UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10KSB/A
Annual Report Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
For fiscal year ended December 31, 1999
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
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FLORIDA 59-3479186
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3560 Cypress Gardens Road
Winter Haven, Florida 33884
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (941) 326-1006
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Check here whether the issuer (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
As of December 31, 1999, the following shares of the Registrant's
common stock were issued and outstanding:
25,000,000 shares authorized, $0.001 par value
7,657,000 issued and outstanding
As of December 31, 1999, the following shares of the Registrant's
convertible preferred stock were issued and outstanding:
200,000 shares authorized, no par value
50,000 issued and outstanding
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Item 1. DESCRIPTION OF THE BUSINESS
HISTORY AND ORGANIZATION
FLORIDINO'S INTERNATIONAL HOLDINGS INC., (the "Company"), was organized in June
1997 under the laws of the State of Florida, having the stated purpose of
engaging in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Florida.
The Company designs, develops, owns and operates family style neighborhood
Italian food restaurants featuring freshly prepared, moderately priced pizza and
pasta dishes. Floridino's restaurants seek to incorporate a self-service upscale
fast casual dining experience for its customers providing high quality Italian
food. Its operations encompass two segments from which the Company seeks to
generate revenue: operation of restaurants and sale of frozen foods.
FLORIDINO'S RESTAURANTS
The restaurant segment of the Company produces and provides food products
through restaurant outlets. The products focus on Italian foods such as pasta,
pizza, sandwiches and salads as an alternative to the quick serve food industry
which offer hamburgers, chicken and fried fish.
Shareholders in late 1998 were dissatisfied with the Company's progress and
results. As a result, they demanded that changes to management be made and that
the Company undertake a fresh and revised approach to its operations. New
management then took over the Company in early 1999 and assessed the Company's
prior results, its products and its potential for future development. After an
assessment of the Company's past performance, new management decided to alter
operations of its restaurants as they operated in their then present format.
Management determined that the restaurants were not producing enough revenue for
the Company and that the style and concept of these restaurants were outdated.
After suspending operations at all six restaurants: Hard Ball Cafe, Pizza Etc.,
Lakeland, Home of the Calzone, Lake Wales, and Bartow's, management decided to
revamp the Company's image and concept for the purpose of creating a more modern
and higher quality food product to consumers. Management also decided that new
products should be introduced which would broaden the Company's product base and
potential for revenue growth.
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The Company revamped its Lakeland restaurant and incorporated a fast self
service upscale concept. This restaurant operates under the name "Mama Mia" and
focuses on providing high quality Italian food in a casual dining environment.
Mama Mia restaurant reopened on November 13, 1999. The Company in September 1999
opened an additional restaurant in New York operating under the name
"Floridino's Cafe" which provides sandwiches, soups, salads and personal size
pizza. The goal of this new restaurant is to serve authentic Italian cuisine in
a fast food environment.
The Company maintains and operates the restaurant in New York City, through its
wholly owned subsidiary "Floridino's Inc.", under the name Floridino's Cafe.
The goal of this new restaurant is to serve authentic Italian cuisine in an
upscale fast food environment. The format is express style with customers being
served at the counter for carry out or to dine on premise. The ambience provides
for a casual dining experience in a warm, relaxed setting. The entire premise
behind Floridino's Cafe is to accommodate the lifestyle of today's consumer
demanding quality, nutritious meals on the run.
Floridino's Inc. and Zoop Soups were acquired by the Company in November 1998
and merged into Floridino's, Inc., a wholly owned subsidiary of the Company.
Zoop Soups specializes in creating soup recipes provided to Floridino's Cafe.
The Company intends to market its Zoop Soups items to the general public and to
also have Zoop Soups items offered at its other restaurants in Florida.
The Company has recently opened two (2) additional restaurants. A location in
Delray Beach opened on January 2000. The second restaurant in Lake Wales was
delayed due to problems in obtaining requisite permits and opened in March 2000.
These new restaurants will operate under the name "Floridino's Fast Italian".
All of the Company's restaurants will emphasize the prior success of the
Company's calzone which is marketed by the Company as "The World's Biggest
Calzone" and include the Floridino's fast casual self-service upscale concept.
The goal of the Company's new concept is to serve authentic Italian cuisine in a
fast food environment. This format incorporates express style restaurants with
customers being served at the counter for carry out or on premises dining. An
upscale ambiance is incorporated into the concept to provide for a casual dining
experience in a warm, relaxed setting.
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The Company does not focus on either metropolitan or rural areas in selecting a
location for its restaurants. Rather, it chooses its location targeting areas
which possess demographics of generally 20,000 homes in a 3.25 mile radius. High
traffic locations are also considered meaning that such locations must have at
least 10,000 cars pass by the location per day. This situates the restaurant in
a location where it has public exposure and which is easily accessible to
customers.
The Company's sources of materials and ingredients for its restaurants are
obtained from food suppliers. The major suppliers of the Company are Coca Cola,
Bari Foods, Catilina Food Ingredients, Sysco Foods, Rockets Red Glare and D & J
Tomato Co. These suppliers provide materials such as beverages, and perishable
goods such as sauces, meats, cheeses and bread products for the Company's
products.
The Company also franchises its concept to individuals interested in operating a
business under the Floridino's name. The franchise concept of the Company
operates through the Company's wholly owned subsidiary, Floridino's
International Inc., which was incorporated in September 1993. Since 1997, there
have been eleven (11) franchise restaurants which have operated under agreement
with the Company. These franchised restaurants have operated in locations
throughout the United States, including in Iowa, Florida, Colorado, South
Dakota, Arizona and Texas.
The main source of income from franchising is generated through the sale of
franchises and franchise fees. They have distinct royalty fee schedules which
range from payments of two (2%)
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percent to four (4%) percent of revenues generates. Of these eleven (11)
restaurants, seven (7) have closed and four (4) remain operational, two in
Arizona and one in Iowa and Oklahoma. Copies of each separate franchise
agreement are not required to be filed as they are not of the material contracts
which must be filed under Exhibit 10.
The Company intends to implement its new self-service fast casual upscale
concept in its franchise stores for the purpose of generating additional revenue
and uplifting the image and style of all restaurants bearing its name.
Subsequent to the implementation of its concept, the Company will charge new
franchisees a straight four (4%) percent of the gross revenues generated along
with a royalty fee. The Company also intends on seeking additional solicitation
for franchises under the Company's newer upscale concept which will include
strict quality controls and adherence to this new concept.
The Company is committed to developing a strong franchise system byseeking
experienced operators, by expanding its system in a controlled manner and by
closely monitoring the performance of each franchisee to help insure adherence
to the Company's standards of operations.
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FROZEN FOOD PRODUCTS SEGMENT
The Company also operates a frozen foods segment which develops and produces
frozen food products including calzones, pizza and pazzo rolls. This segment
operates from a 6,000 square foot operating plant in Lakeland, Florida. New
management which assessed the Company in April 1999 decided to temporarily close
the plant after finding that its production facility and capacity were
inadequate to meet any significant demand for the Company's frozen food product.
Packaging at the plant was also not standardized or efficient. After a
renovation of the plant and acquisition of new machinery and equipment, the
Company reopened the plant in November 1999 with the goal of commencing
production of the Company's trademark frozen food products such as its breakfast
calzone, pazzo rolls and frozen pizzas. The Company seeks to market and sell its
frozen food products through grocery and convenience stores as well as food
service entities such as restaurants, caterers and institutional accounts. The
frozen food manufacturing segment operates under the name "Floridino's
Specialties Inc." which is a wholly owned subsidiary of the Company.
At the present time the frozen food segment has one location in Lakeland. It
includes the production area, offices, and warehouse area. The Company has
increased the original calzone production facility including all new equipment,
installation of a new 26'(W) x 42'(L) x 20'(H) freezer and enclosing the
existing dock area to be environmentally controlled. In addition, the Company
has completed the purchase of a bordering property for future expansion. Subject
to additional demand for the Company's products, construction is to begin in the
third quarter of 2000 to convert this newly acquired property into a state of
the art manufacturing plant. These expansion plans include a full-scale bakery,
four separate production lines, appropriate support facilities and corporate
headquarters. Completion is scheduled for the beginning of fourth quarter of the
year 2000, subject to funding. Upon completion of the new facility the existing
manufacturing area will be refurbished to strictly manufacture Pazzo rolls and
Pizzas.
The Company on January 17, 2000 acquired all of the outstanding shares of common
stock of Triton Prestige Products, Inc. for 50,000 shares of common stock.
Triton is now a wholly owned subsidiary of Floridino's. Triton has been
operating since July 1999. Its primary business is to provide frozen pizza
products to institutions, schools and governmental entities for consumption in
their cafeterias. Floridino's believes that Triton can generate sales of
$1,500,000 during the next year based upon Triton's current capacity. The Triton
brands of products are sold under the Triton brand name and label.
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CONSULTANTS
Any relationship with consultants shall be premised on a performance based
approach whereby the consultant will be allowed to continue to oversee the daily
operations of the Company so long as it meets specified performance milestones
set by the Company. The consultant group shall also oversee the training of
staff, promotions and advertising. The Company believes this will induce and
inspire an aggressive management approach by a consultant thereby effectuating
positive results for the Company. Additionally, the consultant will engage in
the research and development of new products and concepts as it relates to the
frozen food segment.
The Company has adopted an approach whereby each segment should perform on its
own. In line with this philosophy, the Company does not intend to hire any
consultant to oversee or advise on the entire operations of the Company. Rather,
management believes that it is best to retain consultants to advise or consult
on a particular segment of the Company in which the consultant has expertise.
It is the intent of the Company that consultants hired to advise on a particular
segment of the Company shall be paid, whenever possible, on a performance based
arrangement. Consultants hired for the frozen food segment currently advise and
consult on the marketing of the segment, to organize and oversee the
manufacturing and engineering of that segment's production process, to develop
an organizational structure, policies and procedures for the segment's normal
operations of business and to advise on investor relations promotions for that
segment.
The Company has retained a separate consulting group, The Ephraim Group, to
oversee the entire production facility and development of the Company's frozen
food line. The terms of the parties agreement is for five (5) years. In
consideration of such services, The Ephraim Group received One Hundred Thousand
(100,000) shares of restricted common stock in the Company for the first year of
the Agreement. The Company shall each year thereafter compensate the Consultant
in relation to the work performed by providing the Consultant with One Hundred
Thousand (100,000) warrants each of which will entitle the Consultant to
purchase one share of restricted common stock in the Company for a price of
$2.00 per share during the second year of the
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agreement, $3.00 per share during the third year of the agreement and $4.00 per
share during the fourth and fifth year of the agreement. The relationship with
The Ephraim Group rests on a performance based approach. The granting of the
warrants is contingent upon the satisfactory performance of the Ephraim Group at
the discretion of the chairman of the board.
The Ephraim Group's has overseen the management of the frozen foods division,
has been responsible for employee production and hiring, and had conducted
research into the Company frozen foods segment and determined that a
modernization of its production plant by acquiring new machinery which would
streamline the production of the Company's products and increase its capacity.
This would allow the Company to pursue management's aggressive expansion plans.
The Ephraim Group has also consulted the Company on organizing the manufacturing
and engineering of the Company's production process and has advised on the
purchase of additional equipment and freezers which would be conducive to the
modernization of the plant. The Group has also advised on the segment's
organizational structure, policies and procedures as well as potential
promotions of the Company's frozen food products.
The results of The Ephraim Group's research reflected that the Company required
a modernization of its production plant by acquiring new machinery which would
streamline the production of the Company's products and increase its capacity.
To this end, the Company has expended approximately $456,000 to acquire new
machinery and modernize its plant during fiscal 1999.
Management of the Company is intent on spreading, and thereby limiting, the
Company's dependence on a single segment of the market. It has therefore
targeted the two areas mentioned. Management believes each of these segments
represent substantial growth opportunities for the Company while at the same
time spreading the company's risk and dependence on a single segment.
No specific plans to hire consultants have been made beyond the general plan
currently disclosed.
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COMPETITION
The Company recognizes vast competition in both the restaurant and frozen food
industry. In response to this, it has targeted a niche area specializing in
calzones and pazzo rolls which have limited competition. This niche area will be
exploited by management by commencing a national marketing campaign which will
set the Company's products apart from other nationally marketed frozen foods.
Management will insist on an aggressive and innovative market approach in order
to develop and cultivate long term growth for the Company with an aim at
minimizing reliance on any particular segment in the food industry.
The Company believes that competition in the frozen food category is based on
price, quality, marketing, sales, publicity, and distribution. Floridino's is
committed to producing a quality product in order to separate itself from other
competitors. It plans on utilizing only premium ingredients for all of their
products. It also believes that it has identified a market niche and possesses
the ideal product to fill that void. Additionally, the Company seeks to
establish a pricing schedule which is comparable to competitive products being
targeted.
The Company finds that competition in the calzone market is substantial. The
two primary competitors manufacturing calzones today are Stefanos and
Pellegrinos. Both are regional companies with limited distribution. Stefanos has
found a niche in the southeast region with distribution in a few respectable
grocery chains. The primary retailer for Pellegrinos is the Super Wal-Mart chain
of stores. Stefanos and Pellegrinos offer an average product with fairly nice
packaging. The product of both these companies is machine made with the
ingredients being injected into the crust. Floridino's seeks to separate itself
from these competitors by providing a products with a homemade look and with
quality ingredients.
In the restaurant segment competition is fierce. There is an over abundance of
restaurants in the industry each offering a wide array of themes and cuisine to
choose from. The Company believes that all such restaurants compete for a share
of the incremental dollars consumers spend in dining out. Floridino's
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seeks to separate itself by staking out the upscale end of this market and
thereby separating itself from the current top competitors in this arena.
Floridino's believes that the upscale self-service market has yet to be
exploited. It strives to do so by maintaining a clean, friendly, open and
inviting environment, appealing to consumers seeking quality food products and
by focusing on the preparation, presentation of its foods and service.
ADVERTISING AND MARKETING
The Company is currently advertising its restaurants through newspapers, diner
coupon books and through hotels in areas which are in close proximity to each
respective restaurant. The Company believes that this will be the most cost
effective method to attract interest to the restaurants and first time visitors
for the purpose of gaining their repeat business. The Company intends on
researching the possibility of advertising its stores on the radio market. In
doing so, it will assess the cost of such advertising with the potential for
drawing additional customers. The Company's frozen food products are currently
being promoted to national food chains and supermarkets on an individual basis.
Additionally, the Company has participated in various trade and food shows to
display its products and attract purchaser interest. Where the Company is able
to identify a potential purchaser of its frozen foods, it intends on shipping to
such potential purchaser a sample of its products in order to attract their
interest.
SUBSIDIARIES
The Company has eight (8) subsidiaries all of which are wholly owned by the
Company.
There are four subsidiaries in existence which oversee and independently operate
the restaurants owned by the Company. The names of these subsidiaries are as
follows: Floridino's, Inc., a New York Corporation, which operates the Company's
restaurant in New York City; Floridino's Express Inc., a Florida Corporation,
which operates the Company's Lake Wales restaurant which opened in March 2000;
Floridino's of Delray Beach, Inc., a Florida Corporation, which operates the
Company's Delray Beach restaurant which opened on December 26, 1999; and
Floridino's of Lakeland, Inc., a Florida Corporation, which operates the
Lakeland restaurant.
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The Company's frozen foods segment has the following subsidiary: "Floridino's
Specialties Inc." oversees the development and production of frozen food
products including calzones, pizza and pazzo rolls.
The Company's franchising concept has the following subsidiary: "Floridino's
International Inc." oversees the Company's franchising and licensing of the
Company's concept, trademark products and recipes.
The Company also has another wholly owned subsidiary,"Toho Holdings, Inc.",
which holds the Company's real estate properties. At the present time, the
Company holds ownership to five parcels of land in the State of Florida. The
Company intends to sell three of these parcels for the purpose of acquiring
additional funds to assist with the expansion and further development of the
Company. The Company has entered into a Contract of Sale for two of the parcels,
located in Winter Haven, Florida, with a purchase price of $400,000. The
Contract contains a provision for a right of first refusal in the event another
offer is received up to $450,000. The closing date on this contract is scheduled
for January 15, 2000. A third parcel of land, also in Winter Haven, Florida, is
currently being listed in the market however the Company has not entered into
any Contract of Sale for this property. The Company holds an additional two
parcels of land through Toho Holdings.
The Company on January 17, 2000 acquired all of the outstanding shares of common
stock of Triton Prestige Products, Inc. in exchange for 50,000 shares of common
stock. Triton is now a wholly owned subsidiary of Floridino's. Triton has been
operating since July 1999. Its primary business is to provide frozen pizza
products to institutions, schools and governmental entities for consumption in
their cafeterias. Floridino's believes that Triton can generate sales of
$1,500,000 during the next year based upon Triton's current capacity. The Triton
brands of products are sold under the Triton brand name and label.
The Company previously operated the following subsidiaries: Floridino's Pizza
Etc., Inc., Floridino's of Lake Wales, Inc., Hard Ball Cafe, Inc., Floridino's
Home of the Calzone, Inc., and Floridino's of Bartow, Inc. Operation of these
subsidiaries have been closed by the Company as they failed to realize
sufficient profit and reflect the Company's efforts to reorganize its
operations.
TRADEMARKS AND SERVICE MARKS
The Company also is the owner of various trademarks and service marks which are
utilized by the Company in the course of its business. The service mark "Home of
the World's Largest Calzone" is utilized to promote the Company's restaurant
division and also the frozen foods division. The service mark "Floridino's" is
used to promote all three of the Company's divisions which
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utilize the Floridino's name. The service mark "Zoop Soups" was acquired by the
Company during the course of its acquisition of Zoop Soups Inc., and is used to
promote the Zoop Soups concept in the restaurant operated by the Company in New
York City. The trademark "Everything's Going Pazzo at Floridino's" is used to
promote the Company's restaurant division and also by the franchisees under the
terms and conditions of their respective Franchise Agreements. The Company has
also filed an application for the registration of the service mark "Fast
Italian" which is currently pending.
As of December 31, 1999, there were approximately 55 employees of the Company.
Within the next year, and as the Company opens additional restaurants and
expands its frozen food segment, the Company will hire additional employees. As
the number of employees increases, any rise in the cost of labor will have a
more significant impact on the Company which may in turn cause the Company to
increase its prices.
The frozen food products which are produced by the Company are subject to
inspection and approval by the U.S. Department of Agriculture. The Company
facilitates inspection by the requisite government inspector on the premises of
the Company's production plant who insures that all of the goods produced by the
Company are in compliance with the regulations and guidelines of the Department
of Agriculture.
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Item 2. Item 3. DESCRIPTION OF PROPERTY
As of December 31, 1999, the Company held ownership to five (5) parcels of land
situated in the State of Florida as follows:
i. A parcel at 300 Cypress Gardens Road, Winterhaven Florida, valued at
$375,000 and possesses encumbrances of $180,000. The land is
approximately 31,320 square feet and is the site of one of the
Floridino's restaurant in Winterhaven. The site also contains five
residential units in the rear of the restaurant.
ii. A parcel of land at 1810 Third Street SE, Winter Haven, Florida is
valued at $125,000 and possesses encumbrances of $140,000. These two
parcels have been Contracted for Sale at $400,000 and sold in January
2000.
iii. A parcel at 3560 Cypress Gardens Road, Winter Haven, Florida, is
valued at $139,000 and possesses encumbrances of $120,000. This is the
location of the company's corporate offices and is approximately 2,520
square feet.
iv. The parcel at 8135 Highway 33N, Lakeland, Florida is located adjacent
to the company's frozen food processing plant.
v. The parcel at 8141 State Road 33 North, in Lakeland, Florida is the
site of the Company's frozen food production plant. The production
plant is approximately 6,000 square feet and its value is
approximately $400,000. An expansion of the Company's production plant
would likely occur once additional funding is raised on the property
adjacent to the plant which is 7,000 square feet.
On a consolidated basis, the Company's fixed assets associated with equipment
and fixtures as of December 31, 1999 are as follows:
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Equipment $572,180
Leasehold Improvements 942,512
Buildings 859,000
Vehicles 17,232
Furniture 2,885
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The Company also is the owner of various trademarks and service marks which are
utilized by the Company in the course of its business. These are as follows: The
service mark "Home of the World's Largest Calzone" bearing ser. no. 74-468,809
and filed December 14, 1993; The service mark "Floridino's" bearing ser. no.
74-468,810 and filed December 13, 1993; "The service mark "Zoop Soups"; The
trademark and design of "Floridino's, Home of the World's Largest Calzone" and
the trademark and design of "Everything's Going Pazzo at Floridino's". The
Company has assigned no value to trade marks and service markes in its
financial statements at December 31, 1999.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings outside of the ordinary course of business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders.
Part II
ITEM 5. Item 1. MARKET PRICE OF AND DIVIDENDS FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock has been traded on the OTC Bulleting Board under the
symbol "FDNO". The following table sets forth, for the periods indicated, the
high and low sale prices for the shares of common stock as reported by OTC:
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High Low
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Fiscal Year Ended December 31, 1997:
Fourth Quarter ..................................$6.00 $5.00
Fiscal Year Ended December 31, 1998:
First Quarter....................................$5.50 $5.25
Second Quarter...................................$5.50 $4.00
Third Quarter....................................$5.75 $5.375
Fourth Quarter...................................$5.50 $5.00
Fiscal Year Ended December 31, 1999:
First Quarter....................................$6.0625 $5.00
Second Quarter...................................$6.125 $5.00
Third quarter ...................................$7.875 $5.625
Fourth quarter ..................................$8.875 $6.00
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The source of the bid information provided in this section are the quotations as
provided by the OTC. The quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
No dividends have been declared to date by the Company. The Board of Directors
may declare and pay dividends upon the outstanding shares of the Company, from
time to time and to such extent as they deem advisable, in the manner and upon
the terms and conditions provided by statute and the Company's Certificate of
Incorporation. Before payment of any dividend there may be set aside out of the
net profits of the Company such sum or sums as the directors, from time to time,
in their absolute discretion, think proper as a reserve fund 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 interests of the corporation, and the directors may
abolish any such reserve in the manner in which it was created.
Shares owned by insiders, officers and directors totaling 3,472,700 are deemed
"restricted securities" as that term is defined under the Securities Act; and in
the future these shares may be sold under Rule 144, which provides in essence,
that a person holding restricted securities for a period of one year may sell
every three months an amount equal to the greater of (a) one percent of the
Company's issued and outstanding common stock or (b) the average weekly trading
volume of the common stock during the four calendar weeks prior to such sale.
As of December 31, 1999, there were approximately 125 shareholders of the
Company.
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ITEM 6. SELECTED FINANCIAL DATA
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For the Year
Ended
Dec. 31, 1999
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Cash and Cash Items $ 359,449
Marketable Securities 471,250
Notes and Accounts Receivable 0
Allowances for doubtful accounts 0
Inventory 52,354
Other Current Assets 0
Total Current Assets 883,053
Property, plant and equipment 2,713,816
Accumulated depreciation (274,729)
Total assets 3,366,317
Total current liabilities 1,432,771
Bonds, mortgages and debt
Net of current portion 1,367,368
Preferred stock 250,000
Common stock 7,657
Other stockholders' equity 308,581
Total Liabilities and
Stockholders' equity 3,366,317
Net Sales of Tangible
Products 858,052
Total Revenues 893,193
Cost of Tangible Goods Sold 619,082
Total Costs and Expenses
Applicable to sales
and revenues 1,677,873
Other costs and expenses 0
Provision for doubtful accounts 0
Interest and amortization of
Debt discount 67,920
Income before taxes and
and other items (1,061,568)
Income tax expenses 0
Income/loss continuing
operations (1,061,568)
Discontinued operations 0
Extraordinary items 78,533
Cumulative Effect - changes in
Accounting principles 0
Net Income or loss (983,035)
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF
OPERATION
The Company designs, develops, owns and operates family style neighborhood
Italian food restaurants featuring freshly prepared, moderately priced pizza and
pasta dishes. Its operations encompass two segments from which the Company seeks
to generate revenue: operation of restaurants and franchising, and the
production and sale of frozen foods.
During the past two years, the Company's operations failed to realize net income
due to a decrease in revenue and reduction in patrons to its restaurants. The
Company also experienced a decrease in franchising fees and royalties as the
franchise stores operating under the Company's concept were also experiencing
decreased revenue. This led the Company to believe that it required a new
approach to its operations. The Company's management was replaced in March 1999
and new management has sought an aggressive approach to develop and market the
Company's product which management believes is of very high quality. New
management determined that the Company's restaurants required a fresher,
more-upscale fast service image and ambiance to attract customers.
