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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
MOBILE CATERERS, INC.
(Name of small business issuer in its charter)
DELAWARE 06-1469654
(State or other jurisdiction
of incorporation of organization) (I.R.S. Employer Identification No.)
1 La Croix Drive, West Warwick, Rhode Island 02893
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (401) 822-1100
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
(Title of class)
(Title of class)
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ITEM 1. DESCRIPTION OF BUSINESS.
Mobile Caterers, Inc. ("Mobile" or the "Company") was incorporated in
September 1996 as a wholly-owned subsidiary of Saratoga Brands, Inc.
("Saratoga"). Saratoga has two principal business lines: (i) producing and
importing specialty cheeses and Italian foods (the "cheese business") and (ii)
producing and distributing delicatessen and snack foods to mobile caterers and
convenience stores (the "deli business"). In July 1996, the Board of Directors
of Saratoga determined that due to the differences between the operations of the
cheese business and the deli business, shareholder value would be enhanced by
separating the two businesses. Saratoga therefore formed Mobile and contributed
all of the stock of the two subsidiaries which operate the deli business, Deli
King, Inc. ("Deli King") and JR's Delis, Inc. ("JR's"), to Mobile. Upon the
effective date of this registration statement, Saratoga is distributing to its
shareholders one share of Mobile's common stock for every five (5) shares of
Saratoga stock currently outstanding (the "Distribution").
The Company's two wholly-owned subsidiaries, Deli King and JR's, operate
in a 28,000 square foot facility located in West Warwick, Rhode Island. From
this facility, often referred to as a commissary, Deli King and JR's produce
"prepared foods" such as sandwiches, soups, salads, pasta, baked goods and other
entrees, and distribute these products along with delicatessen and other food
items such as snacks and beverages. Deli King sells these products to mobile
catering truck customers and provides support services to these customers as
well. JR's sells the same food products to more than 800 convenience stores and
retail outlets in Rhode Island, Massachusetts and Connecticut. Deli King and
JR's generate approximately 75% and 25%, respectively, of the Company's
revenues.
PRODUCTS. Although Deli King and JR's sell to different types of customers, the
majority of the products which they sell are identical. Approximately seventy
percent of the prepared foods sold by the Company are produced by the Company,
and this production consists of approximately 60% sandwiches and 40% soup, pasta
or other entrees. Sandwiches are produced fresh daily based on previous day
orders from the mobile catering customers and weekly orders from the convenience
store customers. Each sandwich is produced individually as part of a production
run by sandwich type, using recipes developed by the Company, to ensure the
consistency of proper quantity and quality of ingredients. Soups, pastas and
other entrees are prepared in bulk and then packaged in individual portion size
containers. The in-house prepared food products provide the largest profit
margin of the Company's products. The bulk of the remaining 30% of the prepared
foods are purchased from third parties and are frozen. These frozen items
provide the Company's second largest profit margin.
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The Company's bakery produces 30% of the pastries and Danish sold, with
the remaining products originating from other local bakeries and larger local
and national suppliers.
The remaining products include beverages, snacks and candy. Beverage
products include such national brands as Coca-Cola, 7-Up, Dr. Pepper and various
others, including mineral waters, fruit juices, iced tea and hot tea and coffee.
Mobile Catering Business - Deli King derives revenues from three principal
activities: the sale of prepared foods, snacks, beverages and supplies (ice,
containers, plastic utensils, etc.); to independent catering operators; the
operation of a mobile catering truck service facility and the rental of catering
routes and trucks.
The Company believes that approximately 70% of the area mobile catering
truck operators obtain their goods from Deli King's West Warwick, Rhode Island
facility. Deli King has operated in this area since 1985. Approximately 35% of
Deli King's sales consist of products produced under the one of the Company's
brand names at the Company's kitchen and bakery. The remaining sales consist of
approximately 15% third party prepared foods, 10% purchased snacks and 40%
beverages. As is customary in the business, the mobile catering operators place
orders at the end of each day to be picked up the following morning and paid in
cash.
Deli King's customers are all mobile catering operators. These mobile
caterers include persons operating their own vehicles on their own routes;
persons operating their own vehicles on routes rented from Deli King; and
persons renting one of the 27 catering trucks owned by Deli King for use on
their own routes or routes rented from Deli King. The mobile caterer must pay a
fixed amount per week for routes rented from the Company, and a weekly rental
for the use of catering trucks owned by the Company. These operators are
independent from the Company. Deli King served approximately 60 mobile catering
trucks as of December 31, 1996.
Deli King controls 30 catering routes which it "rents" to operators for a
weekly fee. These controlled routes, which are also referred to as owned routes,
represent an established series of regular stops served by the same vehicle.
Each stop is usually a business where the employees depend on the caterer for
their snacks, beverages or meals. In some areas, where the business is located
some distance from any restaurant or market, the mobile caterer may be the only
source of food and drink items during the work day.
In addition to supplying the mobile caterers with food, drink and the
related supplies, Deli King has a full service facility staffed with mechanics
for the maintenance and repair of mobile catering vehicles and equipment. The
facility is able to service
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and repair equipment used for mobile refrigeration, food warming and hot
beverage brewing.
Convenience Store Business - JR's sells the same food products as Deli
King to more than 800 convenience stores and retail outlets in Rhode Island,
Massachusetts, New Hampshire and Connecticut. These products include sandwiches
prepared in the commissary and other products supplied by third parties
including cold cuts, cheeses, muffins, cakes, cookies, candies, snacks such as
jerky, pretzels and nuts and bottled beverages. JR's products have shelf lives
from seven days to six months.
JR's sales force includes driver-sales people who deliver the products in
refrigerated trucks. These driver-sales people are employees who are paid a base
salary plus a 5% commission. Approximately 40% of JR's sales are made on open
account terms with payment due in 14 days. The remaining 60% of sales are made
on a cash basis. Each driver-sales person must cash out or balance his or her
cash receipts and open account sales to inventory changes on a daily basis. JR's
operates seven trucks.
PRINCIPAL PRODUCTS. The Company's product lines include food, beverages and
catering supplies, and it also maintains and repairs catering equipment. The
food and beverage lines include prepared foods, baked goods, snacks and
beverages. The catering supply products include food and beverage containers,
eating utensils, straws, napkins, wrapping materials, seasonings and ice. The
equipment maintenance operation is a full service facility staffed with
mechanics for the maintenance and repair of mobile catering vehicles and
equipment.
Prepared foods include cold-cut sandwiches, soups, salads and other
entrees. The cold-cut sandwich operation produces 5,000 sandwiches per day using
an efficient, production line approach. Sandwiches are produced in batches by
sandwich type. The components of each sandwich are selected from a wide variety
of breads or rolls, meats, cheeses, garnishes and seasoning spreads or
dressings. The ingredients of the sandwiches include meats and cheeses from
national or well known regional producers including Oscar Meyer(R) and Boars
Head(R) meats, cheeses from Kraft(R) and spreads from Heinz(R) and
Admiration(R). Each sandwich is then labeled and wrapped and kept refrigerated
until either loaded on a JR's delivery vehicle or sold to a Deli King customer.
In addition to sandwiches, the Company's kitchen produces fresh soups and
chowders and garden, tuna, chicken and other salads. Hot entrees produced
include lasagna and pastas. Approximately 30% of the prepared food products are
purchased from third parties. These third party supplied items are generally
received frozen and include hamburgers, meatballs and hot dogs. Frozen items
have an indefinite shelf life.
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Approximately 30% of the baked goods are produced in the Company's bakery.
These in-house baked goods include pastry, Danish, cakes, cookies and other
desert items. The breads and rolls used for sandwiches are obtained from local
bakeries as are other baked dessert items.
The snack product line includes a wide variety of pretzels, nuts, chips,
jerky, crackers, candy, ice cream, yogurt, chewing gum, puddings and gelatins.
Some of the national and regional brands represented include Jack Links
Jerky(R), Barcelona Nuts(R), Hershey(R), Nestle(R), Mars(R), Heartland Snacks(R)
and Frito-Lay(R).
The suppliers for the beverage product line include Coca-Cola(R),
Pepsi(R), 7-Up(R),Dr. Pepper(R), Welches(R), Minute Maid(R), Jolt(R),
Rebound(R), Gatorade(R), Fairlee(R) and Nestle(R). These items are available in
aluminum cans, paper cartons and glass and plastic bottles.
NEW PRODUCTS AND EXPANSION. Both Deli King and JR's are constantly seeking new
food and beverage products. The preponderance of advertising for such products,
which is found in most types of media, creates consumer awareness of new items.
The Company is constantly being approached by its suppliers with new products.
As a member of the Mobile Independent Catering Association, the Company receives
publications and attends trade shows which present potential new products.
At the present time, the Company's kitchen and bakery operate at
capacities of approximately 35% and 20%, respectively. Management believes that
the Company will maintain its current competitive position and that the mobile
catering business can be expanded by opening additional distribution locations.
Such satellite operations would be located beyond a 30 mile radius from the
current facility. Any new locations would operate as distribution and service
facilities where third party products would be warehoused. Prepared foods
produced in the current kitchen and bakery would be shipped to any such new
location. Management estimates that the production capacity of the current
location can supply up to three satellite operations. While management believes
implementation of such growth plans is feasible, no assurance can be given as to
the success of any efforts to expand.
COMPETITIVE POSITION. Mobile catering business - Management believes that Deli
King has approximately 70% of the mobile catering business in the geographic
area it serves. Maintenance of its customer base is dependent on the ability of
Deli King to provide superior service and reliability. The underlying
relationship of the mobile caterer with its customers is dependent on service,
reliability (customers expect the catering trucks to arrive within a few minutes
of the same time each day) and on product selection and quality. The Company
employs route managers whose function is to review the performance of the mobile
caterers
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as it relates to their service and reliability. The goal is to ensure that the
Company's quality standards are kept at high levels.
Management believes the remaining 30% of the mobile catering market is
supplied by only one other commissary. Therefore, all mobile caterers in the
area must choose between Deli King and its competitor. Due to the nature of the
business, mobile caterers are severely limited by the time and distance they can
travel to obtain their products. Management believes that there is little
likelihood that another competitor will enter the market due to the cost
associated with opening a new facility and the small number of persons with the
expertise necessary for such an undertaking.
Convenience Store Business - JR's Delis is one of the three companies competing
for the convenience store business in the six New England states. While the two
competitors of JR's are approximately the same size as JR's, only JR's offers a
full line of snacks, baked goods, beverages and other food items in addition to
fresh sandwiches. Management believes that convenience store operators prefer
the efficiency of dealing with JR's rather than with its sandwich-only
competitors.
