<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1998
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ ---------------------
Commission file number 0-25366
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AUSTINS STEAKS & SALOON, INC.
(Name of small business issuer in its charter)
DELAWARE 86-0723400
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization )
6940 "O" Street, Suite 334
Lincoln, Nebraska 68510
(Address of principal executive offices) (Zip Code)
(402) 466-2333
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of
the Act:
NONE
Securities registered pursuant to Section 12 (g) of
the Act:
Common Stock, $ .01 par value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes / X / No
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Issuer's revenues for the year ended December 31, 1998. $9,373,647.
As of March 12, 1999, the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked price of such stock, was $1,512,869.
As of March 12, 1999 there were 2,647,927 shares of Common Stock outstanding.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
THE DISCUSSION IN THIS DOCUMENT CONTAINS TREND ANALYSIS AND OTHER
FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS THROUGHOUT THIS DOCUMENT AS A RESULT OF THE RISK
FACTORS SET FORTH BELOW IN THE SECTION ENTITLED "FACTORS AFFECTING FUTURE
RESULTS" AND ELSEWHERE IN THIS DOCUMENT.
GENERAL
Austins Steaks & Saloon, Inc. (the "Company" or "Austins") owns and
operates seven moderately priced, casual dining full-service AustinsTM
restaurants featuring specialty prime rib dishes, a variety of fresh-cut, aged
steaks, home-cooked entrees, salads and sandwiches. Many of the beef products
are hand-cut on site, and most of the Company's menu items are likewise prepared
on site from fresh ingredients. The Company's restaurants offer lunches and
dinners of generous portions at moderate prices. Management believes its
restaurants appeal to a broad range of patrons by emphasizing consistently
high-quality appealing food and attentive service by a well-trained, friendly
staff for a moderate price. This appeal is enhanced by wood plank floors and
corrugated tin finishes in the reception and bar areas, highlighted by wood
paneling, and a western-style bar.
Based upon the Company's experience in creating, refining, and
implementing its concept, Company management believes it will be able to expand
its Western Roadhouse concept. In an effort to realize the Company's growth
plan, the Company signed a letter of intent on February 23, 1999 to enter into a
business combination with The WesterN SizzliN Corporation. The WesterN SizzliN
Corporation is a family-style steak, buffet and bakery restaurant chain
headquartered in Roanoke, Virginia. Following the combination, the Company and
WesterN SizzliN will have 29 company owned stores and 230 franchised units in 25
states. The Company will continue to focus on attaining its short term strategy
of increasing per unit sales and reducing food costs to increase store level
profitability.
COMPANY HISTORY
The Company was incorporated in December 1992 as a Delaware
corporation. In July and August 1994, the Company acquired all of the
outstanding stock of its five affiliated restaurant corporations. The Company
currently has seven subsidiary restaurant corporations.
THE COMPANY'S RESTAURANT CONCEPT
The Austins concept is designed to appeal to a broad spectrum of casual
dining customers who are seeking a consistent and high-quality dining experience
attentively served in a distinctive, relaxed atmosphere for a moderate price.
Management seeks to provide this experience by serving a limited selection of
tasty and interesting dishes that are prepared largely on site from fresh
ingredients. Management believes that many multiple unit operators have lost
their distinctiveness by over-reliance on commercially prepared foods served to
consumers with too little attention to the complete dining experience desired by
their customers.
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Austins provides a casual and comfortable environment and well-trained,
enthusiastic service to its customers. The Company has focused its efforts upon
a menu of well-prepared favorite dishes served in generous portions at moderate
prices, which has attracted and expects to attract an acceptable share of the
full-service, casual dining market.
The Company believes that the Austins restaurant concept and menu are
designed to attract loyal clientele who return with a high degree of frequency
at both lunch and dinner. The decor of the Company's restaurants emulates a
Western Roadhouse theme which features a variety of western and country
artifacts, giving it a relaxed friendly feel. The restaurants' atmosphere is
enhanced by the decor of the restaurants, which includes wood plank floors,
subdued lighting, and upbeat country western music. Austins is further
distinguished by requiring from its meat purveyors high-quality, USDA top choice
beef from the Midwest, substantially all of which are hand-cut fresh daily on
site. High-quality ingredients are used for all menu items, including gravies,
sauces and dressings, with minimal use of commercially prepared items. All meals
are served in generous portions by a well-trained friendly staff. Austins
provides full liquor and bar service at each of its restaurants, primarily as an
added service to its clientele. Alcoholic beverage service accounted for
approximately 12.4% and 12.7% of the Company's net sales for each of the years
ended December 31, 1998, and 1997, respectively.
The Company emphasizes highly attentive, friendly service by closely
supervising restaurant operations and providing ongoing employee training and
support. Company restaurants are open seven days a week, with an average per
customer check of approximately $9.75 at lunch and $15.35 at dinner.
CORPORATE STRATEGY
OPERATIONS STRATEGY - The Company believes that consistent quality in
food preparation and presentation, coupled with attentive, friendly service
delivered in a distinctive fun atmosphere at a moderate price will result in a
perceived value to the customer. According to management's philosophy, quality
food, service, atmosphere and perceived value are the four keys to success in
the restaurant industry. Accordingly, Austins differentiates its restaurants by
emphasizing the following elements:
* Consistent high-quality products using the finest available fresh
ingredients, carefully prepared, preserving a home-cooked taste,
texture, and appearance.
* High quality and attentive service, with each server generally being
assigned to no more than three tables (four at lunch) to ensure
prompt, attentive, and friendly service, assuring customer
satisfaction.
* The Western Roadhouse motif provides a unique, fun, and attractive
restaurant to people from all walks of life and economic and social
backgrounds, while welcoming children and permitting all members of
the family to enjoy a quality dining experience.
* The positioning of Austins in the full-service casual dining segment
of the industry, offering generous portions at moderate prices.
PROFITABILITY AND GROWTH STRATEGY - The Company's immediate and short
term goal is to seek ways through advertising and variation of menu mix to
increase per unit sales. The Company will also look for ways to reduce food
costs to increase store level profitability. The Company has already taken
measures to accomplish this goal by increasing menu prices at the end of 1998.
The Company's long
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term strategy is to expand its concept by finalizing the business combination
with The WesterN SizzliN Corporation and by receiving a National Market listing
of the Company's stock on NASDAQ. There is no assurance that the Company will be
successful in acquiring The WesterN SizzliN Corporation and obtaining a National
Market listing on NASDAQ.
MENU
Austin's dinner menu features a well-rounded selection of high-quality
specialty prime rib entrees. The Company's goal is to be known for its excellent
prime rib. It has reintroduced some of its original prime rib recipes, including
blackened prime rib with Cajun seasoning, shrimp stuffed prime rib, and
peppercorn prime rib. The dinner menu also features an excellent selection of
favorite steak cuts, including several oversize-cut entrees. Prime rib and
steaks are cooked to order. One of the more popular items at both lunch and
dinner is the Chicken Fried Steak, served with homemade mashed potatoes (skins
on) and a cream gravy. A variety of home-style salads, chicken, fish, and
hardwood smoked barbecued items round out the dinner menu and provide a tasty
alternative to diners who want a lighter meal.
All dinners offer a complete meal. Choices of accompaniments include
fresh-made salad or soup, homemade sugar biscuits and honey butter, and rice
pilaf, twice-baked potato casserole, french fries, mashed potatoes with homemade
cream or brown gravy, or sauteed vegetables. The lunch menu features burgers
with many optional garnishes to "build them from scratch," smaller cut luncheon
steaks, in addition to several favorites from the dinner menu. The lunch and
dinner menus also include a range of appetizers and desserts. Full bar service
is available as an accompaniment to both meals.
Every year the Company changes the menu and experiments with new menu
items. In 1998, the Company focused on new appetizer items to increase per unit
sales. Cowboy Carnation, a fresh whole onion, hand breaded in Cajun spices, and
Cheese Fries were added to the appetizer menu. Management also focused on fish
items by introducing a beer-battered shrimp plate on the dinner menu. Management
has received positive feedback from its customers regarding the new menu items.
RESTAURANT LAYOUT
The Company believes that the decor and interior design of its
restaurants are significant factors in its success. The restaurants' planked
wood floors and the open layout of the dining area is intended to provide dining
customers an expansive view of decor features, artifacts, and other design items
and to enhance the casual dining atmosphere. The Company also designs its
kitchen space for efficiency of work flow, with the goal of minimizing the
amount of space required for production activities. Austins restaurants average
approximately 6,000 square feet and include dining areas with seating averaging
200 customers. A bar area, typically seating an additional 15 patrons, is
located adjacent to the reception area primarily to accommodate customers
waiting for dining tables.
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RESTAURANT LOCATIONS
The following table sets forth the location, month and year of opening,
and approximate square footage of the Company's operating restaurants:
<TABLE>
<CAPTION>
LOCATION DATE OPENED APPROX. SQ. FT.
<S> <C> <C>
11224 West Dodge Road (1) September 1989 3,620
Omaha, Nebraska
12020 Anne Street January 1992 5,200
Omaha, Nebraska
1414 South 72nd Street December 1992 10,000
Omaha, Nebraska
2400 Cerrillos Road April 1994 5,817
Santa Fe, New Mexico
5201 San Mateo Blvd. N.E. February 1995 6,000
Albuquerque, New Mexico
3636 North Scottsdale Road December 1995 6,000
Scottsdale, Arizona
1101 Harney Street January 1996 7,450
Omaha, Nebraska
11111 Emmet Street June 1998 6,000
Omaha, Nebraska
</TABLE>
(1) On January 5, 1999, the Company closed its Dodge Street restaurant
in Omaha, Nebraska. This unit was closed as the lease had expired and the
landlord decided to sell the property.
MARKETING
Austins restaurants are positioned as destination restaurants providing
home-cooked food and full service to the casual dining market segment at a
moderate price. Management has focused on providing its customers with superior
quality, service, and perceived value in a distinctive atmosphere. Historically,
it has relied primarily on customer satisfaction and word-of-mouth to obtain
repeat customers and attract new clientele. Therefore, the Company was able to
maintain a minimal advertising budget of approximately 2% of sales. Because the
Company's previous marketing efforts have been "piece-meal", the Company decided
to direct its efforts into strengthening its position within the Omaha market.
This marketing strategy has resulted in an increase in traffic flow and consumer
awareness.
Since advertising has become such an important aspect of increasing per
unit sales, management decided to increase the advertising budget to 3% of sales
in the Omaha market in 1998. The Company has also shifted its advertising
vehicle from billboards and newspaper to television, radio and direct mail. The
Company has invested some additional money in television advertising by hiring a
professional advertising agency to create commercials. This emphasis on
advertising in the Omaha market has resulted in a 4.4% increase in year-to-date
same store sales. Since the Company has been publicly traded, the Omaha stores
have not had an increase in year-to-date same store sales until 1998. The
Company
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was also voted "Omaha's Best Steakhouse" for 1998 by the consumers in Omaha,
Nebraska in a market survey conducted by the OMAHA MAGAZINE.
RESTAURANT OPERATIONS AND MANAGEMENT
Due to the successful retention of its managers in 1998, the Company is
positioned to further improve same-store sales in 1999. Each restaurant employs
one general manager, two to three managers, one hourly supervisor and
approximately 40 to 60 hourly employees, depending on the size of the
restaurant, many of whom work part-time. The general manager of each restaurant
carries primary responsibility for the day-to-day operation of his or her
restaurant and is required to abide by Company-established operating standards.
The Company requires its management personnel to participate in a
seven-week training program which emphasizes the Company's operating strategy,
procedures, and standards. The executive management of the Company regularly
visits the Company's restaurants to ensure that the Company's concept, strategy,
and standards of quality are being adhered to in all aspects of restaurant
operations. The Company's executive management have developed the restaurants'
operations and management systems based upon their prior experience in the
restaurant industry.
The Company provides an incentive-based compensation plan for its
restaurant management that includes a base salary, a monthly bonus based on a
predetermined percentage of their individual store's controllable operating
profit, participation in the Company's 401(k) Plan, and annual stock options for
its general managers.
PURCHASING
The Company negotiates directly with suppliers for food and beverage
products to ensure consistent quality and freshness of products and to obtain
competitive prices. Food and supplies are shipped directly to the restaurants.
All shipments are inspected for quality and freshness by a manager upon receipt.
The Company does not maintain a central product warehouse or commissary, nor has
it experienced any significant delays in receiving restaurant supplies and
equipment. The Company's major suppliers include Pegler Sysco Food Services Co.,
located in Lincoln, Nebraska, Ben E. Keith located in Albuquerque, New Mexico,
and Sysco Food Services of Arizona, located in Phoenix, Arizona.
The Company has utilized short term locked-in prices for its highest
usage products, primarily beef, chicken, produce, and grocery, in order to
minimize the impact of potential fluctuations in prices.
ACCOUNTING AND MANAGEMENT INFORMATION SYSTEMS
The Company's in-store computer-based management system monitors the
sales, labor and food costs of each restaurant, including average customer
check, product mix, customer count, and a breakdown of sales between lunch and
dinner. This system generates reports to management on a daily basis to allow
management to evaluate trends in sales, labor and food costs.
COMPETITION
The restaurant industry is intensely competitive with respect to price,
service, location, and food quality. In the Company's view, its principal
competitors are not only other steakhouses but also other
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restaurants offering a casual atmosphere and moderately priced meals. Expansion
of the steakhouse concept has increased in recent years. In addition to
traditional steakhouse restaurants, the Company expects to face competition from
new entries into the steakhouse market. The major steakhouse competitors,
principally Lone Star and Outback, have a distinct advantage due mainly to name
recognition, the convenience of quantity discounts, and access to greater
advertising resources. Other competitors include a large number of national and
regional restaurant chains, many of which have been in existence for a
substantially longer period than the Company and may be better established in
the markets where the Company's new restaurants are or may be located. The
restaurant business is often affected by changes in consumer tastes, national,
regional or local economic conditions, demographic trends, traffic patterns, and
the type, number and location of competing restaurants. 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's restaurants in particular. There can be no
assurance that the Company will be able to compete successfully in the future
with respect to any of the above factors.
The Company believes that its Western Roadhouse concept, attractive
price-value relationship, and quality of food and service 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 and a full-service distinctive dining
environment.
GOVERNMENT REGULATION
The Company's restaurants are 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. Each
restaurant has appropriate licenses from regulatory authorities allowing it to
sell liquor, beer and wine, and each restaurant 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 failure of a restaurant to obtain or retain liquor or food service
licenses would have a material adverse effect on its operations. To reduce this
risk, each Company restaurant is operated in accordance with procedures intended
to ensure compliance with applicable codes and regulations.
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 currently
operates in New Mexico, which has a "dram-shop" statute. Nebraska and Arizona
have no such statute presently. 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 restaurant 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. Significant numbers of the
Company's food service
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and preparation personnel are paid at rates related to the federal minimum wage
and, accordingly, further increases in the minimum wage could increase the
Company's labor costs.
TRADEMARKS
The Company believes that it has substantial rights in its Austins
Steaks & Saloon design and trademark, including such territories as the Central
Midwest, South-Central Midwest, and Southwest regions of the United States,
based upon the Company's actual usage and constructive usage derived from its
pending U.S. trademark application, and intends to aggressively protect its
marks from infringement and competing claims. The Company is aware of names and
marks similar to the mark of the Company used by persons in certain geographic
areas, including, specifically, two other restaurant service corporations
located on the east coast which utilize the "AUSTINS" name in their trademark
and design. Although the Company received a notice to cease and desist its
trademark usage from one of these two corporations, neither corporation is
actively seeking to prevent the Company's trademark usage. The Company will
aggressively defend its Austins Steaks & Saloon trademark and design.
EMPLOYEES
As of December 31, 1998, the Company had approximately 286 employees,
five of whom are corporate personnel, 31 of whom are restaurant management, and
the remainder of whom are hourly restaurant personnel. Of the five corporate
employees, two are in management positions and three are administrative
employees. None of the Company's employees is covered by a collective bargaining
agreement. The Company considers its employee relations to be good.
ITEM 2. DESCRIPTION OF PROPERTIES
All of the Company's current restaurants are located in leased space
averaging approximately 6,000 square feet. Leases are negotiated with initial
terms of five to twenty years, with multiple renewal options. All of the
Company's leases provide for a minimum annual rent, and one provides for
additional rent based on sales volume at the particular location over specified
minimum levels. Generally, the leases are net leases which require the Company
to pay the costs of insurance, taxes, and a pro rata portion of lessors' common
area costs.
The Company currently leases its executive offices which are located at
6940 "O" Street, Suite 334, Lincoln, Nebraska 68510. The Company believes that
there is sufficient office space available at favorable leasing terms in the
Lincoln, Nebraska area to satisfy the additional needs of the Company that may
result from any required future expansion.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved from time to time in litigation arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the financial condition or results of operations of the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company was traded on the NASDAQ Small-Cap
Market System under the symbol "STAK" since January 25, 1995 to November 19,
1997. Prior to that date, there was no public market for the Common Stock. On
November 19, 1997 the Company was delisted from NASDAQ due to the Company's
failure to meet the $1 minimum bid price requirement. The following table sets
forth for the periods indicated the high and low closing prices for the Common
Stock as reported on the NASDAQ Small-Cap Market System and the Bulletin Board
Section of NASDAQ:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, 1998 AND 1997 HIGH LOW
- ---------------------------------------------------------------- -------------------- ------------
<S> <C> <C>
First Quarter 1997 $ 1.00 $ .50
Second Quarter 1997 $ 1.00 $ .625
Third Quarter 1997 $ 1.125 $ .625
Fourth Quarter 1997 $ 1.00 $ .25
First Quarter 1998 $ 1.375 $ .25
Second Quarter 1998 $ 1.4375 $ .6875
Third Quarter 1998 $ .875 $ .5625
Fourth Quarter 1998 $ .8125 $ .4375
</TABLE>
As of March 12, 1999, there were approximately 67 stockholders of
record.
The Company has never paid or declared cash dividends on its Common
Stock and does not intend to pay cash dividends on its Common Stock in the
foreseeable future. The Company expects to retain its earnings to finance the
development and expansion of its business. The payment by the Company of cash
dividends, if any, on its Common Stock in the future is subject to the
discretion of the Board of Directors and will depend on the Company's earnings,
financial condition, capital requirements, and other relevant factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS MAY BE DEEMED TO INCLUDE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
THAT INVOLVE RISK AND UNCERTAINTY. ALTHOUGH THE COMPANY BELIEVES THAT ITS
EXPECTATIONS ARE BASED ON REASONABLE ASSUMPTIONS, IT CAN GIVE NO ASSURANCE THAT
ITS EXPECTATIONS WILL BE ACHIEVED. THE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS BELOW
("CAUTIONARY STATEMENTS") INCLUDE THE COMPANY'S DEGREE OF FINANCIAL LEVERAGE,
THE RISK FACTORS SET FORTH BELOW IN THE SECTION ENTITLED "FACTORS AFFECTING
INVESTORS RESULTS," AS WELL AS OTHER RISKS REFERENCED FROM TIME TO TIME IN THE
COMPANY'S FILINGS WITH THE SEC. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING
STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. THE COMPANY
DOES NOT UNDERTAKE ANY OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO SUCH
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF
THIS REPORT OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
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The following discussion and analysis relates to the financial
condition and results of operation of the Company for the years indicated below
and is based on the Consolidated Financial Statements and the notes thereto.
OVERVIEW
The Company currently operates seven steakhouse restaurants. Four are
located in Omaha, Nebraska and one is located in each of Santa Fe, New Mexico,
Albuquerque, New Mexico, and Scottsdale, Arizona. The Omaha restaurants were
opened in January 1992, December 1992, January 1996, and June 1998. The Santa Fe
restaurant was opened in April 1994, the Albuquerque restaurant in February
1995, and the Scottsdale restaurant in December 1995. The discussion of
financial condition and results of operations included in the paragraphs that
follow should be read in conjunction with the consolidated financial statements
contained in this report.
THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY
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RESULTS OF OPERATIONS
The following table presents the major components of the statement of
operations and expressed as a percentage of revenues, and should be used in
reviewing the discussion and analysis of results of operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
----------- ------------ -----------
As a As a As a
Statement of Operations Data: Percent of Percent of Percent of
AMOUNT REVENUE AMOUNT REVENUE AMOUNT REVENUE
------ ------- ------ ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . $ 9,373,647 100.0% $ 9,542,098 100.0% $ 10,440,478 100.0%
Cost of Sales - Food/Beverage . . 3,664,024 39.1 3,832,788 40.2 4,203,556 40.3
Cost of Sales - Labor . . . . . . 2,711,279 28.9 2,887,816 30.3 3,186,378 30.5
Restaurant Operating Expenses 2,127,314 22.7 2,282,000 23.9 2,406,883 23.1
Depreciation and Amortization 513,854 5.5 544,899 5.7 542,752 5.2
General and Administrative
Expenses . . . . . . . . . . 642,150 6.9 608,731 6.4 1,019,964 9.8
Loss on Restaurant Closing . . . . 59,000 0.6 -- -- 193,998 1.8
Impairment of Long-Lived
Assets . . . . . . . . . . . 26,079 0.3 768,085 8.0 -- --
Loss from Operations (370,053) (4.0) (1,382,221) (14.5) (1,113,053) (10.7)
Interest Expense . . . . . . . . (116,769) (1.2) (113,954) (1.2) (181,498) (1.7)
Loss Before
Cumulative Effect
of Change in Accounting
Principle . . . . . . . . . . (486,822) (5.2) (1,496,175) (15.7) (1,294,551) (12.4)
Cumulative Effect on Prior
Years of Change in
Accounting Principle . . . . -- -- -- -- (255,512) (2.4)
Net Loss . . . . . . . . . . . . . (486,822) (5.2) (1,496,175) (15.7) (1,550,063) (14.8)
</TABLE>
The Company's revenues and expenses can be significantly affected by
the number and timing of the opening and closing of restaurants. The timing of
the restaurant openings and closings can also affect net sales and other
period-to-date comparisons. Interim period results can also be affected by
seasonal changes. During recent fiscal years, the Company's sales have been
higher during the second and third quarters than during the first and fourth
quarters, although not significantly.
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YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Net sales for the year ended December 31, 1998 decreased 1.8% to $9.4
million from $9.5 million for the year ended December 31, 1997. Net sales for
the year ended December 31, 1997 include the operations of eight restaurants for
the full year. Net sales for the year ended December 31, 1998 include the
operations of seven restaurants for the full year, an eighth restaurant
(Lincoln) for two and a half months, and a ninth restaurant (Maple Street-Omaha)
for six and a half months. The decrease in net sales is primarily due to one
less restaurant operating three months out of the year in 1998. Year to date
same store sales increased by 1.4% (not including the stores that have closed).
Year to date same store sales for the Company's three Omaha stores increased by
4.4%
Cost of sales (consisting primarily of food, beverage, and restaurant
labor costs) decreased to $6.4 million for the year ended December 31, 1998, a
decrease of 5.1% from $6.7 million in the comparable 1997 period. The overall
decrease in cost of sales is attributed to one less restaurant three months out
of the year, as discussed above. As a percentage of net sales, these costs
decreased from 70.5% in 1997 to 68.0% in 1998. This 2.5% decrease relates mainly
to a decrease in in-store "two for one" promotions and an increase in menu
prices.
Restaurant operating expenses for the year ended December 31, 1998
decreased to approximately $2.1 million, or 22.7% of net sales, from $2.3
million, or 23.9% of net sales in 1997, a decrease of 6.8%. The decrease, as a
percentage of net sales, is due to the conscious effort of restaurant management
in controlling variable expenses such as operating supplies and equipment
maintenance.
General and administrative costs increased 5.5% to $642,000 in 1998
from $609,000 in 1997. As a percentage of net sales, general and administrative
expenses increased .5% to 6.9% in 1998, from 6.4% in 1997. The increase as a
percentage of net sales is attributed to compensation expense recorded in 1998
for stock options granted to the Company's officers priced below fair market
value.
The $59,000 loss on restaurant closing related to two restaurants, the
Lincoln restaurant which was closed in March 1998 and the Dodge Street
restaurant which was closed in January of 1999.
Depreciation and amortization decreased to $514,000, or 5.5% of net
sales, for the year ended December 31, 1998 from $545,000, or 5.7% of net sales,
in the comparable 1997 period. The decrease in absolute dollars is attributed to
one less restaurant three months out of the year. The decrease as a percentage
of net sales is due to the decreased average revenue per unit and the relatively
fixed nature of the depreciation and amortization costs.
Every year the Company reviews its assets to determine whether any
are impaired. Based on that review, the Company determined that the assets in
four restaurants were impaired in 1997 and 1998. In 1998, the impairment
loss, $26,000, related to the Dodge Street restaurant which was closed in
January 1999. In 1997, the impairment loss, $768,000, related to the Lincoln
store which was sold in March 1998 and another store, Albuquerque, which was
experiencing negative cash flows.
Interest expense approximated $117,000 for the year ended 1998 compared
to $114,000 in the same 1997 period. The increase in interest expense is due to
the two additional notes payable totaling $273,000 assumed by the Company on
June 12, 1998 for consideration of the Maple Street restaurant while continuing
to pay down principal.
12
<PAGE>
Before the impairment of long-lived assets, the Company had a net loss
of $461,000 for year end 1998 and $728,000, for the same period in 1997. The
decrease in net loss is primarily due to the decrease in store level expenses.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Net sales for the year ended December 31, 1997 were $9.5 million, a
8.6% decrease from $10.4 million for the year ended December 31, 1996. Net sales
for the year ended December 31, 1996 include the operations of seven restaurants
for the full year, a eighth restaurant (Omaha-Old Market) for eleven-and-a-half
months and a ninth restaurant (Columbia, Missouri) for two-and-a-half months.
Net sales for the year ended December 31, 1997 include the operations of eight
restaurants for the full year. Some of the decrease in net sales is due to one
additional restaurant in operation for two-and-a-half months during 1996. Annual
sales decreased by 7.8% for the eight restaurants open during the entire year of
1997 and 1996.
Cost of sales decreased 9.1% to $6.7 million for the year ended
December 31, 1997 from $7.4 million for the comparable 1996 period. This
decrease is due primarily to the decrease in sales during 1997, as described
above. As a percentage of net sales, these costs approximated 70.5% in 1997
compared to 70.8% in 1996. This percentage decrease relates mainly to improved
labor margins which are in turn the result of better control over labor hours
and manager and employee retention levels.
Restaurant operating expenses were $2.3 million, or 23.9% of net sales,
for the year ended December 31, 1997, a 5.2% decrease from $2.4 million, or
23.1% of net sales, in the comparable period in 1996. These expenses represent
primarily the cost of occupancy, including rent, maintenance, and utilities, and
other various costs. The increase, as a percentage of net sales, is attributed
mainly to a decline in the average revenue per unit, and the associated effect
that these relatively fixed costs have on operating margins. Increased
advertising during the fourth quarter of the year also contributed to the
percentage increase in operating expenses.
General and administrative costs decreased 40.3% to $609,000 for the
year ended December 31, 1997 compared to $1 million for the comparable 1996
period. As a percentage of net sales, these costs decreased to 6.4% in 1997 from
9.8% in 1996. This decrease in absolute dollars and as a percentage of net sales
is primarily related to the Company controlling corporate overhead costs and the
decrease in one corporate employee.
Depreciation and amortization during the year ended December 31, 1997
increased slightly to $545,000 or 5.7% of net sales, from $543,000, or 5.2% of
net sales, for the year ended December 31, 1996, a 0.4% increase. This increase
in absolute dollars is attributed to one full year of depreciation for the Old
Market-Omaha restaurant in 1997. As described above, the Old Market-Omaha
restaurant was opened midway through January of 1996. The increase as a
percentage of net sales is due to the decreased average revenue per unit and the
relatively fixed nature of the depreciation and amortization costs.
Interest expense approximated $114,000 for the year ended 1997 compared
to $181,000 in the same 1996 period. The decrease is due to lower interest
expense as a result of a reduction in average borrowings for 1997.
13
<PAGE>
As of January 1, 1996, the Company changed the method of accounting for
pre-opening costs. Labor costs and certain other costs relating to opening new
restaurants are expensed as incurred. Previously, such costs were capitalized
and amortized over a 12-month period on a straight-line basis. The cumulative
effect of the change of $256,000 represents the reversal of the capitalized
pre-opening costs as of December 31, 1995.
The Company's net loss before the impairment loss for the year ended
December 31, 1997 approximated $728,000. In view of the negative same-store sale
trends, the Company is controlling costs related to food, labor, operating
expenses and corporate overhead.
YEAR 2000 ISSUE
The Company utilizes management information systems and software
technology that may be affected by Year 2000 issues throughout its operations.
During fiscal 1998, the Company began to implement plans to ensure those systems
continue to meet its requirements. The Company's Year 2000 Project is proceeding
on schedule. During fiscal 1998, the Company began by updating the computer
systems at the Corporate level. The Company purchased new computers which
included new processors, additional memory, etc. for each Corporate employee.
The Corporate office network was updated to operate on a Novell 4.11 platform.
In addition to the new computers and server, the Company updated their software
to Windows 95. All accounting and processing software bought during 1998 is
"packaged software" which the vendor has certified that it is compliant with the
Year 2000. The cost of the hardware and software for the Corporate office was
approximately $15,000. The plan for 1999 is to complete the Year 2000 Project
and update the computers at the store level. At this time five stores out of the
seven stores need to be addressed for Year 2000 compliance. Similar to the items
purchased for the Corporate office, the Company is planning on buying one new
computer along with Windows 98 for each restaurant. All of the "point-of-sale"
software at the restaurant level is also "packaged software" which the vendor
has certified that it is compliant with the Year 2000. The cost to complete the
project will be approximately $5,000.
The Company has also initiated communications with vendors and other
third parties whose computer systems' functionality could impact the Company.
Currently, the Company's largest vendor, Pegler Sysco, is addressing their own
Year 2000 issues. As the Company is not electronically interfaced with any
vendors at this time, any Year 2000 issues not resolved by the Company's vendors
will not have a material impact on the Company's computer systems. Other third
parties, such as American Express, Visanet and MAPP are also resolving the Year
2000 problem. These credit card processors understand the Year 2000 issue and
with these communications the Company will facilitate coordination of the Year
2000 solutions and will determine the extent to which the Company may be
vulnerable to failures of third parties to address their own Year 2000 issues.
Based on the progress the Company has made in addressing its Year 2000
issues and the Company's plan and timeline to complete its compliance program,
the Company does not foresee significant risks associated with its Year 2000
compliance at this time. As the Company's plan is to address its significant
Year 2000 issues prior to being affected by them, it has not developed a
comprehensive contingency plan. However, if the Company identifies significant
risks related to its Year 2000 compliance or its progress deviates form the
anticipated timeline, the Company will develop contingency plans as deemed
necessary at that time.
14
<PAGE>
IMPACT OF INFLATION
The primary inflationary factors affecting the Company's operations
include food and labor costs. A large number of the Company's restaurant
personnel are paid at the federally established minimum wage level, and,
accordingly, changes in such wage level could affect the Company's labor costs.
To date, inflation has not had a material impact on operating margins.
ACCOUNTING STANDARDS
FAS 133, "Accounting for Derivative Instruments and Hedging
Activities", was issued in June of 1998. FAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. FAS
133 is effective for all fiscal quarters of fiscal years beginning after June
15, 1999. The Company anticipates adopting this accounting pronouncement in
2000; however, management believes it will not have a significant impact on the
Company's annual consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $178,000 and $114,000 for
the years ended December 31, 1998 and 1997, respectively. The Company had a
working capital deficit of $659,000 and $796,000 at December 31, 1998 and 1997,
respectively. The Company does not have significant receivables or inventory.
The Company's capital requirements relate principally to the
development of new restaurants and the operation of existing restaurants.
Capital expenditures for the restaurant construction and related equipment were
$153,000 for the year ended December 31, 1998 and $102,000 for the year ended
December 31, 1997.
The Company currently has $141,000 borrowed under an agreement with
First National Bank of Omaha, at a variable interest rate which was 9.75% at
December 31, 1998. The Company is paying $5,000 a month in principal plus
interest. This bank agreement is guaranteed by a shareholder and substantially
all assets of the Company. The note matures on January 31, 2000 at which time it
is expected that the agreement will be renewed, or a new agreement will be
negotiated.
The Company has borrowed $270,000 from The Schorr Family Company, Inc.
due December 31, 2000 with an interest rate equal to the First National Bank of
Omaha "Base Rate."
The Company obtained a line of credit from U.S. Bank, N.A. on January
27, 1997 in the amount of $395,000 at a variable interest rate which was 7.75%
at December 31, 1998. The line of credit is guaranteed by a stockholder and is
collateralized by the Rio Rancho land held for sale and substantially all assets
of the Company. The Company currently has $395,000 borrowed against the line to
pay off existing debt. This line of credit is guaranteed by a shareholder and
matures on January 30, 2000.
On November 3, 1997, the Company entered into another line of credit
with U.S. Bank, N.A. in the amount of $210,000 at a variable interest rate which
was 7.75% at December 31, 1998. As of December 31, 1998, there was $210,000
outstanding under this agreement. This line of credit is also
15
<PAGE>
guaranteed by a shareholder and substantially all assets of the Company. The
line of credit matures on January 30, 2000.
On June 12, 1998, the Company purchased the assets and leasehold
improvements of another restaurant in Omaha, Nebraska. As consideration for the
purchase, the Company issued 225,000 shares of its own common stock to the
restaurant corporation. In addition, the Company also assumed two additional
notes payable totaling $261,599 as of December 31, 1998. The Company's Maple
Street location in Omaha, Nebraska was opened on June 20, 1998.
Currently, the Company has a signed purchase agreement for the liquor
license in New Mexico which was purchased in anticipation of opening a new
restaurant in that area. This sale, when consummated, will increase working
capital, and repay the related debt collateralized by this asset and other
various debt listed on the balance sheet. The Company is negotiating the sale
of the Rio Rancho real estate. The proceeds will also be used to repay debt.
Management believes the Company has the financial resources in light of
projected cash flow to maintain its current level of operations throughout
1999. There can be no assurance that the Company will be successful in its
attempt to sell the assets offered for sale at a profit and maintain profitable
operations to the extent necessary to meet existing debt service requirements.
MANAGEMENT'S DISCUSSION AND ANALYSIS - FACTORS AFFECTING FUTURE RESULTS
The Company currently operates seven steakhouse restaurants in four
different cities. The Company's strategy at the time that it went public in
January, 1995 was to achieve significant profitability and use proceeds from the
public offering as well as other internally and externally generated funds to
expand its steakhouse restaurant concept to sixteen to twenty restaurants over a
several year period. Intense and significant competition from other national and
regional steakhouse restaurant chains and from "subsidized" food offerings by
gambling establishments adjacent to the Omaha, Nebraska market have created
significant operational and expansion difficulties for the Company. National
steakhouse chains such as Lone Star and Outback have expanded significantly in
Albuquerque, New Mexico, and the Omaha, Nebraska market where the Company has
half of its restaurants. Riverboat and fixed site gambling institutions in
Council Bluffs, Iowa, directly across the river from Omaha, Nebraska, not only
draw discretionary food dollars to gambling, but offer similar type prime rib
and steak dinners at subsidized prices. Because the number of restaurants
operated by the Company is relatively small, declines in per unit sales have a
significant impact on operating results because there are fewer restaurants over
which to spread fixed operating costs. Although the national steakhouse chains
such as Lone Star and Outback are also affected by the gambling operations,
those organizations have significantly greater resources to withstand such
competition, including the ability to "coupon" and advertise.
The Company has significantly reduced its management and operational
costs over the past year to try to lessen the impact of lower per unit sales.
Management is also working vigorously to explore changes in menu mix, pricing,
advertising and limited restaurant theme modification to meet this competition
and increase per unit sales. There can be no assurance that the Company will be
able to achieve these goals.
On January 5, 1999 the Company closed its Dodge Street restaurant in
Omaha, Nebraska which was opened in September, 1989. This unit was closed as the
lease had expired and the landlord decided to sell the property. The Company may
seek to close or sell other restaurant units if their operating performance does
not appear to be capable of meeting the company's expectations.
16
<PAGE>
On June 12, 1998, the Company purchased the equipment and leasehold
improvements of another restaurant in Omaha, Nebraska. The assets acquired were
recorded on the Company's balance sheet at fair market value. As consideration
for the purchase, the Company issued 225,000 shares of its own common stock to
the seller. The shares issued were valued at the closing market price of $0.75
per share on June 12, 1998. In addition, the Company assumed two additional
notes payable totaling $273,421. The Company opened the new location on June 20,
1998.
Over the short term, the Company's objectives are to increase per unit
sales and reduce food costs to increase store level profitability. Because the
number of profitable restaurants operated by the Company is relatively small
compared to corporate overhead expenses, the long term goal of profitability is
difficult to achieve. Therefore, the Company has taken a different avenue to
attain its long term profitability and growth plan. On February 23, 1999, the
Company entered into a business combination with The WesterN SizzliN
Corporation, a family-style steak, buffet and bakery restaurant chain
headquartered in Roanoke, Virginia. Following the combination, the Company and
WesterN SizzliN will have 29 company owned stores and 230 franchised units in 25
states. Revenue of the two companies was in excess of $45 million for 1998. Upon
completion of the transaction, existing Austins shareholders will own 7% of the
combined equity and WesterN SizzliN shareholders will own 93%. Management will
also seek ways to enhance shareholder value through a National Market listing of
the Company's stock on NASDAQ. Through the combination with The WesterN SizzliN
Corporation, the Company believes it will be in a position to obtain additional
funds to finance expansion and enhance shareholder value. Current management
intends, however, to be cautious and deliberate in expansion and will look for
opportunistic situations. Management cannot predict if the Company will be
successful in completing the combination with The WesterN SizzliN Corporation
and obtaining a National Market listing on NASDAQ. Further, management cannot
predict whether, in such event, it will be able to obtain additional financing
and expand according to its strategies. The inability of the Company to combine
with WesterN SizzliN and to expand its restaurant operations will make it
difficult to achieve and grow significant shareholder value.
In addition to the competitive factors cited above, the restaurant
business is one of the most highly competitive in the United States and has one
of the highest failure rates. Restaurant business is affected by changes in
consumer tastes, national, regional and local economic conditions, demographic
trends, traffic patterns, and the type, number and location of competing
restaurants. In addition, factors such as inflation, increased food, labor and
employee benefit costs and the availability of experienced management and hourly
employees may also adversely affect the restaurant industry in general and the
Company's restaurants in particular. Any adverse changes in any of these factors
may impact the Company's ability to achieve profitability even if it is able to
increase per unit sales. In the Omaha, Nebraska market, the Company's results
are also affected by adverse weather conditions. Adverse weather conditions not
only may affect basic food costs, but during periods of extreme cold and snow,
consumers do not eat out as much.
The name "Austins" in various formats is subject to substantial use
around the country and is the subject of several competing registrations with
the U.S. Patent and Trademark Office (`USPTO"). The Company is in the process of
completing a concurrent use registration with the USPTO. Nonetheless, should
other restaurant operators using names including "Austins" commence and prevail
in proceedings to preclude the Company's use of the name in new markets, the
short-term cost to the Company to change names, signage, menus, and other
advertising material could be significant.
17
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
The information required by this item is incorporated by reference to
the financial statements set forth on pages F-1 through F-17 hereof.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On January 21, 1999 and January 29, 1999, the Company filed a Form 8-K
and Form 8-K/A, respectively, both dated January 14, 1999 with the Securities
and Exchange Commission reporting the dismissal of PricewaterhouseCoopers LLP as
its independent accountants. This decision was based on the Company's desire to
establish a relationship with the same national accounting firm as WesterN
SizzliN. The Company engaged KPMG Peat Marwick LLP as its independent
accountants as of January 14, 1999. The decision to change independent
accountants was approved by the Company's Audit Committee. The reports of
PricewaterhouseCoopers LLP on the financial statements for the past two fiscal
years contained no adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principle. In
connection with its audits for the two most recent fiscal years and through
January 14, 1999, there have been no disagreements with PricewaterhouseCoopers
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.
18
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers and directors of the Company:
<TABLE>
<CAPTION>
NAME TITLE AGE
------------ ------------------------------------ -----
<S> <C> <C>
Paul C. Schorr III Chairman of the Board 62
Timothy N. Griggs Vice President, Secretary and Treasurer 37
Trisha N. Gade-Jones Chief Financial Officer and Principal 28
Accounting Officer
B. Scott Ball Director 62
Roger D. Sack Director 64
Gregory S. Cutchall Director 46
</TABLE>
Paul C. Schorr III has served as Chairman of the Board of the Company
since June 20, 1995. He has been a Director of the Company since August 1, 1994.
For the past eleven years, Mr. Schorr has served as the President and Chief
Executive Officer of ComCor Holding, Inc., a consulting firm. In addition, Mr.
Schorr is a Director of Aliant Communications, Inc. (a public company); Ameritas
Life Insurance Corp.; The Schorr Family Company, Inc. and National Research
Corporation, (a public company.)
B. Scott Ball has served as a Director of the Company since September
16, 1994. For the past three years, Mr. Ball has served as the Chairman and
Chief Executive Officer of Marque VI, Inc., a consulting firm. Previously, Mr.
Ball was Chairman and Chief Executive Officer of Westlund's, Inc., a restaurant
supplier.
Roger D. Sack has served as a Director of the Company since June 26,
1995. For the past sixteen years, Mr. Sack has worked for York Cold Storage
Company, a refrigeration and storage company, most recently serving as Vice
President and Director. Mr. Sack performs a strategic planning and financial
services for York Cold Storage Company. In addition, from 1980 until May 1995,
Mr. Sack served as an Executive Vice President and Director of York State Co., a
bank holding company.
Gregory S. Cutchall has served as a Director of the Company since June
25, 1998. Mr. Cutchall has 28 years of experience in the restaurant industry.
Currently, Mr. Cutchall, through Cutchall Management Company owns and operates
five Popeyes Chicken & Biscuits Restaurants, The Exchange Bar & Grill in Omaha,
Bum Steer Steaks in Lincoln, and Progressive Park, an eighteen acre company
picnic facility in Council Bluffs, Iowa.
Timothy N. Griggs has served as Vice President, Secretary and Treasurer
of the Company since May 1996. Mr. Griggs started with the Company in April of
1995, at the Columbia, Missouri location as a General Manager. In June of 1995,
Mr. Griggs was promoted to Director of Operations. Prior to April 1995, Mr.
Griggs served as a regional manager for a national restaurant chain.
19
<PAGE>
Trisha N. Gade-Jones has served as Chief Financial Officer and
Principal Accounting Officer of the Company since May 1996. Ms. Gade-Jones
started with the Company in February of 1996 as controller. From December 1992
until January 1996, Ms. Gade-Jones worked as a business assurance auditor for a
national public accounting firm, specializing in the insurance and retail
industries.
No family relationships exist between any of the executive officers and
directors of the Company.
COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership of Form 3 and changes in ownership on
Form 4 or Form 5 with the Securities and Exchange Commission (the "SEC"). Such
officers, directors and 10% stockholders are also required by SEC rules to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it, the Company
believes that, during the fiscal year ended December 31, 1998, all Section 16(a)
filing requirements applicable to its officers, directors and 10% stockholders
were satisfied.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. A table is not included as no executive
officer of the Company was paid more than $100,000 during 1998. Paul C. Schorr
III has been serving as Chief Executive Officer since April 1 of 1996. Mr.
Schorr is serving in this capacity on an uncompensated basis.
The following table sets forth information with respect to unexercised
options and SARs, if any, during fiscal year 1998.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
VALUES. No executive officers exercised options during 1998. The following table
sets forth for the current officers the value of unexercised in-the-money
options at year-end:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS OPTIONS AT
NAME AT YEAR-END: (#) YEAR-END: ($) (1)
- ------------------------------------ ---------------------------------------- -----------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Trisha N. Gade-Jones 80,000(2) 0 $0 $0
Timothy N. Griggs 80,000(2) 0 $0 $0
</TABLE>
(1) The closing price of the Company's Common Stock as reported by the
Over-The-Counter-Market on December 31, 1998 was $0.50, which price is the
same as the exercise price of the option.
(2) Options became fully exercisable on May 26, 1998.
OPTION GRANTS IN LAST FISCAL YEAR. The Company did not grant any stock
options to the executive officer of the Company during the year ended December
31, 1998.
20
<PAGE>
BOARD COMPENSATION
On April 20, 1998, the Board of Directors amended the Outside Directors
Stock Option Plan. All non-employee directors will receive annually an automatic
option grant of 10,000 shares exercisable at fair market value on the date of
grant, for serving on the Board. The Outside Directors Stock Option Plan was
initially approved by stockholders in 1996. No Director's fees were paid in
1998. Employee Directors do not receive compensation for their service on the
Board.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as March 12, 1999, by (i) each director of the
Company, (ii) each person known by the Company to beneficially own 5% or more of
its Common Stock, and (iii) all executive officers and directors as a group. The
addresses for these individuals is 6940 "O" Street, Suite 334, Lincoln, Nebraska
68510. Except as specified, the named beneficial owner has sole voting and
investment power.
<TABLE>
<CAPTION>
NAME OF PERSON OR ENTITY NUMBER OF SHARES PERCENT OF CLASS
----------------------- -------------------- --------------------
<S> <C> <C>
The Schorr Family Company, Inc....................... 820,831 29.2%
Paul C. Schorr (1) .................................. 820,831 29.2%
Roger D. Sack ....................................... 720,421 25.7%
Steer Enterprises/MIHART Inc. ....................... 227,100 8.1%
Gregory S. Cutchall (4) ............................. 227,100 8.1%
Trisha N. Gade-Jones (2) ............................ 80,000 2.8%
Timothy N. Griggs (2) ............................... 80,000 2.8%
B. Scott Ball ....................................... 5,000 *
All director and officers as a group (8 persons) (3) 1,933,352 68.9%
</TABLE>
- ---------------------
* Represents less than 1% of the outstanding Common Stock.
(1) Represents shares held by The Schorr Family Company, Inc., of which Mr.
Schorr is the sole director, the president and chief executive officer.
(2) Represents options to purchase 80,000 shares of Common Stock which
options are currently exercisable.
(3) Includes options to purchase 160,000 shares of Common Stock which
options are currently exercisable.
(4) Represents shares held by Steer Enterprises/MIHART Inc., of which Mr.
Cutchall is President, Secretary, and owns 100% of the shares in the
corporation.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has borrowed $269,928 from The Schorr Family Company, Inc.
due December 31, 2000 with an interest rate equal to the First National Bank of
Omaha "Base Rate."
On June 12, 1998, the Company purchased the equipment and leasehold
improvements of another restaurant in Omaha, Nebraska. The assets acquired were
recorded on the Company's balance sheet at fair market value. As consideration
for the purchase, the Company issued 225,000 shares of its own
21
<PAGE>
common stock to the seller, Steer Enterprises/MIHART Inc. Mr. Cutchall is
President, Secretary and owns 100% shares of Steer Enterprises/MIHART, Inc. The
shares issued were valued at the closing market price of $0.75 per share on June
12, 1998. In addition, the Company assumed two additional notes payable totaling
$273,421. The Company opened the new location on June 20, 1998.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits: PAGE NO.