The Company in the past year has raised funding of approximately $2.1 million
though the sale of equity and debentures which has been used to revamp and
reconstruct the Company's operations. These funds have been used to modernize
the Company's frozen foods development plant by acquiring equipment to
streamline the operation of this segment and also to construct and develop its
restaurants. Management's goal is to have a state of the art processing plant
producing the Company's line of frozen foods. The Company has also expended the
funds it has raised to revamp its restaurant concept. New management determined
that the Company should create restaurants which were more upscale and
esthetically pleasing to customers than those previously operated. As a result
the Company shut all of its existing restaurants. After a period or
reconstruction, it reopened and then implemented its new concept at restaurants
in Lakeland, Florida and New York, New York.
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The Company opened two additional restaurants in Del Ray Beach, Florida and Lake
Wales, Florida in the first quarter of fiscal 2000. Funding of the Company's
reconstruction and revamping has been undertaken primarily through the private
sale of equity and debentures in the Company. The funds were used to repay
previous debts of the closed restaurants, acquire new property and equipment and
machinery for the development of the Company's frozen food concept and for the
reconstruction costs associated with the development of the Company's
restaurants adhering to management's new theme. The Company believes that it has
the capacity to raise additional funds if and when they are required. Additional
funds may be raised through the sale of the parcels of real estate held by the
Company. Additionally, the Company believes that its newly developed concept and
operations will attract investors. At this time, the Company has no line of
credit with any financial institution. However, the Company believes that its
new operations will generate sufficient revenue during the next twelve months to
enable the Company to secure a line of credit with a financial institution, if
needed.
As noted by our auditors report dated March 22, 2000 on the financial statements
as of December 31, 1999, there is a substantial doubt raised about the ability
of the Company to operate as a going concern based upon the substantial losses
that the Company has incurred. As noted, the Company's addressed this issue by
closing all unprofitable restaurants during fiscal year 1999. The Company raised
approximately $2.1 million during the year in order to implement management's
plan to reorganize the Company and to redirect the Company's focus to future
profitability.
During the year ending December 31, 1999, the Company raised $1,000,000 in a
private offering of common stock, $750,000 in a debenture offering, and $346,500
upon the exercise of common stock warrants. The Company used these proceeds to
satisfy approximately $166,000 of the outstanding long-term debt attributable to
the closed restaurants. At December 31, 1999, $159,112 of loans attributable to
the closed restaurants remains unpaid. The loans are secured by restaurant
equipment and the Company is currently in the process of negotiating the
resolution of this debt.
In addition, the Company used $320,000 of the proceeds to purchase the land
adjacent to the food processing plant in order to satisfy future expansion
plans. In addition, management executed its option to buy the plant structure in
the fourth quarter of fiscal year 1999 for $225,000. The Company expended
approximately $1.4 million dollars during the year to upgrade the plant facility
and to reconstruct and upgrade restaurant space.
Management's reorganization efforts were substantially completed by the fourth
quarter of 1999. The plant had been reconstructed to satisfy the needs of the
expected demand for the Company's product and USDA requirements. A testing phase
of the Company's frozen food products was completed in the fourth quarter of
1999 and the results were excellent. The frozen food segment began operations in
January 2000 and the initial results are encouraging.
18
<PAGE>
In addition, the improvement of the New York restaurant and the Lakeland
restaurant was completed and the restaurants were reopened in the latter part of
fiscal 1999. The restaurants were reorganized to conform to management's vision
of a fast, self-service, casual Italian food restaurant. The Company opened two
additional restaurants under this new theme in early fiscal 2000.
As of December 31, 1999, the Company's restaurant equipment was used to secure
capital leases and bank loans in the amount of $182,558. In addition, the
Company's real estate assets were used to secure approximately $914,000 of short
and long-term debt.
As a result of the successful implementation of management's reorganization
plans in 1999, the Company expects to achieve self sufficiency in fiscal year
2000 as a result of the positive cash flows achieved from the frozen food
processing plant segment and the reopened restaurants.
Material commitments for capital expenditures include approximately $100,000 for
an upgrading and completion of the Company's production facilities as it relates
to its frozen food plant. An additional $200,000 of expenditures are expected to
be needed towards the Company's Lake Wales restaurant which is scheduled for
completion in January 2000. Sources of funding for these expenditures include
those derived from the Company's sale of the three parcels which it currently is
marketing. Additional sources of funding include secured loans against the
Company's other real estate properties and equipment.
Management intends to hold expenses to a minimum and to obtain services on a
contingency basis when possible. Further, the Company's directors will forego
any compensation until such time as the Company begins to generate sufficient
income in the Company to cover such expenses. However, if the Company engages
outside advisors or consultants in search for business opportunities, it may be
necessary for the Company to attempt to raise additional funds. There is no
assurance that the Company will be able to obtain additional funding when and if
needed, or that such funding, if available, can be obtained on terms acceptable
to the Company.
The Company also expects to raise additional funds through the sale of its real
estate properties located at 300 Cypress Gardens Road, Winter Haven, Florida and
1810 Third Street SE, Winter Haven, Florida. The sale of both these parcels of
land is expected to provide the Company with approximately $200,000 in funding
after encumbrances and mortgages on these properties are extinguished. The
Company has entered into a Contract of Sale for two of the parcels, located in
Winter Haven Florida, with a purchase price of $400,000. The Contract contains a
provision for a right of first refusal in the event another offer is received up
to $450,000. The closing date on this contract is scheduled for January 15,
2000. A third parcel of land, also in Winter Haven, Florida, is currently been
listed in the market
19
<PAGE>
however the Company has not entered into any Contract of Sale for this property.
In the opinion of management, inflation at this time has not and will not have a
material effect on the operations of the Company. Management focuses on the long
term growth of the Company and therefore any increase in inflation or jump in
the price of raw goods purchased by the Company will not result in an immediate
increase in prices to the consumer. Management believes that an increase in its
prices may lead to a loss of customers and therefore hinder the Company's long
term growth. At any course however, management will evaluate the possible
effects of inflation on the Company as it relates to its business and operations
and proceed accordingly.
The Company would consider raising its prices in the event of a significant
increase in the cost of labor. As of December 31, 1999, the Company had 55
employees. Within the coming year, and as the Company opens additional
restaurants and expands its frozen food segment, the Company expects to hire
additional employees. As the number of employees increases, any rise in the cost
of labor will have a more significant impact on the Company which may in turn
cause the Company to increase its prices.
The Company's viability to generate revenue and income is dependent upon the
successful implementation of its new fast casual self service restaurant concept
and the ability to produce quality frozen food products at its production plant.
General Statement - Factors that may affect future results
With the exception of historical information, the matters discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain forward looking statements under the 1995 Private Securities
Litigation Reform Act (the "Reform" Act) that involve various risks and
uncertainties. Typically, these statements are indicated by words such as
"anticipates", "expects", "believes", "plans", "could", and similar words and
phrases. Factors that could cause the Company's actual results to differ
materially from management's projections, forecasts, estimates and expectations
include but are not limited to the following:
20
<PAGE>
- Ability of the Company to raise additional capital
- Ability of the Company to secure sales agreements
for its processing plant products
- Unexpected economic changes in the United States
- The imposition of new restrictions or guidelines by
the United States Department of Agriculture
To the extent possible, the following discussion will highlight the relative
needs of the Company with respect to its business activities.
The Company's operating history, including its losses and revenues, primarily
reflect its operations for the past year. For the year ending December 31, 1999
the Company had $ 893,193 in revenue and a net loss of $ 983,035. As of December
31, 1999 the Company had a net shareholder equity of $566,238.
I. Segment Reporting Disclosures
The Company operates two business segments: restaurants and franchising, and
food processing. In November 1998, management decided to close all of its
existing restaurants at that time and to restructure a new restaurant concept
that emphasized a "fast casual, self-service" style of food delivery as opposed
to the more traditional type of restaurant that it had in place at the time. The
Company would still concentrate its marketing efforts in the Italian foods. The
Company's staff was reorganized and its restaurant space was reconfigured to
deliver its food products according to the new philosophy. During 1999, the
Company opened two restaurants after a period of reconstruction and staff
reorganization, Floridino's, Inc., and Floridino's of Lakeland, Inc. In the
first quarter of fiscal year 2000, a restaurant was opened in Del Ray Beach,
Florida and a restaurant was opened in Lake Wales, Florida.
The food processing plant was completed in 1999 and began operations in January
of 2000. During 1999, the processing plant was being reconstructed to conform to
USDA guidelines and to the requirements of expected demand for the Company's
products.
21
<PAGE>
Please see the discussion and analysis that follows.
Restaurant Segment: Results of Operations
Gross sales for the year ending December 31, 1999 for the restaurant division
decreased to $860,099 or 48% from gross sales for the similar period in 1998.
Consequently gross profit for the year also decreased to $288,727 or 55% as
compared to the similar period in 1998. As expected, this decrease was due to
the closing of four unprofitable restaurants in 1999, thereby decreasing gross
sales revenues. The 1998 sales figures include the gross sales for all the
restaurants for a full year while 1999 sales figures includes the results of the
New York restaurant and the Lakeland restaurant for the months that they were
effectively opened. After a period of construction, Floridino's, Inc., was
opened in September 1999. Floridino's of Lakeland was closed for the month of
October 1999 for reconstruction and reopened in November 1999.
Selling, general, and administrative costs for this segment decreased to
$820,308 as compared to $1,070,888 for the similar period in 1998, or 23%. This
decrease is attributable to closing of the unprofitable restaurants in 1999
resulting in overhead savings. During the period of reconstruction for the New
York restaurant, management decided to retain many of its employees. Management
concluded that the costs of hiring and training new employees at the end of the
reconstruction period would have been greater than the costs of keeping the
employees on salary during the reconstruction period. The Company spent
approximately $200,000 in salaries and rents during the reconstruction period in
1999. An additional $97,000 was spent during 1999 on severance pay and lease
terminations of the unprofitable restaurants that were closed.
The restaurant segment showed a loss from continuing operations of $531,581 as
compared to a loss of $434,562 for a similar period in 1998. However, management
is encouraged by the results obtained from the reorganization of the restaurant
segment undertaken in late 1998 and through 1999 and expects that the benefits
of this reorganization to be realized in 2000.
22
<PAGE>
Processing Plant: Results of Operations
Towards the end of 1998, the Company decided that a significant profit could be
made from the production and marketing of its unique style of Italian food
products, specifically; calzones and pizza rolls. Based upon the initial
response to its products from large Italian food franchises located in Florida
and from large nationwide retail fast food outlets, the Company decided to open
this segment in early 1999 and began operations in January 2000.
The Company contracted with a consulting firm to oversee the plant operations
and manage plant personnel. In addition, the Company expended approximately
$456,000 for equipment and construction of its plant facility.
During the year ending December 31, 1999, the processing segment incurred losses
from continuing operations of $515,488. The significant components of this cost
were approximately $258,000 for plant salaries and consulting fees, $178,000 for
supplies, rent and utilities, and $48,000 in depreciation expense. The plant
staff have been on salary since the first quarter of 1999, and throughout the
reconstruction period. The reconstruction was completed during the last quarter
of 1999. The gross sales and cost of sales figures generated reflect the results
of test sales performed in late 1999 for potential customers of the Company's
products. During the last quarter of 1999, the Company succeeded in passing all
phases of the product testing phase and began actual operations in January 2000.
Management is encouraged by the initial results achieved by this segment.
Consolidated Company
On a consolidated basis, gross sales decreased from $1,669,271 in 1998 to
$893,193 in 1999, or 46%, as a result of management's plan to reorganize the
restaurant segment. Gross profit as a percent of sales decreased in 1999 from
38% to 30%. This decrease is a result of management's efforts to move from a
full service restaurant concept to a fast, self-service concept. Historically, a
full service restaurant has higher profit margins and less volume while the
self-service restaurant has lower profit margins but higher volume.
On a consolidated basis, corporate overhead increased to $1,677,873 through
December 31, 1999 from $1,134,787 for the similar period in 1998. The main
components of this increase were $250,000 in professional fees and consulting
costs attributable to the Company's restructuring, $100,000 in payroll reflected
the hiring of plant personnel, and $150,000 in rent on the new plant facility.
23
<PAGE>
The Company has recognized an unrealized gain on short term marketable
investments of $380,321 and a realized gain on short term marketable investments
of $29,793 as a result of its investment in shares of Cantebury Investing Inc.
(CITI). The investment is made for speculative purposes and is classified as a
trading security as per SFAS 115. The Company intends to sell this investment
during fiscal 2000.
Interest expenses has increased to $67,920 in 1999 as compared to $29,322 in
1998 mainly as a result of the increase in capital leases the Company has
entered into in 1999, the interest accrued on the convertible debentures, and
the assumption and acquisition of mortgages on real estate assets acquired.
After interest expense and the recognition of the favorable settlement of the
Company's long term debt of $78,533, the Company realized a net loss of $983,035
or $.16 per share as compared to a loss of $519.187 or $.19 per share for a
similar period in 1998.
Discussion of Financial Condition- Liquidity and Capital Resources
At December 31, 1999, the Company had working capital deficit of $549,718 as
compared to a deficit of $855,053 at December 31, 1998. On a consolidated basis,
the Company had cash balances totaling $359,449 as compared to $15,502 at
December 31, 1998. This increase is primarily due to the secondary public
offering of 2,000,000 shares of common stock in May 1999 for $1 million and the
issuance of $750,000 in convertible debentures in September and October of 1999
and $346,500 raised by the exercise of common stock warrants and the acquisition
of long term debt of approximately $500,000 less property and equipment
purchases of approximately $1,089,000 and the payment of long term debt of
approximately $166,000 and operating losses of approximately $983,000.
Total current liabilities increased to $1,432,771 at December 31, 1999 as
compared to $897,464 at December 31, 1998. The substantial increase in current
liabilities is primarily due to the increase of approximately $595,000 of debt,
currently due, incurred as a result of of the reconstruction of the New York
restaurant.
The net property and equipment of the Company increased $1,927,065 during fiscal
1999 to $2,439,087 at December 31, 1999. The main components of this increase
were approximately $225,000 for the purchase of the plant, $456,000 in the
acquisition of plant assets for the processing segment, $318,000 for
construction costs for the restaurant segment, $639,000 in three buildings
acquired from an officer of the firm in return for preferred stock, and the
purchase of land adjacent to the plant for $320,000. In addition, the Company
decided to write off the book value of approximately $55,000 of restaurant
equipment of the closed restaurants.
24
<PAGE>
The Company will sell two of the buildings acquired in this transaction in order
to raise capital for the Company. Management expects the sale of the two
buildings to be completed by January 2000. The third building is expected to be
sold in fiscal year 2000, but as of the date of this filing, no contract to sell
this property has been achieved.
Capital lease financing obligations increased to $127,558 at December 31, 1999
from $49,200 at December 31, 1998. This increase is due primarily to the
increase in equipment leases entered into during 1999 on behalf of the
processing segment. Long term debt increased to $1,444,678 at December 31, 1999
as a result of the costs of reconstruction and the assumption of real estate
mortgages in the preferred stock transaction noted above and $500,000 in real
estate mortgages acquired in the last quarter of 1999.
Stockholders equity increased to $566,238 at December 31, 1999 from a deficit of
$370,560 at December 31, 1998. The main source of this increase was $1,000,000
raised in May 1999 through a secondary offering of common stock, $250,000 of
preferred stock issued to an officer of the firm in exchange for liabilities
owed to the officer, and the recognition of $233,333 as a favorable conversion
feature from the debenture offering, and $346,500 in proceeds from the exercise
of common stock warrants.
Management expects the Company to realize the benefits of its reorganization
efforts in fiscal year 2000. Management feels that the completion of the
processing plant in 1999, the closing of unprofitable restaurants, the reopening
of restaurants under the new fast, self service, casual theme will enable the
Company to become profitable in fiscal year 2000. Additional restaurants will be
added depending upon the success of the restaurant's new marketing efforts
established in 1999. However, no assurance can be given as the realizations of
management's expectations.
25
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT AUDITORS
Floridino's International Holdings, Inc. and its Subsidiaries
We have audited the accompanying consolidated balance sheet of Floridino's
International Holdings, Inc. ("the Company") and its Subsidiaries as of December
31, 1999, and the related consolidated statements of operations, shareholders'
equity, and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. The statements of operations, shareholders'
equity, and cash flows of Floridino's International Holdings, Inc. and its
Subsidiaries for the year ended December 31, 1998, were audited by other
auditors whose report dated October 12, 1999, expressed a qualified opinion on
those statements regarding an uncertainty as to the Company's ability to
continue as a going concern.
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 consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, based on our audit, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Floridino's International Holdings, Inc. and its
Subsidiaries at December 31, 1999, and the consolidated results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
As more fully discussed in Note 2 to the financial statements, there are
significant matters concerning the Company that raise substantial doubt as to
the ability of the Company to continue as a going concern. Management's plans
with regard to these maters are also described in Note 2 to the financial
statements. The financial statements do not contain any adjustments that might
result from the outcome of this uncertainty.
Berkovits & Company, P.A.
March 22, 2000
26
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash $359,449
Investments in marketable equity securities 471,250
Inventory 52,354
----------
Total Current Assets $883,053
Property and Equipment, net 2,439,087
Other Assets
Deposits and other assets 42,547
Organizational costs(net of amortization) 1,690
----------
Total Other Assets 44,237
TOTAL ASSETS $3,366,377
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $490,924
Accrued expenses 61,200
Notes payable to banks 159,112
Current portion of obligations under capital leases 21,669
Current portion of long term debt 699,866
----------
Total Current Liabilities $1,432,771
Capital lease obligations 105,889
Long term debt 744,812
Convertible debentures (9% payable semiannually) 516,667
SHAREHOLDERS' EQUITY
Common stock, par value $.001; authorized
25,000,000 shares; issued and outstanding
7,657,000 shares at December 31, 1999 $7,657
Preferred stock, 200,000 shares authorized;
50,000 shares issued and outstanding, convertible
to 50,000 shares of common stock, no par value,
nonparticipating 250,000
Additional Paid in Capital 2,469,846
Accumulated Deficit (2,161,265)
----------
Total Shareholders' Equity 566,238
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,366,377
==========
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial statements and the notes should be read in conjunction with the
auditor's report.
27
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
REVENUES
Food and Beverage Sales $ 858,052 $1,577,564
Franchise revenues 35,141 59,500
Royalty revenues - 32,207
--------- --------
Total Revenues 893,193 1,669,271
Less cost of goods sold 619,082 1,032,945
--------- ---------
Gross Profit 274,111 636,326
OPERATING EXPENSES:
General Administrative 1,519,886 996,232
Cost of store closing 157,987 138,555
---------- ---------
Total Operating Expenses 1,677,873 1,134,787
---------- ---------
Net loss from continuing
operations (1,403,762) (498,461)
OTHER INCOME (EXPENSES):
Unrealized gain on short
term investment 380,321 --
Other income 29,793 8,596
Interest expense (67,920) (29,322)
---------- ----------
Total other income (expenses) 342,194 (20,726)
LOSS FROM OPERATIONS BEFORE
INCOME TAX PROVISION AND
EXTRAORDINARY ITEM (1,061,568) (519,187)
EXTRAORDINARY ITEM:
Gain on early extinguishment
of debt (net of $40,457
tax credit) 78,533 --
----------- ----------
LOSS FROM OPERATIONS BEFORE
INCOME TAX PROVISION (983,035) (519,187)
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Provision for Income taxes -- --
----------- ----------
NET LOSS $ (983,035) $ (519,187)
=========== ===========
Net Loss per common share:
Basic:
Loss from continuing operations $(0.22) $(0.19)
Gain from extraordinary item $0.01 $0.00
Net loss per share $(0.16) $(0.19)
Weighted average shares
outstanding 6,273,134 2,698,974
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial statements and the notes should be read in conjunction with the
auditor's report.
29
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
----------- ------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Loss $(983,035) $(519,187)
Adjustments to Reconcile
Net Income Items Not
Requiring the use of cash:
Depreciation and
Amortization 245,771 91,214
Compensation expense paid
By issuing common stock 90,000 --
Unrealized gain on short
Term Investment (380,321) --
Bad debt expense 14,255 --
Cost of store closings 157,987 --
Changes in Assets and Liabilities
Royalties Receivable 11,826 424
Inventory (37,271) 3,452
Short term investments (90,929) -
Other Assets 42,528 (7,729)
Deferred franchise fee revenue -- (59,500)
Accounts payable 180,369 45,048
Accrued expenses (74,872) 66,091
---------- ----------
NET CASH USED BY OPERATIONS (823,692) (380,187)
INVESTING ACTIVITIES:
Payments of bank overdrafts (19,903) 18,759
Purchase of land adjacent to
Plant (320,000) 0
Purchase of
Property and Equipment (769,032) 39,501
---------- ----------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES (1,108,935) 58,260
---------- ----------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
----------- ------------
<S> <C> <C>
FINANCING ACTIVITIES:
Obligations to Banks 159,112 --
Proceeds from issuance of
convertible debentures 750,000 --
Increase (decrease) in loan
to stockholder (152,799) 131,728
Issuance of common stock upon
Exercise of warrants 346,500 261,000
Issuance of common stock 1,000,000 --
Payment of long term capital
lease obligations (49,206) (24,280)
Payment of long term debt (335,608) (31,019)
Proceeds of
long term debt 558,575 --
---------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,276,574 337,428
---------- ----------
NET INCREASE IN CASH DURING
THE PERIOD 343,947 15,502
CASH BALANCE AT BEGINNING OF
FISCAL YEAR 15,502 --
CASH BALANCE AT END OF
THE PERIOD 359,449 15,502
========== ===========
SUPPLEMENTAL DISCLOSURES:
Interest paid during
the period 67,920 29,322
Acquisition of fixed assets by
capital leases 127,564 49,200
Acquisition of fixed assets by
long term debt 495,227 --
Acquisition of fixed assets by
the assumption of long term
debt and issuance of preferred
stock 509,535 --
Stock issued for acquisition of
fixed assets -- 87,079
Stock issued for acquisition
of subsidiary -- 337,442
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial statements and the notes should be read in conjunction with the
auditor's report.
31
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
Common Stock Preferred Stock Paid in Accumulated
Shares Amount Shares Amount Capital Deficit Total
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 1,1998 2,518,000 $2,518 - - $119,631 $(659,043) $(536,894)
Issuance of common stock
upon exercise of
warrants 261,000 261 - - 260,739 - 261,000
Issuance of common
stock for the purchase
subsidiary 1,680,000 1,680 - - 335,762 - 337,442
Issuance of common
stock for
equipment 500,000 500 - - 86,579 - 87,079
Net Loss - - - - - (519,187) (519,187)
- -------------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 31, 1998 4,959,000 4,959 - - 802,711 (1,178,230) (370,560)
Issuance of common
stock upon exercise of
warrants 558,000 558 - - 345,942 - 346,500
Issuance of
common stock
for compensation 140,000 140 - - 89,860 - 90,000
Issuance of
common stock
for secondary
offering 2,000,000 2,000 - - 998,000 - 1,000,000
Issuance of
preferred
stock - - 50,000 250,000 - - 250,000
Proceeds from
debentures
attributed to
favorable
conversion
feature 233,333 233,333
Net loss (983,035) (983,035)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Common Stock Preferred Stock Paid in Accumulated
Shares Amount Shares Amount Capital Deficit Total
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31, 1999 7,657,000 $7,657 50,000 $250,000 $2,469,846 $(2,161,265) $566,238
==========================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial statements and the notes should be read in conjunction with the
auditor's report.
33
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
Note 1 - Nature of Operations and Summary of Significant
Accounting Policies
Floridino's International Holdings, Inc. (the Company) was incorporated on June
25, 1997 in the State of Florida to develop, own, operate, and franchise family
style Italian restaurants. The company's operations are located in New York
City, New York and throughout Florida. The consolidated statements of the
Company include the following wholly owned subsidiaries:
Floridino's Pizza Etc., Inc.- a restaurant located in Winterhaven, Florida that
was closed in October 1999.
Hard Ball CafE,, Inc.- a restaurant located in Winterhaven, Florida that was
closed in April 1999.
Floridino's Home of the Calzone, Inc.- a restaurant located in Lakeland, Florida
that was closed in May 1999.
Floridino's International, Inc.- a restaurant franchiser located In Winterhaven,
Florida.
Floridino's of Bartow, Inc.- a restaurant located in Bartow, Florida that was
closed in December 1998.
Floridino's Specialties Distributions, Inc.- an Italian food manufacturer
located in Lakeland, Florida incorporated in July 1998.
Floridino's Express, Inc.- a restaurant located in Lake Wales, Florida that was
incorporated in January 1999.
Toho Holdings, Inc.- a company incorporated in 1999 to hold title to the real
estate and lease agreements of the consolidated companies.
Floridino's , Inc.- a restaurant located in New York, New York, formerly Zoop
Soups Inc. This restaurant was reopened in September 1999 after a period of
reconstruction.
