U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the quarterly period ended October 27, 1996.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the transition period from __________ to __________.
Commission File Number
0-18369
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BOSTON RESTAURANT ASSOCIATES, INC.
----------------------------------
(Name of Small Business Issuer as Specified in its Charter)
Delaware 61-1162263
----------- --------------
(State or Other (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation or
Organization)
999 Broadway
Saugus, Massachusetts 01906
---------------------
(Address of Principal
Executive Offices)
(617) 231-7575
---------------------
(Issuer's Telephone Number
including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ----
As of December 9, 1996, 5,015,293 shares of the issuer's Common Stock, par
value $.01 per share, were outstanding.
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC.
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of October 27, 1996
and April 28, 1996 ........................................... 3
Condensed Consolidated Statements of Operations for the thirteen
weeks ended July 28, 1996 and October 29, 1995..................... 4
Condensed Consolidated Statements of Cash Flows for the
thirteen weeks ended July 28, 1996 and October 29, 1995........... 5
Notes to Condensed Consolidated Financial Statements............... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 7
PART II - OTHER INFORMATION................................................. 16
SIGNATURES.................................................................. 19
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
October 27 April 28
1996 1996
---------- ----------
<S> <C> <C>
ASSETS
Current:
Cash and cash equivalents $157,778 $159,564
Accounts receivable $46,513 $65,079
Inventories $240,553 $232,427
Prepaid expenses and other $56,749 $66,609
---------- ----------
Total current assets $501,593 $523,679
Net property and equipment $3,235,475 $2,739,681
Other assets $727,189 $752,624
---------- ----------
Total assets $4,464,257 $4,015,984
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $984,085 $885,791
Accrued liabilities $836,334 $1,021,641
Current maturities:
Notes payable-stockholder $4,148 $4,038
Long-term debt $227,587 $144,836
Subordinated debentures $15,333 $84,000
---------- ----------
Total current liabilities $2,067,487 $2,140,306
Long-term obligations:
Notes payable-stockholders, less current
maturities $127,970 $130,072
Long-term debt, less current maturities $876,007 $474,414
Deferred rent $59,671 $60,871
---------- ----------
Total liabilities $3,131,135 $2,805,663
Stockholders' equity
Common stock, $.01 par value, 25,000,000
shares authorized, 5,015,293 shares issued $50,150 $50,150
Additional paid in capital $8,953,788 $8,953,788
Accumulated deficit ($7,670,816) ($7,793,617)
----------- -----------
Total stockholders' equity $1,333,122 $1,210,321
Total liabilities and stockholders' equity $4,464,257 $4,015,984
=========== ==========
</TABLE>
See accompanying notes.
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<PAGE>
BOSTON RESTAURANTS ASSOCIATES,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
October 27 October 29 October 27 October 29
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales $3,013,279 $2,937,567 $5,812,130 $6,082,160
Cost of food and beverage $691,653 $720,297 $1,350,978 $1,462,333
Payroll $929,774 $958,609 $1,787,576 $2,063,075
Other operating expenses $1,048,854 $1,001,233 $1,910,248 $1,973,570
General and administrative $263,624 $422,921 $588,038 $840,066
---------- ---------- ---------- ----------
Income/(Loss) from operations $79,374 ($165,493) $175,290 ($256,884)
Other(income) ($912) ($50,343) ($2,304) ($50,343)
Interest(income) $0 ($102) $0 ($3,161)
Interest expense $33,752 $4,003 $54,798 $10,234
---------- ---------- ---------- ----------
Net Income/(Loss) $46,534 ($119,051) $122,796 ($213,614)
========== ========== ========== ==========
Income/(Loss) per share $0.01 ($0.02) $0.02 ($0.04)
========== ========== ========== ==========
</TABLE>
See accompanying notes.
-4-
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
October 27 October 29
1996 1995
--------- --------
<S> <C> <C>
Cash flows provided by (used for) operating
activities $260,265 ($376,911)
--------- --------
Cash flows from investing activities:
Additions to property and equipment ($667,063) ($175,521)
Additions to other assets ($8,675) ($8,400)
--------- --------
Cash flows used for investing activities ($675,738) ($183,921)
--------- --------
Cash flows from financing activities:
Repayments of long-term debt ($87,601) ($971)
Repayments of stockholders loans ($1,991) ($1,883)
Repayment of subordinated debentures ($68,666) (100,000)
Proceeds from long-term debt $571,945 $0
--------- --------
Cash flows provided by (used for)
financing activities $413,687 ($102,854)
--------- --------
Increase (decrease) in cash and cash equivalents ($1,786) ($663,686)
Cash and cash equivalents at beginning of period $159,564 $688,978
--------- --------
Cash and cash equivalents at end of period $157,778 $25,292
========= ========
</TABLE>
See accompanying notes.
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<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
OCTOBER 27, 1996
(Unaudited)
NATURE OF BUSINESS AND BASIS OF PRESENTATION
- --------------------------------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the thirteen week period and twenty-six week periods ended
October 27, 1996 are not necessarily indicative of the results that may be
expected for the year ending April 27, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report on form 10-KSB, for the year ended April 28, 1996. The
balance sheet at April 28, 1996 has been derived from the audited financial
statements at that date.
The accompanying statements of operations and cash flows for the Fiscal
1997 period reflect the consolidated operations and cash flow of two casual
dining Italian restaurants and seven Pizzeria Regina restaurants for the entire
period, and three Pizzeria Regina restaurants for a portion of the period. The
accompanying statements of operations and cash flows for the Fiscal 1996 period
reflect the consolidated operations and cash flows of four casual dining Italian
restaurants for the entire period, two casual dining Italian restaurants for a
portion of the portion of the period, and seven Pizzeria Regina Restaurants.
At the October 18, 1996 annual stockholders meeting, the stockholders
approved an amendment to the Company's 1994 Non- Employee Director Stock Option
Plan (the "Director's Plan), pursuant to which each eligible director will
receive options to purchase 10,000 shares of Common Stock on March 15 and
September 15 of each year, commencing on March 15, 1996. In addition, each
eligible director will receive an option to purchase 10,000 shares of Common
Stock when such person has
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<PAGE>
served a term of five consecutive years on the Company's Board of Directors.
Under the Director's Plan, as amended, each of Mr. Smith, Mr. Reeves, and Mr.
Caruso received options to purchase 10,000 shares of Common Stock on March 15,
1996 and September 15, 1996. Mr. Smith also received an additional option to
purchase 10,000 shares of Common Stock on March 15, 1996 in recognition of his
having served as a director for five consecutive years.
The shareholders also approved an increase in the number of shares
reserved for issuance under the Company's 1994 Combination Stock Option Plan
(the "Combination Plan"). Subsequent to that meeting, options to purchase an
aggregate of 83,000 shares of Common Stock were granted under the Combination
Plan.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OR PLAN OF OPERATION
--------------------
Results of Operations:
- ---------------------
Overview:
- --------
In the thirteen weeks ended October 27, 1996, the Company recorded a
profit of $46,534 compared to a loss of $119,051 for the quarter ended October
29, 1995. The Company attributes this turn-around to the substantial completion
of its restructuring of its Capucino's(R) and Bel Canto(R) restaurant operations
during which the Company closed its Cambridge Capucino's restaurant (May 1995),
converted its Saugus Capucino's restaurant location into a Polcari's North
End(TM) restaurant (completed March 1995), closed its Framingham Capucino's
restaurant location (June 1995), sold its Wellesley Bel Canto restaurant
location (October 1995), will continue to operate its Lexington location as a
Bel Canto's, and converted its Brookline Capucino's location into a Pizzeria
Regina(R) restaurant (completed February 1996). The Company is also currently
negotiating the sale of its Framingham location and in Fiscal 1996, reduced the
carrying value of the assets related to that location to reflect its estimated
realizable value in connection with such sale. The Company's profit in the
current Fiscal quarter is substantially attributable to the income generated by
the Company's Pizzeria Regina restaurant business, which has remained profitable
throughout the Company's restructuring.
The Company is evaluating potential future sites for possible expansion of
its Pizzeria Regina operations. During August 1996, the Company opened two new
Pizzeria Regina food court restaurants at the South Shore Plaza in Braintree,
Massachusetts, and the newly opened Solomon Pond Mall in Marlborough,
Massachusetts. The South Shore Plaza food court restaurant is replacing an
existing in-line location at that mall. The opening of the Solomon Pond Mall
restaurant was
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<PAGE>
coordinated with the grand opening of that mall. Both properties included a
brick-oven to produce a pizza characteristic of Pizzeria Regina.
Thirteen Weeks Ended October 27, 1996, as Compared to Thirteen
Weeks Ended October 29, 1995:
- --------------------------------------------------------------
Revenues:
- --------
Net sales in the current period were $3,013,000 compared to net sales
in the prior year's period of $2,938,000. Net sales in the current period
increased at the Company's Pizzeria Regina restaurants, due to the opening of
the two new Pizzeria Regina food court restaurants (one of which replaced an
in-line restaurant at the same location) and at the Polcari's North End
restaurant as compared to the prior year's period. These increases were
partially offset by the reduction in revenue resulting from the closure or
conversion of three of the Company's full-service Capucino's and the sale of the
Wellesley Bel Canto restaurant.
Net sales at the Company's Pizzeria Regina restaurants increased to
$2,104,000 in the current period from $1,701,000 in the prior year's period.