<S> <C> <C>
3.1* Certificate of Incorporation of the Company, as amended
3.2* Bylaws of the Company
10.2* Stock Purchase Agreement among the Company, The Schorr
Family Company, Inc. and Norman A. Lies
10.5* Lease dated January 18, 1989, between John Kai-Chee Moy
and Cindie Suk-Ching Moy and Missouri Development Company
10.6 Lease Agreement dated March 1, 1995, between Martin A.
Pedersen and Austins Omaha, Inc. 25
10.7 Lease Agreement dated April 15, 1998, between Central
Investment Co., Ltd. and Austins 72nd, Inc. 52
10.8 Lease Agreement dated June 1, 1998, between Steer Enterprises, Inc.
and Missouri Development Company 64
10.8.1 Offer to Purchase dated May 15, 1998, between Steer Enterprises,
Inc./MIHART, Inc. and the Company 81
10.8.2 Loan Assumption Agreement dated June 2, 1998, between Steer
Enterprises, Inc., Gregory S. Cutchall, and the Company 86
10.9* Standard Commercial Shopping Center Lease dated August 1, 1993,
between Kinder-Crow L.P. and Austins of New Mexico, Inc.
10.10* Commercial Lease dated March 10, 1994, between Jack Irwin and
Austins Lincoln, Inc.
10.10.1 Assignment and Consent dated March 13, 1998, between Jack
Irwin, Austins Lincoln, Inc. and Charlie's On The Lake, Inc. 88
10.10.2 Assignment and Consent dated February 5, 1999, between
Jack Irwin, Austins Lincoln, Inc., Paul C. Schorr III, Charlie's
On The Lake, Inc., and Charlie's Seafood Grill, Inc. 93
10.11* 1994 Austins Steaks & Saloon, Inc. Incentive and Nonqualified
Stock Option Plan, as amended
10.11.1 Amendment No. 2 to the 1994 Incentive and Nonqualified Stock
Option Plan of the Company 100
10.11.2 Amendment No. 3 to the 1994 Incentive and Nonqualified Stock
Option Plan of the Company 102
10.13* Settlement Agreement dated March 24, 1994, between Missouri
Development Company and Equitable Life Assurance Society of
the United States
10.15** Lease Agreement dated August 15, 1994, between Jacob
Alcon and Petrita Alcon and Austins of Albuquerque,
Inc.
10.15.1 Addendum to Location Lease Agreement dated June 30, 1998, between
Jacob and Petrita Alcon, Paul C. Schorr III, and the Company 103
10.16*** Lease Agreement dated July 19, 1995, between 1101 Harney LLC
and Austins Old Market, Inc.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.17 Lease Agreement dated September 5, 1972, between Lewis
Properties, Inc. and Collins Properties, Inc. 109
10.17.1 Orders from the United States Bankruptcy Court for the Central
District of California regarding the assumption of Collins
Properties, Inc. and the assignment to the Company 152
10.19 Fifth Amendment to Commercial Note
between First National Bank of Omaha and the Company 161
10.20 Commercial Note dated January 27, 1999, between U.S. Bank
National Association and the Company 163
10.21 Note Payable to Shareholder dated February 25, 1999, between
Paul C. Schorr III and the Company 166
10.22 Commercial Note dated January 3, 1999, between U.S. Bank
National Association and the Company 167
10.23 Commercial Note dated October 2, 1996, between Mid City
Bank and Steer Enterprises, Inc. 170
10.24 Promissory Note dated August 19, 1996, between Edward J.
Micek and Steer Enterprises, Inc. 173
16 Letter on change of certifying accountant dated January 22, 1999 183
21 Subsidiaries of the Issuer:
Missouri Development Company
Austins Albuquerque, Inc.
Austins Omaha, Inc.
Austins 72nd, Inc.
Austins Lincoln, Inc.
Austins New Mexico, Inc.
Austins Old Market, Inc.
Austins Scottsdale, Inc.
Austins Rio Rancho, Inc.
Austins Albuquerque East, Inc.
23.1 Consent of PricewaterhouseCoopers LLP 184
23.2 Consent of KPMG Peat Marwick LLP 185
27 Financial Data Schedule 186
</TABLE>
* Incorporated by reference to the specific exhibit to the Form SB-2
Registration Statement, as filed with the Securities and Exchange
Commission on January 23, 1995, Registration No. 33-84440-D.
** Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1994.
*** Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of 1998.
23
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AUSTINS STEAKS & SALOON, INC.
Dated: March 25, 1999 BY: /S/ TRISHA N. GADE-JONES
-------------------------------
Trisha N. Gade-Jones
Chief Financial Officer
In accordance with the Exchange Act, this Report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
---------- -------- ----------
<S> <C> <C>
/S/ PAUL C. SCHORR III Chairman of the Board March 25, 1999
- ------------------------------------
Paul C. Schorr III
/S/ B. SCOTT BALL Director March 25, 1999
- ------------------------------------
B. Scott Ball
/S/ ROGER D. SACK Director March 25, 1999
- --------------------
Roger D. Sack
/S/ GREGORY S. CUTCHALL Director March 25, 1999
- ------------------------------------
Gregory S. Cutchall
</TABLE>
24
<PAGE>
AUSTINS STEAKS & SALOON, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of KPMG Peat Marwick LLP ............................................F-2
Report of PricewaterhouseCoopers LLP .......................................F-3
Consolidated Balance Sheets ................................................F-4
Consolidated Statements of Operations ......................................F-5
Consolidated Statements of Changes in Stockholders' Equity .................F-6
Consolidated Statements of Cash Flows ......................................F-7
Notes to Consolidated Financial Statements .................................F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors
Austins Steaks & Saloon, Inc.:
We have audited the accompanying consolidated balance sheet of Austins
Steaks & Saloon, Inc. and subsidiaries as of December 31, 1998 and the
related consolidated statement of operations, changes in stockholders'
equity, and cash flows for the year then ended. These consolidated
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated 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 statements presentation. We believe that our audit
provides 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 Austins
Steaks & Saloon, Inc. and subsidiaries as of December 31, 1998 and the
results of their operations and their cash flows for the year then ended,
in conformity with generally accepted accounting principles.
Omaha, Nebraska KMPG Peat Marwick LLP
March 12, 1999
F-2
<PAGE>
Report of Independent Accountants
To the Stockholders and Board of Directors
Austins Steaks & Saloon, Inc.
We have audited the accompanying consolidated balance sheet of Austins Steaks &
Saloon, Inc. and its subsidiaries as of December 31, 1997, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates 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, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Austins Steaks &
Saloon, Inc. and its subsidiaries as of December 31, 1997, and the consolidated
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Omaha, Nebraska
March 6, 1998
F-3
<PAGE>
<TABLE>
<CAPTION>
AUSTINS STEAKS & SALOON, INC.
Consolidated Balance Sheets
December 31, 1998 and 1997
ASSETS 1998 1997
---------- ----------
<S> <C> <C>
Current assets:
Cash $ 44,211 53,151
Inventories 116,490 119,068
Prepaid expenses and other current assets 190,926 168,397
----------- -----------
Total current assets 351,627 340,616
----------- -----------
Equipment 1,664,985 1,479,162
Leasehold improvements 2,633,919 2,308,802
----------- -----------
4,298,904 3,787,964
----------- -----------
Accumulated depreciation and amortization (1,869,825) (1,388,183)
----------- -----------
2,429,079 2,399,781
----------- -----------
Intangibles, net accumulated amortization 530,916 605,612
Other assets 782,300 786,599
----------- -----------
$ 4,093,922 4,132,608
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdrafts $ 53,038 106,375
Accounts payable 753,328 817,157
Unredeemed gift certificates 100,095 85,070
Interest payable 9,150 8,858
Current installments of long-term debt 95,817 119,330
----------- -----------
Total current liabilities 1,011,428 1,136,790
----------- -----------
Long-term debt, excluding current installments 982,147 699,361
Note payable to shareholder 269,928 269,928
----------- -----------
Total liabilities 2,263,503 2,106,079
----------- -----------
Stockholders' equity:
Common stock, $.01 par value. Authorized 7,500,000 shares; issued and
outstanding 2,647,927 shares in 1998 and 2,331,052 shares in 1997 26,479 23,311
Additional paid-in capital 5,775,055 5,487,511
Accumulated deficit (3,971,115) (3,484,293)
----------- -----------
Total stockholders' equity 1,830,419 2,026,529
Commitments
----------- -----------
$ 4,093,922 4,132,608
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
AUSTINS STEAKS & SALOON, INC.
Consolidated Statements of Operations
Years ended December 31, 1998 and 1997
1998 1997
--------------- --------------
<S> <C> <C>
Net sales $ 9,373,647 9,542,098
--------------- --------------
Costs and expenses:
Cost of sales 6,375,303 6,720,604
Restaurant operating expenses 2,641,168 2,826,899
General and administrative 642,150 608,731
Impairment of long-lived assets 26,079 768,085
Loss on restaurant closing 59,000 --
--------------- --------------
9,743,700 10,924,319
--------------- --------------
Loss from operations (370,053) (1,382,221)
--------------- --------------
Other expenses:
Interest expense, net (116,769) (113,954)
--------------- --------------
Net loss $ (486,822) (1,496,175)
=============== ==============
Weighted average shares outstanding 2,493,807 2,331,052
=============== ==============
Basic and diluted net loss per common share $ (0.20) (0.64)
=============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
AUSTINS STEAKS & SALOON, INC.
Consolidated Statements of Changes in Stockholders' Equity
Years ended December 31, 1998 and 1997
Common stock Additional Accumu- Total
--------------------------- paid-in lated stockholders'
Shares Dollars capital deficit equity
------------- ---------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 2,331,052 $ 23,311 5,487,511 (1,988,118) 3,522,704
Net loss -- -- -- (1,496,175) (1,496,175)
------------- ---------- -------------- -------------- ---------------
Balance, December 31, 1997 2,331,052 23,311 5,487,511 (3,484,293) 2,026,529
Issuance of shares 316,875 3,168 217,144 -- 220,312
Stock option compensation -- -- 70,400 -- 70,400
Net loss -- -- -- (486,822) (486,822)
------------- ---------- -------------- -------------- ---------------
Balance, December 31, 1998 2,647,927 $ 26,479 5,775,055 (3,971,115) 1,830,419
============= ========== ============== ============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
AUSTINS STEAKS & SALOON, INC.
Consolidated Statements of Cash Flows
Years ended December 31, 1998 and 1997
1998 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (486,822) (1,496,175)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 562,393 591,536
Loss on sale of restaurant and fixed assets 9,094 3,741
Reserve for loss on restaurant closing 24,000 --
Stock option compensation 70,400 --
Loss on sale of liquor license -- 5,248
Impairment of long-lived assets 26,079 768,085
Change in assets and liabilities:
Inventories (7,422) 8,817
Prepaid expenses and other current assets 29,033 (11,905)
Accounts payable (63,829) 250,522
Unredeemed gift certificates 15,025 (4,065)
Interest payable 292 (1,378)
-------------- --------------
Net cash flows provided by operating activities 178,243 114,426
-------------- --------------
Cash flows from investing activities:
Proceeds from sale of restaurant and fixed assets 40,125 3,183
Purchase of equipment and leasehold improvements (153,095) (101,709)
Proceeds from sale of liquor license -- 110,557
(Increase) decrease in other assets (6,728) 23,779
-------------- --------------
Net cash flows provided by (used in) investing activities (119,698) 35,810
-------------- --------------
Cash flows from financing activities:
Change in cash overdrafts (53,337) 28,091
Proceeds from debt 155,000 542,658
Payments on debt (169,148) (698,047)
-------------- --------------
Net cash flows used in financing activities (67,485) (127,298)
-------------- --------------
Net increase (decrease) in cash and cash equivalents (8,940) 22,938
Cash, beginning of period 53,151 30,213
-------------- --------------
Cash, end of period $ 44,211 53,151
============== ==============
Cash paid for interest $ 116,477 114,864
============== ==============
Supplemental disclosure of noncash investing and financing activities:
Issuance of stock for consideration of equipment purchase $ 168,750 --
============== ==============
Issuance of stock in-lieu of lease payments $ 51,562 --
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
AUSTINS STEAKS & SALOON, INC.
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Austins Steaks & Saloon, Inc. (the Company) was incorporated under the
laws of the state of Delaware in December 1992. The Company owns and
operates moderately priced, casual dining restaurants featuring
specialty prime rib dishes, a variety of fresh-cut, aged steaks,
home-cooked entrees, salads, and sandwiches. The Company's restaurants
are located in the Midwest and Southwest Regions of the United States.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial statements
of Austins Steaks & Saloon, Inc. and the accounts of nine restaurant
corporations, eight of which were open as of December 31, 1998. All
significant intercompany balances and transactions have been eliminated
in consolidation.
INVENTORIES
Inventories consist primarily of food and beverages for sale in the
restaurants. Inventories are stated at the lower of cost or market. Cost
is determined using the average cost method, which is recalculated
monthly.
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements are stated at cost. Depreciation on
equipment is calculated on the straight-line method over the estimated
useful lives of the assets, between five to seven years. Leasehold
improvements are amortized straight-line over the shorter of the lease
term or estimated useful life of the assets.
UNREDEEMED GIFT CERTIFICATES
The Company records a liability for outstanding gift certificates at the
time they are issued. Upon redemption, sales are recorded and the
liability is reduced by the amount of the certificates redeemed.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company accounts for long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standards (SFAS) No.
121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be generated by
the asset. If such assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amount
of the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less
costs to sell. The Company recognized impairment losses of approximately
$26,000 and $768,000 during 1998 and 1997, respectively.
(Continued)
F-8
<PAGE>
INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
STOCK OPTION PLANS
The Company accounts for its stock option plans using the intrinsic
value-based method prescribed by Accounting Principles Board Opinion No.
25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB No. 25), and related
interpretations. As such, compensation expense is recorded on the date
of grant only if the current market price of the underlying stock
exceeds the exercise price. On January 1, 1996, the Company adopted SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, which permits entities
to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123
also allows entities to continue to apply the provisions of APB No. 25
and provide pro forma net income and pro forma earnings per share
disclosures as if the fair-value method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the provisions of
APB No. 25 and provide the pro forma disclosure under SFAS No. 123.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
NET LOSS PER SHARE
Basic earnings per share (EPS) is computed by dividing the net loss to
common shareholders by the weighted-average common shares outstanding
during the period. The difference in shares utilized in calculating
basic and diluted EPS represents the effects of the number of shares
issued under the Company's stock option plan less shares assumed to be
purchased with proceeds from the exercise of the stock options. In
addition, the numerator is adjusted for any changes in earnings or loss
that would result from the assumed conversion of these potential common
shares.
Due to the net loss in 1997 and 1998, the anti-dilutive effect of the
Company's stock options are not included in the calculation of diluted
EPS. As a result, the basic and diluted loss per share are identical in
the years presented.
(Continued)
F-9
<PAGE>
VALUATION OF COMMON STOCK ISSUANCES
The Company issues shares of common stock for consideration on certain
transactions, including lease obligations, equipment and leasehold
purchases, and professional services received. The Company values the
shares issued based on the fair-market value of the securities issued.
RECLASSIFICATIONS
Certain amounts have been reclassified for comparability with the 1998
presentation.
(2) LOSS ON CLOSING OF RESTAURANTS AND IMPAIRMENT OF LONG-LIVED ASSETS
In the fourth quarter of 1997, the Company recorded an impairment loss
of $768,085 on long-lived assets relating to their Lincoln, Nebraska and
Albuquerque, New Mexico restaurants. Impairment losses were recognized
on these restaurants due to the Lincoln store having a negotiated sales
price below its cost of certain long-lived assets and the Albuquerque
restaurant experiencing negative cash flows, which were expected to
continue. The impairment loss was calculated by using the estimated
discounted future cash flows from operations and the estimated sales
value of the assets.
On March 17, 1998, the Company closed its Lincoln restaurant. The loss
on closing was $35,000, which consisted of costs to dispose of the unit.
The loss on the equipment and leasehold improvements was recognized in
the impairment loss in 1997.
The Lincoln and Albuquerque restaurants reported net losses of
approximately $30,000 and $81,000 in 1998, respectively.
On January 5, 1999, the Company closed one of its stores in Omaha,
Nebraska as the lease expired on this facility. This store reported net
earnings of $3,145 in 1998. The Company established a reserve of $24,000
for losses incurred from this closing.
(3) PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets include the following at
December 31:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Liquor license held for sale $ 142,250 142,250
Rent 20,919 1,739
Insurance 10,008 8,413
Other 17,749 15,995
------------ ------------
$ 190,926 168,397
============ ============
</TABLE>
The Company is in negotiations for the sale of the liquor license held
for sale at December 31, 1998.
(Continued)
F-10
<PAGE>
(4) INTANGIBLE ASSETS
The Company's intangible assets consist of the following at December 31:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1998 1997
---------------- ------------ ------------
<S> <C> <C> <C>
Trademarks 15 years $ 113,336 113,336
Goodwill 15 years 82,303 119,266
Leasehold interests Life of leases 185,810 185,810
Lease rights Life of lease 326,050 326,050
------------ ------------
707,499 744,462
Less accumulated amortization (176,583) (138,850)
------------ ------------
$ 530,916 605,612
============ ============
</TABLE>
The intangible assets are amortized using the straight-line method over
the estimated useful lives as indicated above. Amortization for the
years ended December 31, 1998 and 1997 on these intangible assets was
$37,733 and $48,617, respectively.
Goodwill represents consideration paid by the Company to purchase
restaurants over the estimated fair-market value of the assets acquired
and liabilities assumed. Leasehold interests represent favorable lease
terms as a result of these purchases. The lease rights represent payment
for favorable lease terms which includes below market rent payments over
the life of the lease plus extension. The amount is being amortized on a
straight-line basis over the life of the lease.
(5) OTHER ASSETS
Other assets at December 31 consist of the following:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Land held for sale $ 535,039 535,039
Liquor licenses 193,183 193,183
Deposits 42,843 36,115
Organization costs, net 11,235 22,262
------------- -------------
$ 782,300 786,599
============= =============
</TABLE>
The land held for sale is actively being marketed for sale and is
carried at cost, which is estimated to be less than fair value. Liquor
licenses acquired in certain states are considered to have unlimited
lives due to state regulations and, accordingly, the acquisition cost of
these licenses has been capitalized and is not amortized. Organization
costs incurred to establish new legal entities are capitalized and
amortized over five years.
(Continued)
F-11
<PAGE>
(6) INCOME TAXES
The differences between the effective income tax rate and the federal
statutory income tax rate (34%) for the years ended December 31 are
summarized below:
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
Statutory federal income tax benefit $ 165,519 508,700
Add (deduct) tax effect of:
State income tax benefit, net of federal benefit 8,190 52,235
Change in valuation allowance (138,581) (642,892)
Nondeductible payroll taxes (22,064) (21,603)
Other, net (13,064) 103,560
----------- ----------
$ -- --
=========== ==========
</TABLE>
The tax effect of significant temporary differences giving rise to
deferred income tax assets and liabilities as of December 31 are shown
below:
<TABLE>
<CAPTION>
1998 1997
------------- ------------
<S> <C> <C>
Deferred income tax liabilities -
intangibles $ 83,784 97,974
------------- ------------
Deferred income tax assets:
Fixed assets 364,653 445,834
Preopening costs 49,530 81,068
Loss carryforwards 1,055,066 882,850
Tax credit carryforwards 168,216 103,322
------------- ------------
Total gross deferred tax assets 1,637,465 1,513,074
Less valuation allowance (1,553,681) (1,415,100)
------------- ------------
Net deferred tax assets 83,784 97,974
------------- ------------
$ -- --
============= ============
</TABLE>
At December 31, 1998 and 1997, the Company had no deferred tax assets or
liabilities reflected on its consolidated financial statements and
recorded no income tax benefit for the two years then ended since the
net deferred tax assets are completely offset by a valuation allowance.
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences
become deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment.
(Continued)
F-12
<PAGE>
The net increase of $138,581 and $642,892 in 1998 and 1997,
respectively, in the valuation allowance for deferred tax assets relate
primarily to federal tax credits and federal and state net operating
loss carryforwards. Benefit has been recognized for these items only to
the extent deferred tax liabilities exist.
For the year ended December 31, 1998, the Company has a net operating
loss for federal income tax purposes of approximately $2.8 million. The
net operating loss will be available to offset future taxable income
through the years 2009 to 2013.
(7) LEASES
The Company has entered into long-term operating leases for the use of
restaurant buildings and land. The minimum annual lease payments,
excluding renewal options, required under these agreements are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 419,132
2000 344,484
2001 344,484
2002 344,484
2003 and thereafter 611,360
------------
Total $ 2,063,944
============
</TABLE>
The majority of operating lease agreements in which the Company has
entered contain renewal options. Lease payments under the renewal terms
increase based on terms established in the original lease. Rent expense
incurred during 1998 and 1997 on these leases amounted to approximately
$616,900 and $592,700, respectively.
On March 13, 1998, the Company finalized an agreement which resulted in
assignment of the lease on the Lincoln store and transfer of certain
personal property to a family-run restaurant business (Buyer) at a sales
price of $40,000. The conditions of assignment included a guarantee to
the lessor by the Company of performance of the lease for the duration
of the lease term, which runs through February 2014. Remaining minimum
lease payments were approximately $1,495,000 at December 31, 1998.
Additionally, the lessor has secured a personal guarantee by a majority
shareholder of the Company in the amount of $40,000.
On June 30, 1998, the Company entered into an agreement with the lessor
of the Albuquerque restaurant to decrease the amount of monthly lease
payments on this store through the end of the lease agreement, July
1999. In consideration for adjusting the payments on this lease, the
Company issued 75,000 shares of common stock to the lessor. The lessor
may not sell, transfer, or assign these shares until August 1, 1999. A
majority shareholder guaranteed the lessor a minimum selling price of
$0.70 a share on these shares for the period beginning August 1, 1999
and ending August 1, 2004.
(Continued)
F-13
<PAGE>
(8) LONG-TERM DEBT AND NOTE PAYABLE TO SHAREHOLDER
Long-term debt and note payable to shareholder at December 31 consist of
the following:
<TABLE>
<CAPTION>
1998 1997
------------- ------------
<S> <C> <C>
Note payable to bank, due in monthly installments of $5,000,
plus interest at 1% above the bank's prime rate (9.75% at
December 31, 1998), with the unpaid principal balance due
on January 31, 2000, collateralized primarily by all assets
of the Company and guaranteed by a shareholder $ 141,006 236,006
Note payable to bank, due January 30, 2000, interest only payable
monthly at the bank's prime rate (7.75% at December 31, 1998),
with principal due upon maturity, collateralized by substantially
all assets of the Company and guaranteed by a shareholder 395,000 395,000
Note payable to bank, due January 30, 2000, interest only payable
monthly at the bank's prime rate (7.75% at December 31, 1998),
with principal due upon maturity, collateralized by substantially
all assets of the Company and guaranteed by a shareholder 210,000 55,000
Note payable to bank, due March 17, 2000, payable in monthly
installments of $945, including interest at 8.25% per annum,
with balance of principal due upon maturity 13,404 23,177
Note payable to bank, due March 25, 2000, payable in monthly
installments of $1,000, including interest at 2% above the
WALL STREET JOURNAL prime rate (9.75% at December 31, 1998),
with a balance of principal due upon maturity, collateralized
by a liquor license 56,955 65,367
Real estate mortgage note payable, paid in January 1998 -- 44,141
Note payable to shareholder, unsecured, due August 15, 2001, payable
in monthly installments of $1,620, including interest
at 9% per annum, with a balance of principal due upon maturity 171,635 --
Note payable to bank, due October 2, 2003, payable in monthly
installments of $1,977, including interest at 9.75% per annum,
with balance of principal due upon maturity 89,964 --
------------- ------------
1,077,964 818,691
Less current portion (95,817) (119,330)
------------- ------------
Total long-term debt $ 982,147 699,361
============= ============
Note payable to shareholder, principal and simple interest
at 10.25%, due on December 31, 2000 $ 269,928 269,928
============= ============
Weighted average interest rate at December 31 8.49% 9.58%
============= ============
</TABLE>
The due dates of the notes payable to bank were extended subsequent to
year-end. The revised maturities are reflected in the financial
statements at December 31, 1998.
(Continued)
F-14
<PAGE>
The aggregate maturities of long-term debt for each of the five years
subsequent to December 31, 1998 are as follows: 1999, $95,817; 2000,
$762,135; 2001, $181,908; 2002, $19,104; and 2003, $19,000.
(9) COMMON STOCK OPTIONS
The Company has stock option plans under which incentive and
nonqualified stock options may be granted to key employees and directors
of the Company. The plans authorize grants of options to purchase up to
375,000 shares of authorized but unissued common stock, including
100,000 shares granted to a former executive officer outside of the
plans. Options are granted at a price not less than 50% of the fair
market value of the shares on the date of the grant. The options may be
granted for terms up to but not exceeding ten years and are generally
fully vested upon grant and in five years from the date granted for
directors. During 1998, the Company recorded $70,400 in compensation
expense related to the modification of terms and issuance of options.
The Company applies the intrinsic value method prescribed by APB No. 25
in accounting for the plans. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options
under the provisions of SFAS No. 123, the Company's pro forma net loss
and loss per share would have been:
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Pro forma loss $ (580,162) (1,501,954)
=============== ===============
Pro forma basic and diluted
net loss per share (.23) (0.64)
=============== ===============
</TABLE>
The pro forma effect on net loss for 1997 and 1998 is not fully
representative of the pro forma effect on net loss in future years
because it does not take into consideration pro forma compensation
expense related to the vesting of grants made prior to 1996.
The per share weighted-average fair value of stock options granted in
1998 and 1997 was $0.87 and $0.70, respectively. For the years ended
December 31, 1998 and 1997, the fair value was estimated as of the grant
date using the Black-Scholes option pricing model. Input variables used
in the model included a weighted-average risk-free interest rate ranging
from 5.25% to 6.7%, no expected dividend yields, an expected volatility
factor of 94% and 84%, respectively, and an estimated option life of six
to ten years from the date of vesting.
(Continued)
F-15
<PAGE>
The stock option activity under the plans is summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
OPTIONS EXERCISE
OUTSTANDING PRICE
-----------------------------
<S> <C> <C>
Balance at December 31, 1996 211,000 $ 1.92
Granted 7,000 0.94
Exercised -- --
Forfeited (5,500) 1.08
------------- -------------
Balance at December 31, 1997 212,500 1.91
Granted 107,000 0.58
Exercised -- --
Forfeited (3,500) 1.12
------------- -------------
Balance at December 31, 1998 316,000 $ 1.30
============= =============
</TABLE>
At December 31, 1998, there were 59,000 shares available for future
grants.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------ ------------------------------
NUMBER WEIGHTED- NUMBER
OUTSTANDING AVERAGE WEIGHTED- EXERCISABLE WEIGHTED-
RANGE OF AT REMAINING AVERAGE AT AVERAGE
EXERCISE DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
PRICES 1998 LIFE (YEARS) PRICE 1998 PRICE
- ------------ -------------- ------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
$ 0.34 5,000 9.0 $ 0.34 -- $ 0.34
0.50 160,000 8.5 0.50 160,000 0.50
0.75 2,000 4.0 0.75 2,000 0.75
0.94 25,000 5.2 0.94 21,250 0.94
1.00 4,000 2.6 1.00 4,000 1.00
1.19 20,000 7.5 1.19 10,000 1.19
2.75 100,000 0.6 2.75 100,000 2.75
- ------------ -------------- ------------- ------------- --------------- ------------
$ 0.34
to 2.75 316,000 5.6 $ 1.30 297,250 $ 1.32
============ ============== ============= ============= =============== ============
</TABLE>
(Continued)
F-16
<PAGE>
(10) MAJOR SUPPLIERS
Purchases from one supplier were approximately $1,753,000 and $1,400,000
for the years ended December 31, 1998 and 1997, respectively.
(11) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of cash, cash overdrafts, accounts payable, and interest
payable are estimated to approximate carrying value due to the
short-term maturities of these financial instruments. The carrying value
of long-term debt and the note payable to shareholder approximates fair
value as the interest rates are variable or consistent with those in
effect at December 31, 1998.
(12) RETIREMENT BENEFIT PLAN
The Company sponsors a defined contribution plan, the Austins Steaks &
Saloon 401(k) Savings Plan & Trust (the Plan). The Plan covers all
employees of the Company who have one year of service and have attained
the age of twenty-one. Participants may contribute up to 15% of their
compensation in pretax dollars. The Company will match employee
contributions on a discretionary basis, not to exceed 4%. Vesting in
Company contributions is 100% after six years in the Plan. For the years
ended December 31, 1998 and 1997, the Company contributed $3,621 and
$3,432, respectively, to the Plan.
(13) PURCHASE OF RESTAURANT
On June 12, 1998, the Company purchased equipment and leasehold
improvements of an existing restaurant in Omaha, Nebraska. As
consideration for the purchase, the Company issued 225,000 shares of
common stock, valued at $168,750, and assumed two notes payable totaling
$273,421, for total consideration of $442,171. Total consideration was
assigned to the value of the assets acquired. Per the purchase
agreement, if this restaurant reaches certain sale levels during the
first year subsequent to the acquisition date, the Company owes
additional consideration of 75,000 shares of common stock. No additional
consideration has been recorded in the financial statements as of
December 31, 1998, as management estimates the required sale levels will
not be met.
(14) SUBSEQUENT EVENTS
On February 23, 1999, the Company signed into a letter-of-intent to
enter into a business combination with WesterN SizzliN Corporation. The
WesterN SizzliN Corporation is a family-style steak, buffet, and bakery
restaurant chain.
F-17
<PAGE>
EXHIBIT 10.6
LEASE
THIS LEASE is made and entered into effective as of the 1st day of
March, 1995, by and between MARTIN A. PEDERSEN, 625 Shorewood Lane,
Waterloo, Nebraska 68069 ("Landlord"), and AUSTINS OMAHA, INC., a Nebraska
corporation, 1065 North 115th Street, Omaha, Nebraska 68154 ("Tenant").
THE PARTIES HERETO DO HEREBY MUTUALLY COVENANT AND AGREE AS FOLLOWS:
1. LEASED PREMISES.
Landlord, for and in consideration of the rents, covenants and
agreements hereinafter reserved and contained on the part of Tenant to be
paid, kept, performed and observed by Tenant, hereby demises and leases unto
Tenant, and Tenant hereby leases from Landlord, that certain real property
more particularly described as Lots 261, 262 and 263, Signal Hill, Douglas
County, Nebraska, together with all the buildings and improvements now or
hereafter erected thereon ("Tenant's building") and all rights, privileges
and easements appurtenant thereto which are hereinafter provided in this
lease (all of which shall constitute and comprise the "leased premises").
2. LEASE TERM.
2.1 INITIAL TERM. The term of this Lease shall be March 1, 1995
through July 31, 2006 unless this lease shall sooner terminate or be extended
as provided in this lease.
2.2 OPTION TO EXTEND. Tenant shall have two (2) successive options
to extend the term of this lease beyond the initial term upon the same terms
and conditions as those herein specified, except as to the monthly rental
which shall be adjusted pursuant to Section 5.2 hereinbelow, for two (2)
separate additional periods of five (5) years each. If Tenant elects to
exercise the first of said options, Tenant shall do so by giving
Landlord written notice of such election at least six (6) months prior to the
expiration of the initial term of this lease, and, if the Tenant elects to
exercise each additional option. Tenant shall do so by giving
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<PAGE>
Landlord written notice of such election at least six (6) months before the
beginning of the additional period for which the term hereof is to be extended
by the exercise of each of said options. If Tenant gives any such notice, the
term of this lease shall be automatically extended for the additional period
of years covered by the option so exercised without execution of an extension
or renewal lease. As used in this lease, the phrases "term of this lease", "the
term hereof", or words of like import shall refer to the initial term of this
lease, together with any extended term with respect to which an option shall
be exercised.
3. USE OF PREMISES-COMPLIANCE WITH LAWS AND ORDINANCES.
3.1 USE OF PREMISES. Tenant shall be entitled to use the leased
premises and improvements to be constructed thereon for any use permitted by
law at all times during the term of this lease, and Tenant covenants and
agrees that Tenant will not use, suffer or permit the leased premises and
such improvements to be used for any other purpose without Landlord's prior
written consent.
3.2 COMPLIANCE WITH LAWS. Tenant covenants that during the lease
term, Tenant will comply, at Tenant's sole cost and expense, with all laws,
ordinances, orders, rules, regulations and requirements of all federal, state
and municipal governments and appropriate departments, commissions, boards
and officers thereof, which may be applicable to the leased premises, the
buildings, improvements and building equipment or the use or manner of use of
the leased premises, including, but not limited to, hazardous waste or
substance use, handling, storage and remediation, except for remediation of
conditions pre-existing Tenant's occupancy.
3.3 RIGHT TO CONTEST LAWS. Tenant shall have the right, after
notice to Landlord, to contest by appropriate legal proceedings, without cost
or expense to Landlord, the validity of any law, ordinance, order, rule,
regulation or requirement of the nature herein referred to and to postpone
compliance with the same, provided such contest shall be promptly and
diligently prosecuted by and at the expense of Tenant and so long as Landlord
shall not thereby suffer any civil, or be subjected to any criminal penalties
-2-
26
<PAGE>
or sanctions, and Tenant shall properly protect and save harmless Landlord
against any liability and claims for any such noncompliance or postponement
of compliance. Landlord shall have the right, but shall be under no
obligations to contest by appropriate legal proceedings, at Landlord's
expense, any such law, ordinance, rule, regulation or requirement.
4. TRADE FIXTURES.
All trade fixtures installed at any time
by Tenant, Tenant's suppliers, or any subtenants of Tenant in, on, or about
the leased premises shall be and remain the property of the person, firm or
corporation installing same and and shall be removable at any time during the
term of this lease. The removal of any such trade fixtures shall be at the
expense of the person, firm or corporation removing the same, who shall
repair any damage or injury to the leased premises occasioned by any such
removal. If Landlord at any time in the future obtains financing secured by
the leased premises, Landlord agrees to obtain waivers from Landlord's lender
to any rights such lender may claim to the trade fixtures installed by
Tenant, Tenant's suppliers, or any subtenants of Tenant as a result of such
lender's secured interest in the real property comprising the leased premises.
5. RENTAL.
5.1 INITIAL TERM. Tenant agrees to pay rent for the use and
occupancy of the premises as follows:
Subject to any adjustment provided for hereinafter, Tenant shall
pay to Landlord as rental for the use and occupancy of the leased premises
during the initial term of this lease the sum of $6,500 per month, each month
for the initial term of this Lease, all payable in advance on the first day
of each calendar month for each month of the initial term and any extension
thereof.
5.2 COST OF LIVING ADJUSTMENT. Commencing with the monthly rent
payable on July 1, 1999 and each time Tenant exercises Tenant's option to
extend the term of this lease as provided in Section 2.2 above, a cost of
living adjustment shall be made to the monthly rental provided herein. Each
adjustment shall be made to
-3-
27
<PAGE>
the monthly rental then in effect immediately prior to the applicable
adjustment, and the adjusted rental shall be payable for each and every month
thereafter until adjusted again or expiration of the term of this lease term.
The cost of living adjustment shall be determined in the manner and pursuant
to the following formula:
R = W x (A/P x 50%)
In such formula "R" represents the monthly rate of rent as
adjusted by the cost of living to be paid during the lease years for which
such rent is being computed under such formula; "W" represents the applicable
monthly rental rate being adjusted as provided herein; "P" represents the
consumer price index published and released in February, 1995 (in the case of
the first adjustment), in July, 1999 (in the case of the second adjustment),
and in July, 2006 (in the case of the third adjustment) reported by the U.S.
Department of Labor, Bureau of Labor Statistics for "U.S. City Average, All
Urban Consumers" and based upon the establishment of one hundred (100) as the
index for the year 1982-84; "A" represents such consumer price index most
recently published and released in the month immediately preceding the date
of beginning of the period for which rent is being adjusted hereunder. For
example, in the case of the first adjustment effective July 1, 1999, "P"
represents the index published in February, 1995 and "A" represents the index
published in June, 1999. If the index which is used or published for any
relevant time as provided in this lease is based upon the establishment of
100 as the price index for the year or a group of years other than 1982-84,
the consumer price index to be substituted for "A" in the above formula shall
be computed by converting the index as then issued or published to the basis
of 100 as the price index for 1982-84. In the event that no such index is
issued or published within one (1) year previous to each period for which
such rent is being adjusted and computed hereunder or that said Bureau should
cease to publish said index figure, then any similar index published by any
other branch or
-4-
28
<PAGE>
department of the U.S. Government shall be used and if none is so published,
then another index generally recognized as authoritative shall be substituted
by agreement. In any event, the base used by any index shall be reconciled to
the 1982-84 index.
It shall be the duty and obligation of Landlord to make the
computations and determinations pursuant to this Section and to communicate
the results to Tenant, together with working papers to support the
computation. The results shall be subject to Tenant's verification for
accuracy.
In no event shall the monthly rent decrease as a result of any
adjustment. If as a result of any adjustment, the rent would decrease, then
the current rental shall remain in effect until the next scheduled adjustment.
5.3 PLACE OF PAYMENT. All payments of rental shall be made by
Tenant to Landlord at the address hereinabove set forth in this lease or at
such other place within the United States of America as Landlord may from
time to time direct in writing.
5.4 SECURITY DEPOSIT. Through an assignment of the same from a
prior landlord, Tenant is deemed to have deposited with the Landlord herein
the sum of Three Thousand Five Hundred Dollars ($3,500.00) as security for
the performance by the Tenant of the terms of the lease. The Landlord may
use, apply, or retain the whole or any part of the security so deposited to
the extent required for the payment of any rent and additional rent or other
sum as to which the Tenant is in default or for any sum which the Landlord
may expend or may be required to expend by reason of the Tenant's default in
respect of any of the terms of this lease, including, but not limited to, any
damages or deficiency in the reletting of the leased premises, whether such
damages or deficiency accrued before or after summary proceedings or other
re-entry by the Landlord. In the event that the Tenant shall comply with all
of the terms of this lease, the security shall be returned to the Tenant
after the date fixed as the end of the lease and after delivery of possession
of the leased premises to the Landlord. In the event of a sale or lease of
the premises of which
-5-
29
<PAGE>
the premises form a part, the Landlord shall have the right to transfer the
security to the vendee or lessee and the Landlord shall thereupon be released
from all liability for the return of such security. The Tenant shall look
solely to the new Landlord for the return of such security. The Tenant shall
not assign or encumber the money deposited as security, and neither the
Landlord nor his successors or assigns shall be bound by any such assignment
or encumbrance.
6. CONTINUED POSSESSION OF TENANT.
If Tenant shall hold over the leased premises after the expiration
of the term hereof with the consent of Landlord, either express or implied,
such holding over shall be construed to be only a tenancy from
month-to-month, subject to all the covenants, rental conditions and
obligations hereof performable by Tenant as provided in the term of this
lease and terminable by either party as provided by law; provided, however,
that nothing herein contained shall be construed to give Tenant any rights to
so hold over and to continue in possession of the leased premises after the
expiration of the term hereof.
7. ASSIGNMENT AND SUBLETTING.
7.1 APPROVAL REQUIRED. Neither this lease nor this term hereof
demised, nor any part thereof shall be mortgaged, pledged, assigned or
transferred by Tenant, its successors and assigns, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, and
any prohibited assignment shall be invalid for all purposes. Without such
consent, Tenant may assign this lease or sublet the leased premises to a
corporation which is majority owned by Tenant, provided that Tenant shall
remain liable for the performance of all its obligations hereunder, including
the payment of rent. Any consent to any assignment of this lease or any
interest herein shall not be construed as a consent to any further or
subsequent assignment or construed as a waiver of the right to object to any
further or subsequent assignment to which consent has not been first had and
obtained.
-6-
30
<PAGE>
8. REPAIRS AND MAINTENANCE.
Tenant covenants that during the initial term of this lease and any
extension thereof, Tenant shall, at Tenant's sole cost and expense, maintain
the leased premises, including the building and improvements located thereon,
in good order and condition except for reasonable wear and tear. Tenant's
maintenance shall include repair and replacement, as deemed reasonably
necessary and appropriate by Landlord, of such items with respect to the
leased premises as are typically characterized as capital improvements such
as, for example only, parking lot resurfacing and restriping, roof
replacement, carpeting replacement, painting and HVAC systems repair and
replacement. Tenant shall not be entitled to any reimbursement or credit from
Landlord for the cost of any of the same, it being intended that all
maintenance and replacement reasonably required by Landlord at the leased
premises during Tenant's occupancy and use of the same shall be borne by
Tenant at its sole cost and expense.
9. ALTERATIONS BY TENANT.
Subject to the prior written consent of Landlord, which will not be
unreasonably withheld, Tenant may at any time and from time to time during
the lease term make, at its sole cost and expense, such changes and
alterations, structural or otherwise, in or to the improvements upon the
leased premises as Tenant shall deem necessary or desirable. No building at
any time on the leased premises shall, however, be demolished without the
consent of the Landlord and any mortgagee of Landlord, which consent shall
not be withheld unreasonably, so long as the same is conditioned upon the
reconstruction of building improvements of at least equivalent quality to
those being demolished. All such permitted changes and alterations (herein
collectively referred to as "alterations") shall be made in all cases subject
to the following conditions which Tenant covenants and agrees to observe and
perform:
(a) No alteration shall be undertaken until Tenant shall have
procured and paid for, so far as the same may be required from time to time,
all municipal and other governmental
-7-
31
<PAGE>
permits and any authorizations of the various municipal departments and
governmental subdivisions having jurisdiction, and Landlord agrees to join,
at the expense of the Tenant, in the application for any such permits or
authorizations whenever such action is necessary.
(b) Each alteration, when completed, shall be of such a
character as not adversely to affect the value of the improvements and
equipment on the leased premises immediately before such alteration.
(c) All work done in connection with any alteration shall be
done promptly and in a good and workmanlike manner and in compliance with the
applicable municipal building and zoning and with all other laws, ordinances,
orders, rules, regulations and requirements of federal, state and municipal
governments and appropriate departments, commissions, boards and officers
thereof; the cost of any such alteration shall be paid in cash or its
equivalent, so that no liens shall be enforced against the leased premises
for labor and materials supplied or claimed to have been supplied to the
leased premises.
10. LIENS AND CLAIMS.
During the initial term of this lease and any extension thereof,
Tenant shall not suffer or permit any mechanic's liens or any other claims or
demands arising from the work caused by Tenant for the repair, alteration or
restoration of the building and all improvements to the leased premises, to
be enforced against the leased premises or any part thereof, and Tenant
agrees to hold Landlord and the leased premises free and harmless from all
liability for any such liens, claims or demands, together with all costs and
expenses in connection therewith; provided, however, if Tenant shall in good
faith contest the validity of any lien, claim or demand, then Tenant shall,
at its expense, defend itself and Landlord against the same and shall pay and
satisfy any final adverse judgment that may be rendered therein before the
enforcement thereof against Landlord or the premises, and Tenant shall name
Landlord as additional obligee under any surety bond furnished in any such
proceedings.
-8-
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<PAGE>
11. UTILITIES.
During the initial term of this lease and any extension thereof,
Tenant shall pay or cause to be paid all charges for gas, electricity, water
and other utilities furnished to the leased premises and all sewerage charges
or similar charges or assessments for utilities levied against the leased
premises for any period included within the initial term of this lease or any
extension thereof.
12. TAXES AND ASSESSMENTS.
12.1 REAL ESTATE. As used herein, the term "real estate taxes"
shall mean all real estate taxes, assessments for improvements to the leased
premises, municipal or county water and sewer rates and charges which shall
be levied against the leased premises or the building and improvements
erected or caused to be erected thereon by Landlord and which become a lien
thereon during the initial or any extended term of this lease, excluding any
franchise, corporate, income, personal property, capital levy, capital stock,
excess profits, transfer, revenue, estate, gift, inheritance or succession
tax payable by Landlord or any other tax, assessment, levy or charge upon, or
measured in whole or in part by, the income or profits of Landlord; provided,
however, if at any time during the initial or any extended term of this
lease, the method of taxation prevailing on the date of this lease shall be
altered so as to cause any tax measured by or imposed upon the rental payable
hereunder in lieu of real estate taxes or assessments in the manner levied
shall be deemed included in the obligations of Tenant under this Section, but
only to the extent the same would be payable if the leased premises were the
only property of Landlord subject to such taxes.
12.2 PAYMENTS BY TENANT. Tenant shall pay or cause to be paid,
before any fine, penalty, interest or cost may be applied thereto for the
nonpayment thereof, all real estate taxes levied against the leased premises
during the initial or any extended term of this lease, including the
improvements on the leased premises, and all permitted alterations and
additions thereto.
-9-
33
<PAGE>
12.3 INSTALLMENT PAYMENTS. If any real estate, special tax or
assessments are at any time during the initial or any extended term of this
lease levied or assessed against the leased premises, which, upon exercise of
any option permitted by the assessing authority, may be paid in installments
or converted to an installment payment basis (irrespective of whether
interest shall accrue on unpaid installments), Tenant may elect to pay such
real estate taxes in installments with accrued interest thereon. In the event
of such election, Tenant shall be liable only for those installments of such
tax or assessment which become payable during the initial or any extended
term of this lease, and Tenant shall not be required to pay any such
installment which becomes due and payable after the expiration of the term of
this lease or sooner termination thereof. Landlord shall execute whatever
documents may be necessary to convert any real estate taxes to such an
installment payment basis unless requested not to do so by Tenant.
12.4 PRORATION. Any real estate taxes which are payable by Tenant
hereunder shall be prorated between Landlord and Tenant as of the date of
expiration or earlier termination of the initial term of this lease or any
extension thereof if such real estate taxes are payable before delinquency
during a calendar year which extends beyond the expiration or earlier
termination of the term hereof so that Tenant shall only pay that portion of
such real estate taxes equal to that proportion which the number of days of
such calendar year falling within the initial lease term and/or the extended
term, as applicable, bears to the total number of days of such calendar year.
12.5 RIGHT TO CONTEST. Tenant shall have the right to contest the
amount or validity of any real estate taxes, in whole or in part, by
appropriate administrative and legal proceedings, either in its own name,
Landlord's name or jointly with Landlord, without any cost or expense to
Landlord, and Tenant may postpone payment of any such contested real estate
taxes pending the prosecution of such proceedings and any appeals so long as
such proceedings shall operate to prevent the collection of such real estate
taxes and the sale of the leased premises to satisfy any
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34
<PAGE>
lien arising out of the nonpayment of the same, and Tenant, if requested by
Landlord, shall furnish a bond to Landlord securing the payment of the same
in the event a decision in such contest shall be adverse to Tenant. Landlord
shall execute and deliver to Tenant whatever documents may be necessary or
proper to permit Tenant to so contest any such real estate taxes or which may
be necessary to secure payment of any refund which may result from any such
proceedings, and in the event Landlord fails or refuses to so execute,
Landlord hereby irrevocably designates Tenant as its attorney-in-fact to
execute such documents.
12.6 COOPERATION OF LANDLORD. Landlord agrees to execute such
documents and take such other action as may be reasonably required so that
the leased premises will be assessed and taxed as a separate parcel from the
entire parcel of real property owned by Landlord, should such be the case;
provided, however, Landlord's undertaking shall be one of best efforts and
Landlord shall provide Tenant an opportunity to join in such applications or
conferences with the taxing authority preliminary thereto.
