Dear Shareholders,
The long term strategy that Boston Restaurant Associates initiated in 1994
is right on track. Fiscal 1998 was a very rewarding year.
We have tightened our focus on developing the Pizzeria Regina brand,
selling our last Bel Canto restaurant and closing all non-performing units. In
August 1997 our first out of state store opened at the Paramus Park Mall in
Paramus, New Jersey, followed by one in Richmond, Virginia and Oviedo, Florida.
New packaging and distribution methods developed for shipping pizza dough are in
place and successful. This will allow us to support company-owned and franchise
stores consistently at greater distances than first thought.
A Pizzeria Regina franchise program has been developed and was finalized in
January 1998. This opens the doors to faster growth in a larger geographic area.
In that regard, Boston Restaurant Associates signed an agreement to develop
franchises in Europe, the Middle East and the Pacific Rim nations with an
experienced food service development company based in Brussels, Belgium. This
has already produced significant inquiries from seasoned overseas food service
companies. We hope to capitalize on the growth opportunities in fiscal 1999.
Our restaurant portfolio performed well this year. Overall same-store sales
grew 7.3% while costs declined 2% for food and beverage, 1% for payroll and 1%
for other operating expenses.
The balance sheet improved as well, as a result of a profitable year and
the raising of $2M in a rights offering that was 33% oversubscribed. These great
results helped to raise our stock price by 24% in fiscal 1998.
With all that has happened this year, our opportunities for fiscal 1999
have broadened. Two leases have already been signed for stores to be built in
1999. The future looks promising. I would like to thank our loyal and
experienced cadre for making this possible and our stockholders for your faith
and support in our plan.
Sincerely,
George R. Chapdelaine
President and Chief
Executive Officer
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934. For the fiscal year ended April 26, 1998.
[ ] 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
BOSTON RESTAURANT ASSOCIATES, INC.
-----------------------------------------------------------
(Name of Small Business Issuer as Specified in its Charter)
Delaware 61-1162263
------------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
999 Broadway, Suite 400 01906
Saugus, Massachusetts ----------
- ---------------------------------------- (Zip Code)
(Address of Principal Executive Offices)
(781)231-7575
-----------------------------------------------
(Issuer's Telephone Number Including Area Code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act
of 1934:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common stock, $.01 par value per share Boston Stock Exchange
Redeemable Common Stock Purchase Warrants
Securities registered under Section 12(g) of the Securities Exchange
Act of 1934:
Common Stock, $.01 par value per share
--------------------------------------
(Title of Class)
Redeemable Common Stock
Purchase Warrants
-----------------------
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
<PAGE>
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendments to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $11,255,049.
The aggregate market value of registrant's Common Stock, $.01 par value
per share, held by non-affiliates of the registrant as of July 14, 1998 was
$1-11/16 based upon the average closing bid and asked prices of such stock on
that date as reported on the NASDAQ SmallCap Market on that date. As of July
14, 1998 there were 7,024,170 shares of the registrant's Common Stock, $.01 par
value per share outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement involving the election of
directors, which is expected to be filed within 120 days after the end of the
registrant's fiscal year, are incorporated by reference in Part III of this
Report.
-5-
<PAGE>
PART I
ITEM 1. BUSINESS
General
Boston Restaurant Associates, Inc. (the "Company") operates a chain of
11 restaurants -- ten fast service, high volume pizzerias under the Pizzeria
Regina(R) name and one full service family-style Italian/American restaurant
under the Polcari's North End(TM) name. Of the ten Pizzeria Regina restaurants,
eight are food court kiosks (self-service, take-out style emphasizing pizza
slices with common area seating), and two are wait-service restaurants
(full-service style emphasizing whole pizzas with in-restaurant seating). A
majority of the restaurants are located in the Boston, Massachusetts
metropolitan area.
The Pizzeria Regina restaurants feature the Company's signature
product, its premium Neapolitan style, thin crust pizza, prepared in gas-fired
brick ovens. The original Pizzeria Regina, located in Boston's historic North
End, has served the Company's premium brick oven pizza since 1926. The Company
believes that the Pizzeria Regina pizza and the brand name are local symbols of
superior and distinctive pizza. See "Pizzeria Regina Restaurants."
The Polcari's North End restaurant is a full service Italian/American,
family-style restaurant that captures the community spirit of the 1940's and
1950's in Boston's Italian North End neighborhood. It highlights exposed
gas-fired brick ovens in open view of diners, memorabilia and photographs
depicting 1940 and 1950 scenes in Boston's North End, and large tables to
encourage family style dining. See "Polcari's North End Restaurant."
The Company plans to expand its operations by opening additional
Company-operated Pizzeria Regina food court kiosks in high volume retail malls
as the opportunities present themselves and by beginning to franchise its
Pizzeria Regina concept. Whether or not the Company seeks to expand the
Polcari's North End concept by opening additional restaurants will depend upon
market opportunities and the Company's overall financial and management
resources. The rate at which the Company actually is able to open new
Company-operated restaurants will be determined by many factors, including the
Company's success in obtaining adequate financing, identifying satisfactory
sites, negotiating satisfactory leases, securing requisite governmental permits
and approvals, and training management personnel. The rate at which franchised
restaurants are opened also will be determined by many factors, including site
availability and qualified franchisees. There can be no assurance that the
Company will have the resources to expand, that expansion will not be more
costly than anticipated, that current and future sites will operate profitably,
or that franchising efforts will be successful.
- 6 -
<PAGE>
The Company's principal offices are located at 999 Broadway, Saugus,
Massachusetts 01906 and its telephone number is (781) 231-7575. As used in this
Report, unless otherwise indicated, the term "Company" refers to Boston
Restaurant Associates, Inc. and its subsidiaries.
Pizzeria Regina Restaurants
The Company currently operates ten Pizzeria Regina restaurants -- fast
service, high volume pizzerias that feature premium brick oven pizza and cater
primarily to the lunchtime diner (with the exception of the original North End
location, which serves both the lunch and dinner markets). Of these ten
restaurants, eight are food court kiosks (self-service, take-out style
emphasizing pizza slices with common area seating), and two are wait-service
restaurants (full-service style emphasizing whole pizzas with in-restaurant
seating).
The Pizzeria Regina restaurants feature the Company's signature
product, its premium Neapolitan style, thin crust, brick oven pizza. This pizza
features a proprietary dough and pizza sauce which the Company believes combine
to produce a distinct flavor and superior pizza. These pizzas are offered with a
wide variety of fresh vegetable and cured meat toppings. The Company believes
that the quality of its pizza resulting from its proprietary ingredients and
baking process should enable it to appeal to both the lunch and dinner markets.
The original Pizzeria Regina, located in Boston's historic North End, has served
the Company's premium brick oven pizza since 1926.
The Company's eight food court kiosks primarily serve pizza by the
slice with multiple topping choices and operate side-by-side with other fast
food vendors. Menu items are presented in a self-service, take-out style
designed to allow customers to order, pay for and consume their food in a very
short period of time. Customers who desire to sit down after purchasing their
food may join customers of other food court vendors in one or more designated
common areas within the mall. The focused menu, self-service, take-out style and
common seating provide food court customers with a fast dining, low cost
alternative relative to more traditional full service restaurants.
The Company intends to open additional Pizzeria Regina food court
kiosks, primarily in retail malls. Based on the Company's own experience and
articles from trade journals, the Company believes there is a trend at retail
malls to retrofit and upgrade food courts to emphasize fast food as a focal
point of malls. The Company further believes that lunchtime diners who visit
retail shopping malls seek high quality, quick service meals in a food court
setting, and that the premium quality of its brick oven pizza should position it
to compete effectively in food court locations.
During fiscal year 1998 the Company opened a total of three food court
kiosk operations: Paramus Park, Paramus, New Jersey; Regency Square Mall,
Richmond, Virginia; and Oviedo Marketplace, Oviedo, Florida. In addition a food
court kiosk was opened at the Auburn Mall, Auburn, Massachusetts in May of 1998.
The Company has
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<PAGE>
preliminarily identified other potential site locations that it believes will
become available during the next 24 months. Management estimates that the cost
of opening a typical food court kiosk currently is approximately $350,000 to
$400,000. There can be no assurance that the Company will be able to obtain
financing necessary to construct additional food courts kiosks, that the Company
will be able to complete the construction of new kiosks on a timely basis and
within budget, if at all, or that the Company will be able to operate these
kiosks successfully.
Two of the Company's Pizzeria Regina restaurants (a food court kiosk
and a wait-service restaurant) are located in the Quincy Market/Faneuil Hall
Marketplace in Boston, Massachusetts. The Company entered into a new five-year
lease for the food court kiosk, the more successful of the two restaurants, on
January 1, 1996. The Company anticipates closing the wait-service restaurant,
the lease of which has expired, on or before December 31, 1998. At that time it
will seek to enter into a lease for additional space for a full service
restaurant in the Quincy Market/Faneuil Hall Marketplace. The Company believes,
based upon communications with the landlord, that it will be able to
successfully negotiate a new lease for a wait service restaurant in that
location, although there can be no assurance that it will be able to do so.
Polcari's North End Restaurant
In March 1995, the Company opened its first Polcari's North End
restaurant in Saugus, Massachusetts, replacing a similar restaurant the Company
had operated from 1954-1989 in Boston's North End. The Polcari's North End
restaurant concept is designed to create an Italian/American, family-style,
casual dining ambiance that captures the community spirit of the 1940's and
1950's in Boston's Italian North End neighborhood. The restaurant highlights
exposed gas-fired brick ovens in open view of diners. In addition, memorabilia
and photographs depicting 1940 and 1950 scenes in Boston's North End are used to
create a neighborhood atmosphere rich with history. The restaurant also features
large tables of six or more seats to encourage family style dining and a
value-oriented menu that includes branded Pizzeria Regina pizza, large
Italian/American pasta dishes and fresh baked breads.
The Company may in the future review opportunities to open additional
Polcari's North End restaurants. Such expansion will be dependent upon market
opportunities and the Company's overall financial and management resources.
Restaurant Operations
The Company invests substantial time and effort in its training
programs, which focus on all aspects of restaurant operations, including
kitchen, bar and dining room operations, food quality and preparation, alcoholic
beverage service, liquor liability avoidance, customer service and employee
relations. The Company holds regular meetings of its managers which cover new
products, continuing training and other aspects
- 8 -
<PAGE>
of business management. Managers also attend seminars, which are periodically
conducted by Company personnel and outside experts, on a broad range of topics.