Floridino's of Lakeland- a restaurant located in Lake Wales, Florida
incorporated in September 1997. This restaurant was opened in January 1998,
closed for reconstruction in October 1999, and reopened in November 1999.
Lake Wales- a restaurant located in Lake Wales, Florida that was closed in
September 1998.
Del Ray- a restaurant incorporated in November 1999 located Del Ray Beach,
Florida that was opened in January 2000.
34
<PAGE>
Consolidation-The accompanying consolidated financial statements include the
accounts of the company and all of its wholly owned and majority owned
subsidiaries. All significant inter-company balances have been eliminated.
Revenue and Cost Recognition-The Company recognizes revenue from food and
beverage sales as the service is provided. Revenue from franchise sales is
recognized, net of allowance of uncollectible amounts, when substantially all
significant services provided by the Company have been performed which normally
occur prior to the start of the operations. Expenditures are recorded on the
accrual basis whereby expenses are recorded when incurred, rather than when
paid.
Use of Estimates-The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make reasonable
estimates and assumptions that affect the reported amounts of the assets and
liabilities and disclosure of contingent assets and liabilities and the reported
amounts of revenues and expenses at the date of the financial statements and for
the period they include. Actual results may differ from these estimates.
Cash and cash equivalents-Cash equivalents include highly liquid short-term
investments with an original maturity of three months or less. Trading
securities are not considered cash equivalents and are shown separately as
investments in marketable securities.
Investment in Marketable Securities-Investment in marketable securities
represents the purchase of common stock of a publicly trade company. As per
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", the Company classifies this
investment as a "trading security" and accordingly, the investment is recorded
at fair market value at December 31, 1999 and an unrealized gain of $380,321 has
been reflected as "other income" in the statement of operations.
The Company utilizes the specific identification method in determining holding
gains and losses on investments in marketable securities.
Inventory-Inventory is stated at the lower of cost (first-in, first-out method)
or market and primarily consists of food and beverage products.
Property and Equipment-Property and equipment are stated at cost. Depreciation
of property and equipment is provided using the straight-line method over the
estimated useful life of the asset. Improvements made to leased property are
depreciated on a straight-line basis over the estimated useful life of the
improvement or the period of the lease remaining, whichever is less. The
following is a summary of the estimated useful lives used in computing
depreciation expense:
35
<PAGE>
<TABLE>
<S> <C>
Equipment 5 years
Leasehold improvements 5-10 years
Vehicles 5 years
Buildings 30 years
Furniture & fixtures 5 years
</TABLE>
Expenditures for major repairs and renewals that extend the useful life of the
asset are capitalized. Minor repair expenditures are charged to expense as
incurred.
Income Taxes-The Company accounts for income taxes under the accrual method
established by Statement of Financial Accounting Standards No. 109, which
requires recognition of deferred tax assets and liabilities for the expected
futures tax consequences and events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statements and tax bases of assets and liabilities using enacted rates for the
year in which the differences are expected to reverse.
Management believes that based on current operations, the realization of a
tax-deferred asset will not be utilized. Therefore, a deferred tax asset has not
been reflected in the accompanying financial statements as of December 31, 1999.
Extraordinary items-During the year ending December 31, 1999, the Company had
extinguished certain long term debt before its scheduled maturity date. The
difference between the carrying value of this debt and the settlement value of
the debt extinguished has been recognized as an extraordinary item in the
consolidated statement of operations, net of the related tax effect.
Fair Values of Financial Instruments-The carrying amounts of all cash and cash
equivalents, accounts receivables, short term investments, inventories, accounts
payable, and other obligations reported in the statement of financial position
are estimated by management to approximate fair value.
Recent accounting pronouncements - Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities",
was issued in June 1998 and is effective for fiscal quarters beginning after
June 15, 1999. This statement establishes accounting and reporting standards for
derivative instruments and for hedging activities and requires that entities
recognize derivative instruments as either assets or liabilities in the
statement of financial position and measure these instruments at fair value.
Management has concluded that the adoptions of SFAS No. 133 will not have a
material impact on the financial position of the Company or its results of
operations.
36
<PAGE>
Concentration of credit risk-Financial instruments which potentially subject the
Company to concentration of credit risk consist primarily of cash deposits and
investments in marketable securities. The Company had cash demand deposit
accounts of approximately $100,000 in domestic banks at year-end which were not
insured. In addition, the Company has investments in a common stock of
approximately $471,000 at year-end. The market for this stock is not highly
liquid due to the small float of the stock.
Note 2-Going Concern Considerations
The accompanying consolidated financial statements have been presented in
accordance with generally accepted accounting principles, which assumes the
continuity of the Company as a going concern. However, during the years ending
December 31, 1999 and December 31, 1998, the Company continues to experience
certain going concern and liquidity problems. The Company has incurred net
losses of $983,035 and $519,187 for the years ending December 31, 1999 and
December 31, 1998. This condition raises substantial doubt to the ability of the
Company to continue as a going concern.
Management's plans with regard to this matter is as follows:
The Company, through a plan formalized in fiscal year 1998 and completed in
1999, closed all unprofitable restaurants. The Company plans to reopen new
restaurants under new management with more emphasis on a "casual fast
food/self-service" theme. During 1999, after a period of reconstruction and
reorganization, the Company opened New York Floridino's and Lakeland. The
Express and Del Ray restaurants were opened in January 2000.
During the year ended December 31, 1999, the Company raised approximately $2.1
million through a Regulation D 505 offering, the exercise of common stock
warrants, and a convertible debenture offering. These funds were used to satisfy
some of the Company's long-term debt, reconstruct and improve current restaurant
space, and to complete the construction of Specialties, its food manufacturing
plant, and purchase of real estate and investments.
The eventual outcome of the success of management's plans cannot be ascertained
with any degree of certainty. The accompanying consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Note 3-Closed Restaurants
Through December 31, 1999, the Company had completed its plans to close the
operations of unprofitable restaurants. The costs associated with these closings
are reported in the caption "Cost of Store Closing" in the statement of
operations. The restaurants that were closed by management through 1999 are as
follows:
37
<PAGE>
Floridino's Pizza Etc., Inc.
Hard Ball Cafe, Inc.
Floridino's Home of the Calzone, Inc
Floridino's of Bartow, Inc.
The costs associated with the closing of these restaurants are $157,987 and
$138,555 for fiscal years 1999 and 1998, respectively.
Note 4-Litigation
The Company and its subsidiaries are defendants in various lawsuits filed by
various suppliers for services rendered. The Company has accrued the amounts of
the proposed settlements in the accompanying consolidated financial statements,
as well as the amounts of potential outstanding claims disclosed by the
Company's outside counsel. Management believes that the eventual disposition of
these lawsuits will not have a material impact on the consolidated financial
statements.
Note 5-Commitments and Contingencies:
The Company is committed to various non-cancelable leases for restaurant space.
At December 31, 1999, total future minimum lease payments under operating leases
is as follows:
<TABLE>
<S> <C>
2000 $353,188
2001 338,024
2002 342,334
2003 335,544
2004 341,008
Thereafter 914,400
----------
Total future minimum lease payments $2,624,498
==========
</TABLE>
Rent expense was $224,817 and $179,111 for fiscal years 1999 and1998,
respectively.
The Company is the lessee of certain equipment accounted for as capital leases
in 1999. The assets and liabilities of the capital leases are recorded at the
lower of the present value of the minimum lease payments or the fair value of
the asset purchased. The assets are being amortized over the term of the
lease or the estimated useful life of the asset, whichever is less.
38
<PAGE>
Minimum future lease payments for capital leases as of December 31, 1999 is as
follows:
<TABLE>
<S> <C>
2000 $ 45,706
2001 46,777
2002 46,777
2003 39,024
2004 12,420
--------
Total future minimum lease payments 190,704
Less amounts representing interest (63,146)
Present value of net minimum lease ---------
payments $ 127,558
=========
</TABLE>
Interest rates on capitalized leases range from 17% to 27% imputed based upon
the lower of the Company's incremental borrowing rate at the inception of the
lease or the lessor's implicit rate of return.
Note 6-Common Stock Transactions
During fiscal year ending December 31, 1999, the balance of warrants outstanding
from an offering completed in July 1997 were exercised or expired. During the
period, 558,000 warrants were exercised resulting in proceeds to the Company of
$346,500 and the issuance of 558,000 shares of common stock. The balance of the
outstanding warrants (63,000) expired on March 31, 1999.
In August 1999, the Company issued 140,000 shares in return for services
rendered by outside consultants.
In July 1999, the Company completed a Regulation D 505 offering resulting in net
proceeds to the Company of $1,000,000 and the issuance of 2,000,000 shares of
common stock.
Note 7-Convertible Debentures
In the last quarter of fiscal year 1999, the Company received proceeds of
$750,000 by issuing convertible debentures. The debentures mature in September
2001 and October 2001 and carry an interest rate of 9%. The debentures are
convertible into common stock at a 40% discount, from the preceding five day
average market price of the stock at the date conversion. Accordingly, $233,333
of the proceeds of the debenture offering has been allocated to additional paid
in capital in the statement of financial position.
Note 8-Convertible Preferred Stock
As more fully discussed in Note 10, the Company issued 50,000 shares of
preferred stock to the president of the Company in exchange for real estate
assets transferred to the Company. The net fair market value of the real estate
at the date of the transaction was $250,000, as determined by management.
39
<PAGE>
The preferred stock is convertible into 50,000 shares of common stock beginning
in May 2000.
Note 9-Long term debt
The following comprises long term debt as of December 31, 1999:
<TABLE>
<CAPTION>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
<S> <C>
Notes payable to an unrelated party at a rate of $64,114
of 9% due May 21, 2000 and October 10, 2000
The loan is secured by a building owned by the Company
Monthly payments of $718.
Mortgages payable to a financial institution 500,000
at an interest rate of 9% due in December 2002.
The mortgages are secured by the land and a
building owned by the Company. Monthly
payments of $11,251 consisting of interest only.
Mortgage payable to an individual at an interest 84,000
rate of 9% secured by a building owned by the
Company. The loan is due January 2000. Monthly
payment of interest only of $750. The loan is
currently being renegotiated.
Mortgage payable to an individual at an interest 126,801
rate of 10% secured by a building owned by
the Company. The loan is due in June 2007.
Monthly payments of $2,023.
Mortgage payable to an individual at an interest 139,276
rate of 9% secured by the processing plant
owned by the Company. The loan is due in June 2007.
Monthly payments of $1,773.
Unsecured note payable to a contractor at an 237,207
interest rate of 8.25%. Balloon payment due
October 2000.
Unsecured notes payable to entities controlled 258,020
by the majority shareholder and chairman of
the board at an interest rate of 8.25%. Balloon
payments are due in January 2000 and October 2000.
Other notes payable due to individual suppliers 35,260
with no stated interest rate ----------
Total debt 1,444,678
Less current maturities 699,866
----------
Long term debt $ 744,812
==========
</TABLE>
40
<PAGE>
A schedule of maturities of long term debt by fiscal year is as follows:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
2000 $ 699,866
2001 262,192
2002 286,934
2003 26,881
2004 29,861
Thereafter 138,944
----------
Total $1,444,678
==========
</TABLE>
Note 10-Related Party Transactions
The Company is indebted to its majority shareholder and chairman of the board
for the cost of certain reconstruction of the New York restaurant incurred
during 1999. Unsecured promissory notes payable of $258,020 to entities
controlled by the chairman were entered into on August 31, 1999 and carry an
interest rate of 8.25%. The notes mature in fiscal year 2000 and are included
in the current portion of long term debt in the statement of financial
condition.
In May 1999, the Company assumed title to three properties and their
corresponding mortgages from the President of the Company. The estimated fair
market value of the net equity of the properties at the date of the transaction
was $250,000. The President was issued 50,000 shares of non-participating
preferred stock in consideration for this transfer. The preferred stock is
convertible into common stock beginning in May 2000 and has no liquidation
preferences.
41
<PAGE>
Note 11-Segments
The segments of the Company follow the same accounting policies as the
consolidated group. The following is a summary of the Company's segment
information for fiscal years 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Gross Sales
Restaurants $860,099 $1,669,271
Food processing 33,094 -
-------- ----------
Total gross sales $893,193 $1,669,271
Gross Profit
Restaurants $288,727 $636,326
Food processing (14,616) -
-------- ----------
Total gross profit $274,111 $636,326
Income (loss) from continuing operations
Restaurants ($531,581) ($434,562)
Food processing (515,488) -
Corporate (356,693) (63,899)
-------- ----------
Total from continuing
operations ($1,403,762) 498,461
Depreciation & amortization
Restaurants $170,586 $69,931
Food processing 47,666 -
Corporate 27,519 21,283
-------- ----------
Total depreciation &
amortization $245,771 $91,214
Interest expense
Restaurants $44,295 $19,509
Food processing 12,307 -
Corporate 11,318 9,813
-------- ----------
Total interest expense $67,920 $29,322
Total Assets
Restaurants $892,024 $566,368
Food processing 510,839 -
Corporate 1,963,514 74,830
---------- ----------
Total assets $3,366,377 $641,198
========== ==========
</TABLE>
42
<PAGE>
The following table provides the Company's geographic information for gross
sales and assets:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Gross sales- restaurants
New York $ 578,392 $ -
Florida 281,707 1,669,271
-------- -----------
Total gross sales $ 860,099 $1,669,271
Gross sales- processing
New York $ - $ -
Florida 33,094 -
--------- ----------
Total gross sales $ 33,094 $ -
Total Assets
New York $ 664,776 $349,729
Florida 2,701,601 291,469
--------- ----------
Total assets $3,366,377 $641,198
</TABLE>
The company does not have any customers who represent greater than 10% or more
of consolidated gross sales.
Note 12-Earnings Per Share
The Company applies SFAS No. 128, Earnings Per Share. In accordance with SFAS
No. 128, basic net income per share has been computed based on the weighted
average of common shares outstanding during the fiscal year. The effects of
convertible debentures preferred stock, and common stock warrants have not been
included since their inclusion would be anti-dilutive.
Note 13-Income taxes
At December 31, 1999 and December 31, 1998, the Company had $1,412,694 and
$533,353 of net operating loss carry forwards which expire in years 2005 and
2004. No portion of the net operating loss carryforwards has been recognized as
a deferred tax asset at December 31, 1999 and December 31, 1998. The following
is a reconciliation between net loss per the statement of operations and taxable
loss at December 31, 1999 and December 31, 1998:
43
<PAGE>
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net loss ($983,035) ($519,187)
Allowance for unrealized
gain on investment (402,531) -
Allowance for timing
difference in
depreciation expense (27,128) (14,166)
------------ ----------
Taxable loss ($1,412,694) ($533,353)
Deferred tax asset $480,315 $181,340
Allowance for tax
recoverability (480,315) (181,340)
------------ ----------
Deferred tax asset
recognized $ - $ -
============ ==========
</TABLE>
The statutory federal tax rate of 34% was used to calculated deferred tax
assets.
Note 14-Subsequent events
In February 2000, the Company purchased 100% of the issued and outstanding
common stock of Triton Prestige Products Inc., a food manufacturer located in
Palm City, Florida, by issuing 50,000 shares of common stock.
The financial statements of Triton Prestige Products at the time of the
transaction are as follows:
44
<PAGE>
Statement of Financial Condition
At Acquisition
Unaudited
<TABLE>
<CAPTION>
Assets
<S> <C>
Current assets:
Cash $ 970
Accounts receivable 47,565
Inventory 39,281
--------
Total current assets 87,816
Leasehold improvements net
accumulated depreciation 4,521
Security deposit 9,704
Other asset 4,000
--------
Total assets $106,041
========
Liabilities and Stockholders'
Current liabilities:
Accounts payable $ 46,264
Loans payable 102,500
--------
Total current liabilities 148,764
Common stock 500
Accumulated Deficit (43,223)
Total liabilities and stockholders' $106,041
========
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
From Inception through date of Acquisition
Unaudited
<S> <C>
Gross sales $ 325,222
Less cost of sales (298,544)
---------
Gross profit 26,678
Less general administrative expenses (67,651)
---------
Loss from operations (40,973)
Other expenses: Interest (2,250)
---------
Net loss ($43,223)
=========
</TABLE>
45
<PAGE>
Note 15-Year 2000 Statement
The Company has actively addressed the issues related to the date change in year
2000. This is necessary because many computer systems were programmed using only
two digits to contain the year in the date fields. On January 1, 2000, many of
these programs will fail to perform date calculations correctly and produce
erroneous results. This could temporarily prevent the Company from processing
business transactions. The Company began efforts to address this issue in fiscal
1999. As of the date of this report, the Company has experienced no disruption
of business due to the Year 2000 issue.
There are significant risks associated with the year 2000 issues. Many of these
risks such as those associated with electrical power or telecommunications are
outside the reasonable control of the Company. Although the Company believes its
remediation and contingency planning efforts adequately identify and addressed
the year 2000 issues that are within the Company's reasonable control, there can
be no assurance that the Company's efforts will be fully effective. Due to the
significant risks, the Company's management continues to monitor this very
closely.
Note 16-Notes payable to banks
The Company is currently in default on $159,112 of equipment loans to banks. The
debt had matured in fiscal 1998 and 1999 and is included in current liabilities
under the caption, "Notes payable to banks" in the financial statements. These
notes carried interest at the prime rate plus 2% and were secured by equipment.
The Company is currently negotiating with the bank to settle this debt.
46
<PAGE>
Note 17-Property and Equipment
The major categories of property and equipment at December 31, 1999 are as
follows:
<TABLE>
<S> <C>
Land $ 320,000
Equipment 572,180
Leasehold improvements 942,519
Vehicles 17,232
Buildings 859,000
Furniture and fixtures 2,885
Total property and equipment 2,713,816
---------
Less accumulated depreciation (274,729)
Net property and equipment $2,439,087
==========
</TABLE>
The category for equipment includes $127,558 in of equipment acquired under
capital lease agreements. The amount of accumulated amortization of capital
leases is included in accumulated depreciation and was $17,678 for 1999.
Depreciation expense was $245,771 and $91,214 for the years ended 1999 and 1998,
respectively. During 1999 the Company wrote off approximately $55,000 of
restaurant equipment associated with the closed operations. The equipment was
pledged as security for bank loans (See Note 16) and is being held in storage
until resolution of such claims.
47
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company on January 17, 2000 dismissed the certified public accounting firm,
Infante, Lago and Company, as a result of the departure of Jesus Lago, the
partner overseeing the audit and financial reporting of the Company. Mr. Lago
has become a partner of the certified public accounting firm of Berkovits and
Company, P.A., located in the State of Florida, and the Company has elected to
retain this firm for the purpose of conducting future audits of the Company and
for providing financial reports for the Company.
The decision to dismiss Infante Lago and Company was based solely on the
departure of Mr. Lago from that firm and did not stem from any disagreement
between the Company and Infante Lago on any matter of accounting principles,
practices, financial statements, disclosure or auditing practices or procedures.
No such disagreements existed between the Company and Infante Lago prior to
their dismissal.
The engagement of the accounting firm of Berkovits & Company has commenced on
January 17, 2000.
The Company on December 17, 1999 filed a Form 8-K reflecting this change. The
Form 8-K is incorporated by reference herein and investors are directed to that
filing for disclosure purposes.
Investors are further advised that the principal accountant's report on the
financial statements for either of the past two years did not contain an adverse
opinion or disclaimer of opinion, or was modified as to uncertainty, audit
scope, or accounting principles. Additionally, the decision to change
accountants was approved by the board of directors of the company.
48
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
<TABLE>
<CAPTION>
Position(s) Held and
Name Age Duration of Service Family Relation
- - ---------------- --- ------------------- ---------------
<S> <C> <C> <C>
William C. Keeler 46 Chief Executive Officer None
Michael Floridino 41 President None
Frank Dolney 43 Secretary/Treasurer None
Nick Pirgousis 44 Chairman of Board Brother of
George Pirgousis
George Pirgousis 58 Director Brother of
Nick Pirgousis
William A. Scott 55 Director None
</TABLE>
All directors hold office until the next annual meeting of stockholders, held on
June 15th of each year, and until their successors have been duly elected and
qualified. There are no agreements with respects to the election of directors.
Set forth below is certain biographical information regarding the Company's
executive officers and directors:
William Keeler, Chief Executive Officer, has over twenty years of successful,
progressive experience in the food industry including work in retail restaurants
and wholesale distribution. He started his career as the franchise owner of five
Kentucky Fried Chicken units, then became Territory and District Sales Manager
and Director of Corporate Produce sales for White Swan Food Service, moved on to
become District Sales Manage and District Sales Director of Sysco, and advanced
from Regional Sales Manager to Vice President of Sales at Rykoff Sexton US Food
Services. Most recently Mr. Keeler worked as Vice President of Sales and
Marketing for Bari Importing Corp, where he supervised all marketing aspects of
Corporation, increased Sales and Profits last year over 20%. Installed a new
shelter program, instituted a new commission program, instituted a new sales
software program, designed an equipment program bringing new customers and
opening new opportunities for the Sales Force.
Michael Floridino, President, is the Founder of the Company. He has been in the
restaurant business nearly his entire life. At the age of 18, he held numerous
management positions in restaurant chains, covering all aspects of operations,
engaging in site selection, training, food suppliers and administration. In
1988, Mr. Floridino moved to Winter Haven, Florida and founded the first
Floridino's. He is the owner and originator of the recipes of Floridino's which
have been handed down to him through his family and perfected by him. Mr.
Floridino's expertise lies within the food development and restaurant operations
business.
49
<PAGE>
Frank Dolney, Secretary/Treasurer, graduated in 1979 with a Bachelors of
Business Administration in Finance and Economics. After graduation, Mr. Dolney
took a position with Merrill Lynch Pierce Fenner & Smith as Asst. Operations
Manager. In the last eighteen years Frank has worked as an investment executive
in the areas of portfolio management, private placements and tax strategy. From
1990 to 1995, Mr. Dolney worked with AT Broad & Company in New York as
investment executive in which he identified corporate finance and merger and
acquisition candidates for top management.
Nick Pirgousis, Chairman of the Board of Directors, opened his first restaurant
at the age of 18 in New York City. He has since owned, operated and managed
restaurants in New York including the Park View Restaurant, Zoop Soups and
Silver Spurs, of which he is still an owner. Mr. Pirgousis maintains a hand-on
style of management and has been involved in every aspect of the growth of the
Company. He has also overseen the growth of a number of establishments in the
food and beverage industry as a consultant utilizing his restaurant expertise to
advise on the operation and management of each entity.
William Scott a director also serves as accountant of the company. He is a
certified accountant in the State of Florida for over twenty two years and has
an extensive financial and accounting background. During his first seven years
as an accountant, Mr. Scott worked for Price Waterhouse & Co. Subsequent to
that, he commenced his own private accounting firm which he has devoted most of
his time to.
George Pirgousis, the brother of Nick Pirgousis, has been a restauranteur for
the past thirty five years. His expertise is the daily operations of restaurants
with a strong emphasis in purchasing and inventory control.
Each director is elected at the annual meeting of Stockholders and each Director
elected holds office until a successor has been elected and qualified, or until
his prior resignation, removal, or death. The following sets forth the dates
since which each director has served: Nick Pirgousis: January 7, 1999; George
Pirgousis: January 7, 1999; Frank Dolney: January 7, 1999; William Scott: March
10, 1999; Michael Floridino: June 1997.
To the best knowledge of management, during the past five years, no present or
former director or executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state insolvency
law, nor had a receiver, fiscal agent or similar officer appointed by a court
for the business or present of such a person, or any partnership in which he was
a general partner at or within two years before the time of such filing, or any
corporation or business association of which he was an executive officer within
two years before the time of such filing;
50
<PAGE>
(2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him form or otherwise limiting, the following activities:
(i) acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, associated person of any of the foregoing, or as an investment
advisor, underwriter, broker or dealer in securities, or as an affiliated
person, director of any investment company, or engaging in or continuing any
conduct or practice in connection with such activity; (ii) engaging in any type
of business practice; or (iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal commodity laws;
(4) was the subject of any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority barring,
suspending, or otherwise limiting for more than 60 days the right of such person
to engage in any activity described above under this Item, or to be associated
with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action or by the
Securities and Exchange Commission to have violated any federal or state
securities law, and the judgment in subsequently reversed, suspended, or vacate;
(6) was found by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding by the Commodity Futures
Trading Commission has not been subsequently reversed, suspended or vacated.
The Company's Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
connection therewith, directors, officers, and beneficial owners of more than
10% of the Company's Common Stock are required to file on a timely basis certain
reports under Section 16 of the Exchange Act as to their beneficial ownership of
the Company's Common Stock.
