the
Land or the Lease upon foreclosure of the Mortgage. The word "foreclosure" and
"foreclosure sale" as used herein shall be deemed to include the acquisition of
Landlord's estate in the Land by voluntary deed, assignment or other disposition
or transfer in lieu of foreclosure.
8. Lease Defined. The word "Lease" as used herein shall be deemed to
be the Lease as originally executed by Landlord and Tenant, as amended or
modified by written agreements hereafter made, from time to time, between the
Landlord and Tenant and consented to by Mortgagee.
9. Applicable Law; Gender. This Agreement shall be construed
according to the laws of the State of New Jersey. The use of the neuter gender
in this Agreement shall be deemed to include any other gender, and words in the
singular number shall be held to include the plural, when the sense so requires.
- 3 - EXHIBIT E
<PAGE>
10. Trustee. Mortgagee hereby authorizes the Trustee to execute this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
WITNESS/ATTEST:
_____________________________________ By: ______________________________
Robert T. Giaimo
President
WITNESS/ATTEST: Cherry Hill Associates L.P.
By: Cherry Hill Partner, Inc.
general partner
By:
- ------------------------------------- ---------------------------
Name:
------------------------
Title:
------------------------
WITNESS/ATTEST:
By:
- ------------------------------------- ---------------------------
Name:
------------------------
Title:
------------------------
WITNESS/ATTEST:
By:
- ------------------------------------- ---------------------------
Name:
------------------------
Title:
------------------------
- 4 - EXHIBIT E
<PAGE>
_________________________ )
) ss:
_________________________ )
Before me, a Notary Public in and for the jurisdiction aforesaid, on
this date personally appeared before me __________________________ of
_________________ personally well known to me and acknowledged that he executed
the Agreement as the corporate act and deed of Silver Diner Development, Inc.
WITNESS my hand and official seal on , 199__.
[SEAL]
-----------------
Notary Public
My commission expires:
_________________________ )
) ss:
_________________________ )
Before me, a Notary Public in and for the jurisdiction aforesaid, on
this date personally appeared before me ________________________,
_________________________ of Cherry Hill Partner, Inc., a New Jersey corporation
and the general partner of Cherry Hill Associates L.P., a New Jersey limited
partnership personally well known to me and acknowledged that he executed the
Agreement as the corporate act and deed of Cherry Hill Partner, Inc. as general
partner of Cherry Hill Associates L.P.
WITNESS my hand and official seal on , 199__.
[SEAL]
-----------------
Notary Public
My commission expires:
- 5 - EXHIBIT E
<PAGE>
_________________________ )
) ss:
_________________________ )
Before me, a Notary Public in and for the jurisdiction aforesaid, on
this date personally appeared before me __________________________ of
_________________ personally well known to me and acknowledged that he executed
the Agreement as the corporate act and deed of
__________________________________.
WITNESS my hand and official seal on , 199__.
[SEAL]
-----------------
Notary Public
My commission expires:
_________________________ )
) ss:
_________________________ )
Before me, a Notary Public in and for the jurisdiction aforesaid, on
this date personally appeared before me__________________________ of
_________________ personally well known to me and acknowledged that he executed
the Agreement as the corporate act and deed of
__________________________________.
WITNESS my hand and official seal on , 199__.
[SEAL]
-----------------
Notary Public
My commission expires:
- 6 - EXHIBIT E
<PAGE>
EXHIBIT F
---------
EXISTING TITLE EXCEPTIONS
1. Flooding and drainage rights within the lines of, bounding or
crossing any natural stream, brook, creek, ditch, drain or other
watercourse, if any.
2. Public and private rights in and to any area included within the
lines of any street, road, avenue, lane, court, etc., including
slope, drainage and grading rights bounding or abutting New Jersey
State Highway Route 38.
3. Utility easements presently existing or hereafter created affecting
all or any portion of the Shopping Center provided such easements do
not materially adversely affect Tenant's use of the Demised Premises
and the Common Areas of the Shopping Center.
4. Terms, covenants, conditions, restrictions and reservations contained
in the OEA.
5. Agreements executed between Landlord and the owners of adjoining
residential apartment buildings with respect to access roads and
easements to construct parking areas in the portions of the Common
Areas, as set forth in Section 2.5 of the OEA.
6. Any agreement executed between Landlord and the City of Cherry Hill
and/or any other governmental body within the State of New Jersey
relating to the development of the Shopping Center provided such
agreement does not prohibit or restrict the use or occupancy of the
Demised Premises for the purposes permitted by the Lease or
materially impair the rights of Tenant under the Lease including, but
not limited to, Tenant's rights of access to, and use of, the Demised
Premises and the common areas of the Shopping Center.
7. Any Fee Mortgage and related financing documents executed by Landlord
provided that Landlord has obtained for Tenant the non-disturbance
and attornment agreement required by the Lease.
8. Any other agreement executed by Landlord between the date of this
Lease and the date the memorandum of this Lease is recorded provided
such agreement does not prohibit or restrict the use or occupancy of
the Demised Premises for the purposes permitted by the Lease or
materially impair the rights of Tenant under the Lease including, but
not limited to, Tenant's rights of access to, and use of, the Demised
Premises and the common areas of the Shopping Center.
Exhibit 10.19
Silver Diner, Inc. Stock Option Plan
together with form of Stock Option Agreement
<PAGE>
SILVER DINER, INC.
STOCK OPTION PLAN
1. Purpose
This Stock Option Plan (the "Plan") for Silver Diner, Inc.
(the "Company") is intended to provide incentive to officers and other key
employees of the Company by providing those persons with opportunities to
purchase shares of the Company's Common Stock under (a) incentive stock options
("Incentive Stock Options") as such term is defined under Section 422 of the
Internal Revenue Code of 1986, as amended and (b) other stock options
("Non-Qualified Options").
2. Definitions
As used in this Plan, the following words and phrases shall
have the meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock, $0.00074 par
value, of the Company.
(d) "Company" shall mean Silver Diner, Inc., a Delaware
corporation.