RAW MATERIALS. The raw materials or ingredients used in the Company's products
are available from many suppliers. The Company has a core group of 50 vendors
with which it has developed good relationships. Because of the large number of
potential suppliers in the food and beverage industry, the Company is not
dependent on any one supplier. The prepared food ingredients include many well
known national brands such as Oscar Meyer, Kayem, Boars Head, Dubuque and Louis
Rich (lunch meats) and Heinz and Kraft dressings and spreads.
PRODUCT LINE EXCLUSIVITY LICENSE & TRADEMARK AGREEMENTS. Except for prepared
foods and baked goods produced by and unique to the Company, the Company has no
product line exclusivity or any trademarks under its control. The products
produced by the Company may use recipes slightly different than for those same
products made elsewhere. However, this is a benefit in that the Company sells
generic, traditional foods which must be prepared in a manner consistent with
the common recipes for each type of dish.
GOVERNMENT REGULATIONS. Both Deli King and JR's are subject to federal, state
and local health and food regulations. These regulations generally provide
standards for sanitation, storage, food quality and grade, shelf lives and
product labeling. Management strives to keep the Company in full compliance with
these regulations.
The Company is currently applying for certification from the United States
Department of Agriculture (USDA), which requires that its commissary be modified
to USDA specifications. If the Company
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obtains this certification, it expects to be able to expand its product lines.
RESEARCH & DEVELOPMENT. In the most recent two years, neither Deli King nor JR's
has expended a material amount on research and development. However, both Deli
King and JR's are continually looking to acquire new products from third
parties. In addition, the Company's kitchen and bakery work to develop new
products to follow industry trends although the monetary expenditure for such
efforts has been minimal to date.
COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS. The costs and effects of
compliance with environmental laws are not material to the Company's operation.
CURRENT EMPLOYEES. The Company currently employs 60 persons, of whom 50 are full
time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Audited Consolidated Financial
Statements and related notes which are contained in elsewhere in this
Registration Statement.
Results of operations for Deli King, Inc. and JR's Deli's, Inc. are being
compared on a consolidated basis as if they were combined for the entire periods
being presented.
Nine Months Ended September 30, 1996 Compared to Nine Months Ended September 30,
1995
Net sales for the nine months ended September 30, 1996 increased 5.0% to
$4,986,453 from $4,750,234 for the nine months ended September 30, 1995. The
increase was primarily due to the acquisition by Deli King of additional
catering routes.
Gross profit for the nine months ended September 30, 1996 increased 20.0%
to $1,506,334 from $1,255,743 for the nine months ended September 30, 1995. As a
percentage of net sales, gross profit increased to 30.2% in the 1996 period
compared to 26.4% in the 1995 period. The increase was primarily the result of a
change in product sales mix between the 1995 and 1996 nine-month periods. Sales
in 1996 consisted of a greater percentage of JR's convenience store business,
which carries a higher gross margin than the mobile catering business.
Selling, general and administrative expenses for the nine months ended
September 30, 1996 increased 10.7% to $1,248,301 from $1,128,047 for the nine
months ended September 30, 1995. The
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increase in selling, general and administrative expenses consisted primarily of
added administrative staff, computerization of accounting functions, and
installation of internal control systems which were put in place in anticipation
of the growth forecasted for the Company in the future.
Income from operations before interest and taxes for the nine months ended
September 30, 1996 increased 102.1% to $258,033 from $127,696 for the nine
months ended September 30, 1995. This increase was due primarily to the improved
gross profit margin and to a lesser extent to the increased sales in the 1996
period, partially offset by the increase in selling, general and administrative
expenses.
Interest expense for the nine months ended September 30, 1996 increased
152% to $45,817 from $18,146 for the nine month ended September 30, 1995. The
increases in interest expense is primarily the result of a $450,000 48-month
term debt, which bears interest at the prime rate plus 1%, that was incurred
upon the acquisition by Saratoga Brands, Inc., of Deli King, Inc. on April 29,
1997.
Depreciation and amortization for the nine months ended September 30, 1996
increased 80.9% to $135,721 from $75,020 for the nine months ended September 30,
1995. The increase was primarily the result of a step-up in the basis of Deli
King's assets recognized upon Saratoga's acquisition of Deli King in April 1996
and depreciation on assets thereafter acquired by Deli King.
Net income for the nine months ended September 30, 1996 increased 93.7% to
$212,216 from $109,550 for the nine months ended September 30, 1995 due to the
foregoing reasons.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Net sales for the year ended December 31, 1995 increased 1.0% to
$5,980,444 from $5,953,706 for the year ended December 31, 1994. This increase
was due primarily to the expansion of JR's product line through its existing
distribution channels.
Gross profit for the year ended December 31, 1995 increased 2.9% to
$1,820,854 from $1,770,073 for the year ended December 31, 1994. As a percentage
of net sales, gross profit in 1995 increased to 30.4% compared to 29.7% in 1994,
due to minor price fluctuations.
Selling, general and administrative expenses for the year ended December
31, 1995 increased 23.2% to $1,851,025 from $1,502,654 for the year ended
December 31, 1994. This increase was due to expenses recognized by Deli King at
December 31, 1995 in anticipation of its sale to Saratoga.
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Income from operations for the year ended December 31, 1995 decreased
$297,590 to a loss of $30,171 from income of $267,419. This decrease was
primarily due to the increase in selling, general and administrative expenses.
Interest expense for the year ended December 31, 1995 increased 302% to
$38,542 from $9,579 in 1994. This increase was primarily due to debt incurred
for the purchase of certain fixed assets (catering trucks and vending
equipment).
In 1993, Deli King began to market a frozen microwavable sandwich that
would retain its freshness after heating. The product, sold as "Microfresh," was
not successful, and Deli King abandoned the product line in the third quarter of
1995. Deli King incurred losses of $67,693 and $191,268 in 1995 and 1994,
respectively, from this operation, the assets of which were not acquired by
Saratoga.
Net income for the year ended December 31, 1995 decreased $246,420 to a
loss of $180,098, or $0.08 per share on a pro forma basis, from net income of
$66,322, or $0.03 per share on a pro forma basis, in 1994. This decrease was due
to the reasons given above, partially offset by the lower loss from operations
of discontinued business in 1995.
Management expects gross margins to improve as the Company takes advantage
of combining the economies of scale of each of the businesses, as well as
improved buying practices.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996 and December 31, 1995, the Company had working
capital of $2,548,708 and $1,699,333, respectively.
The Company has historically financed its business through cash flow from
operations and borrowings from Saratoga, which will no longer be a source of
financing. Management believes the Company has or can obtain sufficient working
capital to meet the needs of its current level of operations. The Company,
however, is actively seeking acquisitions and anticipates that it may require
additional capital in order to fund any acquisitions or substantial growth in
its current business. To this end, the Company plans to pursue both debt and
equity financing from both private institutions and the public markets to
finance acquisitions as needed. However, no assurance can be given that
sufficient capital will be available when needed.
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FORWARD LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains information regarding management's planned growth, financing
and prospective business acquisitions and opportunities. These statements are
forward looking statements that involve risks and uncertainties. The following
is a list of factors, among others, that could cause actual results to differ
materially from the forward looking statements: business conditions and growth
in the Company's market and industry and in the general economy; competitive
factors including increased competition and price pressures; availability of raw
materials and purchased products at competitive prices; and inadequate or
unsatisfactory financing sources.
ITEM 3. DESCRIPTION OF PROPERTY. Deli King owns a 28,000 square foot building on
3.88 acres in West Warwick, Rhode Island. The facility includes administrative
and sales offices, warehouse, frozen and cold storage space, food production
areas and equipment service bays. The space is shared with JR's.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Upon the consummation of the Distribution, the following table sets forth
the number of shares of Common Stock that will be owned by (i) each person
(including any "group," as that term is defined in Section 13(d) (3) of the
Securities Exchange Act of 1934, as amended) known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii)
each director of the Company and (iii) all directors and executive officers of
the Company as a group. Each individual has an address c/o the Company at 1
LaCroix Drive, West Warwick, Rhode Island 02893.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF PERCENTAGE OF OUT-
OF BENEFICIAL OWNER SHARES OWNED STANDING SHARES OWNED
- ------------------- ------------ ---------------------
<S> <C> <C>
Barry Witz 164,740 7.5%
Scott G. Halperin 148,044 6.7%
Ronald M. Gagnon 4,578 0.2%
Bernard F. Lillis, Jr 9,000 0.4%
All directors and executive officers
as a group (4 persons) 326,362 14.8%
</TABLE>
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The following are directors and officers of the Company:
Name Age Title
---- --- -----
Barry Witz 55 Chairman of the Board,
Chief Executive Officer,
Director
Scott G. Halperin 35 Director
Ronald M. Gagnon 45 President, Deli King and
JR's Delis
Bernard F. Lillis, Jr. 53 Chief Financial Officer
Barry Witz has been Chairman of the Board of Directors of Saratoga since January
28, 1995. Mr. Witz was an attorney for the United States Securities and Exchange
Commission from 1966 to 1971, he was an officer of the New York Stock Exchange
from 1971 to 1975, and was a Senior Partner in the law firms of Avery, Hodes,
Costello & Berman from 1975 to 1986, and Wood, Lucksinger and Epstein in 1987.
From 1988 to 1993, he was a private investor. Since 1994, he has been Chairman
of the Board, Director, CEO and President of Brite Lite Industries, Inc., a
privately held company. He is currently a director of Osicom Technologies, Inc.,
a NASDAQ company engaged in the design, manufacturing and distribution of
multimedia and state of the art networking products.
Scott G. Halperin has been a director of Saratoga since January 28, 1994. From
August 1994 to present, Mr. Halperin has been Chief Executive Officer of
Saratoga. He has also been serving as Treasurer since May, 1994. From July 1993
to the present, Mr. Halperin has been President and Chief Executive Officer of
Agama, Inc., a company that pursues mergers and acquisitions. From April, 1987
to July, 1993, Mr. Halperin held a variety of management positions at Osicom
Technologies, Inc.
Ronald M. Gagnon, President, has been President of Deli King, Inc. since
February 1997. He had served as Vice President and CFO since April 1996 when
Saratoga Brands, Inc. acquired the Company from the previous owner. From 1989 to
April 1996, he was General Manager of Deli King, Inc. following the acquisition
of his successful mobile catering company, Coffee An'Services, Inc., by Deli
King, Inc. in June of 1986. Mr. Gagnon was formerly a member of the staff of the
Providence, Rhode Island office of Deloitte & Touche (formerly Deloitte Haskins
& Sells), and began his career as a revenue agent with the Internal Revenue
Service. He holds a B.S. in Business
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Administration from Bryant College, and is a CPA in the State of Rhode Island.
