<PAGE>
As filed with the Securities and Exchange Commission on May 28, 1999.
Registration No. 333-66333
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
Nolbo, Inc.
---------------------------
(Name of small business issuer in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 5812 59-3518685
----------------- ---------------- ----------------
(Primary Standard Industrial (State or other jurisdiction (I.R.S. Employer
of organization) Classification Code No.) Identification No.)
</TABLE>
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 Suite 300
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
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.
================================================================================
<PAGE>
Calculation of Registration Fee
<TABLE>
<CAPTION>
==========================================================================================================
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
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
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(2)
==========================================================================================================
</TABLE>
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
(2) Previously paid.
<PAGE>
NOLBO, INC.
Cross-Reference Sheet Showing Location in prospectus of Information Required by
Items in Part I of Form SB-2
Registration Statement
<TABLE>
<CAPTION>
Item Number and Caption Location in prospectus
------------------------------------------------- --------------------------------------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Outside Front Cover Page of Prospectus
Front Cover of prospectus
2. Inside Front and Outside Bank Cover Pages of Inside Front and Outside Bank Cover Pages of
prospectus 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 Management
Control Persons
11. Security Ownership of Certain Beneficial Owners Principal Stockholders
and Management
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 Underwriting
Indemnification for Securities Act Liabilities
15. Organization Within Last Five Years Business; Certain Transactions
16. Description of Business Prospectus Summary; Business
17. Management's Discussion and Analysis or Plan Management's Discussion and Analysis of Financial
of Operation Condition and Results of Operations
18. Description of Property Business
19. Certain Relationships and Related Transactions Certain Transactions
20. 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 Not Applicable
on Accounting and Financial Disclosure
</TABLE>
<PAGE>
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 May 28, 1999
Nolbo, Inc.
Common Stock
This is an initial public offering of up to 300,000 shares of common stock
of Nolbo, Inc. If a minimum of 200,000 shares are not sold, all monies will be
promptly returned to investors without deductions or interest. The offering
period will expire on ________, 1999 and it may be extended by us until
_______, 1999. Arrangements have been made to place the funds of the offering
in escrow.
Before the offering, there has been no public market for the common stock.
Should a public market develop, the offering price of $6.00 per share may not
reflect the market price of the shares after the offering. We plan to seek to
list the common stock on the OTC Electronic Bulletin Board under the symbol
"____."
Before you decide to invest in the Nolbo common stock, carefully read this
Prospectus, especially the risk factors beginning on page 5.
The purchase of Nolbo's common stock involves the purchase of speculative
securities and involves a high degree of risk.
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
================================================================================
Price to Proceeds to
Public Commissions Nolbo
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
================================================================================
FIRST LEVEL CAPITAL, INC.
Prospectus dated May __, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----------
<S> <C>
Prospectus Summary ....................................................................... 3
Summary Financial Data ................................................................... 4
Risk Factors ............................................................................. 5
We have losses from prior operations and no assurances of future
profitable operations ................................................................ 5
We have limited working capital and may encounter future
liquidity problems ................................................................... 5
Potential difficulties in obtaining suitable sites may hinder our expansion plans ..... 5
Competition from a significant number of fast food chains in
Tampa-St. Petersburg area may adversely affect our
revenues and profitability ........................................................... 5
Possible lack of legal protection for the use of the name Gladstone's
for our restaurants .................................................................. 5
We may need additional capital and may not be able to obtain it ....................... 5
Nolbo could be subjected to significant product liability claims in the future ........ 5
Our common stock has never been publicly traded so we cannot
predict the extent to which a trading market will develop for
our common stock ..................................................................... 6
Our public offering price was arbitrarily determined and not based
upon any established criteria of value ............................................... 6
Lack of at least two independent directors and committees could result
in less objectivity and conflicts of interest ........................................ 6
Control of board of directors by Marvin Nolley and Bo Grektorp who will
own a majority percentage of our Common Stock ........................................ 6
Dependence upon Marvin Nolley and Bo Grektorp-key man life insurance
may be inadequate to compensate for the loss of their services ....................... 6
Immediate and substantial dilution in investment of public investors .................. 6
Disparity between consideration paid for Nolbo's common stock by
existing shareholders and the consideration paid by the public ....................... 6
"Penny Stock" regulations might in the future adversely affect the
purchasers' resale of common stock ................................................... 6
Escrow funds-investors monies may not be returned during the offering period,
and if subsequently returned, investors will not receive interest .................... 7
Limited number of states where a trading market is expected ........................... 7
Forward Looking Statements ............................................................... 7
Use of Proceeds .......................................................................... 7
Dividend Policy .......................................................................... 8
Dilution ................................................................................. 8
Capitalization ........................................................................... 10
Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................................... 10
Business ................................................................................. 12
Management ............................................................................... 17
Principal Stockholders ................................................................... 21
Certain Transactions ..................................................................... 22
Description of Securities ................................................................ 22
Shares Eligible for Future Sale .......................................................... 23
Underwriting ............................................................................. 23
Legal Matters ............................................................................ 25
Experts .................................................................................. 25
Financial Statements ..................................................................... F-1
</TABLE>
2
<PAGE>
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.
Nolbo
Nolbo is engaged the business of owning and operating two restaurants in
Tampa, Florida which specialize in high quality, quickly served gourmet grilled
chicken. The restaurants operate under the name "Gladstone's Grilled Chicken."
We intend to use the net proceeds of the offering to open between three and
five additional restaurants in the Tampa -- St. Petersburg, Florida area. See
"Use of Proceeds." 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 Nolbo ............... 300,000 Shares (maximum)
200,000 Shares (minimum)
Offering price........... $6.00 per Share
Escrow agent............. Continental Stock Transfer & Trust Company
Common stock outstanding
prior to the offering... 906,000 Shares
Common stock to be
outstanding
after the offering...... 1,206,000 Shares (maximum)
1,106,000 Shares (minimum)
Risk factors............. You should read the "Risk Factors" section
beginning on page 5 , as well as the other
cautionary statements throughout the entire
prospectus, so that you understand the risks
associated with an investment in our stock.
3
<PAGE>
SUMMARY FINANCIAL DATA
The summary financial data is derived from the historical consolidated
financial statements of Nolbo. 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.
<TABLE>
<CAPTION>
Ten Months Ended
Year Ended June 30, April 30,
----------------------------- ---------------------------
1997 1998 1998 1999
------------- ------------- ----------- -------------
(unaudited)
<S> <C> <C> <C> <C>
Statement of Operational Data:
Net Sales ................................... $1,025,162 $1,026,404 $837,739 $ 898,301
Net Income (Loss) ........................... (18,585) 18,942 12,104 (140,866)
Net Income (Loss) per common share .......... (.02) .02 .01 (.16)
Weighted average number of shares outstanding
during the period .......................... 906,000 906,000 906,000 906,000
</TABLE>
<TABLE>
<CAPTION>
June 30, 1998 April 30, 1999
--------------- ---------------
(Unaudited)
<S> <C> <C>
Balance Sheet Data:
Total Assets .......................... $ 88,136 $ 234,836
Net Tangible Assets (Deficit) ......... 922 (49,730)
Working Capital (Deficit) ............. (20,396) 52,279
Total Liabilities .................... 80,722 218,288
Stockholders' Equity ................. 7,414 16,548
</TABLE>
4
<PAGE>
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.
We have losses from prior operations and no assurances of future profitable
operations.
Our operations for the ten months ended April 30, 1999 and 1998 and for
years ended June 30, 1998 and 1997, resulted in net income (loss) of
$(140,866), $12,104, $18,942 and $(18,585), respectively. We can provide no
assurances that our operations will be profitable in the future.
We have limited working capital and may encounter future liquidity problems.
Nolbo has historically had limited working capital. Nolbo had working
capital of $52,279 at April 30, 1999 and a working capital deficit of $(20,396)
at June 30, 1998. While we expect the proceeds of this offering to provide us
with sufficient working capital, there is no assurance that future operations
will not encounter capital resource and liquidity problems.
Potential difficulties in obtaining suitable sites may hinder our expansion
plans.
Our objective is to grow more rapidly by opening up between three and five
additional restaurants in the greater Tampa-St. Petersburg Florida area with
the number of restaurants dependent upon the amount of proceeds raised in this
offering. Our ability to successfully expand the number of our restaurants will
depend upon finding and leasing suitable restaurant sites and obtaining permits
and licenses for building restaurants on such sites. Difficulties encountered
in such endeavors will delay our expansion plans and increase costs.
Competition from a significant number of fast food chains in Tampa-St.
Petersburg area may adversely affect our revenues and profitability.
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 in the Tampa-St. Petersburg area
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 with such competitors.
Possible lack of legal protection for the use of the name Gladstone's for our
restaurants.
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 the U.S. Patent and Trademark Office and could in the future bring
a trademark infringement action against us in Florida seeking injunctive relief
and damages for our use of the name Gladstone's. 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. 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.
We may need additional capital and may not be able to obtain it.
We believe that the proceeds from this offering together with our current
cash balances and anticipated cash to be generated from operations will be
sufficient to meet our expected operating and capital requirements for at least
one year. However, we may need to raise additional funds in order to support
further expansion, meet competitive pressures, or respond to unanticipated
requirements. We cannot assure you that additional financing will be available
if needed on terms favorable to us.
Nolbo could be subjected to significant product liability claims in the future.
We may be liable if the consumption of any of our products cause injury,
illness or death. While we are not aware of the occurrence of any injury,
illness or death relating to our restaurants, a product liability claim or
judgment against us could cause serious losses.
5
<PAGE>
Our common stock has never been publicly traded, so we cannot predict the
extent to which a trading market will develop for our common stock.
There has not been a public market for our common stock. We cannot predict
the extent to which a trading market will develop or how liquid that market
might become. 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.
Our public offering price was arbitrarily determined and not based upon any
established criteria of value.
Our initial public offering price for our shares of common stock was
arbitrarily determined through negotiations between the underwriter and us. Our
initial public offering price is not necessarily related to Nolbo's assets,
book value or other established criterion of value and is not indicative of the
price at which it may trade in the future.
Lack of at least two independent directors and committees could result in less
objectivity and conflicts of interest.
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 Nolbo's board of directors.
Control of board of directors by Marvin Nolley and Bo Grektorp, who will own a
majority percentage of our common stock.
Following the offering, Marvin Nolley and Bo Grektorp, executive officers
and directors of Nolbo will own between approximately 75% and 82% of the
outstanding common stock. However, the investors in the offering, who will have
provided between approximately 92% and 94% of the total consideration paid for
our outstanding common stock, will own only between 18% and 25% of our common
stock. Messrs. Nolley and Grektorp will thus have the power to elect a majority
of the directors, appoint management and approve actions requiring the approval
of a majority of stockholders.
Dependence upon Marvin Nolley and Bo Grektorp-key man life insurance may be
inadequate to compensate for the loss of their services.
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.
Immediate and substantial dilution in investment of public investors.
The offering will result in an immediate and substantial dilution of the
public's investment in Nolbo common stock because the net tangible book value
per share of the common stock upon the completion of the offering will be
between $.68 and $1.05, compared to the $6.00 per share offering price. This
represents a dilution of between 82% and 89% of the offering price.
Disparity between consideration paid for Nolbo's common stock by existing
shareholders and the consideration paid by the public.
The investors in this offering will pay $6.00 per share for shares of
Nolbo's common stock which is substantially higher than the $.12 per share
previously paid by current stockholders.
"Penny Stock" regulations might in the future adversely affect the purchasers'
resale of common stock.
The SEC has adopted "penny stock" regulations which apply to certain
securities with a market price of under $5.00. These regulations could
adversely impact the ability of the purchasers in the offering to resell the
shares of common stock purchased if the market price of common stock drops
below $5.00. See "Description of Securities" for a discussion of some of these
rules.
6
<PAGE>
Escrow funds-investors monies may not be returned during the offering period,
and if subsequently returned, investors will not receive interest.
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 promptly
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.
Limited number of states where a trading market is expected.
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, Nevada, New Jersey, New York, Rhode Island, Utah and the District of
Columbia. Such limitation may result in a narrow market for our common stock.
FORWARD LOOKING STATEMENTS
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 the prior
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.
USE OF PROCEEDS
The net proceeds to be received from the sale of the shares offered by
Nolbo (after payment of estimated offering expenses) will be approximately
$800,000 (minimum) and $1,310,000 (maximum). As reflected in the table below,
the proceeds will be used to open additional restaurants, to repay indebtedness
and for working capital. The number of restaurants to be opened will depend
upon the number of shares sold in the offering and can range from three
restaurants if only the minimum number of shares is sold to a maximum of five
restaurants if all shares are sold. In 1998, Nolbo completed a $150,000 bridge
financing. The proceeds of the bridge financing were used to commence
refurbishing and installing a point of sales system that will enable customer
information to be tracked, to finance the expenses of this offering and for
general working capital. Nolbo has allocated $163,000 to repay the notes
(including 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. The following table sets forth the Company's intended use of
the net proceeds:
<TABLE>
<CAPTION>
Minimum Maximum
----------- -------------
<S> <C> <C>
Lease and build up to five additional restaurants .......... $540,000 $ 900,000
Repayment of bridge financing .............................. 163,000 163,000
Working capital ............................................ 97,000 247,000
-------- ----------
TOTAL ...................................................... $800,000 $1,310,000
======== ==========
</TABLE>
Based on currently proposed plans and assumptions relating to the
implementation of its business plans, Nolbo 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 Nolbo'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, Nolbo 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 Nolbo on acceptable terms, or at all.
7
<PAGE>
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.
Bridge Financing
Between July 29 and September 18, 1998, Nolbo raised $150,000 in bridge
financing from non-affiliated investors, (the "bridge lenders"). In exchange
for such loans, Nolbo 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
Nolbo'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 Nolbo
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.
DIVIDEND POLICY
Nolbo currently intends to retain any earnings to finance the development
and expansion of Nolbo'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 Nolbo are subject to the discretion of the board
of directors of Nolbo. Any future determination to pay cash dividends will
depend on Nolbo's results of operations, financial condition, capital
requirements, contractual restrictions and other factors deemed relevant at the
time by the board of directors. Nolbo is not currently subject to any
contractual arrangements which restricts its ability to pay cash dividends.
DILUTION
The net tangible book value (deficit) per share of Nolbo as of April 30,
1999 was approximately $(.05) per share of common stock. Net tangible book
value (deficit) per share is determined by dividing the tangible net worth of
Nolbo (tangible assets less all liabilities) by the total number of outstanding
shares of common stock. Nolbo's tangible assets consists of all of its assets
as shown on its balance sheet, except for intangible assets consisting of
$66,278 as of April 30, 1999. After giving effect to the sale by Nolbo of
200,000 Shares (minimum), the adjusted net tangible book value per share of
Nolbo as of April 30, 1999 would have been approximately $.68. This represents
an immediate increase in the adjusted net tangible book value per share of $.73
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 $5.32 per share of common stock
(representing a dilution percentage of approximately 89%) to new investors.
After giving effect to the sale by Nolbo of 300,000 Shares (maximum), the
adjusted net tangible book value per share of Nolbo as of April 30, 1999 would
have been approximately $1.05. This represents an immediate increase in the
adjusted net tangible book value per share of $1.10 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 $4.95 per share of common stock (representing a dilution
percentage of approximately 82%) to new investors.
8
<PAGE>
The following table illustrates this per share of common stock dilution:
<TABLE>
<CAPTION>
Minimum Maximum
--------- ----------
<S> <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 ................................................................... (.05) (.05)
Increase in adjusted net tangible book value per share of common stock
attributable to new investors .............................................. .73 1.10
------- -------
Adjusted net tangible book value per share of common stock after the
offering ................................................................... .68 1.05
------- -------
Dilution in adjusted net tangible book value per share of common stock to
new investors .............................................................. $ 5.32 $ 4.95
======= =======
</TABLE>
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 Nolbo and the total and average
cash consideration paid per share. (Cash consideration includes cash and cost
basis of property contributed to Nolbo.)
TABLE I (Minimum)
<TABLE>
<CAPTION>
Approximate Approximate Average
Percentage Percentage Price
Shares of Total Total Cash of Total Per
Purchased Shares Consideration $ Consideration % Share $
----------- ------------- ----------------- ----------------- --------
<S> <C> <C> <C> <C> <C>
Public Stockholders .......... 200,000 18 1,200,000 92 6.00
Present Stockholders ......... 906,000 82 109,798 8 .12
------- -- --------- ---
Total ........................ 1,106,000 100 1,309,798 100
========= === ========= ===
</TABLE>
TABLE II (Maximum)
<TABLE>
<CAPTION>
Approximate Approximate Average
Percentage Percentage Price
Shares of Total Total Cash of Total Per
Purchased 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
========= === ========= ===
</TABLE>
9
<PAGE>
CAPITALIZATION
The following table sets forth, as of April 30, 1999, (i) the actual
capitalization of Nolbo, and (ii) the pro forma capitalization of Nolbo,
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 Nolbo and notes thereto included elsewhere in the prospectus. The
table does not reflect options to purchase 50,000 shares of common stock which
may be granted under Nolbo'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.
<TABLE>
<CAPTION>
April 30, 1999
----------------------------------------------
Pro Pro
Actual Forma Forma
------------- ------------ ---------------
Minimum Maximum
<S> <C> <C> <C>
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 ....................... 258,892 1,058,692 1,568,592
Retained Earnings (deficit) ...................... (243,250) (243,250) (243,250)
-------- --------- ---------
Total Stockholders' Equity .................... $ 16,548 $816,548 $ 1,326,548
========== ========= ===========
</TABLE>
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 Nolbo and notes thereto appearing elsewhere in this
prospectus.
Results of Operations
Ten Months Ended April 30, 1999 vs. Ten Months Ended April 30, 1998
During the ten months ended April 30, 1999, our net sales were $898,301 as
compared to $837,739 for the prior year, an increase of approximately 7%. Our
net sales grew due to stronger sales in Nolbo's catering business and an
increase in the number of customers at our restaurants. In future periods, our
sales are not expected to significantly increase until or unless additional
stores are opened.
During the ten months ended April 30, 1999, our gross profit was $605,785,
representing an increase of $53,387 or 9.7% from the comparable period of the
prior year. During the ten months ended April 30, 1999, our gross profit
percentage was approximately 67.4% as compared to approximately 65.9% for the
comparable period of the prior year. During the ten months ended April 30,
1999, we successfully reduced food and labor costs in order to increase gross
margins. The improved margins resulted in us increasing our net income from
operations from $13,460 to $21,331 for the comparable period of the prior year.
During the ten months ended April 30, 1999, our operating expenses
consisted of selling, general and administrative expenses and depreciation of
$584,454 as compared to $538,938 for the comparable period of the prior year.