(e) "Disability" shall mean an Optionee's inability to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
(f) "Fair Market Value" per share as of a particular date
shall mean (i) the closing sales price per share of Common Stock on the
principal national securities exchange, if any, on which the shares of
Common Stock shall then be listed for the last preceding date on which
there was a sale of such Common Stock on such exchange, or (ii) if the
shares of Common Stock are not then listed on a national securities
exchange, the last sales price per share of Common Stock entered on a
national inter-dealer quotation system for the last preceding date on
which there was a sale of such Common Stock on such national
inter-dealer quotation system, or (iii) if no closing or last sales
price per share of Common Stock is entered on a national inter-dealer
quotation system, the average of the closing bid and asked prices for
the shares of Common Stock in the over-the-counter market for the last
preceding date on which there was a quotation for
<PAGE>
such Common Stock in such market, or (iv) if no price can be determined
under the preceding alternatives, then the price per share as most
recently determined by the Board, which shall make such determinations
of value at least once annually.
(g) "Incentive Stock Option" means one or more options to
purchase Common Stock which, at the time such options are granted under
this Plan or any other such plan of the Company, qualify as incentive
stock options under Section 422 of the Code.
(h) "Non-Qualified Option" shall mean any Option that is not
an Incentive Stock Option.
(i) "Option Price" shall mean the purchase price of shares of
Common Stock covered by an Option.
(j) "Parent" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company
if, at the time of granting an Option, each of the corporations other
than the Company owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the
other corporations in such chain.
(k) "Plan" shall mean this Stock Option Plan.
(l) "Option" shall mean any option issued pursuant to this
Plan.
(m) "Optionee" shall mean any person to whom an Option is
granted under this Plan.
(n) "Subsidiary" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if, at the time of granting an Option, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
(o) "Ten Percent Shareholder" shall mean an Optionee who, at
the time an Option is granted, owns directly or indirectly (within the
meaning of section 425(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company, its Parent or a Subsidiary.
- 2 -
<PAGE>
3. General Administration.
(a) The Plan shall be administered by the Board.
(b) The Board shall have the authority in its discretion,
subject to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities either
specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to
grant Options; to determine the Option Price; to determine the persons to whom,
and the time or times at which, Options shall be granted; to determine the
number of shares to be covered by each Option; to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the Option Agreements (which need not be
identical) entered into in connection with Options granted under the Plan; and
to make all other determinations deemed necessary or advisable for the
administration of the Plan.
(c) No member of the Board shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Option
granted hereunder.
4. Granting of Options
Options may be granted under the Plan at any time prior to
September 11, 2006.
5. Eligibility
(a) Options may be granted to any director, officer key
employee or outside consultant of the Company. In determining from time to time
the officers and employees to whom Options shall be granted and the number of
shares to be covered by each Option, the Board shall take into account the
duties of the respective officers and employees, their present and potential
contributions to the success of the Company and such other factors as the Board
shall deem relevant in connection with accomplishing the purposes of the Plan.
(b) At the time of the grant of each Option under the Plan,
the Board shall determine whether such Option is to be designated an Incentive
Stock Option. Incentive Stock Options shall not be granted to a director who is
not an employee of the Company. The length of the exercise period of Incentive
Stock Options shall be governed by Section 7(e)(1) of the Plan; the exercise
period of all other Options will be governed by Section 7(e)(2).
- 3 -
<PAGE>
(c) An Option designated an Incentive Stock Option can, prior
to its exercise, be changed to a Non-Qualified Option if the Optionee consents
to amend his Option Agreement to provide that the exercise period of such Option
will be governed by Section 7(e)(2) of the Plan.
6. Stock
(a) The stock subject to the Options shall be shares of the
Common Stock. Such shares may, in whole or in part, be authorized but unissued
shares contributed directly by the Company or shares which shall have been or
which may be acquired by the Company. The aggregate number of shares of Common
Stock as to which Options may be granted from time to time under the Plan shall
be 350,000 shares. The limitation established by the preceding sentence shall be
subject to adjustment as provided in Section 7(i) hereof.
(b) If any outstanding Option under the Plan for any reason
expires or is terminated without having been exercised in full, the shares of
Common Stock allocable to the unexercised portion of such Option shall (unless
the Plan shall have been terminated) become available for subsequent grants of
Options under the Plan.
7. Terms and Conditions of Options
Each Option granted pursuant to the Plan shall be evidenced by
Option Agreements in such forms as the Board may from time to time approve.
Options shall comply with and be subject to the following terms and conditions:
(a) Option Price. Each Option shall state the Option Price,
which in the case of Incentive Stock Options shall be not less than one
hundred percent (100%) of the Fair Market Value of the shares of Common
Stock on the date of grant of the Option; provided, however, that in
the case of an Incentive Stock Option granted to a Ten Percent
Shareholder, the Option Price shall not be less than one hundred ten
percent (110%) of such fair market value. The Option Price per share
for Non- Qualified Options shall not be less than the par value of a
share of Common Stock on the date of grant of the Option. The Option
Price shall be subject to adjustment as provided in Section 7(i)
hereof. The date on which the Board adopts a resolution expressly
granting an Option shall be considered the day on which such Option is
granted.
(b) Restrictions. Any Common Stock issued under the Plan may
contain restrictions including, but not limited to, limitations on
transferability that may constitute substantial risks of forfeiture, as
the Board may determine.
- 4 -
<PAGE>
(c) Value of Shares. Options may be granted to any eligible
person for shares of Common Stock of any value, provided that the
aggregate Fair Market Value (determined at the time the Option is
granted) of the stock with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year
(under all the plans of the Company, its Parent and its Subsidiaries)
shall not exceed $100,000.
(d) Medium and Time of Payment. The Option Price shall be paid
in full, at the time of exercise, in cash or, with the approval of the
Board, in shares of Common Stock having a fair market value in the
aggregate equal to such Option Price or in a combination of cash and
such shares.
(e) Term and Exercise of Options.