51
<PAGE>
Item 6. EXECUTIVE COMPENSATION
The following table summarizes the total compensation awarded or paid by the
Company to its president, for the fiscal year ended December 31, 1999. No other
executive officer of the Company had a total annual salary and bonus in excess
of $100,000 for fiscal 1999. Accordingly, Floridino's President is the only
named officer of the Company under SEC rules.
Summary Compensation Table
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f) (g)
(h) (i)
<S> <C> <C> <C> <C> <C> <C> <C>
Name and Other Restricted Sec.
All
Principal Annual Stock Underly.
LTIP Other
Position Year Salary Bonus Compen. Award Options
Payouts Comp.
Michael
Floridino
President 1999 $75,000 0 0 0 0
William
Keeler CEO 1999 $20,000 0 0 0 0
</TABLE>
The Company has not had a bonus, profit sharing, or deferred compensation plan
for the benefit of its employees, officers or directors. The Company has no
plans at the present to compensate its directors.
The Company has not issued any shares of its common or preferred stock to any
employee. It has issued shares to The Ephraim Group and to William Scott as
consultancy services rendered to the Company.
COMPENSATION TABLE: None
CASH COMPENSATION
There was no cash compensation paid to any director or executive officer of the
Company during the two fiscal years ended December 31, 1998 and 1999, with the
exception of Michael Floridino who received cash compensation in the sum of
$75,000.00 in conjunction with his position as president of the Company.
BONUSES AND DEFERRED COMPENSATION: None.
COMPENSATION PURSUANT TO PLANS: None.
PENSION TABLE: None.
OTHER COMPENSATION: None.
COMPENSATION OF DIRECTORS: None.
52
<PAGE>
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENT:
There are no compensatory plans or arrangements of any kind, including payments
to be received from the Company, with respect to any person which would in any
way result in payments to any such person because of his or her resignation,
retirement, or other termination of such person's employment with the Company or
its subsidiaries, or any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the information, to the best knowledge of the
Company as of December 31, 1999, with respect to each person known by the
Company to own beneficially more than 5% of the Company's outstanding common
stock, each director of the Company and all directors and officers of the
Company as a group. The Company also provides beneficial ownership information
with respect to each of its executive officers.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- - ---------------- -------------------- --------
<S> <C> <C>
William Keeler 3,000 0.00%
5836 Spruce Creek Drive
Fort Orange, Florida
Michael Floridino 999,700 13.06%
3560 Cypress Gardens Road
Winter Haven, Florida 33884
Hynford Holdings Ltd. 500,000 6.53%
Cable Beach Court - STE #1
Nassau, Bahamas
Toho Ventures Ltd.* 1,680,000 21.94%
494 LaGuardia Place
New York, New York 10012
George Pirgousis (3) 144,000 1.88%
494 LaGuardia Place
New York, New York 10012
William Scott 40,000 0.52%
95 Madison Avenue
Morristown, New Jersey
Lokee LLC* 142,000 1.85%
494 LaGuardia Place
New York, New York 10012
Raffles Toho Ltd.* 464,000 6.06%
494 La Guardia Place
New York, New York 10012
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- - ---------------- -------------------- --------
<S> <C> <C>
All Directors and Named
Executive Officers as
group 3,472,700 45.35%
PREFERRED SHARES
Michael Floridino 50,000 100.00%
3560 Cypress Gardens Road
Winter Haven, Florida 33884
</TABLE>
*- see footnotes
(1) As of December 31, 1999, Nick Pirgousis and Frank Dolney each own a fifty
(50%) percent interest in Toho Ventures Ltd., which holds 1,680,000 shares of
the Company. The corresponding amount of shares beneficially owned by Nick
Pirgousis and Frank Dolney each include the 840,000 shares of the Company they
each beneficially own through Toho Ventures Ltd.
(2) As of December 31, 1999, Nick Pirgousis was the sole beneficial owner of
Raffles Toho Ltd., which owns 464,000 shares of the Company. The corresponding
amount of shares beneficially owned by Nick Pirgousis includes the 464,000
shares of the Company owned beneficially through Raffles Toho Ltd.
(3) As of December 31, 1999, George Pirgousis was the sole beneficial owner of
Lokee LLC which owns 142,000 shares of the Company. The corresponding amount of
shares beneficially owned by George Pirgousis includes the 142,000 shares of the
Company owned beneficially through Low Key Holdings.
Rule 13d-3(d)(1)(i) under the Securities Exchange Act of 1934, regarding the
determination of beneficial owners of securities, includes as beneficial owners
of securities, among others, any person who directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise has or shares
voting power and/or investment power with respect to such securities; and, any
person who has the right to acquire beneficial ownership of such security within
sixty days through a means, including, but not limited to, the exercise of any
option, warrant, right or conversion of a security. Any securities not
outstanding that are subject to such options, warrants, rights or conversion
privileges shall be deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such person, but
shall not be deemed to be outstanding for the purpose of computing the
percentage of the class by any other person.
The Company has been advised that each of the persons listed above has sole
voting, investment, and dispositive power over the share indicated above.
Percent of Class (third column above) is based on 7,657,000 shares of common
stock outstanding as of the date of this filing.
54
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) In May 1999, the Company issued 50,000 shares of preferred restricted common
stock to Michael Floridino, the Company's president, in connection with the
purchase of three (3) parcels of real estate located at 1810 3rd Street, S.E.,
Winter Haven, Florida, 300 Cypress Gardens Blvd, Winter Haven, Florida 33880,
3560 Cypress Gardens Road, Winter Haven, Florida 33884. For additional
consideration to Michael Floridino, the Company assumed the liabilities and
encumbrances on each of those properties. The property provided by Michael
Floridino was the fair market value in accordance with inquiries and appraisals
made by the Company through various real estate brokers in the Winter Haven,
Florida area. The total market value of the three properties, not reduced by
mortgages, liens and encumbrances, was approximately $639,000. The valuation of
the liabilities on the properties was $440,000.
(b) During the course of the year to August 31, 1999, the Company received
funding for reconstruction of the Company's operations from Raffles Toho Inc.,
the total sum of approximately $258,020. Raffles Toho is wholly owned by the
Chairman of the Board of Directors of the Company, Nick Pirgousis. The advance
of such funds is evidenced by three Promissory Notes. The terms of the notes
provide for interest to be assessed at an annual rate of 8.25%. The individual
notes held by Raffles Toho, issued on August 31, 1999, are for $120,435.00 and
$72,197.00. These have a balloon payment due on September 1, 2000 and have been
extended to October 31, 2000. A third individual note issued on August 31, 1999
for $65,388.00 possesses a balloon payment due on January 1, 2000.
INDEBTEDNESS OF MANAGEMENT:
(a) In May, 1999, the Company issued 50,000 shares of preferred restricted
common stock to Michael Floridino, the Company's president, in connection with
the purchase of three (3) parcels of real estate located at 1810 3rd Street,
S.E., Winter Haven, Florida, 300 Cypress Gardens Blvd, Winter Haven, Florida
33880, 3560 Cypress Gardens Road, Winter Haven, Florida 33884. For additional
consideration to Michael Floridino, the Company assumed the liabilities and
encumbrances on each of those properties. The property provided by Michael
Floridino was the Fair Market Value in accordance with inquiries and appraisals
made by the Company through various real estate brokers in the Winter Haven,
Florida area. The total market value of the three properties, not reduced by
mortgages, liens and encumbrances, was approximately $639,000.
55
<PAGE>
(b) During the course of the year to August 31, 1999, the Company received
funding for reconstruction of the Company's operations from Raffles Toho Inc.,
the total sum of approximately $258,020. Raffles Toho is wholly owned by the
Chairman of the Board of Directors of the Company, Nick Pirgousis. The advance
of such funds is evidenced by three Promissory Notes. The terms of the notes
provide for interest to be assessed at an annual rate of 8.25%. The individual
notes held by Raffles Toho, issued on August 31, 1999, are for $120,435.00 and
$72,197.00. These have a balloon payment due on September 1, 2000 and have been
extended to October 31, 2000. A third individual note issued on August 31, 1999
for $65,388.00 possesses a balloon payment due on January 1, 2000.
PART IV
Item 14. FINANCIAL STATEMENTS, EXHIBITS AND REPORTS ON FORM 8-K
(A) FINANCIAL STATEMENTS
The Following financial statements are filed as part of this registration
statement:
Balance Sheet
Statement of Loss
Statement of Cash Flows
Statement of Shareholders' Equity (Deficit)
Selected Financial Data
(B) EXHIBITS AND INDEX OF EXHIBITS
The following exhibits are included in Item 13(c). Other
exhibits have been omitted since the required information is not
applicable to the registrant.
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
3 Certificate of incorporation and by-laws
10.1 Agreement between Michael Floridino and Company
dated May 20, 1999
10.2 Promissory Note Between Floridino's Inc. and
Raffles Toho Inc.
10.3 Promissory Note Between Floridino's Inc. and
Raffles Toho Inc.
10.4 Promissory Note Between Floridino's Inc. and
Raffles Toho Inc.
10.5 Promissory Note Between Floridino's Inc. and
Toho Partners, LLC
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
10.7 Standard Franchise Agreement
10.8 Consulting Agreement
21 Subsidiaries of Company
27 Financial Data Schedule
</TABLE>
(C) REPORTS ON FORM 8-K
A report on Form 8-K was filed on December 15, 1999 and it is incorporated to
this Form 10SB-12G/a by reference herein.
57
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
- - ----------------------
(Registrant)
Date: April 13, 2000
By: /s/ Nick Pirgousis
- ------------------------
Chairman of the Board
58
EX-27
<TABLE> <S> <C>
[ARTICLE] 5
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] DEC-31-1999
[CASH] 359,449
[SECURITIES] 471,250
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 52,354
[CURRENT-ASSETS] 883,053
[PP&E] 2,713,816
[DEPRECIATION] (274,729)
[TOTAL-ASSETS] 3,366,317
[CURRENT-LIABILITIES] 1,432,771
[BONDS] 1,367,368
[COMMON] 7,657
[PREFERRED-MANDATORY] 0
[PREFERRED] 250,000
[OTHER-SE] 308,581
[TOTAL-LIABILITY-AND-EQUITY] 3,366,317
[SALES] 858,052
[TOTAL-REVENUES] 893,193
[CGS] 619,082
[TOTAL-COSTS] 1,677,873
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 67,920
[INCOME-PRETAX] (1,061,568)
[INCOME-TAX] 0
[INCOME-CONTINUING] (1,403,762)
[DISCONTINUED] 0
[EXTRAORDINARY] 78,533
[CHANGES] 0
[NET-INCOME] (983,035)
[EPS-DILUTED] (.16)
</TABLE>
Exhibit 3 - BY LAWS
BY LAWS
OF
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
ARTICLE I - OFFICES
The principal office of the corporation shall be established
and maintained at 3560 Cypress Gardens Road, in the City of
Winter Haven, County of Polk, State of Florida. The Corporation
may also have offices at such places within or without the State
of Florida as the board may from time to time establish, or as
the business of the Corporation may require from time to time.
ARTICLE II - SHAREHOLDERS
1. ANNUAL MEETINGS
The annual meeting of the Shareholders of this Corporation
shall be held on the 1st day of April of each year or at such
other time and place designated by the Board of Directors of the
Corporation. Business transacted at the annual meeting shall
include the election of Directors of the Corporation and all
other matters properly before the Board. If the designated day
shall fall on a Sunday or legal holiday, then the meeting shall
be held on the first business day thereafter.
2. SPECIAL MEETINGS
Special meetings of the Shareholders shall be held when
directed by the President or the Board of Directors, or when
requested in writing by the holders of not less than 10% of all
the shares entitled to vote at the meeting. A meeting requested
by Shareholders shall be called for a date not less than 10 nor
more than 60 days after the request is made unless the
Shareholders requesting the meeting designate a later date. The
call for the meeting shall be issued by the Secretary, unless the
President, Board of Directors, or Shareholders requesting the
meeting shall designate another person to do so.
3. PLACE
Meetings of Shareholders shall be held at the principal
place of business of the Corporation or at such other place as
may be designated by the Board of Directors.
4. NOTICE
Written notice to each Shareholder entitled to vote stating
the place, day and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than 10 nor more than 60 days
before the meeting. If any Shareholder shall transfer his stock
after notice, it shall not be necessary to notify the transferee.
Any Stockholder may waive notice of any meeting either before,
during or after meeting, by a writing signed by the Shareholders
entitled to the notice.
5. QUORUM AND VOTING
The majority of the Shares entitled to vote, represented in
person or by Proxy, shall constitute a Quorum at a meeting of
Shareholders, but in no event shall a Quorum consist of less than
1/3 of the shares entitled to vote at the meeting.
After a Quorum has been established at a Shareholders
meeting, the subsequent withdrawal of Shareholders, so as to
reduce the number of shares entitled to vote at the meeting below
the number required for-the Quorum, shall not effect the validity
of any action taken at the meeting or any adjournment thereof.
If a quorum exists, action on a matter, other than the
election of directors, is approved it the votes cast by the
holders of the Shares represented at the meeting and entitled to
vote on the subject matter favoring the action exceed the votes
cast opposing the action, unless a greater number of affirmative
votes or voting by classes is required by the Florida Business
Corporation Act or the Corporation's Articles of Incorporation.
6. PROXY
Every Shareholder entitled to vote at a meeting of
Shareholders, or to express consent or dissent without a meeting,
or his duly authorized attorney-in-fact, may authorize another
person or persons to act for him by Proxy. The Proxy must be
signed by the Shareholder or his attorney-in-fact. A Proxy shall
be effective when received by the Secretary of the Corporation or
other person authorized to tabulate votes. No Proxy shall be
valid after the expiration of eleven months from the date
thereof, unless otherwise provided in the Proxy.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business of the corporation shall be managed and its
corporate power exercised by a Board of Directors, each of whom
shall be of full age. it shall not be necessary for Directors to
be Stockholders or residents of the state of Florida.
2. ELECTION AND TERM OF DIRECTORS
Directors shall be elected at the annual meeting of
Stockholders and each Director elected shall hold office until
his successor has been elected and qualified, or until his prior
resignation, removal, or death. Unless otherwise provided in the
Articles Of incorporation, Directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
3. VACANCIES
If the office of any Director, member of a committee or
other officer becomes vacant, including a vacancy resulting from
an increase in the numbers of Directors, the remaining Directors
in office, though less than a quorum, by a majority vote, may
appoint any qualified person to fill such vacancy, who shall hold
office for the unexpired term and until his successor shall be
duly chosen.
4. REMOVAL OF DIRECTORS
Any or all of the Directors may be removed with or without
cause by vote of a majority of all of the stock outstanding and
entitled to vote at an annual -meeting or special meeting of
stockholders called for that purpose.
5. NUMBER OF DIRECTORS; NEWLY CREATED DIRECTORSHIPS
The authorized number of directors shall not be less than 5.
The number of Directors may be increased by amendment of these
By-Laws, by the affirmative vote of a majority in interest of the
Stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional
Directors may be chosen at such meeting to hold office until the
next annual election and until their successors are elected and
qualify.
6. RESIGNATION
A Director may resign at any time by giving written notice
to the Board, the President or the Secretary of the Corporation.
Unless otherwise specified in the notice, the resignation of such
officer shall take effect upon receipt thereof by the board, and
the acceptance of the resignation shall not be necessary to make
it effective.
7. QUORUM OF DIRECTORS AND VOTING
A majority of the Directors shall constitute a quorum for
the transaction of business. If at any meeting of the board
there shall be less than a quorum present, a majority of those
present may adjourn the meeting from time to time until a quorum
is obtained, and no further notice thereof need be given other
than by announcement at the meeting which shall be so adjourned.
If a quorum is present when a vote is taken, the affirmative vote
of a majority of Directors present shall be the act of the Board
of Directors.
8. PLACE AND TIME OF BOARD MEETINGS
The board may hold its meeting at the office of the
corporation or at such other places, either within or without the
State of Florida as it may from time to time determine.
9. NOTICE OF MEETINGS OF THE BOARD
A regular annual meeting of the Board may be held without
notice at such time and place as it shall from time to time
determine. Special meetings of the Board shall be held upon
notice to the Directors and may be called by the President upon
three days notice to each Director either personally or by mail,
wire or fax; special meetings shall be called by the President or
by the Secretary in a like manner on written request of two
Directors. Notice of a meeting need not be given to any Director
who submits a waiver of notice whether before or after the
meeting or who attends the meeting without protesting prior
thereto or at its commencement, the lack of notice to him.
10. REGULAR ANNUAL MEETING
A regular annual meeting of the Board shall be held
immediately following the annual meeting of Stockholders at the
place of such annual meeting of Stockholders.
11. EXECUTIVE AND OTHER COMMITTEES
The Board, by resolution, may designate two or more of
their members to any committee. To the extent provided in said
resolution or these By-Laws, said committee any exercise the
powers of the Board concerning the management of the business of
the corporation.
12. COMPENSATION
No compensation shall be paid to Directors, as such, for
their services, but by resolution of the Board, a fixed sum and
expenses for actual attendance, at each regular or special
meeting of the Board may be authorized. Nothing herein contained
shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV - OFFICERS
1. OFFICERS, ELECTION AND TERM
a) The Board may elect or appoint a Chairman, a President,
one or more vice Presidents, a Secretary and a Treasurer, and
such other officers as it may determine, who shall have such
duties and powers as hereinafter provided. If specifically
authorized by the Board of Directors, an officer may appoint one
or more officers or assistant officers.
b) All officers shall be elected or appointed to hold
office until the meeting of the Board following the next annual
meeting of Stockholders and until their successors have be-en
elected or appointed and qualified.
c) Any two or more offices may be held by the same person.
2. REMOVAL, RESIGNATION, SALARY, ETC.
a) Any officer elected or appointed by the Board may be
removed by the Board with or without cause.
b) In the event of the death, resignation or removal of an
officer, the Board in its discretion may elect or appoint a
successor to fill the unexpired term.
c) An officer may resign at any time by delivering a
written notice to the corporation.
d) The salaries of all officers shall be fixed by the
Board.
e) The Directors may require any Officer to give security
for the faithful performance of his duties.
f) Any vacancy in any office may be filled by the Board of
Directors.
3.DUTIES
The officers of this Corporation shall have the following
duties:
The President shall be the chief executive officer of the
Corporation, shall have general and active management of the
business and affairs of the Corporation subject to the directions
of the board of Directors, and shall preside at all meetings of
the Shareholders and Board of Directors.
In absence of the President or in the event of his death,
inability or refusal to act, the Vice-President (or in the event
there is more than one vice-President, the Vice-Presidents in the
order of their appointment) 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 Secretary shall have custody of, and maintain, all of
the corporate records except the financial records; shall record
the minutes of all meetings of the Shareholders and Board of
Directors, send all notices of all meetings and perform such
other duties as may be prescribed by the Board of Directors or
the President.
The Treasurer shall have custody of all corporate funds and
financial records, shall keep full and accurate accounts of
receipts and disbursements and render accounts thereof at the
annual meetings of Shareholders and whenever else required by the
Board of Directors or the President, and shall perform such other
duties as may be prescribed by the Board of Directors or the
President.
ARTICLE V - STOCK CERTIFICATES
1. ISSUANCE
Every holder of shares in this Corporation shall be entitled
to have a certificate representing all shares of which he is
entitled. No certificate shall be issued for any share until
such share is fully paid.
2. FORM
Certificates representing shares in this Corporation shall be
signed by the President or Vice President and the Secretary or an
Assistant Secretary and may be sealed with the seal of this
Corporation or a facsimile thereof.
3. TRANSFER OF STOCK
The Corporation shall register a stock certificate presented
to it for transfer if the certificate is properly endorsed by the
holder of record or by his duly authorized attorney.
4. LOST, STOLEN OR DESTROYED CERTIFICATES
If the shareholder shall claim to have lost or destroyed a
certificate of shares issued by the Corporation, a new
certificate shall be issued upon the making of an affidavit of
that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed, and at the discretion of the Board of
Directors, upon the deposit of a bond or other indemnity in such
amount and with such sureties, if any, as the Board may
reasonably require.
ARTICLE VI - BOOKS AND RECORDS
1. BOOKS AND RECORDS
This Corporation shall keep correct and complete books and
records of account and shall keep -minutes of the proceedings of
its Shareholders, Board of Director and committees of Directors.
This corporation shall keep at its registered office or
principal place of business a record of its Shareholders, qiving
the names and addresses of all Shareholders and the number of the
shares hold by each.
Any books, records and minutes may be in written form or in
any other form capable of being converted into written form
within a reasonable time.
2. SHAREHOLDERS' INSPECTION RIGHTS
If he gives the Corporation written notice of his demand,
made in good faith and stating the purpose thereof, at least 5
business days before the date on which he wishes to inspect and
copy, a shareholder shall have the right to examine, in person or
by agent or attorney, during regular business hours for any
proper purpose, the Corporation's relevant books and records of
accounts, minutes and records of Shareholders and to make extract
therefrom.
3. FINANCIAL INFORMATION
The Corporation shall furnish its shareholders annual
financial statements, which may be consolidated or combined
statements of the Corporation and one or more of its
subsidiaries, as appropriate, that include a balance sheet as of
the end of the f iscal year, an income statement for that year,
and a statement of cash flows for that year. If f inancial
statements are prepared for the Corporation on the basis of
generally accepted accounting principles, the annual financial
statements for the shareholders also m,ast be prepared on that
basis.
If the annual financial statements are reported upon by a
public accountant, his report must accompany them. If not, the
statements must be accompanied by a statement of the President or
the person responsible for the corporation's accounting records:
1. stating his reasonable belief whether the statements
were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation; and
2. describing any respects in which the statements were
not prepared on a basis of accounting consistent with the
statements prepared for the preceding year.
The Corporation shall mail the annual financial statements to
each shareholder within 120 days after the close of each fiscal
year. Thereafter, on written request from a shareholder who was
not mailed the statements, the Corporation shall mail him the
latest annual financial statements.
ARTICLE VII -DIVIDEND
The Board may out of funds legally available therefor, at any
regular or special meeting, declare dividends upon the capital
stock of the Corporation as and when it deems expedient. Before
declaring any dividend there may be set apart out of any funds of
the Corporation available for dividends, such sum or sums as the
Board from time to time in their discretion deem proper for
working capital or as a reserve fund to meet contingencies or for
equalizing dividends or for such other purposes as the Board
shall deem conducive to the interests of the Corporation.
ARTICLE VIII - CORPORATE SEAL
The seal of the corporation shall be circular inform and bear
the name of the corporation, the year of its organization and the
words "CORPORATE SEAL, FLORIDA." The seal may be used by causing
it to be impressed directly on the instrument or writing to be
sealed, or upon adhesive substance affixed thereto. The seal on
the certificates for shares or on any corporate obligation for
the payment of money may be facsimile, engraved or printed.
ARTICLE IX - EXECUTION
All corporate instruments and documents shall be signed or
countersigned, executed, verified or acknowledged by, such
officer or officers or other person or persons as the Board may
from time to time designate.
ARTICLE X - FISCAL YEAR
The fiscal year shall begin the first day of January in each
year.
ARTICLE XI - NOTICE AND WAIVER OF NOTICE
Whenever any notice is required by these By-Laws to be given,
personal notice is not meant unless expressly so stated, and any
notice so required shall be deemed to be sufficient if given by
depositing the same in the post office box in a sealed post-paid
wrapper, addressed to the person entitled thereto at his last
known post office address, and such notice shall be deemed to
have been given an the day of such mailing. Stockholders not
entitled to vote shall not be entitled to receive notice of any
meetings except as otherwise provided by statute.
Whenever any notice is required to be given under the
provisions of any law, or under the provisions of the Articles of
Incorporation of the Corporation, or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time state therein,
shall be deemed equivalent thereto.
ARTICLE XII - CONSTRUCTION
Whenever a conflict arises between the language of these By-
Laws and the Articles of Incorporation, the Articles of
Incorporation shall govern.
ARTICLE XIII - ACTION WITHOUT A MEETING
1. ACTION BY SHAREHOLDERS WITHOUT A MEETING.
Any action required or permitted to be taken at a meeting of
the shareholders may be taken without a meeting, without prior
notice, and without a vote if one or more consents in writing,
setting forth the action so taken, shall be signed and dated by
the holders of the outstanding stock entitled to vote with
respect to the subject matter thereof and 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, and shall be delivered to
the Corporation for inclusion in the minute book.
2. ACTION BY DIRECTORS WITHOUT A MEETING.
Any action required or permitted to be taken by the Board of
Directors or a committee of the Board at a meeting may be taken
without a meeting if all the members of the Board or the
committee take the action, each director or committee member
signs a written consent describing the action taken, and the
consents are filed with the records of the Corporation.