New employees are trained by experienced employees who have
demonstrated their ability to implement the Company's commitment to provide high
quality food and attentive service. The Company has developed manuals regarding
its policies and procedures for restaurant operations. Senior management
regularly visits Company restaurants and meets with the respective management
teams to ensure compliance with the Company's strategies and standards of
quality in all respects of restaurant operations and personnel development.
The Company seeks to attract and retain high caliber restaurant
managers by providing them with an appropriate balance of autonomy and
direction. Annual performance objectives and budgets for each restaurant are
jointly determined by restaurant managers and senior management. To provide
incentives, the Company has a cash bonus program tied to achievement of
specified objectives.
The staff for a typical Pizzeria Regina kiosk restaurant consists of
one general manager, two managers and approximately 12 to 15 hourly employees.
The staff of a typical sit-down Pizzeria Regina consists of a general manager,
two managers, and approximately 15 to 25 hourly employees. The staff for a
Polcari's North End restaurant consists of one general manager, two managers,
one kitchen manager and approximately 40 to 60 hourly employees. Most of the
Company's hourly employees are part-time personnel. The general manager of each
restaurant is primarily responsible for the day-to-day operations of the entire
restaurant and maintaining standards of quality and performance established by
the Company.
The Company believes centralized financial and management controls are
fundamental to improving operating margins. These controls are maintained
through the use of an automated data processing system and prescribed reporting
procedures. Each restaurant has a point-of-sale system that captures restaurant
operating information. The restaurants forward daily sales reports, vendor
invoices, payroll information and other data to the Company's corporate
headquarters. Company management utilizes this data to centrally monitor costs
and sales mix and to prepare periodic financial management reports. This system
is also used for budget analysis, planning and determination of menu
composition. Restaurant managers perform daily inventories of key supplies. All
other supplies are inventoried weekly at the Pizzeria Regina restaurants and are
inventoried biweekly at the Polcari's North End. Cash is controlled through
deposits of sale proceeds in local operating accounts following each restaurant
shift with respect to the Pizzeria Regina locations and following each business
day with respect to Polcari's North End location. The balances in those accounts
are wire transferred daily to the Company's principal operating account.
- 9 -
<PAGE>
Site Selection
The Company considers the specific location of a restaurant to be
critical to the restaurant's long term success. It devotes significant time and
resources to the investigation and evaluation of each prospective site,
including consideration of local market demographics, population density,
average household income levels and site characteristics such as visibility,
accessibility and traffic.
The Company seeks sites for the Pizzeria Regina kiosk restaurants
within high-traffic food courts or retail shopping malls located in metropolitan
areas. It seeks sites for Pizzeria Regina wait-service restaurants in densely
populated areas. Factors which will favor a Polcari's North End restaurant site
are its proximity to high-volume, middle market traffic centers, such as retail
and residential areas with populations of at least 100,000 persons within a five
mile radius. For all types of restaurants, the Company also considers existing
local competition and, to the extent such information is available, the sales of
other comparably priced restaurants operating in the area.
Purchasing and Commissary Operations
The Company maintains a commissary where food products such as pizza
dough are produced for the Company's restaurants. These products require a high
degree of consistency that would be more difficult to maintain at the individual
restaurant locations. The Company believes that close, centralized monitoring of
the dough preparation ensures a more consistent premium product. All other food
preparation is performed on site at the restaurant level.
The Company negotiates directly with wholesale suppliers of high volume
food ingredients such as cheese, tomato sauce, and flour to ensure consistent
quality and freshness of products across its restaurants and to obtain
competitive pricing. These ingredients are then purchased by the Company's
distributor at the negotiated price and redistributed to the Company's
restaurants. All other food ingredients and beverage products are purchased
directly by the general manager of each restaurant in accordance with corporate
guidelines. The Company believes that all essential food and beverage products
are available from many qualified wholesale suppliers.
Franchising
In 1997, the Company formed Boston Restaurant Associates International,
Inc. ("BRAII"), a wholly owned subsidiary, for the purpose of offering Pizzeria
Regina franchise opportunities both domestically and internationally. BRAII has
filed a Uniform Franchise Offering Circular in Connecticut, Florida, Georgia,
Kentucky, New Hampshire, Pennsylvania and Texas and is actively seeking
franchisees with operational experience.
In addition, in January 1998, the Company entered into an International
Development Agreement with Regina International, Ltd. ("Regina International"),
- 10 -
<PAGE>
controlled by Terrance Smith, a Company director with experience in
international franchising, to pursue and develop franchise territories outside
the Americas, anticipated to be principally in Europe, the Far East and the
Pacific Rim.
Franchising operations present numerous risks, and the Company faces
vigorous competition from other similar type restaurant chains in attracting and
retaining suitable franchisees. The Company is subject to regulation by the
Federal Trade Commission and must comply with certain state laws that govern the
offering, sale, and termination of franchises and the refusal to renew
franchises. The Company has limited experience in franchising restaurants.
Franchisees' failure to maintain the Company's high standards could adversely
affect customer attitudes towards the Company's restaurants. Granting exclusive
territory agreements may also limit future expansion opportunities for
Company-owned restaurants. Franchise developers or franchisees may leave the
franchise system at the end of the term of their development or franchise
agreements or may attempt to terminate their agreements before the end of their
terms, thereby reducing royalty revenues. Further, while franchising permits the
Company to increase the geographic coverage of its restaurant system without
substantial investments of capital, it also means that the Company may not have
direct operational control over the Company's franchised restaurants.
Seasonality
The Company's restaurants are subject to seasonal fluctuations in sales
volume. Sales at the Pizzeria Regina restaurants are typically higher in June
through August and in November and December due to increased volume in shopping
malls during the holiday and tourist seasons and school vacations.
Employees
As of July 15, 1998, the Company had approximately 275 employees, of
whom 10 were corporate and administrative personnel, 33 were field supervision
or restaurant managers or management trainees, and the remainder were hourly
restaurant personnel. Many of the Company's hourly employees work part-time. The
Company believes that its relationship with its employees is good. None of the
Company's employees are covered by a collective bargaining agreement.
Advertising and Marketing
The Company's target market for the Pizzeria Regina restaurants is very
broad, consisting of individuals and families who seek fast service and high
value-to-price meals during the lunch period. The target markets for the
Polcari's North End restaurant are adults and families who seek moderately
priced Italian dinner entrees, in a comfortable environment. The Company
believes that its focus on premium quality, service and value is the most
effective approach to attracting customers.
- 11 -
<PAGE>
The Company anticipates that it will obtain greater name recognition
from increased distribution channels for its premium Pizzeria Regina brick oven
pizza and the development of additional Pizzeria Regina food court kiosks. In
addition, management believes that the concentration of most of its
Company-owned restaurants within Eastern Massachusetts will enable the Polcari's
North End restaurant to benefit from the recognition of the Pizzeria Regina and
Polcari names. The Company plans to rely upon local advertising, high-volume
traffic flow at retail malls, and word of mouth exposure.
Competition
The restaurant business is highly competitive. Price, restaurant
location, food quality, service and attractiveness of facilities are important
aspects of competition, and the competitive environment is often affected by
factors beyond the Company's or a particular restaurant's control, including
changes in the public's tastes and eating and drinking habits, population and
traffic patterns and local economic conditions. The Company's restaurants
compete with a wide variety of restaurants ranging from national and regional
restaurant chains (some of which have substantially greater financial resources
than the Company) to locally-owned restaurants. There is also active competition
for liquor licenses in certain markets and for advantageous commercial real
estate sites suitable for restaurants. The Pizzeria Regina restaurants compete
with other fast-service, high volume food providers on the basis of price,
value, location, and speed of service. The Polcari's North End restaurant
competes with other casual, full service restaurants primarily on the basis of
menu selection, quality, price, service, ambiance and location.
Trademarks
The Company regards its service marks as having significant value and
as being an important factor in the marketing of its products. Its most
significant marks are "Pizzeria Regina," "Regina," the Regina crown design logo,
and "Polcari's." These marks, which appear in its advertisements, menus and
elsewhere, are widely recognized. "Pizzeria Regina" and the crown design logo
are registered trademarks of the Company. The Company has applied to register
the "Polcari's" logo, "Polcari's North End" and the Regina service marks with
the United States Patent and Trademark Office.
Government Regulation
The Company is subject to a variety of federal, state and local laws
and regulations. Each of the Company's restaurants is subject to licensing and
regulation by a number of government authorities, including alcoholic beverage
control, health, safety, sanitation, building and fire agencies in the state or
municipality in which the restaurant is located. Difficulties in obtaining or
failure to obtain required licenses or approvals could delay or prevent the
development of a new restaurant in a particular area.
- 12 -
<PAGE>
The selection of new restaurant sites is affected by federal, state and
local laws and regulations regarding environmental matters, zoning and land use
and the sale of alcoholic beverages. Varied requirements (particularly at the
local level) may result in increases in the cost and time required for opening
new restaurants, as well as increases in the cost of operating restaurants.
Difficulties in obtaining necessary licenses or permits could cause delays in or
cancellations of new restaurant openings.
A significant portion of the Company's revenues at the Polcari's North
End restaurant and the original Pizzeria Regina location in the North End is
attributable to the sale of alcoholic beverages. Alcoholic beverage control
regulations require each of the Company's restaurants which serve alcohol to
apply to both a state authority and municipal authorities for a license or
permit to sell alcoholic beverages on the premises. Typically, licenses must be
renewed annually and may be revoked or suspended for cause at any time.
Alcoholic beverage control regulations affect numerous aspects of restaurant
operations, including minimum age of patrons and employees, hours of operation,
advertising, wholesale purchasing, inventory control and handling, storage and
dispensing of alcoholic beverages. The failure of the Company to obtain or
retain liquor or food service licenses could have a material adverse affect on
the particular restaurant's operations and the business of the Company
generally.