(1) Unless the applicable Option Agreement otherwise
provides, each Option shall become vested and first
exercisable in the following installments:
Year Percentage Exercisable
---- ----------------------
Less than Two Years 0%
Two Years 20%
Three Years 20%
Four Years 25%
Five Years 35%
(2) Incentive Stock Options shall be exercisable over the
exercise period specified by the Board in the Option
Agreement, but in no event shall such period exceed ten (10)
years from the date of the grant of each such Incentive Stock
Option; provided, however, that in the case of an Incentive
Stock Option granted to a Ten Percent Shareholder, the
exercise period shall not exceed five (5) years from the date
of grant of such Option. The exercise period shall be subject
to earlier termination as provided in Section 7(f) and 7(g)
hereof. An Incentive Stock Option may be exercised, as to any
or all full shares of Common Stock as to which the Incentive
Stock Option has become exercisable, by giving written notice
of such exercise to the Board; provided that an Incentive
Stock Option may not be exercised at any one time as to less
than 100 shares (or such number of shares as to which the
Incentive Stock Option is then exercisable if such number of
shares is less than 100).
- 5 -
<PAGE>
(3) Non-Qualified Options shall be exercisable over a
period not to exceed ten (10) years.
(f) Termination of Employment. Except as provided in this
Section 7(f) and Section 7(g) hereof, an Option may not be exercised by
persons who are not outside consultants to the Company unless the
Optionee is then a director of or in the employ of the Company or any
Parent or Subsidiary of the Company (or a corporation or a Parent or
Subsidiary of such corporation issuing or assuming the Option in a
transaction to which Section 425(a) of the Code applies), and unless
the Optionee has remained continuously a director or so employed since
the date of grant of the Option. In the event all association of an
Optionee (other than an outside consultant) with the Company (as an
employee, or director or both) shall terminate (other than by reason of
death or Disability), all Options or unexercised portions thereof
granted to such Optionee which are then exercisable may, unless earlier
terminated in accordance with their terms, be exercised within thirty
(30) days after such termination; provided, however, that if the
association of the Optionee with the Company shall terminate for
"cause" (as determined by the Board), all Options theretofore granted
to such Optionee shall, to the extent not theretofore exercised,
terminate forthwith. A bona fide leave of absence shall not be
considered a termination or break in continuity of employment for any
purpose of the Plan so long as the period of such leave does not exceed
ninety (90) days or such longer period during which the Optionee's
right to reemployment is guaranteed by statute or by contract. Where
the period of such leave exceeds ninety (90) days and the Optionee's
right to reemployment is not guaranteed, the Optionee's employment will
be deemed to have terminated on the ninety-first (91st) day of such
leave. Nothing in the Plan or in any Option granted pursuant hereto
shall confer upon an employee any right to continue in the employ of
the Company or any of its divisions or Parent or Subsidiaries or
interfere in any way with the right of the Company or any such
divisions or Parent or Subsidiary to terminate or change the terms of
such employment at any time.
(g) Death or Disability of Optionee. If an Optionee who was an
outside consultant when his Option was granted shall die or if an
Optionee shall die while a director of or employed by the Company or
any Parent or Subsidiary of the Company, or if the Optionee's
employment shall terminate by reason of Disability, all Options
theretofore granted to such Optionee may, unless earlier terminated in
accordance with their terms, be exercised by the Optionee or by the
personal representative of the Optionee's estate or by a person who
acquired the right to exercise such Option by bequest or inheritance or
otherwise by reason of death of the Optionee, at any time within nine
(9) months after the date of death or Disability of the Optionee, but
in no
- 6 -
<PAGE>
event later than the date of expiration of the Option, provided that
during the lifetime of the Optionee any Option granted to him may be
exercised only by the Optionee.
(h) Nontransferability of Options. Options granted under the
Plan shall not be transferable other than by will or by the laws of
descent and distribution, and Options may be exercised, during the
lifetime of the Optionee, only by the Optionee. Notwithstanding the
preceding sentence, the Board, in its sole discretion, permit the
assignment or transfer of a Non-Qualified Option and the exercise
thereof by a person other than an Optionee, on such terms and
conditions as the Board in its sole discretion may determine. Any such
terms shall be determined at the time the Non-Qualified Option is
granted, and shall be set forth in the Option Agreement.
(i) Effect of Certain Changes.
(1) If there is any change in the number of shares of
Common Stock through the declaration of stock dividends,
recapitalization resulting in stock splits, or combinations or
exchanges of such shares, then the number of shares of Common
Stock available for Options, the number of such shares covered
by outstanding Options, and the price per share of such
Options shall be proportionately adjusted to reflect any
increase or decrease in the number of issued shares of Common
Stock; provided, however, that any fractional shares resulting
from such adjustment shall be eliminated.
(2) In the event of a proposed dissolution or
liquidation of the Company, or in the event of any corporate
separation or division, including but not limited to, a
split-up, a split-off or spin-off, the Board may provide that
the holder of each Option then exercisable shall have the
right to exercise such Option (at its then Option Price)
solely for the kind and amount of shares of stock and other
securities, property, cash or any combination thereof
receivable upon such dissolutions or liquidation, or corporate
separation or division; or the Board may provide, in the
alternative, that each Option granted under the Plan shall
terminate as of a date to be fixed by the Board, provided,
however, that no less than thirty (30) days' written notice of
the date so fixed shall be given to each Optionee, who shall
have the right, during the period of thirty (30) days
preceding such termination, to exercise the Options as to all
or any part of the shares of Common Stock covered thereby,
including shares as to which such Options would not otherwise
be exercisable.
(3) If while unexercised Options remain outstanding
under the Plan (i) the Company executes a definitive agreement
to merge or consolidate with or
- 7 -
<PAGE>
into another corporation or to sell or otherwise dispose of
substantially all its assets, (ii) more than 50% of the
Company's then outstanding voting stock is acquired by any
person or group or (iii) Robert T. Giaimo ceases to be
President of the Company (any such event being an
"Accelerating Event") then from and after the date of any such
agreement or the date on which public announcement of the
acquisition of such percentage shall have been made or the
date on which Mr. Giaimo ceases to be President of the Company
(any such date being referred to herein as the "Acceleration
Date"), all Options shall be exercisable in full, whether or
not otherwise exercisable. Following the Acceleration Date,
(a) the Board shall, in the case of a merger, consolidation or
sale or disposition of assets, promptly make an appropriate
adjustment to the number and class of shares of Common Stock
available for Options, and to the amount and kind of shares or
other securities or property receivable upon exercise of any
outstanding Options after the effective date of such
transaction, and the price thereof, and (b) the Board may, in
its discretion, permit the cancellation of outstanding Options
in exchange for a cash payment in an amount per share subject
to any such option determined by the Board in its sole
discretion, but not less than the difference between the
Option Price per share and the Fair Market Value per share of
Common stock on the Acceleration Date.
