As filed with the Securities and Exchange Commission on May ____, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM SB-2/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EAT AT JOE'S, LTD
(Name of Small Business Issuer in its Charter)
DELAWARE 5812 75-2636283
(State or other jurisdiction (Primary standard industrial (I.R.S Employer
of incorporation) classification code number) (Identification no.)
670 WHITE PLAINS ROAD
SCARSDALE, NEW YORK 10583
(914) 725-2700
(Address and Telephone Number of Principal Executive Offices)
JOSEPH FIORE, CHIEF EXECUTIVE OFFICER
EAT AT JOE'S, LTD.
670 WHITE PLAINS ROAD
SCARSDALE, NEW YORK 10583
(914) 725-2700
(Name, Address, and Telephone Number of Agent For Service)
Copies to:
JAMES EISBERG, ESQ
BECKMAN, MILLMAN & SANDERS, LLP
116 JOHN STREET, 13TH FLOOR
NEW YORK, NEW YORK 10038
(212) 406 4700
FAX (212) 406 3750
<PAGE>
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
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. / /
CALCULATION OF REGISTRATION FEE
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Proposed Proposed Max.
Title of Each Class Maximum Offering Aggregate Amount of
of Securities Amount to be Price per Offering Registration
to be registered registered(1) Security Price(1) fee
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Warrants
188,000 $ .01 $ 1,880 $ 1
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Common Stock
$.0001 par value 292,000(2) $2,00 $ 584,000 $ 170
underlying Warrants (2)
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Common Stock $.0001
par value issuable
upon conversion of
outstanding Convertible 2,500,000(3) $2.00 $5,000,000 $1,450
Preferred Stock
and Debentures
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Total
$5,585,880 $1,621
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(ii)
<PAGE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(2) Pursuant to Rule 415 under the Securities Act of 1933, as amended, this
registration statement also covers such additional securities as may become
issuable upon exercise of warrants issued to J. P. Carey Securities, Inc.,
and Sovereign Capital Advisers (and their designees) who served as agent
for the placement of the Company's securities in March, May and July,
1998.
(3) Plus such indeterminate additional number of shares as may be issuable
pursuant to adjustment provisions of such securities.
------------------------
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.
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EAT AT JOE'S, LTD
CROSS REFERENCE SHEET
PURSUANT TO RULE 404
ITEM NUMBER IN
FORM SB-2 AND TITLE OF ITEM LOCATION IN PROSPECTUS
PROSPECTUS
- - ---------------------------------------------------
Item 1. Front of Registration Statement and
Outside Front Cover of Prospectus....... Cover Page
Item 2. Inside Front and Outside Cover Pages
of Prospectus . . . . . . . . . . . . Inside Front and Outside
Cover Pages of Prospectus
Item 3. Summary Information and Risk Factors.... Prospectus Summary; The
Company; Risk Factors
(iii)
<PAGE>
Item 4. Use of Proceeds......................... Not Applicable
Item 5. Determination of Offering Price......... Outside Front Cover Page;
Price Range of Common
Stock
Item 6. Dilution................................ Not Applicable
Item 7. Selling Security Holders................ Principal and Selling
Shareholders
Item 8. Plan of Distribution.................... Principal and Selling
Shareholders
Item 9. Legal Proceedings....................... Business
Item 10. Directors, Executive Officers, Promoters
and Control Persons..................... Management
Item 11. Security Ownership of Certain Beneficial
Owners and Management................... Principal and Selling
Shareholders
Item 12. Description of Securities............... Description of Securities
Item 13. Interest of Named Experts and Counsel... Legal Matters; Experts
Item 14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Management
Item 15. Organization Within Last Five Years..... Certain Transactions
Item 16. Description of Business................. The Company; Business
Item 17. Management's Discussion and Analysis or
Plan of Operation.................... Management's Discussion
and Analysis of Financial
Condition and Results of
Operations
Item 18. Description of Property................. Business
Item 19. Certain Relationships and Related
Transactions......................... Certain Transactions
Item 20. Market for Common Equity and Related
Stockholder Matters.................. Outside Front Cover Page
of Prospectus; Risk
Factors
(iv)
<PAGE>
Item 21. Executive Compensation.................. Management
Item 22. Financial Statements.................... Financial Statements
Item 23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure . . . . . .. . . . . .. Not Applicable
(v)
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION; DATED ____________, 1998
Eat at Joe's Logo
EAT AT JOE'S, LTD
_____________ Shares of Common Stock
__________________ shares of Common Stock of Eat at Joe's, Ltd. ("Company")
are being sold ("Offering") by certain shareholders of the Company (the "Selling
Shareholders"). The Company will not receive any proceeds from the sale of the
shares by the Selling Shareholders. See "Principal and Selling Shareholders."
The Selling Shareholders may be deemed to be "underwriters" as defined
in the Securities Act of 1933, as amended ("Securities Act"). If any
broker-dealers are used by the Selling Shareholders, any commission paid to
broker-dealers and, if broker-dealers purchase any Selling Shareholders Common
Stock as principals, any profits received by such broker-dealers on the resale
of the Selling Shareholders Common Stock may be deemed to be underwriting
discounts or commissions under the Securities Act. In addition, any profits
realized by the Selling Shareholders may be deemed to be underwriting
commissions.
The Company's Common Stock is quoted on the OTC Bulletin Board under
the symbol JOES. The closing bid price for the Common Stock on __________ , 1998
as reported by the OTC Bulletin Board was $__________ per share.
See "Price Range of Common Stock."
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING
ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
<PAGE>
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Proceeds to Selling
Price to Public Underwriting Discount Stockholders
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Per Share $_______ Not Applicable $_________
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Total $__________ Not Applicable $_________
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The date of this Prospectus is , 1998.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes no exercise of the Warrants referred to herein.
Investors should carefully consider the information set forth under the caption
"Risk Factors."
THE COMPANY
The business of Eat at Joe's, Ltd. (the "Company") is to develop, own and
operate theme restaurants called "Eat at Joe's(R)." The Company presently owns
and operates six restaurants; four restaurants located in Philadelphia,
Pennsylvania, one in Cherry Hill, New Jersey, and one in Vorhees, New Jersey
("Existing units"). The Company is planning to open six additional restaurants
before the end of 1998. All these restaurants will be located within two hours
from the Company's operation's center in Cherry Hill, New Jersey. All
restaurants will be located in high traffic locations. The restaurants will be
modest priced restaurants catering to the local working and residential
population rather than as a tourist destination.
The Company's operations have generated losses since its inception.
Approximately $2,600,000 will be required to open the additional restaurants.
Management anticipates that sources of funds for the construction of the
additional units will come from cash flow from operations ($350,000); private
placements of securities ($1,650,000); and landlord contributions for build out
alterations ($600,000).
The restaurants will be decorated in a 1950's diner style. Each restaurant
will offer three meals a day from an extensive 50's diner style menu including:
eggs and hot cakes for breakfast; soup, sandwiches and salads for lunch;
burgers, meat loaf and chicken entrees for dinner. All units will offer take out
service.
The Company opened a 550 square foot Philadelphia location ("Shops at
Penn") in November 1997, 600 square foot Cherry Hill location in December 1997
;470 square foot location in Vorhees, New Jersey in May, 1998; 845 square foot
location at the Philadelphia Airport in May 1998; 4,000 square foot University
City Diner location (Philadelphia) in July 1998 and 2,000 square foot Market
East (Philadelphia) location in August 1998 . Four of the restaurants are
located in food courts in malls with common seating provided by the mall
operator and two are sit down restaurants
The Company's revenues are not yet sufficient to cover its expenses and it
is compelled to issue securities convertible into common stock at a significant
discount to market to finance itself. The Company plans to open 2 additional
3
<PAGE>
restaurants in September 1998 and the Company projects it will be operating on a
break-even basis at the end of its third quarter.
The Company was incorporated in January 1988 as a Delaware corporation.
Through December 1992 it engaged in businesses unrelated to the present
restaurant business. See Note 1 to Consolidated Financial Statements, page F-8.
The Company was inactive from December 1992 through January 1997 when its
shareholders adopted a plan of reorganization and merger with E.A.J. Holding
Co., Inc. and subsequently began development of its present business. The
Company's executive offices are located at 670 White Plains Road, Scarsdale, New
York 10583 and its telephone number is 914 725 2700. The Company's operation's
office is located at 1415 Route 70 East, Suite 412, Cherry Hill, New Jersey
08034
THE OFFERING
Common Stock Offered by the Selling Stockholders.............. 1,745,362 shares
Common Stock to be outstanding after the Offering.............14,727,175 shares
OTC Bulletin Board Symbol..................................................JOES
SUMMARY FINANCIAL INFORMATION
===============================================================================
Fiscal Years Ended December 31
===============================================================================
1993(1) 1994(1) 1995(1) 1996 1997
-------------------------------------------------
Income Statement Data:
Net sales $ - $ - $ - $ - $ 84,781
Gross profit - - - - 27,926
Operating loss - - - (14,762) (294,718)
Other expense, net - - - (3,938) (4,304)
------- -------
Loss before inc. taxes - - - (18,700) (299,022)
Income taxes - - - - -
Net Loss $ - $ - $ - $(18,700) $(299,022)
Per Share Data
Net loss $ - $ - $ - $ - $ (0.02)
---------
Weighted average
shares outstanding 313,973 313,973 313,973 6,535,247 11,729,107
4
<PAGE>
December 31, 1997
Actual As Adjusted(2)
Balance Sheet Data:
Working Capital $ (1,118,474) $(1,118,574)
Total Assets 2,314,972 2,314,972
long-term debt - -
Shareholders' equity 912,315 912,315
- -----------------------
(1) The Company was inactive during 1993, 1994 and 1995
(2) Reflects the consummation of the offering as if the offering had occurred at
December 31, 1997.
RISK FACTORS
An investment in the Common Stock of the Company offered hereby is highly
speculative and involves a high degree of risk. Investors could lose their
entire investment. Prospective investors should carefully consider the following
factors, along with the other information set forth in this Prospectus, in
evaluating the Company, its business and prospects before purchasing the Common
Stock.
LACK OF PROFITABILITY; LACK OF OPERATING HISTORY
The Company opened its first restaurant in November 1997 and second in
December 1997. The Company had a loss of $211,522 for the year ended December
31, 1997. The Company had a working capital deficit of 1,118,474 and a retained
earnings deficit of $1,373,257 at December 31, 1997. Prior to the opening of its
Philadelphia location ("Shoppes at Penn'), the Company had no operations or
revenues. Accordingly, the Company's operations are subject to all of the risks
inherent in the establishment of a new business enterprise, including the lack
of operating history. The likelihood of success of the Company must be
considered in light of the problems, expenses, difficulties, complications and
delays frequently encountered in connection with the establishment of any
company. There can be no assurance that future operations of such restaurants,
or any future restaurants, will be profitable. Future revenues and profits, if
any, will depend upon various factors, including the market acceptance of the
Company's 50's diner decor concept, the quality of restaurant operations, and
general economic conditions. Frequently, restaurants, particularly
theme-oriented restaurants, experience a decline of revenue growth or of actual
revenues as the restaurant's "initial honeymoon" period expires and consumers
tire of the related theme. There is no assurance that the Company can operate
profitably or that it will successfully implement its expansion plans, in which
5
<PAGE>
case the Company will continue to be dependent on the revenues of the Existing
Units. Furthermore, to the extent that the Company's expansion strategy is
successful, the Company must manage the transition to multiple site operations,
higher volume operations, the control of overhead expenses and the addition of
necessary personnel.
LIMITED MANAGEMENT EXPERIENCE/NEED FOR ADDITIONAL MANAGEMENT
The success of the Company will depend upon the Company's ability to
attract and retain a highly qualified management team. Joseph Fiore and Andrew
Cosenza, Jr., the Company's Chairman and President respectively, each have over
15 years experience in the multi-unit restaurant business. The Company will also
need to hire other corporate level and management employees to help implement
and operate its expansion plans, including a chief financial officer, retail
leasing specialist and construction coordinator. The failure to obtain, or
delays in obtaining, key employees could have a material adverse effect on the
Company. See "Management."
LIMITED BASE OF OPERATIONS
The Company currently operates only 6 restaurants and plans to open 6
additional restaurants in 1998. The combination of the relatively small number
of locations and the significant investment associated with each new unit may
cause the operating results of the Company to fluctuate significantly and
adversely affect the profitability of the Company. Due to this relatively small
number of current and planned locations for the current year, poor operating
results at any one unit or a delay in the planned opening of a unit could
materially affect the profitability of the entire Company. Future growth in
revenues and profits will depend to a substantial extent on the Company's
ability to increase the number of its restaurants. Additionally, the Company's
history does not provide any basis for prediction as to whether individual units
will tend to show increases or decreases in comparable unit sales. The Company
has not conducted extensive market surveys in determining restaurant locations
but has relied on the expertise of its management. Management anticipates that
sources of funds for the construction of the additional units will come from
cash flow from operations ($350,000); private placements of securities
($1,650,000); and landlord contributions for build out alterations ($600,000).
An investor, Sareq, Inc., has agreed to purchase $1,650,000 principal amount of
the Company's convertible debentures during 1998. $450,000 principal amount has
been purchased as of the date of this prospectus. While there is no assurance
that the Company will be able to continue raising funds from private sources, it
believes it will able to continue to do so.
LIMITED FINANCIAL RESOURCES; NEED FOR ADDITIONAL FINANCING
The Company's ability to execute its business strategy depends to a
significant degree on its ability to obtain substantial equity capital to
finance the development of additional restaurants. During the remainder of this
year, in addition to the sale of $1,650,000 of convertible debentures descried
6
<PAGE>
above, the Company will seek to raise expansion funds as needed by the sale of
equity securities or by borrowing. There is no assurance that the Company will
be successful in this financing effort. The proceeds("New Financings"), if
obtained will provide the Company with the financing required to develop and
open 8 additional restaurants in 1999 and for working capital purposes. The
total cost of developing the Shops at Penn unit was approximately $195,000,
which included $125,000 for the design and construction, $50,000 for equipment,
furniture and fixtures, and $20,000 for other costs. The total cost of
developing the Cherry Hill unit was approximately $215,000, which included
$140,000 for the design and construction, $55,000 for equipment, furniture and
fixtures, and $20,000 for other costs. The Company estimates that the costs of
developing 6 additional restaurants presently planned for the remainder of this
calendar year will be approximately $2,600,000. If the proceeds of the New
Financings are not sufficient to develop such units, the expansion strategy of
the Company will be adversely affected. If additional funds are required, there
can be no assurance that any additional funds will be available on terms
acceptable to the Company or its shareholders. New investors may seek and obtain
substantially better terms than were granted its present investors and the
issuance of such securities would result in dilution to the existing
shareholders. Furthermore, as the Company prepares to open additional units, it
will expend a relatively higher amount on administrative expenses than would a
mature Company with such operations.
SECURITY INTEREST
The Company's indebtedness to the holder of its convertible debenture
in the principal amount of $450,000 due July 2001, is collateralized by
substantially all of the assets of the Company. If this debt is not paid, the
secured party could foreclose on substantially all of the assets of the Company
which would materially adversely affect the Company's business plans and
financial condition.
EXPANSION STRATEGY
The Company's ability to open and successfully operate additional units
will also depend upon the hiring and training of skilled restaurant management
personnel and the general ability to successfully manage growth, including
monitoring restaurants and controlling costs, food quality and customer service.
While the Company's present senior management has experience developing and
operating multi-unit facilities, the Company anticipates that the opening of
additional units will give rise to additional expenses associated with managing
operations located in multiple markets. Furthermore, the Company believes that
competition for unit-level management has become increasingly intense as
additional restaurant chains expand to new markets. Achieving consumer awareness
and market acceptance will require substantial efforts and expenditures by the
Company. An extraordinary amount of management's time may be drawn to such
matters and negatively impact operating results. There can be no assurance that
the Company will be able to enter into any other contracts for development of
additional units on terms satisfactory to the Company. Accordingly, there can be
no assurance that the Company will be able to open new units or that, if opened,
those units can be operated profitably. See "Business -- Expansion Strategy."
7
<PAGE>
THE RESTAURANT INDUSTRY AND COMPETITION
The restaurant industry is highly competitive with respect to price,
service, quality and location and, as a result, has a high failure rate. There
are numerous well-established competitors, including national, regional and
local restaurant chains, possessing substantially greater financial, marketing,
personnel and other resources than the Company. There can be no assurance that
the Company will be able to respond to various competitive factors affecting the
restaurant industry. The restaurant industry is also generally affected by:
changes in consumer preferences, national, regional and local economic
conditions, and demographic trends. The performance of restaurant facilities may
also be affected by factors such as traffic patterns, demographic
considerations, and the type, number and location of competing facilities. In
addition, factors such as inflation, increased labor and employee benefit costs,
and a lack of availability of experienced management and hourly employees may
also adversely affect the restaurant industry in general and the Company's
restaurants in particular. Restaurant operating costs are further affected by
increases in the minimum hourly wage, unemployment tax rates and similar matters
over which the Company has no control. Finally, by the nature of its business,
the Company would be subject to potential liability from serving contaminated or
improperly prepared food.
CONCEPT EVOLUTION
The Company presently intends that most of its future restaurants will
feature the 50's diner decor similar to that in the Existing Units. The
restaurants will be positioned to offer an "every day" type of dining
opportunity, i.e. a place where individuals who live and work nearby can
comfortably enjoy a wide variety of high quality fresh food at affordable
prices. However, this concept is evolving and a number of factors could change
this theme as applied in different locations. These factors include demographic
and regional differences, locations that have more or less traffic than the
areas in which those units are located, type of available floor space, and the
availability of specialty items such as antiques. Accordingly, future units
could be larger or smaller than those units, could vary in the mix of
retail/restaurant operations, and could have differences in the application of
the 50's diner theme.
Management of the Company has a long relationship with owners of
commercial real estate and brokers acting on their behalf. Properties have been
offered to the Company on a regular basis and the Company usually has been able
to obtain the locations it was seeking.
CENTRALIZED FOOD COMMISSARY.
Soups, sauces, toppings and certain entrees are prepared in a central
commissary and delivered to individual restaurant units. The agreement with the
commissary is on a month to month basis. Management believes the individual
restaurant units can prepare all food in house without any material increase in
costs and may in the future do so.
8
<PAGE>
LONG-TERM, NON-CANCELABLE LEASES
In carrying out its plan to develop, own and operate theme restaurants,
the Company will enter into leases which are non-cancelable and range in term
from 8 to 15 years. Any right to sublet or assignment requires approval of the
landlord. If a restaurant unit does not perform at a profitable level, and the
decision is made to close the restaurant, the Company may nevertheless be
committed to perform its obligations under the applicable lease, which would
include, among other things, payment of the base rent for the balance of the
respective lease term. If such a restaurant closing were to occur at one of
these locations, and the Company was unable to sublet the premises, the Company
would lose a unit without necessarily receiving an adequate return on the its
investment. See "Business -- Property and Unit Locations" and "Certain
Transactions."
TRANSACTIONS WITH MANAGEMENT; CONFLICTS OF INTEREST
Anthony Cosenza, Jr., the Company's President is the owner of Cozco
Management Corp., a mall food court operating company in the Philadelphia area.
Cozco operates 24 food court restaurant units, none which carry out the concept
of the Company's operations. In the opinion of management, none of the Company's
existing or planned locations compete with the Cozco locations. To date the
Cozco locations, which do not carry out the 50s theme or offer a diner type menu
have been located in food courts and offer a limited service menu dictated by
the landlord. In the event of a conflict for a sit down location or a food court
location featuring a diner type menu, the Company shall have a right of first
refusal. The Company's operations office consists of 3,000 square feet and
shares space with Cozco in Cherry Hill, New Jersey. The Company pays Cozco a
monthly rent of $3,786 on a month to month tenancy. See "Certain Transactions."
CONTROL OF THE COMPANY; DEPENDENCE ON KEY PERSONNEL
Following this Offering, Joseph Fiore and Andrew Cosenza Jr., will control
approximately 39 % of the Company's Common Stock. Therefore, Messrs. Fiore and
Cosenza will have the ability to direct its operations and financial affairs and
to substantially influence the election of members of the Board of Directors of
the Company. The loss of the services of Messrs. Fiore and/or Cosenza,who
respectively devote 95% and 80% of their working time to the Company could have
a substantial adverse effect on the Company's ability to achieve its objectives.
The Company currently has no key man insurance on either Mr. Fiore or Mr.
Cosenza.
CURRENT REGISTRATION STATEMENT
The Company is required to maintain the effectiveness of the
Registration Statement until the earlier of August, 2000 or the date on which
the holders of the Company's Preferred Stock or Debentures shall have sold the
Common Shares into which said securities were convertible.
9
<PAGE>
GOVERNMENT REGULATION
The restaurant business is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. The failure to maintain food and liquor licenses would have
a material adverse effect on the Company's operating results. In addition,
restaurant operating costs are affected by increases in the minimum hourly wage,
unemployment tax rates, sales taxes and similar costs over which the Company has
no control. Many of the Company's restaurant personnel will be paid at rates
based on the federal minimum wage. Recent increases in the minimum wage are not
expected to materially impact the Company's labor costs. The Company will be
subject to "dram shop" statutes in certain states, including New Jersey and
Pennsylvania which generally allow a person injured by an intoxicated person to
recover damages from an establishment that served alcoholic beverages to such
intoxicated person. The Company has obtained liability insurance against such
potential liability.
TRADEMARKS
The Company has been granted a servicemark registration for the name Eat at
Joe's. There can be no assurance that the Company can protect such mark and
design against prior users in areas where the Company conducts operations. There
is no assurance that the Company will be able to prevent competitors from using
the same or similar marks, concepts or appearance.
ABSENCE OF DIVIDENDS
At the present time, the Company intends to use any earnings which may be
generated to finance further growth of the Company's business. Accordingly,
investors should not purchase the shares with a view towards receipt of cash
dividends from any Shares.
RISK OF LOW-PRICED STOCKS
Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act
of 1934 ("Exchange Act") impose sales practice and disclosure requirements on
certain brokers and dealers who engage in certain transactions involving " a
penny stock."