Selling, general and administrative expenses as a percentage of net sales was
approximately 63.6% for the ten months ended April 30, 1999 as compared to
62.3% for the comparable period of the prior year.
During the ten months ended April 30, 1999, our net loss was $(140,866) as
compared to a net income of $12,104 for the comparable period of the prior
year. The increased net loss for the ten months ended April 30, 1999 was due to
interest charges of $162,197 as compared to $3,856 for the comparable period of
the prior year. The ten months ended April 30, 1999 include $150,000 of
interest expense to recognize the complete charge-off of loan discount related
to the conversion feature of our convertible notes sold during this period.
10
<PAGE>
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 are attributable to reduced food and labor costs.
Possible Fluctuations in Future Quarterly Results
We expect that quarterly results in the future may fluctuate due to
certain factors including:
o the timing of the opening of new restaurants;
o the expenses associated with our expansion;
o the timing of the completion of this offering and our receipt of the net
proceeds; and
o discount pricing offered by Nolbo or its local competitors.
Liquidity and Capital Resources
We have over the past two years and ten months 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.
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. Nolbo's payroll is anticipated to
grow as we expand our operations and acquire new staff to manage and operate
each facility.
11
<PAGE>
BUSINESS
General
Nolbo is a Delaware corporation formed on June 22, 1998. 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. Nolbo intends to use the proceeds of the
offering to establish between three and five additional five restaurants in the
greater Tampa-St. Petersburg, Florida area.
The success of Nolbo is dependent upon the success of Gladstone's Grilled
Chicken restaurants, Nolbo's ability to create awareness and acceptance of such
restaurants in the geographical markets in which it enters. Nolbo'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 Nolbo'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 Nolbo 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 Nolbo.
Nolbo 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.
Nolbo intends to merge and consolidate its subsidiaries into Nolbo (or to
transfer the assets and liabilities to Nolbo and to dissolve the two
corporations) to reduce overhead and operating costs.
Restaurant Concept
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.
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 Nolbo is positioned to
expand in primarily the greater Tampa-St. Petersburg Florida area. Nolbo
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.
12
<PAGE>
Corporate Strategy
Nolbo believes that excellence in operations, quality of food and service,
ambiance, location and price-value relationship are keys to success in the
restaurant industry. Nolbo intends to differentiate its restaurants by
emphasizing the following strategic elements:
o Positioning in the moderately priced, high quality, gourmet chicken
segment of the restaurant industry.
o Generous portions offered at moderate prices.
o High quality and attentive service.
o Consistent high-quality products through careful ingredient selection
and food preparation.
o Personalized marketing program.
o Strong and well organized catering organization.
o Well recognized "Healthy" and "Health Smart" grilled (vs. fried) food.
Nolbo offers value priced meals, combination meals and discount coupons,
in order to attract customers and compete with other restaurants.
Expansion of Operations
After the completion of the offering, we intend to locate between three
and five sites establishing new restaurants with the first two anticipated to
be located in Tampa and additional restaurants in the greater Tampa-St.
Petersburg Florida area. Nolbo considers the location of each restaurant to be
critical to its long-term success and intends to devote significant effort to
the investigation and evaluation of potential sites. The site selection process
will focus on visibility, accessability, traffic volume and the availability of
adequate parking. In selecting locations, we will carefully review potential
competition and customer activity at other fast food restaurants in the area.
Nolbo anticipates that the cost of opening each new restaurant will be
approximately $180,000. Such amount includes leasehold improvements, furniture,
fixtures, equipment, food and beverage inventory and other pre-opening
expenses. There can be no assurances that Nolbo's cost of opening additional
restaurants will not exceed its present estimate.
The opening and success of Nolbo's restaurants will depend on various
factors. Such factors include the following:
o the availability of suitable sites and negotiations of acceptable lease
terms for new locations;
o the ability to obtain construction and any other necessary permits
and/or licenses in a timely manner;
o the ability to meet construction schedules;
o the ability of Nolbo to generate sales at new restaurants;
o to effectively manage new restaurants to hire and train additional
personnel; and
o general economic and business conditions.
Not all of the foregoing factors are within the control of Nolbo.
Previously, Nolbo had operated a third restaurant under the name
"Gladstone's Grilled Chicken" in the "Town and Country" area of Tampa, Florida
for the period November 1992 to November 1994. 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.
13
<PAGE>
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. Nolbo owns a delivery van which is specially painted
to insure high recognition and function effectively as a rolling advertisement.
Restaurant Operations and Management
Nolbo 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.
Nolbo 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. Nolbo'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 expands, Nolbo intends to
have new restaurant managers complete an extensive training program during
which they will be instructed in areas of 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, Nolbo's executive officers define
operations and performance objectives for each restaurant and monitor
operations. Nolbo's executive officers regularly visit each Gladstone's
Restaurant and meet with the respective management teams to ensure compliance
with Nolbo's strategies and standards of quality in all respects of restaurant
operations and personnel development.
Each new restaurant employee of Nolbo 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
Food and supplies are shipped directly to the restaurants, although
invoices for purchases are sent to Nolbo for payment. Nolbo's emphasis on
first-quality food requires frequent deliveries of fresh food supplies. Because
of the need for freshness of products, Nolbo does not maintain a central product
warehouse or commissary. Nolbo's operations, results and financial condition may
be adversely affected by fluctuations in the cost of Nolbo's primary food
supplies. Such costs are determined by constantly changing market forces over
which Nolbo has no control. Nolbo has no long-term contracts with any of its
suppliers. Nolbo negotiates directly with suppliers for food and beverage
products to ensure consistent quality and freshness of products and to obtain
competitive prices.
Marketing
Nolbo 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. Nolbo
relies principally on its commitment to customer service, excellent price value
relationship, and providing a pleasant dining atmosphere.
14
<PAGE>
Nolbo's restaurants rely on positive word-of-mouth for references,
in-store promotions, billboards, direct mail, newspaper and specialty
advertisements to generate customer interest. A major marketing tool is a
computerized customer program called V.I.P. The program consists of a data base
of customers along with their name, address, phone number and date of birth.
Mass mailings take place 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, Nolbo expended approximately $19,500 and
$17,500, respectively, on advertising, promotion and related matters.
A costumed "Gladstone Chicken" is also an integral part of Nolbo's
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.
In fiscal 1999, Nolbo spent $6,300 of the proceeds of a bridge loan to
commence refurbishing and installing a point of sales system that will enable
customer information to be tracked when the system is completed at a total
estimated cost of $30,000. For example, customers can be rewarded with personal
gift certificates when they spent a certain amount of money. To create
additional name recognition, Nolbo sells T-shirts, hats and other items bearing
Nolbo's restaurant's name and logo.
For each new restaurant, Nolbo intends to conduct a pre-opening
advertising program prior to the opening of a restaurant. Nolbo anticipates
that a given program would typically 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
Nolbo'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. Nolbo is required to renew
these licenses annually. Such licenses may be suspended or revoked at any time
for cause. The failure of Nolbo to retain food service licenses would have a
material adverse effect on its operations. In order to reduce this risk, each
of Nolbo'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. Nolbo carries liability coverage as part of
its comprehensive general liability insurance.
Nolbo's future restaurant operations are and will 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
Nolbo'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 benefits, or increased tax reporting and
tax payment requirements for employees who receive gratuities, could be
detrimental to the economic viability of Nolbo's restaurants.
The development and construction of additional restaurants will be subject
to compliance with applicable zoning, land use and environmental regulations.
We are not aware of any environmental regulations that have had a material
effect on Nolbo 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. Our restaurants are in full compliance with the Disabilities
Act, and we intend to ensure continued compliance. Our restaurants are designed
to be accessible to the disabled. Nolbo believes that it is in substantial
compliance with all current applicable regulations relating to restaurant
accommodations for the disabled. We do not anticipate that such compliance will
require Nolbo 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. There
15
<PAGE>
are numerous well-established competitors possessing substantially greater
financial, marketing, personnel and other resources than Nolbo and
substantially longer operating histories. Nolbo 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,
Nolbo'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 our area. Nolbo competes on the basis of providing quality foods, quick
service and competitive prices. There can be no assurance that consumers will
regard Nolbo's products as sufficiently distinguishable from competitive
products, that substantially equivalent products will not be introduced by
Nolbo's competitors or that Nolbo will be able to compete successfully.
Lack of Trademarks and Servicemark Protection.
Nolbo has not filed for service mark or trademark protection of Nolbo'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 Nolbo 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 corporation to prevail in a trademark infringement in
Florida in which injunctive relief is sought to deny Nolbo's use of the mark
"Gladstone's Grilled Chicken" since:
o such corporation has failed to contest the use of Nolbo's mark for a
period of over ten years;
o there is no actual confusion between customers of such corporation and
customers of Nolbo as to the respective products offered by each entity;
and
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.
No assurances can be given, however, that Nolbo would prevail in such a
legal action. Further, any lawsuit would involve Nolbo incurring significant
legal costs in the defense of such a lawsuit and, if unsuccessful, Nolbo could
be forced to pay a material damage award and/or change its name which may
adversely effect Nolbo and its operations.
Product Liability Insurance
As a seller of restaurant food, Nolbo is exposed to potential liability.
There is a possibility that someone could claim personal injury resulting from
eating Nolbo's food. Nolbo 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, currently expiring December
20, 1999. Although Nolbo 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 Nolbo in the
future. An uninsured successful claim against Nolbo 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 Nolbo.
Employees
At April 30, 1999, Nolbo employed approximately 25 individuals, of which
five occupy executive or managerial positions and 20 hold non-managerial
restaurant related positions and clerical and office positions. None of Nolbo's
employees are covered by a collective bargaining agreement. Nolbo considers its
relations with its employees to be good and has not experienced any
interruption of operations due to labor disputes.
Facilities
Nolbo's executive office and warehouse facility are located at 8426
Sunstate Street, Tampa, FL 33634. Nolbo leases these facilities from
Amenitique, Inc., an affiliate of Nolbo. Nolbo pays Amenitique $400 per month.
The term of the lease expires on June 30, 1999 and is expected to be renewed
for an additional two years at the same rent. Nolbo shares office suites and a
warehouse facility with Amenitique. See "Management."
16
<PAGE>
One of Nolbo'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. Nolbo currently pays an annual fixed rent of
approximately $27,000 and its proportionate share of the cost of operating and
maintaining the shopping center.
Nolbo'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. Nolbo also pays additional rent for tax increases and is
responsible for its monthly utility charges. In 1995, Nolbo 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 Nolbo 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. As of May 24, 1999, the balance is approximately
$16,000.
Legal Proceedings
While Nolbo may become involved in suits, proceedings, or claims in the
ordinary course of business, Nolbo is not currently a party to any material
legal proceedings.
Additional Information
At your request, Nolbo will provide you, without charge, a copy of any
exhibits to its registration statement. 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
Nolbo's fiscal year ends on June 30. Nolbo intends to furnish its
shareholders annual reports containing audited financial statements and other
appropriate reports. In addition, Nolbo intends 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 Nolbo files 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. Nolbo's SEC filings are also available to the public on
the SEC Internet site at http://www.sec.gov.
MANAGEMENT
Directors and Executive Officers
The names and ages of the directors and executive officers of Nolbo 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 Nolbo's directors is one year until their
respective successors are elected and qualify. Executive officers serve at the
pleasure of the board of directors.
17
<PAGE>
Marvin M. Nolley, has been an officer, director and full-time employee of
Nolbo 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
Nolbo, from 1990 until the present time. Mr. Nolley is the founder, president
and director of Flame Broiled Chicken, Inc., a wholly-owned subsidiary of
Nolbo, 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 nonprofessional judged music
festivals worldwide.
Bo G. Grektorp, has been an officer and director of Nolbo 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 and 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 Nolbo as is
necessary for the performance of his duties which is estimated to be 20 hours
per week.
Hans Bremstrom, has been a director of Nolbo since its inception in June
1998. Since 1994, he has been an owner and president of Web Street Inc., a
company engaged in the 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 to 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 Nolbo 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
Nolbo as is necessary for the performance of his duties.
In the event that Nolbo has two outside directors after the completion of
the offering, of which no assurances can be given in this regard, the board of
directors will establish a compensation committee and an audit committee, each
consisting of at least a majority of outside directors. If established, the
audit committee will among other things, make recommendations to the board of
directors regarding the independent auditors for Nolbo, 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. If
established, the compensation committee will review and recommend to the board
of directors the compensation structure for Nolbo'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.
18
<PAGE>
Executive Compensation
The following table sets forth the total compensation paid to the named
Chief Executive Officer for the fiscal years ended December 31, 1998, 1997 and
1996. During 1998, Nolbo did not have any executive officers earning $100,000
or more in salaries and bonuses.
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
- --------------------------------------------------------------------- ------------ ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted Number Other
and Compen- Stock of LTIP Compen-
Principal sation Award(s) Options / Payouts sation
Position Year Salary ($) Bonus ($) ($) ($) Warrants ($) ($)
- ------------------- ------ ------------ ----------- --------- ------------ ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marvin M. Nolley, 1998 46,300 0 0 1,000 (1) 0 0 --
Chief Executive 1997 46,300 0 0 0 0 0 0
Officer(2) 1996 47,680 0 0 0 0 0 0
</TABLE>
- ------------
(1) Does not include 620,000 shares of Nolbo'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., Nolbo's two subsidiaries.
See "Certain Transactions."
Stock Option Plan
Nolbo has a 1998 Stock Option Plan, as amended, covering 50,000 shares of
common stock (the "plan"). These shares are subject to adjustment to cover
stock splits, stock dividends, recapitalizations and other capital adjustments
for employees, including officers and directors and consultants of Nolbo. 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 Nolbo 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.
19
<PAGE>
Employment Agreements
Each of Nolbo's three executive officers have entered into employment
agreements dated as of July 1, 1998 with Nolbo. The agreements, which are
nearly identical, provide for a term of three years expiring June 30, 2001. The
employment agreements have fixed the annual salaries of Marvin M. Nolley, Bo G.
Grektorp and Sean Flaherty at $75,000, $25,000 and $15,000, respectively. The
board of directors shall annually 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 Nolbo and the
executive officers' contributions to same. In addition, the employment
agreements provided for bonuses for the period June 1, 1998 through May 31,
1999. Marvin M. Nolley was 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 was 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 was entitled to a bonus of 2 1/2% of cash flow
from operations with an amount to be received of not less than $2,000 and a
maximum of $6,000. Pursuant to an amendment to the employment agreements of
Messrs. Nolley, Grektorp and Flaherty, bonuses for fiscal 1999 have been waived
and salaries for the period July 1, 1998 through June 30, 1999 have been
retroactively reduced to $52,000 for Mr. Nolley, $-0- for Grektorp and $10,000
for Mr. Flaherty.
Nolbo 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. Nolbo 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, Nolbo 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
Nolbo'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, Nolbo's Bylaws provide that Nolbo 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 Nolbo pursuant to the foregoing provisions, or otherwise, Nolbo has been
advised that, in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
20
<PAGE>
Directors Compensation
Nolbo intends to pay its directors who are not also employees of Nolbo
$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 Nolbo are eligible to receive the grant of options
to purchase shares of Nolbo's common stock pursuant to the plan.
Anti-takeover measures
The certificate of incorporation allows Nolbo to issue preferred stock
without stockholder approval. The issuance of shares of Preferred Stock under
certain circumstances could make it more difficult for a third party to acquire
control of Nolbo, even if such change in control would be beneficial to
stockholders.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of the date of this prospectus certain
information with respect to the record and beneficial ownership of common stock
by each person or entity known by Nolbo to be the beneficial owner of 5% or
more of such shares, each officer and director of Nolbo, and all officers and
directors of Nolbo as a group. Beneficial ownership as reported in the table
above has been determined in accordance with Rule 13d-3 of the Exchange Act.
All addresses for the officers and directors are c/o Nolbo, Inc., 8426 Sunstate
Street, Tampa, FL 33634.
The percentages are 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. Shares of common stock shown
in the table below as owned by Mr. Grektorp are held by him as trustee for the
benefit of his two minor children under a trust called Bonita Trust.
<TABLE>
<CAPTION>
Shares of
Common
Stock
Percentage Beneficial Ownership
Beneficially -----------------------------------
Owned After After
Before Before Offering Offering
Name and Address Offering Offering Minimum Maximum
- ---------------------------------------------------- -------------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Marvin M. Nolley ................................... 621,000 68.5 56.1 51.5
Bo G. Grektorp, as Trustee ......................... 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
</TABLE>
21
<PAGE>
CERTAIN TRANSACTIONS
Effective June 30, 1998, Nolbo acquired its two operating subsidiaries,
namely, Flame Broiled Chicken, Inc. and Gladstone's Grilled Chicken, Inc., in
exchange for 905,000 shares of Nolbo's common stock. In connection with such
transactions, Nolbo issued the following:
o 280,000 shares to Bo Grektorp as trustee under the Bonita Trust for the
benefit of his two minor children 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.
Nolbo also issued at $1.00 per share an additional 1,000 shares to Marvin
Nolley in connection with Nolbo's incorporation.
For a description of Nolbo's lease for its principal executive office with
Amenitique, Inc., an affiliate of Nolbo, see "Business -- Facilities."
DESCRIPTION OF SECURITIES
Common Stock
Nolbo 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
Nolbo, 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.
Preferred Stock
The certificate of incorporation provides Nolbo'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 Nolbo. Nolbo has no present
plans to issue any shares of preferred stock.
Underwriter's Warrants
In connection with the offering, Nolbo 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 Nolbo's common
stock for each ten shares sold in the Offering. For a description of the terms
of the underwriter's warrants, see "Underwriting."
22
<PAGE>
Transfer Agent and Registrar
The transfer agent and registrar for Nolbo'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 SEC 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 Nolbo's common stock does
develop after the offering and Nolbo'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 Nolbo's Shares in the
secondary market.
SHARES ELIGIBLE FOR FUTURE SALE
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 of 1933. The
remaining shares of common stock outstanding will be restricted securities as
that term is defined by Rule 144 of the Securities Act of 1933. These shares
may be sold commencing 90 days after the date of this prospectus without
registration under the Securities Act of 1933 to the extent permitted by Rule
144. The present stockholders of Nolbo 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 three years (one year in the case
of convertible note holders) from the initial closing date of the offering
without the prior written consent of the underwriter, except that (i) each such
person, who is subject to a three-year lock-up, may sell up to 10,000 shares
during each of the second and third years and (ii) each person who is subject
to a three-year lock-up, may sell shares without such restriction if the common
stock of the Company is trading at a price of $7.50 per share or higher. The
possible or actual future sales of the Nolbo common stock may negatively impact
the market price for Nolbo's common stock.