Bernard F. Lillis, Jr., Chief Financial Officer, has been Chief Financial
Officer of Saratoga Brands, Inc. and Subsidiaries since April of 1996. Prior to
joining Saratoga he served as Chief Financial Officer of one of the largest
suppliers of construction aggregate in the New York Metropolitan Area for
fourteen years. Previously he was Vice President Finance & Administration of a
Princeton (NJ) management consulting firm for seven years. Mr. Lillis also
served as Deputy City Manager-Finance of Rochester, New York, and began his
career with Deloitte & Touche (previously Haskins & Sells), Certified Public
Accountants. He is a Certified Public Accountant, a recipient of the New York
State Society of CPA's Award for Outstanding Scholastic Achievement in
Accounting, and a member of the New York, New Jersey and Pennsylvania Societies
of CPA's, and the Institute of Management Accountants.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the compensation that the Company paid during its
last three fiscal years to its chief executive officer and four most highly
compensated executive officers.
<TABLE>
<CAPTION>
Other Annual
Name and Title Year Salary Compensation
- -------------- ---- ------ ------------
<S> <C> <C> <C>
Barry Witz, Chairman, 1996 -- --
Chief Executive Officer 1995 -- --
1994 -- --
Scott G. Halperin, 1996 -- --
Chief Executive Officer 1995 -- --
(Saratoga) 1994 -- --
Ronald M. Gagnon, 1996 $46,400 10,000
President JR's Delis 1995 42,300 --
and Deli King 1994 43,250 --
Bernard F. Lillis, Jr., 1996 $57,250 15,000
Chief Financial Officer 1995 -- --
1994 -- --
</TABLE>
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Information concerning compensation paid by Saratoga to Mr. Witz and Mr.
Halperin is included in Saratoga's Annual Report on Form 10KSB for the year
ended December 31, 1995.
STOCK OPTION PLAN
The Company has established an incentive and non-qualified stock option
plan (the "Stock Option Plan") to become effective upon the Distribution. The
Stock Option Plan is to be administered by the Board of Directors. A total of
300,000 shares of Common Stock is reserved for issuance under the Stock Option
Plan.
The purpose of the Stock Option Plan is to advance the Company's interests
by enhancing its ability to attract and retain key employees. All grants will be
made at the discretion of the Board to such individuals and in such amounts as
the Board deems advantageous for compensation and incentive purposes. The
Company's employees are all eligible for the grant of options.
The Stock Option Plan provides for the grant of both incentive stock
options as defined in Section 422 of the Code and non-qualified options subject
to the rules contained in Section 83 of the Code. No options may be granted
under the Stock Option Plan more than ten years after the date of the
Distribution. All options under the Stock Option Plan will be non-transferable
except upon death. The exercise price of a stock option granted under the Stock
Option Plan may not be less than 100% (110% in the case of incentive stock
options granted to owners of more than 10% of the total combined voting power of
all classes of stock of the Company and its subsidiaries) of the fair market
value of the underlying stock at the time of grant.
The term of each option will be set by the Board but cannot exceed ten
years from grant (five years from grant, in the case of an incentive stock
option granted to someone owning more than 10% of the total combined voting
power of all classes of stock of the Company and its subsidiaries). Each option
will become exercisable in cumulative installments: on the first anniversary of
the date of grant as to 25% of the shares covered by the option, and on each of
the second, third and fourth anniversaries of the grant date as to an additional
25%. The exercise price of an option may be paid either in cash, certified
check, bank draft or money order or, if the Board so permits, by delivery of
previously owned Common Stock or a promissory note or a combination of the
foregoing.
If a participant's employment with the Company terminates by reason of
death, each option held by the participant immediately prior to death will be
exercisable, to the extent it was then exercisable, for 12 months after death or
until the end of the option period if earlier. The options which were not
exercisable at the time of death will immediately terminate upon death. If a
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participant's employment terminates for any other reason, all of the
participant's options that are not then exercisable will immediately terminate.
The participant's options that were then exercisable will continue to be
exercisable for 30 days, unless the participant is discharged for cause, as
determined in the Board's sole discretion. In such a case, all previously vested
options shall be forfeited immediately.
In the Board's sole discretion, options granted under the Stock Option
Plan will also terminate in the event of certain mergers, consolidations or sale
of assets or public or private Common Stock offerings of the Company. However,
in such instances, the Stock Option Plan also provides that at least 20 days in
advance of such an event all outstanding vested and non-vested options shall
become exercisable for a limited period of time. Options not exercised during
that time period shall be forfeited.
The Board retains the right to amend the Stock Option Plan or any
outstanding option. An amendment adversely affecting the rights of an employee
under a previously granted option requires the employee's consent, and certain
Stock Option Plan amendments, including any increase in the number of shares
available under the Stock Option Plan, a change in the group of eligible
employees, a reduction in the minimum option price for incentive stock options,
an extension of the term of the Stock Option Plan, or amendments affecting the
status of already granted incentive stock options, require shareholder approval.
The number of shares reserved for issuance under the Stock Option Plan, as
well as the number of shares subject to outstanding options, option price, and
other option provisions, including where relevant the kind of shares subject to
options, is subject to adjustment in the event of a stock dividend, stock split
or similar capital change or to take into consideration material changes in
accounting practice or principles or certain corporate transactions. The Board
may, at any time, discontinue granting options under the Stock Option Plan.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In 1996, Saratoga loaned $1,307,097 to Deli King to acquire the real
estate in West Warwick, Rhode Island where the Company operates its business.
Such amount has not paid by Deli King, and has been treated as a demand
obligation from Deli King to Saratoga without interest. In addition, Saratoga
issued a $450,000 Note to Roy LaCroix on behalf of Deli King (which agreed to
make the payments on the note) and loaned amounts to Deli King from time to
time, the current balance of which is approximately $787,084. In connection with
the Distribution, such indebtedness will be cancelled by Saratoga in
consideration of the issuance by the Company to Saratoga of shares of Series A
Preferred Stock. The
13
<PAGE> 15
Series A Preferred Stock will have a liquidation value equal to balance of the
indebtedness at the time of Distribution, bear no cumulative dividend, be
non-voting and be convertible to Common Stock at the market price of Mobile's
stock at the time of Distribution.
Barry Witz and Scott G. Halperin will be the sole directors of the Company
and are also the sole directors of Saratoga. To the extent business
opportunities, such as the purchase of a business, become available, the Board
will determine whether the opportunity is more appropriate to the existing
respective businesses of the Company or Saratoga and pursue the opportunity
through that company only.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company will be authorized to issue 25,000,000 shares of Common Stock,
par value $.01 per share. As of the date of the Distribution, approximately
2,200,000 shares of Common Stock will be outstanding, held of record by 225
persons. The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voting for the election of
directors can elect all of the directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the Board of Directors
out of the funds legally available therefor. In the event of the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining available for distribution
after payment of liabilities and after provision has been made for each class of
stock, if any, having preference over the Common Stock. Holders of shares of
Common Stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the Common Stock.
All of the outstanding shares of Common Stock are, and the shares of Common
Stock to be issued in this offering, when issued against payment therefor, will
be, validly authorized and issued, fully paid and nonassessable.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
1,000,000 shares of "blank check" preferred stock, par value $.01 per share (the
"Preferred Stock"), with such designations, powers, preferences, rights,
qualifications, limitations and restrictions of such series as the Board of
Directors, subject to the laws of the State of Delaware, may determine from time
to time. Accordingly, the Board of Directors
14
<PAGE> 16
is empowered, without stockholder approval, to issue Preferred Stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of Common Stock. In
addition, the Preferred Stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company. Although the Company does not currently intend to issue any shares of
Preferred Stock, there can be no assurance that the Company will not do so in
the future.
SERIES A PREFERRED STOCK
Effective on the date of the Distribution, the Company will have
outstanding ______ shares of Series A Preferred Stock, owned by Saratoga. These
shares will be issued in cancellation of the Company's indebtedness of $______
to Saratoga. See Part I, Item 7, Certain Relationships and Related Transactions.
The Series A Preferred Stock is non-voting, bears no cumulative dividend of and
has a liquidation value equal to the indebtedness being cancelled. Each share of
Series A Preferred Stock is convertible to _____ shares of common stock at the
option of the holder.
DIVIDENDS
The Company has never paid any dividends. Future dividends, if any, will
be contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to the consummation of a
Business Combination. The payment of dividends is within the discretion of the
Company's Board of Directors. The Company presently intends to retain all
earnings, if any, for use in the Company's business operations and accordingly,
the Board does not anticipate declaring any dividends in the foreseeable future.
TRANSFER AGENT
The transfer agent for the Common Stock is Signature Stock Transfer,
Dallas, Texas.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
Prior to the issuance of the shares to be registered herein, no market
existed for common shares of the Company. Upon the effective date of this
registration statement, the Company will have outstanding approximately
2,200,000 shares of common stock with a par value of $.01 per share. There will
be approximately 225 shareholders of record for the common shares to be
registered by
15
<PAGE> 17
this Registration Statement. There are no outstanding options or warrants to
purchase or convert to common stock.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any material legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
The Company has had no disagreements with its accountants regarding
accounting or financial disclosure matters.
ITEM 4. RECENT SALE OF UNREGISTERED SECURITIES.
On October 7, 1996, the Company issued one hundred (100) shares of Common
Stock to Saratoga in exchange for all of the outstanding stock of JR's Deli and
Deli King. The transaction was exempt from registration under the Securities Act
of 1933, as amended (the "Act") as a transaction not involving any public
offering, as set forth in Section 4(2) of the Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against them
by a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any action, suit or proceedings. Article IX of the Certificate of
Incorporation and Article III of the Bylaws of the Company provide for
indemnification of directors and officers to the fullest extent permitted by the
General Corporation Law of the State of Delaware. Reference is made to the
Certificate of Incorporation of the Company, filed as Exhibit 3.1 hereto.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct of a knowing violation of law, (iii) under
Section 174 (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock) of the General Corporation Law of the State
of Delaware, or (iv) for any transaction from which the director
16
<PAGE> 18
derived an improper personal benefit. Article Seventh of the Company's
Certificate of Incorporation contains such a provision.