Currently the Company's Common Stock is considered a penny stock for
purposes of the Exchange Act. The additional sales practice and disclosure
requirements imposed on certain brokers and dealers could impede the sale of the
Company's Common Stock in the secondary market. In addition, the market
liquidity for the Company's securities may be severely adversely affected, with
concomitant adverse effects on the price of the Company's securities.
Under the penny stock regulations, a broker or dealer selling penny
stock to anyone other than an established customer or "accredited investor"
(generally, an individual with net worth in excess of $1,000,000 or annual
incomes exceeding $200,000, or $300,000 together with his or her spouse) must
make a special suitability determination for the purchaser and must receive the
purchaser's written consent to the transaction prior to sale, unless the broker
10
<PAGE>
or dealer or the transaction is otherwise exempt. In addition, the penny stock
regulations require the broker or dealer to deliver, prior to any transaction
involving a penny stock, a disclosure schedule prepared by the Securities and
Exchange Commission ("SEC") relating to the penny stock market, unless the
broker or dealer or the transaction is otherwise exempt. A broker or dealer is
also required to disclose commissions payable to the broker or dealer and the
registered representative and current quotation for the securities. In addition,
a broker or dealer is required to send monthly statements disclosing recent
price information with respect to the penny stock held in a customer's account
and information with respect to the limited market in penny stocks.
SHARES ELIGIBLE FOR FUTURE SALE
The sale, or availability for sale, of substantial amounts of Common Stock
in the public market subsequent to this offering may adversely affect the
prevailing market price of Common Stock and may impair the Company's ability to
raise additional capital by the sale of its equity securities. See "Description
of Securities -- Shares Eligible for Future Sale."
POTENTIAL ANTI-TAKEOVER EFFECTS OF DELAWARE LAW
The Company is subject to Delaware statutes regulating business
combinations ,tender offers and proxy contests, which may hinder or delay a
change in control of the Company. See "Description of Securities."
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1998, as further adjusted to give effect to the sale of the Common
Stock offered hereby.See the Consolidated Financial Statements.
June 30, 1998
Actual As adjusted(1)
Short-term debt:
Notes payable and shareholder loans $2,467,395 $2,467,395
---------- ----------
Long-term debt - -
Shareholder's equity:
Preferred Stock, $.0001 par value, 10,000,000 shares
authorized, 115 shares issued and outstanding - -
Common Stock, $.0001 par value, 50,000,000 shares
authorized, 12,754,305 issued and outstanding; 1,275 1,275
Common Stock to be issued 4 4
Additional paid-in capital 4,900,827 4,900,827
Retained deficit (2,974,814) (2,974,814)
Total shareholders' equity 1,927,292 1,927,292
Total capitalization $4,394,687 $4,394,687
11
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(1)Does not include 1,060,000 shares of Common Stock issuable upon exercise of
Warrants at an exercise price of $1.00 per share; 102,000 shares issuable
upon the exercise of Warrants at an exercise price of $1.49 per share; and
154,000 shares issuable at an exercise price of $1.79 per share and 36,000
shares issuable at an exercise price of $1.38 per share.
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated statement of income date set forth below with respect
to the year ended December 31, 1996 and 1997, and the consolidated balance sheet
data at December 31, 1996 and 1997, are derived from, and are qualified by
reference to, the audited consolidated financial statements included elsewhere
in this prospectus. The data presented below are qualified bay reference to
Consolidated Financial Statement included elsewhere in this prospectus and
should be read in conjunction with such financial statements and related notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
===============================================================================
Fiscal Years Ended December 31
===============================================================================
1993(1) 1994(1) 1995(1) 1996 1997
Income Statement Data:
Net Sales $ - $ - $ - $ - $ 84,781
Gross Profit - - - - 27,926
Operating Loss - - - (14,762) (294,718)
Other expense, net - - - (3,938) 4,304)
-------- -------
Loss before inc. taxes - - - (18,700) (299,022)
-------- --------
Income taxes - - - - -
Net Loss $ - $ - $ - $(18,700) (299,022)
-------- --------
Per Share Data:
Net Loss - - - - (0.02)
------
Weighted average shares
outstanding 313,973 313,973 313,973 6,535,247 11,729,107
12
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===============================================================================
Fiscal Years Ended December 31
===============================================================================
1993(1) 1994(1) 1995(1) 1996 1997
Balance Sheet Data:
Working Capital $ - $ - $ - $100,247 $(1,118,474)
Total Assets - - - 291,072 2,314,974
Long-term debt - - - - -
Shareholders' equity - - - 271,337 912,315
- ---------------
(1) The Company was inactive during 1993, 1994 and 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company was re-activated in January 1997 to develop, own and operate
1950's style diner style restaurants featuring popular dishes at affordable
prices under the name "Eat at Joe's(R)." The Company opened its first restaurant
in the Shoppes at Penn in November , 1997 and its second restaurant in the
Cherry Hill Mall, Cherry Hill, New Jersey in December 1997, and through August
1998, 4 additional restaurants.. Prior to opening these restaurants the Company
had no revenues and its activities were devoted solely to development. The
Company is developing 6 additional restaurants to open during the current
calendar year.
Future revenues and profits, if any, will depend upon various factors,
including market acceptance of the 1950's diner style concept, the quality of
the restaurant operations, the ability to expand to multi-unit locations and
general economic conditions. The Company's present sources of revenue are
limited to its Existing Units. There can be no assurances the Company will
successfully implement its expansion plans, in which case it will continue to be
dependent on the revenues from the Existing Units. The Company also faces all of
the risks, expenses and difficulties frequently encountered in connection with
the expansion and development of a new and expanding business. Furthermore, to
the extent that the Company's expansion strategy is successful, it must manage
the transition to multiple site operations, higher volume operations, the
control of overhead expenses and the addition of necessary personnel.
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RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996.
The Company had no revenues in 1996 except for receipt of $70,000 received
from the sale of securities and its activities were devoted solely to
development. Revenues from operations commenced in November 1997 with the
opening of the Shoppes at Penn restaurant. Accordingly, comparisons with periods
prior to November 1997 are not meaningful.
Total Revenues -For the year ended December 31, 1997, the Company had total
sales of $85,000 compared with no sales for the previous year.
Costs and Expenses - For the year ended December 31, 1997, the Company had a
net loss of $299,022 compared with a net loss of $18,700 for the prior year. The
net loss for 1997 is largely attributable to additional expenses incurred as the
Company increases its Corporate overhead structure for the development of
additional locations supported by revenues from primarily two operating units
which were open for business for 6 weeks and 3 weeks respectively. Given the
limited operations which took place in 1997, any discussion of operating
expenses as a percentage of sales would not be meaningful and might be
misleading.
LIQUIDITY AND CAPITAL RESOURCES
The Company has met its capital requirements through the sale of its Common
Stock and borrowings. In May of 1996, the Company sold 14,455 shares of its
Common Stock for $10,000. In November 1996, the Company completed the sale of
6,000,000 shares of its Common Stock and 2,000,000 warrants for $60,000 pursuant
to a Reg. D-504 offering. In 1997, $940,000 was raised through the exercise of
940,000 warrants. The warrants are exerciseable at $1 per share and expire in
November, 1998. Also in 1997, $995,000 was borrowed including $690,000 from
Messrs. Fiore and Cosenza . As of June 30, 1998, $452,000 remained due to Mr.
Fiore and none due Mr. Cosenza. The net proceeds to the Company were used for
additional unit development and working capital.
For the year ended December 31, 1996, the Company used $35,000 in cash flow
for operating activities and during the year ended December 31, 1997, the
Company provided $98,000 in cash flow for operating activities.
Since the Company's re-activation in January, 1997 , the Company's
principal capital requirements have been the funding of (i) the development of
the Company and its 1950's diner style concept, (ii) the construction of its
Existing Units and the acquisition of the furniture, fixtures and equipment
therein and (iii) towards the development of additional units as described
below. Total capital expenditures for the Cherry Hill and Philadelphia Units
were approximately $210,000 and $195,000, respectively.
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The Company is developing additional restaurants in the Philadelphia/Cherry
Hill area and other areas. The Company had incurred approximately $1,000,000 in
the development of these units as of April 30, 1998. When completed, the Company
estimates that capital expenditures for these additional units will be
approximately $9,200,000. The units are expected to be opened by the end of
1998.
In addition to construction in progress, the Company has capitalized
approximately $104,000 of direct costs relating to the Cherry Hill and
Philadelphia units and under construction. It is the Company's policy to
amortize the direct costs of hiring and training the initial work force and
other direct costs associated with opening a new unit over a twelve-month
period, beginning when the facility is opened, if the recoverability of such
costs can be reasonably assured.
Subsequent to December 31, 1997, the Company has raised approximately
$2,750,000 through the sale of preferred stock and later, debentures, both of
which are convertible into Common Stock of the Company (See "Description of
Securities", page 29). These securities were issued pursuant to an exemption
under the Securities Act of 1933, as amended. To induce investors to make an
equity investment in the Company, it was necessary to offer a security which
paid a dividend and enjoyed a priority over common shareholders in the event of
a liquidation of the Company. At the time of the sale of the preferred stock,
officers were not prepared to lend additional sums to the Company nor were other
lenders prepared to make loans to the Company.
After the completion of these expansion plans, future development and
expansion will be financed through cash flow from operations and other forms of
financing such as the sale of additional equity and debt securities, capital
leases and other credit facilities. There are no assurances that such financing
will be available on terms acceptable or favorable to the Company.
BUSINESS
OVERVIEW
The business of Eat at Joe's, Ltd. (the "Company") is to develop, own
and operate theme restaurants called "Eat at Joe's(R)". The Company presently
owns and operates six restaurants; four are located in Philadephia and one each
in Cherry Hill and Vorhees, New Jersey. The Company is planning to open 6
additional restaurants before the end of 1998. All these restaurants generally
will be located within a two hour drive of the Company's operation's center in
Cherry Hill, New Jersey. The approximate population of the target area is
5,000,000 people. In addition to the indigenous population, the Company expects
to benefit from from tourists and other travelers visiting the region. All
restaurants will be located in high traffic locations such as shopping malls,
airports and densely populated settings. The Company will utilize a cluster
strategy- i.e. grouping sites geographically in order to maximize both the
chain's exposure, as well as management and marketing efficiency. The
restaurants will be modest priced restaurants catering to the local working and
residential population rather than as a tourist destination.
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THE EAT AT JOE'S CONCEPT AND STRATEGY
Concept Development
The Company's theme is promoted with establishing restaurants which are
decorated with a 1950's style diner concept featuring a variety of popular
breakfast, lunch and dinner dishes. The restaurants will be three-meal a day
operations, emphasize fresh ingredients, affordable prices, consistent quality
and a fun and visually appealing atmosphere. The restaurants will seek to
attract patrons who live and work nearby and on a repeat basis, can comfortably
enjoy a wide variety of fresh foods at affordable prices.
Mr. Fiore previously established 9 restaurant locations ( 7 by
franchise) featuring a traditional American menu of full breakfasts, hamburgers,
fries and hot dogs and ice cream sundaes. In 1993 Mr. Fiore concluded that the
Eat at Joe's concept had potential for a regional or national chain. To regain
control of the name, concept and market territories, Mr. Firore negotiated the
closing of all franchise sites. At the time of the closings, all units were
operating on a profitable basis. Mr. Fiore also determined that the appeal of
the Eat at Joe's restaurants could be enhanced by expanding menu choices,
refining the 50's design theme and adding retail merchandising. The Eat at Joe's
chain of restaurants reflect the refinements to the concept inspired by the
initial test marketing and franchising expereince.
In identifying a potential market niche, Messrs. Fiore and Cosenza
have studied the development of certain restaurants that have capitalized on the
growing trend of home replacement meals taking the place of home cooked meals.
Through Cozco, Mr. Consenza has fifteen years experience in restaurant site
selection, lease negotiation and management. The Company hopes to capitalize on
this trend, both for dine-in and take-out meals. The Company believes that the
comfortable, appealing decor of its restaurants and the universal appeal of home
type cooking will be significant advantages in its attempts to penetrate this
niche market.
Competitive Differentiation
The Company seeks to establish a niche in between a fast food
restaurant and a traditional restaurant. The Company's restaurants provide a
menu offering fresh cooked food with rapid meal service at affordable prices.
The Company seeks to attract customers who are tired of standard fast food and
desire a quick, quality, modest priced meal not being served by existing casual
restaurants. While patrons will be served faster at a fast food franchise, Eat
at Joe's restaurants will serve a meal in food court in approximately 3 minutes
from the time of order. Further, the menu will not include items which requires
complicated preparation or lengthy cooking time.
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Currently there is no chain of restaurants in the Philadelphia area
offering the atmosphere and food selection at that of Eat at Joe's. On an
individual basis, traditional diners do offer similar atmosphere. The Company
will seek to expand penetration by multiple restaurant openings in a certain
area rather than on a one restaurant at a time expansion. Should competitors
emerge, the Company's believes its proposed market penetration will provide it
with a competitive advantage. Many of the Company's planned restaurants are to
be located in malls and other venues where most of the competition are not theme
restaurants.
The Menu
The restaurants' decor notwithstanding, the Company's primary focus is
its food where it seeks to attract repeat business. Breakfasts will include
eggs, waffles and cereal; lunches, soups, salads, burgers and sandwiches and
dinner, entrees including turkey, meat loaf and chicken. Most of the baked goods
offered for sale will have been baked on the premises. Generous portions will be
provided to diners. Lunch entrees range from $5.95 to $8.95 and dinner entrees
from $7.95 to $11.75. The average guest check for the Company's opened units is
approximately $6.00 at the present time. The breakfast meal generates
approximately 20 % of the Company's revenues, the lunch meal 55% and the dinner
meal 25 %.
The Company intends to obtain a beer and wine license for some of its
restaurants, with the intention that such beverages will be served along with
meals. The Company does not intend to emphasize sales of beer and wine apart
from meals in most of its restaurants, primarily because the Company feels that
it reduces the number of table turns and therefore profitability.
Food Preparation and Delivery
The Company believes that ease of food preparation and delivery will be one
key to its success. While some restaurants require highly compensated and
extensively trained chefs, the food served at each restaurant is prepared in a
basic process that requires minimal training time and which allows each menu
item to be served with minimal preparation. The Company views this efficient and
effective process as critical for its planned expansion as a chain.
The Company's units are supplied by major food distributors. The
Company has established a "national account" with these distributors which
enables pricing to be consistent regardless where the Company's units are
located. In the event the Company terminated a relationship with a distributor,
other distributors are available at comparable costs. In addition, soups,
sauces, toppings and certain entrees are prepared in a central commissary for
delivery to the units. The Company's agreement with the commissary, which is
unaffiliated with the Company, is on a month to month basis and could service up
to 200 restaurant units. The units have the ability to prepare all food "in
house" without any meaningful increase in costs.
17
<PAGE>
PROPERTY AND UNIT LOCATIONS
The Eat at Joe's restaurant concept has been adapted for three versions
requiring difference space arrangements to allow flexibility in site selection
and maximum market penetration. These versions include mall food court units
requiring 350-500 square feet; sit down restaurant requiring 1,500-7,500 square
feet and sit down restaurant with a bar and liquor license requiring 2,500-7,500
square feet.
The following table sets forth certain information about the Company's
existing and planned restaurants:
Approx. Approx. nos. Date Opened or
Location Sq. Footage of seats Planned to Open
Shoppes at Penn 450 600(1) November 15, 1997
Philadelphia, PA (2)
Cherry Hill Mall 600 800(1) December 6, 1997
Cherry Hill, NJ (3)
Echelon Mall 470 600(1) May 9, 1997
Vorhees, NJ (4)
Philadelphia Airport 845 120(1) May 23 1998
Philadelphia, PA (5)
Eat at Joe's Univ. City 4000 160 July14, 1998
Philadelphia, PA (6)
Gallery at Market East 2000 100 August14, 1998
Philadelphia, PA (8)
Moorestown Mall 3680 150 September, 1998
Moorestown, NJ (7)
Gallery at Harbor Pl. 2530 160 September, 1998
Baltimore, BD (9)
Shoppingtown Mall 2450 600(1) 4th quarter, 1998
DeWitt, NY (10)
Neshaminy Mall 4500 150 4thd quarter, 1998
Bensalom, PA (11)
Plymouth Meeting Mall 4540 160 4th quarter, 1998
Plymouth Meeting, PA (12)
Danbury Fair Mall 3020 140 4th quarter, 1998
Danbury, CT (13)
18
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(1) Food Court
(2) Monthly rent $ 1,710; lease expiration date-December, 2008
(3) Monthly rent $ 4,400; lease expiration date-September, 2007
(4) Monthly rent $ 1,950; lease expiration date-January, 2006
(5) Monthly rent $ 7,100; lease expiration date-April, 2007
(6) Monthly rent $ 6,667; lease expiration date-December, 2008
(7) Monthly rent $ 6,250; lease expiration date-June, 2012
(8) Monthly rent $ 4,166; lease expiration date-December, 2007
(9) Monthly rent $ 8,333; lease expiration date-March, 2008
(10) Monthly rent $ 4,166; lease expiration date-December, 2012
(11) Monthly rent $ 7,500; lease expiration date-July 2013
(12) Monthly rent $12,500; lease expiration date-March, 2008
(13) Monthly rent $11,080; lease expiration date-December, 2013
The Company's leases are generally subject to periodic increases in base rent as
well as a percentage of sales during the term of the lease.
The Company's executive offices are located at 670 White Plains Road, Scarsdale,
New York in space leased by the Company's Chairman. The lease expires in April,
2003. The Company pays no rent for its space. The Company's operations office is
located at 1415 Route 70, Cherry Hill, New Jersey in space provided by Cozco
Management Corp.
EXPANSION STRATEGY
The Company intends to identify sites to locate its restaurants based on a
variety of factors including local market demographics, site viability,
competition and projected economics of each unit. In addition to site selection
criteria, the Company has primarily focused on sites where management has
operating experience through other entities as well as a previous relationship
with the developer/management organization. Initial plans are to continue to
identify and finalize future site opportunities in the Philadelphia/Cherry Hill
area via leases. The Company believes the area can support up to approximately
12 units, and expects to open at least 6 additional units in the
Philadelphia/Cherry Hill area in 1998.
The Company intends to target additional major metropolitan markets to
broaden and enhance the recognition value of the concept. Specific cities for
expansion will be identified and analyzed as to potential compatibility with the
concept. There is no assurance that the Company will be successful in targeting
new areas.
OPERATIONS, MANAGEMENT AND EMPLOYEES
The Company's ability to manage multi-location units will be central to its
overall success. See "Risk Factors -- Limited Management Experience/Need for
Additional Management." While the Company's Chairman and President have
extensive restaurant and multi-unit restaurant experience, the Company
acknowledges that its management must include skilled personnel at all levels.
19
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The Company also intends to hire other corporate level and management employees
to help implement and operate its expansion plans, including a chief financial
officer, retail leasing specialist and construction coordinator. At the unit
level, the Company places specific emphasis on the position of general manager
("General Manager") and seeks employees with significant restaurant experience
and management expertise. The General Manager of each restaurant reports
directly to the President. The Company strives to maintain quality and
consistency in each of its units through the careful training and supervision of
personnel and the establishment of, and adherence to, high standards relating to
personnel performance, food and beverage preparation, and maintenance of
facilities. The Company believes that it will be able to attract high quality,
experienced restaurant and retail management personnel by paying competitive
compensation. Staffing levels vary according to the time of day and size of the
restaurant. In general, each unit has between 8 and 25 employees.
All managers must complete a training program, during which they are
instructed in areas such as food quality and preparation, customer service, and
employee relations. An "Opening Team" spends between 4 and 6 weeks at a new
location training personnel. Management strives to instill enthusiasm and
dedication in its employees, regularly solicits employee suggestions concerning
Company operations, and endeavors to be responsive to employees' concerns. In
addition, the Company has extensive and varied programs designed to recognize
and reward employees for superior performance. As of April 30, 1998, the Company
had approximately 30 employees, 12 of which were full-time. The Company believes
that its relationship with its employees is good.
PURCHASING
As of the date of this prospectus, only 6 of the Company's units are in
operation. Currently, food is prepared a centralized food commissary. As more
units are opened, each unit's management team will determine the daily
quantities of food items needed and order such quantities from major suppliers
at prices often negotiated directly with the Company's corporate office.
Suppliers for the Eat at Joe's chain will generally be companies with which
management has an ongoing relationship and which has been judged over time to be
reliable. The Company strives to obtain consistent quality items at competitive
prices from reliable sources. Any discontinuance of such favorable pricing could
negatively impact the Company's purchasing abilities. In order to maximize
operating efficiencies and to provide the freshest ingredients for its food
products while obtaining the lowest possible prices for the required quality,
food and supplies will be shipped directly to the restaurants. Perishable food
products will be purchased locally.
MARKETING AND PROMOTION; RETAIL MERCHANDISING
The Company may utilize a variety of marketing materials to inform the
public about the Company's restaurants. These may include:
*radio advertisements describing the Eat at Joe's dining and take out
experience;
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*newspaper and local magazine advertisements which will emphasize Eat
at Joe's restaurant openings or site-specific promotional programs;
*retail product catalog featuring a variety of merchandise bearing the
Eat Joe's logo-which can be considered to be a "mobile advertising for
the chain;
*direct mail promotional literature for mailing to households within
driving or walking distance of an Eat at Joe's site;
*trade show booth for shows, conferences and seminars relating to the
food service industry and shopping malls;
*Public relations to promote the Company's individual restaurant sites.
In addition to press releases, management intends to initiate efforts
to develop and have published articles showcasing Eat at Joe's and
its theme, decor, menu and merchandise offerings.
The Company's units are located in very high traffic locations, such as
airports, college campuses and regional shopping centers. In regional shopping
centers, the Company participates in co-op advertising in both print and radio
campaigns. On college campuses, the Company participates in local print and
media mediums, as well s paid radio advertising. In airports, co-op advertising
is utilized by the Company as well as directory advertising. For 1998, the
Company estimates that $_100,000 will be spent on marketing materials of which
$20,000 has been expended as of the date of this prospectus.