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.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement, which is filed as an exhibit to the registration statement, First
Level Capital, Inc. (the "underwriter") has agreed to offer the shares to the
public, as agent for Nolbo. The shares are offered by Nolbo on a "best efforts
200,000 shares minimum, 300,000
23
<PAGE>
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
Nolbo and the underwriter, and subject to certain other conditions. The
underwriter and Nolbo 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 _______, 1999 unless extended by
Nolbo and the underwriter for an additional 60-day period until the close of
business on _________, 1999. If at least 200,000 shares are sold, Nolbo 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 Nolbo and the underwriter. Nolbo 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
Nolbo 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 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.
Nolbo 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. to offer the shares for sale and allow
a concession to them. Such dealers may reallow to other members. In any event,
such concessions and reallowances will not exceed the commission the
underwriter is to receive ($.60 per share).
Nolbo has agreed to enter into a one-year consulting agreement with the
underwriter. Such agreement provides that the underwriter will render
consulting services to Nolbo. 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 Nolbo will pay to the underwriter
a non-accountable expense allowance of three percent (3%) of the proceeds of
this offering less the sum of $15,000, which was paid to a previously intended
underwriter (or $21,000 to the underwriter if the minimum is sold and $39,000
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.
In addition to the underwriter's commissions, non-accountable expense
allowance and financial consulting fee, Nolbo 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.
Nolbo and the underwriter have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933. To
the extent that the underwriting agreement may purport to provide exculpation
from possible liabilities arising under the federal securities laws, it is the
opinion of the Securities and Exchange Commission that such indemnification is
contrary to public policy and therefore unenforceable.
Subject to the sale of the minimum number of shares offered hereby and
closing of this offering, Nolbo has agreed to sell to the underwriter, for a
nominal consideration, warrants ("underwriter's warrants") to acquire one share
of common stock for each ten shares sold in he offering, or a total 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 $9.90 per
share and for a period of five years commencing on the date of this prospectus.
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
underwriter's warrants (or the underlying
24
<PAGE>
shares of common stock issuable upon exercise thereof) be offered or sold
except in compliance with the Securities Act of 1933. Accordingly, no public
offering of the underwriter's warrants or the underlying shares will be made
until a new registration statement or post-effective amendment to this
registration statement covering the underwriter's warrants or underlying shares
has become effective. The underwriter's warrants provide for certain
registration rights 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 Nolbo bear the expense of
registration of the underwriter's warrants and underlying shares more than once
for any registration initiated by the holders of the underwriter's warrants.
Under certain conditions, Nolbo may also be required to include, at Nolbo's
sole expense, the underwriter's warrants or underlying shares in any
post-effective amendment to the registration statement and any other
registration statement (except on Form S-8 or any other inappropriate form)
filed by Nolbo, 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 Nolbo, the holders of the underwriter's warrants
will not be entitled to any dividends. In the event of any dissolution or
winding up of Nolbo, the holders of the underwriter's warrants will not be
entitled to participate in a distribution of Nolbo'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 Nolbo 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 Nolbo 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.
First Level Capital, Inc. has been engaged in the securities business for
less than one year and has not previously underwritten any public offerings of
securities. Prospective purchasers of the shares being offered should consider
this limited experience of the underwriter in evaluating the securities being
offered.
The underwriter has been granted by the Company the option to nominate two
individuals to serve on the company's board of directors for a period of three
years from the date of this prospectus. The individuals must be reasonably
satisfactory to the Company's board of directors. As of the date hereof, no
such person has been designated for nomination. Any person appointed to the
board will receive the same compensation as any other non-executive and will be
entitled to indemnification to the full extent permitted by law.
Subject to the sale of the minimum number of shares, the Company has
agreed not to sell or issue any shares of common stock for a period of 12
months without the prior written consent of the underwriter, which consent will
not be unreasonably withheld, except for the issuance of shares pursuant to the
exercise of options, warrants or convertible securities outstanding upon the
completion of this offering.
LEGAL MATTERS
The validity of the sale of common stock in this offering will be passed
upon for Nolbo by Lester Morse P.C., Suite 420, 111 Great Neck Road, Great
Neck, NY 11021. Certain legal matters will be passed upon for the underwriter
by Henry C. Malon, Esq., One Battery Park Plaza, Suite 300, 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.
25
<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 3,
as to which the date is September 18, 1998
Tampa, Florida
F-1
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS (Note 6)
<TABLE>
<CAPTION>
April 30, 1999
(Unaudited) June 30, 1998
--------------- --------------
<S> <C> <C>
Current assets:
Cash ................................................................. $ 73,314 $ 10,262
Accounts receivable .................................................. 3,528 3,033
Inventory ............................................................ 12,438 11,871
Due from related party (Note 4) ...................................... 11,123 --
---------- ----------
Total current assets ............................................... 100,403 25,166
Property and equipment, net (Notes 2 and 3) ........................... 50,558 50,131
Deferred offering costs ............................................... 66,278 6,492
Other assets .......................................................... 17,597 6,347
---------- ----------
$ 234,836 $ 88,136
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note 3) ........................ $ 8,000 $ 7,732
Accounts payable and accrued expenses ................................ 40,124 29,925
Due to related party (Note 4) ........................................ -- 7,905
---------- ----------
Total current liabilities .......................................... 48,124 45,562
Long-term debt, less current maturities, (Note 3) ..................... 153,914 10,577
Deferred lease obligation (Note 6) .................................... 16,250 24,583
---------- ----------
Total liabilities .................................................. 218,288 80,722
---------- ----------
Commitments (Note 6) .................................................. -- --
Stockholders' equity (Note 8):
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 .............................. 906 906
Additional paid-in capital ........................................... 258,892 108,892
Accumulated deficit .................................................. (243,250) (102,384)
---------- ----------
16,548 7,414
---------- ----------
$ 234,836 $ 88,136
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Ten months ended
April 30 Years ended
(Unaudited) June 30
----------------------------- -------------------------------
1999 1998 1998 1997
-------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Net sales ...................................... $ 898,301 $ 837,739 $ 1,026,404 $ 1,025,162
Cost of sales .................................. 292,516 285,341 344,487 371,651
---------- --------- ----------- -----------
Gross profit ................................... 605,785 552,398 681,917 653,511
---------- --------- ----------- -----------
Operating expenses:
Selling, general and administrative ........... 570,979 522,255 631,384 632,103
Depreciation .................................. 13,475 16,683 29,978 35,575
---------- --------- ----------- -----------
584,454 538,938 661,362 667,678
---------- --------- ----------- -----------
Income (loss) from operations .................. 21,331 13,460 20,555 (14,167)
---------- --------- ----------- -----------
Other income (expense):
Interest (Note 3) ............................. (162,197) (3,856) (4,113) (4,418)
Gain on disposal of equipment ................. -- 2,500 2,500 --
---------- --------- ----------- -----------
(162,197) (1,356) (1,613) (4,418)
---------- --------- ----------- -----------
Income (loss) before income taxes .............. (140,866) 12,104 18,942 (18,585)
Income taxes (Note 5) .......................... -- -- -- --
---------- --------- ----------- -----------
Historical net income (loss) ................... $ (140,866) $ 12,104 $ 18,942 $ (18,585)
========== ========= =========== ===========
Historical net income (loss) per share ......... $ (.16) .01 $ .02 $ (.02)
========== ========= =========== ===========
Proforma income data:
Net income (loss) as reported ................. $ (140,866) $ 12,104 $ 18,942 $ (18,585)
Proforma adjustment to recognize "C"
corporation provision for income tax
(expense) benefit ........................... -- (5,000) (7,000) 3,100
---------- --------- ----------- -----------
Proforma net income (loss) .................... $ (140,866) $ 7,104 $ 11,942 $ (15,485)
========== ========= =========== ===========
Proforma net income (loss) per share .......... $ (.16) $ .01 $ .01 $ (.02)
========== ========= =========== ===========
Weighted average shares outstanding during
the period .................................. 906,000 906,000 906,000 906,000
========== ========= =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1998 AND 1997 AND
TEN MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<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
Beneficial conversion feature of
convertible debt (Notes 1 and 3)
(unaudited) .................... 150,000 -- 150,000
Net loss (unaudited) ............ -- -- -- (140,866) (140,866)
------- ----- --------- ---------- ----------
Balances, April 30, 1999
(unaudited) .................... 906,000 $ 906 $ 258,892 $ (243,250) $ 16,548
======= ===== ========= ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Ten months ended
April 30 Years ended
(Unaudited) June 30
--------------------------- ----------------------------
1999 1998 1998 1997
-------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ................................ $ (140,866) $ 12,104 $ 18,942 $ (18,585)
---------- -------- --------- ---------
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities .....................................
Depreciation ................................... 13,475 16,683 29,978 35,575
Gain on disposal of equipment .................. -- (2,500) (2,500) --
Amortization of discount on notes
payable ....................................... 150,000 -- -- --
Increase (decrease) in
cash due to changes in:
Accounts receivable ........................... (495) (2,008) 1,587 (2,124)
Inventory ..................................... (567) (1,653) (3,127) 1,599
Accounts payable and accrued
expenses .................................... 10,199 (7,650) (10,422) 10,076
Deferred lease obligation ..................... (8,333) (8,333) (10,000) (10,000)
---------- -------- --------- ---------
Total adjustments ........................... 164,279 (5,461) 5,516 35,126
---------- -------- --------- ---------
Net cash provided by operating activities ......... 23,413 6,643 24,458 16,541
---------- -------- --------- ---------
Cash flows from investing activities:
Acquisition of property and equipment ............ (13,902) -- (2,194) (14,004)
Proceeds from disposal of property and
equipment ...................................... -- 1,869 2,500 --
Advance to related party ......................... (11,123) (3,000) -- --
---------- -------- --------- ---------
Net cash provided by (used in) investing
activities ....................................... (25,025) (1,131) 306 (14,004)
---------- -------- --------- ---------
Cash flows from financing activities:
Repayment of notes payable ..................... (6,395) (7,468) (8,388) (8,777)
Increase (decrease) in bank overdraft .......... -- 3,638 (4,689) 4,689
Distributions paid to stockholders ............. -- (3,836) (3,836) (4,059)
Proceeds from (repayment of) related
party payable ................................. (7,905) 2,154 2,411 (1,792)
Issuance of notes payable ...................... 150,000 -- -- --
Payment of offering costs ...................... (59,786) -- -- --
Loan costs paid ................................ (11,250) -- -- --
---------- -------- --------- ---------
Net cash provided by (used in) financing
activities ....................................... 64,664 (5,512) (14,502) (9,939)
---------- -------- --------- ---------
Net change in cash ................................ 63,052 -- 10,262 (7,402)
Cash at beginning of period ....................... 10,262 -- -- 7,402
---------- -------- --------- ---------
Cash at end of period ............................. $ 73,314 $ -- $ 10,262 $ --
========== ======== ========= =========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest ............................ $ 947 $ 3,856 $ 4,113 $ 4,418
========== ======== ========= =========
</TABLE>
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 AND
TEN MONTHS ENDED APRIL 30, 1999 AND 1998 (UNAUDITED)
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 audited financial statements include
the accounts of GGCI and FBCI as of May 31, 1998 and for each of the two
years then ended. Similarly, the accompanying unaudited financial
statements include the accounts of GGCI and FBCI as of March 31, 1999 and
for the ten months ended March 31, 1999 and 1998. Intervening events from
June 1 through June 30, 1998 and from April 1 through April 30, 1999
(unaudited) 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
that are included in consolidated statements of operations and certain
other changes in stockholders' equity are as follows:
<TABLE>
<CAPTION>
GGCI and
Nolbo, Inc FBCI Total
------------ ----------------- ----------------
Year ended June 30, 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)
-------- ----------- -----------
Year ended June 30, 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>
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, consisting of legal, accounting and underwriting
expenses, 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.
F-6
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997 AND
TEN MONTHS ENDED APRIL 30, 1999 AND 1998 (UNAUDITED) -- (Continued)
1. Nature of business and summary of significant accounting policies:
-- (Continued)
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. Useful
lives for property and equipment are as follows: Furniture, equipment, and
signs - 7 years; leasehold improvements - 15 years; vehicles - 5 years.
Convertible long-term debt (unaudited):
As discussed in Note 3, from July through September, 1998, the Company
issued certain convertible notes payable with a beneficial conversion
feature. In accordance with guidance provided in Emerging Issues Task Force
Topic D-60 "Accounting for the Issuance of Convertible Preferred Stock and
Debt Securities with a Non-detachable Conversion Feature", the Company
recognized the value of the beneficial conversion feature by allocating a
portion of the debt proceeds equal to the intrinsic value of the conversion
feature to additional paid-in capital. The intrinsic value is equal to the
difference between the conversion price per share and the fair market value
per share of the common stock into which the debt is convertible,
multiplied by the number of shares into which the debt is convertible. The
resulting debt discount was immediately charged to interest expense since
the debt is immediately convertible at the lender's option.
The staff of the Securities and Exchange Commission has advised the Company
that, for purposes of determining the intrinsic value of the conversion
feature, the fair market value of the common stock into which the debt is
convertible should be equal to the offering price of the common stock
contemplated by this prospectus. Accordingly, the Company recorded interest
expense and additional paid-in capital of $150,000 (30,000 shares subject
to conversion multiplied by the $5 per share difference between $1 per
share conversion price and $6 per share fair market value of common stock).
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 the years ended June 30, 1998 and 1997,
respectively.
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.
F-7
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997 AND
TEN MONTHS ENDED APRIL 30, 1999 AND 1998 (UNAUDITED) -- (Continued)
1. Nature of business and summary of significant accounting policies:
-- (Continued)
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.
Unaudited interim financial statements:
The unaudited balance sheet as of April 30, 1999, and the unaudited
statements of operations, stockholders' equity and cash flows and footnote
disclosures for the ten months ended April 30, 1999 and 1998 ("interim
financial information") have been prepared by the Company, and are
unaudited. In the opinion of the Company, the interim financial information
includes all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of results of interim periods.
The interim financial information should be read in conjunction with the
Company's June 30, 1998 and 1997 audited financial statements appearing
herein. The results of operations for the periods ended April 30, 1999 and
1998 may not be indicative of the operating results for the full year.
2. Property and equipment:
Property and equipment at June 30, 1998 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
=========
F-8
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997 AND
TEN MONTHS ENDED APRIL 30, 1999 AND 1998 (UNAUDITED) -- (Continued)
3. Long term debt:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
April 30,
1999 June 30,
(Unaudited) 1998
------------- -----------
<S> <C> <C>
Notes payable, bank, bearing interest at 8.75%, collateralized by
equipment ....................................................... $ 11,914 $ 18,309
Notes payable bearing interest at 10%; interest-only payable semi-
annually in January and July; principal payable in August 2000,
but immediately callable by the noteholders if the Company
raises at least $1,000,000 in connection with any subsequent pri-
vate or public offering of securities. $30,000 of these notes are
convertible into 30,000 shares ($1 per share) of the Company's
common stock at any time until maturity.(1) ..................... 150,000 --
--------- --------
161,914 18,309
Less current maturities .......................................... 8,000 7,732
--------- --------
$ 153,914 $ 10,577
========= ========
</TABLE>
Future maturities of long term debt are as follows:
Year ending April 30, (unaudited):
----------------------------------
2000 ................... $ 8,000
2001 ................... 153,914
---------
$ 161,914
=========
- ------------
(1) As discussed in Note 1, the Company has recorded interest expense of
$150,000 during the ten months ended April 30, 1999 to recognize the
complete charge-off of loan discount related to this beneficial
conversion feature.
4. Due to/from related party:
At June 30, 1998, due to related party consisted of non-interest bearing
advances (due on demand) to an entity under common ownership control. Due
from related party at April 30, 1999 (unaudited) consisted of non-interest
bearing advances to a shareholder, due on demand.
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 during both of the years ended June 30, 1998
and 1997.
F-9
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997 AND
TEN MONTHS ENDED APRIL 30, 1999 AND 1998 (UNAUDITED) -- (Continued)
5. Income taxes:
Income tax (expense) benefit consists of the following:
<TABLE>
<CAPTION>
Year ended
June 30,
-------------------------
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>
Year ended
June 30,
-------------------------
1998 1997
---------- ------------
<S> <C> <C>
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>
Components of deferred tax assets are as follows:
<TABLE>
<CAPTION>
June 30,
--------------------------
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.
F-10
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997 AND
TEN MONTHS ENDED APRIL 30, 1999 AND 1998 (UNAUDITED) -- (Continued)
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 the years ended June 30, 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.
On July 1, 1998 the Company entered into three-year employment agreements
with three executive officers which provide for aggregate 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. Pursuant to an amendment to the employment agreements for
fiscal 1999, bonuses have been waived and salaries for the period July 1,
1998 through June 30, 1999 have been retroactively reduced to an aggregate
$62,000.
7. Financial instruments:
The carrying values of cash, accounts receivable, accounts payable and due
from and to related party 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. 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-11
<PAGE>
NOLBO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997 AND
TEN MONTHS ENDED APRIL 30, 1999 AND 1998 (UNAUDITED) -- (Continued)
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-12
================================================================================
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 _________, 1999.
-----------------------
Until __________ , 1999 (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
================================================================================
<PAGE>
================================================================================
300,000 Shares
NOLBO, INC.
Prospectus
FIRST LEVEL CAPITAL, INC.
____________, 1999
================================================================================
<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 Nolbo 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
Nolbo's three officers provides for his indemnification to the full extent
permitted by law.
Nolbo'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.
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
Nolbo will bear all expenses shown above.
II-1
<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, Nolbo acquired its two operating subsidiaries.
namely, Flame Broiled Chicken, Inc. and Gladstone's Grilled Chicken, Inc., in
exchange for 905,000 shares of Nolbo's common stock. In connection with such
transactions, Nolbo issued the following: 280,000 shares to Bo Grektorp as
trustee under the Bonita Trust for the benefit of his two minor children 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. Nolbo also
issued at $1.00 per share an additional 1,000 shares in connection with Nolbo'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, Nolbo 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, Nolbo 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
Nolbo'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-2
<PAGE>
Item 27. Exhibits.
All Exhibits have been previously filed herewith unless otherwise noted.
Exhibit 1.0 Revised Underwriting Agreement*
1.1 Revised Selected Dealer Agreement*
1.2 Revised Financial Consulting Agreement*
1.3 Escrow Agreement
3.0 Certificate of Incorporation
3.1 Certificate of Amendment
3.2 By-Laws
4.0 Specimen of Common Stock*
4.3 Revised 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
10.6 Form of bridge financing agreement
10.7 Amendment to Employment Contracts of Marvin Nolley, Bo
Grektorp and Sean Flaherty*
23.0 Consent of Aidman, Piser & Company, P.A.*
23.1 Consent of Lester Morse P.C. (included in Exhibit 5.0)
* Filed herewith.