17
<PAGE> 19
PART F/S
MOBILE CATERERS, INC. AND SUBSIDIARIES
INDEX
FINANCIAL STATEMENTS
PAGE
----
Reports of Independent Certified Public Accountants 18
Consolidated Balance Sheets at December 31, 1995 and
(unaudited) September 30, 1996 22
Consolidated Statements of Operations for the Years
Ended December 31, 1995 and 1994, and the Nine Months
(unaudited) Ended September 30, 1996 23
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1995 and 1994, and the Nine Months
(unaudited) Ended September 30, 1996 24
Consolidated Statements of Changes in Stockholders'
Equity for the Years Ended December 31, 1995 and 1994,
and the Nine Months (unaudited) Ended September 30, 1996 25
Notes to Consolidated Financial Statements 26
18
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANT
To the Boards of Directors and Stockholders of
Saratoga Brands, Inc. and Mobile Caterers, Inc.
In our opinion, based upon our audits and the reports of other auditors, the
accompanying combined balance sheets and the related combined statements of
operations, cash flows and stockholder's equity appearing on pages 21 through 28
present fairly, in all material respects, the financial position of JR Deli,
Inc. and Deli King, Inc. to become wholly-owned subsidiaries of Mobile Caterers,
Inc. and the combined companies as discussed in Note 1 (collectively, the
"Company"), a wholly-owned subsidiary of Saratoga Brands, Inc. at December 31,
1995, and the results of their operations and their cash flows for each of the
two years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
1995 and 1994 financial statements of Deli King, Inc., which was acquired by the
Company in 1996. Those statements were audited by other auditors whose reports
thereon have been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for Deli King, Inc., is based solely on the
reports of other auditors. We conducted our audits of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for the opinion expressed above.
BROZA, BLOCK & RUBINO
Certified Public Accountants
February 28, 1997
19
<PAGE> 21
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of Deli King,
Inc. d/b/a LaCroix Food Services, Ltd.:
We have audited the accompanying balance sheet of the Deli King, Inc. d/b/a/
LaCroix Food Services, Ltd. (a Rhode Island corporation), as of December 31,
1995, the related statement of operations, statement of retained earnings and
statement of 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 account principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe 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 financial position of the Deli King, Inc. d/b/a
LaCroix Food Services, Ltd., as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
D.E. RODRIGUES & COMPANY, INC.
Fall River, Massachusetts
May 30, 1996
20
<PAGE> 22
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Deli King, Inc. d/b/a LaCroix Food Services, Ltd.:
We have audited the accompanying balance sheet of the Deli King, Inc. d/b/a
LaCroix Food Services, Ltd., (a Rhode Island corporation) as of December 31,
1994, the related statement of operations and retained earnings and statement of
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 account principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe 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 financial position of the Deli King, Inc. d/b/a
LaCroix Food Services, Ltd., as of December 31, 1994, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
D.E. Rodrigues & Company, Inc.
Fall River, Massachusetts
May 30, 1996
21
<PAGE> 23
MOBILE CATERERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AUDITED UNAUDITED PRO FORMA
DECEMBER 31, 1995 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
----------------- ------------------ ------------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 9,496 $ (126,440) $ (126,440)
Accounts receivable net of allowance
for doubtful accounts of $97,845 and
$58,839 respectively (Note 2) 140,134 327,350 327,350
Inventories (Note 2) 298,583 235,921 235,921
Loans receivable-stockholder 211,635
Due from affiliate 356,172
Prepaid expenses and other current assets 42,941 174,511 174,511
---------- ----------- -----------
Total current assets 1,058,961 611,342 611,342
Property and equipment - net (Note 3) 822,560 2,861,288 2,861,288
Other assets 400 5,625 5,625
Intangible assets (Note 2) 30,803 824,194 824,194
Excess of cost over fair market value of
assets acquired (Note 2) 1,280,764 1,480,896 1,480,896
---------- ----------- -----------
TOTAL ASSETS $3,193,488 $ 5,783,345 $ 5,783,345
========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Loans payable (Note 4) $ 24,871 $ 13,539 $ 13,539
Accounts payable and accrued expenses 656,887 844,756 844,756
Dividend payable 517,803 -- --
Current portion of capital leases payable
(Note 7) 0 28,084 28,084
Current portion of long-term debt (note 5) 177,893 126,655 126,655
Current portion-note payable related party
(Note 6) 112,500
---------- ----------- -----------
Total current liabilities 1,377,454 1,125,534 1,013,034
---------- ----------- -----------
Long term debt (Note 5) 116,701 116,617 116,617
Long-term notes payable-related party (Note 6) -- 300,000
Due to Shareholder -- 1,640,449
Capital leases payable (Note 7) -- 52,037 52,037
---------- ----------- -----------
TOTAL LIABILITIES 1,494,155 3,234,637 1,181,688
---------- ----------- -----------
Contingencies (None)
STOCKHOLDERS' EQUITY (NOTE 9)
Preferred stock - Class A convertible
preferred shares stated at liquidation
value, authorized 10,000 shares of which 2,053
shares are issued and outstanding, $.01 par value -- -- 2,052,949
Common stock 1,000 shares authorized,
1000 shares issued and outstanding,
no par value 1,000 1,000 1,000
Additional paid-in capital 1,535,635 2,173,794 2,173,794
Retained earnings 161,698 373,914 373,914
---------- ----------- -----------
Total Stockholders' Equity 1,699,333 2,548,708 4,601,657
---------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,193,488 $ 5,783,345 $ 5,783,345
========== =========== ===========
</TABLE>
The accompanying notes to the consolidated financial statements are in integral
part hereof.
22
<PAGE> 24
MOBILE CATERERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
AND THE NINE MONTHS (UNAUDITED) ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
UNAUDITED
FOR THE YEAR ENDED FOR THE NINE
DECEMBER 31, MONTHS ENDED
1995 1994 1996 1995
--------------------------- ------------------------
<S> <C> <C> <C> <C>
Net sales $ 5,980,444 $ 5,953,706 $4,986,453 $4,750,234
Cost of sales 4,159,590 4,183,633 3,480,119 3,494,491
----------- ----------- ---------- ----------
Gross profit 1,820,854 1,770,073 1,506,334 1,255,743
Selling, general and administrative
expenses 1,851,025 1,502,654 1,248,301 1,128,047
----------- ----------- ---------- ----------
Income (loss) from operations before
interest and income taxes (30,171) 267,419 258,033 127,696
Interest (income) expense - net 38,542 9,579 45,817 18,146
Income taxes (Note 8) 500 250 -- --
----------- ----------- ---------- ----------
Net earnings (loss from
continuing operations (69,213) 257,590 212,216 109,550
Loss from operations of discontinued
business (Note 10) (110,885) (191,268)
----------- ----------- ---------- ----------
Net income (loss) $ (180,098) $ 66,322 $ 212,216 $ 109,550
=========== =========== ========== ==========
EARNINGS(LOSS) PER COMMON SHARE
Earnings(loss) from continuing
operations $ (69.21) $ 257.59 $ 212.22 $ 109.55
Loss from discontinued operations $ (110.89) $ (191.27) -- --
Total earnings (loss) per share $ (180.10) $ 66.32 $ 212.22 $ 109.55
Weighted average shares used in 1,000 1,000 1,000 1,000
computation
PRO FORMA EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) from continuing
operations $ (0.03) $ 0.12 $ 0.10 $ 0.05
Loss from discontinued operations $ (0.05) $ (0.09) -- --
Total earnings (loss) per share $ (0.08) $ 0.03 $ 0.10 $ 0.05
Weighted average shares used in
computation 2,200,000 2,200,000 2,200,000 2,200,000
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part hereof.
23
<PAGE> 25
MOBILE CATERERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
AND THE NINE MONTHS (UNAUDITED) ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
UNAUDITED
FOR THE YEAR ENDED FOR THE NINE
DECEMBER 31, MONTHS ENDED
1995 1994 SEPTEMBER 30, 1996
------------------------- ------------------
<S> <C> <C> <C>
Cash Flows from operating activities:
Adjustments to reconcile net operating profit
to net cash provided by (used in) operating
activities:
Net operating profit (loss) $ (180,098) $ 66,322 $ 212,216
Depreciation and amortization 151,466 155,270 135,721
(Increase) decrease in accounts receivable (31,381) 17,780 (231,222)
Provision for losses on accounts receivable -- (44,006)
Increase (decrease) in loans receivable (34,706) (180,904)
(Increase) decrease in prepaid expenses
and prepaid expenses (44,210) (11,588) (68,908)
Increase (decrease) in other assets (38,263) 11,308 (5,225)
Increase in accounts payable and accrued
expenses 217,577 92,839 187,869
Increase (decrease) in other liabilities 570,779 -- (517,803)
----------- --------- -----------
Net cash provided by (used in) operating
activities 611,164 151,027 (243,346)
----------- --------- -----------
Cash flows from investing activities:
(Increase)decrease in loans receivable -- -- 567,807
Purchase of fixed assets (133,418) (215,009) (2,112,250)
Disposal of fixed assets 99,678 -- --
Increase in accumulated depreciation
and amortization (78,301) (13,658) --
Increase in Goodwill (1,313,604) (228,525)
Purchase of intangible assets (routes) -- -- (827,197)
Increase (decrease) in other assets
Net cash used in investing activities (1,425,645) (228,667) (2,600,165)
Cash flows from financing activities:
Increase in paid-in capital 1,153,880 637,159
Proceeds from notes payable 77,962 108,116 504,111
Capital leasing transactions -- -- 80,121
Repayment of notes payable (150,588) (29,693) (154,265)
Changes on equity due to adjustments (280,817) 15,485
Increase in Due to Shareholder -- -- 1,640,449
----------- --------- -----------
Net cash provided by (used in) financing
activities 800,437 93,908 2,707,575
----------- --------- -----------
Increase(decrease) in cash (14,044) 16,268 135,936
Cash at beginning of year 23,540 7,272 9,496
----------- --------- -----------
Cash at end of year $ 9,496 $ 23,540 $ (126,440)
=========== ========= ===========
Supplemental disclosure of cash flows information:
Interest paid $ 42,620 $ 16,533 $ 45,817
Income taxes paid 500 250 250
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part hereof.
24
<PAGE> 26
MOBILE CATERERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
AND THE NINE MONTHS (UNAUDITED) ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
COMMON
SHARES Add'l Retained
Number of Paid In Earnings
Shares Amount Capital (Deficit) Total
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994 1,000 $1,000 $ 46,000 $ 887,561 $ 934,561
Changes in Equity Due to Adjustments 5,485 5,485
Net Income (Loss) for the year ended
December 31, 1994 66,322 66,322
Balance at December 31, 1994 1,000 1,000 46,000 959,368 1,006,368
Prior Period Adjustments (28,056) (28,056)
Dividends & Distribution to Shareholder (589,516) (589,516)
Changes in Equity due to Adjustments 1,490,635
Net Income (Loss) for the year
December 31, 1995 (180,098) (180,098)
Balance at December 31, 1995 1,000 1,000 1,536,635 161,698 1,699,333
Paid in Capital in Connection with
Acquisition of Deli King, Inc. 637,159 637,159
Net Income (loss) for the nine months
(unaudited) ended September 30,
1996) 212,216 212,216
- -------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996
(unaudited) 1,000 $1,000 $2,173,794 $ 373,914 $2,548,708
=========================================================================================================================
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part hereof.