ARTICLE XIV - AMENDMENTS
These By-Laws may be altered or repealed and BY-Laws may be
made at any annual meeting of the Stockholder5 or at any special
meeting thereof if notice of the proposed alteration or repeal to
be made be contained in the notice of such special meeting, by
the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat, or by the affirmative
vote of a majority of the board at any regular meeting of the
board or at any special meeting of the board if notice of the
proposed alteration or repeal to be made, be contained in the
notice of such special meeting.
Exhibit 10.1 AGREEMENT BETWEEN MICHAEL FLORIDINO AND COMPANY
AGREEMENT
AGREEMENT, entered into on the 23rd of February, 1999
between Michael Floridino, (hereinafter "Michael Floridino")
residing in Winter Haven, Florida and Floridino's International
Holdings Inc., (hereinafter "the Company"), incorporated under
the laws of the State of Florida.
WHEREAS, the Company requires equity and capital for its
continued operation and;
WHEREAS, Michael Floridino has agreed to provide equity and
capital to the Company for the repayment of debt owned by the
Company.
IT IS HEREBY AGREED, by the respective parties as follows:
1. Michael Floridino shall, upon the execution of this
Agreement, immediately list for sale the properties set forth on
the attached Schedule A and transfer the equity obtained from the
sale of such properties to the Company after reasonable sales
costs and the satisfaction of any encumbrances or liens.
2. In consideration of the foregoing, upon the transfer to
the Company of the equity proceeds obtained from the sale of the
properties, the Company shall issue to Michael Floridino an
amount of convertible preferred stock of Floridino International
Holdings Inc., ____ par value, which are convertible into common
shares of stock of the Company. The amount of convertible
preferred stock to be issued to Michael Floridino shall be equal
to the net equity proceeds obtained from the sale of the
properties listed on Schedule A and calculated at $5.00 per
share.
3. The shares of convertible preferred stock may only be
converted upon the attainment of revenues of $3 million during a
fiscal year by the Company's distribution division, specifically
Floridino's Specialty Distribution. The figure of $3 million
shall be certified by an independent auditor or accountant who
has conducted an audit of the books and records of the Company.
A certificate numbered 1107, in the name of Michael Floridino,
representing 650,000 shares of common stock shall be held in an
escrow deposit box in the State of Florida and shall be in the
name of Michael Floridino and a director of the Company. Upon
the attainment of the aforementioned $3 million, Michael
Floridino shall have the option to convert the preferred shares
received hereunder and share certificate numbered 1107 shall be
released and transferred to Michael Floridino.
4. The parties represent that they have entered into this
Agreement on their own accord and that this Agreement sets forth
the entire understanding between the parties hereto. This
Agreement may not be amended except by written agreement signed
by all the parties hereto. The Agreement shall be binding upon
the heirs, successors and assigns of the parties hereto.
______________________________ ______________________________
MICHAEL FLORIDINO FLORIDINO'S INTERNATIONAL
HOLDINGS INC.
By:
SCHEDULE A
1. Apartment united A-E, located at 1810 3rd Street, S.E.,
Winter Haven, Florida 33880
Approximate Value: $130,000.00
Liens: Colonial Bank - First Mortgagee ($55,606.95)
Jacqueline Williams - Private Mortgagee($75,000.00)
Michael Nolen, Jr. - Private Note ($ 6,000.00)
2. Restaurant - 300 Cypress Gardens Blvd,
Winter Haven, Florida 33880
Approximate Value: $375,000.00
Liens: Wilma Jones - Private Mortgagee ($138,664.00)
Colonial Bank - First Mortgagee ($ 7,000.00)
1st Union Bank - Second Mortgagee ($ 43,000.00)
3. Building on office located at 3560 Cypress Gardens Road,
Winter Haven, Florida 33884
Liens: Colonial Bank - First Mortgagee ($ 58,822.06)
Honkamp Krueger & Co. ($ 67,229.00)
Exhibit 10.2 Promissory Note Between Floridino's Inc. and
Raffles Toho Inc.
PROMISSORY NOTE
On the 31st day of August 1999, Floridino's Inc., agrees to pay
Raffles Toho, Inc., One Hundred seventeen thousand three hundred
forty dollars and no cents ($117,340.00) at the rate of 8.25
percent per annum. A balloon payment will be due on the 1st day
of September, 2000.
____________________________
Nick Pirgousis, President
Floridino's Inc.
Exhibit 10.3 Promissory Note Between Floridino's Inc. and
Raffles Toho Inc.
PROMISSORY NOTE
On the 31st day of August 1999, Floridino's Inc., agrees to pay
Raffles Toho, Inc., Seventy two thousand one Hundred ninety seven
dollars and no cents ($72,197.00) at the rate of 8.25 percent per
annum. A balloon payment will be due on the 1st day of September,
2000.
____________________________
Nick Pirgousis, President
Floridino's Inc.
Exhibit 10.4 Promissory Note Between Floridino's Inc. and
Raffles Toho Inc.
PROMISSORY NOTE
On the 31st day of December, 1998, Floridino's Inc., agrees to pay
Raffles Toho, Inc., forty five thousand three hundred eighty
eight dollars and no cents ($45,388.00) at the rate of 8.25
percent per annum. A balloon payment will be due on the 1st day
of January, 2000.
____________________________
Nick Pirgousis, President
Floridino's Inc.
Exhibit 10.5 Promissory Note Between Floridino's Inc. and
Toho Partners, LLC
PROMISSORY NOTE
On the 31st day of December 1998, Floridino's Inc., agrees to pay
Toho Parnters, LLC, twenty thousand dollars and no cents
($20,000.00) at the rate of 8.25 percent per annum. A balloon
payment will be due on the 1st day of January, 2000.
____________________________
Nick Pirgousis, President
Floridino's Inc.
Exhibit 10.6 FLORIDINO'S STANDARD FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into this ________ day of
______________,19 ____, by and between FLORIDINO'S INTERNATIONAL,
INC., a Florida corporation, with its principal office at 3560
Cypress Gardens Road, Winter Haven, Florida 33884 ("COMPANY"),
and _________________________________ with his principal address
at ___________________________________________
__________________________________________("FRANCHISEE").
1. PREAMBLES AND ACKNOWLEDGMENTS
A. PREAMBLES
The COMPANY has developed specialty restaurants, known as
"Floridino's Restaurants", that sell and serve calzones, pizzas,
pastas, salads, Italian sandwiches, beers, wines, sodas, and
other Italian, Italian-American, and American foods and
beverages. The Floridino's Restaurants are identified by certain
service marks, trade names, logos, trade dress, and other
commercial symbols, including, without limitation, the
"Floridino's" service mark and trade name and the "Home of the
World's Largest Calzone" service mark ("Marks"). The Floridino's
Restaurants are operated pursuant to formats, specifications,
standards, methods, and procedures required or approved by the
COMPANY ("System"), all of which may be improved, further
developed, or otherwise modified from time to time by the
COMPANY. The COMPANY grants to persons who meet the COMPANY's
qualifications, who have selected a location approved by the
COMPANY, and who are willing to undertake the investment and
effort, a franchise to operate a Floridino's Restaurant at such
location, offering the products and services required or approved
by the COMPANY and using the Marks and the System.
B. ACKNOWLEDGMENTS
FRANCHISEE acknowledges that he has read this Agreement and the
COMPANY's franchise offering circular and that he understands and
accepts the terms, conditions, and covenants contained in this
Agreement as being reasonably necessary to maintain the COMPANY's
high standards of quality and service at all Floridino's
Restaurants in order to protect and preserve the goodwill
associated with the Marks and the System. FRANCHISEE further
acknowledges that he has conducted an independent investigation
of the franchise contemplated by this Agreement and recognizes
that, like any other business, the business of operating a
Floridino's Restaurant may evolve and change over time, that an
investment in the franchise contemplated by this Agreement
involves risks, and that the success of the franchise
contemplated by this Agreement will be largely dependent upon the
abilities and efforts of FRANCHISEE. The COMPANY expressly
disclaims the making of, and FRANCHISEE acknowledges that he has
not received or relied upon, any-warranty or guarantee, express
or implied, as to the revenues, profits, or financial success of
the franchise contemplated by this Agreement. FRANCHISEE further
acknowledges that he has not received or relied on any
representation about the franchise contemplated by this Agreement
by the COMPANY, or its directors, officers, employees, or agents,
that are contrary to the disclosures made in the COMPANY's
franchise offering circular. FRANCHISEE represents to the
COMPANY, as an inducement to its entry into this Agreement, that
FRANCHISEE has made no misrepresentations in obtaining the
franchise contemplated by this Agreement.
2. FRANCHISE
A. FRANCHISE GRANT
Subject to the provisions of this Agreement, the COMPANY grants
to FRANCHISEE a franchise ("Franchise") to operate one (1)
Floridino's Restaurant ("Restaurant"), offering the products and
services required and approved by the COMPANY and using the Marks
and the System, at the following location:
The COMPANY's approval of the foregoing location does not
constitute a representation, warranty, or guarantee by the
COMPANY that the Restaurant can be successfully operated at such
location.
B. FRANCHISE TERM
The term of the Franchise shall commence upon the date of
execution of this Agreement by the COMPANY and shall expire on
the last day of the month that includes the tenth (10th)
anniversary of such date, unless otherwise terminated prior
thereto by operation of law or in accordance with any provision
of this Agreement.
C. FRANCHISE RENEWAL
Provided FRANCHISEE is in full compliance with all provisions of
this Agreement, any and all other agreements between the COMPANY
and FRANCHISEE, and any and all applicable laws and regulations,
and upon not less than six (6) not more than twelve (12) months
written notice to the COMPANY of his intention to do so,
FRANCHISEE shall have the right to renew the Franchise for
successive periods of ten (10) years each upon the payment to the
COMPANY of a renewal fee in an amount equal to twenty-five
percent (25%) of the franchise fee then most recently received by
the COMPANY for a comparable new franchise and the execution of
the then current form of standard franchise agreement used by the
COMPANY prior to the expiration of each such-successive term.
D. TERRITORIAL RIGHTS
Provided FRANCHISEE is in full compliance with all of the
provisions of this Agreement, any and all other agreements
between the COMPANY and FRANCHISEE, and any and all applicable
laws and regulations, the COMPANY agrees that it will not
operate, or permit any person other than FRANCHISEE to operate,
any Floridino's Restaurant at any location within two and
one-half (2.5) miles of the Restaurant during the term of the
Franchise. The COMPANY (on behalf of itself and its affiliates)
retains the right, in its sole discretion and without granting
any rights to FRANCHISEE, (i) to itself operate, and permit
persons other than FRANCHISEE to operate, Floridino's Restaurants
at such locations greater than two and one-half (2.5) miles from
the Restaurant as the COMPANY deems appropriate and (ii) to
distribute anywhere the products and services required and
approved by the COMPANY for Floridino's Restaurants under the
Marks and other marks through dissimilar channels of trade (such
as, food store, supermarket, factory, hospital, nursing home,
school, arena, and stadium sales).
3. CONSTRUCTION AND OPENING OF THE RESTAURANT
A. ACQUISITION OF PREMISES OF THE RESTAURANT
FRANCHISEE has purchased or leased, or will, within thirty (30)
days after the date of the execution of this Agreement, purchase
or lease the premises at which the Restaurant is to be operated.
Any lease or sublease of such premises shall contain such terms
and provisions as are reasonably acceptable to the COMPANY and,
at the COMPANY'S option, shall (i) be collaterally assigned to
the COMPANY (with the consent of the lessor, if required) by a
collateral assignment agreement in form and substance reasonably
acceptable to the COMPANY to secure performance of any and all of
FRANCHISEE's liabilities and obligations to the COMPANY; or (ii)
contain substantially the following provisions:
(a) Anything contained in this Lease to the contrary
notwithstanding, Lessor agrees that without its consent, this
Lease and the right, title, and interest of Lessee hereunder may
be assigned by Lessee to Floridino's International, Inc., a
Florida corporation, or its designee, provided that Floridino's
International, Inc. shall execute documents evidencing that it
will be bound by all of the obligations of Lessee arising under
this Lease from and after the time of such assignment.
(b) Lessee hereby agrees that Lessor may, upon the written
request of Floridino's International, Inc., disclose to
Floridino's International, Inc. all reports, information, or data
in Lessor's possession respecting, sales made in, upon, or from
the leased premises.
(c) Lessor shall give written notice to Floridino's
International, Inc. (concurrently with the giving of such notice
to Lessee) of any defaults by Lessee under this Lease and
Floridino's International, Inc. shall have, after the expiration
of the period during which Lessee may cure such default, an
additional fifteen (15) days to cure, at its sole option, any
such default and, upon the curing of such default, the right to
enter upon the leased premises and assume Lessee's rights under
this Lease as if this Lease had been assigned by Lessee to
Floridino's International, Inc.
B. CONSTRUCTION OF THE RESTAURANT
The COMPANY shall provide to FRANCHISEE prototype plans and
specifications for a Floridino's Restaurant reflecting the
COMPANY's requirements and suggestions for dimensions, exterior
design, interior design and layout, decor, building materials,
equipment, fixtures, furniture, and signs.
Promptly after purchasing or leasing the premises at which the
Restaurant is to be operated and having been provided with the
above-described plans and specifications, FRANCHISEE shall do or
cause to be done the following:
(i) prepare and submit to the COMPANY for approval, which shall
not be unreasonably withheld, final plans and specifications for
the Restaurant, specifically noting any proposed modifications to
the COMPANY's prototype plans and specifications, all such
modifications being subject to prior written approval by the
COMPANY;
(ii) obtain all licenses, permits, and certificates required for
construction and operation of the Restaurant;
(iii) construct all required improvements to the premises,
purchase and install all required equipment, fixtures,
furniture, and signs, and decorate the premises in compliance
with the plans and specifications approved by the COMPANY and all
applicable ordinances, building codes, permit requirements, and
lease or deed requirements and restrictions;
(iv) establish filing, accounting, and inventory control systems
conforming to requirements of the COMPANY;
(v) obtain a certificate of occupancy for the Restaurant; and
(vi) purchase, in accordance with the COMPANY's specifications,
an opening inventory of ingredients, foods, beverages, plates,
glasses, cups, utensils, menus, napkins, and other supplies
required f or operation of the Restaurant.
The COMPANY shall make reasonable efforts to provide consultation
services in connection with the construction of the Restaurant
upon written request therefor from FRANCHISEE, but the ultimate
responsibility for such construction remains with FRANCHISEE.
C. OPENING OF THE RESTAURANT
FRANCHISEE agrees that he will not open the Restaurant for
business without a certificate of occupancy and the COMPANY's
prior written approval. FRANCHISEE agrees to complete the
construction of and open the Restaurant for business within one
hundred twenty (120) days after he purchases or leases the
premises of the Restaurant, subject to such extensions of time as
the COMPANY may grant, in its sole discretion.
D. RELOCATION OF THE RESTAURANT
If FRANCHISEE's lease for the premises of the Restaurant
terminates, with or without the fault of FRANCHISEE, or if in the
judgment of the COMPANY and FRANCHISEE there is a change in the
character of the location of the Restaurant sufficiently
detrimental to its business potential to warrant its relocation,
the COMPANY may, in its sole discretion, grant permission for
relocation of the Restaurant to a new location approved in
writing by the COMPANY. In the absence of such permission to
relocate, this Agreement and the Franchise shall automatically
terminate upon the loss of the right to continue to occupy the
premises of the Restaurant. Any approved relocation shall be at
FRANCHISEE's sole expense and FRANCHISEE shall reimburse the
COMPANY for any and all costs and expenses incurred by the
COMPANY in connection with such relocation. FRANCHISEE agrees
that the premises at any such new location shall be acquired and
the Restaurant shall be constructed and opened at such premises
in accordance with the then current standards and specifications
for a Floridino's Restaurant and in accordance with the
provisions of Paragraphs A, B, and C of this Section 3.
4. TRAINING AND ASSISTANCE
A. TRAINING BY THE COMPANY
The COMPANY shall provide, and FRANCHISEE (or if FRANCHISEE is a
partnership or corporation, a managing partner or officer who
shall have been approved by the COMPANY) and any proposed
managers of the Restaurant shall complete, an initial training
program on the operation of a Floridino's Restaurant at such
places and times as the COMPANY may designate. The initial
training program shall consist of at least twenty (20) days of
training covering such topics and using such instructional
methods as the COMPANY, in its sole discretion, shall determine
to be appropriate.
If, during the initial training program, the COMPANY determines,
in its sole discretion, that any proposed manager of the
Restaurant is not qualified to manage the Restaurant, the COMPANY
shall notify FRANCHISEE thereof and FRANCHISEE may select a
substitute manager for attendance at such training program. If,
during the initial training program, the COMPANY determines, in
its sole discretion, that FRANCHISEE (or if FRANCHISEE is a
partnership or corporation, its managing partner or officer) is
not qualified to operate the Restaurant, the COMPANY shall have
the right to terminate the Franchise, effective upon delivery of
written notice thereof to FRANCHISEE. Upon such termination, the
COMPANY shall promptly refund (without interest) the franchise
fee paid pursuant to Paragraph A of Section 8 hereof, and
FRANCHISEE shall accept such refund as its only remedy with
respect thereto.
The COMPANY shall have the right to require that FRANCHISEE (or
if FRANCHISEE is a partnership or corporation, its managing
partner or officer) and all managers of the Restaurant complete
supplemental and refresher training programs during the term of
the Franchise, to be provided at such places and times as the
COMPANY may designate. The COMPANY shall have the right to
assess FRANCHISEE reasonable charges for such training programs.
FRANCHISEE shall be solely responsible for all travel, lodging,
and living expenses incurred in connection with the attendance by
FRANCHISEE (or if FRANCHISEE is a partnership or corporation, its
managing partner or officer) and all managers of the Restaurant
at the initial training program and any supplemental or refresher
training programs.
B. START-UP ASSISTANCE
The COMPANY shall provide FRANCHISEE the services of one (1) or
more of its employees for twenty-one (21) days commencing one (1)
day prior to the scheduled date of opening of the Restaurant to
assist FRANCHISEE with the start-up and initial operation of the
Restaurant.
C. OPERATING ASSISTANCE
The COMPANY may advise FRANCHISEE of operating problems of the
Restaurant disclosed by reports submitted to or inspections made
by the COMPANY. Further, the COMPANY may provide to FRANCHISEE
such guidance and assistance in connection with the operation of
the Restaurant as is deemed appropriate by the COMPANY. Such
guidance and assistance as the COMPANY does provide may be
provided, in the sole discretion of the COMPANY, in the form of
bulletins and other written materials, telephone consultations,
and consultations at the offices of the COMPANY or at the
Restaurant in conjunction with inspections of the Restaurant.
Additional guidance and assistance may be made available to
FRANCHISEE, at the written request of FRANCHISEE and in the sole
discretion of the COMPANY, at per then fees and charges
established by the COMPANY.
D. OPERATING MANUAL
The COMPANY shall loan to FRANCHISEE during the term of the
Franchise one (1) copy of an operating manual, which may consist
of one (1) or more manuals and other written materials
("Operating Manual"), pertaining to the operation of Floridino's
Restaurants, containing a description of the foods, beverages,
and other products and services required and approved by the
COMPANY, formats, specifications, standards, methods, and
procedures required and approved by the COMPANY, and information
relative to other obligations of FRANCHISEE hereunder. The
COMPANY shall have the right to add to, and otherwise modify, the
Operating Manual to reflect changes in required and approved
foods, beverages, and other products and services and required
and approved formats, specifications, standards, methods, and
procedures for Floridino's Restaurants. FRANCHISEE shall keep
his copy of the Operating Manual current. The master copy
maintained by the COMPANY at its principal office shall be
controlling in the event of a dispute relative to the contents of
the Operating Manual. FRANCHISEE shall not at any time copy any
part of the Operating Manual, or disclose its contents to any
third party, without the written approval of the COMPANY.
5. MARKS
A. OWNERSHIP AND GOODWILL OF THE MARKS
FRANCHISEE acknowledges that the COMPANY is the owner of the
Marks, that FRANCHISEE has no interest whatsoever in the Marks,
and that FRANCHISEE's right to use the Marks is derived solely
from this Agreement and is limited to the operation of the
Restaurant pursuant to and in compliance with this Agreement and
the formats, specifications, standards, methods, and procedures
required and approved by the COMPANY. Any other use of the Marks
by FRANCHISEE shall constitute an infringement of the rights of
the COMPANY in the Marks. FRANCHISEE agrees that all use of the
Marks by FRANCHISEE, and any goodwill established thereby, shall
inure to the exclusive benefit of the COMPANY, and FRANCHISEE
acknowledges that this Agreement does not confer any such
goodwill or other interest in the Marks upon FRANCHISEE. All
provisions of this Agreement applicable to the Marks shall apply
to any additional or substitute service marks, trade names,
logos, trade dress, commercial symbols, and other identifying
characteristics of Floridino's Restaurants hereafter authorized
for use by FRANCHISEE pursuant to this Agreement.
B. LIMITATIONS ON FRANCHISEE'S USE OF THE MARKS
FRANCHISEE agrees to use the Marks as the sole identification of
the Restaurant, provided that FRANCHISEE shall identify himself
as the independent owner thereof in the manner required by the
COMPANY. FRANCHISEE shall not use any Mark as part of any
corporate, partnership, or organizational name or with any
prefix, suffix, or other modifying words, terms, designs, or
symbols, or in any modified form, nor may FRANCHISEE use any Mark
in connection with the sale of any food, beverage, or other
product or service that is not required or approved by the
COMPANY or in any other manner not expressly authorized in
writing by the COMPANY. FRANCHISEE agrees to display the Marks
prominently and in the manner required by the COMPANY at the
Restaurant, on stationery, business forms, signs, and uniforms
required or approved by the COMPANY, and in connection with
advertising and promotional materials required or approved by the
COMPANY. Further, FRANCHISEE agrees to give such notices of mark
registrations as the COMPANY specifies and to obtain such
fictitious or assumed name registrations as may be required under
applicable law.
C. NOTIFICATION OF INFRINGEMENT AND CLAIMS
FRANCHISEE shall notify the COMPANY immediately in writing of any
apparent infringement of, or challenge to FRANCHISEE's use of,
any Mark, or any claim by any person of any rights in any Mark,
or any similar trademark, service mark, trade name, logo, trade
dress, commercial symbol, or other identifying characteristic of
which FRANCHISEE becomes aware. FRANCHISEE shall not communicate
with any person other than the COMPANY and its counsel in
connection with any such infringement, challenge, or claim. The
COMPANY shall have sole discretion to take such action as it
deems appropriate and have the right to exclusively control any
litigation, U.S. Patent and Trademark Office proceeding, or other
administrative proceeding arising out of any such infringement,
challenge, or claim or otherwise relating to any Mark, including
any claim of unfair competition relating thereto.
FRANCHISEE may not, without the written approval of the COMPANY,
in its sole discretion, commence or prosecute, or seek leave to
intervene in, any litigation or other proceeding, including any
arbitration proceeding, in which FRANCHISEE purports to enforce
any right to recover any element of damage arising from the use
or infringement of any of the Marks or from any unfair
competition relating thereto. FRANCHISEE agrees to execute all
instruments and documents, render such assistance, and do such
acts and things as, in the opinion of the COMPANY's counsel, may
be necessary or advisable to protect and maintain the interests
of the COMPANY in any such litigation, U.S. Paten and Trademark
Office proceeding, or other administrative or arbitration
proceeding or to otherwise protect and maintain the interests of
the COMPANY in the Marks.
D. DISCONTINUANCE OF USE OF THE MARKS
If it becomes advisable at any time, in the COMPANY's sole
discretion, for the COMPANY and/or FRANCHISEE to modify or
discontinue use of any Mark, and/or use one (1) or more
additional or substitute service marks, trade names, logos, trade
dress, commercial symbols, or other identifying characteristics
of Floridino's Restaurants, FRANCHISEE agrees to comply with the
COMPANY's directions with respect thereto within a reasonable
time after notice thereof by the COMPANY. FRANCHISEE shall be
solely responsible for all expenses associated with his
compliance with the COMPANY's directions.
6. CONFIDENTIAL INFORMATION
A. THE COMPANY'S CONFIDENTIAL INFORMATION
The COMPANY possesses certain trade secrets and other
confidential information relating to the System, including,
without limitation, formats, specifications, standards, methods,
procedures, information, and knowledge of and experience in
operating Floridino's Restaurants ("Confidential Information").