This increase was primarily attributable to the addition of sales from the
Company's converted Brookline Pizzeria Regina restaurant, the opening of two new
Pizzeria Regina food court restaurants (one of which replaced an in-line
restaurant at the same location), partially offset by decreased sales at the
Company's original Burlington Mall restaurant. The Company believes that the
decrease in sales at the original Burlington mall restaurant was attributable to
the opening of the new food court in that mall, including a new Pizzeria Regina
restaurant in that food court. The remaining five Pizzeria Regina locations
showed an increase in net sales to $1,276,000 in the current period compared to
$1,244,000 in the prior years period.
Net sales at the Company's full service casual dining restaurants
decreased to $898,000 in the current period from $1,227,000 in the prior year's
period, primarily reflecting the closure or conversion of three and sale of one
full service casual dining restaurants during Fiscal 1996. Net sales at the
Company's Bel Canto's Restaurant were $243,000 in the current Fiscal 1997 period
compared to $281,000 for the same period in Fiscal 1996. Sales at the Polcari's
North End restaurant in the current period increased by over $122,000 from the
sales in the prior year's period.
-8-
<PAGE>
Costs and Expenses:
- ------------------
Cost of Food and Beverages:
- --------------------------
Cost of food and beverages as a percentage of net sales was 23% in
Fiscal 1997 compared to 25% in Fiscal 1996. This decrease was primarily due to a
greater portion of the Company's net sales being derived from the higher margin
Pizzeria Regina locations.
The cost of food and beverages as a percentage of net sales at the
Pizzeria Regina restaurants was 20% and 19% in the Fiscal 1997 and 1996 periods,
respectively. The cost of food and beverages as a percentage of net sales
increased at the Pizzeria Regina restaurants principally due to higher food
costs which were not fully passed through to the Company's customers.
The cost of food and beverages as a percentage of net sales at the
Company's full service casual dining restaurants was 31% and 32% in the Fiscal
1997 and 1996 periods, respectively. This decrease was primarily due to the
Company's Bel Canto's restaurant where the cost of food and beverages as a
percentage of net sales decreased due to the introduction of a new menu.
Payroll Expenses:
- ----------------
Payroll expenses were $930,000 (31% of net sales) in the current period
compared to payroll expenses in the prior year's period of $959,000 (33% of net
sales). The decrease in payroll expenses was primarily attributable to the
closure or conversion of three and the sale of one of the Company's full-service
casual dining restaurants during Fiscal 1996, which was partially offset by the
opening of two new Pizzeria Regina food court locations (one of which replaced
an in-line restaurant at the same location).
Payroll expenses at the Pizzeria Regina restaurants increased to
$607,000 (29% of sales) in the current period from $470,000 (28% of net sales)
in the prior year's period. The increase in payroll expenses at the Pizzeria
Regina restaurants was primarily attributable to the conversion of the Company's
Brookline Capucino's restaurant into a full service Pizzeria Regina and the
opening of two new Pizzeria Regina Food Court restaurants (one of which replaced
an in-line restaurant at the same location).
Payroll expenses at the Company's full service casual dining
restaurants decreased to $291,000 (32% of net sales) in the current period from
$461,000 (38% of net sales) in the prior year's period, reflecting the closure
or conversion of three and
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<PAGE>
the sale of one of the Company's restaurants in the Fiscal 1996. Payroll
expenses at the Company's commissary increased to $32,000 for Fiscal 1997
compared to $28,000 in Fiscal 1996.
Other Operating Expenses:
- ------------------------
Other operating expenses in the current period were $1,049,000 (35% of
net sales), compared to $1,001,000 (34% of net sales) in the prior year's
period. The increase in other operating expenses in the current period was
primarily attributable to the opening of two Pizzeria Regina food court
restaurants (one of which replaced an in-line restaurant at the same location).
Other operating expenses from the Pizzeria Regina restaurants increased
to $715,000 in the current period from $526,000 in the prior year's period. This
increase is primarily attributable to the conversion of the Brookline Capucino's
restaurant into a Pizzeria Regina restaurant and the opening of the two new
Pizzeria Regina food court restaurants (one of which replaced an in-line
restaurant at the same location).
Other operating expenses at the Company's full service casual dining
restaurants decreased to $315,000 in the current period from $455,000 in the
prior year's period. This decrease was primarily attributable to the closures of
the Cambridge Capucino's restaurant, the Framingham Capucino's restaurant, and
the sale of the Wellesley, Bel Canto restaurant during Fiscal 1996, which was
partially offset by increased costs associated with the Polcari's North End
restaurant. Other operating expenses also include commissary expenses of $18,000
in Fiscal 1997 as compared to $20,000 in Fiscal 1996.
General and Administrative Expenses:
- -----------------------------------
General and administrative expenses were $264,000 (9% of net sales) in
the current period, as compared to $423,000 (14% of net sales) in the prior
year's period. The decrease in general and administrative expenses was
principally due to a reduction in the administrative payroll expenses and a
decrease in depreciation and amortization (attributable to the sale of equipment
previously used in full service restaurants), and legal expenses.
Other Income:
- ------------
Other income in the Fiscal 1997 period decreased to $1,000 compared to
$50,000 in Fiscal 1996 which was realized on the sale of the Company's Wellesley
Bel Canto restaurant which occurred in Fiscal 1996.
-10-
<PAGE>
Interest Expense:
- ----------------
Interest expense increased to $34,000 in the current period as compared
to interest expense in the prior year's period of $4,000. This increase is
primarily attributable to the Company's use of the long term credit facility
with Haymarket Co-operative Bank.
Twenty-Six Weeks Ended October 27, 1996 as Compared to Twenty-Six
Weeks Ended October 29, 1995.
- -----------------------------------------------------------------
Revenues:
- --------
Net sales in the Fiscal 1997 period were $5,812,000, compared to net
sales in the Fiscal 1996 period of $6,082,000. Net sales in the 1997 period
decreased due to the closure or conversion of the Company's full-service
Capucino's and the sale of the Wellesley Bel Canto restaurant. These decreases
were partially offset by the opening of two New Pizzeria Regina food court
restaurants (one of which replaced an in-line restaurant at the same location)
and increased sales at the Polcari's North End restaurant.
Net sales at the company's Pizzeria Regina restaurants increased to
$3,965,000 in the Fiscal 1997 period from $3,385,000 in the Fiscal 1996 period
principally due to the opening of two new Pizzeria Regina food court restaurants
(one of which replaced an in-line restaurant at the same location) and the
addition of sales from the Company's converted Brookline Pizzeria Regina
restaurant. This increase was partially offset by decreased sales at the
Company's original Burlington mall restaurant and the closure of the Braintree
Pizzeria Regina restaurant. The decrease in sales at the original Burlington
mall restaurant was attributable to the opening of the new food court in that
mall, including a new Pizzeria Regina restaurant in that food court.
Net sales at the Company's full service casual dining restaurants
decreased to $1,826,000 in the Fiscal 1997 period from $2,679,000 in the Fiscal
1996 period. While sales at the Polcari's North End restaurant in the Fiscal
1997 period increased by over $183,000, this increase was offset by the closure
or conversion of three and the sale of one of the Company's full service casual
dining restaurants during Fiscal 1996 and decreased sales at the Company's
Lexington Bel Canto's restaurant.
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<PAGE>
Costs, Expenses and Other Income:
- --------------------------------
Cost of Food and Beverages:
- --------------------------
Cost of food and beverages as a percentage of net sales was 23% in the
Fiscal 1997 period as compared to 24% in the Fiscal 1996 period.
The cost of food and beverages as a percentage of net sales at the
Pizzeria Regina restaurants was 20% in Fiscal 1997 compared to 19% in the Fiscal
1996 period. The cost of food and beverages as a percentage of net sales
increased at the Pizzeria Regina restaurants principally due to higher food
costs which were not fully passed through to the Company's customers.
The cost of food and beverages as a percentage of net sales at the
Company's full service casual dining restaurants was 31% in both the Fiscal 1997
and 1996 periods.
Payroll Expenses:
- ----------------
Payroll expenses were $1,788,000 (31% of net sales) in the Fiscal 1997
period, compared to payroll expenses in the Fiscal 1996 period of $2,063,000
(34% of net sales). The decrease in payroll expenses was primarily attributable
to the closure or conversion of three and the sale of one of the Company's full
service casual dining restaurants during Fiscal 1996.
Payroll expenses at the Pizzeria Regina restaurants increased to
$1,132,000 (29% of net sales) in the Fiscal 1997 period from $936,000 (28% of
net sales) in the Fiscal 1996 period. The increase in payroll expenses at the
Pizzeria Regina restaurants was primarily attributable to the conversion of the
Brookline Capucino's restaurant into a full service Pizzeria Regina and the
opening of two new Pizzeria Regina food court restaurants (one of which replaced
an in-line restaurant at the same location).
Payroll expenses at the Company's full service casual dining
restaurants decreased to $594,000 (33% of net sales) in the Fiscal 1997 period
from $1,069,000 (40% of net sales) in the Fiscal 1996 period. The decrease in
payroll expenses was primarily attributable to the closure or conversion of
three and the sale of one of the Company's full service restaurants in Fiscal
1996. Payroll expenses at the Company's commissary increased to $61,000 in
Fiscal 1997 period compared to $57,000 in the Fiscal 1996 period.
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<PAGE>
Other Operating Expenses:
- ------------------------
Other operating expenses in the Fiscal 1996 period were $1,910,000 (33%
of net sales), compared to $1,974,000 (32% of net sales) in the Fiscal 1997
period. The decrease in other operating expenses in the Fiscal 1997 period was
primarily attributable to the closure of the Braintree Pizzeria Regina
restaurant and to the Company's full service restaurant closures and sale. The
decrease in operating expenses was partially offset by the opening of the two
new Pizzeria Regina food court restaurants (one of which replaced an in-line
restaurant at the same location).