Item 28. Undertakings.
(a) Rule 415 Offering
Nolbo 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;
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 Nolbo 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.
II-3
<PAGE>
(c) Indemnification
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of Nolbo
pursuant to the provisions referred to in Item 24 of this Registration
Statement or otherwise, Nolbo 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 Nolbo of expenses incurred or paid by a director, officer or
controlling person of Nolbo 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, Nolbo 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-4
<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 28th day of May, 1999.
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.
Signature Title Date
- ---------------------- -------------------------------- -------------
/s/ Marvin M. Nolley President, Chief Executive May 28, 1999
- ---------------------- Officer, Director
Marvin M. Nolley
/s/ Bo G. Grektorp Vice-President, Director May 28, 1999
- ----------------------
Bo G. Grektorp
/s/ Hans Bremstrom Director May 28, 1999
- ----------------------
Hans Bremstrom
/s/ Sean Flaherty Chief Financial and Accounting May 28, 1999
- ---------------------- Officer, Treasurer, Secretary
Sean Flaherty Director
II-5
<PAGE>
Exhibit Index
All Exhibits have been previously filed herewith unless otherwise noted.
<TABLE>
<CAPTION>
Exhibit
- --------
<S> <C>
1.0 Revised Underwriting Agreement*
1.1 Revised Selected Dealer Agreement*
1.2 Revised Financial Consulting Agreement*
1.3 Escrow Agreement
3.0 Certificate of Incorporation
3.1 Certificate of Amendment
3.2 By-Laws
4.0 Specimen of Common Stock*
4.3 Revised 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
10.6 Form of bridge financing agreement
10.7 Amendment to Employment Contracts of Marvin Nolley, Bo Grektorp and Sean Flaherty*
23.0 Consent of Aidman, Piser & Company, P.A.*
23.1 Consent of Lester Morse P.C. (included in Exhibit 5.0)
</TABLE>
- ------------
* Filed herewith.
<PAGE>
Nolbo, Inc.
8426 Sunstate Street
Tampa, FL 33634
UNDERWRITING AGREEMENT
----------------------
First Level Capital, Inc.
4183 Shell Road
Sasasota, Florida 34242 _________, 1999
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. 333-66333) 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
1
<PAGE>
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
2
<PAGE>
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.
3
<PAGE>
(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.
4
<PAGE>
(c) The Underwriter shall deposit all funds received by it
from the sale of up to 300,000 Shares in an escrow account, at _____________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 _____________ 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.
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.
5
<PAGE>
(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, an expense
allowance equal to three (3%) percent of the public offering price less the sum
of $15,000 and its financial consulting fee equal to two (2%) percent of the
public offering price of the shares sold at such Closing. 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 $9.90 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.
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
6
<PAGE>
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) First Level Capital, Inc. ("First Level") 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 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
7
<PAGE>
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 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.
8
<PAGE>
(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.
(i) The Company shall appoint Continental Stock Transfer &
Trust Company as transfer agent for the Common Stock (the "Transfer Agent").
9
<PAGE>
(j) Subject to the sale of the minimum number of shares, the
Company will not sell or issue any shares of its common stock, except for the
issuance of shares pursuant to the exercise of opions, warrants or convertible
securities outstanding upon the completion of the offering, for a period of one
year from the completion of the offering without the prior written consent of
the Underwriter, which consent shall not be unreasonably withheld.
(k) For a period of three years following the closing of the
offering, the Underwriter shall have the right to nominate two persons to be
directors of the Company, and the Company shall use its best efforts to cause
such nominees to be elected to the board of directors. Such directors shall be
reimbursed for all reasonable out-of-pocket expenses incurred in attending each
meeting and shall also be entitled to attendance fees in an amount determined by
the board of directors.
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
10
<PAGE>
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 First Level an expense allowance equal to three
(3%) percent of the total gross proceeds derived from the public offering
contemplated by this Agreement, less the amount of $15,000, 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 First Level shall not be
obligated to account to the Company for such disbursements and expenses.
(b) At the Initial Closing, the Company will enter into an
agreement retaining First Level, 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
11
<PAGE>
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 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
12
<PAGE>
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 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
13
<PAGE>
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
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.
14
<PAGE>
(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
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.
15
<PAGE>
(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 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
16
<PAGE>
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.
(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
17
<PAGE>
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 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
18
<PAGE>
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
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
19
<PAGE>
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
(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
20
<PAGE>
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 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.
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 stockholders have agreed not to sell, transfer, hypothecate or convey
any of shares of stock of the Company
21
<PAGE>
held by them, by registration or otherwise, for a period of three years from the
Effective Date without the prior written consent of the Underwriter except that
(i) each such person may sell up to 10,000 shares during each of the second and
third years of such period, and (ii) such persons may sell shares without such
restriction if the common stock of the Company is trading at a price of $7.50
per share of higher. In addition, the holders of the Company's outstanding
convertible notes have agreed not to transfer any shares of Common Stock which
may be issued upon conversion for a period of one year from the Effective Date.
Stop transfer instructions reflecting such restrictions shall be issued to the
transfer agent for the common stock of the company and appropriate legends
reflecting such restrictions shall be placed on the face of the 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 four-year period commencing twelve (12) months from the Effective Date, on
one occasion only at the Company's sole expense, cause the Underwriters'
Warrants and/or the underlying securities 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 theretofore availed
themselves of the right above provided, the Company, at its own expense, will
offer to said holders the opportunity to register such 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
22
<PAGE>
to be given to the Underwriters, such notice shall be in writing addressed to
the Underwriter at 4183 Shell Road, Sasasota, Florida 34242, 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 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 Florida, 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:
FIRST LEVEL CAPITAL, INC.
By:_____________________________________
Alvin Mirman, Chief Executive Officer
23
<PAGE>
First Level Capital, Inc.
4183 Shell Road
Sasasota, Florida 34242
NOLBO, INC.
300,000 Shares
SELECTED DEALER AGREEMENT
, 1999
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
1
<PAGE>
promptly upon the receipt thereof, directly to, and for deposit in the escrow
account with_____________________, 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____________________ 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 "__________ 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___________ . 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 _____________. 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_____________. 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 "_________. 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.
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.
2
<PAGE>
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.
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.
3
<PAGE>
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.
8. COMMUNICATIONS: All communications from you to us should be
addressed to First Level Capital, Inc.,4183 Shell Road, Sasasota, Florida 34242.
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,
First Level Capital, Inc.
By:
----------------------------
4
<PAGE>
First Level Capital, Inc.
4183 Shell Road
Sasasota, Florida 34242
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: _____________, 1999
-----------------------------
(Name of Selected Dealer)
-----------------------------
(Address)
-----------------------------
-----------------------------
(Telephone Number)
By
-----------------------------
(Title)
5
<PAGE>
FINANCIAL CONSULTING AGREEMENT
AGREEMENT made this day of __________________, 1998 between First Level
Capital, 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 ____________,
1999, and conditioned upon the closing of the underwriting contemplated in the
Registration Statement on Form SB-2 (No. 333-66333) 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 Florida
and shall be governed by the laws of such state, without giving effect to the
conflicts of laws rules thereunder.
1
<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:_______________________________________
FIRST LEVEL CAPITAL, INC.
By:_______________________________________
2
<PAGE>
Nolbo Inc.
NUMBER SHARES
CHKN CUSIP 655295 10 3
INCORPORATED UNDER THE LAWS CUSIP 655295 10 3
OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the record holder of
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $.001 PAR VALUE OF
---------------------------- Nolbo Inc. ----------------------------
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney upon surrender of this certificate properly
endorsed. This certificate is not valid until countersigned by the Transfer
Agent and Registrar.
WITNESS the facsimile signatures of its duly authorized officers.
Dated:
- -------------------------- --------------------------
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
JERSEY CITY, N.J.
TRANSFER AGENT
AND REGISTRAR
By
-------------------------
AUTHORIZED SIGNATURE
<PAGE>
Nolbo, Inc
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT- ___________ Custodian ____________
(Cust) (Minor)
under Uniform Gifts to Minors
Act_______________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ____________________________________________ hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
---------------------------------------
| |
| |
---------------------------------------
- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE(S)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
of the Shares of capital stock represented by the within Certificate and do(es)
hereby irrevocably constitute and appoint ______________________________________
Attorney to transfer the said Shares on the books of the within named
Corporation with full power of substitution in the premises.
Dated
------------------------- ----------------------------------------
NOTE: The signature to this assignment
must correspond with the names as
written upon the face of the certificate
in every particular, without alteration
ore enlargement or any change whatever.
Signature must be guaranteed.
Signature(s) Guaranteed:
By
-------------------------------------------------------------
THE SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO S.E.C. RULE
17Ad-15.
<PAGE>
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 __________,
2004(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 $9.90 per share which is subject
to adjustment pursuant to Section 4 hereof.
(c) "Underwriter" shall refer to First Level Capital, Inc.
<PAGE>
(d) "Underwriting Agreement" shall refer to the Underwriting
Agreement dated as of _____________, 1999 between the Company and the
Underwriter.
(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. 333-66333.
(i) Warrant Agreement shall refer to the agreement dated as of
___________, 1999 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 _____________,
2004 (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
2
<PAGE>
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
3
<PAGE>
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.
(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
4
<PAGE>
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.
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,
5
<PAGE>
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.
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
6
<PAGE>
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.
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 Florida 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 ________________, 1999.
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
9
<PAGE>
FORM OF ASSIGNMENT
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
Board of Directors May 28, 1999
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>
STICHTER, RIEDEL, BLAIN & PROSSER, P.A.
ATTORNEYS AT LAW
WANDA RAGAN ANTHONY
RUSSELL M. BLAIN
W. GREGORY GOLSON 110 MADISON STREET
ALBERT D F. GOMEZ, Jr SUITE 200
STEPHEN R. LESUE TAMPA, FLORIDA 33602-4700
CHARLES A. POSTLER
RICHARD C. PROSSER (813) 229-0144
HARLEY E. RIEDEL, Jr FAX (913) 229-1811
DON M. SNCHMR
SCOTR A. SNCHMR
November 13, 1995
Via Hand-Delivery
- -----------------
Mr. Marvin Nolley
GLADSTONES GRILLED CHICKEN
Tampa Street
Tampa, Florida 33602
Re: The certain Retail Lease dated April 27, 1990, by and between
City Towers of Florida, Inc. and Gladstone's Grilled Chicken,
Inc.
Dear Marvin:
By execution of this letter, Madison Street Properties, Inc., as assignee
of City Towers of Florida, Inc. ("Landlord") and Gladstones Grilled Chicken
agree that the above-referenced existing lease for the space located in the
110 Madison Building in Downtown Tampa will be extended under all the same
terms and conditions (except as set forth below) for a period of five (5)
years (a copy of said lease is attached hereto as Exhibit "A". The
commencement date is October 1, 1995, and the new termination date will be
September 30, 2000. The base rent in the lease will be $3,200.00 per month
with a $200 credit for food allowance each month. The rent will remain the
same for the first year of the lease. Thereafter, the base rent will
increase or decrease by one-half of the increase or decrease in the
consumer price index for the preceding year. The food allowance shall be
cumulative from month-to-month throughout this lease term, but any
cumulative unused amount shall expire at the end of the lease term unless
otherwise agreed. Gladstone's Grilled Chicken, Inc., may continue to use
their existing parking spaces for as long as the lot is used as a parking
lot.
Gladstone's Grilled Chicken, Inc., hereby acknowledges that it owes
back rent in the amount of $50, 000. Gladstone's Grilled Chicken, Inc.,
hereby agrees that, in addition to the Landlord's lien, which Landlord has
to secure the payment of this amount, Landlord shall have a security
interest in all assets of Gladstone's Grilled Chicken, Inc., to secure the
payment of this
<PAGE>
Mr. Marvin Nolley
November 13, 1995
Page 2
$50,000 amount. Gladstone's Grilled Chicken, Inc., agrees to execute such
further documents as Landlord may require to evidence or perfect such lien
and authorizes Landlord to execute, in its name, a UCC-1 financing
statement with respect to such lien. If Gladstone's Grilled Chicken, Inc.,
faithfully performs each and every obligation under the renewed lease,
including the payment of monthly rent, then no payment shall be required on
account of this $50,000 past-due rental amount, and Landlord agrees that at
the end of this lease term, Landlord shall release said lien and deem the
past-due amount paid in full, provided that Gladstone's Grilled Chicken,
Inc., has been in full compliance under the terms of this lease. Landlord
agrees that Gladstone's Grilled Chicken, Inc., shall be credited $10,000
annually against the $50,000 debt.
It shall also be the obligation of Gladstone's Grilled Chicken, Inc., to
maintain the common areas used by it for the delivery of its product,
specifically the doors, corridors, and floors in the back entry to the
building, in a clean, safe, and well-maintained fashion. It shall be the
obligation of Gladstone's Grilled Chicken, Inc., to provide such security
devices as the Landlord may reasonably require with respect to all garbage
and garbage containers and to place such garbage containers in the location
that Landlord may require.
Upon your execution of this letter, this will create an extension of the
existing lease and the terms set forth herein.
Very Truly yours,
/s/
----------------
Harley E. Riedel
HER:jr
Enclosure
AGREED TO AND ACCEPTED:
GLADSTONES GRILLED CHICKEN
By: /S/
-------------------
Marvin Nolley
As its President
Dated: Nov. 13, 1995
her\gladstone.it2
<PAGE>
TERRACE RIDGE PLAZA LEASE
REFERENCE PAGE
LANDLORD: MGI Properties
A Massachusetts Trust
LANDLORD'S ADDRESS: 30 Rowes Wharf
Boston, Massachusetts 021 1 0
TENANT: Flame-Broiled Chicken, Inc.
TENANT'S ADDRESS: 5203 East Fowler Avenue
Temple Terrace, Florida 33617
TENANT'S TRADE NAME: Gladestones Grilled Chicken
PREMISES- Suite 5203, 1,660 Square Feet
BUILDING: Terrace Ridge Plaza
USE: Sale of prepared chicken and desserts.
COMMENCEMENT DATE: March 1, 1995
EXPIRATION DATE: February 28, 2000
LEASE TERM: Sixty (60) months
ANNUAL FIXED RENT: Year 1 $24,900 Annually
Year 2 $25,730 Annually
Year 3 $26,560 Annually
Year 4 $27,390 Annually
Year 5 $28,220 Annually
MONTHLY INSTALLMENT
OF FIXED RENT: Year 1 $2,075.00 Monthly
Year 2 $2,144.17 Monthly
Year 3 $2,213.33 Monthly
Year 4 $2,282-50 Monthly
Year 5 $2,351.67 Monthly
TENANT'S PROPORTIONATE SHARE: .01659
SECURITY DEPOSIT: $1,291.67 (carried over from previous lease)
The Reference Page information is incorporated into and made a part of this
Lease. In the event of any conflict between any Reference Page information and
this Lease, this Lease shall control. This Lease includes Exhibits A through F
all of which are made a part hereof.
MGI PROPERTIES FLAME-BROILED CHICKEN, INC.
A Massachusetts
LANDLORD: /S/ TENANT: /S/
------------- -------------------
Name: Karl W. Weller Name: Marvin Nolley
Title: SVP Title: President
<PAGE>
INDEX
Page No.
SECTION I - PREMISES 1
SECTION 2 -TERM 1
SECTION 3 - FIXED RENT 1
SECTION 4 - ADDITIONAL RENT 2
SECTION 5 - COMMON AREAS 4
SECTION 7 - USE 4
SECTION 8 - UTILITIES 5
SECTION 9 - RULES AND REGULATIONS 6
SECTION 10 - CHANGE OF IMPROVEMENTS BY TENANT 6
SECTION 11 - REPAIRS AND MAINTENANCE 6
SECTION 12 - WAIVER OF LIABILITY BY TENANT 7
SECTION 13 - INDEMNIFICATION AND INSURANCE 7
SECTION 14 - SIGNS 8
SECTION 15 - ASSIGNMENT AND SUBLETTING 8
SECTION 16 - REPAIR AFTER CASUALTY 9
SECTION 17 - CONDEMNATION 11
SECTION 18 - LANDLORD'S REMEDIES UPON DEFAULT 11
SECTION 19 - DISCHARGE OF LIENS 13
SECTION 20 - LIABILITY OF LANDLORD 13
SECTION 21 - RIGHTS OF LANDLORD 13
SECTION 22 - SUBORDINATION TO MORTGAGE 14
SECTION 23 - NO WAIVER BY LANDLORD 14
SECTION 24 - VACATION OF PREMISES 14
SECTION 25 - MEMORANDIJM TO LEASE 15
SECTION 26 - RENT DEMAND 15
SECTION 27 - NOTICES 15
SECTION 28 - APPLICABLE LAW AND CONSTRUCTION 15
SECTION 29 - FORCE MAJEURE 15
SECTION 30 - LANDLORD'S LIEN 16
SECTION 31 - QUIET ENJOYMENT 16
SECTION 32 - HOLDING OVER 16
SECTION 33 - BROKERS 16
SECTION 34 - CAPTIONS 16
SECTION 35 - VARIATIONS IN PRONOUNS 16
SECTION 36 - LENDERS'APPROVAL 17
SECTION 37 - SECURITY DEPOSIT 17
SECTION 38 - NO INCOME PARTICIPATION 17
<PAGE>
LEASE
THIS LEASE made and entered into between Landlord and Tenant evidences the
following understandings and agreements. The Reference Page, including all terms
defined thereon, is incorporated as part of this Lease.
WITNESSETH:
PREMISES
Section 1. (a) Landlord leases to Tenant and Tenant rents from Landlord the
Premises consisting of 1,660 square feet, currently being leased (all dimensions
herein are measure from center of the wall to center of the wall for all party
walls and from the outside face of all exterior walls and store fronts), located
at the Building and commonly known as Terrace Ridge Plaza ("Shopping Center").
The Shopping Center is more particularly described on Exhibit "A" attached
hereto and made a part hereof by reference.
(b) The Premises are indicated in red on Exhibit "B" attached hereto and
made a part hereof by reference. "Tenants Proportionate Share" as used in this
Lease shall mean a fraction, the numerator of which is the gross leasable area
of the Premises and the denominator of which is the gross leasable area of the
Shopping Center which is occupied and open for business from time to time (but
in no event less than ninety percent (90%) of the gross leasable area of tile
Shopping Center), in each case as reasonably determined by Landlord.