The Company may seek to capitalize on the nostalgia craze by offering
50s style merchandise at its restaurants and through a catalog. Apparel such as
hats, jackets, T-shirts and sweatshirts bearing the Eat at Joe's logo; gifts and
collectibles, such as 50's music; printed matter and toys and games could be
offered for sale. As all retail merchandise to be sold by the Company would be
out-sourced on an as-needed basis, the initial investment would no more than
$25,000. As of the date of this prospectus, the Company has been offering 50's
style merchandise for sale at its 2 sit down restaurants. The contracts which
the Company has entered into with purveyors for the purchase and manufacture of
such merchandise are not material. The Company has no continuing obligation to
order merchandise from the purveyors.
TRADEMARKS
The Company's ability to successfully implement its Eat at Joe's concept
will depend in part upon its ability to protect its servicemark. The Company has
been granted a servicemark registration for the name Eat at Joe's. There is no
assurance that the Company will be able to prevent competitors from using the
same or similar marks, concepts or appearance.
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LEGAL PROCEEDINGS
The Company is not a party to any material litigation and is not aware of
any threatened litigation that would have a material adverse effect on its
business.
COMPETITION
The food service industry is intensely competitive with respect to food
quality, concept, location, service and price. In addition, there are many
well-established food service competitors with substantially greater financial
and other resources than the Company and with substantially longer operating
histories. The Company believes that it competes with other full-service dine-in
restaurants, take-out food service companies, fast-food restaurants,
delicatessens, cafeteria-style buffets, and prepared food stores, as well as
with supermarkets and convenience stores. Competitors include national,
regional, and local restaurants, purveyors of carry-out food, and convenience
dining establishments.
Competition in the food service business is often affected by changes in
consumer tastes, national, regional, and local economic and real estate
conditions, demographic trends, traffic patterns, the cost and availability of
labor, purchasing power, availability of product, and local competitive factors.
The Company attempts to manage or adapt to these factors, but it should be
recognized that some or all of these factors could cause the Company to be
adversely affected.
The pricing policy of the Company is to canvas the area of other
related diner-type operations and maintain a pricing structure that is
competitive after factoring in labor, food and the Company's operating cost for
that location. The Company believes that its distinctive diner concept,
attractive price-value relationship and quality of food and service will enable
it to differentiate itself for its competitors. While the Company believes that
its restaurants are distinctive in design and operating concept, it is aware of
restaurants that operate with similar concepts.
REGULATION
Restaurants are subject to licensing and regulation by state and local
health, sanitation, safety, fire, and other authorities and are also subject to
state and local licensing and regulation of the sale of alcoholic beverages and
food. Difficulties in obtaining or failure to obtain required licenses and
approvals will result in delays in, or cancellation of, the opening of
restaurants. The food and alcoholic beverage licenses are also subject to
suspension or non-renewal if the granting authority determines that the conduct
of the holder does not meet the standards for initial grant or renewal. The
Company believes that it is in compliance with all licensing and other
regulations.
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The federal Americans With Disabilities Act prohibits discrimination on the
basis of disability in public accommodations and employment. The Company could
be required to expend funds to modify its restaurants in order to provide
service to or make reasonable accommodations for disabled persons. The Company's
restaurants are currently designed to be accessible to the disabled. The Company
believes it is in substantial compliance with all current applicable regulations
relating to accommodations for the disabled.
YEAR 2000 Compliance
The Company utilizes software and related technologies which have been
programmed to recognize and properly process data fields containing a two digit
year and commonly referred to as a the Year 2000 Compliance issue. While the
Company has little communication with the systems of its vendors and suppliers,
it cannot measure the impact that the Year 2000 issue will have on such parties
with which it conducts business.
PRICE RANGE OF COMMON STOCK
Since October, 1996 the Common Stock of the Company has been traded on
the OTC Bulletin Board under the symbol JOES. The following table sets forth the
closing high and low sales prices, and trading volume for each of the periods
indicated below for the Company's Common Stock:
Year Quarter High Low Volume
(shares)
1996 Fourth (Oct.7 to Dec. 31.) $2.53 $2.00 7,400
1997 First 5.63 4.00 188,300
Second 4.50 2.00 1,037,700
Third 3.50 1.50 1,725,800
Fourth 2.75 0.82 3,864,900
1998 First 2.04 1.06 6,459,000
Second
On ____ 1998, the closing bid price of the Common Stock on the OTC Bulletin
Board was $_________. These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions. As of June30, 1998, there were approximately 371 shareholders of
record and 1,500 beneficial owners of the Common Stock. The Company has never
paid or declared any dividends on its Common Stock and does not anticipate
paying any cash dividends in the foreseeable future. The Company currently
intends to retain future earnings to fund the development and growth of its
business
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each of
the directors and executive officers of the Company.
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NAME AGE POSITION(S) HELD
- -------------------------------- --- ---------------------------------
Joseph Fiore................ 37 Chairman of the Board and Chief
Executive Officer, Secretary
Andrew Cosenza, Jr.......... 29 President, Chief Operating Officer
Director
James Mylock................ 31 Director
Tim Matula ... .. .. .. .. . 38 Director
Joseph Fiore has been Chairman and Chief Executive Officer since
October, 1996. In 1982, Mr. Fiore formed East Coast Equipment and Supply Co.,
Inc., a restaurant supply company that he still owns. Between 1982 and 1993, Mr.
Fiore established 9 restaurants (2 owned and 7 franchised) which featured a
1959's theme restaurant concept offering a traditional American menu. Also in
1993 Mr. Fiore acquired the Red Rooster Drive-In, a landmark 50's theme
restaurant in Brewster, New York.
Andrew Cosenza, Jr. Has been the President and Chief Operating Officer
since October, 1996. Since 1990 he has been the owner of Cozco Management Corp.,
an operator of 24 mall food court restaurants in the Philadelphia area.
James Mylock has worked with Joseph Fiore in marketing and business
development since graduating from the State University of New York at Buffalo in
1990.
Tim Matula joined Shearson Lehman Brothers as a financial consultant in
1992. In 1994 he joined Prudential Securities and when he left Prudential in
1997, he was Associate Vice President, Investments, Quantum Portfolio Manager.
EXECUTIVE COMPENSATION
The following table sets forth all cash and non-cash compensation paid by
the Company during the fiscal year ended December 31, 1997 to all officers and
directors as a group.
Number in Group Capacities in Which Served Compensation
All officers and directors
as a group (4 persons)................................................$ 12,500
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EMPLOYMENT AGREEMENTS
Effective January 1, 1997, both Joseph Fiore and Andrew Cosenza, Jr.
entered into employment agreements with the Company calling for a salary of
$50,000 per year. Given the limited cash available to the Company in 1997, Mr.
Fiore deferred his salary for the year. Mr. Fiore is to receive a salary of
$75,000 for 1998 which may be paid in restricted Common Stock of the Company.
In 1999 he is to receive a salary of $350,000 in cash conditioned on 10 of the
Company's units being operating at the end of the 1998.
In 1997, Mr. Cosenza deferred $37,500 of his $50,000 salary. Mr. Cosenza
is to receive a salary of $75,000 for 1998. In 1999 he is to receive a salary
of $350,000 in cash conditioned on 10 of the Company's units being operating at
the end of the 1998. In addition, the Company will provide Mr. Cosenza with the
use of an automobile.
Messrs. Fiore and Cosenza were to receive family health insurance coverage
until age 70 and life insurance coverage until age 70 with a death benefit of
$1,000,000 and the use of an automobile with all expenses associated with its
maintenance and operation paid by the Company. Both gentlemen deferred these
benefits until after 1997 except Mr. Cosenza did receive the use of an
automobile for ten months of 1997 at a cost to the Company of $16,000.
The employment agreements of Messrs. Fiore and Cosenza are performance
based and are contingent on the opening of units and the profitability of the
Company
The Company intends to retain other management employees pursuant to
employment and consulting agreements. The Company has no current plans to pay
cash compensation to its directors who are also officers of the Company.
For a one-year period following the Effective Date, the Company will not
grant options to promoters, employees or affiliates of the Company which,
together with options previously granted to such persons, would in the aggregate
exceed 15% of the then outstanding shares of Common Stock.
BOARD OF DIRECTORS
Each of the Company's directors has been elected to serve until the next
annual meeting of shareholders. The Company's executive officers are appointed
annually by the Company's directors. Each of the Company's directors continues
to serve until his or her successor has been designated and qualified. Directors
currently receive no fees.
PERSONAL LIABILITY AND INDEMNIFICATION OF DIRECTORS
The Company's By-laws contain provisions which reduce the potential
personal liability of directors for certain monetary damages and provide for
indemnity of directors and other persons. The Company is unaware of any pending
or threatened litigation against the Company or its directors that would result
in any liability for which such director would seek indemnification or similar
protection.
25
<PAGE>
The provisions regarding indemnification provide, in essence, that the
Company will indemnify directors against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with any action, suit, or proceeding arising out of the director's
status as a director of the Company, including actions brought by or on behalf
of the Company (stockholder derivative actions). The provisions do not provide
indemnification for liability in proceedings arising out of personal benefit
improperly received or where a person is found liable to the Company. The
Company does not presently provide insurance to its directors although the
Company will attempt to obtain such insurance in the future.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors and officers of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been advised that such
indemnification , in the opinion of the Securities and Exchange Commission, is
against public policy as expressed in the Securities Act and is, therefor,
unenforceable.
CERTAIN TRANSACTIONS
During 1997, Cozco Management Corp., a corporation controlled by the
Company's President, received $546,574 as reimbursement of rent, telephone,
equipment, travel, automotive salaries and other shared expenses. During 1997,
Messrs. Fiore and Cosenza and/or companies controlled by them, paid expenses and
made advances to the Company aggregating $702,922. Repayment of these monies
will be in the form of cash with interest at 6% per annum and/or restricted
Common Stock valued at a 25% discount from market price at the time of the
advance. These advances were made on short notice and the shares to be issued to
the lenders do not require a commitment by the Company to register them for
sale.
On April 1 , 1998, the Company entered into a 12 month agreement with The
Wall Street Group, Inc. ("Wall Street") calling for Wall Street to act as
financial public relations counsel to the Company. Mr. Donald Kirsch is the
owner of Wall Street and has no affiliation with the Company or its officers and
directors. The agreement calls for monthly payments of $5,000 for services
rendered and grants an five year option to Wall Street to acquire 61,350
restricted shares of the Company's Common Stock at the then market price of
$1.63 per share.
To obviate any conflicts of interest between the Company and Cozco, certain
policies have been adopted by the Company. These policies include no vendor
doing business with both companies; a verification statement to be signed by
vendor and service provider and the requirement that the officer authorizing a
major expenditure, not be the officer signing checks for the payment of the
expenditure.
26
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of August 21, 1998, by (i) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company, (iv) by all executive officers and directors
of the Company as a group and (v) the Selling Shareholders. See "Description of
Securities". Unless otherwise indicated, each of the following persons has sole
voting and investment power with respect to the shares of Common Stock set forth
opposite their respective names.
Shares Beneficially Shares Shares Beneficially
Owned Before the Being Owned After the
Offering (1) Offered Offering
Beneficial Owner number percent number number percent
Joseph Fiore 2,909,384 19.7 0 2,909,384 19.7
Andrew Cosenza, Jr. 2,662,450 18.1 0 2,662,384 18.1
Sandro Grimaldi 76,336 less than 1 76,336 0 0
Holden Holdings, Ltd. 124,045 less than 1 124,045 0 0
UnionKredit Anstalt 47,710 less than 1 47,710 0 0
Arab Commerce Bank 47,710 less than 1 47,710 0 0
Bonetti Enrico 47,710 less than 1 47,710 0 0
Ailouros, Ltd. 47,710 less than 1 47,710 0 0
Zooley Services Ltd. 47,710 less than 1 47,710 0 0
Primecap Management 47,710 less than 1 47,710 0 0
Group Ltd.
Fructose Ltd 111,832 less than 1 111,832 0 0
GPS America Fund Ltd. 78,281 less than 1 78,281 0 0
J.P. Carey Securities 130,000 less than 1 130,000 0 0
Jack Augsback & Assoc. 44,500 less than 1 44,500 0 0
LaRocque Trading Group 197,382 1.4 197,382 0 0
L.L.C
Silenus, Ltd. 182,745 1.3 182,745 0 0
Excalibur Ltd. P'ship. 231,477 1.6 231,477 0 0
Soreq, Inx. 251,004 1.7 251,004 0 0
Sovereign Capital Adv. 31,500 less than 1 31,300 0 0
Executive Officers
and Directors as a
group (4)persons) 5,571,834 37.8 0 5,571,834 37.8
- ---------------------------
(1) The figures represented by this table assume full conversion and exercise of
Convertible Debentures, Convertible Preferred Stock and Warrants owned by each
individual or entity.
27
<PAGE>
The Selling Shareholders have advised the Company that sales of the Selling
Shareholder shares may be effected from time to time in transactions (which may
include block transactions) in the over-the-counter market, in negotiated
transactions, or a combination of such methods of sale, at fixed prices which
may be changed, at market prices prevailing at a time of sale, or at negotiated
prices. The Selling Shareholders may effect such transactions by selling shares
directly to purchasers or through broker dealers who may act as agents or
principals. The Selling Shareholders have been advised that they may only effect
sales of the Selling Shareholder shares in certain jurisdictions through
broker-dealers registered in those states. Such broker-dealers may receive
compensation in the form of discounts, concession or commission from the Selling
Shareholders and/or the purchasers of Selling Shareholder shares for whom such
broker-dealers may act as agents or to whom they sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Selling Shareholders and any broker-dealers that act
in connection with the sale of the Selling Shareholder shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act and
any commission received by them and any profit on the resale of the Selling
Shareholder shares as principals might be deemed to be underwriting discounts
and commissions under the Securities Act. The Selling Shareholders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the Selling Shareholder shares against certain liabilities,
including liabilities arising under the Securities Act.
DESCRIPTION OF SECURITIES
CONVERTIBLE DEBENTURE
The material terms of the Company' convertible debentures provide for
the payment of interest at 8% per annum payable quarterly, mandatory redemption
after 3 years from the date of issuance at 130% of the principal amount. Subject
to adjustment, the debentures are convertible into Common Stock at the lower of
$ 1.7928 or the Discounted Conversion Price as defined below. Repayment of the
indebtedness is secured by a general lien on the assets of the Company and
guarantee by 5 of the Company's operating subsidiaries.
28
<PAGE>
CAPITAL STOCK
The Company's authorized capital stock consists of 10,000,000 shares of
Preferred Stock, issuable in one or more series and 50,000,000 shares of Common
Stock. The par value of each of said shares is $.0001. As of May 22, 1998
12,752,805 shares of Common Stock and 51 shares of Series A Convertible
Preferred Stock and 64 shares of Series B Convertible Preferred Stock are
outstanding.
PREFERRED STOCK
The Board of Directors of the Company is authorized to issue, without
further stockholder approval, up to 10,000,000 shares of Preferred Stock from
time to time in one or more series and to fix such designations, powers,
preferences and relative voting, distribution, dividend, liquidation, transfer,
redemption, conversion and other rights, preferences, qualifications,
limitations or restrictions thereon..
The material terms of the Company's Series A and B Convertible Preferred
Stock are identical except as to conversion price. Subject to adjustment, the
Preferred Stock pays a dividend of 3% per annum payable quarterly in cash or
Common Stock. The Series A shares are convertible into Common Stock at the lower
of $2.19 or 75% of the average closing bid price for the Company's Common Stock
for the 5 trading days preceding the date of the conversion notice ("Discounted
Conversion Price"). Subject to adjustment, the Series B Convertible Preferred
Stock is convertible at the lower of $1.7928 or the Discounted Conversion Price.
COMMON STOCK
There are no preemptive, subscription, conversion or redemption rights
pertaining to the Common Stock. The absence of preemptive rights could result in
a dilution of the interest of existing shareholders should additional shares of
Common Stock be issued. Holders of the Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of assets legally
available therefor, and to share ratably in the assets of the Company available
upon liquidation.
Each share of Common Stock is entitled to one vote for all purposes and
cumulative voting is not permitted in the election of directors. Accordingly,
the holders of more than 50% of all of the outstanding shares of Common Stock
can elect all of the directors. Significant corporate transactions such as
amendments to the articles of incorporation, mergers, sales of assets and
dissolution or liquidation require approval by the affirmative vote of the
majority of the outstanding shares of Common Stock. Other matters to be voted
upon by the holders of Common Stock normally require the affirmative vote of a
majority of the shares present at the particular shareholders' meeting. The
Company's directors and officers as a group beneficially own approximately 39%
of the outstanding Common Stock of the Company. See "Principal and Selling
Shareholders." Accordingly, such persons will continue to be able to
substantially control the Company's affairs, including, without limitation, the
sale of equity or debt securities of the Company, the appointment of officers,
the determination of officers' compensation and the determination whether to
cause a registration statement to be filed.
29
<PAGE>
The rights of holders of the shares of Common Stock may become subject in
the future to prior and superior rights and preferences in the event the Board
of Directors establishes one or more additional classes of Common Stock, or one
or more additional series of Preferred Stock.
WARRANTS
In connection with the private placement by J.P. Carey Securities, Inc.
("Carey") of 51 shares of the Company's Series A Convertible Preferred Stock on
March 20, 1998, Carey received warrants to purchase 102,000 shares of the
Company's Common Stock, subject to adjustment. The warrants are exercisable at
$1.49 per share and expire on March 20, 2003.
In connection with the private placements by Carey of 64 shares of the
Company's Series B Convertible Preferred Stock in May, 1998, Carey received
warrants to purchase 28,000 shares of the Company's Common Stock, and its
designees, 126,000 warrants, subject to adjustment The warrants are exercisable
at $1.79 per share; 120,000 warrants expire on May 5, 2003 and 34,000 on May 22,
2003.
In connection with the private placements by Sovereign Capital Advisers of
$450,000 principal amount of the Company's convertible debentures on July 31,
1998, Sovereign received warrants to purchase 31,500 shares of the Company's
Common Stock, and its designees, 4,500 warrants, subject to adjustment The
warrants are exercisable at $1.38 per share and expire July 31, 2003.
The Warrant Agreement provides for adjustment of the exercise price and the
number of shares of Common Stock purchasable upon exercise of the Warrants to
protect Warrant holders against dilution in certain events, including stock
dividends, stock splits, reclassification, and any combination of Common Stock,
or the merger, consolidation, or disposition of substantially all the assets of
the Company.
The Company has agreed to "piggy-back" registration rights for the
securities underlying the Warrants at the Company's expense during the during
the five years following the issuance of the Warrants. In addition, at any time
commencing 90 days after the issuance of the warrants, the Company has agreed to
register the securities underlying the Warrants at the Company's expense upon
notice from the holders.
Wall Street Management Group, Inc. holds 5 year options to acquire 61,350
restricted shares of the Company's Common Stock at a price of $1.63 per share.
See "Certain Transactions."
In connection with a Regulation D 504 offering completed in November, 1996,
the Company sold 6,000,000 shares of Common Stock and Warrants to purchase an
additional 2,000,000 shares at $1.00 per share. As of the date of this
Prospectus 1,060,000 Warrants remain unexercised.
30
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
As of April 30, 1998 (assuming no exercise of options or warrants after
April 30, 1998 except for the underlying shares being registered on behalf of
the Selling Shareholders), there will be 14,212,163 shares of Common Stock
outstanding. Of these, including the shares sold in this Offering, 8,511,324 are
freely tradable without restriction under the Securities Act. The remaining
5,665,839 shares of Common Stock will be "restricted securities" as that term is
defined in Rule 144 ("Restricted Shares") of the Securities Act. Restricted
Shares may be sold in the public market only if registered or if they qualify
for an exemption from registration under Rule 144 of the Securities Act.
Beginning 90 days after the date of this Prospectus, approximately 275,000
shares will become eligible for sale in compliance with Rule 144. As of April
30, 1998, options warrants to purchase 61,350 shares of Common Stock were
outstanding. In addition, holders of warrants (expiring in November 1998) to
purchase 1,060,000 shares, should they exercise the warrants, would receive
shares which would be freely tradable without restriction. See "Warrants."
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) including persons deemed to be affiliates, whose
restricted securities have been fully paid for and held for at least one year
from the later of the date of issuance by the Company or acquisition from an
affiliate, may sell such securities in broker's transactions or directly to
market makers, provided that the number of shares sold in any three month period
may not exceed the greater of 1% of the then-outstanding shares of Common Stock
or the average weekly trading volume of the shares of Common Stock in the
over-the-counter market during the four calendar weeks preceding the sale. Sales
under Rule 144 are also subject to certain notice requirements and the
availability of current public information about the Company. After two years
have elapsed from the later of the issuance of restricted securities by the
Company or their acquisition from an affiliate, such securities may be sold
without limitation by persons who are not affiliates under the rule.
Shares of substantial amount of Common Stock in the public amount, or the
perception that such sales could occur, could adversely affect prevailing market
prices of the Common Stock and could impair the Company's future ability to
raise capital through an offering of its equity securities.
DELAWARE ANTI-TAKEOVER LAW
The Delaware General Corporation Law contains certain anti-takeover
provisions. Section 203 of the Delaware General Corporation Law provides, with
certain exceptions, that a Delaware corporation may not engage in any broad
range of business combinations with a person who owns 15% or more of the
corporation's outstanding voting stock (an "interested stockholder") for a
period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person's becoming an
interested stockholder, or the business combination is approved by the board of
31
<PAGE>
directors of the corporation before the person becomes an interested
stockholder, (ii) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans); or (iii) the business combination is
approved by the corporation's board of directors of at least 66 2/3% of
corporation's outstanding voting stock at an annual meeting or special meeting,
excluding shares owned by the interested stockholder.