Other operating expenses from the Pizzeria Regina restaurants increased
to $1,277,000 in the Fiscal 1997 period from $1,036,000 in the Fiscal 1996
period. This increase was primarily attributable to the conversion of the
Brookline Capucino's restaurant to a Pizzeria Regina restaurant and the opening
of two new Pizzeria Regina food court restaurants (one of which replaced an
in-line restaurant at the same location).
Other operating expenses at the Company's full service casual dining
restaurants decreased to $593,000 in the Fiscal 1997 period from $897,000 in the
Fiscal 1996 period. This decrease was primarily attributable to the closure of
the Framingham and Cambridge Capucino's restaurants, the sale of the Wellesley,
Bel Canto restaurant, and the conversion of Brookline Capucino's into a Pizzeria
Regina restaurant during Fiscal 1996. This decrease was partially offset by
increased variable costs associated with increased sales at the Polcari's North
End restaurant. Other operating expenses also include commissary expenses of
$41,000 in the Fiscal 1997 period compared to $40,000 in the Fiscal 1996 period.
General and Administrative Expenses:
- -----------------------------------
General and administrative expenses were $588,000 (10% of net sales) in
the Fiscal 1997 period, as compared to $840,000 (14% of net sales) in the Fiscal
1996 period. The decrease in general and administrative expenses in the Fiscal
1997 period as compared to the Fiscal 1996 period was due primarily to the
reduction in administrative payroll expenses and a decrease in depreciation and
amortization (attributable to the sale of equipment previously used in full
service restaurants)and legal expenses.
Other Income:
- ------------
Other income in the Fiscal 1997 period decreased to $2,000 when
compared to $50,000 in Fiscal 1996 which was as a result of the gain realized on
the sale of the Company's Wellesley Bel Canto restaurant which occurred in
Fiscal 1996.
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<PAGE>
Interest Expense:
- ----------------
Interest expense increased to $55,000 in the Fiscal 1997 period as
compared to interest expense in the Fiscal 1996 period of $10,000. This increase
reflects the Company's use of the long-term credit facility with Haymarket
Co-operative Bank.
Liquidity and Capital Resources:
- -------------------------------
At October 27, 1996, the Company had a negative net working capital of
approximately $1,566,000 and cash and cash equivalents of approximately
$158,000.
During the twenty-six weeks ended October 27, 1996, (the Company had a
net decrease in cash of $2,000 reflecting net cash provided by operating
activities of $260,000, net cash used for investing activities of $676,000, and
net cash provided by financing activities of $414,000. Net cash provided by
operating activities included the reduction of $185,000 of accrued expenses,
the increase of $98,000 in accounts payable, depreciation and amortization of
$205,000, the reduction in accounts receivable of $19,000, and net income of
$123,000. Net cash used in investing activities reflects partial costs
associated with the construction of the new Braintree, Massachusetts Pizzeria
Regina food court and the new Marlboro, Massachusetts Pizzeria Regina food
court. Net cash provided by financing activities are funds provided by Haymarket
Co-operative Bank, less principal repayments of debt.
At October 27, 1996, the Company had current liabilities of $2,067,000,
including $984,000 of accounts payable, $836,000 of accrued liabilities and
current maturities of long-term debt in the amount of $247,000. The Company has
extended payment of certain of its accounts payable and accrued liabilities
beyond their stated terms. At October 27, 1996, the Company had long-term
obligations, less current maturities, in the amount of $1,064,000, including
$876,000 under its credit facility with Haymarket Co-operative Bank, $128,000 of
loans payable to stockholders and $60,000 of deferred rent. The President and
the Treasurer of the Company and each of the Company's subsidiaries have
guaranteed the Company's obligations to the bank. As of October 27, 1996, the
Company had borrowed the full amount available under this credit facility.
The Company believes that its existing resources, cash flow from
operations, and borrowings under its credit facility will be sufficient to allow
it to meet its obligations over the next twelve months. The Company intends to
fund its current obligations and operating expenses through cash generated from
operations and amounts, if any, to be received upon the proposed sale of its
Framingham location. In addition, upon the sale of the Framingham location, the
Company will benefit from the
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<PAGE>
elimination of ongoing expenses associated with the location. During Fiscal
1996, the Company incurred rent and utility expenses at the Framingham location
of $283,000. The Company is also seeking additional financing in order to fund
its expansion plans and other cash flow requirements. There can be no assurance
that cash flows will improve in an amount sufficient to allow the Company to
fund its current obligations and operating expenses, or that the Company will be
able to obtain such additional financing upon favorable terms, if at all.
Failure of the Company to do so could result in the Company's failure to be able
to meet its cash flow requirements.
"Safe Harbor" Statement Under the Private Securities Litigation
Reform Act of 1995:
Forward-looking statements in this report, including, without
limitation, statements relating to the adequacy of the Company's resources, are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that such forward-looking statements
involve risks and uncertainties, including without limitation: potential
quarterly fluctuations in the Company's operating results; seasonality of sales;
competition; risks associated with expansion; the Company's reliance on key
employees; risks generally associated with the restaurant industry; risks
associated with geographic concentration of the Company's restaurants; risks
associated with serving alcoholic beverages; and other risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission.
<PAGE>
PART II
ITEM 1. Legal Proceedings.
-----------------
No material litigation.
ITEM 2. Changes in Securities.
----------------------
None.
ITEM 3. Defaults Upon Senior Securities.
--------------------------------
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
On October 18, 1996 the Company held its annual meeting of Stockholders. At
the meeting, Stockholders were requested to act on the following three matters:
(i) to elect seven directors to serve for the ensuing year and until their
successors are duly elected; (ii) to consider and act upon a proposal to amend
to the 1994 NonEmployee Director Stock Option Plan; and (iii) to consider and
act upon a proposal to amend the 1994 Combination Stock Option Plan and to
approve the issuance of options to certain key employees.
The Company set forth seven nominees for election to the Board of
Directors, each of whom was elected. The nominees were George R. Chapdelaine,
John P. Polcari, Jr., Terrance A. Smith, Richard J. Reeves, Joseph J. Caruso,
Roger Lipton and Lucille S. Salhany.
The results with respect to each of the nominees were as set forth below:
Nominee FOR AGAINST ABSTAIN OR
WITHHELD
George R. Chapdelaine 4,629,185 20,775 178,210
John P. Polcari, Jr. 4,629,185 20,775 210
Richard J. Reeves 4,623,185 25,775 0
Terrance A. Smith 4,623,185 25,775 0
Joseph J. Caruso 4,629,185 20,775 0
Roger Lipton 4,629,185 20,775 0
<PAGE>
Lucille S. Salhany 4,629,185 20,875 0
With respect to the proposal to amend the 1994 NonEmployee Director Stock
Option Plan to increase the aggregate number of shares eligible for issuance
thereunder from 30,000 shares to 500,000 shares and to provide for the issuance
of additional options to the Company's independent directors, 2,582,470 shares
were voted in favor of such proposal, 567,194 shares were voted against such
proposal, 72,215 shares abstained and 1,596,791 shares represented broker
non-votes.
With respect to the proposal to amend the 1994 Combination Stock Option
Plan to increase the aggregate number of shares eligible for issuance thereunder
from 125,000 shares to 135,000 shares and to provide for the issuance of options
to certain key employees, 4,803,295 shares were voted in favor of such proposal,
100 shares voted against such proposal and no shares abstained.
ITEM 5. Other Information.
------------------
None.
ITEM 6. Exhibits And Reports On Form 8-K.
---------------------------------
(a) Exhibits.
---------
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
-------- -------
<S> <C> <C>
10.01 Form of Options to purchase an aggregate of 105,000 shares Filed herewith **
of Common Stock granted to each of Messrs. Chapdelaine and
Polcari in consideration of their guaranties of obligations
of Boston Restaurant Associates, Inc. under its credit
facility
10.02 Option to purchase 12,600 shares of Common Stock granted to Filed herewith **
Mr. Chapdelaine in consideration of his guaranty of
obligations of Boston Restaurant Associates, Inc. for
certain indebtedness regarding the Registrant's principal
executive offices in Saugus, Massachusetts
10.03 Form of 1994 Non-Employee Director Stock Option Plan, as Filed herewith **
amended through October 18, 1996
10.04 Form of Stock Option Agreement between the Registrant and Filed herewith **
certain key employees of the Registrant
<PAGE>
27 Financial Data Schedule Filed herewith
</TABLE>
** Management Contract or Compensatory Plan or Arrangement
- ---------------
(b) Reports On Form 8-K.
--------------------
None.
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BOSTON RESTAURANT ASSOCIATES, INC.
Date: December 10, 1996 By: /s/ George R. Chapdelaine
--------------------------
George R. Chapdelaine, President
and Chief Financial Officer
NEITHER THIS OPTION NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER
OR OTHER DISPOSITION OF THIS OPTION OR SAID SHARES MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (ii) AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.
Option No. of
No._ STOCK OPTION Shares _______
To Subscribe for and Purchase Common Stock of
BOSTON RESTAURANT ASSOCIATES, INC.
THIS CERTIFIES that, for value received, _______________ (together with any
subsequent transferees of all or any portion of this Option, the "Holder"), is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe for and purchase from Boston Restaurant Associates, Inc., a Delaware
corporation (hereinafter called the "C
ompany"), at the price hereinafter set
forth in Section 2, up to _______ fully paid and nonassessable shares of the
Company's common stock, $.01 par value per share, subject to adjustment as set
forth in Section 6 (the "Shares"),
1. Definitions. As used herein the following term shall have the following
meaning:
"Act" means the Securities Act of 1933 as amended, or a similar Federal
statute and the rules and regulations of the Commission issued under that Act,
as they each may, from time to time, be in effect.
"Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the securities laws of the United
States.
"Registration Statement" means a registration statement (other than a
registration statement on Form S-8 solely with respect to employee benefit
plans, or on Form S-4 solely with respect to Rule 145 transactions, or any
successor form or forms used for the purposes specified by such forms) filed by
the Company with the Commission under the Act for a public offering and sale of
securities of the Company.
"Shares" means the _________ shares of the Company's Common Stock issued or
issuable to the Holder upon the exercise of this Option (or such other number as
adjusted pursuant to Section 6 hereof) and any other shares of Common Stock of
the Company issued with respect to such shares (because of stock splits, stock
dividends, reclassifications, recapitalizations, mergers, consolidations, or
similar events); provided, however, that any shares previously sold by the
Holder to the public pursuant to a registered public offering or Rule 144 under
the Act shall cease to be within the definition of "Shares" as used herein.
2. Purchase Rights. The purchase rights represented by this Option are
exercisable by the Holder in whole or in part, at any time and from time to time
commencing on the date
<PAGE>
hereof and ending at 5:00 p.m. on the fifth anniversary of the date hereof at an
exercise price of $_______ per share.
3. Exercise of Option. (a) Subject to Section 2 above, the purchase rights
represented by this Option may be exercised, in whole or in part and from time
to time, by the surrender of this Option and the duly executed Notice of
Exercise (the form of which is attached as Exhibit A) at the principal office of
the Company and by the payment to the Company, by check, of an amount equal to
the then applicable Option Exercise Price per share multiplied by the number of
Shares then being purchased. Upon exercise, the Holder shall be entitled to
receive, as promptly as possible, a certificate or certificates, issued in the
Holder's name or in such name or names as the Holder may direct, for the number
of Shares so purchased. The Shares so purchased shall be deemed to be issued as
of the close of business on the date on which this Option shall have been
exercised.
(b) Net Issue Election. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, Shares equal to the value
of this Option or any portion hereof by the surrender of this Option or such
portion to the Company, with the net issue election notice annexed hereto duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable Shares as is computed
using the following formula:
X = Y (A-B)
-------
A
where X = the number of Shares to be issued to the Holder pursuant to this
Section 3(b).
Y = the number of Shares covered by this Option in respect of which the
net issue election is made pursuant to this Section 3(b).
A = the fair market value of one share of Common Stock, as determined
in good faith by the Board of Directors of the Company, as at the
time the net issue election is made pursuant to this Section 3(b).
B = the exercise price in effect under this Option at the time the net
issue election is made pursuant to this Section 3(b).
The Board of Directors of the Company shall promptly respond in writing to an
inquiry by the Holder as to the fair market value of one share of Common Stock.
4. Shares to be Issued; Reservation of Shares. The Company covenants that
the Shares that may be issued upon the exercise of the purchase rights
represented by this Option will, upon issuance, be fully paid and nonassessable,
and free from all liens and charges with respect to the issue thereof. During
the period within which the purchase rights represented by the Option may be
exercised, the Company will at all times have authorized and reserved, for the
purpose of issuance upon exercise of the purchase rights represented by this
Option, a sufficient number of shares of its Common Stock to provide for the
exercise of the right represented by this Option.
5. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Option. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common
Stock, as determined in good faith by the Company's Board of Directors.
-2-
<PAGE>
6. Adjustments of Option Purchase Price and Number of Shares. If there
shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors of the Company (or if the Company is not
the surviving corporation in any such transaction, the Board of Directors of the
surviving corporation) in the aggregate number and kind of shares subject to
this Option, and the number and kind of shares and the price per share then
applicable to shares covered by the unexercised portion of this Option.
7. Piggyback Registration Rights. The Company agrees as follows:
(a) If the Company shall determine to register any shares of its Common
Stock under the Act at any time and in connection therewith the Company may
lawfully register any of the Shares, the Company will promptly give written
notice thereof to the Holder. Upon the written request of the Holder within 30
days after receipt of any such notice from the Company, the Company will, except
as herein provided, cause all of the Shares which the Holder has requested to be
registered to be included in such Registration Statement, all to the extent
requisite to permit the sale or other disposition of the Shares. However nothing
herein shall prevent the Company from at any time abandoning or delaying any
registration.
(b) If any shares registered pursuant to this Section 7 shall be included
in an underwritten public offering in whole or in part, the Company may require
that the Shares requested for inclusion hereunder be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If and in the event that the managing underwriter
of such public offering shall be of the opinion that inclusion of all of the
Shares would adversely affect the marketing of the securities to be sold by the
Company therein, then the number of Shares otherwise to be included in the
underwritten public offering may be reduced on a pro rata basis with the shares
proposed to be included in such offering by any other selling shareholder
(exclusive of the Company).
8. Registration Procedures. If and whenever the Company is required by the
provisions of Section 7 to effect the registration of the Shares under the Act,
the Company will:
(a) prepare and file with the Commission a Registration Statement with
respect to such securities, and use its best efforts to cause such Registration
Statement to become and remain effective for such period as may be reasonably
necessary to effect the sale of such securities, not to exceed nine months;
(b) prepare and file with the Commission such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for such period
as may be reasonably necessary to effect the sale of such Shares, not to exceed
nine months;
(c) furnish to the Holder participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies
of the Registration Statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities covered by
such Registration Statement under the state securities or blue sky laws of such
jurisdictions as the
-3-
<PAGE>
Holder may reasonably request within 20 days following the original filing of
such Registration Statement, except that the Company shall not for any purpose
be required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the Holder promptly after it shall receive notice thereof, of
the time when such Registration Statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(f) notify the Holder promptly of any request by the Commission for the
amending or supplementing of such Registration Statement or prospectus or for
additional information;
(g) prepare and promptly file with the Commission and promptly notify the
Holder of the filing of such amendment or supplement to such Registration
Statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(h) advise the Holder promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(i) furnish on the effective date of the Registration Statement to the
Holder and any underwriters, at the closing provided for in the underwriting
agreement, an opinion of counsel for the Company and a letter from the
independent certified public accountants for the Company, in form and substance
customary for similar offerings.
9. Expenses. All expenses in connection with, or incidental to, the
preparation and filing of any Registration Statement pursuant to Section 7
hereof, any registration or qualification under securities or blue sky laws of
states in which the offering will be made, and any filing fee of the National
Association of Securities Dealers, Inc. ("NASD") relating to such offering,
shall be borne by the Company (the "Company Obligations"); provided, however,
that the Holder shall bear its pro rata share of the underwriting discount and
commissions and transfer taxes, all reasonable documented fees and disbursements
of Holder's counsel, and, to the extent required by applicable state securities
laws and NASD rules and regulations, all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the Shares to be offered are to be registered or
qualified.
10. Indemnification.
(a) The Company will indemnify and hold harmless the Holder and any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or such underwriter within the meaning of the Act, from and
against, and will reimburse such Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such Holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of
-4-
<PAGE>
any material fact contained in any Registration Statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by such Holder, such
underwriter or such controlling person in writing specifically for use in the
preparation thereof.
(b) The Holder will indemnify and hold harmless the Company, its directors
and officers, any underwriter and any controlling person of such underwriter
from and against, and will reimburse the Company, underwriter or controlling
person with respect to, any and all loss, damage, liability, cost or expense to
which the Company, any underwriter or any controlling person thereof may become
subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in any Registration Statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was so made in
reliance upon written information furnished by such Holder specifically for use
in the preparation thereof. The maximum liability for indemnification hereunder
of the Holder shall not exceed, in the aggregate, the aggregate dollar amount of
gross proceeds received by the Holder on account of the Shares which are
included in a Registration Statement pursuant to Section 7.
11. Rights and Obligations Survive Exercise and Expiration of Option. The
rights and obligations of the Company and the Holder set forth in Sections 7, 8,
9 and 10 shall survive the exercise and expiration of this Option.
12. No Rights as Shareholders. This Option does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to
exercise of this Option and the payment for the Shares so purchased.
Notwithstanding the foregoing, the Company agrees to transmit to the Holder such
information, documents and reports as are generally distributed to holders of
the capital stock of the Company concurrently with the distribution thereof to
the shareholders. Upon valid exercise of this Option and payment for the Shares
so purchased in accordance with the terms of the Option, the Holder or the
Holder's designee, as the case may be, shall be deemed a shareholder of the
Company.
13. Sale or Transfer of the Option; Legend. The Option and the Shares shall
not be sold or transferred unless either (i) they first shall have been
registered under the Act, or (ii) the Company first shall have been furnished
with an opinion of legal counsel satisfactory to the Company to the effect that
such sale or transfer is exempt from the registration requirements of the Act.
Each certificate representing any Option shall bear the legend set out on page 1
hereof. Each certificate representing any Shares shall bear a legend
substantially in the following form, as appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE
-5-
<PAGE>
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
Such Option and Shares may be subject to additional restrictions on transfer
imposed under applicable state and federal securities law.
14. Modifications and Waivers. This Option may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
15. Notices. Any notice, request or other document required or permitted to
be given or delivered to the Holder or the Company shall be delivered, or shall
be sent by certified or registered mail, postage prepaid, to the Holder at its
address shown on the books of the Company or to the Company at the address
indicated therefor on the signature page of this Option, or, if different, at
the principal office of the Company.