Notwithstanding the foregoing, in connection with the calculation of Tenant's
Proportionate Share of Tax Cost, Insurance Cost or Shopping Center Cost (as such
terms are hereinafter defined), the denominator of such fraction shall be
reduced by the gross leasable area of those portions of the Shopping Center that
Landlord is not obligated to incur such Tax Cost, Insurance Cost or Shopping
Center Cost. Tenant's Proportionate Share is initially set forth on the
Reference Page. If the denominator in the above fraction increases with the
further development of the Shopping Center, Tenant's Proportionate Share shall
decrease accordingly. Gross leasable area of the Premises means all ground floor
area contained in the Shopping Center designated for tenants' exclusive
occupancy.
(c) Landlord expressly reserves (i) the use of the exterior rear and side
walls and roof of the Premises and any space between the ceiling of the Premises
and the floor above or the roof of the Building, (ii) the right to install,
maintain, use, repair and replace the pipes, ducts,-conduits and wires leading
into or running through the Premises (in locations which will not materially
interfere with 1'enant's use thereof, and (iii) the right to make alterations or
additions to, and to build additional stories on, the Shopping Center and to
build other buildings or improvements on the Common Areas (as hereinafter
defined).
TERM
Section 2. (a) The Lease Term shall be as indicated on the Reference Page. The
term "Commencement Date" means the date after landlord's work on the Premises,
as specifically set forth in Section 6 hereof, will be completed to the extent
reasonably required for the installation by Tenant of Tenant's fixtures,
furnishings and equipment or if no work is to be performed by Landlord pursuant
to Section 6 hereof, on the date keys are delivered to Tenant by Landlord.
FIXED RENT
Section 3. (a) Tenant agrees, without demand and without any deduction or set
off, to pay to Landlord, at Landlord's Address shown on the Reference Page, or
at such other place as Landlord may designate, as a fixed minimum rent for the
Premises per Lease Year, the Annual Fixed Rent indicated on the Reference Page
for such Lease Year in fixed equal monthly installments during each Lease Year
equal to the Monthly Installments of Fixed Rent indicated on the Reference Page
for such Lease Year, each Monthly Installment or Fixed Rent to be payable in
advance on the first day of each month during the Term.
[1]
<PAGE>
(b) Upon execution of this Lease, Tenant shall deposit with Landlord (i)
the Security Deposit as indicated on the Reference Page to be held by Landlord
during tile Term pursuant to the provisions of Section 37 thereof, and (ii)
the first Monthly Installment of Fixed Rent which deposit shall be applied to
the Monthly Installment of Fixed Rent due for the first full month of the Tenn.
(c) Tenant's obligation to pay rent (as hereinafter defined) shall begin
on the earlier to occur of the Commencement Date or the date upon which 'Tenant
shall open for business in the Premises. Rent due for any period which is less
than a calendar month, whether prior to the Commencement Date or after the
Expiration Date, shall be prorated on a daily basis and shall be computed on the
basis of Tenant's monthly rental payments. Tenant shall pay to Landlord the rent
for each such day (i) concurrently with the first Monthly Installment of Fixed
Rent due hereunder; (ii) upon vacating the Premises as herein provided; or (iii)
upon demand from Landlord, as the case may be.
(d) Tenant recognizes that late payment of any rent or other sum due
hereunder will result in administrative expense to Landlord, the extent of which
additional expense is extremely difficult and economically impractical to
ascertain. Tenant therefore agrees that if rent or any other sum is due and
unpaid ten (10) days after said amount is due (or payment is made by a bank
draft which is returned unpaid), such amount shall be increased by late charge
in the amount equal to the greater of- (a) One Hundred Dollars ($100.00) or (b)
a sum equal to five percent (5%) of the unpaid amount. The amount of the late
charge shall be reassessed and added to Tenant's obligation for each successive
monthly period until paid. The provisions of this Section shall not in any way
affect Landlord's remedies pursuant to Section 18 of this Lease.
ADDITIONAL RENT
Section 4. (a) Tenant agrees to pay to Landlord, as additional rent
("Additional Rent") for the Premises, throughout the Term, the
following amounts.
(i) Tenant's Proportionate Share of the cost of operating
and maintaining tile Shopping Center, including the Common
Areas, which areas are defined in Section 5 (the "Shopping
Center Cost") including without limitation, the cost of the
following: management fees, lighting, utilities, cleaning snow
and trash removal, line painting, security (if provided),
maintenance, materials, labor costs, equipment (including,
without limitation, the cost of service agreements on
equipment's), tools, general repairs, employee benefits and
payroll taxes, accounting fees, legal fees, permits, license
and inspection fees, sales, use and service taxes, insurance
(including without limitation, public liability insurance),
and the repair or replacement of paving, curbs, stations,
first aid stations, comfort stations, stairways, truck ways,
loading docks, package pick-up stations, sidewalks, ramps, the
parking lot, driveways, any garage, the roof, landscaping,
drainage facilities, and lighting facilities, as may be
necessary from time to time, and any other cost of operation
of the improvement of the Shopping Center. Shopping Center
Cost shall include depreciation of equipment acquired for use
in Shopping Center maintenance, but shall not include the
original cost thereof.
(ii) Tenant's Proportionate Share of any real estate and ad
valorem taxes and assessments (1) which shall or may become a
lien upon, or be assessed, imposed, or levied by lawful taxing
authorities against the land upon which the Shopping Center is
located, the Building, and other improvements on the Shopping
Center for the tax years (the years for which a lien is
imposed) failing wholly or partially within the term of this
Lease; (2) which arise in connection with the use, occupancy,
or possession of the Shopping Center or any part thereof for
any land, buildings, or other improvements thereon; (3) which
become due and payable out of or for the Shopping Center, any
part thereof, or any land, buildings, or other improvements
thereon; or (4) which are imposed, assessed, or levied in lieu
of, in substitution for, or in addition to any or all of the
(2)
<PAGE>
foregoing (collectively the "Tax Cost"). The "Tax Cost" shall
include any fees, expense or costs (including attorneys' fees,
expert fees and appraisal fees) incurred by Landlord in
protesting any assessments, levies or the tax rate, but shall
not include any charge (,such as a water meter charge) which is
measured
by actual user consumption. A real estate tax bill or copy
thereof submitted by Landlord to Tenant shall be conclusive
evidence of the amount of any real estate taxes, assessments,
or installment thereof. In addition, Tenant shall pay all
taxes levied against personal property, mixtures and Tenant's
improvements in the Premises. If such taxes for which Tenant
is liable are levied against Landlord or Landlord's property
and if Landlord elects to pay the same or if the assessed
value of Landlord's property is increased by inclusion of any
such items and Landlord elects to pay the taxes based oil such
increase, Tenant shall pay to Landlord upon demand that part
of such taxes for which Tenant is liable hereunder.
Tenant's Proportionate Share of all premiums for public
liability, fire and extended coverage or all risk, business
interruption and/or rent loss, and/or any other insurance
policy which may reasonably be carried by Landlord insuring
the Premises, the Building, the Shopping Center, or any
improvements therein (the "Insurance Cost"). In the event
Landlord elects to self insure, insure with a deductible in
excess of $1,000 or obtain insurance coverage in which the
premium fluctuates in proportion to losses incurred, then
Landlord shall estimate the amount of premium that landlord
would have been required to pay to obtain insurance coverage
(or insurance coverage without such provisions) with a
recognized carrier and such estimate amount shall be deemed to
be an Insurance Cost. Landlord may, in a reasonable manner,
allocate insurance premiums for so-called "blanket" insurance
policies which insure other properties as well as the Building
and said allocated amount shall be deemed to be an Insurance
Cost.
(iv) A proportionate share of all utilities services not
measured by a separate meter for the Premises and provided
to Tenant and other tenants of the Shopping Center (the
"Utility Cost"). Tenant's share of the Utility Cost shall
be determined on the basis of the total square feet of
floor area of the Premises as a percentage of the total
square feet of floor area leased by all tenants provided
such services. Tenant shall pay its share of such cost
within ten (10) days after demand thereof. Landlord shall
not bill Tenant for such cost more often than monthly.
(b) Tenant's Proportionate Share of the Shopping Center Cost,
the Tax Cost and the Insurance Cost shall be estimated by
Landlord no later than thirty (30) days prior to the first day
of each Lease Year. Landlord shall notify Tenant of such
estimates which shall be paid by Tenant in advance, on the
first day of each and every calendar month throughout such
Lease Year. At the end of the Lease Year, when Landlord has
calculated the exact amount of Tenant's Proportionate Share of
such costs, Landlord shall notify Tenant of such exact amount.
Any deficiencies in the payments therefore made by Tenant
shall be paid by Tenant to Landlord within ten (10) days of
receipt of said notice. Any surplus paid by Tenant during the
preceding Lease Year shall be applied against the next due
monthly installments of such costs due from Tenant. During any
part of the Term which shall be less than a full calendar
year, any and all such costs shall be prorated on a daily
basis so that Tenant shall only pay Tenant's proportionate
share of such costs attributable to the portion of the
calendar year occurring within the Term.
(c) The term "rent" as herein used shall include Annual Fixed Rent,
and Additional Rent.
[3]
<PAGE>
COMMON AREAS
Section 5. Subject to the Rules and Regulations specified in Section 9 hereof
and Landlord's rights under Section l(c) hereof, Landlord hereby grants to
'Tenant and 'Tenant's employees, agents, customers, and invites the
non--exclusive right, during the Term, to use, subject to the rights of
governmental authorities, casements, public highways and other restrictions of
record, in common with others granted the use thereof the Common Areas located
within the Shopping Center. The term "Common Areas" as used in this Lease shall
mean the entire Shopping Center less the gross leasable area of the Shopping
Center and shall include, without limitation, the parking areas, roadways,
pedestrian sidewalks, loading docks, delivery areas, landscaped areas, and all
other areas or improvements which may be provided by Landlord for the general
use of tenants of the Building and the Shopping Center and their agents,
employees, and customers. Landlord shall be responsible for the operation,
management, and maintenance of the Common Areas. The Banner in which the Common
Areas shall be maintained and the expenditures therefor shall be at the sole
discretion of the Landlord. Landlord may temporarily close parts of the Common
Areas for such periods of time as may be necessary for (i) temporary use as a
work area in connection with the construction of buildings or other improvements
within the Shopping Center or contiguous property, (ii) repairs or alterations
in or to the Common Areas or to any utility type facilities, (iii) preventing
the public from obtaining prescriptive rights in or to the Common Areas, (iv)
emergency or security reasons, or (v) doing and performing such other acts as in
the use of good business judgment Landlord shall determine to be appropriate for
the Shopping Center; provided however, that Landlord shall use reasonable
efforts not to unduly interfere with or disrupt 'Tenant's business.
USE
Section 7. (a) The Premises shall be occupied and used exclusively for the
purposes described on the Reference Page. No amusement games of any character or
description may be used or offered for use in the Premises. No live
entertainment shall be provided in the Premises unless expressly permitted
herein. Tenant shall commence business in the Premises on or before 30 days
after the Commencement Date, shall operate one hundred percent (100%) of the
Premises during the entire Term, and shall keep the Premises fully stocked with
merchandise and staffed with personnel so as to maximize Gross Sales at the
Premises at all times. Tenant shall conduct its
[4]
<PAGE>
business in the Premises on all business days during all to be consistent with
the days and hours of other tenants in the Shopping Center, but in no event less
than eight (8) hours in a business day, six (6) days a week and sixty (60) hours
a week. Tenant may close the premises during reasonable periods for repairing,
cleaning or decorating the Premises, with the prior written consent of Landlord
(b) Tenant agrees to conduct its business in the Premises under
Tenant's Trade Name as indicated on the Reference Page.
(c) Tenant shall use and occupy the Premises in accordance with all
governmental laws, ordinances, rules, and regulations and regulations and shall
keep the premises in a careful, safe, and proper manner. Tenant shall not use,
or allow the Premises to be used, for any purpose other than as specified herein
and shall not use or permit the Premises to be use for any unlawful,
disreputable, or immoral purpose or in any way that will injure the reputation
of the Shopping Center. Tenant shall not permit any activities in the Premises
which may create or cause noise levels which are audible outside the Premises
and disturbing to other tenants or their customers or employees. Tenant shall
not permit the Premises to be occupied in whole or in part by any other person
or entity. Tenant shall not cause or permit the use or occupancy of the Premises
to be or remain a nuisance or disturbance, as determined by Landlord in its sole
discretion, to other tenants, occupants, or users of the Shopping Center.
UTILITIES
Section 8. (a) (i) Landlord shall provide, up to the lease line of the
Premises, the necessary mains and conduits to provide water,
sewer, gas (if available by public utilities) and electric
service to the Premises. Tenant shall duly and promptly pay to
the supplier thereof all bills for utilities consumed in the
Premises measured by a separate meter for the Premises.
(ii) If Tenant shall use any utility service for any purpose
in the Premises and Landlord shall elect to supply such
service, Tenant shall accept and use the same as tendered by
Landlord and pay Landlord therefor at the applicable rates as
filed by Landlord with the proper regulating authorities and
in effect from time to time. In no event shall Tenant pay to
Landlord for any such service more than would be chargeable to
Tenant by the utility company providing such service. Payment
for any and all water, gas, sewer, and electricity service
used by Tenant, if furnished by Landlord, shall be made
monthly as Additional Rent within ten (10) days of the
presentation by Landlord to Tenant of bills therefor.
(b) In the event Landlord supplies any sanitary sewer facilities to
the Premises, 'Tenant shall pay as Additional Rent Tenant's Proportionate Share
of the cost of operating and maintaining such facilities, including, without
limitation, the rental cost and/or amortization of such facilities.
(c) The obligations of Tenant to pay for utility service as herein
provided shall commence on the Commencement Date. Landlord shall not be liable
in damages or otherwise should the furnishing of such services to the Premises
be interrupted by fire, accident, riot, strike, act of God, the making of
necessary repairs or improvements, or other causes beyond the control of
Landlord.
(d) Landlord shall not be liable in the event of any interruption
in the supply of any utilities. Tenant agrees that it will not install any
equipment which will exceed or overload the capacity of any utility facilities
serving the Premises and that if any equipment installed by Tenant shall require
additional utility facilities, installation of the same should be at Tenant's
expense, but only after Landlord's written approval of same.
[5]
<PAGE>
RULES AND REGULATIONS
Section 9. Tenant agrees that Landlord has the right, at any time and from time
to time, for the general welfare of the Shopping Center and its occupants, to
impose reasonable rules and regulations of general application governing the
conduct of occupants of the Shopping Center and their use of the Common Areas.
Tenant agrees to comply with any and all such rules and regulations imposed by
Landlord, including, without limitations those rules and regulations set forth
in Exhibit "E".
CHANGE OF IMPROVEMENTS BY TENANT
Section 10.(a) (i) Upon prior written approval of Landlord, Tenant
shall have the right during the Term to make such interior
alterations, changes and improvements to the Premises
(except structural alterations, changes, or improvements),
as may be proper and necessary for the conduct of Tenant's
business and for the full beneficial use of the Premises;
provided Tenant shall (A) pay all costs and expenses thereof
(B) make such alterations, changes, and improvements in a
good and workmanlike manner, with new materials of
first-class quality, and in accordance with all applicable
laws and building regulations, and (C) provide Landlord
reasonable assurances, prior to Commencement such
alterations, changes, and improvements, that payment for the
same will be made by Tenant.
(ii) In order to obtain Landlord's approval for such
alterations, changes, and improvements, Tenant shall submit
to Landlord plans and specifications describing the design,
materials, style, and appearance of such alterations,
changes, and improvements with reasonable particularity.
Within thirty (30) days after receipt of such plans and
specifications, Landlord shall notify Tenant of any
objections of Landlord. Tenant shall cure the cause for such
objection within thirty (30) days after receipt of such
notice and shall resubmit such plans and specifications for
Landlord's review and approval. Landlord may charge Tenant a
reasonable charge to cover Landlord's overhead as it relates
to such proposed work. Prior to construction, Tenant shall
provide such financial assurances as Landlord shall require
to assure payment of the costs thereof an to protect
Landlord against any loss from any mechanics, materialmen's
or other liens. 'Tenant shall not be permitted to enter upon
the roof of any building without the prior consent of
Landlord, with the exception of maintenance and service of
HVAC and exhaust fans for the restaurant.
(b) Except as otherwise provided below, all signs,
equipment, furnishings,improvements, and trade fixtures
within the Premises, installed in the Premises by Tenant,
and paid for by Tenant, shall remain the property of Tenant
and shall be removed by Tenant upon the termination of this
Lease; provided that any of such as are affixed to the
Premises and require severance shall be removed by Tenant
and Tenant shall repair any damage caused by such removal.
Anything contained herein to the contrary notwithstanding,
the HVAC Facilities (as hereinafter defined), and related
systems shall remain the property of Landlord and shall not
be removed by Tenant.
REPAIRS AND MAINTENANCE
Section 11. (a) Landlord shall maintain the foundation, the exterior structural
walls, and the roof of the Building, as well as the common area of the shopping
center as defined in Exhibit A of this Lease, in good repair, except that Tenant
shall reimburse Landlord for the cost of any repair occasioned by the act or
negligence of Tenant, its agents, employees, invites or licensees. Landlord
shall not be required to make any other improvements or repairs of any kind upon
the Premises and appurtenances thereto, except as otherwise provided in this
Lease. If the Premises should become in need of repairs required to be made by
landlord hereunder, Tenant shall give immediate written notice thereof to
Landlord, and Landlord shall not be responsible in any way for failure to make
any
[6]
<PAGE>
such repairs until a reasonable time shall have elapsed after the giving of such
written notice. Landlord's sole liability shall be limited to the cost of the
repair. Landlord shall not be liable to Tenant for any interruption of Tenant's
business or inconvenience caused Tenant or Tenant's assigns, subleases,
customers, invites, employees, licensees or concessionaires in the Premises on
account of Landlord's performance of any repair, Maintenance or replacement in
the Premises, any other work therein or in the Shopping Center pursuant to
Landlord's rights or obligations under this Lease so long as such work is being
conducted by Landlord in accordance with the terms of this Lease and without
gross negligence or gross disregard for Tenant's business operations. Unless
,otherwise provided herein, there shall be no abatement of' rent and no
liability of' Landlord by reason of any injury to or interference with Tenant's
business arising from the making of any repairs, alterations or improvements in
or to any portion of the Shopping Center or the Premises or in or to fixtures,
appurtenances and equipment therein.