25
<PAGE> 27
MOBILE CATERERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- ORGANIZATION AND BUSINESSES
Organization - Mobile Caterers, Inc. (the "Company") is a Delaware corporation
incorporated on September 27, 1996, headquartered in West Warwick, Rhode Island.
The Company is a wholly-owned subsidiary of Saratoga Brands Inc. ("Saratoga").
Saratoga operates as both a specialty cheese and Italian foods producer and
importer distributor ("cheese") and as a producer=distributor of delicatessen
and snack foods ("deli") for the mobile catering and convenience store
clientele. In July 1996, management of Saratoga determined that due to the
difference between the operations of the cheese and deli businesses,
maximization of shareholder value would be better achieved by operating these
activities as two separate organizations. The board of directors of Saratoga
then resolved to implement these plans and formed the Company for the purpose of
operating a separate deli business. On October 7, 1996, Saratoga contributed its
holdings in its two wholly owned deli subsidiaries: Deli King, Inc. ("Deli
King") and JR's Delis, Inc. ("JR's") to the Company, in exchange for 100% of the
Company's common stock.
Upon the effective date of a registration statement to be filed with the
Securities and Exchange Commission in March 1997, Saratoga intends to spin off
100% of the shares of the Company to the Saratoga shareholders as a stock
dividend.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the two
wholly-owned subsidiaries of the Company, Deli-King, Inc. and JR's Deli, Inc.
for each of the periods presented. In consolidation all inter company balances
are eliminated.
BASIS OF PRESENTATION
The accompanying combined financial statements include those assets,
liabilities, revenues and expenses directly attributable to Mobile Caterers,
Inc.'s operations. These financial statements have been prepared as if Mobile
Caterers, Inc. had operated as a freestanding entity for all periods presented.
The financial information included herein does not necessarily reflect
what the financial position and results of operations of Mobile Caterers, Inc.
would have been had it operated as a stand-along entity during the periods
covered, and may not be indicative of future operations or financial position.
PRO FORMA BALANCE SHEET AND EARNINGS PER SHARE
The pro forma information represents data as if the Distribution had
occurred on the date(s) for which such information is given.
INTERIM FINANCIAL STATEMENTS
In the opinion of management, the interim combined financial statements
reflect all adjustments necessary for fair presentation of the interim periods.
All such adjustments are of a normal recurring nature. The results of operations
for the interim periods are not necessarily indicative of the results of
operations to be expected for the full year.
INVENTORIES
Inventories are stated at the lower of cost on a first-in, first out basis
or market, and consist entirely of material suitable for sale.
DEPRECIATION AND AMORTIZATION
Depreciation of fixed assets is computed utilizing the straight-line
method over the estimated useful lives of the related assets which range from 5
to 30 years. Amortization of catering routes has been computed on a straight
line basis over a 15 year period.
26
<PAGE> 28
MOBILE CATERERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
REVENUE RECOGNITION
Revenues are recognized upon shipment of product.
PER SHARE DATA
The per share data has been calculated using the shares expected to be
outstanding on the date when the registration of such shares is deemed effective
as the weighted average number of Common Shares outstanding during each period
presented. Outstanding options and warrants have been excluded from the
computation due to their antidilutive effect.
EXCESS OF COST OVER FAIR MARKET VALUE OF ASSETS ACQUIRED, AND INTANGIBLE ASSETS
The Company evaluates the amortization period of the excess of cost over
fair market value of assets acquired (goodwill) and intangible assets on an
ongoing basis in light of changes in business conditions, events or
circumstances that may indicate the potential impairment of goodwill or
intangible assets.
The excess of cost over fair market value of assets (less liabilities)
acquired is being amortized over 40 years. Goodwill at September 30, 1996 for
each of the subsdiairies consisted of the following:
<TABLE>
<S> <C>
JR's Delis, Inc. $1,256,134
Deli King, Inc. 224,762
----------
TOTAL $1,480,896
==========
</TABLE>
Intangible assets consist of Deli King catering routes with a value of $ 30,803
and $824,194 at December 31, 1995 and September 30, 1996 respectively.
Amortization of these routes is being recognzied over a 15-year period. The
goodwill attributable to JR's Delis has been transferred by Saratoga Brands,
Inc. to the Company as part of its initial capitalization.
CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
CONCENTRATIONS
The Company does not have any single customer which accounts for more than
10% of the Company's trade receivables or sales. The Company's products are
distributed locally and regionally.
PROVISION FOR DOUBTFUL ACCOUNTS
The Company periodically reviews and adjusts its provision for bad debts
to reflect its experience.
27
<PAGE> 29
MOBILE CATERERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- PROPERTY AND EQUIPMENT - NET
Property and equipment - net consisted of the following at December 31,
1995 and September 30, 1996:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Land $ 0 $ 611,007
Buildings -- 1,372,460
Furniture & Equipment 977,223 526,557
Vehicles 695,135 441,058
Leasehold Improvements 323,335 --
----------- -----------
Total Cost $ 1,995,693 $ 2,951,082
Less Accumulated Depreciation (1,173,133) (89,794)
----------- -----------
Net $ 822,560 $ 2,861,288
=========== ===========
</TABLE>
NOTE 4 -- LOANS PAYABLE
JR has short term loans totaling $16,871 and $10,584 on December 31, 1995
and September 30, 1996, respectively, with Banca Nazional which bear interest at
the prime rate and is due on demand. Additionally, JR has a term loan totalling
$3,000.00 at September 30, 1996 with Shawmut Bank, which bears no interest and
has 6 payments of $500.00 remaining.
NOTE 5 -- LONG-TERM DEBT
The Company has bank notes, principally for the purchase of equipment,
payable over terms ranging from 24 to 48 months and secured by various Company
vehicles and vending equipment. The balances due at December 31, 1995 and
September 30, 1996 are:
<TABLE>
<CAPTION>
Current Long-Term Total
------- --------- -----
<S> <C> <C> <C>
December 31, 1995 $177,893 $116,701 $294,594
September 30, 1996 $126,655 $116,617 243,272
</TABLE>
At September 30, 1996, the remaining payments are:
<TABLE>
<S> <C>
1996 $ 39,028
1997 114,897
1998 49,698
1999 24,191
2000 13,476
2001 1,982
</TABLE>
28
<PAGE> 30
MOBILE CATERERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- NOTES PAYABLE-RELATED PARTY
Saratoga Brands, Inc. has a note outstanding with Roy LaCroix, the former
owner of Deli King, Inc. which was incurred as part of the purchase price at the
time of the acquisition of Deli King. At the instruction of Saratoga Deli King
has been paying the note, and a liability of equal amount was recordd on Deli
King's books at the time of the acquisition.
Upon the effective date of the spin off Saratoga will resume payment of
the note and the balance of the note due Saratoga will be converted to Series A
Preferred Stock.
The amount of the note at September 30, 1996 is $412,500. THis note bears
interest at the prime rate plus 1 percent, and is being repaid in monthly
installments of $9,375 plus accrued interest over a 4-year period. At September
30, 1996 the remaining payments required are:
<TABLE>
<S> <C>
1996 $ 28,125
1997 112,500
1998 112,500
1999 112,500
2000 46,875
</TABLE>
NOTE 7 -- CAPITAL LEASES
At September 30, 1996, Deli King had capital leases totaling $80,121 with
a current portion of $28,084. As of September 30, 1996, the remaining payments
required are:
<TABLE>
<S> <C>
1996 $ 7,333
1997 26,658
1998 22,373
1999 14,071
2000 9,686
</TABLE>
NOTE 8 -- INCOME TAXES
Effective January 1, 1995 for JR and January 1, 1996 for Deli King, the
companies adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Under Statement NO. 109, deferred tax assets and
liabilities are determined based upon differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. Additionally, deferred tax balances are adjusted in periods that
include the enactment of tax rate changes. The adoption of this statement, which
was made on a prospective basis, did not have a material impact on the Company's
financial condition or results of operations. Prior to the effective dates above
each of these companies were S-Corporations. For the years ended December 31,
1995 and September 30, 1996 JR had no provision for income taxes due to the
utilization of net operating loss ("NOL") carryforwards when consolidated with
its parent company.
NOTE 9 -- STOCKHOLDERS' EQUITY
Common Stock:
The Company will be authorized to issue 25,000,000 shares of common stock, par
value $.01 per share. As of the date of the Distribution, approximately
2,200,000 shares of Common Stock will be outstanding.
29
<PAGE> 31
MOBILE CATERERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Preferred Stock:
The Company's Certificate of Incorporation authorizes the issuance of 1,000,000
shares of the "blank check" preferred stock, par value $.01 per share, with such
designations, powers, preferences, rights, qualifications, limitations and
restrictions of such series as the Board of Directors, subject to the laws of
the State of Delaware may determine from time to time. At the date of the
Distribution the Company does not intend to issue any shares of Preferred Stock,
however, there can be no assurance that the Company will not do so in the
future.
Series A Preferred Stock:
Effective on the date of the Distribution, the Company will have outstanding
shares of Series A Preferred Stock, owned by Saratoga. These shares will be
issued in cancellation of the of the Company's indebtedness of $2,052,949 to
Saratoga which arose out of the purchase of the Company's real estate from
Saratoga in 1996. The Series A Preferred Stock is non-voting, bears no
cumulative dividend, and has a liquidation value equal to the indebtedness
cancelled. Each share of Series A Preferred Stock is convertible to shares of
common stock at the option of the holder.
NOTE 10 -- LOSS FROM DISCONTINUED BUSINESS
During the month of July 1995, Deli King, Inc. discontinued operations of its
Micro Fresh Division due to its inability to demonstrate profitable operations
since its inception. Accordingly, the activities for the periods presented,
relating to the Micro Fresh Division, have been presented as discontinued
operations.
Revenues from the discontinued business, which were not included in the income
statement revenues, were $30,998 in 1995 and $23,874 in 1994.
Deli King, Inc. concluded all transactions related to the Micro Fresh Division
prior to the acquisition of the Company by Saratoga Brands, Inc.