(4) Paragraphs (2) and (3) of this Section 7(i) shall
not apply to a merger or consolidation in which the Company is
the surviving corporation and shares of Common Stock are not
converted into or exchanged for stock, securities or any other
corporation, cash or any other thing of value. Notwithstanding
the preceding sentence, in case of any consolidation or merger
of another corporation into the Company in which the Company
is the continuing corporation and in which there is a
reclassification or change (including a change to the right to
receive cash or other property) of the shares of Common Stock
(other than a change in par value, or from par value to no par
value, or as a result of a subdivision or combination, but
including any change in such shares into two or more classes
or series of shares), the Board may provide that the holder of
each Option then exercisable shall have the right to exercise
such Option solely for the kind and amount of shares of stock
and other securities (including those of any new direct or
indirect parent of the Company), property, cash or any
combination thereof receivable by the holder of the number of
shares of Common Stock for which such Option might have been
exercised upon such reclassification, change, consolidation or
merger.
- 8 -
<PAGE>
(5) In the event of a change in the Common Stock as
presently constituted, which is limited to a change of all of
its authorized shares with par value into the same number of
shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be
the Common Stock within the meaning of the Plan.
(6) To the extent that the foregoing adjustments
relate to stock or securities of the Company, such adjustments
shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive, provided that
each Option granted pursuant to this Plan and designated an
Incentive Stock Option shall not be adjusted in a manner that
causes the Option to fail to continue to qualify as an
Incentive Stock Option within the meaning of Section 422 of
the Code.
(7) Except as hereinbefore expressly provided in this
Section 7(i), the Optionee shall have no rights by reason of
any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any
class or by reason of any dissolution, liquidation, merger, or
consolidation, and any issue by the Company of shares of stock
of any class, or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Option
Price of shares of Common Stock subject to an Option. The
grant of an Option pursuant to the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital
or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
(j) Rights as a Shareholder. An Optionee or a transferee of an
Option shall have no rights as a shareholder with respect to any shares
covered by his Option until the date of the issuance of a stock
certificate to him for such shares. No adjustments shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record
date is prior to the date such stock certificate is issued, except as
provided in Section 7(i) hereof.
(k) Other Provisions. The Option Agreements authorized under
the Plan shall contain such other provisions, including, without
limitation, (i) the imposition of restrictions upon the exercise of an
Option and (ii) the inclusion of any condition not inconsistent with an
Option designated by the Board as an Incentive Stock Option
- 9 -
<PAGE>
qualifying as an Incentive Stock Option, as the Board shall deem
advisable, including provisions with respect to compliance with federal
and applicable state securities laws.
8. Agreement by Optionee Regarding Withholding Taxes
(a) No later than the date of exercise of any Option granted
hereunder, the Optionee will pay to the Company or make arrangements
satisfactory to the Board regarding payment of any federal, state or local taxes
of any kind required by law to be withheld upon the exercise of such Option, and
(b) The Company shall, to the extent permitted or required by
law, have the right to deduct from any payment of any kind otherwise due to the
Optionee any federal, state or local taxes of any kind required by law to be
withheld upon the exercise of such Option.
9. Term of Plan
Options may be granted pursuant to the Plan from time to time
within a period of ten (10) years from the date on which the Plan is adopted by
the Board, provided that no Options granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company's
shareholders.
10. Savings Clause
Notwithstanding any other provision hereof, this Plan is
intended to qualify as a plan pursuant to which Incentive Stock Options may be
issued under Section 422 of the Code. If this Plan or any provision of this Plan
shall be held to be invalid or to fail to meet the requirements of Section 422
of the Code or the regulations promulgated thereunder, such invalidity or
failure shall not affect the remaining parts of this Plan, but rather it shall
be construed and enforced as if the Plan or the affected provision thereof, as
the case may be, complied in all respects with the requirements of Section 422
of the Code.
11. Amendment and Termination of the Plan
The Board may at any time and from time to time suspend,
terminate, modify or amend the Plan, provided that any amendment that would
materially increase the aggregate number of shares of Common Stock as to which
Options may be granted under the Plan, materially increase the benefits accruing
to participants under the Plan, or materially modify the requirements as to
eligibility for participation in the Plan shall be subject to the approval of
the holders of a majority of the Common Stock voting at a meeting at which a
quorum is present, except that any such increase or modification that may result
from adjustments
- 10 -
<PAGE>
authorized by Section 7(i) hereof shall not require such approval. Except as
provided in Section 7 hereof, no suspension, termination, modification or
amendment of the Plan may adversely affect any Option previously granted unless
the written consent of the Optionee is obtained.
12. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board nor the
submission of the Plan to stockholders of the Company for approval shall be
construed as creating any limitations on the power or authority of the Board to
adopt such other or additional incentive or other compensation arrangements of
whatever nature as the Board may deem necessary or desirable or preclude or
limit the continuation of any other plan, practice or arrangement for the
payment of compensation or fringe benefits to employees generally, or to any
class or group of employees, which the Company or any Subsidiary now has
lawfully put into effect, including, without limitation, any retirement,
pension, savings and stock purchase plan, insurance, death and disability
benefits and executive short-term incentive plans.
13. Nature of Payments
(a) All Options granted shall be in consideration of services
performed for the Company by the Optionee.
(b) All Options granted shall constitute a special incentive
benefit to the Optionee and shall not be taken into account in computing the
amount of salary or compensation of the Optionee for the purpose of determining
any benefits under any pension, retirement, profit-sharing, bonus, life
insurance or other benefit plan of the Company or under any agreement between
the Company and the Optionee, unless such plan or agreement specifically
otherwise provides.