16. Loss, Theft, Destruction or Mutilation of Option. The Company covenants
with the Holder that upon its receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Option or any
stock certificate and, in the case of any such loss, theft or destruction, of an
indemnity or security reasonably satisfactory to it, and upon reimbursement to
the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of this Option or stock certificate, if mutilated, the Company
will make and deliver a new Option or stock certificate, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Option or stock certificate.
17. Representations and Warranties of Holder. By accepting thisOption, the
Holder represents and warrants that the Holder is acquiring this Option and the
Shares for such Holder's own account, for investment and not with a view to, or
for sale in connection with, any distribution thereof or any part thereof.
Holder represents and warrants that such Holder is (a) experienced in the
evaluation of businesses similar to the Company, (b) is able to fend for
himself, herself or itself in the transactions contemplated by thisOption, (c)
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Company, (d)
has the ability to bear the economic risks of an investment in the Company, (e)
has been furnished with or has had access to such information as is specified in
subparagraph (b)(2) of Rule 502 promulgated under the Act and (f) has been
afforded the opportunity to ask questions of and to receive answers from the
Company and to obtain any additional information necessary to make an informed
investment decision with respect to an investment in the Company.
18. Binding Effect on Successors. This Option shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Shares issuable upon exercise of this Option shall
survive the exercise and termination of this Option and all of the covenants and
agreements of the Company shall inure to the benefit of the successors and
assigns of the Holder.
19. Governing Law. This Option shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware.
-6-
<PAGE>
IN WITNESS WHEREOF, BOSTON RESTAURANT ASSOCIATES, INC. has caused this
Option to be executed under seal by its officer thereunto duly authorized.
ORIGINAL ISSUANCE DATE:
BOSTON RESTAURANT
ASSOCIATES, INC.
By: ____________________________
Name:
Title:
-7-
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
-------------------
To: BOSTON RESTAURANT ASSOCIATES, INC.
1. The undersigned hereby elects to purchase ____________ shares of Common
Stock of BOSTON RESTAURANT ASSOCIATES, INC. pursuant to the terms of the
attached Option, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below.
3. The undersigned represents that the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
The undersigned further represents that such shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended, or (ii) the Company first shall have been
furnished with an opinion of legal counsel reasonably satisfactory to the
Company to the effect that such sale or transfer is exempt from the registration
requirement.
4. In the event of partial exercise, please issue an appropriate Option
exercisable into the remaining shares.
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(Signature)
-------------------------------
(Date)
-8-
<PAGE>
NET ISSUE ELECTION NOTICE
TO: _________________ DATE: __________________________
The undersigned hereby elects under Section 3(b) to surrender the right to
purchase ______ shares of Common Stock pursuant to thisOption. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
-------------------------------
Signature
-------------------------------
Name for Registration
-------------------------------
Mailing Address
-9-
NEITHER THIS OPTION NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS OPTION OR SAID
SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT IS AVAILABLE.
Option No. of
No.7 STOCK OPTION Shares 12,600
To Subscribe for and Purchase Common Stock of
BOSTON RESTAURANT ASSOCIATES, INC.
THIS CERTIFIES that, for value received, George R. Chapdelaine (together
with any subsequent transferees of all or any portion of this Option, the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, to subscribe for and purchase from Boston Restaurant Associates,
Inc., a Delaware corporation (hereinafter called the "Company"), at the price
hereinafter set forth in Section 2, up to 12,600 fully paid and nonassessable
shares of the Company's common stock, $.01 par value per share, subject to
adjustment as set forth in Section 6 (the "Shares"),
1. Definitions. As used herein the following term shall have the following
meaning:
"Act" means the Securities Act of 1933 as amended, or a similar Federal
statute and the rules and regulations of the Commission issued under that Act,
as they each may, from time to time, be in effect.
"Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the securities laws of the United
States.
"Registration Statement" means a registration statement (other than a
registration statement on Form S-8 solely with respect to employee benefit
plans, or on Form S-4 solely with respect to Rule 145 transactions, or any
successor form or forms used for the purposes specified by such forms) filed by
the Company with the Commission under the Act for a public offering and sale of
securities of the Company.
"Shares" means the 12,600 shares of the Company's Common Stock issued or
issuable to the Holder upon the exercise of this Option (or such other number as
adjusted pursuant to Section 6 hereof) and any other shares of Common Stock of
the Company issued with respect to such shares (because of stock splits, stock
dividends, reclassifications, recapitalizations, mergers, consolidations, or
similar events); provided, however, that any shares previously sold by the
Holder to the public pursuant to a registered public offering or Rule 144 under
the Act shall cease to be within the definition of "Shares" as used herein.
2. Purchase Rights. The purchase rights represented by this Option are
exercisable by the Holder in whole or in part, at any time and from time to time
commencing on the date
<PAGE>
hereof and ending at 5:00 p.m. on the fifth anniversary of the date hereof at an
exercise price of $.9375 per share.
3. Exercise of Option. (a) Subject to Section 2 above, the purchase rights
represented by this Option may be exercised, in whole or in part and from time
to time, by the surrender of this Option and the duly executed Notice of
Exercise (the form of which is attached as Exhibit A) at the principal office of
the Company and by the payment to the Company, by check, of an amount equal to
the then applicable Option Exercise Price per share multiplied by the number of
Shares then being purchased. Upon exercise, the Holder shall be entitled to
receive, as promptly as possible, a certificate or certificates, issued in the
Holder's name or in such name or names as the Holder may direct, for the number
of Shares so purchased. The Shares so purchased shall be deemed to be issued as
of the close of business on the date on which this Option shall have been
exercised.
(b) Net Issue Election. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, Shares equal to the value
of this Option or any portion hereof by the surrender of this Option or such
portion to the Company, with the net issue election notice annexed hereto duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable Shares as is computed
using the following formula:
X = Y (A-B)
-------
A
where X = the number of Shares to be issued to the Holder pursuant to this
Section 3(b).
Y = the number of Shares covered by this Option in respect of which
the net issue election is made pursuant to this Section 3(b).
A = the fair market value of one share of Common Stock, as
determined in good faith by the Board of Directors of the
Company, as at the time the net issue election is made pursuant
to this Section 3(b).
B = the exercise price in effect under this Option at the time the
net issue election is made pursuant to this Section 3(b).
The Board of Directors of the Company shall promptly respond in writing to an
inquiry by the Holder as to the fair market value of one share of Common Stock.
4. Shares to be Issued; Reservation of Shares. The Company covenants that
the Shares that may be issued upon the exercise of the purchase rights
represented by this Option will, upon issuance, be fully paid and nonassessable,
and free from all liens and charges with respect to the issue thereof. During
the period within which the purchase rights represented by the Option may be
exercised, the Company will at all times have authorized and reserved, for the
purpose of issuance upon exercise of the purchase rights represented by this
Option, a sufficient number of shares of its Common Stock to provide for the
exercise of the right represented by this Option.
5. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Option. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common
Stock, as determined in good faith by the Company's Board of Directors.
-2-
<PAGE>
6. Adjustments of Option Purchase Price and Number of Shares. If there
shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors of the Company (or if the Company is not
the surviving corporation in any such transaction, the Board of Directors of the
surviving corporation) in the aggregate number and kind of shares subject to
this Option, and the number and kind of shares and the price per share then
applicable to shares covered by the unexercised portion of this Option.
7. Piggyback Registration Rights. The Company agrees as follows:
(a) If the Company shall determine to register any shares of its Common
Stock under the Act at any time and in connection therewith the Company may
lawfully register any of the Shares, the Company will promptly give written
notice thereof to the Holder. Upon the written request of the Holder within 30
days after receipt of any such notice from the Company, the Company will, except
as herein provided, cause all of the Shares which the Holder has requested to be
registered to be included in such Registration Statement, all to the extent
requisite to permit the sale or other disposition of the Shares. However nothing
herein shall prevent the Company from at any time abandoning or delaying any
registration.
(b) If any shares registered pursuant to this Section 7 shall be included
in an underwritten public offering in whole or in part, the Company may require
that the Shares requested for inclusion hereunder be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If and in the event that the managing underwriter
of such public offering shall be of the opinion that inclusion of all of the
Shares would adversely affect the marketing of the securities to be sold by the
Company therein, then the number of Shares otherwise to be included in the
underwritten public offering may be reduced on a pro rata basis with the shares
proposed to be included in such offering by any other selling shareholder
(exclusive of the Company).
8. Registration Procedures. If and whenever the Company is required by the
provisions of Section 7 to effect the registration of the Shares under the Act,
the Company will:
(a) prepare and file with the Commission a Registration Statement with
respect to such securities, and use its best efforts to cause such Registration
Statement to become and remain effective for such period as may be reasonably
necessary to effect the sale of such securities, not to exceed nine months;
(b) prepare and file with the Commission such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for such period
as may be reasonably necessary to effect the sale of such Shares, not to exceed
nine months;
(c) furnish to the Holder participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies
of the Registration Statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities covered by
such Registration Statement under the state securities or blue sky laws of such
jurisdictions as the
-3-
<PAGE>
Holder may reasonably request within 20 days following the original filing of
such Registration Statement, except that the Company shall not for any purpose
be required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the Holder promptly after it shall receive notice thereof, of
the time when such Registration Statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(f) notify the Holder promptly of any request by the Commission for the
amending or supplementing of such Registration Statement or prospectus or for
additional information;
(g) prepare and promptly file with the Commission and promptly notify the
Holder of the filing of such amendment or supplement to such Registration
Statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(h) advise the Holder promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(i) furnish on the effective date of the Registration Statement to the
Holder and any underwriters, at the closing provided for in the underwriting
agreement, an opinion of counsel for the Company and a letter from the
independent certified public accountants for the Company, in form and substance
customary for similar offerings.