30
<PAGE> 32
PART III
ITEM 1. INDEX TO EXHIBITS
3.1 Certificate of Incorporation, as amended
3.2 By-Laws, as amended
10 1997 Incentive and Non-Qualified Stock Option Plan
21 Subsidiaries of the Registrant
23.1 Consent of Independent Auditor
23.2 Consent of Independent Auditor
24 Power of Attorney
31
<PAGE> 33
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant authorized this Registration Statement to be signed on its
behalf by the undersigned, in the City of Santa Monica, State of California, on
the 14th day of March, 1997.
MOBILE CATERERS, INC.
BY:/s/ Barry Witz
------------------------------------------
BARRY WITZ, Chairman and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Barry Witz and Scott Halperin his true and
lawful attorneys-in-fact, each acting alone, with full powers of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including any post-effective
amendments, to this registration statement, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorneys-in-fact or their substitutes, each acting along, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Barry Witz Chairman of the Board, March 14, 1997
- --------------------- Chief Executive Officer
BARRY WITZ (Principal Executive
Officer)
/s/ Bernard F. Lillis Chief Financial Officer March 14, 1997
- --------------------- (Principal Financial
BERNARD F. LILLIS, JR. and Accounting Officer)
/s/ Scott Halperin Director March 14, 1997
- ---------------------
SCOTT G. HALPERIN
32
<PAGE> 1
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
MOBILE CATERERS, INC.
Under Section 245 of the
General Corporation Law
The undersigned, being, respectively, the president and secretary, hereby
certify as follows:
*The name of the corporation is
MOBILE CATERERS, INC.
*The date it filed its Certificate of Incorporation with the
Secretary of State is September 26, 1996.
*The text of the Certificate of Incorporation, as amended heretofore,
is hereby restated as further amended to read as herein set forth in full:
<PAGE> 2
RESTATED
CERTIFICATE OF INCORPORATION
OF
MOBILE CATERERS, INC.
ARTICLE I
The name of the corporation is MOBILE CATERERS, INC. (hereinafter called
the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Three Mill Road, Suite 206, City of Wilmington, County of New Castle
and the name of its registered agent at such address is The Incorporators, Ltd.
ARTICLE III
The purpose for which the Corporation is formed is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
(a) The total number of shares of all classes of stock which the
corporation shall have authority to issue is 26,000,000 shares, of which:
(1) 25,000,000 shares shall be designated as Common Stock, having a
par value of $.01 per share; and
(2) 1,000,000 shares shall be designated as Preferred Stock, having
a par value of $.01 per share.
(b) A statement of the designations and powers, preferences and rights,
and the qualifications,limitations or restrictions thereof, of the shares of
stock of each class, is as follows:
(i) Except as otherwise provided by law or by paragraph (b)(iii)
of this ARTICLE IV, the entire voting right shall be vested in the holders
of the Common Stock.
(ii) (A) The Board of Directors is expressly authorized at any
time and from time to time, to provide for the issuance of shares of
Preferred Stock in one or more series, with such voting powers, full or
limited but not to exceed one vote per share, or without voting powers,
and with
2
<PAGE> 3
such designations, preferences and relations, participating, optional
or other special rights, qualifications, limitations or restrictions
thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of
Directors, and as are not stated and expressed in this Certificate of
Incorporation, or any amendment thereto, including, but without
limiting the generality of the foregoing the following:
(i) the designation of such series:
(ii) the dividend rate of such series, the
conditions and dates upon which such dividends shall be payable, the
preference or relations which such dividends shall bear is the
dividends payable on any other class or classes or of any other
series at capital stock, and whether such dividends shall be
cumulative or noncumulative;
(iii) whether the shares of such series shall be
subject to redemption by the corporation, and if made subject to such
redemption by the corporation, and if made subject to such
redemption, the times, prices and other terms and conditions of such
redemption;
(iv) the terms and amount of any sinking fund
provided for the purchase of redemption of the shares of such series;
(v) whether or not the shares of such series shall
be convertible into or exchangeable for shares of any other class or
classes of capital stock of the corporation, and, if provision be
made for conversion or exchange, the times, prices, rates,
adjustments and other terms and conditions of such conversion or
exchange;
(iv) the extent, if any, to which the holders of
such series shall be entitled to vote as a class or otherwise with
respect to the election of the directors or otherwise; provided,
however, that in no event shall any holder of any series of Preferred
Stock be entitled to more than one vote for each share of such
Preferred Stock held by him;
(vii) the restrictions, if any, on the issue or
reissue of any additional shares or series of Preferred Stock;
(viii) the rights of the holders of the shares of
such series upon the dissolution of, or upon the distributions of
assets of, the corporation.
3
<PAGE> 4
(B) Except as otherwise required by law and except
for such voting powers with respect to the election of directors or other
matters as may be stated in the resolutions of the Board of Directors
creating any series of Preferred Stock, the holders of any such series
shall not have any voting power whatsoever.
(iii) No holder of any stock of the corporation of any class now
or hereafter authorized shall, as such holder, be entitled as of right to
purchase or subscribe for any shares of stock of the corporation of any
class or any series now or hereafter authorized, or any securities
convertible into or exchangeable for any such shares, or any warrants,
options, rights or other instruments evidencing rights to subscribe for,
or purchase, any such shares, whether such shares, securities, warrants,
options, rights or other instruments be unissued or issued and thereafter
acquired by the corporation.
(iv) Without action by the stockholders, the shares of any class
of capital stock may be issued by the corporation from time to time for
such consideration as may be fixed by the Board of Directors, provided
that such consideration shall be not less than par value in the case of
any class of stock having par value. Any and all shares so issued, the
full consideration for which has been paid or delivered shall be deemed
fully paid stock and shall not be liable to any further call or assessment
thereon, and the holders of such shares shall not be liable for any
further payment thereon.
ARTICLE V
The name of the incorporator is Marie P. Jorczak and the address of
the Incorporator is Three Mill road, Suite 206, Wilmington, Delaware 19806.
ARTICLE VI
The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and shareholders:
(1) The number of directors of the Corporation shall be such as from
time to time shall be fixed by, or in the manner provided in the By-Laws.
Election of the directors need not be by ballot unless the By-Laws so provide.
4
<PAGE> 5
(2) The Board of Directors shall have the power without the assent or
vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the bylaws
of the Corporation, to fix and vary the amount to be reserved for any proper
purpose; to authorize and cause to be executed mortgages and liens upon all or
any part of the property of the Corporation; to determine the use and
disposition of any surplus or net profits; and to fix the times for the
declaration and payment dividends.
(b) To determine from time to time whether, and to what times
and places, and under what conditions the accounts and books of the Corporation
(other than the stock ledger) or any of them, shall be open to the inspection of
the stockholders.
(3) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the stockholders or any
meeting of the stockholders called for the of considering any such act or
contract, and any contract or act that shall be approved or be ratified by the
vote of the holders of the majority of the stock of the Corporation which is
represented in person or by proxy at such meeting and entitled to vote thereat
(provided that a lawful quorum of stockholders be there represented in person or
by proxy) shall be as valid and as binding upon the Corporation and upon all the
stockholders as though it had been approved or ratified by every stockholder of
the Corporation, whether or not the contract or act would otherwise be open to
legal attack because of the directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this certificate, and to any bylaws from time to time
made by the stockholders; provided, however, that no bylaws so made shall
invalidate any prior act of the directors which would have been valid if such
bylaw had not been made.
ARTICLE VII
No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. It is the intent
that this provision be
5
<PAGE> 6
interpreted to provide the maximum protection against liability afforded to
directors under the Delaware General Corporation Law in existence either now or
hereafter.
ARTICLE VIII
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware, may, on the application in any summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths (3/4) in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, agrees to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement of the said reorganization shall, if sanctioned by the
court to which the said application has been made, be binding on all creditors
or class of creditors, and/or on all the stockholders or class of stockholders,
of this Corporation, as the case may be, and also on this Corporation.
The foregoing Restated Certificate of Incorporation has been duly adopted
in accordance with the applicable provisions of Section 242 and Section 245 of
the General Corporation Law of the State of Delaware, the Board of Directors and
a majority of the stockholders of the Corporation having approved and adopted
the foregoing Amended and Restated Certificate of Incorporation by unanimous
written consent.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate
of Incorporation to be executed by Barry Witz, Chief Execute Officer, and
attested by _________________, Secretary, this ____ day of February, 1997.
________________________________
BARRY WITZ,
Chief Executive Officer
ATTEST:
___________________________
, Secretary
6
<PAGE> 1
EXHIBIT 3.2
MOBILE CATERERS, INC.
BY-LAWS
ARTICLE I
OFFICERS
SECTION 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
SECTION 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may rehire.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION I. All meetings o(pound) the stockholders for the
election of directors shall be held in the City of State of at such place as may
be fixed from time to time by the board of directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
SECTION 2. Annual meetings of stockholders, commencing with the
year 1997, shall be held on the last Tuesday in May if not a legal holiday, and
if a legal holiday, then on the next secular day following, at West Warwick,
Rhode Island, or at such other date and time as shall be designated from time to
time by the board of directors and stated in the notice of the meeting, at which
they shall elect by a board of directors, and transact such other business as
may properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less twenty (20) than nor more than sixty (60) days
before the date of the meeting.
SECTION 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days
1
<PAGE> 2
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
o(pound) the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 5. Special meetings of the stockholders, for any purpose
or purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
SECTION 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than nor more than days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
SECTION 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
SECTION 8. The holders of fifty percent (50%) of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
2
<PAGE> 3
SECTION 9. When a quorum is present at any meeting, the vote of
the holders of a majority o(pound) the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the certificate of incorporation, a different vote is required in
which case such express provision shall govern and control the decision of such
question.
SECTION 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
At all elections of directors of the corporation each
stockholder having voting power shall be entitled to exercise the right of
cumulative voting as provided in the certificate of incorporation.
SECTION 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stock-holders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. The number of directors which shall constitute the
whole board shall be between three (3) and nine (9), as established by the Board
by resolution. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
SECTION 2. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual
3
<PAGE> 4
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
SECTION 3. The business of the corporation shall be managed by
or under the direction of its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
SECTION 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to Constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
SECTION 6. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.
SECTION 7. Special meetings of the board may be called by the
president on two (2) days' notice to each director, either personally or by mail
or by facsimile communication; special meetings shall be called by tho president
or secretary in like manner and on like notice on the written request of two
directors unless the board consists of only one director, in which case special
meetings shall be called by the president or secretary in
4
<PAGE> 5
like manner and on like notice on the written request of the sole director.
SECTION 8. At all meetings a majority of the Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or Committee.