(b)At the sole cost and expense of Tenant and throughout the Term,
Tenant shall keep and maintain the Premises in good order, condition, and
repair, in a clean, sanitary, and safe condition in accordance with the laws of
the State in which the Premises are located, and in accordance with all
directions, rules, and regulations of the health officer, fire marshal, building
inspector, or any other proper officer of the governmental agencies having
jurisdiction over the Premises. Without limiting the foregoing, Tenant shall be
responsible for maintenance, repair, and replacement as needed of all
electrical, plumbing. ventilating, and utility systems located on the Premises
(including the HVAC Facilities), all windows, window fittings and sashes,
interior and exterior doors, all fixtures within the Premises, all interior
walls, floors and ceilings, water heaters, termite and pest extermination, all
of Tenant's improvements and trade fixtures. Tenant shall keep and maintain the
Premises in accordance with all requirements of law concerning the manner,
usage, and condition of the Premises and appurtenances thereto, as the same
shall be in effect from time to time. Tenant shall permit no waste, damage, or
injury to the Premises. If at any time and from time to time during the Term,
and any renewal thereof, Tenant shall fail to make any maintenance, repairs or
replacements in and to the Premises as required in this Lease, Landlord shall
have the right, but not the obligation, to enter the Premises and to make the
same for and on behalf of Tenant, and all sums so expended by Landlord shall be
deemed to be Additional Rent hereunder and payable to Landlord upon demand.
(c)Tenant shall, at its sole cost and expense, maintain, repair, and,
with Landlord's consent, replace the facilities and systems ("HVAC Facilities")
which provide heating, ventilation and air-conditioning ("HVAC Services") to the
Premises. Tenant shall keep in force throughout the Term a maintenance contract
which provides for semiannual inspections for such HVAC Facilities. Tenant shall
pay all costs and expenses of providing HVAC Services to the Premises.
WAIVER OF LIABILITY BY TENANT
Section 12. Landlord and Landlord's agents and employees shall not be liable
for, and Tenant unconditionally and absolutely waives any and all causes of
action, rights, and claims against Landlord and its agents and employees arising
from, any damage or injury to person or property, regardless of cause, sustained
by 'Tenant or any person claiming through or under Tenant, resulting From any
accident or occurrence in or upon the Premises or any other part of the Building
or the Shopping Center, unless the same shall be due to the intentional or
negligence act or omission - of Landlord and/or Landlord's agents and employees.
'This provision shall survive the termination or expirations of this Lease.
INDEMNIFICATION AND INSURANCE
Section 13. (a) Tenant will defend, indemnify, and save Landlord harmless from
and against any and all claims, actions, lawsuits, damages, liability, and
expense (including, without limitation, attorneys' fees) arising from loss,
damage, or injury to persons or property occurring in, on, or about the
Premises, arising out of use of the premises, or occasioned wholly or in part by
any intentional or negligent act or omission of Tenant, 'Tenant's agents,
contractors.
[7]
<PAGE>
(b) At all times from the Commencement Date and during the Term or
any Renewal Term, Tenant shall, at its expense, keep in full force and effect
the following insurance policies insuring Tenant, Landlord and Landlord's
mortgagee (i) public liability insurance on an occurrence basis and with
companies acceptable to Landlord, with a minimum Best Insurance Rating of A-XI
and with minimum limits of Five Hundred Thousand Dollars ($500,000.00) on
account of bodily injuries to or death of one (1) person, and One Million
Dollars ($1,000,000.00) on account of bodily injuries to or death or more than
one (1) person as the result of any one (1) accident or disaster, and Two
Hundred 'Thousand Dollars ($200,000.00) on account of damage to property; (ii)
all risk hazard insurance covering Tenant's improvements to the Premises and all
equipment within and the contents of the Premises for the full replacement value
thereof-, and (iii) business interruption insurance for a minimum of' six (6)
months. Prior to the Commencement Date and upon each renewal, Tenant shall
deposit with Landlord the policies of such insurance, or certificates thereof,
showing Landlord and its mortgages as additional insured, and shall update the
same prior to expiration thereof. Tenant's insurance shall not be cancelable or
modifiable without thirty (30) days prior written notice to Landlord.
(c) With the exception of natural gas service provided to the Premises,
supplied by Peoples Gas Company, Tenant shall not carry any stock of goods or do
anything in or about the Premises which will in any way increase the insurance
rates on the Premises, the Building and/or the Shopping Center. Any such
increase shall be paid by Tenant to Landlord within ten (10) days after written
demand therefor.
(d) All casualty coverage insurance carried by Landlord or Tenant shall
provide for waiver of subrogation against Landlord, Tenant and other tenants in
the Shopping Center on the part of the insurance carrier. Evidence of the
existence of such waiver shall be furnished by either party to the other party
on request.
SIGNS
Section 14. Prior to opening for business, Tenant shall install an
identification sign for the Premises at its cost and expense. Tenant shall not
erect or install any other signs except as expressly permitted by Landlord. All
signs installations from the commencement date forward shall comply with the
terms and provisions of Exhibit "F" and all requirements of appropriate
governmental authorities. All necessary permits or licenses shall be obtained by
Tenant. Tenant shall maintain all permitted signs in good condition and repair
at all times and shall hold Landlord harmless from any injury to person or
property arising from the erection and maintenance of said signs. Upon vacating
the Premises, Tenant shall remove all signs and repair all damage caused by such
removal. Present signs are deemed acceptable to the Landlord.
ASSIGNMENT AND SUBLETTING
Section 15. (a) Neither this Lease nor any or all interest herein shall be sold,
mortgaged, pledged, encumbered, assigned, transferred, or otherwise disposed of
in any manner by Tenant, voluntarily or involuntarily, by operation of law, or
otherwise, nor shall the Premises or any part thereof be sublet, used, or
occupied for the conduct of any business by any third person, firm, or
corporation or for any purpose other than herein authorized, except with the
prior written consent of Landlord, which consent may be withheld in Landlord's
sole and absolute discretion. A sale or sales of fifty percent (50%) or more of
the capital stock of' Tenant (if Tenant is a corporation) or of the interest in
capital, profits, or losses of Tenant (if Tenant is a partnership) shall be
deemed to be a prohibited assignment of this Lease within the meaning of this
Section 15. In the event Tenant desires to sublet the Premises, or any portion
thereof, or assign this Lease, Tenant shall give written notice thereof to
Landlord at least 90 days but not more than 180 days prior to the proposed
commencement date of such subletting or assignment, which notice shall set forth
the name of the proposed subtenant or assignee, the relevant terms of any
sublease or assignment and copies of financial reports and any other relevant
financial information of the proposed subtenant or assignee. Notwithstanding any
permitted assignment or subletting Tenant shall at all times remain directly and
primarily liable for the payment of the rent herein specified and for compliance
with all of its
[8]
<PAGE>
other obligations under this lease. Upon the occurrence of a default under
Section 18 of this Lease, which is not cured within the applicable grace period,
if-the Premises or any part thereof are then sublet, Landlord in addition to any
other remedies provided herein or by law, may collect directly from such
subtenant all rents due and becoming due to Tenant under such sublease and apply
such rent against any sums due to Landlord from Tenant hereunder. No such
collection directly from an assignee or subtenant shall be construed to
constitute a notation or a release of Tenant from the further performance of
Tenant's obligations hereunder. Any guaranty of Tenant executed as consideration
for this Lease shall remain in full force and effect before and after any such
assignment or subletting. Landlord may require Tenant, and Tenant hereby agrees,
to execute a guaranty of this Lease before Landlord consents to any such
assignment or sublease.
(b) In addition to Landlord's right of consent to any subtenant or
assignee, Landlord shall have the option, its sole discretion, in the event of
any proposed subletting or assignment, to ten-terminate this Lease, or in the
case of a proposed subletting of less than the entire Premises, to recapture the
portion of the Premises to be sublet, as of the date the subletting or
assignment is to be effective. The option shall be exercised by Landlord's
giving Tenant written notice thereof within sixty (60) days following Landlord's
receipt of Tenant's written notice as required above. If this Lease shall be
terminated with respect to the entire Premises, the Term shall end on the date
stated in Tenant's notice as the effective date of the sublease or assignment as
if that date had been originally fixed in this Lease for the expiration of the
Tenn. If Landlord recaptures only a portion of the Premises, the Annual Fixed
Rent and Additional Rent during the unexpired Term and Additional Rent due as of
the date immediately prior to such recapture shall be calculated using the
adjusted Annual Fixed Rent in the formula specified in Section 3 hereof. Tenant
shall, at Tenant's own cost and expense discharge in full any outstanding
commission obligation with respect to this Lease and any commissions which may
be owing as a result of any proposed assignment or subletting, whether or not
the Premises are rented by Landlord to the proposed tenant or any other tenant.
(c) Consent by Landlord to any assignment or subletting shall not
include consent to a subsequent assignment or subletting of the Premises by
Tenant or its assignee or subtenant lessee or the consent to the assignment or
transferring of any lease renewal option rights, space option rights or other
special privileges granted to Tenant hereunder (and such options, fights or
privileges shall terminate upon such assignment, unless Landlord specifically
grants in writing such options, rights or privileges to assignee or subtenant.
Any sale, assignment, mortgage, transfer of this Lease or subletting which does
not comply with the provisions of this Section shall be void.
(d) Notwithstanding Landlord's consent, in the event that Tenant sells,
sublets, assigns or transfers this Lease and at any time receives periodic rent
and/or other rental consideration which exceeds that which Tenant would at that
time be obligated to pay to Landlord, Tenant shall pay to Landlord 100% of the
gross increase in such rent as such rent is received by Tenant and 100% of any
other rental consideration received by Tenant from such subtenant or such
assignee.
(e) Should Landlord consent to an assignment or sublease of this Lease,
Tenant, its proposed assignee or subtenant and Landlord shall execute an
agreement prepared by or acceptable to Landlord wherein the proposed assignee or
subtenant agrees to be bound by the terms and conditions of this Lease, and
Tenant will pay to Landlord on demand a sum equal to all of Landlord's costs,
including reasonable attorneys' fees, incurred in connection with such
assignment, sublease or transfer.
REPAIR AFTER CASUALTY
Section 16.(a)(i) Tenant shall immediately give written notice to Landlord of
any damages caused to the Premises by fire or other casualty.
If the Premises shall be destroyed or so injured, due to any
cause, as to be unfit, in whole or in part, for occupancy, and
such destruction or injury could reasonably be repaired within
four (4) months from the receipt of such insurance proceeds,
unless such damage
[9]
<PAGE>
is the result of the negligence or willful misconduct of 'Tenant
or its agents, employees or invites, if during such period
'Tenant shall be deprived of the use of all or any portion of'
the Premises, a proportionate adjustment in the Annual Fixed
Rent and Additional Rent shall be made corresponding to the time
during which, and the portion of the Premises of which, 'Tenant
shall be so deprived shall be calculated using the adjusted
Annual Fixed Rent in the formula specified in Section 3 hereof
'Tenant shall, within sixty (60) days after completion of
landlord's work, complete all work to the Premises (without any
allowance from Landlord) necessary to restore the Premises to
their condition on the date Landlord delivered the Premises to
Tenant.
(ii) If such destruction or injury to the Premises cannot
reasonably be repaired within four (4) months from the receipt
of adequate insurance proceeds covering such destruction or
injury, Landlord shall notify Tenant within ninety (90) days
after the occurrence of such destruction or injury whether or
not Landlord will repair or rebuild. If Landlord elects not to
repair or rebuild, this Lease shall be terminated. If Landlord
shall elect to repair or rebuild, Landlord shall notify Tenant
of the time within which such repairs or reconstruction will be
completed, and Tenant shall have the option, within thirty (30)
days after the receipt of such notice, to elect by written
notice to Landlord to either terminate this Lease and any
further liability hereunder, or to extend the Term by a period
of time equivalent to the time from the occurrence of such
destruction or injury until the Premises are restored to their
former condition. In the event Tenant elects to extend the Term,
Landlord shall restore the structural portions of the Premises
to their former condition within the time specified in said
notice, Tenant shall complete the work required of Tenant
pursuant to paragraph (i) above within thirty (30) days after
completion of Landlord's work, and Tenant shall not be liable to
pay the Annual Fixed Rent and Additional Rent for the period
from the occurrence of such destruction or injury until the
structural portions of the Premises are so restored by Landlord
shall be calculated using the adjusted Annual Fixed Rent in the
formula specified in Section 3 hereof.
(b) In addition to all rights to cancel or terminate this Lease
given to the parties in Section 16 (a) hereof, if the Premises are destroyed or
damaged during the last two (2) years of the Term to the extent of fifty percent
(50%) or more of the total square feet of floor area of the Premises, then
Landlord or Tenant shall have the right to cancel and terminate this Lease as of
the date of such damage or destruction by giving notice thereof within thirty
(30) days after the date of said damage or destruction. However, if Tenant
shall, within thirty (30) days following receipt of Landlord's notice of
cancellation, give Landlord notice of its intention to renew this Lease for any
additional option periods then available to it under the terms of this Lease,
then the notice of Landlord to terminate this Lease shall be of no Force and
effect and Sections 16(a) (ii) hereof, as the case may be shall apply. If no
additional option periods are then available to Tenant, this Lease shall
terminate on the date recited in such notice from Landlord.
(c) Notwithstanding anything to the contrary contained in Sections
16(a) (i), 16(a) and 16(b) hereof, Landlord may cancel this Lease with no
further liability to Tenant whatsoever in the event that following any damage,
destruction or injury to the Premises or the Building, Landlord's mortgagee
elects to require Landlord to make advance payments upon or for any indebtedness
secured by a mortgage on the Shopping Center or any portion thereof.
(d) In the event of any insurance claim against any of Landlord's
insurance policies, Landlord shall have the right to recover from Tenant
Tenant's Proportionate share of the amount of any deductible or other loss not
reimbursed to Landlord by proceeds of insurance. The limit of aggregate
insurance deductible liability for the Tenant shall be no greater than the
Tenant's proportionate share of $15,000.
[10]
<PAGE>
CONDEMNATION
Section 17. (a) In the event the entire Premises shall be taken by condemnation
or right of eminent domain, this Lease shall terminate as of the day possession
shall be taken by the taking authority and Landlord and Tenant shall be released
from any further liability hereunder. In the event only a portion of the
Premises shall be taken by condemnation or right of eminent domain and the
portion so taken renders the balance unsuitable for the purpose of this Lease,
and Landlord is unable to furnish suitable replacement space, either Landlord or
Tenant shall be entitled to terminate this Lease, such termination to become
effective as of the day possession of the Premises shall be taken, provided
notice of such termination is given within thirty (30) days ,after the date of
notice of such taking. If, in such case, this Lease is not terminated, Landlord
agrees to restore the Premises with reasonable speed to all architectural unit
as nearly like its condition prior to such taking as shall be practicable. If
during and/or after the work of restoration, Tenant shall be deprived of the use
of all or any portion of tile Premises, a proportionate adjustment in the Annual
fixed Rent and Additional Rent shall be made corresponding to the time during
which and the portion of the Premises of which Tenant is so deprived shall be
calculated using the adjusted Annual Fixed Rent in the formula specified in
Section 3 hereof.
(b) All damages awarded in connection with the taking of the Premises,
whether allowed as compensation for diminution in value to the leasehold, to the
fee of the Premises, or otherwise, shall belong to Landlord. Notwithstanding the
foregoing, Tenant shall be entitled to make a separate claim to the condemning
authority for damage to merchandise and fixtures, removal and reinstallation
costs, and moving expenses and Tenant's business damage.
(c) Notwithstanding anything to the contrary contained in Sections
17(a) and 19(b) hereof, Landlord may cancel this Lease with no further liability
to Tenant whatsoever in the event that following any taking of the Premises or
the Building by condemnation or right of eminent domain, Landlord's mortgagee
elects to require Landlord to make advance payments upon or for any indebtedness
secured by a mortgage on the Shopping Center or any portion thereof.
LANDLORD'S REMEDIES UPON DEFAULT
Section 18. (a) If, at any time after the Commencement Date, Tenant shall:
(i) be in default in the payment of rent or other sums of
money required to be paid by Tenant, or in the performance
of any of the covenants, terms, conditions, provisions,
rules and regulations of this Lease, and Tenant shall fail
to remedy such default within five (5) days after the
receipt of notice, in the event the default is as to payment
of any sums of money, or within thirty (30) days after
receipt of written notice thereof if the default relates to
matters other than the payment of money (but Tenant shall
not be deemed to be in default if the default requires more
than thirty (30) days to cure and Tenant commences to remedy
such default within said thirty (30) day period, and
proceeds therewith with due diligence);
(ii) commit waste upon the Premises, vacate the Premises or
a substantial portion thereof, fail to continuously occupy
and conduct Tenant's business in the Premises; or
(iii) become insolvent or make an assignment for the benefit
or creditors, or if any guarantor of Tenant shall become
insolvent or make an assignment for the benefit of
creditors, or if a receiver or trustee of Tenant's property
shall be appointed, or if proceedings under the Bankruptcy
Code shall be instituted by or against Tenant or any
guarantor of this Lease and the same shall not be dismissed
by the Court within ninety (90) days after being filed, or
if any event shall happen which, aside from this provision,
would cause any assignment or devolution of Tenant's
interest or occupancy hereunder by operation of law; or
[11]
<PAGE>
(iv) fail to vacate the Premises immediately upon termination
of this Lease, by lapse of time or otherwise; then Landlord
may, in addition to all other remedies given to Landlord in
law or in equity, by written notice to Tenant, terminate this
Lease or without terminating this Lease re-enter the Premises
by summary proceedings or otherwise and, in any event,
dispossess Tenant, it being the understanding and agreement
of' the parties that under no circumstances is this Lease to
be an asset for Tenant's creditors by operation of law or
otherwise. In the event of such re-entry, Landlord may, but
need not, relet the Premises or any part thereof for such rent
upon such terms as Landlord, in its sole discretion, shall
determine (including the right to rent the Premises for a
greater or lesser term than that remaining tinder this Lease,
the right to relet the Premises a as part of a larger area,
and the right to change the character or use made of the
Premises). If Landlord (decides to relet the Premises or a
duty to relet is imposed upon Landlord by law, Landlord and
Tenant agree that Landlord shall only be required to use the
same efforts Landlord then uses to lease other properties
Landlord owns or manages (or if the premises is then managed
for Landlord, then Landlord will instruct such manager to use
the same efforts such manager then uses to lease other space
or properties which it owns or manages); provided, however,
that Landlord (or its manager) shall not be required to give
any preference or priority to the showing or leasing of the
Premises over any other space that Landlord (or its manager)
may be leasing or have available and may place a suitable
prospective tenant in any such available space regardless of
when such alternative space becomes available; provided,
further, that Landlord shall not be required to observe any
instruction given by Tenant about such reletting or accept any
tenant offered by Tenant unless such offered tenant has a
credit worthiness acceptable to Landlord, leases the entire
Premises, agrees to use the Premises in a manner consistent
with this Lease and leases the Premises at the same rent, for
no more than the Term and on the same other terms and
conditions as in this Lease without the expenditure by
Landlord for tenant improvements or broker's commissions. In
any such case, Landlord may, but shall not be required to,
make repairs, alterations and additions in or to the Premises
and redecorate the same to the extent Landlord deems necessary
or desirable, and Tenant shall, upon demand, pay the cost
thereof, together with Landlord's expenses of reletting,
including, without limitation, any broker's commission
incurred by Landlord. In the event of a reletting, Landlord
may apply the rent therefrom first to the payment of
Landlord's expenses, including attorneys' fees incurred by
reason of Tenant's default and the expense of reletting
(including, without limitation, repairs, renovation or
alteration of the Premises) and then to the amount of rent and
all other sums due from Tenant hereunder, Tenant remaining
liable for any deficiency. Any and all deficiencies shall be
payable by Tenant monthly on the date herein provided for the
payment of Monthly Installment of' the Fixed Rent. determining
the deficiencies and rent which would be payable by Tenant
hereunder subsequent to default, the annual rent for each
Lease Year of the unexpired portion of the Term shall be equal
to the average Annual Fixed Rent paid by Tenant from the
commencement of the Term to the time of default, or during the
preceding three (3) full calendar years, whichever period is
shorter.
