<PAGE>
As filed with the Securities and Exchange Commission on October 29, 1998.
Registration No. 333- _____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
Nolbo, Inc.
(Name of small business issuer in its charter)
Delaware 5812 59-3518685
- ----------------- ---------------------------- -------------------
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code No.) Identification No.)
of organization)
8426 Sunstate Street
Tampa, FL 33634
(813) 882-4753
(Address and telephone number of principal executive offices and
principal place of business.)
Marvin M. Nolley, President
Nolbo, Inc.
8426 Sunstate Street
Tampa, FL 33634
(813) 882-4753
(Name, address and telephone number of agent for service)
Copies to:
Steven Morse, Esq. Henry C. Malon, Esq.
Lester Morse P.C. One Battery Park Place
Suite 420 Third Floor
111 Great Neck Road New York, NY 10004
Great Neck, NY 11021 Phone: (212) 483-9600
Phone: (516) 487-1446 Fax: (212) 422-7839
Fax: (516) 487-1452
<PAGE>
Approximate date of commencement of proposed sale to public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis, pursuant to Rule 415 under the Securities Act of
1933, check the following box: | x |
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Calculation of Registration Fee
================================================================================
Proposed
Title of Each Amount Maximum Proposed Maximum Amount of
Class of Securities to be Offering Price Aggregate Offering Registration
Being Registered Registered Per Unit Price(1) Fee
- --------------------------------------------------------------------------------
Shares of Common
Stock.
$.001 par value 300,000 6.00 1,800,000 $531.00
Underwriter's Warrant 30,000 .001 30 .01
Shares of Common
Stock,
$.001 par value,
underlying the
Underwriter's Warrant 30,000 9.00 270,000 79.65
Total Registration
Fee $610.66
=======
================================================================================
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
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NOLBO, INC.
Cross-Reference Sheet
Showing Location in Prospectus of
Information Required by Items in Part I of Form SB-2
<TABLE>
<CAPTION>
Registration Statement
Item Number and Caption Location in Prospectus
<S> <C>
1. Front of Registration Statement and
Outside Front Cover of Prospectus Outside Front Cover Page of Prospectus
2. Inside Front and Outside Bank Cover Inside Front and Outside Bank Cover Pages of
Pages of Prospectus Prospectus; Additional Information
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Outside Front Cover Page of Prospectus; Underwriting
6. Dilution Dilution
7. Selling Security holders Not Applicable
8. Plan of Distribution Outside Front Cover Page of Prospectus; Underwriting
9. Legal Proceedings Business - Legal Proceedings
10. Directors, Executive Officers,
Promoters and Control Persons Management
11. Security Ownership of Certain
Beneficial Owners and Management Principal Stockholders
12. Description of Securities Description of Securities; Dividends
13. Interest of Named Experts and Counsel Experts and Legal Matters
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities Underwriting
15. Organization Within Last Five Years Business; Certain Transactions
16. Description of Business Prospectus Summary; Business
17. Management's Discussion and Analysis Management's Discussion and Analysis of Financial
or Plan of Operation Condition and Results of Operations
18. Description of Property Business
18. Certain Relationships and Related
Transactions Certain Transactions
19. Market for Common Equity and Related Risk Factors; Shares Eligible for Future Sale;
Stockholder Matters Description of Securities
21. Executive Compensation Management - Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure Not Applicable
</TABLE>
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion, dated October 29, 1998
Nolbo, Inc.
Common Stock
This is an initial public offering of up to 300,000 shares of common
stock of Nolbo, Inc. on a "best efforts" basis. A minimum of 200,000 shares is
to be sold. Continental Stock Transfer & Trust Company, New York, NY, has agreed
to act as Escrow Agent. All checks shall be made payable to "Continental Stock
Transfer & Trust Company f/b/o Nolbo, Inc." The offering period will expire on
________, 1998. The Offering period may be extended until _______, 1999. If the
Offering is unsuccessful, all monies will be returned to investors without
deductions or interest. We may reject the entire subscription order or any part
of the subscription.
Before the Offering, there has been no public market for the common
stock. We plan to seek to list the common stock on the OTC Electronic Bulletin
Board under the symbol "____." The Underwriter does not intend to make a market
in our common stock.
Before you decide to invest in the Nolbo Common Stock, carefully read
this Prospectus, especially the risk factors beginning on page __.
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved these securities or passed upon the
adequately or accuracy of this Prospectus.
================================================================================
Price to Underwriting Proceeds to
Public Commissions Company (1)
- --------------------------------------------------------------------------------
Per Share $6.00 $.60 $5.40
Minimum $1,200,000 $120,000 $1,080,000
Maximum $1,800,000 $180,000 $1,620,000
================================================================================
(1) Before deduction of expenses payable by Nolbo.
J.W. Barclay & Co., Inc.
Prospectus dated _______, 1998
<PAGE>
TABLE OF CONTENTS
Prospectus Summary.......................................................
Summary Financial Data...................................................
Where you can find More Information......................................
Risk Factors.............................................................
Use of Proceeds..........................................................
Dividend Policy..........................................................
Dilution.................................................................
Capitalization...........................................................
Management's Discussion and Analysis
of Financial Condition and Results
of Operations.........................................................
Business.................................................................
Management...............................................................
Principal Stockholders...................................................
Certain Transactions.....................................................
Description of Securities................................................
Shares Eligible for Future Sale..........................................
Underwriting.............................................................
Legal Matters............................................................
Experts..................................................................
Index to Financial Statements............................................
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PROSPECTUS SUMMARY
This summary highlights some information from this Prospectus. Because this is a
summary, it does not contain all the information that may be important to you.
You should read the entire Prospectus before you decide to invest.
THE COMPANY
Nolbo, Inc. was incorporated in Delaware on June 22, 1998 originally
under the name Marbo, Inc.. We are engaged in the business of owning and
operating two restaurants in Tampa, Florida which specializes in high quality,
quickly served gourmet grilled chicken. Each restaurant operates under the name
"Gladstone's Grilled Chicken." We intend to use the net proceeds of the Offering
to open up to five additional restaurants in the Tampa - St. Petersburg, Florida
area. Our executive offices are located at 8426 Sunstate Street, Tampa, FL 33634
and our telephone number is (813) 882-4753.
THE OFFERING
Securities Offered
by the Company on
a "best efforts" basis 300,000 Shares (maximum)
200,000 Shares (minimum) - This does not include
options to purchase 50,000 shares of Common
Stock which may be granted under the Company's
stock option plan, Underwriter's Warrants to
purchase up to 30,000 shares of Common Stock,
and notes owned by certain Bridge Lenders
convertible into a total of 30,000 shares of
Common Stock.
Offering Price $6.00 per Share
Capitalization
- --------------
Common Stock Outstanding
prior to Offering 906,000 Shares
Common Stock to be
Outstanding after the
Offering 1,206,000 Shares (maximum)
1,106,000 Shares (minimum)
Proposed OTC Bulletin
Symbol
Common Stock CHKN
Use of Proceeds We intend to use the net proceeds of the
Offering primarily to lease and build up to five
additional restaurants in the State of Florida,
repayment of a bridge loan and for working
capital.
Risk Factors You should read the "Risk Factors" section
beginning on page __ , as well as the other
cautionary statements throughout the entire
prospectus, so that you understand the risks
associated with an investment in our stock.
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SUMMARY FINANCIAL DATA
The summary financial data is derived from the historical consolidated
financial statements of Nolbo. The pro forma financial statements are derived
from the historical consolidated financial statements and gives effect to the
sale of a minimum of 200,000 shares of common stock and a maximum of 300,000
shares. This summary financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" as well as Nolbo's historical consolidated financial statements and
the related notes thereto, included elsewhere in the Prospectus.
Year Ended June 30,
-----------------------------
1998 1997
------ ------
Statement of Operational Data:
Net Sales $1,026,404 $1,025,162
Net Income (Loss) 18,942 (18,585)
Net Income (Loss) per common share .02 (.02)
Weighted average number of shares
outstanding during the period 906,000 906,000
June 30, 1998
---------------------------------------
Pro Forma
Actual Minimum (1) Maximum (1)
------ ----------- -----------
Balance Sheet Data:
Total Assets $ 88,136 $ 888,136 $1,398,136
Net Tangible Assets 922 800,922 1,310,922
Working Capital (Deficit) (20,396) 779,604 1,289,604
Total Liabilities 80,722 80,722 80,722
Stockholders' Equity 7,414 807,414 1,317,414
- --------------------
(1) Reflects the sale of 200,000 shares (minimum) and 300,000 shares (maximum)
offered hereby, and the receipt of the net proceeds ($800,000 minimum;
$1,310,000 maximum).
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WHERE YOU CAN FIND MORE INFORMATION
At your request, we will provide you, without charge, a copy of any
exhibits to our registration statement incorporated by reference in this
prospectus. If you want more information, write or call us at:
Nolbo, Inc.
8426 Sunstate Street
Tampa, FL 33634
Telephone: (813) 882-4753
Fax: (813) 888-7287
Our fiscal year ends on June 30. We intend to furnish our shareholders
annual reports containing audited financial statements and other appropriate
reports. In addition, we intend to become a reporting company and file annual,
quarterly and current reports, proxy statements and other information with the
Securities and Exchange Commission ("SEC"). You may read and copy any reports,
statements or other information we file at the SEC's public reference room in
Washington, D.C. You can receive copies of these documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. Our SEC
filings are also available to the public on the SEC Internet site at
http://www.sec.gov.
5
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RISK FACTORS
Before you invest in our common stock, you should be aware that there
are various risks, including those described below. You should carefully
consider these risk factors together with all of the other information included
in this prospectus before you decide to purchase shares of our common stock.
Some of the information in this prospectus may contain forward-looking
statements. Such statements can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"continue" or other similar words. These statements discuss future expectations,
contain projections of results of operations or of financial condition or state
other "forward-looking" information. When considering such forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this prospectus. The risk factors noted in this section and other
factors noted throughout this prospectus, including certain risks and
uncertainties, could cause our actual results to differ materially from those
contained in any forward-looking statement.
Minimal Working Capital and Revenues; Loss From Operations; Accumulated Deficit
Our operations for the years ended June 30, 1998 and 1997, resulted in
us realizing revenues of $1,026,404 and $1,025,162 and net income (loss) of
$18,942 and $(18,585), respectively. At June 30, 1998, we had a working capital
(deficiency) of $(20,396) and an accumulated deficit of $(102,384). Our general
and administrative expenses will increase in the future because of our proposed
expansion efforts. We can provide no assurances that our operations will be
profitable in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Dependence Upon Gladstone's Grilled Chicken Restaurants
We own and operate two restaurants under the name "Gladstone's Grilled
Chicken Restaurant." We intend to open additional restaurants with the proceeds
of this offering under the same or a different name. Our operations are
dependent upon the success of these fast-food restaurants. We can provide no
assurances that the operation of these restaurants will be profitable in the
future. See "Business."
Expansion of Operations
Our objective is to grow more rapidly by opening up to five additional
restaurants in the greater Tampa-St. Petersburg Florida area. Our ability to
successfully expand depends upon many factors which include:
o identifying and financing suitable restaurant sites and obtaining
construction permits and licenses for the restaurants;
6
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o negotiating acceptable lease terms for the new sites;
o creating awareness and acceptance of our restaurants in the
geographical market in which we enter; and
o being able to hire skilled restaurant management to successfully
manage our growth, including costs and quality controls.
We can provide no assurances that we will be able to accomplish these
necessary prerequisites for our successful growth.
Food Service Industry-Changes in Consumer Preferences
General Risks
Various factors affect the quick service restaurant industry in which
we operate. These include:
o changes in consumer preferences, tastes and eating habits;
o demographic trends and traffic patterns;
o increases in food and labor costs; and
o national, regional and local economic conditions.
We can provide no assurance that the foregoing factors will be
favorable in the future.
Discount Pricing
Most fast food restaurants engage in discount pricing strategies. We
currently offer value priced meals, combination meals and discount coupons.
Continuing or sustained price discounting in the quick service food industry may
hurt our ability to operate profitably in the future. See "Business."
Competition
The restaurant industry, and particularly the quick-service segment,
is highly competitive with respect to price, services, food quality including
taste, freshness, healthfulness and nutritional value and location. There are
numerous well-established competitors possessing substantially greater
financial, marketing, personnel and other resources than us and substantially
longer operating histories. We compete with fast food chains specializing in
chicken products. To a lesser extent, our competitors also include major pizza
and hamburger chains, many of which have introduced chicken products. We can
provide no assurances that we will be able to successfully compete in the
future. See "Business."
7
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Lack of Trademark and Service Mark Protection
We have not filed for service mark or trademark protection of our name
"Gladstone's Grilled Chicken" with the United States Patent and Trademark Office
and we do not intend doing so in the future. Another company that is believed by
Management to operate one restaurant in California, has registered the marks
"Gladstone's" and "Gladstone 4 Fish and Design" with such office and could in
the future bring a trademark infringement action against us in Florida seeking
injunctive relief and damages. While we believe that we have valid defenses to
such an action, no assurances can be given that we would prevail in such a legal
action. Further, any lawsuit would involve us incurring significant legal costs
in the defense of such a lawsuit and, if unsuccessful, we could be forced to pay
a material damage award and/or change our name which may adversely effect our
operations. See "Business - Lack of Trademark and Service Mark Protection."
Raw Material Cost Fluctuations; Dependence on Suppliers.
Our operations, results and financial condition may be adversely
effected by fluctuations in the cost of our primary raw material. Such costs are
determined by constantly changing market forces over which we have no control.
We have no long-term contracts with any of our suppliers. The loss of any of our
suppliers could adversely impact our business until alternative arrangements are
obtained. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Impact of Government Regulation on Our Operations
Our restaurants are subject to numerous federal, state and local laws
regarding health, sanitation and safety standards and the requirements of
maintaining food service licenses from local health authorities. We are required
to maintain these licenses. Our failure to retain food service licenses would
have a material adverse effect on our operations. We are subject to federal and
state minimum wage laws governing such matters as working conditions, overtime
and other employee matters. The development and construction of additional
restaurants will be subject to compliance with zoning and use and environmental
regulations. See "Business."
Possible need for additional financing
The proceeds of the offering are estimated to be applied over a period
of at least twelve months following the completion of the offering. We may
require additional financing during such twelve month period if:
o less than all shares of common stock are sold in the offering;
o unforeseen events occur; or
o we seek to open additional restaurants beyond those provided for
in the "Use of Proceeds."
8
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Before the offering, we lack the capital to open additional
restaurants. We can provide no assurances that we will be able to obtain
additional financing, if needed, in the future. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Potential product liability
We may be liable if the consumption of any of our products cause
injury, illness or death. We are not aware of the occurrence of any injury,
illness or death relating to our products. However, a product liability claim or
judgment against us could have a material adverse effect on our business or
financial results. See "Business."
Quarterly Fluctuations
Our quarterly results of operations may be affected by the timing of
the opening of new restaurants and by expenses associated with our expansion.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Management's broad discretion in the application of proceeds of the offering
Between $100,000 or 12% and $250,000 or 19% of the net proceeds of the
offering will be used for our working capital and general corporate purposes.
Since no specific purpose of the funds allocated to our working capital has been
identified by us, we will have broad discretion in the use such proceeds. Also,
our intended uses of the net proceeds of the offering are estimates only and
there could be significant variations in the uses of proceeds due to unexpected
changes in business or economic circumstances. We reserve the right to
reallocate the uses of proceeds depending upon any such change of circumstances.
See "Use of Proceeds."
Lack of Public Market for Common Stock; Determination of Public Offering Price
Before the offering, there has been no public market for our common
stock. J.W. Barclay & Co., Inc. , the underwriter of the offering, does not
intend to make a market in our common stock after the completion of the
offering. We plan to list the common stock for trading on the OTC Electronic
Bulletin Board. We can provide no assurance that such listing will be
successful. We do not know the extent to which investor interest in us will lead
to the development of a trading market or how liquid that market might be. The
initial public offering price for our shares of common stock was determined
through negotiations between the underwriter and us. See "Underwriting."
Lack of at Least Two Independent Directors and Committees
Our board of directors consists of four directors. Three of the
directors also serve as executive officers. The absence of at least two outside
or disinterested directors and committees composed of such disinterested
directors, could result in less objectivity and an increased risk for conflicts
of interest with respect to decisions made by the Board of Directors. See
"Management."
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Control by Officers and Directors
Following the offering, Marvin Nolley and Bo Grektorp will own between
approximately 75% and 82% of the outstanding common stock. However, the
investors in the offering will have provided between approximately 92% and 94%
of the total consideration paid for our outstanding Common Stock. Messrs. Nolley
and Grektorp will control Nolbo and have the power to elect a majority of the
directors, appoint management and approve certain actions requiring the approval
of a majority of stockholders. See "Principal Stockholders."
Dependence Upon Key Personnel
We believe that our ability to successfully operate our existing
operations, implement expansion plans and to operate profitably depends on the
continued employment of Marvin Nolley and Bo Grektorp. If they become unable or
unwilling to continue in their present positions, our business and financial
results could be materially adversely effected. We will attempt to obtain a $1
million key man life insurance policy on the lives of each of Messrs. Nolley and
Grektorp. We can provide no assurances that such insurance would adequately
compensate us for the loss of their services or that we would be able to recruit
and retain new management personnel should the need arise. See "Management."
Immediate and Substantial Dilution to Public Investors
The offering will result in an immediate and substantial dilution of
the public's investment in the Company because the net tangible book value per
share of the common stock upon the completion of the offering will be between
$.72 and $1.09, compared to the $6.00 per share offering price. This represents
a dilution of between 82% and 88% of the offering price. See "Dilution."
Limitation on Director Liability
As permitted by Delaware corporation law, our Certificate of
Incorporation limits the liability of directors to Nolbo or its stockholders for
monetary damages for breach of a director's fiduciary duty except for liability
in certain instances. As a result of such limitation in our Certificate of
Incorporation, our stockholders have a limited right to recover against
directors for breach of their fiduciary duty. See "Management-Limitation of
Directors' Liability and Indemnification Matters."
No Cash Dividends to Holders of Common Stock
We have not paid cash dividends on our common stock and do not
anticipate paying cash dividends in the foreseeable future. We intend to retain
future earnings, if any, to finance our growth. See "Description of Securities"
and "Dividend Policy."
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"Penny Stock" Regulations
The SEC has adopted "penny stock" regulations which apply to certain
securities traded over-the-counter. These regulations may adversely impact the
ability of the purchasers in the offering to resell the shares of common stock
purchased therein if a public market should develop in the future. See
"Description of Securities."
Escrow Funds
We have established an escrow account with Continental Stock Transfer &
Trust Company, New York, NY. In the event that a minimum number of 200,000
shares is not sold within the offering period, all funds will be returned to
investors without interest or deduction therefrom. Investors' funds may not be
returned during the offering period, unless state law dictates otherwise. Also,
investors' funds may be tied up for a period of up to 120 days without the
investors having the use of their funds. See "Underwriting."
Limits on Secondary Trading
We believe that the common stock will be eligible to be resold after
the completion of this offering in a limited number of states. These include the
states of Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois,
Louisiana, Maryland, New Jersey, New York, Pennsylvania, Rhode Island, Utah and
the District of Columbia. Such limitation may adversely impact the development
of a trading market in our common stock.
Unregistered Shares Eligible for Future Sale
If a market for our common stock should develop in the future, the
market price of our common stock could drop as a result of sales of a large
number of shares of common stock in the market after the offering, or the
perception that such sales could occur. These factors also could make it more
difficult for us to raise funds through future offerings of common stock.
There will be between 1,106,000 and 1,236,000 shares of our common
stock outstanding after the offering. The exact number will depend upon the
number of shares sold in the offering and the possible issuance of up to 30,000
shares of common stock upon conversion of certain notes. Of these shares,
between 200,000 and 300,000 shares sold in the offering will be freely
transferable without restriction or further registration under the Securities
Act. The remaining shares of common stock outstanding will be"restricted
securities" as that term is defined by Rule 144 of the Securities Act. These
shares may be sold commencing in June 1999 without registration under the
Securities Act to the extent permitted by Rule 144. In connection with the
offering, our stockholders have agreed that they will not sell or otherwise
transfer their common stock for a period of one year after the initial closing
date of this offering without the consent of the Underwriter. See "Shares
Eligible for Future Sale."
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Anti-Takeover Measures
Certain provisions of the Certificate of Incorporation could make it
more difficult for a third party to acquire control of us, even if such change
in control would be beneficial to stockholders. The Certificate of Incorporation
allows us to issue additional preferred stock without stockholder approval. Such
issuances could make it more difficult for a third party to acquire Nolbo. See
"Description of Securities."
USE OF PROCEEDS
The net proceeds to be received from the sale of the Shares offered by
the Company (after payment of estimated offering expenses) will be approximately
$800,000 (minimum) and $1,310,000 (maximum).
Minimum Maximum
------- -------
Lease and build up to five
additional restaurants (1) $540,000 $ 900,000
Repayment of indebtedness (2) 160,000 160,000
Working Capital (3) 100,000 250,000
-------- ----------
TOTAL $800,000 $1,310,000
======== ==========
- ------------------
(1) See "Business."
(2) The Company borrowed $150,000 from certain investors as described under
"Bridge Financing." The proceeds of this bridge loan were used to
refurbish and install a point of sales system that enables customer
information to be tracked, to finance the expenses of this offering and
for general working capital. The Company has allocated $160,000 to repay
the Notes (inclusive of estimated interest) on the basis that the holders
of the Notes demand payment. Any monies not used to repay the Notes would
be re-allocated to working capital.
(3) The Company intends to use the funds allocated toward general working
capital purposes primarily for paying for the ongoing expenses of being
a publicly held corporation and miscellaneous administrative expenses.
Based on currently proposed plans and assumptions relating to the
implementation of its business plans, the Company believes that the proceeds
from the sale of the minimum Offering will be sufficient to satisfy its
contemplated cash requirements for at least 12 months following the consummation
of such Offering. In the event that the Company's plans change, its assumptions
change or prove to be inaccurate or if the proceeds of the Offering otherwise
prove to be insufficient to implement its business plan, the Company may find it
necessary or desirable to reallocate a portion of the proceeds within the above
described categories, use proceeds for other purposes, seek additional financing
or curtail its operations. There can be no assurance that any additional
financing will be available to the Company on acceptable terms, or at all.
Proceeds not immediately required for the purposes described above will
be invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest bearing
investments.
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Bridge Financing
Between July 29 and September 18, 1998, the Company raised $150,000 in
bridge financing from non-affiliated investors, (the "Bridge Lenders"). In
exchange for such loans, the Company issued to the Bridge Lenders
non-convertible notes due the earlier of the completion of the Offering or two
years from the date of issuance in the principal amount of $120,000 (the
"Non-Convertible Notes") and convertible notes in the principal amount of
$30,000 due two years from the date of issuance (the "Convertible Notes"). The
Convertible Notes and NonConvertible Notes are collectively referred to as the
"Notes." Each Note bears interest at the rate of ten (10%) percent per annum.
The principal of the Convertible Notes is convertible at the option of the
holder into shares of the Company's Common Stock at $1.00 per share at anytime
from the date of issuance until the Convertible Notes are retired. At the option
of the holders of the Notes, such holders may demand prepayment of the Notes in
the event that the Company raises gross proceeds of at least $1,000,000 through
either public or private financing. The Shares underlying the Convertible Notes
are subject to a lock-up agreement. See "Shares Eligible for Future Sale."
DIVIDEND POLICY
The Company currently intends to retain any earnings to finance the
development and expansion of the Company's business and does not anticipate
paying any cash dividends on its Common Stock in the foreseeable future. The
declaration and payment of cash dividends by the Company are subject to the
discretion of the Board of Directors of the Company. Any future determination to
pay cash dividends will depend on the Company's results of operations, financial
condition, capital requirements, contractual restrictions and other factors
deemed relevant at the time by the Board of Directors. The Company is not
currently subject to any contractual arrangements which restricts its ability to
pay cash dividends.
DILUTION
The net tangible book value per share of the Company as of June 30,
1998 was approximately $.0.00 per share of Common Stock. Net tangible book value
per share is determined by dividing the tangible net worth of the Company
(tangible assets less all liabilities) by the total number of outstanding shares
of Common Stock. The Company's tangible assets consists of all of its assets as
shown on its balance sheet, except for intangible assets consisting of $6,492 on
June 30, 1998. After giving effect to the sale by the Company of 200,000 Shares
(minimum), the adjusted net tangible book value per share of the Company as of
June 30, 1998 would have been approximately $0.72 This represents an immediate
increase in the adjusted net tangible book value per share of $0.72 to existing
Common Stockholders and an immediate dilution (the difference between the $6.00
price to the public per share of Common Stock and the adjusted net tangible book
value per share of Common Stock after the Offering) in the adjusted tangible
book value of $5.28 per share of Common Stock (representing a dilution
percentage of approximately 88%) to new investors. After giving effect to the
sale by the Company of 300,000 Shares (maximum), the adjusted net tangible book
value per share of the Company as of June 30, 1998 would have been approximately
$1.09. This represents an immediate increase in the
13
<PAGE>
adjusted net tangible book value per share of $1.09 to existing Common
Stockholders and an immediate dilution (the difference between the $6.00 price
to the public per share of Common Stock and the adjusted net tangible book value
per share of Common Stock after the Offering) in the adjusted tangible book
value of $4.91 per share of Common Stock (representing a dilution percentage of
approximately 82%) to new investors.
The following table illustrates this per share of Common Stock
dilution:
<TABLE>
<CAPTION>
Minimum Maximum
------- -------
<S> <C> <C> <C> <C>
The initial price of a share of Common
Stock paid by new investors $6.00 $6.00
Adjusted net tangible book value per share
of Common Stock before the Offering $0.00 $0.00
Increase in adjusted net tangible book
value per share of Common Stock
attributable to new investors 0.72 0.72
----- -----
Adjusted net tangible book value per
share of Common Stock after the Offering 1.09 1.09
----- -----
Dilution in adjusted net tangible book
value per share of Common Stock to
new investors $5.28 $4.91
===== =====
</TABLE>
14
<PAGE>
The following tables summarize, as of the completion of the Offering,
the differences between existing stockholders and new investors with respect to
the number of shares of Common Stock purchased from the Company and the total
and average cash consideration paid per share.
TABLE I (Minimum)
<TABLE>
<CAPTION>
=============================================================================================
Approximate Average
Approximate Percentage Price
Shares Percentage of Total Cash of Total Per
Purchased Total Shares Consideration $ Consideration % Share $
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Public
Stockholders 200,000 18 1,200,000 92 6.00
- ---------------------------------------------------------------------------------------------
Present
Stockholders (1) 906,000 82 109,798 8 .12
- ---------------------------------------------------------------------------------------------
Total 1,106,000 100 1,309,798 100 1.18
=============================================================================================
</TABLE>
TABLE II (Maximum)
<TABLE>
<CAPTION>
=============================================================================================
Approximate Average
Approximate Percentage Price
Shares Percentage of Total Cash of Total Per
Purchased Total Shares Consideration $ Consideration % Share $
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Public
Stockholders 300,000 25 1,800,000 94 6.00
- ---------------------------------------------------------------------------------------------
Present
Stockholders 906,000 75 109,798 6 .12
- ---------------------------------------------------------------------------------------------
Total 1,206,000 100 1,909,798 100 1.58
=============================================================================================
</TABLE>
The foregoing tables do not reflect the following: (i) options
to purchase 50,000 shares of Common Stock which may be granted under the
Company's stock option plan; (ii) Underwriter's Warrants to purchase up to
30,000 shares of Common Stock; and (iii) notes owned by certain Bridge Lenders
convertible into a total of 30,000 shares of Common Stock. See "Use or Proceeds
- - Bridge Financing."
15
<PAGE>
CAPITALIZATION
The following table sets forth, as of June 30, 1998, (i) the
actual capitalization of the Company, and (ii) the pro forma capitalization of
the Company, including the issuance of 200,000 shares of Common Stock (minimum)
and 300,000 shares (maximum). The table below should be read in conjunction with
the financial statements of the Company and notes thereto included elsewhere in
the Prospectus.
June 30, 1998
----------------------------------
Pro Pro Forma(1)
Actual Forma (1)
----------------------------------
Minimum Maximum
------- -------
Stockholders' Equity:
Preferred Stock, $.001 par value,
5,000,000 shares authorized,
no shares outstanding -0- -0- -0-
Common Stock, $.001 par value
20,000,000 shares authorized,
906,000 shares issued, 1,106,000
shares issued and outstanding
pro forma minimum and 1,206,000
shares issued and outstanding
pro forma maximum 906 1,106 1,206
Additional Paid-in-capital 108,892 908,092 1,418,592
Retained Earnings (deficit) (102,384) (102,384) (102,384)
--------- -------- ----------
Total Stockholders' Equity $ 7,414 $807,414 $1,317,414
========= ======== ==========
- ------------
(1) Does not include the following: (i) options to purchase 50,000 shares of
Common Stock which may be granted under the Company's Stock Option Plan;
(ii) Underwriter's Warrants to purchase up to 30,000 shares of Common
Stock; and (iii) notes owned by certain Bridge Lenders convertible into
a total of 30,000 shares of Common Stock. See "Use of Proceeds - Bridge
Financing."
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
This discussion should be read in conjunction with the information in
the financial statements of the Company and notes thereto appearing elsewhere in
this Prospectus.
Results of Operations
Year Ended June 30, 1998 Compared to Year Ended June 30, 1997
During fiscal 1998, our net sales were $1,026,404 as compared to
$1,025,162 for the prior year. Our net sales remained constant during the past
two years and are not expected to significantly increase until or unless
additional stores are opened.
During fiscal 1998, our gross profit was $681,917, representing an
increase of $28,406 or 4.3% from the comparable period of the prior year. During
fiscal 1998 our gross profit percentage was approximately 66.4% as compared to
approximately 63.7% for the comparable period of the prior year. During fiscal
1998, we successfully reduced food and labor costs in order to increase gross
margins. The improved margins resulted in us achieving income from operations of
$20,555 as compared to a loss from operations of ($14,167) for the comparable
period of the prior year.
During fiscal 1998, our operating expenses remained constant with
selling, general and administrative expenses of $631,384 as compared to $632,103
for the comparable period of the prior year. Selling, general and administrative
expenses as a percentage of net sales was approximately 61.5% for the past two
years.
During fiscal 1998, our net income was $18,942 as compared to a net
loss of ($18,585) for the comparable period of the prior year. The improved
results for fiscal 1998 is attributable to reduced food and labor costs.