TRANSFER AGENT AND REGISTRAR
Signature Transfer, Inc. Dallas, Texas, is the transfer agent and registrar
for the Common Stock of the Company.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Beckman, Millman and Sanders, L.L.P. a Professional Limited Liability
Partnership, New York, New York. Members of the firm of Beckman, Millman &
Sanders own 15,000 shares of the Common Stock of the Company.
EXPERTS
The financial statements for the periods ended December 31, 1996 and 1997
included herein have been audited by Robison, Hill & Co., Certified Public
Accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
ADDITIONAL INFORMATION
The Company is a reporting company under the Securities Exchange Act of
1934, as amended. The Company has filed with the Washington, D.C. Office of the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form SB-2 under the Act with respect to the Common Stock offered hereby. This
Prospectus filed as a part of the Registration Statement does not contain all of
the information contained in the Registration Statement and the exhibits
thereto, certain portions of which have been omitted in accordance with the
rules and regulations of the Commission. For further information with respect to
the Company and the securities offered hereby, reference is made to such
Registration Statement including the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract, agreement or
other documents are not necessarily complete, and in each instance, reference is
made to such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement and exhibits may be inspected without
charge and copied at the Washington office of the Commission, 450 Fifth Street,
32
<PAGE>
N.W., Washington, DC 20549, and copies of such material may be obtained at
prescribed rates from the Commission's Public Reference Section at the same
address.
33
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheets, December 31, 1997 and 1996 F-2
Consolidated Statements of Operations, For the Years
Ended December 31, 1997 and 1996 F-4
Consolidated Statement of Changes in Stockholders'
Equity for The Years Ended December 31, 1997 and 1996 F-5
Consolidated Statements of Cash Flows, For the Years
Ended December 31 1997 and 1996 F-6
Notes to Consolidated Financial Statements F-8
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Eat At Joe's, Ltd.:
We have audited the accompanying consolidated balance sheet of East At
Joe's, Ltd. and subsidiaries as of December 31, 1997 and 1996 and the related
consolidated statements of operations, changes in stockholder's equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our 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 consolidated 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 financial position of Eat At
Joe's, Ltd. and subsidiaries (formerly a development stage enterprise) as of
December 31, 1997 and 1996 and the results of their operations and their cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
Respectfully submitted ROBISON,
HILL & Co.
/s/ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
March 23, 1998
F-1
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
(Formerly a development stage enterprise)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
----------- ---------
ASSETS
Current Assets:
Cash and cash equivalents ...................... $ 232,601 $ 35,016
Receivables .................................... -- 70,000
Inventory ...................................... 7,488 --
Other .......................................... 400 --
Prepaid expense ................................ 30,993 3,975
Deposits ....................................... 12,701 10,991
----------- --------
Total Current Assets ...................... 284,183 119,982
----------- --------
Property and equipment:
Equipment ...................................... 279,667 --
Office furniture ............................... 1,000 --
Leasehold improvements ......................... 1,527,099 12,495
----------- --------
1,807,766 12,495
Less accumulated depreciation .................. (11,546) --
----------- --------
1,796,220 12,495
----------- --------
Other Assets:
Intangible and other assets
net of $2,150 amortization in 1997 ............. 234,569 158,595
----------- --------
Total Assets .............................. $ 2,314,972 $291,072
=========== ========
F - 2
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
(Formerly a development stage enterprise)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(Continued)
1997 1996
----------- -----------
LIABILITIES
Current Liabilities:
Accounts payable ............................. $ 347,295 $ 7,235
Accrued liabilities........................... 87,500 --
Short-term notes payable ..................... 264,940 --
Shareholders loans ........................... 702,922 12,500
----------- -----------
Total Liabilities ....................... 1,402,657 19,735
----------- -----------
STOCKHOLDERS EQUITY
Preferred stock - $0.0001 par value ..........
10,000,000 shares authorized;
none issued and outstanding ................ -- --
Common Stock - $0.0001 par value .............
50,000,000 shares Authorized ...............
12,733,805 and 11,833,805 issued
and Outstanding, respectively .............. 1,273 1,183
Common Stock To Be Issued .................... 4 --
Additional paid-in capital ................... 2,284,295 1,344,389
Retained deficit ............................. (1,373,257) (1,074,235)
----------- -----------
Total Stockholders' Equity .............. 912,315 271,337
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ......................... $ 2,314,972 $ 291,072
=========== ===========
The accompanying notes are an integral part of these financial statements.
F - 3
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
(Formerly a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, AND 1996
1997 1996
--------- --------
Revenues ........................................ $ 84,781 $ --
Cost of revenues ................................ 56,855 --
--------- --------
Gross Margin .................................... 27,926 --
Expenses
General and administrative ................... 322,644 14,762
--------- --------
Net loss from continuing operations ............. (294,718) (14,762)
--------- --------
Other Income (Expense)
Interest income .............................. 3,759 --
Interest expense ............................. (7,311) (3,938)
Loss on sale of assets ....................... (752) --
--------- --------
Net Other Income (Expense) ...................... (4,304) (3,938)
--------- --------
Net loss before income taxes .................... (299,022) (18,700)
Income tax expense (benefit) .................... -- --
--------- --------
Net Loss ........................................ $(299,022) $(18,700)
========= ========
Basic Loss Per Common Share: .................... $ (.02) $ --
The accompanying notes are an integral part of these financial statements.
F - 4
<PAGE>
<TABLE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, AND 1996
<CAPTION>
Common Stock Additional
To Be Issued Common Stock Paid-in Retained
Shares Amount Shares Amount Capital Deficit
--------- --------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1996 .. -- $ -- 314,350 $ 31 $1,055,504 $(1,055,535)
Adjustment in connection
with pooling of interests .... -- -- 5,505,000 550 219,037 --
--------- --------- ---------- --------- ---------- -----------
Balances at January 1, 1996,
as restated .................. -- -- 5,819,350 581 1,274,991 (1,055,535)
May 1996, shares issued
to Company for cash ....... -- -- 14,455 2 9,998 --
November 1996, shares
issued in Reg D-504
offering ..................... -- -- 6,000,000 600 59,400 --
Net loss for the year ........ -- -- -- -- -- (18,700)
--------- --------- ---------- --------- ---------- -----------
Balances at December 31,
1996......................... -- -- 11,833,805 1,183 1,344,389 (1,074,235)
March 1997, shares issued
on exercise of warrants ... -- -- 400,000 40 399,960 --
April 1997, shares issued on
exercise of warrants ...... -- -- 300,000 30 299,970 --
November 1997 shares
issued on exercise of
warrants ..................... 40,000 4 200,000 20 239,976 --
Net loss for the year ........ -- -- -- -- -- (299,022)
--------- --------- ---------- --------- ---------- -----------
Balance at December 31,
1997......................... 40,000 $ 4 12,733,805 $ 1,273 $2,284,295 $(1,373,257)
========= ========= ========== ========= ========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
F - 5
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, AND 1996
1997 1996
----------- --------
Cash Flows From Operating Activities
Net loss for the period ............................ $ (299,022) $(18,700)
Adjustments to reconcile net loss to net cash
Provided by operating activities
Loss from sale of marketable securities .......... 752 --
Depreciation ..................................... 11,546 --
Payment of organization costs .................... (78,124) (8,558)
Amortization of organization costs ............... 2,150 --
Decrease (Increase) in Receivables ............... 70,000 --
Increase in inventory ............................ (7,488) --
Increase in other assets ......................... (400) --
Increase in prepaid expense ...................... (27,018) (3,975)
Decrease (increase) in deposits .................. (1,710) (10,991)
Increase in accounts payable and accrued liablities 427,560 7,235
----------- --------
Net Cash Provided by (Used in) Operating Activities ... 98,246 (34,989)
----------- --------
Cash Flows From Investing Activities
Purchase of property and equipment ................. (1,795,271) (12,495)
Proceeds from sale of marketable securities ........ 143,248 --
Purchase of marketable securities .................. (144,000) --
----------- --------
Net Cash Provided by Investing Activities ............. (1,796,023) (12,495)
----------- --------
Cash Flows From Financing Activities
Issuance of common stock ........................... 940,000 70,000
Advances from majority stockholders ................ 690,422 12,500
Proceeds from short-term notes payable ............. 264,940 --
----------- --------
Net Cash Provided by Financing Activities ............. 1,895,362 82,500
----------- --------
Increase in Cash ...................................... 197,585 35,016
Cash at beginning of period ........................... 35,016 --
----------- --------
Cash at End of Period ................................. $ 232,601 $ 35,016
=========== ========
F - 6
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
1997 1996
------------ ------------
Supplemental Disclosure of Interest and
Income Taxes Paid
Interest paid for the period .................. $ -- $ 3,938
============ ============
Income taxes paid for the period .............. $ -- $ --
============ ============
Supplemental Disclosure of Non-cash Investing
and Financing Activities
Intangible Assets Acquired with Issuance of
Common stock ............................... $ 149,832 $ --
============ ============
Organization Costs Acquired with Issuance
Common stock ............................... $ 200 $ --
============ ============
The accompanying notes are an integral part of these financial statements.
F - 7
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Eat At Joe's, Ltd. And subsidiaries
is presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
Organization and Basis of Presentation
Eat At Joe's Ltd. (Company) was incorporated on January 6, 1988, under the
laws of the State of Delaware, as a wholly-owned subsidiary of Debbie Reynolds
Hotel and Casino, Inc. (DRHC) (formerly Halter Venture Corporation or Halter
Racing Stables, Inc.) a publicly-owned corporation. DRHC caused the Company to
register 1,777,000 shares of its initial 12,450,000 issued and outstanding
shares of common stock with the Securities and Exchange Commission on Form S-18.
DRHC then distributed the registered shares to DRHC stockholders.
During the period September 30, 1988 to December 31, 1992, the Company
remained in the development stage while attempting to enter the mining industry.
The Company acquired certain unpatented mining claims and related equipment
necessary to mine, extract, process and otherwise explore for kaolin clay,
silica, feldspar, precious metals, antimony and other commercial minerals from
its majority stockholder and other unrelated third-parties. The Company was
unsuccessful in these start-up efforts and all activity was ceased during 1992
as a result of foreclosure on various loans in default and/or the abandonment of
all assets.
From 1992 until 1996 the Company has had no operations, assets or
liabilities.
Principles of Consolidation
The consolidated financial statements include the accounts of Eat At Joe's,
LTD. And its wholly- owned subsidiary, E.A.J. Holding Corporation, a Delaware
corporation ("Holding"). Holding includes the accounts of its wholly-owned
subsidiaries, E.A.J. PHL Airport, Inc. a Pennsylvania corporation, Eat At Joe's
U. of P., Inc. a Pennsylvania corporation, E.A.J. Cherry Hill, Inc., a New
Jersey corporation, Eat At Joe's Harborplace, Inc., a Maryland corporation, Eat
At Joe's Neshaminy, Inc. a Pennsylvania corporation, Eat At Joe's Plymouth,
Inc., a Pennsylvania corporation, E.A.J. Echelon Mall, Inc., a New Jersey
corporation, E.A.J. Gallery, Inc., a Pennsylvania corporation, E.A.J.
Moorestown, Inc., a New Jersey corporation, and E.A.J. Shoppingtown,Inc., a New
York corporation. All significant intercompany accounts and transactions have
been eliminated.
F - 8
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Nature of Business
The Company is developing, owns and operates theme restaurants styled in an
"American Diner" atmosphere.
Inventories
Inventories consist of food, paper items and related materials and are
stated at the lower of cost (first-in, first-out method) or market.
Income Taxes
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income tax assets and liabilities for the expected future income tax
consequences, based on enacted tax laws, of temporary differences between the
financial reporting and tax bases of assets and liabilities.
Depreciation
Office furniture, equipment and leasehold improvements, are stated at cost.
Depreciation and amortization are computed using the straight-lin method over
the estimated economic useful lives of the related assets as follows:
Office furniture 5-10 years
Equipment 5-7 years
Leasehold improvements 8-15 years
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
Amortization
Organization costs are amortized over a sixty month period. Intangible
assets are amortized over useful life of 10 years.
F - 9
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
The Company has adopted the Financial Accounting Standards Board SFAS No.,
121, "Accounting for the Impairment of Long-lived Assets." SFAS No. 121
addresses the accounting for (i) impairment of long-lived assets, certain
identified intangibles and goodwill related to assets to be held and used, and
(ii) long-live lived assets and certain identifiable intangibles to be disposed
of. SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. If the sum of the expected future cash flows from the
used of the asset and its eventual disposition (undiscounted and without
interest charges) is less than the carrying amount of the asset, an impairment
loss is recognized.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements. The Company maintains the majority of its cash balances
with one financial institution, in the form of demand deposits.
Reverse Stock Split
Effective May 3, 1997 the Stockholders approved a 50 to 1 reverse split of
the common stock and effective October 7, 1997 the Stockholders approved a 4 to
1 reverse split. The financial statements have been retroactively restated to
reflect the reverse stock split as if it had been effective prior to the
earliest date presented.
F - 10
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Earnings (Loss) Per Share
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" (EPS). SFAS No. 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share. The
application of SFAS No. 128 had no effect of the earnings per share for 1996 as
previously reported.
Diluted net income per common share was calculated based on an increased
number of shares that would be outstanding assuming that the 1,060,000 warrants
are converted to 1,060,000 common shares. The effect of outstanding common stock
equivalents are antidilutive for 1997 and 1996 and are thus not considered.
The reconciliations of the numerators and denominators of the basic
earnings per share computations are as follows:
<TABLE>
For the Year Ended 1997 For the Year Ended 1996
------------------------------- ----------------------------
<CAPTION>
Per Share Per Share
Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common shareholders $(299,022) 11,729,107 $ (.02) $(18,700) 6,535,247 $ -
========== ========== ======= ========= ========= ======
</TABLE>
F - 11
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Reclassifications
Certain reclassifications have been made in the 1996 financial statements
to conform with the 1997 presentation.
NOTE 2 - SHORT-TERM NOTES PAYABLE
Short-Term Notes Payable consist of loans from unrelated entities as of
December 31, 1997. The notes are payable one year from the date of issuance
together with interest at 6.50% A.P.R.
NOTE 3 - INCOME TAXES
Deferred taxes result from temporary differences in the recognition of
income and expenses for income tax reporting and financial statement reporting
purposes. Deferred benefits of $71,000 and $4,000 for the years ended December
31, 1997 and 1996 respectively, are the result of net operating losses and the
gaming license rights reserve.
The Company has recorded net deferred income taxes in the accompany
consolidated balance sheets as follows:
As at December 31,
1997 1996
Future deductible temporary differences related to
Reserves, accruals, and net operating losses $ 387,000 $ 341,000
Valuation allowance (387,000) (341,000)
---------- ----------
Net Deferred Income Tax $ - $ -
========== ==========
As of December 31, 1997, the Company had a net operating loss ("NOL") carry
forward for income tax reporting purposes of approximately $1,141,000 available
to offset future taxable income. This net operating loss carry forward expires
at various dates between December 31, 2003 and 2012. A loss generated in a
particular year will expire for federal tax purposes if not utilized within 15
years. Additionally, the Internal Revenue Code contains provisions which could
reduce or limit the availability and utilization of these NOLs if certain
ownership changes have taken place or will take place. In accordance with SFAS
No. 109, a valuation allowance is provided when it is more likely than not that
all or some portion of the deferred tax asset will not be realized. Due to the
uncertainty with respect to the ultimate realization of the NOLs, the Company
established a valuation allowance for the entire net deferred income tax asset
of $387,000 as of December 31, 1997. Also consistent with SFAS No. 109, an
allocation of the income (provision) benefit
F - 12
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
NOTE 3 - INCOME TAXES (Continued)
has been made to the loss from continuing operations.
The difference between the effective income tax rate and the federal
statutory income tax rate on the loss from continuing operations are presented
below:
As at December 31,
1997 1996
Benefit at the federal statutory rate of 34% $ 71,000 $ 4,000
Nondeductible expenses (1,000) -
Utilization of net operating loss carryforward (70,000) (4,000)
---------- -----------
$ - $ -
========== ===========
NOTE 4 - PURCHASE OF SUBSIDIARIES
On January 1, 1997 the shareholders of the Company approved an agreement
whereby 5,505,000 shares of the Company's common stock was exchanged for a 100%
interest in E.A.J. Holding Corporation, Inc. ("Holding"), a Delaware
corporation. Holding, which was organized on February 14, 1997, had total assets
with a historical cost value of $150,037, consisting of the Eat at Joe's trade
mark, business plan, graphics, illustrations/renderings, corporate brochure and
website with a historical value of $149,837, organization costs of $200 and no
liabilities on the date of the exchange.
During March, 1997 Holding acquired 100% of the issued and outstanding
stock of E.A.J.: PHL, Airport Inc. ("PHL Airport"), a Pennsylvania corporation
organized August 19, 1996 for $25,000. At the time of the acquisition PHL
Airport had assets with a historical cost value of $37,500, consisting of
developmental costs and organizational costs and liabilities of $12,500.
These transactions have been accounted for as a reorganization of ownership
interests between related parties as if it were a "Pooling of Interest."
Accordingly, assets and liabilities are reflected at their historical values.
The accompanying financial statements for 1997 are based on the assumption that
the companies were combined for the full year, and the financial statements of
1996 have been restated to give effect to the combination.
Following is a reconciliation of the amounts of net sales and net income
previously reported for 1996 with restated amounts:
F - 13
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
NOTE 4 - PURCHASE OF SUBSIDIARIES (continued)
Year Ended
December 31, 1996
Revenues:
As previously reported $ -
Acquired companies -
-------------
As restated $ -
=============
Net Loss:
As previously reported $ 13,288
Acquired companies 5,412
-------------
As restated $ 18,700
=============
NOTE 5 - RENT AND LEASE EXPENSE
The Company occupies various retail restaurant space under operating leases
beginning October 1997 and expiring at various dates through 2012.
The minimum future lease payments under these leases for the next five
years are:
Year Ended December 31, Real Property Equipment
----------------------- ------------- ---------
1998 $ 298,320 $ -
1999 298,320 -
2000 298,320 -
2001 298,320 -
2002 298,320 -
------------- ---------
Total minimum future lease payments $ 1,491,600 $ -
============ =========
The leases generally provides that insurance, maintenance and tax expenses
are obligations of the Company. It is expected that in the normal course of
business, leases that expire will be renewed or replaced by leases on other
properties.
F - 14
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company utilized office space that is shared with companies controlled
by two officers of the Company. During 1997 Cozco Management received $546,574
as reimbursement for rent, telephone, equipment, travel, automotive salaries and
other shared expenses. During 1997 the two officers and/or companies controlled
by the two officers paid expenses and made advances to the Company totaling
$702,922.
NOTE 7 - PRIVATE PLACEMENT OF COMMON STOCK
On November 11, 1996 the Company completed a Regulation D section 504
private placement whereby the Company issued 600,000 common shares for $60,000.
Each share included detachable warrants to purchase one common share at $1.00
per share.
NOTE 8 - SELECTED FINANCIAL DATA (Unaudited)
The following table set forth certain unaudited quarterly financial
information:
1997 Quarters Ended
Mar 31 Jun 30 Sep 30 Dec 31
-------- --------- -------- ---------
Income statement data:
Net sales ...................... $ -- $ -- $ -- $ 84,781
Gross profit ................... -- -- -- 27,926
-------- --------- -------- --------
Income (loss) from operations .. (60,733) (152,046) (68,971) (12,968)
Other income ...................... 6 1,926 1,075 (7,311)
-------- --------- -------- --------
Income (loss) before tax .......... (60,727) (150,120) (67,896) (20,279)
Income tax (provision) benefit .... -- -- -- --
-------- --------- -------- --------
Net Income (Loss) ................. $(60,727) $(150,120) $(67,896) $(20,279)
======== ========= ======== ========
F - 15
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
(Formerly a development stage company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996
(Continued)
NOTE 8 - SELECTED FINANCIAL DATA (Unaudited) (continued)
1996 Quarters Ended
Mar 31 Jun 30 Sep 30 Dec 31
--------- --------- -------- ---------
Income statement data:
Net sales ...................... $ -- $ -- $ -- $ --
Gross profit ................... -- -- -- --
-------- --------- -------- --------
Income (loss) from operations .. (10,000) -- -- (4,762)
Other income ...................... -- -- -- (3,938)
-------- --------- -------- --------
Income (loss) before tax .......... (10,000) -- -- (8,700)
Income tax (provision) benefit .... -- -- -- --
-------- --------- -------- --------
Net Income (Loss) ................. $(10,000) $ -- $ -- $ (8,700)
======== ========= ======== ========
F - 16
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------------
TABLE OF CONTENTS
PAGE
Prospectus Summary.....................
Risk Factors...........................
Use of Proceeds........................
Dilution...............................
Dividend Policy........................
Capitalization.........................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations...........................
Business...............................
Management.............................
Certain Transactions...................
Principal Shareholders.................
Description of Securities..............
Underwriting...........................
Legal Matters..........................
Experts................................
Additional Information.................
Index to Consolidated Financial
Statements...........................
----------------------------
<PAGE>
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
EAT AT JOE'S, LTD.
EAT AT JOE'S LOGO
________________ SHARES
------------------------------
PROSPECTUS
------------------------------
, 1998
------------------------------------------------------
------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
See "Management - Personal Liability and Indemnification of Directors."
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the distribution of the shares
registered hereby, are set forth in the following table:
SEC registration fee........................................ $ 2,500
Legal fees and expenses..................................... 50,000
Accounting fees and expenses................................ 17,500
Blue Sky fees and expenses.................................. 7,500
Transfer agent fees and expenses............................ 1,000
Printing and engraving expenses............................. 2,000
Miscellaneous............................................... 2,000
-----
Total..................................................... $82,500
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In November 1996, the Company raised $60,000 through the issuance 600,000
shares of its Common Stock and warrants to acquire 2,000,000 shares at an excise
price of $1.00 per share. The offering was exempt from registration pursuant to
Regulation D Section 504. In 1997, 940,000 warrants were exercised against
payment of $940,000.