12.7 IMPROVEMENT OR SPECIAL ASSESSMENT DISTRICT. If at any time
during the initial or any extended term of this lease any governmental
subdivision shall undertake to create an improvement or special assessment
district the proposed boundaries of which shall include any portion of the
leased premises, Landlord and Tenant shall each be entitled to appear in any
proceeding relating thereto and to present their respective positions as to
whether the leased premises should be included or excluded from the proposed
improvement or assessment district and as to the degree of benefit to the
leased premises resulting therefrom. Landlord shall promptly advise Tenant in
writing of the receipt of any notice or other information relating to the
proposed creation of any such improvement or special assessment district the
boundaries of which include any portion of the leased premises.
12.8 PERSONAL PROPERTY. Tenant covenants and agrees to pay before
delinquency all personal property taxes, assessments and liens levied during
the initial or any extended term of this lease
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<PAGE>
upon all personalty belonging to Tenant and situated on or about the leased
premises.
13. INDEMNIFICATION AND NONLIABILITY OF LANDLORD.
13.1 INDEMNIFICATION BY TENANT. Tenant agrees to protect, defend,
indemnify and save harmless Landlord against any and all loss, damages and
liability on account of any, all and every demand or claim or assertion of
liability or any claim or any action founded thereon arising or alleged to
have arisen out of any act or omission of Tenant, its agents, servants,
employees, patrons, customers, licensees or invitees, including risks
associated with so called "dram shop" liability, arising out of the
occupation, use, possession, conduct or management of the leased premises
whether to person or property, including the property of Tenant, or death of
any person, made by any person, group or organization, whether employed by
either of the parties hereto or otherwise, except if Landlord shall have been
negligent or contributorily negligent under the circumstances involved.
14. INSURANCE.
14.1 FIRE AND EXTENDED COVERAGE. During the initial term of this
lease and any extension thereof, Tenant shall at Tenant's sole cost and
expense, for the mutual benefit and protection of Landlord, Landlord's lender
(if any) and Tenant, procure and maintain or cause to be procured and
maintained a policy or policies of fire and extended coverage insurance
covering the building and improvements located on the leased premises, in a
company or companies in a total amount of not less than one hundred (100%)
percent of the full replacement value of said building and appurtenances. The
term "full replacement value" shall mean the then actual replacement cost,
less physical depreciation, excluding excavation and foundation costs. Tenant
agrees to re-evaluate insurance coverage at Landlord's request, but not more
often than at three (3) year intervals and to increase said coverage if it
shall then be less than one hundred (100%) percent of the then full
replacement value.
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14.2 GENERAL LIABILITY. During the initial term of this lease, and
any extension thereof, Tenant shall, at Tenant's sole cost and expense, for
the mutual benefit and protection of Landlord and Tenant, maintain
comprehensive general liability insurance against claims for personal injury
or death and property damage occurring upon, in or about the leased premises
or on, in or about the adjoining sidewalks and passageways, such insurance to
afford protection to the limit of not less than a combined single limit of
$1,000,000 per occurrence in respect of personal injury or death and property
damage.
14.3 PRORATION OF PREMIUMS. With respect to any insurance
effective for a term extending beyond the initial term of this lease or any
extensions thereof, Tenant shall be obligated to pay only such proportion of
the premium upon such insurance as that portion of the term of the policy
prior to the expiration of such term of this lease bears to the entire term
of the policy.
14.4 WORKER'S COMPENSATION. During the course of any construction,
repairs, alterations and additions to the leased premises, the party
arranging for such work shall maintain or cause to be maintained, worker's
compensation insurance as required by law.
14.5 BLANKET POLICIES. All policies of insurance required
hereunder of the Tenant during the initial term of this lease and any
extension thereof may be in the form of "blanket" policies provided that the
coverage thereunder must be at least equal to that which would be provided
under the separate policies which Tenant must maintain pursuant to this
Section.
14.6 POLICIES AND CERTIFICATES OF INSURANCE. Tenant agrees during
the initial term of this lease and any extension thereof, to deliver to
Landlord certified copies of policies evidencing the insurance procured by
Tenant under the terms hereof, or to deliver in lieu thereof certificates of
coverage from the insurance company or companies writing said policy or
policies of insurance which certificates shall designate the company writing
the same, the number, amount and provisions thereof, and shall indicate on the
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face thereof that Landlord is named as an additional insured under said
policies and that any lender of Landlord holding a lien on the leased
premises shall be named as an additional insured for the policies provided in
this Section. Landlord agrees to provide Tenant with similar documents
evidencing the insurance to be provided by Landlord pursuant to this
Section 14.
14.7 CANCELLATION OR TERMINATION. All insurance policies to be
provided by Tenant shall contain a provision that said policies shall not be
canceled, terminated or expire without thirty (30) days prior notice from the
insurance company to Landlord. Tenant agrees that on or before twenty (20)
days prior to expiration of any insurance policy, Tenant shall deliver to
Landlord written notification in the form of a receipt or other similar
documents from the applicable insurance company that said policy or policies
have been renewed, or deliver certificates or coverage or certified copies
from another good and solvent insurance company for such coverage.
14.8 FAILURE TO PROCURE. In the event Landlord or Tenant should
fail to procure or keep in force the insurance which, as provided in this
Section, must be procured and kept by Landlord or Tenant respectively,
Landlord or Tenant may procure insurance for the other's benefit and recover
the cost thereof from said obligated party.
15. DAMAGE AND DESTRUCTION.
15.1 DAMAGE COVERED BY INSURANCE. If, during the initial term
of this lease or any extension thereof, the leased premises shall be damaged
or destroyed by a cause or casualty covered by the insurance Tenant is
required to carry pursuant to Section 14 above, Landlord shall repair or
replace the building and/or improvements damaged or destroyed by the
insurable cause of damage or destruction on the same plan and design as
existed immediately prior to such damage or destruction, subject to such
delays as may be reasonably attributable to governmental restrictions or
inability to obtain materials or labor, or other causes, whether similar or
dissimilar, beyond the control of Landlord. Materials
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used in repair shall be as nearly like original materials as may then be
reasonably procured in regular channels of supply. All proceeds of insurance
carried on the building and improvements pursuant to Section 14 hereinabove,
payable as a result of such damage or destruction, shall be used and applied
to the extent necessary for such repair or rebuilding. To the extent of any
shortfall, Tenant shall contribute its own funds to the remaining cost of
repair or rebuilding.
15.2 DAMAGE NOT COVERED BY INSURANCE. If, during the initial term
of this lease or any extension thereof, the leased premises shall be damaged
or destroyed by a cause or casualty not covered by the insurance Tenant is
required to maintain pursuant to Section 14 hereinabove to the extent of
thirty percent (30%) or more of the monetary value thereof, then by written
notice to the other party within thirty (30) days after the date of such
damage or destruction either party may elect to terminate this lease or to
cause the repair and restoration of the premises at the sole cost and expense
to the party electing to cause such repair or restoration. However, if either
party gives notice of termination to the other, this lease shall not be so
terminated if the other party shall, within thirty (30) days after receipt of
such notice, give written notice to the terminating party of said other
party's election to cause the repair and restoration of the leased premises.
The party electing to cause the repair and restoration shall, at its sole
expense, provide the funds necessary therefor and shall thereafter promptly
and diligently repair and restore the leased premises to the same extent
required in Section 15.1 hereinabove. In the event any such damage or
destruction, from a cause not covered by the insurance required to be
maintained in Section 14, is not sufficient to permit termination of the
lease pursuant to this Section 15.2, Landlord shall, at Landlord's sole cost
and expense, promptly repair and restore the leased premises to the same
extent required in Section 15.1 hereinabove.
15.3 REPLACEMENT OF TENANT'S EQUIPMENT. In the event of the damage
or destruction of the leased premises not giving rise to a
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termination of this lease, Tenant shall, at its own expense, replace and
repair so much of Tenant's equipment in the leased premises which may be
damaged or destroyed, as may, in the option of Tenant, be necessary for the
resumption by Tenant of its business in the leased premises. Such replacement
or repair shall commence as soon after the damage or destruction as may be
reasonably possible, subject to delays beyond the control of Tenant.
15.4 ABATEMENT OF RENT. In the event of a partial damage or
destruction of the leased premises such that if the lease is not terminated,
Tenant shall continue to utilize the leased premises for the operation of its
business to the extent that it may be practicable to do so from the
standpoint of good business. All rent shall abate from the time any damage or
destruction occurs until the leased premises are wholly restored, unless
Tenant shall continue or resume doing business therein, in which event the
rent will be equitably reduced in the proportion that the unusable part of
the leased premises bears to the whole thereof.
15.5 RIGHT TO TERMINATE. In the event of the damage or destruction
of the leased premises by a cause or casualty covered by the insurance Tenant
is required to carry pursuant to Section 14 hereinabove, Landlord shall have
the right to terminate this lease if, during the last two (2) years of the
term of this lease including any extension of the term of this lease
exercised by Tenant within thirty (30) days of the date of such damage or
destruction, the leased premises are damaged in an amount exceeding sixty-six
and two-thirds (66-2/3%) percent of the then reconstruction cost thereof
provided that, in such event, such termination of this lease shall be
effected by written notice within thirty (30) days of the happening of the
casualty causing such damage, and all insurance proceeds shall be immediately
paid over and assigned to Landlord.
16. CONDEMNATION.
16.1 DEFINITION OF TERMS. The term "total taking" as used in this
Section means the taking of the entire leased premises under the power of
eminent domain or the taking of so much thereof as to
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prevent or substantially impair the use thereof by Tenant for the uses and
purposes hereinabove provided.
The term "partial taking" means the taking of a portion only of the
leased premises which does not constitute a total taking as defined above.
The term "taking" shall include a voluntary conveyance of all or
any portion of the leased premises by Landlord to an agency, authority or
public utility under threat of a taking under the power of eminent domain in
lieu of formal proceedings, or an involuntary forced conveyance by virtue of
formal proceedings.
The term "date of taking" shall be the date upon which title to the
leased premises or portion thereof passes to and vests in the condemnor or
the date of entry of an order for immediate possession by a court of
competent jurisdiction in connection with any judicial proceedings in eminent
domain.
16.2 EFFECT OF TAKING. If during the term hereof there shall be a
total or partial taking of the leased premises under the power of eminent
domain, then the leasehold estate of Tenant in and to the leased premises or
the portion thereof taken shall cease and terminate, as of the date of taking
thereof. If this lease is so terminated in whole or in part, all rentals and
other charges payable by Tenant to Landlord hereunder and attributable to the
leased premises or portion thereof taken shall be paid by Tenant up to the
date of taking by the condemnor, and the parties shall thereupon be released
from all further liability in relation thereto.
16.3 ALLOCATION OF AWARD. All compensation or damages awarded upon
a partial or total taking of the leased premises shall go to Landlord and
Tenant as provided by law; provided, however, that Tenant shall in any event
be entitled to receive from such award an amount equal to the unamortized
cost of all improvements made to the leased premises by Tenant and to the
unamortized cost of Tenant's trade fixtures (amortized on a straight line
basis over the useful life thereof to Tenant), provided that such amount is
separately stated and designated in any such award.
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16.4 REPAIR OR REPLACEMENT OF IMPROVEMENTS. Unless this lease is
terminated by reason of a taking, all compensation for the taking of the
building and improvements shall be first used for the prompt repair or
replacement of the building and improvements on the leased premises at the
time or taking. Landlord and tenant shall cooperate in approving plans and
specifications and in securing proper permits and any other documents
necessary or convenient in connection with such work. If such compensation is
insufficient to pay the costs of such work, Tenant shall pay any excess of
construction cost over the award to Landlord of such taking.
16.5 TENANT'S CLAIM. In the event of a taking, nothing contained
herein shall preclude Tenant from prosecuting a claim directly against the
taking authorities for diminution of the value of its leasehold interest
hereunder or for the loss of its business or goodwill or for damage to, or
cost of removal or relocation of, or value of its stock, furniture, fixtures
and equipment, or for any other claim authorized by law.
16.6 REDUCTION OF RENT ON PARTIAL TAKING. In the event of a
partial taking, the rent payable by Tenant hereunder shall be adjusted from the
date of taking to the date of the expiration of the term of this lease. Such
rental adjustment will be made by reducing the basic rental payable by Tenant
in the ratio that the fair market value of the leased premises at the date of
taking bears to the fair market value of the leased premises immediately
thereafter.
17. RIGHT OF INSPECTION BY LANDLORD.
Landlord and Landlord's representatives may enter the leased
premises at all reasonable times for the purpose of inspecting the premises;
performing any work which Landlord elects to undertake by reason of Tenant's
default hereunder, at Tenant's expense; or posting notices of
nonresponsibility under any mechanic's lien or similar law.
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18. SALE OF LEASED PREMISES BY LANDLORD.
In the event of any sale of the leased premises by Landlord,
Landlord shall be entirely freed and relieved of all liability under any and
all covenants and unaccrued obligations contained in or derived from this
lease arising out of any act, occurrence or omission occurring after the
consummation of such sale; provided, however, that Landlord shall not be
freed or relieved from such liability prior to the completion of the work and
provided further, that Landlord shall be responsible for all accrued and
unsatisfied obligations under this lease and provided further that the
purchaser at such sale or any subsequent sale of the leased premises shall,
in writing, covenant to and with Tenant to carry out any and all of the
covenants and obligations of Landlord under this lease.
19. CONDITIONAL LIMITATIONS-DEFAULT PROVISIONS.
19.1 EVENTS OF DEFAULT. If at any time during the term of this
lease, any one or more of the following events (herein called an "event of
default") shall occur, that is to say:
(a) If Tenant shall make an assignment for the benefit of its
creditors; or
(b) If any petition shall be filed against Tenant in any
court, whether or not pursuant to any statute of the United States of America
or of any State, in any bankruptcy, reorganization, composition, extension,
arrangement or insolvency proceedings, and Tenant shall thereafter be
adjudicated bankrupt, or if such proceedings shall not be dismissed within
sixty (60) days after the institution of the same, or if any such petition
shall be so filed by Tenant or liquidator; or
(c) If, in any proceeding, a receiver, receiver and manager,
trustee or liquidator be appointed for all or any portion of Tenant's
property, and such receiver, receiver and manager, trustee or liquidator
shall not be discharged within sixty (60) days after the appointment of such
receiver, receiver and manager, trustee or liquidator; or
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(d) If Tenant shall fail to pay any installment of rent
provided for herein, or any part thereof, when the same shall become due and
payable, and such failure shall continue for twenty (20) days after notice
thereof from Landlord or Tenant; or
(e) If Tenant shall fail to pay any item of real estate taxes
or any other charge or sum required to be paid by Tenant hereunder, and such
failure shall continue for forty-five (45) days after notice thereof from
Landlord by Tenant; or
(f) If Tenant shall fail to perform or observe any other
requirement of this lease (not hereinbefore in this Section specified) on the
part of Tenant to be performed or observed, and such failure shall continue
for forty-five (45) days after notice thereof from Landlord to Tenant; then
upon the happening of any one or more of the aforementioned events of
default, and the expiration of the period of time prescribed in any such
notice, Landlord shall have the right, then or at any time thereafter and
while such default or defaults shall continue, to give Tenant written notice
of Landlord's intention to terminate this lease on a date specified in such
notice, which date shall not be less than ten (10) days after the date of
giving of such notice, and on the date specified in such notice, Tenant's
right to possession of the premises shall cease and Tenant shall peaceably
and quietly yield to and surrender to Landlord the leased premises and
improvements located thereon and this lease shall thereupon be terminated and
all of the right, title and interest of Tenant hereunder and in the
improvements shall wholly cease and expire in the same manner and with the
same force and effect as if the date of expiration of such ten (10) day
period were the date originally specified herein for the expiration of this
lease and the lease term, and Tenant shall then quit and surrender the leased
premises and improvements to Landlord, but Tenant shall remain liable as
hereinafter provided.
19.2 RE-ENTRY BY LANDLORD. In the event of any termination of this
lease as so stated hereinabove or as otherwise permitted by law, or if an
event of default shall continue beyond the expiration of any grace period
above provided for without termination of this
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lease by Landlord, Landlord may enter upon the leased premises and
improvements and have, repossess and enjoy the same by summary proceedings,
ejectment or otherwise, and in any such event neither Tenant nor any person
claiming through or under Tenant by virtue of any statute or of an order of
any court shall be entitled to possession or to remain in possession of said
premises but shall forthwith quit and surrender the leased premises and
improvements. Landlord shall incur no liability to any person for or by
reason of any such entry, repossession or removal of Tenant or any person
claiming through or under Tenant.
19.3 PAYMENT OF RENTAL AND EXPENSES UPON DEFAULT. In case of any
such termination, re-entry or dispossession by summary proceedings, ejectment
or otherwise, the rent and all other charges required to be paid by Tenant
hereunder shall thereupon become due and payable up to the time of such
termination, re-entry or dispossession, and Tenant shall also pay to Landlord
all reasonable expenses which Landlord may then or thereafter incur for legal
expenses, reasonable attorneys' fees, brokerage fees and all other costs paid
or incurred by Landlord for restoring the leased premises and improvements to
good order and condition, for repairing and otherwise preparing the same for
reletting, for maintaining the lease premises and improvements and for
reletting the same. Landlord shall exercise reasonable diligence to mitigate
its damages upon any event of default, but Tenant shall remain liable for
payment of all rents and other charges under this lease accruing before and
after termination or dispossession, except as actually mitigated by Landlord.
19.4 WAIVER OF RIGHTS. The right of Landlord to recover from
Tenant the amounts hereinabove provided for shall survive the issuance of any
order for possession or other cancellation or termination hereof, and Tenant
hereby expressly waives any defense that might be predicated upon the
issuance of such order for possession or other cancellation or termination
hereof. Tenant, for itself and any and all persons claiming through or under
Tenant, including its creditors, upon the termination of this lease
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in accordance with the terms hereof, or in the event of entry of judgment for
the recovery of the possession of the leased premises and the improvements in
any action or proceeding, or if Landlord shall enter the leased premises and
the improvements by process of law or otherwise, hereby waives any right of
redemption provided or permitted by any statute, law or decision now or
hereafter in force, and does hereby waive, surrender and give up all rights
or privileges which Tenant may or might have under and by reason of any
present or future law or decision, to redeem the leased premises and the
improvements or for a continuation of this lease for the term hereby demised
after having been dispossessed or ejected therefrom by process of law or
otherwise.
19.5 PERIODS TO CURE DEFAULTS. Anything in this Section to the
contrary notwithstanding, it is expressly understood that, with respect to
any event of default within the purview of subparagraph (f) of Section 19.1
hereof, if such event of default is of such a nature that it cannot, in fact,
with due diligence, be cured within a period of forty-five (45) days,
Landlord shall not be entitled to re-enter the leased premises and
improvements or serve a notice of termination upon Tenant, as provided in
said Section, nor shall the same be regarded as an event of default for any
of the purposes of this lease, if Tenant shall have commenced the curing of
such default within the period of forty-five (45) days referred to in said
subparagraph (f), and so long as Tenant shall thereafter proceed with all due
diligence to complete the curing of such default not susceptible of being
cured with due diligence within forty-five (45) days, and the time of Tenant
within which to cure the same shall be extended for, such period as may be
necessary to complete the same with all due diligence.
20. DEFAULT BY LANDLORD.
If Landlord shall be in default in the performance of any
provisions of this lease, after twenty (20) days notice thereof is given by
Tenant, Tenant may, at its option, cure such default for the account and at
the expense of Landlord, in which event Landlord shall reimburse Tenant for
all reasonable amounts paid to effect
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such cure (including, without limitation, interest at the minimum legal rate
and reasonable attorneys' fees). Tenant may, at Tenant's option, in addition
to any other right or remedy of Tenant pursuant to this lease, or at law or
in equity, elect to offset any sums payable by Landlord to Tenant pursuant to
this Section 20 against rental then due and payable or thereafter becoming
due and payable pursuant to Section 5 hereinabove.
21. GENERAL PROVISIONS.
21.1 NOTICES. Every notice, demand, request, designation,
consent, approval or other document or instrument required or permitted to be
served hereunder shall be in writing, shall be deemed to have been duly
delivered on the day of mailing and shall be sent by certified or registered
United States mail, postage prepaid, return receipt requested, addressed to
the parties hereto as their addresses appear hereinabove in this lease.
Either party may change the place for address of notice, or provide for the
delivery of not more than two (2) additional copies, by giving the other
party at least ten (10) days prior notice to such effect. Any written notice
served by registered or certified mail shall be deemed to have been served as
of the date it is mailed in accordance with the foregoing provisions.
21.2 ESTOPPEL CERTIFICATES. Each party agrees from time to time
upon not less than thirty (30) days prior notice from the other, to execute,
acknowledge and deliver, to the other party, a statement in writing
certifying (i) that this lease is unmodified and in full force and effect
(or, if there have been modifications, identifying the same by the date
thereof and specifying the nature thereof); (ii) that to the knowledge of
such party no uncured event of default exists hereunder (or, if such uncured
event of default does exist, specifying the same); (iii) the dates to which
the rent and other sums and charges payable hereunder have been paid; (iv)
that such party, to its knowledge, has no claims against the other party
hereunder except for the continuing obligations under this lease (or, if such
party has any such claims, specifying the same); and (v) whether or not there
are then existing any offsets or
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defenses against the enforcement of any of the terms, covenants or conditions
hereof.
21.3 FORCE MAJEURE. The time within which either party hereto
shall be required to perform any act under this lease, shall be extended by a
period of time equal to the number of days during which performance of such
act is delayed unavoidably by strikes, lock-outs, Acts of God, governmental
restrictions, failure or inability to secure materials or labor by reason of
priority or similar regulation or order of any governmental or regulatory
body, enemy action, civil disturbance, fire, unavoidable casualties or any
other cause beyond the reasonable control of either party hereto.
21.4 WAIVERS. No delay or omission by either party in exercising
any right or power accruing upon the noncompliance or failure of performance
by the other party hereto under the provisions of this lease shall impair any
such right or power or be construed to be a waiver thereof. A waiver by
either party hereto of any of the covenants, conditions or agreements hereto
to be performed by the other party shall not be construed as a waiver of any
succeeding breach of the same or any other covenants, agreements,
restrictions and conditions hereof.
21.5 MODIFICATIONS. Any alteration, change or modification of or
to this lease, in order to become effective, shall be made by written
instrument or endorsement hereon and in each such instance executed on behalf
of each party hereto.
21.6 APPLICABLE LAW. This lease shall be governed by, and
construed in accordance with, the laws of the State in which the leased
premises are situated.
21.7 PARTIAL INVALIDITY. If any term, provision, condition or
covenant of this lease or the application thereof to any party or
circumstances shall, to any extent, be held invalid or unenforceable, the
remainder of this lease, or the application of such term, provision,
condition or other covenant to persons or circumstances other than those as
to whom or which it is held invalid or unenforceable, shall not be affected
thereby, and each
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term and provision of this lease shall be valid and enforceable to the
fullest extent permitted by law.
21.8 COVENANTS RUNNING WITH THE LAND. All of the covenants,
agreements, conditions and restrictions set forth in this lease are intended
to be and shall be construed as covenants running with the land, binding
upon, inuring to the benefit of and enforceable by the parties hereto and
their successors and assigns.
21.9 SECTION HEADINGS. The section headings of this lease are
inserted as a matter of convenience and reference only and in no way define,
limit or describe the scope or intent of this lease or in any way affect the
terms and provisions hereof.
21.10 GENDER. The use herein of (i) the singular number shall be
deemed to mean the plural; (ii) the masculine gender shall be deemed to mean
the feminine or neuter; and (iii) the neuter gender shall be deemed to mean
the masculine or feminine whenever the sense of this lease so requires.
21.11 MEMORANDUM OF LEASE. A short form or memorandum of this
lease, incorporating this indenture of lease by reference, may be executed,
acknowledged and recorded at the commencement date of the initial term of
this lease setting forth the parties hereto, the legal description of the
leased premises, the term of this lease and the options granted to Tenant
hereunder if so requested by either party hereto to the other.
21.12 SURRENDER AND QUITCLAIM AT END OF TERM. Upon the end of the
term of this lease, as provided herein, or any extension thereof, or sooner
termination of this lease, Tenant shall surrender to Landlord all and
singular the leased premises, including the building and all improvements
constructed upon the leased premises, and Tenant shall execute, acknowledge
and deliver to Landlord within five (5) days after written demand from
Landlord to Tenant, any Quitclaim deed or other document required by any
title company to remove the claim of this lease from the leased premises.
21.13 ATTORNEYS' FEES. In the event any action is brought by
Landlord to recover any rent due and unpaid hereunder or to recover
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possession by Landlord or Tenant against the other to enforce or for the
breach of any of the terms, covenants or conditions contained in this lease,
the prevailing party shall be entitled to recover reasonable attorneys' fees
to be fixed by the court together with costs of such therein incurred.
21.14 RELATIONSHIP OF PARTIES. The relationship of the parties
hereto is that of Landlord and Tenant, and its is expressly understood and
agreed that Landlord does not in any way nor for any purpose become a partner
of Tenant or a joint venturer with Tenant in the conduct of Tenant's business
or otherwise, and that the provisions of any agreement between Landlord and
Tenant relating to rent are made solely for the purpose of providing a method
whereby rental payments are to be measured and ascertained.
21.15 TITLE. Landlord covenants that Landlord has good and
marketable title to the Premises in fee simple absolute and that the same are
subject to no leases, tenancies, agreements, encumbrances, liens or defaults
in title affecting or limiting in any way the rights granted Tenant in this
lease.
21.16 QUIET POSSESSION. Landlord covenants that Tenant, upon
payment of the rental herein reserved, and upon the due performance of the
covenants and agreements herein contained on Tenant's part to be performed,
shall and may at all times, for itself as tenant, peacefully and quietly
have, hold and enjoy the lease premises during the term of this lease.
21.17 CORPORATE AUTHORITY. In the event either party to this
lease is a corporation, each individual executing this lease on behalf of
said corporation represents and warrants that he or she is duly authorized to
execute and deliver this lease on behalf of said corporation, in accordance
with a duly adopted resolution of the Board of Directors of said corporation
or in accordance with the By-Laws of said corporation, and that this lease is
binding upon said corporation in accordance with its terms.
21.18 CONSENTS AND APPROVALS. Wherever the consent or approval of
either party is provided for in this lease, such consent or approval shall be
given in writing to the requesting
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party, and each party agrees to not unreasonably withhold or delay such
consent or approval, except as provided to the contrary in this lease.
21.19 ADDENDUM. Amendments to this lease must be in writing and
signed by the parties, and the same may be attached as addenda riders to this
lease, and the same when made and attached shall be deemed incorporated
herein and made a part hereof.
21.20 PRIOR LEASES. This lease replaces and supersedes any prior
leases of the leased premises involving Tenant or any predecessor of Tenant,
which prior leases are deemed null and void.
IN WITNESS WHEREOF, the parties hereto have executed this lease as
of the day and year first above written.
LANDLORD:
MARTIN A. PEDERSEN
By: /s/ Martin A. Pedersen
--------------------------------
Martin A. Pedersen
TENANT:
AUSTINS OMAHA, INC.
By: /s/ [illegible]
--------------------------------
Title: President
-------------------------
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EXHIBIT 10.7
LEASE AGREEMENT
This Lease made as of this 15th day of April, 1998, by and between
Central Investment Co., Ltd., a limited partnership organized and existing
under the laws of the State of Nebraska (hereinafter referred to as the
"Lessor"), and Austins 72nd, Inc., a corporation organized and existing under
the laws of the State of Nebraska (hereinafter referred to as the "Tenant").
TERMS AND CONDITIONS
Section 1. LEASED PREMISES AND EXHIBITS. Lessor, in consideration of
the rent to be paid and the covenants to be performed by Tenant, does hereby
demise and lease unto Tenant, and Tenant hereby rents from Lessor, the
following described real property and all buildings and improvements thereto
located at 1414 South 72nd Street, Omaha, Nebraska (herein the "Leased
Premises") legally described on Exhibit "A" to this Lease Agreement. The
Leased Premises is improved with a building. The Building includes the
fixtures described on Exhibit "B" to this Lease (herein together with any
replacements and substitutions, the "Leased Fixtures"). The Leased Premises
shall be benefitted by and the Tenant shall be entitled to all tenements,
easements, appurtenances, hereditaments, rights and privileges associated
with the Leased Premises.
Section 2. COVENANTS OF TITLE. Landlord covenants and warrants (i)
that it is the legal owner of the Leased Premises, (ii) that it is a duly
organized and existing limited partnership under the laws of the State of
Nebraska, and (iii) that it has lawful authority to enter into this Lease.
Section 3. COMMENCEMENT AND ENDING DAY OF TERM. The term of this Lease
shall commence on the 1st day of May, 1998, and the term of this Lease shall
be for a period of one (1) year.
Section 4. RENT. Tenant hereby agrees and covenants with Landlord to
pay as rent for the Leased Premises, the sum of Five Thousand Dollars
($5,000.00) per month. The first rent payment is due at the commencement of
the Lease term, as specified in Section 3. Thereafter, rent payments shall be
due on the first day of each calendar month. Rent for any partial month of
occupancy during the term hereof shall be prorated for such fraction of the
month. At the beginning of each lease year of the extension terms, the
monthly rent shall be adjusted to the greater of: (i) the monthly rent during
the previous years, or (ii) $5,000.00 plus the cost of living adjustment. The
"cost of living adjustment" shall equal $5,000.00 plus the product of
$5,000.00 multiplied times the fraction: (a) the numerator of which is one
half of the difference between the Consumer Price Index - All Urban Consumers
(CPI-U) on the immediately preceding August 31, minus the CPI-U for August
31, 1992; and (b) the denominator of which is the CPI-U as of August 31,
1992. In the event the U.S. Department of Labor shall cease to compute the
CPI-U, the adjustment shall be computed on the basis of a reasonably
comparable index selected by Landlord.
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Section 5. RENEWAL TERM. Tenant shall have the right to extend the
original term of this Lease for two (2) successive periods of one (1) year,
such extensions to be for and upon the terms, covenants, and conditions of
this Lease. Each individual extension may be exercised by written notice to
Landlord at least ninety (90) days prior to the expiration of the original
term or the preceding extension term.
Section 6. DELIVERY OF POSSESSION. Landlord covenants that actual
possession of the Leased Premises shall be delivered on the commencement day.
Section 7. USE OF LEASED PREMISES. Tenant shall use the Leased
Premises solely and exclusively as a restaurant and for related and
incidental uses (including on-sale of alcoholic beverages). Tenant shall not
permit any use or occupation contrary to this restriction. Tenant shall
comply with all present and future applicable laws, ordinances, and
regulations of duly constituted public authorities now or hereafter in any
manner affecting the Leased Premises or the operation of the business
conducted upon the Leased Premises. Tenant shall not permit any unlawful
occupation, business or trade to be conducted on the Leased Premises or any
use to be made thereof contrary to any law, ordinance or regulation. Tenant
shall be entitled to whatever opportunity is reasonable under all
circumstances to contest the validity of any such laws, ordinances or
regulations adversely affecting its use of the Leased Premises and while
doing so shall not be deemed to be in default hereunder.
Section 8. INSTALLATION BY TENANT. Tenant may, with the prior written
consent of Landlord which consent shall not be unreasonably withheld or
delayed, at any time during the term of this Lease make or cause to be made
any alterations, additions, or improvements to the Leased Premises. Landlord
shall execute and deliver upon request of Tenant such instrument or
instruments embodying the approval of Landlord which may be required by any
public or quasi-public authority for the purpose of obtaining any license or
permit for the making of such alterations, changes, and/or installations in,
to, or upon the Leased Premises as the case may be. Tenant shall pay for any
such license or permit.
Section 9. REMOVAL BY TENANT. All alterations, decorations, additions,
and improvements made by Tenant shall be deemed to have attached to the
Leased Premises and to have become the property of Landlord upon such
attachment, and upon expiration of this Lease, the Tenant shall not remove
any such alterations, decorations, additions, and improvements.
Notwithstanding the foregoing, Tenant may remove any business and trade
fixtures upon expiration of this Lease, or any renewal term hereof, other
than the Leased Fixtures and any replacement or substitution for the Leased
Fixtures. Any damage incurred by such removal shall be repaired by Tenant.
Section 10. TENANT'S OBLIGATIONS FOR MAINTENANCE. Tenant shall keep
and maintain in good order, condition, and repair (including replacement if
necessary) the Leased Premises and every part thereof and any and all
appurtenances thereto wherever located including, but without limitation,
doors, door frames, door checks, windows, plate glass, plumbing and sewage
facilities
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within or servicing the Leased Premises, fixtures heating and air
conditioning and electrical systems located within the Leased Premises,
sprinkler systems, walls (interior and exterior), floors and ceilings, walks,
drives, parking areas, green areas, lighting and all other structural and
non-structural improvements to the Leased Premises, whether interior or
exterior, ordinary or extraordinary, foreseen or unforeseen. If Tenant
refuses or neglects to commence and to complete repairs or replacements
promptly and adequately, Landlord may, but shall not be required to, make and
complete such repairs and replacements and the Tenant shall, upon demand, pay
the reasonable cost thereof together with interest thereon at fourteen
percent (14.00%) per annum to Landlord. Tenant shall keep and maintain the
Leased Premises a clean, sanitary and safe condition in accordance with the
laws of the State of Nebraska, at the sole cost and expense of the Tenant. At
the time of the expiration of the tenancy created herein, Tenant shall
surrender the Leased Premises (including the Fixtures and any replacements or
substitutions for the Fixtures) in good condition, reasonable wear and tear
excepted.
Section 11. INSURANCE
A. LIABILITY INSURANCE. Tenant shall, during the entire term hereof,
keep in full force and effect a policy of public liability and property
damage insurance with respect to the Leased Premises, and the business
operated by Tenant, in which the limits of public liability and property
damage liability shall be not less than $2,000,000.00 single limit. The
policy shall name Landlord and Tenant as insured, and shall contain a clause
that the insurer will not cancel or change the insurance without first giving
the Landlord ten (10) days prior written notice. Such insurance may be
furnished under any blanket policy carried by the Tenant or under a separate
policy therefor. The insurance shall be with an insurance company approved
by Landlord and a copy of the paid-up policy evidencing such insurance or a
certificate or insurer certifying the issuance of such policy shall be
delivered to Landlord upon written request of Landlord.
B. PROPERTY INSURANCE. Tenant agrees, during the term hereof, to carry
insurance against fire, vandalism, malicious mischief and such other perils
as are from time to time included in and "All Risks" coverage endorsement
insuring the Building all improvements to the Leased Premises in an amount
equal to one hundred percent (100%) of the full replacement cost. The policy
shall name Landlord and Tenant as insured and shall contain a clause that the
insurer will not cancel or change the insurance without first giving the
Landlord ten (10) days prior written notice. Such insurance may be furnished
by Tenant under any blanket policy carried by it or under a separate policy
therefor. The proceeds of such insurance shall be paid to Landlord and tenant
and shall be used for repair and restoration of the Leased Premises.
C. COVENANT TO HOLD HARMLESS. Tenant covenants to indemnify Landlord,
and save it harmless from and against any and all claims, damages, liability
and expense, including attorneys' fees, in connection with loss of life,
personal injury and/or damage to Leased Premises arising from or out of any
occurrence in, upon or at the Leased Premises or any part thereof, or arising
from or out of Tenant's failure to comply with this insurance section, or
occasioned
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wholly or in party by any act or omission of Tenant, its agents, contractors,
employees, servants, customers or licensees (except for loss or damage
resulting from the negligence of Landlord, its agents or employees). In case
Landlord shall, without fault on its part, be made a party to any litigation
commenced by or against Tenant, the Tenant shall protect and hold it harmless
and shall pay all costs, expenses reasonable attorneys' fees, incurred or
paid by Landlord in connection with such litigation.
D. WAIVER OF SUBROGATION. Tenant hereby releases and discharges
Landlord, its agents and employees of and from all liability to the Tenant
and to anyone claiming by, through or under the Tenant by subrogation or
otherwise on account of any loss or damage caused by or arising out of any
fire or other insured casualty, however caused.
Section 12. UTILITY CHARGES. Tenant shall be solely responsible for
and promptly pay all charges for water, gas, heat, electricity, sewer and any
other utility used upon or furnished to the Leased Premises.
Section 13. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS.
A. SPECIAL ASSESSMENTS. Tenant shall be responsible and pay for, as
the same become due and payable, any and all special assessments of any
nature whatsoever which are assessed and levied against the Leased Premises
during the term of this Lease. Tenant shall provide Landlord with evidence of
the prompt payment of such special assessments.
B. REAL ESTATE TAXES. Tenant shall be responsible for and pay for all
real estate taxes assessed and levied prior to delinquency against the Leased
Premises during the term hereof. Tenant shall provide Landlord with evidence
of the prompt payment of such real estate taxes. Taxes for the initial and
final year of the Lease term shall be prorated.
Section 14. OFF-SET, ATTORNMENT AND SUBORDINATION.
A. OFF-SET STATEMENT. Tenant agrees within ten (10) days after request
therefor by Landlord to execute in recordable form and deliver to Landlord a
statement, in writing, certifying (a) that this Lease is in full force and
effect, (b) the date of commencement of the term of this Lease, (c) that rent
is paid currently without any off-set or defense thereto, (d) the amount of
rent, if any, paid in advance, (e) whether the Lease has been modified and,
if so, identifying the modifications, and (f) that there be no uncured
defaults by Landlord or stating those claimed by Tenant, provided that, in
fact, such facts are accurate an ascertainable. In the event any of the
foregoing portions of the Statement not be true at the time of the request
for such Statement, then Tenant shall reflect the true state of facts in such
statement.
B. ATTORNMENT. In the event any proceedings are brought for the
foreclosure of, or in the event of the conveyance by deed in lieu of
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage or deed of trust made by Landlord covering the Leased
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Premises, Tenant hereby covenants and agrees to execute an instrument in
writing reasonably satisfactory to the new owner and Tenant whereby Tenant
attorns to such successor in interest and recognizes such successor as the
Landlord under this Lease.
C. SUBORDINATION. Tenant agrees that this Lease shall, at the request of
the Landlord, be subordinate to any mortgages or deeds of trust that have
been or may hereafter be placed upon the Leased Premises and to any and all
advances to be made thereunder, and to the interest thereon, and all
renewals, replacements and extensions thereof, provided the mortgagee or
trustee named in such mortgages or trust deeds shall agree to recognize the
Lease of Tenant in the event of foreclosure if Tenant is not in default.
Tenant also agrees that any mortgagee or trustee may elect to have this Lease
a prior lien to its mortgage or deed of trust, and in the event of such
election and upon notification by such mortgagee or trustee to Tenant to that
effect, this Lease shall be deemed a prior lien to such mortgage or deed of
trust whether this Lease dated prior to or subsequent to the date of
such mortgage or deed of trust. Tenant agrees, that upon the request of
Landlord, any mortgagee or any trustee, it shall execute such instruments as
may be reasonably required to carry out the intent of this subsection.
Section 15. TRANSFER OF LEASE. Tenant may not assign or transfer this
Lease or any estate or interest therein nor may the Tenant sublet any part or
all of the Leased Premises without the prior written consent of Landlord
which consent shall not be unreasonably withheld or delayed. Consent by the
Landlord to the assignment of this Lease or to one subletting or to any other
occupancy of the Leased Premises shall not operate to exhaust the Landlord's
right to consent. In the event Tenant, with or without previous consent of
Lessor, does in any manner assign, sublet or transfer this Lease or any
intent therein, whether or not Landlord accepts performance from the assignee
or transferee, Tenant shall not be released from its obligations under this
Lease. The transfer of a majority of the shares of Tenant to any third party
shall be considered a transfer of the Lease for purposes of this Section.
Section 16. RECONSTRUCTION OF DAMAGED PREMISES. In the event that the
Building or any other improvements to the Leased Premises shall be partially
or totally destroyed by fire or other casualty, then the damage to the Leased
Premises shall be promptly repaired and restored by the Tenant, at its sole
cost, to the condition which existed prior to such damage to the extent
reasonably practicable. Any and all insurance proceeds paid to Landlord and
Tenant shall be earmarked for such repair and restoration. Rent and other
charges payable by Tenant hereunder shall not be abated because of such
damage or destruction.
Section 17. CONDEMNATION.
A. TOTAL CONDEMNATION OF LEASED PREMISES. If the entire Leased Premises
shall be taken by any public authority under the power of eminent domain or
deed in lieu of eminent domain, then the term of this Lease shall cease as of
the day possession shall be taken by such public authority and rent and other
charges payable hereunder shall be paid up to that day with a proportionate
refund by Landlord of such rent as may have been paid in advance for the
period
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subsequent to the date of the taking. "Date of Taking" as that term is
used in this Section shall mean the date on which the Tenant is deprived of
possession of the Leased Premises.
B. PARTIAL CONDEMNATION. If, after the execution of this Lease and prior
to its termination, less than the whole of the Leased Premises shall be taken
under eminent domain or deed in lieu of eminent domain and such taking shall
include any part of the Building or shall materially effect the ability of the
Tenant to continue to operate a restaurant from the Leased Premises, then
unless the Landlord and Tenant agree otherwise, the term of this Lease shall
expire on the Date of Taking. Otherwise, Tenant shall continue in the
possession of the Leased Premises, all of the terms herein provided shall
continue in effect.
C. LANDLORD'S AND TENANT'S DAMAGES. All damages awarded for such taking
under the power of eminent domain, whether for the whole or a part of the
Leased Premises, shall belong to and be the property of Landlord whether
such damages shall be awarded as compensation for diminution in value to the
leasehold or to the fee of the Leased Premises, provided, however, that
Landlord shall not be entitled to any award properly in respect to the
Tenant's leasehold interest, or the cost of removal or relocation of Tenant's
property.
Section 18. DEFAULT.
A. In the event of any failure of Tenant to pay any fixed monthly rent
due hereunder within ten (10) days after written notice of such failure, or
any failure to perform any other of the terms, conditions or covenants of
this Lease to be observed or performed by Tenant for more than thirty (30)
days after written notice of such default shall have been mailed to Tenant, or
if Tenant abandons the Leased Premises, or permit this Lease to be taken
under any writ of execution, then the Landlord, in addition to other rights
or remedies it may have, shall have the right by three (3) days notice to
declare this Lease terminated and the term ended. Upon expiration of such
three (3) day period, the term of the Lease shall expire, cease and terminate
with the same force and effect as though the date set forth in such notice
were the date originally set forth herein and fixed for the expiration of the
term and Tenant shall vacate and surrender the Leased Premises but shall
remain liable as hereafter provided. Landlord shall have the right to bring a
special proceeding to recover possession from the Tenant holding over and/or
Landlord may, in any of such events, without notice, re-enter the Leased
Premises either by force or otherwise, and dispossess by summary proceedings
or otherwise, Tenant and the legal representative of Tenant or other occupant
of the Leased Premises and remove their effects and hold the Leased Premises
as if this Lease had not been made. Tenant hereby waives the service of
notice of intention to re-enter or to institute legal proceedings to that
end. In the event of re-entry by Landlord, Landlord may remove all persons
and property from the Leased Premises and such property may be removed and
stored in a public warehouse or elsewhere at the cost of, and for the
account of Tenant, without notice or resort to legal process and without
being deemed guilty of trespass, or becoming liable for any loss or damage
which may be occasioned thereby.
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B. Should Landlord elect to re-enter, as herein provided, or should it
take possession pursuant to legal proceedings or pursuant to any notice
provided for by law, it may either terminate this Lease or it may from time
to time, without terminating this Lease, make such alterations, improvements
and repairs as may be necessary in order relet the Leased Premises, and relet
the Leased Premises or any part thereof for such term or terms (which may be
for a term extending beyond the term of this Lease) and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable. Upon each such reletting all rentals and other
sums received by Landlord from such reletting shall be applied, first, to the
payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any costs and expenses of such reletting,
including reasonable brokerage fees and attorneys' fees and of costs of
repair and cleaning of the Premises; third, to the payment of the portion of
the cost of alterations and improvements of the Leased Premises which are
allocable to the remaining term of this Lease; fourth, to the payment of rent
and other charges due and unpaid hereunder; and the residue, if any, shall be
held by Landlord and applied in payment of future rent as the same may become
due and payable hereunder. If such rentals and other sums received from such
reletting during any month be less than that to be paid during that month by
Tenant hereunder, Tenant shall pay such deficiency to Landlord; if such
rentals and sums shall be more, Tenant shall have no right to the excess.
Such deficiency shall be calculated and paid monthly. No such re-entry or
taking possession of the Leased Premises by Landlord shall be construed as an
election on its part to terminate this Lease unless a written termination
thereof be decreed by a Court of competent jurisdiction. Notwithstanding any
such reletting without termination, Landlord may at any time hereafter elect
to terminate this Lease for such previous breach. Should Landlord at any time
terminate this Lease for any breach and relet the Premises, in addition to any
other remedies it may have, it may recover from Tenant all damages it may
incur by reason of such breach, including the cost of recovering the Leased
Premises, reasonable attorneys' fees, and the worth at the time of such
reletting of the excess, if any, of the amount of rent and charges equivalent
to rent reserved in this Lease for the remainder of the stated term over the
then reasonable rental value of the Leased Premises for the remainder of the
stated term, all of which amounts shall be immediately due and payable from
Tenant to Landlord. In determining the rent which would be payable by Tenant
hereunder, subsequent to default, the annual rent for each year of the
unexpired term shall be equal to the average annual base rent paid by Tenant
from the commencement of the Lease term to the time of default.
C. In the event the estate created in Tenant hereby shall be taken in
execution or by other process of law, or if Tenant or its assigns, if any,
shall be adjudicated insolvent or bankrupt pursuant to the provisions of
any state or federal insolvency or bankruptcy act, or if a receiver or
trustee of the property of Tenant shall be appointed by reason of the
insolvency or inability of Tenant to pay its debts, or if any assignment
shall be made of the property of Tenant for the benefit of creditors, then and
in any such events, Landlord may at its option terminate this Lease and all
rights of Tenant hereunder, by giving to Tenant notice in writing of the
election of
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Landlord to so terminate, in which event this Lease shall cease and terminate
with the same force and effect as though the date set forth in such notice
were the date originally set forth herein and fixed for the expiration of the
term and Tenant shall vacate and surrender the Leased Premises but shall
remain liable as herein provided.
Section 19. RIGHT OF ENTRY. Landlord or Landlord's agents shall have the
right to enter and inspect the Leased Premises at all reasonable times.
Section 20. TAXES ON TENANT'S PROPERTY. Tenant shall be responsible for
and shall pay before delinquency all local, municipal, county, state and
federal taxes assessed during the term of this Lease against any leasehold
interest or personal property of any kind, owned by or placed in, upon or
about the Leased Premises by the Tenant.
Section 21. QUIET ENJOYMENT. Upon payment by the Tenant of the rents
herein provided, and upon the observance and performance of all covenants,
terms and conditions on Tenant's part to be observed and performed, Tenant
shall peaceably and quietly hold and enjoy the Leased Premises for the term
hereby demised without interruption by Landlord or any other person or
persons lawfully or equitably claiming by, through or under the Landlord,
subject, nevertheless, to the terms and conditions of this Lease, and any
mortgages to which this Lease is subordinate.
Section 22. MISCELLANEOUS.
A. HOLDING OVER. It is understood and agreed that should the Tenant hold
over the Leased Premises without first having extended or renewed the
original term of this Lease, as the case may be, such holding over shall not
be construed as a renewal or extension of this Lease for a longer period than
one (1) month.
B. SUCCESSORS. All rights and liabilities herein given to, or imposed
upon, the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and assigns of such
parties.