Liquidity and Capital Resources
We have over the past two years funded our cash needs from operations
and modest borrowings to occasionally fund furniture and equipment purchases.
At the present two restaurant level of operations, we expect to
continue to be able to fund all of our cash requirements, including repayment of
existing long-term debt, from operations. Any increase in the number of
restaurant units and the attendant increased working capital requirements are
expected to be funded by the proceeds of the offering contemplated by this
Prospectus. We may also attempt to obtain bank line-of-credit financing within
the next twelve to fifteen months, but there can be no assurance that we will be
successful in that regard.
17
<PAGE>
Plan of Operations
After the completion of the offering, we intend to increase the number
of "Gladstone's Grilled Chicken" restaurants from two to as many as seven. The
number of additional restaurants will depend upon the amount of net proceeds
received by us from the offering. The establishment of each restaurant is
anticipated to cost approximately $180,000. The Company's payroll is anticipated
to grow as we expand our operations and acquire new staff to manage and operate
each facility.
BUSINESS
General
The Company is a Delaware corporation formed on June 22, 1998. The
Company is engaged in the business of owning and operating two restaurants in
Tampa, Florida which specialize in high quality, quickly served gourmet chicken.
Each restaurant operates under the name "Gladstone's Grilled Chicken."
The first Gladstone restaurant opened in January 1988 in a Publix
supermarket anchored strip center in the University South Florida/Temple Terrace
area of Tampa. This store has approximately 1,600 square feet of space. Annual
sales of the first Gladstone restaurant have reached an average of approximately
$600,000 per annum over the past three years. The second Gladstone restaurant
opened in downtown Tampa, Florida in 1991. This store has approximately 2,800
square feet of space. Sales at the downtown location have averaged approximately
$425,000 per annum over the last three years. The Company intends to use the
proceeds of the Offering to establish up to an additional five restaurants in
the greater Tampa - St. Petersburg, Florida area. The investment per proposed
restaurant is expected to be approximately $180,000 with an estimated break even
point at $375,000 in annual sales.
The success of the Company is dependent upon the success of Gladstone's
Grilled Chicken restaurants, the Company's ability to create awareness and
acceptance of such restaurants in the geographical markets in which it enters.
The Company's proposed expansion to own and operate additional restaurants is
dependent upon the availability of suitable restaurant sites, the construction
and development of the restaurants within projected time frames, the hiring of
skilled restaurant management and other personnel, the ability to successfully
manage growth (including cost and quality controls) and the availability of
adequate financing. The opening and success of the Company's restaurants will
depend on various factors, including the availability of suitable sites and
negotiations of acceptable lease terms for new locations; the ability to obtain
construction and any other necessary permits in a timely manner; the ability to
meet construction schedules; the ability of the Company to manage this
anticipated expansion and to hire and train personnel, and general economic and
business conditions. Not all of the foregoing factors are within the control of
the Company.
The Company operates its business through its two wholly-owned
subsidiaries incorporated under the laws of the State of Florida, Flame Broiled
Chicken, Inc. and Gladstone's Grilled Chicken, Inc., which were formed on July
27, 1987 and April 30, 1990, respectively.
18
<PAGE>
Restaurant Concept
Management believes that the demographics of Tampa, Florida closely
resemble what the United States as a whole will be in the near future. Many
restaurant concepts have therefore been tested in the Tampa, Florida market and
some like Outback, Hooters, Checkers, Shells and Hops have started, survived and
prospered in the Tampa region. For over ten years, the Gladstone concept of high
quality, quickly served marinated and grilled gourmet chicken has survived in
the Tampa proving ground and Management believes that the Company is positioned
to expand in primarily the greater Tampa-St. Petersburg Florida area. The
Company intends to focus on developing 1,400-1,700 square feet restaurants with
25 to 40 seats set up for eat-in, take out and catering. The investment per
restaurant is approximately $180,000 with break even estimated at $375,000 in
annual sales. No specific sites have been definitively selected as of the date
of this Prospectus, although certain potential sites in Tampa have been
identified as suitable locations.
Corporate Strategy
The Company believes that excellence in operations, quality of food and
service, ambiance, location and price-value relationship are keys to success in
the restaurant industry. The Company intends to differentiate its restaurants by
emphasizing the following strategic elements:
* Positioning in the moderately priced, high quality, gourmet
chicken segment of the restaurant industry.
* Generous portions offered at moderate prices.
* High quality and attentive service.
* Consistent high-quality products through careful ingredient
selection and food preparation.
* Personalized marketing program.
* Strong and well organized catering organization.
* Well recognized "Healthy" and "Health Smart" grilled (vs.
fried) food.
Expansion of Operations
After the completion of the Offering, Management intends to locate up
to a maximum of five restaurant sites for expansion efforts with the first two
anticipated to be located in Tampa and additional restaurants in the greater
Tampa-St. Petersburg Florida area. The Company considers the location of each
restaurant to be critical to its long-term success and Management intends to
devote significant effort to the investigation and evaluation of potential
sites. The site
19
<PAGE>
selection process will focus on visibility, accessability, traffic volume and
the availability of adequate parking. The Company also intends to review
potential competition and customer activity at other fast food restaurants in
the area.
The Company anticipates that the cost of opening each new restaurant
will be approximately $180,000. Such estimates include leasehold improvements,
furniture, fixtures, equipment, food and beverage inventory and other
pre-opening expenses. There can be no assurances that the Company's cost of
opening additional restaurants will not exceed the foregoing estimates.
The opening and success of the Company's restaurants will depend on
various factors, including the availability of suitable sites and negotiations
of acceptable lease terms for new locations; the ability to obtain construction
and any other necessary permits and/or licenses in a timely manner; the ability
to meet construction schedules; the ability of the Company to generate sales and
manage this anticipated expansion and to hire and train personnel, and general
economic and business conditions. Not all of the foregoing factors are within
the control of the Company.
Previously, the Company had operated for a period of two years from
November 1992 to November 1994 a third restaurant under the name "Gladstone's
Grilled Chicken" in the "Town and Country" area of Tampa, Florida. This store
was closed due to the lack of sales and a large overhead.
Menu
Gladstone's menu features its unique marinated Grilled Chicken. A full
chicken is split and the wings are notched in order to facilitate marinating.
The chickens are marinated for 18 hours in a secret citrus and herb based
marinade. The chickens are cooked on an open flamed grill. Chickens are then
taken directly from the grill and cut to order for every customer. Customers
usually receive their entire meal within 30 seconds of ordering and paying.
Gladstone's restaurants currently offer seven different chicken
combination meals and two chicken sandwiches, featuring a side dish selection of
nine items including such items as baked beans, whipped potatoes and gravy,
macaroni and cheese and five different speciality salads. Hot pita and homemade
honey butter are also served with each meal. Customers can also choose from a
variety of Coca Cola products and iced tea. The Company owns a delivery van
which is specially painted to insure high recognition and function effectively
as a rolling advertisement.
Restaurant Operations and Management
The Company maintains quality and consistency in its restaurants
through the careful hiring, training and supervision of personnel and the
establishment of standards relating to food and beverage preparation,
maintenance of facilities and conduct of personnel.
20
<PAGE>
The Company maintains financial and accounting controls for each of its
restaurants through the use of centralized accounting and management information
systems. Sales information is collected on a daily basis from each restaurant,
and restaurant managers are provided with monthly operating statements for their
locations. The Company's downtown location is open Monday through Saturday from
11:00 a.m. to 6:00 p.m. and its other restaurant is open from 11:00 a.m. to 9:00
p.m., seven days a week.
The management team for each restaurant consists of one general manager
and between one and two assistant managers. Each restaurant employs a staff
consisting of between three to seven hourly employees, some of whom work
part-time. As the number of Gladstone's restaurants expand, the Company
anticipates having new Restaurant managers complete an extensive training
program during which they would be instructed in areas including food quality
and preparation, customer satisfaction, beverage service, governmental
regulations compliance, and employee relations. Restaurant managers are provided
with an operations manual relating to food and beverage preparation, all areas
of restaurant management and compliance with governmental regulations. Working
in concert with the individual restaurant managers, the Company's executive
officers define operations and performance objectives for each restaurant and
monitor implementation. The Company's executive officers regularly visit each
Gladstone's Restaurant and meet with the respective management teams to ensure
compliance with the Company's strategies and standards of quality in all
respects of restaurant operations and personnel development.
Each new restaurant employee of the Company participates in a training
program during which the employee works under the close supervision of a
restaurant manager, or an experienced employee. Management continuously solicits
employee feedback concerning restaurant operations and strives to be responsive
to the employees' concerns.
Purchasing
The Company negotiates directly with suppliers for food and beverage
products to ensure consistent quality and freshness of products and to obtain
competitive prices. Food and supplies are shipped directly to the restaurants,
although invoices for purchases are sent to the Company for payment. The
Company's emphasis on first-quality food requires frequent deliveries of fresh
food supplies. Because of the need for freshness of products, the Company does
not maintain a central product warehouse or commissary.
Marketing
The Company has positioned itself as being a Bistro style upscale
quickly served grilled chicken restaurant that focuses on moderately priced and
high quality gourmet chicken, casual dining or take-out market segments. The
Company relies principally on its commitment to customer service, excellent
price value relationship and the Gladstone's ambiance of its restaurants to
attract and retain customers. Accordingly, the Company focuses its resources on
providing customers with superior service, value and a pleasant dining
atmosphere.
21
<PAGE>
The Company's restaurants rely on positive word-of-mouth, in-store
promotions, billboards, direct mail, newspaper and specialty advertisements to
generate customer interest. A major marketing tool is its V.I.P. customer
program. The Company maintains a data base of V.I.P. customers along with their
name, address, phone number and date of birth. Mass mailings take place with
substantial offers at least every six months. Each month each customer with a
birthday receives a birthday card that he/she can redeem for a free meal. During
fiscal 1998 and 1997, the Company expended approximately $19,500 and $17,500,
respectively, on advertising, promotion and related matters.
A costumed "Gladstone Chicken" is also an integral part of the
marketing plan. The chicken has been used to distribute coupons, wave to cars,
interact with children and generally create an awareness at restaurant sites and
special events.
The Company recently spent $30,000 of the proceeds of the Bridge Loan
to refurbish and install a point of sales system that enables customer
information to be tracked. For example, customers can be rewarded with personal
gift certificates when they spent a certain amount of money. To create
additional name recognition, the Company sells T-shirts, hats and other items
bearing the Company's restaurant's name and logo.
For each new restaurant, the Company intends to conduct a pre-opening
awareness program prior to the opening of a restaurant. The Company anticipates
that a given program typically would include special promotions, site signs,
coupons, billboard, newspaper and direct mail advertisements. Sponsorship of a
fund raising event for a local charity to establish ties to local community
leaders and increase awareness of the new restaurant, and pre-opening trial
operations, to which family and friends of new employees would be invited, may
also be considered in the future.
Government Regulation
The Company's restaurants are subject to numerous federal, state and
local laws affecting health, sanitation and safety standards, as well as to
state and local licensing regulations. Each restaurant currently has appropriate
food service licenses from local health authorities. The Company is required to
renew these licenses annually. Such licenses may be suspended or revoked at any
time for cause. The failure of the Company to retain food service licenses would
have a material adverse effect on its operations. In order to reduce this risk,
each of the Company's restaurants is operated in accordance with strict
standardized procedures designed to assure compliance with all applicable codes
and regulations. Difficulties in obtaining or failures to obtain the required
licenses or approvals could delay or prevent the development of a new restaurant
in a particular area. The Company carries liability coverage as part of its
comprehensive general liability insurance.
The Company's current and future restaurant operations are and will
also be subject to federal and state minimum wage laws governing such matters as
working conditions, overtime and tip credits and other employee matters.
Significant numbers of the Company's food service and preparation personnel will
be paid at rates related to the federal minimum wage. Government-imposed
increases in minimum wages, paid leaves of absence and mandated health
22
<PAGE>
benefits, or increased tax reporting and tax payment requirements for employees
who receive gratuities, could be detrimental to the economic viability of the
Company's restaurants.
The development and construction of additional restaurants will be
subject to compliance with applicable zoning, land use and environmental
regulations. Management is not aware of any environmental regulations that have
had a material effect on the Company or its restaurants to date.
The Federal Americans With Disabilities Act (the "Disabilities Act")
prohibits discrimination on the basis of disability in public accommodations and
employment. The Company's current restaurants are in full compliance with the
Disabilities Act, and the Company intends to review plans and specifications of
any new restaurants and make periodic inspections to ensure continued
compliance. The Company's current restaurants are designed to be accessible to
the disabled. The Company believes that it is in substantial compliance with all
current applicable regulations relating to restaurant accommodations for the
disabled. The Company does not anticipate that such compliance will require the
Company to expend substantial funds.
Competition
The restaurant industry, and particularly the quick-service segment, is
highly competitive with respect to price, services, food quality including
taste, freshness, healthfulness and nutritional value and location, and there
are numerous well-established competitors possessing substantially greater
financial, marketing, personnel and other resources than the Company and
substantially longer operating histories. The Company competes with fast food
chain specializing in chicken products, such as Boston Market, KFC, and the
combined Popeye's Famous Fried Chicken and Church's Chicken chains. To a lesser
extent, the Company's competitors also include major pizza and hamburger chains,
such as Pizza Hut, McDonald's, Burger King and Wendy's, many of which have
introduced chicken products. Other competitors include independent chicken
establishments in the State of Florida. The Company competes on the basis of
providing quality foods at competitive prices. There can be no assurance that
consumers will regard the Company's products as sufficiently distinguishable
from competitive products, that substantially equivalent products will not be
introduced by the Company's competitors or that the Company will be able to
compete successfully.
Lack of Trademarks and Servicemark Protection.
The Company has not filed for service mark or trademark protection of
the Company's name "Gladstone's Grilled Chicken" with the United States Patent
and Trademark Office and it does not intend doing so in the future. Another
corporation that Management believes operates one restaurant in California, has
registered the marks "Gladstone's" and "Gladstone 4 Fish and Design" with such
office and could in the future bring a trademark infringement action against the
Company in Florida seeking injunctive relief and damages. Management believes
that such corporation has perfected an incontestible right to its marks with the
United States Patent and Trademark Office. Nevertheless, Management believes
that it may be difficult for such
23
<PAGE>
corporation to prevail in a trademark infringement in Florida in which
injunctive relief is sought to deny the Company's use of the mark "Gladstone's
Grilled Chicken" since:
o such corporation has failed to contest the use of the Company's
mark for a period of over ten years;
o there is no actual confusion between customers of such corporation
and customers of the Company as to the respective products offered
by each entity.
o such corporation will be unable to demonstrate that it has a
famous or distinctive mark that is easily recognized in Florida by
the consuming public; and
No assurances can be given that the Company would prevail in such a
legal action. Further, any lawsuit would involve the Company incurring
significant legal costs in the defense of such a lawsuit and, if unsuccessful,
the Company could be forced to pay a material damage award and/or change its
name which may adversely effect the Company and its operations.
Product Liability Insurance
As a seller of restaurant food, the Company is exposed to potential
liability. There is a possibility that someone could claim personal injury
resulting from eating the Company's food. The Company maintains product
liability insurance. Currently, the amount of coverage is $1,000,000 per
occurrence and $2,000,000 in the aggregate. The policy is for a period of one
year is currently in effect through December 20, 1998. Although the Company
believes that its present insurance coverage is sufficient for its current level
of business operations, there is no assurance that such insurance will be
sufficient to cover potential claims, or that adequate, affordable insurance
coverage will be available to the Company in the future. An uninsured successful
claim against the Company or a successful claim in excess of the liability
limits or relating to an injury excluded under the policy could have a material
adverse effect on the Company.
24
<PAGE>
Employees
At August 31, 1998, the Company employed approximately 20 individuals,
of which 4 occupy executive or managerial positions, 16 hold non-managerial
restaurant related positions and the balance occupy clerical and office
positions. None of the Company's employees are covered by a collective
bargaining agreement. The Company considers its relations with its employees to
be good and has not experienced any interruption of operations due to labor
disputes.
Facilities
The Company's executive office is located at 8426 Sunstate Street,
Tampa, FL 33634. The Company leases these facilities from Amenitique, Inc., an
affiliate of the Company. The Company pays Amenitique $400 per month. The term
of the lease expires on June 30, 1999. The Company shares office suites and a
warehouse facility with Amenitique. See "Management."
One of the Company's restaurants is located at 5203 East Fowler Avenue,
Temple Terrace-Tampa, Florida in the Terrace Ridge Plaza Shopping Center. The
Terrace Ridge restaurant is composed of approximately 1,660 square feet and is
leased through February 28, 2000. The Company currently pays an annual fixed
rent of approximately $27,000 and its proportionate share of the (i) cost of
operating and maintaining the shopping center, (ii) real estate taxes, (iii)
insurance, and (iv) utility costs.
The Company's other restaurant is located in downtown Tampa at 110
Madison Avenue, Tampa, FL 33602. The restaurant has been leased since 1990 and
its current five-year extension began on October 1, 1995 and terminates on
September 30, 2000. The current base rent is $3,000 per month, net of a $200
credit for food allowance each month. The base rent will increase or decrease
each year by an amount equal to one-half of the increase or decrease in the
consumer price index. The Company also pays additional rent for tax increases
and is responsible for its monthly utility charges. In 1995, the Company was in
arrears in the amount of $50,000 for back rent on one of its restaurants. In
November 1995, the lease agreement was renegotiated to reduce monthly rental
payments and provides for the prospective forgiveness of $10,000 per calendar
year of the $50,000 debt provided the Company remains in full compliance with
the terms of the new lease agreement. In addition, all of the assets were
pledged as collateral on this obligation. At the date of this Prospectus, the
balance is approximately $20,000.
Legal Proceedings
While the Company may become involved in suits, proceedings, or claims
in the ordinary course of business, the Company is not currently a party to any
legal proceedings.
25
<PAGE>
MANAGEMENT
Directors and Executive Officers
The names and ages of the directors and executive officers of the
Company are set forth below:
Name Age Position
- ---- --- --------
Marvin M. Nolley 56 President, Director
Bo G. Grektorp 57 Vice President, Director
Hans Bremstrom 67 Director
Sean Flaherty 48 Chief Financial Officer, Treasurer,
Secretary, Director
The term of office for each of the Company's directors is one year
until their respective successors are elected and shall qualify. Executive
officers serve at the pleasure of the Board of Directors.
Marvin M. Nolley, has been an officer, director and full-time employee
of the Company since its inception in June 1998. Mr. Nolley is a founder,
president and a director of Gladstone's Grilled Chicken, Inc., a wholly-owned
subsidiary of the Company, from 1990 until the present time. Mr. Nolley is the
founder, president and director of Flame Broiled Chicken, Inc., a wholly-owned
subsidiary of the Company, from 1987 until the present time. From 1979 through
1986, he was a Director of Sales and Marketing for the Performing Arts Abroad,
Inc., where he supervised the marketing and on-site operation of
non-professional judged music festivals worldwide.
Bo G. Grektorp, has been an officer and director of the Company since
its inception in June 1998. Mr. Grektorp is a founder, director and Vice
President of Gladstone's Grilled Chicken, Inc. from 1990 until the present time.
Since 1993, he has been a board member, president and principal of Amenitique
Inc., a company engaged in the business of manufacturing and distribution of
high-end Hotel & Resort Bath Amenities. Mr. Grektorp founded Amenitique Inc. in
1993. Since 1993, he has served as a board member of Scandinavian Amenities A/S,
a company engaged in the business of Hotel Amenities. From 1989 until 1993, he
was a founder, president and principal of City Towers of Florida Inc., a real
estate company. Mr. Grektorp devotes such time to the affairs of the Company as
is necessary for the performance of his duties.
Hans Bremstrom, has been a director of the Company since its inception
in June 1998. Since 1994, he has been an owner and president of Web Street Inc.,
a company engaged in the
26
<PAGE>
business of developing and managing a website and production of Advertising
Banners and web sites and international listing of Hospitality Products and
Services on the Internet. From 1992-1994, he was president of Barkman and Co.,
a company that developed a 250-room luxury room hotel in New York City.
Sean Flaherty, has been an officer and director of the Company since
its inception in June 1998. Since October 1994, Mr. Flaherty has served as vice
president of operations of Amenitique, Inc. At Amenitique, Inc., he coordinates
the processing of client order, purchasing, manufacturing, import of products,
warehousing, inventory control, distribution and financial collection. From
October 1992 through October 1994, he was an officer, director and principal of
Impact International, Inc., a company engaged in the business of manufacturing
and sales of custom soap gift and promotional products. Mr. Flaherty was in
charge of purchasing, manufacturing, legal and distribution of this corporation.
During this time, he also worked with attorneys and Florida investors as a
consultant to review and analyze the feasibility of potential business
opportunities and their legal, financial, development and administrative
strengths. Mr. Flaherty devotes such time to the affairs of the Company as is
necessary for the performance of his duties.
In the event that the Company can successfully appoint two outside
directors after the completion of the Offering, of which no assurances can be
given in this regard, the Board of Directors would establish a Compensation
Committee and an Audit Committee. The Audit Committee and Compensation
Committee, which would consist of at least a majority of outside directors who
will among other things, make recommendations to the Board of Directors
regarding the independent auditors for the Company, approve the scope of the
annual audit activities of the independent auditors and review audit results and
have general responsibility for all auditing related matters. The Compensation
Committee would review and recommend to the Board of Directors the compensation
structure for the Company's officers and other management personnel, including
salary rates, participation in incentive compensation and benefit plans, fringe
benefits, non-cash perquisites and other forms of compensation. Executive
Compensation
27
<PAGE>
The following table sets forth the total compensation paid to the named
Chief Executive Officer for the fiscal years ended December 31, 1997, 1996 and
1995. During 1997, the Company did not have any executive officers earning
$100,000 or more in salaries and bonuses.
<TABLE>
<CAPTION>
==========================================================================================================================
Long Term Compensation
---------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other Restricted Number Other
and Annual Stock of LTIP All
Principal Compensation Award(s) Options/ Payouts Compensation
Position Year Salary ($) Bonus ($) ($) ($)(1) Warrants ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marvin M. Nolley, 1997 46,300 -0- -0- -0- -0- -0- -0-
----------------------------------------------------------------------------------------------------
Chief Executive 1996 47,680 -0- -0- -0- -0- -0- -0-
----------------------------------------------------------------------------------------------------
Officer (2) 1995 38,300 -0- -0- -0- -0- -0- -0-
</TABLE>
- ---------------
(1) Does not include 620,000 shares of the Company's Common Stock issued to
Mr. Nolley in 1998 in exchange for his equity interests in Gladstone's
Grilled Chicken, Inc. and Flame Broiled Chicken, Inc., the Company's two
subsidiaries, and 1,000 shares issued in 1998 in connection with the
Company's incorporation. See "Certain Transactions."
28
<PAGE>
Stock Option Plan
The Company has a 1998 Stock Option Plan, as amended, covering 50,000
shares of Common Stock (the "Plan"), subject to adjustment to cover stock
splits, stock dividends, recapitalizations and other capital adjustments for
employees, including officers and directors and consultants of the Company. The
Plan provides that options to be granted under the Plan will be designated as
incentive stock options or non-incentive stock options by the Board of Directors
or a committee thereof, which also will have discretion as to the persons to be
granted options, the number of shares subject to the options and the terms of
the options. Options designated as incentive stock options are intended to
receive incentive stock option tax treatment pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended.
The Plan provides that all options granted thereunder shall be
exercisable during a period of no more than 10 years from the date of grant
(five years for incentive stock options granted to holders of 10% or more of the
outstanding shares of common stock), depending upon the specific stock option
agreement and that the option exercise price for incentive stock options shall
be at least equal to 100% of the fair market value of Common Stock on the date
of grant (110% for options granted to holders of 10% or more of the outstanding
shares of Common Stock). Pursuant to the provisions of the Plan, the aggregate
fair market value (determined on the date of grant) of the shares of the Common
Stock for which incentive stock options are first exercisable under the terms of
the Plan by an option holder during any one calendar year cannot exceed
$100,000.
Currently, the Plan provides that if the employment of an optionee is
terminated other than by reason of death, disability or retirement at age 65,
any incentive stock options granted to the optionee will immediately terminate.
If employment is terminated by reason of disability or retirement at age 65, the
optionee may, within one year from the date of termination, in the event of
termination by reason of disability, or three months from the date of
termination, in the event of termination by reason of retirement at age 65,
exercise the incentive stock option (but not after the normal termination date
of the option). If employment is terminated by death, the person or persons to
whom the optionee's rights under the incentive stock option are transferred by
will or the laws of descent and distribution have similar rights of exercise
within three months after such death (but not after the normal termination date
of the option). Any termination provisions of non-statutory stock options will
be fixed by the board of directors or a committee thereof.
Options are not transferable otherwise than by will or the laws of
descent and distribution and during the optionee's lifetime are exercisable only
by the optionee. Shares subject to options which expire or terminate may be the
subject of future options. The Plan provides that no new options may be granted
by the Board of Directors of the Company after ten years from the establishment
of the Plan by the Board of Directors. As of the date of this Prospectus, no
options were issued and outstanding under the Plan.
Employment Agreements
Each of the Company's three executive officers have entered into
employment agreements dated as of July 1, 1998 with the Company. The agreements,
which are nearly identical, provide for a term of three years expiring June 30,
2001. Currently, the employment agreements have fixed the annual salaries of
Marvin M. Nolley, Bo G. Grektorp and Sean Flaherty at $75,000, $25,000 and
29
<PAGE>
$15,000, respectively. Annually, the Board of Directors shall review the
salaries of each executive officer and it has the right to increase such
salaries based upon various factors including, without limitation, the
performance of the Company and the executive officers' contributions to same.
Further, for the period June 1, 1998 through May 31, 1999, Marvin M. Nolley is
entitled to a bonus of 10% of cash flow from operations with an amount to be
received of not less than $12,500 and a maximum of $30,000; Bo G. Grektorp is
entitled to a bonus of 5% of cash flow from operations with an amount to be
received of not less than $5,000 and a maximum of $15,000; and Sean Flaherty is
entitled to a bonus of 2-1/2% of cash flow from operation with an amount to be
received of not less than $2,000 and a maximum of $6,000.
The Company has the right to terminate any of its executive officers
for cause after giving the officer 30-days prior written notice with an
opportunity to comply with his obligations under the employment agreement. The
Company has the option to terminate the executive officer without cause upon
giving at least 60-days prior written notice. In the event of cause, the officer
is entitled to receive his salary through the date of termination, any unpaid
but promised bonuses and all benefits due under stock option and other employee
benefit plans. For termination without cause, the officer is entitled to receive
the same payments for termination with cause plus the remaining salary that is
due for the full term of the employment contract, calculated based upon the
officer's existing salary at the time of termination. In the event of
termination without cause, payments will be made to the officer in equal monthly
installments over the balance of the employment contract without interest. The
agreement also provides for certain benefits in the event of termination for
disability where the disability exists for at least six months in any 12 month
consecutive period. Such benefits include, without limitation, salary to the
date of termination, promised bonuses and six months severance pay. In the event
of death, the Company is required to pay an amount equal to the executive's
total annual compensation for the last year of employment for a period of three
years from the officers' date of death. The agreements continue in effect on a
year-to-year basis beyond June 30, 2001 unless on party gives written notice to
the other to terminate the extended agreement in effect for at least 120 days
prior to the end of the calendar year, 2001 and not less than 60 days prior to
the end of any following year.
Limitation of Liability and Indemnification Matters
The Company's Certificate of Incorporation contains a provision
eliminating the personal monetary liability of directors to the extent allowed
under the General Corporation Law of the State of Delaware. Under the provision,
a stockholder is able to prosecute an action against a director for monetary
damages only if he can show a breach of the duty of loyalty, a failure to act in
good faith, intentional misconduct, a knowing violation of law, an improper
personal benefit or an illegal dividend or stock repurchase, as referred to in
the provision, and not "negligence" or "gross negligence" in satisfying his duty
of care. In addition, the provision applies only to claims against a director
arising out of his role as a director or not, if he is also an officer, his role
as an officer or in any other capacity or to his responsibilities under any
other law, such as the federal securities laws. In addition, the Company's
Bylaws provide that the Company will indemnify its directors, officers,
employees and other agents to the fullest extent permitted by Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such
30
<PAGE>
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
Directors Compensation
The Company intends to pay its directors who are not also employees of
the Company $500 for each meeting attended and will reimburse such directors for
travel and other expenses incurred by them in connection with attending Board of
Directors meetings. All directors of the Company are eligible to receive the
grant of options to purchase shares of the Company's Common Stock pursuant to
the 1998 Plan.
31
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of the date of this Prospectus
certain information with respect to the beneficial ownership of Common Stock by
each person or entity known by the Company to be the beneficial owner of 5% or
more of such shares, each officer and director of the Company, and all officers
and directors of the Company as a group. Beneficial ownership as reported in the
table above has been determined in accordance with Rule 13d-3 of the Exchange
Act. Accordingly, unless otherwise noted, all of the Company's securities over
which the officers and directors named, or as a group, directly or indirectly
have, or share voting or investment power, have been deemed beneficially owned.
Percentage Beneficial Ownership
Shares of
Common Stock After After
Beneficially Before Offering Offering
Owned Before Offering Minimum Maximum
Name and Address (1) Offering(2) (3) (3) (3)
- -------------------- ------------ -------- -------- --------
Marvin M. Nolley 621,000 68.5 56.1 51.5
Bo G. Grektorp 280,000 30.9 25.3 23.2
Hans Bremstrom -0- -0- -0- -0-
Sean Flaherty -0- -0- -0- -0-
All four officers and
directors as a group 901,000 99.4 81.4 74.7
_______________
* Represents less than 1% of the outstanding shares.
(1) All addresses for the officers and directors are c/o Nolbo, Inc.,
8426 Sunstate Street, Tampa, FL 33634.
(2) All shares are directly beneficially owned of record unless indicated
otherwise.
(3) Calculated based upon 906,000 shares of Common Stock outstanding before the
Offering and 1,106,000 shares (minimum) and 1,206,000 shares (maximum)
outstanding after the Offering without giving effect to the possible
conversion of the Convertible Notes. See "Use of Proceeds - Bridge
Financing."
32
<PAGE>
CERTAIN TRANSACTIONS
Effective June 30, 1998, the Company acquired its two operating
subsidiaries, namely, Flame Broiled Chicken, Inc. and Gladstone's Grilled
Chicken, Inc., in exchange for 905,000 shares of the Company's Common Stock. In
connection with such transactions, the Company issued the following:
o 280,000 shares to Bo Grektorp in exchange for his interest in
Gladstone's Grilled Chicken, Inc.; and
o 5,000 shares to Kenneth Hansen in exchange for his interest in
Flame Broiled Chicken, Inc., and an aggregate of 620,000 shares
to Marvin Nolley in exchange for his interest in Flame Broiled
Chicken, Inc. and Gladstone's Grilled Chicken, Inc.