14. Nonuniform Determinations
The Board's determinations under this Plan need not be uniform and may
be made by it selectively among persons who receive, or are eligible to receive,
Options (whether or not such persons are similarly situated). Without limiting
the generality of the foregoing, the Board shall be entitled, among other
things, to make nonuniform and selective determinations which may, inter alia,
reflect the specific terms of individual employment agreements, and to enter
into nonuniform and selective Option Agreements, as to the persons to receive
Options and the terms and conditions of Options.
- 11 -
<PAGE>
15. Section Headings
The section headings contained herein are for the purpose of
convenience only and are not intended to define or limit the contents of said
sections.
Adopted by the Board of Directors on September 11, 1996.
Attest:
- --------------------------- --------------------------------
Secretary
Date: ________________
- 12 -
<PAGE>
SILVER DINER, INC.
STOCK OPTION PLAN AGREEMENT
A Stock Option award is hereby granted by_________________________, a
_________________ corporation ("Company"), to the Key Employee named below
("Optionee"), for and with respect to common stock of the Company, par value
_______ per share ("Common Stock"), subject to the following terms and
conditions:
1. Subject to the provisions set forth herein and the provisions of the
Stock Option Plan ("Plan"), the provisions of which are hereby incorporated by
reference, and in consideration of the agreements of Optionee herein provided,
the Company hereby grants to Optionee a Stock Option to purchase from the
Company the number of shares of Common Stock, at the purchase price per share
("Option Exercise Price"), and on the schedule, all as set forth below. Such
Stock Option is sometimes referred to herein as the "Award."
Name of Optionee:
Number of Shares
Subject to Stock Option:
Option Exercise Price
Per Share:
Date of Grant:
Exercise Schedule:
<TABLE>
<CAPTION>
Number of Shares Exercise Period
Subject to Stock Option Date First Exercisable Expiration Date
----------------------- ---------------------- ---------------
<S><C>
</TABLE>
2. The exercise of all or any portion of the Award is conditioned upon
the acceptance by Optionee of the terms hereof as evidenced by his execution of
this Option Agreement in the space provided therefor at the end hereof and the
return of an executed copy to the Secretary of the Company.
Written notice of an election to exercise any portion of the Award, in
a form substantially identical to that attached as an Exhibit hereto and
specifying the portion thereof being exercised
<PAGE>
and the exercise date, shall be given by Optionee, or his legal representative,
(a) by delivering such notice at the principal executive offices of the Company
no later than the exercise date, or (b) by mailing such notice, postage prepaid,
addressed to the Secretary of the Company at the Company's principal executive
offices at least three business days prior to the exercise date.
3. Neither Optionee nor any other person entitled to exercise the Stock
Option under the terms hereof shall be, or have any of the rights or privileges
of, a shareholder of the Company in respect of any Common Stock issuable on
exercise of the Stock Option, until the date of the issuance of a stock
certificate for such Common Stock.
4. If the Award shall be exercised in whole, this Option Agreement
shall be surrendered to the Company for cancellation. If the Award shall be
exercised in part, or a change in the number or designation of the Common Stock
shall be made, this Option Agreement shall be delivered by Optionee to the
Company for the purpose of making appropriate notation thereon, or of otherwise
reflecting, in such manner as the Company shall determine, the partial exercise
or the change in the number or designation of the Common Stock.
5. Optionee represents, warrants and agrees that Optionee will acquire
and hold the shares purchased on exercise of the Option for his own account for
investment and not with the view to the resale or distribution thereof, except
for resales or distributions in accordance with applicable securities laws, and
that Optionee will not, at any time or times, directly or indirectly, offer,
sell, distribute, pledge, or otherwise grant a security interest in or otherwise
dispose of or transfer all, any portion of or any interest in, any shares
purchased on exercise of the Option (or solicit an offer to buy, take in pledge
or otherwise acquire or receive, all or any portion thereof).
Optionee acknowledges that Optionee has received and reviewed a
description of the Common Stock of the Company and a copy of the Plan. Optionee
further acknowledges that Optionee has had the opportunity to ask questions of,
and receive answer from, the officers and representatives of the Company
concerning all material information concerning the Company and the terms and
conditions of the transactions in which Optionee is acquiring the Option and may
subsequently acquire shares of the Common Stock. Optionee further acknowledges
that Optionee understands that the Company may use the proceeds from the
exercise of the Option for general corporate purposes.
6. The grant of the Award hereunder shall not be deemed to give the
Optionee the right to be retained in the employ of the Company or to affect the
right of the Company to discharge the Optionee at any time.
7. The Award shall be exercised in accordance with such administrative
regulations as the Board shall from time to time adopt.
- 2 -
<PAGE>
8. The Award and this Option Agreement shall be construed, administered
and governed in all respects under and by the laws of the State of Maryland,
without giving effect to principles of conflict of laws.
9. The Award and this Option Agreement are subject to the requirement
that the shareholders of the Company approve and ratify the adoption of the Plan
no later than __________________, 1996.
SILVER DINER, INC, a Delaware corporation
By:__________________________________
The undersigned hereby accepts the foregoing Award and the terms and
conditions hereof.
-------------------------------------
Key Employee
- 3 -
Exhibit 10.20
Silver Diner, Inc. Employee Stock Purchase Plan
together with form of Subscription Agreement and Notice of Withdrawal
<PAGE>
SILVER DINER, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Employee Stock Purchase
of Silver Diner, Inc. (the "Company").
1. Purpose. The purpose of the Plan is to provide employees
of the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company. It is the intention of the Company to have
the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the
Internal Revenue Code of 1986, as amended. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock, $0.00074 par
value, of the Company.
(d) "Company" shall mean Silver Diner, Inc., a Delaware
corporation.
(e) "Compensation" shall mean all regular straight time gross
earnings excluding payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses, commissions and other compensation.
(f) "Continuous Status As An Employee" shall mean the absence
of any interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Company, provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
(g) "Contributions" shall mean all amounts credited to the
account of a participant pursuant to the Plan.