The Company is subject to "dram shop" statutes, which generally provide
a person injured by an intoxicated person the right to recover damages from an
establishment that wrongfully served alcoholic beverages to the intoxicated
person. The Company presently carries $1,000,000 of liquor liability coverage
for its restaurants, as well as excess liability coverage of $10,000,000 per
occurrence, with a $10,000 deductible. The Company has never been named as a
defendant in a lawsuit involving "dram shop" liability. There can be no
assurance that dram shop insurance will continue to be available to the Company
at commercially reasonable prices, if at all, or that such insurance, if
maintained, will be sufficient to cover any claims against the Company for dram
shop liability for which it may be held liable.
The Company's restaurant operations are all subject to federal and
state laws governing such matters as the proposed government mandated health
insurance, over which the Company has no control. A significant number of the
Company's personnel are paid at rates related to the federal minimum wage, and
increases in the minimum wage could increase the Company's labor costs.
Risk Factors
An investment in the Company involves a degree of risk. Accordingly, in
addition to the risks discussed elsewhere in this Form 10-KSB, investors should
consider carefully the following risk factors in evaluating an investment in the
Company.
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<PAGE>
Risks Related to Planned Expansion
The Company intends to open additional Pizzeria Regina food court
kiosks and to grant franchises to others. However, the Company's ability to open
additional Company restaurants and acquire franchises will depend upon a number
of factors, such as identifying satisfactory sites, negotiating satisfactory
leases, securing requisite governmental permits and approvals, adequate
supervision of construction, and recruiting and training management personnel,
some of which are beyond the control of the Company. There can be no assurance
that the Company will be able to open any of its planned new restaurants within
budget or on a timely basis, if at all, or that any of the new restaurants will
operate profitably. If the Company is unable to expand as planned, it may reduce
the Company's ability to increase profitability.
Possible Need of Additional Funding
The Company believes that its anticipated cash flow from operations,
together with existing resources, will be sufficient to fund its working capital
needs and expansion plans for at least the next 12 months. However, there can be
no assurance that this will be the case. Changes in the Company's business or
its business plan could affect its capital requirements. Moreover, there can be
no assurance that the Company will have sufficient revenues after the end of
that 12 month period to continue to fund its expansion plans and other operating
requirements. In the event the Company requires additional financing, there can
be no assurance that the Company would be able to obtain financing on favorable
terms, if at all, and failure to do so could have a material adverse effect on
the Company's business. See "Item 6. Management's Discussion and Analysis or
Plan of Operation-- Liquidity and Capital Resources."
Risks of Restaurant Industry
The Company's future performance will be subject to a number of factors
that affect the restaurant industry generally, including (i) the highly
competitive nature of the restaurant industry, (ii) general and local economic
conditions, (iii) changes in tastes and eating and drinking habits, (iv) changes
in tax laws that affect the deductibility of business related meals, (v) changes
in food costs due to shortages, inflation or other causes, (vi) population and
traffic patterns, (vii) demographic trends, (viii) general employment and wage
and benefit levels in the restaurant industry, which may be affected by changes
in federal and local minimum wage requirements or by federally or locally
mandated health insurance, and (ix) the number of people willing to work at or
near the minimum wage. See "Item 1. Business - Competition."
Dependence on Key Executive Officers
The future success of the Company will depend in large part on the
continued services of its President, George R. Chapdelaine, as well as on the
Company's ability to attract and retain other qualified senior management
personnel. The Company has
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<PAGE>
retained the services of Mr. Chapdelaine through April 1999 pursuant to an
employment agreement. The Company also has and intends to maintain key man life
insurance in the amount of $2,000,000 on the life of Mr. Chapdelaine.
Control by Management
The Company's executive officers, directors and their affiliates and
members of their immediate families control the vote of approximately 49.2% of
the outstanding shares of the Common Stock. George R. Chapdelaine and John P.
Polcari, Jr., as the Voting Trustees under an Amended and Restated Voting Trust
Agreement dated April 28, 1994 (the "Voting Trust Agreement") had joint
dispositive and voting power over certain shares beneficially owned by the
Company's executive officers, directors or their affiliates or members of their
immediate families and were able to control or exert substantial influence over
actions requiring stockholder approval. On July 13, 1998, the Voting Trust was
terminated and the assets of the Voting Trust were distributed to its
beneficiaries.
Geographic Concentration
A total of eight of the Company's eleven existing restaurants are
located in Eastern Massachusetts. As a result, the Company's results of
operations may be materially affected by changes in the Massachusetts economy.
See "Item 1. Business - General."
Volatility of Stock Price
The Company's Common Stock is traded on the Nasdaq SmallCap Market and,
compared to many other publicly traded companies, the Company is relatively
small and has a relatively small average trading volume. Quarterly operating
results of the Company or other restaurant companies, changes in general
conditions in the economy, the restaurant industry, or the financial markets, or
other developments affecting the Company, its competitors or the financial
markets, could cause the market price of the Common Stock to fluctuate
significantly. In addition, the stock market has recently experienced marked
price and volume fluctuations. These broad market fluctuations may adversely
affect the market price of the Common Stock. See "Item 5. Market for Common
Equity and Related Stockholder Matters."
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<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY
All of the Company's existing restaurants are located in leased space,
except for the North End Pizzeria Regina location which is owned by the Company.
All of the Company's leases provide for a minimum annual rent, and most call for
additional rent based on sales volume at the particular location over a
specified minimum level. Generally, these leases are net leases which require
the Company to pay the cost of insurance, taxes and a portion of the lessor's
operating costs. Certain mall locations also require the Company to participate
in upkeep of common areas and promotional activities.
The following table sets forth certain information with respect to the
Company's restaurant properties:
<TABLE>
<CAPTION>
Approx. Seating Lease
Location Sq. Ft. Capacity(1) Expiration Date Name/Type
<S> <C> <C> <C> <C>
Auburn Mall 924 N/A 1/31/08 Pizzeria Regina
Auburn, MA (food court)
North End 4,300 67 N/A(2) Pizzeria Regina
Boston, MA (wait-service)
Faneuil Hall Marketplace 750 N/A 12/31/00 Pizzeria Regina
Boston, MA (food court)
(Upstairs)
Faneuil Hall Marketplace(3) 2,000 75 12/31/98 Pizzeria Regina
Boston, MA (wait service)
(Downstairs)
Burlington Mall 1,018 N/A 11/30/05 Pizzeria Regina
Burlington, MA (food court)
South Shore Plaza 700 N/A 2/28/06 Pizzeria Regina
Braintree, MA (food court)
Solomon Pond Mall 1,085 N/A 1/30/07 Pizzeria Regina
Marlborough, MA (food court)
Oviedo Market Place 714 N/A 4/01/08 Pizzeria Regina
Oviedo, FL (food court)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Paramus Park 696 N/A 7/31/09 Pizzeria Regina
Paramus, NJ (food court)
Regency Square 605 N/A 11/03/04 Pizzeria Regina
Richmond, VA (food court)
Saugus, MA 11,000 400 11/30/12 Polcari's
North End
</TABLE>
(1) Food court locations have no independent seating capacity. Seating is
centralized in the common areas of the food courts.
(2) Company-owned. This property is subject to a mortgage in favor of Haymarket
Co-Operative Bank. See "Item 6. Management's Discussion And Analysis Or
Plan Of Operation -- Liquidity and Capital Resources." Includes
approximately 1,000 square feet located in two adjacent condominiums owned
by the Company which have not been built-out as of the date of this Report.
(3) The Company is currently in negotiations for a new wait service location
within the marketplace.
The Company occupies approximately 3,200 square feet of executive
office space at 999 Broadway, Saugus, Massachusetts 01906. The Company also
leases approximately 5,000 square feet of warehouse space located in Somerville,
Massachusetts under a lease expiring on July 31,2001 (including all extension
options that may be exercised by the Company in its discretion) and
approximately 2,741 square feet for its commissary located in Charlestown,
Massachusetts under a lease expiring on August 14, 1999.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal matters in the ordinary course
of its business. Each of these matters is subject to various uncertainties and
some of these matters may be resolved unfavorably to the Company. Management
believes that any liability that may ultimately result from these matters will
not have a material adverse effect on the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders of the Company.
- 17 -
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock (NASDAQ symbol: "BRAI") is traded publicly
on the NASDAQ SmallCap Market and the Boston Stock Exchange (BSE symbol:"BNR").
As of July 15, 1998, there were approximately 1,130 holders of record of the
Company's Common Stock. On July 14,1998, the last bid and asked price of the
Company's Common Stock as reported on the Nasdaq Small-Cap Market were $1-9/16
and $1-11/16 per share, respectively.
The table below represents the quarterly high and low bid and asked
prices for the Company's Common Stock for the Company's last two fiscal years.
The prices listed in this table reflect quotations without adjustment for retail
mark-up, markdown or commission, and may not represent actual transactions.
<TABLE>
<CAPTION>
High Bid Low Bid High Asked Low Asked
-------- ------- ---------- ---------
Fiscal Year Ended April 27, 1997
<S> <C> <C> <C> <C>
First Quarter........................ $1.06 $0.56 $1.08 $1.00
Second Quarter....................... 1.00 .60 1.04 .62
Third Quarter........................ 1.12 1.00 1.31 1.02
Fourth Quarter....................... 1.08 1.04 1.22 1.08
Fiscal Year Ended April 26, 1998
First Quarter........................ $1.31 $1.06 $1.43 $1.18
Second Quarter....................... 2.18 1.18 2.31 1.28
Third Quarter........................ 1.62 1.25 1.87 1.37
Fourth Quarter....................... 1.75 1.25 1.81 1.31
</TABLE>
The Company has never paid cash dividends on its capital stock and does
not anticipate paying any cash dividends in the foreseeable future. Rather, the
Company intends to retain all of its future earnings to finance future growth.