The Company also issued at $1.00 per share an additional 1,000 shares
to Marvin Nolley in connection with the Company's incorporation.
For a description of the Company's lease for its principal executive
office with Amenitique, Inc., an affiliate of the Company, see "Business -
Facilities."
DESCRIPTION OF SECURITIES
Common Stock
The Company has 20,000,000 shares of authorized Common Stock, $.001 par
value. Immediately prior to the Offering, 906,000 shares of Common Stock were
issued and outstanding to three stockholders.
Holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Stockholders do not
have non-cumulative voting rights. Subject to preferences that may be applicable
to any then outstanding Preferred Stock, holders of Common Stock are entitled to
receive ratably such dividends as may be declared from time to time by the Board
of Directors out of funds legally available therefor. See "Dividend Policy." In
the event of a dissolution, liquidation or winding-up of the Company, holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities and the liquidation preference of any then outstanding Preferred
Stock. Holders of Common Stock have no right to convert their Common Stock into
any other securities. The Common Stock has no preemptive or other subscription
rights. There are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of Common Stock are, and the Common Stock
to be outstanding upon completion of the Offering will be, duly authorized,
validly issued, fully paid and nonassessable.
33
<PAGE>
Preferred Stock
The Certificate of Incorporation provides the Company's Board of
Directors with the authority, without further action by the stockholders, to
issue up to 5,000,000 shares of Preferred Stock in one or more series and to fix
the rights, preferences, privileges and restrictions thereof, including dividend
rights, conversion rights, voting rights, terms of redemption, liquidation
preferences and the number of shares constituting any series or the designation
of such series. The issuance of Preferred Stock could adversely affect the
voting power of holders of Common Stock and could have the effect of delaying,
deferring or preventing a change in control of the Company. The Company has no
present plans to issue any shares of Preferred Stock.
Underwriter's Warrants
In connection with the Offering, the Company has agreed to sell to the
Underwriter, for a purchase price of $.001 per warrant, the Underwriter's
Warrants, which entitles the holders to purchase one share of the Company's
Common Stock for each ten shares sold in the Offering. For a description of the
terms of the Underwriter's Warrant, see "Underwriting."
Transfer Agent and Registrar
The transfer agent and registrar for the Company's Common Stock is
Continental Stock Transfer & Trust Company, Two Broadway, 19th Floor, New York,
NY 10004.
"Penny Stock" Regulations
The SEC has adopted "penny stock" regulations which apply to securities
traded over-the-counter. These regulations generally define "penny stock" to be
any equity security that has a market price of less than $5.00 per share or an
equity security of an issuer with net tangible assets of less than $5,000,000 as
indicated in audited financial statements, if the corporation has been in
continuous operations for less than three years. Subject to certain limited
exceptions, the rules for any transaction involving a "penny stock" require the
delivery, prior to the transaction, of a risk disclosure document prepared by
the Commission that contains certain information describing the nature and level
of risk associated with investments in the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Monthly
account statements must be sent by the broker-dealer disclosing the estimated
market value of each penny stock held in the account or indicating that the
estimated market value cannot be determined because of the unavailability of
firm quotes. In addition, the rules impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and institutional accredited investors (generally
institutions with assets in excess of $5,000,000). These practices require that,
prior to the purchase, the broker-dealer determined that transactions in penny
stocks were suitable for the purchaser and obtained the purchaser's written
consent to the transaction. If a market for the Company's Common Stock does
develop after the Offering and the Company's Shares trade below $5.00 per Share
after the Offering, it will be a penny stock. Consequently, the "penny stock"
rules may restrict the ability of broker-dealers to sell the Shares and may
affect the ability of purchasers in the Offering to sell the Company's Shares in
the secondary market.
34
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
At the date of the Offering, the Company's outstanding unregistered
securities include 906,000 shares of the Company's Common Stock and Notes
convertible into a maximum of an additional 30,000 Shares (collectively the
"Restricted Securities"). The Restricted Securities are owned primarily by
officers and directors of the Company and are "restricted securities" as that
term is defined by Rule 144 of the Securities Act. Such Restricted Securities
may only be sold commencing in June 1999 in compliance with the provision of
Rule 144 unless otherwise registered by the Company. These stockholders may
elect to sell some or all of these shares as soon as they are permitted to do
so. Ordinarily, under Rule 144, a person holding restricted securities for a
period of one year may, every three months thereafter, sell in ordinary
brokerage transactions or in transactions directly with a market maker, an
amount of shares equal to the greater of one percent of the Company's then
outstanding Common Stock or the average weekly trading volume in the same
securities during the four calendar weeks prior to such sale. For non-affiliated
persons who own the Company's securities for at least two years, the
aforementioned volume restrictions are not applicable to sales by such person.
Furthermore, all security holders of the Company have agreed with the
Underwriter not to sell or otherwise transfer the Restricted Securities within
12 months of the initial closing date of this Offering unless earlier permitted
by the Underwriter. The possible or actual future sales of the Restricted
Securities under Rule 144 may have an adverse effect on the market price of the
Company's Common Stock should a public trading market develop for such shares.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, which is filed as an exhibit to the Registration Statement, J.W.
Barclay & Co., Inc. (the "Underwriter") has agreed to offer the Shares to the
public, as agent for the Company. The Shares are offered by the Company on a
"best efforts 200,000 shares minimum, 300,000 shares maximum" basis, subject to
prior sale, when, as and if received and accepted by it, subject to approval of
certain legal matters by counsel for the Company and the Underwriter, and
subject to certain other conditions. The Underwriter and the Company reserve the
right to withdraw, cancel or modify the Offering and to reject any order in
whole or in part.
The offering period will terminate on _______, 1998 unless extended by
the Company and the Underwriter for an additional 60-day period until the close
of business on _________, 1999. Following the sale of at least 200,000 Shares,
the Company may close on the sale of such Shares ("Initial Closing") and
continue offering the balance of the Shares through the end of the offering
period unless the offering is earlier terminated by the Company and the
Underwriter. The Company will close on the sale of any additional Shares ("Final
Closing") at the end of the offering period or earlier if all the Shares are
sold or if it is determined by the Company and the Underwriter that no
additional Shares will be sold. Until the closing on the sale of 200,000 shares,
the proceeds from the sale of Shares will be held in an escrow account with
Continental Stock Transfer & Trust Company, Two Broadway, 19th Floor, New York,
NY 10004. All checks shall be made payable to "Continental Stock Transfer &
Trust Company f/b/o Nolbo." If at least 200,000 Shares are not sold during the
offering period, all funds received will be promptly repaid in full without
interest thereon or deduction therefrom. Prior to the Initial Closing, the
escrow agent will confirm that 200,000
35
<PAGE>
Shares have been sold, and cash or cleared funds have been received in full
payment for the purchase of the Shares before releasing the funds from escrow.
The Company has agreed to pay the Underwriter a commission of 10% of
the price of the Shares sold ($.60 per share) upon the Closing. The Underwriter
may authorize selected securities brokers who are members of the National
Association of Securities Dealers, Inc. ("NASD") to offer the Shares for sale
and allow a concession to them. Such dealers may reallow to members of the NASD.
In any event, such concessions and reallowances will not exceed the commission
the Underwriter is to receive ($.60 per share).
The Company has agreed to enter into a one-year consulting agreement
(the "Consulting Agreement") with the Underwriter. Such agreement provides that
the Underwriter will render consulting services to the Company. The aggregate
fee due to the Underwriter for such consulting services will be an amount equal
to two (2%) percent of the gross proceeds of the Offering and shall be paid in
full upon the closing date of the Offering.
The Underwriting Agreement provides that the Company pay a
non-accountable expense allowance of three percent (3%) of the proceeds of this
offering, or $36,000 to the Underwriter if the minimum is sold and $54,000 if
the maximum is sold, which amount will be used to reimburse the Underwriter for
its expenses, including fees and disbursements of counsel and such other due
diligence and customary expenses as are normally incurred by an Underwriter. As
of the date of this Prospectus, $25,000 has been advanced to the Underwriter
against the Underwriter's non-accountable expense allowance.
In addition to the Underwriter's commissions, non-accountable expense
allowance and financial consulting fees, the Company is required to pay the
costs of qualifying this offering under Federal and state securities laws,
together with legal and accounting fees, printing and other costs in connection
with this offering, estimated to total approximately $220,000.
The Company and the Underwriter have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act of
1933, as amended. To the extent that the underwriting agreement may purport to
provide exculpation from possible liabilities arising under the federal
securities laws, in the opinion of the securities and exchange commission. Such
indemnification is contrary to public policy and therefore unenforceable.
Upon the sale of the minimum number of Units offered hereby and closing
of this offering, the Company has agreed to sell to the Underwriter, for nominal
consideration, warrants ("Underwriter's Warrants") to acquire one share of
Common Stock for each ten shares sold consisting of 20,000 shares of Common
Stock if the minimum is sold, and 30,000 shares if the maximum is sold. The
Underwriter's Warrants are exercisable at a price of $9.00 per share commencing
twelve months from the date of this Prospectus and for a period of four years
thereafter. Each of the Underwriter's Warrants shall represent the right to
purchase one share of Common Stock.
The Underwriter's Warrants may not be sold, assigned, transferred,
pledged, hypothecated or delivered except to officers of the Underwriter,
selected dealers and their officers and/or partners, for a period of twelve
months from the date of this Prospectus, and, in no event will such
36
<PAGE>
Underwriter's Warrants (or the underlying shares of Common Stock issuable upon
exercise thereof) be offered or sold except in compliance with the Securities
Act. Accordingly, no public offering of the Underwriter's Warrants or the
underlying shares will be made until a new Registration Statement,
Post-Effective Amendment to this Registration Statement or Offering Statement
pursuant to Regulation A, if appropriate, covering the Underwriter's Warrants or
underlying shares has become effective with the Securities and Exchange
Commission. The Underwriter's Warrants provide for certain registration rights
under the Securities Act of 1933, as amended, for the Underwriter's Warrants
and/or underlying shares thereof. Such registration rights may be exercised at
any time during the four-year period commencing one year after the date of this
Prospectus upon written request of the holders of not less than 50% of the
Underwriter's Warrants or underlying shares. In no event shall the Company bear
the expense of registration of the Underwriter's Warrants and underlying shares
more than once for any registration initiated by the Underwriter. Under certain
conditions, the Company may also be required to include, at the Company's sole
expense, the Underwriter's Warrants or underlying shares in (i) one
post-effective amendment to the Registration Statement filed for the Company's
account and (ii) one new Registration Statement or Offering Statement (except on
Form S-8 or any other inappropriate form) filed for the Company's account,
occurring during the four-year period (six-year period if the Underwriter's
Warrants are exercised prior to their expiration) commencing one year from the
date of this Prospectus. Any profits realized by the Underwriter upon the sale
of the Underwriter's Warrants or the underlying shares may be deemed to be
additional compensation.
The Underwriter's Warrants contain anti-dilution provisions regarding
certain events, including but not limited to, stock dividends, split-ups, and
reclassifications. Holders of the Underwriter's Warrants will have no voting
power and will not be entitled to any dividends. In the event of any dissolution
or winding up of the Company, the holders of the Underwriter's Warrants will not
be entitled to any dividends. In the event of any dissolution or winding up of
the Company, the holders of the Underwriter's Warrants will not be entitled to
participate in a distribution of the Company's assets. For the life of the
Underwriter's Warrants, the Underwriter is given, at a nominal cost, the
opportunity to profit from a rise in the market price of the Common Stock with a
resulting dilution in the interest of existing security holders. The terms upon
which the Company could obtain additional capital during that period may be
adversely affected. The Underwriter might be expected to exercise the
Underwriter's Warrants at a time when the Company would, in all likelihood, be
able to obtain any needed capital by a new offering of securities on terms more
favorable than those provided for by the Underwriter's Warrants.
All officers, directors and other stockholders of the Company have
agreed not to sell or otherwise transfer their shares of Common Stock or shares
of Common Stock issuable upon conversion of certain outstanding notes for twelve
months from the Initial Closing date of the Offering without the prior written
consent of the Underwriter.
The Company has been advised that the Underwriter does not intend to
make a market in the securities following this offering. See "Risk Factors."
LEGAL MATTERS
The validity of the Securities being offered hereby will be passed upon
for the Company by Lester Morse P.C., Suite 420, 111 Great Neck Road, Great
Neck, NY 11021. Certain legal matters
37
<PAGE>
will be passed upon for the Underwriter by Henry C. Malon, Esq., One Battery
Park Plaza, Third Floor, New York, NY 10004. Lester Morse P.C. has in the past
represented the Underwriter in connection with matters unrelated to the
Offering.
EXPERTS
The financial statements as of June 30, 1998 and for the years ended
June 30, 1998 and 1997 appearing in this Prospectus, have been audited by
Aidman, Piser & Company, P.A., 401 East Jackson Street, Suite 3400, Tampa,
Florida 33602 independent auditors, and are included herein in reliance upon the
authority of said firm as experts in auditing and accounting.
38
<PAGE>
Independent Auditors' Report
----------------------------
To the Board of Directors
Nolbo, Inc. and Subsidiaries
Tampa, Florida
We have audited the accompanying consolidated balance sheet of Nolbo, Inc. and
Subsidiaries (the "Company"), as of June 30, 1998 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the two-year period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the consolidated financial position of the
Company, as of June 30, 1998, and the consolidated results of their operations
and their cash flows for each of the years in the two-year period then ended in
conformity with generally accepted accounting principles.
/s/ Aidman, Piser & Company, P.A.
September 1, 1998, except for Note 8 as to
which the date is September 18, 1998
Tampa, Florida
F - 1
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
ASSETS (Note 6)
Current assets:
Cash $ 10,262
Accounts receivable 3,033
Inventory 11,871
---------
Total current assets 25,166
Property and equipment, net (Notes 2 and 3) 50,131
Deferred offering costs 6,492
Other assets 6,347
---------
$ 88,136
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note 3) $ 7,732
Accounts payable and accrued expenses 29,925
Due to related party (Note 4) 7,905
---------
Total current liabilities 45,562
Long term debt, less current maturities (Note 3) 10,577
Deferred lease obligation (Note 6) 24,583
---------
Total liabilities 80,722
---------
Commitments (Note 6)
Stockholders' equity:
Preferred stock; $.001 par value, 5,000,000 shares
authorized --
Common stock, $.001 par value, 20,000,000 shares
authorized; 906,000 shares issued and outstanding 906
Additional paid-in capital 108,892
Accumulated deficit (102,384)
---------
7,414
---------
$ 88,136
=========
F - 2
See notes to consolidated financial statements.
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------------ ----------------
<S> <C> <C>
Net sales $ 1,026,404 $ 1,025,162
Cost of sales 344,487 371,651
------------------ ----------------
Gross profit 681,917 653,511
------------------ ----------------
Operating expenses:
Selling, general and administrative 631,384 632,103
Depreciation 29,978 35,575
------------------ ----------------
661,362 667,678
------------------ ----------------
Income (loss) from operations 20,555 ( 14,167)
------------------ ----------------
Other income (expense):
Interest ( 4,113) ( 4,418)
Gain on disposal of equipment 2,500 -
------------------ ----------------
( 1,613) ( 4,418)
------------------ ----------------
Income (loss) before income taxes 18,942 ( 18,585)
Income tax expense (Note 5) - -
------------------ ----------------
Historical net income (loss) $ 18,942 ($ 18,585)
================== ================
Historical net income (loss) per share $ .02 ($ .02)
================== ================
Proforma income data:
Net income (loss) as reported $ 18,942 ($ 18,585)
Proforma adjustment to recognize "C"
corporation provision for income tax
(expense) benefit ( 7,000) 3,100
------------------ ----------------
Proforma net income (loss) $ 11,942 ($ 15,485)
================== ================
Proforma net income (loss) per share $ .01 ($ .02)
================== ================
Weighted average shares outstanding
during the period 906,000 906,000
================== ================
</TABLE>
F - 3
See notes to consolidated financial statements.
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock Additional
---------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balances, July 1, 1996 906,000 $ 906 $ 108,892 ($ 94,846) $ 14,952
Distributions - - - ( 4,059) ( 4,059)
Net loss - - - ( 18,585) ( 18,585)
--------------- --------------- --------------- --------------- ---------
Balances, June 30, 1997 906,000 906 108,892 ( 117,490) ( 7,692)
Distributions - - - ( 3,836) ( 3,836)
Net income - - - 18,942 18,942
--------------- --------------- --------------- --------------- ---------
Balances, June 30, 1998 906,000 $ 906 $ 108,892 ($ 102,384) $ 7,414
=============== ================ =============== ================ =========
</TABLE>
See notes to consolidated financial statements.
F - 4
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------------ ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 18,942 ($ 18,585)
------------------ ----------------
Adjustments to reconcile net income (loss)
to net cash provided by operating activities
Depreciation 29,978 35,575
Gain on disposal of equipment ( 2,500) -
Increase (decrease) in cash due to changes in:
Accounts receivable 1,587 ( 2,124)
Inventory ( 3,127) 1,599
Accounts payable and accrued expenses ( 10,422) 10,076
Deferred lease obligation ( 10,000) ( 10,000)
------------------ ----------------
Total adjustments 5,516 35,126
------------------ ----------------
Net cash provided by operating activities 24,458 16,541
------------------ ----------------
Cash flows from investing activities:
Acquisition of furniture and equipment ( 2,194) ( 14,004)
Proceeds from disposal of property and equipment 2,500 -
------------------ ----------------
Net cash provided by (used in) investing activities 306 ( 14,004)
------------------ ----------------
Cash flows from financing activities:
Repayment of notes payable ( 8,388) ( 8,777)
Increase (decrease) in bank overdraft ( 4,689) 4,689
Distributions paid to stockholders ( 3,836) ( 4,059)
Proceeds from (repayment of) related party payable 2,411 ( 1,792)
----------------- ----------------
Net cash used in financing activities ( 14,502) ( 9,939)
------------------ ----------------
Net change in cash 10,262 ( 7,402)
Cash at beginning of year - 7,402
------------------ ----------------
Cash at end of year $ 10,262 $ -
================== ================
</TABLE>
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
----------------------------------------------
Interest paid was $4,113 and $4,418 for the years ended June 30, 1998 and 1997,
respectively.
See notes to consolidated financial statements.
F - 5
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
1. Nature of business and summary of significant accounting policies:
Nature of business, business combination, and basis of presentation:
Nolbo, Inc. (the "Company") was organized on June 22, 1998 as a Delaware
corporation for the purpose of acquiring all of the outstanding capital
stock of Gladstone's Grilled Chicken, Inc. ("GGCI") and Flame Broiled
Chicken, Inc. ("FBCI"), two corporations under substantially common
ownership with that of the Company. On June 30, 1998 the Company acquired
the stock of GGCI and FBCI in exchange for the issuance by the Company of
905,000 shares of its common stock. The transaction was accounted for in a
manner similar to a pooling of interests and, as such, the Company recorded
the underlying acquired assets at GGCI's and FBCI's cost basis. GGCI and
FBCI own and operate two restaurants in Tampa, Florida under the trade name
of "Gladstone's Grilled Chicken".
GGCI and FBCI prepared their financial statements on a May 31 fiscal-year
basis. Accordingly, the accompanying financial statements include the
accounts of GGCI and FBCI as of May 31, 1998 and for each of the two years
then ended. Intervening events from June 1 through June 30, 1998 did not
have a significant effect on GGCI's or FBCI's financial position or results
of operations.
Details of results of operations of the previously separate enterprises for
the periods before the combination was consummated that are included in
consolidated net income and certain other changes in stockholders' equity
are as follows:
<TABLE>
<CAPTION>
GGCI and
Nolbo, Inc FBCI Total
1998
--------------------------------------------------------------
<S> <C> <C> <C>
Net sales - $ 1,026,404 $ 1,026,404
------------------ ----------------- -----------------
Net income (loss) ($ 2,411) $ 21,353 $ 18,942
------------------ ----------------- -----------------
Other changes in stockholders'
equity (distributions) - ($ 3,836) ($ 3,836)
------------------ ------------------ ------------------
1997
--------------------------------------------------------------
Net sales - $ 1,025,162 $ 1,025,162
------------------ ----------------- -----------------
Net loss - ($ 18,585) ($ 18,585)
------------------ ----------------- -----------------
Other changes in stockholders'
equity (distributions) - ($ 4,059) ($ 4,059)
------------------ ------------------ ------------------
</TABLE>
F - 6
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
1. Nature of business and summary of significant accounting policies
(continued):
Principles of consolidation:
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All intercompany accounts and
transactions have been eliminated in consolidation.
Use of estimates:
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and contingent
assets and liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from these estimates.
Deferred offering costs:
Deferred offering costs will be 1) amortized over the life of the related
debt if related to debt instruments, or 2) if related to an equity
offering, either charged directly against stockholders' equity upon
completion of a successful offering or charged to operations if the
offering is aborted.
Inventory:
Inventory, consisting of food purchases and food production supplies, is
stated at the lower of cost or market. Cost is determined generally on a
first-in, first-out method.
Property and equipment:
Property and equipment are stated at cost. Depreciation is provided on the
straight-line method over the estimated useful lives of the assets.
Advertising costs:
The costs associated with producing and communicating advertising are
expensed in the period incurred. Advertising costs were approximately
$19,500 and $17,500 during 1998 and 1997, respectively.
F - 7
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
1. Nature of business and summary of significant accounting policies
(continued):
Income taxes:
The Company and each of its subsidiaries have filed separate federal and
state income tax returns.
Prior to June 30, 1998, FBCI elected, under the Internal Revenue Code, to
be treated as an S Corporation for income tax purposes. As such, FBCI did
not record any income tax expense or tax benefits in its financial
statements since such taxes or tax benefits are recognized by FBCI's
shareholders in their individual income tax returns.
The Company recognizes deferred income taxes for the tax consequences of
temporary differences between financial statement and taxable income by
applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and the tax
basis of existing assets and liabilities. Effective with the reorganization
on June 30, 1998 (see Nature of business, business combination and basis of
presentation), FBCI's S Corporation status was terminated and, as such,
deferred income taxes were provided on that date for the accumulated
temporary differences between the tax basis and financial reporting basis
of FBCI's assets and liabilities.
Net income (loss) per share:
Net income (loss) per share was computed based on the weighted average
number of shares outstanding during the periods presented.
New accounting pronouncements:
In 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income", and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", and in 1998 the American Institute of Certified
Public Accountants issued Statement of Position 98-5, "Reporting on the
Costs of Start-Up Activities". All of these standards will be effective for
the Company's 1999 fiscal year. Future adoption of these new accounting
standards are not expected to have a significant effect on the Company's
financial position or results of operations.
F - 8
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
2. Property and equipment:
Property and equipment consists of the following:
Furniture and equipment $ 205,610
Leasehold improvements 31,453
Signs 14,202
Vehicles 39,992
-----------
291,257
Less accumulated depreciation 241,126
-----------
$ 50,131
===========
3. Long term debt:
Long term debt consists of two notes payable, bank. The loans bear
interest at 8.75% and are collateralized by equipment.
Future maturities of long term debt are as follows:
Year ending June 30,
-------------------
1999 $ 7,732
2000 8,438
2001 2,139
-----------
$ 18,309
===========
4. Due to related party:
Due to related party consists of non-interest bearing advances (due on
demand) to an entity under common ownership control. These advances were
repaid in September 1998.
The Company leases its principal office space from an entity related
through partial common ownership. Total rent expense associated with this
lease was approximately $4,800 in both 1998 and 1997.
F - 9
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
5. Income taxes:
Income tax (expense) benefit consists of the following:
<TABLE>
<CAPTION>
1998 1997
-------------- ---------------
<S> <C> <C>
Current $ - $ -
Deferred:
Deferred - other 1,000 ( 2,000)
Initial recognition of deferred income
taxes resulting from change in tax status 1,100 -
Benefit of net operating loss carryover ( 4,000) 4,000
Change in valuation allowance 1,900 ( 2,000)
-------------- ---------------
$ - $ -
============== ===============
</TABLE>
The proforma income data in the statements of operations provides
information as if the Company and its subsidiaries (including its former
S-Corporation subsidiary) had all been treated as a C-Corporation for
income tax purposes for all periods presented.
The expected income tax (expense) benefit at the statutory tax rate
differed from income taxes in the accompanying statements of operations, as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
-------------- ---------------
Statutory tax rate 34.0% (34.0%)
Taxes attributable to FBCI's
S Corporation earnings (23.5) 10.8
Change in deferred tax valuation
allowance (14.0) 24.5
Non-deductible permanent differences 7.3 1.0
Other (3.8) (2.3)
-------------- ---------------
Effective tax rate in accompanying
statements of operations 0% 0%
============== ===============
</TABLE>
F - 10
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
5. Income taxes (continued):
Components of deferred tax assets are as follows:
<TABLE>
<CAPTION>
1998 1997
-------------- ---------------
<S> <C> <C>
Net operating loss carryover $ 6,000 $ 10,000
Different depreciation methods/lives 10,100 6,000
Pre-opening costs capitalized for income
tax purposes 1,000 -
Deferred lease obligation 10,000 13,000
Valuation allowance ( 27,100) ( 29,000)
-------------- ---------------
$ - $ -
============== ===============
</TABLE>
GGCI has a net operating loss carryover available of approximately $14,700
available to offset future taxable income. This carryover expires in 2012.
6. Commitments:
The Company leases restaurant space under non-cancelable operating leases.
Future minimum lease payments under non-cancelable operating leases, with
initial or remaining lease terms in excess of one year as of June 30, 1998
are as follows:
Year ending June 30,
--------------------
1999 $ 70,000
2000 46,000
2001 14,000
-------------
$ 130,000
=============
Rental expense relating to these leases was approximately $73,000 and
$70,000 during 1998 and 1997, respectively.
In 1995 GGCI was in arrears in the amount of $50,000 for back rent on one
of its restaurants. In November 1995, the lease agreement was renegotiated
to reduce monthly rental payments and provide for the prospective
forgiveness of $10,000 per calendar year of the $50,000 debt provided GGCI
remains in full compliance with the terms of the new lease agreement. In
addition, all of GGCI's assets were pledged as collateral on this
obligation. Reductions in this liability associated with the annual
forgiveness are recognized as a reduction of rent expense over the life of
the new lease.
F - 11
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
7. Financial instruments:
The carrying values of cash, accounts receivable and accounts payable
approximated fair value due to short-term maturities of these instruments.
In addition, the carrying value of long-term debt approximated fair value
since the stated interest rates approximate current market interest rates
for similar instruments.
8. Subsequent events:
Private placement of debt:
During July through September 1998, the Company completed a private
placement of $150,000 of convertible and non-convertible debt, which
resulted in proceeds to the Company, net of placement fees, of
approximately $135,000. The underlying notes bear interest at 10%, which is
payable semi-annually in January and July. Principal is repayable in August
2000 but is also immediately callable by the noteholders if the Company
raises at least $1,000,000 in connection with any subsequent public or
private offering of securities. $30,000 of these notes are convertible into
30,000 shares of the Company's common stock at any time until maturity.
Stock option plan:
During August 1998, the Company adopted a stock option plan, covering
50,000 shares of common stock, for employees, officers, directors and
consultants of the Company. No options have been granted as of September 1,
1998. Options granted will be exercisable up to 10 years from date of grant
(5 years for incentive options granted to holders of more than 10% of the
Company's outstanding stock). Under the plan, the exercise price for
incentive options will be at least 100% of the fair market value of the
stock at the date of grant (110% for options granted to holders of 10% or
more of the Company's outstanding stock). Pursuant to the provisions of the
Plan, the aggregate fair market value (determined on the date of grant) of
the shares of the Common Stock for which incentive stock options are first
exercisable under the terms of the Plan by an option holder during any one
calendar year cannot exceed $100,000.
F - 12
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
8. Subsequent events (continued):
Employment agreements:
On July 1, 1998 the Company entered into three-year employment agreements
with three executive officers which provide for aggregate and annual base
compensation of $115,000. In addition, the agreements provide for bonuses
equal to an aggregate of 17-1/2% of net cash flow, as defined, with
aggregate minimum and maximum annual bonuses of $19,500 and $51,000,
respectively.
9. Proposed public offering:
The Company is attempting to complete a public offering of its common stock
under Regulation SB of the Securities Act of 1933. In that regard, the
Company proposes to sell from 200,000 (minimum) to 300,000 (maximum) shares
of its common stock at $6 per share, which is expected to yield net
proceeds to the Company of between $800,000 (minimum) and $1,300,000
(maximum). No assurance can be given that the Company will be successful in
completing this offering.
F - 13
<PAGE>
================================================================================
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this Prospectus. You must not
rely on any unauthorized information. This Prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful. The information in this
Prospectus is current as of _________, 1998.
Until , 1998 (90 days after the date of this Prospectus), all dealers that
buy , sell or trade these securities, whether or not participating in this
offering, may be required to deliver a Prospectus. This is in addition to the
dealers' obligation to deliver a Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
300,000 Shares
NOLBO, INC.
PROSPECTUS
J.W. BARCLAY & CO., INC.
____________, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law, as amended,
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that the person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. Section 145 further provides that a
corporation similarly may indemnify any such person serving in any such capacity
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor, against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
such action or suit if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of chancery or such other court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnify for such expenses which the Court of Chancery or such
other court shall deem proper.
Article IX of the By-Laws of the Company provides for indemnification
of officers, directors, employees and agents to the maximum extent permitted
under the Delaware General Corporation Law. The employment agreement with each
of the Company's three officers provides for his indemnification to the full
extent permitted by law.
The Company's Certificate of Incorporation contains a provision
eliminating the personal monetary liability of directors to the extent allowed
under the General Corporation Law of the State of Delaware. Under the provision,
a stockholder is able to prosecute an action against a director for monetary
damages only if he can show a breach of the duty of loyalty, a failure to act in
good faith, intentional misconduct, a knowing violation of law, an improper
personal benefit or an illegal dividend or stock repurchase, as referred to in
the provision, and not "negligence" or "gross negligence" in satisfying his duty
of care. In addition, the provision applies only to claims against a director
arising out of his role as a director and not, if he is also an officer, his
role, as an officer or in any other capacity or to his responsibilities under
any other law, such as federal securities laws.