SECTION 1O. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
SECTION 11. The Board of Directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of
the board of directors, shall have and may exercise all the Powers and authority
of the board of directors in the management of the business and affairs of the
corporation, and may
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<PAGE> 6
authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the certificate of incorporation, (except that a committee may, to
the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board of directors as provided in
Section 153(a) of the General Corporation Law of Delaware fix any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation) adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock or to
adopt a certificate of ownership and merger. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the board of directors.
SECTION 12. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
SECTION 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
SECTION 14. Unless otherwise restricted by the certificate of
incorporation or by laws, any director or the entire Board of Directors may be
removed with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
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ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of the statute or of
the certificate of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by facsimile telecommunication.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by
the board of directors and shall be a president, a vice president, a secretary
and treasurer. The board of directors may also choose additional
vice-presidents, and one or more assistant secretaries and assistant treasurers.
Any number of offices may be held by the same person, unless the certificate of
incorporation or the by-laws otherwise provide.
SECTION 2. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
SECTION 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
SECTION 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
SECTION 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the board of directors may be removed at any time by the affirmative vote of
a majority of the
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board of directors. Any vacancy occurring in any office of the corporation shall
be filled by the board of directors.
THE PRESIDENT
SECTION 6. The president shall be the chief executive officer of
the corporation, shall preside at all meetings of the stockholders and the board
of directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
SECTION 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
SECTION 8. In the absence of the president or in the event of
his inability or refusal to act, the vice-president (or in the event there be
more than one vice-president, the vice presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
SECTION 9. The secretary shall attend all meetings of the board
of directors and all meetings of the stockholders and record all the Proceedings
of the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing Committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
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SECTION 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the Powers of the secretary and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
SECTION 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the board of
directors.
SECTION 12. He shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the President and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
SECTION 13. If required by the board of directors, he shall give
the corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the board of directors
for the faithful performance of the duties or his office and for the restoration
to the corporation, in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other Property of
whatever kind in his possession or under his control belonging to the
corporation.
SECTION 14. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
SECTION 1. The shares of the corporation shall be represented by
a certificate or shall be uncertificated. Certificates shall be signed by, or in
the name of the corporation
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by, the chairman or vice-chairman of the board of directors, or the president or
a vice-president, and by the treasurer or an assistant treasurer, or the
secretary or an assistant secretary of the corporation.
Upon the face or back of each stock certificate issued to
represent any partly paid shares, or upon the books and records of the
corporation in the case of uncertificated partly paid shares, shall be set forth
the total amount of the consideration to be paid therefor and the amount paid
thereon shall be stated.
If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
or the certificate which the corporation shall issue to represent such class or
series or stock, a statement that the corporation will furnish without charge to
each Stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications limitations or restrictions of such
preferences and/or rights.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General
Corporation Law of Delaware or a statement that the corporation will furnish
without charge to each stockholder who so requests the Powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
SECTION 2. Any of or all the signatures on a certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issues.
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LOST CERTIFICATES
SECTION 3. The board of director may direct a new certificate or
certificates or uncertificated shares to be issued in place of any certificate
or certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming this certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates or uncertificated
shares, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
TRANSFER OF STOCK
SECTION 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instructions from
tho registered owner of uncertificated shares such uncertificated shares shall
be cancelled and issuance of new equivalent uncertificated shares or
certificated shares shall be made to the person entitled thereto and the
transaction shall be recorded upon the books of the corporation.
FIXING RECORD DATE
SECTION 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to Corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
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REGISTERED STOCKHOLDERS
SECTION 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books owner or shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
SECTION 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
SECTION 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
CHECKS
SECTION 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
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FISCAL YEAR
SECTION 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
SECTION 6. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
SECTION 7. The corporation shall indemnify its officers,
directors, employees and agents to the extent permitted by the General
Corporation Law of Delaware.
ARTICLE VIII
AMENDMENTS
SECTION I. These by-laws may be altered, amended or repealed or
new by-laws may be adopted by the stockholders or by the board of directors,
when such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of Incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
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EXHIBIT 10
MOBILE CATERERS, INC.
1997 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSES OF PLAN. The purposes of the Mobile Caterers, Inc. 1997
Incentive and Non-Qualified Stock Option Plan (hereinafter referred to as the
"Plan") are to provide to employees of Mobile Caterers, Inc. (hereinafter
referred to as the "Corporation"), as well as employees of subsidiary or parent
corporations which may currently exist or be formed or acquired in the future,
an opportunity for investment in the Corporation's common stock (hereinafter
referred to as the "Shares"), as an inducement for such individuals to remain
with the Corporation, and to encourage them to increase their efforts to make
the Corporation's business more successful.
2. EFFECTIVE DATE AND TERMINATION OF PLAN. The effective date of the
Plan is __________, 1997, the date on which the Plan was adopted by the Board
of Directors of the Corporation. The Plan shall terminate on, and no option
shall be granted hereunder, after __________, 2007; provided, however, that the
Board of Directors may at any time prior to that date terminate the Plan; and
provided further that any option granted hereunder prior to the termination of
the Plan shall remain exercisable in accordance with its terms as then in
effect.
3. ADMINISTRATION OF PLAN. The Plan shall be administered by the
Board of Directors of the Corporation. The Board of Directors may, however, to
the extent permissible under the Corporation's Articles of Organization, By-laws
and applicable law, delegate any of its functions under this Plan to a committee
of the Board of Directors or any other committee. Wherever in this Plan the term
"Board of Directors" is used it shall be construed to mean such committee to the
extent that the Board of Directors may have delegated any of its functions to
said committee and only to the extent of any such delegation. The acts of a
majority of the members present at any meeting of the Board of Directors at
which a quorum is present, or acts approved in writing by a majority of the
entire Board, shall be the acts of the Board of Directors for purposes of the
Plan.
4. ELIGIBILITY AND GRANT OF OPTIONS. Subject to the provisions of the
Plan, the Board of Directors shall (i) authorize the granting of incentive stock
options, non-qualified stock options or a combination of incentive stock options
and non-qualified stock options (hereinafter collectively referred to as
"options" unless otherwise stated); (ii) determine and designate from time to
time those employees (from the group consisting of all employees of the Company)
to whom options are to be granted and the number of Shares to be optioned to
each employee; (iii) determine the number of Shares subject to each option; and
(iv) determine the
<PAGE> 2
time or times when and the manner in which each option shall be exercisable and
the duration of the exercise period. In determining the eligibility of an
individual to receive an option, as well as in determining the number of Shares
to be optioned to any individual, the Board of Directors shall consider the
position and responsibilities of the employee, the nature and value to the
Corporation, parent or subsidiary of his services and accomplishments, his
present and potential contribution to the success of the Corporation, parent or
subsidiary, and such other factors as the Board may deem relevant. To be
eligible to receive an incentive stock option or non-qualified stock option an
individual must be an employee of the Corporation, parent or subsidiary. A
Director shall abstain from voting on the grant of any options to himself, his
spouse, his children, grandchildren and parents. The grant of each option shall
be confirmed by a Stock Option Agreement (in the form prescribed by the Board of
Directors) which shall be executed by the Corporation and the optionee as
promptly as practicable after such grant. More than one option may be granted to
an individual.
Incentive stock options shall be those options which satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
which the Board of Directors has specifically identified as incentive stock
options in the Stock Option Agreement executed by the Corporation and the
optionee. In the case of incentive stock options, the aggregate fair market
value, determined at the time incentive stock options are granted, of the stock
with respect to which the incentive stock options are exercisable for the first
time by such individual during any calendar year (under all such plans the
Corporation may adopt) shall not exceed one hundred thousand dollars
($100,000.00). In the event that an incentive stock option granted pursuant to
the terms of this Plan is granted to an employee who, prior to the grant, holds
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation, its parent or a subsidiary ("10% Shareholder") the
option price under such grant shall be at least one hundred ten percent (110%)
of the fair market value, and such option, by its terms, shall not be
exercisable more than five (5) years from the date of grant.
Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue in the employ of the Corporation
or any parent or subsidiary or interfere in any way with the right of the
Corporation to terminate his employment at any time.
5. NUMBER OF SHARES SUBJECT TO OPTIONS. The Board of Directors, prior
to the time options under the Plan become exercisable, shall reserve for the
purposes of the Plan a total of Six Hundred Thousand (_______) Shares, which
Shares may be either
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authorized and unissued Shares, or previously issued Shares held in the treasury
of the Corporation, or both. Shares as to which an option granted under the Plan
shall remain unexercised at the expiration or termination thereof, and Shares
subject to options which are cancelled, may be the subject of the grant of
further options. Shares reserved pursuant to this paragraph may be adjusted to
reflect changes in the Corporation's capital structure as discussed in paragraph
19 hereof.
6. OPTION PRICE. The option price per Share shall be determined in
each case by the Board of Directors and shall not be less than one hundred
percent (100%) (one hundred ten percent (110%) in the case of an incentive stock
option granted to a 10% Shareholder) of the fair market value thereof as
determined by the Board by any reasonable method using market quotations on the
date the option is granted.
7. PERIOD OF OPTION AND WHEN EXERCISABLE. No option may be granted
under this Plan whose exercise date is later than ten (10) years after the date
of the grant or five (5) years after the date of grant in the case of an
incentive stock option granted to a 10% Shareholder. Generally, an option may be
exercised only by the optionee and subject to the rules set forth below only if,
at all times during the period beginning on the date of the granting of such
option and ending with the date of exercise of such option, the optionee is an
employee of the Corporation, its parent or a subsidiary.
(i) Except as otherwise provided herein, in the case of an
employee who terminates employment, options which are vested but unexercised as
of the date of termination of employment must be exercised within three (3)
months of termination. In the case of an employee who is discharged for cause,
as determined in the sole discretion of the Board of Directors, all previously
vested but unexercised options shall be forfeited immediately.
(ii) In the case of an employee who dies during the three (3)
month period discussed in (i) above, options which are vested but unexercised as
of the date of termination of employment must be exercised within twelve (12)
months of death.
(iii) Options which are vested but unexercised as of the date of
termination of employment due to death, must be exercised within twelve (12)
months after the death of an optionee.
(iv) In the event that the employee becomes disabled as defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, options
which are vested but unexercised as of the date of termination of employment due
to disability must be exercised within twelve (12) months following the date of
termination of the optionee's said employment.
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(v) In the event an optionee's employment is terminated for any
reason (including but not limited to, voluntary or involuntary termination or
termination resulting from the death or disability of the optionee), all
unvested options shall be immediately forfeited.