(h) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
<PAGE>
(i) "Employee" shall mean any person, including an officer,
who is customarily employed for at least twenty (20) hours per week and more
than five (5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(j) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(k) "Exercise Date" shall mean the last day of each Offering
Period of the Plan.
(l) "Offering Date" shall mean the first business day of each
Offering Period of the Plan, except that in the case of an individual who
becomes an eligible Employee after the first business day of an Offering Period
but prior to the first business day of the last calendar quarter of such
Offering Period, the term "Offering Date" shall mean the first business day of
the calendar quarter coinciding with or next succeeding the day on which that
individual becomes an eligible Employee.
Options granted after the first business day of an
Offering Period will be subject to the same terms as the options granted on the
first business day of such Offering Period except that they will have a
different grant date (thus, potentially, a different exercise price) and,
because they expire at the same time as the options granted on the first
business day of such Offering Period, a shorter term.
(m) "Offering Period" shall mean a period of twelve (12)
months.
(n) "Plan" shall mean this Employee Stock Purchase Plan.
(o) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
3. Eligibility.
(a) Any person who has been continuously employed as an
Employee for three (3) months as of the Offering Date of a given Offering Period
shall be eligible to participate in such Offering Period under the Plan,
provided that such person was not eligible to participate in such Offering
Period as of any prior Offering Date, and further, subject to the requirements
of paragraph 5(a) and the limitations imposed by Section 423(b) of the Code.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d)
- 2 -
<PAGE>
of the Code) would own stock and/or hold outstanding options to purchase stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any subsidiary of the Company, or
(ii) which permits his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of fair market value of such stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by a
series of Offering Periods, with a new Offering Period commencing on January
1 of each year (or at such other time or times as may be determined by the
Board of Directors). The Plan shall continue until terminated in
accordance with paragraph 19 hereof. The Board of Directors of the Company
shall have the power to change the duration and/or the frequency of Offering
Periods with respect to future offerings without stockholder approval if
such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first Offering Period to be affected.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement on the form provided by the Company and
filing it with the Company's Office of Human Resources prior to the applicable
Offering Date, unless a later time for filing the subscription agreement is set
by the Board for all eligible Employees with respect to a given offering. The
subscription agreement shall set forth the percentage of the participant's
Compensation (which shall not be less than 1% and not more than 10%) to be paid
as Contributions pursuant to the Plan.
(b) Payroll deductions shall commence on the first payroll
following the Offering Date and shall end on the last payroll paid on or prior
to the Exercise Date of the offering to which the subscription agreement is
applicable, unless sooner terminated by the participant as provided in paragraph
10.
6. Method of Payment of Contributions.
(a) The participant shall elect to have payroll deductions
made on each payday during the Offering Period in an amount not less than one
percent (1%) and not more than ten percent (10%) of such participant's
Compensation on each such payday; provided that the aggregate of such payroll
deductions during the Offering Period shall not exceed ten percent (10%) of the
participant's aggregate Compensation during said Offering Period. All payroll
deductions made by a participant shall be credited to his or her account under
the Plan. A participant may not make any additional payments into such account.
(b) A participant may discontinue his or her participation in
the Plan as provided in paragraph 10, or, on one occasion only during the
Offering Period, may decrease,
- 3 -
<PAGE>
but may not increase, the rate of his or her Contributions during the Offering
Period by completing and filing with the Company a new subscription agreement
within the ten (10) day period immediately preceding the beginning of any
calendar quarter during the Offering Period. The change in rate shall be
effective as of the beginning of the calendar quarter following the date of
filing of the new subscription agreement.
(c) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and paragraph 3(b) herein, a
participant's payroll deductions may be decreased to 0% at such time during any
Offering Period which is scheduled to end during the current calendar year that
the aggregate of all payroll deductions accumulated with respect to such
Offering Period and any other Offering Period ending within the same calendar
year equal $21,250. Payroll deductions shall recommence at the rate provided in
such participant's Subscription Agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in paragraph 10.
7. Grant of Option.
(a) On the Offering Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period a number of
shares of the Company's Common Stock determined by dividing such Employee's
Contributions accumulated prior to such Exercise Date and retained in the
participant's account as of the Exercise Date by the lower of (i) eighty-five
percent (85%) of the fair market value of a share of the Company's Common Stock
on the Offering Date, or (ii) eighty-five percent (85%) of the fair market value
of a share of the Company's Common Stock on the Exercise Date; provided,
however, that the maximum number of shares an Employee may purchase during each
Offering Period shall be determined at the Offering Date by dividing $25,000 by
the fair market value of a share of the Company's Common Stock on the Offering
Date, and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. The fair market value of a
share of the Company's Common Stock shall be determined as provided in Section
7(b) herein.
(b) The option price per share of the shares offered in a
given Offering Period shall be the lower of (i) 85% of the fair market value of
a share of the Common Stock of the Company on the Offering Date; or (ii) 85% of
the fair market value of a share of the Common Stock of the Company on the
Exercise Date. The fair market value of the Company's Common Stock on a given
date shall be determined by the Board on its discretion based on the closing
price of the Common Stock for such date (or, in the event that the Common Stock
is not traded on such date, on the immediately preceding trading date), as
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) National Market System or, if such price is not reported, the mean of
the bid and asked prices per share of the Common Stock as reported by NASDAQ or,
in the event the Common Stock is listed on a stock exchange, the fair market
value per share shall be the closing price on such
- 4 -
<PAGE>
exchange on such date (or, in the event that the Common Stock is not traded on
such date, on the immediately preceding trading date), as reported in The Wall
Street Journal.
8. Exercise of Option. Unless a participant withdraws from the
Plan as provided in paragraph 10, his or her option for the purchase of shares
will be exercised automatically on the Exercise Date of the Offering Period,
and the maximum number of full shares subject to option will be purchased for
him or her at the applicable option price with the accumulated Contributions in
his or her account. The shares purchased upon exercise of an option
hereunder shall be deemed to be transferred to the participant on the
Exercise Date. During his lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after the Exercise Date
of each Offering Period, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option. Any cash remaining to the credit of a
participant's account under the Plan after a purchase by him or her of shares
at the termination of each Offering Period, or which is insufficient to
purchase a full share of Common Stock of the Company, shall be returned to said
participant.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
the Exercise Date of the Offering Period by giving written notice to the
Company. All of the participant's Contributions credited to his or her account
will be paid to him or her promptly after receipt of his or her notice of
withdrawal and his or her option for the current period will be automatically
terminated, and no further Contributions for the purchase of shares will be made
during the Offering Period.