II-1
<PAGE>
Item 25. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with this offering, other than
underwriting commissions, non-accountable expense allowance and financial
consulting fee are as follows:
SEC filing fees...........................................$610.66
NASD fees .........................................707.00
Accounting fees and
expenses ......................................20,000.00*
Legal fees ......................................60,000.00
Blue Sky fees and expenses..............................50,000.00*
Printing and engraving..................................70,000.00*
Miscellaneous expenses..................................18,682.34*
---------
TOTAL..................$220,000.00
===========
- ----------
* Estimated
The Company will bear all expenses shown above.
II-2
<PAGE>
Item 26. Recent Sales of Unregistered Securities.
The following shares of unregistered securities have been issued by the
Registrant since its incorporation in Delaware. There were no underwriting
discounts and commissions paid in connection with the issuance of any of said
securities.
Effective June 30, 1998, the Company acquired its two operating
subsidiaries. namely, Flame Broiled Chicken, Inc. and Gladstone's Grilled
Chicken, Inc., in exchange for 905,000 shares of the Company's Common Stock. In
connection with such transactions, the Company issued the following: 280,000
shares to Bo Grektorp in exchange for his interest in Gladstone's Grilled
Chicken, Inc; .5,000 shares to Kenneth Hansen in exchange for his interest in
Flame Broiled Chicken, Inc.; and an aggregate of 620,000 shares to Marvin Nolley
in exchange for his interest in Flame Broiled Chicken, Inc. and Gladstone's
Grilled Chicken, Inc. The Company also issued at $1.00 per share an additional
1,000 shares in connection with the Company's incorporation. Exemption is
claimed for the foregoing sale pursuant to Section 4(2) of the Securities Act of
1933, as amended (the "Act"), inasmuch as the transactions did not involve a
public offering within the meaning of Section 4(2) of the Act. All purchases
were afforded access to information and had knowledge and experience in
financial and business matters that they were capable of evaluation of the
merits and risks of such investment and were able to bear the economic risk
thereof.
Between July 29 and September 18, 1998, the Company raised $150,000 in
bridge financing from four affiliated investors (the "Bridge Lenders") namely,
Randy Brodsky, Enrique Urrutia, Philip Jahoor and Wilfrid Chalme. In exchange
for such loans, the Company issued to the Bridge Lenders non-convertible notes
due the earlier of the completion of the Offering or two years from the date of
issuance in the principal amount of $120,000 (the "Non-Convertible Notes") and
convertible notes in the principal amount of $30,000 due two years from the date
of issuance (the "Convertible Notes"). The Convertible Notes and Non-Convertible
Notes are collectively referred to as the "Notes." Each Note bears interest at
the rate of ten (10%) percent per annum. The principal of the Convertible Notes
is convertible at the option of the holder into shares of the Company's Common
Stock at $1.00 per share at anytime from the date of issuance until the
Convertible Notes are retired. Exemption is claimed for the foregoing sale
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Act"),
inasmuch as the transactions did not involve a public offering within the
meaning of Section 4(2) of the Act. All purchases were afforded access to
information and had knowledge and experience in financial and business matters
that they were capable of evaluation of the merits and risks of such investment
and were able to bear the economic risk thereof. Exemption is also claimed under
Rule 505 and 506 of the Act. All purchasers were accredited investors as that
term is defined under Rule 501. A 10% commission on all sales was paid to
Caribbean Securities LLC, 63 Wall Street, New York, NY 10005.
II-3
<PAGE>
Item 27. Exhibits.
All Exhibits have been previously filed herewith unless otherwise
noted.
Exhibit 1.0 Underwriting Agreement
1.1 Selected Dealer Agreement
1.2 Financial Consulting Agreement
1.3 Escrow Agreement
3.0 Certificate of Incorporation
3.1 Certuficate of Amendment
3.2 By-Laws
4.0 Specimen of Common Stock**
4.3 Form of Underwriter's Warrant
5.0 Opinion of Lester Morse P.C.
10.0 Lease for Downtown Tampa, Florida Restaurant**
10.1 Lease for Terrace Ridge Plaza**
10.2 Lease for principal executive office**
10.3 Employment Contract-Marvin Nolley
10.4 Employment Contract-Bo Grektorp
10.5 Employment Contract-Sean Flaherty
23.0 Consent of Aidman, Piser & Company, P.A.
23.1 Consent of Lester Morse P.C. (included in
Exhibit 5.0)
-------------
** To be filed by amendment.
Item 28. Undertakings.
(a) Rule 415 Offering
The Company will:
1. File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) Include any additional or changed material information on
the plan of distribution;
II-4
<PAGE>
2. For determining liability under the Securities Act, treat each such
post-effective amendment as a new registration statement of the securities
offered, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering.
3. File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) Equity Offerings of Nonreporting Small Business Issuers
The Company will provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
(c) Indemnification
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or controlling persons of
the Company pursuant to the provisions referred to in Item 24 of this
Registration Statement or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suite or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form SB-2, and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Tampa, State of Florida, on this 27th day of October, 1998.
NOLBO, INC.
By: /s/ Marvin M. Nolley
-----------------------
President and Chief
Operating Officer
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Marvin M. Nolley President, Chief Executive October 27, 1998
- --------------------- Officer, Director
Marvin M. Nolley
/s/ Bo G. Grektorp Vice-President, Director October 27, 1998
- ---------------------
Bo G. Grektorp
/s/ Hans Bremstrom Director October 27, 1998
- ---------------------
Hans Bremstrom
/s/ Sean Flaherty Chief Financial and Accounting October 27, 1998
- --------------------- Officer, Treasurer, Secretary
Sean Flaherty Director
</TABLE>
II-6
<PAGE>
Exhibit Index
All Exhibits have been previously filed herewith unless otherwise noted.
Exhibit 1.0 Underwriting Agreement
1.1 Selected Dealer Agreement
1.2 Financial Consulting Agreement
1.3 Escrow Agreement
3.0 Certificate of Incorporation
3.1 Certuficate of Amendment
3.2 By-Laws
4.0 Specimen of Common Stock**
4.3 Form of Underwriter's Warrant
5.0 Opinion of Lester Morse P.C.
10.0 Lease for Downtown Tampa, Florida Restaurant**
10.1 Lease for Terrace Ridge Plaza**
10.2 Lease for principal executive office**
10.3 Employment Contract-Marvin Nolley
10.4 Employment Contract-Bo Grektorp
10.5 Employment Contract-Sean Flaherty
23.0 Consent of Aidman, Piser & Company, P.A.
23.1 Consent of Lester Morse P.C. (included in Exhibit 5.0)
-------------
** To be filed by amendment.
<PAGE>
Exhibit 1.0 Nolbo, Inc.
8426 Sunstate Street
Tampa, FL 33634
UNDERWRITING AGREEMENT
J.W. Barclay & Co., Inc. _________, 1998
One Battery Park Plaza, 23rd Fl.
New York, NY 10004
Gentlemen:
The undersigned, Nolbo, Inc., a Delaware corporation (hereinafter
called the "Company"), proposes to issue and sell an aggregate of up to 300,000
shares of Common Stock (the "Shares") at a public offering price of $6.00 per
Share. All of the securities which are the subject of this Agreement are more
fully described in the Prospectus of the Company described below.
The purpose of this agreement (the "Agreement") is to confirm the
arrangements with both you as "Underwriter" and any Co-Underwriter chosen by you
who may later join in this Agreement (collectively called the "Underwriters"),
with respect to the sale of 300,000 Shares by the Underwriter as exclusive agent
for the Company on a "best efforts, all-or-none" basis as to 200,000 Shares and
on a "best efforts" basis as to the remaining 100,000 Shares.
SECTION 1. Description of Securities. The Company's authorized and
outstanding capitalization when the public offering of securities contemplated
hereby is permitted to commence, under the Securities Act of 1933, as amended
(the "Act"), and at the Closing Date (hereinafter defined) will be as set forth
in the Prospectus (hereinafter defined).
SECTION 2. Representations and Warranties of the Company. The Company
hereby represents and warrants to, and agrees with, the Underwriter as follows:
(a) A Registration Statement on Form SB-2 (No. 333-_____) and
Amendments thereto, with respect to, among other things, the Shares and a form
of Prospectus relating thereto, copies of which have been previously delivered
to you, have been prepared by the Company in conformity with the Securities Act
of 1933, as amended (hereinafter called the "Act"), and the rules and
regulations (hereinafter called the "Rules and Regulations") of the Securities
and Exchange Commission (hereinafter called the "Commission") thereunder, and
were filed with the Commission under the Act. The Company, subject to the
provisions of Section 6(a) hereof, may file one or more Post Effective
Amendments to such Registration Statement and Prospectus. The Underwriter will
receive copies of each such amendment.
The date on which the offering of securities contemplated by this
Agreement is authorized to commence pursuant to the Act, is herein called the
"Effective Date". The Registration Statement and Prospectus, as finally amended
and revised immediately prior to the Effective
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Date, are herein called respectively the "Registration Statement" and the
"Prospectus". If, however, a prospectus is filed by the Company pursuant to
Rule 424(b) or Rule 424(c) of the Rules and Regulations which differs from the
Prospectus, the term "Prospectus" shall also include the prospectus filed
pursuant to such Rule. The times and dates of delivery and payment hereunder are
herein called the "Closing(s) or Closing Dates."
(b) On the Effective Date, the Registration Statement and the
Prospectus, and on each Closing Date the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission an amendment or
supplement thereto), will comply with the provisions of the Act, and the Rules
and Regulations, and will contain all statements which are required to be stated
therein in accordance with the Act and the Rules and Regulations and will not
contain an untrue statement of a material fact and will not omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided, however, that none of the representations and
warranties contained in this subsection (b) shall extend to the Underwriters in
respect of any statements in or omissions from the Registration Statement and/or
the Prospectus, based upon information furnished in writing to the Company by or
on behalf of the Underwriters specifically for use in connection with the
preparation thereof.
(c) The Company has been duly incorporated and is now and at
each Closing Date will be validly existing as a corporation in good standing
under the laws of Delaware, having power and authority (corporate and other) to
own its properties and conduct its business as described in the Prospectus. The
Company is now and at each Closing Date will be duly qualified to do business as
a foreign corporation in good standing in all of the jurisdictions in which it
owns or leases property or in which the conduct of its business requires such
qualification and where the failure to so qualify would have a material adverse
effect on the business and operation of the Company. The Company has no
subsidiaries, except as are set forth in the Prospectus.
(d) The financial statements of the Company included in the
Registration Statement and Prospectus fairly present the financial position,
results of operations and other information purported to be shown therein, of
the Company at the respective dates and for the respective periods to which they
apply; and such financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout the
periods involved, and are in accordance with the books and records of the
Company.
(e) Aidman, Piser & Company, who has certified the financial
statements which were included as a part of the Registration Statement and the
Prospectus is, with respect to the Company, an independent public accountant as
required under the Act and the Rules and Regulations.
(f) Subsequent to the respective dates as of which information
is given in the Prospectus and prior to each Closing Date, and except as may
otherwise be stated in or contemplated by the Registration Statement and the
Prospectus (i) the Company has not incurred, nor will it incur, any material
liabilities or obligations, direct or contingent, nor has it, nor will it have
entered into any material transactions not in the ordinary course of business
and (ii) there
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has not been, and will not have been, any material adverse change in the
condition (financial or otherwise) of the Company whether or not arising from
transactions in the ordinary course of business.
(g) Except as described in the Prospectus, the real and
personal properties of the Company as shown in the Prospectus, are either (i)
owned by the Company by good marketable title in fee simple, free and clear of
all liens, encumbrances and equities of record, or otherwise, except those which
do not materially adversely affect the use or value of such assets and except
the lien of current taxes not now due, or (ii) are held by the Company by valid
leases, none of which is in default. Except as described in the Prospectus, the
Company in all material respects has full right to maintain and operate its
business and properties as the same are now operated or proposed to be operated
and is complying with all laws, ordinances and regulations applicable thereto.
(h) The Company has no material contingent obligations, nor
are its properties or business subject to any material risks, which may be
reasonably anticipated, which are not disclosed in the Prospectus.
(i) Except as described in the Prospectus, there are no
actions, suits or proceedings at law or in equity pending or, to the Company's
knowledge, threatened against the Company and there are no proceedings pending,
or, to the knowledge of the Company, threatened, against the Company before or
by any Federal or State Commission, regulatory body, or administrative agency or
other governmental body, wherein an unfavorable ruling, decision or finding
would materially adversely affect the business, franchise, licenses, permits,
operations or financial condition or income of the Company.
(j) The outstanding common stock has been duly and validly
issued and is fully-paid and non-assessable and shall conform to all statements
with regard thereto contained in the Prospectus. The Shares have been duly and
validly authorized by proper corporate authority; and the Shares when issued and
paid for in accordance with the terms hereof will be duly and validly issued,
fully-paid and non-assessable, and shall not be subject to any pre-emptive
rights of any stockholder of the Company.
(k) The Underwriter's Warrants as defined herein to be issued
to the Underwriter hereunder will be, when issued, duly and validly authorized
and executed by the Company and will constitute valid and binding obligations of
the Company, legally enforceable in accordance with their terms, and the Company
will have duly authorized, reserved and set aside the shares of its Common Stock
issuable upon exercise, and such stock, when issued and paid for upon exercise
of the Underwriter's Warrants in accordance with the provisions thereof, will be
duly and validly authorized and issued, fully-paid and non-assessable.
(l) The certificates required to be furnished to the
Underwriter pursuant to the provisions of Section 11 hereof will be true and
correct.
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(m) The execution and delivery by the Company of this
Underwriting Agreement has been duly authorized by all necessary corporate
action and this Underwriting Agreement is a valid, binding, and legally
enforceable obligation of the Company.
(n) The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, and compliance with the
terms of this Agreement will not conflict with, or constitute a default under
any material indenture, mortgage, deed of trust, or other agreement or
instrument to which the Company is now a party or the Certificate of
Incorporation and any amendments thereto, or by-laws of the Company, or any law,
order, rule or regulation, writ, injunction or decree of any government,
governmental instrumentality, or court, domestic or foreign, having jurisdiction
over the Company.
(o) The Company will apply the proceeds from the sale of the
Shares to the purposes set forth in the Prospectus.
(p) All of the aforesaid representations, agreements, and
warranties shall survive delivery of and payment for all or any part of the
securities covered by this Agreement.
SECTION 3. Issuance, Sale and Delivery of the Shares and the
Underwriter's Warrants.
(a) The Company hereby appoints the Underwriter as its
exclusive agent from the date of this Agreement until the close of business on
___________, 1999, to sell the Shares, and the Underwriter, on the basis of the
representations and warranties herein contained but subject to the terms and
conditions herein set forth, accepts such appointment and agrees to use its best
efforts to find purchasers for the Shares. The selling period, by mutual
agreement, may be extended until the close of business on ______, 1999 (the
selling period, as it may be extended is referred to as the "Offering Period").
An additional period for collection purposes only beyond the aforesaid Offering
Period shall be permitted for a period not to exceed ten (10) business days. In
the event the last day of the offering period occurs on a Saturday, Sunday or
holiday, then the offering period will remain open until the next business day.
The price at which the Underwriter shall sell the Shares to the public, as agent
for the Company, shall be $6.00 per Share and subject to the sale of at least
200,000 shares, the escrow agent on behalf of the Company shall pay the
Underwriter a selling commission equal to ten (10%) percent of the public
offering price for each Share sold. Neither you nor any person acting on your
behalf, including any co-Underwriter or Selected Dealer shall have any authority
to give any information or make any representations in connection with any offer
or sale of the Shares other than as contained in the Prospectus or as is
otherwise expressly authorized in writing by the Company.
(b) It is mutually agreed that the Company shall not issue and
sell any of the Shares to any of the purchasers found by the Underwriters unless
and until the escrow agent on behalf of the purchasers of Shares makes payment
to the Company for at least 200,000 Shares within the period of time specified
above, and no commission or expense allowance shall be payable by the escrow
agent on behalf of the Company hereunder, unless and until such payment shall
have been received by the Company.
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(c) The Underwriter shall deposit all funds received by it
from the sale of up to 300,000 Shares in an escrow account, at Continental Stock
Transfer & Trust Co., 2 Broadway, New York, New York 10004 by 12:00 noon of the
next business day in compliance with NASD Notice to Members 84-7, dated January
30, 1984, and shall so instruct any co-underwriters or selected dealers to do
likewise. Such deposits shall continue to be made until either (a) such funds
are turned over to the Company for the Shares or (b) such funds are returned
directly to the persons who subscribe for the Shares without interest thereon or
deduction therefrom; all in accordance with the terms of an appropriate escrow
agreement to be entered into with such Trust Company.
The Underwriters shall instruct all subscribers to make checks
payable only to "Continental Stock Transfer & Trust Company as escrow agent
f/b/o Nolbo, Inc." and shall instruct any co-underwriters or selected dealers to
do likewise. In the event that customer checks are made out to the order of the
co-underwriters or selected dealers, then the co-underwriters and selected
dealers agree to promptly forward their own checks or wire funds to said escrow
account or to endorse the check to the order of the escrow account. It is
acknowledged that only unaffiliated $100,000 net capital broker/dealers may
endorse checks to the order of the escrow account or forward their own checks or
wired funds.
(d) On or before the fifth business day following the
Company's and the Underwriter's receipt of notification from the escrow agent
that it has received cash or cleared funds for 200,000 Shares during the
Offering Period, the initial closing, on the sale of such Shares shall occur at
the time and place agreed upon by the Company and the Underwriter ("Initial
Closing"), provided that the other conditions to Closing set forth in Section 6
hereof have been satisfied. The escrow agent's notification will be deemed
received by both the Company and the Underwriter on the date the Company
actually receives it, provided that the Company promptly notifies the
Underwriter on such date by telecopy, telegram or telex of such receipt. At the
Initial Closing, the Company will deliver to the Underwriter the Certificates
for the Shares (in such denominations and in such names as the Underwriter shall
request upon at least 48 hours prior written notice) against payment to the
Company by the escrow agent, on behalf of the purchasers of such Shares (by
certified or bank cashier's check, payable to the order of the Company, in New
York Clearing House Funds), of the public offering price of such Shares less the
commissions and expense allowance payable to the Underwriter as to said Shares
as provided in subsection 3(e) below.
Following the Initial Closing, the Company and the Underwriter
shall mutually agree upon the time and place for additional Closings on Shares
sold during the balance of the Offering Period and shall instruct the escrow
agent, in writing signed by both the Company and the Underwriter, to make
payment for any Shares as to which a Closing shall occur to the Company less the
commissions and expense allowance payable to the Underwriter for such Shares (as
provided in Subsection 3(f) below) against delivery to the Underwriter by the
Company of Certificates for the Shares sold at such Closing.
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The Certificates so delivered for the Shares shall be
registered with the transfer agent in the names of the purchasers thereof for
the number of Shares purchased by each, as requested by the Underwriter in the
notices.
(e) At the Initial Closing, the escrow agent shall deduct from
the Company's proceeds for the Shares sold at such Closing, the Underwriter's
commission equal to ten (10%) percent of the public offering price, its expense
allowance equal to three (3%) percent of the public offering price and its
financial consulting fee equal to two (2%) percent of the public offering price
of the shares sold at such Closing after making an appropriate adjustment for
the $25,000 advanced by the Company to the Underwriter towards the Underwriter's
non-accountable expense allowance. The escrow agent shall be permitted to deduct
from the proceeds to the Company any expenses to be paid by the Company under
Sections 7(a) and (b).
(f) At any Closing after the Initial Closing, the escrow agent
shall deduct from the Company's proceeds, the Underwriter's commission equal to
ten (10%) percent of the public offering price of such Shares, its expense
allowance equal to three (3%) percent of the public offering price of such
Shares and its financial consulting fee equal to two (2%) percent of the public
offering price of the Shares, so that the net amount to be paid to the Company
by the escrow agent for the Shares sold at such Closing shall be equal to
eighty-five (85%) of the public offering price of such Shares.
(g) The Parties hereto represent that at each Closing, the
representations and warranties herein contained and the statements contained in
all certificates theretofore or simultaneously delivered by any party to another
pursuant to this Agreement, shall in all respects be true and correct.
(h) The Company will give irrevocable instructions to its
Transfer Agent (which it agrees to appoint) to deliver to the Underwriter (at
the Company's expense) for a period of five years from the first sale of the
Shares, daily advice sheets showing any transfers of Shares, and from time to
time during the aforesaid period a complete Stockholders' list will be furnished
by the Company when requested by the Underwriter.
(i) At each Closing, the Company will deliver to the
Underwriter, Warrants to purchase one Share for each ten Shares sold in the
offering (the "Underwriter's Warrants") for an aggregate purchase price of $30.
Each Warrant shall entitle the owner thereof to purchase one Share of Common
Stock of the Company at an exercise price equal to $9.00 per Share. Such
Warrants will be exercisable for five (5) years from the Effective Date of the
Registration Statement. From the Effective Date of the Registration Statement
and until one (1) year thereafter, such Warrants may be transferred only to
officers or partners of the Underwriter(s) and selling group members.
The Warrants shall contain customary clauses protecting
Warrant holders in the event the Company pays stock dividends, effects stock
splits, or effects a sale of assets, merger or consolidation.
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SECTION 4. Offering of the Shares on Behalf of the Company. In offering
the Shares for sale the Underwriter shall offer it solely as agent for the
Company and such offer shall be made upon the terms and subject to the
conditions set forth in the Registration Statement and Prospectus. The
Underwriter shall commence making such offer as agent for the Company as soon
after the Effective Date as it may deem advisable, provided, however, that if
the Underwriter does not commence such offering within three business days after
the Effective Date it shall so advise the Company and the Commission.
The Underwriter shall have the right to engage the services of
Co-Underwriter(s) with regard to the offering contemplated hereby pursuant to
separate written agreement. Such separate agreement, executed copies of which
shall be delivered to the Company prior to the Closing Date, shall provide in
part that (i) J.W. Barclay & Co., Inc. ("Barclay") shall act as Managing
Underwriter hereunder, (ii) the rights of the Co-Underwriter(s) shall not exceed
the rights of the Managing Underwriter, (iii) the liabilities of the
Co-Underwriter(s) shall not be less than the liabilities of the Managing
Underwriter, (iv) the Managing Underwriter shall have the right to allot any
portion of the Underwriter's compensation to the Co-Underwriter(s) and (v) the
Managing Underwriter shall have the right to reject orders from such
Co-Underwriter(s), in whole or in part, for any of the Shares to be offered in
contemplation of this Agreement.
The Underwriter may engage registered dealers selected by it
("Selected Dealers") to solicit sales of Shares and such solicitations shall be
made pursuant to a Selected Dealer Agreement substantially in the form annexed
hereto and pursuant to which it may allow such concession (out of its
underwriting commission) as it may determine within the limits set forth in the
Registration Statement and Prospectus.
The Selected Dealer Agreement shall require the Selected
Dealer to agree to offer the Shares on the terms and conditions of offering set
forth in the Prospectus and in accordance with such covenants, commitments and
undertakings as are submitted by the Company and the Underwriter to the
Commission.
SECTION 5. Registration Statement and Prospectus. The Company will
furnish the Underwriter, without charge, two signed copies of the Registration
Statement and of each amendment thereto, including all exhibits thereto and such
amount of conformed copies of the Registration Statement and Amendments as may
be reasonably requested by the Underwriter for distribution to each of the
Co-Underwriters and Selected Dealers.
The Company will furnish, at its expense, as many printed
copies of a Preliminary Prospectus and of the Prospectus as the Underwriter may
request for the purposes contemplated by this Agreement. If, while the
Prospectus is required to be delivered under the Act or the Rules and
Regulations, any event known to the Company relating to or affecting the Company
shall occur which should be set forth in a supplement to or an amendment of the
Prospectus in order to comply with the Act (or other applicable law) or with the
Rules and Regulations, the Company will forthwith prepare, furnish and deliver
to the Underwriter and to each of the other Underwriters and to others whose
names and addresses are designated by the
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Underwriter, in each case at the Company's expense, a reasonable number of
copies of such supplement or supplements to or amendment or amendments of, the
Prospectus.
The Company authorizes the Underwriter, Co-Underwriters and
the selected dealers, if any, in connection with the distribution of the Shares
and all dealers to whom any of the Shares may be sold by the Underwriter,
Co-Underwriters, or by any Selected Dealer, to use the Prospectus, as from time
to time amended or supplemented, in connection with the offering and sale of the
Shares and in accordance with the applicable provisions of the Act and the
applicable Rules and Regulations and applicable State Securities Laws.
SECTION 6. Covenants of the Company. The Company covenants and agrees
with each Underwriter that:
(a) After the date hereof, the Company will not at any time,
whether before or after the Effective Date, file any amendment to the
Registration Statement or the Prospectus, or any supplement to the Prospectus,
of which the Underwriter shall not previously have been advised and furnished
with a copy, or to which the Underwriter or the Underwriter's counsel shall have
reasonably objected in writing on the ground that it is not in compliance with
the Act or the Rules and Regulations.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective (provided, however, the Company shall
not cause the Registration Statement to become effective without the written
consent of the Underwriter) and will advise the Underwriter, (i) when the
Registration Statement shall have become effective and when any amendment
thereto shall have become effective, and when any amendment of or supplement to
the Prospectus shall be filed with the Commission, (ii) when the Commission
shall make a request or suggestion for any amendment to the Registration
Statement or the Prospectus or for additional information and the nature and
substance thereof, and (iii) of the issuance by the Commission of an order
suspending the effectiveness of the Registration Statement or of the initiation
of any proceedings for that purpose, and will use its best efforts to prevent
the issuance of such an order, or if such an order shall be issued, to obtain
the withdrawal thereof at the earliest possible moment.
(c) The Company will prepare and file with the Commission,
promptly upon the request of the Underwriter, such amendments, or supplements to
the Registration Statement or Prospectus, in form and substance satisfactory to
counsel to the Company, as in the reasonable opinion of Henry C. Malon, Esq., as
counsel to the Underwriter, may be necessary or advisable in connection with the
offering or distribution of the Shares, and will diligently use its best efforts
to cause the same to become effective.
(d) The Company will, at its expense, when and as requested by
the Underwriter, supply all necessary documents, exhibits and information, and
execute all such applications, instruments and papers as may be required, in the
opinion of the Underwriter's counsel, to qualify the Shares or such part thereof
as the Underwriter may determine, for sale under the so-called "Blue Sky" Laws
of such states as the Underwriter shall designate, and to
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continue such qualification in effect so long as required for the purposes of
the distribution of the Shares, provided, however, that the Company shall not be
required to qualify as a foreign corporation or dealer in securities or to file
a consent to service of process in any state in any action other than one
arising out of the offering or sale of the Shares.
(e) The Company will, at its own expense, file and provide,
and continue to file and provide, such reports, financial statements and other
information as may be required by the Commission, or the proper public bodies of
the States in which the Shares may be qualified for sale, for so long as
required by applicable law, rule or regulation and will provide the Underwriter
with copies of all such registrations, filings and reports on a timely basis.
(f) During the period of five years from the Effective Date,
the Company will deliver to the Underwriter a copy of each annual report of the
Company, and will deliver to the Underwriter (i) within 60 days after the end of
each of the Company's first three quarter-yearly fiscal periods, a balance sheet
of the Company as at the end of such quarter-yearly period, together with a
statement of its income and a statement of changes in its cash flow for such
period (Form 10-Q or Form 10-QSB), all in reasonable detail, signed by its
principal financial or accounting officer, (ii) within 110 days after the end of
each fiscal year, a balance sheet of the Company as at the end of such fiscal
year, together with a statement of its income and statement of cash flow for
such fiscal year (Form 10-K or 10-KSB), such balance sheet and statement of cash
flow for such fiscal year to be in reasonable detail and to be accompanied by a
certificate or report of independent public accountants, (who may be the regular
accountants for the Company), (iii) as soon as available a copy of every other
report (financial or other) mailed to the stockholders, and (iv) as soon as
available a copy of every non-confidential report and financial statement
furnished to or filed with the Commission or with any securities exchange
pursuant to requirements by or agreement with such exchange or the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), or
any regulations of the Commission thereunder. If and for so long as the Company
has one or more active subsidiaries, the financial statements required by (i)
and (ii) above shall be furnished on a consolidated basis in respect of the
Company and all of the Company's subsidiaries. Separate financial statements
shall be furnished for each subsidiary, the accounts of which are not so
consolidated. The financial statements referred to in (ii) shall also be
furnished to all of the stockholders of the Company as soon as practicable after
the 110 days referred to therein.
(g) The Company will make generally available to its security
holders, as soon as practicable, but in no event later than 15 months after the
Effective Date, an earnings statement of the Company (which need not be audited)
in reasonable detail, covering a period of at least twelve months beginning
after the Effective Date, which earnings statement shall satisfy the provisions
of Section 11(a) of the Act.
(h) On or before the Effective Date, the Company will apply
for listing in Standard & Poor's Corporation Records Manual. The Company agrees
to keep such listing current for a period of not less than five years from the
Closing Date.
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(i) The Company shall appoint Continental Stock Transfer &
Trust Company as transfer agent for the Common Stock (the "Transfer Agent").
SECTION 7. Expenses of the Company.
(a) The Company will pay its own costs and expenses incurred
in connection with the public offering contemplated hereby, including, without
limitation: (i) expenses incident to the issuance and delivery of the Shares,
including fees of any transfer or registration agent; (ii) Federal, State,
National Association of Securities Dealers, Inc. ("NASD") and other
qualification or registration fees regarding the Shares; (iii) costs of
preparing, printing and filing all copies of the Registration Statement and
related Prospectus (including preliminary and final copies thereof), all
subsequent amendments or supplements thereto, and all exhibits and other
instruments relating to the sale of the Shares, including the costs of
syndication material; (iv) costs of qualifying the Company's Shares for listing
on the OTC Electronic Bulletin Board; (v) costs of printing all copies of the
Underwriting Agreement, the Agreement Among Underwriters, the Selling Group
(Selected Dealers) Agreement, Underwriters' Questionnaire, Power of Attorney,
"Blue Sky" Memorandum, it being understood that in the event the Underwriter
acts as sole Underwriter, it will not print these documents other than the
Selling Group Agreement and Blue Sky Memorandum; (vi) costs of engraving and
supplying the certificates for the Shares and component parts thereof; and (vii)
fees and expenses of legal counsel, accountants and other experts of the
Company. In addition, the Company shall bear the costs of otherwise unreimbursed
postage, including mailing to customers of preliminary and final prospectuses
incurred by or on behalf of the Underwriters in preparation for, or in
connection with the offering and sale and distribution of the Shares on an
accountable basis.