- 18 -
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following table sets forth for the fiscal periods indicated the
percentage of total revenues, unless otherwise indicated, represented by certain
items reflected in the Company's consolidated statements of operations:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------
April 26, 1998 April 27, 1997
-------------- --------------
<S> <C> <C>
Income Statement Data:
Net Sales 100% 100.0%
Costs and expenses:
Cost of food and beverages 20.2 22.2
Other operating expenses 60.5 62.4
General and administrative 12.2 8.9
Depreciation and amortization 4.2 5.1
Loss from valuation of assets impaired, assets to be -- --
disposed of and restaurant closures
Total costs and expenses 97.1 98.6
Operating Income/(Loss) 2.9 1.4
Interest expense, Net 2.4 1.3
Other (income) expense, net -- --
Net Income/(Loss) .5 .1
</TABLE>
Results of Operations
Results of Operations for the Years Ended April 26, 1998 and April 27, 1997
Net sales in fiscal 1998 were $11,255,000, compared to net sales of
$11,411,000 in fiscal 1997. The decrease in net sales was attributable to the
closure of the self-service in-line Pizzeria Regina at the Burlington Mall in
October of 1997, the closure of the two Brookline Pizzeria Regina restaurants in
May and October of 1997 at the completion of their leases due to the inability
to renegotiate a market value lease at those locations and the closure of the
Lexington Bel Canto Restaurant. This was partially offset by the opening of the
new Paramus, NJ Pizzeria Regina food court kiosk in August of 1997, the opening
of the new Richmond, VA Pizzeria Regina food court kiosk in November of 1997,
and the opening of the new Oviedo, FL Pizzeria Regina food court kiosk in March
- 19 -
<PAGE>
of 1998. Comparable sales for the restaurants open throughout both fiscal 1998
and 1997 increased by approximately 7.3%.
Net sales at the Company's Pizzeria Regina restaurants increased to
$7,952,000 in fiscal 1998 from $7,890,000 in fiscal 1997, principally due to the
addition of sales from the new Pizzeria Regina food court kiosks and an increase
in aggregate same store sales for existing Pizzeria Regina restaurants.
Net sales at the Company's full service casual dining restaurants
decreased to $3,286,000 in fiscal 1998 from $3,479,000 in fiscal 1997. The
decrease was primarily attributable to closure of the Lexington Bel Canto
Restaurant in December 1997, which was partially offset by increased sales at
the Polcari's North End Restaurant.
Costs and Expenses
Cost of Food and Beverages
Cost of food and beverages as a percentage of net sales for all
restaurants was 20% in fiscal 1998, compared to 22% in fiscal 1997.
The cost of food and beverages as a percentage of net sales at the
Pizzeria Regina restaurants was 16% in fiscal 1998, compared to 18% in fiscal
1997. The decrease as a percentage of net sales was principally due to lower
food costs and the addition of food court restaurants, which generally have
lower food and beverage costs than wait service restaurants.
The cost of food and beverages as a percentage of net sales at the
Company's full service casual dining restaurants decreased to 29% in fiscal 1998
from 31% in fiscal 1997. This decrease as a percentage of net sales was due to a
change in menu mix and minimal menu price increases at the Company's Polcari's
North End Restaurant.
Other Operating Expenses
Payroll Expenses. Payroll expenses were $3,380,000 (30% of net sales)
in fiscal 1998, compared to of $3,496,000 (31% of net sales) in fiscal 1997. The
decrease in payroll expenses is primarily attributable to the closure of the
Lexington Bel Canto restaurant in December of 1997.
Payroll expenses at the Pizzeria Regina restaurants decreased to
$2,167,000 (27% of net sales) in fiscal 1998 from $2,242,000 (28% of net sales)
in fiscal 1997. The decrease in payroll expenses at the Pizzeria Regina
restaurants was primarily attributable to the closure of the Company's two
Brookline Pizzeria Regina restaurants and the self-service in-line Pizzeria
Regina at the Burlington Mall, which was partially offset by an increase in
payroll expenses associated with the new Paramus Park Mall food court
- 20 -
<PAGE>
location in August of 1997, the new Regency Square Mall food court location in
November of 1997 and the new Oviedo Mall food court location in March of 1998.
Payroll expenses at the Company's full service casual dining
restaurants decreased to $1,056,000 (32% of net sales) in fiscal 1998 from
$1,139,000 (33% net sales) in fiscal 1997. The decrease in payroll expenses is
primarily attributable to the closure of the Lexington Bel Canto restaurant in
December of 1997. Commissary payroll expenses were $157,000 in fiscal 1998 as
compared to $115,000 in fiscal 1997.
Other Operating Expenses, Exclusive of Payroll.
Other operating expenses, exclusive of payroll were $3,435,000 (31% of
net sales) in fiscal 1998, compared to $3,623,000 (32% of net sales) in fiscal
1997.
Other operating expenses exclusive of payroll from the Pizzeria Regina
restaurants decreased to $2,376,000 in fiscal 1998 from $2,415,000 in fiscal
1997. This decrease in other operating expenses was attributable to the closure
of the Company's two Brookline Pizzeria Regina restaurants and the
self-service-in-line Pizzeria Regina at this Burlington Mall. The decrease in
operating expenses was partially offset by the three new food court locations--
Pizzeria Regina in Paramus Park Mall, Pizzeria Regina in Regency Square Mall,
and Pizzeria Regina in the Oviedo Mall--and the Company's policy to expense
pre-opening costs associated with new food court locations.
Other operating expenses exclusive of payroll from the Company's full
service casual dining restaurants decreased to $972,000 in fiscal 1998 from
$1,130,000 in fiscal 1997. Other operating expenses also include commissary
expenses, which were $57,000 in fiscal 1998 and $78,000 in fiscal 1997,
respectively. In addition the Company realized pre-opening expenses of $30,000
in the current fiscal year.
General and Administrative Expenses
General and administrative expenses were $1,377,000 (12% of net sales)
in fiscal 1998, compared to $1,021,000 (9% of net sales) in fiscal 1997. The
increase in general and administrative expenses in fiscal 1998 compared to
fiscal 1997 was due principally to the opening of new locations and future
development costs expensed by the Company.
Depreciation and Amortization Expenses
Depreciation and amortization expense was $470,000 (4% of net sales) in
fiscal 1998, as compared to $579,000 (5% of net sales) in fiscal 1997. The
decrease in depreciation and amortization expense in fiscal 1998 compared to
fiscal 1997 was attributable to the closure of the Company's two Brookline
Pizzeria Regina restaurants and the self-service in-line Pizzeria Regina at the
Burlington Mall.
Interest Expense and Interest Income
- 21 -
<PAGE>
Interest expense increased to $305,000 in fiscal 1998, compared to
$157,000 in fiscal 1997. The increase in interest expense was associated with
borrowings under the Company's new credit facility and the issuance of
convertible subordinated debentures.
Interest income increased to $25,000 in fiscal 1998 as compared to
interest income in fiscal 1997 of $5,000. The increase in interest income was
attributable to the proceeds from the issuance of convertible subordinated
debentures and the proceeds from the March 1998 rights offering.
Liquidity and Capital Resources
At April 26, 1998 the Company had net working capital of $1,013,000 and
cash equivalents of $1,788,000.
During fiscal 1998 the Company had a net increase in cash of $1,062,000
reflecting net cash provided by operating activities of $257,000, net cash used
for investing activities of $1,064,000 and net cash provided by financing
activities of $1,869,000.
Net cash provided by operating activities include a decrease in
accounts receivable of $23,000 and an increase in deferred rent of $19,000,
partially offset by an increase in prepaid expenses of $23,000, a decrease in
accounts payable of $68,000, and a decrease in a accrued liabilities of
$138,000. Approximately $1,020,000 of the net cash used in investing activities
were costs associated with the opening of the new Pizzeria Regina food court
locations in Paramus, NJ, Richmond, VA, Oviedo, FL and Auburn, MA. Net cash
provided by financing activities reflects the receipt of $381,000 of proceeds
from the convertible subordinated debentures private placement and $1,756,000 of
net proceeds from the March 1998 rights offering, partially offset by the use of
$241,000 to repay long term debt, lease obligations and stockholder loans, and
the use of $27,000 for debt issuance costs.
The Company opened Pizzeria Regina food court kiosks at the Paramus
Park Mall, Paramus, NJ on August 7, 1997, at the Regency Square Mall, Richmond,
VA on November 30, 1997 and at the Oviedo Mall, Oviedo, FL on March 11, 1998.
The Company also opened a Pizzeria Regina food court kiosk in the Auburn Mall,
Auburn, MA on May 7, 1998.
The Company believes that its existing resources, cash flow from
operations, borrowings under its credit facility and the net proceeds from the
March 1998 rights offering 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. The
net proceeds of the March 1998 rights offering will be used for repayment of
indebtedness, to finance its expansion plans and for other working capital
requirements. There can be no assurance that cash flows will improve in an
- 22 -
<PAGE>
amount sufficient to allow the Company to fund its current obligations and
operating expenses, or that the Company will be able to obtain 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.
Year 2000 Systems
The Company has undertaken a review concerning the ability of its
internal information systems, including its internal accounting systems, to
handle date information and to function appropriately from and after January 1,
2000, and does not believe that the total cost to address any changes required
as a result of the so-called "Year 2000 Problem" will be material. The Company
believes it is unlikely that any Year 2000 Problems encountered by any of its
suppliers or customers will have a material impact on the Company.
New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
130") and Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information ("SFAS 131").
SFAS 130 establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity, except those resulting from
investments by owners and distribution to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.
SFAS 131, which supersedes SFAS 14, Financial Reporting for Segments of
a Business Enterprise, establishes standards for the way that public companies
report information about operating segments in annual financial statements and
requires reporting of selected information about operating segments in interim
financial statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. SFAS 131 defines operating segments as components of a company about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and in
assessing performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and require comparative information for
earlier years to be restated. Management does not expect implementation of these
standards to materially affect future financial statements and disclosures.
- 23 -
<PAGE>
"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, and
the timing of the Company's expansion 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 limitations: 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. See also "Item 1. Business - Risk Factors"
ITEM 7. FINANCIAL STATEMENTS
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Boston Restaurant Associates, Inc. and Subsidiaries
Index to Financial Statements....................... F-1
Report of Independent Certified Public Accountants.. F-2
Consolidated Financial Statements
Balance Sheets................................ F-3 - F-4
Statements of operations...................... F-5
Statements of stockholders' equity............ F-6
Statements of cash flows...................... F-7
Summary of accounting policies................ F-8 - F-11
Notes to consolidated financial statements.... F-12 - F-29
</TABLE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
- 24 -
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
The information required by this Item 9 is hereby incorporated by
reference to the Company's definitive proxy statement to be filed by the Company
within 120 days after the close of its 1998 fiscal year.