The COMPANY will disclose the Confidential Information to
FRANCHISEE in providing FRANCHISEE training, in the Operating
Manual, and in guidance and assistance provided to FRANCHISEE
during the term of the Franchise. FRANCHISEE acknowledges and
agrees he will not acquire any interest in the Confidential
Information other than the right to use it in the operation of
the Restaurant during the term of the Franchise, and that the use
or duplication of the Confidential Information in any other
business would constitute unfair competition. FRANCHISEE
acknowledges and agrees that the Confidential Information is
proprietary to the COMPANY and is disclosed to FRANCHISEE solely
on the condition that FRANCHISEE agrees, and FRANCHISEE does
hereby agree, that he will (i) not use the Confidential
Information in any other business or capacity; (ii) maintain the
absolute confidentiality of the Confidential Information during
and after the term of the Franchise; (iii) not make unauthorized
copies of any portion of the Confidential Information disclosed
in written form; and (iv) adopt and implement all reasonable
procedures required from time to time by the COMPANY to prevent
unauthorized use or disclosure of the Confidential Information,
including, without limitation, restrictions on disclosure thereof
to FRANCHISEE's employees and the use of nondisclosure and
noncompetition clauses in employment agreements with such
employees if the COMPANY so directs.
B. FRANCHISEE'S OTHER BUSINESS INTERESTS
FRANCHISEE acknowledges and agrees that the COMPANY would be
unable to protect the Confidential Information against
unauthorized use or disclosure and encourage a free exchange of
ideas and information among the COMPANY and all owners of
franchised Floridino s Restaurants if any owner or manager of a
franchised Floridino s Restaurant is permitted to have any
interest in or involvement with any Italian or Italian-American
restaurant, other than a Floridino's Restaurant. Therefore,
during the term of the Franchise, neither FRANCHISEE (or any
partner, shareholder, director, or officer of FRANCHISEE if
FRANCHISEE is a partnership or corporation), any manager of the
Restaurant, nor any member of his (or their) immediate families,
shall have any interest in or involvement with, as an owner,
investor, partner, director, officer, employee, consultant,
representative, or agent, or in any other capacity, any Italian
or Italian-American restaurant, other than a Floridino's
Restaurant. This prohibition shall not preclude any such person
from owning less than five percent (5%) of the outstanding shares
of stock of any publicly held corporation owning or operating any
such restaurant so long as such person is not involved in the
operation of such restaurant.
C. FRANCHISEE'S INVENTIONS AND IMPROVEMENTS
FRANCHISEE agrees that the COMPANY shall have the perpetual right
to use and authorize other persons to use, and FRANCHISEE shall
fully and promptly disclose to the COMPANY, all inventions,
improvements, ideas, concepts, methods, and procedures relating
to the operation of Italian or Italian-American restaurants
conceived or developed by FRANCHISEE and/or his employees during
the term of the Franchise.
7. RELATIONSHIP OF THE PARTIES - INDEMNIFICATION
A. RELATIONSHIP OF THE PARTIES
It is understood and agreed by the parties hereto that this
Agreement does not create a fiduciary relationship between them,
that the COMPANY and FRANCHISEE shall be independent contractors,
and that nothing in this Agreement is intended to make either
party a general or special agent, legal representative,
subsidiary, joint venturer, partner, employee, or servant of the
other for any purpose. FRANCHISEE shall identify himself in all
dealings with customers, lessors, contractors, suppliers, public
officials, and others as the owner and operator of the Restaurant
under a franchise from the COMPANY, and shall place such notices
of independent ownership and operation on forms, signs
stationery, advertising, and other materials, as the COMPANY may
require.
The COMPANY has not authorized or empowered FRANCHISEE to use the
Marks other than as provided by this Agreement. FRANCHISEE shall
not employ any Mark in signing any contract, lease, mortgage,
check, purchase agreement, negotiable instrument, or other legal
obligation without the prior written approval of the COMPANY or
employ any Mark in a manner that is likely to result in liability
of the COMPANY for any indebtedness or obligation of FRANCHISEE.
Except as may otherwise be specifically provided in this
Agreement, neither the COMPANY nor FRANCHISEE shall make any
express or implied agreements, guarantees, or representations, or
incur any debt, in the name of or on behalf of the other, or
represent that their relationship is other than franchiser and
franchisee. Neither the COMPANY nor FRANCHISEE shall be
obligated by or have any liability under any agreements or
representations made by the other that are not expressly
authorized hereunder, nor shall the COMPANY be obligated for any
damages to any person or property directly or indirectly arising
out of FRANCHISEE's ownership, construction, or operation of the
Restaurant. The COMPANY shall have no liability for any sales,
service, use, value added, excise, gross receipts, property, or
other taxes, whether levied upon FRANCHISEE, the Restaurant, or
the COMPANY, in connection with FRANCHISEE's ownership,
construction, or operation of the Restaurant.
B. INDEMNIFICATION
FRANCHISEE agrees to indemnify and hold the COMPANY, and its
subsidiaries, affiliates, stockholders, directors, officers,
employees, agents, and assignees, harmless from and against, and
to reimburse them for, any loss, liability, taxes, or damages
(actual, consequential, and incidental) and all reasonable costs
and expenses of defending any claim brought against any of them
or any action in which any of them is named as a party
(including, without limitation, reasonable accountant, attorney,
and expert witness fees, costs of investigation and proof of
acts, court costs , other litigation expenses, and travel and
living expenses) that any of them may suffer, sustain, or incur
by reason of, arising from, or in connection with FRANCHISEE's
ownership, construction, or operation of the Restaurant. The
indemnities and assumptions of liabilities and obligations herein
shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of the Franchise.
8. FRANCHISE FEES
A. FRANCHISE FEE
FRANCHISEE shall pay to the COMPANY a franchise fee in the amount
of ________________ ($______) payable upon the execution of this
Agreement. If FRANCHISEE has paid to the COMPANY a development
fee for the Restaurant prior to the execution of this Agreement,
such development fee shall be fully credited to the franchise
fee. The franchise fee shall be fully earned by the COMPANY upon
the execution of this Agreement and shall be nonrefundable,
except as expressly provided in Paragraph A of Section 4 hereof.
B. ROYALTY AND SERVICE FEE
FRANCHISEE agrees to pay to the COMPANY a monthly royalty and
service fee based on the following percentages of the Gross
Revenues, as defined in Paragraph C of this Section 8, payable by
the tenth (10th) day of each month in respect of the Gross
Revenues for the preceding month:
Four percent (4.0%) of the Gross Revenues for each month during
the period commencing on the date of execution of this Agreement
by the COMPANY and expiring on the last day of the month that
includes the first (1st) anniversary of such date;
The COMPANY may, in its sole discretion, institute an electronic
funds transfer system for payment of the royalty and service fee
each month during the term of the Franchise. If the COMPANY
institutes such a system, FRANCHISEE agrees to execute all
documents required to authorize his bank to electronically
transfer funds from his account to the COMPANY's account at its
bank as payment of the royalty and service fee each month upon
presentation by the COMPANY of a statement of the Gross Revenues
and the royalty and service fee due and owing in respect of the
Gross Revenues for the preceding month.
C. DEFINITION OF "GROSS REVENUES"
The term "Gross Revenues" shall mean the total amount of all
sales of foods, beverages, and other products and services sold
at, from, and otherwise in connection with the operation of the
Restaurant, including delivery, special event, and other off
premises sales, whether for cash, on credit, or otherwise, but
shall not include any sales, service, value added, or excise
taxes paid or accrued by FRANCHISEE.
D. INTEREST ON LATE PAYMENTS
All royalty and service fees, advertising contributions, amounts
due for purchases by FRANCHISEE from the COMPANY or its
affiliates, and other amounts that FRANCHISEE owes to the COMPANY
or its affiliates shall bear interest after the due date at the
applicable maximum legal rate for open account business credit,
but not to exceed one and one-half percent (1.5%) per month.
FRANCHISEE acknowledges that this Paragraph D shall not
constitute the COMPANY's agreement to accept such payments after
they are due or a commitment by the COMPANY to extend credit to,
or otherwise finance FRANCHISEE's operation of, the Restaurant.
Further, FRANCHISEE acknowledges that his failure to pay all
amounts when due shall constitute grounds for termination of the
Franchise, as provided in Paragraph B of Section 14 hereof,
notwithstanding the provisions of this paragraph.
E. APPLICATION OF PAYMENTS
The COMPANY shall have sole discretion to apply any and all
payments received from FRANCHISEE and any and all indebtedness
of the COMPANY to FRANCHISEE to any and all past due indebtedness
of FRANCHISEE for royalty and service fees, advertising
contributions, and purchases from the COMPANY and its affiliates
in such amounts and in such order as the COMPANY deems
appropriate.
9. IMAGE AND OPERATING STANDARDS
A. BUILDING MATERIALS, EQUIPMENT, FIXTURES, FURNITURE, AND
SIGNS
FRANCHISEE acknowledges and agrees that the COMPANY would be
unable to maintain its high standards of quality and service at
all Floridino's Restaurants and protect and preserve the goodwill
associated with the Marks and the System if any franchisee is
permitted to use any building materials, equipment, fixtures,
furniture, or signs other than those required or approved by the
COMPANY in the construction or operation of his Floridino's
Restaurant. The COMPANY shall provide FRANCHISEE with a list of
required or approved building materials, equipment, fixtures,
furniture, and signs and may issue revisions thereto. The
COMPANY's requirement or approval of building materials,
equipment, fixtures, furniture, and signs may be given in the
form of specifications and in the requirement or approval of
specific types and brands. FRANCHISEE agrees that he will not,
without the prior written approval of the COMPANY, use or
authorize his employees or contractors to use, any building
materials, equipment, fixtures, furniture, or signs that are not
on such list in the construction or operation of the Restaurant.
FRANCHISEE may purchase required and approved building materials,
equipment, fixtures, furniture, and signs from the COMPANY or any
other supplier that can provide the same.
B. CONDITION OF THE RESTAURANT, EQUIPMENT, FIXTURES, FURNITURE,
AND SIGNS
FRANCHISEE agrees that he will maintain the condition and
appearance of the Restaurant and all equipment, fixtures,
furniture, and signs used in the operation of the Restaurant in
accordance with the specifications of the COMPANY. FRANCHISEE
shall not alter the Restaurant and/or any equipment, fixture,
furniture, or sign used in the operation of the Restaurant
without the prior written approval of the COMPANY. If the
Restaurant and/or any equipment, fixture, furniture, or sign used
in the operation of the Restaurant is damaged by fire or any
other casualty, FRANCHISEE shall, within thirty (30) days
thereafter, repair the Restaurant and/or such equipment, fixture,
furniture, or sign in accordance with the specifications of the
COMPANY if such repair is commercially practical or commence
reconstruction of the Restaurant and/or replace such equipment,
fixture, furniture, or sign if such repair is not commercially
practical. If the Restaurant and/or any equipment used in the
operation of the Restaurant is destroyed by fire or any other
casualty, FRANCHISEE shall, within thirty (30) days
thereafter, commence reconstruction of the Restaurant and/or
replace such equipment, fixture, furniture, or sign. Upon
commencement of reconstruction of the Restaurant, FRANCHISEE
shall thereafter proceed with such reconstruction with reasonable
diligence until such reconstruction has been completed and the
Restaurant reopened in accordance with the provisions of
Paragraphs B and C of Section 3 hereof. As an alternative to
reconstruction of the Restaurant if the Restaurant has been
damaged to the extent that repair is commercially impractical or
destroyed, FRANCHISEE may terminate the Franchise by written
notice to the COMPANY.
C. FOODS AND BEVERAGES
FRANCHISEE acknowledges and agrees that the COMPANY would be
unable to maintain its high standards of quality and service at
all Floridino's Restaurants and protect and preserve the goodwill
associated with the Marks and the System if any franchisee is
permitted to offer any foods, beverages, and other products and
services other than those required and approved by the COMPANY in
connection with the operation of his Floridino's Restaurant.
FRANCHISEE agrees that he will offer all foods, beverages, and
other products and services required by the COMPANY in the
Operating Manual and will not, without the prior written approval
of the COMPANY, offer any food, beverage, or other product or
service that is not approved by the COMPANY in the Operating
Manual in connection with the operation of the Restaurant.
FRANCHISEE further agrees that he will not offer any food,
beverage, or other product or service that is required or
approved by the COMPANY in the Operating Manual at any location
other than the premises of the Restaurant without the prior
written approval of the COMPANY.
D. INGREDIENTS AND OTHER SUPPLIES
FRANCHISEE acknowledges and agrees that the COMPANY would be
unable to maintain its high standards of quality and service at
all Floridino's Restaurants and protect and preserve the goodwill
associated with the Marks and the System if any franchisee is
permitted to use any ingredients, foods, beverages, plates,
glasses, cups, utensils, menus, napkins, or other supplies other
than those required or approved by the COMPANY in the operation
of his Floridino's Restaurant. The COMPANY shall provide
FRANCHISEE a list of required or approved ingredients, foods,
beverages, plates, glasses, cups, utensils, menus, napkins, and
other supplies and shall from time to time issue revisions
thereto. The COMPANY's requirement or approval of ingredients,
foods, beverages, plates, glasses, cups, utensils, menus,
napkins, and other supplies may be given in the form of
specifications and in the requirement or approval of specific
types and brands. FRANCHISEE agrees that he will not, without
the prior written approval of the COMPANY, use or authorize his
employees to use, any ingredients, foods, beverages, plates,
glasses, cups, utensils, menus, napkins, and other supplies that
are not on such list in the operation of the Restaurant.
FRANCHISEE must purchase required and approved ingredients,
foods, beverages, plates, glasses, cups, utensils, menus,
napkins, and other supplies from suppliers as are required or
approved by the COMPANY.
E. FORMATS, SPECIFICATIONS, STANDARDS, METHODS, AND PROCEDURES
FRANCHISEE acknowledges and agrees that each and every detail of
the operation of the Restaurant is important to the COMPANY and
the franchised owners of other Floridino's Restaurants.
FRANCHISEE agrees to cooperate with the COMPANY in maintaining
high standards in his operation of the Restaurant and,
accordingly, agrees to comply with all formats, specifications,
standards, methods, and procedures (whether contained in the
Operating Manual or any other written or oral communication to
FRANCHISEE) that the COMPANY may, in its sole discretion, require
for Floridino's Restaurants. Required formats, specifications,
standards, methods, and procedures required in the Operating
Manual or otherwise communicated to FRANCHISEE in writing shall
constitute provisions of this Agreement as if fully set forth
herein. All references herein to this Agreement shall include
all such required formats, specifications, standards, methods,
and procedures.
F. RECOMMENDED RETAIL PRICES
The COMPANY may recommend or suggest retail prices for the foods,
beverages, and other products and services sold at, from, and
otherwise in connection with the operation of the Restaurant.
All such recommendations or suggestions are based on the
COMPANY's experience relating to the various factors that
determine appropriate prices, but such recommendations or
suggestions are not binding upon FRANCHISEE. FRANCHISEE shall
have the right to charge whatever retail prices for such foods,
beverages, and other products and services he determines to be
appropriate.
G. STATIONERY AND BUSINESS FORMS
FRANCHISEE shall use only such stationery and business forms as
are required or approved by the COMPANY. FRANCHISEE may purchase
such stationery and business forms from any supplier that can
produce such stationery and business forms using the Marks in
accordance with the COMPANY's specifications.
H. UNIFORMS
When serving customers at the Restaurant or promoting the
Restaurant, FRANCHISEE and his employees shall wear such uniforms
or other items of clothing as may be required or approved by the
COMPANY. All such uniforms or other items of clothing shall be
maintained by FRANCHISEE and his employees in a clean and
attractive manner. FRANCHISEE may purchase such uniforms or
other items of clothing from any supplier that can provide such
uniforms or other items of clothing in accordance with the
COMPANY's specifications.
I. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES
FRANCHISEE shall obtain and maintain in force all licenses,
permits, and certificates required for the operation of the
Restaurant and shall operate the Restaurant in full compliance
with all applicable laws, ordinances, and regulations.
FRANCHISEE agrees that he will not take any action, or fail to
take any action, that may cause any license, permit, or
certificate required to operate the Restaurant to be revoked,
suspended, or restricted, and FRANCHISEE shall be solely
responsible for compliance with all applicable laws, ordinances,
and regulations pertaining thereto. FRANCHISEE shall immediately
notify the COMPANY of steps taken or threatened to be taken by
the issuing authority to revoke, suspend, or restrict any such
license, permit, or certificate. FRANCHISEE shall notify the
COMPANY in writing within five (5) days of the commencement of
any action, suit, proceeding, or investigation, or of the
issuance of any order, writ, injunction, award, or decree, by any
court, agency, or other governmental authority that may adversely
affect the operation of the Restaurant.
All advertising and promotion by FRANCHISEE shall be completely
factual and shall conform to the highest standards of ethical
advertising. FRANCHISEE agrees to refrain from any business or
advertising practice that may be injurious to the COMPANY or the
goodwill associated with the Marks, the System, and Floridino's
Restaurants. FRANCHISEE shall at all times give prompt,
courteous, and efficient service to the customers of the
Restaurant. Franchisee shall, in all dealings with the customers
and suppliers of the Restaurant and the public, adhere to the
highest standards of honesty, integrity, fair dealing, and
ethical conduct.
J. MANAGEMENT OF THE RESTAURANT
The Restaurant shall at all times be under the direct,
day-to-day, full-time supervision of FRANCHISEE (or if FRANCHISEE
is a partnership or corporation, a managing partner or officer
who shall have completed the initial training program), subject
to the requirements of the Operating Manual. FRANCHISEE shall at
all times faithfully, honestly, and diligently perform his
obligations hereunder and exert his best efforts to promote and
enhance the business of the Restaurant. FRANCHISEE (and the
partners, directors, shareholders, and officers of FRANCHISEE if
FRANCHISEE is a partnership or corporation) and the managers of
the Restaurant shall not engage in any other business or other
activity, directly or indirectly, that substantially conflicts
with FRANCHISEE's obligations hereunder.
K. HIRING, TRAINING, AND SUPERVISION OF EMPLOYEES
FRANCHISEE shall hire all employees of the Restaurant and shall
be exclusively responsible for the terms of their employment and
compensation. FRANCHISEE shall implement a training program for
his employees in compliance with the COMPANY's requirements.
FRANCHISEE agrees to maintain at all times a staff of trained
employees sufficient to operate the Restaurant in compliance with
the COMPANY's standards. FRANCHISEE (or if FRANCHISEE is a
partnership or corporation, its managing partner or officer) or a
manager of the Restaurant who shall have completed the initial
training program or other training satisfactory to the COMPANY
shall be on the premises of the Restaurant at all times during
the hours of its operation to supervise all other employees on
duty.
L. INSURANCE
FRANCHISEE shall at all times during the term of the Franchise
maintain in force, at his sole expense, fire and casualty
insurance for the Restaurant and commercial general liability
insurance against claims for bodily and personal injury, death,
and property damage caused by or occurring in connection with the
operation of the Restaurant. Such insurance coverage shall be
maintained under policies of insurance containing minimum
protection in such amounts as may be specified by the COMPANY in
the Operating Manual. FRANCHISEE shall carry workers'
compensation insurance covering all of his employees as required
by the laws of the applicable state. All insurance policies
shall be issued by one or more insurance carriers acceptable to
the COMPANY. All liability insurance policies shall name the
COMPANY as an additional insured, shall contain a waiver of the
insurance carrier's right of subrogation against the COMPANY, and
shall provide that the COMPANY will receive thirty (30) days
prior written notice of termination, expiration, or cancellation
of any such policy.
FRANCHISEE shall provide to the COMPANY annually a copy of the
certificate or other evidence of the renewal or extension of each
insurance policy. If FRANCHISEE at any time fails or refuses to
maintain in effect any insurance coverage required by the
COMPANY, or to provide satisfactory evidence thereof, the
COMPANY, at its option and in addition to its other rights and
remedies hereunder, may obtain such insurance coverage on behalf
of FRANCHISEE, and FRANCHISEE shall promptly execute any
application or other form or instrument required to obtain any
such insurance and pay to the COMPANY, on demand, any costs and
premiums paid or incurred by the COMPANY. FRANCHISEE's
obligation to maintain the insurance described herein shall not
be limited in any way by reason of any insurance maintained by
the COMPANY, nor shall FRANCHISEE's performance of such
obligations relieve FRANCHISEE of any obligations under Section 7
hereof.
M. CREDIT CARDS
FRANCHISEE shall at all times have arrangements in existence with
VISA, MasterCard, American Express, and such other credit card
issuers or sponsors, check verification services, and electronic
funds transfer systems as the COMPANY designates from time to
time in order that the Restaurant may accept customers' credit
cards, personal checks, and other forms of non-currency payment.
If the COMPANY designates a processor for all credit card
transactions at Floridino's Restaurants during the term of the
Franchise, FRANCHISEE agrees to use that processor for all credit
card transactions at, from, or in connection with the operation
of the Restaurant.
10. ADVERTISING
A. BY THE COMPANY
Recognizing the value of uniform advertising to the goodwill and
public image of Floridino's Restaurants, the COMPANY may
institute, maintain, and administer a central advertising fund
("Fund") for such advertising or public relations programs as the
COMPANY, in its sole discretion, may deem necessary or
appropriate to advertise or promote Floridino's Restaurants. The
COMPANY shall direct all such programs, with sole discretion over
the creative concepts, materials, endorsements, and media used,
and the placement and allocation of advertisements in such media.
The COMPANY shall have the right to determine, in its sole
discretion, the composition of all geographic areas for the
development and implementation of such programs. FRANCHISEE
shall contribute to the Fund an amount designated by the COMPANY,
in its sole discretion, not to exceed one and two percent (2.0%)
of the Gross Revenues, payable monthly together with the royalty
and service fee due hereunder.
FRANCHISEE agrees that the Fund may be used to meet all costs of
maintaining, administering, directing, and preparing national,
regional, or local advertising and public relations materials and
programs, including, without limitation, costs for preparing and
conducting television, radio, magazine, billboard, newspaper, and
other media programs and activities, costs associated with
conducting market research, and costs for providing promotional
brochures and advertising materials to Floridino's Restaurants.
The COMPANY may spend in any fiscal year an amount greater or
less than the aggregate contributions of Floridino's Restaurants
to the Fund in that year and the COMPANY may make loans to the
Fund bearing reasonable interest to cover any deficits of the
Fund and cause the Fund to invest any surplus for future use by
the Fund.
The Fund shall be accounted for separately from the other funds
of the COMPANY and shall not be used to defray any of the
COMPANY's general operating expenses, except for such reasonable
salaries, administrative costs, and overhead as the COMPANY may
incur in activities reasonably related to the administration or
direction of the Fund and its programs (including, without
limitation, conducting market research, preparing advertising
materials, and collecting and accounting for contributions to the
Fund). A report of the operations of the Fund shall be prepared
annually by the COMPANY and shall be made available to FRANCHISEE
upon request.
FRANCHISEE understands and acknowledges that the Fund is intended
to maximize general recognition of the Marks and the goodwill and
public image of Floridino's Restaurants for the benefit of all
Floridino's Restaurants and that the COMPANY undertakes no
obligation in developing, implementing, or administering
advertising or public relations programs to ensure that
expenditures that are proportionate or equivalent to FRANCHISEE's
contributions are made for the Restaurant or that any Floridino's
Restaurant benefits directly or pro rata from the placement of
advertising through the Fund.
B. BY FRANCHISEE
In addition to making the advertising contributions required
under Paragraph A of this Section 10, FRANCHISEE agrees to list
and advertise the Restaurant in the principal (as determined by
the COMPANY) regular (white pages) and classified (Yellow pages)
telephone directories for the market area within which the
Restaurant is located in such directory categories as are
specified by the COMPANY using the COMPANY's standard forms of
listing and classified directory advertisements. If such
classified directory advertisements include other Floridino's
Restaurants operating within such market area, the cost of such
advertisements shall be reasonably apportioned among all
Floridino's Restaurants included therein in proportion to the
annualized total Gross Revenues of each such Floridino's
Restaurant for the preceding year.
In addition to making the advertising contributions required
under Paragraph A of this Section 10, FRANCHISEE shall be
obligated to expend not less than an additional two percent
(2.0%) of the Gross Revenues in connection with local advertising
and promotional activities in such media (including any secondary
regular and classified telephone directories) and by such methods
as FRANCHISEE may determine to be appropriate, subject to the
approval of the COMPANY, which shall not be unreasonably
withheld. Prior to their use by FRANCHISEE, samples of all local
advertising and promotional materials not prepared or previously
approved by the COMPANY shall be submitted to the COMPANY for
approval, which shall not be unreasonably withheld. If written
disapproval is not received by FRANCHISEE within fifteen (15)
days from the date of receipt by the COMPANY of such materials,
the COMPANY shall be deemed to have given the required approval.
FRANCHISEE shall not use any advertising or promotional materials
that the COMPANY has disapproved.