In January, 1997 the shareholders of the Company adopted an agreement
whereby 5,505,000 shares of the Company's Common Stock was exchanged for a 100%
interest in E.A.J. Holding Corporation, Inc. Messrs. Joseph Fiore and Andrew
<PAGE>
Cosenza, Jr., the Company's Chairman and President, were the owners of all the
outstanding shares of E.A.J. Holding Corporation, Inc. The Company issued its
shares upon an exemption from registration under Section 4(2) of the Securities
Act.
In March, 1998, the Company sold 51 shares of its Series A Convertible
Preferred Stock to a total of 8 accredited investors pursuant to an exemption
from registration under the Section 4(2) and/or Regulation D or as an
alternative, Regulation S of the Act. The Company received proceeds of
approximately $797,000 from the sale of the securities. As of the date of this
prospectus the shares are convertible and warrants exercisable into 588, 641
shares of Common Stock of the Company.
On May 5 1998, the Company sold 30 shares of its Series B Convertible
Preferred Stock to a total of 3 accredited investors pursuant to an exemption
from registration under the Section 4(2) and/or Regulation D. The Company
received proceeds of approximately $484,,000 from the sale of the securities. As
of the date of this prospectus the shares are convertible and warrants
exercisable into 555,495 shares of Common Stock of the Company.
On May 21, 1998, the Company sold 34 shares of its Series B Convertible
Preferred Stock to a total of 2 accredited investors pursuant to an exemption
from registration under the Section 4(2) and/or Regulation D. The Company
received proceeds of approximately $549,,000 from the sale of the securities. As
of the date of this prospectus the shares are convertible into 414,222 shares of
Common Stock of the Company.
On July 31, 1998, the Company sold its 8% convertible debenture in the
principal amount of $450,000 to an accredited investor pursuant to an exemption
from registration under Section 4(2) and/or Regulation D. The Company received
proceeds of approximately $ 383,988 from the sale of the securities. As of the
date of this prospectus, the shares are convertible and warrants exercisable
into 287,004 shares of Common Stock of the Company.
INDEX TO EXHIBITS
ITEM 27. EXHIBITS.
PAGE
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- -------------------------------------------------------------------------------
3.1 Articles of Incorporation(1)
3.2 By-laws(1)
4.1 Certificate of Designations-Series A Convertible Preferred Stock
4.2 Certificate of Designations-Series B Convertible Preferred Stock
4.3 Form of Warrant Agreement
5.1 Opinion of Beckman, Millman & Sanders, L.L.P.
10.1 Consulting Agreement-Wall Street Group, Ltd.
10.2 Indenture of Lease between University of Pennsylvania and Eat at Joe's
U. of P., Inc.
10.3 Lease Abstract between Cherry Hill Center, Inc. and Eat at Joe's
Cherry Hill, Inc.
<PAGE>
10.4 Lease Abstract between Echelon Mall, Inc. and E.A.J. Eachelon Mall,
Inc.
10.5 Lease Information Form between E.A.J. PHL, Airport, Inc. and
Marketplace Redwood Limited Partnership
10.6 Lease Abstract between Eat at Joe's U. of P., Inc. and UCA Realty
Group, Inc.
10.7 Lease Abstract between Rouse Philadelphia, Inc. and Eat at Joe's
Gallery, Inc.
10.8 Lease Information Form between E.A.J. Enterprises, Inc. and First
Fidelity Bank, N.A
10.9 Lease Abstract between Eat at Joe's Harbor Place, Inc. and Baltimore
Center, Inc.
10.10 Lease Abstract between E.A.J. Shoppington, Inc. and Wilmorite, Inc.
10.11 Lease Abstract between Eat at Joe's Neshaminy, Inc. and General
Growth Properties, Inc.
10.12 Lease Abstract between Eat at Joe's Plymouth Incorporate and Plymouth
Meeting, Inc.
10.13 Lease Abstract between E.A.J. Danbury, Inc. and Wilmorite, Inc.*
10.14 Registration of trade name for Eat at Joe's
21 Subsidiaries of the Company.
23.1 Consent of Robison, Hill & Co.
24.2 Consent of Beckman, Millman & Sanders, L.L.P. (included in Exhibit 5).
27.1 Financial Data Schedule
(1) Previously filed.
* To be filed by Amendment
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the small
business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, 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.
The undersigned small business issuer hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to (i) include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii)reflect
<PAGE>
in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration
statement; and (iii) include any additional or changed material information
on the plan of distribution.
(2) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the small business issuer under Rule 424(b)(1) or
(4) or Rule 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.
(3) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Town of Scarsdale, State of New York, on August 24, 1998.
EAT AT JOE'S, LTD
By /s/ Joseph Fiore
------------------------------------
Joseph Fiore
Chairman of the Board and
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
SIGNATURE TITLE DATE
/s/ JOSEPH FIORE Chairman of the Board, August 25, 1988
Chief Executive Officer
and Principal Financial
- -------------------------------- Officer
Joseph Fiore
/s/ ANDREW COSENZA, JR. President August 25, 1998
- --------------------------------
Andrew Cosenza, Jr.
/s/ JAMES MYLOCK Director August 25, 1998
- --------------------------------
James Mylock
/s/ TIM MATULA Director August 25, 1998
- --------------------------------
Tim Matula
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Eat Joe's U of P., Inc.
E. A. J. Phl, Airport, Inc.
Eat at Joe's Gallery, Inc.
E. A. J. Enterprises, Inc.
Eat at Joe's Harborplace, Inc.
E. A. J. Shoppington, Inc.
Eat at Joe's Neshaminy, Inc.
Eat at Joe's Plymouth Incorporated
E. A. J. Danbury, Inc.
Exhibit 5.1
BECKMAN, MILLMAN & SANDERS, LLP
116 John Street
New York, New York 10038
August 25, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: East at Joe's, Ltd. Registration Statement on Form SB-2
(File nos. 333-55679)
Gentlemen:
We have acted as counsel to Eat at Joe's, Ltd. a Delaware corporation
(the "Company"), in connection with the registration by the Company under the
Securities Act of 1933 (the "Act") pursuant to the Company's Registration
Statement on Form SB-2 (File nos. 333-55679) to be filed with the Securities and
Exchange Commission (the "Commission") on or about the date of this letter (the
"Registration Statement") of up to ______________ shares of the Company's common
stock, par value $.0001 to be issued under certain circumstances (the "Issuable
Shares") pursuant to certain Securities Purchase Agreements dated March 20, May
5, and May 20 1998 and Debenture and Warrant Purchase Agreement dated July 31,
1998.
In connection with this opinion, we have examined originals or copies,
certified or otherwise to our satisfaction, of the Certificate of Incorporation
of the Company, as amended to date, Certificates of Designations, Preferences
and Rights, Certificates of Good Standing of a recent date, and certificates of
certain officers of the Company, and such other documents, instruments and
records; and have made such other investigations, as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
We have assumed the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of the originals of
such latter documents. In making our examination of documents executed by
parties other than the Company, we have assumed that such parties had the power,
corporate or otherwise to enter into and perform their respective obligations
thereunder and have also assumed the due authorization by all requisite action,
corporate or otherwise, and the execution and delivery by such parties of such
documents and the validity and binding effect thereof. As to any facts material
to the opinions expressed herein, we have relied upon oral or written statements
and representations of officers and other representatives of the Company and
others.
Based upon and subject to the foregoing, we are of the opinion that the
Issuable Shares, when issued, sold and delivered in the manner and or the
consideration stated in the Prospectus included in the Registration Statement,
will be duly authorized and validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Prospectus included in the
Registration Statement.
Very truly yours,
BECKMAN, MILLMAN & SANDERS, LLP
by:
Steven A. Sanders
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Eat at Joe's, Ltd. on Form SB-2 of our reports dated March 23, 1998, and to
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
ROBISON, HILL & CO.
Salt Lake City, Utah
August 25, 1998
EXHIBIT
10.1
The Wall Street Group, Inc.
32 E. 57th Street
NEW YORK, N.Y. 10022
Office of the President (212)888-4848
FAX (212)888-4903
March 17, 1998
Mr. Joseph Fiore
Chairman and Chief Executive Officer
Eat At Joe's, Ltd.
670 White Plains Road
Scarsdale, NY 10583
Dear Mr. Fiore:
This will confirm our understanding that The Wall Street Group, Inc.
has been retained as financial public relations counsel to Eat At Joe's, Ltd.,
beginning April 1, 1998 at a cash fee of $5,000 per month, payable in advance on
the first day of each month, plus the reimbursement of out-of-pocket expenses,
payable on receipt of an itemized statement thereof, as well as the granting of
a five-year option, with piggyback registration rights as more fully set forth
below, on as many shares as could be purchased on the open market for $100,000
at the closing bid price on ___________________, but not less than 50,000 shares
for the first year, which option shall be evidenced by an option agreement in
the form attached hereto as Exhibit A. This option is to be granted to our
consulting affiliate, Wall Street Consultants, Inc.
At the conclusion of 12 months, should this contract not be cancelled
by either party on 90 days prior written notice, or modified, by mutual
agreement, the same terms will pertain to the next 12 month period, except that
Wall Street Consultants, Inc. will be granted an additional five-year option on
as many shares as could be bought for $100,000 using the closing bid price (or
last sale price if the common stock shall be listed on a national securities
exchange) of the common stock on the anniversary of the date of this Agreement
as the exercise price; and each year thereafter, this additional option grant
and formula will be maintained, until this agreement shall be cancelled or
modified. Eat At Joe's, Ltd. agrees to maintain and reserve a sufficient number
of authorized and unissued shares of common stock for future exercise of any
additional stock options granted pursuant to the preceding sentence.
____(JF)
____(DK)
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THE WALL STREET GROUP, INC.
Eat At Joe's Ltd. Agrees, with respect to all options which Wall Street
Consultants, Inc. is entitled to receive hereunder, that for so long as such
options remain exercisable and for a period of two years thereafter, whenever
Eat At Joe's, Ltd. proposes to file with the Securities and Exchange Commission
a registration statement (other than as to securities issued pursuant to an
employee benefit plan or as to a merger, acquisition or similar transaction
subject to Rule 145 promulgated under the Securities Act of 1933, as amended),
Eat At Joe's, Ltd. shall, at least 30 days prior to such filing, give written
notice of such proposed filing to Wall Street Consultants, Inc. (or its
successors or assigns, as the case may be) setting forth the facts with respect
to such proposed filing, and shall offer to include in any such filing all of
the shares subject to such options, provided that Eat At Joe's, Ltd. receives a
request therefore at least 10 days prior to the proposed filing date. All fees,
disbursements and out-of-pocket expenses in connection with the filing of any
registration statement and in complying with applicable securities and blue sky
laws shall be borne by Eat At Joe's, Ltd., all as more fully set forth in the
option agreement.
The number of options due Wall Street Consultants, Inc. in any twelve
month period beginning with the initiation of this agreement will double and
vest fully and immediately should arrearages of fees and reimbursements of out
of pocket expenses due Wall Street Group, Inc. cumulatively total $15,000,
equivalent to ninety days of cash fees.
This agreement can be cancelled by either party on ninety (90) days
written notice. Should this agreement be cancelled earlier than one year from
the date hereof as reflected below, Wall Street Consultants, Inc. will, if
applicable, return to Eat At Joe's, Ltd. a prorated portion of the five-year
stock option, which portion shall be based on the number of days remaining in
the twelve month retainer period. For this purpose (and all other purposes of
this agreement), the ninety (90) day period following notice of termination
shall be considered part of the retainer period.
It is understood that during the ninety day period following notice of
termination, Eat At Joe's, Ltd. will continue to honor its fee arrangement to
The Wall Street Group, Inc., plus reimbursement of expenses, and that The Wall
Street Group, Inc. will continue the completion of any work undertaken on behalf
of Eat At Joe's, Ltd..
Any disputes arising under or in connection with the interpretation of
t1is Agreement or the rights and obligations of the parties hereto shall be
resolved by arbitration in the City of New York under the rules of the American
Arbitration Association then obtaining. The decision of the arbitrator(s) shall
be final and binding, and judgment may be entered thereon in the Supreme Court
of the State of New York or in the United States District Court for the Southern
District of New York or any court having jurisdiction. The costs and expenses,
including counsel fees, shall be borne by each of the parties or as the
arbitrator(s) may determine at the request of any party.
___(JF)
___(DK)
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THE WALL STREET GROUP, INC.
It is further understood that as your financial public relations counsel we
must in 0 instances rely upon the accuracy and completeness of the information
supplied to us by Eat At Joe's, Ltd., its officers and directors. In that
connection, Eat At Joe's, Ltd. assumes full responsibility for the accuracy and
completeness of such information, and Eat At Joe's, Ltd. agrees to indemnify WSG
and pay the reasonable costs and expenses (including, without limitation,
attorneys' fees, disbursements and related expenses), of The. Wall Street
Group,Inc. in any suit or proceeding wising out of or related to any action
taken by, or omitted to be taken by, Eat At Joe's, Ltd. or any of its officers,
directors, agents or employees, or by WSG in the performance of services for Eat
At Joe's, Ltd.. in turn, The Wall Street Group, Inc. agrees to issue no press
releases on behalf of Eat At Joe's, Ltd. which have not had the prior clearance
of Mr. Joseph Fiore or any other corporation officer he may designate.
If this agreement meets with your approval please sign one copy and
return it to me, along with a check representing the first month's fee and the
completed Stock Option Agreement while retaining the other copy for your files.
Very truly yours,
Donald Kirsch
President
DK/bn
AGREED TO:
Eat At Joe's, Ltd.
----------------------
Mr. Joseph Fiore
Chairman and Chief Executive Officer
Dated:____4/1/98_____________
<PAGE>
The Wall Street Group, Inc.
32 E. 57th Street
NEW YORK, N.Y. 10022
(212)888-4848
FAX (212)888-xxxx
Eat At Joe's Ltd.
STOCK OPTION AGREEMENT
Option granted as of ________________ by Eat At Joe's, Ltd. (the
"Corporation") to Wall Street Consultants, Inc. (which together with its assigns
is sometimes hereinafter referred to as the "Grantee"):
1. The 0ption. In further consideration of the services to be provided to
the Corporation by the Grantee pursuant to that certain retainer agreement
between the Corporation and the Grantee dated ____________________ (the
"Retainer Agreement"), the Corporation grants to the Grantee, effective on the
Date of Grant, a stock option (the "Option") to purchase, on the terms and
conditions herein set forth, up to the number of shares (the "Shares") of the
Corporation's fully paid, nonassessable shares of common stock, ("Common
Stock"), at the purchase price for the Shares set forth in Section 2 below, such
that the aggregate purchase price shall equal $100,000, but not less than 50,000
shares for the first year-, provided, however, that in no event shall the
Corporation be required to sell a fractional Share, and the number of Shares
purchasable hereunder shall be limited accordingly.
2. The Purchase Price. The purchase price of the Shares shall be $ per
share (the "Option Price"), which price is the fair market value of the Shares
as of the Date of the Grant, as such Option Price shall be adjusted from time to
time pursuant to paragraph 10.
3. Exercise of Option.
(a) The Option is exercisable over a period ending five years from the Date
of Grant (the "Option Period"). The Option may be exercised from time to time
during the Option Period as to the total number of Shares subject to this Option
as: determined under Section 1, or any lesser amount thereof and the Option
shall continue as to any unexercised Shares.
(b) In the event the Grantee elects to exercise all or any portion of the
Option, the Grantee shall deliver to the Corporation written notice (the
"Notice") of such election, which Notice shall specify the number of Shares in
respect of which the Option is to be exercised, along with payment of the Option
Price of the Shares m respect of which the Option is exercised. The Option Price
shall be paid in full in United States dollar's at the time of exercise;
provided, however, that if any fees are owed or expenses unreimbursed pursuant
to the Retainer Agreement, then the exercise price may be paid by the Grantee
agreeing to credit the corporation therefore. If the Option is exercised in
accordance with the provisions of this Agreement, the Corporation shall deliver
as soon as practicable to the Grantee a certificate or certificates representing
the number of Shares in respect of which the Option is being exercised, which
Shares shall be registered in the holder's name.
_____(JF)
_____(DK)
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4. Sale of Shares. The Grantee not be entitled to sell, transfer, or
distribute the Shares except pursuant to (i) an effective registration statement
under the Securities Act of 1933, as amended (the "Act"), or (ii) if there be no
registration statement in effect pursuant to an exemption from registration
under the Act. Prior to offering or selling the Shares upon claim of exemption,
the holder shall obtain a written opinion from counsel reasonably satisfactory
to the Corporation to the effect that such exemption is available or shall
deliver a "no-action" letter from the Securities and Exchange Commission with
respect to the proposed sale, transfer or distribution of the Shares.
5. Registration Rights. The Corporation agrees that, for so long as the
Option remains exercisable and for a period of two years thereafter, whenever
the Corporation proposes to file with the Securities and Exchange Commission a
registration statement (other than as to securities issued pursuant to an
employee benefit plan or as to a merger, acquisition or similar transaction
subject to Rule 145 promulgated under the Securities Act),. The Corporation
shall, at least 30 days prior to such filing, give written notice of such
proposed filing to the Grantee setting forth the facts with respect to such
proposed filing, and offer to include in any such filing the Shares subject to
the Option provided that the Corporation receives a request therefor at least 10
days prior to the proposed filing date. All fees, disbursements and
out-of-pocket expenses in connection with the filing of any registration
statement and in complying with applicable securities and blue sky laws shall be
borne by the Corporation.
The Corporation will indemnify and hold harmless the Grantee and each
person who controls the Grantee within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and a losses, claims, damages, expenses and
liabilities, joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in any settlement
effected with the Corporations consent (not to be unreasonably withheld) of, any
action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Act the Exchange Act or other federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based on (A) any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement filed with respect to. the Shares (including any related
preliminary or definitive prospectus, or any amendment or supplement to such
registration statement or prospectus), (B) any omission or alleged omission to
state in such document a material fact required to be stated in it or necessary
to make the statements in it not misleading, or (C) any violation by the
Corporation of the Act the Exchange Act, any Mud sky laws or any rule or
regulation thereunder in connection with such registration; provided however,
that the Corporation will not be liable to the extent that such loss, claim,
damage, expense or liability arises from and is based solely on a material
untrue statement or omission or alleged material untrue statement or omission
made in such registration statement and in conformity with information furnished
in writing to the Corporation by the Grantee expressly for use in such
registration statement. With respect to the matter referred to in the proviso of
the foregoing sentence, the Grantee will indemnify and hold harmless the
Corporation from and against any and all losses, claims, damages, expenses and
liabilities, joint or several, to which it may become subject under the Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise to the same extent provided in the immediately preceding
sentence.
_____ (JF)
_____ (DK)
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Promptly after receipt by an indemnified party of notice of the
commencement of any action involving matters referred to in the foregoing
paragraph, such indemnified party will, if a claim in respect thereof is to be
made against any party, thereof and the indemnifying party shall have the fight
to participate in, and, to the Went the indemnifying party so desires, jointly
with any other indemnifying. party similarly notified, to the defense thereof at
its own expense with counsel reasonably satisfactory to the indemnified party or
parties, and in such case, if the indemnified party desires to retain its own
counsel the expense of such counsel shall be borne by the indemnified party.
6. Termination of Retainer Agreement. In the event the engagement of the
Wall Street Group, Inc. under the Retainer Agreement, reason of the termination
of the Retainer Agreement by either party on ninety (90) days notice pursuant to
the provisions thereof the maximum number of Shares exercisable hereunder shall
be multiplied by a fraction, the numerator of which shall be the number of days
which shall have expired from the Date of Grant to the earlier of the next
subsequent anniversary date of the Retainer Agreement or ninety (90) days after
receipt by the Wall Street Group, Inc. of the notice of termination sent
pursuant thereto, and the denominator of which shall be 365, and such product
shall thereupon be the maximum -number of Shares purchasable hereunder;
provided, however, that in no event shall the Corporation be required to sell a
fractional Share, and the number of Shares purchasable hereunder shall be
limited accordingly.
7. Successors and Assigns. This agreement shall be binding upon and shall
inure to the benefit of the parties! respective successors and assigns.
8. Expiration of Option This Option is not exercisable after the expiration
of five years from the Date of Grant.
9. Rights.
(a) The granting of this Option shall not confer upon the Grantee any right
to continue to be retained by the Corporation or any of its -subsidiaries,
subject, however, to the terms of the Retainer Agreement between the Grantee and
the Corporation.
(b) The Grantee shall not by reason of the granting to it of the Option,
have or thereby acquire any rights of a stockholder of the Corporation with
respect to any Shares unless and until it has tendered full payment of the
Option Price for such Shares.
10. Adjustment of Number Of shares and Option Price. In the event that a
dividend shall be declared upon the Shares payable in shares of Common Stock,
the number of Shares then subject to the Option and the Option Price shall be
adjusted by adding to each of such Shares the number of shares of Common Stock
which would be distributable thereon if such Share had been outstanding on the
date fixed for determining the stockholders entitled to receive such stock
dividend and reducing the Option Price proportionally. In the event that the
outstanding Shares shall be changed into or exchanged for a different number or
kind of shares of stock or other securities of the Corporation or of
_____ (JF)
_____ (DK)
Initials
another corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, merger or consolidation, then there shall be
substituted for each Share subject to the Option the number for number and kind
of shares of stock or other securities into which each outstanding share of
Common Stock shall be so changed or for which each such share be exchanged;
provided, however, that in the event that such change or exchange results from a
merger or consolidation, and in the judgment of the Board of Directors of the
Corporation such substitution cannot be effected or would be inappropriate, or
if the Corporation sell all or substantially all of its assets, the Corporation
shall use reasonable efforts to effect some other adjustment of the Option which
the Board of Directors, in its sole discretion, shall deem equitable, In the
event that there shall be any change, other than as specified above in this
Paragraph 10, in the number or kind of outstanding Shares or of any stock or
other securities into which such Shares shall have been changed or for which
they shall have been exchanged, then, if the Board of Directors shall determine
that such change equitably requires an adjustment in the number or kind of
Shares then subject to the Option, such adjustment shall be made by the Board of
Directors andbe effective and binding for all purposes of this Option. In the
case of any such substitution or adjustment as provided for in this paragraph,
the Option Price will be the option price for all shares of stock or other
securities which shall have been substituted for each Share or to which such
Share shall have been adjusted pursuant to this paragraph 10. No adjustment or
substitution provided for in this paragraph 10 shall require the Corporation to
sell a fractional Share, and the total substitution or adjustment shall be
limited accordingly.
