SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report (Date of earliest event reported): May 28,
1996 (January 17, 1996)
HUDSON'S GRILL OF AMERICA, INC.
(Exact name of Registrant as specified in its Charter)
California
(State or other jurisdiction of incorporation)
0-13642
(Commission or File Number)
95-3477313
(IRS Employer Identification Number)
16970 Dallas Parkway, Suite 402, Dallas, Texas 75248
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:
(214) 931-9743
PAGE
Item 5. Other Events.
Hudson's Grill of America, Inc. (the "Company") announced
that on January 17, 1996, it consummated its tentative
agreement with Macotela, Inc., a company affiliated with
Alvaro Hernandez, the manager of the joint venture that
operated the Hudson's Grill in Oxnard, California. The sale
involved the Hudson's Grill in Oxnard, California; this
restaurant had been operated as a joint venture between the
Company and Mr. Hernandez. The tentative sale agreement was
announced in Spring 1994, and the Company and buyer waited to
get regulatory approval and consents from the landlord.
At closing the Company received $5,230 in cash and a note
in the amount of $222,000. The note was modified shortly
afterwards to reflect an increase in obligations paid by or
carried by the Company. The new note is for $282,086.85, and
is guaranteed by Mr. Hernandez. Interest on the note will
accrue at a rate of 9.75% and is amortized based on an 180
month payout but with a balloon payment at the end of the
tenth year. Macotela has assumed the real estate lease, but
the Company remains secondarily liable on the lease. Macotela
also signed a ten year lease for the restaurant equipment and
will pay $4,000 per month to lease the equipment.
Subsequent to the closing, the Company agreed to modify
some of the terms of the sale. Payments on the note were
reduced to payments of interest only for the first two years;
and the monthly payment on the equipment lease was reduced to
$2,500, but the term was extended to 15 years.
Beginning February 1996, the Company began to offset its
note with Travis Bryant because of non payment on the note the
Company holds from Famous Bars, Grills and Cafes of America,
Inc. ("FGA"). The Company has agreed with FGA to postpone
payments on the FGA note until February 1997, at which time
the entire amount of unpaid principal and interest is to be
amortized at 8% over ten years. The Company was assigned
several notes receivable with an aggregate face value at the
time of assignment of $1,199,000. These notes, in turn, are
collateralized by assets of restaurants that had been sold by
FGA.
On February 6, 1996, the Company's Directors met and
voted to put to a shareholder vote a resolution to increase
the number of authorized shares of common stock of the Company
to 100,000,000 shares. Currently the Company has 10,000,000
authorized shares, and 6,056,986 shares outstanding. However,
in the last several years, the Company has granted options to
purchase more than 4,400,000 of its shares to reduce a past
debt and to compensate a new officer of the Company. If all
of the options were to be exercised, the Company would not
have a sufficient number of authorized shares to satisfy its
obligations. Thus, the Company's Directors decided to
recommend to the shareholders to vote at the annual meeting
being held on May 28, 1996, that the number of the Company's
authorized shares be increased.
On March 2, 1996, the Company's first franchised
restaurant on the East Coast opened for business. It is also
the Company's first restaurant to open in a shopping mall, and
is located in the food court of the Garden State Mall in
Paramus, New Jersey. This is the first franchise location
opened under an agreement with Jotar, Inc., to develop twelve
sites in certain counties in New Jersey and New York.
The Company also announced that effective March 25, 1996,
it took back the Westlake, California, Hudson's Grill
restaurant that had been sold to Grills Unlimited, Inc., a
company affiliated with Davis Beckham. Mr. Beckham's company
has been in default, but it will continue to own and operate
the Hudson's Grill in Simi Valley, California, so long as it
stays current on its Simi Valley obligations.
The agreement calls for Beckham to become current on all
past due obligations owed on account of Beckham's Simi Valley
franchise, including his note to the Company. The Company
forgave all amounts owed it on account of the Westlake
franchise. Beckham transferred to the Company all of the
franchise's interest in the Westlake Hudson's Grill and all of
the assets involved in the operation of the restaurant.
Beckham agreed to hold the Company harmless from all
liabilities and obligations of the restaurant incurred prior
to the effective date of the agreement, to remain a guarantor
of the Westlake lease, and to pay the legal expenses of the
Company involved in negotiating and consummating the
agreement. He will also execute a confession of judgment for
all debts owed on account of the Simi Valley franchise.
Also in March 1996, the Company entered into a contract
to sell the Westlake restaurant, formerly owned by Beckham,
and the Company's Whittier, California Hudson's Grill to the
current manager of the restaurants, Walter De La Cruz ("De La
Cruz"). De La Cruz will use a company named F.U.N. Remco,
Inc. ("Remco"), to buy both of the restaurants. The purchase
price will be $320,000, of which $20,000 will be paid in cash
at closing, and the remainder will be paid pursuant to a
$300,000 secured promissory note payable over a ten year, nine
month period. Remco and De La Cruz will assume all of the
restaurants' lease obligations. The sales have been put into
escrow pending governmental approvals of liquor license
transfers and permission of state tax authorities to convey
the restaurants' assets.
Item 7. Exhibits.
1. Press Release dated May 28, 1996, regarding
closing the sale of the Hudson's Grill in Oxnard, California,
and taking back the Westlake, California, Hudson's Grill.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
Date: May 28, 1996
HUDSON'S GRILL OF AMERICA, INC.
Registrant
s/s David L. Osborn
David L. Osborn
f\sec\960125.O01