(b) The Company will also pay all expenses relating to
qualifying or registering the securities which are the subject of this Agreement
under the securities or "Blue Sky" laws of such states and jurisdictions as
shall be designated by the Underwriter. Such qualification or registration shall
be performed by the Underwriter's counsel and its counsel fees relating thereto,
in the sum of $20,000 plus state filing fees and disbursements relating thereto,
but not limited to, long-distance telephone calls, photocopying, excess postage,
messengers, overnight mail and courier services which shall be paid by the
Company upon demand. The state filing fees are due upon the Company's receipt of
"Blue Sky" papers for filing. The $20,000 fee is due at the Initial Closing Date
of the Offering. Disbursements are payable upon receipt of invoice.
SECTION 8. Payment of Underwriter's Expenses.
(a) On the Closing Date and Additional Closing Date(s) (if
any) the Company will pay to Barclay an expense allowance equal to three (3%)
percent of the total gross proceeds derived from the public offering
contemplated by this Agreement, $25,000 of which has been paid in advance to
Barclay, for its expenses including costs of otherwise unreimbursed advertising,
traveling, postage, telephone and telegraph expenses and other miscellaneous
expenses incurred by or on behalf of the Underwriter in preparation for, or in
connection with the offering and sale and distribution of the Shares; and
Barclay shall not be obligated to account to the Company for such disbursements
and expenses. In the event, however, that the Underwriter terminates this
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Agreement pursuant to the provisions of Section 12 hereof, the Underwriter shall
be obligated to account for expenditures of any advance payment to Barclay and
to refund to the Company any portion of the advance not expended.
(b) At the Initial Closing, the Company will enter into an
agreement retaining Barclay, as a consultant for a one-year period commencing as
of the Effective Date for a fee equal to 2% of the gross amount of the moneys
raised in this offering. This sum shall be payable in full, in advance on each
Closing Date.
SECTION 9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of
the Underwriters, and each person who controls each of the Underwriters within
the meaning of Section 15 of the Act, from and against any and all losses,
claims, damages, expenses, or liabilities, joint or several, to which they or
any of them may become subject under the Act or any other statute or at common
law or otherwise, and to reimburse persons indemnified as above for any
reasonable legal or other expense (including the cost of any investigation and
preparation) incurred by them (as incurred), or any of them, in connection with
investigating, defending against or appearing as a third party witness in
connection with any claim or litigation, whether or not resulting in any
liability, but only insofar as such losses, claims, liabilities, expenses or
litigation arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus (as amended or supplemented, if amended or supplemented), or in any
"Blue Sky" application, or arising out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; provided, however, that
the indemnity agreement contained in this subsection (a) shall not apply to
amounts paid in settlement of any such claims or litigation if such settlement
is effected without the consent of the Company, nor shall it apply to the
Underwriters or any person controlling the Underwriters in respect of any such
losses, claims, damages, expenses, liabilities or litigation arising out of, or
based upon, any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made in reliance
upon and in conformity with written information furnished in writing to the
Company by such Underwriter, or on its behalf, specifically for use in
connection with the preparation of the Registration Statement or the Prospectus
or any such amendment thereof or supplement thereto or any such blue sky
application.
(b) Each of the Underwriters severally agrees, in the same
manner and to the same extent as set forth in subsection (a) above, to indemnify
and hold harmless the Company, each of the directors and officers who have
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act, with respect to any
statement in or omission from the Registration Statement, or the Prospectus (as
amended or as supplemented, if amended or supplemented), or in any "Blue Sky"
application, if such statement or omission was made in reliance upon and in
conformity with written information furnished in writing to the Company by such
Underwriter, or on its behalf, specifically for use
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in connection with the preparation of the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto, or any such
application. An Underwriter shall not be liable for amounts paid in settlement
of any such claim or litigation if such settlement was effected without its
consent.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any claim asserted against it and of any action commenced
against it in respect of which indemnity may be sought hereunder. The omission
to so notify an indemnifying party shall relieve such party of its obligation to
indemnify pursuant to this Agreement, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, subject to the provisions
herein stated, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. The indemnified
party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that the fees and expenses of such counsel shall
be at the expense of the indemnifying party if (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party or
(ii) the defendants in any such action include both the indemnified and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of such indemnified party or parties), it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for the indemnified party which firm shall be
designated in writing by the indemnified party.
(d) The respective indemnity agreements between the
Underwriters and the Company contained in subsections (a) and (b) above, and the
representations and warranties of the Company set forth in Section 2 hereof or
elsewhere in this Agreement, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of the Underwriters
or by or on behalf of any controlling person of the Underwriters or the Company
or any such officer or director or any controlling person of the Company, and
shall survive the delivery of the Shares. Any successor of the Company, or any
Underwriter, or of any controlling
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person of any Underwriter or the Company, as the case may be, shall be entitled
to the benefit of such respective indemnity agreements.
(e) In order to provide for just and equitable contribution
under the Act in any case in which (i) any person entitled to indemnification
under this Section 9 makes claim for indemnification pursuant hereto but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 9 provides for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 9, then, and in each such case, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, expenses or liabilities to
which they may be subject (after any contribution from others) in such
proportions so that the Underwriters are responsible in the aggregate for the
proportion of such losses, claims, damages or labilities represented by the
percentage that the underwriting discounts and commissions appearing on the
cover page of the Prospectus bears to the public offering price appearing
thereon, and the Company is responsible for the remaining portion; provided,
that, in any such case, no person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Within twenty days after receipt by any party to this
Agreement (or its representative) of notice of the commencement of any action,
suit or proceeding, such party will, if a claim for contribution in respect
thereof is to be made against another party (the "contributing party"), notify
the contributing party, in writing, of the commencement thereof, but the
omission so to notify the contributing party will not relieve it from any
liability which it may have to any other party other than for contribution
hereunder. In case any such action, suit or proceeding is brought against any
party, and such party so notifies a contributing party or his or its
representative of the commencement thereof within the aforesaid twenty days, the
contributing party will be entitled to participate therein with the notifying
party and any other contributing party similarly notified. Any such contributing
party shall not be liable to any party seeking contribution on account of any
settlement of any claim, action or proceeding effected by such party seeking
contribution without the written consent of such contributing party. The
contribution provisions contained in this Section 9 are in addition to any other
rights or remedies which either party hereto may have with respect to the other
or hereunder.
SECTION 10. Effectiveness of Agreement. This Agreement shall become
effective (i) at 10:00 A.M., New York Time, on the first full business day after
the Effective Date, or (ii) at the time of the initial public offering by the
Underwriter of the Shares, whichever shall first occur. The time of the initial
public offering by the Underwriter of the Shares for the purposes of this
Section 10, shall mean the time, after the Registration Statement becomes
effective, of the release by the Underwriter for publication of the first
newspaper advertisement which is subsequently published relating to the Shares,
or the time, after the Registration Statement becomes effective, when the Shares
are first released by the Underwriter for offering by the Underwriter or dealers
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<PAGE>
by letter or telegram, whichever shall first occur. The Underwriter agrees to
notify the Company immediately after it shall have taken any action, by release
or otherwise, whereby this Agreement shall have become effective. This Agreement
shall, nevertheless, become effective at such time earlier than the time
specified above, after the Effective Date, as the Underwriter may determine by
notice to the Company.
SECTION 11. Conditions of the Underwriter's Obligations. The
obligations of the Underwriter are subject to: the accuracy, as of the date
hereof and as of the Closing Dates; of all of the representations and warranties
of the Company contained in this Agreement; the Company's compliance with, or
performance of, all of its covenants, undertakings and agreements contained in
this Agreement that are required to be complied with or performed on or prior to
each of the Closing Dates and to the following additional conditions:
(a) On or prior to the Initial Closing Date and each
Additional Closing Date, no order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
shall have been instituted or be pending or, to the knowledge of the Company,
shall be threatened by the Commission; any request for additional information on
the part of the Commission (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the satisfaction of
the Commission; and neither the Registration Statement nor any amendment thereto
shall have been filed as which counsel for the Underwriters shall have
reasonably objected, in writing.
(b) The Underwriter shall not have disclosed in writing to the
Company that the Registration Statement or Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel to the Underwriters, is material, or omits to state a fact which, in
the opinion of such counsel, is material and is required to be stated therein,
or is necessary to make the statements therein not misleading.
(c) Between the date hereof, the Initial Closing Date and any
Additional Closing Date(s), the Company shall not have sustained any loss on
account of fire, explosion, flood, accident, calamity or other cause, of such
character as materially adversely affects its business or property, whether or
not such loss is covered by insurance.
(d) Between the date hereof, the Initial Closing Date and any
Additional Closing Date(s), there shall be no litigation instituted or
threatened against the Company, and there shall be no proceeding instituted or
threatened against the Company before or by any federal or state commission,
regulatory body or administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding would materially
adversely affect the business, licenses, permits, operations or financial
condition or income of the Company.
(e) Except as contemplated herein or as set forth in the
Registration Statement and Prospectus, during the period subsequent to the
Effective Date and prior to the Initial Closing Date and each Additional Closing
Date(s), (A) the Company shall have conducted its business in the usual and
ordinary manner as the same was being conducted on the date of the filing of the
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<PAGE>
initial Registration Statement and (B) except in the ordinary course of its
business, the Company shall not have incurred any material liabilities or
obligations (direct or contingent), or disposed of any of its assets, or entered
into any material transaction, and (C) the Company shall not have suffered or
experienced any material adverse change in its business, affairs or in its
condition, financial or otherwise. On each Closing Date, the capital stock and
surplus accounts of the Company shall be substantially as great as at its last
financial report without considering the proceeds from the sale of the Shares
except to the extent that any decrease is disclosed in or contemplated by the
Prospectus.
(f) The authorization of the Shares, the Registration
Statement, the Prospectus and all corporate proceedings and other legal matters
incident thereto and to this Agreement, shall be reasonably satisfactory in all
respects to counsel to the Underwriters.
(g) The Company shall have furnished to the Underwriter the
opinions, dated the Closing Date, and Additional Closing Date(s), addressed to
you, from Lester Morse P.C., counsel for the Company, that:
(i) The Company has been duly incorporated and is a
validly existing corporation in good standing under the laws of the State of
Delaware with full corporate power and authority to own and operate its
properties and to carry on its business as set forth in the Registration
Statement and Prospectus; it has authorized and outstanding capital as set forth
in the Registration Statement and Prospectus; and the Company is duly licensed
or qualified as a foreign corporation in all jurisdictions in which the
ownership or leasing of its properties requires such qualification or license,
except where failure to be so qualified or licensed would have no material
adverse effect on the business of the Company.
(ii) All of the outstanding shares of Common Stock
are duly authorized, validly issued, fully paid, and non-assessable, and do not
have any preemptive rights. The Company will have duly authorized, reserved and
set aside shares of Common Stock issuable upon conversion of certain outstanding
notes and, when issued in accordance with the terms contained therein against
payment therefor, will be duly and validly issued, fully paid and
non-assessable.
(iii) The Shares and the Underwriter's Warrants
conform to descriptions thereof under "Description of Securities" contained in
the Prospectus.
(iv) The purchasers of the shares will receive good
and marketable title to the Shares purchased by them from the Company in
accordance with the terms and provisions of this Agreement, to the best of such
counsel's knowledge, free and clear of all liens, encumbrances, claims, security
interests, restrictions, stockholders' agreements and voting trusts whatsoever.
(v) Except as set forth in the Prospectus, there are
no outstanding options, warrants, or other rights, providing for the issuance
of, and, to the best of the knowledge of such counsel, no commitments, plans or
arrangements to issue, any shares of any class of capital stock
15
<PAGE>
of the Company, or any security convertible into, or exchangeable for, any
shares of any class of capital stock of the Company.
(vi) To the best of such counsel's knowledge, no
consents, approvals, authorizations or orders of agencies, officers or other
regulatory authorities are necessary for the valid authorization, issue or sale
of the Shares hereunder, except such as may be required under the Act or state
securities or Blue Sky Laws.
(vii) The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for that purpose have been instituted or are pending before or
threatened by, the Commission; the Registration Statement and Prospectus, and
each amendment thereof and supplement thereto, comply as to form in all material
respects with the applicable requirements of the Act and the Rules and
Regulations (except that no opinion need be expressed as to financial
statements, notes thereto, and financial data contained in the Registration
Statement or Prospectus); such counsel has participated in conferences with
officers and representatives of the Company and with its certified public
accountants in the preparation of the Registration Statement and the Prospectus.
At such conferences counsel has made inquiries of such officers, representatives
and accountants, and discussed the contents of the Registration Statement and
the Prospectus. Such counsel has not independently verified, and, accordingly,
does not assume any responsibility for, the accuracy, completeness or fairness
of the information contained in the Registration Statement or the Prospectus,
other than as set forth in paragraph (viii) below, insofar as such statements
relate to the contents of particular documents or laws therein described. On the
basis of the foregoing, nothing has come to the attention of such counsel to
cause such counsel to believe that the Registration Statement, the Prospectus or
any amendment or supplement thereto contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make statements
therein, in light of the circumstances under which they were made, not
misleading (except, in the case of both the Registration Statement and any
amendment thereto and the Prospectus and any supplement thereto, for the
financial statements, notes thereto and other financial and statistical data and
schedules contained therein, as to which such counsel need express no opinion);
and such counsel is familiar with all contracts referred to in the Registration
Statement or in the Prospectus and such contracts are sufficiently summarized or
disclosed therein, or filed as exhibits thereto, as required, and such counsel
does not know of any other contracts required to be summarized or disclosed or
filed; and such counsel does not know of any legal or governmental proceedings
to which the Company is a party, or in which property of the Company is the
subject, of a character required to be disclosed in the Registration Statement
or the Prospectus which are not so disclosed therein.
(viii) This Agreement has been duly authorized and
executed by the Company and is a valid and binding agreement of the Company
enforceable in accordance with its terms subject to bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors rights generally
and except that no opinion need be given with regard to the enforceability of
Section 9 hereof or the availability of equitable relief.
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<PAGE>
(ix) To the best knowledge of such counsel: (a) no
default exists, and no event has occurred which, with notice or lapse of time,
or both, would constitute a default in the due performance and observance of any
material term, covenant or condition by the Company, of any indenture, mortgage,
deed of trust, note or any other agreement or instrument to which the Company is
a party or by which it or its business or its properties may be bound or
affected, except where such default would not have a material adverse effect on
the business of the Company and except as disclosed in the Prospectus; (b) the
Company has full power and lawful authority to authorize, issue and sell the
Shares on the terms and conditions set forth herein and in the Registration
Statement and in the Prospectus; (c) no consent, approval, authorization or
other order of any regulatory authority is required for such authorization,
issue or sale, except as may be required under the Act or State securities laws,
clearance with the NASD and such other consent, approval, authorization or order
as has been obtained and is in full force and effect; and (d) the execution and
delivery of this Agreement, the consummation of the transactions herein
contemplated, and compliance with the terms hereof will not conflict with, or
constitute a default under, any material indenture, mortgage, deed of trust,
note or any other agreement or instrument to which the Company is now a party or
by which it or its business or its properties may be bound or affected, the
Certificate of Incorporation and any amendments thereto, the by-laws of the
Company, or any order, rule or regulation, writ, injunction or decree of any
government, governmental instrumentality, or court, domestic or foreign, having
jurisdiction over the Company or its business or properties.
(x) Except as disclosed in the Registration Statement
and Prospectus, to the best knowledge of such counsel, there are no material
actions, suits or proceedings at law or in equity of a material nature pending,
or to such counsel's knowledge, threatened against the Company which are not
adequately covered by insurance and there are no proceedings pending or, to the
knowledge of such counsel, threatened against the Company before or by any
Federal or State Commission, regulatory body, or administrative agency or other
governmental body, wherein an unfavorable ruling, decision or finding would
materially and adversely affect the business, operation or condition (financial
or otherwise) of the Company, which are not disclosed in the Prospectus.
(xi) The Underwriter's Warrants to be issued to the
Underwriter hereunder will be, when issued, duly and validly authorized and
executed by the Company and will constitute valid and binding obligations of the
Company, legally enforceable in accordance with their terms except as
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws pertaining to creditors rights generally and the
Company will have duly authorized, reserved and set aside the shares of its
Common Stock issuable upon exercise of the Underwriter's Warrants and such
stock, when issued and paid for upon exercise of the Underwriters' Warrants in
accordance with the provisions thereof, will be duly and validly issued,
fully-paid and non-assessable.
Such opinion shall also cover such other matters
incident to the transactions contemplated by this Agreement as the Underwriter
shall reasonably request. In rendering such
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<PAGE>
opinion, such counsel may rely upon certificates of any officer of the Company
or public officials as to matters of fact.
(h) The Company shall have furnished to the Underwriter
certificates of the President or Chairman of the Board and the
Vice-President-Finance and Administration of the Company, dated as of the
Closing Date, and Additional Closing Date(s), to the effect that:
(i) Each of the representations and warranties of the
Company contained in Section 2 hereof are true and correct in all material
respects at and as of such Closing Date, and the Company has performed or
complied with all of its agreements, covenants and undertakings contained in
this Agreement and has performed or satisfied all the conditions contained in
this Agreement on its part to be performed or satisfied at such Closing Date;
(ii) The Registration Statement has become effective
and no order suspending the effectiveness of the Registration Statement has been
issued, and, to the best of the knowledge of the respective signers, no
proceeding for that purpose has been initiated or is threatened by the
Commission;
(iii) The respective signers have each carefully
examined the Registration Statement and the Prospectus and any amendments and
supplements thereto, and to the best of their knowledge the Registration
Statement and the Prospectus and any amendments and supplements thereto and all
statements contained therein are true and correct in all material respects, and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and, since the effective date of the
Registration Statement, there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been so set forth except
changes which the Registration Statement and Prospectus indicate might occur.
(iv) Except as set forth or contemplated in the
Registration Statement and Prospectus, since the respective dates as of which,
or periods for which, information is given in the Registration Statement and
Prospectus and prior to the date of such certificate (A) there has not been any
material adverse change, financial or otherwise, in the business, business
prospects, earnings, general affairs or condition (financial or otherwise), of
the Company (in each case whether or not arising in the ordinary course of
business), and (B) the Company has not incurred any liabilities, direct or
contingent, or entered into any transactions, otherwise than in the ordinary
course of business other than as referred to in the Registration Statement or
Prospectus and except changes which the Registration Statement and Prospectus
indicate might occur.
(i) The Company shall have furnished to the Underwriter on
each Closing Date, such other certificates, additional to those specifically
mentioned herein, as the Underwriter may have reasonably requested, as to: the
accuracy and completeness of any statement in the Registration Statement or the
Prospectus, or in any amendment or supplement thereto; the representations and
warranties of the Company herein; the performance by the Company of its
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<PAGE>
obligations hereunder; or the fulfillment of the conditions concurrent and
precedent to the obligations of the Underwriters hereunder, which are required
to be performed or fulfilled on or prior to each Closing Date.
(j) At the time this Agreement is executed, and on the Initial
Closing Date you shall have received a letter from Aidman, Piser & Company,
addressed to the Underwriter, and dated, respectively, as of the date of this
Agreement and as of the Initial Closing Date and Additional Closing Date(s) as
the case may be, in form and substance reasonably satisfactory to the
Underwriter, to the effect that:
(i) They are independent public accountants within
the meaning of the Act and the applicable published Rules and Regulations of the
Commission;
(ii) In their opinion, the financial statements and
related schedules of the Company included in the Registration Statement and
Prospectus and covered by their reports comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published Rules and Regulations of the Commission issued thereunder;
(iii) On the basis of limited procedures in
accordance with standards established by the American Institute of Certified
Public Accountants, including (1) a reading of the latest available financial
statements of the Company (a copy of which shall be attached to such letter),
(2) a reading of the latest available minutes of the meetings of the
stockholders and the Board of Directors of the Company as set forth in the
minute books of the Company, officials of the Company having advised you and
them that the minutes of all such meetings through that date were set forth
therein, (3) consultations with officials of the Company responsible for
financial and accounting matters of the Company, which procedures do not
constitute an examination in accordance with generally accepted accounting
standards, and would not necessarily reveal material adverse changes in the
financial position or results of operations or inconsistencies in the
application of generally accepted accounting principles, nothing has come to
their attention which in their judgment would lead them to believe that (a) the
unaudited financial statements and related schedules of the Company included in
the Registration Statement and Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and the
published Rules and Regulations of the Commission issued thereunder, or were not
prepared in accordance with generally accepted accounting principles and
practices consistent in all material respects with those followed in the
preparation of the comparable financial statements and schedules covered by
their reports included in the Registration Statement and Prospectus, or would
require any material adjustments for a fair presentation of the information
purported to be shown thereby or (b) during the period from the date of the
Capitalization table included in the Prospectus to a specified date not more
than four business days prior to the date of such letter, there has been any
material change in the capital stock or debt of the Company, or (c) during the
period from the date of the latest balance sheet and related statements of
operations, changes in stockholders' equity and changes in financial position
included in the Prospectus and covered by their reports contained therein to the
date of the letter, there has been any material adverse change in the financial
condition, or results of operations, of the Company; and
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(iv) In addition to the examination referred to in
their reports included in the Registration Statement and the Prospectus and the
limited procedures referred to in clause (iii) above, they have carried out
certain specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are derived from the
general accounting records of the Company which appear in the Prospectus under
the captions "Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Executive Compensation", "Certain Transactions",
"Selected Financial Data," "Dilution," and "Risk Factors," as well as such other
financial information as may be specified by the Underwriter, and that they have
compared such amounts, percentages and financial information with the accounting
records of the Company and have found them to be in agreement.
All the opinions, letters, certificates and evidence
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and substance
reasonably satisfactory to counsel to the Underwriters, whose approval shall not
be unreasonably withheld, conditioned or delayed.
If any of the conditions specified in this Section
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, this Agreement and all obligations of the Underwriters hereunder may
be terminated and canceled by the Underwriter by notifying the Company of such
termination and cancellation in writing or by telegram at any time prior to, or
on, the Initial Closing Date or any Additional Closing Date(s) and any such
termination and cancellation shall be without liability of any party hereto to
any other party, except with respect to the provisions of Sections 7 and 8
hereof. The Underwriter may, of course, waive, in writing, any conditions which
have not been fulfilled or extend the time for their fulfillment.
SECTION 12. Termination.
(a) This Agreement may be terminated by the Underwriter by
written or telegraphic notice to the Company at any time before it becomes
effective pursuant to Section 10.
(b) This Agreement may be terminated by the Underwriter by
written or telegraphic notice to the Company, at any time after it becomes
effective, in the event that the Company, after notice from the Underwriter and
an opportunity to cure, shall have failed or been unable to comply with any of
the terms, conditions or provisions of this Agreement on the part of the Company
to be performed, complied with or fulfilled within the respective times herein
provided for, including without limitation Section 6(g) hereof, unless
compliance therewith or performance or satisfaction thereof shall have been
expressly waived by the Underwriter in writing. This Agreement may also be
terminated if (i) qualifications are received or provided by the Company's
independent public accountants or attorneys to the effect of either difficulties
in furnishing certifications as to material items including, without limitation,
information contained within the footnotes to the financial statements, or as
affecting matters incident to the issuance and sale of the securities
contemplated or as to corporate proceedings or other matters or (ii) there is
any action, suit or proceeding, threatened or pending, at law or equity against
the Company, or by any Federal, State or other commission, board or agency
wherein any unfavorable result or
20
<PAGE>
decision could materially adversely affect the business, property, or financial
condition of the Company which was not disclosed in the Prospectus.
(c) This Agreement may be terminated by the Underwriter by
written or telegraphic notice to the Company at any time after it becomes
effective, if the offering of, or the sale of, or the payment for, or the
delivery of, the Shares is rendered impracticable or inadvisable because (i)
additional material governmental restriction, not in force and effect on the
date hereof, shall have been imposed upon trading in securities generally or
minimum or maximum prices shall have been generally established on the New York
Stock Exchange or trading in securities generally on such exchange shall have
been suspended or a general banking moratorium shall have been established by
Federal or New York State authorities or (ii) a war or other national calamity
shall have occurred or (iii) the condition of the market for securities in
general shall have materially and adversely changed, or (iv) the condition of
any matter materially affecting the Company or its business or business
prospects, is such that it would be undesirable, impractical or inadvisable to
proceed with, or consummate, this Agreement or the public offering of the
Shares.
(d) Any termination of this Agreement pursuant to this Section
12 shall be without liability of any character (including, but not limited to,
loss of anticipated profits or consequential damages) on the part of any party
hereto, except that the Company shall remain obligated to pay the costs and
expenses provided to be paid by it specified in Sections 6, 7 and 8, to the
extent therein provided. In addition, the Underwriter shall account to the
Company for any advance and shall reimburse the Company for any portion of the
$25,000 advance not expended for actual out-of-pocket expenses.
SECTION 13. Finder. The Company and the Underwriters mutually represent
that they know of no person who rendered any service in connection with the
introduction of the Company to the Underwriters and that they know of no claim
by anyone for a "finder's fee" or similar type of fee, in connection with the
public offering which is the subject of this Agreement. Each party hereby
indemnifies the other against any such claims by any person known to it, and not
known to the other party hereto, who shall claim to have rendered services in
connection with the introduction of the Company to the Underwriters and/or to
have such a claim.
SECTION 14. Restriction on Securities All officers, directors and
present security holders have agreed not to sell, transfer, hypothecate or
convey any of such stock (including shares of Common Stock issuable upon
conversion of notes) by registration or otherwise for a period of one year from
the Effective Date without the prior written consent of the Underwriter An
appropriate legend shall be marked on the face of stock certificates
representing all of such securities.
SECTION 15. Registration of the Underwriter's Warrants and/or Common
Stock underlying the Underwriters' Warrants. The Company agrees that it will,
upon request by the holders of at least 50% of the Underwriter's Warrants within
the period commencing twelve (12) months from the Effective Date, and for a
period of four years thereafter, on one occasion only at the Company's sole
expense, cause the Underwriters' Warrants and/or the underlying securities
21
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issuable upon exercise of the Underwriters' Warrants, to be the subject of a
post-effective amendment, or a new Registration Statement, if appropriate
(hereinafter referred to as the "demand Registration Statement"), so as to
enable the Underwriter and/or its assigns to offer publicly the Underwriters'
Warrants and/or the underlying securities. The Company agrees to register such
securities expeditiously and, where possible, within forty-five (45) business
days after receipt of such requests. The Company agrees to use its "best
efforts" to cause the post-effective amendment, or new Registration Statement to
become effective and for a period of nine (9) months thereafter to reflect in
the post-effective amendment, new Registration Statement, financial statements
which are prepared in accordance with Section 10(a)(3) of the Act and any facts
or events arising which, individually or in the aggregate, represent a
fundamental and/or material change in the information set forth in such
post-effective amendment or new Registration Statement. The holders of the
Underwriter's Warrants may demand registration without exercising such Warrants
and, in fact, are never required to exercise same.
The Company understands and agrees that if, at any time within
the period commencing one year and ending seven years after the Effective Date,
it should file a registration statement with the Commission pursuant to the Act,
regardless of whether some of the holders of the Underwriter's Warrants and
underlying securities shall have therefore availed themselves of the right above
provided, the Company, at its own expense, will offer to said holders the
opportunity to register securities. This paragraph is not applicable to a
Registration Statement filed by the Company with the Commission on Form S-8 or
any other inappropriate form.
SECTION 16. Notice. Except as otherwise expressly provided in this
Agreement, (A) whenever notice is required by the provisions hereof to be given
to the Company, such notice shall be given in writing, by certified mail, return
receipt requested, addressed to the Company at 8426 Sunstate Street, Tampa, FL
33634, copy to Lester Morse P.C., 111 Great Neck Road, Suite 420, Great Neck, NY
11021; and (B) whenever notice is required by the provisions hereof to be given
to the Underwriters, such notice shall be in writing addressed to the
Underwriter at One Battery Park Plaza, 23rd Fl., New York, NY 10004, copy to
Henry C. Malon, Esq., One Battery Park Plaza, 3rd Fl., New York, NY 10004. Any
party may change the address for notices to be sent by giving written notice to
the other persons.
SECTION 21. Representations and Agreements to Survive Delivery. Except
as the context otherwise requires, all representations, warranties, covenants,
and agreements contained in this Agreement shall be deemed to be
representations, warranties, covenants, and agreements as at the date hereof and
as at the Closing Date and the Additional Closing Date(s), and all
representations, warranties, covenants, and agreements of the several
Underwriters and the Company, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any of the
Underwriters or the Company or any of their respective controlling persons, and
shall survive any termination of this Agreement (whensoever made) and/or
delivery of the Shares and the Optional Shares to the several Underwriters.
SECTION 22. Miscellaneous. This Agreement is made solely for the
benefit of the Underwriters and the Company and their respective successors and
assigns, and no other person
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shall acquire or have any right under or by virtue of this Agreement. The term
"successor" or the term "successors and assigns" as used in this Agreement shall
not include any purchaser, as such, of any of the Shares.
This Agreement shall not be assignable by any party without
the other party's prior written consent. This Agreement shall be binding upon,
and shall inure to the benefit of, our respective successors and permitted
assigns. The foregoing represents the sole and entire agreement between us with
respect to the subject matter hereof and supersedes any prior agreements between
us with respect thereto. This Agreement may not be modified, amended or waived
except by a written instrument signed by the party to be charged. The validity,
interpretation and construction of this Agreement, and of each part hereof,
shall be governed by the internal laws of the State of New York, without giving
effect to the conflict of laws provisions thereof.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall be
deemed to be one and the same instrument.
If a party signs this Agreement and transmits an electronic
facsimile of the signature page to the other party, the party who receives the
transmission may rely upon the electronic facsimile as a signed original of this
Agreement.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Company and the Underwriters in accordance with its terms.
Very truly yours,
NOLBO, INC.
By:________________________________
Marvin M. Nolley, President
CONFIRMED AND ACCEPTED, as of
the date first above written:
J.W. BARCLAY & CO., INC.
By:____________________________
John Bruno, President
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Exhibit 1.1 J.W. Barclay & Co., Inc.
One Battery Park Plaza, 23rd Fl.
New York, NY 10004
NOLBO, INC.
300,000 Shares
SELECTED DEALER AGREEMENT
________, 1998
Dear Sirs:
Subject to the terms and conditions of the Underwriting Agreement with
Nolbo, Inc. (the "Company"), we have been employed to find purchasers for an
aggregate of 300,000 shares of Common Stock (the "Shares") as more fully
described in and subject to the conditions set forth in the Prospectus contained
in the Registration Statement with respect to the Shares, which has become
effective.