C. FRANCHISEE'S PARTICIPATION IN LOCAL ADVERTISING COOPERATIVE
The COMPANY may, in its sole discretion, designate geographical
areas for which it has determined, on the basis of television
coverage, newspaper coverage, or other criteria that it may
establish, in its sole discretion, that the establishment of a
local advertising cooperative may be appropriate for all
Floridino's Restaurants located within each such area. If the
owners of seventy-five percent (75%) of the franchised
Floridino's Restaurants located within any such area that
includes the Restaurant concur with the COMPANY's judgment that a
local advertising cooperative would be appropriate, FRANCHISEE
shall be obligated to participate in the cooperative for such
area ("Local Advertising Cooperative"). The Local Advertising
Cooperative shall be formed by all of the owners of the
Floridino's Restaurants within such area and shall operate
pursuant to such by-laws and in such form as the members thereof
may determine, on the basis of one (1) vote for each Floridino's
Restaurant within such area. Pursuant to the by-laws adopted by
the Local Advertising Cooperative, FRANCHISEE shall contribute to
the Local Advertising Cooperative an amount of the Gross Revenues
designated thereby, not to exceed one and one-half percent (1.
5%) of the Gross Revenues. FRANCHISEE's obligation to expend
funds directly on local advertising and promotional activities
pursuant to Paragraph B of this Section 10 shall be reduced as
necessary such that the total amount of the Gross Revenues that
FRANCHISEE is required to expend for local advertising and
promotional activities, including direct local advertising and
promotional activities by FRANCHISEE and contributions to the
Local Advertising Cooperative by FRANCHISEE (but excluding any
expenditures made for advertising in telephone directories as
required by Paragraph B of this Section 10), shall not exceed two
percent (2%).
11. RECORDS AND REPORTS
A. ACCOUNTING AND RECORDS
During the term of the Franchise, FRANCHISEE shall, at his
expense, (i) implement record keeping and accounting systems
conforming to the requirements required by the COMPANY and (ii)
maintain at a location required or approved by the COMPANY and
preserve for no less than three (3) years from the date of their
preparation, or for such longer period as may be required by any
applicable law, ordinance, or regulation, full, complete, and
accurate books, records, and accounts for the Restaurant and all
supporting documents pertaining thereto. FRANCHISEE shall use
only cash registers with "non-resettable totals" in the operation
of the Restaurant. If requested by the COMPANY, FRANCHISEE shall
use in the operation of the Restaurant cash registers and
associated computer hardware and software that permits the
COMPANY to electronically poll and capture all transaction data
entered into such cash registers.
B. REPORTS AND TAX RETURNS
FRANCHISEE shall provide to the COMPANY the following:
(i) within ten (10) days after the end of each month,
(a)a statement relating to the Gross Revenues for such month and
(b) a year-to-date profit and loss statement, a year-to-date
source and use of funds statement, and a balance sheet as of the
end of the month preceding such month; and
(ii) within sixty (60) days after the end of each year, an annual
profit and loss statement, an annual source and use of funds
statement, and a balance sheet as of the end of such year, which
shall be reviewed by an independent certified public accountant
if requested by the COMPANY.
FRANCHISEE shall provide to the COMPANY upon its request such
other written and electronic reports and such other information
as the COMPANY shall designate. All such financial statements,
written reports, and information shall be on forms approved by
the COMPANY and signed and verified by FRANCHISEE. FRANCHISEE
shall provide to the COMPANY upon its request exact copies of all
state sales tax returns and such portions of FRANCHISEE's federal
and state income tax returns as reflect the operation of the
Restaurant.
12. INSPECTION AND AUDITS
A. THE COMPANY'S RIGHT TO INSPECT THE RESTAURANT
To determine whether FRANCHISEE is complying with this Agreement,
the COMPANY shall have the right at any time during business
hours, and without prior notice to FRANCHISEE, to view and
inspect the operation of the Restaurant. FRANCHISEE shall fully
cooperate with representatives of the COMPANY making any such
inspection and shall permit representatives of the COMPANY to
take photographs, movies, and videotapes of FRANCHISEE and/or his
employees during their service of customers and to interview his
employees and customers.
B. THE COMPANY'S RIGHT TO EXAMINE BOOKS AND RECORDS
The COMPANY shall have the right at any time during business
hours, and without prior notice to FRANCHISEE, to examine or
audit, or cause to be examined or audited, the books, records,
and accounts of the Restaurant and all supporting documents
pertaining thereto. FRANCHISEE shall fully cooperate with
representatives of the COMPANY and independent accountants hired
by the COMPANY to conduct any such examination or audit. If any
such examination or audit shall disclose an understatement of the
Gross Revenues, FRANCHISEE shall pay to the COMPANY, within
fifteen (15) days after receipt of the examination or audit
report, the royalty and service fees and any advertising
contributions due on the amount of such understatement, plus
interest (at the rate and on the terms provided in Paragraph D of
Section 8 hereof) from the date originally due until the date of
payment. Any contention that the COMPANY or its independent
accountants have miscalculated any sum then due shall not excuse
FRANCHISEE from making full payment of all sums then determined
to be due, with all disputed sums to be paid as provided herein
and a refund to be made by the COMPANY within ten (10) days of
any final determination that a lesser sum than FRANCHISEE has
paid pursuant hereto was properly due to the COMPANY. Further,
if any such examination or audit is made necessary by the failure
of FRANCHISEE to provide reports, records, financial statements,
or other documents or information as herein required, or failure
to provide such reports, records, financial statements,
documents, or information on a timely basis, or if an
understatement of the Gross Revenues for any month is determined
by any such examination or audit to be greater than two percent
(2%), FRANCHISEE shall reimburse the COMPANY for the cost of such
examination or audit, including, without limitation, the charges
of any independent accountants and the travel expenses, room and
board, and compensation of employees of the COMPANY. The
foregoing remedies shall be in addition to all other remedies and
rights of the COMPANY hereunder or under applicable law.
13. ASSIGNMENT
A. BY THE COMPANY
This Agreement and the Franchise are fully assignable by the
COMPANY and shall inure to the benefit of any assignee or other
legal successor to the interest of the COMPANY herein.
B. FRANCHISEE MAY NOT ASSIGN WITHOUT APPROVAL OF THE COMPANY
FRANCHISEE understands and acknowledges that the rights and
duties created by this Agreement are personal to FRANCHISEE and
that the COMPANY has granted the Franchise in reliance upon the
individual or collective character, skill, aptitude, attitude,
business ability, and financial resources of FRANCHISEE or its
owners. Therefore, except as otherwise provided in Paragraphs D
and E of this Section 13, neither the Franchise, nor the
Restaurant, nor any interest in the Restaurant, nor any part or
all of the ownership of FRANCHISEE may be voluntarily,
involuntarily, directly or indirectly, assigned, sold,
subdivided, subfranchised, or otherwise transferred by FRANCHISEE
or its owners (including, without limitation, by merger or
consolidation, by issuance of additional securities representing
an ownership interest in FRANCHISEE, by operation of law, or, in
the event of the death of FRANCHISEE or an owner of FRANCHISEE,
by will, declaration of or transfer in trust, or the laws of
interstate succession) without the prior written approval of the
COMPANY, and any such assignment or transfer without such
approval shall constitute a breach hereof and shall convey no
rights to or interests in the Franchise or the Restaurant.
C. CONDITIONS FOR APPROVAL OF ASSIGNMENT
If FRANCHISEE and its owners are in full compliance with this
Agreement, the COMPANY shall not unreasonably withhold its
approval of an assignment, provided that the proposed assignee
is, in the opinion of the COMPANY, of good moral character and
has sufficient business experience, aptitude, and financial
resources to own and operate the Restaurant and otherwise meets
the COMPANY's then applicable standards for new franchisees, and
further provided that the following conditions are met prior to,
or concurrent with, the effective date of the assignment:
(i) all obligations of FRANCHISEE and its owners incurred in
connection with this Agreement have been assumed by the assignee;
(ii) FRANCHISEE shall have paid such royalty and service fees,
advertising contributions, amounts owed for purchases by
FRANCHISEE from the COMPANY and its affiliates, and any other
amounts owed to the COMPANY and its affiliates that are then due;
(iii) the assignee agrees to complete the initial training
program then required of new franchisees;
(iv) if required, the lessor of the premises of the Restaurant
has consented to FRANCHISEE's assignment or sublease of the
premises to the assignee;
(v) the assignee (and, if the assignee is a partnership or
corporation, its partners or shareholders) shall, at the
COMPANY's option, have executed and agreed to be bound by (a) an
assignment and assumption agreement satisfactory to the COMPANY
whereby the assignee assumes the obligations of FRANCHISEE under
this Agreement, or (b) the form of franchise agreement and any
ancillary agreement as are then customarily used by the COMPANY
in the grant of new franchises for Floridino's Restaurants, which
shall provide for the same royalty and service fees and
advertising contributions required hereunder and a term equal to
the remaining term of the Franchise;
(vi) FRANCHISEE or the assignee shall have paid to the COMPANY
an assignment fee in an amount equal to twenty-five percent (25%)
of the franchise fee then most recently received by the COMPANY
for a comparable new franchise to defray expenses incurred by the
COMPANY in connection with the assignment, including, without
limitation, training of the assignee, legal and accounting fees,
credit and other investigation charges, and evaluation of the
assignee and the terms of the assignment;
(vii) except to the extent limited or prohibited by applicable
law, FRANCHISEE (and each of its partners or shareholders if
FRANCHISEE is a partnership or corporation) shall have executed a
general release, in a form satisfactory to the COMPANY, of any
and all claims against the COMPANY and its affiliates, officers,
directors, employees, and agents;
(viii) the COMPANY shall have approved the material terms and
conditions of such assignment and shall have determined that the
price and terms of payment are not so burdensome as to adversely
affect the operation of the Restaurant by the assignee;
(ix) FRANCHISEE (and each of its partners or shareholders if
FRANCHISEE is a partnership or corporation) shall have executed a
noncompetition covenant in favor of the COMPANY and the assignee
agreeing that, for a period of two (2) years commencing on the
effective date of the assignment or from the effective date of
any injunction required to enforce the provisions of the
covenant, whichever is later, he will not have any direct or
indirect interest as an owner, investor, partner, director,
officer, employee, consultant, representative, or agent, or in
any other capacity, in any Italian or Italian-American restaurant
within five (5) miles of the Restaurant or any Floridino's
Restaurant in operation or under development as of the effective
date of the assignment; and
(x) FRANCHISEE (and each of its partners or shareholders if
FRANCHISEE is a partnership or corporation) shall have entered
into an agreement with the COMPANY agreeing that any and all
obligations of the assignee to make installment payments of the
purchase price to FRANCHISEE (and each of its partners or
shareholders if FRANCHISEE is a partnership or corporation) shall
be subordinated to the assignee's obligations to the COMPANY and
its affiliates, including, without limitation, any royalty and
service fees and advertising contributions.
The COMPANY's approval of an assignment shall not constitute a
waiver of any claims it may have against the assignor, nor shall
it be deemed a waiver of the COMPANY's right to demand exact
compliance with any of the terms or conditions of this Agreement
by the assignee.
D. DEATH OR DISABILITY OF FRANCHISEE
Upon the death or permanent disability of FRANCHISEE (or the
managing partner or officer of FRANCHISE if FRANCHISEE is a
partnership or corporation), the executor, administrator,
conservator, or other personal representative of such person, or
the remaining partners or directors, shall appoint a competent
manager within a reasonable time, not to exceed thirty (30) days
from the date of death or permanent disability. The appointment
of such manager shall be subject to the COMPANY's prior written
approval, and such manager shall, if requested by the COMPANY,
attend and satisfactorily complete the COMPANY's then required
initial training program at FRANCHISEE's expense. If the
Restaurant is not being managed by a COMPANY approved manager
within such thirty (30) day period, the COMPANY is authorized,
but shall not be required, to immediately appoint a manager to
maintain the operation of the Restaurant for and on behalf of
FRANCHISEE until an approved assignee or manager shall be able to
assume the management and operation of the Restaurant. The
COMPANY's appointment of a manager of the Restaurant shall not
relieve FRANCHISEE of his obligations hereunder, and the COMPANY
shall not be liable for any debts, losses, costs, or expenses
incurred in the operation of the Restaurant or to any creditor of
FRANCHISEE for any products, materials, supplies, or services
purchased by the Restaurant during any period that it is managed
by the COMPANY appointed manager. The COMPANY shall have the
right to charge a reasonable fee for such management services and
to cease to provide such management services at any time.
Upon the death or permanent disability of FRANCHISEE (or the
managing partner of officer of FRANCHISEE, if FRANCHISEE is a
partnership or corporation), executor, administrator,
conservator, or other personal representative of such person
shall transfer his interest within a reasonable time, not to
exceed twelve (12) months from the date of death or permanent
disability, to a person approved by the COMPANY unless FRANCHISEE
is a partnership or corporation and a new managing partner or
officer approved by the COMPANY, subject to the satisfactory
completion of all then required training for such managing
partners or officers, has been appointed within such period, and
subject to the transfer or assignment of such interest within
thirty (30) days of the completion of any applicable probate or
administration proceedings with respect to the estate of such
person. Such transfers, including, without limitation, transfers
by devise or inheritance, shall be subject to all the terms and
conditions for assignments and transfers contained in Paragraph B
and C of this Section 13. Failure to comply with the
requirements of this paragraph shall constitute grounds for
termination under Paragraph B of Section 14 hereof.
E. ASSIGNMENT TO A CORPORATION
Upon thirty (30) days prior written notice to the COMPANY, the
Franchise may be assigned, by an agreement in form and substance
approved by the COMPANY, to a corporation that conducts no
business other than operating the Restaurant, that is actively
managed by FRANCHISEE and for which FRANCHISEE owns and controls
all of the equity and voting power of all issued and outstanding
capital stock. Such an assignment shall not relieve FRANCHISEE
of his obligations hereunder, and FRANCHISEE shall remain jointly
and severally liable for all obligations hereunder. The articles
of incorporation, by-laws, and other organizational documents of
such corporation shall recite that the issuance and assignment of
any interest therein is restricted by the terms of Paragraphs B,
C, D, and E of this Section 13 and all issued and outstanding
stock certificates of such corporation shall bear a legend
reflecting or referring to such restrictions.
Any person who becomes a shareholder of FRANCHISEE during
the term of the Franchise shall execute an agreement in a form
provided or approved by the COMPANY undertaking to be bound
jointly and severally by all provisions of this Agreement and any
shareholder owning more than five percent (5%) of the beneficial
interest in such corporation shall execute a personal guarantee,
in the form attached hereto as Exhibit A or any form then
required by the COMPANY, of all obligations of FRANCHISEE to the
COMPANY and any affiliated corporation, partnership, or other
business entity. FRANCHISEE shall provide to the COMPANY at any
time upon a request a certified copy of the articles of
incorporation and a list, in such form as the COMPANY may
require, of all shareholders (of record and beneficially)
reflecting their respective interests in FRANCHISEE.
F. THE COMPANY'S RIGHT OF FIRST REFUSAL
If FRANCHISEE (or its partners or shareholders if FRANCHISEE
is a partnership or corporation) shall at any time determine to
sell or to transfer for consideration the Franchise, the
Restaurant, any interest in the Restaurant, or any ownership
interest in FRANCHISEE, other than to any individual or entity
already owning an interest therein, FRANCHISEE (or its partners
or shareholders if FRANCHISEE is a partnership or corporation)
shall obtain a bona fide, signed written offer from a responsible
and fully disclosed purchaser and shall submit an exact copy of
such offer to the COMPANY. The COMPANY shall have the right,
exercisable by written notice delivered to FRANCHISEE, (or its
partners or shareholders if FRANCHISEE is a partnership or
corporation) within thirty (30) days from the date of delivery of
an exact copy of such offer to the COMPANY, to purchase the
Franchise, the Restaurant, such interest in the Restaurant, or
such ownership interest in FRANCHISEE for the price and on the
terms and conditions contained in such offer, provided that the
COMPANY may substitute cash for any form of payment proposed in
such offer and shall have not less than thirty (30) days within
which to close any such transaction, or such longer period as may
have been provided by the terms and conditions of such offer. If
the COMPANY does not exercise its right of first refusal,
FRANCHISEE (or its partners or shareholders if FRANCHISEE is a
partnership or corporation) may complete the sale to such
purchaser pursuant to and on the terms of such offer, subject to
the COMPANY's approval of the purchaser as provided in Paragraphs
B and C of this Section 13, provided that if the sale to such
purchaser is not completed within one hundred twenty (120) days
after delivery of such offer to the COMPANY, or if there is a
material change in the terms and conditions of such offer, the
COMPANY shall again have the right of first refusal provided
herein.
14. TERMINATION OF THE FRANCHISE
A. BY FRANCHISEE
If FRANCHISEE is in substantial compliance with this Agreement
and the COMPANY materially breaches this Agreement and fails to
cure such breach within thirty (30) days after written notice
thereof is delivered to the COMPANY, FRANCHISEE may terminate the
Franchise. Such termination shall be effective ten (10) days
after delivery to the COMPANY of written notice that such breach
has not been cured and FRANCHISEE elects to terminate the
Franchise. A termination (or purported or attempted termination)
of the Franchise by FRANCHISEE, other than in strict compliance
with the foregoing provisions or the provisions in Paragraph B of
Section 9 hereof shall be deemed a termination by FRANCHISEE
without cause and a material breach of this Agreement by
FRANCHISEE.
B. BY THE COMPANY
The COMPANY shall have the right to terminate the Franchise by
delivery of a written notice to FRANCHISEE stating that the
COMPANY elects to terminate the Franchise as a result of any of
the breaches set forth below. Such termination shall be
effective upon delivery of such notice of termination or, if
applicable, upon the failure to cure (to the COMPANY's
satisfaction) any such breach, by the expiration of any period of
time within which such breach may be cured in accordance with the
provision set forth below, without the necessity of any further
notice from the COMPANY to FRANCHISEE. It shall be a material
breach of this Agreement if FRANCHISEE (and/or, when applicable,
any of its partners, shareholders, directors, or officers if
FRANCHISEE is a partnership or corporation):
(i) fails to acquire the premises for the Restaurant as provided
in Paragraph A of Section 3 hereof, construct the Restaurant as
provided in Paragraph B of Section 3 hereof, open the Restaurant
for business as provided in Paragraph C of Section 3 hereof, or
satisfactorily complete the initial training program as provided
in Paragraph A of Section 4 hereof;
(ii) abandons, surrenders, or loses the right to occupy the
premises of the Restaurant (except as otherwise permitted in
Paragraph D of Section 3 hereof) or fails to actively operate the
Restaurant;
(iii) has made any material misrepresentation or omission in his
application for the Franchise, or is convicted of or pleads no
contest to a felony, or is convicted of or pleads no contest to
any crime or offense that may adversely affect the reputation of
Floridino's Restaurants or the goodwill associated with the Marks
and the System;
(iv) surrenders or transfers control of the operation of the
Restaurant (including entering into a management arrangement with
any person not a party to this Agreement), makes an unauthorized
direct or indirect assignment or transfer of this Agreement, the
Franchise, the Restaurant, any interest in the Restaurant, or
any ownership interest in FRANCHISEE or fails or refuses to
effect an assignment, transfer, or appointment of an approved
manager in accordance with Paragraph D of Section 13 hereof;
(v) makes any unauthorized use of the Marks or unauthorized use
or disclosure of any of the Confidential Information;
(vi) terminates (or purports or attempts to terminate) the
Franchise, other than in strict compliance with Paragraph B of
Section 9 hereof or Paragraph A of this Section 14,
(vii) fails to timely pay royalty and service fees, advertising
contributions, amounts due for purchases from the COMPANY or its
affiliates, or other payments due the COMPANY;
(viii) fails to maintain insurance in strict compliance with
Paragraph L of Section 9 hereof;
(ix) fails to comply with any other provision of this Agreement
or any mandatory format, specification, standard, method, or
procedure required by the COMPANY, or to timely pay amounts due
to persons other than the COMPANY or its affiliates; or
(x) fails on three (3) or more separate occasions within any
twelve (12) consecutive month period to submit when due financial
statements, reports or other data, information, or supporting
records, to pay when due the royalty and service fees,
advertising contributions, amounts due for purchases from the
COMPANY or its affiliates, or other payments due to the COMPANY,
or to pay amounts due to other persons, or otherwise fails to
comply with this Agreement, whether or not such failures to
comply are cured after notice thereof is delivered to FRANCHISEE.
FRANCHISEE shall have the right to cure a breach under
subparagraph (vii) or subparagraph (viii) within ten (10) days
after delivery of the COMPANY's notice of termination pursuant
thereto and shall have the right to cure a breach under
subparagraph (ix) within thirty (30) days after delivery of the
COMPANY's notice of termination pursuant thereto.
15. RIGHTS AND OBLIGATIONS UPON EXPIRATION OR TERMINATION
A. PAYMENT OF AMOUNTS OWED TO THE COMPANY
FRANCHISEE agrees to pay to the COMPANY, within fifteen (15) days
after the effective date of the expiration or termination of the
Franchise, such royalty and service fees, advertising
contributions, any and all amounts owed for products purchased by
FRANCHISEE from the COMPANY and its affiliates, interest due the
COMPANY on any of the foregoing, and any and all other amounts
owed to the COMPANY and its affiliates that are then unpaid.
FRANCHISEE shall contemporaneously with such payment provide a
complete accounting of all such amounts owed to the COMPANY and
its affiliates.
B. THE MARKS
FRANCHISEE shall, upon the expiration or termination of the
Franchise:
(i) not directly or indirectly at any time or in any manner
identify himself as a current or former franchisee or licensee of
or as otherwise associated with the COMPANY, identify any
restaurant as a current or former Floridino's Restaurant, use the
Marks, any colorable imitation thereof, or other indicia of
Floridino's Restaurants in any manner or for any purpose, or use
for any purpose any trademark, service mark, trade name, logo,
trade dress, or other commercial symbol that suggests or
indicates a connection or association with the COMPANY;
(ii) promptly remove or paint over all signs, decals, and
lettering displaying the Marks at the Restaurant and take such
other actions as required or approved by the COMPANY to
distinguish the Restaurant from Floridino's Restaurants; promptly
destroy or deliver to the COMPANY (at the COMPANY's option,
exercisable within ten (10) days after the termination) all
menus, advertising materials, stationery, business forms, and
other materials displaying the Marks or otherwise identifying or
relating to Floridino's Restaurants
(iv) promptly take such action as may be required to cancel all
fictitious or assumed name registrations relating to his use of
the Marks;
(v) promptly notify the telephone company and all listing
agencies of the expiration or termination of FRANCHISEE's right
to use any telephone number and any regular, classified, or
other telephone directory listings associated with the Marks and
authorize transfer of the same to or at the direction of the
COMPANY; and
(vi) provide to the COMPANY within thirty (30) days after the
effective date of the expiration or termination evidence
satisfactory to the COMPANY of FRANCHISEE's compliance with the
foregoing obligations.
If requested by the COMPANY during the term of the Franchise,
FRANCHISEE shall execute dated letters to telephone companies and
telephone directory listing agencies directing termination and/or
transfer of FRANCHISEE's right to use telephone numbers
associated with the Marks that the COMPANY may utilize upon
the expiration or termination of the Franchise. FRANCHISEE
acknowledges that as between the COMPANY and FRANCHISEE, the
COMPANY has the sole right to and interest in all telephone
numbers and directory listings associated with the Marks, and
FRANCHISEE authorizes the COMPANY, and hereby appoints the
COMPANY and any officer of the COMPANY as his attorney in fact to
direct the telephone company and all listing agencies to transfer
the same to the COMPANY or at its direction should FRANCHISEE
fail or refuse to do so, and the telephone company and all
listing agencies may accept such direction or this Agreement as
conclusive of the exclusive right of the COMPANY in such
telephone numbers and directory listings and its authority to
direct their transfer.
C. CONFIDENTIAL INFORMATION
FRANCHISEE shall, upon the expiration or termination of the
Franchise, immediately cease to use in any business or otherwise
the Confidential Information disclosed to FRANCHISEE pursuant to
this Agreement and return to the COMPANY all copies of the
Operating Manual and other written forms of the Confidential
Information that have been loaned or provided to him by the
COMPANY.
D. COVENANT NOT TO COMPETE
If the Franchise expires or is terminated by the COMPANY in
accordance with the provisions of this Agreement or by FRANCHISEE
without cause, FRANCHISEE agrees that, for a period of two (2)
years commencing on the effective date of the expiration or
termination, the date on which FRANCHISEE ceases to operate the
Restaurant, or the effective date of any injunction required to
enforce the provisions of this paragraph, whichever is later,
FRANCHISEE (and its partners or shareholders if FRANCHISEE is a
partnership or corporation) will not have any interest as an
owner, partner, director, officer, employee, consultant,
representative, or agent, or in any other capacity, in any
Italian or Italian American restaurant (i) on the premises of the
Restaurant or (ii) within five (5) miles of the Restaurant or any
other Floridino's Restaurant in operation or under development as
of the effective date of such expiration or termination.