(b) Upon termination of the participant's Continuous Status as
an Employee prior to the Exercise Date of the Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under paragraph 14, and his or her option
will be automatically terminated.
(c) In the event an Employee fails to remain in Continuous
Status as an Employee of the Company for at least twenty (20) hours per week
during the Offering Period in which the employee is a participant, he or she
will be deemed to have elected to withdraw from the Plan and the Contributions
credited to his or her account will be returned to him or her and his or her
option terminated.
- 5 -
<PAGE>
(d) A participant's withdrawal from an offering will not have
any effect upon his or her eligibility to participate in a succeeding offering
or in any similar plan which may hereafter be adopted by the Company.
11. Interest. No interest shall accrue on the Contributions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 300,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in paragraph 18. If the total number of shares which would otherwise be subject
to options granted pursuant to Section 7(a) hereof on the Offering Date of an
Offering Period exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. Any amounts remaining in
an Employee's account not applied to the purchase of stock pursuant to this
Section 12 shall be refunded on or promptly after the Exercise Date. In such
event, the Company shall give written notice of such reduction of the number of
shares subject to the option to each Employee affected thereby and shall
similarly reduce the rate of Contributions, if necessary.
(b) The participant will have no interest or voting right in
shares covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration. The Board, or a committee named by the Board,
shall supervise and administer the Plan and shall have full power to adopt,
amend and rescind any rules deemed desirable and appropriate for the
administration of the Plan and not inconsistent with the Plan, to construe and
interpret the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. The composition of the committee
shall be in accordance with the requirements to obtain or retain any available
exemption from the operation of Section 16(b) of the Exchange Act,
pursuant to Rule 16b-3 promulgated thereunder.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to the end of the Offering Period but prior to delivery to
- 6 -
<PAGE>
him or her of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to the Exercise Date of the Offering Period. If a participant is married
and the designated beneficiary is not the spouse, spousal consent shall be
required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant (and his or her spouse, if any) at any time by written notice. In
the event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such shares and/or cash to the
executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
15. Transferability. Neither Contributions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged
or otherwise disposed of in any way (other than by will, the laws of descent
and distribution or as provided in paragraph 14 hereof) by the participant.
Any such attempt at assignment, transfer, pledge or other disposition shall
be without effect, except that the Company may treat such act as an election
to withdraw funds in accordance with paragraph 10.
16. Use of Funds. All Contributions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such Contributions.
17. Reports. Individual accounts will be maintained for
each participant in the Plan. Statements of account will be given to
participating Employees promptly following the Exercise Date, which statements
will set forth the amounts of Contributions, the per share purchase price, the
number of shares purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each option under the Plan which has not yet been
exercised and the number of shares of Common Stock which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the price per share of Common
Stock covered by each option under the Plan which has not yet been exercised,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided,
- 7 -
<PAGE>
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an option.
In the event of the proposed dissolution or liquidation of the
Company, the Offering Period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board. In
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, each
option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Period then in progress by setting a new Exercise Date (the "New
Exercise Date"). If the Board shortens the Offering Period then in progress in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board shall notify each participant in writing, at least ten (10) days prior
to the New Exercise Date, that the Exercise Date for his or her option has been
changed to the New Exercise Date and that his or her option will be exercised
automatically on the New Exercise Date, unless prior to such date he or she has
withdrawn from the Offering Period as provided in paragraph 10. For purposes of
this paragraph, an option granted under the Plan shall be deemed to be assumed
if, following the sale of assets or merger, the option confers the right to
purchase, for each share of option stock subject to the option immediately prior
to the sale of assets or merger, the consideration (whether stock, cash or other
securities or property) received in the sale of assets or merger by holders of
Common Stock for each share of Common Stock held on the effective date of the
transaction (and if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if such consideration received
in the sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of Common Stock and the
sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.
- 8 -
<PAGE>
19. Amendment or Termination. The Board of Directors of the
Company may at any time terminate or amend the Plan. Except as provided in
paragraph 18, no such termination may affect options previously granted, nor
may an amendment make any change in any option theretofore granted which
adversely affects the rights of any participant. In addition, to the extent
necessary to comply with Rule 16b-3 under the Exchange Act, or under
Section 423 of the Code (or any successor rule or provision or any applicable
law or regulation), the Company shall obtain stockholder approval in such a
manner and to such a degree as so required.
20. Notices. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Term of Plan. The Plan became effective upon its adoption by
the Board of Directors on September 11, 1996 and shall continue in effect for a
term of twenty (20) years unless sooner terminated under paragraph 19.
23. Additional Restrictions of Rule 16b-3. The terms and
conditions of options granted hereunder to, and the purchase of shares by,
persons subject to Section 16 of the Exchange Act shall comply with the
applicable provisions of Rule 16b-3. This Plan shall be deemed to
contain, and such options shall contain, and the shares issued upon exercise
thereof shall be subject to, such additional conditions and restrictions as
may be required by Rule 16b- 3 to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan transactions.
24. Severability. With respect to persons subject to Section 16
of the Exchange Act, transactions under this Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under the Exchange
Act. To the extent any provision of the Plan or
- 9 -
<PAGE>
any action by the administrator of the Plan fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
administrator of the Plan.
- 10 -
<PAGE>
New Election ___
Change of Election ___
SILVER DINER, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
1. I, , hereby elect to participate
in the Silver Diner Inc. 1996 Employee Stock Purchase Plan (the "Plan") for the
Offering Period , 19 to , 19 , and
subscribe to purchase shares of the Company's Common Stock in accordance with
this Subscription Agreement and the Plan.
2. I elect to have Contributions in the amount of % of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more
than 10% of my Compensation during the Offering Period. (Please note
that no fractional percentages are permitted.)