As Underwriter, we are offering to certain selected dealers, who are
$100,000 net capital broker/dealers and members in good standing of the National
Association of Securities Dealers, Inc. or foreign dealers who are not eligible
for membership in said Association and who will agree to be bound by the Rules
of Fair Practice of said Association and agree not to sell such Shares to any
purchaser in the United States of America or to persons who they have any reason
to believe are residents of the United States of America (herein collectively
called the Selected Dealers), the right as set forth herein to obtain
subscriptions to a portion of these Shares at the public offering price of
$_____ per Share, as set forth below and on the following terms and conditions.
1. TERMS AND CONCESSIONS: We expressly reserve the right to
accept or reject subscriptions in our discretion, either in whole or in part,
and to allot.
Except as may be otherwise expressly agreed, we agree to allow
a concession of $_____ per Share on all Shares confirmed by us. We reserve the
right to modify or change, but not decrease, the foregoing concession, and shall
be under no obligation to allow the same concession to all Selected Dealers.
2. DELIVERY AND PAYMENT: You will notify us in writing when you have
obtained subscriptions to the Shares allotted to you and have received the
purchase price therefor. You agree and covenant to transmit subscriptions in
full and without deduction for concessions
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promptly upon the receipt thereof, directly to, and for deposit in the escrow
account with Continental Stock Transfer & Trust Company, with a mailing address
of 2 Broadway, New York, NY 10004 being maintained for the benefit of the
subscribers, where they will be held until paid to the Company on the closing
date, hereinafter specified or until returned to the respective subscribers. In
the event that subscriptions for at least 200,000 Shares are obtained, you will
receive a notice from us to that effect specifying a closing date (which shall
be at least three full business days subsequent to such notice) on which
delivery will be made to you of Shares for which you have found subscribers. The
closing shall be held at the offices of Continental Stock Transfer & Trust
Company, 2 Broadway, New York, NY 10004 or at such other place as we shall
notify you, at 12:00 noon, on such closing date. In the event that at least
200,000 Shares are not sold by ____________, 1999 (extendable at the mutual
agreement of the Company and us until ____________, 1999, plus an additional 10
business days which may be required for collection of checks), you will be so
notified, and you covenant and agree, in such event, that the proceeds of all
subscriptions received by you (other than those subscriptions returned directly
by the Escrow Agent) shall be returned without any deduction whatsoever and
without interest to the respective subscribers promptly upon receipt of notice
from us. Delivery of certificates for Shares subscribed for by purchasers found
by you and confirmed by us hereunder will take place at the closing or as soon
thereafter as practicable.
You shall instruct customers to make payment for subscriptions
to the order of "Continental Stock Transfer & Trust Co. f/b/o "Nolbo, Inc." You
acknowledge that you are familiar with NASD Notice to Members 84-7, dated
January 30, 1984, and that in accordance therewith, you will forward all
customers' checks received as payment for subscriptions directly to the
Continental Stock Transfer & Trust Co. at the address above stated by 12:00 Noon
of the next business day. All checks shall be in good funds in an amount equal
to the public offering price of the Shares subscribed for. Copies of all
transmittal letters to the Continental Stock Transfer & Trust Co. shall be
contemporaneously sent to our office. In the event that customers' checks are
made out to your order then you agree to promptly forward your own check or wire
funds to said escrow account or to endorse the check to the order of the
Continental Stock Transfer & Trust Co. Please be advised that: (i) only
non-affiliated $100,000 net capital broker/dealers may forward their own check
or wire funds or endorse checks to the order of the escrow account; and (ii) in
the event customers inadvertently make checks payable to a broker/dealer who is
not a non-affiliated $100,000 net capital broker/dealer, such checks must be
returned to such customers so that they can be made payable to "Continental
Stock Transfer & Trust Co. f/b/o Nolbo, Inc."
Certificates delivered will be in customers' names where
practicable and the balance in street name. Settlement for concessions payable
will be made as promptly as practicable after delivery of certificates. In the
event that payment is not made on a check for an accepted subscription as above
provided, we may, in addition to any other remedies provided by law, cancel such
subscription by letter, telephone or telegraph notice to you.
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3. OFFERING: Selected Dealers may immediately offer Shares for sale and
take orders therefor, but only subject to confirmation. We, in turn, are
prepared to receive subscriptions and orders, subject, as set forth above, to
acceptance and allotment by us in whole or in part. Orders transmitted to us by
telephone should be confirmed by you by letter or telegram.
You agree to make a bona fide public offering of said Shares
but you will not offer or sell any of such shares below the public offering
price before the termination of this Agreement. You also agree to abide by all
applicable provisions of the Securities Act of 1933, the Securities Exchange Act
of 1934, the Rules and Regulations under such acts and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and, in
particular Section 24 of such Rules of Fair Practice.
No expenses shall be charged to Selected Dealers; however, you
shall pay any transfer tax on sales of the Shares by you and you shall pay your
proportionate share of any transfer tax or other tax in the event that any such
tax shall from time to time be assessed against you and other Selected Dealers
as a group or otherwise.
You further agree not to sell any of the Shares offered
hereunder to any officer, director, controlling stockholder, partner, employee
or agent of your organization, or member of the immediate family of any such
person, except as permitted under the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and the interpretations thereof.
4. TERMINATION: This Agreement shall terminate on the close of business
on _______, 1999, unless extended at the mutual agreement of the Company and us
until the close of business on _________, 1999.
You understand that the offering is being made on a "best
efforts all or none" basis with respect to 200,000 Shares, and on a "best
efforts" basis with respect to the remaining 100,000 Shares in accordance with
the terms of the Underwriting Agreement and will be terminated in the event at
least 200,000 Shares are not sold in accordance with the terms thereof. In such
event, none of the Shares to be sold hereunder shall be issued or sold; and you
agree that in such case you will promptly return all funds received by you and
which you may still be holding on account of proposed purchases of the Shares by
the persons who tendered the same, without any deduction whatsoever. In the
event of any such termination, we shall have no responsibility to you.
Notwithstanding such termination, you may remain liable to the
extent provided by law for your proportionate amount of any claim, demand or
liability which may be asserted against you alone or against you together with
other Selected Dealers and/or us, based upon the claim that the Selected Dealers
or any of them and/or we constitute an association, an unincorporated business,
or any other separate entity.
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5. USE OF PROSPECTUS: Neither you nor any other person is authorized by
the Company or by us to give any information or make any representation other
than those contained in the Prospectus in connection with the sale of the Shares
and if given or made, such information or representation must not be relied upon
as having been authorized by the Company or by us. You also agree to deliver a
copy of the Prospectus to each prospective purchaser as required by the
Securities Act of 1933, as amended, and by the Rules and Regulations thereunder.
Additional copies of the Prospectus will be supplied in reasonable quantity upon
request.
You are not authorized to act as our agent or as agent for the
Company in offering the Shares to the public or otherwise. Nothing contained
herein or otherwise shall constitute Selected Dealers partners with us or with
one another.
6. UNDERWRITER'S AUTHORITY: We shall have authority to take such action
as we deem advisable in respect of all matters pertaining to the offering or
arising hereunder. We and our agents shall be under no liability to you for or
in respect of the authorization, issue, full payment and validity of the Shares;
for or in respect of the form of, or the statements contained in or omitted from
the Prospectus, the Underwriting Agreement, or other instruments executed by the
Company or by others; for or in respect of the delivery of the Shares or the
performance by the Company or by others of any agreement on its or their part;
for or in respect of the qualification of the Shares for sale under the laws of
any jurisdiction; or for or in respect of any other matter connected with this
Agreement, except agreements expressly assumed by us herein and for lack of good
faith. No obligation not expressly assumed herein shall be implied; provided
that nothing herein contained shall be deemed to deny, exclude or impair any
liability imposed upon us or our agents as an underwriter by the Securities Act
of 1933, as amended, and the Rules and Regulations thereunder.
7. APPLICABLE SECURITIES LAWS: This offer to you to enter into this
Agreement and thereby become a Selected Dealer is conditioned upon your being
qualified under applicable securities laws, if any, to act as a dealer or broker
in securities and upon your being a member in good standing of the National
Association of Securities Dealers, Inc. This offer is also being made to foreign
dealers who are not eligible for membership in said association and who will
agree to be bound by the Rules of Fair Practice of said Association, including
but not limited to Sections 8, 24, 25 and 36 of Article III thereof, and who
further agree not to sell such Shares to any purchaser within the United States
of America or to persons who they have any reason to believe are residents of
the United States of America.
Upon application, we will inform you as to the states in which
we are advised the Shares have been qualified for sale or are exempt from
qualification under applicable securities laws; but we assume no responsibility
or obligation by reason of such information as to the right of the Company or
any Selected Dealer to offer or sell such Shares in any state. Pursuant to the
provisions of Article 23-A of the General Business Law of the State of New York,
we have filed a Further State Notice in respect to the offering and sale of the
Shares in the State of New York.
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8. COMMUNICATIONS: All communications from you to us should be
addressed to J.W. Barclay & Co., Inc., One Battery Park Plaza, 23rd Floor, New
York, NY 10004. All communications from us and/or the Company to you shall be
deemed to have been duly given if mailed, telegraphed or telephoned to you at
the address to which this letter is mailed, unless written notification shall be
received from you of a change in address.
If you desire to become a Selected Dealer, please advise us immediately
by signing and returning to us the form of acceptance attached hereto.
Very truly yours,
J.W. BARCLAY & CO., INC.
By:________________________________
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J.W. Barclay & Co., Inc.
One Battery Park Plaza, 23rd Fl.
New York, NY 10004
We agree to become a Selected Dealer with respect to the offering of
300,000 Shares of Common Stock (the "Shares") of Nolbo, Inc. at the public
offering price of $6.00 per Share as outlined in this Agreement, and we
acknowledge receipt of the Prospectus, dated _______________, 1998 relating to
such Shares.
We agree to obtain subscriptions, on the terms set forth in this
Agreement, for _________________ Shares of Nolbo, Inc. and, upon receipt of
payment from subscribers, to remit payment directly to the escrow agent before
noon of the next business day following receipt thereof.
We confirm that we are a member in good standing of the National
Association of Securities Dealers, Inc. and we agree to abide by the "Rules of
Fair Practice" of the Association and the interpretations thereof. We also
confirm that in connection herewith, we have relied solely on the Prospectus and
upon no other representations or statements whatsoever.
Dated: _____________, 1998
________________________________
(Name of Selected Dealer)
________________________________
(Address)
________________________________
(Telephone Number)
By _____________________________
(Title)
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Exhibit 1.2
FINANCIAL CONSULTING AGREEMENT
AGREEMENT made this day _____________, 1998 between J.W.
Barclay & Co., Inc. (hereinafter referred to as "Consultant") and Nolbo, Inc.
(herein referred to as "Client").
WHEREAS, Client desires to obtain consultant's consulting services in
connection with Client's business and financial affairs, and Consultant is
willing to render such services as hereinafter more fully set forth.
NOW, THEREFORE, the parties agree as follows:
1. Client hereby engages and retains Consultant and Consultant hereby
agrees to use its best efforts, to render to Client the consulting services
hereinafter described for a period of two years commencing as of ____________,
1998, and conditioned upon the closing of the underwriting contemplated in the
Registration Statement on Form SB-2 (No. 333-______) filed by Client with the
Securities and Exchange Commission.
2. Consultant's services hereunder shall consist of consultations with
Client concerning the management and operations and the financing of Client's
business as Client may form time to time request during the term of this
consulting agreement.
3. Consultant's services may include, at the request of the Client,
attendance at meetings of the Client's Board of Directors and review, analysis
and report on proposed investment opportunities, short term and long term
investment policies, evaluation of the Client's managerial and financial
requirements, assistance in preparation of budgets and business plans, advice
regarding sales and marketing and review and advice with respect to future
public or private financing. Client agrees that Consultant shall not be
prevented or barred from rendering services of similar or dissimilar nature for
or on behalf of any person, firm or corporation other than Client. Nothing
herein shall require the Consultant to provide any minimum number of hours of
consultation services to the Client, and the amount of time to be devoted by
Consultant in performing services hereunder shall be within the discretion of
Consultant. Consultant agrees to keep confidential any nonpublic information
concerning Client which is imparted to Consultant by Client and which is
identified as confidential or proprietary by Client in writing and to use the
same only for the purposes of this agreement. Materials prepared for Client
pursuant to this agreement are to be the property of Client.
4. Client agrees to pay to the Consultant for its services hereunder a
fee equal to 2% of the gross proceeds of the Company's initial public offering
pursuant to the aforesaid Registration Statement. Said fee shall be paid in full
upon each Closing Date of such offering. Client will reimburse Consultant for
reasonable out-of-pocket expenses but only to the extent authorized by Client in
advance.
This agreement has been executed and delivered in the State of New York
and shall be governed by the laws of such state, without giving effect to the
conflicts of laws rules thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
signed as of the day and year first above written.
NOLBO, INC.
By:_______________________________________
J. W. BARCLAY & CO., INC.
By:_______________________________________
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Exhibit 1.3
ESCROW AGREEMENT
----------------
AGREEMENT made as of the __ day of _________, 1998 by and between the
Issuer whose name and address appear on the Information Sheet (as defined
herein) attached to this Agreement, the Underwriter whose name and address
appear on the Information Sheet and Continental Stock Transfer & Trust Company
with an address at Two Broadway, 19th Floor, New York, New York 10004 (the
"Escrow Agent").
W I T N E S S E T H:
--------------------
WHEREAS, the Underwriter proposes to offer the Securities, as agent for
the Issuer, for sale to the public pursuant to a Registration Statement on Form
SB-2, file no, 333-____, on a "best efforts, all or none" basis with respect to
the Minimum Securities Amount and Minimum Dollar Amount and on a "best efforts"
basis as to the remaining Securities at the price per share all as set forth on
the Information Sheet;
WHEREAS, the Issuer proposes to establish with the Escrow Agent an
escrow account (the "Escrow Account"), to which subscription monies which are
received by the Escrow Agent from the Underwriter in connection with such public
offering are to be credited, and the Escrow Agent is willing to establish the
Escrow Account on the terms and subject to the conditions hereinafter set forth;
and
WHEREAS, the Escrow Agent has an agreement with Chase Manhattan Bank or
such other bank as selected by the Escrow Agent and reasonably acceptable to the
Issuer and the Underwriter to establish a special bank account (the "Bank
Account") into which the subscription monies, which are received by the Escrow
Agent from the Underwriter and credited to the Escrow Account, are to be
deposited;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Information Sheet. Each capitalized term not otherwise defined in
this Agreement shall have the meaning set forth for such term on the information
sheet which is attached to this Agreement and is incorporated by reference
herein and made a part hereof (the "Information Sheet").
2. Establishment of the Bank Account.
2.1 The Escrow Agent shall establish a non-interest-bearing
bank account at the branch of Chase Manhattan Bank or such other bank as
selected by the Escrow Agent and reasonably acceptable to the Issuer and the
Underwriter, and bearing the title set forth on the Information Sheet
(heretofore defined as the "Bank Account"). The purpose of the Bank Account is
for (a) the deposit of all subscription monies (checks, cash or wire transfers)
which are received by the Underwriter from prospective purchasers of
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the Securities and are delivered by the Underwriter to the Escrow Agent, (b) the
holding of amounts of subscription monies which are collected through the
banking system, and (c) the disbursement of collected funds, all as described
herein.
2.2 The Offering Period, which shall be deemed to commence on
the date set forth in the Issuer's definitive Prospectus to be supplied to the
Escrow Agent and to terminate on the date set forth on the Information Sheet.
The last day of the Offering Period, or the last day of the Extension Period (if
the Escrow Agent has received written notice thereof as hereinabove provided),
is referred to herein as the "Termination Date". Except as provided in Section
4.3 hereof, after the Termination Date, the Underwriter shall not deposit, and
the Escrow Agent shall not accept, any additional amounts representing payments
by prospective purchasers.
3. Deposits to the Bank Account.
3.1 The Underwriter shall promptly deliver to the Escrow Agent
all monies which it receives from prospective purchasers of the Securities,
which monies shall be in the form of checks, cash, or wire transfers. Upon the
Escrow Agent's receipt of such monies, they shall be credited to the Escrow
Account. All checks delivered to the Escrow Agent shall be made payable to
"Continental Stock Transfer & Trust Company, Escrow Agent f\b\o Nolbo, Inc." Any
check payable other than to the Escrow Agent as required hereby shall be
returned to the Underwriter, by noon of the next business day following receipt
of such check by the Escrow Agent, and such check shall be deemed not to have
been delivered to the Escrow Agent pursuant to the terms of this Agreement.
3.2 Promptly after receiving subscription monies as described
in Section 3.1, the Escrow Agent shall deposit the same into the Bank Account.
Amounts of monies so deposited are hereinafter referred to as "Escrow Amounts."
The Escrow Agent shall cause Chase Manhattan Bank to process all Escrow Amounts
for collection through the banking system. Simultaneously with each deposit to
the Escrow Account, the Underwriter shall inform the Escrow Agent in writing of
the name and address of the prospective purchaser, the amount of Securities
subscribed for by such purchaser, and the aggregate dollar amount of such
subscription (collectively the "Subscription Information").
3.3 The Escrow Agent shall not be required to accept for
credit to the Escrow Account or for deposit into the Bank Account checks which
are not accompanied by the appropriate Subscription Information. Wire transfers
and cash representing payments by prospective purchasers shall not be deemed
deposited in the Escrow Account until the Escrow Agent has received in writing
the Subscription Information required with respect to such payments.
3.4 The Escrow Agent shall not be required to accept in the
Escrow Account any amounts representing payments by prospective purchasers,
whether by check, cash or wire, except during the Escrow Agent's regular
business hours.
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3.5 Only those Escrow Amounts, which have been deposited in
the Bank Account and which have cleared the banking system and have been
collected by the Escrow Agent, are herein referred to as the "Fund."
3.6 If the proposed offering is terminated before the
Termination Date, the Escrow Agent shall refund any portion of the Fund prior to
disbursement of the Fund in accordance with Article 4 hereof upon instructions
in writing signed by the Issuer.
4. Disbursement from the Bank Account.
4.1 Subject to Section 4.3 below, if by the close of regular
banking hours on the Termination Date the Escrow Agent determines that the
amount in the Fund is less than the Minimum Dollar Amount or the Minimum
Securities Amount, as indicated by the Subscription Information submitted to the
Escrow Agent, then in either such case, the Escrow Agent shall promptly refund
to each prospective purchaser the amount of payment received from such purchaser
which is then held in the Fund or which thereafter clears the banking system,
without interest thereon or deduction therefrom, by drawing checks on the Bank
Account for the amounts of such payments and transmitting them to the
purchasers. In such event, the Escrow Agent shall promptly notify the Issuer and
the Underwriter of its distribution of the Fund.
4.2 Subject to Section 4.3 below, if at any time up to the
close of regular banking hours on the Termination Date, the Escrow Agent
determines that the amount in the Fund is at least equal to the Minimum Dollar
Amount and represents the sale of not less than the Minimum Securities Amount,
the Escrow Agent shall promptly notify the Issuer and the Underwriter of such
fact in writing. The Escrow Agent shall promptly disburse the Fund, by drawing
checks on the Bank Account in accordance with instruction in writing signed by
the Issuer and the Underwriter as to the disbursement of the Fund, promptly
after it receives such instructions. In the event that cleared funds exceed the
Minimum Dollar Amount, the Issuer may close on such excess funds when it closes
on the Minimum Dollar Amount or opt to close on such excess funds at a later
date or dates. Such closing(s) may take place by mutual agreement of the Issuer
and the Underwriter any time during or after the Offering Period, as, and if,
extended.
4.3 If the Escrow Agent or the Underwriter has on hand at the
close of business on the Termination Date any uncollected amounts which when
added to the Fund would raise the amount in the Fund to the Minimum Dollar
Amount, and result in the Fund representing the sale of the Minimum Securities
Amount, the Collection Period (consisting of the number of business days set
forth on the Information Sheet) shall be utilized to allow such uncollected
amounts to clear the banking system. During the Collection Period, the
Underwriter shall not deposit, and the Escrow Agent shall not accept, any
additional amounts; provided, however, that such amounts as were received by the
Underwriter by the close of business on the Termination Date may be deposited
with the Escrow Agent by noon of the next business day following the Termination
Date. If at the close of business on the last day of the Collection Period an
amount sufficient to raise the amount in the Fund to the Minimum Dollar Amount
and which would result in the Fund representing
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the sale of the Minimum Securities Amount shall not have cleared the banking
system, the Escrow Agent shall promptly notify the Issuer and the Underwriter in
writing of such fact and shall promptly return all amounts then in the Fund, and
any amounts which thereafter clear the banking system, to the prospective
purchasers as provided in Section 4.1 hereof.
4.4 Upon disbursement of the Fund pursuant to the terms of
this Article 4, the Escrow Agent shall be relieved of all further obligations
and relieved from all liability under this Agreement. It is expressly agreed and
understood that in no event shall the aggregate amount of payments made by the
Escrow Agent exceed the amount of the Fund.
5. Rights, Duties and Responsibilities of Escrow Agent. It is
understood and agreed that the duties of the Escrow Agent are purely ministerial
in nature, and that:
5.1 The Escrow Agent shall notify the Underwriter and the
Issuer, on a daily basis, of the Escrow Amounts which have been deposited in the
Bank Account and of the amounts, constituting the Fund, which have cleared the
banking system and have been collected by the Escrow Agent.
5.2 The Escrow Agent shall not be responsible for or be
required to enforce any of the terms or conditions of any agreement between the
Underwriter and the Issuer nor shall the Escrow Agent be responsible for the
performance by the Underwriter or the Issuer of their respective obligations
under this Agreement.
5.3 The Escrow Agent shall not be required to accept from the
Underwriter any Subscription Information pertaining to prospective purchasers
unless such Subscription Information is accompanied by checks, cash, or wire
transfers meeting the requirements of section 3.1, nor shall the Escrow Agent be
required to keep records of any information with respect to payments deposited
by the Underwriter except as to the names, addresses and amount of such
payments; however, the Escrow Agent shall notify the Underwriter promptly of any
discrepancy between the amount set forth in any Subscription Information and the
amount delivered to the Escrow Agent therewith. Such amount need not be accepted
for deposit in the Escrow Account until such discrepancy has been resolved.
5.4 The Escrow Agent shall be under no duty or responsibility
to enforce collection of any check delivered to it hereunder. The Escrow Agent,
within a reasonable time, shall return to the Underwriter any check received
which is dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.5 The Escrow Agent shall be entitled to rely upon the
accuracy, act in reliance upon the contents, and assume the genuineness of any
notice, instruction, certificate, signature, instrument or other document which
is given to the Escrow Agent pursuant to this Agreement without the necessity of
the Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall
not be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document.
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5.6 If the Escrow Agent is uncertain as to its duties or
rights hereunder or shall receive instructions with respect to the Bank Account,
the Escrow Amounts or the Fund which, in its sole determination, are in conflict
either with other instructions received by it or with any provision of this
Agreement, it shall be entitled to hold the Escrow Amounts, the Fund, or a
portion thereof, in the Bank Account pending the resolution of such uncertainty
to the Escrow Agent's sole satisfaction, by final judgment of a court or courts
of competent jurisdiction or otherwise; or the Escrow Agent, at its sole option,
may deposit the Fund (and any other Escrow Amounts that thereafter become part
of the Fund) with the Clerk of a court of competent jurisdiction in a proceeding
to which all parties in interest are joined. Upon the deposit by the Escrow
Agent of the Fund with the Clerk of any such court, the Escrow Agent shall be
relieved of all further obligations and released from all liability hereunder.
5.7 The Escrow Agent shall not be liable for any action taken
or omitted hereunder, or for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful misconduct or gross negligence.
The Escrow Agent shall be entitled to consult with counsel of its own choosing
and shall not be liable for any action taken, suffered or omitted by it in
accordance with the advice of such counsel.
5.8 The Escrow Agent shall have no responsibility at any time
to ascertain whether or not any security interest exists in the Escrow Amounts,
the Fund or any part thereof or to file any financing statement under the
Uniform Commercial Code with respect to the Fund or any part thereof.
6. Amendment; Resignation. This Agreement may be altered or amended
only with the written consent of the parties hereto. The Escrow Agent (and any
successor escrow agent) at any time may be discharged from its duties and
obligations hereunder by the delivery to it of a notice of termination signed by
both the Company and the Underwriter, or at any time the Escrow Agent may resign
by giving written notice to such effect to the Issuer and the Underwriter. Upon
any such termination or resignation, the Escrow Agent shall deliver the Escrowed
Amounts or the Fund to any successor escrow agent jointly designated by the
other parties hereto in writing, or to any court of competent jurisdiction if no
such successor escrow agent is agreed upon, whereupon the Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Escrow Agreement. The termination of services or resignation of the
Escrow Agent shall take effect on the earlier of (i) the appointment of a
successor (including a court of competent jurisdiction) or (ii) the day that is
30 days after the date of delivery: (A) to the Escrow Agent of the other
parties' notice of termination or (B) to the other parties hereto of the Escrow
Agent's written notice of resignation. If at that time the Escrow Agent has not
received a designation of successor escrow agent, the Escrow Agent's sole
responsibility after that time shall be to keep the Escrowed Amounts or the Fund
safe until receipt of a designation of a successor escrow agent or a joint
written disposition instruction by the other parties hereto or an enforceable
order of a court of competent jurisdiction. Without limiting the provisions of
Section 8 hereof, the resigning Escrow Agent shall be entitled to be reimbursed
by the Issuer for any expenses incurred in
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connection with its resignation, transfer of the Fund to a successor escrow
agent or distribution of the Fund spursuant to this Section 6.
7. Representations and Warranties. The Issuer and the Underwriter
hereby individually represent and warrant to the Escrow Agent that:
7.1 No party other than the parties hereto and the prospective
purchasers have, or shall have, any lien, claim or security interest in the
Escrow Amounts or the Fund or any part thereof.
7.2 No financing statement under the Uniform Commercial Code
is on file in any jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Escrow Amounts or the Fund or any part
thereof.
7.3 The Subscription Information submitted with each deposit
shall, at the time of submission and at the time of the disbursement of the
Fund, be deemed a representation and warranty that such deposit represents a
bona fide payment by the purchaser described therein for the amount of
Securities set forth in such Subscription Information.
7.4 All of the information contained in the Information Sheet
is, as of the date hereof, and will be, at the time of any disbursement of the
Fund, true and correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the Escrow
Agent Fees set forth on the Information Sheet, payable as and when stated
therein. In addition, the Issuer agrees to reimburse the Escrow Agent for any
reasonable expenses incurred in connection with this Agreement, including but
not limited to, reasonable counsel fees. Upon receipt of the Minimum Dollar
Amount, the Escrow Agent shall have a lien upon the Fund to the extent of its
fees for services as Escrow Agent.
9. Indemnification and Contribution.
9.1 The Issuer (referred to as the "Indemnitor") agrees to
indemnify the Escrow Agent and its officers, directors, employees, agents and
shareholders (collectively referred to as the "Indemnitees") against, and hold
them harmless of and from, any and all loss, liability, cost, damage and
expense, including without limitation, reasonable counsel fees, which the
Indemnitees may suffer or incur by reason of any action, claim or proceeding
brought against the Indemnitees arising out of or relating in any way to this
Agreement or any transaction to which this Agreement relates, unless such action
claim or proceeding is the result of the willful misconduct or gross negligence
of the Indemnitees.
9.2 If the indemnification provided for in Section 9.1 is
applicable, but for any reason is held to be unavailable, the Indemnitor shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
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<PAGE>
settlement of, any action, claim or proceeding arising out of or relating in any
way to any actions or omissions of the Indemnitor.
9.3 The provisions of the Article 9 shall survive any
termination of this Agreement, whether by disbursement of the Fund, resignation
of the Escrow Agent or otherwise.
10. Participating Broker/Dealers.
The Underwriter will notify the Escrow Agent of the names of
any participating broker/dealers other than the Underwriter and the Escrow Agent
is authorized to accept subscription payments from such broker/dealers and/or
their customers.
11. Governing Law and Assignment. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York and shall be
binding upon the parties hereto and their respective successors and assigns;
provided, however, that any assignment or transfer by any party of its rights
under this Agreement or with respect to the Escrow Amounts or the Fund shall be
void as against the Escrow Agent unless (a) written notice thereof shall be
given to the Escrow Agent; and (b) the Escrow Agent shall have consented in
writing to such assignment or transfer, which consent shall not be unreasonably
withheld or delayed.
12. Notices. All notices required to be given in connection with this
Agreement shall be (a) delivered by hand or by facsimile (with confirmation of
receipt, or (b) sent by registered or certified mail, or by the Express Mail
service offered by the United States Post Office with proper postage prepaid,
and addressed as follows:
If to the Issuer, to:
Nolbo, Inc.
8426 Sunstate Street
Tampa, FL 33634
Attention: Marvin Nolley, President
Phone: (813) 882-4753
Fax: (813) 888-7287
If to the Underwriter, to:
J. W. Barclay & Co., Inc.
One Battery Park Plaza
23rd Floor
New York, NY 10005
Phone: (212) 809-5800
Fax: 212-809-6619
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If to the Escrow Agent, to:
Continental Stock Transfer & Trust Company
Two Broadway
New York, N.Y. 10004
Attention: Trust Department
Phone: (212)
Fax: (212)
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. All such
notices and communications, if mailed, shall be effective, if to the
Underwriter, when deposited in the mails, if to the Issuer, five days after
deposited in the mails, and if to the Escrow Agent shall not be effective until
received. Notices of changes of address shall not be effective until received.
13. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
14. Execution in Several Counterparts. This Agreement may be executed
in several counterparts or by separate instruments, and all of such counterparts
and instruments shall constitute one agreement, binding on all of the parties
hereto.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings (written or oral) of the
parties in connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
NOLBO, INC. CONTINENTAL STOCK
TRANSFER & TRUST COMPANY
By:___________________________ By:____________________________
MARVIN NOLLEY, President STEVEN NELSON, President
J.W. BARCLAY & CO., INC.
By:___________________________
(authorized officer)
8
<PAGE>
ESCROW AGREEMENT INFORMATION SHEET
1. The Issuer
Name: Nolbo, Inc.
Address: 8426 Sunstate Street
Tampa, FL 33634
Country of incorporation or organization: Delaware
2. The Underwriter
Name: J.W. Barclay & Co., Inc.
Address: One Battery Park Plaza
23rd Floor
New York, NY 10005
3. The Securities
Description of the Securities to be offered (e.g., shares of
or warrants for Common Stock, Debentures, Units consisting of
shares and warrants, etc.): Common Stock
Offering price per share/unit/other: $6.00 per Share
4. Minimum Amount Required for Disbursement of the Escrow Account
Aggregate dollar amount which must be collected before the
Escrow Account may be disbursed to the Issuer ("Minimum Dollar
Amount") $1,200,000.