ITEM 10. EXECUTIVE COMPENSATION
The information required by this Item 10 is hereby incorporated by
reference to the Company's definitive proxy statement to be filed by the Company
within 120 days after the close of its 1998 fiscal year.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 11 is hereby incorporated by
reference to the Company's definitive proxy statement to be filed by the Company
within 120 days after the close if its 1998 fiscal year.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item 12 is hereby incorporated by
reference to the Company's definitive proxy statement to be filed by the Company
within 120 days after the close of its 1998 fiscal year.
ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
Exhibit Reference
Number Number
<S> <C> <C>
3.01 Amended Certificate of Incorporation of the Registrant A-3(a)*
3.02 Amended By-Laws of the Registrant A-3(b)*
4.01 Description of Common Stock (contained in the Amended A-4(a)*
Certificate of Incorporation of the Registrant, filed as
Exhibit 3(a).
4.02 Form of Certificate evidencing shares of Common Stock F-4(b)*
</TABLE>
- 25 -
<PAGE>
<TABLE>
<S> <C> <C>
4.03 Stock Purchase Warrant issued to Corning Partners IV, A-10(z)*
L.P. on April 29, 1994
4.04 Loan and Security Agreement dated December 28, 1995 H-10.03*
between Boston Restaurant Associates, Inc. and Haymarket
Co-Operative Bank
4.05 $500,000 Note, dated December 28, 1995, issued by Boston H-10.01*
Restaurant Associates, Inc. in favor of Haymarket
Co-Operative Bank
4.06 Condominium Mortgage-Security Agreement, dated December H-10.02*
28, 1995, issued by George R. Chapdelaine, Trustee of
BRA Nominee Trust, in favor of Haymarket Co-Operative
Bank
4.07 Guaranty of Ocean Inc., Polcari Enterprises, Inc., H-10.04*
Pizzeria Regina, Inc., Polcari's, Inc. and Fantail
Restaurant, Inc. dated December 28, 1995, in favor of
Haymarket Co-Operative bank
4.08 Guaranty of George R. Chapdeline, individually and as H-10.05*
trustee of the BRA Nominee Trust, dated December 28,
1995, in favor of Haymarket Co-Operative Bank
4.09 Guaranty of John P. Polcari, Jr., dated December 28, H-10.06*
1995, in favor of Haymarket Co-Operative Bank
4.10 $350,000 Note, dated April 19, 1996 issued by Boston I-10.09*
Restaurant Associates, Inc. in favor of Haymarket
Co-Operative Bank
4.11 $500,000 Note, dated July 26, 1996, issued by Boston I-10.10*
Restaurant Associates, Inc. in favor of Haymarket
Co-Operative Bank
4.12 Form of option granted to Mr. Chapdeline and Mr. Polcari H-10.07*
in consideration of their guaranties of Boston
Restaurant Associates, Inc. obligations under its
credit facility
</TABLE>
- 26 -
<PAGE>
<TABLE>
<S> <C> <C>
4.13 Guaranty of Lease of George R. Chapdelaine and John Filed Herewith
P. Polcari, Jr. dated March 17, 1998 in favor of H.C.B.
Corporation.
4.14 Guaranty of Lease of George R. Chapdelaine and John Filed Herewith
P. Polcari, Jr. dated March 17, 1998 in favor of H.C.B.
Corporation.
4.15 Guaranty of Lease of George R. Chapdelaine and John Filed Herewith
P. Polcari, Jr. dated March 17, 1998 in favor of H.C.B.
Corporation.
4.16 Form of Option granted to Mr. Chapdelaine and Mr. Polcari Filed Herewith
in consideration of their guaranties of Boston Restaurant
Associates, Inc. obligations under the H.C.B. Corporation
leases.
10.02 Lease dated August 19, 1992 between Polcari's Inc. and A-10(k)*
the Yen H. Tow Realty Trust regarding a location in
Saugus, Massachusetts
10.03 Lease dated August 1, 1993 between Polcari Enterprises, A-10(n)*
Inc. and the E.J.H. Realty Trust regarding Registrant's
warehouse located in Somerville, Massachusetts
10.04 Lease dated October 14, 1986 between Polcari Enterprises, A-10(o)*
Inc., and Costa Fruit & Produce Co., Inc. regarding the
Registrant's commissary located in Charlestown,
Massachusetts
10.05 Lease dated June 30, 1995 between Berlin Properties G-10(p)*
Limited Partnership and Ocean, Inc. regarding a Pizzeria
Regina location in the Solomon Pond Mall, Berlin and
Marlborough, Massachusetts
10.06 Lease dated May 10, 1994 between Bellwether Properties G-10(q)*
of Massachusetts, L.P. and Ocean, Inc. regarding a
Pizzeria Regina in the Burlington Mall, Burlington,
Massachusetts
10.07 Employment Agreement between the Registrant and George A-10(p)***
R. Chapdelaine
10.08 Form of 1994 Non-employee Director Stock Option Plan A-10(q)***
</TABLE>
- 27 -
<PAGE>
<TABLE>
<S> <C> <C>
10.09 Form of 1994 Combination Stock Option Plan A-10(r)***
10.10 Form of Indemnification Agreement with each of the A-10(bb)***
directors and certain officers of the Registrant
10.11 Incentive Stock Option Plan B-(10)h***
10.12 Non-employee Director Stock Option Plan C-10(h)***
10.13 Amendment to Employment Agreement between the Registrant A-(hh)***
and George R. Chapdelaine
10.14 Lease dated July 24, 1996 between Faneuil Hall I-10.08*
Marketplace, Inc. and Fantail Restaurant, Inc.
regarding a Pizzeria Regina location in the Faneuil
Hall Marketplace Area, Boston, Massachusetts
10.15 Equipment Lease dated July 26, 1996 between HCB I-10.11*
Corporation and Ocean, Inc. regarding certain equipment
at a Pizzeria Regina location in the Solomon Pond Mall,
Berlin and Marlborough, Massachusetts
10.16 Lease dated June 30, 1995 between Berlin Properties J-10.01
Limited Partnership and Ocean, Inc. regarding a Pizzeria
Regina Location in Solomon Pond Mall, Berlin and
Marlborough, Massachusetts
10.17 Lease dated July 7, 1997 between One Federal Street Joint K-10.01
Venture and Pizzeria Regina of Virginia, Inc. regarding a
Pizzeria Regina located in Regency Square Mall, Richmond,
Virginia
10.18 Lease dated December 10, 1997 between Rouse-Orlando, L-10.01*
Inc. and Pizzeria Regina of Florida, Inc. regarding a
Pizzeria Regina location in the Oviedo Marketplace,
Oviedo, Florida
</TABLE>
- 28 -
<PAGE>
<TABLE>
<S> <C> <C>
10.19 International Development Agreement dated as of January M-10.01
1, 1998 between Boston Restaurant Associates, Inc. and
Regina International, Ltd.
10.20 Equipment Lease dated March 17, 1998 between H.C.B. N-10.01
Corporation and Pizzeria Regina of Virginia, Inc.
regarding certain equipment located in the Regency
Square Mall, Richmond Virginia
10.21 Equipment Lease dated March 17, 1998 between H.C.B. Filed Herewith
Corporation and Pizzeria Regina of Florida, Inc. regarding
certain equipment located in the Oviedo Marketplace,
Oviedo, Florida.
10.22 Equipment Lease dated March 17, 1998 between H.C.B. Filed Herewith
Corporation and Ocean, Inc. regarding certain equipment
at a Pizzeria Regina location in the Auburn Mall,
Auburn, Massachusetts.
21 Subsidiaries of the Registrant A-21*
23 Consent of BDO Seidman, LLP Filed Herewith
27 Financial Schedule Filed Herewith
</TABLE>
- 29 -
<PAGE>
<TABLE>
<S> <C>
* In accordance with Rule 12b-32 under the Securities Exchange Act of
1934, as amended, reference is made to the documents previously
filed with the Securities and Exchange Commission, which documents
are hereby incorporated by reference
** Management Contract or Compensatory Plan or Arrangement
A Incorporated by reference to the Company's Registration Statement on
Form SB-2 (Registration No. 33-81068). The number set forth herein
is the number of the Exhibit in said registration statement
B Incorporated by reference to the Company's registration statement on
Form S-1 (File No. 33-31748). The number set forth herein is the
number of the Exhibit in said registration statement
C Incorporated by reference to the Company's annual report on Form
10-K for the year ended April 30, 1991. The number set forth herein
is the number of the Exhibit in said annual report
D Incorporated by reference to the Company's transition report on Form
10K for the seven months ended April 30, 1990. The number set forth
herein is the number of the Exhibit in said transition report
E Incorporated by reference to the Company's annual report on Form
10-K for the year ended April 30, 1993. The number set forth herein
is the number of the Exhibit in said annual report.
F Incorporated by reference to the Company's annual report on Form
10-K for the year ended April 30, 1994. The number set forth herein
is the number of the Exhibit in said annual report.
G Incorporated by reference to the Company's annual report on Form
10-K for the year ended April 30, 1995. The number set forth herein
is the number of the Exhibit in said annual report.
H Incorporated by reference to the Company's quarterly report on Form
10-QSB for the period ended January 28, 1996. The number set forth
herein is the number of the Exhibit in said quarterly report
I Incorporated by reference to the Company's annual report on Form
10-KSB for the year ended April 28, 1996. The number set forth
herein is the number of the Exhibit in said annual report.
</TABLE>
- 30 -
<PAGE>
<TABLE>
<S> <C>
J Incorporated by reference to the Company's annual report on Form
10-KSB for the year ended April 27, 1997. The number set forth
herein is the number of the Exhibit in said annual report.
K Incorporated by reference to the Company's quarterly report on Form
10-QSB for the period ended July 26, 1997. The number set forth
herein is the number of the Exhibit in said quarterly report.
L Incorporated by reference to the Company's quarterly report on Form
10-QSB for the period ended October 26, 1997. The number set forth
herein is the number of the Exhibit in said quarterly report.
M Incorporated by reference to the Company's S-2 Registration
Statement dated February 26, 1998. The number set forth herein is
the number of the Exhibit in said Registration Statement.
N Incorporated by reference to the Company's quarterly report on Form
10-QSB for the period ended January 25, 1998. The number set forth
herein is the number of the Exhibit in said quarterly report.
O Incorporated by reference to the Company's annual report on Form
10-KSB for the year ended April 26, 1998. The number set forth
herein is the number of the Exhibit in said annual report.