C. WAIVER. One or more breaches or waivers of any covenant by Landlord
or of any act by Tenant requiring Landlord's consent shall not be construed
as a waiver of a subsequent breach of the same covenant or condition, unless
such waiver be in writing signed by Landlord.
D. ENTIRE AGREEMENT. This Lease contains all the covenants, promises,
agreements, conditions and understandings between Landlord and Tenant
concerning the Leased Premises and there are no covenants, promises,
agreements, conditions or understandings, either oral or written, between
them other than are herein set forth. No alteration, amendment, change or
addition to this Lease shall be binding upon Landlord or Tenant unless
reduced to writing and signed by each party.
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E. NOTICE. Any notice given under this Agreement by Landlord or Tenant
may be given personally or by certified mail as follows:
Landlord: Central Investment Co., Ltd.
11818 "L" Street
Omaha, NE 68137
Tenant: Austins 72nd, Inc.
Tish Gade-Jones, Chief Executive Officer
11324 Q Street
Omaha, NE 68137
or to such other addresses as the Landlord and Tenant may direct from
time to time.
F. LAWS OF THE STATE OF NEBRASKA. This Lease shall be governed by and
construed in accordance with the laws of the State of Nebraska. If any
provision of this Lease or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the
remainder of the Lease shall not be affected thereby and each provision of
the Lease shall be valid and enforceable to the fullest extent permitted by
law.
G. ENVIRONMENTAL PROTECTION. Tenant warrants and covenants to comply
during the term of this Lease to comply with the rules, regulations and
policies of federal, state or local environmental protection agency or body
and any federal, state or local environmental protection laws, orders,
regulations, rules or policies. Upon written request, Tenant shall provide
Landlord with evidence of the compliance with such environmental protection
laws, rules, regulations, orders or policies.
H. NET LEASE. It is the intention of the Landlord and Tenant that the
base rent provided for in this Lease shall net to the Landlord, and that all
costs and expenses of every kind and nature relating to the leased premises
or this Lease shall be paid or reimbursed by Tenant. The net rent shall be
paid to Landlord without notice, demand, deduction or setoff, and all costs
and expenses relating to the leased premises and this Lease shall constitute
additional rent due from Tenant to Landlord under the terms of this Lease.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
year and day first above written.
CENTRAL INVESTMENT CO., LTD.,
a limited partnership
By: /s/ Andrew Clifton Nelsen
----------------------------
Andrew Clifton Nelsen, General Partner
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AUSTINS 72ND, INC.,
A Nebraska Corporation
By: /s/ Paul Schorr, III
---------------------
Its: President
-------------------
STATE OF NEBRASKA )
) ss
COUNTY OF DOUGLAS )
The foregoing instrument was acknowledged before me this 15 day of April,
1998, by Andrew Clifton Nelsen, General Partner of Central Investment Co.,
Ltd., a limited partnership, on behalf of the limited partnership.
GENERAL NOTARY-State of Nebraska
V. KAY LANE
My Comm. Exp. May 16, 2000
/s/ V. Kay Lane
----------------------
Notary Public
STATE OF NEBRASKA )
) ss
COUNTY OF LANCASTER )
The foregoing instrument was acknowledged before me this 17th day of
April, 1998, by Paul Schorr, President of Austins 72nd, Inc., a Nebraska
corporation, on behalf of the corporation.
GENERAL NOTARY-State of Nebraska /s/ Karolynn S. Mizell
KAROLYNN S. MIZELL ----------------------
My Comm. Exp. July 22, 2000 Notary Public
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EXHIBIT A
Legal Description of the South 12 ft. of the West 232.4 (plus or minus) ft.
of the East 272.4 (plus or minus) ft. of Tax Lot 2, Together with the North
308.6 ft. of the West 232.4 (plus or minus) ft. of the East 267.4 (plus or
minus) ft. of Tax Lot 3, All in the NE 1/4 of the NE 1/4 of Sec. 26 T 15 N, R
12 E of the 6th PM, Douglas County, Nebraska, more particularly described as
follows:
Beginning at a point 73 ft. west of the east line of the NE 1/4 of the NE 1/4
of SEC. 26 T 15 N, R 12 E of the 6th PM in Douglas County, Nebraska, and 12
ft. north of the south line of Tax Lot 2 in said Sec. 26; thence west and
parallel to the said south line of said TL 2, 232.4 (plus or minus) ft.
(232,59' measured); thence south and parallel to the east line of said NE 1/4
of the NE 1/4 of said Sec. 26, 12 ft. to the south line of said Tax Lot 2;
thence east along the south line of said TL 2, 232.4 (plus or minus) ft. to a
point 73' west of the east line of said NE 1/4 of the NE 1/4 of said Sec. 26;
thence north 12 ft. to place of beginning.
Together with part of said Tax Lot 3 described as follows: beginning at a
point on the north line of TL 3, 68 ft. west of the east line of said NE 1/4
of the NE 1/4 of said Sec. 26; thence west along the north line of said TL 3,
232.4 (plus or minus) ft; thence south 308.3 ft. to a point 300.05 ft. west
of the east line of said NE 1/4 of the NE 1/4 of said Sec. 26; thence east
232.05 ft. to a point 68 ft. west of the east line of said NE 1/4 of the NE
1/4 of said Sec. 26 and 308.6 ft. south of the point of beginning; thence
north, 68 ft. west of and parallel to the said east line of said NE 1/4 of
the NE 1/4 of said Sec. 26, 308.6 ft. to the point of beginning.
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SCHEDULE B
Bar Counter and Bar Back
All lights, electrical fixtures and related
All plumbing fixtures
All walk-in coolers and freezers
All heating and cooling fixtures
All permanently attached fixtures and equipment
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EXHIBIT 10.8
LEASE
THIS LEASE, dated for reference purposes only, the 1st day of June, 1998,
is made by and between STEER ENTERPRISES, INC. ("Lessor") and MISSOURI
DEVELOPMENT COMPANY, a Nebraska corporation ("Lessee").
1. PREMISES LEASED. Subject to the terms and conditions hereinafter set
forth, Lessor hereby leases to Lessee and Lessee hereby leases from Lessor
that certain real property, including all improvements located thereon,
located at 11111 Emmett Street in the City of Omaha, County of Douglas, State
of Nebraska, and legally described on EXHIBIT A attached hereto and
incorporated by reference herein (the "Premises").
2. TERM. The term of this Lease shall be as follows:
(a) EFFECTIVE DATE. The effective date of this Lease shall be as of 1st
day of June, 1998 (the "Effective Date");
(b) TERM. The term of this Lease shall be five (5) year(s) commencing on
the Effective Date.
(c) RENEWAL OPTION. So long as Lessee is not then in default of any of
its obligations under this Lease, Lessee shall have the option to
renew and extend this Lease three (3) additional term(s) of five (5)
year(s) each, upon the same terms and conditions, except rental, as
provided herein, by giving Lessor notice of Lessee's election to
renew or extend this Lease at least 180 days prior to the expiration
of the then current primary or renewal term.
3. RENTAL. Lessee shall pay to Lessor at the location identified in
Section 23 below as rental for the Premises during the primary or any renewal
term of this Lease, the sum of $6,800.00 monthly (the "Base Rent"), in
advance. The first Base Rent payment shall be due on the Effective Date and
successive monthly Base Rent payments shall be due and payable on the first
day of each successive month thereafter during the term of this Lease. Base
Rent for any portion of a calendar month shall be prorated on a per diem
basis. In the event Lessee validly exercises any of its option to renew the
term of the Lease as provided in Section 2(b) above, the monthly Base Rent
during the first renewal term shall be $7,310.00; during the second renewal
term shall be $7,858.25 and during the third renewal term shall be $8,447.62.
4. USE AND OCCUPATION OF PREMISES; COMPLIANCE WITH LAW. Lessee, by taking
possession of the Premises, accepts the same in their existing condition
without any representation or warranty, express or implied (except as
otherwise provided in this Lease), as to the condition of the Premises or any
improvements thereon or as to the use that may be made thereof. Lessee may
only use the Premises for the operation of a steakhouse restaurant and Lessee
shall not use the Premises for any other purpose without obtaining the prior
written consent of Lessor. During the term of this Lease, the Premises shall
be kept in a clean and wholesome condition, free from any disorderly conduct,
noise, odor or nuisance.
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Lessee shall at all times during the term of this Lease, at Lessee's own
cost and expense, perform and comply in all respects with all laws (including
all Environmental Laws), statutes, rules, orders, ordinances, regulations and
requirements now or hereafter enacted or promulgated, of every government and
municipality having jurisdiction over the Premises and of any agency thereof
and any applicable judgments, decrees, injunctions, writs, orders or like
actions of any court, arbitrator or administrator, or agency of competent
jurisdiction (collectively, "Applicable Laws") relating to the Premises or
any of the facilities or equipment therein, and Lessee shall so perform and
comply, whether or not such Applicable Laws shall now exist or shall
hereafter ben enacted or promulgated. Lessee shall also observe and comply in
all material respects with the requirements of any permits relating to the
Premises and all public liability, fire or other policies of insurance at
anytime enforced wit respect to the Premises.
Lessor hereby represents that the Premises is, or on the commencement
date of this Lease shall be, in material compliance with all laws (including
all Environmental Laws), statutes, rules, orders, ordinances, regulations,
and requirements now in existence of every government and municipality having
jurisdiction over the Premises and of any court, arbitrator, or
administrator, or agency of competent jurisdiction (collectively, "Applicable
Laws") relating to the Premises or any of the facilities of equivalent
therein. Lessor further represents that it, and Lessee has observed and
complied in all material respects with the requirements of any permits
relating to the Premises.
5. SECURITY DEPOSIT. Upon execution of this Lease by Lessee, Lessee
shall pay to Lessor a security deposit in the amount of $6,800.00 which shall
be held by Lessor, without interest, as security for the faithful performance
by Lessee of all the terms of this Lease by Lessee to be observed and
performed. Lessor shall have the right to commingle said security deposit with
its other funds.
If Lessee fails to pay any rent reserved or any other sum payable by
Lessee to Lessor pursuant to this Lease, or if Lessee should fail to perform
any other term of this Lease, then Lessor may, at its option and without
prejudice to any other remedy which Lessor may have on account thereof, apply
all or any portion of said security deposit toward the payment of rent or
other charges due or less or damage sustained by Lessor due to such breach on
the part of Lessee. In the event any proceedings are commenced by or against
Lessee under any chapter of the Bankruptcy Act, said security deposit shall
be deemed to be applied first to the payment of rent and other charges due
Lessor for all periods prior to the filing of such proceedings.
6. TAXES. Lessee covenants and agrees to pay, at the time of payment of
the monthly rent, as additional rent any privilege, sales, gross income or
other tax imposed upon or measured by the rentals from the Premises and the
appurtenances thereof. Lessee shall also pay during the term of this Lease,
within 30 days prior to delinquency, all real estate and personal property
taxes and assessments imposed upon the Premises, and the land upon which it
is situated and any furniture, fixtures or equipment located on or about the
Premises.
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7. UTILITIES. Lessee agrees to pay before delinquency all charges for all
utilities used at the Premises, including, but not limited to, water ,gas,
heating, cooling, electricity, telephone and power, and Lessee agrees not to
permit any charges of any kind to accumulate or become a lien against the
Premises.
8. INSURANCE; INDEMNITY. (a) Lessee will, at its own expense, carry and
maintain "all risks" insurance coverage, on a per occurrence basis, against
all hazards, including, but not limited to, fire, theft, and extended
coverage insurance naming Lessor and Lessor's lender or lenders as loss
payees thereunder. Such policies of insurance shall be in an amount not less
than the full replacement value of the Premises as determined by Lessor,
written by a financially sound and reputable insurer reasonably acceptable to
Lessor, and shall provide for at least 30 days written notice of cancellation
or material alteration to Lessor. Lessee shall furnish certificates as proof
of such insurance upon execution of this Lease by Lessee and within 10 days
after request therefore by Lessor. Any fire, theft and extended coverage
insurance with respect to the Premises shall name Lessor as loss payee and
any proceeds from such insurance received by Lessor shall be applied in
accordance with the terms and provisions of Section 11 hereof. Any such
deductible under such policy shall not exceed $1,000.00 per occurrence and
Lessee shall be responsible for the payment for all deductibles and repairs
falling within such deductible.
(b) Lessee shall maintain during the term of this Lease, at its expense,
a commercial general public liability insurance policy, for injury, death or
damage which might result from Lessee's occupation of the Premises or
business either to persons or property, in amounts not less than
$2,000,000.00 as to injury or loss of life of one person, $2,000,000.00 as to
injury and loss of life to all persons arising out of a single accident or
disaster, and $100,000.00 for accident or property damage liability. Lessee
shall also maintain during the term of this Lease, at its own expense,
insurance covering all plate glass in the Premises in an amount equal to
their full replacement value from time to time insuring the same against
breakage and other damage. Lessee shall also maintain during the term of this
Lease, at its expense, insurance covering all of Lessee's improvements,
fixtures, merchandise and other property.
(c) All such insurance to be maintained by Lessee pursuant to Section
8(b) above shall be for the mutual benefit and protection of Lessor and
Lessee shall name Lessor as coinsured and shall additionally contain a
provision to the effect that Lessor, although coinsured, shall be entitled to
recovery under said insurance for any loss or damage occasioned to it or its
servants, agents, employees, customers, visitors or licensees. Each insurance
policy shall provide that it may not be cancelled without giving Lessor
thirty (30) days prior written notice thereof. A copy of each insurance
policy and any renewals thereof shall be furnished by Lessee to Lessor.
(d) Lessee agrees to indemnify and hold harmless Lessor from and against
all third-party claims of whatever nature arising from any act, omission or
negligence of Lessee, or Lessee's officers, agents or employees, or arising
from any accident, injury or damage whatsoever caused to any third person,
or to the property of any such person, occurring during the term of this
Lease in or about the Premises or arising from any accident, injury or
damage occurring outside the Premises where such accident, damage or
injury results from an act or
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omission on the part of Lessee or Lessee's officers, agents or employees.
Lessee does also hereby indemnify Lessor against any expense, loss or
liability paid, suffered or incurred as the result of any breach by Lessee,
its servants, against, employees, customers, visitors or licensees, of any
covenant or condition contained in this Lease or as a result of Lessee's use
or occupation on the Premises or the careless, negligent or improper conduct
of Lessee, its servants, agents, employees, customers, visitors or licensees.
9. ALTERATIONS. Lessee shall not make any improvements, alterations,
additions, or changes to the Premises without obtaining the prior written
consent of Lessor. If Lessee desires to make any improvements, alterations,
additions or changes to the Premises, Lessee shall furnish Lessor with plans
and specifications for same, together with a written bid from a licensed
contractors reasonably acceptable to Lessor. All costs of construction shall
be borne by Lessee. Notwithstanding the foregoing, Lessee shall not make any
improvements, alterations, additions or changes of any nature to the exterior
or roof of the Premises. All alterations, additions or improvements installed
in the Premises at any time, either by Lessee or by Lessor on behalf of
Lessee, shall become the property of Lessor shall become the property of
Lessor and shall remain upon and be surrendered with the Premises unless
Lessor, by notice to Lessee not later than twenty (20) days prior to the
termination of this Lease, elects to have them removed by Lessee, in which
event, the same shall be removed from the Premises by Lessee forthwith at
Lessee's expense. Nothing contained herein shall be construed to prevent
Lessee's removal of trade fixtures, but upon removal of any such trade
fixtures from the Premises, or upon removal of other installations as may be
required by Lessor, Lessee shall immediately, and at is expense, repair and
restore the Premises to the condition existing prior to installation and
repair any damage to the Premises due to such removal. All property permitted
or required to be removed by Lessee at the end of the term remaining in the
Premises after Lessees removal shall be deemed abandoned and may, at the
election of Lessor, either be retained as Lessor's property or may be removed
from the Premises by Lessor at Lessee's expense.
10. MAINTENANCE OF PREMISES. Lessee shall, at its sole expense, keep and
maintain the exterior and interior of the Premises, including but not limited
to all plumbing, heating and air-conditioning equipment serving the Premises,
all fixtures and equipment therein and all window casements or frames, plate
glass, doors and door frames, locks, closing devices and Lessee's signs, and
the walls, roofs, foundations and all parking lots, driveways and landscaped
areas in good condition and repair during the term of this Lease. Lessee
shall keep the Premises in the condition required from time to time by all
applicable municipal, county, state and federal ordnances, law, rules and
regulations.
If Lessee refuses or neglects to timely make repairs or otherwise
maintain the Premises in accordance with the provisions hereof and in a
manner satisfactory to Lessor, Lessor shall have the right, but shall not be
obligated, to make any or all such repairs or perform any or all such
maintenance on behalf of and for the account of Lessee upon giving ten (10)
days written notice to Lessee of its intention to do so. In such event, all
sums expended and all expenses incurred by Lessor in connection with the
foregoing shall be additional rent hereunder, payable
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on demand, and bearing interest from the date of such expenditure or
occurrence at the highest legal rate permitted by law.
No exercise by Lessor of any rights reserved herein shall entitle Lessee
to any damages for any injury to the property or business of Lessee or
inconvenience occasioned thereby nor to any abatement of rent.
11. DAMAGE OR DESTRUCTION TO PREMISES. In the event of substantial
damage, unless this Lease is terminated as hereinafter provided, Lessor shall
with all due diligence commence to repair the Premises to the same condition
as existed immediately prior to such damage, and Lessor shall complete such
repair with due diligence and dispatch, and this Lease shall remain and
continue in full force and effect; provided, that such loss is insured and
that all proceeds of such insurance coverage are made available to Lessor and
are not subject to any superior right thereto of any other party; provided,
further that Lessee shall repair all damage caused by the acts or omissions of
Lessee or Lessee's officers, employees, agents or contractors and further
provided, that Lessee shall, at its sole expense, diligently repair, restore
or replace all damage or destroyed leasehold improvements, fixtures,
furniture, equipment and other property of Lessee in, on or at the Premises.
Lessor repair responsibilities hereunder shall be limited to available
insurance proceeds, and Lessee shall be responsible for all repair costs in
excess of available insurance proceeds. There shall be no abatement of rent
during any such repair period. If the damage is not repaired within ninety
(90) days after the date the damage occurs, Lessee shall have the right to
terminate this Lease by giving Lessor written notice. Upon such termination,
any unearned rent or other payments paid in advance beyond the date of damage
shall immediately be refunded to Tenant.
In the event the damage to the Premises by fire or any other casualty (but
not including any damage caused by the acts or omissions of Lessee or
Lessee's officers, employees, agents, contractors or employees) equals or
exceeds fifty percent (50%) of the replacement value thereof as of the date
such damage occurs, either Lessee or Lessor may elect to terminate this Lease
by giving notice in writing of such election to the other party within thirty
(30) days from the date the damage occurs. Upon such termination, any
unearned rent or other payments paid in advance beyond the date of damage
shall immediately be refunded to Lessee.
If Lessor and Lessee cannot agree whether damage or destruction of the
Premises is "minor damage" or "substantial damage" or whether the damage to
the Premises equals or exceeds fifty percent (50%) of its replacement value,
then the parties agree to submit such disputed issue or issues to binding
arbitration. Within forty-five (45) days of such damage or destruction, each
party shall select an arbitrator who is a duly licensed general contractor in
the State of Nebraska. If these arbitrators are unable to agree upon the
issue or issues submitted to them within ten (10) days following their
appointment, then such arbitrators shall elect a third arbitrator of like
qualification, and the decision of the third arbitrator shall be controlling.
Each party to this Lease shall pay for the services of its selected
arbitrator. The decision of the arbitrators or arbitrator in regard to any
issue or issues submitted shall be final and binding upon the parties.
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12. CONDEMNATION. Should the Premises or any portion thereof be taken
for public use by right of eminent domain with or without litigation, any
award for compensation and/or damages, whether attained by agreement prior to
or during the time of trial, or by judgement or verdict after trial, applying
to the leasehold estate created hereby other than that portion of said award,
if any, based upon a taking of Lessee's movable trade fixtures shall belong
and be paid to Lessor, and Lessee hereby assigns, transfers and sets over to
Lessor all of the right, title and interest which it might otherwise have
therein. In the event the portion of the Premises so taken shall be more than
fifteen percent (15%) of the floor area of the Premises, Lessee shall have
the option, to be exercised by written notice given to Lessor within thirty
(30) days after the date of such taking, to terminate this Lease. In the
event that more than fifteen percent (15%) of the floor area of the Premises
shall be so taken and Lessee does not so elect to terminate this Lease, or if
less than fifteen percent (15%) of the floor area of the Premises is so
taken, then the minimum monthly rent payable under this Lease shall be
reduced in the same proportion as the amount of said floor area is reduced by
such taking and Lessor shall make such reconstruction of the Premises as may
be required to the extent of the aforesaid award.
13. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease or any
interest herein, or mortgage or hypothecate this Lease or any interest
herein, or sublet the Premises in whole or in part, without obtaining the
written consent of Lessor, which consent will not be unreasonably withheld.
If Lessee is a corporation, the issuance or a transfer of any of the shares
of stock of said corporation (except to member of transferor's immediate
family by gift, devise or bequest) which results in a change in the ownership
of the majority of the issued and outstanding shares of stock of said
corporation as of this Lease, shall be deemed to be an assignment prohibited
hereby.
Lessor shall have the right to assign, transfer and convey all or any
part of its interest in this Lease or in the Premises at any time. Lessor's
obligations to Lessee shall cease wholly or partly, as the case may be, as of
the effective date of such assignment, transfer or conveyance and Lessee
shall thereafter look solely to the assignee, transferee or purchaser thereof.
In the event of any such assignment, transfer, or conveyance of all or any
part of Lessor's interest herein, either voluntarily or involuntarily, as a
result of a foreclosure of any mortgage or deed of trust, or otherwise,
Lessee hereby agrees to attorn to, and become the Lessee of any assignee,
successor in interest or purchaser of Lessor's interest here.
14. DEFAULT BY LESSEE AND REMEDIES.
a. DEFAULT. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee;
(i) The failure by Lessee to make any payment of rent, additional
rent or any other payment required to be made by Lessee
hereunder within five (5) days after the same shall be due.
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(ii) The failure by Lessee to observe or perform any other
covenant, condition or provision of this Lease to be observed
or performed by Lessee where such failure shall continue for a
period of thirty (30) days after written notice thereof is
given by Lessor to Lessee.
(iii) The abandonment of the Premises by Lessee for a period of
thirty (30) days.
(iv) Lessee makes an assignment for the benefit of creditors or a
receiver is appointed to take possession of substantially all
of Lessee's assets located in the Premises or of Lessee's
interest in this Lease, or a petition is filed by or against
Lessee under any section of the Bankruptcy Act which is not
dismissed within sixty (60) days thereafter, or substantially
all of Lessee's assets located in the Premises of Lessee's
leasehold interest in the Premises are attached or taken by
other judicial seizure.
b. REMEDIES. In the event of any such material default or breach by
Lessee, Lessor shall have the right, at its election, adhering to applicable
legal processes without further notice or demand, to re-enter upon the
Premises and take possession of the same and of all equipment and fixtures
therein, including the right to change door locks and suspend utilities and
services and expel or remove Lessee and all other parties occupying the
Premises using such force as may reasonably be necessary to do so without
being liable to Lessee for any loss or damage occasioned thereby; such
property may be removed and stored in any place for the account of and at the
expense and risk of Lessee, and Lessee will pay to Lessor on request any and
all expenses incurred in such removal and any storage charges therefore; or
Lessor may, at its option, without notice to Lessee, sell said property for
such price and upon such terms as Lessor may determine, applying the proceeds
of such sale upon any amounts due under this Lease, including the expenses of
removal and sale.
Should Lessor elect to re-enter as herein provided or should it take
possession pursuant to legal proceedings, it may terminate this Lease or it
may, from time to time, without terminating this Lease, relet the Premises or
any part thereof for such term or terms and at such rental or rentals and
upon such other terms and conditions as Lessor in its sole discretion may
deem advisable with the right to make alterations and repairs to the Premises
at the expense of Lessee, or it may avail itself of any other right or remedy
granted by law or equity, to be exercised cumulatively or successively as the
law permits. In the event that Lessor relets the Premises from time to time,
Lessee shall have no right or authority whatever to collect any rentals
received thereunder and rentals so received by Lessor shall be applied first
to the payment of any indebtedness, other than rent, due hereunder from
Lessee to Lessor, then to the payment of any cost of such reletting,
including attorney's fees and leasing commissions which Lessor may have paid
or incurred in connection with such repossession and reletting, then to the
payment of the cost of any alteration or repair to the Premises to make them
tenantable or acceptable to a new tenant, then to the payment of rent due and
unpaid hereunder, and the
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residue, if any, shall be held by Lessor and applied in payment of future
rent as the same may become due and payable thereafter.
Whether or not the Premises are relet, Lessee shall pay Lessor all
amounts required to be paid by Lessee up to the date of Lessor's re-entry,
and thereafter Lessee shall pay Lessor until the end of the term of this
Lease the amount of all rentals and other charges required to be paid by
Lessee hereunder, less the proceeds of such reletting during the term hereof,
if any, after payment of the foregoing. Such payments by Lessee shall be due
at such times as we are provided in this Lease, and Lessor need not delay any
action to recover such payments until the termination of this Lease. Lessor
shall not by such re-entry or other act be deemed to have terminated this
Lease or the liability of Lessee for the total rent reserved hereunder unless
Lessor shall give to Lessee written notice of Lessor's election to terminate
this Lease as provided herein, and Lessor shall thereupon be entitled to
recover from Lessee the worth, at the time of such termination, of the
excess, if any, of the rent and other charges required to be paid by Lessee
hereunder for the balance of the term of this Lease (if this Lease has not
been so terminated) over the then reasonable rental value of the Premises for
such period.
In addition to any other remedy provided to Lessor herein, and regardless
of which remedy or remedies are exercised by Lessor, upon any default or
breach of this Lease by Lessee which is not cured within the time period
provided in Section 14.a above, Lessor shall have the option to purchase, and
Lessee hereby grants Lessor the option to purchase, all furniture, fixtures
and equipment located in or about the Premises, which Lessor shall pay a
purchase price therefore equal to the amount of the existing loan debt
against such furniture, fixtures and equipment. Upon the exercise of such
option, Lessee shall, within 15 days after request therefore from Lessor,
convey said furniture, fixtures and equipment to Lessor by bill of sale.
15. RULES AND REGULATIONS. Lessee agrees and covenants that it shall
comply with all rules and regulations regarding the use and occupancy of the
Premises as Lessor shall in its sole discretion establish from time to time.
Upon the (10) days written notice to Lessee, Lessor shall have the right to
repeal, amend, alter or supplement such rules and regulations.
16. ACCESS TO PREMISES. Lessor shall have the right to enter upon the
Premises at all reasonable times for the purpose of examining or inspecting
the Premises or showing the same to prospective purchasers or tenants or
lenders. Lessor shall have the right to place a sign upon the Premises
indicating that the Premises are for rent, lease or sale sixty (60) days
prior to the expiration of the term of this Lease.
17. SURRENDER OF THE PREMISES. Upon the expiration or sooner termination
of this Lease, Lessee shall quit and surrender to Lessor the Premises and all
improvements thereon, in good order and condition, ordinary wear excepted.
18. HOLDING OVER. If Lessee shall remain in possession of the Premises
after the expiration or sooner termination of this Lease, such occupancy
shall, at the sole option of
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Lessor, be a tenancy from month to month upon all of terms and provisions
hereof. Said monthly tenancy may be terminated by Lessor upon giving Lessee
prior written notice.
19. SUBORDINATION. Lessee's interest under this Lease at the option of
Lessor is and shall be subject, subordinate and inferior to the lien of any
mortgage or deed of trust now or hereafter placed by Lessor upon the Premises
and to all renewals, modifications, consolidations, replacements or
extensions thereof. The parties hereto intend that the foregoing provision
shall be self-operative and that no further instrument shall be required to
effect such subordination, but Lessee shall, within 10 days after request
from Lessor, at any time or times execute and deliver any and all instruments
that may be reasonably necessary or proper to effect such subordination or
to conform or evidence the same.
20. CERTIFICATE OF LEASE. At any time and from time to time Lessee
agrees, within 10 days after request from Lessor, to execute, acknowledge and
deliver to Lessor a statement in writing and in recordable form certifying
that this Lease is in full force and effect and setting forth such other
matters and information as may be reasonably required from a prospective
mortgagee or purchaser of the Premises. Lessee agrees that any such statement
delivered pursuant to this section may be relied upon by any prospective
purchaser, mortgagee or assignee of any mortgagee of the Premises.
21. WAIVER. Lessee hereby releases and waives, on behalf of itself and
any company, firm or individual insuring Lessee or Lessee's property, any
claim or right of subrogation against Lessor which would otherwise arise in
favor of any such party. Lessee agrees that, to the extent that such
endorsement is available, it will obtain for the benefit of Lessor a waiver of
any right of subrogation from Lessee's insurers.
22. NOTICES. All notices under this Lease must be in writing and either
hand-delivered or sent by United States certified or registered mail, postage
prepaid, addressed as follows, except that any party may by written notice
given as aforesaid change its address for subsequent notices to be given
hereunder:
(a) Lessor: Steer Enterprises, Inc.
4524 Farnam Street
Omaha, Nebraska 68132
Attn: Greg Cutchall
(b) Lessee: Missouri Development Company
6940 "O" Street, Suite 334
Lincoln, Nebraska 68510
Attn: Tish Jones
23. TIME OF ESSENCE. Time shall be of the essence of this Lease and
each of the provisions herein.
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24. CUMULATIVE REMEDIES. No remedy or election given by any provision in
this Lease shall be deemed exclusive unless so indicated but it shall,
wherever possible, be cumulative with all other remedies in law or equity,
except as otherwise herein specifically provided.
25. WAIVER. No waiver by Lessor of any provision of this Lease shall be
effective except by an instrument in writing signed by Lessor and shall not
be deemed to be a waiver of any other provisions hereof or of any subsequent
breach by Lessee of the same or any other provision. If Lessor consents to or
approves of any act by Lessee, such consent or approval shall not be deemed
to be a waiver of any requirement of Lessor's consent to or approval of any
subsequent act of Lessee, whether or not similar to the act so consented to
or approved. No act or thing done by Lessor or Lessor's agents during the
term of this Lease shall be deemed an acceptance of a surrender of the
Premises and no agreement to accept such a surrender shall be valid unless in
writing and signed by Lessor. No employee of Lessor, or of Lessor's agents,
shall have any power to accept the keys to the Premises prior to the
termination of this Lease and the delivery of the keys to any such employee
shall not operate as a termination of this Lease or a surrender of the
Premises.
26. ENTIRE AGREEMENT. This Lease and the covenants and agreements set
forth herein are and shall constitute the entire agreement between the
parties. No prior agreement or understandings, verbal or otherwise, of the
parties, their agents, servants, employees or attorneys shall be valid or
enforceable unless embodied in this Lease. Each party to this Lease hereby
acknowledges and agrees that the other party has made no warranties,
representations, covenants and agreements, express or implied, to such party
other than those expressly set forth herein, and that each party in entering
into and executing this Lease has relied upon no warranties, representations,
covenants, or agreements other than those expressly set forth herein. This
lease may not be altered or amended in any respect except by an agreement in
writing executed by Lessor and Lessee.
27. BENEFITS. This Lease shall be binding upon and inure to the benefit
of the parties hereto and their representatives, successors and permitted
assigns.
28. ENVIRONMENTAL INDEMNITY.
(a) (i) Lessee shall keep and maintain the Premises in compliance with,
and shall not cause or permit the Premises to be in violation of, applicable
environmental laws (below defined). Lessor shall have the right, at all
reasonable times, to inspect the Premises to confirm Lessee's compliance with
the foregoing.
(ii) Lessee will promptly notify Lessor of any changes in the
Lessee's operations and shall likewise promptly notify Lessor upon Lessee's
receipt of any warning, notices, notices of violations, lawsuits or the like
received by Lessee from any governmental or similar agency relating to
lawsuits filed by third parities relating to environmental impacts and/or
releases of hazardous materials, hazardous wastes, hazardous substances or
substances having a negative
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environmental impact on the Premises, or the discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Premises
of which Lessee becomes aware which might cause the Premises or any portion
thereof to be in violation of any environmental law or subject to any
restriction on ownership, occupancy, transferability or use under any
environmental law.
(b) (i) If any investigation, site monitoring, containment, cleanup,
removal, restoration or other remedial work of any kind or nature
(collectively, the "Remedial Work") is required reasonably necessary or
desirable under any applicable environmental law because of or in connection
with the current or future presence, suspected presence, release or
suspected release of a hazardous substance into the air, soil, ground water,
surface water, or soil vapor on, under or about the Premises or any portion
thereof, Lessee shall promptly commence and diligently prosecute to
completion all such Remedial Work. In all events, such Remedial Work shall be
commenced within twenty (20) days after any demand therefor by lessor, or
such shorter period as may be required under any applicable environmental law.
(ii) All Remedial Work shall be performed by contractors, and under
the supervision of an independent consulting engineer, each approved in
advance by Lessor. All costs and expenses of such Remedial Work and Lessor's
monitoring or review of such Remedial Work (including reasonable attorneys
fees) shall be paid by Lessee. If Lessee does not timely commence and
diligently prosecute to completion the Remedial Work, Lessor may (but shall
not be obligated to) cause such Remedial Work to be performed, and all costs
and expenses thereof (including reasonable attorneys fees) shall be
considered as rental and shall, together with interest thereon, be paid by
Lessee to Lessor immediately upon demand.
(iii) Except with Lessor's prior consent, Lessee shall not commence
any Remedial Work (unless required to be immediately commenced by
governmental authorities and after immediate notice thereof to Lessor) or
enter into any settlement agreement, consent decree or other compromise
relating to any hazardous substances or environmental laws which might, in
Lessor's sole judgment, impair the value of Lessor's security hereunder.
Lessor's prior consent shall not be required, however, if the presence or
threatened presence of hazardous substances on, under or about the Premises
poses an immediate threat to the health, safety or welfare of any person or
is of such a nature that an immediate remedial response is necessary, and it
is not possible to obtain Lessor's prior consent. In such event, Lessee shall
notify Lessor as soon as practicable of any action taken.
(c) Lessee shall provide annual certifications to Lessor that it is in
compliance with the environmentally related restrictions of this Lease.
(d) Lessee shall protect, indemnify and hold Lessor and Lessor's
directors, officers, employees, agents, successors and assigns harmless from
and against any and all loss, damage, cost, expense and liability (including
reasonable attorneys fees) directly or indirectly arising out of or
attributable to the installation, use, generation, manufacture, production,
storage, release, threatened release, discharge, disposal or presence of a
hazardous substance on, under or about
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the Premises or any portion thereof including (i) all foreseeable
consequential damages, (ii) the costs of any required or necessary repair,
cleanup or detoxification, and (iii) the costs of the preparation and
implementation of any closure, remedial or other required plans. This
indemnity shall survive the termination or other ending of this Lease.
Notwithstanding anything herein to the contrary, the liability of Lessee for
the indemnity in this paragraph shall be limited to environmental matters
which arise, regardless of how caused, after the Effective Date hereof and
prior to the latter of the termination of this Lease or the discovery of
Lessee's noncompliance with the terms of this Section.
(e) Notwithstanding other provisions of this Lease, Lessor shall have
the right to terminate the Lease for Lessee's failure to comply with the
environmentally related provisions hereof, ten days following delivery of
notice by Lessor to Lessee thereof.
(f) "Environmental Law" shall mean, for purposes hereof, any federal,
state or local law, statute, regulation or ordinance, and any judicial or
administrative order or judgment thereunder, pertaining to health, industrial
hygiene or the environmental or ecological conditions on, under or about the
Premises, including each of the following as to date or hereafter amended:
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Sections 9601-9657; the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Sections 6901-6991(i); the Toxic Substances Control
Act, 15 U.S.C. Sections 2601-2629; the Water Pollution Control Act (also
known as the Clean Water Act), 33 U.S.C. Section 1251 ET SEQ., and the
Hazardous Materials Transportation Act, 49 U.S.C. Section 18 ET SEQ.
(g) "Hazardous Substance" shall mean for purposes hereof any material,
waste or substance which is:
(i) included within the definitions of "hazardous substances,"
"hazardous materials," "toxic substance," or "solid waste" in or pursuant to
any environmental law, or subject to regulation under any environmental law;
(ii) listed in the United States Department of Transportation
Optional Hazardous Materials Table, 49 C.F.R. Section 172.101, as to date or
hereafter amended, or in the United States Environmental Protection Agency
List of Hazardous Substances and Reportable Quantities, 40 C.F.R. Part 302,
as to date or hereafter amended; or
(iii) explosive, radioactive, asbestos, a polychlorinated biphenyl,
oil or a petroleum product.
(h) During the period that Lessor has owned the Premises, the Premises
has been owned, leased, and operated in material compliance with all federal,
state, or local laws, statutes, ordinances, regulations, rules, judgments,
orders, notice requirements, court decisions, permits, licenses, agency
guidelines or principles of law, which (i) regulate or relate to the
protection or cleanup of the environment, the use, treatment, storage,
transportation, handling, or disposal of hazardous, toxic or otherwise
dangerous substance, wastes or materials (whether
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gas, liquid, or solid), the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural
resources, or the health and safety of persons or property, including without
limitation protection of the health and safety of employees or (ii) impose
liability with respect to any of the foregoing, including without limitation
the Federal Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.),
Resource Conservation & Recovery Act (42 U.S.C. Section 6901 ET SEQ.)
("RCRA"), Safe Drinking Water Act (21 U.S.C. Section 349, 42 U.S.C. Section
201, 300f) Toxic Substances Control Act (15 U.S.C. Section 2601 ET SEQ.),
Clean Air Act (42 U.S.C. Section 7401 ET SEQ.), Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 ET SEQ.)
("CERCLA") or any other similar federal, state, or local law of similar effect,
each as amended ("Environmental Laws"). Lessor has not received any notice
that there is pending or threatened lawsuit, governmental action or other
legal action claiming that the Premises are in violation of the provisions of
any Environmental Law or in non-compliance or violation with the conditions
of any permit required under any Environmental Law.
Any handling, transportation, storage, treatment, or use of any quantity of
hazardous, toxic or otherwise dangerous substances, materials, or wastes,
whether solid, liquid or gas, including but not limited to asbestos in any
form, urea formaldehyde, PCB's, radon gas, crude radioactive substance, any
infectious reactive, corrosive, ignitable or flammable chemical or chemical
compound ("Hazardous Materials"), that has occurred on the Premises while
Lessor has owned the Premises has been in compliance with all Environmental
Laws and performed in a manner that will not result in liability of Lessor or
Tenant under any Environmental Law.
Lessor is not aware of any present or past Environmental Conditions (as
defined below) in any way relating to the Premises. "Environmental
Conditions" mean the introduction into the soil, groundwater, soil vapor or
environment of the Premises (through leak, spill, release, discharge, escape,
migration, emission, dumping, disposal or otherwise) of any chemical or
chemical compound, including without limitation any contaminant, irritant or
pollution or other Hazardous Material (whether gas, liquid, or solid)
(whether or not such introduction constituted at the time thereof a violation
of any Environmental Law), as a result of which Lessor or Lessee has or may
become liable to any person or entity.
Lessor agrees to indemnify, defend (with counsel approved by Tenant) and hold
Tenant and its directors, officers, employees, and agents harmless from any
and all claims, judgments, damages (including consequential damages),
penalties, fines, costs, liabilities (including sums paid in settlement of
claims) or loss including attorney's fees, consultant fees,and expert fees
(consultants and experts to be selected by Tenant) from or in connection with
(i) any Environmental Condition caused by Lessor (ii) any liability arising
under any Environmental Law on account of the conduct of Lessor, or (iii) the
breach of any of the representations or warranties contained in this Lease.
Without limiting the generality of the foregoing, the indemnification
provided by this paragraph shall specifically cover costs incurred in
connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of any Environmental
Condition, unless the Environmental Condition is a direct result of the
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Tenant's use of the Premises or the acts or inactions or willful misconduct
of Tenant's officers, employees, agents, or invitees.
IN WITNESS WHEREOF, the parties hereto have executed this Lease in
duplicate the day and year first above written.
LESSOR LESSEE
STEER ENTERPRISES, INC. MISSOURI DEVELOPMENT COMPANY
By: /s/ illegible By: /s/ illegible
--------------------------------- -----------------------------
Title: President Title: Secretary
------------------------------ --------------------------
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EXHIBIT A
Lot 1, Lemke's Addition, a Subdivision, as surveyed, platted and recorded in
Douglas County, Nebraska.
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GUARANTY
In consideration of Landlord's entering into the Lease dated June 1,
1998 between STEER ENTERPRISES, INC., as Landlord, and MISSOURI DEVELOPMENT
COMPANY, as Tenant (herein called the "Lease"), and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged by the
undersigned, a principal shareholder of Tenant (herein called "Guarantor").
Guarantor guarantees the full and punctual payment of rent and other charges,
rates, and sums to be paid by Tenant under the Lease and the performance by
Tenant of all of the terms and conditions thereof, and agrees:
(1) That, if Tenant shall default in the payment or performance of any
of its obligations under the Lease, Guarantor will pay to Landlord any
payment that may be due to Landlord or perform any obligation accruing by
reason of such default, together with all damages that may arise in
consequence thereof and all attorneys' fees that may be incurred by Landlord
in enforcing such covenants and agreements set forth in the Lease or in
enforcing the covenants and agreements of Guarantor herein, all without
requiring notice from Landlord of any default by Tenant, which notice is
hereby waived by Guarantor;
(2) That, at Landlord's option, the Guarantor may be joined in any
action or proceeding commenced by Landlord against Tenant in connection with
and based upon the Lease or any provision thereof, and that recovery may be
had against the Guarantor in any such action or proceeding or in any
independent action or proceeding against the Guarantor, without any
requirement that Landlord, its successors or assigns, first assert, prosecute
or exhaust, any remedy or claim against Tenant, its successors and assigns;
(3) That, in the event of any bankruptcy, reorganization, winding-up or
similar proceedings with respect to Tenant, no limitation on Tenant's
liability under the Lease which may now or hereafter be imposed by any
federal, state or other statute, law, regulation or judicial or
administrative determination applicable to such proceedings shall in any way
limit Guarantor's obligation hereunder, which obligation is co-extensive with
Tenant's liability as set forth in the Lease without regard to any such
limitation;
(4) That, this Guaranty shall be absolute and unconditional and shall
be in full force and effect notwithstanding any amendment, addition,
assignment, sublease, transfer, renewal, extension or other modification of
the Lease, whether or not Guarantor shall have knowledge or have been
notified of or agreed or consented thereto;
(5) That, the validity of this Guaranty and the obligations of
Guarantor hereunder shall not in any way be terminated, affected or impaired
by reason of any action which Landlord might take or be forced to take
against Tenant, or by reason of any waiver of or failure to enforce any of
the rights or remedies reserved to Landlord in the Lease, or otherwise, or by
reason of any extension of time or other forbearance granted to Tenant by
Landlord, or Landlord's compromise, settlement, release, discharge,
subordination or indulgence with respect to, or failure, neglect or omission
to collect or enforce, or to record, file, perfect, enforce or
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exercise any liens or rights with respect to any claims against Tenant,
Guarantor or any other person liable directly therefor;
(6) That, Guarantor hereby waives notice of any and all notices or
demands which may be given by Landlord to Tenant, whether or not required to
be given under the Lease and hereby waives any notice of acceptance of the
Guaranty by Landlord;
(7) Guarantor hereby warrants and represents that (i) Guarantor is
sufficiently knowledgeable and experienced in financial and business matters
to evaluate and understand the risks assumed in connection with the execution
of this Guaranty; (ii) Guarantor has had the opportunity to examine the
records, reports, financial statements, and other information relating to the
financial condition of Tenant; (iii) Guarantor has relied solely upon
investigations of Tenant's financial conditions conducted by Guarantor or
Guarantor's authorized representative to execute this Guaranty; and (iv)
Guarantor, or its authorized representatives, shall continue independently to
review, monitor and investigate the financial condition of Tenant while this
Guaranty is in effect, Guarantor specifically relieving Landlord of any duty,
obligation, requirement or responsibility of any nature whatsoever to advise
Guarantor of any change in Tenant's financial condition;
(8) If Landlord at any time is compelled to take action, by legal
proceedings or otherwise, to enforce or compel compliance with the terms of
the Guaranty, the Guarantor shall, in addition to any other rights or
remedies to which Landlord may be entitled hereunder or as a matter of law or
in equity, pay to Landlord all costs, including reasonable attorneys' fees,
incurred or expended by Landlord in connection therewith; and
IN WITNESS WHEREOF, Guarantor has executed this Guaranty, under seal, on
June 1, 1998.
AUSTINS STEAKS & SALOON, INC.
By /s/ illegible
-------------------------------
Its Secretary
------------------------------
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EXHIBIT 10.8.1
--------------
OFFER TO PURCHASE
Austins Steaks & Saloon, Inc., as Buyer, hereby offers to purchase assets
from Steer Enterprises, Inc./MIHART, Inc., as Seller, identified herein.
SECTION ONE
SUBJECT MATTER
Subject to the terms and conditions of this offer, Buyer agrees to
purchase:
(a) All of the furniture, fixtures, equipment and leasehold
interests of Seller of every kind and description, real, personal, mixed,
tangible, and intangible (Assets), wherever situated (except for the Bum
Steer outdoor signs). Without limiting the foregoing, the Assets are as
listed on the attached Exhibit "A," which is incorporated herein. Prior to
closing, Buyer shall have the option to conduct a due diligence inspection of
the Assets. This offer is contingent on such due diligent inspection
confirming the Assets are in Buyer's possession and further that such Assets
are in good operating condition and repairs.
By accepting this Offer, Seller represents and warrants the book value of
Seller's furniture, fixtures and equipment has not materially changed from
February 22, 1998 until the date this Offer is signed by Seller. This Offer
is contingent upon Seller's representations herein being true and accurate.
(b) It is further expressly agreed that Buyer shall assume the
following liabilities and obligations of Seller only and NO OTHERS:
Micek - $174,881.67 (approximately)
Mid City Bank - $102,971.65 (approximately)
(c) Seller acknowledges that the computer system and
point-of-sale equipment used by Seller is not year 2000 compatible. Seller
agrees to pay for the cost of upgrading said computer system and
point-of-sale equipment to make it year 2000 compatible prior to closing
date. If the upgrade is not completed prior to the closing, Seller agrees to
deposit in escrow such funds as are acceptable to Buyer as Seller's assurance
such upgrade will be timely completed. Such escrow funds will be released at
such time as the upgrade is complete. Should Seller fail to complete the
upgrade within 30 days following closing, Buyer shall be entitled to demand
from escrow the funds deposited by Seller and apply such funds to the upgrade.
SECTION TWO
CONSIDERATION
The consideration to be paid by Buyer to Seller for the assets, and
rights to be purchased by Buyer shall be:
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(A) 225,000 shares of stock of Buyer delivered to Seller on the
closing date subject to the conditions described section two(c) below:
(B) An additional 75,000 shares of stock of Buyer to be
delivered to Seller within 30 days following the one year anniversary of the
closing of the sale and purchase contemplated by this Agreement, contingent
upon the following:
(i) That the Buyer's net sales for the steak house
to be operated by Seller at 11111 Emmet Street, Omaha, Nebraska, for
the period commencing on the closing date and ending on the one year
anniversary of said closing, shall be an average of $28,500 per week
for each week Buyer's store was in operation during such period;
(ii) If Buyer's net sales do not meet the minimum
stated in section two(b)(i), Seller shall not be entitled to any
additional shares of stock or other compensation as consideration in
this Agreement;
(iii) For purposes of this Agreement, "net sales"
shall be defined as all food and beverage (beer, liquor, and wine)
sales less discounts and promotions.