Total amount of securities which must be subscribed for before
the Escrow Account may be disbursed to the Issuer ("Minimum
Securities Amount"): 200,000 Shares
Maximum Amount - The maximum number of Shares to be sold is
300,000 and the maximum dollar amount is $1,800,000.
5. Plan of Distribution of the Securities
Offering Period: Commencing on the date of the Prospectus and
expiring _______, 1999.
Extension Period, if any: __ days, expiring ________, 1999.
Collection Period, if any: 10 business days
6. Title of Bank Account:
Continental Stock Transfer & Trust Company, Escrow Agent
f/b/o Nolbo, Inc.
7. Escrow Agent
Continental Stock Transfer & Trust Company
Two Broadway
New York, NY 10004
8. Escrow Agent Fees
$750.00 upon execution of this Agreement and $750.00 upon the
distribution of funds at closing. All other fees will be
mutually agreed upon by the Issuer and the Escrow Agent.
9. Federal I.D. No.
59-3518685
9
<PAGE>
EXHIBIT 3.0
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 9:00 AM 06/22/1998
981239962 - 2911399
CERTIFICATE OF INCORPORATION
OF
MARBO, INC.
-------------------------------------
FIRST: The name of this corporation shall be:
MARBO, INC.
SECOND: Its registered office in the State of Delaware is to be located at: 15
East North Street, in the City of Dover, County of Kent and its registered agent
at such address is: XL CORPORATE SERVICES, INC.
THIRD: The nature of the business and the objects and purposes proposed to be
transacted, promoted and carried on are to do any or all things herein
mentioned, as fully and to the same extent as natural persons might or could do,
and in any part of the world, viz:
The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of stock which this corporation is authorized
to issue is:
25,000,000 shares with a Par Value of $.001 of which:
a)20,000,000 shall be common, with a Par Value of
.001 and
b) 5,000,000 shall be preferred, with a Par Value of
.001
The voting powers, designations, preferences and relative, participating
optional or other rights, if any, and the qualifications, limitations or
restrictions, if any, of the preferred stock, in one or more series, shall be
fixed by one or more resolutions providing for the issue of such stock adopted
by the Corporation's board of directors, in accordance with the provisions of
Section 151 of the General Corporation Law of Delaware and the board of
directors is expressly vested with authority to adopt one or more such
resolutions.
<PAGE>
FIFTH: The name and address of the incorporator is as follows:
Robert Aratingi
BlumbergExcelsior Corporate Services, Inc.
62 White Street
New York, NY 10013
SIXTH: The Directors shall have power to make and to alter or amend the By-Laws,
to fix the amount to be reserved as working capital, and to authorize and cause
to be executed, mortgages and liens without limit as to the amount, upon the
property and franchise of this corporation.
With the consent in writing, and pursuant to a majority vote of the holders of
the capital stock issued and outstanding, the Directors shall have authority to
dispose, in any manner, of the whole property of this corporation.
The By-Laws shall determine whether and to what extent the account and books of
this corporation, or any of them, shall be open to the inspection of the
stockholders; no stockholder shall have any right of inspecting any account, or
book, or document of this Corporation except as conferred by the law or the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and keep
the books, documents and papers of the corporation outside of the State of
Delaware, at such places as may be, from time to time, designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in the THIRD
paragraph hereof shall, except where otherwise specified in said paragraph, be
nowise limited or restricted by referenced to or inference from the terms of any
other clause or paragraph in this certificate of incorporation, but that the
objects, purposes and powers specified in the THIRD paragraph and in each of the
clauses or paragraphs of this charter shall be regarded as independent objects,
purposes and powers.
SEVENTH: No director of this Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 1st day
of June, A.D. 1998.
/s/ Robert Aratingi
-----------------------------
Robert Aratingi
Incorporator
<PAGE>
Exhibit 3.1
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 9:00 AM 08/24/1998
981330800 - 2911399
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
MARBO, INC., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That a meeting of the Board of Directors of MARBO, INC., resolutions were
duly adopted setting forth proposed amendments of the Certificate of
Incorporation of said corporation, declaring said amendments to be advisable and
calling a meeting of the stockholders of said corporation for considering
thereof. The resolution setting forth the proposed amendments are as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Article thereof numbered FIRST so that, as amended, said Article
shall be and read as follows:
FIRST: The name of the corporation shall be: NOLBO, Inc.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Laws
of the State of Delaware at which meeting the necessary number of shares as
required by statute were 905,000 voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said corporation, MARBO, INC. has caused this certificate to
be signed by Marvin Nolley, its President and attested to by Sean Flaherty, its
Secretary, this 21st day of August, 1998.
By: /s/ Marvin Nolley
---------------------------
Marvin Nolley
President
Attest: /s/ Sean Flaherty
---------------------------
Sean Flaherty
Secretary
<PAGE>
Exhibit 3.2
Nolbo, Inc.
(formerly Marbo, Inc.)
BY-LAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be at such place within the
State of Delaware as the board of directors may, from time to time, determine.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the State of New Jersey, at such place as may be
fixed, from time to time by the board of directors, or at such other place
either within or without the States of Delaware or New Jersey as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the
fifteenth day of the fifth month following the end of each fiscal year or as
soon thereafter as practicable, as shall be designated from time to time by the
board of directors and stated in the notice of the meeting, at which they shall
elect by a plurality vote a board of directors, and transact such other business
as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any
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purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman or president and shall be called by
the president or secretary at the request in writing of a majority of the board
of directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes, of
the certificate of incorporation or other provisions of the by-laws, a different
vote is required in which case such express provision shall govern and control
the decision of such question.
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Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 12. At each meeting of the stockholders, the chairman of the
board or, in his absence or inability to act, any person chosen by the majority
of those stockholders present in person or represented by proxy shall act as
chairman of the meeting. The secretary or, in his absence or inability to act,
any person appointed by the chairman of the meeting shall act as secretary of
the meeting and keep the minutes thereof.
Section 13. The board may, in advance of any meeting of stockholders,
appoint one or more inspectors to act at such meeting or any adjournment
thereof. If the inspectors shall not be so appointed or if any of them shall
fail to appear or act, the chairman of the meeting shall appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares outstanding and the voting power of each,
the number of shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
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ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be not less than one nor more than nine. The first board shall
consist of one director. Thereafter, within the limits above specified, the
number of directors shall be determined by resolution of the board of directors
or by the stockholders at the annual meeting of the stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held immediately following the annual meeting of stockholders at the
place of such annual meeting of stockholders and no notice of such meeting shall
be necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not
held immediately following the annual meeting of stockholders at the place of
such annual meeting of stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided
4
<PAGE>
for special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the president
on one day's notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the president or secretary in like
manner and on like notice on the written request of two directors (one director
in the event that there be a single director in office).
Section 8. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 11. No contract or other transaction between this corporation
and any other corporation shall be impaired, affected or invalidated, nor shall
any director be liable in any way by reason of the fact that any one or more of
the directors of this corporation is or are interested in, or is a director or
officer, or are directors of such other corporation, provided that such facts
are disclosed or made known to the board of directors.
Any director, personally and individually, may be a party to
or may be interested in any contract or transaction of this corporation, and no
director shall be liable in any way by reason of such interest, provided that
the fact of such interest be disclosed or made known to the board of directors,
and provided that the board of directors shall authorize, approve or ratify such
contract or transaction by the vote (not counting the vote
5
<PAGE>
of any such director) of a majority of a quorum, notwithstanding the presence of
any such director at the meeting at which such action is taken. Such director or
directors may be counted in determining the presence of a quorum at such
meeting. This Section shall not be construed to impair or invalidate or in any
way affect any contract or other transaction which would otherwise be valid
under the law (common, statutory or otherwise) applicable thereto.
COMMITTEES OF DIRECTORS
Section 12. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at a meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
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REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by-laws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a secretary and a treasurer. The board of
directors may also choose a chairman, one or more vice-presidents, and one or
more assistant secretaries and assistant treasurers. Any number of offices may
be held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
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Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE CHAIRMAN OF THE BOARD AND THE PRESIDENT
Section 6. The chairman of the board, if any, shall be the chief
executive officer of the Corporation and shall have general and active
management of the business of the Corporation and general and active supervision
and direction over the other officers, agents and employees and shall see that
their duties are properly performed. He shall, if present, preside at each
meeting of the stockholders and of the board and shall be an ex officio member
of all committees of the board. He shall perform all duties incident to the
office of chairman of the board and chief executive officer and such other
duties as may from time to time be assigned to him by the board.
The president shall be the chief operating officer (and if
there is no chairman of the board, then also the chief executive officer) of the
Corporation and shall have general and active supervision and direction over the
business operations and affairs of the Corporation and over its several
officers, agents and employees, subject, however, to the direction of the
chairman of the board and the control of the board of directors. At the request
of chairman of the board, or in the case of his absence or inability to act, the
president shall perform the duties of the chairman of the board and when so
acting, shall have all the powers of, and be subject to all the restrictions
upon, the chairman of the board. In general, the president shall have such other
powers and shall perform such other duties as usually pertaining to office of
president or as from time to time may be assigned to him by the board, the
chairman of the board or these by-laws.
Section 7. The chairman or president shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
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THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
the authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by his signature or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
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Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation.
If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
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sole discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or give, the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall end on a date fixed
by resolution of the Board of Directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, at any
meeting of the stockholders or of the board of directors if notice of such
alteration, amendment, repeal or adoption of new by-laws be contained in the
notice of such special meeting. The by-laws may also be amended by the
stockholders pursuant to Section 11 of Article II without prior notice of
alteration, amendment, repeal or adoption of new by-laws. The power to adopt,
amend or repeal by-laws by the board of directors shall not divest or limit the
power of the stockholders to adopt, amend or repeal by-laws.
ARTICLE IX
INDEMNIFICATION
The officers and directors of the corporation shall be entitled to
indemnification to the maximum extent permitted by Delaware law.
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Exhibit 4.3
No sale, offer to sell or transfer of the securities represented by this
certificate or any interest therein shall be made unless a registration
statement under the Federal Securities Act of 1933, as amended, with respect to
such transaction is then in effect, or the issuer has received an opinion of
counsel satisfactory to it that such transfer does not require registration
under that Act.
This Warrant will be void after 5:00 p.m. New York time on __________,
200 (i.e. five years from the effective date of the Registration Statement).
UNDERWRITER'S WARRANT
WARRANT NO. 1
To Subscribe for and Purchase Shares of
NOLBO, INC.
(Transferability Restricted as Provided in Paragraph 8 Below)
THIS CERTIFIES THAT, for value received, _______________ or
registered assigns, is entitled to subscribe for and purchase up to __________
fully paid and non-assessable shares of Common Stock (the "Shares") of Nolbo,
Inc., a Delaware Corporation, (the "Company") at the "Purchase Price" and during
the period hereinafter set forth, subject, however, to the provisions and upon
the terms and conditions hereinafter set forth. This Warrant is one of an issue
of the Company's Common Stock Purchase Warrants (herein called the "Warrants"),
identical in all respects except as to the names of the holders thereof and the
number of Shares purchasable thereunder, representing on the original issue
thereof rights to purchase up to Shares.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer to
the Company's Common Stock, $.001 par value, per share as more fully set forth
in Section 5 hereof.
(b) "Purchase Price" shall be $9.00 per share which is subject
to adjustment pursuant to Section 4 hereof.
(c) "Underwriter" shall refer to J.W. BARCLAY & CO., INC.
(d) "Underwriting Agreement" shall refer to the Underwriting
Agreement dated as of _____________, 1998 between the Company and the
Underwriter.
<PAGE>
(e) "Warrants" or shall refer to Warrants to purchase an
aggregate of up to Shares issued to the Underwriter or its designees by the
Company pursuant to the Underwriting Agreement, as such may be adjusted from
time to time pursuant to the terms of Section 4 and including any Warrants
represented by any certificate issued from time to time in connection with the
transfer, partial exercise, exchange of any Warrants or in connection with a
lost, stolen, mutilated or destroyed Warrant certificate, if any, or to reflect
an adjusted number of Shares.
(f) "Underlying Shares" shall refer to and include the Common
Shares issuable or issued upon exercise of the Underwriter's Warrants.
(g) "Holders" shall mean the registered holder of such
Underwriter's Stock Purchase Warrants or any issued Underlying Shares.
(h) "Effective Date" shall refer to the effective date of the
Form SB-2 Registration Statement File No. 333- .
(i) Warrant Agreement shall refer to the agreement dated as of
___________, 1998 by and among the Company, the Underwriter and Continental
Stock Transfer & Trust Co.
2. The purchase rights represented by this Warrant may be
exercised by the holder hereof, in whole or in part at any time, and from time
to time, during the period commencing on the Effective Date until _____________,
200 (the "Expiration Date"), by the presentation of this Warrant, with the
purchase form attached duly executed, at the Company's office (or such office or
agency of the Company as it may designate in writing to the Holder hereof by
notice pursuant to Section 14 hereof), and upon payment by the Holder to the
Company in cash, or by certified check or bank draft of the Purchase Price for
such Shares of Common Stock. The Company agrees that the Holder hereof shall be
deemed the record owner of such Underlying Shares as of the close of business on
the date on which this Warrant shall have been presented and payment made for
such Shares as aforesaid. Certificates for the Underlying Shares so purchased
shall be delivered to the Holder hereof within a reasonable time, not exceeding
five (5) days, after the rights represented by this Warrant shall have been so
exercised. If this Warrant shall be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, deliver a new Warrant
evidencing the rights of the Holder hereof to purchase the balance of the Shares
which such Holder is entitled to purchase hereunder. Exercise in full of the
rights represented by this Warrant shall not extinguish the rights granted under
Section 9 hereof.
3. Subject to the provisions of Section 8 hereof, (i) this
Warrant is exchangeable at the option of the Holder at the aforesaid office of
the Company for other
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Underwriter's Warrants of different denominations entitling the Holder thereof
to purchase in the aggregate the same number of Shares of Common Stock as are
purchasable hereunder; and (ii) this Warrant may be divided or combined with
other Underwriter's Warrants which carry the same rights, in either case, upon
presentation hereof at the aforesaid office of the Company together with a
written notice, signed by the Holder hereof, specifying the names and
denominations in which new Underwriter's Warrants are to be issued, and the
payment of any transfer tax due in connection therewith.
4. Subject and pursuant to the provisions of this Section 4,
the Purchase Price and number of Common Shares subject to this Warrant shall be
subject to adjustment from time to time as set forth hereinafter.
(A) If the Company shall, at any time, subdivide its
outstanding Common Shares by recapitalization, reclassification, split up
thereof, or other such issuance without additional consideration, the
appropriate Purchase Price immediately prior to such subdivision shall be
proportionately decreased, and if the Company shall at any time combine the
outstanding Common Shares by recapitalization, reclassification or combination
thereof, the Purchase Price immediately prior to such combination shall be
proportionately increased. Any such adjustment to the Purchase Price or the
corresponding adjustment to the Purchase Price shall become effective at the
close of business on the record date for such subdivision or combination. No
adjustment to the Purchase Price and the number of shares issuable upon exercise
of this Warrant shall be required if such adjustment provides the holders of
this Warrant with disproportionate rights, privileges and economic benefits
which are not provided to the public shareholders.
(B) In the event that prior to the Underwriter's Warrant's
expiration date the Company adopts a resolution to merge, consolidate, or sell
percentages in all of its assets, each Warrant holder upon the exercise of his
Underwriter's Warrant will be entitled to receive the same treatment as a holder
of any other share of Common Stock. In the event the Company adopts a resolution
for the liquidation, dissolution, or winding up of the Company's business, the
Company will give written notice of such adoption of a resolution to the
registered holders of the Underwriter's Warrants. Thereupon all liquidation and
dissolution rights under this Warrant will terminate at the end of thirty (30)
days from the date of the notice to the extent not exercised within those thirty
(30) days.
(C) If any capital reorganization or reclassification of the
capital stock of the Company or consolidation or merger of the Company with
another corporation, shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, cash or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the Company or
such successor or purchasing corporation, as the case may be, shall execute with
the Warrant Agent a supplemental Warrant Agreement providing that each
registered holder of a Underwriter's Warrant shall have the right thereafter and
until the expiration date to exercise such Warrant for the kind and amount of
stock, securities, cash or assets receivable upon such reorganization,
reclassification, consolidation, merger or sale by a holder of the number of
shares of Common Stock for the purchase of which such Warrant might have been
exercised immediately prior to such reorganization, reclassification,
consolidation, merger or sale, subject to adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
4.
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(D) In case at any time the Company shall declare a dividend
or make any other distribution upon any stock of the Company payable in Common
Stock, then such Common Stock issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
(E) Upon any adjustment of the appropriate respective Purchase
Price as hereinabove provided, the number of Common Shares issuable upon
exercise of each class of Warrant shall be changed to the number of shares
determined by dividing (i) the aggregate Purchase Price payable for the purchase
of all shares issuable upon exercise of that class of Warrant immediately prior
to such adjustment by (ii) the appropriate Purchase Price per share in effect
immediately after such adjustment.
(F) No adjustment in the Purchase Price shall be required
under Section 4 hereof unless such adjustment would require an increase or
decrease in such price of at least 1% provided, however, that any adjustments
which by reason of the foregoing are not required at the time to be made shall
be carried forward and taken into account and included in determining the amount
of any subsequent adjustment, and provided further, however, that in case the
Company shall at any time subdivide or combine the outstanding Common Shares as
a dividend, said amount of 1% per share shall forthwith be proportionately
increased in the case of a combination or decreased in the case of a subdivision
or stock dividend so as to appropriately reflect the same.
(G) On the effective date of any new Purchase Price the number
of shares as to which this Warrant may be exercised shall be increased or
decreased so that the total sum payable to the Company on the exercise of this
Warrant shall remain constant.
(H) The form of Underwriter's Warrant need not be changed
because of any change pursuant to this Article, and Underwriter's Warrants
issued after such change may state the Purchase Price and the same number of
shares as is stated in the Underwriter's Warrants initially issued pursuant to
this Warrant. However, the Company may at any time in its sole discretion (which
shall be conclusive) make any change in the form of Underwriter's Warrant that
the Company may deem appropriate and that does not affect the substance thereof,
and any Underwriter's Warrant thereafter issued or countersigned, whether in
exchange or substitution for an outstanding Warrant or otherwise, may be in the
form as so changed.
5. For the purposes of this Warrant, the terms "Common Shares"
or "Common Stock" shall mean (i) the class of stock designated as the Common
Stock, $.001 par value, of the Company on the date set forth on the first page
hereof or (ii) any other class of stock resulting from successive changes or
re-classifications of such Common Stock consisting solely of changes in par
value, or from no par value to par value, or from par value to no par value. If
at any time, as a result of an adjustment made pursuant to Section 4, the
securities or other property obtainable upon exercise of this Warrant shall
include shares or other securities of the Company other than Common Shares or
securities of another corporation or other property, thereafter, the number of
such other shares or other securities or property so obtainable shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
Section 4 and all other provisions of this Warrant with respect to Common Shares
shall apply on like terms to any such other shares or other securities or
property. Subject to the foregoing, and unless the context requires otherwise,
all references herein to Common Shares shall, in the event of an adjustment
pursuant to Section 4, be deemed to refer also to any other securities or
property then obtainable as a result of such adjustments.
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6. The Company covenants and agrees that:
(a) During the period within which the rights represented by
the Underwriter's Warrant may be exercised, the Company shall, at all times,
reserve and keep available out of its authorized capital stock, solely for the
purposes of issuance upon exercise of this Warrant, such number of its Common
Shares as shall be issuable upon the exercise of this Warrant and at its expense
will obtain the listing thereof on all securities exchanges on which the Common
Shares are then listed; and if at any time the number of authorized Common
Shares shall not be sufficient to effect the exercise of this Warrant, the
Company will take such corporate action as may be necessary to increase its
authorized but unissued Common Shares to such number of shares as shall be
sufficient for such purpose; the Company shall have analogous obligations with
respect to any other securities or property issuable upon exercise of this
Warrant.
(b) All Common Shares which may be issued upon exercise of the
rights represented by this Warrant will, upon issuance be validly issued, fully
paid, nonassessable and free from all taxes, liens and charges with respect to
the issuance thereof.
(c) All original issue taxes payable in respect of the
issuance of Common Shares upon the exercise of the rights represented by this
Warrant shall be borne by the Company but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the transfer of
any Underwriter's Stock Purchase Warrants.
7. Until exercised, this Warrant shall not entitle the Holder
hereof to any voting rights or other rights as a shareholder of the Company,
except that the Holder of this Warrant shall be deemed to be a shareholder of
this Company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the Delaware Corporation Law.
8. This Warrant and the Underlying Shares shall not be sold,
transferred, assigned or hypothecated for a period of twelve (12) months from
the Effective Date, except to officers or partners of the Underwriter, and/or
the other underwriters and/or selected dealers who participated in such
offering, or the officers or partners of the Underwriter, such underwriters
and/or selected dealers. In no event shall this Warrant and the Underlying
Shares be sold, transferred, assigned or hypothecated except in conformity with
the applicable provisions of the Securities Act of 1933, as then in force (the
"Act"), or any similar Federal statute then in force, and all applicable "Blue
Sky" laws.
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9. The Holder of this Warrant, by acceptance hereof, agrees
that, prior to the disposition of this Warrant or of any Underlying Shares
theretofore purchased upon the exercise hereof, under circumstances that might
require registration of such securities under the Act, or any similar Federal
statute then in force, such Holder will give written notice to the Company
expressing such Holder's intention of effecting such disposition, and describing
briefly such Holder's intention as to the disposition to be made of this Warrant
and/or the Underlying Shares theretofore issued upon exercise hereof. Promptly
upon receiving such notice, the Company shall present copies thereof to its
counsel and the provisions of the following subdivisions shall apply:
(a) If, in the opinion of such counsel, the proposed
disposition does not require registration under the Act, or any similar Federal
statute then in force, of this Warrant and/or the securities issuable or issued
upon the exercise of this Warrant, the Company shall, as promptly as
practicable, notify the Holder hereof of such opinion, whereupon such holder
shall be entitled to dispose of this Warrant and/or such Underlying Shares
theretofore issued upon the exercise hereof, all in accordance with the terms of
the notice delivered by such Holder to the Company.
(b) If, in the opinion of such counsel, such proposed
disposition requires such registration or qualification under the Act, or
similar Federal statute then in effect, of this Warrant and/or the Underlying
Shares issuable or issued upon the exercise of this Warrant, the Company shall
promptly give written notice of such opinion to the Holder hereof and to the
then holders of the securities theretofore issued upon the exercise of this
Warrant at the respective addresses thereof shown on the books of the Company.
Section 15 of the Underwriting Agreement is incorporated herein as if set forth
herein in its entirety.
10. The Company agrees to indemnify and hold harmless the
holder of this Warrant, or of securities issuable or issued upon the exercise
hereof, from and against any claims and liabilities caused by any untrue
statement of a material fact, or omission to state a material fact required to
be stated, in any such registration statement, prospectus, notification or
offering circular under Regulation A, except insofar as such claims or
liabilities are caused by any such untrue statement or omission based on
information furnished in writing to the Company by such holder, or by any other
such holder affiliated with the holder who seeks indemnification, as to which
the holder hereof, by acceptance hereof, agrees to indemnify and hold harmless
the Company.
11. If this Warrant, or any of the securities issuable
pursuant hereto, require qualification or registration with, or approval of, any
governmental official or authority (other than registration under the Act, or
any similar Federal statute at the time in force), before such securities may be
issued on the exercise hereof, the Company, at its expense, will take all
requisite action in connection with such qualification, and will use its best
efforts to cause such securities and/or this Warrant to be duly registered or
approved, as may be required.
6
<PAGE>
12. This Warrant is exchangeable, upon its surrender by the
registered holder at such office or agency of the Company as may be designated
by the Company, for new Underwriter's Warrants of like tenor, representing, in
the aggregate, the right to subscribe for and purchase the number of Common
Shares that may be subscribed for and purchased hereunder, each of such new
Underwriter's Stock Purchase Warrants to represent the right to subscribe for
and purchase such number of Common Shares as shall be designated by the
registered holder at the time of such surrender. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity satisfactory to the Company, or in the case of
such mutilation, upon surrender or cancellation of this Warrant, the Company
will issue to the registered holder a new Underwriter's Warrant of like tenor,
in lieu of this Warrant, representing the right to subscribe for and purchase
the number of Common Shares that may be subscribed for and purchased hereunder.
Nothing herein is intended to authorize the transfer of this Warrant except as
permitted under Paragraph 8.
13. Every holder hereof, by accepting the same, agrees with
any subsequent holder hereof and with the Company that this Warrant and all
rights hereunder are issued and shall be held subject to all of the terms,
conditions, limitations and provisions set forth in this Warrant, and further
agrees that the Company and its transfer agent may deem and treat the registered
holder of this Warrant as the absolute owner hereof for all purposes and shall
not be affected by any notice to the contrary.
14. All notices required hereunder shall be given by
first-class mail, postage prepaid; if given by the holder hereof, addressed to
the Company at 8426 Sunstate Street, Tampa, Florida 33634 or such other address
as the Company may designate in writing to the holder hereof; and if given by
the Company, addressed to the holder at the address of the holder shown on the
books of the Company.
15. The validity, construction and enforcement of this Warrant
shall be governed by the laws of the State of New York and jurisdiction is
hereby vested in the Courts of said State in the event of the institution of any
legal action under this Warrant.
7
<PAGE>
IN WITNESS WHEREOF, NOLBO, INC. has caused this Warrant to be signed by
its duly authorized officers under its corporate seal, to be dated as of
________________, 1998.
NOLBO, INC.
By:
----------------------------
Attest:
- ----------------------------
(Corporate Seal)
8
<PAGE>
PURCHASE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned hereby exercises the right to purchase ____ shares of Common
Stock evidenced by the within Warrant, according to the terms and conditions
thereof, and herewith makes payment of the purchase price in full. The
undersigned requests that certificates for such shares shall be issued in the
name set forth below.
Dated: , 19
--------------------------------------------------
Signature
--------------------------------------------------
Print Name of Signatory
--------------------------------------------------
Name to whom certificates are to
be issued if different from above
Address:
------------------------------------------
Social Security No.
-------------------------------
or other identifying number
If said number of shares shall not be all the shares purchasable under
the within Warrant, the undersigned requests that a new Warrant for the
unexercised portion shall be registered in the name of:
--------------------------------------------------
(Please Print)
Address:
------------------------------------------
--------------------------------------------------
Social Security No.
-------------------------------
or other identifying number
--------------------------------------------------
Signature
FORM OF ASSIGNMENT
9
<PAGE>
FOR VALUE RECEIVED , hereby
sells assigns and transfers to , Soc. Sec. No.
[ ] the within Warrant, together with all rights, title and interest therein,
and does hereby irrevocably constitute and appoint attorney to transfer such
Warrant on the register of the within named Company, with full power of
substitution.
--------------------------------------------------
Signature
Dated: , 19
Signature Guaranteed:
- --------------------------------------------------
10
<PAGE>
Exhibit 5.0
Lester Morse P.C.
111 Great Neck Road
Suite 420
Great Neck, New York 11021
Telephone: (516) 487-1446
Facsimile: (516) 487-1452
October 23, 1998
Board of Directors
Nolbo, Inc.
8426 Sunstate Street
Tampa, FL 33634
Re: Form SB-2 Registration Statement
300,000 shares of Common Stock at $6.00 per share
--------------------------------------------------
Gentlemen:
We have reviewed the Certificate of Incorporation and amendments
thereto, By-Laws (as amended), corporate proceedings and other documents of
Nolbo, Inc. (the "Company") and based upon the foregoing, it is our opinion that
the securities being registered with the Securities and Exchange Commission
pursuant to the Form SB-2 Registration Statement filed with this Opinion as
Exhibit 5.0 will when sold, be legally issued, fully paid and non-assessable.
No consents, approvals, authorizations or orders of agencies, officers
or other regulatory authorities are necessary for the valid authorization,
issuance or sale of the shares hereunder, except as such may be required under
the Securities Act of 1933, as amended, or state securities, or Blue Sky laws.
We consent to the filing of this opinion as an exhibit to the aforesaid
Registration Statement and further consent to the reference made to us under the
caption "Legal Matters" in the Prospectus constituting a part of such
Registration Statement. Nothing contained herein shall be considered an omission
that we are deemed an expert within the meaning of the Securities Act of 1933,
as amended.
Very truly yours,
LESTER MORSE P.C.
Steven Morse
SM:ag
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made this 1st day of July, 1998, between Marbo Inc., a Delaware
Corporation, and Marvin M. Nolley ,the executive Employee.
1. EMPLOYMENT AND TERM
A) The word "Company" as used in this agreement shall refer to and include
Marbo, Inc. and its subsidiaries, affiliates, successors and all related
companies.
B) The Company shall employ Executive and the Executive shall be employed
by the Company for a term beginning July 1, 1998 and continuing until June 30,
2001 unless executive is terminated or terminates employment for reasons
contained herein.
2. SALARY, BONUS, EXECUTIVE EMPLOYEE BENEFITS
A) The Board of Directors of the Company shall annually set and adjust the
salary and determine bonuses to the Executive based on Executive's performance,
Company success, other executive raises and bonuses and relevant factors. The
base salary shall be $75,000. which the Board has the right to increase.
B) All executive insurance and fringe benefit policies apply to the
Executive.
3. POSITION AND DUTIES
A) The Executive shall serve as President of the Company pursuant to the
power of the Board of Directors to install and remove officers. The Executive
shall perform to the best of his abilities all executive duties assigned to him
by the Board of Directors on behalf of the Company and/or all subsidiaries and
interests of the Company. Particularly, but not instead of including the
generality of the foregoing, the Executive agrees that his various
responsibilities and duties to the Company's subsidiaries d.b.a. GladstoneAEs
Grilled Chicken , will be materially increased in comparison with prior duties
performed by the Executive for such subsidiaries and that the increase of such
duties shall not diminish his various responsibilities and duties to the
Company. The executive shall devote his full time and best ability to the
performance of all assignments with the exception of reasonable vacation,
illness or disability time. The Executive shall always conduct himself in a
manner that maintains the good reputation of the Company, its shareholders,
subsidiaries and related interests. The Executive shall not directly or
indirectly undertake or accept other employment without having obtained the
prior approval of the Board of Directors of the Company. This shall not prevent
the Executive from investing his assets in a business whose operation or affairs
will not require significant service from the Executive. In addition this shall
not require the Executive to divest himself of ownership in or management of any
investments or business he currently may have.