9. Expenses. All expenses in connection with, or incidental to, the
preparation and filing of any Registration Statement pursuant to Section 7
hereof, any registration or qualification under securities or blue sky laws of
states in which the offering will be made, and any filing fee of the National
Association of Securities Dealers, Inc. ("NASD") relating to such offering,
shall be borne by the Company (the "Company Obligations"); provided, however,
that the Holder shall bear its pro rata share of the underwriting discount and
commissions and transfer taxes, all reasonable documented fees and disbursements
of Holder's counsel, and, to the extent required by applicable state securities
laws and NASD rules and regulations, all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the Shares to be offered are to be registered or
qualified.
10. Indemnification.
(a) The Company will indemnify and hold harmless the Holder and any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or such underwriter within the meaning of the Act, from and
against, and will reimburse such Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such Holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of
-4-
<PAGE>
any material fact contained in any Registration Statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by such Holder, such
underwriter or such controlling person in writing specifically for use in the
preparation thereof.
(b) The Holder will indemnify and hold harmless the Company, its directors
and officers, any underwriter and any controlling person of such underwriter
from and against, and will reimburse the Company, underwriter or controlling
person with respect to, any and all loss, damage, liability, cost or expense to
which the Company, any underwriter or any controlling person thereof may become
subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in any Registration Statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was so made in
reliance upon written information furnished by such Holder specifically for use
in the preparation thereof. The maximum liability for indemnification hereunder
of the Holder shall not exceed, in the aggregate, the aggregate dollar amount of
gross proceeds received by the Holder on account of the Shares which are
included in a Registration Statement pursuant to Section 7.
11. Rights and Obligations Survive Exercise and Expiration of Option. The
rights and obligations of the Company and the Holder set forth in Sections 7, 8,
9 and 10 shall survive the exercise and expiration of this Option.
12. No Rights as Shareholders. This Option does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to
exercise of this Option and the payment for the Shares so purchased.
Notwithstanding the foregoing, the Company agrees to transmit to the Holder such
information, documents and reports as are generally distributed to holders of
the capital stock of the Company concurrently with the distribution thereof to
the shareholders. Upon valid exercise of this Option and payment for the Shares
so purchased in accordance with the terms of the Option, the Holder or the
Holder's designee, as the case may be, shall be deemed a shareholder of the
Company.
13. Sale or Transfer of the Option; Legend. The Option and the Shares shall
not be sold or transferred unless either (i) they first shall have been
registered under the Act, or (ii) the Company first shall have been furnished
with an opinion of legal counsel satisfactory to the Company to the effect that
such sale or transfer is exempt from the registration requirements of the Act.
Each certificate representing any Option shall bear the legend set out on page 1
hereof. Each certificate representing any Shares shall bear a legend
substantially in the following form, as appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE
-5-
<PAGE>
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933.
Such Option and Shares may be subject to additional restrictions on transfer
imposed under applicable state and federal securities law.
14. Modifications and Waivers. This Option may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
15. Notices. Any notice, request or other document required or permitted to
be given or delivered to the Holder or the Company shall be delivered, or shall
be sent by certified or registered mail, postage prepaid, to the Holder at its
address shown on the books of the Company or to the Company at the address
indicated therefor on the signature page of this Option, or, if different, at
the principal office of the Company.
16. Loss, Theft, Destruction or Mutilation of Option. The Company covenants
with the Holder that upon its receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Option or any
stock certificate and, in the case of any such loss, theft or destruction, of an
indemnity or security reasonably satisfactory to it, and upon reimbursement to
the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of this Option or stock certificate, if mutilated, the Company
will make and deliver a new Option or stock certificate, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Option or stock certificate.
17. Representations and Warranties of Holder. By accepting thisOption, the
Holder represents and warrants that the Holder is acquiring this Option and the
Shares for such Holder's own account, for investment and not with a view to, or
for sale in connection with, any distribution thereof or any part thereof.
Holder represents and warrants that such Holder is (a) experienced in the
evaluation of businesses similar to the Company, (b) is able to fend for
himself, herself or itself in the transactions contemplated by thisOption, (c)
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Company, (d)
has the ability to bear the economic risks of an investment in the Company, (e)
has been furnished with or has had access to such information as is specified in
subparagraph (b)(2) of Rule 502 promulgated under the Act and (f) has been
afforded the opportunity to ask questions of and to receive answers from the
Company and to obtain any additional information necessary to make an informed
investment decision with respect to an investment in the Company.
18. Binding Effect on Successors. This Option shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Shares issuable upon exercise of this Option shall
survive the exercise and termination of this Option and all of the covenants and
agreements of the Company shall inure to the benefit of the successors and
assigns of the Holder.
19. Governing Law. This Option shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, BOSTON RESTAURANT ASSOCIATES, INC. has caused this
Option to be executed under seal by its officer thereunto duly authorized.
ORIGINAL ISSUANCE DATE: July 26, 1996
BOSTON RESTAURANT
ASSOCIATES, INC.
By: _______________________________
John P. Polcari, Jr., Treasurer
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<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
------------------
To: BOSTON RESTAURANT ASSOCIATES, INC.
1. The undersigned hereby elects to purchase ____________ shares of Common
Stock of BOSTON RESTAURANT ASSOCIATES, INC. pursuant to the terms of the
attached Option, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below.
3. The undersigned represents that the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
The undersigned further represents that such shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended, or (ii) the Company first shall have been
furnished with an opinion of legal counsel reasonably satisfactory to the
Company to the effect that such sale or transfer is exempt from the registration
requirement.
4. In the event of partial exercise, please issue an appropriate Option
exercisable into the remaining shares.
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(Signature)
-------------------------------
(Date)
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<PAGE>
NET ISSUE ELECTION NOTICE
TO: _________________ DATE: __________________________
The undersigned hereby elects under Section 3(b) to surrender the right to
purchase ______ shares of Common Stock pursuant to thisOption. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
-------------------------------
Signature
-------------------------------
Name for Registration
-------------------------------
Mailing Address
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BOSTON RESTAURANT ASSOCIATES, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN,
AS AMENDED THROUGH OCTOBER 18, 1996
1. Purpose. The purpose of this 1994 Non-Employee Director Stock Option
Plan is to attract and retain the services of experienced and knowledgeable
independent directors of Boston Restaurant Associates, Inc. (the "Corporation")
for the benefit of the Corporation and its stockholders and to provide
additional incentives for such independent directors to continue to work for the
best interests of the Corporation and its stockholders through continuing
ownership of its common stock.
2. Definitions. As used herein, each of the following terms has the
indicated meaning:
"Code" is the Internal Revenue Code of 1986, as it may be amended from time
to time.
"Corporation" means Boston Restaurant Associates, Inc.
"Fair Market Value" means the last sale price of the Shares as reported on
the NASDAQ Small-Cap Market or on a national securities exchange on which the
Shares may be traded on the date of the granting of the Option. If the Shares
are not publicly traded, the fair market value shall mean the fair market value
of the Shares as determined by the Board of Directors.
"Option" means the contractual right to purchase Shares upon the specific
terms set forth in this Plan.
"Option Exercise Period" means the period commencing on the date of grant
of an Option pursuant to this Plan and ending ten years from the date of grant.
"Plan" means this Boston Restaurant Associates, Inc. 1994 Non-Employee
Director Stock Option Plan.
"Shares" means the Common Stock, $.01 par value, of the Corporation.
3. Stock Subject to the Plan. The aggregate number of Shares that may be
issued and sold under the Plan shall be 500,000 shares. The Shares to be issued
upon exercise of Options granted under this Plan shall be made available, at the
discretion of the Board of Directors, from (i) treasury Shares and/or Shares
reacquired by the Corporation for such purposes, including Shares purchased in
the open market, (ii) authorized but unissued Shares, and (iii) Shares
previously reserved for issuance upon exercise of Options which have expired or
been terminated. If any Option granted under this Plan shall expire or terminate
for any reason without having been exercised in full, the unpurchased Shares
covered thereby shall become available for grant as additional Options under the
Plan so long as it shall remain in effect.
4. Administration of the Plan. The Plan shall be administered by the Board
of Directors of the Corporation (the "Board"). The Board shall, subject to the
provisions of the Plan, grant options under the Plan and shall have the power to
construe the Plan, to determine all questions as to eligibility, and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable. The Board may delegate any and all of its authority
hereunder to one or more Committees of the Board.
<PAGE>
5. Eligibility; Grant of Options. Each director who is not then an employee
of the Corporation or affiliated with any holder of more than 5% of the
outstanding voting stock of the Corporation ("Eligible Directors") shall
automatically be granted an Option to purchase 10,000 shares of Common Stock
under the Plan on March 15 and September 15 of each year commencing on March 15,
1996. In addition, Eligible Directors shall automatically be granted an
additional Option to purchase 10,000 shares of Common Stock under the Plan upon
having served as a member of the Board of Directors for five consecutive years.
6. Terms of Options and Limitations Thereon.
(a) Option Agreement. Each Option granted under this Plan shall be
evidenced by an option agreement between the Corporation and the Option holder
and shall be upon such terms and conditions not inconsistent with this Plan as
the Board may determine. Each Option shall explicitly state that it is not
intended to be an "incentive stock option" as that term is defined in Section
422 of the Code.
(b) Price. The price at which any Shares may be purchased pursuant to the
exercise of an Option shall be the Fair Market Value of the Shares on the date
of grant, but in no event shall the price be less than the par value of the
Shares.