11. Reserve of Shares. The Corporation will reserve and set about and have
at all times, free from preemptive rights, a number of shares or authorized but
unissued Common Stock deliverable upon exercise of the Option, and it will have
at all times any other rights or privileges provided for therein sufficient to
enable it at any time to all of its obligations in this Agreement.
12. Governing Law. This Agreement be governed by, and construed and
enforced in accordance with, the laws of the State of New York. If the foregoing
is in accordance with the Grantee's understanding and approved by it, it may so
confirm by signing and returning the duplicate of this Agreement delivered for
that purpose.
Eat At Joe's, Ltd.
Dated:________ By:__________________
The foregoing is in accordance with the undersigned's understanding and is
hereby confirmed and agreed to as of the Date of Grant.
WALL STREET CONSULTANTS, INC.
Dated:__________ By:____________________
EXHIBIT
10.2
INDENTURE OF LEASE
THIS INDENTURE OF LEASE, made on the 30 day of October 1997 by
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA, a Pennsylvania not-for-profit
corporation, with a notice address of 748 Franklin Building, 3451 Walnut Street,
Philadelphia, PA 19104-6205 ("Landlord") and EAT AT JOE'S U. OF P., INC., a
Pennsylvania corporation trading as EAT AT JOEIS, with a notice address at 1415
Route 70 East, Suite 412, Cherry Hill, NJ 08034, and an address for receipt of
invoices at 1415 Route 70 East, Suite 412, Cherry Hill, NJ 08034 ("Tenant").
WITNESSETH:
A. Premises.
The Trustees of the University of Pennsylvania, a Pennsylvania not for
profit corporation (the "Prime Landlord"), are the owners of a parcel of ground
with the buildings and improvements thereon, located at the northwest comer of
the intersection of 34th,and Walnut Streets, Philadelphia, Pennsylvania (the
"Fee Owner's Property"). Pursuant to Lease dated as of July 1, 1985, the Prime
Landlord, as landlord, leased to Landlord's predecessor, as tenant, certain
portions (as shown on the plan attached hereto and made a part hereof as Exhibit
"A") of the first floor of the mixed use retail/office building facility (the
"Building") constructed on Fee Owner's Property, which portions are hereinafter
called "Project". Said Lease, together with all amendments thereto and
assignments thereof, current and future, is hereinafter referred to as the
"Prime Lease". The Project as currently known as THE SHOPPES AT PENN).
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord the
store premises (the "Premises") in the Building designated on Exhibit "A" hereto
as Store Number FC- 9 . The Premises are measured and described by the following
dimensions which are measured from the outside building lines of each wall of
the Premises or, in the case of those walls separating the Premises from other
stores in the Project or Building, from the center lines of such walls:
Front:
Depth:
Total Area: 456 square feet
together with the right to the non-exclusive use in common with others entitled
to use same of all such automobile parking areas, driveways, malls, courts,
corridors, footways, loading facilities and other facilities as may be
designated by Landlord from time to time, as more fully set forth in and subject
to the terms and conditions of this Indenture of Lease and the Lease Agreement
(hereinafter collectively referred to as "the Lease"), and to such reasonable
rules and regulations for the use thereof as may be prescribed from time to time
by the Landlord in accordance with Section 5.4 of the Lease.
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<PAGE>
Tenant hereby acknowledges that this Lease is a sublease under the Prime
Lease, and that Tenant's rights hereunder are subject to and limited by the
provisions of the Prime Lease. Accordingly, notwithstanding anything herein to
the contrary, Tenant agrees that Landlord shall not be obligated to do anything
hereunder which it, as the tenant under the Pri 'me Lease, is prohibited from
doing by the Prime Lease and that Landlord will not be obligated to refrain from
doing any act hereunder if to refrain from so doing is prohibited by the Prime
Lease or would result in Landlord's being in default thereunder. Furthermore,
notwithstanding anything contained herein to the contrary, Landlord shall not be
liable to Tenant for the performance or non-performance of Prime Landlord's
obligations under the Prime Lease and it is intended that Tenant shall look
solely to and hold the Prime Landlord responsible for the performance or
non-performance of such obligations to the extent that such obligations are also
the obligations of Landlord hereunder or are designated herein as the
obligations of Prime Landlord. As to those matters that are the obligations of
the Prime Landlord under the Prime Lease as set forth in the preceding sentence,
Landlord shall, as its sole obligation with respect thereto, request performance
of such obligations by Prime Landlord upon receipt of a written request from
Tenant to do so and Landlord shall thereafter use reasonable efforts to obtain
performance of the same by the Prime Landlord. Performance of such obligations
by the Prime Landlord will be deemed performance by Landlord of such obligations
hereunder.
B. Length of Term.
The Original Term (defined herein) and Tenant's obligation to pay rent and
occupy the Premises in accordance with the terms of the Lease shall commence on
the earlier of the following dates (such earlier date being hereinafter called
the "Commencement Date"): (1) January 1, 1998 or; (2) the date on which Tenant
shall first open the Premises for business with the public. 'Me Tenn (defined
herein) shall be for a period of ten (10) years from the Commencement Date, plus
the period, if any, between the Commencement Date, if it falls on a day other
than the first day of the month, and the first day of the first full calendar
month in the Original Tenn. 'Me expected date of delivery of possession to
Tenant is the date of execution of the Lease.
C. Fixed Minimum Rent. SEE RIDER.
Tenant shall pay to Landlord a guaranteed annual minimum rent ("Fixed
Minimum Rent") for of the following periods during the Term as follows:
TIME PERIQD ANNUAL MONTHLY RATE PER
AMOUNT AMOUNT SQUARE FOOT
Lease Years 1-5 $20,520.00 $1,710.00 $45.00
Lease Years 6-10 $22,800-00 $1,900.00 $50.00
Each such installment of Fixed Minimum Rent shall be due and payable on or
before the first day of each calendar month in the Original Term, in advance, at
the office of Agent or at such place as may be designated by Landlord from time
to time, without any prior demand therefor and without any deduction or setoff
whatsoever, the first installment to be paid on the Commencement Date whether or
not the Commencement Date is the first day of a calendar month. In the event
that the Commencement Date of
<PAGE>
the Term shall be a day other than the first day of a calendar month, Tenant's
first payment of Fixed Minimum Rent shall be prorated for the fractional month
between the Commencement Date and the first day of the first full calendar month
in the Term, on a per them basis (calculated on a thirty (30) day month).
Landlord may accept any payment by Tenant of a lesser amount than shall be due
from Tenant without prejudice to any rights or remedies which Landlord may have
against Tenant. Any endorsement or statement on any check accepted by Landlord,
or any statement in correspondence accompanying such check, that acceptance of
such lesser amount is payment in full, shall be given no effect. All rent shall
be paid in United States currency and shall, if other than cash, be drawn on a
United States bank.
D. Percentage Rent. SEE RIDER.
In addition to the Fixed Minimum Rent as aforesaid, Tenant, in accordance
with Section 2.1 of the Lease, shall pay to Landlord, as Additional Rent
(defined herein) hereunder ("Percentage Rent"), and as part of the consideration
of the aforesaid demise, for each Lease Year (defined herein) in the Original
Term a sum equal to Eight percent (8%) of that portion of Gross Sales (as
defined in Section 2.2 of the Lease) during each Lease Year which is in excess
of the applicable Percentage Rent Gross Sales Base. The Percentage Rent Gross
Sales Base for the following periods within each Lease Year shall be:
TIME PERIOD PERCENTAGER.ENT GROSS SALE
BASE
Lease Years 1-5 $342,000.00
Lease Years 6-10 $380,000.00
E. Use of Premises.
Subject to the provisions of Article 5 of the Lease, Tenant shall use the
Premises solely for the purpose of conducting the business of: the operation of
a 1950's style diner offering burgers, french fries, sandwiches, ice cream
sundaes, menu attached hereto as Exhibit C.
F. Hours of Operation.
The present hours of operation of the Project during which Tenant must have
the Premises open for business with the public (subject to adjustment by
Landlord as set forth in Section 5.1) are:
Food Court Tenant
Monday through Thursday: 10:00 A.M. to 10:00 P.M.
Friday and Saturday: 10:00 A.M. to 12:00 Midnight
Sunday: 12:00 Noon to 10:00 P.M.
G. Intentionally Deleted.
H. Taxes.
In accordance with and subject to the adjustments set forth in Section 3.1
of the Lease, for each "Tax Year" (as defined in said Section) during the
Original Term, Tenant shall pay Landlord on account
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<PAGE>
of Tenant's share of any "Taxes" (as defined in such Section), the annual amount
of Four Dollars and Fifty Cents ($4.50) multiplied by the number of square feet
of floor area contained within the Premises. The dollar amount set forth herein
is an initial estimate only.
I. Operating Costs.
In accordance with and subject to the adjustments set forth in Section 7.3
of the Lease, for each "Accounting Period" (as defined in said Section) during
the Original Term, Tenant shall pay Landlord on account of Tenant's share of
"Operating Costs" (as therein defined), the annual amount equal to the greater
of Seven Hundred Fifty dollars ($750.00) or Five Dollars and Fifty Seven Cents
($5.57) multiplied by the number of square feet of floor area contained within
the Premises. Ile dollar amount set forth herein is an initial estimate only.
J. Promotion Fund.
In accordance with and subject to the adjustments set forth in Article 15
of the -Lease, for each year during the Original Term, Tenant shall pay to
Landlord for the Promotion Fund the annual amount of (a)
Two Dollars ($2.00) multiplied by the number of square feet of floor area
contained within the Premises.
K. Intentionally Deleted.
L. Remodeling.
In accordance with the provisions of Section 4.2 of the Lease, Tenant shall
remodel the e Premises not later than January 1, 1998.
M. Security Deposit.
Tenant, contemporaneously with the execution of this Indenture of Lease,
has deposited with Landlord the sum of One Thousand Seven Hundred Ten Dollars.,
($1.7 10.00) receipt of which is hereby acknowledged by Landlord, which deposit
is now the property of the Landlord and is to be held as security for the
faithful performance by Tenant of all of the tern s, covenants and conditions of
this Lease by said Tenant to be kept and performed during the Term, subject to
Article 20 of the Lease.
N. Lease Documents.
In addition to the Indenture of Lease and the Lease Agreement consisting of
_ pages, the following are attached to the Lease and are hereby incorporated in
and made part of the Lease as fully as though set forth at length in the Lease
Rider, if any, and the following Exhibits:
Exhibit "A" - Site Plan of Project
Exhibit "B" - Food Court Exhibit
Exhibit "C" - Menu
Rider
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Lease to be duly executed the day and year first above
written.
LANDLORD:
THE TRUSTEES OF THE UNIVERSITY
OF PENNSYLVANIA
ATTEST:
__________________________ BY: _____________________
Assistant Secretary Vice President
TENANT:
EAT AT JOE'S U. OF P., INC.,
t/a EAT AT JOES
ATTEST:
_________________________ BY: ________________________
Secretary President
EXHIBIT
10.3
Eat at Joe's Cherry Hill, Inc.,
T/a Eat at Joe's
Cherry Hill Mail - Cherry Hill, Now Jersey - Camden County
660 Square Feet
Cherry Hill Center, Inc.
An Affiliate of
The Rouse Company
Debra S. Ramcy
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
(410) 992-6129
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Preopening Date Rent Commencement Date Opening Date Termination Date
- ---------------- -------------------------- ---------------- -------------------
Earlier of October 1, 1997 September 30, 2007
or opening to public for
business
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RENEWAL OPTION:
EARLY TERMINATION OPTION:
FINANCIAL INFORMATION:
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Security Deposit: -0-
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Base Rent:
Years 1-5 Years 6-10
Monthly: $4,400.00 $4,950.00 Annual: $52,800.00 $59,400.00 Square Foot: $80.00
$90.00
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Percentage Rent: Break Point: $528,000.00 $59,400.00 Percentage: 10% 10%
- -------------------------------------------------------------------------------
Common Area Maintenance: - LL Operating x (660 --LL Leased floor area) - In LL
floor am is expanded or renovated to the extent of $20.00 sq, ft., Annual Base
and Percentage Rents: With increase by 10%
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Food Court Maintenance:
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Marketing/Advertising/Promotional Fees/Merchant's Association: .* Merchant's
Association Contribution Rate: Year I - $1.00 sq. ft -;- 12 paid monthly - Years
2- 10 - Adjusted in same proportion as most recent CP1 over that of preceding
year. Marketing Fund: $2.00 sq. JI. - 12 paid monthly. Adjusted in same
proportion as above
- -------------------------------------------------------------------------------
Utility Service Charge: Water, sewer, electric, gas phone and others charged as
used.
- -------------------------------------------------------------------------------
Construction Allowance/Rent Concession:
- -------------------------------------------------------------------------------
Other Pass-Through Charges:-Sprinkler Contribution Rate:($.15 x 660)/12 monthly.
T's Insurance. *Proportione Insurance: LL Insurance Cost x (660/LL Floor Area).
* Proportionate Taxes; 1.1, Taxes x (660 - LL Floor Area). *Trash Removal.
- -------------------------------------------------------------------------------
Department Store: Annual Basic Rental, and Breakpoint increase 10% for each
Anchor store or expansion of at least 50,000 sq.ft. 6
- -------------------------------------------------------------------------------
RADIUS RESTRICTIONS: No other store with same trade name within five (5) miles.
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: E.A.J. Holding Corp.
1415 Route 70 East, Suite 412
Chcrry Hill, NJ 08034
GUARANTOR LIMITATIONS: Unconditional
1 Shall occur only once during the term, and LL agrees tentant shall be
obligated to pay only one of the two charges.
EXHIBIT
10.4
E.A.J. Echelon, Inc.,
t/a Eat at Joe's Express
The Mall at Echelon - Vorhees, Now Jersey - Camden County
468 Square Feet
Echelon Mall, Inc.
An Affiliate of
The Rouse Company
Mary E.A. Olivieri
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
(410) 992-6378
- ----------------- ------------------------ -------------- ------------------
Preopening Date Rent Commencement Date Opening Date Termination Date
- ----------------- ------------------------ -------------- ------------------
Earlier of January 1, 1998 January 14, 2006
or date open for business
- ----------------- ------------------------ -------------- ------------------
RENEWAL OPTION:
EARLY TERMINATION OPTION:
FINANCIAL INFORMATION:
- -------------------------------------------------------------------------------
Security Deposit: -0-
- -------------------------------------------------------------------------------
Base Rent: Years 1-8
Monthly: $1,950.00
Annual: $23,400.00
Square Feet $50.00
- -------------------------------------------------------------------------------
Percentage Rent: Break Point: $260,002.08
Percentage: 9%
- -------------------------------------------------------------------------------
Common Area Maintenance: - LL Operating x (468 --LL Leased floor area)
- -------------------------------------------------------------------------------
Food Court Maintenance: * Food Court Proportionate Share: 1/2 Food Court
Expenses x (T's Gross Sales / Total gross Sales of food Court Tenants) / 1/2
Food Court Expenses x 468 / Total Leased Floor Area of Food Court Premises)
- -------------------------------------------------------------------------------
Marketing/Advertising/Promotional Fees/Merchant's Association:
o Merchant's Association Contribution Rate: ($3.25 x 468) / 12 monthly.
- -------------------------------------------------------------------------------
Utility Service Charge: HVAC Equipment Contribution Rate:($1.25x468)/12 monthly;
o T responsible for all charges for water, sewer, electricity, gas, phone or
other utilities consumed on premises;
- -------------------------------------------------------------------------------
Construction Allowance/Rent Concession:
- -------------------------------------------------------------------------------
Other Pass-Through Charges:-Sprinkler Contribution Rate: ($.25 x 468/12 monthly.
o T's Taxes; oT's Proportional Taxes: Estimated and billed monthly by LL;
o T's Insurance;
o T's Proportionate Taxes; Costs x (468 / LL Floor Area) / 12 monthly.
o Construction Deposit: $3,00; *Trash Removal Service
- -------------------------------------------------------------------------------
Department Store: ABR and Breakpoint increase 10% if either of the following
occur: Anchor store expansion2 or expansion of at least 50,000 sq. ft. or
expansion or Renovation to the sum of $20.00 sq ft. shall only occur once.
- -------------------------------------------------------------------------------
RADIUS RESTRICTIONS: T shall not operate another store under same Trade Name or
variation thereof, within five (5) miles. This restriction is further limited to
food court style versions, and not full service dinner style.
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: Eat at Joe's LTD., 1415 Route 70 East, Suite 412, Cherry Hill, NJ
08034
GUARANTOR LIMITATIONS: Limited to T's performance of the terms and conditions of
the Lease Agreement accruing during the first two (2) rental years, plus costs
and collection of attorney's fees.
1 Adjusted annually in same proportion as CPI from previous year
2 Specifically excludes Sears expansion.
EXHIBIT
10.5
COZCO MANAGMENT / EAT AT JOES
LEASE INFORMATION FORM
1. PARTIES:
TENANT: E.A.J.: PHL, AIRPORT, INC.
LANDLORD: MARKETPLACE REDWOOD LIMITED PARTNERSHIP
PRIME LANDLORD: City of Philadelphia
2. LEASED PREMISES
Address: Prime Leased Premises; That certain area located within the Terminal
Building (as defined in the lease) leased by Prime Landlord to
Landlord pursuant to the Prime Lease, as more particularly designated
in Exhibit A attached to the Lease.
Leased Premises: Tenant's portion of the Prime Leased Premises shown
crosshatched on Exhibit A to the Lease,
Leaseable Building Area: Approximately 845 sq. ft.
Permitted Uses: The first-class, high-quality operation for the sale and display
of the items listed on Exhibit G attached to the Lease
Prohibited Uses (Check One): _None
X All except permitted uses
Specific prohibited uses:
<PAGE>
3. TERM:
Initial Term Commencement Date through Termination Date
Commencement Date is defined as the earlier to occur of (a) the Outside
Commencement Date (the later to occur of (i) May 1, 1997, or (ii) the day that
is 75 days after the date on which Landlord approves the plans and
specifications for the Tenant's Work, as provided in the Lease), or, if later,
the expiration of 45 days after delivery of possession of the Premises to the
Tenant; or (b) the opening by Tenant of its business in the Premises
Termination Date is April 30, 2007. [4. 1]
Options to Renew No.
What is rent during renewal period?.: N/A
4. RENTAL:
Minimum Annual: $85,500.00
Percentage? Yes.
If yes, (1) describe percentage rent formula: Annual percentage Rental is the
sum equal to 15% of the amount by which annual Gross Concession Sales exceed the
"First Breakpoint" as defined in the Lease up to the "Second Breakpoint", as
defined in the Lease, plus 18% of the amount by which annual Gross Concessions
Sales exceed the Second Breakpoint, [11. 1E]
(2) discuss effect of of assignment or subletting: N/A
Is there a provision for tenant to pay tax and operating expense escalation?
Tenant responsible for allocable portion of Taxes (as defined in the Lease) (see
below).
If yes, outline formula:
<PAGE>
Prepaid or free rent or existing offsets: None.
Amount: N/A
Period: ______________________________________
Renewal or Escalation Rent: N/A
Any Take-over lease? N/A
5. EXPENSES PAID BY TENANT:
Summarize lease provision regarding the following expenses:
Real Estate Taxes: Tenant pays its proportionate share of real estate and other
Taxes, computed by multiplying the amount of such Taxes by a fraction, the
numerator of which is Tenant's Floor Area and the denominator of which is
landlord's Floor Area. [7, 1]
Insurance; Tenant must maintain certain insurance at its expense, including
commercial general liability, all-risk property and casualty, boiler and
machinery, worker's compensation, automobile, liquor law legal liability,
builder's risk, and any other insurance as required by Landlord or Prime
Landlord. [13. 3]
Repairs and Maintenance (Structural, Roof, Exterior, Interior, Glass): Prime
Landlord has covenanted landlord in Prime Lease that it will make or cause
to be made all structural repairs to exterior walls, exterior columns, roof
penetrations and structural floors which collectively enclose the Premises.
[10.1]
All other repairs to the Premises, other than those required to be made by
Landlord pursuant to Section 14.1 of the Lease (with respect to partial
damage), and other than those required to be made by the Prime Landlord (as
described above) are to be made by the Tenant at its expense. [10-2]
1121;22
3
<PAGE>
Utilities (Electricity, Heat, Air Conditioning, Water): Tenant must. pay for
utility service, whether furnished by Landlord directly or by the utility
company furnishing the utility to the Airport. To the extent practicable,
all utility service to the Premises is to be separately submetered. [12.1]
No separate charge to be assessed against Tenant for HVAC Service; however,
the costs to maintain, repair and replace, and the costs of electric
service to operate the systems and equipment providing HVAC Service shall
be excluded in Landlord's Operating Costs for which Tenant is required to
pay a proportionate share. [12-2]
Services(Janitorial Cleaning).- The cost of trash removal service is included in
Landlord's Operating Costs. Tenant pays its allocable share of Dumpster
Costs, Tenant also pays a monthly Delivery Service Charge if Landlord elect
to furnish a service for the delivery and distribution of merchandise and
other items. [9.4]
Contributions to Parking and/or Common Areas (CAM): Included -Landlords
Operating Costs of which Tenant pays a proportionate share (as defined in
the [11.4]
Would CAM obligations be affected by more favored treatment of another tenant?
No.
If yes explain:
Any other tenant obligations: Tenant paid an Initial Marketing Charge and a
Pro-Opening Marketing Charge. Tenant must also pay a monthly contribution
to the Marketing Fund. [9. 15, 9.16]
6. TENANT RIGHTS TO TERMINATE:
Can tenant cancel lease it:
a. Premises are not available or construction completed by specific date?
No.