3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price determined
in accordance with the Plan. I further understand that, except as otherwise set
forth in the Plan, shares will be purchased for me automatically on the Exercise
Date of the Offering Period unless I otherwise withdraw from the Plan by giving
written notice to the Company for such purpose.
4. I understand that I may discontinue at any time prior to the
Exercise Date my participation in the Plan as provided in paragraph 10 of the
Plan. I also understand that on one occasion only during the Offering Period I
may increase or decrease the rate of my Contributions during the Offering Period
by completing and filing with the Company a new Subscription Agreement. The
change in rate shall be effective as of the beginning of the calendar quarter
following the date of filing of the new Subscription Agreement.
5. I have received a copy of the Company's most recent description of
the Plan and a copy of the complete "Silver Diner Inc. 199 Stock Purchase
Plan." I understand that my participation in the Plan is in all respects subject
to the terms of the Plan.
6. Shares purchased for me under the Plan should be issued in the
name(s) of (name of employee or employee and spouse only):
<PAGE>
--------------------------
--------------------------
7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan.
NAME: (Please print) ______________________________________________________
(First) (Middle) (Last)
- ---------------------- ------------------------------------------------------
(Relationship) (Address)
------------------------------------------------------
8. I understand that if I dispose of any shares received by me pursuant
to the Plan within two (2) years after the Offering Date (the first day of the
Offering Period during which I purchased such shares) or within one (1) year
after the date of the end of the Offering Period, I will be treated for federal
income tax purposes as having received ordinary compensation income at the time
of such disposition in an amount equal to the excess of the fair market value of
the shares at the time such shares were transferred to me over the price which I
paid for the shares, regardless of whether I disposed of the shares at a price
less than their fair market value at transfer. The remainder of the gain or
loss, if any, recognized on such disposition will be treated as capital gain or
loss.
I hereby agree to notify the Company in writing within thirty
(30) days after the date of any such disposition, and I will make adequate
provision for federal, state or other tax withholding obligations, if any, which
arise upon the disposition of the Common Stock. The Company may, but will be
obligated to, withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to make
available to the Company any tax deductions or benefits attributable to the sale
or early disposition of Common Stock by me.
9. If I dispose of such shares at any time after expiration of the two
(2) year and one (1) year holding periods, I understand that I will be treated
for federal income tax purposes as having received compensation income only to
the extent of an amount equal to the lesser of (1) the excess of the fair market
value of the shares at the time of such disposition over the purchase price
which I paid for the shares under the option, or (2) 15% of the fair market
value of the shares on the Offering Date. The remainder of the gain or loss, if
any, recognized on such disposition will be treated as capital gain or loss.
- 2 -
<PAGE>
I understand that this tax summary is only a summary and is
subject to change.
10. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.
SIGNATURE:__________________________________
SOCIAL SECURITY NUMBER:_____________________
DATE:_______________________________________
SPOUSE'S SIGNATURE (necessary if beneficiary
is not spouse):
(Signature)
- --------------------------------------------
- --------------------------------------------
(Print name)
- 3 -
<PAGE>
SILVER DINER, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I, , hereby elect to withdraw my
participation in the Silver Diner Inc. 199 Employee Stock Purchase Plan (the
"Plan") for the Offering Period . This withdrawal covers all
Contributions credited to my account and is effective on the date designated
below.
I understand that all Contributions credited to my account will be paid
to me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.
The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.
If the undersigned is an officer, director of Silver Diner Inc. or
other person subject to Section 16 of the Securities Exchange Act of 1934, the
undersigned further understands that under rules promulgated by the U.S.
Securities and Exchange Commission he or she may not re-enroll in the Plan for a
period of six (6) months after withdrawal.
Dated:
---------------------------- ------------------------------
Signature of Employee
------------------------------
Social Security Number
Exhibit 21
Subsidiaries
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Percentage of State of Incorporation
Parent Subsidiary Ownership or Organization
------ ---------- ------------- ----------------------
<S><C>
Silver Diner, Inc. Silver Diner Development, Inc. 100% Virginia
</TABLE>
Exhibit 23.1
The Board of Directors
Silver Diner, Inc.
We consent to incorporation by reference in the registration statements Nos.
33-9668449 and 33-97535703 on Form S-8 and No. 333-09735 on Form S-3 of Silver
Diner, Inc. and Subsidiaries of our report dated April 2, 1996, relating to the
consolidated balance sheet of Silver Diner, Inc. and Subsidiaries (formerly
Silver Diner Development, Inc., Silver Diner Limited Partnership and Silver
Diner Potomac Mills, Inc.) as of December 31, 1995, and the related consolidated
satements of operations, stockholders' equity and partners' deficit and cash
flows for the two-year period ended December 31, 1995, which report appears in
the December 29, 1996 annual report on Form 10-K of Silver Diner, Inc. and
Subsidiaries.
/s/ REZNICK FEDDER & SILVERMAN
_________________________________
Bethesda, Maryland
March 31, 1997
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-09735 of Silver Diner, Inc. on Form S-3 and in Registration Statements No.
33-96684449 and No. 33-97535703 of Silver Diner, Inc. on Forms S-8 of our report
dated March 14, 1997, appearing in this Annual Report on Form 10-K of Silver
Diner, Inc. for the year ended December 29, 1996.
/s/ Deloitte & Touche LLP
_____________________________
March 14, 1997
Washington DC
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> DEC-29-1996
<CASH> 8,285,533
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 147,981
<CURRENT-ASSETS> 9,716,610
<PP&E> 15,862,164
<DEPRECIATION> 2,906,045
<TOTAL-ASSETS> 25,864,375
<CURRENT-LIABILITIES> 3,174,262
<BONDS> 0
0
0
<COMMON> 8,526
<OTHER-SE> 21,932,191
<TOTAL-LIABILITY-AND-EQUITY> 25,864,375
<SALES> 16,550,468
<TOTAL-REVENUES> 16,550,468
<CGS> 4,526,286
<TOTAL-COSTS> 4,526,286
<OTHER-EXPENSES> 10,816,214
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 180,293
<INCOME-PRETAX> (1,429,472)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,429,472)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (1,429,472)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