(c) Exercise of Options. Subject to Paragraph 7 of this Plan, each Option
granted under this Plan may be exercised in full at one time or in part from
time to time only during the Option Exercise Period by the giving of written
notice, signed by the person or persons exercising the Option, to the
Corporation stating the number of Shares with respect to which the Option is
being exercised, accompanied by full payment for such Shares pursuant to section
7(b) hereof; provided however, (i) if a person to whom an Option has been
granted is permanently disabled or dies during the Option Exercise Period, the
portion of such Option then exercisable, as provided in Paragraph 7(a) shall be
exercisable by him or her or by the executors, administrators, legatees or
distributees of his or her estate during the twelve (12) months following his or
her or death or permanent disability and, (ii) if a person to whom an Option has
been granted ceases to be a director of the Corporation for any cause other than
death or permanent disability, the portion of Option then exercisable shall be
exercisable during the thirty (30) day period following the date such person
ceased to be a director, but, in any event, only to the extent vested pursuant
to Paragraph 7(a) hereof.
(d) Non-Assignability. No Option or right or interest in an Option shall be
assignable or transferable by the holder except by will or the laws of descent
and distribution and during the lifetime of the holder shall be exercisable only
by him or her.
7. Vesting; Payment.
(a) Options granted under this Plan shall vest in full and may be exercised
in full or in part any time during the Option Exercise Period, commencing six
months after the date of grant.
(b) The purchase price of Shares upon exercise of an Option shall be paid
by the Option holder in full upon exercise and may be paid (i) in cash, (ii) by
delivery of Shares having a Fair Market Value on the date of exercise equal to
the purchase price, or (iii) any combination of cash and Shares, as the Board
may determine.
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<PAGE>
(c) No Shares shall be issued or transferred upon exercise of any Option
under this Plan unless and until all legal requirements applicable to the
issuance or transfer of such shares and such other requirements as are
consistent with the Plan have been complied with to the satisfaction of the
Board, including without limitation those described in Paragraph 10 hereof.
8. Stock Adjustments.
(a) If the Corporation is a party to any merger or consolidation, any
purchase or acquisition of property or stock, or any separation, reorganization
or liquidation, the Board (or, if the Corporation is not the surviving
corporation, the Board of Directors of the surviving corporation) shall have the
power to make arrangements, which shall be binding upon the holders of unexpired
Options, for the substitution of new options for, or the assumption by another
corporation of, any unexpired Options then outstanding hereunder.
(b) If by reason of recapitalization, reclassification, stock split-up,
combination of shares, separation (including a spin-off) or dividend on the
Stock payable in Shares, the outstanding Shares of the Corporation are increased
or decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Corporation, the Board shall conclusively
determine the appropriate adjustment in the exercise prices of outstanding
Options and in the number and kind of shares as to which outstanding Options
shall be exercisable.
(c) In the event of a transaction of the type described in Paragraphs (a)
and (b) above, the total number of Shares on which Options may be granted under
this Plan shall be appropriately adjusted by the Board.
9. No Rights Other Than Those Expressly Created. No person affiliated with
the Corporation or other person shall have any claim or right to be granted an
Option hereunder. Neither this Plan nor any action taken hereunder shall be
construed as (i) giving any Option holder any right to continue to be affiliated
with the Corporation, (ii) giving any Option holder any equity or interest of
any kind in any assets of the Corporation, or (iii) creating a trust of any kind
or a fiduciary relationship of any kind between the Corporation and any such
person. No Option holder shall have any of the rights of a stockholder with
respect to Shares covered by an Option until such time as the Option has been
exercised and Shares have been issued to such person.
10. Miscellaneous.
(a) Withholding of Taxes. Pursuant to applicable federal, state, local or
foreign laws, the Corporation may be required to collect income or other taxes
upon the grant of an Option to, or exercise of an Option by, a holder. The
Corporation may require, as a condition to the exercise of an Option, that the
recipient pay the Corporation, at such time as the Board determines, the amount
of any taxes which the Board may determine is required to be withheld.
(b) Securities Law Compliance. Upon exercise of an Option, the holder shall
be required to make such representations and furnish such information as may, in
the opinion of counsel for the Corporation, be appropriate to permit the
Corporation to issue or transfer the Shares in compliance with the provisions of
applicable federal or state securities laws. The Corporation, in its discretion,
may postpone the issuance and delivery of Shares upon any exercise of an Option
until completion of such registration or other qualification of such Shares
under any federal or state laws, or stock exchange listing, as the Corporation
may consider appropriate. The Corporation is not obligated to register or
qualify the Shares under federal or
-3-
<PAGE>
state securities laws and may refuse to issue such Shares if neither
registration nor exemption therefrom is practical. The Board may require that
prior to the issuance or transfer of any Shares upon exercise of an Option, the
recipient enter into a written agreement to comply with any restrictions on
subsequent disposition that the Board or the Corporation deems necessary or
advisable under any applicable federal and state securities laws. Certificates
representing the Shares issued hereunder may be legended to reflect such
restrictions.
(c) Indemnity. The Board shall not be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with its responsibilities with respect to the Plan, and the Corporation hereby
agrees to indemnify the members of the Board, in respect of any claim, loss,
damage, or expense (including counsel fees) arising from any such act, omission,
interpretation, construction or determination to the full extent permitted by
law.
11. Effective Date; Amendment; Termination.
(a) The effective date of this Plan shall be the date of the approval of
stockholders of the Corporation holding at least a majority of the voting stock
of the Corporation.
(b) The date of grant of any Option granted hereunder shall be the date
upon which the Eligible Director to whom the Option is granted becomes a
director of the Company.
(c) The Board, or any Committee who has been delegated the authority to do
so, may at any time, and from time to time, amend, suspend or terminate this
Plan in whole or in part. Provided however, that so long as there is a
requirement under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, for stockholder approval of a Plan and certain amendments thereto, any
such amendment which (i) materially increases the number of Shares which may be
subject to Options granted under the Plan, (ii) materially increases the
benefits accruing to participants in the Plan, or (iii) materially modifies the
requirement for eligibility to participate in the Plan, shall be subject to
stockholder approval, to the extent so required under said Rule; and provided
further that the Plan may not be modified more often than once every six months
to materially modify (i) the requirements for eligibility under the Plan, (ii)
the timing of the grants of Options under the Plan or (iii) the number of Shares
subject to Options to be granted under the Plan. Except as provided herein, no
amendment, suspension or termination of this Plan may adversely affect the
rights of any person under an Option that has been granted to such person
without such person's consent.
(d) This Plan shall terminate ten years from its effective date, and no
Option shall be granted under this Plan thereafter, but such termination shall
not affect the validity of Options granted prior to the date of termination.
Date of Board of Director Adoption: March 8, 1996
Date of Stockholder Adoption: October 18, 1996
- 4 -
BOSTON RESTAURANT ASSOCIATES, INC.
----------------------------------
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
Incentive Stock Option Agreement (the "Option") made effective as of
_____________, between Boston Restaurant Associates, Inc. (the "Corporation"),
and _____________ (the "Recipient"), an employee of the Corporation, a parent or
a subsidiary of the Corporation ("Parent" and "Subsidiary," respectively),
pursuant to the Corporation's 1994 Combination Stock Option Plan, as it may be
amended from time to time (the "1994 Plan").
W I T N E S S E T H:
-------------------
WHEREAS, on July 29, 1994, the Corporation adopted the 1994 Plan which
provides, for the issuance of stock options including stock options intended to
qualify as "incentive stock options", as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (The "Code"); and
WHEREAS, the Corporation and the Recipient desire to enter into an
agreement whereby the Corporation will grant the Recipient an option to purchase
shares of the Common Stock, $.01 par value, of the Corporation (the "Stock"),
and this Option is intended to qualify as an incentive stock option;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Corporation and the Recipient
agree as follows:
1. Grant of Option.
Pursuant to the terms and conditions of the 1994 Plan and this Option, the
Corporation hereby grants to the Recipient an Option to purchase, as provided in
Section 3 hereof, all or any part of a total of ________ shares of Stock (the
"Option Shares").
2. Purchase Price.
The price at which the Option Shares may be purchased shall be $_____ per
share (the "Option Exercise Price"). This price is not less than the Fair Market
Value of the Stock on the date of this Option.
<PAGE>
3. Exercise of Option.
Subject to the provisions of Section 4 and the right of the Corporation to
accelerate the date upon which any or all of this Option becomes exercisable,
the Recipient shall be entitled to exercise this Option with respect to the
percentage of the Option Shares provided as follows:
Percentage of Total
Years Elapsed From Option Shares
November 1, 1995 Purchasable
- ------------------ -------------------
1 or more, but not more than 5 40%
2 or more, but not more than 5 60%
3 or more, but not more than 5 80%
4 or more, but not more than 5 100%
Notwithstanding any provision of this Option to the contrary, in no event may
this Option be exercised after five (5) years from the date of this Option (the
"Expiration Date").
4. Termination of Employment.
If the Recipient ceases to be employed by the Corporation, a Parent, or a
Subsidiary (a "Termination"), then this Option may be exercised as to all shares
with respect to which Recipient could exercise this Option on the date of
Termination, and which shares have not been previously purchased, until the
earlier of the Expiration Date, or:
(i) in the case of Termination by reason of death or Permanent and Total
Disability, one (1) year after termination of employment and;
(ii) in the case of any other Termination, other than termination for
cause, three (3) months after the termination of employment.
Notwithstanding the foregoing, in the case of Termination for cause, the ability
to exercise this Option may be terminated on such earlier date as the
Corporation may specify, and such date may be set so as to prevent the Recipient
from further exercising any portion of this Option.