Notwithstanding the foregoing, options may not be exercised after the
original five (5) or ten (10) year term. Options may be exercised on behalf of
the estate of a former employee by the person or persons entitled to do so under
the optionee's will or, if the optionee shall have failed to make testamentary
disposition of such option or shall have died intestate, by the optionee's legal
representative or representatives. Such person, persons, representative, or
representatives are hereinafter referred to as the "Successors of an Optionee."
8. VESTING. Options granted to a participant shall be exercisable in
accordance with the following schedule:
Cumulative Percentage
of Aggregate Number of
Shares of Stock Covered
by an Option Which May
Exercise Period be Exercised
--------------- -----------------------
Beginning on the one year anniversary
date from date of grant 33 1/3%
Beginning on the second anniversary
date from date of grant 66 2/3%*
Beginning on the third anniversary
date from date of grant 100%*
*less, in the case of each exercise period, the number of Shares, if any,
previously purchased under the option. Non-vested options shall be immediately
forfeited upon the termination of employment for any reason. Vested options
shall be forfeited upon the termination of employment as provided in paragraph 7
hereof.
Notwithstanding the foregoing, the Board of Directors or its
designees shall have the right to grant options with shorter vesting schedules
under the Plan.
9. EXERCISE OF OPTIONS. Subject to Plan restrictions and vesting, an
option may be exercised, and payment in full of the option price made, by an
optionee only by written notice (in the form prescribed by the Board of
Directors) to the Corporation specifying the number of Shares to be so
purchased. Such notice shall state that the option price will be paid in full in
cash (which in the discretion of the Board of Directors may be obtained
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through a loan from the Corporation or from a third party and guaranteed by the
Corporation) or other property, in the discretion of the Corporation. If the
Corporation accepts a request to pay in stock of the Corporation in satisfaction
of the exercise price, the fair market value of said stock shall at least equal
the option price, and, in the case of incentive stock options, prior to such
acceptance the Corporation must be furnished with evidence that the acquisition
of said stock and its transfer in payment of the option price satisfies the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
other applicable law. As soon as practicable after receipt by the Corporation of
such notice and of payment in full of the option price of all the Shares with
respect to which an option has been exercised, a certificate or certificates
representing such Shares shall be registered (subject to the provisions of
paragraph 16 hereof) in the name of the optionee or the Successors of an
Optionee as defined under this Plan and delivered to the optionee or to the
Successors of an Optionee.
10. SALE OF THE CORPORATION. In the case of a Sale of the Corporation
as herein defined, in the discretion of the Board of Directors options granted
but unexercised shall become fully vested (100%) and exercisable for a period of
twenty (20) days from the date notice of such Sale is given to the optionees.
Upon the expiration of the twenty (20) day period, all then unexercised options
shall be permanently cancelled. For purposes of this paragraph, a Sale or Public
Offering shall be deemed to occur upon the happening of any one of the
following:
(i) A sale of all or substantially all of the Corporation's
assets outside the ordinary course of business;
(ii) An offer to purchase at least a majority of the
Corporation's issued and outstanding common stock or an offer to the
Corporation's shareholders to tender for sale at least a majority of the
Corporation's issued and outstanding common stock, which offer is accepted or
tender made with respect to at least a majority of the Corporation's issued and
outstanding shares of common stock;
(iii) The merger or consolidation of the Corporation with
another corporation or entity; or
(iv) A dissolution or liquidation of the Corporation.
11. EMPLOYER WITHHOLDING. In the case of non-qualified stock options,
the Corporation shall be required to withhold additional income taxes
attributable to that amount which is considered compensation includible in the
optionee's gross income by reason of the exercise of such options. The
Corporation in its discretion shall determine the method and amount of
withholding.
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12. EXERCISE BY SUCCESSORS AND PAYMENT IN FULL. An option may be
exercised, and payment in full of the option price made, by the Successors of an
Optionee only by written notice (in the form prescribed by the Board of
Directors) to the Corporation specifying the number of Shares to be purchased.
Such notice shall state that the option price will be paid in full in cash
(which in the discretion of the Board of Directors may be obtained through a
loan from the Corporation or from a third party and guaranteed by the
Corporation), property or stock of the Corporation in conformance with paragraph
9 hereof. As soon as practicable after receipt by the Corporation of such notice
and of payment in full of the option price of all the Shares with respect to
which an option has been exercised, a certificate or certificates representing
such Shares shall be registered (subject to the provisions of paragraph 16
hereof) in the name or names of such Successors of an Optionee and shall be
delivered to him.
13. NON-TRANSFERABILITY OF OPTION. Each option granted under the Plan
shall by its terms be nontransferable by the optionee except by will or the laws
of descent and distribution of the state wherein the optionee is domiciled at
the time of his death.
14. OTHER TERMS OF OPTIONS. Options granted pursuant to the Plan
shall contain such terms, provisions, and conditions not inconsistent herewith
as shall be determined by the Board of Directors.
15. REGISTRATION OF CERTIFICATES. Certificates representing Shares
may be registered either in the name of the Optionee or in the name or names of
the Successors of an Optionee. Designation of the appropriate form of
registration of certificates shall be made in the written notice given to the
Corporation upon exercise of an option.
16. LISTING AND REGISTRATION OF SHARES. If at any time the Board of
Directors of the Corporation shall determine, in its discretion, that the
listing, registration, or qualification of any of the Shares subject to options
under the Plan upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of or in connection with the granting of options or the
purchase or issue of Shares thereunder, no further options may be granted and
outstanding options may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors. The Board of Directors shall have the authority to cause the
Corporation at its expense to take any action related to the Plan which may be
required in connection with such listing, registration, qualification, consent,
or approval. The Board of Directors may require that any person exercising an
option
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hereunder shall make such representations and agreements and furnish such
information as it deems appropriate to assure compliance with the foregoing or
any other applicable legal requirement.
17. INTERPRETATION AND AMENDMENTS. The Board of Directors may make
such rules and regulations and establish such procedures for the administration
of the Plan as it deems appropriate. In the event of any dispute or
disagreements as to the interpretation of this Plan or of any rule, regulation,
or procedure, or as to any question, right or obligation arising from or related
to the Plan, the decision of the Board of Directors shall be final and binding
upon all persons. The Board of Directors may amend this Plan as it shall deem
advisable. However, in no event shall any such amendment adversely affect the
rights of an optionee under any existing stock option agreement without the
consent of such optionee.
18. INDEMNIFICATION AND EXCULPATION.
(a) Each person who is or shall have been a member of the Board
of Directors shall be indemnified and held harmless by the Corporation against
and from any and all loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be or become a party or in which he
may be or become involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof (with the Corporation's written approval) or paid by him in satisfaction
of a judgment in any such action, suit, or proceeding, except a judgment in
favor of the Corporation based upon a finding of his lack of good faith;
subject, however, to the condition that upon the institution of any claim,
action, suit, or proceeding against him, he shall in writing give the
Corporation an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other right to which such
person may be entitled as a matter of law or otherwise, or any power that the
Corporation may have to indemnify him or hold him harmless.
(b) Each member of the Board of Directors, and each officer and
employee of the Corporation shall be fully justified in relying or acting in
good faith upon any information furnished in connection with the administration
of the Plan by any appropriate person or persons other than himself. In no event
shall any person who is or shall have been a member of the Board of Directors,
or an officer or employee of the Corporation be held liable for any
determination made or other action taken or any omission to act in reliance upon
any such information, or for any action (including the furnishing of
information) taken or any failure to act, if in good faith.
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19. CHANGES IN CAPITAL STRUCTURE. In the event that a dividend shall
be declared upon the Shares payable in Shares, the number of Shares then subject
to any option outstanding under the Plan and the number of Shares reserved for
the grant of options pursuant to the Plan but not yet subject to option shall be
adjusted by adding to each such Share the number of Shares which would be
distributable in respect thereof if such Shares had been outstanding on the date
fixed for determining the shareholders of the Corporation entitled to receive
such Share dividend. In the event that the outstanding Shares shall be changed
into or exchanged for a different number of Shares or other securities of the
Corporation or of another corporation, whether through reorganization,
recapitalization, split-up, combination of shares, merger, or consolidation,
then there shall be substituted for each Share subject to any such option and
for each Share reserved for the grant of options pursuant to the Plan but not
yet subject to option the number and kind of Shares or other securities into
which each outstanding Share shall have been so changed or for which each such
Share shall have been exchanged. In the event there shall be any change, other
than as specified above in this paragraph, in the number or kind of outstanding
Shares or of any shares or other securities into which such Shares shall have
been changed or for which they shall have been exchanged, then if the Board of
Directors shall in its sole discretion determine that such change equitably
requires an adjustment in the number or kind of Shares theretofore reserved for
the grant of options pursuant to the Plan but not yet subject to option and of
the Shares then subject to an option or options, such adjustments shall be made
by the Board of Directors and shall be effective and binding for all purposes of
the Plan and of each option outstanding thereunder. In the case of any such
substitution or adjustment as provided for in this paragraph, the aggregate
option exercise price set forth for all outstanding options for all Shares
covered thereby prior to such substitution or adjustment will be the option
exercise price for all shares or other securities which shall have been adjusted
pursuant to this paragraph. No adjustment or substitution provided for in this
paragraph shall require the Corporation to sell a fractional Share, and the
total substitution or adjustment with respect to each outstanding option shall
be limited accordingly. Upon any adjustment made pursuant to this paragraph, the
Corporation will, upon request, deliver to the optionee or to his successors a
certificate setting forth the option price thereafter in effect and the number
and kind of shares or other securities thereafter purchasable on the exercise of
the option.
20. NOTICES. All notices under the Plan shall be in writing, and if
to the Corporation, shall be delivered to the Treasurer of the Corporation or
mailed to its principal office, addressed to the attention of the Treasurer; and
if to the optionee, shall be delivered personally or mailed to the optionee at
the address appearing in the payroll records of the Corporation. Such addresses
may be changed at any time by written notice to the other party.
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EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Deli King, Inc., a Rhode Island corporation
JR's Delis, Inc., a Rhode Island corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Form 10SB of our report
dated February 28, 1997, with respect to the 1995 and 1994 financial statements
of Mobile Caterers, Inc. and Subsidiaries.
BROZA, BLOCK & RUBINO
Certified Public Accountants
February 28, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT
We hereby consent to the inclusion of our reports dated May 30, 1996 as to
the financial statements of Deli King, Inc. d/b/a LaCroix Food Services, Ltd.,
as of and for the years ended December 31, 1995 and December 31, 1994, in the
Form 10-SB of Mobile Caterers, Inc. to which this is an exhibit.
D.E. Rodrigues & Company, Inc.
Fall River, Massachusetts
March 13, 1997