(c) Seller shall hold all shares of stock subject to the
following conditions:
(i) Seller shall not transfer, sell, assign, or
otherwise dispose of said stock for a period of one year from the
date the shares of stock are issued to Seller. The holding period
for the 225,000 shares of stock to be issued at closing shall end on
the one year anniversary of the closing; the holding period for the
additional 75,000 shares of stock, if acquired by Seller under the
terms of this Agreement, shall be on the one year anniversary
following the date said shares are issued to Seller.
(ii) Following the one year holding period for the
225,000 shares of stock, Seller may transfer, sell, assign, or
otherwise dispose of said stock as follows.
(A) Seller shall be permitted to transfer,
sell, assign, or otherwise dispose of more than 11,250
shares of stock each calendar month;
(B) Buyer shall have a right of first
refusal to purchase any shares of stock to be
transferred, sold, assigned or otherwise disposed of by
Seller, upon the same terms and conditions as offered
by a bona fide offeror for said shares of stock.
(iii) Following the one year holding period for the
75,000 shares of stock (if acquired by Seller under the terms of this
Agreement), Seller may transfer, sell, assign, or otherwise dispose
of said stock as follows:
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(A) Seller shall be permitted to transfer,
sell, assign, or otherwise dispose of not more than
3,750 shares of stock each calendar month;
(B) Buyer shall have a right of first
refusal to purchase any shares of stock to be
transferred, sold, assigned or otherwise disposed of by
Seller, upon the same terms and conditions as offered by
a bona fide offeror for said shares of stock.
SECTION THREE
CONTINGENCIES AND CONDITIONS
1. This offer is subject to the following contingencies:
(a) This offer is specifically conditioned on and expressly
subject to the final approval of this sale prior to closing by the Board of
Directors of Buyer;
(b) The consummation of this offer does not violate any
agreement or restriction to which Seller is subject;
(c) All food and beverage inventories (consumables) should be
removed from the building upon closing;
(d) All furniture, fixtures, and equipment being sold is in
good operating condition and repair, subject only to normal wear and tear;
(e) Seller shall take all steps necessary and obtain all
authorizations necessary to consummate this transaction;
(f) Seller, as of the closing, shall have good and marketable
title to all the properties, assets, and rights to be delivered by Seller to
Buyer free of all liens, charges and encumbrances other than noted in section
one(b);
(g) Seller has not employed any broker or agent with respect
to the sale and purchase contemplated in this offer, nor taken any other
action nor will Seller take any such action that would cause Buyer to become
liable for the payment of any finder's fee, broker's fee, or commission;
(h) This offer is contingent upon legal and accounting due
diligence by Buyer and Buyer's attorneys and accountants;
(i) Seller shall lease to Buyer the property located at 11111
Emmet Street, Omaha, NE 68164 for five years at $6,800.00 per month, triple
net, with three-five year renewal options. The monthly rental for each
renewal option will increase by 7.5 percent. If Buyer assigns
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said lease to a related entity, Buyer shall guarantee payments under said
lease agreement. Simultaneously with executing this offer to purchase, Seller
shall deliver to Buyer all written leases entered into by Seller for the
property at 11111 Emmet Street, Omaha, NE 68164 and any personal property
leases for any personal property subject to this offer to purchase. The
parties will execute a written lease agreement on or before the closing date;
(j) All costs associated with removal of Bum Steer signs from
the premises shall be paid by Seller. All such signs shall be removed within
15 days following the closing date.
2. The following special conditions shall apply to this offer:
(a) Buyer has the right, with the Seller's approval, to
assign the lease under this offer to a corporation or other entity now
existing to be formed by Buyer.
(b) At the closing, or as soon as practicable after it,
Seller will deliver to Buyer all books, papers, and records relating to the
assets, and rights being purchased under this offer.
(c) All employees of the Seller will be given first
consideration for employment with Buyer.
(d) Seller agrees not to operate a steak house in Omaha,
Nebraska, without Buyer's written consent, for a period of five years from
the closing date. Buyer agrees not to operate a steak house in Lincoln,
Nebraska, without Seller's written consent, for a period of five years,
provided, such agreement shall not exclude Buyer from operating steak house
at 3940 Village Drive, Lincoln, Nebraska. The parties agree the above
covenants by each party are a material part of this Agreement.
(e) In the event Buyer shall receive a bona fide offer to
purchase either of Buyer's steak houses located at 3636 Scottsdale Road,
Scottsdale, Arizona, or 2400 Cerrillos Road, Santa Fe, New Mexico, Seller
shall have a right of first refusal to purchase said steak house upon the
same terms and conditions as offered by such bona fide offeror. Buyer shall
provide written notice, by certified mail, to Seller of the receipt of a bona
fide offer and, thereafter, Seller shall have fifteen days in which to elect
to purchase said steak house on the same terms and conditions as the bona
fide offer. Such election shall be made in writing and delivered to Buyer by
certified mail.
(f) In the event Seller shall receive a bona fide offer to
purchase Seller's steak house located at 6440 "O" Street, Lincoln, Nebraska,
Buyer shall have a right of first refusal to purchase said steak house upon
the same terms and conditions as offered by such a bona fide offeror. Seller
shall provide written notice by certified mail to Buyer of the receipt of a
bona fide offer and, thereafter, Buyer shall have fifteen days in which to
elect to purchase on the same terms and conditions as the bona fide offer.
Such election shall be made in writing and delivered to Seller by certified
mail.
(g) Upon the prior approval of the shareholders of Buyer, a
representative
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designated by Seller will be elect to the Board of Directors of Buyer.
(h) The parties agree no public announcement of this sale and
purchase will be made by either party, or such parties' representatives,
without first giving the other party at least 48 hours prior notice. Formal
public announcement to be made on or before May 15, 1998.
(i) Buyer acknowledges that Buyer is not aware of any current
intent of Tim Griggs and Tish Cade-Jones to leave their employment with Buyer
during the next two-year period.
SECTION FOUR
CLOSING
The date and time of closing shall be mutually agreed on by Seller and
Buyer; provided, however, said closing date to be not earlier than June 1,
1998 and not later than June 15, 1998. In the event of the inability of the
parties to agree on the closing date, Seller or Buyer shall have the right to
fix the closing date on 30 days' written notice to the other, the first such
notice received being binding.
SECTION FIVE
MISCELLANEOUS
1. Time is of the essence.
2. This offer shall be governed by and construed under the laws of
the State of Nebraska.
3. Seller and Buyer acknowledge Seller has prior to the Closing date
of this Agreement sold gift certificates to customers and members of the
general public, and Seller has received the consideration paid for said gift
certificates. Buyer agrees to accept and honor the gift certificates issued
by Seller, provided, Seller agrees to reimburse Buyer for such gift
certificates. On a monthly basis, Buyer will notify Seller of the number and
dollar amount of all gift certificates issued prior to the closing date and
honored by Buyer for the preceeding month. Seller agrees to reimburse buyer
for said gift certificates within thirty days of receipt of the notice
required hereto.
Dated: 5-14-98 Austins Steaks & Saloon, Inc., Buyer
-------
By: /s/ illegible
--------------------------
Dated: 5-15-98 Steer Enterprises, Inc./MIHART, Inc., Seller
-------
By: /s/ illegible
--------------------------
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EXHIBIT 10.8.2
LOAN ASSUMPTION AGREEMENT
THIS AGREEMENT made as of June 2, 1998 (the "Effective Date") by and
between STEER ENTERPRISES, INC. ("Steer"), GREGORY S. CUTCHALL ("Cutchall")
and AUSTINS STEAKS & SALOON, INC. ("Austins").
W I T N E S S E T H:
In consideration of the sum of Ten Dollars ($10.00) and other good and
valuable consideration, and in contemplation of that certain Offer to
Purchase dated May 14, 1998, made by and between Austins as buyer and Steer
and Mihart, Inc. as sellers, wherein Austins agreed to purchase certain
assets of Steer and Mihart, Inc., Steer and Cutchall, for themselves and
their successors and assigns, do hereby assign and transfer unto Assignee all
of Steer's and Cutchall's obligations and duties with respect to the
following "Loans":
1. The obligation to pay all of the principal balance and accrued
interest due under that certain Promissory Note (the "Micek Note"), dated
August 19, 1996, in the original principal balance of $180,000.00, made
by Steer to the order of Edward J. Micek ("Micek"), together with that
Deed of Trust securing the Micek Note, dated August 19, 1996, made by
Steer as Trustee for the benefit of Micek as Beneficiary.
2. The obligations to pay all of the principal balance and accrued
interest due under that certain Promissory Note (the "Mid City Note"),
dated October 2, 1996, in the original principal balance of $120,000.00,
made by Steer and Cutchall to the order of Mid City Bank ("Bank"),
together with that Security Agreement securing the Mid City Note, dated
October 2, 1996, made by Steer as debtor to Mid City Bank as secured
party.
The Micek Note and the Deed of Trust securing the same and the Mid City
Note and the Security Agreement securing the same shall hereinafter to
collectively referred to as the "Loan Documents".
Assignee, for its successors and assigns, does hereby accept, assume,
take over and succeed to all of Steer's and Cutchall's obligations and duties
with respect to the Loans and Loan Documents and all of their terms,
conditions; provisions, covenants and obligations contained therein, and any
amendments thereto, which Steer or Cutchall is obligated to keep or perform
and Assignee hereby covenants with Steer and Cutchall, and their success and
assigns, to fully and faithfully make, keep and perform all payments, terms,
conditions, covenants and obligations contained in the Loans and the Loan
Documents. Assignee shall indemnify and hold Steer and Cutchall harmless from
and against all payments, costs, expenses and obligations due under and with
respect to the Loan and the Loan Documents.
Assignee will immediately notify Steer and Cutchall of any and all
notices that Assignee may receive from Micek or Bank. If Assignee shall fail
to perform any of the obligations under the Loans or the Loan Documents,
either Steer or Cutchall shall have the right to cure any such
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default and any sums so expended by Steer or Cutchall in curing such defaults
shall be refunded to Steer or Cutchall, as the case may be, together with
interest thereon at the rate of 18% per annum, within 15 days after request
therefore from Steer or Cutchall.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
STEER ENTERPRISES, INC. AUSTINS STEAKS & SALOON, INC.
By: /s/ [Illegible] By: /s/ [Illegible]
------------------------------ ------------------------------
Title: President Title: Secretary
---------------------------- ---------------------------
/s/ Gregory S. Cutchall
- ----------------------------------
GREGORY S. CUTCHALL
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EXHIBIT 10.10.1
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CONSENT TO ASSIGMENT
This Consent to Assignment ("Agreement") is entered into by and
between Austins Lincoln, Inc., a Nebraska corporation ("Assignor"), Charlie's
On The Lake, Inc., a Nebraska Corporation ("Assignee") and Jack Irwin
("Irwin") as of the date this Agreement its fully executed by the parties for
good and valuable consideration including, but not limited to the promises
and convenants herein.
RECITALS:
A. Assignor currently operates a restaurant in Lincoln, Nebraska,
and owns certain business assets (the "Business Assets") as part of said
business. Said business is operating pursuant to a Commercial Lease entered
into March 15, 1993 (the "Commercial Lease") between Assignor as Lessee and
Irwin as Lessor.
B. Assignor desires to sell the Business Assets to Assignee.
C. Assignor has requested that Irwin consent to the Assignment of
the Commercial Lease in connection with the Assignor's sale of the Business
Assets to Assignee. Irwin is willing to consent to such sale and Assignment
upon the terms and conditions set forth herein below.
D. That the performance of the Lessee of the Commercial Lease has
been guaranteed by the Austins Steaks & Saloon, Inc., ("ASSI") and ASSI will
continue to guaranty the performance of the Lessee pursuant to the Lease
Guaranty originally executed by ASSI. Further, that Paul C. Schorr, III, will
personally guaranty the performance of the Commercial Lease with the guaranty
limited to $40,000.00.
NOW, THEREFORE, it is agreed as follows:
1. CONSENT. Irwin hereby agrees to the Assignment of the Commercial
Lease to Assignee, effective as of the date this Assignment is fully
executed, provided that Assignor and Assignee, as applicable, satisfy the
conditions precedent set forth herein.
Assignee hereby accepts the Assignment of the Commercial Lease and
hereby specifically agrees to:
a. Assume, keep, observe and perform all the conditions, covenants
and obligations imposed on the Lessee as set forth in the
Commercial Lease;
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b. To make all payments which may hereafter become due to the
Lessor under the Commercial Lease, according to the terms and
conditions of the Commercial Lease; and
2. CONDITIONS PRECEDENT. This Agreement and Irwin's consent granted
pursuant hereto, is expressly subject to and conditioned upon Assignor and
Assignee fulfilling the following conditions precedent and complying with the
balance of the terms set forth hereinafter:
a. All parties shall execute this Agreement and deliver the same to
Irwin.
b. All sums due and owing to Irwin pursuant to the Commercial Lease
up to and including the date of this Agreement shall be paid in
full.
c. That Paul C. Schorr, III, ("Schorr") execute a personal guaranty
of the performance of the Commercial Lease limited to $40,000.00.
3. ASSIGNMENT. For good and valuable consideration, the receipt of
which is specifically acknowledged, Assignor does hereby assign to the
Assignee all of the Assignor's rights, title and interest to and in the
Commercial Lease identified above
4. CONTINUING OBLIGATIONS. The Assignor acknowledges that the terms
of the Commercial Lease require that the Assignor continue to be bound to the
terms, conditions, and covenants of the Commercial Lease following the
Assignment. Assignor shall continue to be bound by said Commercial Lease.
ASSI acknowledges that it has guaranteed the performance of the
Lessee pursuant to a Lease Guaranty dated March 10, 1994, and that it will
continue to be bound to the terms, conditions, and covenants of the
Commercial Lease and the Lease Guaranty following the Assignment.
The parties acknowledge and agree that the ASSI guaranty shall
expire at the end of the Base Term of the Commercial Lease.
5. ASSIGNEE'S REPRESENTATIVES. Assignee hereby represents and
declares that the Assignee has relied wholly upon his individual judgment
regarding the facts and circumstances surrounding the investigation,
negotiation, and purchase of the business of the Business Assets and the
assumption of the terms, conditions and obligations of the Commercial Lease.
The decision to consummate the transaction by the Assignee is made without
reliance upon any statement or representation of Irwin and, further, Assignee
hereby releases Irwin and its affiliates from any action, cause of action, or
loss arising from the Assignee's investigation and purchase of the Business
Assets of the Assignor and the assumption of the obligations of the
Commercial Lease.
6. WARRANTIES. Assignor and ASSI hereby covenant, warrant and
represent to and with Assignee and Irwin that they will indemnify and hold
Assignee and Irwin harmless.
89
<PAGE>
from any and all claims or causes of action which may be made or asserted
against Assignee or Irwin as a result of any act or omission by anyone, if
such claim or cause of action is based upon any act or omission arising out of
ownership, operation or management of the restaurant and if such act or
failure to act occurred at any time prior to the date of the Assignment.
Assignee hereby gives Assignor and Irwin the same indemnifications as a result
of any act or omission by anyone or claims arising after the date of the
Assignment.
7. INDEMNIFICATION AND RELEASE. Assignor and Assignee hereby agree to
defend, indemnify and hold Irwin harmless from and against any claims,
demands, costs, attorney fees, or other damages or injuries which Irwin may
sustain as the result of any dispute arising in connection with the sale of
the Business Assets by Assignor to Assignee.
Assignor and ASSI hereby release, acquit and forever discharge Irwin from
any and all claims, actions, causes of action, demands, rights, damages,
costs and expenses whatsoever, which they now have or which may hereafter
accrue on account of or in any way growing out of any known or unknown,
foreseen or unforeseen acts or failures to act and the consequences thereof
arising out of the investigation, consideration, negotiation, execution of
the Commercial Lease and the Guaranty and operation of the Business to the
date of Assignment pursuant to the Commercial Lease.
8. ASSIGNMENT. Article 12 of the Commercial Lease provides for certain
rights of the Tenant to assign the Tenant's interest in the Commercial Lease.
The parties hereby acknowledge and agree that as a result of the continuing
obligation of ASSI and the Guaranty of Schorr, that said Article 12.a. shall
be amended by the addition of the following:
Notwithstanding anything to the contrary contained in this
Commercial Lease, Tenant shall not voluntarily or by operation of
law, assign, mortgage, sublet or otherwise transfer all or any part
of Tenant's interest in the Commercial Lease without the consent of
Austin's Steaks & Saloon, Inc., and Paul C. Schorr, III, so long as
said individual and corporation are Guarantors of this Commercial
Lease. Said consent may be withheld in the sole discretion of the
Guarantors.
9. NO WAIVER. Neither Irwin's consent to the proposed Assignment of the
Commercial Lease by Assignor to Assignee, nor the terms of any agreement
entered into between Assignor and Assignee to which Irwin is not a party,
shall in any manner limit, waive, or alter any of Irwin's rights or
obligations pursuant to the Commercial Lease or any guaranty thereof.
10. ENTIRE AGREEMENT. This Agreement supersedes any prior agreement,
oral or written, with respect to the subject matter hereof. The parties to
this Agreement understand and agree that no representations, warranties,
agreements, or covenants have been made with respect to this Agreement by
Irwin, other than those set forth herein, and that in executing this
Agreement the parties are not relying upon any representation, warranty,
agreement or covenant of Irwin not set forth herein.
]3[
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<PAGE>
11. AGREEMENT LEASE. This Agreement shall, in all [illegible]
IN WITNESS WHEREOF, the [illegible]
ASSIGNOR: [illegible] [illegible]
By: /s/ [illegible] By: /s/ [illegible]
--------------------------------- ---------------------------------
/s/ [illegible] /s/ [illegible]
--------------------------------- ---------------------------------
[illegible] [illegible]
By: /s/ [illegible] By: /s/ [illegible]
--------------------------------- ---------------------------------
President [illegible]
------------------------
STATE OF NEBRASKA )
)vs.
COUNTY OF LANCASTER )
[illegible]
STATE OF NEBRASKA )
)vs.
COUNTY OF LANCASTER )
[illegible] 13th day of March [illegible]
]4[
91
<PAGE>
STATE OF NEBRASKA )
)vs.
COUNTY OF LANCASTER )
The foregoing instrument was acknowledged before me this
13th day of March, 1998, by Paul C. Schorr, III, CEQ of Austins Steaks &
Saloon, Inc., a Delaware corporation.
[NOTARY] /s/
--------------------------------------
Notary Public
STATE OF NEBRASKA )
)vs.
COUNTY OF DOUGLAS )
The foregoing instrument was acknowledged before me this
13th day of March, 1998, by Yves Menard, President of Charlie's On the
Lake, Inc., a Nebraska corporation.
[NOTARY]
--------------------------------
Notary Public
]5[
92
<PAGE>
EXHIBIT 10.10.2
ASSIGNMENT AND CONSENT
This Assignment and Consent ("Agreement") is given effective January
____, 1999 by the Landlord, JACK IRWIN ("Irwin"), and the Guarantors,
AUSTIN'S STEAKS & SALOON, INC. ("Austin's"), a Delaware corporation, and PAUL
C. SCHORR, III ("Schorr") to the current Tenant, CHARLIE'S ON THE LAKE, INC.,
a Nebraska corporation ("COL") and the Assignee, CHARLIE'S SEAFOOD GRILL,
INC., a Nebraska corporation ("CSG").
RECITALS:
A. On or about March 10, 1994, Austin's Lincoln, Inc., a Nebraska
corporation, as Tenant, and Irwin, as Landlord, entered into a certain
Commercial Lease (herein referred to as the "Lease"), pertaining to real
property in Lincoln, Lancaster County, Nebraska commonly known as Lots 1 and
2, Williamsburg Village North 9th Addition (the "Property").
B. On or about March 16, 1998, Austin's Lincoln, Inc., a subsidiary of
Austin's, assigned to COL all of its interest as Tenant in the Lease incident
to the sale of certain Business Assets, and Schorr executed a personal
guaranty of Lease limited to $40,000. The Lease had been previously
guaranteed by Austin's pursuant to the terms and provisions of a Lease
Guaranty dated March 10, 1994 in favor of Irwin as Landlord.
C. Irwin consented to the assignment referred to in paragraph B above
by a Consent to Assignment ("Prior Consent") executed on or about March 16,
1998.
D. Paragraph 12 of the Lease requires the prior written consent of
Irwin to any further assignment thereof, and paragraph 8 of the Prior Consent
requires the consent of Austin's and Schorr to any such assignment.
E. In connection with the sale of certain Business Assets from COL to
CSG, COL now desires to further assign the Lease to CSG, and Irwin, Austin's
and Schorr are willing to give their consent to such further assignment upon
the terms and conditions herein stated.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and consents herein contained, it is agreed as follows:
1. CONSENT BY IRWIN. Irwin hereby agrees and consents to the assignment
of the Lease to CSG, effective as of the date this Assignment and Consent is
fully executed, provided that COL and CSG, as applicable, satisfy the
conditions precedent set forth herein.
2. CONSENT BY AUSTIN'S. Austin's hereby agrees and consents to the
assignment of the Lease to CSG, effective as of the date this Assignment and
Consent is fully executed, provided that COL and CSG, as applicable, satisfy
the conditions precedent set forth herein.
3. CONSENT BY SCHORR. Schorr hereby agrees and consents to the
assignment of the Lease to CSG, effective as of the date this Assignment and
Consent is fully executed, provided that COL and CSG, as applicable, satisfy
the conditions precedent set forth herein.
1
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<PAGE>
4. CONDITIONS PRECEDENT. This Agreement and the consents granted
pursuant hereto, is expressly subject to and conditioned upon COL and CSG
fulfilling the following conditions precedent and complying with the balance
of the terms set forth hereinafter:
a. All parties shall execute this Agreement and deliver the same to
Irwin, Austin's and Schorr.
b. All sums due and owing Irwin pursuant to the Lease up to and
including the date of this agreement shall be paid in full.
c. Schorr shall acknowledge the continued effectiveness of his personal
guaranty of the Lease limited to $40,000.
d. Yves Menard, principal of COL shall execute a personal guaranty of
the Lease, to be effective for a period of one year from execution,
limited to $40,000.
e. Austin's of Lincoln, Inc. ("AOLI"), the original tenant and COL as
AOLI's assignee, shall each acknowledge, pursuant to Article 12.b of the
Lease, the neither Irwin's consent to the AOLI/COL assignment of 3/16/98
nor this assignment release AOLI or COL.
5. FURTHER ASSIGNMENT. Article 12a of the Commercial Lease is hereby
amended by the addition of the following:
Notwithstanding anything to the contrary contained in this
Commercial Lease, Tenant shall not voluntarily or by operation of
law, assign mortgage, sublet or otherwise transfer all or any part
of Tenant's interest in the Commercial Lease without the consent of
Austin's Steaks & Saloon, Inc., and Paul C. Schorr III, so long as
said corporation and individual are Guarantors of this Commercial
Lease. Said consent may be withheld in the sole discretion of the
Guarantors without regard to the reasonableness or unreasonableness
of any refusal to provide such consent.
6. LEASE ASSIGNMENT. For good and valuable consideration, the receipt
and sufficiency of which is hereby specifically acknowledged, COL hereby
sells, assigns, transfers and sets over unto CSG all of its right, title and
interest in, to and under the Lease and in and to the Property therein leased.
7. ASSUMPTION OF LEASE. CSG hereby accepts said assignment and hereby
specifically agrees to:
a. Assume, keep, observe and perform all the conditions, covenants and
obligations imposed on the Tenant as set forth in the Lease;
2
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<PAGE>
b. To make all payments which may hereafter become due to the Landlord
under the Lease, according to the terms and conditions of the Lease; and
c. CSG hereby agrees to provide Schorr with monthly financial
statements for its operations by the 25th of the following month, for a
period of one year. Should CSG achieve 70% of its business plan sales for
the first year of operations, its obligation to provide monthly statements
hereunder shall cease, but if CSG shall fail to achieve 70% of its business
plan sales during the first year of operations, monthly financial reporting
pursuant to this paragraph shall continue until it has achieved such level
of annual sales.
8. CONTINUING OBLIGATIONS. Austin's and Schorr each acknowledges that
it has previously guaranteed the performance of the Lease pursuant to a
written Guaranty, and that each will continue to be bound according to the
terms, conditions, covenants and limitation of their respective Guaranty,
notwithstanding this Agreement. AOLI and COL hereby each acknowledge,
pursuant to Article 12.b of the Lease, that neither Irwin's consent to the
AOLI/COL assignment of 3/16/98 nor this assignment release AOLI or COL.
9. CSG'S REPRESENTATIONS. CSG hereby represents and declares that the
CSG has relied wholly upon its individual judgement and that of its
principals regarding the facts and circumstances surrounding the
investigation, negotiation, and purchase of the business of the Business
Assets and the assumption of the terms, conditions and obligations of the
Lease. The decision to consummate the transaction by the CSG is made without
reliance upon any statement of representation of Irwin, Schorr or Austin's
and further, CSG hereby releases Irwin, Schorr and Austin's and the
affiliates of each of them from any action, casue of action, or loss arising
from CSG's investigation and purchase of the Business Assets of COL and
assumptions of the obligations of the Lease.
10. INDEMNITY BY COL. COL hereby covenants, warrants and represents to
end with CSG and Irwin that it will indemnify and hold CSG and Irwin harmless
from any and all claims or causes of action which may be made or asserted
against CSG or Irwin as a result of act or omission by anyone, if such claim
or cause of action is based upon any act of omission arising out of the
ownership, operation or management of the Business Assets and if such act or
failure to act occurred at any time prior to the date of this Assignment.
11. INDEMNITY BY CSG. CSG hereby covenants, warrants and represents to
and with COL and Irwin that it will indemnify and hold COL and Irwin harmless
from any and all claims or causes of action which may be made or asserted
against COL or Irwin as a result of act or omission by anyone, of such claim
or cause of action is based upon any act of omission arising out of the
ownership, operation or management of the Business Assets and if such act or
failure to act occurred at any time after the date of this Assignment.
12. JOINT INDEMNIFICATION AND RELEASE. COL and CSG hereby agree to
defend, indemnify and hold Irwin harmless from and against any and all
claims, demands, costs, attorney fees, or other damages or injuries which
Irwin may sustain as the result of any dispute arising in
3
95
<PAGE>
connection with this sale of the Business Assets by COL to CSG. COL and CSG
hereby acquit and forever discharge Irwin from any and all claims, actions,
causes of action, demands, rights, damages, costs and expenses whatsoever,
which they now have or which may hereafter accrue on account of or in any way
growing out of any known or unknown, foreseen or unforseen acts or failures
to act and the consequences thereof arising out of the investigation,
consideration, negotiations, execution of the Lease and the Guaranty and
operation of the business to the date of this Agreement.
13. NOW WAIVER. Neither Irwin's consent to this proposed Assignment of
the Lease by COL to CSG, nor the terms of any agreement entered into between
COL and CSG to which Irwin is not a party, shall in any manner limit, waive
or alter any of Irwin's rights or obligations pursuant to the Lesse or any
guaranty thereof.
14. ESQUIRE AGREEMENT. This agreement supercedes any prior agreement,
oral or written, with respect to the subject matter hereof. The parties to
this Agreement understand and agree that no representations, warranties,
agreements, or covenants have been made with respect to this Agreement by
Irwin, other than those set forth herein, and that in executing this
agreement the parties are not relying upon any representations, warranty,
agreement, or covenant of Irwin not set forth herein.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Consent, to be effective the date first written above.
COL:
Charlie's On The Lake, Inc.
By: /s/ Yves Menard
-------------------------------------
Yves Menard, President
CEC:
Charlie's On The Lake, Inc.
By: /s/ Brad Armati
-------------------------------------
Brad Armati, President
AUSTIN'S:
Austin's Steaks & Saloon, Inc.
By: /s/ Paul C. Schorr III
-------------------------------------
Paul C. Schorr III, President
4
96
<PAGE>
AOLL:
Austin's of Lincoln, Inc.
By: /s/ Paul C. Schorr III
-------------------------------------
Paul C. Schorr III, President
SCHORR:
/s/ Paul C. Schorr, III
-------------------------------------
Paul C. Schorr, III
STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )
The foregoing instrument was acknowledged before me this ____ day of
February, 1999 by Yves Menard, President of Charlie's On The Lake, Inc., a
Nebraska corporation, on behalf of the corporation.
-------------------------------------
Notary Public
STATE OF NEBRASKA )
) ss.
COUNTY OF LANCASTER )
The foregoing instrument was acknowledged before me this 5th day of
February, 1999 by Paul C. Schorr III, President of Austin's Steaks & Saloon,
Inc., a Delaware corporation, on behalf of the corporation.
GENERAL NOTARY-State of Nebraska /s/ Karolynn S. Mizell
KAROLYNN S. MIZELL -------------------------------------
My Comm. Exp. July 22, 2000 Notary Public
STATE OF NEBRASKA )
) ss.
COUNTY OF LANCASTER )
The foregoing instrument was acknowledged before me this 5th day of
February, 1999 by Paul C. Schorr III, President of Austin's of Lincoln, Inc.,
a Nebraska corporation, on behalf of the corporation.
GENERAL NOTARY-State of Nebraska /s/ Karolynn S. Mizell
KAROLYNN S. MIZELL -------------------------------------
My Comm. Exp. July 22, 2000 Notary Public
3
97
<PAGE>
STATE OF NEBRASKA )
) ss.
COUNTY OF LANCASTER )
The foregoing instrument was acknowledged before me this 5th day of
February, 1999 by Paul C. Schorr, III.
GENERAL NOTARY-State of Nebraska /s/ Karolynn S. Mizell
KAROLYNN S. MIZELL -------------------------------------
My Comm. Exp. July 22, 2000 Notary Public
IN WITNESS WHEREOF, the undersigned executes this Agreement and Consent,
to be effective the date first written above.
-------------------------------------
Jack Irwin
STATE OF NEBRASKA )
) ss.
COUNTY OF LANCASTER )
The foregoing instrument was acknowledged before me this _____ day of
February, 1999 by Jack Irwin.
-------------------------------------
Notary Public
6
98
<PAGE>
SIGNATURE PAGE OF JACK IRWIN TO THE ASSIGNMENT
AND CONSENT
IN WITNESS WHEREOF, the undersigned executes this Assignment and Consent, to
be effective the date first written above.
LANDLORD:
/s/ Jack L. Irwin
-------------------------------------
Jack Irwin, Date Feb. 3, 1999
STATE OF NEBRASKA )
) ss.
COUNTY OF LANCASTER )
The foregoing instrument was acknowledged before me this 5th day of
February, 1999, by Jack L. Irwin, Landlord.
GENERAL NOTARY-State of Nebraska /s/ Barbara C. Chmelka
BARBARA C. CHMELKA -------------------------------------
My Comm. Exp. Sept. 13, 2000 Notary Public
99
<PAGE>
EXHIBIT 10.11.1
AMENDMENT NO. 2 TO THE 1994
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
0F
AUSTINS STEAKS & SALOON, INC.
The 1994 Incentive and Nonqualified Stock Option Plan (the "Plan") of
Austins Steaks & Saloon, Inc. (the "Company"), adopted as of August 1, 1994
and amended as of November 30, 1994 is hereby amended effective August 1,
1995 as follows:
3. DESIGNATION OF OPTIONEES
The first sentence of Paragraph 3 of the Plan is hereby amended in its
entirety to read as follows: "The persons eligible for participation in the
Plan as recipients of Options ("Optionees") shall include full time key
employees and directors of the Company, or any subsidiary."
The last sentence of Paragraph 3 is amended in its entirety to read as
follows: "A person who has been granted an Option hereunder may be granted an
additional Option or Options, if the Committee shall so determine."
5. TERMS AND CONDITIONS OF OPTION
Paragraph 5 of the Plan is hereby amended by adding subparagraph (k) as
follows:
"(k) DIRECTORS OPTIONS. All non-officer directors of the Company shall,
upon their election to the Board of Directors and on each anniversary
thereafter so long as they serve as a Director, be granted Options to
purchase 1,000 shares of Stock at an exercise price equal to the Fair Market
Value of the Stock on the date of grant. In the case of persons who serve as
non-officer directors as of the date of this Amendment or are elected to the
Board of Directors prior to January 25, 1996, their initial 1,000 share
Option grants shall be effective January 26, 1996 at an exercise price equal
to the Fair Market Value of the Stock on that date. The provisions of this
subparagraph (k) may not be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code of 1986, the
Employee Retirement Income Security Act, or the rules and regulations
thereunder."
13. RULE 16b-3 COMPLIANCE
The first sentence of Paragraph 13 of the Plan is hereby amended in its
entirety as follows:
"The Company intends that the Plan meet the requirements of Rule 16b-3
and that transactions of the type specified in subparagraphs (c) and (f) of
Rule 16b-3 by officers of the Company (whether or not they are directors) and
by directors of the Company pursuant to the Plan will be exempt from the
operation of Section 16(b) of the Act."
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<PAGE>
This Amendment No. 2 to the Plan is effective for all purposes upon being
approved by the affirmative votes of the holders of a majority of the common
stock of the Company present, or represented, or entitled to vote at the 1995
Annual Meeting of stockholders of the Company or at any adjournment thereof.
AUSTINS STEAKS & SALOON, INC.
101
<PAGE>
EXHIBIT 10.11.2
AMENDMENT NO. 3
TO THE 1994 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
OF
AUSTINS STEAKS & SALOON, INC.
The 1994 Incentive and Non-Qualified Stock Option Plan (the "Plan") of
Austins Steaks & Saloon, Inc. (the "Company") adopted as of August 1, 1994
and amended as of October 31, 1994 and August 1, 1995 is hereby amended
effective August 1, 1997 as follows:
4. STOCK RESERVED FOR THE PLAN
The first sentence of Paragraph Four of the Plan is hereby amended in
its entirety to read as follows:
"Subject to adjustment as provided in Section 7 hereof, a total of Two
Hundred Twenty-Five Thousand (225,000) shares of common stock, $0.01 par
value ("Stock") of the Company shall be subject to the Plan."
5. TERMS AND CONDITIONS OF OPTIONS
The first sentence of Paragraph Five (a) designated OPTION PRICE of the
Plan is hereby amended as follows:
"(A) OPTION PRICE. The purchase price of each share of stock purchasable
under an Option shall be determined by the Committee at the time of grant but
shall not be less than 100% of the fair market value of such share of Stock
on the date the Option is granted in the case of an Inventive Option and not
less than 50% of the fair market value of such share of Stock on the date the
Option is granted in the case of a Non-Incentive Option; PROVIDED, HOWEVER,
that with respect to an Incentive Option, in the case of an Optionee who, at
the time such Option is granted, owns (within the meaning of Section 424(d)
of the Code) more than 10% of the total combined voting power of all classes
of stock of the Company or of any subsidiary, then the purchase price per
share of stock shall be at least 110% of the Fair Market Value (as defined
below) per share of Stock at the time of grant."
This Amendment No. 3 to the Plan is effective for all purposes upon
being approved by the affirmative vote of the holders of a majority of the
Common Stock of the Company present, or represented, or entitled to vote at
the 1998 Annual Meeting of Stockholders of the Company or at any adjournment
thereof.
AUSTINS STEAKS & SALOON, INC.
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<PAGE>
EXHIBIT 10.15.1
ADDENDUM TO LOCATION LEASE AGREEMENT
This Addendum to the Location Lease Agreement (the "Addendum") is entered
into this 30 day of June, 1998, between Austins Steaks & Saloon, Inc. (the
"Company"), Paul C. Schorr, III ("Schorr") and Jacob and Petrita Alcon
("Landlord").
WHEREAS, the Landlord and the Company entered into a Location Lease
Agreement dated August 15, 1994, relating to property located at 5210 San
Mateo, N.E., Building #A, Albuquerque, New Mexico, which lease is scheduled
to expire on July 31, 1999;
WHEREAS, consideration to be paid by the Company is set forth in the lease
under Section III, and specifically provides that lease payments shall be in
the amount of $7,874.05 from August 1, 1997 through July 31, 1998 with an
increase to the amount of $8,189.01 from August 1, 1998 through July 31, 1999;
WHEREAS, the Board of Directors deems it in the best interest of the
Company to enter into an agreement with the Landlord to reduce the rent
currently being paid pursuant to the Location Lease Agreement and to enter
into this Addendum.
NOW, THEREFORE, in consideration of the mutual premises contained below,
the parties agree as follows:
1. ADJUSTMENT OF MONTHLY RENTAL PAYMENT. Landlord agrees to adjust
the monthly rental payments of the Company and agrees that the
monthly rental payment shall be as follows:
<TABLE>
<S> <C>
March 1998 $4,000
April 1998 $5,000
May 1998 $4,000
June 1998 $5,000
July 1998 thru July 1999 $5,000
</TABLE>
2. ISSUANCE OF COMMON STOCK. The Company agrees, upon the terms and
conditions set forth below, to issue to Landlord a stock certificate
representing 75,000 shares of Common Stock of the Company, in
consideration for the reduced rental payments outlined in Section 1.
Landlord agrees to accept the Common Stock on the terms set forth
below and that the receipt of such stock is fair and equitable
consideration for the reduction in rental payments.
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3. TERMS RELATING TO GRANT OF COMMON STOCK. The Company agrees to issue
75,000 shares of Common Stock of the Company to the Landlord upon the
following terms and conditions.
(a) The Shares shall be issued in the name of the Landlord and shall
be placed in escrow with the law firm of CRIDER, BINGHAM &
HURST, P.C., 3908 Carlisle N.E., Albuquerque, New Mexico
("the Escrow Agent").
(b) The Escrow Agent will release the Shares held in escrow to the
Lanlord upon the first to occur of the following events:
(i) The Company is delinquent in the payment of any installment
of rent as defined in Article III of the Lease and as
amended by this Addendum, provided, however, that the
Company is entitled to written notice of delinquent rent
and is entitled to cure the default within five days of
receipt of said notice; or
(ii) August 1, 1999.
(c) Prior to release by the Escrow Agent of the Shares held in
escrow, the Landlord shall not be permitted to vote the Shares
and shall be entitled to no dividends which may be declared by
the Company with respect to its shares.
(d) Lanlord may not sell, transfer or assign the Shares before
August 1, 1999.
(e) For a period of 5 years, beginning on August 1, 1999 and ending
on August 1, 2004 ("Guarantee Period"), Lanlord shall have the
right to receive a minimum consideration of $.70 per share of
Common Stock and maximum consideration of $1.00 per share of
Common Stock. Schorr hereby agrees to personally guarantees said
consideration of $.70 per share. During the Guarantee Period,
Landlord shall be required to notify the Company in writing if
it desires to sell a portion or all of the Common Stock received
pursuant to this Addendum. Within fifteen (15) days after
receipt of said written notice, the Company shall have the
option to either (i) purchase all of the shares of Common Stock
from Landlord for a purchase price equal to $1.00 per share, or
(ii) require that the Landlord sell all of the shares of Common
Stock on the open market. If the
-2-
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<PAGE>
Landlord's shares of Common Stock are sold on the open market
as provided in clause (ii) above, and if the gross sales
proceeds therefrom shall be less than $.70 per share of Common
Stock, Schorr agrees to pay to Landlord, the amount by which
such gross sales proceeds are less than $.70 per share, within
thirty (30) days after receipt of written notice and
documentation of the sale from Landlord.
(f) In the event, after the date hereof, that the Landlord's shares
of Common Stock are effected by a reclassification,
recapitalization, reduction of capital stock, stock split, or
otherwise, of a stock dividend is declared, or there is a
merger, consolidation, or other reorganization, or the like,
then the number and price of the Landlord's shares of Common
Stock or any securities issued in respect thereof shall be
appropriately adjusted.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Landlord as follows:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its
business as it is presently being conducted and to own and
lease its properties and assets.
(b) The Company has all necessary corporate power and authority to
enter into this Addendum, to consummate the transactions
contemplated hereby and to perform its obligations hereunder.
This Addendum has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance
with its respective terms, subject to the approval of the Board
of Directors of the Company.
5. REPRESENTATIONS AND WARRANTIES OF LANDLORD. The Landlord hereby
represents and warrants as follows:
(a) Landlord has all necessary authority and has taken all
necessary action to enter into this Addendum, to consummate the
transactions contemplated hereby and to perform its obligations
hereunder. This Addendum has been duly executed and delivered
by the Landlord and constitutes a legal,
-3-
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valid and binding obligation of the Landlord, enforceable
against the Landlord in accordance with its respective terms.
(b) Landlord has been advised by the Company and understands that
(i) the Shares have not been registered under the Securities
Act of 1933, as amended, and are being issued in reliance upon
the exemption afforded by Section 4(2) thereof for transactions
by an issuer not involving any public offering and under and in
reliance upon a New Mexico exemption from registration under
Section 58-13B-26 NMSA 1978 or that the issuance constitutes a
New Mexico exempt transaction under Section 58-13B-27 NMSA 1978,
(ii) the Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act of
1933, as amended, or is exempt from such registration, (iii)
the Shares will bear a restrictive legend to such effect, and
(iv) the Company will make a notation on its transfer books to
such effect.
(c) The Landlord further represents that (i) the Shares are being
acquired for investment and except as otherwise provided
herein, without any present view towards distribution thereof
to any other person, (ii) they will not sell or otherwise
dispose of the Shares prior to August 1, 1999, and thereafter
only in compliance with the registration requirements or
exemption provisions under the Securities Act of 1933, as
amended the rules and regulations thereunder, and as otherwise
set forth by the Securities and Exchange Commission, (iii) they
have such knowledge and experience in financial and business
matters and are capable of evaluating the risks and merits of an
investment in the Shares, (iv) they have consulted with counsel,
to the extent deemed necessary, as to all matters covered by this
subparagraph 5.C. and have relied upon the Company or Schorr
for any explanation of the application of the various federal
or state securities laws with regard to the receipt of the
Shares from the Company, (v) they have investigated and are
familiar with the affairs, financial conditions and prospects
of the Company, and have been given sufficient access to and
have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Shares,
and (vi) they are able to bear the economic risks of such an
investment.
6. NON-ASSIGNMENT. Neither this Agreement nor any of the rights or
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obligations hereunder may be assigned by any party without the prior
written consent of the other parties.
7. NOTICES. Unless otherwise provided herin, any notices, requests,
instruction or other document to be given hereunder by either party
to the other shall be in writing and delivered personally or mailed
by certified mail, postage prepaid, return receipt requested. (Such
mailed notice to be effective on the date such receipt is
acknowledged or refused), as follows; if to Company:
Austins Steaks & Saloon, Inc.
6940 "O" Street, Suite 334
Lincoln, NE 68510
If to Landlord:
Jacob and Petrita Alcon
4055 Dietz Farm Circle NW
Albuquerque, NM 87107
If to Guarantor:
Paul C. Schorr, III
ComCor Holding, Inc.
6940 "O" Street, Suite 336
Lincoln, NE. 68510
8. GOVERNING LAW. This Addendum shall be governed by the laws of the
State of New Mexico.
9. REVISION OF LEASE AGREEMENT. This Addendum amends only the
provisions of the Location Lease Agreement as indicated herein. All
other provisions of the Location Lease Agreement shall remain in tact
as set forth therein.
/s/ Paul C. Schorr
----------------------------------
Paul C. Schorr, III
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AUSTINS STEAKS & SALOON, INC.
/s/ Paul C. Schorr
By: ------------------------------
Paul C. Schorr, III, President
/s/ Jacob Alcon
------------------------------
Jacob Alcon
/s/ Petrita Alcon
------------------------------
Petrita Alcon
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EXHIBIT 10.17
LEASE AGREEMENT
Between
LEWIS PROPERTIES, INC.,
as Lessor
And
COLLINS FOODS INTERNATIONAL, INC.,
as Lessee
Dated as of September 5, 1972
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Paragraph Page
- --------- ----
<S> <C> <C>
1. Demise of Premises......................................... 1
2. Certain Definitions........................................ 2
3. Title and Condition........................................ 3
4. Use of Leased Premises; Quiet Enjoyment.................... 3
5. Terms...................................................... 4
6. Rent....................................................... 5
7. Net Lease; Non-Terminability............................... 6
8. Taxes and Assessments; Compliance With Law................. 7
9. Liens...................................................... 9
10. Indemnification............................................ 10
11. Maintenance and Repair..................................... 11
12. Alterations................................................ 13
13. Insurance.................................................. 14
14. Condemnation and Casualty.................................. 17
15. Economic Abandonment....................................... 21
16. Procedure Upon Purchase.................................... 25
17. Assignment and Subletting.................................. 26
18. Permitted Contests......................................... 27
19. Conditional Limitations; Default Provisions................ 29
20. Additional Rights of Lessor................................ 34
21. Notices, Demands and Other Instruments..................... 36
22. Estoppel Certificate....................................... 36
23. Lessee's Option to Purchase................................ 37
24. No Merger.................................................. 37
25. Surrender.................................................. 38
26. Separability............................................... 38
27. Binding Effect............................................. 39
28. Table of Contents; Headings................................ 39
29. Governing Law.............................................. 39
30. Schedules.................................................. 39
</TABLE>
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LEASE AGREEMENT, dated as of September 5, 1972, between LEWIS PROPERTIES,
INC., a Delaware corporation (herein called Lessor), having an address at c/o
The Prentice Hall Corporation System, Inc., 229 South State Street, Dover,
Delaware 19901 and COLLINS FOODS INTERNATIONAL, INC., a California
corporation, (herein, together with any corporation succeeding thereto by
consolidation, merger or acquisition of its assets substantially as an
entirety, called Lessee), having an address at 12731 West Jefferson
Boulevard, Los Angeles, California 90066.
1. DEMISE OF PREMISES. (A) In consideration of the rents and covenants
herein stipulated to be paid and performed, Lessor hereby demises and lets to
Lessee, and Lessee hereby demises and lets from Lessor, for the respective
terms hereinafter described, the fourteen separate premises consisting of (i)
the parcels of land described in Schedule A hereto, (ii) all improvements
constructed and to be constructed on such parcels, and (iii) all easements,
rights and appurtenances relating to such parcels upon the terms and
conditions hereinafter specified.
(b) This Lease, although executed and delivered as a composite instrument
for convenience, constitutes a separate lease between Lessor and Lessee of
each of the separate premises referred to in paragraph 1(a), and all
provisions hereof shall be applicable separately to each of said premises,
with the same effect as if a separate lease with respect thereto had been
executed and delivered by Lessor and Lessee. If any such separate lease
shall be terminated or extended pursuant to any provision hereof, such
termination or extension shall have no effect upon the remaining leases and
an appropriate notation of such termination or extention shall be made upon
Schedules A, B and C hereto at the request of Lessor or Lessee. Upon request
of Lessor or Lessee,
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a separate lease or any of the separate premises, in the same form as this
Lease except for such mutually satisfactory modifications as shall be
required by the fact that such lease relates to only such separate premises,
will be executed and delivered by Lessor and Lessee. Lessor and Lessee will
execute and deliver, with respect to some or all of the separate premises
referred to in paragraph 1(a), a memorandum of lease for the purpose of
recording, which will be in a form sufficient for such purpose.