B) The executive shall be a member of the Board of Directors of the
Company pursuant to the power of its shareholders to elect and remove Directors.
4. TERMINATION BY COMPANY FOR CAUSE
Under this Agreement, if the Executive violates any of his obligations to the
Company, his employment may be terminated at the Company's option after a thirty
(30) days written notice specifying the alleged violation has been issued to and
received by the Executive and in those thirty days the Executive shall have
failed to comply with his obligations. Under this agreement if the Executive's
employment should be terminated for the above-mentioned cause, the Executive
shall be entitled to the following.
1)Salary to the termination date.
2)Any promised bonus unpaid by the Company.
3)All benefits that may be due him under the Company's profit sharing,
pension, stock option or other plans.
1
<PAGE>
5. TERMINATION AT OPTION OF COMPANY
Under this Agreement the Company reserves the right to terminate the Executive's
employment at its option and without cause upon giving the Executive a minimum
of sixty (60) days written notice. In the event of termination pursuant to this
paragraph, the Company shall be obligated to pay the Executive the following:
1) The remaining salary that would have become due and payable during the
period from the date of termination to the end of the full term of
employment herein, calculated at the existing salary paid to the executive.
2) Any promised bonus unpaid by the Company.
3) All benefits that may be due him under the Company's profit sharing,
pension, stock option or other plans.
The amounts due to the Executive under clauses 1) and 2) of this paragraph will
be payable without interest in essentially equal monthly installments over the
period from the date of termination to the end of the full term of employment.
6. TERMINATION BY EXECUTIVE FOR CAUSE
A) Under this Agreement if the Company violates any of its obligations to
the Executive, the Executive may terminate his employment for cause at his
option, at any time, upon giving the Company a minimum of sixty (60) days
written notice provided that the occurrence of such violation shall have
occurred within that sixty (60) days and that the Company shall have failed to
comply with such obligations for thirty (30) days after receipt of such notice.
If the executive terminates his employment for cause as provided for in this
paragraph, all rights and benefits shall be due him as stated in paragraph 5
with regard to termination at the Company's option.
7. DISABILITY
A) If the Executive should become unable to perform his normal duties for
a cumulative period of six (6) months in any twelve (12) month consecutive
period due to illness, accident or other disability, the Company or the
Executive may terminate his employment upon giving the other party a minimum of
thirty (30) days written notice. Such notice may be presented at any time in the
twelve (12) month consecutive period or reasonably soon thereafter. Should such
termination result, the Executive shall remain entitled to the following:
1) All benefits to the extent the Executive has participated in under
illness, accident, disability, health, hospitalization, or insurance
policies of the Company.
2) Salary to the date of termination.
3) Severance pay equal to six (6) months salary.
4) Any promised bonus unpaid by the Company.
5) All benefits, if any, that may be due him under the Company's
profit-sharing, pension, stock option, or other plans.
The premiums upon all illness, accident, disability, health and hospitalization
plans shall continue in force or be paid by the Company to the extent in which
the Executive has participated until the Executive reaches the age of sixty-five
(65) or dies, whichever is first.
2
<PAGE>
B) The Board of Directors of the Company shall determine, in good faith,
whether the Executive shall have been unable to perform his duties herein for
the period stated in 7A. The determination of the Board of Directors of the
Company shall be final and binding in every instance upon the Executive and the
Company subject only to the merit of its judgment being made in good faith.
8. DEATH
A) Upon the death of the Executive, this Agreement shall be terminated. In
the event of death, the Executive's estate shall be entitled to any bonus
promised and yet to be paid by the Company.
B) In consideration of the services that the Executive has to the present
performed on behalf of the Company and in consideration of the services yet to
be performed by the Executive in compliance with this Agreement, the Company
shall pay the executive's "total annual compensation" if the executive dies
during his term of employment as follows:
1) "Total Annual Compensation" in this context shall be the average of
all compensation, bonuses included, (paid by the Company, its
subsidiaries, affiliates and all related Companies to the Executive for
the period of three (3) calendar years immediately preceding his
death.)
2) The payments shall continue for three (3) years from the Executive's
date of death, paid on a monthly basis with no interest.
3) The payments shall be made to the Executive's surviving spouse. If
the spouse shall have predeceased the Executive, or dies subsequently
and before the three (3) years expiration, the payments shall be made
to the spouse's estate. Under this subparagraph, at the option of the
Board of Directors of the Company, any amounts that are to be paid to
the Executive's surviving spouse's estate may be made in one lump sum.
9. CONFIDENTIAL INFORMATION
The Executive agrees that he will not disclose to any person, agency, firm or
Corporation any information confidential to the Company, its subsidiaries,
affiliates or related business related to their sources of supply, customers,
prices, employees, finances or other Company related information for the term
beginning with his employment date until June 30, 2004.
10. ASSIGNMENT, SUCCESSORS, ETC.
Under this Agreement neither the rights nor the obligations herein may be
assigned by any party, except that such assignment shall be binding upon and
take effect for the benefit of any successor of the Company created by merger,
reorganization, sale of assets or otherwise.
11. INSURANCE ON EMPLOYEE
A) The Executive agrees that the Company may continue or terminate and may
periodically apply for and take out life, health, accident or other insurance on
the Executive in its own name and at its own expense in whatever sum the Company
may deem necessary to protect its interests. The Executive also agrees to submit
to the customary medical examinations and to fill out, execute and deliver all
applications or other instruments in writing as is reasonably required by any or
all insurance companies to which any or all applications are made by or for the
Company in order to aid the Company in procuring the insurance. The Executive
further agrees that he shall have no right, title or interest in or to any of
the insurance policies the Company may take out in his name.
3
<PAGE>
12. NOTICES
Under this Agreement, any notice shall be sufficient if in writing and sent by
registered mail addressed as follows:
A) If to the Company, addressed to Corporate Secretary
Marbo, Inc.
8426 Sunstate Street
Tampa, Florida 33634
B) If to the Executive, addressed to
Marvin M. Nolley
7002 Drury St.
Tampa, Fl. 33635
Either party may change the address specified herein by giving written notice of
the change to the other party as herein provided.
13. YEAR TO YEAR EXTENSION
This Agreement shall continue in effect on a year-to-year basis beyond the
initial employment term, expiration date June 30, 2001, unless one party gives
written notice to the other of intention to terminate the extended agreement in
effect for at least one hundred and twenty (120) days prior to the end of the
calendar year, 2001, and not less than sixty (60) days prior to the end of any
following year.
14. ARBITRATION
Any controversy or claim resulting from or relating to this Agreement or breach
thereof shall be subject to arbitration in Florida to be settled in accordance
with the existing rules of the American Arbitration Association. The initiating
party shall give the other party notice of his or its intention to arbitrate.
Such notice shall explain the nature of the dispute, if money, the amount
disputed, resolution sought and the name and location of the initiating party's
arbitrator. Within fifteen (15) days of the receipt of such notice, the other
party shall give the initiating party notice of the name and address of his or
its arbitrator. If he/it fails to do so within the specified fifteen (15) days,
the American Arbitration Association will select a second arbitrator at the
request of the initiating party. Within fifteen (15) days after the selection
date of the second arbitrator, the two chosen arbitrators shall select a third
arbitrator. If, within the specified fifteen (15) days the two chosen
arbitrators, however chosen, shall have failed to agree on a third arbitrator,
the American Arbitration Association shall select the third arbitrator at the
request of the initiating party. The arbitration shall commence twenty (20) days
after the selection of the third arbitrator. The award delivered by the
arbitrators may be entered for judgment in any court having the appropriate
jurisdiction. The party against whom or which the award is made shall pay all
costs and expenses of the arbitration, including (without limitation) reasonable
compensation to each arbitrator and counsel fees.
15. OTHER AGREEMENTS
This agreement supersedes any and all other agreements made by and between the
parties referred to herein (or their predecessors) that have or would apply to
the contents and subjects covered within this Agreement.
4
<PAGE>
16. GOVERNING LAW
This Agreement is made and shall be interpreted and carried out under the laws
of Florida.
17. ENTIRE AGREEMENT
The entire Agreement of and between the parties is contained within this
Agreement. It may not be changed or modified orally, but only by written
agreement enforcing the change, waiver, modification, extension or termination
and signed by the party against whom enforcement is sought.
IN WITNESS WHEREOF, both parties hereby set their hands and seals and agree that
the contents hereunder be executed by their appropriate Corporate officers as of
the first date above written.
MARBO, INC.
/S/ Bo Grektorp
- ---------------------------------
ATTEST:
/S/ Sean Flaherty
- ---------------------------------
Secretary
/S/Marvin M. Nolley
- ---------------------------------
WITNESS:
/S/ Sean Flaherty
- ---------------------------------
<PAGE>
Exhibit 10.4
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made this 1st day of July, 1998, between Marbo Inc., a
Delaware Corporation, and Bo G. Grektorp ,the executive Employee.
1. EMPLOYMENT AND TERM
A) The word "Company" as used in this agreement shall refer to and
include Marbo, Inc. and its subsidiaries, affiliates, successors and all related
companies.
B) The Company shall employ Executive and the Executive shall be
employed by the Company for a term beginning July 1, 1998 and continuing until
June 30, 2001 unless executive is terminated or terminates employment for
reasons contained herein.
2) SALARY, BONUS, EXECUTIVE EMPLOYEE BENEFITS
A) The Board of Directors of the Company shall annually set and adjust
the salary and determine bonuses to the Executive based on Executive's
performance, Company success, other executive raises and bonuses and relevant
factors. The base salary will be $25,000 annually and the Board has the right to
increase.
B) All executive insurance and fringe benefit policies apply to the
Executive.
3) POSITION AND DUTIES
A) The Executive shall serve as Vice President of the Company pursuant
to the power of the Board of Directors to install and remove officers. The
Executive shall perform to the best of his abilities all executive duties
assigned to him by the Board of Directors on behalf of the Company and/or all
subsidiaries and interests of the Company. Particularly, but not instead of
including the generality of the foregoing, the Executive agrees that his various
responsibilities and duties to the Company's subsidiaries d.b.a. Gladstone's
Grilled Chicken , will be materially increased in comparison with prior duties
performed by the Executive for such subsidiaries and that the increase of such
duties shall not diminish his various responsibilities and duties to the
Company. The executive shall devote his full time and best ability to the
performance of all assignments with the exception of reasonable vacation,
illness or disability time. The Executive shall always conduct himself in a
manner that maintains the good reputation of the Company, its shareholders,
subsidiaries and related interests. The Executive shall not directly or
indirectly undertake or accept other employment without having obtained the
prior approval of the Board of Directors of the Company. This shall not prevent
the Executive from investing his assets in a business whose operation or affairs
will not require significant service from the Executive. In addition this shall
not require the Executive to divest himself of ownership in or management of any
investments or business he currently may have.
B) The executive shall be a member of the Board of Directors of the
Company pursuant to the power of its shareholders to elect and remove Directors.
4. TERMINATION BY COMPANY FOR CAUSE
Underthis Agreement, if the Executive violates any of his obligations to the
Company, his employment may be terminated at the Company's option after a thirty
(30) days written notice specifying the alleged violation has been issued to and
received by the Executive and in those thirty days the Executive shall have
failed to comply with his obligations. Under this agreement if the Executive's
employment should be terminated for the above-mentioned cause, the Executive
shall be entitled to the following.
1) Salary to the termination date.
2) Any promised bonus unpaid by the Company.
3) All benefits that may be due him under the Company's profit sharing,
pension, stock option or other plans.
1
<PAGE>
5. TERMINATION AT OPTION OF COMPANY
Under this Agreement the Company reserves the right to terminate the Executive's
employment at its option and without cause upon giving the Executive a minimum
of sixty (60) days written notice. In the event of termination pursuant to this
paragraph, the Company shall be obligated to pay the Executive the following:
1) The remaining salary that would have become due and payable during
the period from the date of termination to the end of the full term of
employment herein, calculated at the existing salary paid to the
executive.
2) Any promised bonus unpaid by the Company.
3) All benefits that may be due him under the Company's profit sharing,
pension, stock option or other plans.
The amounts due to the Executive under clauses 1) and 2) of this paragraph will
be payable without interest in essentially equal monthly installments over the
period from the date of termination to the end of the full term of employment.
6. TERMINATION BY EXECUTIVE FOR CAUSE
A) Under this Agreement if the Company violates any of its obligations
to the Executive, the Executive may terminate his employment for cause at his
option, at any time, upon giving the Company a minimum of sixty (60) days
written notice provided that the occurrence of such violation shall have
occurred within that sixty (60) days and that the Company shall have failed to
comply with such obligations for thirty (30) days after receipt of such notice.
If the executive terminates his employment for cause as provided for in this
paragraph, all rights and benefits shall be due him as stated in paragraph 5
with regard to termination at the Company's option.
7. DISABILITY
A) If the Executive should become unable to perform his normal duties
for a cumulative period of six (6) months in any twelve (12) month consecutive
period due to illness, accident or other disability, the Company or the
Executive may terminate his employment upon giving the other party a minimum of
thirty (30) days written notice. Such notice may be presented at any time in the
twelve (12) month consecutive period or reasonably soon thereafter. Should such
termination result, the Executive shall remain entitled to the following:
1) All benefits to the extent the Executive has participated in under
illness, accident, disability, health, hospitalization, or insurance
policies of the Company.
2) Salary to the date of termination.
3) Severance pay equal to six (6) months salary.
4) Any promised bonus unpaid by the Company.
5) All benefits, if any, that may be due him under the Company's
profit-sharing, pension, stock option, or other plans.
The premiums upon all illness, accident, disability, health and hospitalization
plans shall continue in force or be paid by the Company to the extent in which
the Executive has participated until the Executive reaches the age of sixty-five
(65) or dies, whichever is first.
2
<PAGE>
B) The Board of Directors of the Company shall determine, in good
faith, whether the Executive shall have been unable to perform his duties herein
for the period stated in 7A. The determination of the Board of Directors of the
Company shall be final and binding in every instance upon the Executive and the
Company subject only to the merit of its judgment being made in good faith.
8. DEATH
A) Upon the death of the Executive, this Agreement shall be terminated.
In the event of death, the Executive's estate shall be entitled to any bonus
promised and yet to be paid by the Company.
B) In consideration of the services that the Executive has to the
present performed on behalf of the Company and in consideration of the services
yet to be performed by the Executive in compliance with this Agreement, the
Company shall pay the executive's "total annual compensation" if the executive
dies during his term of employment as follows:
1) "Total Annual Compensation" in this context shall be the average of
all compensation, bonuses included, (paid by the Company, its
subsidiaries, affiliates and all related Companies to the Executive for
the period of three (3) calendar years immediately preceding his
death.)
2) The payments shall continue for three (3) years from the Executive's
date of death, paid on a monthly basis with no interest.
3) The payments shall be made to the Executive's surviving spouse. If
the spouse shall have predeceased the Executive, or dies subsequently
and before the three (3) years expiration, the payments shall be made
to the spouse's estate. Under this subparagraph, at the option of the
Board of Directors of the Company, any amounts that are to be paid to
the Executive's surviving spouse's estate may be made in one lump sum.
9. CONFIDENTIAL INFORMATION
The Executive agrees that he will not disclose to any person, agency, firm or
Corporation any information confidential to the Company, its subsidiaries,
affiliates or related business related to their sources of supply, customers,
prices, employees, finances or other Company related information for the term
beginning with his employment date until June 30, 2004.
10. ASSIGNMENT, SUCCESSORS, ETC.
Under this Agreement neither the rights nor the obligations herein may be
assigned by any party, except that such assignment shall be binding upon and
take effect for the benefit of any successor of the Company created by merger,
reorganization, sale of assets or otherwise.
11. INSURANCE ON EMPLOYEE
A)The Executive agrees that the Company may continue or terminate and
may periodically apply for and take out life, health, accident or other
insurance on the Executive in its own name and at its own expense in whatever
sum the Company may deem necessary to protect its interests. The Executive also
agrees to submit to the customary medical examinations and to fill out, execute
and deliver all applications or other instruments in writing as is reasonably
required by any or all insurance companies to which any or all applications are
made by or for the Company in order to aid the Company in procuring the
insurance. The Executive further agrees that he shall have no right, title or
interest in or to any of the insurance policies the Company may take out in his
name.
3
<PAGE>
12. NOTICES
Under this Agreement, any notice shall be sufficient if in writing and sent by
registered mail addressed as follows:
A) If to the Company, addressed to Corporate Secretary
Marbo, Inc.
8426 Sunstate Street
Tampa, Florida 33634
B) If to the Executive, addressed to
Bo G. Grektorp
4723 Cheval Blvd.
Lutz, Fl. 33549
Either party may change the address specified herein by giving written notice of
the change to the other party as herein provided.
13. YEAR TO YEAR EXTENSION
This Agreement shall continue in effect on a year-to-year basis beyond the
initial employment term, expiration date June 30, 2001, unless one party gives
written notice to the other of intention to terminate the extended agreement in
effect for at least one hundred and twenty (120) days prior to the end of the
calendar year, 2001, and not less than sixty (60) days prior to the end of any
following year.
14. ARBITRATION
Any controversy or claim resulting from or relating to this Agreement or breach
thereof shall be subject to arbitration in Florida to be settled in accordance
with the existing rules of the American Arbitration Association. The initiating
party shall give the other party notice of his or its intention to arbitrate.
Such notice shall explain the nature of the dispute, if money, the amount
disputed, resolution sought and the name and location of the initiating party's
arbitrator. Within fifteen (15) days of the receipt of such notice, the other
party shall give the initiating party notice of the name and address of his or
its arbitrator. If he/it fails to do so within the specified fifteen (15) days,
the American Arbitration Association will select a second arbitrator at the
request of the initiating party. Within fifteen (15) days after the selection
date of the second arbitrator, the two chosen arbitrators shall select a third
arbitrator. If, within the specified fifteen (15) days the two chosen
arbitrators, however chosen, shall have failed to agree on a third arbitrator,
the American Arbitration Association shall select the third arbitrator at the
request of the initiating party. The arbitration shall commence twenty (20) days
after the selection of the third arbitrator. The award delivered by the
arbitrators may be entered for judgment in any court having the appropriate
jurisdiction. The party against whom or which the award is made shall pay all
costs and expenses of the arbitration, including (without limitation) reasonable
compensation to each arbitrator and counsel fees.
15. OTHER AGREEMENTS
This agreement supersedes any and all other agreements made by and between the
parties referred to herein (or their predecessors) that have or would apply to
the contents and subjects covered within this Agreement.
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16. GOVERNING LAW
This Agreement is made and shall be interpreted and carried out under the laws
of Florida.
17. ENTIRE AGREEMENT
The entire Agreement of and between the parties is contained within this
Agreement. It may not be changed or modified orally, but only by written
agreement enforcing the change, waiver, modification, extension or termination
and signed by the party against whom enforcement is sought.
IN WITNESS WHEREOF, both parties hereby set their hands and seals and agree that
the contents hereunder be executed by their appropriate Corporate officers as of
the first date above written.
MARBO, INC.
/S/ Marvin Nolley
- --------------------------------
ATTEST:
/S/ Sean Flaherty
- --------------------------------
Secretary
/S/ Bo G. Grektorp
- --------------------------------
WITNESS:
/S/ Sean Flaherty
- --------------------------------
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Exhibit 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made this 1st day of July, 1998, between Marbo Inc., a Delaware
Corporation, and Sean Flaherty, the executive Employee.
1. EMPLOYMENT AND TERM
A) The word "Company" as used in this agreement shall refer to and
include Marbo, Inc. and its subsidiaries, affiliates, successors and all related
companies.
B) The Company shall employ Executive and the Executive shall be
employed by the Company for a term beginning July 1, 1998 and continuing until
June 30, 2001 unless executive is terminated or terminates employment for
reasons contained herein.
2. SALARY, BONUS, EXECUTIVE EMPLOYEE BENEFITS
A) The Board of Directors of the Company shall annually set and adjust
the salary and determine bonuses to the Executive based on Executive's
performance, Company success, other executive raises and bonuses and relevant
factors. The base salary shall be $15,000 annual salary, which the Board has the
right to increase.
B) All executive insurance and fringe benefit policies apply to the
Executive.
3. POSITION AND DUTIES
A) The Executive shall serve as Secretary and Treasurer of the Company
pursuant to the power of the Board of Directors to install and remove officers.
The Executive shall perform to the best of his abilities all executive duties
assigned to him by the Board of Directors on behalf of the Company and/or all
subsidiaries and interests of the Company. Particularly, but not instead of
including the generality of the foregoing, the Executive agrees that his various
responsibilities and duties to the Company's subsidiaries d.b.a. GladstoneAEs
Grilled Chicken , will be materially increased in comparison with prior duties
performed by the Executive for such subsidiaries and that the increase of such
duties shall not diminish his various responsibilities and duties to the
Company. The executive shall devote his full time and best ability to the
performance of all assignments with the exception of reasonable vacation,
illness or disability time. The Executive shall always conduct himself in a
manner that maintains the good reputation of the Company, its shareholders,
subsidiaries and related interests. The Executive shall not directly or
indirectly undertake or accept other employment without having obtained the
prior approval of the Board of Directors of the Company. This shall not prevent
the Executive from investing his assets in a business whose operation or affairs
will not require significant service from the Executive. In addition this shall
not require the Executive to divest himself of ownership in or management of any
investments or business he currently may have.
B) The executive shall be a member of the Board of Directors of the
Company pursuant to the power of its shareholders to elect and remove Directors.
4. TERMINATION BY COMPANY FOR CAUSE
Under this Agreement, if the Executive violates any of his obligations to the
Company, his employment may be terminated at the Company's option after a thirty
(30) days written notice specifying the alleged violation has been issued to and
received by the Executive and in those thirty days the Executive shall have
failed to comply with his obligations. Under this agreement if the Executive's
employment should be terminated for the above-mentioned cause, the Executive
shall be entitled to the following.
1) Salary to the termination date.
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2) Any promised bonus unpaid by the Company.
3) All benefits that may be due him under the Company's profit sharing,
pension, stock option or other plans.
5. TERMINATION AT OPTION OF COMPANY
Under this Agreement the Company reserves the right to terminate the Executive's
employment at its option and without cause upon giving the Executive a minimum
of sixty (60) days written notice. In the event of termination pursuant to this
paragraph, the Company shall be obligated to pay the Executive the following:
1) The remaining salary that would have become due and payable during the
period from the date of termination to the end of the full term of
employment herein, calculated at the existing salary paid to the executive.
2) Any promised bonus unpaid by the Company.
3) All benefits that may be due him under the Company's profit sharing,
pension, stock option or other plans.
The amounts due to the Executive under clauses 1) and 2) of this paragraph will
be payable without interest in essentially equal monthly installments over the
period from the date of termination to the end of the full term of employment.
6. TERMINATION BY EXECUTIVE FOR CAUSE
A) Under this Agreement if the Company violates any of its obligations
to the Executive, the Executive may terminate his employment for cause at his
option, at any time, upon giving the Company a minimum of sixty (60) days
written notice provided that the occurrence of such violation shall have
occurred within that sixty (60) days and that the Company shall have failed to
comply with such obligations for thirty (30) days after receipt of such notice.
If the executive terminates his employment for cause as provided for in this
paragraph, all rights and benefits shall be due him as stated in paragraph 5
with regard to termination at the Company's option.
7. DISABILITY
A) If the Executive should become unable to perform his normal duties
for a cumulative period of six (6) months in any twelve (12) month consecutive
period due to illness, accident or other disability, the Company or the
Executive may terminate his employment upon giving the other party a minimum of
thirty (30) days written notice. Such notice may be presented at any time in the
twelve (12) month consecutive period or reasonably soon thereafter. Should such
termination result, the Executive shall remain entitled to the following:
1) All benefits to the extent the Executive has participated in under
illness, accident, disability, health, hospitalization, or insurance
policies of the Company.
2) Salary to the date of termination.
3) Severance pay equal to six (6) months salary.
4) Any promised bonus unpaid by the Company.
5) All benefits, if any, that may be due him under the Company's
profit-sharing, pension, stock option, or other plans.
The premiums upon all illness, accident, disability, health and hospitalization
plans shall continue in force or be paid by the Company to the extent in which
the Executive has participated until the Executive reaches the age of sixty-five
(65) or dies, whichever is first.
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B) The Board of Directors of the Company shall determine, in good
faith, whether the Executive shall have been unable to perform his duties herein
for the period stated in 7A. The determination of the Board of Directors of the
Company shall be final and binding in every instance upon the Executive and the
Company subject only to the merit of its judgment being made in good faith.
8. DEATH
A) Upon the death of the Executive, this Agreement shall be terminated.
In the event of death, the Executive's estate shall be entitled to any bonus
promised and yet to be paid by the Company.
B) In consideration of the services that the Executive has to the
present performed on behalf of the Company and in consideration of the services
yet to be performed by the Executive in compliance with this Agreement, the
Company shall pay the executive's "total annual compensation" if the executive
dies during his term of employment as follows:
1) "Total Annual Compensation" in this context shall be the average of
all compensation, bonuses included, (paid by the Company, its
subsidiaries, affiliates and all related Companies to the Executive for
the period of three (3) calendar years immediately preceding his
death.)
2) The payments shall continue for three (3) years from the Executive's
date of death, paid on a monthly basis with no interest. 3) The
payments shall be made to the Executive's surviving spouse. If the
spouse shall have predeceased the Executive, or dies subsequently and
before the three
(3) years expiration, the payments shall be made to the spouse's
estate. Under this subparagraph, at the option of the Board of
Directors of the Company, any amounts that are to be paid to the
Executive's surviving spouse's estate may be made in one lump sum.
9. CONFIDENTIAL INFORMATION
The Executive agrees that he will not disclose to any person, agency, firm or
Corporation any information confidential to the Company, its subsidiaries,
affiliates or related business related to their sources of supply, customers,
prices, employees, finances or other Company related information for the term
beginning with his employment date until June 30, 2004.
10. ASSIGNMENT, SUCCESSORS, ETC.
Under this Agreement neither the rights nor the obligations herein may be
assigned by any party, except that such assignment shall be binding upon and
take effect for the benefit of any successor of the Company created by merger,
reorganization, sale of assets or otherwise.
11. INSURANCE ON EMPLOYEE
A)The Executive agrees that the Company may continue or terminate and
may periodically apply for and take out life, health, accident or other
insurance on the Executive in its own name and at its own expense in whatever
sum the Company may deem necessary to protect its interests. The Executive also
agrees to submit to the customary medical examinations and to fill out, execute
and deliver all applications or other instruments in writing as is reasonably
required by any or all insurance companies to which any or all applications are
made by or for the Company in order to aid the Company in procuring the
insurance. The Executive further agrees that he shall have no right, title or
interest in or to any of the insurance policies the Company may take out in his
name.
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12. NOTICES
Under this Agreement, any notice shall be sufficient if in writing and sent by
registered mail addressed as follows:
A) If to the Company, addressed to Corporate Secretary
Marbo, Inc.
8426 Sunstate Street
Tampa, Florida 33634
B) If to the Executive, addressed to
Sean Flaherty
3402 Ellenwood Lane
Tampa, Fl. 33618
Either party may change the address specified herein by giving written notice of
the change to the other party as herein provided.
13. YEAR TO YEAR EXTENSION
This Agreement shall continue in effect on a year-to-year basis beyond the
initial employment term, expiration date June 30, 2001, unless one party gives
written notice to the other of intention to terminate the extended agreement in
effect for at least one hundred and twenty (120) days prior to the end of the
calendar year, 2001, and not less than sixty (60) days prior to the end of any
following year.
14. ARBITRATION
Any controversy or claim resulting from or relating to this Agreement or breach
thereof shall be subject to arbitration in Florida to be settled in accordance
with the existing rules of the American Arbitration Association. The initiating
party shall give the other party notice of his or its intention to arbitrate.
Such notice shall explain the nature of the dispute, if money, the amount
disputed, resolution sought and the name and location of the initiating party's
arbitrator. Within fifteen (15) days of the receipt of such notice, the other
party shall give the initiating party notice of the name and address of his or
its arbitrator. If he/it fails to do so within the specified fifteen (15) days,
the American Arbitration Association will select a second arbitrator at the
request of the initiating party. Within fifteen (15) days after the selection
date of the second arbitrator, the two chosen arbitrators shall select a third
arbitrator. If, within the specified fifteen (15) days the two chosen
arbitrators, however chosen, shall have failed to agree on a third arbitrator,
the American Arbitration Association shall select the third arbitrator at the
request of the initiating party. The arbitration shall commence twenty (20) days
after the selection of the third arbitrator. The award delivered by the
arbitrators may be entered for judgment in any court having the appropriate
jurisdiction. The party against whom or which the award is made shall pay all
costs and expenses of the arbitration, including (without limitation) reasonable
compensation to each arbitrator and counsel fees.
15. OTHER AGREEMENTS
This agreement supersedes any and all other agreements made by and between the
parties referred to herein (or their predecessors) that have or would apply to
the contents and subjects covered within this Agreement.
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<PAGE>
16. GOVERNING LAW
This Agreement is made and shall be interpreted and carried out under the laws
of Florida.
17. ENTIRE AGREEMENT
The entire Agreement of and between the parties is contained within this
Agreement. It may not be changed or modified orally, but only by written
agreement enforcing the change, waiver, modification, extension or termination
and signed by the party against whom enforcement is sought.
IN WITNESS WHEREOF, both parties hereby set their hands and seals and agree that
the contents hereunder be executed by their appropriate Corporate officers as of
the first date above written.
MARBO, INC.
/S/ Marvin Nolley
- ------------------------------
ATTEST:
/S/ Bo Grektorp
- ------------------------------
Acting - Secretary
/S/ Sean Flaherty
- ------------------------------
WITNESS:
/S/ Bo Grektorp
- ------------------------------
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EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED ACCOUNTANTS
Nolbo, Inc.
Tampa, FL
As independent certified public accountants for Nolbo, Inc., we hereby consent
to the use in this Form SB-2 Registration Statement for Nolbo, Inc. of our
report included herein, which has a date of September 1, 1998, except for Note 8
as to which the date is September 18, 1998, relating to the balance sheets of
Nolbo, Inc. as of June 30, 1998 and the related statements of operations, cash
flows, and stockholders' equity for each of the two years in the period ended
June 30, 1998 and to the reference to our firm under the caption "Experts" in
the Prospectus.
Aidman, Piser & Company, P.A.
Tampa, FL
October 27, 1998