(b) No-termination of this Lease or any taking or recovery of
possession of the Premises shall deprive Landlord of any of its remedies or
rights of action against Tenant, and Tenant shall remain liable for all past or
future rent, including all Additional Rent, taxes, insurance premiums, and other
charges and rent payable by Tenant under this Lease during the Term. In no event
shall the bringing of any action for rent or other default be construed as a
waiver of the right to obtain possession of the Premises.
[12]
<PAGE>
(c) If suit shall be brought for recovery of possession of the
Premises, for the recovery of rent, or for any Other amount due under the terms
and provisions of this Lease, or because of the breach of any other covenant
herein contained on the part of Tenant, and a breach shall be established,
Tenant shall pay to Landlord all-expenses incurred therefore including
reasonable attorneys' fees.
(d)All rights and remedies provided herein or otherwise existing at law
or in equity are cumulative, and the exercise of one or more rights or remedies
by either party shall not preclude or waive its right to the exercise of any or
all of the others.
DISCHARGE OF LIENS
Section 19. Tenant shall not cause, suffer, or permit the Premises,
Building or the Shopping Center to be encumbered by any liens of mechanics,
laborers or materialmen, any security interests, or .any other liens. Tenant
shall, whenever and as often as any such liens are filed against the Premises,
the Building or the Shopping Center and are purported to be for labor or
material furnished or to be furnished to Tenant, discharge the same of record
within ten (10) days after the date of filing by payment, bonding or otherwise
as provided by law. Tenant shall, upon reasonable notice and request in writing
from Landlord, also defend against Landlord, at Tenant's sole cost and expense,
any action, suit, or proceeding which may be brought on or for the enforcement
of any such lien and shall pay any damages and satisfy and discharge any
judgments entered in such action, suit, or proceeding and shall save harmless
Landlord from any liability, claim, or damages resulting therefrom. In default
of Tenant procuring the discharge of any such lien, Landlord may, without fewer
notice, procure the discharge thereof by bonding or payment or otherwise, and
all costs and expenses which Landlord may incur in obtaining such discharge
shall be paid by Tenant as Additional Rent within ten (10) days of my demand
therefor.
LIABILITY OF LANDLORD
Section 20. If Landlord shall fail to perform any covenant, term or condition of
this Lease, Tenant shall recover a money judgment against Landlord, such
judgment to be satisfied only out of the proceeds of sale received upon
execution of such judgment and levy thereon against the right, title and
interest of Landlord in the Shopping Center as the same may then be encumbered
and neither Landlord nor any of its partners shall be liable for any deficiency.
It is understood that in no event shall Tenant have any fight to levy execution
against any property of Landlord other than its interest in the Shopping Center.
Such right of execution shall be subordinate and subject to any mortgage or
other encumbrance upon the Shopping Center.
RIGHTS OF THE LANDLORD
Section 21. (a) Landlord shall have the right, but not the duty, at all
reasonable times, by itself or through its duly authorized agents, to go upon
and inspect all or any part of the Premises and, at Landlord's option, to make
repairs, alterations and additions to the Premises, the Building, or any part
thereof, or to show the Premises or the Building to lenders or to prospective
purchasers or tenants.
(b)If Tenant shall fail to fulfill any of its obligations hereunder,
Landlord shall have the right to fulfill such obliga6on and any amounts so paid
by Landlord are agreed and declared to be "Additional Rent" due and payable to
Landlord from Tenant with the next installment of Monthly Installment of Fixed
Rent due thereafter under this Lease. Any such amounts which shall be paid by
Landlord on behalf of Tenant shall bear interest from the date so paid by
Landlord at the rate of three percent (3%) per annum above the prime rate of
interest; provided that in no event shall such rate to be charged Tenant exceed
the rate otherwise permitted by law.
[13]
<PAGE>
SUBORDINATION TO MORTGAGE
Section 22 (a) Tenant understands, acknowledges and agrees that this Lease is
and shall be subordinate to any mortgage, ground lease or other lien or
restriction of record now existing or hereafter placed on or affecting the
Premises, the Building or the Shopping Center, or any part thereof, and to any
renewals, refinancing or extensions thereof and to all advances made o!,
hereafter to be, made. upon the security thereof. This subordination provision
shall be self-operative and no further instrument of subordination shall be
required by any mortgagee or lender. However, Landlord is hereby irrevocably
vested with full power and authority to subordinate this lease to any mortgage
or other lien now existing or hereafter placed upon the Premises, the Building
or the Shopping Center as a whole. Further, Tenant agrees, upon the demand or
request of any party in interest, to execute promptly such further instruments
or certificates as may be necessary to carry out the intent of this Section.
(b) Notwithstanding the provisions of Section 22(a) hereof, any
mortgagee may at any time subordinate the lien of its mortgage to the operation
and effect of this Lease without obtaining Tenant's consent thereto, by giving
Tenant written notice thereof, in which even this Lease shall be deemed to be
senior to such mortgage without regard to their respective dates of execution,
delivery, and/or recordation among the land records of the county in which the
Shopping Center is located, and thereafter such mortgages shall have the same
rights as to this Lease as it would have had, were this Lease executed and
delivered before the execution of such mortgage.
(c) Tenant shall, within ten (10) days from request by Landlord,
execute and deliver to such persons as landlord shall specify a statement
certifying that this Lease is unmodified and in full force and effect (or, if
there have been modifications, that the same is in full force and effect as so
modified), stating the dates to which rent and other charges payable under this
Lease have been paid, stating that Landlord is not in default hereunder (or, if
Tenant alleges a default stating the nature of such alleged default) and
further stating such other matters as Landlord or its mortgagee(s) or proposed
purchaser(s) shall reasonably require.
(d) In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deed of trust,
Tenant shall attorn to the purchaser in any such foreclosure or sale and
recognize such purchaser as landlord under this Lease.
NO WAIVER BY LANDLORD
Section 23. No waiver of any of the terms, covenants, provisions, conditions,
rules and regulations imposed by this Lease, and no waiver of any legal or
equitable relief or remedy, shall be implied by the failure of Landlord to
assert any rights, declare any forfeiture, or for any other reason. No waiver of
any of said terms, provisions, covenants, conditions, rules and regulations
shall be valid unless it shall be in writing signed by Landlord. No waiver by
Landlord or forgiveness of performance by Landlord in respect to one or more
tenants of the Building shall constitute a waiver or forgiveness of performance
in respect to Tenant.
VACATION OF PREMISES
Section 24. Tenant shall deliver and surrender to Landlord possession of the
Premises (including all of Tenant's permanent work upon and to the Premises, all
replacements thereof, and all nonrestaurant equipment fixtures permanently
attached to the Premises during the Term upon the expiration of the Term or the
termination of this Lease in any other way in as good condition and repair as
the same were. on the Commencement Date (loss by any insured casualty and
ordinary wear and tear only excepted) and deliver the keys at the office of
Landlord or Landlord's agent; provided, however, that upon Landlord's request
made at least thirty (30) days prior to the end of the Term, or the date Tenant
is otherwise required to vacate the Premises, Tenant shall remove all fixtures
and equipment affixed to the Premises by Tenant, and restore the Premises to
their condition on the Commencement Date (loss by any insured casualty and
ordinary wear and tear
[14]
<PAGE>
only excepted), at Tenant's sole expense. Such removal shall be performed prior
to the earlier of' the end of the Term or the date Tenant is required to vacate,
the Premises.
MEMORANDUM TO LEASE
Section 25. Neither this Lease, nor any memorandum thereof shall be recorded.
RENT DEMAND
Section 26. Every demand for rent wherever and whenever made shall have the same
effect as if made at the time it falls due at the place of payment. After the
service of any notice or commencement of any suit, or final judgment therein,
Landlord may receive and collect any rent due, and such collection or receipt
shall neither operate as a waiver of nor affect such notice, suit or judgment.
NOTICES
Section 27. Any notices, requests or consents required to be given by or on
behalf of Landlord or Tenant shall be in writing and shall be sent by registered
or certified United States mail, return receipt requested, postage prepaid,
addressed to the parties hereto at the respective addressees set forth on the
Reference Page, or at such other address as may be specified from time to time,
in writing. Such notice shall be deemed given when it is deposited in an
official United States Post Office, postage prepaid. Copies of all notices to
Landlord shall be sent to:
Axiom Real Estate Management, Inc. 4014 Gunn Highway
Suite 270
Tampa, FL 33624
APPLICABLE LAW AND CONSTRUCTION
Section 28 The laws of the State of Florida shall govern the validity,
performance, interpretation and enforcement of this Lease. The invalidity or
unenforceability of any provision of this Lease shall not affect or impair any
other provision. All negotiations, considerations, representations and
understandings between the parties are incorporated herein. This Lease may be
modified or altered only by agreement in writing between the parties. Tenant
shall have no right to quit the Premises or cancel or rescind this Lease except
as expressly granted herein. This Lease has been negotiated by Landlord and
Tenant and this Lease, together with all of the terms and provisions hereof,
shall not be deemed to have been prepared by either Landlord or 'Tenant, but by
both equally. If any provision of this Lease is held to be invalid or
unenforceable the validity and enforceability of the remainder of this Lease
shall not be affected hereby.
FORCE MAJEURE
Section 29. In the event that either party hereto shall be delayed, hindered in
or prevented from performing any act required hereunder by reason of strikes,
lockouts, inability to procure materials, failure of power, restrictive
governmental laws or regulations, riots, insurrection, war, adverse weather
conditions or any other reason of a like nature not the fault of or beyond the
control of the party delayed in performing such act, the performance of such act
shall be excused for the period of the delay. Notwithstanding anything contained
herein to the contrary, Tenant shall not excused from the payment of rent or
other sums of money which may become due under the terms of this Lease.
[15]
<PAGE>
LANDLORD'S LIEN
Section 30, (a) Tenant hereby grants to Landlord a lien and security interest on
all property of Tenant now or hereafter placed (in or upon the Premises, iii(i
such property shall be and remain subject to such lien, however, shall not be
superior to lien from a lending institution, supplier or leasing company, if
such lending institution, supplier or leasing company has a perfected security
interest in the equipment, furniture or other, tangible personal property which
originated in a transaction whereby Tenant acquired same.
(b) The provisions of this Section relating to such lien and security
interest shall constitute a security agreement under and subject to the Uniform
Commercial Code of the State of Florida, so that Landlord shall have and may
enforce a security interest on all property of Tenant now or hereafter placed in
or on the Premises, in addition to and cumulative of Landlord's liens and rights
provided by law or by the other terms and provisions or this Lease.
(c) Tenant agrees to execute as debtor such financing statement or
statements and such other documents as Landlord may now or hereafter request in
order to protect or further perfect Landlord's security interest.
Notwithstanding the above, Landlord shall neither sell nor withhold from
Tenant's business records.
QUIET ENJOYMENT
Section 31. Landlord hereby covenants and agrees that if Tenant shall perform
all of the covenants and agreements herein stipulated to be performed by Tenant,
Tenant shall at all times during the continuance hereof have peaceable and quiet
enjoyment and possession of the Premises without any manner of let or hindrance
from or any person or persons claiming by, through, or under Landlord.
HOLDING OVER
Section 32, If at the expiration of the Term or any renewal thereof Tenant
continues to occupy the Premises, such holding over shall not constitute a
renewal of this Lease, but Tenant shall be a tenant from month to month upon all
of the terms, provisions, covenants, and agreements hereof, except that Landlord
may, in its sole discretion, increase the amount of the Annual Fixed Rent
thereafter due hereunder to all amount equal to 150% of the Annual Fixed Rent
being paid immediately prior to such expirations.
BROKERS
Section 33, Tenant represents and warrants that it has not deal with any real
estate broker other than the real estate broker (s) listed on the Reference Page
in connection with this Lease. Landlord shall pay any commission or fee due such
broker (s) as a result of' this Lease. Tenant agrees to indemnify Landlord
against, and hold it harmless from, all liabilities arising from any claim
resulting from its having deal with any other broker in connection with this
Lease.
CAPTIONS
Section 34, All paragraph titles or captions contained in this Lease are for
convenience only and shall bit be deemed part of the context of this Lease.
VARIATIONS IN PRONOUNS
Section 35. All of the terms and words used in this Lease regardless of the
number and gender in which they are used, shall be interpreted as the context or
sense of this Lease or any paragraph or clause herein may require, as if such
terms and words had been fully and properly written in the appropriate number
and gender.
[16]
<PAGE>
LENDERS'APPROVAL
Section 36, Notwithstanding anything contained herein to the contrary,
Landlord's obligations and Tenant's rights under this Lease are conditioned upon
its approval by Landlord's construction lender and permanent lender. In the
event Landlord is unable to obtain such approvals, Landlord shall notify Tenant
of the basis therefor and Tenant shall have thirty (30) days in which to agree
to any such changes within said thirty (30) days in to make the within Lease
acceptable to it
SECURITY DEPOSIT
Section 37, The Security Deposit shall be held by Landlord without liability for
interest and as security for the performance by Tenant of Tenant's covenants and
obligations under this Lease. It being expressly understood that the Security
Deposit shall not be considered an advance payment of rental or a measure of
Tenant's damages in case of default by Tenant. The Security Deposit shall be
paid to Landlord upon execution of this Lease. Landlord may, in its sole
discretion, from time to time without prejudice to any other remedy, use the
Security Deposit to the extent necessary to make good any default under this
Lease or to satisfy any other covenant or obligation of Tenant hereunder.
Following any such application of the Security Deposit, Tenant shall pay to
Landlord on demand the amount so applied in order or restore the Security
Deposit to its original amount. If Tenant is not in default at the termination
of this Lease, the balance of the Security Deposit remaining after any such
application shall be returned by Landlord to Tenant to Landlord as may arise
under this Lease, including, without limitation, the obligation to restore the
Premises pursuant to Section 24 hereof. If Landlord transfers its interest on
the Premises during the term of this Lease Landlord may assign the Security
Deposit to the transferee and thereafter Landlord shall have no further
liability to Tenant for the return of such Security Deposit.
NO INCOME PARTICIPATION
Section 38, Neither Tenant nor any other person having an interest in the
possession, use occupancy or utilization of the Premises shall enter into any
lease, sublease, license, concession or other agreement for use, occupancy or
utilization of the Premises which provides for rental or other payment for such
use, occupancy or utilization based in whole or in part on the net income or
profits, derived by any person from the Premises or portion thereof leased,
used, occupied or utilized (other than an amount based on a fixed percentage or
percentages of receipts of sales), and that any such purported lease, sublease,
license, concession or other agreement shall be absolutely void and ineffective
as a conveyance of any right or interest in the possession, use occupancy or
utilization of any part of the mortgaged Premises.
IN WITNESS WHEREOF, the parties hereto have set their hands this 22nd day of
March, 1995 as to Landlord, and this 16th day of March, 1995 as to Tenant.
WITNESSES: MGI PROPERTIES
A Massachusetts Trust
/S/ Landlord: /s/
- -------------------------------- -------------------------
Name: Karl W. Weller
/S/ Title: SVP
- --------------------------------
FLAME-BROILED CHICKEN, INC.
/S/ Tenant: /s/
- -------------------------------- -------------------------
Name: Marvin Nolley
/S/ Title: President
- --------------------------------
.
[17]
<PAGE>
ADDENDUM
Lease Notification
Reference the Lease dated July 20, 1987, between Marvin M. Nolley D/B/A
Gladstone's Grilled Chicken and Terrace Ridge Limited. The lease dated July 20,
1987 is rendered null and void by the execution of this Lease Agreement dated
March 22, 1995.
Exclusive Use
Landlord shall not lease to any other tenant in the shopping center, as
described in Exhibit A of the Lease, a restaurant or retail establishment whose
primary business is the sale of prepared chicken.
[18]
<PAGE>
EXHIBIT A
TERRACE RIDGE PLAZA
Legal Description
PT'. OF LOTS B AND C BLOCK 9 DES AS COM AT 'SW COR OF LOT D BLOCK 9 THN N 123.70
FT. (124.1 FT PLAT) TO SW COR OF LOT C FOR POB THN N ALG W BDRY OF LOT C123.87
FT. (124.1 FT PLAT) CON'T N ALG W BDRY OF LOT B 84..30 FT THN E 186.03 FT' TO W
R/W OF 56TH ST THN ALG R/W S 16.05 FT THN E 4 FT THIN 2 192.17 F'I' MOL TO S
BDRY OF LOT C THN W 190.43 FT MOL TO POB AND PT 'OF LOTS A AND B BLOCK 10 DESC
AS COM AT' SW COR OF LOT C BLOCK 10 THN N ALG E R/W OF 53RD ST '123.88 FT (124.1
FT' PLAT) TO SW COR OF LOT B FOR POB THN N 11.82 FT THN E I IO FT THN N 205.11
FT TO S R/W OF FOWLER AVE THN E ALG R/W 198.44 FT TO E BDRY OF LOT A THN S
132.50 FT THN CONT S 84..30 FT TO SE COR OF LOT B BLOCK 1O THN W 306.09 FT (305
FT PLAT) TO POB... LOT D BLOCK 9 LOT C BLOCK 10
Al
<PAGE>
EXHIBIT B
TERRACE RIDGE PLAZA
Suite 5203
1,660 Square Feet
EXHIBIT C
Landlord's Work
Landlord provides Premises in an "as-is" condition
EXHIBIT D
Tenant's Work
Tenant is required to have Landlord's written approval of
all renovations to the Premises
B1-C1-D1
<PAGE>
EXHIBIT E
RULES AND REGULATIONS
1. Landlord reserves the right to change from time to time the format of
the signs or lettering on the signs, and to require replacement of any
signs previously approved pursuant to Section 16 to conform to
Landlord's new standard sign criteria established pursuant to any
remodeling of the Shopping Center. All signs shall be illuminated
between the hours of' 8:00 a.m. through I 1:00 p.m. Monday through
Sunday. Landlord shall pay for signs as a result of any changes Landlord
may require to the signage.