2. CERTAIN DEFINITIONS. (a) Unless otherwise expressly stated or
necessarily required by the context, the term "this Lease" means the separate
lease of one of the separate premises, as provided in paragraph 1(b); and the
term "Leased Premises" means the parcel or parcels of land described in
Schedule A hereto, all improvements constructed and to be constructed
thereon, and all easements, rights and appurtenances relating thereto, which
are demised and let by such separate lease.
(b) The term "Assignment" means the Assignment of Lease and Agreement,
dated as of September 5, 1972, from Lessor and Lessee to the Mortgagee
relating to these Leases as such Assignment may be amended or supplemented
from time to time.
(c) The term "Mortgage" means the Mortgage and the Deeds of Trust, each
dated as of September 5, 1972, covering the Leased Premises from Lessor as
Mortgager to the Mortgagee, as mortgagee or beneficiary, as the case may be.
(d) The term "Mortgagee" means Massachusetts Mutual Life Insurance
Company and any successors or assigns of Mortgagee's interest in the
Mortgage.
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(e) The term "Kotos" means the 9 1/2 Secured Notes of Lessor secured
by the Mortgage and any evidence of indebtedness issued in exchange therefor
or in replacement thereof.
3. TITLE AND CONDITION. The Leased Premises are demised and let
subject to (a) the rights of any parties in possession thereof and the
existing state of the title thereof as of the commencement of the term of
this Lease, (b) any state of facts which an accurate survey or physical
inspection thereof might show, (c) all zoning regulations, restrictions,
rules and ordinances, building restrictions and other laws and regulations
now in effect or hereafter adopted by any governmental authority having
jurisdiction, and (d) with respect to buildings, structures and other
improvements located on the Leased Premises, in their condition as of the
commencement of the term of this Lease, without representation or warranty by
Lessor. Lessee represents to Lessor that Lessee has examined the title to the
Leased Premises prior to the execution and delivery of this Lease and has
found the same to be satisfactory for all purposes hereof.
4. USE OF LEASED PREMISES: QUIET ENVIRONMENT. (a) Lessee may
occupy and use the Leased Premises for any lawful purpose.
(b) If and so long as Lessee shall observe and perform all
covenants, agreements and obligations required by it to be observed and
performed hereunder, Lessor warrants peaceful and quiet occupation and
enjoyment of the Leased Premises by Lessee; provided, that Lessor and its
agents may enter upon and examine the Leased Premises at reasonable times.
Any failure by Lessor to comply with the foregoing covenant shall not give
Lessee any right to cancel or terminate this Lease, or to abate, reduce or
make deduction from or offset against any Basic Rent, as hereinafter defined,
or additional rent or other sum payable under this Lease, or to fail to
perform or observe any
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other covenants, agreements or obligations of Lessee hereunder except that,
without in any way limiting the foregoing and without limiting the rights of
the Mortgagee or Lessor, this provision shall not prevent Lessee from seeking
injunctive relief for any such failure of Lessor to comply with its covenant
of quiet enjoyment. The Mortgage shall be subject to this Lease and the
rights of Lessee hereunder.
5. TERMS. Subject to the terms, covenants, agreements and
conditions contained herein, Lessee shall have and hold the Leased Premises
for (a) an interim term (herein called the Interim Term) commencing on
November 8, 1972 and ending at midnight on December 31, 1972, and (b) a
primary term (herein called the Primary Term) commencing on January 1, 1973
and ending at midnight on December 31, 1997. Thereafter, Lessee shall have
the right and option to extend this Lease for three consecutive extended
terms of five years each (herein called the Extended Terms) unless and until
this Lease shall be sooner terminated pursuant to the terms of this Lease.
The first such Extended Term shall commence on the day immediately succeeding
the expiration date of the Primary Term and shall end at midnight of the day
immediately preceding the fifth anniversary of the first day of such Term.
Each subsequent Extended Term shall commence on the day immediately
succeeding the expiration date of the next preceding Extended Term, and shall
end at mid-night on the day immediately preceding the fifth anniversary of
the first day of such Term. Lessee may, at any time at least 190 days prior
to the end of the term of this Lease then in effect, by giving notice to
Lessor, exercise any, all or one or more of its three options to extend the
term of this Lease provided that all such Terms so extended shall
consecutively follow a then existing Term. The giving of such written notice
by Lessee to Lessor shall automatically extend this Lease for such Extended
Term or Terms and no instrument of renewal need be executed. In the event
that Lessee fails to give such notice to Lessor, this Lease shall
automatically terminate at the end of
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the Term of this Lease then in effect and Lessee shall have no further option
to extend this Lease. In the event that Lessee does not exercise its option
to extend the term of this Lease for an Extended Term, as provided in this
paragraph 5, then Lessor shall have the right during the remainder of the
term of this Lease then in effect to advertise the availability of the Leased
Premises for sale or for reletting and to erect upon the Leased Premises
signs indicating such availability; provided, that such signs do not
unreasonably interfere with the use of the Leased Premises by Lessee.
6. RENT. (a) Lessee covenants to pay to Lessor, as instalments of
rent for the Leased Premises during the term of this Lease, the respective
amounts set forth in Schedule B hereto (herein called the Basic Rent) on the
dates set forth in said Schedule (herein called the Basic Rent Payments
Dates), and to say the same at Lessor's address set forth above or at such
other place within the continental United States or to such other person as
Lessor from time to time may designate to Lessee in writing, in lawful money
of the United States of America.
(b) Lessee covenants to pay and discharge when the same shall
become due, as additional rent, all other amounts, liabilities and
obligations which Lessee assumes or agrees to pay or discharge pursuant to
this Lease (except that amounts payable as the purchase price for the Leased
Premises or any part thereof pursuant to any provision of this Lease and
amounts payable as liquidated damages pursuant to paragraph 19 shall not
constitute additional rent), together with every fine, penalty, interest and
cost which may be added for non-payment or late payment thereof. In the event
of any failure by Lessee to pay or discharge any of the foregoing, Lessor
shall have all rights, powers and remedies provided herein, by law or
otherwise in the case of non-payment of Basic Rent. Lessee will also pay to
Lessor on demand as additional rent, interest at
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the rate of 10% per annum on all overdue instalments of Basic Rent and on
all overdue amounts of additional rent relating to obligations which Lessor
shall have paid on behalf of Lessee, in either case, from the due date
thereof until paid in full.
7. NET LEASE; NON-TERMINABILITY. (a) This is a net lease and the
Basic Rent, additional rent and all other sums payable hereunder by Lessee,
whether as the purchase price for the Leased Premises or otherwise, shall be
paid without notice or demand, and without set-off, counterclaim, abatement,
suspension, deduction or defense.
(b) This Lease shall not terminate, nor shall Lessee have any right
to terminate this Lease (except as otherwise expressly provided in paragraph
14(b), 15 or 23 of this Lease), nor shall Lessee be entitled to any abatement
or reduction of rent hereunder, nor shall the obligations of Lessee under
this Lease be affected, by reason of (i) any damage to or the destruction of
all or any part of the Leased Premises from whatever cause, (ii) the taking
of the Leased Premises or any portion thereof by condemnation, requisition or
otherwise for any reason, (iii) the prohibition, limitation or restriction of
Lessee's use of all or any part of the Leased Premises, or any interference
with such use, (iv) any eviction by paramount title or otherwise, (v)
Lessee's acquisition or ownership of all or any part of the Lease Premises
otherwise than pursuant to an express provision of this Lease, (vi) any
default on the part of Lessor under this Lease, or under any other agreement
to which Lessor and Lessee may be parties, or (vii) any other cause whether
similar or dissimilar to the foregoing, any present or future law to the
contrary notwithstanding. It is the intention of the parties hereto that the
obligations of Lessee hereunder shall be separate and independent covenants
and agreements, that the Basic Rent,
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the additional rent and all other sums payable by Lessee hereunder shall
continue to be payable in all events and that the obligations of Lessee
hereunder shall continue unaffected, unless the requirement to pay or perform
the same shall have been terminated pursuant to an express provision of this
Lease.
(c) Lessee agrees that it will remain obligated under this Lease in
accordance with its terms, and that it will not take any action to terminate,
rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution,
winding-up or other proceeding affecting Lessor or any assignee or Lessor in
any such proceeding and (ii) any action with respect to this Lease which may
be taken by any trustee or receiver of Lessor or of any assignee of Lessor in
any such proceeding or by any court in any such proceeding.
(d) Lessee waives all rights which may now or hereafter be
conferred by law (i) to quiz, terminate or surrender this Lease or the Leased
Premises or any part thereof, or (ii) to any abatement, suspension, deferment
or reduction of the Basic Rent, additional rent or any other sums payable
under this Lease, except as otherwise expressly provided herein.
8. TAXES AND ASSESSMENTS; COMPLIANCE WITH LAW. (a) Lessee shall
pay, when due: (i) all taxes, assessments (including assessments for benefits
from public works or improvements, whether or not begun or completed prior to
the commencement of the term of this Lease and whether or not to be completed
within said term), levies, fees, water and sewer rents and charges, and all
other governmental charges, general and special, ordinary and extraordinary,
and whether or not the same shall have been within the express contemplation
of the parties hereto, together with any interest or penalties thereon, which
are, at any time, imposed or levied upon or assessed against (A) the Leased
Premises or any part thereof, (B) any Basic Rent,
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any additional rent reserved or payable hereunder or any other sums payable
by Lessee hereunder, (C) this Lease or the leasehold estate hereby created or
which arise in respect of the operation, possession, occupancy or use
thereof, (ii) any gross receipts or similar taxes imposed or levied upon,
assessed against or measured by the Basic Rent, such additional rent or such
other sums payable by Lessee hereunder, (iii) all sales and use taxes which
may be levied or assessed against or payable by Lessor or Lessee on account
of the acquisition, leasing or use of the Leased Premises or any portion
thereof and (iv) all charges for water, gas, light, heat, telephone,
electricity, power and other utility and communications services rendered or
used on or about the Leased Premises. Notwithstanding the foregoing
provisions of this paragraph 8(a), Lessee shall not be required to pay any
franchise, corporate, estate, inheritance, succession, transfer, income,
profits or revenue taxes of Lessor (other than any gross receipts or similar
taxes imposed or levied upon, assessed against or measured by the Basic Rent,
additional rent or any other sums payable by Lessee hereunder) unless any
such tax, assessment, charge or levy is imposed or levied upon or assessed
against Lessor in substitution for or in place of any other tax, assessment,
charge or levy referred to in this paragraph 8(a). Lessee agrees to furnish
to Lessor, within 30 days after written demand therefor, proof of the payment
of all such taxes, assessments, levies, fees, rents and charges and all such
utility and communication charges which are payable by Lessee as provided in
this paragraph 8(a). In the event that any assessment levied or assessed
against the Leased Premises becomes due and payable during the Interim,
Primary or any Extended Term and may be legally paid in instalments, Lessee
shall have the option to pay such assessment in instalments,
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and in such event, Lessee shall be liable only for these instalments which
become due and payable during the Interim, Primary and such Extended Term.
(b) Lessee shall, at its expense, comply with and shall cause the
Leased Premises to comply with all governmental statutes, laws, rules,
orders, regulations and ordinances affecting the Leased Premises or any part
thereof, or in use thereof, including those which require the making of any
structural, unforeseen or extraordinary changes, whether or not any of the
same, which may hereafter be enacted, involve a change of policy on the part
of the governmental body enacting the same. Lessee shall, at its expense,
comply with the requirements of all policies of insurance which at any time
may be in force with respect to the Leased Premises, and with the provisions
of all contracts, agreements and restrictions affecting the Leased Premises
or any part thereof or the ownership, occupancy or use thereof.
9. LIENS. Lessee will not, directly or indirectly, create or permit
to be created or to remain, and will promptly discharge, at its expense, any
mortgage, lien, encumbrance or charge on, pledge of, or conditional sale or
other title retention agreement with respect to, the Leased Premises or any
part thereof or Lessee's interest therein or the Basic Rent, additional rent
or other sums payable by Lessee under this Lease, other than the Mortgage,
Permitted Exceptions as defined in the Mortgage and any mortgage, lien,
encumbrance or other charge created by or resulting from any act of Lessor.
The existence of any mechanic's,
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laborer's, materialman's, supplier's or vendor's lien, or any right in
respect thereof, shall not constitute a violation of this paragraph 9 if
payment is not yet due upon the contract or for the goods or services in
respect of which any such lien has arisen. Nothing contained in this Lease
shall be construed as constituting the consent or request of Lessor,
expressed or implied, of any contractor, subcontractor, laborer, materialman
or vendor to or for the performance of any labor or services or the
furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to the Leased Premises or any part thereof. Notice
is hereby given that Lessor will not be liable for any labor, services or
materials furnished or to be furnished to Lessee, or to anyone holding the
Leased Premises or any part through or under Lessee, and that no mechanic's
or other liens for any such labor, services or materials shall attach to or
affect the interest of Lessor in and to the Leased Premises.
10. INDEMNIFICATION. Lessee agrees to pay, and to protect,
indemnify and save harmless Lessor from and against any and all liabilities,
losses, damages, costs, expenses (including all reasonable attorneys' fees
and expenses of Lessee and Lessor), causes of action, suits, claims, demands
or judgments of any nature whatsoever (other than losses, damages, costs,
expenses, causes of actions, suits, claims, demands or judgments caused by
Lessor, its agents or employees) arising from (i) any injury to, or the death
of, any person or any damage to property on the Leased Premises or upon
adjoining sidewalks, streets or ways, or in any manner growing out of or
connected with the use, non-use, condition or occupation of the Leased
Premises or any part thereof or resulting from the condition thereof or of
adjoining sidewalks, streets or ways, (ii)
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violation of any agreement or condition of this Lease, and (iii) violation by
Lessee of any contract or agreement to which Lessee is a party or any
restriction, statute, law, ordinance or requisition, in each case affecting
the Leased Premises or any part thereof or the ownership, occupancy or use
thereof.
11. MAINTENANCE AND REPAIR. (a) Lessee acknowledges that it has
received the Leased Premises in good order and condition. Lessee agrees that
it will, at its expense, keep and maintain the Leased Premises, including any
altered, rebuilt, additional or substituted buildings, structures and other
improvements thereto in good repair and appearance, except for ordinary wear
and tear, and will with reasonable promptness make all structural and
non-structural, foreseen and unforeseen, and ordinary and extraordinary
changes and repairs of every kind and nature which may be required to be made
upon or in connection with the Leased Premises or any part thereof in order
to keep and maintain the Leased Premises in such good repair and appearance.
Lessor shall not be required to maintain, repair or rebuild, or to make any
alterations, replacements or renewals of any nature or description to the
Leased Premises or any part thereof, whether ordinary or extraordinary,
structural or non-structural, foreseen or unforeseen, or to maintain the
Leased Premises or any part thereof in any way, and Lessee hereby expressly
waives the right to make repairs as the expense of Lessor, which right may be
provided for in any statute or law in effect at the time of the execution and
delivery of this Lease or any other statute or law which may thereafter be
enacted.
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(b) In the event that any buildings, structures or other
improvements to the Leased Premises, whether situated upon the Leased
Premises at the commencement of this Lease or thereafter constructed thereon,
shall encroach upon any property, street or right-of-way adjoining or
adjacent to the Leased Premises, or shall violate the agreements or conditions
contained in any restrictive covenant affecting the Leased Premises or any
part thereof, or shall hinder or obstruct any easement or right-of-way to
which the Lease Premises are subject or shall impair the rights of others
under any such easement or right-of-way, then, promptly after written request
of Lessor or of any person affected by any such encroachment, violation,
hindrance, obstruction or impairment. Lessee shall, at its expense, either
(i) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Lessor,
Lessee or both, or (ii) make such changes in the buildings, structures and
other improvements to the Leased Premises and take such other action as shall
be necessary to remove such encroachments, hindrances or obstructions and to
end such violations or impairments, including if necessary the alteration or
removal of any building, structure or other improvement to the Leased
Premises. Any such alteration or removal shall be made in conformity with the
requirements of paragraph 12(a), in the case of any such removal, to the same
extent as if removals were alterations under the provisions of paragraph 12(a).
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12. ALTERATIONS. (a) Lessee may, at its expense, make additions to
and alterations of the buildings, structures or other improvements to the
Leased Premises, and Lessee may make substitutions and replacements for the
same on the Leased Premises, provided, that (i) the market value of the
Leased Premises shall not thereby be lessened, (ii) the foregoing actions
shall be performed in a good and workmanlike manner, and (iii) such
additions, alterations, substitutions and replacements shall be expeditiously
completed in compliance with all laws, ordinances, orders, rules, regulations
and requirements applicable thereto. All work done in connection with each
such addition, alteration, substitution or replacement shall comply with the
requirements of any insurance policy required to be maintained by Lessee
hereunder and with the orders, rules and regulations of the National Fire
Protection Association or any other body exercising similar functions. Lessee
shall promptly pay all costs and expenses of each such addition, alteration,
substitution or replacement and shall discharge all liens filed against the
Leased Premises arising out of the same. Lessee shall procure and pay for all
permits and licenses required in connection with any such addition,
alteration, substitution or replacement.
(b) Lessee may, at its expense, (i) construct upon the Leased
Premises any additional buildings, structures or other improvements and (ii)
install, assemble or place upon the Leased Premises any items of machinery,
equipment, trade fixtures or signs used or useful in Lessee's business, in
each case upon compliance with all the terms and conditions set forth in
paragraph 12(a). All such buildings, structures and other improvements shall
be and remain part of the realty and the property of the Lessor and subject to
this Lease. Such machinery, equipment, trade fixtures and signs (other than
machinery and equipment necessary in connection with the operation or
maintenance of the
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Leased Premises as such, without regard to the nature of the business
conducted therein shall be and remain the property of Lessee. Lessee may
remove the same from the Leased Premises at any time prior to the expiration
or earlier termination of this Lease, provided that Lessee shall be required
to repair any damage to the Leased Premises resulting from such removal.
13. INSURANCE. (a) Lessee will maintain, at its expense,
insurance on the Leased Premises of the following character:
(i) Insurance against loss or damage by fire, lightning and other
risks from time to time included under "extended coverage"
policies, in amounts sufficient to prevent Lessor or Lessee from
becoming a coo-insurer of any loss under the applicable policies
but in any event in amounts not less than 100s of the full
insurable value of the Lease Premises. The term "full insurable
value", as used herein, means actual replacement value loss
physical depreciation.
(ii) General public liability insurance against claims for bodily
injury, death or property damage occurring on, in or about the
Leased Premises and the adjoining streets, sidewalks and
passageways, such insurance to afford protection to Lessor of not
less that $500,000 with respect to bodily injury or death to any
one person, not less than $1,000,000 with respect to any one
resident, and not less than $250,000 with respect to property
damage. Policies for such insurance shall be for the mutual
benefit of Lessor, Lessee and the Mortgages.
(iii) Workmen's compensation insurance covering all persons employed in
connection with any work done on or about the Leased Premises
with respect to which claims for death of bodily injury could be
asserted against Lessor, Lessee or the Leased Premises, or in
lieu of such workman's compensation insurance, a program of
self-insurance complying with the rules, regulations and
requirements of the appropriate state agency of the state in
which the Leased Premises are situated from time to time in force.
(iv) Such other insurance on the Leased Premises in such amounts and
against such other insurable hazards which at the time are
usually obtained in the ease of property similar to the Leased
Premises, including war-risk insurance when and to the extent
obtainable from the United States Government or any agency
thereof.
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Every policy which Lessee is obligated to carry under the terms of paragraph
13(a) shall contain an agreement by the insurer that it will not cancel such
policy except after 10 days' prior written notice to Lessor and the Mortgagee
and that any loss otherwise payable thereunder shall be payable
notwithstanding any act or negligence of Lesser or Lessee which might,
absent such agreement, result in a forfeiture of all or a part of such
insurance payment and notwithstanding (i) the occupation or use of the
Leased Premises for purposes more hazardous than permitted by the terms of
such policy, (ii) any foreclosure or other action or proceeding taken by the
Mortgagee pursuant to any provision of the Mortgage upon the happening of an
Event of Default, as defined therein, or (iii) any change in title or ownership
of the Leased Premises.
(d) Lessee shall deliver to Lessor upon the execution and delivery
of this Lease, the original or duplicate policies or certificates of the
insurers, satisfactory to the Mortgagee, evidencing all the insurance which
is required to be maintained by Lessee hereunder, and Lessee shall, within
30 days prior to the expiration of any such insurance, deliver other original
or duplicate policies or other certificates of the insurers evidencing the
renewal of such insurance. Should Lessee fail to effect, maintain or renew
any insurance provided for in this paragraph 13, or to pay the premium
therefor, or to deliver to Lessor any of such policies or certificates, then
and is any of said events Lessor, at its option, but without obligation so to
do, may, upon 5 days' notice to Lessee, procure such insurance. Any sums
expended by Lessor to procure such insurance shall be additional rent
hereunder and shall be repaid by Lessee within 5 days following the date on
which such expenditure shall be made be Lessor.
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(e) Lessee shall not obtain or carry separate insurance concurrent in
form or contributing in the event of loss with that required in this
paragraph 13 to be furnished by Lessee unless Lessor is included therein as a
named insured, with loss payable as in this Lease provided. Lessee shall
immediately notify Lessor when ever any such separate insurance is obtained
and shall deliver to Lessor the policies or certificates evidencing the same.
(f) Anything contained in this paragraph 13 to the contrary
notwithstanding, any and all insurance which Lessee is obligated to carry
pursuant to paragraph 13(a) may be carried under a "blanket" policy or
policies covering other properties or liabilities of Lessee, provided, that
such "blanket" policy or policies otherwise comply with the provisions of
this paragraph 13.
14. CONDEMNATION AND CASUALTY. (a) Subject to the rights of Lessee
hereinafter set forth in this paragraph 14, Lessee hereby irrevocably
assigns to Lessor any award or payment to which Lessee any be or become
entitled by reason of any taking of the Leased Premises or any part thereof
in or by condemnation or other eminent domain proceedings pursuant to any
law, general or special, or by reason of the temporary requisition of the use
or occupancy of the Leased Premises or any portion thereof by any
governmental authority, civil or military, whether the same shall be paid or
payable in respect of Lessee's leasehold interest hereunder or otherwise. For
the purpose of this Lease, all payments made pursuant to any agreement with
any condemning authority, in settlement of or under threat of any condemnation
or other eminent domain proceedings affecting the Leased Premises, shall be
deemed to constitute an award made in such proceeding. Such award less any
expenses incurred in collecting such award is hereinafter called the Net
Award. Lessor shall be entitled to participate in any such proceeding at
Lessee's expense if, in the reasonable opinion of Lessor, Lessor's
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Participation is desirable or Lessee is not proceeding in a reasonably
prudent manner.
(b) If (i) the entire Leased Premises shall be taken in or by
condemnation or other eminent domain proceedings pursuant to any law, general
or special, (ii) any substantial portion of the Leased Premises, which is
sufficient to render the remaining portion thereof unsuitable for continued
use or occupancy in the business operations of Lessee and any affiliate of
Lessee, shall be taken in or by such proceedings, or (iii) the Leased
Premises shall be substantially damaged or destroyed in any single casualty
so that the Leased Premises shall be unsuitable for restoration for continued
use or occupancy in the business operations of Lessee, and any affiliate of
Lessee, then Lessee shall, in the event of the circumstances contemplated by
subparagraph 14(b)(i) or 14(b)(ii), and Lessee may, at its option, in the
event of the circumstances contemplated by subparagraph 14(b)(iii), in lieu
of rebuilding, replacing or repairing the Leased Premises, give notice to
Lessor, within 30 days after such taking or the occurrence of such damage or
destruction of Lessee's intention to terminate this Lease on any business day
specified in such notice which occurs not less thant 60 days nor more than 90
days after the giving of such notice. In the event of the circumstances
contemplated by subparagraph 14(b)(ii) or 14(b)(iii), such notice shall be
accompanied by a certificate of Lessee, signed by the President or any Vice
President thereof, stating that, in the judgment of the Lessee, the Leased
Premises are unsuitable for continued use and occupancy-in the business
operations of Lessee and any affiliate of Lessee, by reason of such taking or
such damage or destruction, as the case may be. If such date for termination
occurs during the Primary Term, as a part of such notice Lessee shall give
its irrevocable offer to purchase the Leased Premises, or the portion of the
Leased Premises remaining after such
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taking, or, in the case of the taking of the entire Leased Premises, to
purchase the Net Award payable in connection with such taking, or the right
to receive the same when made if no payment therefor has yet been made, at a
price determined in accordance with Schedule C hereto. If either (1) Lessor
shall reject such offer to purchase by notice given to Lessee not later than
the 15the day prior to such termination date or (2) such termination date
shall occur during an Extended Term of this Lease, this Lease shall terminate
on such date, except with respect to obligations and liabilities of Lessee
under this Lease, actual or contingent, which have arisen on or prior to such
date, upon the payment by Lessee of all instalments of Basic Rent and all
other sums then due and payable under this Lease to and including such date
for termination; provided, that, if such date shall occur during the Primary
Term, such rejection by Lessor shall be of no effect unless accompanied by
the written consent thereto of the Mortgagee. Unless Lessor shall have
rejected such offer to purchase by notice to Lessee given no later than the
15th day prior to such termination date, or if Lessor shall make such
rejection without the consent of the Mortgagee, then Lessor shall be
conclusively presumed to have accepted such offer to purchase and, if Lessee
shall not be in default under this Lease on such termination date, Lessor
shall transfer and convey the Leased Premises, or remaining portion thereof,
if any, to Lessee or its designee upon the terms and provisions set forth in
paragraph 16 and Lessor shall assign to Lessee or its designee all its right,
title and interest in and to the Net Award or to the proceeds of any
insurance payable in connection with such damage or destruction, as the case
may be, against payment by Lessee of the purchase price therefor, together
with all instalments of Basic Rent and all other sums then due and payable
under this Lease to and including such date of termination.
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(e) If (1) the Leased Premises or any portion thereof shall be damaged
or destroyed by fire or other casualty which casualty is not sufficient to
authorize or require that Lessee give notice of its intention to terminate
this Lease as provide in paragraph 14(b), (2) a portion of the Leased
Premises shall be taken in or by condemnation or other eminent domain
proceedings pursuant to any law, general or special, which taking is not
sufficient to authorize or require that Lessee give notice of its intention
to terminate this Lease as provided in paragraph 14(b) or (3) the use or
occupancy of the Leased Premises or any portion thereof shall be temporarily
requisitioned by any governmental authority, civil or military, then this
Lease shall, notwithstanding such casualty, taking or requisition, continue
in full effect without abatement or reduction of Basic Rent, additional rent
or other sums payable by Lessee hereunder, and Lessee shall, at its expense,
rebuild, replace or repair any damage caused by such casualty, taking or
requisition in conformity with the requirements of paragraph 12(a), so that,
after the completion of such work, the Leased Premises shall be, as nearly as
possible, in a condition as good as the condition thereof immediately prior
to such casualty taking or requisition, except (in the case of any such
requisition) for ordinary wear and tear. In the event of any such casualty,
taking or requisition, Lessee shall be entitled to receive the insurance
proceeds payable in connection with such casualty and the Net Award payable
in connection with such taking or requisition. Insurance proceeds in excess
of $25,000 payable for such casualty and the Net Award payable for such
taking shall be paid to Lessee only on the basis of certificates of Lessee,
signed by the President or any Vice President thereof, delivered to Lessor
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from time to time as such work progresses or is completed, each such
certificate describing such work for which Lessee is requesting payment, the
cost incurred by Lessee in connection therewith and stating that Lessee has
not theretofore received payment for such work. Upon completion of such
work, any remaining insurance or Net Award proceeds shall be paid to Lessee
upon delivery to Lessor of a certificate of Lessee, signed by the President
or any Vice President thereof, to the effect that such work has been completed
and complies with the requirements of paragraph 12(a). If the cost of any such
work required to be made by Lessee pursuant to this paragraph 14(c) shall
exceed the amount of such insurance proceeds or the Net Award, the deficiency
shall be paid by Lessee. No payments shall be made to Lessee pursuant to this
paragraph 14(c) if any default shall have happened and be continuing under
this Lease unless and until such default shall have been cured or removed.
15. ECONOMIC ABANDONMENT. (a) So long as Lessee is not in default
under this Lease, if the Leased Premises shall have become uneconomic or
unsuitable for the continued use and occupancy in the business operations of
Lessee, and any affiliate of Lessee, and if the Board of Directors of Lessee
has determined that the use of the Leased Premises shall be discontinued
during the period ending on the first anniversary of the date of the delivery
of the notice hereinafter referred to in this paragraph is 15(a) or if, on or
before such date of delivery, such use had already been discontinued, then
lessee may notify Lessor of its intention to terminate this Lease (herein
called the Replaced Lease) on the business day specified in such notice which
occurs during the Primary Term and which is not less than 180 nor more than
210 days after the date of delivery of such notice (herein called the
Substitution Date) but only if the following conditions shall have been
satisfied on or before such date or termination:
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(1) Lessee, or its designee, shall have conveyed or caused to be
conveyed to Lessor a parcel of land with buildings, structures and other
improvements thereon (herein called the Substitute Property).
(2) The Mortgagee and Lessor shall have received a Lease (herein
called the Substitute Lease) covering the Substitute Property, identical in
form and substance to the Replaced Lease (including, without limitation,
identical provisions for the payment of rents from and after the
Substitution Date and identical provisions for the payment of purchase
prices provided for in the Replaced Lease), except (i) the Primary Term of
the Substitute Lease shall commence on the Substitution Date and shall
continue to and including the date specified in paragraph 5 of the
Replaced Lease as the end of the Primary Term of the Replaced Lease,
(ii) Schedule a thereto shall describe the Substitute Property; and
(iii) such other non-substantive changes and modifications as the
Mortgagee or its counsel may deem necessary or appropriate by reason of
the transactions contemplated by this paragraph 15(a).
(3) The Mortgagee and Lessor shall have received a supplement to the
Assignment (herein called the Assignment Supplement), in form and substance
satisfactory to the Mortgagee and its counsel, which Assignment Supplement
shall (i) subject the Substitute Lease to the Assignment to the same
extent as if the Substitute to Property had been originally described in
Schedule A of the Assignment and the Substitute Lease had been in existence
on the date of the execution and delivery of the Assignment, (ii)
release the Replaced Lease from the Assignment, and (iii) make such other
non-substantive changes and modifications in the Assignment as the
Mortgagee or its counsel may deem necessary or appropriate by reason of the
transactions contemplated by this paragraph 15(a).
(4) The Mortgagee shall have received a supplement to the Mortgage
(herein called the Mortgage Supplement), in form and substance satisfactory
to the Mortgages and its counsel, which Mortgage Supplement shall subject
the Substitute Property and the Substitute Lease to the lien of the
Mortgage to the same extent as if the same had been describe in the
Granting Clauses of the Mortgage on the date of the execution and delivery
of the Mortgage, and which Mortgage Supplement shall make such other
changes and modifications in the Mortgage as the Mortgagee or its counsel
may deem necessary or appropriate by reason of the transactions,
contemplated by this paragraph 15(a).
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(5) The Mortgagee shall have redeemed a certificate of Lessee,
signed by a Vice President of Lessee, to the effect that (A) the fair
market value of the Substitute Property (as certified by the appraiser
referred to in subsection (7) below) is at least equal to greater of (i)
the fair market value of the Replaced Property (as certified by such
appraiser), or (ii) the then outstanding balance of the Allocable Portion
of the Notes (as defined in the Mortgage), (B) the estimated remaining
useful life of the Substitute Property (as certified by the appraiser
referred to in subsection (7) below) is at least equal to the estimated
remaining useful life of the Replaced Property (as certified by such
appraiser) and (C) the Lessee has complied with the terms and provisions
of paragraph 15(a) of the Replaced Lease.
(6) The Mortgagee shall have received an appraisal of the Replaced
Property and an appraisal of the Substitute Property which appraisals
shall contain the fair market value of such properties and their estimated
remaining useful lines. The appraisals shall be made at the expense of the
Lessee and by appraisers selected by the Mortgagee.
(7) The conditions set forth in Section 6 of the Note Agreement
shall have been complied with, to the satisfaction of the Mortgagee and
its counsel, on the Substitution Date with respect to the Substitute
Property to the same extent as if the Substitution Date were the Closing
Date (as defined in the Note Agreement) and the Substitute Property were
the Replaced Property.
Upon compliance by Lessee with the provisions of this paragraph 15(a)
and payment by Lessee of all installments of Basic Rent and all other sums
due under this Lease, Lessor shall transfer and convey the Leased Premises to
Lessee, Lessor shall transfer and convey the Leased Premises to Lessee or its
designee upon the terms and provisions of paragraph 16.
(b) So long as Lessee is not in default under this Lease, if the
Leased Premises shall have become uneconomic or unsuitable for the continued
use and occupancy in the business operations of Lessee, and any affiliate of
Lessee, and if the Board of Directors of Lessee has determined that the use
of the Leased Premises shall be discontinued during the period not more than
one year after the date of the delivery of the notice hereinafter referred to
in this paragraph 15(b), or if such parties had on or before such date of
delivery already discontinued such use, then Lessee may notify Lessor of its
intention to terminate this Lease on any business day specified in such
notice which occurs during the Primary Term and which is not less than 180
days after the date of delivery of such notice and is not earlier than
January 1, 1998. Such termination date may be prior to January 1, 1998 if the
Leased Premises shall
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have become [illegible] or unsuitable for the [illegible] use and occupancy
in the business operations of Lessee, and any affiliate of Lessee due to any
legal requirement pursuant to, or promulgated in respect of, the California
Environmental Quality Act of 1970. As part of said notice (in lieu of
exercising its right of substitution pursuant to paragraph 15(a)), Lessee
shall make an irrevocable offer to purchase the Leased Premises on such date
of termination at a price determined in accordance with Schedule C hereto.
Such notice and offer shall be accompanied by a certificate of Leases signed
by the President or any Vice President thereof, to the effect that the
Board of Directors of Lessee has determined that the Leased Premises have
become uneconomic or unsuitable for the continued and occupancy in the
business operation of Lessee, and any affiliate of Lessee, and to the further
effort that Lessee, and any affiliate of either has discontinued such use of
the Leased Premises or will discontinue such use within the period ending one
year after the date of the delivery of such notice to Lessor. If lessor shall
reject such offer to purchase by notice given to Lessee not later than the
60th day prior to such termination date, this Lease shall terminate on such
termination date, except with respect to obligations and liabilities of
Lessee under this Lease, actual or contingent which have arisen on or prior
to such date upon payment by Lessee of the Basic Rent, additional rent and
all other sums due and payable by it to and including such termination date;
provided, that such rejection by Lessor shall be of no effect unless
accompanied by the written consent thereto of the Mortgagee. Unless Lessor
shall have rejected such offer to purchase by notice to Lessee given not
later than the 60th day prior to such termination date or if Lessor makes
such rejection without the consent of the Mortgagee, then Lessor shall be
conclusively presumed to have accepted such offer to purchase, and on such
termination date Lessor shall convey the Leased Premises to Lessee pursuant
to paragraph 16, against payment by Lessee of the purchase price therefor,
together
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with all installments of Basic Rent, additional rent and all other sums then
due under this Lease and unpaid to and including such termination date.
(e) If Lessee shall give notice pursuant to paragraph 15(a) or 15(b) of
its intention to terminate this Lease, whether or not Lessee shall have
exercised its right to substitute a property pursuant to paragraph 15(a) or
shall have made an offer to purchase the Leased Premises pursuant to
paragraph 15(b) (and whether or not such offer to purchase was accepted or
rejected by Lessor), neither Lessee, nor any affiliate of Lessee shall have
the right thereafter to use the Leased Premises, directly or indirectly, in
its business operations.
16. PROCEDURE UPON PURCHASE. (a) In the event of the purchase of the
Leased Premises or any part thereof by Lessee pursuant to any provision of
this Lease, Lessor need not transfer and convey to Lessee or its designee any
better title thereto than existed on the date of the commencement of this
Lease, and Lessee shall accept such title, subject, however, to all liens,
encumbrances, charges, exceptions and restrictions on, against or relating to
the Leased Premises and to all applicable laws, regulations and ordinances,
but free of the lien of the Mortgage and liens, encumbrances, charges,
exceptions and restrictions which have been created by or resulted from acts
of Lessor.
(b) Upon the date fixed for any such purchase of the Leased Premises or
portion thereof pursuant to any provision of this Lease, Lessee shall pay to
Lessor at its address set forth above, or at any other place designated by
Lessor, the purchase price therefor specified herein, and Lessor shall there
deliver to Lessee (i) a deed which describes the Leased Premises or portion
thereof then being sold to Lessee and which conveys and transfers the title
thereto described in paragraph 16(a), together with (ii) such other
instruments as
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shall be necessary to transfer to Lessee or its assignee any other property
then required to be sold by Lessor pursuant to this Lease. Lessee shall pay
all charges incident to such conveyance and transfer, including counsel fees,
escrow fees, recording fees, title insurance premiums and all applicable
federal, state and local taxes (other than any income or franchise taxes
levied upon or assessed against Lessor) which may be incurred or imposed by
reason of such conveyance and transfer and by reason of the delivery of said
deed and other instruments. Upon the completion of such purchase, but not
prior thereto (whether or not any delay in the completion of, or the failure
to complete, such purchase shall be the fault of Lessor), this Lease and all
obligations hereunder (including the obligations to pay Basic Rent and
additional rent) shall terminate with respect to the Leased Premises, except
with respect to obligations and liabilities of Lessee, actual or contingent,
under this Lease which arose on or prior to such date of purchase.
17. ASSIGNMENT AND SUBLETTING. (a) Without the consent of Lessor,
Lessee may sublet any part of the Leased Premises and may sublet to a
franchisee of Lessee the entire Leased Premises and may assign all its rights
and interests under this Lease to the successor or surviving corporation of a
corporate merger or consolidation of Lessee and may assign all its right,
title and interests under this Lease to a corporation in which Lessee owns at
least 51% of the stock entitled to vote for the election of directors of such
corporation and with the consent of Lessor (which consent will not be
reasonably withheld) may sublet the entire Leased Premises or assign all its
rights and interests under this Lease, provided, that each such sublease
shall expressly be made subject to the provisions of this Lease. If Lessee
assigns all its rights and interests under this Lease, the assignee under
such assignment shall expressly assume all the obligations
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of Lessee hereunder - in a written instrument delivered to Lessor at the
time of such assignment. No assignment or sublease made as permitted by this
paragraph 17 shall affect or reduce any of the obligations of Lessee
hereunder, and all such obligations shall continue in full effect as
obligations of a principal and not as obligations of a guarantor or surety,
to the same extent as though no assignment or subletting had been made. No
sublease or assignment made as permitted by this paragraph 17 shall impose
any obligations on Lessor or otherwise affect any of the rights of Lessor
under this Lease. Neither this Lease nor the term hereby demised shall be
mortgaged by Lessee, nor shall Lessee mortgage or pledge the interest of
Lessee in and to any sublease of the Leased Premises or the rentals payable
thereunder. Any such mortgage, pledge, sublease or assignment made in
violation of this paragraph 17 shall be void. Lessee shall, within 10 days
after the execution and delivery of any such assignment, deliver a conformed
copy thereof to Lessor, and within ten days after the execution and delivery
of any such sublease, Lessee shall give notice to Lessor of the existence and
term hereof, and of the name and address of the sublessee thereunder.
(b) Lessee will keep and perform all covenants, terms and conditions
set forth in the subsurface oil and gas leases set forth in Schedule A
hereto, if any, which covenants, terms and conditions are to be kept and
performed by the lessor thereunder, and will pay and indemnify and save
Lessor harmless from, any and all liability, damage, expense, causes of
action, suits, claims or judgements arising from the failure of Lessee to
keep or perform any such covenants, terms or conditions.
18. PERMITTED CONTESTS. Lessee shall not be required to (i) pay any
tax, assessment, levy, fee, rent or charge referred to in paragraph 8(a), (ii)
comply with any statute, law, rule, barrier, regulation or ordinance
referred to in paragraph 8(b) or any order, rule or regulation of the
National Fire Protection Association referred to in paragraph 12(a) or other
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body exercising similar functions, (iii) discharge or remove any lien,
encumbrance or charge referred to in paragraph 9 or 12(a), or (iv) obtain any
waivers or settlements or make any change or take any action with respect to
any encroachment, hindrance, obstruction, violation or impairment referred
to in paragraph 11(b), so long as Lessee shall contest, in good faith and at
its expense, the existence, the amount or the validity thereof, the amount of
the damages caused thereby, or the extent of its liability therefor, by
appropriate proceedings (or, in the case of non-compliance with regulations
of the National Fire Protection Association or said other body exercising
similar functions, in accordance with the rules of said Association or said
body) which shall operate during the pendency thereof to prevent (i) the
collection of, or other realization upon, the tax, assessment, levy, fee,
rent or charge or lien, encumbrances or charge so contested, (ii) the sale,
forfeiture or loss of the Leased Premises, or any part thereof, or the Basic
Rent or any additional rent, or any portion thereof, to satisfy the same or
to pay any damages caused by the violation of any such statute, law, rule,
order, regulation or ordinance or by any such encroachment, hinderance,
obstruction, violation, or impairment, (iii) any interference with the use or
occupancy of the Leased Premises or any part thereof, and (iv) any
interference with the payment of the Basic Rent or any additional rent, or
any portion thereof. While any such proceedings are pending, Lessor shall not
have the right to pay, remove or cause to be discharged the tax, assessment,
levy, fee, rent or charge or lien, encumbrance or charge thereby being
contested. Lessee further agrees that each such contest shall be promptly
prosecuted to a final conclusion. Lessee will pay, and save Lessor harmless
against, any and all losses, judgments, decrees and costs (including all
reasonable attorneys' fees and expenses) in connection with any such contest
and will, promptly after the
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final settlement, compromise or determination or such contest, fully pay and
discharge the amounts which shall be levied, assessed, charged or imposed or
be determined to be payable therein or in connection therewith, together with
all penalties, fines, interests, costs and expenses thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Lessor or the
Mortgagee to the risk of any material civil liability or the risk of any
criminal liability, and Lessee shall give such reasonable security to Lessor
and the Mortgagee as may be demanded by Lessor or the Mortgagees to insure
compliance with the foregoing provisions of this paragraph 18.
19. CONDITIONAL LIMITATIONS; DEFAULT PROVISION. (a) Any of the
following occurrences or acts shall constitute an event of default under this
Lease: (i) if Lessee, at any time during the continuance of this Lease (and
regardless of the pendency of any bankruptcy, reorganization, receivership,
insolvency or other proceedings, in law, in equity, or before any
administrative tribunal, which have or might have the effect of preventing
Lessee from complying with the terms of this Lease), shall (1) fail to make
any payment of Basic Rent, additional rent or other sum herein required to be
paid by Lessee and Lessee shall fail to make any such payment, for a period
of five days after delivery by Lessor of notice to Lessee that any such
payment has become due, or (2) fail to observe or perform any other provision
hereof for 30 days after Lessor shall have delivered to Lessee notice of such
failure (provided, that in the case of any default referred to in this clause
(2) which cannot with diligence be cured within such 30-day period, if Lessee
shall proceed promptly to cure the same and thereafter shall prosecute the
curing of such default with
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diligence, then upon receipt by Lessor of a certificate from the President
or a Vice President of Lessee stating the reason that such default cannot be
cured within 30 days and stating that Lessee is proceeding with diligence to
cure such default, the time within which such failure may be cured shall be
extended for such period as may be necessary to complete the curing of the
same with diligence); or (ii) if Lessee shall file a petition in bankruptcy
or for reorganization or for an arrangement pursuant to any present or future
federal or state law, or shall be adjudicated a bankrupt or insolvent or
shall make an assignment for the benefit of its creditors or shall admit in
writing its inability to pay its debts generally as they become due, or if a
petition or answer proposing the adjudication of Lessee as a bankrupt or its
reorganization under any present or future federal or state bankruptcy law or
any similar federal or state law shall be filed in any court and such
petition or answer shall not be discharged or denied within 120 days after
the filing thereof, or (iii) if a receiver, trustee or liquidator of Lessee
or of all or substantially all of the assets of Lessee or of the Leased
Premises shall be appointed in any proceeding brought by Lessee, or if any
such receiver, trustee or liquidator shall be appointed in any proceeding
brought against Lessee and shall not be discharged within 120 days after such
appointment, or if Lessee shall consent to or acquiesce in such appointment,
or (iv) if the Lease Premises shall have been abandoned.
(b) If an event of default shall have happened and be continuing,
Lessor shall have the right at its election, then or at any time thereafter
while such event of default
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shall continue, to give Lessee notice of Lessor's intention to terminate the
term of this Lease on a date specified in such notice. Upon the giving of
such notice, the term of this Lease and the estate hereby granted shall
expire and terminate on such date as fully and completely and with the same
effect as if such date were the date hereinbefore fixed for the expiration of
the term of this Lease, and all rights of Lessee hereunder shall expire and
terminate, but Lessee shall remain liable as hereinafter provided.
(c) If an event of default shall have happened and be continuing,
Lessor shall have the immediate right, whether or not the term of this Lease
shall have been terminated pursuant to paragraph 19(b), to re-enter and
repossess the Leased Premises or any part thereof by force, summary
proceedings, ejectment or otherwise and the right to remove all persons and
property therefrom. Lessor shall be under no liability for or by reason of
any such entry, repossession or removal. No such re-entry or taking of
possession of the Leased Premises by Lessor shall be construed as an election
on Lessor's part to terminate the term of this Lease unless a notice of such
intention be given to Lessee pursuant to paragraph 19(b), or unless the
termination of this Lease be decreed by a court or of competent jurisdiction.
(d) At any time or from time to time after the repossession of the
Leased Premises or any part thereof pursuant to paragraph 19(c), whether or
not the term of this Lease shall have been terminated pursuant to paragraph
19(b), Lessor may (but shall be under no obligation to) relet the Leased
Premises or any part thereof for the account of Lessee, in the name of
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Lessee or Lessor or otherwise, without notice to Lessee, for such term or
terms (which may be greater or less than the period which would otherwise
have constituted the balance of the term of this Lease) and on such
conditions (which may include concessions or free rent) and for such use as
Lessor, in its absolute discretion, may determine, and Lessor may collect and
receive any rents payable by reason of such reletting. Lessor shall not be
responsible or liable for any failure to relet the Leased Premises or any
part thereof or for any failure to collect any rent due upon any such
reletting.
(e) No expiration or termination of the term of this Lease pursuant
to paragraph 19(b), by operation of law or otherwise, and no repossession of
the Leased Premises or any part thereof pursuant to paragraph 19(c) or
otherwise, and no reletting of the Leased Premises or any part thereof
pursuant to paragraph 19(d), shall relieve Lessee of its liabilities and
obligations hereunder, all of which shall survive such expiration,
termination, repossession or reletting.
(f) In the event of any expiration or termination of this Lease or
repossession of the Leased Premises or any part thereof by reason of the
occurrence of an event of default, Lessee will pay to Lessor the Basic Rent,
additional rent and other sums required to be paid by Lessee to and including
the date of such expiration, termination or repossession; and, thereafter,
Lessee shall, until the end of what would have been the term of this Lease in
the absence of such expiration, termination or repossession, and whether or
not the Leased Premises or any part thereof shall have been relet, be liable
to Lessor for, and shall pay to Lessor, as liquidated and
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<PAGE>
agreed current damages: (i) the Basic Rent, additional rent and other sums
which would be payable under this Lease by Lessee in the absence of such
expiration, termination or repossession, less (ii) the net proceeds, if any,
of any reletting effected for the account of Lessee pursuant to paragraph
19(d), after deducting from such proceeds all Lessor's expenses in connection
with such reletting (including, without limitation, all repossession costs,
brokerage commissions, legal expenses, attorneys' fees, employees' expenses,
alteration costs and expenses of preparation for such reletting). Lessee will
pay such current damages on the days on which the Basic Rent would have been
payable under this Lease in the absence of such expiration, termination or
repossession, and Lessor shall be entitled to recover the same from Lessee on
each such day.