(a) REPORTS ON FORM 8-K
1. Boston Restaurant Associates, Inc. filed a report on Form 8-K dated
February 26, 1998 reporting the filing of a S-2 Registration with
respect to an offering of Rights to purchase Common Stock.
2. Boston Restaurant Associates, Inc. filed a report on Form 8-K dated
March 25, 1998 reporting the closing and results of the S-2
Registration with respect to an offering of Rights to purchase
Common Stock.
3. Boston Restaurant Associates, Inc. filed a report on Form 8-K dated
12 June 1998 reporting the net tangible worth of the Company as of
April 26, 1998 for purposes of the Nasdaq SmallCap Market listing
requirements.
</TABLE>
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<PAGE>
Signatures
- ----------
In accordance with section 13 or 15 (d) 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: 20 July, 1998 By: /s/ George R. Chapdelaine
-------------------------
George R. Chapdelaine, President
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
SIGNATURES DATE
- ---------- ----
/s/ George R. Chapdelaine 20 July, 1998
- ------------------------------------------------
George R. Chapdelaine, Chief
Executive Officer, President and
Director (principal executive officer)
/s/ Fran V. Ross 20 July, 1998
- ------------------------------------------------
Fran V. Ross, Chief Financial Officer
(principal financial and accounting officer)
/s/ Joseph J. Caruso 20 July, 1998
- ------------------------------------------------
Joseph J. Caruso, Director
/s/ Roger Lipton 20 July, 1998
- ------------------------------------------------
Roger Lipton, Director
/s/ John P. Polcari, Jr. 20 July, 1998
- ------------------------------------------------
John P. Polcari, Jr., Director
/s/ Richard J. Reeves 20 July, 1998
- -------------------------------------------------
Richard J. Reeves, Director
Lucille Salhany 20 July, 1998
- -------------------------------------------------
Lucille Salhany, Director
/s/ Terrance A. Smith 20 July, 1998
- -------------------------------------------------
Terrance A. Smith, Director
- 32 -
<PAGE>
<TABLE>
<CAPTION>
Corporate Officers Directors
- ------------------ ---------
<S> <C>
George R. Chapdelaine George R. Chapdelaine
President, Chief Executive Officer President, Chief Executive Officer
Anthony V. Buccieri Joseph J. Caruso(2)
Vice President of Operations President
Bantam Group, Inc.
Fran V. Ross Roger Lipton(1)
Chief Financial Officer Managing Director
Axiom Capital Management, Inc.
Gordon R. Penman John P. Polcari, Jr.
Secretary One of the Founders of Pizzeria Regina, Inc.
Member, Brown, Rudnick, Freed & Gesmer
Richard J. Reeves(1)(2)
Engaged in restaurant development as a
franchisee of various restaurants
General Counsel
- ---------------
Brown, Rudnick, Freed & Gesmer Lucille Salhany
President, Chief Executive Officer
Independent Auditors United Paramount Network
- --------------------
BDO Seidman, LLP
Transfer Agent and Registrar Terrance A. Smith(1)
- ---------------------------- President
American Stock Transfer & Trust Company Chi-Chi's International Operations, Inc.
Master franchisee of Chi-Chi's Mexican
Restaurants outside of the United States and Canada
(1) Audit Committee
(2) Compensation Committee Member
</TABLE>
Annual Meeting
The Annual Meeting of Boston Restaurant Associates, Inc. will be held at 10:00
a.m. on Monday, September 14, 1998 at the offices of Brown, Rudnick, Freed &
Gesmer, One Financial Center, Boston, MA 02111.
Corporate Address
Boston Restaurant Associates, Inc. 999 Broadway, Suite 400, Saugus,
Massachusetts 01906. Telephone: (781) 231-7575; Fax: (781) 231-5225.
Listing
Boston Restaurant Associates, Inc.'s stock is traded on the Nasdaq SmallCap
Market under the symbol BRAI and on the Boston Stock Exchange under the symbol
BNR.
General
This annual report and the financial statements that it contains are submitted
for the general information of the stockholders of Boston Restaurant Associates,
Inc. and are not intended to introduce or to be used in connection with any
sales or purchases of securities.
- 33 -
<PAGE>
Boston Restaurant
Associates, Inc.
and Subsidiaries
================================================================================
Consolidated Financial Statements
Years Ended April 26, 1998 and April 27, 1997
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Index to Financial Statements
================================================================================
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants F-2
Consolidated Financial Statements:
Balance sheets F-3 to F-4
Statements of operations F-5
Statements of stockholders' equity F-6
Statements of cash flows F-7
Summary of accounting policies F-8 to F-11
Notes to consolidated financial statements F-12 to F-29
</TABLE>
F-1
<PAGE>
Report of Independent Certified Public Accountants
To the Board of Directors and Stockholders of
Boston Restaurant Associates, Inc.
We have audited the accompanying consolidated balance sheets of Boston
Restaurant Associates, Inc. and subsidiaries as of April 26, 1998 and April 27,
1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Boston Restaurant
Associates, Inc. and subsidiaries at April 26, 1998 and April 27, 1997, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
BDO Seidman, LLP
Boston, Massachusetts
June 17, 1998
F-2
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Consolidated Balance Sheets
================================================================================
<TABLE>
<CAPTION>
April 26, April 27,
1998 1997
=============================================================================================
Assets (Note 4)
<S> <C> <C>
Current:
Cash and cash equivalents $ 1,788,361 $ 726,054
Accounts receivable 46,958 69,729
Inventories (Note 1) 212,071 209,295
Prepaid expenses and other 49,152 27,532
- ---------------------------------------------------------------------------------------------
Total current assets 2,096,542 1,032,610
- ---------------------------------------------------------------------------------------------
Property and equipment (Note 8):
Building 512,500 512,500
Leasehold improvements 2,977,315 2,591,941
Equipment, furniture and fixtures 1,974,473 1,799,061
- ---------------------------------------------------------------------------------------------
5,464,288 4,903,502
Less accumulated depreciation and amortization 2,119,015 2,247,174
- ---------------------------------------------------------------------------------------------
Net property and equipment 3,345,273 2,656,328
- ---------------------------------------------------------------------------------------------
Other assets (Note 2) 1,323,160 944,180
- ---------------------------------------------------------------------------------------------
$ 6,764,975 $ 4,633,118
=============================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements.
</TABLE>
F-3
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Consolidated Balance Sheets
(Continued)
================================================================================
<TABLE>
<CAPTION>
April 26, April 27,
1998 1997
=========================================================================================================
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities:
Accounts payable $ 314,124 $ 382,294
Accrued expenses (Note 3) 490,525 628,277
Current maturities (Notes 4, 5 and 8):
Long-term debt 200,000 200,000
Notes payable - stockholder 4,495 4,261
Obligations under capital leases 74,206 30,850
- --------------------------------------------------------------------------------------------------------
Total current liabilities 1,083,350 1,245,682
Long-term obligations:
Long-term debt, less current maturities (Note 4) 425,000 625,000
Notes payable - stockholder, less current
maturities (Note 5) 121,336 125,810
Obligations under capital leases, less
current maturities (Note 8) 361,548 138,850
Deferred rent (Note 8) 85,662 67,024
Subordinated debentures (Note 6) 1,500,000 1,118,750
- --------------------------------------------------------------------------------------------------------
Total liabilities 3,576,896 3,321,116
- --------------------------------------------------------------------------------------------------------
Commitments and contingencies (Notes 4, 8 and 9)
Stockholders' equity (Notes 4, 6, 9, 10 and 12):
Common stock, $.01 par value, 25,000,000
shares authorized; shares issued 7,021,970
and 5,015,693 70,220 50,157
Additional paid-in capital 10,846,333 9,043,199
Accumulated deficit (7,728,474) (7,781,354)
- --------------------------------------------------------------------------------------------------------
Total stockholders' equity 3,188,079 1,312,002
- --------------------------------------------------------------------------------------------------------
$ 6,764,975 $ 4,633,118
========================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements.
</TABLE>
F-4
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Consolidated Statements of Operations
================================================================================
<TABLE>
<CAPTION>
April 26, April 27,
Years ended 1998 1997
=========================================================================================================
<S> <C> <C>
Net sales $11,255,049 $11,410,886
- ---------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of food, beverages and liquor 2,267,331 2,532,050
Other operating expenses 6,814,565 7,119,142
General and administrative 1,377,464 1,020,796
Depreciation and amortization 469,559 579,071
- ---------------------------------------------------------------------------------------------------------
Total costs and expenses 10,928,919 11,251,059
- ---------------------------------------------------------------------------------------------------------
Operating income 326,130 159,827
Interest expense, net of interest income of $25,215 and
$4,983 in 1998 and 1997, respectively 279,645 151,941
Other income, net (6,395) (4,377)
- ---------------------------------------------------------------------------------------------------------
Net income $ 52,880 $ 12,263
=========================================================================================================
Net income per share of common stock (Note 11):
Basic $ 0.01 $ 0.00
Diluted $ 0.01 $ 0.00
=========================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements.
</TABLE>
F-5
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Consolidated Statements of
Stockholders' Equity
================================================================================
<TABLE>
<CAPTION>
Common Stock
$.01 Par Value Additional Total
Years ended April 26, 1998, and -------------------------- Paid-In Accumulated Stockholders'
April 27, 1997 Shares Amount Capital Deficit Equity
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Balance, April 28, 1996 5,015,293 $ 50,153 $ 8,953,785 $(7,793,617) $1,210,321
Exercise of stock options (Note 9) 400 4 384 - 388
Issuance of options and warrants in
exchange for services (Note 10) - - 89,030 - 89,030
Net income for the year - - - 12,263 12,263
- ------------------------------------------------------------------------------------------------------------------------
Balance, April 27, 1997 5,015,693 50,157 9,043,199 (7,781,354) 1,312,002
Proceeds from sale of common stock,
net of expenses of $250,240 (Note 12) 2,006,277 20,063 1,735,974 - 1,756,037
Issuance of options and warrants in
exchange for services (Note 10) - - 67,160 - 67,160
Net income for the year - - 52,880 52,880
- ------------------------------------------------------------------------------------------------------------------------
Balance, April 26, 1998 7,021,970 $ 70,220 $ 10,846,333 $(7,728,474) $3,188,079
========================================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements.