2. Tenant shall not, without the prior written consent of Landlord (i)
paint, decorate or make any changes to the store front of the Premises;
or (ii) install any exterior lighting, awning or protrusions, signs,
advertising matter, decoration or painting visible from the exterior of
the Premises or any coverings on exterior windows and doors, excepting
only dignified displays of customary type in store windows. If Landlord
objects in writing to any of the foregoing, Tenant shall immediately
discontinue such use.
3. Tenant shall not, (i) conduct or permit any fire, bankruptcy or auction
sale (whether real or fictitious) unless directed by order of a court of
competent jurisdiction, or conduct or permit any legitimate or
fictitious "Going Out of Business" sale nor represent or advertise that
it regularly or customarily sells merchandise at ""manufacturers,"
"distributor's, or "wholesale", "warehouse," or similar prices or permit
to be used, the malls or sidewalks adjacent to such Premises, or any
other area outside the Premises for solicitation or for the sale or
display of any merchandise or front any other business, occupation or
undertaking, or for outdoor public meetings, circus or other
entertainment (except for promotional activities in cooperation with the
management of the Shopping Center); (iii) use or permit to be used any
sound broadcasting or amplifying device which can be heard outside of
the Premises or any flickering lights; or use or permit to be used any
portion of the Premises for any unlawful purpose or use or permit the
use of any portion of the Premises as regular living quarters sleeping
apartments or lodging rooms or for the conduct of any manufacturing
business.
4. Tenant shall at all times keep the Premises at a temperature
sufficiently high to prevent freezing of water pipes and mixtures.
Tenant shall not, nor shall Tenant at any time permit any occupant of
the Premises to: (i) use, operate or maintain the Premises in such
manner that any rates for any insurance carried by Landlord, or the
occupant of any premises within the Shopping Center, shall thereby be
increased; or (ii) commit waste, perform any acts or carry on any
practices which may injure the Shopping Center or be a nuisance or
menace to other tenants in the Shopping Center. Use of natural gas
provided by Peoples Gas is permitted.
5. Tenant shall not obstruct any sidewalks, passages, exits, entrances,
truck ways, loading docks, package pick-up stations, pedestrian sidewalk
and ramps, first aid and comfort stations, or stairways of the Shopping
Center. No tenant and no employee or invitee of any tenant shall go upon
the roof of the Shopping Center without notifying the Landlord, with the
exception of maintenance and repair of the exhaust fan and HVAC.
6. Landlord will furnish Tenant free of charge with two keys to each door
lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant, upon the termination of its tenancy, shall
deliver to Landlord the keys of all doors which have been furnished to
Tenant, and in the event of loss of any keys so furnished, shall pay
Landlord thereof.
7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with Landlord's instructions
in their installation, existing equipment is acceptable to Landlord.
E1
<PAGE>
8. Tenant shall not place a load upon any floor which exceeds the designed
load per square foot or the load permitted by law. Landlord shall have
the right to prescribe the weight, size and position of all equipment,
materials, furniture or other property brought into the Premises. Heavy
objects shall stand on such platforms as determined by Landlord to be
necessary to properly distribute the weight. Business machines and
mechanical equipment belonging to Tenant which cause noise or vibration
that may be transmitted to the structure of Tenant's store or to any
other spice to such a degree as to be objectionable to Landlord or to
any tenants shall be removed by Tenant, from the Tenant's store.
Landlord will not be responsible for loss of, or damage to, any
equipment or other properly from any cause, and all damage done to the
Shopping Center by maintaining or moving such equipment or other
property shall be repaired at the expense of Tenant.
9. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were
constructed, foreign substance or any breakage, stoppage or damage
resulting from the violation of' this rule shall be home by the tenant
who, or whose employees or invites, shall have caused it.
10. Tenant shall not install any radio or television antenna loudspeaker or
other device on the roof or exterior walls of Tenant's store. Tenant
shall not interfere with radio or television broadcasting or reception
from or in the Shopping Center or elsewhere.
11. Except as approved by Landlord, Tenant shall not damage partitions,
woodwork or plaster or in any way deface the Premises. Tenant shall not
cut or bore holes for wires, Tenant shall not affix any floor covering
to the floor of the Premises in any-manner except as approved by
Landlord. Tenant shall repair any damage resulting from noncompliance
with this rule.
12. Tenant shall not install, maintain or operate upon the Premises or in
any Common Areas under the exclusive control of Tenant any vending
machine or video game without Landlord's prior written consent.
13. Tenant shall store all its trash and garbage in containers within its
Premises and/or in the portion of the Common Areas designated by
Landlord. Tenant shall not place in any trash box or receptacle any
material which cannot be disposed of in the ordinary and customary
manner of trash and garbage disposal. All garbage and refuse disposal
shall be made in accordance with directions issued from time to time by
Landlord.
14. Tenant shall not use in any space any hand trucks except those equipped
with the rubber tires and side guards or such other material-handling
equipment as Landlord may approve. Tenant shall not bring any other
vehicles of any kind into Tenant's store.
15. Employees of Landlord shall not perform any work or do anything outside
of their regular duties unless under special instructions from Landlord.
16. All loading of goods shall be done only at such times, in the areas, and
through the entrances, designated for such purposes by Landlord. The
delivery or shipping of merchandise, supplies and fixtures to and from
the leased premises shall be subject to such rules and regulations as,
in the judgment of the Landlord, are necessary for the proper operation
of the leased premises or- the Shopping Center.
l7. Tenant and Tenant's employees shall park their cars only in such portion
of the parking area designated for such purposes by Landlord. Tenant
shall furnish Landlord with state automobile license numbers assigned to
Tenant's employees within five (5) days after taking possession of the
premises and shall thereafter notify the Landlord of any changes within
five (5) days after changes occur. In the event that the Tenant or its
employees fail to park their cars in designated parking areas as
aforesaid, then the Landlord at its option shall
E2
<PAGE>
charge the Tenant Ten Dollars ($10.00) per day or partial day per car
parked in ally area other than that designated.
18. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenant or tenants but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in
favor of any other tenant or tenants, nor prevent Landlord from
thereafter enforcing any such Rules and Regulations against any or all
of the tenants of the Shopping Center.
19. These Rules and Regulations are in addition to and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the
Shopping Center.
20. Tenant shall be responsible for the observance of' all of the foregoing
rules by 'Tenant's employees, agents, clients, customers, invites and
guests.
21. Tenant shall use, at Tenant's cost, such pest extermination contractor
as Landlord may direct and at such intervals as Landlord may require.
22. Trailers and trucks shall not be permitted to remain parked overnight in
any area of the Shopping Center, whether loaded, unloaded or partially
loaded. No parking shall be permitted, with the exception of two
catering vans parked at the west end of the parking lot as defined by
Exhibit A of the Lease, of any trailer, truck or other vehicle in any
area of the Shopping Center at any time for purposes of advertising or
promotion without Landlord's written permission
Tenant agrees to comply with all additional and supplemental rules and
regulations upon notice of same from the Landlord.
E3
<PAGE>
EXHIBIT F
SIGN REGULATIONS FOR IN LINE TENANTS TERRACE RIDGE PLAZA,
TEMPLE TERRACE, FLORIDA
In recognition of the importance of signage to a strip type shopping center, and
the impact that signs have on both the aesthetics of a center and its economic
welfare, the following sign regulations have been designed to meet the special
requirements of Terrace Ridge Plaza. The goal and purpose of the following
regulations is to make Terrace Ridge Plaza a viable and attractive business area
working within the scope of and elaborating upon the Zoning Ordinance of the
City of Temple Terrace and its signage regulation. 'Therefore, the following
regulations are recommended as the official standards to be used in approving or
disapproving all signs for the Terrace Ridge Plaza, a development.
Section I
A. Each commercial Tenant or Enterprise within the subject shall be permitted to
erect a sign which meets the requirement outlined in sections 11, III and IV of
the following sign regulations. No other exterior signs will be permitted in or
attached to any building.
Section 11
A. Shopping Center Canopy Signs
1. Each tenant shall furnish and hang on the building canopy directly in
front of his/her leased premises an illuminated sign to identify the
tenant doing business on the premises.
2. Signs shall not be used for advertising other than that which is
implicit in "Identifying the 'Tenant," nor shall "brand names" be used
except when a brand name coincides with the name of the Tenant's store.
Advertising symbols or logo-types may be used only as specifically
provided in Section IV.
3. Canopy signs shall be individual cut out letters mounted on fascia.
'There shall be no fluorescent tubes or other lamps exposed to view.
Fasteners and reinforcements shall be concealed as far as possible.
Access panel(s) for maintenance shall be flush and tight fitting. All
exposed non-illuminating surfaces shall be painted to match landlord's
color. Sign body shall be formed of Alucobond or a similar material
which will provide a flat surface free of "oil canning" or surface
variations.
4. Lettering shall be permitted in one or two lines. No lettering or logo
types shall be permitted other than on the surface of the sign facing
the parking or public access streets.
5. All signs will be restricted to a height of 3'0" overall, (except for
building "E" where height will be restricted to 2'6" overall), must be
centered on the face of the canopy. Signs shall not be located within
3'0" from each lease line. Lettering shall have a maximum depth of six
inches.
6. Lettering style of the trim cap letters may be of a style and color of
the tenants choice subject to owner approval.
7. Trim cap signs are normally to be internally illuminated by fluorescent
tubes. Ballasts should be concealed inside the sign.
The electrical conduit for the Tenant signage shall be provided and installed by
the Landlord, the electrical wire and hook-up shall be provided and installed by
the Tenant. As part of the Tenant's
F1
<PAGE>
electrical work, lie shall include a seven-day timing device to control the
canopy sign so that hours of illumination can be determined in accordance with
the overall shopping center policy.
8. Valances or signs painted on glass storefronts will not be permitted
except as outlined in Section III.
9. The total sign area for any one Tenant shall be limited to an area equal
to five (5) percent of the product to the total width of the Tenant
space times the height to the top of the canopy.
10. The area of the sign shall be the area of the smallest circle, square,
or rectangle that can be drawn on a scaled elevation of the sign that
could enclose all parts of the sign.
11. No paper signs shall be permitted to be applied to the interior or
exterior faces of the storefront glass or other material.
Section III
A.
1. Door sign content shall be limited to the business name only.
2. Door signs shall be composed of 4 inch high (maximum) white vinyl,
individual numbers adhered cleanly to the transom glass.
3. Door sign letters shall be Helvetica medium style.
B. Address Signs
1. Address signs shall be composed 4 inch high (maximum) white vinyl,
individual numbers adhered cleanly to the transom glass.
2. Address sign numbers shall be Helvetica medium style.
3. Address numbers shall be centered on tile transom glass.
C. Pylon Signs
1. No pylon or freestanding signs shall be permitted within the limits of
shopping center except as approved by the City of Temple Terrace.
D. Rear Door Signs
1. For purpose of receiving deliveries the business name and address number
only shall be permitted on rear metal doors.
2. Address numbers shall be composed of 4 inch high (maximum) white vinyl
individual numbers adhered cleanly to the hollow metal doors.
3. Business name shall be composed of 3 inch high (maximum) white vinyl
individual numbers adhered cleanly to the hollow metal door.
4. Address number and business name shall be Helvetica medium style.
Section IV
A. All signs shall require written approval by the Landlord prior to
fabrication. The Tenant shall cause the sign company to submit detailed
drawings, in triplicate, to the Landlord. The Landlord will review the
drawings and return copies marked to indicate approval of the necessary
documents. No sign shall be erected by any Tenant except in accordance
with the
F2
<PAGE>
drawing bearing the Landlord's final approval, and only after the
issuance of a sign permit by the City of Temple Terrace.
B. It is recognized that on occasion, it may be desirable to include
advertising symbols or logotypes in the sign work of a particular
Tenant. Further, it may such standard units will not fit every criteria
stated above. Therefore, if a Tenant desires to include such devices in
their sign, a drawing of the entire sign whereon a waiver of one or more
of the criteria is requested shall be submitted, and if the Landlord
considers the entire sign to be suitable with respect to the shopping
center as a whole, a waiver will granted subject to the approval of the
City of Temple Terrace.
C. A permit shall be secured from the City of Temple Terrace prior to the
installation of any new signs within Terrace Ridge Plaza shopping
center.
D. Upon vacating his leased premises, each Tenant is responsible for
removing his sign and returning the canopy, sign mounting points, front
and rear door, and all glazing to original conditions and configuration;
cleaning, patching and repairing as necessary. Any aforementioned
repairs not provided by the tenants shall be undertaken by the
Landlord/deducted from the tenants security deposit and/or backcharged
to the tenant.
E. Non-illuminated signs will not be permitted.
Section V
A. The above sign regulations shall apply only to the Terrace Ridge Plaza
Shopping Center.
B. All signs shall comply with the above regulations and the applicable
Zoning Ordinance of the City of Temple Terrace.
C. No variance shall be permitted except as recommended by the Zoning Board
of Appeals and approved by the City Council.
F3
<PAGE>
LEASE
THIS INDENTURE made the lst day of July, 1998, between Amenitique, Inc.,
hereinafter called lessor, and Marbo, Inc., hereinafter called lessee.
WITNESSETH: That in consideration of the payment of the rents and the
performance of the covenants herein agreed to be paid and performed by the
lessee, in the manner herein stated, the lessor does hereby lease unto the
lessee the following described property, situated at 8426 Sunstate Street,
Tampa, Florida 33634 for the term of One Year to-wit: from the lst day of July,
1998, to the 30th day of June, 1999, at the monthly rental of Four Hundred
dollars ($400.00), lawful money of the United States of America, payable monthly
in advance, on the lst day of each month of said term.
And the said lessee does hereby promise to pay the rent in the manner
specified, and not to assign this lease, or let, or underlet the whole or any
part of said premises, or make, or suffer to be made any alterations therein,
without the written consent of the lessor, which consent shall not be
unreasonably withheld. The said lessor shall not be called upon to make any
improvements or repairs, the lessee agreeing to keep the premises in good order
at their own expense, suffering no strip or waste thereof; but the lessor may
enter to view or make improvements or repairs at their option.
The lessee further agrees not to use or keep on the premises any article
which the insurance companies may deem extra-hazardous, or which increases the
rate of insurance. At the expiration of said term, or prior termination of this
lease, the lessee will quit and surrender the premises in as good order as
he/she received them, reasonable wear thereof and damage by the elements
excepted.
And should default be made in the payment of any portion of the rent when
due, and for 15 days thereafter, or in the keeping of any of the covenants
herein contained, said lessor, their agent or attorney, may (subject to the
giving of such notice, if any, as shall be required by law) re-enter and take
possession of said premises, remove all persons therefrom and at Lessors option
terminate this lease, or without terminating this lease the lessor may have the
remedies provided in Civil Code of the State of Florida.
WITNESS our hands this ___1st____ day of July, 1998
Signed and Delivered in the Presence of
_______/s/_____________
Marbo', Inc.
_______/s/_____________
Amenitique, Inc.
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENTS
AGREEMENT made as of March 1, 1999 by and among Nolbo, Inc., Marvin M.
Nolley ("Nolley"), Bo G. Grektorp ("Grektorp") and Sean Flaherty ("Flaherty").
WHEREAS, Messrs. Nolley, Grektorp and Flaherty each entered into
employment agreements dated July 1, 1998 with Nolbo; and
WHEREAS, the parties desire to amend the respective employment
agreements of each of Messrs. Nolley, Grektorp and Flaherty.
NOW, THEREFORE, it is agreed as follows:
1. Section 2(a) of Nolley's employment agreement is hereby amended such
that his base salary for the period July 1, 1998 to June 30, 1999 is $52,000.
Thereafter, Nolley's base salary shall be $75,000, which the Board has the right
to increase.
2. Section 2 (a) of Grektorp's employment agreement is hereby amended
such that his base salary for the period July 1, 1998 to June 30, 1999 is $-0-.
Thereafter, Grektorp's base salary shall be $25,000, which the Board has the
right to increase.
3. Section 2 (a) of Flaherty's employment agreement is hereby amended
such that his base salary for the period July 1, 1998 to June 30, 1999 is
$10,000. Thereafter, Flaherty's base salary shall be $15,000, which the Board
has the right to increase.
4. Section 2 (c) is hereby added to Nolley's employment agreement and
shall read as follows: "For the period June 1, 1998 to May 31, 1999, it was
intended that Nolbo would pay a bonus equal to 10% of cash flow from operations
with an amount to be received of not less than $12,500 and a maximum of $30,000.
Nolbo and Nolley have agreed that the bonus for said period shall be $-0-.
Thereafter, bonuses shall be at the discretion of Nolbo's Board of Directors."
5. Section 2 (c) is hereby added to Grektorp's employment agreement and
shall read as follows: "For the period June 1, 1998 to May 31, 1999, it was
intended that Nolbo would pay a bonus equal to 5% of cash flow from operations
with an amount to be received of not less than $5,000 and a maximum of $15,000.
Nolbo and Grektorp have agreed that the bonus for said period shall be $-0-.
Thereafter, bonuses shall be at the discretion of Nolbo's Board of Directors."
6. Section 2 (c) is hereby added to Flaherty's employment agreement and
shall read as follows: "For the period June 1, 1998 to May 31, 1999, it was
intended that Nolbo would pay a bonus equal to 2-1/2% of cash flow from
operations with an amount to be received of not less than $2,000 and a maximum
of $6,000. Nolbo and Flaherty have agreed that the bonus for said period shall
be $-0-. Thereafter, bonuses shall be at the discretion of Nolbo's Board of
Directors."
<PAGE>
7. The respective employment agreements of Nolley, Grektorp and
Flaherty as amended by this agreement represent the entire agreement between the
parties and may only be amended in writing executed by the parties thereto.
Except as set forth in this agreement.
8. 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 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.
IN WITNESS WHEREOF, the parties hereto have executed this agreement and
affixed their hands and seal the day and year first above written.
NOLBO, INC.
BY: /s/ MARVIN M. NOLLEY
-----------------------------------
Marvin M. Nolley, President
/s/ MARVIN M. NOLLEY
-----------------------------------
Marvin M. Nolley
/s/ BO GREKTORP
-----------------------------------
Bo Grektorp
/s/ SEAN FLAHERTY
-----------------------------------
Sean Flaherty
<PAGE>
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 Amendment No. 2 to Form SB-2 Registration Statement
for Nolbo, Inc. of our report included herein, which has a date of September 1,
1998, except for Note 3 as to which the date is September 18, 1998, relating to
the balance sheet 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.
/s/ Aidman, Piser & Company, P.A.
Tampa, FL
May 28, 1999