(g) At any time after any such expiration or termination of this Lease
or repossession of the Leased Premises or any part thereof by reason of the
occurrence of an event of default, whether or not Lessor shall have collected
any current damages pursuant to paragraph 19(f), Lessor shall be entitled to
recover from Lessee, and Lessee will pay to Lessor on demand, as and for
liquidated and agreed final damages for Lessee's default and in lieu of all
current damages beyond the date of such demand (it being agreed that it would
be impracticable or extremely difficult to fix the actual damages), an amount
equal to the excess, if any, of (d) the Basic Rent, additional rent and other
sums which would be payable under this Lease from the date of such demand
(or, if it be earlier, the date to which Lessee shall have satisfied in full
its obligations under paragraph 19(f) to pay current damages) for
32
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<PAGE>
what would be the then expired term of this Lease in the absence of such
expiration, termination or repossession over (b) the then fair net rental
value of the Leased Property for the same period, both discounted at a rate
per annum equal to the discount rate of the Federal Reserve Bank of San
Francisco on the date of such demand plus 1%. If any statute or rule of law
shall validly limit the amount of such liquidated final damages to less than
the amount above agreed upon, Lessor shall be entitled to the maximum amount
allowable under such statute or rule of law.
(b) The words "enter", "re-enter" or "re-entry", as used in this
paragraph 19, are not restricted to their technical meaning.
20. ADDITIONAL RIGHTS OF LESSOR. (a) No right or remedy herein conferred
upon or reserved to Lessor is intended to be exclusive of any other right or
remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute. The failure of Lessor to insist
at any time upon the strict performance of any covenant or agreement or to
exercise any option, right, power or remedy contained in this Lease shall not
be construed as a waiver or a relinquishment thereof for the future. A
receipt by Lessor of any Basic Rent, any additional rent or any other sum
payable hereunder with knowledge of the breach of any covenant or agreement
contained in this Lease shall not be deemed a waiver of such breach, and no
waiver by Lessor of any provision of this Lease shall be deemed to have been
made unless expressed in writing and signed by Lessor. In addition
33
143
<PAGE>
to other remedies provided in this Lease, Lessor shall be entitled, to the
extent permitted by applicable law, to injunctive relief in case of the
violation, or attempted or threatened violation, of any of the covenants,
agreements, conditions or provision of this Lease, or to a decree compelling
performance of any of the covenants, agreements, conditions or provisions of
this Lease, or to any other remedy allowed to Lessor at law or in equity.
(b) Lessee hereby waives and surrenders for itself and all those
claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future
constitution, statute or rule of law to redeem the Leased Properties or to
have a continuance of this Lease for the term hereby demised after
termination of Lessee's right of occupancy by order or judgment of any court
or by any legal process or writ, or under the terms of this Lease, or after
the termination of the term of this Lease as herein provided, and (ii) the
benefits of any present or future constitution, statute or rule of law which
exempts property from liability for debt or for distress for rent.
(c) In the event Lessee shall be in default in the performance of any of
its obligations under this Lease, and an action shall be brought for the
enforcement thereof in which it shall be determined that Lessee was in
default, Lessee shall pay to Lessor all the expenses incurred in connection
therewith including reasonable attorneys' fees. In the event Lessor shall,
without fault on its part, be made a party to any litigation commenced
against Lessee, if Lessee, at its expense, shall fail to provide Lessor with
counsel approved
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<PAGE>
by Lessor, Lessee shall pay all costs and reasonable attorneys' fees incurred
or paid by Lessor in connection with such Litigation.
21. NOTICES, DEMANDS AND OTHER INSTRUMENTS. All notices, demands,
requests, consents, approvals and other instruments required or permitted to
be given pursuant to the terms of this Lease shall be in writing and shall be
deemed to have been properly given if (a) with respect to Lessee, sent by
registered mail, postage prepaid, addressed to Lessee at its address first
above set forth, and (b) with respect to Lessor, sent by registered mail
postage prepaid addressed to Lessor at its address first above set forth.
Lessor and Lessee shall each have the right from time to time to specify as
its address for purposes of this Lease any other address in the United States
of America upon giving 15 days' notice thereof, similarly given, to the other
party.
2. ESTOPPEL CERTIFICATE. Lessee will, at any time and from time to
time, upon not less than 20 days' prior request by Lessor, execute,
acknowledge and deliver to Lessor a statement in writing, executed by the
President or any Vice President of Lessee, certifying that this Lease is
unmodified and in full effect (or, if there have been modifications, that
this Lease is in full effect as modified, and setting forth such
modifications) and the dates to which the Basic Rent, additional rent and
other sums payable hereunder have been paid, and either stating that to the
knowledge of the signer of such certificate no default exists hereunder or
specifying each such default of which the signer may have knowledge; it being
intended that any such statement by Lessee may be
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<PAGE>
relied upon by the Mortgagee or by any prospective purchaser of the Leased
Premises.
23. LESSEE'S OPTION TO PURCHASE. So long as Lessee is not in default
under this Lease, Lessee shall have an option to purchase the Leased
Premises on December 31, 1997 at a price equal to the fair market value of the
Leased Premises on such date of purchase. Lessee shall exercise such option to
purchase by delivering notice to Lessor at least 210 days prior to such date
of purchase. Such notice shall state that Lessee is exercising its option to
purchase the Leased Premises pursuant to this paragraph 23 and the date such
purchase is to occur. On such date of purchase, Lessor shall convey the
Leased Premises to Lessee pursuant to paragraph 16 against payment by Lessee
of the purchase price therefor, together with all installments of Basic Rent,
all additional rent and all other sums then due and payable under this Lease
to and including such date of purchase. If Lessee and Lessor cannot agree on
the fair market value of the Leased Premises, Lessee and Lessor shall each
appoint an appraiser. The two appraisers so appointed shall appoint a third
appraiser. If the three appraisers do not agree on the fair market value of
the Leased Premises, the fair market value shall be the average of the three
appraisals. In determining the fair market value of the Leased Premises, the
three appraisers shall consider the value of the Leased Premises as
encumbered by this Lease including any unexercised remaining Extended Terms.
24. NO MERGER. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the Leased Premises or
any part thereof by reason of the fact that the same persons may acquire or
hold, directly or indirectly, this Lease or the leasehold estate hereby
created or any interest in this Lease or in such leasehold estate as well as
the fee estate in the Leased Premises or
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146
<PAGE>
any interest in such fee estate.
25. SURRENDER. Upon the expiration or earlier termination of this
Lease, Lessee shall peaceably leave and surrender the Leased Premises to
Lessor in the same condition in which the Leased Premises were originally
received from Lessor at the commencement of this Lease, except as repaired,
rebuilt, restored, altered, or added to as permitted or required by any
provision of this Lease and except for ordinary wear and tear. Lessee shall
remove from the Leased Premises on or prior to such expiration or earlier
termination all property situated thereon which is not owned by Lessor, and,
at its expense, shall, on or prior to such expiration or earlier termination,
repair any damage caused by such removal. Property not so removed shall
become the property of Lessor, and Lessor may thereafter cause such property
to be removed from the Leased Premises and disposed of, but the cost of any
such removal and disposition and the cost of repairing any damage caused by
such removal shall be borne by Lessee.
26. SEPARABILITY. Each and every covenant and agreement, contained in
this Lease is, and shall be construed to be, a separate and independent
covenant and agreement, and the breach of any such covenant or agreement by
Lessor shall not discharge or relieve Lessee from its obligations to perform
the same. If any term or provision of this Lease or the application thereof
to any person or circumstances shall to any extent be invalid and
unenforceable, the remainder of this Lease, or the application of such term
or provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to the extent
permitted by law.
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147
<PAGE>
27. BINDING EFFECT. All of the covenants, conditions and obligations
contained in this Lease shall be binding upon and inure to the benefit of the
respective successors and assigns of Lessor and Lessee to the same extent as
if each such successor and assign were in each case named as a party to this
Lease. This Lease may not be changed, modified or discharged except by a
writing signed by Lessor and Lessee.
28. TABLE OF CONTENTS; HEADINGS. The table of contents and the headings
to the various paragraphs of this Lease have been inserted for convenient
reference only and shall not to any extent have the effect of modifying,
amending or changing the expressed terms and provisions of this Lease.
29. GOVERNING LAW. This Lease shall be governed by and interpreted under
the laws of the state in which the Leased Premises are located.
30. SCHEDULES. The following are Schedules A, B and C referred to in this
Lease.
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148
<PAGE>
SCHEDULE B
BASIC RENT PAYMENTS AND LESSOR'S COST
-------------------------------------
<TABLE>
<CAPTION>
Column 1 Column 2 Column 3 Column 4 Column 5
- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Short Desig- Amount of Amount of each instalment of Basic Amount of each instal- Original
nation of the Basic Rent Rent payable in advance on January ment of Basic Rent pay- to Lessor
Leased Prem- payable in 1, 1973 and thereafter on the 1st able in advance on the acquiring the
ises as Set arrears on day of each July and January occur- 1st day of each January Leased Prem-
Forth in December ring during the Primary Term to and and July occurring to and ises (herein
Schedule A 31, 1972 including July 1, 1997. including July 1, 2012. called Les-
sor's Cost).
- ---------------------------------------------------------------------------------------------------------------------------------
1. Phoenix, Arizona $4,111.92 $15,067.50 $7,350.00 $294,000
2. Scottsdale, Arizona 4,587.45 16,810.00 8,200.00 328,000
3. Independence, Missouri 4,615.42 16,912.50 8,250.00 330,000
4. Raytown, Missouri 4,153.88 15,221.25 7,425.00 297,000
</TABLE>
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149
<PAGE>
SCHEDULE C
1. Upon the purchase of the Leased Premises pursuant to paragraph 14(b)
or 15(b) of this Lease, the purchase price payable shall be an amount equal
to the sum of (i) Lessor's Cost (as set forth in Schedule B), multiplied by a
fraction, the denominator of which fraction shall be 10,000,000 and the
numerator of which fraction shall be the applicable amount set forth in
Column 2 below opposite the period in which such purchase occurs (period 1
being the period commencing with the first day of the Primary Term and ending
on and including June 30, 1972 and each succeeding period being the following
six month period of the Primary Term); and (ii) if such date of purchase is
not a Basic Rent Payment Date, interest at the rate of 9 1/2% per annum
(computed as if each full calendar year consists of 360 days and each full
calendar month consists of 30 days) on the amount determined as provided in
clause (i) above for the period beginning on the Basic Rent Payment Date
immediately preceding such date of purchase (or if there is no Basic Rent
Payment Date preceding such date of purchase, beginning on the first day of
the Interim Term) and ending on and including such date of purchase:
<TABLE>
<CAPTION>
Column 1 Column 2
Period in which Purchase Occur Applicable Amount
- ------------------------------ -----------------
Interim Term 10,000,000.00
<S> <C>
1 9,497,136.97
2 9,445,387.95
3 9,391,180.85
4 9,334,398.91
5 9,274,919.83
6 9,212,615.49
7 9,147,351.70
8 9,078,987.88
9 9,007,376.77
10 8,932,364.14
</TABLE>
40
150
<PAGE>
<TABLE>
<CAPTION>
Period in which Purchase Occur Applicable Amount
- ------------------------------ -----------------
<S> <C>
11 8,853,788.41
12 8,771,480.33
13 8,685,262.62
14 8,594,949.56
15 8,500,346.63
16 8,401,250.06
17 8,297,446.41
18 8,188,712.08
19 8,074,812.87
20 7,955,503.45
21 7,830,526.83
22 7,699,613.82
23 7,562,482.45
24 7,418,837.34
25 7,268,369.08
26 7,110,753.58
27 6,945,651.35
28 6,772,706.76
29 6,591,547.30
30 6,401,782.77
31 6,203,004.42
32 5,994,784.10
33 5,776,673.31
34 5,548,202.26
35 5,308,678.84
36 5,058,187.55
37 4,795,588.43
38 4,520,515.85
39 4,232,377.32
40 3,930,552.21
41 3,414,390.41
42 3,283,210.92
43 2,936,300.41
44 2,572,911.65
45 2,192,261.92
46 1,793,531.33
47 1,375,861.04
48 938,351.41
49 480,060.07
50 0.00
</TABLE>
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151
<PAGE>
EXHIBIT 10.17.1
RICHARD M. PACHULSKI, ESQ., (State Bar #90073)
JAMES I. STANG, ESQ., (State Bar #94435)
BRAD R. GODSHALL, ESQ., (State Bar #105438)
DEBRA GRASSGREEN, ESQ., (State Bar #169978)
RACHELLE S. VISCONTE, ESQ., (State Bar #182158)
PACHULSKI, STANG, ZIEHL & YOUNG P.C.
10100 Santa Monica Boulevard, Suite 1100
Los Angeles, California 90067
Telephone: (310) 277-6910
Attorneys for Reorganized Debtor
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re: ) Case No. SV 96-16075 AG
)
SIZZLER RESTAURANTS ) (Jointly administered with:
INTERNATIONAL, INC., SIZZLER ) Case Nos: SV 96 -16076 AG
INTERNATIONAL, INC., COLLINS ) SV 96 -16077 AG
PROPERTIES, INC., TENLY ) SV 96 -16078 AG
ENTERPRISES, INC., and BUFFALO ) SV 96 -16079 AG
RANCH STEAKHOUSES, INC., )
) Chapter 11 cases
)
) NOTICE OF ORDER RE
) ASSIGNMENT PORTION OF
Debtors. ) MOTION FOR AUTHORITY TO
______________________________________ ) SELL, ASSUME AND ASSIGN
) UNEXPIRED NONRESIDENTIAL
/ / Affects all Debtors ) REAL PROPERTY LEASE [3636
/ / Affects SRI ) SCOTTSDALE ROAD,
/ / Affects SII ) SCOTTSDALE, AZ
/XX/ Affects CPI ) (Store No. 271)]
/ / Affects Tenly )
/ / Affects Buffalo Ranch ) HEARING DATE:
) DATE: November 4, 1997
) TIME: 1:30 p.m.
)
) STATUS CONFERENCE:
) DATE: March 9, 1998
) TIME: 10:00 a.m.
) CTRM: 302
) 21041 Burbank Boulevard
______________________________________ ) Woodland Hills, CA
152
<PAGE>
TO ALL PARTIES IN INTEREST:
PLEASE TAKE NOTICE that on March 10, 1998, the Court entered its ORDER
RE ASSIGNMENT PORTION OF MOTION FOR AUTHORITY TO SELL, ASSUME AND ASSIGN
UNEXPIRED NONRESIDENTIAL REAL PROPERTY LEASE [3636 SCOTTSDALE ROAD,
SCOTTSDALE, AZ (Store No. 271)], a copy of which is attached hereto as
Exhibit A.
DATED: March 20, 1998 PACHULSKI, STANG, ZIEHL & YOUNG P.C.
By: /s/ Rachelle S. Visconte
---------------------------------
Rachelle S. Visconte
Attorneys for Reorganized Debtors
2
153
<PAGE>
ATTORNEY
WORKING COPY
[DATE STAMP]
FILED
MAR -9 1998
[DATE STAMP]
ENTERED
MAR 10 1998
RICHARD M. PACHULSKI, ESQ., (State Bar #90073)
JAMES I. STANG, ESQ., (State Bar #94435)
BRAD R. GODSHALL, ESQ., (State Bar #105438)
DEBRA GRASSGREEN, ESQ., (State Bar #169978)
RACHELLE S. VISCONTE, ESQ., (State Bar #182158)
PACHULSKI, STANG, ZIEHL & YOUNG P.C.
10100 Santa Monica Boulevard, Suite 1100
Los Angeles, California 90067
Telephone: (310) 277-6910
Attorneys for Reorganized Debtor
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re: ) Case No. SV 96-16075 AG
)
SIZZLER RESTAURANTS ) (Jointly administered with:
INTERNATIONAL, INC., SIZZLER ) Case Nos: SV 96 -16076 AG
INTERNATIONAL, INC., COLLINS ) SV 96 -16077 AG
PROPERTIES, INC., TENLY ) SV 96 -16078 AG
ENTERPRISES, INC., and BUFFALO ) SV 96 -16079 AG
RANCH STEAKHOUSES, INC., )
) Chapter 11 cases
)
) ORDER RE ASSIGNMENT PORTION
) OF MOTION FOR AUTHORITY TO
Debtors. ) SELL, ASSUME AND ASSIGN
______________________________________ ) UNEXPIRED NONRESIDENTIAL
) REAL PROPERTY LEASE [3636
/ / Affects all Debtors ) SCOTTSDALE ROAD,
/ / Affects SRI ) SCOTTSDALE, AZ
/ / Affects SII ) (Store No. 271)]
/XX/ Affects CPI )
/ / Affects Tenly ) HEARING DATE:
/ / Affects Buffalo Ranch ) DATE: November 4, 1997
) TIME: 1:30 p.m.
)
) STATUS CONFERENCE:
) DATE: March 9, 1998
) TIME: 10:00 a.m.
) CTRM: 302
) 21041 Burbank Boulevard
) Woodland Hills, CA
______________________________________ )
On November 4, 1997 at 1:30 p.m., the Court considered the motion (the
"Motion") of Collins Properties, Inc., the reorganized debtor (the "Debtor"),
for an order of the Court approving the
EXHIBIT [A]
1
154
<PAGE>
sale, assumption and assignment to Austins Steaks And Saloon, Inc., a
Delaware corporation ("Austins," "Buyer" or "Subtenant"), of the Debtor's
tenancy interest in an unexpired nonresidential real property lease ("Lease")
for the real property located at 3636 Scottsdale Road, Scottsdale, AS (Store
No. 271) ("Real Property"), pursuant to the "Assignment and Assumption of
Leasehold Interest" entered into by the Debtor and Austins on August 29, 1997
("Agreement").
The Debtor appeared by and through their counsel of record, James I.
Stang and Rachelle S. Visconte of Pachulski, Stang, Ziehl & Young P.C. Daniel
E. Mintz and Sharon C. Hughes appeared on behalf of the Debtor's landlord on
the Real Property Lease, Lewis Properties, Inc. ("Lewis") and Lewis'
administrative and management agent, Win Properties, Inc. ("Win") (Lewis and
Win are collectively referred to herein as the "Landlord").
At the November 4, 1997 hearing, the Court ruled that the Lease had
been assumed under the Debtor's Amended Plan of Reorganization, as Modified
(the "Plan"). A separate order, along with related findings of fact and
conclusions of law was submitted regarding the assumption portion of the
Motion. As a result, this order addresses only the assignment portion of the
Motion.
After the November 4, 1997 hearing, this Court scheduled a status
conference on the assignment portion of the Motion, which is currently
scheduled for March 9, 1998 at 10:00 a.m. During the interim, the parties
have reached an agreement regarding the terms of the order approving and
authorizing the assignment portion of the Motion, which terms are set forth
herein.
2
155
<PAGE>
The Court, having considered the assignment portion of the Motion, the
Landlord's opposition thereto, the declarations offered in support of and in
opposition to the Motion, the Debtor's Plan, the record in this case and the
argument of counsel, makes the following findings of fact and conclusions of
law: (1) notice of the Motion satisfies the requirements of the Bankruptcy
Code, Rules of Bankruptcy Procedure and the Local Bankruptcy Rules for the
Central District of California, all as modified by this Court's order
limiting notice, entered June 24, 1996; (2) Austins is a good faith purchaser
as defined in Bankruptcy Code Section 363(m); (3) there is no existing
default under the Lease; (4) the Landlord received due notice of the hearing
on the Motion; (5) the original term of the Lease expired on December 31,
1997; (6) one five-year option has been properly and validly exercised to
extend the Lease term to December 31, 2002; (7) there are two (2) additional
renewal options of five (5) years each under the Lease; and (8) the Debtor
and Austins have provided the Landlord of the Real Property Lease with
adequate assurance of future performance as defined in Bankruptcy Code
Sections 365(b)(1)(C), (b)(3) and 365(f)(2), and good cause appearing
therefore,
IT IS HEREBY ORDERED that the Motion, as it relates to the assignment of
the Lease to Austins, is granted;
IT IS FURTHER ORDERED that the Debtor is authorized to assign, and the
Court approves the assignment to Austins of the Debtor's tenancy interest in
an unexpired nonresidential real property lease for the real property located
at 3636 Scottsdale Road, Scottsdale, AZ (Store No. 271), pursuant to the
"Assignment and Assumption of Leasehold Interest" entered into by the Debtor
and Austins on
3
156
<PAGE>
August 29, 1997 ("Agreement"), with the modifications to the Agreement stated
herein;
IT IS FURTHER ORDERED that paragraph 6 of the Agreement, which provides
that the $10,000.00 security deposit held by the Debtor under the Sublease
shall be returned to Austins within ten (10) days of the "Effective Date" of
the Agreement, is modified. On the Effective Date of the Agreement, the
Debtor shall turn the $10,000.00 security deposit given to the Debtor by
Austins over to Lewis, for Lewis to hold as a security deposit from Austins;
IT IS FURTHER ORDERED that the security deposit shall be held by the
Landlord to secure the full and faithful performance by the Tenant, Austins,
of all of the terms and conditions of this Lease and such sum shall be
returned to Austins at the satisfactory termination of this Lease after
deducting therefrom the cost of curing any default and repairing any and all
damage to the premises caused by Austins, its representatives, invitees or
licensees during the term, excluding ordinary wear and tear. In the event of a
breach or default by Austins with respect to any of the terms or conditions
of this Lease, Landlord may apply such security deposit or any part thereof to
any costs, damages, losses or injuries resulting from such breach or default
without in any manner waiving or limiting Landlord's right to further hold
Austins liable for the costs, damages or losses or injuries otherwise due and
incurred. In the event Landlord so applies all or any portion of such
security deposit, Austins shall within ten (10) days after notice thereof
immediately pay Landlord an amount equal to the difference between (a) the
amount of security deposit then held by Landlord after such application and
(b) the sum of $10,000.00. The security
4
157
<PAGE>
deposit shall under no circumstances be applied by Austins to the payment of
rent hereunder, or mortgaged, assigned or otherwise encumbered or made the
subject of a security interest by Austins in any manner, and any attempt to
do so shall be null and void. Landlord shall not be liable to Austins for the
payment of interest on the security deposit maintained hereunder.
IT IS FURTHER ORDERED that the claim Austins filed against the Debtor's
estate, in the amount of $10,000.00, on account of the security interest held
by the Debtor from Austins pursuant to the sublease between the debtor and
Austins for the Real Property, which claim was assigned claim number 1568 by
the Clerk of the Court, is hereby withdrawn, with prejudice, and disallowed
in its entirety;
IT IS FURTHER ORDERED that the claim the Landlord filed against the
Debtor's estate, in the amount of $44,153.87, which claim was assigned claim
number 2703 by the Clerk of the Court, is hereby withdrawn, with prejudice,
and disallowed in its entirety;
IT IS FURTHER ORDERED that paragraph 9 of the Agreement is amended to
the extent that every reference in that paragraph to "Assignor," which is
defined on page 1 of the Agreement as Collins Properties, Inc., shall be
substituted with the word "Landlord," which is defined in recital "A" on
page 1 of the Agreement as Lewis Properties, Inc.;
IT IS FURTHER ORDERED that the Debtor is released from liability under
the Lease pursuant to Bankruptcy Code Section 365(k); and
/ / /
/ / /
/ / /
5
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<PAGE>
IT IS FURTHER ORDERED that eleven (11) days after the entry of this
order by the Bankruptcy Court, in the event that there is no appeal pending
filed by the Landlord, of this order or any other order of the Bankruptcy
Court in this case affecting the assumption or assignment of the Lease, the
Debtor shall pay to Lewis, as "cure" under the Plan and Bankruptcy Code
Section 365, the monetary arrearages owed to Lewis under the Lease, which the
Debtor and Lewis agree total $187.00 on account of prepetition rent and
$16,335.85 on account of real property taxes for the second half of the
1995-1996 tax period and the first half of the 1996-1997 tax period, with
interest and penalties thereon.
Dated: MAR 9 1998
-----------------
/s/ Arthur M. Greenwald
---------------------------------------
The Honorable Arthur M. Greenwald
United States Bankruptcy Judge
Submitted by:
PACHULSKI, STANG, ZIEHL & YOUNG P.C.
By: /s/ James I. Stang
---------------------------------
James I. Stang
Rachelle S. Visconte
Attorneys for Reorganized Debtor
APPROVED AS TO FORM AND CONTENT:
LAW OFFICES OF DANIEL E. MINTZ
By: /s/ Daniel E. Mintz
---------------------------------
Daniel E. Mintz
Attorney for Lewis Properties, Inc.
and Win Properties, Inc.
BAYLOR, EVNEN, CURTISS, GRIMIT & WITT
By: /s/ David D. Zwart
---------------------------------
David D. Zwart
Attorneys for Austins Steaks
And Saloon, Inc.
6
159
<PAGE>
NOTE TO USERS OF THIS FORM:
PHYSICALLY ATTACH THIS FORM AS THE LAST PAGE OF THE PROPOSED ORDER OR JUDGMENT.
DO NOT FILE THIS FORM AS A SEPARATE DOCUMENT.
- --------------------------------------------------------------------------------
In Re (SHORT TITLE) CHAPTER 11 CASE NUMBER:
SIZZLER RESTAURANTS INTERNATIONAL, SV 96-10675-AG
INC., ET AL.,
Debtor.
- --------------------------------------------------------------------------------
NOTICE OF ENTRY OF JUDGMENT OR ORDER
AND CERTIFICATE OF MAILING
TO ALL PARTIES IN INTEREST ON THE ATTACHED SERVICE LIST:
1. You are hereby notified, pursuant to Local Bankruptcy Rule 116(1)(1)(iv),
that a judgment or order entitled (SPECIFY):
ORDER RE ASSIGNMENT PORTION OF MOTION FOR AUTHORITY TO SELL, ASSUME AND
ASSIGN UNEXPIRED NONRESIDENTIAL REAL PROPERTY LEASE
[3636 SCOTTSDALE ROAD, SCOTTSDALE, AZ (Store No. 271)]
was entered on (SPECIFY DATE): MAR 10 1998
2. I hereby certify that I mailed a copy of this notice and a true copy of
the order to judgment to the persons on the attached service list on (SPECIFY
DATE): MAR 10 1998
Dated: JON D. CERETTO
Clerk of the Bankruptcy Court
By: /s/ Nancy Monroy
----------------------------------
Deputy Clerk
- ------------------------------------------------------------------------------
Rev. 6/95 This form is optional. It has been approved for use by the United
States Bankruptcy Court for the Central District of California. 110
160
<PAGE>
EXHIBIT 10.19
FIFTH AMENDMENT TO AGREEMENT
This Agreement made as of the 31st day of January, 1999, by and among First
National Bank of Omaha ("BANK"), a national banking association with
principal offices in Omaha, Nebraska, and Austins Steaks & Saloon, Inc.
("BORROWER"), a Delaware corporation.
Whereas, BANK and BORROWER executed a written Agreement dated as of
August 31, 1996, which was subsequently amended by written Amendments to
Agreement dated February 7, 1997, March 21, 1997, October 7, 1997, and
January 31, 1998 (the Agreement, together with all amendments thereto is
collectively called the "AGREEMENT").
Now, Therefore, in consideration of the AGREEMENT, and their mutual
promises made herein, BANK and BORROWER agree as follows:
1. Unless otherwise defined in this Amendment, terms which defined in
the AGREEMENT shall have the same meanings herein.
2. Paragraph 1. of the AGREEMENT is hereby amended to read, effective
immediately:
1. ACKNOWLEDGMENT OF DEBT. The principal balance of the
OBLIGATION is $141,006.35 as of January 31, 1999. In addition, the OBLIGATION
consists of accrued interest, costs and attorney fees incurred by BANK.
3. BORROWER certifies by its execution hereof that the representations
and warranties set forth in the AGREEMENT are true as of this date, and that
no EVENT OF DEFAULT under the AGREEMENT, and no event which, with the giving
of notice or passage of time or both, would become such an EVENT OF DEFAULT,
has occurred as of this date.
4. Except as amended hereby the parties ratify and confirm as binding
upon them all of the terms of the AGREEMENT.
In witness whereof the parties set their hands as of the date first written
above.
First National Bank of Omaha Austins Steaks & Saloon, Inc., a/k/a Austins
Steaks and Saloon, Inc.
By /s/ Mark M. Miller By /s/ [illegible]
-------------------------- ---------------------------------
Its VP Its CFO
-------------------------- ---------------------------------
161
<PAGE>
ACKNOWLEDGMENT BY GUARANTORS
The undersigned corporations each guarantee the indebtedness of Austins
Steaks & Saloon, Inc. to First National Bank of Omaha by written guaranty
agreements. By their execution hereof, each of the undersigned hereby
acknowledges, consents, and agrees to the above and foregoing Third Amendment
to Agreement, and each ratifies and confirms their existing guaranty of
BORROWER's OBLIGATION.
Austins of Albuquerque, Inc. Austins of Scottsdale, Inc.
By /s/ [illegible] By /s/ [illegible]
--------------------------- ---------------------------
Its CFO Its CFO
--------------------------- ---------------------------
Austins Old Market, Inc.
By /s/ [illegible]
---------------------------
Its CFO
---------------------------
Austins of New Mexico, Inc. Austins 72nd, Inc.
By /s/ [illegible] By /s/ [illegible]
--------------------------- ---------------------------
Its CFO Its CFO
--------------------------- ---------------------------
Austins Omaha, Inc.
By /s/ [illegible]
---------------------------
Its CFO
---------------------------
By: /s/ Paul C. Schorr
----------------------------------------------
Paul C. Schorr III, Individually as Guarantor
162
<PAGE>
EXHIBIT 10.20
PROMISSORY NOTE
<TABLE>
<CAPTION>
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$395,000.00 01-27-1999 01-30-2000 2556 070 1735053866 RB27
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
</TABLE>
Borrower: Austin's Steak and Saloon, Inc. Lender: U.S. Bank National Association
6940 "O" Street, Suite 334 Lincoln Main
Lincoln, NE 68510 233 South 13th Street
Lincoln, NE 68508
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Principal Amount: $395,000.00 Initial Rate: 7.750% Date of Note: January 27, 1999
</TABLE>
PROMISE TO PAY. Austin's Steak and Saloon, Inc. ("Borrower") promises to pay
to U.S. Bank National Association ("Lender"), or order, in lawful money of
the United States of America, the principal amount of Three Hundred Ninety
Five Thousand & 00/100 Dollars ($395,000.00), together with interest on the
unpaid principal balance from January 27, 1999, until paid in full.
PAYMENT. Borrower will pay this loan in one principal payment of $395,000.00
plus interest on January 30, 2000. This payment due January 30, 2000, will be
for all principal and accrued interest not yet paid. In addition, Borrower
will pay regular monthly payments of all accrued unpaid interest due as of
each payment date, beginning February 28, 1999, with all subsequent interest
payments to be due on the last day of each month after that. The annual
interest rate for this Note is computed on a 365/360 basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender
at Lender's address shown above or at such other place as Lender may designate
in writing. Unless otherwise agreed or required by applicable law, payments
will be applied first to accrued unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the U.S. Bank
National Association Reference Rate (the "Index"). The Index is not
necessarily the lowest rate charged by Lender on its loans and is set by
Lender in its sole discretion. If the Index becomes unavailable during the
term of this loan, Lender may designate a substitute index after notifying
Borrower. Lender will tell Borrower the current Index rate upon Borrower's
request. Borrower understands that Lender may make loans based on other rates
as well. The interest rate change will not occur more often than
each day. The Index currently is 7.750% per annum. The interest rate to be
applied to the unpaid principal balance of this Note will be at a rate equal
to the Index, resulting in an initial rate of 7.750% per annum. NOTICE: Under
no circumstances will the interest rate on this Note be more than the maximum
rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to
make payments under the payment schedule. Rather, they will reduce the
principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect either now or at the time made or
furnished. (d) Borrower becomes insolvent, a receiver is appointed for any
part of Borrower's property. Borrower makes an assignment for the benefit of
creditors, or any proceeding is commenced either by Borrower or against
Borrower under any bankruptcy or insolvency laws. (e) Any creditor tries to
take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with
Lender. (f) Any guarantor dies or any of the other events described in this
default section occurs with respect to any guarantor of this Note. (g) A
material adverse change occurs in Borrower's financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is
impaired. (h) Lender in good faith deems itself insecure.
In any default, other than a default in payment, is curable and if Borrower
has not been given a notice of a breach of the same provision of this Note
within the preceding twelve (12) months, it may be cured (and no event of
default will have occurred) if Borrower, after receiving written notice from
Lender demanding cure of such default: (a) cures the default within fifteen
(15) days; or (b) if the cure requires more fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Notes and all accrued unpaid interest immediately due,
without notice, and then Borrower will pay that amount. Upon default,
including failure to pay upon final maturity, Lender, at its option, may
also, if permitted under applicable law, increase the variable interest rate
on this Note to 3,000 percentage points over the Index. The interest rate
will not exceed the maximum rate permitted by applicable law. Lender may hire
or pay someone else to help collect this Note if Borrower does not pay.
Borrower also will pay Lender that amount. This includes, subject to any
limits under applicable law, Lender's attorneys' fees and Lender's legal
expenses whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post--judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums
provided by law. This Note has been delivered to Lender and accepted by
Lender in the State of Nebraska. If there is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of Lancaster
County, the State of Nebraska. This Note shall be governed by and construed
in accordance with the laws of the State of Nebraska.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender
all Borrower's right, title and interest in and to, Borrower's accounts with
Lender (whether checking, savings, or some other account), including without
limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on this Note
against any and all such accounts.
COLLATERAL. This Note is secured by Deed of Trust dated 1/27/97, Commercial
Pledge Agreement from Jane S. Schorr date 11/3/97 and FS/SA all business
assets.
PURPOSE OF LOAN. Reliance real estate.
YEAR 2000. Borrower has reviewed and assessed or will review and assess its
business operations and computer systems and applications to address the
"year 2000 problem" (that is, that computer applications and equipment used
by Borrower, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000), and based upon that review Borrower will develop and implement a plan,
including expense estimates, to address the year 2000 problem and to
remediate any material year 2000 problem, and complete leasing with respect
thereto, as soon as practicable and in any event by June 30, 1999. Borrower
will promptly deliver to Lender such information relating to this covenant as
Lender requests from time to time.
PRIOR NOTE. #26 (012798).
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and notice of dishonor. Upon
any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length
of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize, upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made.
163
<PAGE>
01-27-1999 PROMISSORY NOTE Page 2
Loan No (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.
BORROWER:
Austin's Steak and Saloon, Inc.
By: /s/ PAUL C. SCHORR III By: /s/ TIMOTHY GRIGGS
------------------------------ --------------------------------
Paul C. Schorr III, President Timothy Griggs, Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
164
<PAGE>
NOTICE OF FINAL AGREEMENT
<TABLE>
<CAPTION>
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$395,000.00 01-27-1999 01-30-2000 2556 070 1735053866 RB27
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
</TABLE>
BORROWER: Austin's Steak and Saloon, Inc. LENDER: U.S. Bank National Association
6940 "O" Street, Suite 334 Lincoln Main
Lincoln, NE 68510 233 South 13th Street
Lincoln, NE 68508
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE -- WRITTEN AGREEMENTS. A credit agreement must be in writing
to be enforceable under Nebraska law. To protect you and us from any
misunderstandings or disappointments, any contract, promise,
undertaking or offer to forbear repayment of money or to make any
other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of,
waiver of, or substitution for any or all of the terms or provisions
of any instrument or document executed in connection with this loan
of money or grant or extension of credit must be in writing to be
effective.
- --------------------------------------------------------------------------------
BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT:
(A) THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES, AND (C) THE WRITTEN LOAN AGREEMENT MAY NOT BE CONTRADICTED
BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
AS USED IN THIS NOTICE, THE FOLLOWING TERMS HAVE THE FOLLOWING
MEANINGS:
LOAN. The term "Loan" means the following described loan: a
Variable Rate (at U.S. Bank National Association Reference Rate,
making an initial rate of 7.750%). Nondisclosable Single Pay Loan
to a Corporation for $395,000.00 due on January 30, 2000. This is
a secured renewal of the following described indebtedness:
#26 (012798).
PARTIES. The term "Parties" means U.S. Bank National Association
and any and all entities or individuals who are obligated to
repay the loan or have pledged property as security for the Loan,
including without limitation the following:
BORROWER: Austin's Steak and Saloon, Inc.
LOAN AGREEMENT. The term "Loan Agreement" means one or more
promises, promissory notes, agreements, undertakings, security
agreements, deeds of trust or other documents, or commitments, or
any combination of those actions or documents, relating to the
Loan, including without limitation the following:
NECESSARY FORMS
<TABLE>
<S> <C>
Promissory Note / Change in Terms Agr. Security Agreement
UCC-1 Disbursement Request and Authorization
Notice of Final Agreement
</TABLE>
OPTIONAL FORMS
Amortization Schedule
- --------------------------------------------------------------------------------
Each Party who signs below, other than U.S. Bank National Association,
acknowledges, represents, and warrants to U.S. Bank National Association that
it has received, read and understood this Notice of Final Agreement. This
Notice is dated January 3, 1999.
BORROWER:
Austin's Steak and Saloon, Inc.
By: /s/ PAUL C. SCHORR III By: /s/ TIMOTHY GRIGGS
--------------------------------- --------------------------------
Paul C. Schorr III, President Timothy Griggs, Vice President
LENDER:
U.S. Bank National Association
By: /s/ illegible
---------------------------------
Authorized Officer
165
<PAGE>
EXHIBIT 10.21
[LETTERHEAD]
February 25, 1999
To Whom It May Concern:
I am the President and Chief Executive Officer of ComCor Holding, Inc., a
consulting firm. During the calendar years, 1996 and 1997, ComCor Holding,
Inc. loaned Austins Steak and Saloon, Inc. $269,927.62. The maturity date for
the entire sum, $269,927.62 is December 31, 2000.
Sincerely,
/s/ Paul C. Schorr III
- -----------------------------
Paul C. Schorr III
President and Chief Executive Officer
166
<PAGE>
EXHIBIT 10.22
PROMISSORY NOTE
<TABLE>
<CAPTION>
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$210,000.00 01-03-1999 01-30-2000 2555 070 1735053866 RB27
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
</TABLE>
Borrower: Austin's Steak and Saloon, Inc. Lender: U.S. Bank National Association
6940 "O" Street, Suite 334 Lincoln Main
Lincoln, NE 68510 233 South 13th Street
Lincoln, NE 68508
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Principal Amount: $210,000.00 Initial Rate: 7.750% Date of Note: January 3, 1999
</TABLE>
PROMISE TO PAY. Austin's Steak and Saloon, Inc. ("Borrower") promises to pay
to U.S. Bank National Association ("Lender"), or order, in lawful money of
the United States of America, the principal amount of Two Hundred Ten
Thousand & 00/100 Dollars ($210,000.00), together with interest on the unpaid
principal balance from January 3, 1999, until paid in full.
PAYMENT. Borrower will pay this loan in one principal payment of $210,000.00
plus interest on January 30, 2000. This payment due January 30, 2000, will be
for all principal and accrued interest not yet paid. In addition, Borrower
will pay regular monthly payments of all accrued unpaid interest due as of
each payment date, beginning January 30, 1999, with all subsequent interest
payments to be due on the same day of each month after that. The annual
interest rate for this Note is computed on a 365/360 basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender
at Lender's address shown above or at such other place as Lender may designate
in writing. Unless otherwise agreed or required by applicable law, payments
will be applied first to accrued unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the U.S. Bank
National Association Reference Rate (the "Index"). The Index is not
necessarily the lowest rate charged by Lender on its loans and is set by
Lender in its sole discretion. If the Index becomes unavailable during the
term of this loan, Lender may designate a substitute index after notifying
Borrower. Lender will tell Borrower the current index rate upon Borrower's
request. Borrower understands that Lender may make loans based on other rates
as well. The interest rate change will not occur more often than each day.
The Index currently is 7.750% per annum. The interest rate to be applied to
the unpaid principal balance of this Note will be at a rate equal to the
Index, resulting in an initial rate of 7.750% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum
rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments under the payment schedule. Rather, they will reduce the
principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect either now or at the time made or
furnished. (d) Borrower becomes insolvent, a receiver is appointed for any
part of Borrower's property, Borrower makes an assignment for the benefit of
creditors, or any proceeding is commenced either by Borrower or against
Borrower under any bankruptcy or insolvency laws. (e) Any creditor tries to
take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with
Lender. (f) Any guarantor dies or any of the other events described in this
default section occurs with respect to any guarantor of this Note. (g) A
material adverse change occurs in Borrower's financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is
impaired. (h) Lender in good faith deems itself insecure.
In any default, other than a default in payment, is curable and if Borrower
has not been given a notice of a breach of the same provision of this Note
within the preceding twelve (12) months, if may be cured (and no event of
default will have occurred) if Borrower, after receiving written notice from
Lender demanding cure of such default: (a) cures the default within fifteen
(15) days; or (b) if the cure requires more than fifteen (15) days,
immediately initiates steps which Lender deems in Lender's sole discretion to
be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due,
without notice, and then Borrower will pay that amount. Upon default,
including failure to pay upon final maturity, Lender, at its option, may
also, if permitted under applicable law, increase the variable interest rate
on this Note to 3,000 percentage points over the Index. The interest rate
will not exceed the maximum rate permitted by applicable law. Lender may hire
or pay someone else to help collect this Note if Borrower does not pay.
Borrower also will pay Lender that amount. This includes, subject to any
limits under applicable law, Lender's attorneys' fees and Lender's legal
expense whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums
provided by laws. This Note has been delivered to Lender and accepted by
Lender in the State of Nebraska. If there is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of Lancaster
County, the State of Nebraska. This Note shall be governed by and construed
in accordance with the laws of the State of Nebraska.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender
all Borrower's right, title and interest in and to, Borrower's accounts with
Lender (whether checking, savings, or some other account), including without
limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on this Note
against any and all such accounts.
COLLATERAL. This Note is secured by FS/SA all business assets and Commercial
Pledge Agreements from Jane S. Schorr and The Schorr Family Company, Inc.
PURPOSE OF LOAN. Operating Capital
YEAR 2000. Borrower has reviewed and assessed or will review and assess its
business operations and computer systems and applications to address the
"year 2000 problem" (that is, that computer applications and equipment used
by Borrower, directly or indirectly through third parties, may be unable to
property perform date-sensitive functions before, during and after January 1,
2000), and based upon that review Borrower will develop and implement a plan,
including expense estimates, to address the year 2000 problem and to
remediate any material year 2000 problem, and complete testing with respect
thereto, as soon as practicable and in any event by June 30, 1999. Borrower
will promptly deliver to Lender such information relating to this covenant as
Lender requests from time to time.
PRIOR NOTE. #67 (110398).
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and notice of dishonor. Upon
any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length
of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made.
167
<PAGE>
01-03-1999 PROMISSORY NOTE Page 2
Loan No (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.
BORROWER:
Austin's Steak and Saloon, Inc.
By: /s/ PAUL C. SCHORR III By: /s/ TIMOTHY GRIGGS
------------------------------ --------------------------------
Paul C. Schorr III, President Timothy Griggs, Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
168
<PAGE>
NOTICE OF FINAL AGREEMENT
<TABLE>
<CAPTION>
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$210,000.00 01-03-1999 01-30-2000 2555 070 1735053866 RB27
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
</TABLE>
Borrower: Austin's Steak and Saloon, Inc. Lender: U.S. Bank National Association
6940 "O" Street, Suite 334 Lincoln Main
Lincoln, NE 68510 233 South 13th Street
Lincoln, NE 68508
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE -- WRITTEN AGREEMENTS. A credit agreement must be in writing
to be enforceable under Nebraska law. To protect you and us from any
misunderstandings or disappointments, any contract, promise,
undertaking or offer to forbear repayment of money or to make any
other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of,
waiver of, or substitution for any or all of the terms or provisions
of any instrument or document executed in connection with this loan
of money or grant or extension of credit must be in writing to be
effective.
- --------------------------------------------------------------------------------
By signing this document each Party represents and agrees that:
(a) The written Loan Agreement represents the final agreement between
the Parties, (b) There are no unwritten oral agreements between the
Parties, and (c) The written Loan Agreement may not be contradicted
by evidence of any prior, contemporaneous, or subsequent oral
agreements or understandings of the Parties.
As used in this Notice, the following terms have the following
meanings:
Loan. The term "Loan" means the following described loan: a
Variable Rate (at U.S. Bank National Association Reference Rate,
making an initial rate of 7.750%). Nondisclosable Single Pay Loan
to a Corporation for $210,000.00 due on January 30, 2000. This is
a secured renewal of the following described indebtedness:
#67 (110396).
PARTIES. The term "Parties" means U.S. Bank National Association
and any and all entities or individuals who are obligated to
repay the loan or have pledged property as security for the Loan,
including without limitation the following:
Borrower: Austin's Steak and Saloon, Inc.
Grantor #1: June S. Schorr
Grantor #2: The Schorr Family Company, Inc.
Guarantor *1: June S. Schorr
Loan Agreement. The term "Loan Agreement" means one or more
promises, promissory notes, agreements, undertakings, security
agreements, deeds of trust or other documents, or commitments, or
any combination of those actions or documents, relating to the
Loan, including without limitation the following:
NECESSARY FORMS
<TABLE>
<S> <C>
Promissory Note / Change in Terms Agr. Commercial Guaranty
Security Agreement Commercial Pledge Agreement
Acknowledgment Pledge & Security Interest UCC-1
Disbursement Request and Authorization Notice of Final Agreement
</TABLE>
OPTIONAL FORMS
Amortization Schedule
- --------------------------------------------------------------------------------
Each Party who signs below, other than U.S. Bank National Association,
acknowledges, represents, and warrants to U.S. Bank National Association that
it has received, read and understood this Notice of Final Agreement. This
Notice is dated January 3, 1999.
BORROWER:
Austin's Steak and Saloon, Inc.
By: /s/ PAUL C. SCHORR III By: /s/ TIMOTHY GRIGGS
--------------------------------- --------------------------------
Paul C. Schorr III, President Timothy Griggs, Vice President
GRANTOR:
By: /s/ JUNE S. SCHORR
---------------------------------
June S. Schorr
GRANTOR:
The Schorr Family Company, Inc.