E. THE COMPANY'S RIGHT TO PURCHASE FRANCHISEE'S ASSETS
Upon the expiration or termination of the Franchise by the
COMPANY in accordance with the provisions of this Agreement or by
FRANCHISEE without cause, the COMPANY shall have the option,
exercisable by giving written notice thereof within thirty (30)
days from the date of such expiration or termination, to purchase
from FRANCHISEE all of the tangible assets of FRANCHISEE used in
the operation of the Restaurant (including, without limitation,
all equipment, fixtures, furniture, signs, and inventory of
ingredients, foods, beverages, plates, glasses, cups, utensils,
menus, napkins, and other supplies, but excluding any unamortized
portion of the franchise fee, cash, short term investments, and
accounts receivable) and, if assignable, an assignment of all
leases, subleases, agreements, licenses, permits, and
certificates required for operation of the Restaurant. The
COMPANY shall have the unrestricted right to assign this option
to purchase.
The purchase price for the tangible assets of FRANCHISEE used in
the operation of the Restaurant shall be the lesser of the (i)
total purchase price paid by FRANCHISEE for such tangible assets,
less depreciation for federal income tax purposes through the
date of the expiration or termination of the Franchise as
previously elected by FRANCHISEE, or (ii) fair market value of
such assets on the date of the expiration or termination of the
Franchise. Should the COMPANY and FRANCHISEE disagree as to the
purchase price of such tangible assets, such disagreement shall
be resolved pursuant to the arbitration provisions of Section 18
hereof, with the COMPANY and FRANCHISEE responsible for their
respective costs and attorney fees incurred in connection
therewith. No amount shall be paid by the COMPANY to FRANCHISEE
for the assignment of all leases, subleases, agreements,
licenses, permits, and certificates that may be assigned.
The purchase price for the tangible assets of FRANCHISEE used in
the operation of the Restaurant shall be paid in cash at the
closing of the purchase, which shall take place not later than
thirty (30) days after the determination of the purchase price,
at which time FRANCHISEE shall: (i) deliver instruments
transferring good and marketable title to the tangible assets
purchased, free and clear of all liens and encumbrances, to the
COMPANY or its nominee, with all sales and other transfer taxes
paid by FRANCHISEE and (ii) assign to the COMPANY or its nominee
all leases, subleases, agreements, licenses, permits, and
certificates that may be assigned. If FRANCHISEE cannot deliver
clear title to all of the tangible assets purchased or there are
other unresolved issues, the closing of the sale shall be
accomplished through an escrow. The COMPANY and FRANCHISEE
shall, prior to closing, comply with any applicable bulk sales
provisions of the Uniform Commercial Code as enacted in the
applicable state. The COMPANY shall have the right to set off
against and reduce the purchase price by any sums then due to the
COMPANY or any of its affiliates.
If the COMPANY exercises the foregoing option to purchase the
tangible assets of FRANCHISEE used in the operation of the
Restaurant, the COMPANY shall have the right (but shall not be
required) pending determination of the purchase price and the
closing of such purchase to operate the Restaurant for its
exclusive benefit at its expense, subject to its having assumed
all liabilities associated with its operation of the Restaurant
and having executed a written indemnification agreement by which
FRANCHISEE is held harmless for events occurring after the
COMPANY commences operation of the Restaurant.
F. CONTINUING RIGHTS AND OBLIGATIONS
All rights and obligations of the COMPANY and FRANCHISEE that
expressly or by their nature survive the expiration or
termination of the Franchise shall continue in full force and
effect subsequent to and notwithstanding its expiration or
termination and until they are satisfied or by their nature
expire.
16. ENFORCEMENT
A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS
Except as expressly provided to the contrary herein, each
section, paragraph, term, and provision of this Agreement, and
any portion thereof, shall be considered severable and if, for
any reason, any such portion of this Agreement is held to be
invalid, contrary to, or in conflict with any applicable present
or future law or regulation in a final, unappealable ruling
issued by any court, agency, or other tribunal of competent
jurisdiction in a proceeding to which the COMPANY is a party,
that ruling shall not impair the operation of, or have any other
effect upon, such other portions of this Agreement as may remain
otherwise intelligible, which shall continue to be given full
force and effect and bind the parties hereto, although any
portion held to be invalid shall be deemed not to be a part of
this Agreement from the date the time for appeal expires, if
FRANCHISEE is a party thereto, otherwise upon FRANCHISEE's
receipt of a notice of non-enforcement thereof from the COMPANY.
If any applicable and binding law or rule of any jurisdiction
requires a greater period of notice of any proposed termination
of the Franchise than is required hereunder, or the taking of
some other action not required hereunder, or if under any
applicable and binding law or regulation of any applicable
jurisdiction, any provision of this Agreement or any format,
specification, standard, method, or procedure required by the
COMPANY is invalid or unenforceable, the period of notice and/or
other action required by such law or rule shall be substituted
for the comparable provisions hereof, and the COMPANY shall have
the right, in its sole discretion, to modify such invalid or
unenforceable provision, format, specification, standard, method,
or procedure to the extent required to be valid and enforceable.
FRANCHISEE agrees to be bound by any promise or covenant imposing
the maximum duty permitted by law that is subsumed within the
terms of any provision hereof, as though it were separately
articulated in and made a part of this Agreement, that may result
from striking from such provision, or any format, specification,
standard, method, or procedure required by the COMPANY, any
portion or portions that a court or other tribunal of competent
jurisdiction may hold to be unenforceable in a final decision to
which the COMPANY is a party, or from reducing the scope of any
promise or covenant to the extent required to comply with such an
order. Any modification to this Agreement contemplated by this
paragraph shall be effective only in such jurisdiction or
jurisdictions as are specifically included within the authority
of the court or other tribunal rendering the decision giving rise
to such modification, unless the COMPANY elects to give such
modification greater applicability, and this Agreement shall be
enforced in all other jurisdictions without regard to any such
modification.
B. WAIVER OF OBLIGATIONS
The COMPANY may by written instrument unilaterally waive or
reduce any obligation of or restriction upon FRANCHISEE under
this Agreement, and FRANCHISEE may by written instrument
unilaterally waive or reduce any obligation of or restriction
upon the COMPANY under this Agreement, effective upon delivery of
written notice thereof to the other or such other effective date
stated in the notice of waiver. Whenever this Agreement requires
the COMPANY's prior approval or consent, FRANCHISEE shall make a
timely written request therefor, and such approval shall be
obtained in writing.
The COMPANY makes no warranties or guarantees upon which
FRANCHISEE may rely, and assumes no liability or obligation to
FRANCHISEE, by granting any waiver, approval, or consent to
FRANCHISEE, or by reason of any neglect, delay, or denial of any
request therefor. Any waiver granted by the COMPANY shall be
without prejudice to any other rights the COMPANY may have, will
be subject to continuing review by the COMPANY, and may be
revoked, in the COMPANY's sole discretion, at any time and for
any reason, effective upon delivery to FRANCHISEE of ten (10)
days prior written notice.
The COMPANY shall not be deemed to have waived or impaired any
right, power, or option reserved by this Agreement (including,
without limitation, the right to demand exact compliance with
every term, condition, and covenant herein, or to declare any
breach thereof to be a default and to terminate the Franchise) by
virtue of any custom or practice of the parties at variance with
the terms hereof; any failure, refusal, or neglect of the COMPANY
to exercise any right under this Agreement or to insist upon
exact compliance with FRANCHISEE's obligations hereunder
(including, without limitation, any format, specification,
standard, method, or procedure required by the COMPANY) ; any
waiver, forbearance, delay, failure, or omission by the COMPANY
to exercise any right, power, or option, whether of the same,
similar, or different nature, with respect to other Floridino's
Restaurants; or the acceptance by the COMPANY of any payments due
from FRANCHISEE after any breach of this Agreement.
Neither the COMPANY nor FRANCHISEE shall be liable for loss or
damage or deemed to be in breach of this Agreement if its failure
to perform its obligations results from: (i) transportation
shortages, material or energy shortages, or the voluntary
foregoing of the right to acquire or use any of the foregoing in
order to accommodate or comply with the orders, requests,
regulations, recommendations, or instructions of any federal,
state, or municipal government or any department or agency
thereof; (ii) compliance with any law, ruling, order, regulation,
requirement, or instruction of any federal, state, or municipal
government or any department or agency thereof; (iii) acts of
God; (iv) acts or omissions of the other party; (v) fires,
strikes, embargoes, war, or riot; or (vi) any other similar event
or cause. Any delay resulting from any of the said causes shall
extend performance accordingly or excuse performance, in whole or
in part, as may be reasonable.
C. SPECIFIC PERFORMANCE/INJUNCTIVE RELIEF
Nothing herein contained shall bar the COMPANY's right to obtain
specific performance of the provisions of this Agreement and
injunctive relief against threatened conduct that will cause it
loss or damage under customary equity rules, including applicable
rules for obtaining restraining orders and preliminary
injunctions. FRANCHISEE agrees that the COMPANY may have such
injunctive relief, in addition to such further and other relief
as may be available at equity or law, and the sole remedy of
FRANCHISEE, in the event of the entry of such injunction, shall
be the dissolution of such injunction, if warranted, upon hearing
duly had (all claims for damages by reason of the wrongful
issuance of any such injunction being expressly waived hereby).
D. RIGHTS AND REMEDIES ARE CUMULATIVE
The rights and remedies of the COMPANY hereunder are cumulative
and no exercise or enforcement by the COMPANY of any right or
remedy hereunder shall preclude the exercise or enforcement by
the COMPANY of any other right or remedy hereunder or that the
COMPANY is entitled by law to exercise or enforce.
E. COSTS AND ATTORNEY FEES
If a claim for amounts owed by FRANCHISEE to the COMPANY or any
affiliate is asserted in any legal proceeding before a court of
competent jurisdiction or arbitrators, or if the COMPANY is
required to enforce this Agreement in a judicial or arbitration
proceeding, the COMPANY shall be entitled to reimbursement of its
costs and expenses, including reasonable accounting and legal
fees.
F. GOVERNING LAW/CONSENT TO JURISDICTION
Except to the extent governed by the United States Trademark Act
(Lanham Act, 15 U.S. C. Sections 1051, et. seq.), any other
applicable federal law, or any applicable state franchise law,
this Agreement and the Franchise shall be governed by the laws of
the State of Florida, the state in which the COMPANY is
headquartered, all financial obligations of FRANCHISEE are
required to be paid, and this Agreement is deemed to have been
executed.
G. BINDING EFFECT
This Agreement is binding upon the parties hereto and their
respective heirs, personal representatives, assigns, and
successors in interest, and shall not be modified except by
written agreement signed by both the COMPANY and FRANCHISEE. If
FRANCHISEE is a corporation, each shareholder or other owner of
more than five percent (5%) of the beneficial interest in
FRANCHISEE shall execute a personal guarantee in the form of that
which appears in Exhibit A attached hereto.
H. CONSTRUCTION
The preambles to this Agreement are a part of this Agreement,
which constitutes the entire agreement of the parties, and there
are no other oral or written understandings or agreements between
the COMPANY and FRANCHISEE relating to the subject matter of this
Agreement as of the date of this Agreement other than as may be
specifically referenced herein.
Except as otherwise expressly provided herein, nothing in this
Agreement is intended, nor shall be deemed, to confer any rights
or remedies upon any person or legal entity not a party hereto.
The headings of the several sections and paragraphs hereof are
for convenience only and do not define, limit, or construe the
contents of such sections or paragraphs.
The term "FRANCHISEE" as used herein is applicable to one or more
persons, a partnership, or a corporation, as the case may be, and
the singular usage includes the plural and the masculine and
neuter usages include the other and the feminine. If two or more
persons are at any time FRANCHISEE hereunder, their obligations
and liabilities to the COMPANY shall be joint and several.
References to "FRANCHISEE" and "assignee" which are applicable to
an individual or individuals shall mean the owner or owners of
the equity or operating control of FRANCHISEE or the assignee if
FRANCHISEE or the assignee is a partnership or corporation.
This Agreement may be executed in multiple copies, each of which
shall be deemed an original.
Time is of the essence in this Agreement.
17. EFFECTIVENESS OF AGREEMENT
The delivery of an unexecuted copy of this Agreement and any
accompanying franchise offering circular to FRANCHISEE shall not
be deemed to be an offer to grant a franchise or enter into an
agreement that FRANCHISEE may accept by the execution of such
copy. No franchise shall be deemed to have been granted by the
COMPANY to FRANCHISEE and no agreement shall be deemed to have
been reached between the COMPANY and FRANCHISEE until the COMPANY
has delivered a fully executed copy of this Agreement to
FRANCHISEE and the franchise fee required to be paid by Paragraph
A of Section 8 hereof has been received by the COMPANY.
18. ARBITRATION
All disputes between the COMPANY and FRANCHISEE arising from
or in any way related to this Agreement or to business dealings
between the COMPANY and any affiliated corporation, partnership,
or other business entity and FRANCHISEE shall be submitted to
binding arbitration pursuant to the Commercial Arbitration Rules
of the American Arbitration Association, with such arbitration to
take place in Winter Haven, Polk County, Florida, unless the
COMPANY shall specifically agree in writing to the conduct of
such arbitration proceeding in some other location.
Nothing in this section shall be deemed to preclude the COMPANY
from filing litigation in any court of competent jurisdiction for
injunctive relief to enforce the provisions of this Agreement
either during the term or upon the expiration hereof, nor shall
the commencement of any such litigation be deemed to constitute a
waiver of the COMPANY's right to arbitrate any dispute otherwise
subject to this section. In any such action seeking injunctive
relief, the remedies available to the COMPANY shall be limited to
such injunction as the court deems appropriate and neither the
COMPANY nor FRANCHISEE may assert any monetary claims or other
causes of action or affirmative defenses in such litigation,
without regard to any otherwise applicable rule of civil
procedure requiring the assertion of any such claim as a
compulsory counterclaim or affirmative defense. Upon the
completion of any arbitration contemplated by this Section 18,
either the COMPANY or FRANCHISEE may apply to any court of
competent jurisdiction for such order as may be deemed
appropriate to modify, vacate, or confirm any award of the
arbitration panel entered pursuant to this Section 18.
19. NOTICES AND PAYMENTS
All written notices permitted or required to be delivered by
the provisions of this Agreement or of the Operating Manual shall
be deemed so delivered at the time delivered by hand, one (1)
business day after sending by telegraph, telefax, or a comparable
electronic system, or three (3) business days after being placed
in the U.S. mail by Registered or Certified Mail, Return Receipt
Requested, postage prepaid, addressed to the party to be notified
at its most current principal business address of which the
notifying party has been notified.
All payments and reports required by this Agreement shall be
directed to the COMPANY at the address listed in the first
paragraph of this Agreement or to such other persons and places
as the COMPANY may direct from time to time. Any required
payment or report not actually received by the COMPANY during
regular business hours on the date due or properly placed in the
U. S. mail and postmarked by postal authorities at least three
(3) business days prior thereto shall be deemed delinquent.
IN WITNESS WHEREOF, the parties hereto have executed sealed, and
delivered this Agreement in counterparts on the day and year
first above written.
FLORIDINO'S INTERNATIONAL, INC. FRANCHISEE:
Sign: _________________________ Sign: _______________________
Print: ________________________ Print: ______________________
Title: ________________________ Title: ______________________
Date: _________________________ Date: _______________________
ACKNOWLEDGEMENTS
STATE OF _____________________
COUNTY OF ___________________
The foregoing franchise agreement was acknowledged before me this
day of _____________, 19____, by _______________________ as
____________________________________________, of Floridino's
International, Inc., a Florida corporation, on behalf of the
corporation. He or she is personally known to me or has produced
______________as identification and did take an oath.
NOTARY PUBLIC:
Signed: _______________________
Print: _________________________
(Seal) My Commission Expires:
STATE OF _______________________
COUNTY OF ______________________
The foregoing franchise agreement was acknowledged before me this
_______day of _______, 19 ____________, by _________________.
He or she is personally known to me or who has produced as
identification and did take an oath.
NOTARY PUBLIC:
Signed: _______________________
Print: _________________________
(Seal) My Commission Expires:
5465-001-289008
EXHIBIT A
PERSONAL GUARANTEE
In consideration of the granting of a franchise to construct,
own, and operate a Floridino's Restaurant to [name of
corporation] or of the approval by Floridino's International,
Inc., a Florida corporation, of the assignment of a previously
granted franchise to operate a Floridino's Restaurant to (name of
corporation], the undersigned, as the owner of more than five
percent (5%) of the beneficial interest in (name of corporation],
hereby guarantees all obligations, financial and otherwise, of
[name of corporation] to Floridino's International, Inc.
(including its successors and assigns) and any affiliated
corporation, partnership, or other business entity (including its
successors and assigns), and agrees to pay any such financial
obligation immediately upon demand therefor irrespective of
whether any demand has yet been made upon [name of corporation]
and irrespective of the ability of [name of corporation] to
satisfy any then existing financial obligation to Floridino's
International, Inc. (including its successors and assigns) or any
affiliated corporation, partnership, or other business entity
(including its successors and assigns).
The obligations of the undersigned are to be joint and several
with any other guarantor of the obligations of [name of
corporation] to Floridino's International, Inc. (including its
successors and assigns) and any affiliated corporation,
partnership, or other business entity (including its successors
and assigns) and it is specifically understood that the failure
of Floridino's International, Inc. (including its successors and
assigns) or any such affiliated corporation, partnership, or
other business entity (including its successors and assigns) to
attempt to recover on the guarantee of any other individual with
respect to the obligations of (name of corporation] shall not
constitute a defense to any claims against the undersigned
arising from this guarantee.
Sign: ___________________________
Print: ___________________________
Date: ____________________________
Exhibit 10.7 CONSULTING AGREEMENT
CONSULTING AGREEMENT
THIS AGREEMENT (the "agreement") is entered into as of June
, 1999 by and between Floridino's International Holdings Inc.,
(the "Company") and The Ephraim Group (the "Consultant").
WHEREAS, the Company is desirous of engaging the Consultant
to provide various consulting work relating to the organizing,
structuring and marketing the Company;
NOW THEREFORE, in consideration of the recitals, promises and
conditions in this Agreement, the Company and the Consultant agree
as follows:
1. CONSULTING SERVICES
Company hereby retains Consultant to render advice and
consulting on the marketing of the Company, to organize the
manufacturing and engineering of the Company's production process,
to develop an organizational structure, policies and procedures
for the Company's normal operations of business and to advise on
investor relations promotions. The specific obligations and
responsibilities of the Consultant are set forth on the proposal
letter of the Consultant attached to this Agreement as Exhibit A
which is incorporated by reference herein.
2. TERM
The term of this consulting Agreement shall be for a period
of five (5) years and shall not be terminable by either party only
for failure of Consultant to perform its obligations as set forth
in the proposal letter of the Consultant any time upon notice.
3. COMPENSATION OF CONSULTANT
The Company shall compensate the Consultant in relation to
the work performed by providing the Consultant or its nominees
with One Hundred Thousand (100,000) shares of restricted common
stock in the Company for the first year of the Agreement. The
Company shall each year thereafter compensate the Consultant in
relation to the work performed by providing the Consultant or its
nominees with One Hundred Thousand (100,000) warrants each of
which will entitle the Consultant to purchase one share of
restricted common stock in the Company for a price of $2.00 per
share during the second year of the agreement, $3.00 per share
during the third year of the agreement and $4.00 per share during
the fourth and fifth year of the agreement. In the event a
majority of the Company's shares are acquired by another entity or
taken over, the Consultant may accelerate its entitlement to the
warrants remaining under this Agreement up to Five Hundred
Thousand (500,000) warrants. In addition, the Consultant will
receive $.05 for each item, except pazzo rolls which are to be
determined by the dozen, as set forth in the proposal letter,
attached as Exhibit A, produced by the Company commencing on May
1, 1999. Additionally, the Consultant will be reimbursed for
reasonable expenses and disbursements incurred during the
performance of its duties with the Company as approved by the
Company. The Consultant shall submit an expense report to the
Company within a reasonable time of incurring its disbursements
for approval by the Company. For the first year of the Agreement,
only expenses will be reimbursed.
4. RELATIONSHIP OF PARTIES
For the purposes of the internal revenue code, this Agreement
shall not constitute an employer-employee relationship. It is the
intention of each party that Consultant shall be an independent
contractor and not an employee of the Company. Consultant shall
not have the authority to act as the agent of the Company except
when such authority is specifically delegated to Consultant by the
Company. Subject to the express provisions herein, the manner and
means utilized by Consultant are at the discretion of the
Consultant. All compensation paid to Consultant hereunder shall
constitute earnings to Consultant from self-employment income.
5. CONFIDENTIALITY
As a condition to the Consultant furnishing information and
advice under this Agreement, the Company agrees to treat with the
strictest confidence all such information ("Confidential
Information") which is furnished to the Company, its directors,
officers, employees, attorneys, accountants, advisors, agents
and/or other representatives (collectively, "Representatives") by
or on behalf of the Consultant or any companies or individuals
related to the Consultant. As used herein, the term "Confidential
Information" shall also include all analysis, compilations,
studies or other materials containing or generated from, in whole
or in part, information furnished to the Company by or on behalf
of the Undersigned, except that information which is public
knowledge. The Confidential Information will be kept confidential
and will not, except as hereinafter provided or as required by
applicable law, be disclosed by the Company or its Representatives
to any person without our prior written consent and will not be
used by the Company or its Representatives other than for the
purpose of evaluating the Transaction. The Company shall not
disclose to any person or organization (other than those
authorized hereunder) (a) the fact that the Confidential
Information has been made available to the Company, (b) the fact
that discussions or negotiations are taking place, or (c) any of
the terms or facts with respect to the possible Transaction,
including the status thereof. In the event that the Company
decides not to proceed with the proposed transaction or upon our
request, it will promptly deliver to the Consultant all of the
Confidential Information, including all copies, reproductions,
summaries, analyses or extracts thereof or based thereon, in the
possession or control of the Company or any of its
Representatives. Notwithstanding the return of any Confidential
Information, the Company will continue to be bound by its
obligation of confidentiality and other obligations hereunder. In
addition, the Company agrees that neither it nor its
organization(s) nor its Representatives will enter into any
agreement or other arrangement with any third party introduced to
it by the undersigned or conduct any discussions with such party
without our prior written consent, for a period of two years from
the date of this agreement.
6. NOTICES
Any notice, request, demand or other communication required
or permitted hereunder shall be deemed to be property given when
personally served in writing or when deposited in the United
States mail, postage prepaid, addressed to the other party at the
address appearing at the end of this Agreement. Either party may
change its address by written notice made in accordance with this
section.
7. BENEFIT OF AGREEMENT
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal
representatives, administrator, executors, successors,
subsidiaries and affiliates.
8. COUNTERPARTS
This Agreement may be executed in any number of counterparts,
including counterparts transmitted by telecopier or FAX, any one
of which shall constitute an original of this Agreement. When
counterparts of facsimile copies have been executed by all
parties, they shall have the same effect as if the signature to
each counterpart or copy where upon the document and copies of
such signature may be transferred to a single document upon the
request of any party.
9. ASSIGNMENT
This Agreement may not be assigned by the Consultant in any
manner whatsoever.
10. SUNDRY PROVISIONS
(a) The parties agree that this transaction and agreement
shall be governed by the federal
laws of the United States and, where no conflict exists, under
the laws of the State of New York. The parties submit to the
jurisdiction of New York for the settlement and adjudication of
any and all disputes.
(b) The descriptive headings of the several Articles and
sections of this Agreement are inserted for convenience only and
shall not control or affect in any way or to any extent the
meaning, construction or interpretation of this Agreement or of
any of the provisions hereof.
(c) In the event there is any conflict between the terms of
the instant Agreement and the attached Exhibit, the terms of the
instant Agreement shall control and supercede.
11. ENTIRE AGREEMENT; MODIFICATIONS
This Agreement constitutes the entire agreement between the
Company and the Consultant. No promises, guarantees, inducements
or agreements, oral or written, expressed or implied, have been
made other than as contained in this Agreement. This Agreement
can only be modified or changed in writing signed by both parties.
IN WITNESS WHEREOF, the parties hereto have hereby executed
this Agreement the day and year first above written.
THE EPHRAIM GROUP FLORIDINO'S INTERNATIONAL
HOLDINGS INC.
________________________ ________________________
By: By:
Exhibit 21
SUBSIDIARIES OF FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
AS OF SEPTEMBER 30, 1999
ORGANIZED UNDER PERCENTAGE OF
THE LAWS OF VOTING POWER
---------------------------------------
Floridino's Inc. New York 100%
Toho Holdings, Inc. New York 100%
Floridino's Express Inc. Florida 100%
Floridino's of Delray Beach, Inc. Florida 100%
Floridino's of Lakeland, Inc. Florida 100%
Floridino's Specialties Inc. Florida 100%
Floridino's International, Inc. Florida 100%