1124U
4
<PAGE>
If yes, what date?
b. Leaves to other tenants are not in force or kept in force? No.
If yes, which tenants?
c. Leases to Others are not occupied for particular uses or operated under
required names? No.
If yes, identify tenants and conditions:
d. Premises are substantially destroyed during final lease years?
(see below)
At any time? Landlord has the obligation to restore substantial damage to the
Premises during the Term, unless, in the reasonable estimate of landlord,
the net amount of insurance proceeds to Landlord would be insufficient to
cover the cost of restoration. [14.2]
If yes, what is definition of substantial destruction? Damage of such a
character as cannot reasonably be expected to be repaired or the Premises
restored within 60 days from the time that such repair work would be
commenced. [14.6]
e. Land1ord is unable to restore premises within ___________days?
See above.
f. Property or demised premises partially condemned? If the whole or any part
of the Premises under the of eminent domain the Lease terminates as to the
part so taken on the date Tenant is required to yield possession thereof to
the condemning authority. [15.1]
If Yes, what is definition of partial condemnation? N/A
112122
5
<PAGE>
g. Landlord defaults for any reason other than to provide additional space?
N/A
If Yes, is tenant obligated to notify and give mortgagee rights to cure?
h. For any other reasons? No. If yes describe:
7. PARKING REQUIRED: N/A
Car stalls or ratio:
For exclusive use of this tenant?
Location: on leased promises?
on non-leased property?
off mortgaged property or property being purchased?
(if so, describe how parking to be assured):
8. LANDLORD OBLIGATION TO RESTORE
Is landlord obligated to restore in event of of partial destruction? No.
If yes, define partial destruction:
Total Landlord has the obligation to restore substantial damage to the Premises
during the Term, unless, in the reasonable estimate of Landlord, the net
amount of insurance proceeds available to Landlord would be insufficient to
cover the cost of restoration. [14.2]
112122
6
<PAGE>
9. COMPETITION LIMITATIONS:
Radius Clause: Is landlord prohibited from developing, leasing or occupying
other property for business similar to this tenant? No.
If yes, what Is geographic restriction? NIA
Is there a radius clause restricting this tenant? No-
It so, describe.
Exclusives: b tenant granted an exclusive No.
Or other restrictions upon other tenants? No.
If Yes, in either case, describe:
Restrictions on tenant's activities in surrounding area? No.
10. LEASE SUBORDINATIONS
Is this lease subordinate to any mortgage? The Lease is subordinate to any
mortgage, deed of trust or other security instrument constituting a lien
upon the Premises or Landlord's interest therein, whether in existence at
the date of the lease or created thereafter. [18-1]
If yes, does foreclosure statute terminate lease?
- -----------------------------------------------------
Does mortgagee in foreclosure have option to recognize or cancel lease?
- -----------------------------------------------------
Is subordination conditioned on Non-Disturbance or Recognition Agreement? No,
but Landlord agrees to use its best efforts to have the holder of any Mortgage
that may become prior to the Lease enter into its usual
7
<PAGE>
nondisturbance agreement with Tenant, W long as Tenant is not in default under
the Lease. [ 18.1]
11. EXPANSION PROVISION:
Must landlord provide additions space? No.
If yes, under what conditions?
How much space and at what cost? ________________________
Is rent increased? ___________________________If yes, discuss formula:
If landlord defaults:
Does tenant have the right to cancel? _________________________
to construct & charge cost against existing fixed rent?
_____________ percentage rent only?
all rent? _________________________________
12. RENTAL OFFSETS;
If Landlord defaults in any lease obligations does tenant have the right to
remedy and offset, costs against rent? No.
If yes, must tenant notify mortgagee and give mortgagee right to cure?
Are notice and curing terms satisfactory? Monetary -no notice and cure
provisions. Non-monetary .. 20 days after the giving of notice by Landlord,
unless the default is of such nature that it cannot be cured within such 20-day
period, in which case no Event of Default shall occur so long as Tenant
112122
8
<PAGE>
commences the curing of the default within such 20-day period and thereafter
diligently prosecutes the curing of the same [17.1(g)]
13. PURCHASE OPTION: RIGHT OF FIRST REFUSAL:
Is tenant granted the right to purchase the demised promises? No.
If yes, during what Period can option be exercised?
Price ?
Is tenant given the right to match any other offer to purchase? No.
14. TAKE-OVER-OBLIGATIONS
Does lease require landlord to assume rental or lease obligations of this tenant
at another location? N/A
If yes, during what period can option be exercised?
15. RETAIL STORE OPERATING AGREEMENTS:
Must Tenant operate business in premises? Yes.
If yes, for what duration, under what trade name, and what type of business? For
the duration of the Term of the lease, under the trade name "Eat at Joe" [5.3;
1.1(x), for the permitted use.
If tenant can vacate must tenant continue to pay minimum annual rent?
112122
9
<PAGE>
If lease provides for percentage rent, describe how such rent is determined
after promises are vacated:
Is tenant prevented from opening a store in competition with subject? No.
If yes, describe:
Is subletting Permitted? No,
Is assignment by tenant permitted? No (except that in the event of Tenant's
Bankruptcy. Tenant may propose to assign the Lease pursuant to 11 U.S.C $365).
[16.1, 17.4]
Is tenant relieved of liability after assignment? N/A
After subletting or assignment, how is Percentage rent to be determined? N/A
Is there any limitation on type of business, to be conducted? N/A
16. ASSIGNABUITY BY LANDLORD:
Any restriction upon assignment by landlord? No.
If yes, describe:
Is landlord relieved of liability after assignment? Yes. [21.51
17. NOTICES:
To whom should notices and duplicate notices be sent? (indicate names and
addresses):
1121Z2
10
<PAGE>
If to Landlord: MarketPlace Redwood Limited Partnership
50 Federal Street
Boston, Massachusetts 02110
with a copy to: MarketPlace/Redwood Airport Management
Philadelphia International Airport Philadelphia,
Pennsylvania 19153
and a copy to: Now England Development
One Wells Avenue
Newton, Massachusetts 02159
and a copy to.- Goulston & Storrs, P.C.
400 Atlantic Avenue
Boston, Massachusetts 02110
Attention: NED -Philadelphia AirportRetail
If to Tenant: c/o Cozco Management Corporation
1415 Route 70 East Suite 412
Cherry , New Jersey 08034
with a copy to: Obermayer Rebmann Maxwell & Hippel LLP
One Penn Center, 19tb Floor
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
Attention: Thomas A. Leonard, Esquire
If to Prime LanLord: Director, Division of Aviation
City of Philadelphia, Terminal E
Philadelphia International Airport
Philadelphia, Pennsylvania 19153
with a copy to: City of Philadelphia
City Solicitor
1600 Arch Street, 8th Floor
Philadelphia, Pennsylvania 19103
112122
11
<PAGE>
18. IMPROVEMENTS AND ALTERATIONS
Landlord must, at its cost expense, perform all items of "Landlord's Work"
as described in Exhibit C attached to the Lease. [8.1]
Tenant must, at its cost and expense perform all items. of "Tenant's Work"
as described in Exhibits C and D attached to the Lease- [8.21
All leasehold improvements and other fixtures, equipment and property
installed in the Premises at any time, whether by or on behalf of Tenant or by
or on behalf of Landlord. may not be removed from the Premises at any time, and
at the expiration of the lease. all such leasehold improvements shall be deemed
to be part of the Premises, and shall not be removed by Tenant when it vacates
the Premises, and title there vest solely in Prime Landlord without payment of
any nature to Tenant, unless Landlord or Prime Landlord requests their removal.
[8.7]
I 12,IZZ
12
EXHIBIT
10.6
Eat at Joe's U. of P.,Inc
t/a Eat at Joe's
Walnut Mall Shopping Center - Philadelphia, Pennsylvania - Philadelphia County
4000 sq. ft.
UCA Realty Group, Inc.
Pollack, Meyers & Rosenblum
David L. Pollack
37th Floor Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103-2793
(215) 994-5522
Lease Commencement Date Rent Commencement Date Termination Date
November 1, 1997 January 1, 1998 December 31, 2008
RENEWAL OPTION: T holds option to renew for 1 (one) period of 5 (five) years.
ABR will increase to $25.00 sq. ft., Breakpoint to $2,000,000.00 and percentage
to 10% if excercised.
EARLY TERMINATION OPTION:
FINANCIAL INFORMATION:
Security Deposit: -0-
Base Rent: Years 1-10
Monthly: $6,666.67
Annual: $80,000.00
Square Foot: $20.00
Percentage Rent: Break Point: $1,600,000.00
Percentage: 5%
Common Area Maintenance: T's Proportionate Share of Operating Expenses: LL to
make a reasonable estimate of expenses, and T's share, then divide 12, and paid
monthly.1
Food Court Maintenance:
Marketing/ Advertising/ Promotional Fees/ Merchant's Association:
Utility Service Charge: T responsible for maintenance, repair, and replacement
of the plumbing, electrical, HVAC and mechanical systems; T responsible for
electricity, utilities, sewer and water charges / rents and other services
provided to the Leased premises.
Construction Allowance/ Rent Concession: T to receive $250,000.00 to be applied
toward renovations, $51,133 upon approval of plans, $51,133 upon 50% completion
of project, $51,134 upon the later of completion, commencement , or waiver of
lien, and $96,600 to be applied to abatement of rent for first year.
Other Pass-Through Charges: 10.10% of Real Estate Taxes for Complex; T to pay
use and occupance taxes; T's own taxes; T's Insurance; Pre-opening services:
$1.00 sq. Ft.; Weekly Extermination Contract; T to provide its own janitorial,
cleaning and char services.
Department Store: Expansion Rent Decreases:
RADIUS RESTRICTIONS:
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: E.A.J. Holding Corp.
1415 Rt. 70 East, Suite 412
Cherry Hill, New Jersey 08034
GUARANTOR LIMITATIONS: Expires at 11:59 p.m. of the last day of
the 4th Lease year.
- --------
1 The amount determined shall not increase more then 5% over that paid in the
previous year.
EXHIBIT
10.7
Eat at Joe's Gallery, Inc.
t/a Eat at Joe's
The Gallery at Market East - Philadelphia, Pennsylvania - Philadelphia County
2000 sq. ft.
Rouse Philadelphia, Inc.
A Subsidiary of
The Rouse Company
Debra S. Ramey
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
(410) 992-6129
Preopening Date Rent Commencement Date Opening Date Termination Date
Earlier of August 1, 1997 or December 31, 2007
date T opens for business
RENEWAL OPTION:
EARLY TERMINATION OPTION:
FINANCIAL INFORMATION:
Security Deposit:
Base Rent:1 Years 1-5 Years 6-10
Monthly: $4,166.67 $5,000.00
Annual: $50,000.00 $60,000.00
Square Foot: $25.00 $25.00
Percentage Rent: Break Point: $375,000.00
Percentage: 8%
Common Area Maintenance: LL Operating Costs times (2000 sq. ft. divide LL Leased
floor area)
Food Court Maintenance:
Marketing/Advertising/Promotional Fees/ Merchant's Association:
* Merchant's Association Contribution Rate: ($1.10 times 2000 sq. ft.) divide
12.
* Marketing Fund Contribution Rate: ($1.75 times 2000 sq. ft.) divide 12. Both
of the above are adjusted annually in that proportion which the CPI increases
over the previous year.2
Utility Service Charge: * HVAC:($1.64 times 2000 sq. ft) divide 12; *T
responsible for all charges for water, sewer, electricity, gas , phone and any
other utility used or consumed.
Construction Allowance/Rent Concession:
Other Pass-Through Charges: * Proportionate Taxes: Payable in amounts as
estimated, and billed by LL, each year, on a monthly basis.
* Trash Removal Service:
* Sprinkler Contribution Rate: ($.20 times 2000 sq. ft.) divide 12;
* T's Insurance:
* Proportionate Insurance: Insurance Costs times 2000 sq. ft. divide LL Floor
Area) divide 12.
Department Store: Expansion Rent Decreases: ABR and Breakpoint to
increase 7.5% for each expansion of LL Floor Area that exceeds $20.00 sq. ft.3
RADIUS RESTRICTIONS: T not to have any interest in a store or business operating
under same trade name, for term of lease, within area of Market and Chestnut
Streets, between Broad Street and the Delaware River.
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: E.A.J. Holding Corp., 226 Neshaminy Mall, Bensalem, Pa. 19020.
GUARANTOR LIMITATIONS: Unconditional
- --------
1 In the event that an additional Anchor Store, or an expansion
involving at least 50,000 sq. ft., ABR and Breakpoint increased by
10%.
2 If Shopping Center expands by 10% of LL floor area, T to pay a one
time charge of (2000 sq. ft. times Average sq. ft. Marketing Fund
Contribution) divide 12.
3 This increase shall only apply once. And either this or the increase
mentioned in footnote 1 shall apply at all, never both.
EXHIBIT
10.8
Shopping Center Lease
THIS LEASE made as of the day of 1997, between
First Fidelity Bank, N.A., New Jersey, not personally, but as Ancillary Trustee
under Trust Agreement dated December 6, 2984 ("Landlord"). A trust having a
place of business at 900 North Michigan Avenue, Chicago Illinois 60611-1957 and
E.A.J. Enterprises, Ltd. ("Tenant"). A New York corporation whose principal
place of business is located at P.O. Box 500, Yonkers, New York 10704
Article 1
BASIC PROVISIONS
A. Tenant's Trade Name: Eat at Joe's
B. Center: Moorestown Mall Address: 400 Route 38, Moorestown, New Jersey
08057-3295
C. Premises: Space No. 466 at the Center consisting of approximately 3,683
rentable square feet, the approximate location of which is shown
cross-hatched on Exhibit A hereto
D. Commencement Date: July 1, 1997
E. Expiration Date: June 30, 2012
F. Permitted Use: A restaurant serving standard "fifties" diner fare, salads,
chicken and pasta dishes, as shown on the menu attached as Exhibit D . and
for no other purpose whatsoever
G. Minimum Rent: * (See Pages 1A and 1B) Period Monthly Amount Annual Amount
Commencement Date Through June 30, 1999 $6,250.00$75,000.00 July 1, 19991
Through Expiration Date**
* Minimum Rent Center Expenses. Taxes and Media Fund only shall abate for the
first twenty-four (24) months of Term. If prior to or during said period
Tenant commits a default and does not cure it within the time provided for
cure, if any, the foregoing abatement shall immediately cease and Tenant
shall thereafter pay the full Minimum Rent. Center Expenses. Taxes and
Media Fund without the abatement. If this Lease shall terminate prior to
the scheduled Expiration Date due to a Default by Tenant, Tenant shall
reimburse Landlord the amount of the abatement.
** (See Pages 1A and 1B)
<PAGE>
COZCO MANAGEMENT / EAT AT JOE'S
LEASE INFORMATION FORM
1. PARTIES:
TENANT: E.A.J. Enterprises, Inc.
LANDLORD: First Fidelity Bank, N.A., New Jersey, not personally , but as
Ancillary Trustee under Trust Agreement dated December 6, 1984.
2. LEASED PREMISES:
Address: Space No. 466, Moorestown Mall, 400 Route 38, Moorestown, New Jersey
08057- 3295
Leaseable Building Area: 3683 sq. ft.
Permitted Uses: A restaurant serving standard "fifties" diner fare, salads,
chicken and pasta dishes, as shown on the menu attached to the Lease as Exhibit
D.
Prohibited Uses (Check One): None
X All except permitted uses
Specific prohibited uses: Tenant may not sell alcoholic beverages. (1F)
3. TERM:
Initial Term: Commencement Date (earlier of September 1, 1997 or 1st day open
for business) through Expiration Date (August 31, 2012). [Art.2, 1D, 1E]
Options to Renew: No
<PAGE>
What is rent during renewal periods?: N/A
4. RENTAL:
Minimum Annual: (1G & insert)
Commencement Date through 8/31/99 $75,000
Lease Years 9/1/1999 through 8/31/2000
9/1/2000 through 8/31/2001
9/1/2001 through 8/31/2002
If Gross Sales less than or equal to $800,000 $80,000
If Gross Sales greater than $800,000 but
less than or equal to $900,000 $90,000
If Gross Sales greater than $900,000 but
less than or equal to $1,000,000 $100,000
If Gross Sales Greater than $1,000,000 but
less than or equal to $1,100,000 $110,000
If Gross Sales greater than $1,100,000 $120,000
Lease Years 9/1/2002 through 8/31/2003
9/1/2003 through 8/31/2004
9/1/2004 through 8/31/2005
9/1/2005 through 8/31/2006
9/1/2006 through 8/31/2007
If Gross Sales less than or equal to $80,000 $85,000
If Gross Sales greater than $800,000 but
less than or equal to $900,000 $90,000
If Gross Sales greater than $900,000 but
less than or equal to $1,000,000 $100,000
If Gross Sales greater than $1,000,000 but
less than or equal to $1,100,000 $110,000
If Gross Sales greater than $1,100,000 $120,000
Lease Years 9/1/2007 through 8/31/2006
9/1/2008 through 8/31/2009
9/1/2009 through 8/31/2010
9/1/2010 through 8/31/2011
9/1/2011 through 8/31/2012
If Gross Sales less than or equal to $900,000 $90,000
If Gross Sales greater than $900,000 but
less than or equal to $1,000,000 $100,000
If Gross Sales greater than $1,000,000 but
less than or equal to $1,100,000 $110,000
If Gross Sales greater than $1,100,000 $120,000
<PAGE>
Percentage? Yes
If yes, (1) describe percentage rent formula: 6% of Gross Sales in excess of
Breakpoint as follows: [1H & insert]
Commencement Date through 8/31/99 $750,000
Lease Years 9/1/1999 through 8/31/2000
9/1/2000 through 8/31/2001
9/1/2001 through 8/31/2002
If Gross Sales less than or equal to $800,000 $800,000
If Gross Sales greater than $800,000 but
less than or equal to $900,000 $900,000
If Gross Sales greater than $900,000 but
less than or equal to $1,000,000 $1,000,000
If Gross Sales greater than $1,000,000 but
less than or equal to $1,100,000 $1,100,000
If Gross Sales greater than $1,100,000 $1,200,000
Lease Years 9/1/2002 through 8/31/2003
9/1/2003 through 8/31/2004
9/1/2004 through 8/31/2005
9/1/2005 through 8/31/2006
9/1/2006 through 8/31/2007
If Gross Sales less than or equal to $800,000 $850,000
If Gross Sales greater than $800,000 but
less than or equal to $900,000 $900,000
If Gross Sales greater than $900,000 but
less than or equal to $1,000,000 $1,000,000
If Gross Sales greater than $1,000,000 but
less than or equal to $1,100,000 $1,100,000
If Gross Sales greater than $1,100,000 $1,200,000
Lease Years 9/1/2007 through 8/31/2008
9/1/2008 through 8/31/2009
9/1/2009 through 8/31/2010
9/1/2010 through 8/31/2011
9/1/2011 through 8/31/2012
If Gross Sales less than or equal to $900,000 $900,000
If Gross Sales greater than $900,000 but
less than or equal to $1,000,000 $1,100,000
If Gross Sales greater than $1,100,000 but
less than or equal to $1,100,000 $1,100,000
If Gross Sales greater than $1,100,000 $1,200,000
<PAGE>
(2) discuss effect of assignment or subletting: If Landlord consents to a
Transfer (as defined in the Lease), the monthly Minimum Rent is increased on the
effective date of the Transfer to all amount equal to the average total monthly
Minimum Rent and Percentage Rent payable by Tenant during the 36 months prior
thereto ( or such shorter period as may have occurred since the Commencement
Date). If the Minimum Rent is so increased, there shall be a proportionate
adjustment to the Breakpoint. [20E]
Is there a provision for tenant to pay tax and operating expense escalation?
Yes-- Tenant responsible for allocable portion of Center Expenses (see below).
Prepaid or free rent or existing offsets: None.
Amount: N/A
Period: N/A
Renewal or Escalation Rent: N/A
Any Take-over lease? N/A
5. EXPENSES PAID BY TENANT
Summarize lease provisions regarding the following expenses:
Real Estate Taxes: Tenant must pay Tenant's Proportionate Share of Taxes (as
defined in the Lease). [1I; 5A; missing p. 2A] "Tenant's Proportionate Share" is
a fraction equal to the rentable square footage of Premises divided by the total
square footage of all rentable floor space in the Center). [29Q]
<PAGE>
Insurance: Tenant must maintain certain insurance, including commercial general
liability, workers' compensation, plate glass and all-risk property.[13A]
Repairs and Maintenance (Structural, Roof, Exterior, Interior, Glass): Yes,
including Tenant's trad fixtures and equipment, security gates, ceilings, walls,
storefront, entrances, signs, interior decorations, floor-coverings, entry and
interior doors, exterior and interior glass, plumbing fixtures, light fixtures
and bulbs, keys and locks , fire extinguishers and fire protection systems, and
equipment and lines for water, sewer, HVAC, electrical, gas, steam, sprinkler
and mechanical facilities, and other systems and equipment which serve the
Premises exclusively whether located within or outside the Premises. [11A] The
cost of Landlord's maintenance of foundation, exterior walls other than
storefront, common utility lines to the point of connection for Tenant, and
structural portions of the Premises is included in Center Expenses, of which
Tenant must pay its Proportionate Share. [5b; 28B]
Utilities (Electricity, Heat, Air Conditioning, Water): Yes (may be separately
metered). [Art. 10]
Services (Janitorial, Cleaning): Yes; included in Center Expenses, of which
Tenant must pay its Proportionate Share. [5B; 28b}
Contributions to Parking and/or Common Areas (CAM): Yes, included in Center
Expenses, of which Tenant must pay its Proportionate Share. [5B; 28B]
Would CAM obligations be affected by more favored treatment of another tenant?