By: /s/ PAUL C. SCHORR III
---------------------------------
Paul C. Schorr III, President
GRANTOR:
By: /s/ JUNE S. SCHORR
---------------------------------
June S. Schorr
LENDER:
U.S. Bank National Association
By: /s/ illegible
---------------------------------
Authorized Officer
169
<PAGE>
EXHIBIT 10.23
-------------
MID CITY BANK
OMAHA, NEBRASKA 68108
NOTE, SECURITY AGREEMENT AND FINANCING STATEMENT
THE FOLLOWING DISCLOSURES ARE MADE IN COMPLIANCE WITH
THE TRUTH IN LENDING ACT
Name STEER ENTERPRISE Loan No. 54256-50
----------------- ---------
Name Gregory S. Cutchall Date 10-2, 1996
-------------------- ----------- ----
Address Maturity 10-2 2003
----------------- ------- ----
City Loan Amount *120,000.00*
----------------- -------------
I (Customer(s)) acknowledge that this Note covers my loan with Mid City Bank
("Bank", "You"). By signing below, I indicate that I have read and agree to
the terms of this loan. I promise to pay to the Bank, Farnam at Forty-Second,
Omaha, Nebraska, or at any of its offices, or at such other place as you may
tell me:
One hundred twenty thousand and no/100--------Dollars ($120,000.00)
- ---------------------------------------------- -----------
Until I have done so, I will also pay you simple interest from 10-2-96 , on
the unpaid balance of my loan at the yearly simple interest rate of * 9.75 %.
------
I will pay you just as my payment schedule is filled in below in my loan
disclosure, with my last payment, I will pay everything also due under this
Note unless the Variable Rate option is checked and then I will pay as stated
in the Disclosure below. You may apply my payments first to interest, and
then to my principal.
THE BANK'S DISCLOSURES TO CUSTOMER
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
ANNUAL PERCENTAGE RATE* FINANCE CHARGE AMOUNT FINANCED TOTAL OF PAYMENTS
The cost of my credit at The dollar amount the The amount of my credit The amount I will have paid
a yearly rate credit will cost me provided to me or on my after I have made all payments
behalf as scheduled
<S> <C> <C> <C>
9.75% $ 46,058.76 $ 120,000.00 $ 166,058.76
- ------- ----------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*THE ANNUAL PERCENTAGE RATE DISCLOSED ABOVE:
/X/ Is a fixed rate for the life of my loan.
/ / May change. This obligation has a variable rate feature. Such rate shall
be adjusted on the 15th day of each month to Mid City Bank's consumer
base rate plus____%. The consumer base rate is determined by the Bank and
is based on consideration of business and economic times, and is not tied
to any specific index. Presently the rate on this loan is____%. However,
in spite of these provisions, I understand that the interest rate on my
loan will not fall below____% not exceed____% during the term of my loan.
Any change in the rate will result in:
/ / an increase or decrease in the total amount due at maturity, if due
to an in rate an additional amount is left owing at maturity, the
balance will be paid in consecutive installments equal to the regular
scheduled installments until paid in full.
(ex.) if my loan is for $_________at____% for___ months and the rate
increased to____% in___months, I would have to make____ additional
payments and a final payment of $_________.
/ / an increase or decrease in my regular scheduled monthly
installments.
(ex.) if my loan is for $_________at____% for___ months and the rate
increased to____% in___months, my regular payments would increase by
$__________to $_________ per installment.
MY PAYMENT SCHEDULE WILL BE:
Number of Payments Amount of Payments
- ------------------ -------------------
84 1,976.89
- ------------------ -------------------
When my Payments are Due
/X/ Monthly / / Quarterly / / Semi-Annually / / Annually Beginning 11-2-96
-------
(Date)
/ / at the maturity date of
------------
SECURITY: To assure you that I will pay and do everything else I have
promised in this Note, I am giving you a Security Interest in:
ALL ACCOUNTS, INVENTORY, EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED BY
DEBTOR, INCLUDING ALL ATTACHMENTS, ACCESSIONS, ADDITIONS, SUBSTITUTIONS,
REPLACEMENTS THEREOF, ALONG WITH TOOLS, PARTS AND SUPPLIES NOW OWNED OR
HEREAFTER ACQUIRED INCLUDING, BUT NOT LIMITED TO ALL EQUIPMENT ON THE ATTACHED
EXHIBIT "A".
/X/ If elected here, specific collateral is listed and described on an
attached schedule and made a part of this Note by this reference.
Security agreement dated 10/2/96, UCC # filed
FILING FEES $ 10.50 .
----------
PREPAYMENT. If I pay off early, I will not have to pay a penalty, except I
agree to pay a minimum interest charge of $ 7.50 .
-------
If I have credit insurance I will receive a refund of the unearned premium
figured using the rule of 78's. You do not have to make a refund if is less
than $1.00.
LATE CHARGE. If a payment is late by 15 days, I will pay a late charge of 5%
of the installment payment or 55.00 whichever is less.
I can see my contract documents for additional information about nonpayment,
default any required repayment in full before the scheduled date.
AND PREPAYMENT REFUNDS AND PENALTIES.
I have the right at this time to receive an itemization of the Amount Financed
/ / I want an itemization /X/ I do not want an itemization
- -------------------------------------------------------------------------------
INSURANCE
- --------------------------------------------------------------------------------
CREDIT LIFE AND DISABILITY INSURANCE is not required to obtain this loan. No
charge is made for credit insurance and no credit insurance is provided
unless the borrower signs the appropriate request below:
(a) The cost for Credit Life insurance will be
$______________ for the term of the credit for applicant or
$______________ for joint with co-applicant.
(b) The cost for Disability Insurance will be
$______________ for the term of the credit (applicant only)
Property insurance, if written in connection with a secured transaction, may
be obtained by customers through any duly licensed insurance Agent or Broker
of their choice, subject only to Bank's right to refuse to accept any insurer
offered by customers, for reasonable cause, if this a variable interest rate
loan. I understand that Credit Life insurance benefits may not pay off the
total amount I owe even though all payments are current at my death, in case
of disability the benefits of the insurance may not cover payment of all the
installments.
/ / I desire Credit Life Insurance only
/ / I desire Credit Life and Disability Insurance
/ / I desire Disability Insurance
- -----------------------------------------------
Applicant
- -----------------------------------------------
Co-Applicant
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
TYPE OF LOAN IS: PURPOSE OF LOAN IS:
/ / Personal Purchase equipment for
/X/ Business Bum Steer Restaurant
/ / at 11111 Emment St. in
------------- Omaha, Ne.
- -----------------------------------------------------------------------------
ACKNOWLEDGEMENT OF RECEIPT OF DISCLOSURES
I acknowledge that this Note was executed and delivered on the date first
written above; that the Note was complete with all blanks and appropriate
boxes filled in prior to my signing the Note and that I received an exact
copy of this Note. I acknowledge that this Note is subject to the additional
terms and conditions on the REVERSE SIDE which are made part of this contract
by reference.
- ------------------------------------------------------------------------------
(Corporations or Partnerships Sign Below) (Individuals Sign Below)
Steer Enterprises Inc. Debtor /s/ Greg Cutchall
- ----------------------------------------- --------------------------
Name of Corporation or Partnership Greg Cutchall Personally
By: /s/ Greg Cutchall Pres. Debtor /s/ Tamara B. Cutchall
-------------------------------------- --------------------------
Greg Cutchall, President Tamara B. Cutchall Personally
By: Debtor
-------------------------------------- --------------------------
Address: Debtor
--------------------------------- --------------------------
For purposes of filing as a financing statement this Note, Security Agreement
and Financing Statement accepted MID CITY BANK INC.
SECURED UNSECURED 10-2 , 19 96 By: /s/ Illegible
XX ------------ -- ---------------------------
Farnam at 42nd Street,
Omaha, Nebraska 68108
Form MCB 88/6-30
170
<PAGE>
ADDITIONAL TERMS OF THIS NOTE AND SECURITY AGREEMENT
PRESERVATION OF THE PROPERTY
MUSTS
(a) I must keep the Property in good condition and repair, the way it is now,
and shelter it and protect it against loss, damage or deterioration.
(b) I must license, register, use and control the Property as the law requires
I must pay all license and registration fees before they are overdue.
(c) I must give you all legal ownership certificates, which will show me as the
legal owner.
(d) I must show you the Property and let you look it over any time you want.
(e) I must let you know right away of any change of address or storage place
of the Property.
(f) I must let you know right away if the Property is damaged or destroyed.
MUST NOTS
(a) I must not damage or destroy the Property or use it in any way that tends
to do so,
(b) I must not remove the property from this state without your permission.
(c) I must not use the Property for any unlawful purpose (such as illegally
transporting or concealing liquor, drugs, narcotics or any other kind of
contraband), or for racing competition of any type, or for military
purposes.
(d) I must not operate or use the Property if not permitted to do so under the
property insurance policies required in this Note or under any law.
(e) I must not abandon, give possession of, sell or transfer the Property or
any right to it to anyone without prior written consent from you.
I will not let anyone else do any of those things either. Your consent that
is referred to in subparagraph (e), immediately above, may be subject to any
condition that you may choose to impose, including partial prepayment of
unpaid amounts.
OTHER CLAIMS. By signing this Note I am representing to you that I am the
owner of the Property and have complete and total control of it. No one other
than myself has any claim of any kind to the Property, excluding a first
mortgage on my real estate property, if any. No financing statement showing
any secured party other than myself and covering any of the Property is on
file in any public office.
(a) I must keep the Property free from, and if necessary defend it in court
against all claims from everyone else but you and people to whom you
approve
(b) I must help prepare and sign any financing statements or other documents
and do anything else you may ask of me to carry out this Note and to
protect your security interests against the claims of anyone else. The
information that I am giving to be put in such financing statements and
other documents must be true.
(c) I must pay before they are overdue, all taxes, bills for repairs or
storage and other liens, security interests and charges of any kind, on
the Property or any interest in it or for its use or operation.
(d) I must not do anything or let anything happen which will make or let the
Property become subject to any claim liable to seizure in bankruptcy or
or otherwise, or which will impair your interest in it.
INSURANCE. I must keep the Property insured for actual cost value against all
hazards you want me to. I must pay all insurance premiums before they are
overdue. The insurance will be payable to you as well as to me until this
Note is fully paid. I will enforce each policy and pay all insurance
proceeds. You won't have to do that, but you may if you want to. I must use
all insurance proceeds to repair or replace the Property or to pay this Note,
whatever you say. All policies must provide that the insurance company will
give the bank ten (10) days written notice before the policy is cancelled.
YOUR EXPENDITURES. If you want to, you may pay any thing that I am required to
pay in the paragraphs above. You may pay for insurance on the Property. You
may pay for the maintenance and preservation of the Property. You may make
any advance or incur any expenses or do anything else that seems to you like
a good idea to protect you security under this Note (whether or not the
charge you pay is valid) You will not have to do any of those things, however.
REIMBURSEMENT. When you demand, I must repay you everything you have paid or
advanced under the previous paragraph. You may, if you want to treat any
amount which is mentioned in this paragraph, and which I do not pay, as a
delinquent installment, or you may add it to my balance. If you add it to my
balance I will have to pay interest on it at the current Annual Percentage
Rate of this Note until it is paid. My monthly installments may be increased
to provide for payment of the additional amount and the additional finance
charge.
SET OFF. Except as limited by law, you may set off and deduct any amount due
under this Note from anything you owe me (such as the balance in my checking
and savings accounts), but you do not have to do so. You may do this without
prior notice.
THIS MEANS THAT IF I DO NOT PAY YOU AND KEEP MY OTHER PROMISES I RISK LOSING
WHAT YOU OWE ME, AS WELL AS THE PROPERTY.
DEFAULT. I will be in default under this Note if
(a) any statement about myself or my financial condition that I have made to
you in this Note or any place else is false: or
(b) I do not pay you something I owe to you under this Note or something else
I owe to you, or
(c) I do not provide to you an annual financial statement when you request
one, or
(d) I do not keep some other promise or agreement I have made to you in this
Note or in an agreement or instrument securing this Note, or
(e) the payment due date of any other debt I owe to you or anyone else is
accelerated; or
(f) any of the following things happens to me; death, dissolution, termination
of existence, failure to pay any of my debts as the come due, appointment
of or taking possession by a receiver or other custodian of any of my
property or the commencement of a case under the Federal Bankruptcy Laws
by or against me as a debtor.
THINGS YOU HAVE THE RIGHT TO DO TO PROTECT YOURSELVES IF I DEFAULT. If I am in
default under this Agreement for a period of 10 days, you shall have the
obligation of providing me with a notice of such default, and I shall have a
period of 20 days after that notice to cure the default by giving you the
amount of all unpaid sums due at the time of the tender, without
acceleration, plus any unpaid charges, or by performing any other necessary
actions to cure the default. If I cure the default within the 20 day period,
you shall restore my rights under this Note and Security Agreement as though
the default had not occurred. I understand that this right to cure is
available to me only one time during the term of this agreement, and only if
this agreement provides for a security interest in personal property. I
understand that I may voluntarily surrender possession of any goods which are
collateral for this Note, and that you may enforce any security interest in
the goods at any time after default. If I do not cure the transaction within
the 20 day period after receipt of notice, or if I have not voluntarily
surrendered possession of the goods which are collateral for this Note, you
can do the following things:
(a) You can require me to assemble the Property and make it available to you
anywhere you say which is reasonably convenient to both of us. I agree
that your branch nearest my address written on the face of this Note is
reasonably convenient to me.
(b) You may repossess the Property wherever you find it, without giving me
advanced notice or making any demand or having any court hearing in order
to do that you may lawfully and peaceably by yourselves enter any place
where the Property is kept and take it if you give notice and have a court
hearing you can do it with the help of the courts. I will not hold you
responsible for anything left in or on the Property or attached to it when
you repossess and remove the Property.
(c) You shall have all the rights and remedies of a secured party under the
Nebraska Uniform Commercial Code or any other applicable law except as those
rights and remedies are changed by this Note. All of your rights and
remedies will be cumulative. You won't have to make any exclusive choices
among them.
(d) You can cancel insurance purchased under this Note, and you will have no
liability for anything that happens that would otherwise have been covered
by the canceled insurance.
(e) You may sell the Property to a wholesaler or retailer, and I agree that
such a sale is commercially reasonable. You are not restricted, however,
from using other resale procedures or selling to persons other than those
described herein.
(f) I will be liable for any unpaid difference between the net amount you
receive from the sale of the Property or any part of it that you dispose of
and the unpaid amount of my debt. If you sell or otherwise dispose of the
Property without giving me the notice that the Nebraska Uniform Commercial
Code requires I will have the remedies expressly stated in Section S-607(1)
of the Nebraska Uniform Commercial Code, but that's all. Your right to
recover the unpaid difference from me shall not be forfeited.
(g) Before or after selling the Property you can go to court and get a
judgment against me for the then unpaid amount of my debt plus accrued
interest. Then you can collect the judgment by having the sheriff seize and
sell any non-exempt real or personal property of mine or by garnishing
any non-exempt wages or other amounts that other people owe me. If you
haven't already sold the Property you can sell it then, if you are still not
paid off.
THIS MEANS THAT IF I DO NOT PAY YOU AND KEEP MY OTHER PROMISES I RISK LOSING
THE PROPERTY ALTOGETHER.
COLLECTION COSTS. If you have to hire an attorney to help you collect my loan
I must pay a reasonable attorney fee. If you have to file suit, I must pay
court costs, whether or not you hire an attorney.
NOTICE. I agree that you shall have given me notice if you mail the notice to
me, postage prepaid, at my address as it appears herein, or to any other
address that I give to you in writing, or to my last address known to you.
TIME. It is essential that I make my payments and keep all of my promises
under this Note on time.
WAIVERS. I agree and everyone signing for me as a guarantor also agrees to be
liable for the repayment of this Note, even if you do not give me notices
such as demand, presentment, notice of dishonor and protest or follow all of
the legal procedures which you might be required to follow in the absence of
this waiver. In addition I will have to pay the loan even if you or someone
else repeatedly agree to renew or extend it for any length of time, revise
its terms or release security. I consent to any extension of time or other
break that you give me that in any way impairs or suspends your remedies or
rights. You shall not waive any of your rights under this Note by giving me
or someone else a break. No waiver, consent or approval by you of change or
amendment of this Note shall be effective unless it is in writing and you
have signed it.
JOINT AND SEVERAL. I agree, and everyone signing for me as a guarantor also
agrees, to be liable to you jointly, and each of us will also be liable to
you individually for the loan and other obligations under this Note. You may
require that any one of us pay the whole loan without asking anyone else to
pay. You may sue any one or more of us without giving up any of your rights
against the others. This Note is also binding up the heirs and personal
representatives in probate of all signers and upon any one to whom any signer
assigns his assets or who succeeds to them in any other way.
Upon payment in full of this obligation, all collateral pledged if any to
secure this loan will be returned to me. When applicable all items will be
released providing that the collateral is not pledged towards any other
obligation(s).
SIGNATURE OF OWNER(S) OF SPECIFIC COLLATERAL. I acknowledge myself to be
fully bound by the provisions of the Security Agreement portion of said
Agreement which I herewith execute:
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
OWNER(S) OF SPECIFIC COLLATERAL ADDRESS
Form MCB 88/6-30
171
<PAGE>
MID CITY BANK CONSENT
MID CITY BANK ("Mid City"), as payee under that certain Promissory
Not(the "Note"), dated October 2, 1996, in the original principal amount of
$120,00.00, made by Steer Enterprises, Inc. ("Steer") and Gregory S. Cutchall
("Cutchall"), to the order of Mid City, which Note is secured by that
Security Agreement (the "Security Agreement"), dated October 2, 1996, made by
Steer and Cutchall as debtor for the bemnefir of Mid City as secured part,
hereby consents to the sale of the equipment describied in the Security
Agreement to Austins Steaks & Saloon, Inc. and the assumption of the
obligations due under the Note and the Security Agreement by Austins Steak &
Saloon, Inc. Nothing herein shall release Cutchall or Steer from their
obligations to Mid City under the Note of the Security Agreement. Nothing
herein shall be deemed a waiver of or affect Mid City's security interest
position with respect to said equipment.
MID CITY BANK\
By: /s/ illegible
__________________
Title: President
__________________
172
<PAGE>
EXHIBIT 10.24
PROMISSORY NOTE
$180,000.00 August 19, 1996
FOR VALUE RECEIVED, STEER ENTERPRISES, INC., a Nebraska corporation
("Maker") promises to pay to the order of EDWARD J. MICEK ("Holder"), at 3728
North 52nd Street, Omaha, Nebraska 68104, the principal sum of $180,000.00,
with interest thereon from the date first written above, at the rate of 9%
per annum.
The principal balance and all accrued interest thereon shall be paid in
monthly payments of $1,620.12, and the entire debt matures on August 15,
2001. This Note may be prepaid in whole or in part any any time.
The payment of this Note and all interest hereunder is secured by a
Guaranty executed by Mihard, Inc., a Nebraska corporation ("Guarantor"),
which Guaranty is secured by a Deed of Trust, which Deed of Trust is dated
the same date as this Note and is being duly recorded in Douglas County,
Nebraska, where said real estate is located.
If Maker fails to make the payment due under this Note on the due date and
such payment remains unpaid for 10 days after notice of such default, all
sums due hereunder shall, at the option of the Holder of this Note, become
immediately due and payable and bear interest at the rate of 12% per annum.
If Maker defaults in the payment of any sums due under this Promissory Note,
Maker shall pay to Holder of this Note all attorney fees and costs incurred
by Holder in the collection of this Promissory Note.
Maker, Guarantor, and any other party liable for the payment of any sums of
money payable on this Note, severally waive presentment and demand for
payment, protest and notice or protest and non-payment, and agree that their
liability on this Note shall not be affected by any renewal or extension in
the time of payment, or by any release or change in the security for the
payment of this Note.
Whenever used herein, the words "Maker" and "Holder" shall be deemed to
include their respective heirs, personal representatives, successors, and
assigns.
IN WITNESS WHEREOF, Maker has caused this Note to be executed as of the
date first hereinabove written.
STEER ENTERPRISES, INC.
BY: /s/ GREGORY S. CUTCHALL
------------------------------
Gregory S. Cutchall, President
173
<PAGE>
GUARANTY
Date: August 19, 1996
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and to induce EDWARD J. MICEK ("Micek") to make a
loan to STEER ENTERPRISES, INC., a Nebraska corporation (the "Borrower"), the
undersigned Guarantors hereby guarantee the prompt payment to Micek, his
successors, heirs, and assigns, of all obligations due remaining unpaid and
due by Borrower to Micek pursuant to a Promissory Note of even date herewith
in the face amount of $180,000.00 (the "Indebtedness").
The undersigned further acknowledge and agree with Micek that:
1. No act or thing need occur to establish the liability of the
undersigned hereunder, and no act or thing, except full payment and discharge
of all Indebtedness, shall in any way exonerate the undersigned or modify,
reduce, limit or release the liability of the undersigned hereunder, except
as hereinafter provided.
2. If the undersigned shall become insolvent (however defined), then Micek
shall have the right to declare immediately due and payable the undersigned
will forthwith pay to Micek, the full amount of all Indebtedness, whether due
and payable or unmatured. If any of the undersigned voluntarily commence, or
if there is commenced involuntarily against the undersigned a case under the
United States Bankruptcy Code which is not dismissed within thirty days, the
full amount of all Indebtedness, whether due and payable or unmatured, shall
be immediately due and payable upon demand with notice thereof. The death or
incompetence of any of the undersigned who is a natural person shall not
revoke this Guaranty, except upon actual receipt of written notice thereof by
Micek, and then only as to the decedent or the incompetent, and only
prospectively, as to future transactions.
3. Micek may apply any sums received by or available to Micek on account
of the Indebtedness from Borrower or any other person (except the
undersigned), from their properties, out of any collateral security or from
any other source to payment of the Indebtedness. Any payment made by the
undersigned under this Guaranty shall be effective to reduce or discharge
such liability only if accompanied by a written transmittal document,
received by Micek, advising Micek that such payment is made under this
Guaranty for such purpose.
4. The undersigned will not exercise or enforce any right of contribution,
reimbursement, recourse or subrogation available to the undersigned against
any person liable for payment of the Indebtedness, or as to any collateral
security therefor, unless and until all of the Indebtedness shall have been
fully paid and discharged.
174
<PAGE>
5. Whether or not any existing relationship between the undersigned and
Borrower has been changed or ended and whether or not this Guaranty has been
revoked, Micek may, but shall not be obligated to, enter into transactions
resulting in the creation or continuance of Indebtedness, without any consent
or approval by the undersigned but with notice to the undersigned.
6. The undersigned waive any and all defenses, claims and discharges of
Borrower, or any other obligor, pertaining to Indebtedness, except the
defense of discharge by payment in full.
7. The undersigned waive presentment, demand for payment, and protest of
any instrument evidencing Indebtedness. Micek shall not be required first to
resort for payment of the Indebtedness to Borrower or other person or their
properties, or first to enforce, realize upon or exhaust any collateral
security for Indebtedness, before enforcing this Guaranty.
8. If any payment applied by Micek to Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization
of Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this Guaranty be deemed to have continued
in existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
9. This Guaranty shall be enforceable and fully binding upon and
enforceable against the undersigned unless otherwise specifically provided
herein. This Guaranty shall be effective upon delivery to Micek, without
further act, condition or acceptance by Micek, shall be binding upon the
undersigned and the heirs, representatives, and assigns of the undersigned
and shall inure to the benefit of Micek and his heirs, successors and
assigns. Any invalidity or unenforceability of any provision or application
of this Guaranty shall not affect other lawful provisions and application
hereof, and to this end the provisions of this Guaranty are declared to be
severable. This Guaranty may not be waived, modified, amended, terminated,
released or otherwise changed except by a writing signed by the undersigned
and Micek.
10. This Guaranty is issued in the State of Nebraska and shall be governed
by its laws.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the undersigned
the day and year first above written.
/s/ GREGORY S. CUTCHALL /s/ TAMARA B. CUTCHALL
- ----------------------- ----------------------
GREGORY S. CUTCHALL TAMARA B. CUTCHALL
2
175
<PAGE>
GUARANTY
Date: August 19, 1996
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and to induce EDWARD J. MICEK ("Micek") to make a
loan to STEER ENTERPRISES, INC., a Nebraska corporation (the "Borrower"), the
undersigned Guarantor hereby guarantee the prompt payment to Micek, his
successors, heirs, and assigns, of all obligations due remaining unpaid and
due by Borrower to Micek pursuant to a Promissory Note of even date herewith
in the face amount of $180,000.00 (the "Indebtedness").
The undersigned further acknowledge and agree with Micek that:
1. No act or thing need occur to establish the liability of the
undersigned hereunder, and no act or thing, except full payment and discharge
of all Indebtedness, shall in any way exonerate the undersigned or modify,
reduce, limit or release the liability of the undersigned hereunder, except
as hereinafter provided.
2. If the undersigned shall be dissolved or shall be or become insolvent
(however defined), then Micek shall have the right to declare immediately due
and payable, and the undersigned will forthwith pay to Micek, the full amount
of all Indebtedness, whether due and payable or unmatured. If any of the
undersigned voluntarily commences, or if there is commenced involuntarily
against the undersigned a case under the United States Bankruptcy Code which
is not dismissed within thirty days, the full amount of all Indebtedness,
whether due and payable or unmatured, shall be immediately due and payable
upon demand with notice thereof.
3. Micek may apply any sums received by or available to Micek on account
of the Indebtedness from Borrower or any other person (except the
undersigned), from their properties, out of any collateral security or from
any other source to payment of the Indebtedness. Any payment made by the
undersigned under this Guaranty shall be effective to reduce or discharge
such liability only if accompanied by a written transmittal document,
received by Micek, advising Micek that such payment is made under this
Guaranty for such purpose.
4. The undersigned will not exercise or enforce any right of contribution,
reimbursement, recourse or subrogation available to the undersigned against
any person liable for payment of the Indebtedness, or as to any collateral
security therefor, unless and until all of the Indebtedness shall have been
fully paid and discharged.
5. Whether or not any existing relationship between the undersigned and
Borrower has been changed or ended and whether or not this Guaranty has been
revoked, Micek may, but shall not be obligated to, enter into transactions
resulting in the creation or
176
<PAGE>
continuance of Indebtedness, without any consent or approval by the
undersigned but with notice to the undersigned.
6. The undersigned waives any and all defenses, claims and discharges of
Borrower, or any other obligor, pertaining to Indebtedness, except the
defense of discharge by payment in full.
7. The undersigned waive presentment, demand for payment, and protest of
any instrument evidencing Indebtedness. Micek shall not be required first to
resort for payment of the Indebtedness to Borrower or other person or their
properties, or first to enforce, realize upon or exhaust any collateral
security for Indebtedness, before enforcing this Guaranty.
8. If any payment applied by Micek to Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization
of Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this Guaranty be deemed to have continued
in existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
9. This Guaranty shall be enforceable and fully binding upon and
enforceable against the undersigned unless otherwise specifically provided
herein. This Guaranty shall be effective upon delivery to Micek, without
further act, condition or acceptance by Micek, shall be binding upon the
undersigned and the heirs, representatives, successors and assigns of the
undersigned and shall inure to the benefit of Micek and his heirs,
successors and assigns. Any invalidity or unenforceability of any provision
or application of this Guaranty shall not affect other lawful provisions and
application hereof, and to this end the provisions of this Guaranty are
declared to be severable. This Guaranty may not be waived, modified, amended,
terminated, released or otherwise changed except by a writing signed by the
undersigned and Micek.
10. This Guaranty is issued in the State of Nebraska and shall be governed
by its laws.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the undersigned
the day and year first above written.
MIHART, INC., a Nebraska corporation,
Guarantor
BY: /s/ GREGORY S. CUTCHALL
------------------------------
Gregory S. Cutchall, President
2
177
<PAGE>
[Letterhead]
EDWARD J. MICEK CONSENT
EDWARD J. MICEK ("Micek") as payee under that certain Promissory Note (the
"Note"), dated August 16, 1996, in the original principal amount of
$180,000.00, made by Steer Enterprises, Inc. ("Steer") and Gregory S.
Cutchall ("Cutchall"), to the order of Micek, which Note is secured, made by
Steer and Cutchall as debtor for the benefit of Micek as secured party,
hereby consents to the assumption of the obligations due under the Note by
Austins Steaks & Saloon, Inc. Nothing herein shall release Cutchall or Steer
from their obligations to Micek under the Note. Nothing herein shall be
deemed a waiver of or affect Micek's security interest position with respect
to said Note.
EDWARD J. MICEK
/s/ EDWARD J. MICEK
--------------------
178
[LOGO] [LOGO] [LOGO] [LOGO]
<PAGE>
SECOND DEED OF TRUST
THIS DEED OF TRUST AND ASSIGNMENT OF RENTS ("Deed of Trust"), is made
this 19th day of August, 1996, by and among Mihart, Inc., a Nebraska
corporation ("Trustor" also known as "Borrower"), whose mailing address is
4524 Farnam Street, Omaha, Nebraska 68132, Michael McCormack, a member of the
Nebraska State Bar ("Trustee"), whose mialing address is 7171 Mercy Road,
Suite 650, Omaha, Nebraska 68106-2669 and Edward J. Micek ("Beneficiary" also
known as "Lender") whose mailing address is 3728 No. 52 St. 58104.
FOR VALUABLE CONSIDERATION, Trustor irrevocably transers, conveys and
assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and
security of Beneficiary, under and subject to the terms and conditions of
this Deed of Trust, the real property, located in the County of Douglas,
State of Nebraska, and described as follows (the "Real Estate"):
Lot 1, Lernke's Addition, a subdivision, as surveyed, platted and recorded in
Douglas County, Nebraska.
TOGETHER WITH, all buildings, fixtures and improvements upon the Real Estate,
whether now or hereafter existing, all rights-of-way, easements, rents,
issues, profits, income, leases, tenements, hereditaments, privileges and
appurtenances belonging, used or enjoyed in connection with the Real Estate,
or any part thereof (subject, however, to the right, power and authority of
Trustor to collect and apply such rents, issues, profits and income as they
become due and payable, as long as no default exists hereunder) and all
proceeds of conversion, voluntary or involuntary, of any of the foregoing into
cash or liquidated claims, including without limitation, proceeds of
insurance and condemnation awards, all of which collectively is hereunder
referred to as the "Trust Estate".
FOR THE PURPOSE OF SECURING:
(a) Payment of indebtedness in the principal amount of One Hundred
Eighty Thousand ($180,000.00), with interest thereon, as
evidenced by that certain promissory note of even date herewith
(the "Note") with a maturity date of August 15, 2001, executed
by Steer Enterprises, Inc., a Nebraska corporation and guaranteed
by a Guaranty of even date herewith (the "Guaranty") executed by
Trustor, which has been delivered and is payable to the order of
Beneficiary, and which by this reference is made part of this
Deed of Trust.
(b) Payment of all sums advanced by Beneficiary to protect the Trust
Estate, with interest thereon at the default rate provided in
the Note.
(c) Payment of any other past or future indebtedness of Trustor to
Beneficiary, including any and all future advances, extensions
of maturity date, and all loans or lines of credit, whether said
loans or lines of credit are due in installments, periodically,
on a revolving basis, or in a lump sum, and whether said loans
or lines of credit result from direct disbursement, overdraft,
continuing commitment to loan, or any other basis. (THIS
PARAGRAPH SHALL NOT CONSTITUTE NOR OTHERWISE BE CONSTRUED AS A
COMMITMENT TO MAKE ADDITIONAL LOANS, ADVANCES OR EXTENSIONS OF
ANY KIND OR IN ANY AMOUNT).
This Deed of Trust, the Note, the Guaranty and any other instrument
given to evidence or further secure the payment and performance of any past,
current or future obligations secured hereby are referred to collectively as
the "Loan Instruments".
TO PROTECT THE SECURITY OF THIS DEED OF TRUST:
1. PAYMENT OF INDEBTEDNESS. Turstor shall pay when due the principal of,
and the interest on, the indebtedness evidenced by the Loan Instruments, and
all other charges, fees and all other sums as provided in the Loan
Instruments. All payments received by Beneficiary as to any indebtedness or
as to any other debt, liability or obligation owed to Beneficiary by Trustor
may be applied by Beneficiary to the payment of the Note or to any such debt,
liability or obligations, in any order or manner of application which
Beneficiary, in its absolute discretion, deems appropriate. Unless otherwise
elected by Beneficiary, any such payment shall be deemed applied first to the
payment of any debt, liability or obligation other than the Note.
2. TAXES AND ASSESSMENTS. Trustor shall pay each installment of all
taxes and special assessments of every kind, now or hearafter levied against
the Trust Estate or any part thereof, before delinquency, without notice or
demand. Trustor shall pay all taxes and assessments which may be levied upon
Trustee's or Beneficiary's interest hereon or upon this Deed of Trust
(including any mortgage or similar tax) or the debt secured hereby, without
regard to any law that may be enacted imposing payment of the whole or any
part thereof upon the Beneficiary.
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<PAGE>
3. INSURANCE. Trustor, [COPY ILLEGIBLE] expense, will maintain
insurance with respect to [COPY ILLEGIBLE] movements and personal property
constituting the Trust Estate against loss by fire, lightning and other
perils covered by the standard all risk [COPY ILLEGIBLE] ment, in an amount
equal to at least 100% of the full replacement value thereof, with no
deduction for depreciation. Trustor will comply with such other requirements
as Beneficiary may from time to time reasonably request in writing for the
protection by insurance of the interest of the respective parties. All
insurance policies maintained pursuant to this Deed of Trust shall name
Trustor and Trustee as insureds, as their respective interests may appear,
and shall provide that there shall be no cancellation or modification without
at least fifteen (15) days prior written notification to Trustee and
Beneficiary. Such insurance shall contain a standard mortgage clause in favor
of Beneficiary. In the event any policy hereunder is not renewed on or before
fifteen (15) days prior to its expiration date, Trustee or Beneficiary may
procure such insurance, pay the premiums therefor, and such sums shall be
immediately due and payable with interest at the higher rate of the default
rate or base rate as provided in the Note until paid and shall be secured by
this Deed of Trust. Failure of Trustor to furnish such insurance, or renewals
as are required hereunder, or failure to timely repay any sums advanced
hereunder shall, at the option of Beneficiary, constitute a default.
4. MAINTENANCE. Trustor will not commit any waste upon the Trust
Estate and will, at all times, maintain the same in good operating order and
condition and will make, from time to time, all repairs, renewals,
replacements, additions and improvements which are necessary to such end.
5. ACTIONS AFFECTING TRUST ESTATE. The Trustor will promptly comply
with all present and future laws, ordinances, rules and regulations of any
governmental authority affecting the Trust Estate or any part thereof. This
shall apply to any construction upon the Trust Estate as well as the
operation of any business upon the Trust Estate.
6. EMINENT DOMAIN. Should the Trust Estate, or any part thereof or
interest therein, be taken or damaged by reason of any taking by right of
eminent domain, condemnation proceeding ("Condemnation"), or in any other
manner including deed in lieu of Condemnation, or should Trustor receive any
notice or other information regarding such proceeding, Trustor shall give
prompt written notice thereof to Beneficiary. Beneficiary shall be entitled
to all compensation, awards and other payments or relief thereof, and shall
be entitled at its option to commence, appear in and prosecute in its own
name any such action or proceeding. Beneficiary shall also be entitled to
make any compromise or settlement in connection with such taking or damage.
All such compensation, awards, damages, rights or action and proceeds awarded
to Trustor (the "Proceeds") are hereby assigned to Beneficiary, and Trustor
agrees to execute such further assignments of the Proceeds as Beneficiary or
Trustee may require. The Proceeds shall, at the option of the Beneficiary, be
applied against the costs of restoring the Trust Estate or against the unpaid
principal balance of the Note in the inverse order of maturity without any
reduction in the amount of periodic principal and interest payments otherwise
due under the Note.
7. REPRESENTATIONS. Trustor covenants and warrants with Beneficiary,
its successors and assigns, that Trustor owns the Trust Estate free from any
prior lien or encumbrance (except as expressly designated in a rider hereto,
if any), that this Deed of Trust is and will remain a valid and enforceable
first lien on the Trust Estate, that Trustor will preserve such title and
will forever warrant and defend the same to the Beneficiary and will forever
warrant and defend the validity and priority of the lien hereof against the
claims of all persons and claimants whomsoever.
8. TRUSTEE'S DUTIES. Trustor acknowledges that: (a) the duties and
obligations of Trustee shall be determined solely by the express provisions
of this Deed of Trust and Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth
herein, and no implied covenants or obligations shall be imposed upon
Trustee; (b) no provision of this Deed of Trust shall require Trustee to
expend or risk its own funds, or otherwise incur any financial obligation in
the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have grounds for believing that the
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it; (c) Trustee may consult with counsel of its
own choosing and the advice of such counsel shall be full and complete
authorization and protection in the respect of any action taken or suffered
by it hereunder in good faith and in reliance thereon; (d) Trustee shall not
be liable for any action taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights of powers conferred
upon it by this Deed of Trust.
9. APPOINTMENT OF SUCCESSOR TRUSTEE. Beneficiary may, from time to
time, by written instrument executed and acknowledged by Beneficiary, mailed
to Trustor and recorded in the County in which the Trust Estate is located,
and by otherwise complying with the provisions of the applicable law of the
State of Nebraska, substitute a successor or successors to the Trustee named
herein or acting hereunder.
10. SUCCESSORS AND ASSIGNS. This Deed of Trust applies to, inures to
the benefit of and binds all parties hereto, their heirs, legatees, devisees,
personal representatives, successors and assigns. The term "Beneficiary"
shall mean the owner and holder of the Note, whether or not specifically
named as Beneficiary herein.
11. ACCELERATION UPON DEFAULT, ADDITIONAL REMEDIES. Should an Event of
Default occur which is not cured within ten (10) days after notice to Trustor
thereof, Beneficiary may declare all indebtedness secured hereby to be
immediately due and payable and the same shall thereupon become due and
payable without any presentment, demand, protest or notice of any kind.
Thereafter Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a Court and without regard
to the adequacy of its security, enter upon and take possession of
the Trust Estate, or any part thereof, in its own name or in the name
of Trustee, and do any acts which it deems necessary or desirable to
preserve the value, marketability or rentability of the Trust Estate,
or any part thereof or interest therein, increase the income
therefrom or protect the security hereof and with or without taking
possession of the Trust Estate, sue for or otherwise collect the
rents, issues and profits thereof, including those past due and
unpaid, and apply the same, less costs and expenses of operation and
collection, including attorney's fees, upon any indebtedness secured
hereby, all in such order as Beneficiary may determine. The entering
upon and taking possession of the Trust Estate, the collection of
such rents, issues and profits and the application thereof as
described above, shall not cure or waive any default or notice of
default hereunder or invalidate any act done in response to such
default or pursuant to such notice of default and, notwithstanding
the continuance in possession of the Trust Estate or the collection,
-2-
180
<PAGE>
receipt and application [copy illegible], issues or profits, Trustee
or Beneficiary shall [copy illegible] to exercise every right
provided for in any of the Loan Instruments or by law upon
occurrence of any Event of Default including the right to exercise
the Power of Sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage, to
seek deficiency on the indebtedness after the foreclosure without
any limitation otherwise applicable under the Nebraska Trust Deeds
Act, to appoint a receiver, and to otherwise specifically enforce
any of the covenants or provisions hereof;
(c) Deliver to Trustee a written declaration of default and demand for
sale, and a written notice of default and election to cause
Trustor's interest in the Trust Estate to be sold under the Power of
Sale contained herein, which notice Trustee shall cause to be duly
filed for record in the appropriate Official Records of the County
in which the Trust Estate is located, all to the extent required by
applicable law;
(d) Pay such sums as it deems necessary to protect the Trust Estate and
cure any default of the Trustor; and
(e) Exercise all rights and remedies available to it at law, in equity
or under the Nebraska Trust Deeds Act.
12. FORECLOSURE BY POWER OF SALE. Should Beneficiary elect to foreclose
by exercise of the Power of Sale herein contained, Beneficiary shall notify
Trustee and shall deposit with Trustee this Deed of Trust and the Note and
such receipts or other evidence of expenditures made and secured hereby as
Trustee may require.
(a) Upon receipt of such notice from Beneficiary, Trustee shall cause to
be recorded, published and delivered to Trustor such Notice of
Default and Notice of Sale as then required by law and by this Deed
of Trust. Trustee shall, without demand on Trustor, after such time
as may then be required by law and after recordation of such Notice
of Default and after Notice of Sale having been given as required by
law, sell the Trust Estate at the time and place of sale fixed by it
in such Notice of Sale, either as a whole, or in separate lots,
parcels or items as Trustee shall deem expedient, and in such order
as it may determine, at public auction to the highest bidder for cash
in lawful money of the United States, or certified check, payable at
the time of sale. Trustee shall deliver to such purchaser or
purchasers thereof its good and sufficient trustee's deed conveying
the property so sold, but without any covenant or warranty, express
or implied. The recitals in such deed of any matters or facts shall
be conclusive proof of the truthfulness thereof. Any person,
including, without limitation, Trustor, Trustee or Beneficiary, may
purchase at such sale. Trustor hereby covenants to forever warrant
and defend the title of such purchaser or purchasers of any of the
Trust Estate so conveyed as if Trustor had conveyed the same to such
purchaser(s) by general warranty deed.
(b) As may be permitted by law, after deducting all costs, fees and
expenses of Trustee and of this Trust incurred in connection with
any such default or sale or foreclosure or all of them, including
attorney's fees and costs of evidence of title in connection with
sale, and a Trustee's fee. Trustee shall apply the proceeds of sale
to payment of (i) all sums expended under the terms hereof, not then
repaid, with accrued interest at the default rate provided in the
Note, (ii) all other sums then secured hereby, and (iii) the
remainder, if any, to the person or persons legally entitled
thereto. The Trustee's fee shall equal 5% of the outstanding
principal balance of the Note, PLUS attorney's fees incurred by the
Trustee in connection with performing its duties under this Deed of
Trust.
(c) Trustee may in the manner provided by law postpone sale of all or
any portion of the Trust Estate.
13. TRANSFER OF THE PROPERTY; ASSUMPTION. If all or any part of the
Trust Estate or interest therein is sold, transferred or otherwise
conveyed by Trustor, without Beneficiary's prior written consent
such action gives rise to a right of acceleration under this Deed of
Trust or the Loan Instruments and Beneficiary may, at Beneficiary's
option, declare all sums secured by this Deed of Trust to be
immediately due and payable, or cause the Trustee to file a notice
of default if all such sums are not paid within thirty (30) days of
notice of acceleration. Beneficiary shall have waived such option to
accelerate if, prior to the sale, transfer or conveyance,
Beneficiary and the person to whom the property is to be sold or
transferred reach agreement in writing that the credit of such
person is satisfactory to Beneficiary and that the interest payable
on the sums secured by this Deed of Trust shall be at such rate as
Beneficiary shall request. This provision shall not be construed as
imposing on Beneficiary an obligation or duty to reach such an
agreement or to give consent to a sale, transfer or other
conveyance, and Beneficiary shall have the right to withhold
approval for any reason.
14. REQUEST FOR NOTICE. Trustor hereby requests a copy of any notice of
default or notice of sale hereunder be mailed to it at the address
set forth in the first paragraph of this Deed of Trust.
15. GOVERNING LAW AND NON-WAIVER. This Deed of Trust shall be governed
by the laws of the State of Nebraska. In the event that any
provision or clause of any of the Loan Instruments conflicts with
applicable laws, such conflicts shall not affect other provisions of
such Loan Instruments which can be given effect without the
conflicting provision, and to this end the provisions of the Loan
Instruments are declared to be severable. This instrument can be
waived, changed, discharged or terminated only by an instrument in
writing signed by the party against whom enforcement of any waiver,
change, discharge or termination is sought.
16. RECONVEYANCE BY TRUSTEE. Upon satisfaction of all of Trustor's
obligations under the Loan Instruments, and upon written request of
Beneficiary stating that all sums secured hereby have been paid, and
upon surrender of this Deed of Trust and the Note to Trustee for
cancellation, Trustee shall reconvey to Trustor, or the person or
persons legally entitled thereto, with warranty, any portion of the
Trust Estate then held hereunder. The recitals in such reconveyance
of any matters or facts shall be conclusive proof of the
truthfulness thereof. The grantee in any reconveyance may be
described as "the person or persons legally entitled thereto."
17. NOTICES. Whenever Beneficiary, Trustor or Trustee shall desire to
give or serve any notice, demand, request or other communication
with respect to this Deed of Trust, each such notice, demand,
request or other communication shall be in writing and shall be
effective only if the same is delivered by personal service or
mailed by certified mail, postage prepaid, addressed to the address
set forth at the
-3-
181
<PAGE>
beginning of this Deed of Trust or at such [copy illegible] address as a
party may designate for itself by no [copy illegible] the other parties
hereto given in like manner. If Trustor consists of more than one person, one
notice sent to both Trustors at the address originated for them in this Deed
of Trust shall be deemed to be good and sufficient notice given to both
Trustors, regardless of whether either of them subsequently asserts or proves
that it did not actually receive such notice.
EXECUTED and dated as of the year and day first written above.
Mihart, Inc., Trustor
By: /s/ Gregory S. Cutchall
------------------------------
Gregory S. Cutchall, President
STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )
The foregoing Deed of Trust was acknowledged before me on August 17
1996, by Gregory S. Curchall, President of Mihart, Inc., a Nebraska
corporation, on behalf of said corporation.
/s/ Deborah K. Wilbeck
------------------------------
Notary Public
[NOTARY SEAL]
4
182
<PAGE>
EXHIBIT 16
[LETTERHEAD]
January 22, 1999
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Commissioners:
We have read the statements made by Austins Steaks & Saloon, Inc. (copy
attached), which we understand will be filed with the Commission, pursuant to
Item 4 of Form 8-K report for the month of January 1999. We agree with the
statements concerning our Firm in such Form 8-K. We have no basis to agree or
disagree with the Company's statements regarding KPMG Peat Marwick.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
183
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Austins Steaks & Saloon, Inc. on Form S-8 (File No. 33-92196) of our report
dated March 6, 1998, on our audit of the consolidated financial statements of
Austins Steaks & Saloon, Inc. as of December 31, 1997 and for the year then
ended, which report is included in this Annual Report on Form 10-KSB.
PricewaterhouseCoopers LLP
Omaha, Nebraska
March 26, 1999
184
<PAGE>
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
The Board of Directors
Austins Steaks & Saloon, Inc.:
We consent to incorporation by reference in the registration staement (No.
33-92196) on Form S-8 of Austins Steaks & Saloon, Inc. of our report dated
March 12, 1999, relating to the consolidated balance sheet of Austins Steaks &
Saloon, Inc. and subsidiaries as of December 31, 1998, and the related
consolidated statements of operations, shareholders' equity, and cash flows
for the year then ended, which report appears in the December 31, 1998,
annual report on Form 10-KSB of Austins Steak & Saloon, Inc.
KPMG Peat Marwick LLP
Omaha, Nebraska
March 26, 1999
185
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES F-4 AND F-5 OF THE COMPANY'S FORM 10-KSB FOR THE YEAR-TO-DATE.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 44,211
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 116,490
<CURRENT-ASSETS> 190,926
<PP&E> 4,298,904
<DEPRECIATION> (1,869,825)
<TOTAL-ASSETS> 4,093,922
<CURRENT-LIABILITIES> 1,011,428
<BONDS> 0
0
0
<COMMON> 26,479
<OTHER-SE> 1,803,940
<TOTAL-LIABILITY-AND-EQUITY> 4,093,922
<SALES> 9,373,647
<TOTAL-REVENUES> 9,373,647
<CGS> 9,743,700
<TOTAL-COSTS> 9,743,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116,769
<INCOME-PRETAX> (486,822)
<INCOME-TAX> 0
<INCOME-CONTINUING> (486,822)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (486,822)
<EPS-PRIMARY> (0.20)
<EPS-DILUTED> (0.20)
</TABLE>