</TABLE>
F-6
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
(Note 10)
================================================================================
<TABLE>
<CAPTION>
April 26, April 27,
Years ended 1998 1997
========================================================================================================================
<S> <C> <C>
Cash flows from operating activities:
Net income $ 52,880 $ 12,263
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation and amortization 469,559 579,071
Options granted in exchange for services 37,704 20,300
Changes in operating assets and liabilities:
Accounts receivable 22,771 (4,650)
Inventories (2,776) 23,132
Prepaid expenses and other (21,620) 39,077
Other assets (113,787) (142,570)
Accounts payable (68,170) (503,497)
Accrued expenses (137,752) (393,364)
Deferred rent 18,638 6,153
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities 257,447 (364,085)
- ------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (796,716) (331,430)
Purchase of lease acquisition rights (290,700) -
Proceeds from sales of fixed assets 22,908 99,811
- ------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (1,064,508) (231,619)
- ------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net proceeds from sale of common stock 1,756,037 -
Proceeds from issuance of long-term debt - 380,750
Repayments of long-term debt (200,000) (175,000)
Repayments of capital lease obligations (36,711) (20,300)
Repayments of stockholder loans (4,240) (4,039)
Repayments of subordinated debentures - (84,000)
Proceeds from issuance of subordinate debentures 381,250 1,118,750
Proceeds from exercise of stock options - 388
Debt issuance costs (26,968) (54,355)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,869,368 1,162,194
- ------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 1,062,307 566,490
Cash and cash equivalents, beginning of year 726,054 159,564
- ------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 1,788,361 $ 726,054
========================================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements.
</TABLE>
F-7
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
<TABLE>
<S> <C>
Nature of Business The Company is engaged in the restaurant business. As of
And Basis of April 26, 1998, the Company operated nine pizza and one
Presentation casual Italian dining restaurants. As of April 27, 1997,
the Company operated nine pizza and two casual Italian
dining restaurants, including one held for sale. A
Company restaurant location has been closed since June
1995 and was sold in April 1997. In May 1997, the lease
for a pizza restaurant location expired and was not
renewed.
The consolidated financial statements include the
accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany balances and
transactions have been eliminated.
Fiscal Year The Company's fiscal year ends on the last Sunday in
April. Fiscal years 1998 and 1997 both included 52 weeks.
Use of Estimates The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash Equivalents For purposes of the statements of cash flows, the Company
considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash
equivalents. Cash equivalents were approximately
$1,646,000 and $656,000 at April 26, 1998 and April 27,
1997, respectively.
Inventories Inventories are valued at the lower of cost (first-in,
first-out) or market.
</TABLE>
F-8
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
<TABLE>
<S> <C>
Property and Property and equipment are stated at cost. Depreciation
Equipment is computed using accelerated and straight-line methods
over the estimated useful lives of the assets. Leasehold
improvements are amortized over the estimated useful
lives of the improvements or the length of the lease,
including anticipated renewal periods, whichever is
shorter.
Other Assets
Goodwill Goodwill resulting from the excess of cost over fair
value of net assets acquired is being amortized on a
straight-line basis over 20 years.
Deferred Financing Costs incurred in connection with obtaining financing are
Costs amortized over the terms of the related debt.
Lease Acquisition Costs incurred in connection with the purchase of a lease
Rights are being amortized over the term of the lease.
Revenue Recognition Substantially all revenues are recognized at the point
of sale and represent retail sales to the general
public through Company-owned restaurants.
Advertising Costs Advertising costs are expensed when incurred. Advertising
expense was approximately $118,000 in 1998 and $107,000
in 1997.
Pre-Opening Costs All nonrecurring costs, such as recruiting, training and
other initial direct administrative expenses associated
with the opening of new restaurant locations are expensed
as incurred.
</TABLE>
F-9
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
<TABLE>
<S> <C>
Taxes on Income The Company accounts for income taxes under the asset and
liability method pursuant to Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109"),
"Accounting for Income Taxes." Under SFAS No. 109,
deferred income taxes are recognized for the future tax
consequences attributable to differences between the
financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred
tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in
which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on
deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment date.
Stock Options Effective April 29, 1996, the Company adopted the
provisions of Statement of Accounting Standards No. 123,
Accounting for Stock-Based Compensation. The Company has
elected to continue to account for stock options at their
intrinsic value with disclosure of the effects of fair
value accounting on net earnings and earnings per share
on a pro forma basis.
Net Income Per Share In fiscal 1998, the Company adopted Statement of
of Common Stock Financial Accounting Standards No. 128, ("SFAS No. 128")
Earnings Per Share. SFAS No. 128 requires the
presentation of both basic and diluted earnings per share
and replaces previously required standards for computing
and presenting earnings per share. Earnings per share
amounts for all periods have been presented and, where
appropriate, restated to conform to the new requirements
of SFAS No. 128.
Long-Lived Assets The Company evaluates long-lived assets under the
provisions of Statement of Financial Accounting Standards
No. 121 ("SFAS No. 121"), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be
Disposed of". SFAS No. 121 establishes accounting
standards for the impairment of long-lived assets and
certain identifiable intangibles to be held and used and
for long-lived assets and certain identifiable
intangibles to be disposed of.
</TABLE>
F-10
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
<TABLE>
<S> <C>
Long-Lived Assets The Company reviews the carrying values of its long-lived
(Continued) and identifiable intangible assets for possible
impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not
be recoverable.
New Accounting In June 1997, the Financial Accounting Standards Board
Standards issued two new disclosure standards.
Statement of Financial Accounting Standards No. 130
("SFAS No. 130"), "Reporting Comprehensive Income",
establishes standards for reporting and display of
comprehensive income, its components, and accumulated
balances. Comprehensive income is defined to include all
changes in equity except those resulting from investments
by owners and distributions to owners. Among other
disclosures, SFAS No. 130 requires that all items that
are required to be recognized under current accounting
standards as components of comprehensive income be
reported in a financial statement that is displayed with
the same prominence as other financial statements.
SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information", which supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business
Enterprise", establishes standards for the way that
public enterprises report information about operating
segments in annual financial statements and requires
reporting of selected information about operating
segments in interim financial statements issued to the
public. It also establishes standards for disclosures
regarding products and services, geographic areas, and
major customers. SFAS No. 131 defines operating segments
as components of an enterprise about which separate
financial information is available that is evaluated
regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing
performance.
Both of these new standards are effective for financial
statements for periods beginning after December 15, 1997
and require comparative information for earlier years to
be restated. Management does not expect implementation of
these standards to materially affect future financial
statements and disclosures.
</TABLE>
F-11
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
1. Inventories Inventories consist of the following:
<TABLE>
<CAPTION>
April 26, April 27,
1998 1997
======================================================================
<S> <C> <C>
Food, beverages and liquor $102,943 $110,732
Paper goods and supplies 109,128 98,563
----------------------------------------------------------------------
Total $212,071 $209,295
======================================================================
</TABLE>
2. Other Assets Other assets consist of the following:
<TABLE>
<CAPTION>
April 26, April 27,
1998 1997
======================================================================
<S> <C> <C>
Goodwill $ 765,133 $ 765,133
Lease acquisition rights 290,700 -
Deferred financing costs 268,524 212,100
Deposits and other 213,646 99,859
Favorable lease - 41,590
----------------------------------------------------------------------
1,538,003 1,118,682
Less accumulated amortization 214,843 174,502
----------------------------------------------------------------------
Other assets, net $1,323,160 $ 944,180
======================================================================
</TABLE>
F-12
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
3. Accrued Expenses Accrued expenses consist of the following:
<TABLE>
<CAPTION>
April 26, April 27,
1998 1997
======================================================================
<S> <C> <C>
Compensation $160,315 $230,117
Interest 127,412 35,315
Taxes other than income taxes 71,073 88,786
Professional fees 64,000 50,000
Gift certificates 36,465 37,365
Accrued rent 22,209 89,455
Reserves for store closures - 46,325
Insurance - 10,873
Other 9,051 40,041
----------------------------------------------------------------------
Total $490,525 $628,277
======================================================================
</TABLE>
4. Long-Term Debt Long-term debt consists of the following:
<TABLE>
<CAPTION>
April 26, April 27,
1998 1997
======================================================================
<S> <C> <C>
Note payable to a bank, interest at
prime plus 2% (10.5% at April 26,
1998), payable in monthly
installments of $8,333 plus interest,
due April, 2001. $300,000 $400,000
Note payable to a bank, interest at
12.0%, payable in monthly
installments of $8,333 plus interest,
due July, 2001. 325,000 425,000
----------------------------------------------------------------------
Total 625,000 825,000
Less current maturities 200,000 200,000
----------------------------------------------------------------------
Long-term debt $425,000 $625,000
======================================================================
</TABLE>
F-13
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
4. Long-Term Debt The notes payable to a bank are collateralized by
(Continued) substantially all of the Company's assets, excluding real
estate, and are personally guaranteed by both the
Company's President and Treasurer.
In consideration for their guarantees of the notes
payable, the Company issued options to purchase an
aggregate of 115,500 shares of the Company's common stock
in fiscal 1997 to the Company's President and Treasurer.
The Company also issued warrants to purchase a total of
50,000 shares of the Company's common stock to the bank in
connection with the issuance of the notes payable (see
Note 9). The value of these options and warrants was not
material as of their issuance dates. A member of the
Company's Board of Directors also serves as a member of
the bank's Board of Directors.
Maturities of the long-term debt are as follows:
<TABLE>
<CAPTION>
Fiscal year ending Amount
==========================================================
<S> <C>
1999 $200,000
2000 200,000
2001 200,000
2002 25,000
----------------------------------------------------------
Total $625,000
==========================================================
</TABLE>
F-14
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
5. Notes Payable - Notes payable - stockholder consists of two notes, with
Stockholder interest at 7.18% and 8%, payable in aggregate monthly
installments of principal and interest of $810, maturing
January, 2017.