5. Nontransferability; Persons Able to Exercise.
The Option may not be transferred other than by will or the laws of descent
and distribution. During the life of the Recipient, only the Recipient may
exercise this Option. If the Recipient dies while still employed by the
Corporation, or the periods specified in Section 4, this Option may be exercised
by his executors, administrators,
-2-
<PAGE>
legatees or distributees, provided that such person or persons comply with the
provisions of this Option applicable to the Recipient.
6. Method of Exercising Option.
The Option may be exercised, in whole or in part, by written notice to the
Corporation, containing an executed Notice of Exercise in the form of Attachment
A, provided that the Corporation, in its discretion, may modify or augment these
requirements as provided in Section 9 of this Option, or where appropriate
because a person other than the Recipient is exercising the Option pursuant to
Section 5. The written notice specified in this Section must be accompanied by
payment of the Option Exercise Price for the shares being purchased. Payment
shall be made in cash, unless the Corporation, in its sole discretion,
authorizes payment to be made in shares of the Corporation or a combination of
such shares and cash. As soon as practical after receipt of this notice and
payment, the Corporation shall deliver a certificate or certificates
representing the purchased shares registered in the name of the person or
persons exercising this Option. In the event this Option is exercised by any
person other than the Recipient, the notice shall be accompanied by appropriate
proof of the right of such person to exercise this Option. All shares purchased
upon the exercise of this Option and payment of the full Option Exercise Price
will be fully paid and nonassessable.
7. Stock Adjustments.
If there shall be any change in the Stock through merger, consolidation,
reorganization, recapitalization, or other change in the corporate structure of
the Corporation, appropriate adjustments in the total number and kind of shares
subject to this Option, consistent with the requirements of the Code to insure
that this Option will qualify as an Incentive Stock Option, shall be made by the
Corporation as provided in the 1994 Plan. Such adjustments may include the
elimination of any fractional shares that might otherwise be subject to this
Option.
8. No Rights Other Than Those Expressly Created.
Neither this Option nor any action taken hereunder shall be construed as
(i) giving the Recipient any right to be retained in the employ of, or continue
to be affiliated with, the Corporation, (ii) giving the Recipient any equity or
interest of any kind in any assets of the Corporation, or (iii) creating a trust
of any kind or a fiduciary relationship of any kind between the Recipient and
the Corporation. As to any claim for any unpaid
-3-
<PAGE>
amounts under this Option, any person having a claim for payments shall be
unsecured creditor. The Recipient shall not have any of the rights of a
stockholder with respect to any Option Shares until such time as this Option has
been exercised and Option Shares have been issued.
9. Compliance with Laws.
(a) Withholding of Taxes. Pursuant to applicable federal, state, local or
foreign laws, the Corporation may be required to collect or withhold income or
other taxes from Recipient upon the grant of this Option, the exercise of this
Option, or at some other time. The Corporation may require, as a condition to
the exercise of this Option, or demand, at such other time as it may consider
appropriate, that the Recipient pay the Corporation the amount of any taxes
which the Corporation may determine is required to be collected or withheld, and
the Recipient shall comply with the requirement or demand of the Corporation.
(b) Securities Law Compliance. Upon exercise (or partial exercise) of this
Option, the Recipient shall make such representations and furnish such
information as may, in the opinion of counsel for the Corporation, be
appropriate to permit the Corporation to issue or transfer the Option Shares in
compliance with the provisions of applicable federal or state securities laws.
The Corporation, in its discretion, may postpone the issuance and delivery of
Option Shares upon any exercise of this Option until completion of such
registration or other qualification of such shares under any federal or state
laws, or stock exchange listing, as the Corporation may consider appropriate.
The Corporation may require that, prior to the issuance or transfer of Option
Shares upon exercise of this Option, the Recipient enter into a written
agreement to comply with any restrictions on subsequent disposition that the
Corporation deems necessary or advisable under any applicable federal and state
securities laws. Certificates of Stock issued hereunder may bear a legend
reflecting such restrictions.
(c) General. No Option Shares shall be issued upon exercise of this Option
unless and until the Corporation is satisfied, in its sole discretion, that
there has been compliance with all legal requirements applicable to the issuance
of such Option Shares.
10. Miscellaneous.
(a) Provisions of the Plan. This Option is expressly subject to all of the
terms and conditions contained in this Option and in the 1994 Plan, except those
terms and conditions which are expressly applicable only to options which are
not "1994 Plan ISOs",
-4-
<PAGE>
and the 1994 Plan is hereby incorporated herein by reference. All capitalized
terms not defined in this Option have the meanings specified in the 1994 Plan.
(b) Discretion of the Committee. Unless otherwise explicitly provided
herein, the Committee, as defined in the Plan, shall make all determinations
required to be made hereunder, including determinations required to be made by
the Corporation, and shall interpret all provisions of this Option, as it deems
necessary or desirable, in its sole and unfettered discretion. Such
determinations and interpretations shall be binding and conclusive to the
Corporation and the Recipient. The Committee, in its sole discretion, is
authorized (i) to convert the unexercised portion of this Option to an option
which is not an incentive stock option by written notice to the Recipient, and
(ii) to accelerate the time at which this Option may be exercised.
(c) $100,000 Limitation. As provided in Section IV(d) of the Plan, if the
aggregate Fair Market Value of Common Stock with respect to which Corporation
ISOs (determined without regard to Section IV(d) of the Plan) are exercisable
for the first time by the Recipient during any calendar year exceeds $100,000, a
portion of such Corporation ISOs (which may include this Option) shall be
treated as options which are not Incentive Stock Options. For purposes of this
limitation, (i) options shall be taken into account in the order granted, and
(ii) the Committee may designate that portion of any Corporation ISO (including
this Option) that shall be treated as not an Incentive Stock Option if the
provisions of this paragraph apply to a portion of any option, unless another
treatment is required by the Code or regulations of the Internal Revenue
Service. The foregoing designation may be made at such time as the Committee
considers appropriate, including after the issuance of this Option or at the
time of its exercise. For the purpose of this section, Fair Market Value shall
be determined as of the time the option with respect to such stock is granted.
(d) Reservation of Shares. During the term of this Option, the Corporation
shall at all times reserve and keep available shares of Stock sufficient to
satisfy the requirements of this Option.
(e) Amendment. This Option may only be modified or amended by a writing
signed by both parties.
(f) Notices. Any notices required to be given under this Option shall be
sufficient if in writing and if hand-delivered or if sent by first class mail
and addressed as follows:
-5-
<PAGE>
if to the Corporation:
Boston Restaurant Associates, Inc.
205 Portland Street
Boston, MA 02114
Attn: President
if to the Recipient:
c/o Boston Restaurant Associates, Inc.
205 Portland Street
Boston, MA 02114
or to such other address as either party may designate under the provisions
hereof.
(g) Successors and Assigns. The rights and obligations of the Corporation
under this Option shall inure to the benefit of and be binding upon the
successors and assigns of the Corporation.
(h) Applicable Law. All rights and obligations under this Option shall be
governed by the laws of the State of Delaware.
(i) Paragraph Headings. The paragraph headings used in this Option are for
convenience or reference, and are not to be construed as part of this Option.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Option as an instrument
under seal effective as of the date written on the first page of this Option.
BOSTON RESTAURANT
ASSOCIATES, INC.
By: ________________________________
George R. Chapdelaine, President
RECIPIENT:
____________________________________
Name:
-7-
<PAGE>
ATTACHMENT A
-------------
NOTICE OF EXERCISE
Boston Restaurant Associates, Inc.
205 Portland Street
Boston, MA 02114
Attention: Treasurer
- ---------
Gentlemen:
Pursuant to our Incentive Stock Option Agreement dated as of November 1,
1996, I hereby elect to exercise this Option to the extent indicated:
Number of Shares Per Share Total
Which I Elect to x Price = Price
Purchase
_______________ x _______________ = __________
Enclosed with this letter is full payment of the total price of the shares
described above in the following form:
(1) a check in the amount of $_______ payable to the order of the
Corporation; and/or [if authorized by the Corporation]
(2) shares of Stock of the Corporation properly endorsed and having a fair
market value equal to $________.
Kindly issue a certificate or certificates to me representing the shares
which I am acquiring by this exercise, and deliver it to the address provided
above.
Very truly yours,
------------------------------
Name
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 27, 1996 AND APRIL 28, 1996
(UNAUDITED) AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN
WEEKS ENDED OCTOBER 27, 1996 AND OCTOBER 29, 1995 (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS."
</LEGEND>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-28-1996
<PERIOD-START> JUL-29-1996
<PERIOD-END> OCT-27-1996
<EXCHANGE-RATE> 1.00
<CASH> $157,778
<SECURITIES> 0
<RECEIVABLES> $46,513
<ALLOWANCES> 0
<INVENTORY> $240,553
<CURRENT-ASSETS> $501,593
<PP&E> $3,235,475
<DEPRECIATION> 0
<TOTAL-ASSETS> $4,464,257
<CURRENT-LIABILITIES> $2,067,487
<BONDS> 0
0
0
<COMMON> $50,150
<OTHER-SE> $8,953,788
<TOTAL-LIABILITY-AND-EQUITY> $4,464,257
<SALES> $3,013,279
<TOTAL-REVENUES> $3,014,191
<CGS> $691,653
<TOTAL-COSTS> $2,933,905
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $33,752
<INCOME-PRETAX> $46,534
<INCOME-TAX> 0
<INCOME-CONTINUING> $79,374
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $46,534
<EPS-PRIMARY> $0.01
<EPS-DILUTED> $0.01
</TABLE>