No
If yes, explain:
Any other tenant obligations: Monthly Promotion Fund Charges and Media Fund
Charges (as defined in Lease). [9A, 9C]
<PAGE>
6. TENANT RIGHTS TO TERMINATE:
Can tenant cancel lease if:
a. Premises are not available or construction completed by specific date? No
If yes, what date?
b. Leases to other tenants are not in force or kept in force? No
If yes, which tenants?
c. Leases to others are not occupied for particular uses or operated under
required names? No
d. Premises are substantially destroyed during final lease years? Yes, during
last 24 months of the Term. [14D, page 13A]
At any time? No
If yes, what is definition of substantial destruction? If 50% or more of the
rentable sq. Footage of the Premises is damaged or destroyed. [14D]
e. Landlord is unable to restore premises within days? No
f. Property or demised premises partially condemned? Yes
If yes, what is definition of partial condemnation? If at least 25% of the
rentable area of the Premises is taken by eminent domain or condemned, including
any temporary taking for a period of 1 year or longer, the Lease terminates on
the date possession for such use is so taken.
<PAGE>
IF (i) less than 25% of the Premises is taken, but the taking includes a
material portion of the Center or of the portion thereof owned or leased by
Landlord, or (ii) the taking is temporary and will be in effect for less than 1
year but more than 30 days, then in either such event, Landlord may elect to
terminate the Lease upon at least 30 days prior written notice to Tenant. [Art.
15]
g. Landlord defaults for any reason other than to provide additional space?
N/A.
If yes, is tenant obligated to notify mortgages and give mortgages rights to
cure?
h. For any other reasons? Yes. If yes describe: If Landlord notifies Tenant of
its election to relocate the Premises and Tenant is not reasonably
satisfied with the new premises, Tenant may terminate the Term by notice to
Landlord within 15 days after Landlord's notice, in which event the Term
shall expire 60 days after Tenant's notice, unless Landlord rescinds its
relocation notice by notice to Tenant within 45 days after Tenant's notice,
in which event the Lease remains in full force and effect. [21I, insert #3
p. 17A]
7. PARKING REQUIRED:
Car stalls or ratio: N/A
For exclusive use of this tenant?
Location: on lease premises?
on non-leased property?
Off mortgaged property or property being purchased:
(If so, describe how parking to be assured):
<PAGE>
8. LANDLORD OBLIGATION TO RESTORE:
Is landlord obligated to restore in event of partial destruction? In the event
of damage to the Premises by fire or other casualty, Landlord must use available
insurance proceeds to repair the Premises. [14A]
If yes, define partial destruction: Not defined.
Total? Landlord may elect to terminate the Lease if the Center is materially
damaged by Tenant or by fire or other casualty or cause such that (a) more
than 50% of the Premises is affected by the damage (b) the damage occurs
less than 1 year prior to the end of the Term (c) any Lender requires that
the insurance proceeds or any portion thereof by applied to the Mortgage
debt, or the damage is not fully covered by Landlord's insurance policies,
or (d) in Landlord's reasonable opinion, the cost of the repairs,
alterations, restoration or improvement work would exceed 50% of the value
of the Center or of th protion thereof owned or leased by Landlord. [14D]
9. COMPLETION LIMITATIONS:
Radius Clause: Is landlord prohibited from developing, leasing or occupying
other property for business similar to this tenant? No
If yes, what is geographic restriction? N/A
Is there a radius clause restricting this tenant? Yes.
If so, describe: One (1) mile from the Center. [1O]
Exclusives: Is tenant granted an exclusive? No.
or other restrictions upon other tenants? No.
If yes, in either case, describe:
<PAGE>
Restrictions on tenant's activities in surrounding area? N/A
10. LEASE SUBORDINATION:
Is this lease subordinate to any mortgage? Yes, to all Mortgages placed on the
Center and all other encumbrances and matters of public record applicable to the
Center at the Commencement Date, and thereafter only if Tenant is furnished with
a non-disturbance agreement from the Lender (unless Tenant is in default).
[Art.18}
If yes, does foreclosure statute automatically terminate lease?
Does mortgagee in foreclosure have option to recognize or cancel lease?
Is subordination conditioned on Non-Disturbance or Recognition Agreement? Yes,
unless Tenant is in default (see above).
11. EXPANSION PROVISION:
Must landlord provide additional space? No
If yes, under what conditions?
How much space and at what cost?
Is rent increased? If yes, discuss formula:
If landlord defaults:
Does tenant have the right to cancel?
to construct & charge cost against existing fixed rent?
<PAGE>
percentage rent only?
- -----------------------
all rent?
12. RENTAL OFFSETS:
If landlord defaults in any lease obligations does tenant have the right to
remedy and offset costs against rent? No.
If yes, must tenant notify mortgagee and give mortgagee right to cure? N/A
Are notice and curing terms satisfactory? Payment of Rent - 7 days to cure after
notice. Failure to observe or perform any term or condition of the Lease other
than payment of rent - period of time following notice expressly provided in
each section of the Lease, or otherwise within a reasonable time, but in no
event more than 15 days following notice. [22A]
If no, describe objections: N/A
13. PURCHASE OPTION: RIGHT OF FIRST REFUSAL:
Is tenant granted the right to purchase the demised premises? N/A
If yes, during what period can option be excercised?
Price?
Is tenant given the right to match any other offer to purchase?
<PAGE>
14. TAKE-OVER OBLIGATIONS:
Does lease require landlord to assume rental or lease obligations of this tenant
at another location? N/A
If yes, during what period can option be exercised?
15. RETAIL STORE OPERATING AGREEMENTS:
Must tenant operate business in premises? Yes.
If yes, for what duration, under what trade name, and what type of business? For
duration of Lease, under trade name "Eat at Joe's", a restaurant serving
standard "fifties" diner fare, salads, chicken and pasta dishes, as shown on the
menu attached to the Lease as Exhibit D. [1A, 1F]
If tenant can vacate must tenant continue to pay minimum annual rent? N/A
If lease provides for percentage rent, describe how such rent is determined
after premises are vacated: N/A
Is tenant prevented from opening a store in competition with subject? Yes.
If yes, describe: Radius restriction of one (1) mile from the Center. [1O]
Is subletting permitted? Only with prior written consent of Landlord. [20A]
Is assignment by tenant permitted? Only with prior written consent of Landlord.
[20A]
Is tenant relieved of liability after assignment? No. [20C]
After subletting or assignment, how is percentage rent to be determined? If
Landlord consents to a Transfer, the monthly Minimum Rent shall be increased on
<PAGE>
the effective date of the Transfer to an amount equal to the average total
monthly Minimum Rent and Percentage Rent payable by Tenant during the 36 months
prior thereto (or such shorter period as may have occurred since the
Commencement Date). [20E]
Is there any limitation on type of business to be conducted? No.
16. ASSIGNABILITY BY LANDLORD:
Any restriction upon assignment by landlord? No.
If yes, describe:
Is landlord relieved of liability after assignment? Yes [Art. 33]
17. NOTICES
To whom should notices and duplicate notices be sent? (Indicate names and
addresses):
To Tenant: E.A.J. Enterprises, Ltd.
P.O. Box 500
Yonkers, NY 10704
To Landlord: First Fidelity Bank, N.A., New Jersey, not personally, but as
Ancillary Trustee under Trust Agreement dated December 6, 1984
c/o Urban Retail Properties Co.
Moorestown Mall Management Office
400 Route 38
Morrestown, NJ 0857-3295
<PAGE>
Also to: Urban Retail Properties Co.
900 North Michigan Avenue
Chicago, IL 60611
Attn: Director of Lease Asministration
18. IMPROVEMENTS AND ALTERATIONS:
Tenant may make improvements and alterations only with Landlord's prior
written consent, which consent shall nat be unreasonably withheld. [Art.7]
EXHIBIT
10.9
Eat at Joe's Harborplace, Inc.
t/a Eat at Joe's Gourmet Diner
The Gallery at Harborplace - Baltimore, Maryland - Baltimore County
2537 Square Feet
Baltimore Center, Inc.
A Subsidiary of
The Rouse Company
Helen S. Safranck
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
(410) 992-6129
Preopening Date Rent Commencement Date Opening Date Termination Date
Earlier of April 1, 1997 or March 31, 2008
opening to public for business
RENEWAL OPTION:
EARLY TERMINATION OPTION:
FINANCIAL INFORMATION:
Security Deposit: -0-
Base Rent: Years 1-2 Years 3-5 Years 6-10
Monthly: $8,333.33 $10,416.67
Annual: $100,000.00 $125,000.00
Square Foot:
*Expansion or renovations totaling $20.00sq.ft. A.B.R. increases 10% (only once)
Percentage Rent: Break Point: All gross sales $740,000.00- $925,000.00-
$1,000,000.00 $1,000,000.00
Percentage: 13.5% 13.5% 13.5%
$1,000,000.00+ $1,000,000.00+
15% 15%
Common Area Maintenance: LL Operating Costs times (2,537 sq. ft. divide LL
Leased Qualifying Floor Area)
Food Court Maintenance:
Marketing/Advertising/Promotional Fees/ Merchant's Association:
* Merchant's Association Contribution Rate: Year 1 - $3.00 sq. ft. divide 12 -
Years 2-10 - Greater of increase of most recent CPI over that of preceding year
or 1% Gross Sales.
* Promotion Fund: LL reserves the right to create such fund in addition to, or
in lieu of the above, and the above may be apportioned or applied completely to
said fund.
Utility Service Charge: T solely responsible for all charges for water, sewer,
electricity, gas, telephone, and any other utility used or consumed in the
premises, plus;
* Electric Equipment Contribution: $1.00 sq. ft. divide 12 and paid monthly.
* V/CW Equipment Contribution Rate: $1.50 sq. ft. divide 12 and paid monthly.
Construction Allowance/Rent Concession:
Other Pass-Through Charges: Sprinkler Contribution: $0.30 sq. ft. divide 12 paid
monthly.
* T to pay a proportionate share of taxes payable by LL.
* LL Insurance Costs times (2537 divide LL Qualifying Floor Area)
Department Store: Annual Basic Rental increase 7.5% for each Anchor store or
expansion of at least 50,000 sq. ft. Breakpoint of percentage rent increased by
like percentage.
RADIUS RESTRICTIONS: No other store with same trade name within two (2) miles.
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: EAJ Holding Corporation
1415 Route 70, Suite 412
Cherry Hill, New Jersey 08034
GUARANTOR LIMITATIONS: No Limitations. Guarantor liable for all breaches through
renewal, extension, or amendment of the current lease.
EXHIBIT
10.10
E.A.J. Shoppington, Inc.
d/b/a Eat at Joe's
Shoppington Mall - DeWitt, New York - Onondaga County
2,453 Square Feet
Wilmorite, Inc.
Teresa M. Rubert
1265 Scottsville Road, P.O. Box 370
Rochester, New York 14602
(716) 464-9400
Preopening Date Rent Commencement Date Opening Date Termination Date
July 1, 1998 January 1, 1998 December 21,2012
RENEWAL OPTION:
EARLY TERMINATION OPTION:
FINANCIAL INFORMATION:
Security Deposit: -0-
* Base Rent: Years 1-5 Years 6-10 Years 11-15
Monthly: $4,166.67 $4,583.33 $5,000.00
Annual: $50,000.00 $55,000.00 $60,000.00
Square Foot:
*Alternate Rent: If within the first two years, gross sales do not exceed
$375,000.00, then commencing on the third year tenant is to pay 5% of the gross
sales per month as rent.
Percentage Rent: Break Point: $833,333.00 for 1 full lease term
Percentage: 6%
Common Area Maintenance: * Shopping Center Maintenance Charge: Expenses times
(2,453 sq. ft. divide Total number of square feet of leased area of all tenants)
* Mall Maintenance Charge: Expenses times (2,453 sq. ft. divide Total number of
square feet of leased area of all tenants)
Food Court Maintenance:
Marketing/Advertising/Promotional Fees/ Merchant's Association: * $2,453.00 per
year.
Utility Service Charge: Tenant to pay Landlord, as additional rent, charges for
electric, sewer, water, heating, ventilation and air conditioning on premises,
as used.
Construction Allowance/Rent Concession: Tenant to be reimbursed $55,000.00 for
initial construction; 1/2 when construction work is half completed, 1/2 upon
completion.
* Tenant agrees to remodel premises now, and prior to the end of the 10th year.
Other Pass-Through Charges: Taxes, or Payment in Lieu of Taxes (PILOT)
Department Store: Expansion Rent Decreases:
RADIUS RESTRICTIONS: * No Kiosk within 25 feet (25') of Tenant's storefront.
* Tenant agrees to not operate another store within a radius of two (2) miles.
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: EAJ Holding Corporation, Inc.
1415 East Rt. 70, Suite 412
Cherry Hill, NJ 08034
GUARANTOR LIMITATIONS: Guarantor is limited to default's occurring during the
first three (3) full lease years.
EXHIBIT
10.11
Eat At Joe's Neshaminy, Inc.
t/a Eat At Joe's
Neshaminy Mall - Bensalom, Pennsylvania - Bucks County
4,500 sq. ft.
General Growth Properties, Inc.
Linda Spooner
55 West Monroe - Suite 3100
Chicago, Illinois 60603-5060
(312) 551-5000
Beginning Work Date Rent Commencement Date Opening Date Termination Date
March 1, 1998 Earlier of August 1, 1998 August 1, 1998 July 31, 2013
or dater open for business1
RENEWAL OPTION:
EARLY TERMINATION OPTION: If T's Net Sales fail to exceed $1,200,000 by the 5th
full lease year, LL or T has a one-time option to terminate the lease upon 90
days written notice. If T's Net Sates exceed the figure in any of the first five
(5) Lease Years, this provision is null and void.
FINANCIAL INFORMATION:
Security Deposit: -0-
* Base Rent: Years 1-10 Years 11-15
Monthly: $7,500.00 $9,375.00
Annual: $90,000.00 $112,500.00
Square Foot: $20.00 $25.00
Percentage Rent: Break Point: $1,800,000 $2,250,000
Percentage: 5% 5%
Common Area Maintenance: * Joint Area Use Cost: Costs times the percentage that
4,500 sq. ft. is of the gross sq. ft. area of all stores in the Mall.2
Food Court Maintenance: * Common Seating Area Maintenance: 4% of T's Net Sales,
payable monthly.
* Advertising and Promotional Services of Food Court: 1% of T's Net Sales,
payable monthly.
Marketing/Advertising/Promotional Fees/ Merchant's Association:
Utility Service Dharge: * T responsible for all utilities used on premises;
* T responsible for the installation, maintenance, and repair of an HVAC system.
Construction Allowance/Rent Concession: * $400,000.00 or $88.89 sq. ft. to be
paid to T subsequent to T's satisfying 5 requirements on page R-2 of Lease.
Other Pass-Through Charges: * T's Proportionate Taxes: Taxes times (4,500 sq.ft.
divide total sq. ft. of gross leasable floor area in Mall) divide 12, paid
monthly; * Excise, transaction, sales and privilege taxes if applicable;
* T's Insurance; * T to reimburse LL $250.00 for expense of reviewing, preparing
and processing the Lease.
Department Store: Expansion Rent Decreases:
RADIUS RESTRICTIONS: T will be in default if it owns, operates . . . another
business similar to, or in competition with, the Leased Premises within ten (10)
miles of the perimeter of the Mall of the Mall for the first two (2) full Lease
years, and a radius of one (1) mile for the remainder of the Lease term. LL has
option of including the Net Sales of the defaulting premises into the Net Sales
of the Leased Premises upon default.
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: EAJ Holding Corporation, Ltd., 1415 Rt. 70 East-Cherry Hill, NJ 08034
GUARANTOR LIMITATIONS: Guarantor's liability shall not exceed the sum equal to
(a) $400,000.00 reduced monthly by the amount of monthly Minimum Annual Rental
and monthly Additional Rental paid by T, + (b) $150,000.00. Once the sum of
$400,000.00 is reduced to zero, Guarantor's liability shall not exceed the sum
of $150,000.00 for the remainder of the Lease.
- --------
1 This date may be delayed, if requested by LL, to coincide with "Grand
Opening" of Shopping Center.
2 In no event shall T's pro rate share exceed that amount equal to T's pro
rate share for previous year times 103%
EXHIBIT
10.12
Eat at Joe's Plymouth Incorporated
t/a Eat at Joe's
Plymouth Meeting Mall - Plymouth Meeting, Pennsylvania - Montgomery County
4540 Square Feet
Plymouth Meeting, Inc.
A Subsidiary of
The Rouse Company
Debra S. Ramey
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
(410) 992-6129
Preopeing Date Rent Commencement Date Opening Date Termination Date
Earlier of 60 days after premises March 31, 2008
ready for occupancy or opening
for business
RENEWAL OPTION:
EARLY TERMINATION OPTION:
FINANCIAL INFORMATION:
Security Deposit: -0-
* Base Rent: Monthly: $12,500.00
Annual:1 $150,000.00
Square Foot:
Percentage Rent: Break Point: $1,500,000.00
Percentage: 8%
Common Area Maintenance: LL Operating Cost times (4540 divide LL Qualifying
Floor Area) * In LL floor area is expanded or renovated to the extent of $20.00
sq. ft., Annual Base and Percentage Rents will increase by 10%.
Food Court Maintenance:
Marketing/Advertising/Promotional Fees/ Merchant's Association:
* Merchant's Association Contribution Rate: Year 1 - $1.00 sq. ft. divide 12
paid monthly - Years 2-10 - Adjusted in same proportion as most recent CPI over
that of preceding year.
* Marketing Fund;2 $1.50 sq. ft. divide 12 paid monthly. Adjusted in same
proportion as above.
* Special Promotion Contribution Rate: One time payment of (4540 times $2.00)
Utility Service Charge: Water, sewer, electric, gas, phone and others charged as
used.
Construction Allowance/Rent Concession: T receives $75,000 for initial
improvements.
Other Pass-Through Charges: * Sprinkler Contribution Rate: ($.25 times 683)
divide 12 monthly.
* T's Insurance. *Proportionate Insurance: LL Insurance Cost times (4540 divide
LL Floor Area).
* Proportionate Taxes: LL taxes times (4540 divide LL Floor Area). * Trash
Removal.
* Construction Trash Removal Service and Electric Charge: (4540 times $2.00)
Department Store: Annual Basic Rental, and Breakpoint increase 10% for each
Anchor store or expansion of at least 50,000 sq. ft.
RADIUS RESTRICTIONS: No other store with same trade name within five (5) miles.
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: EAJ Holding Corporation. 1412 Rt. 70, Suite 412, Cherry Hill, NJ 0803
GUARANTOR LIMITATIONS: Unconditional
- --------
1 If Tenant's gross annual sales for Rental Year 2, do not exceed $1,200,000,
then Annual Base Rental shall be reduced for Rental Year 3 as follows: If
gross sales for Rental Year 2 is less then $1,100,000, Year 3 rent is
$140,000; if less then $1,000,000, rent is $130,000; if less then $900,000,
rent is $120,000; if less then $800,000, rent is $110,000.
2 If shopping center is expanded by more then 10% of LL floor area, Tenant
pays a one-time charge of 4540 times average rate per sq. ft. of all
contributions.
EXHIBIT
10.13
E.A.J. Danbury, Inc.
d/b/a Eat At Joe's
The Danbury Fair - Danbury, Connecticut - Fairfield County
3,022 sq. ft.
Wilmorite, Inc.
Teresa M. Rubert, Paralegal
1265 Scottsville Road
P.O. Box 370
Rochester, New York 14602
Preopeing Date Rent Commencement Date Opening Date Termination Date
Earlier of December 1, 1998 December 31, 2013
or date open for business
RENEWAL OPTION:
EARLY TERMINATION OPTION:
FINANCIAL INFORMATION:
Security Deposit: -0-
* Base Rent: Years 1-5 Years 6-10 Years 11-15
Monthly: $11,080.67 $11,584.33 $12,088.00
Annual: $132,968.00 $139,012.00 $145,056.00
Square Foot:
Percentage Rent: Break Point: $1,500,000 $1,500,000 $1,500,000
Percentage: 6% 6% 6%
Common Area Maintenance: * Exterior Shopping Center Maintenance Charge: Costs
times (3,022 sq. ft. divide total sq. ft. Of Leased Area of all Tenants) divide
12 paid monthly.
* Mall Maintenance Charge: Costs times (3,022 divide total gross leased area of
all mall stores.)
Food Court Maintenance:
Marketing/Advertising/Promotional Fees/ Merchant's Association:
* Marketing Fund: ($1.00 times 3,022)divide and paid monthly.1
Utility Service Charge: T to pay LL, as additional rent, all charges for sewer,
water, HVAC, lighting, and electricity as consumed in the premises.
Construction Allowance/Rent Concession: T to remodel, at its own const, prior to
commencement of term, and again prior to the end of the 10th lease year.
Other Pass-Through Charges: * T's Insurance; * Garbage and rubbish removal; *
Proportionate Taxes: Taxes times (3,022 divide total sq. ft. Of leased area of
all Tenant's.)
Department Store: Expansion Rent Decreases:
RADIUS RESTRICTIONS: T shall not, during the term of the lease, operate another
store within a radius of two (2) miles.
ASSIGNMENT/SUBLETTING: Conformed
GUARANTOR: E.A.J. Holding Corporation, Inc.
1415 East Route 70, Suite 412
Cherry Hill, New Jersey 08034
GUARANTOR LIMITATIONS: Guarantor's obligations exists only during first three
(3) years of lease term.
- --------
1 Adjusted annually in proportion to that of the CPI for the previous year.
EXHIBIT
10.14
Int. Cl.: 42
Prior U.S. Cl.: 100
Reg, No. 1,575,696
United States Patent and Trademark Office Registered Jan. 2, 1990
SERVICE MARK
PRINCIPAL REGISTER
(grafic omitted)
THE LINING IN THE DRAWING IS A FEATURE OF THE MARK AND DOES NOT INDICATE COLOR.
E. A. J. FRANCHISING, LTD, (NEW YORK CORPORATION.)
P.O. BOX 500
YONKERS, NY 10704
FOR-. RESTAURANT SERVICES, IN CLASS 42 (U.S. Cl. 100).
FIRST USE 3-29-1985; IN COMMERCE 10-28-1986
SER. NO- 73-687,270, FILED 10-1-1987
J. C. DEMOS, EXAMINING ATTORNEY