<TABLE>
<CAPTION>
Fiscal year ending Amount
----------------------------------------------------------
<S> <C>
1999 $ 4,495
2000 4,738
2001 4,996
2002 5,274
2003 5,567
Thereafter 100,761
----------------------------------------------------------
Total 125,831
Less current maturities 4,495
----------------------------------------------------------
Long-term portion $121,336
----------------------------------------------------------
</TABLE>
6. Subordinated Subordinated debentures outstanding at April 26, 1998 and
Debentures April 27, 1997 consist of convertible debentures bearing
interest at variable rates of 8% through December 31,
1997, 10% through December 31, 1998, 12% through December
31, 1999 and 14% through December 31, 2011, payable
semi-annually and convertible into the Company's common
stock at a conversion rate of $1.25 per share. The Company
has recorded interest costs related to these debentures at
a straight-lined rate of 13.2%. The convertible debentures
are convertible at the option of the holder, at any time,
and automatically convert into shares of common stock at
the conversion rate if the average bid price of the
Company's common stock for any sixty consecutive trading
days has been equal to or greater than $3.00. The
debentures are due December 31, 2011. The Company issued
$381,250 of subordinated debentures during the year ended
April 26, 1998.
F-15
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
7. Taxes on Income At April 26, 1998, the Company has the following net
operating loss carryforwards, subject to review by the
Internal Revenue Service, available to offset future
taxable income for Federal income tax purposes as
indicated:
<TABLE>
<CAPTION>
Expiration
Amount Dates
============================================================================
<S> <C> <C>
Net operating losses purchased in a 1994
acquisition, whose use is limited. $2,908,000 2004-2009
Net operating losses incurred before and
after acquisition and available for
immediate offset against taxable income. $5,122,000 1998-2013
</TABLE>
Deferred tax assets are comprised of the following:
<TABLE>
<CAPTION>
April 26, April 27,
Years ended 1998 1997
============================================================================
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 3,212,000 $ 2,960,000
Depreciation 452,000 333,000
Losses on store closures and
write-downs not yet deductible
for tax purposes - 163,000
Valuation allowance (3,664,000) (3,456,000)
-------------------------------------------------------------------------
Net deferred tax assets $ - $ -
============================================================================
</TABLE>
F-16
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
7. Taxes on Income A reconciliation of the statutory federal income tax rate
(Continued) (benefit) and the effective tax rate as a percentage of
income (loss) before taxes on income is as follows:
<TABLE>
<CAPTION>
April 26, April 27,
Years ended 1998 1997
=============================================================================
<S> <C> <C>
Statutory rate (benefit) 34.0% 34.0%
Operating income offset by current tax
loss generating no current or deferred
tax effect. (34.0) (34.0)
-----------------------------------------------------------------------------
Effective tax rate -% -%
=============================================================================
</TABLE>
8. Commitments and
Contingencies
Leases The Company is obligated under noncancellable operating
leases for its leased restaurant locations, office,
commissary and warehouse space. Lease terms range from
five to twenty years and in certain instances provide
options to extend the original term. Generally, the
Company is required to pay its proportionate share of real
estate taxes, insurance, common area and other operating
costs in addition to annual base rent. Substantially all
restaurant leases provide for contingent rentals based on
sales in excess of specified amounts. The Company also
leases equipment under capital leases.
F-17
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
8. Commitments and
Contingencies
(Continued)
Leases The following is an analysis of leased property under
(Continued) capital leases, included in property and equipment:
<TABLE>
<CAPTION>
April 26, April 27,
Years ended 1998 1997
=================================================================================
<S> <C> <C>
Equipment $492,765 $190,000
Less: accumulated amortization 65,868 19,724
---------------------------------------------------------------------------------
Net leased property under capital leases $426,897 $170,276
=================================================================================
</TABLE>
Aggregate minimum rental requirements under capital
leases and operating leases as of April 26, 1998, are
approximately as follows:
<TABLE>
<CAPTION>
Capital Operating
Fiscal year ending Leases Leases
=================================================================================
<S> <C> <C>
1999 $127,886 $ 1,763,000
2000 127,886 1,702,000
2001 127,886 1,596,000
2002 106,205 1,572,000
2003 87,167 1,487,000
Thereafter - 5,578,000
=================================================================================
Total minimum lease payments 577,030 $13,698,000
===========
Amount representing interest 141,276
-----------------------------------------------------------
Present value of net minimum
lease payments 435,754
Less current maturities 74,206
-----------------------------------------------------------
Long-term portion $361,548
===========================================================
</TABLE>
F-18
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
8. Commitments and
Contingencies
(Continued)
Leases Deferred rent liabilities of $85,662 and $67,024 as of
(Continued) April 26, 1998 and April 27, 1997, respectively, were
recorded in order to recognize lease escalation provisions
on a straight-line basis for certain operating leases.
Rent expense under all operating leases was approximately
$1,499,000 and $1,481,000 which included contingent
rentals of approximately $17,400 and $13,500 in 1998 and
1997, respectively.
Lease Guarantees In connection with the sale of a restaurant to a
non-affiliated third-party, the Company is a guarantor of
the lease payments under the lease assumed by the buyer
expiring in fiscal 2001. At April 26, 1998, the Company is
contingently liable for approximately $510,000 under the
guaranty. The Company is of the opinion that the buyer
of the location will be able to perform under the terms of
the lease and that no payments will be required or losses
will be incurred by the Company under the guaranty.
Employment The Company has an employment agreement with its
Agreement and President, which expires April 29, 1999. In addition to a
Guaranty base salary, adjusted annually for cost-of-living changes
and an annual bonus, the agreement provides for a
performance bonus, as defined. The commitment for future
compensation, excluding the performance bonus, amounts to
$200,000 per year. The employment agreement further
provides that upon the termination of the President, for
defined reasons, the President will agree not to compete
with the Company for a three year period and the Company
will continue to pay the President's then current base
salary and annual bonus for three years effective at the
date of such termination.
F-19
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
8. Commitments and
Contingencies
(Continued)
Litigation The Company is involved in various legal matters in the
ordinary course of its business. Each of these matters is
subject to various uncertainties, and some of these
matters may be resolved unfavorably to the Company.
Management believes that any liability that may ultimately
result from the resolution of these matters will not have
a material adverse effect on the financial position of the
Company.
Franchising In December 1997, the Company formed Boston Restaurant
Associates International, Inc. ("BRAII"), a wholly owned
subsidiary, for the purpose of offering Pizzeria Regina
franchise opportunities both domestically and
internationally. BRAII has filed a Uniform Franchise
Offering Circular in Connecticut, Florida, Georgia,
Kentucky, New Hampshire, Pennsylvania and Texas and is
actively seeking franchisees with operational experience.
In addition, in January 1998, the Company entered into an
International Development Agreement ("Development
Agreement") with Regina International, Ltd ("Regina
International"), a corporation controlled by a Company
director, to pursue and develop franchise territories
outside the Americas, anticipated to be principally in
Europe, the Far East and the Pacific Rim.
The Development Agreement, which is for an initial term of
five and a half years, requires the Company to pay a
monthly development fee of $7,000 beginning the month
after the first territory fee has been received and
continuing for sixty months, provided the Development
Agreement has not been earlier terminated. The Development
Agreement provides that either party may re-negotiate the
agreement pursuant to a written notice prior to the end of
the initial term. If the parties are unable to
re-negotiate this agreement on mutually satisfactory
terms, the Company and Regina International have the right
to cause the Company to pay Regina International a
one-time buy-out fee equal to the aggregate gross
F-20
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
8. Commitments and
Contingencies
(Continued)
Franchising revenues of BRAII for the 5 years immediately preceding
(Continued) the buy-out or such shorter period, if 5 years have not
elapsed less certain international expenses, as defined.
The Company is also required to pay Regina International
during the term of the agreement a royalty equal to 40% of
the gross revenues of BRAII less international expenses.
The royalty payment is subject to reduction, if certain
levels of international expenses in relation to revenues
are not achieved by BRAII. At April 26, 1998, no
territories have been established and no development fees
or royalties have been earned.
9. Stock Options At April 26, 1998, outstanding options consist of the
and Warrants following:
In July 1994, the Company's stockholders approved the 1994
Combination Stock Option Plan (the "1994 Combination
Plan") and the 1994 Non-Employee Director Stock Option
Plan (the "1994 Director Plan").
The 1994 Combination Plan provides for the granting of
incentive stock options intended to qualify under the
requirements of the Internal Revenue Code and options not
qualified as incentive stock options. Incentive stock
options may only be granted to employees of the Company.
Non-employees contributing to the success of the Company
are eligible to receive non-qualified stock options. The
1994 Combination Plan is to be administered by a Committee
designated by the Board of Directors. Options under the
1994 Combination Plan may not be granted after July 2004
and the exercise price shall be at least equal to the fair
market value of the common stock at the grant date.
F-21
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
9. Stock Options Incentive stock options may be granted to holders of more
and Warrants than 10% of the Company's common stock at an exercise
(Continued) price of at least 110% of the fair market value of the
Company's common stock at the grant date. The terms of the
options granted are to be determined by the Committee, but
in no event shall the term of any incentive stock option
extend beyond three months after the time a participant
ceases to be an employee of the Company. No options may be
exercised more than five years after the date of the grant
for 10% stockholders, or ten years after the date of grant
for all other participants. A total of 500,000 shares of
common stock have been reserved for issuance under the
1994 Combination Plan.
The 1994 Director Plan, as amended, provides for the
granting to each eligible non-employee director of the
Company options to purchase shares of the Company's common
stock. Options granted under the 1994 Director Plan become
exercisable over a five year period at an exercise price
equal to the fair market value of the Company's common
stock at the grant date and expire ten years from the
grant date. A total of 500,000 shares have been reserved
for issuance under the 1994 Director Plan.
During fiscal 1998, the Company issued options to the
Company's President and Treasurer to purchase an aggregate
of 108,346 shares of the Company's common stock in
connection with their guarantees of certain equipment
leases. The options are exercisable at $1.27 per share and
expire March 17, 2003.
During fiscal 1997, the Company issued options to the
Company's President and Treasurer to purchase an aggregate
of 115,500 shares of the Company's common stock in
connection with guarantees of certain notes payable (see
Note 4) and a new lease facility. Options for an aggregate
of 75,600 shares are exercisable at $0.94 per share and
expire July 26, 2001. The remaining options for an
aggregate of 39,900 shares are exercisable at $1.00 per
share and expire October 18, 2001.
F-22
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
9. Stock Options Changes in options outstanding under the 1994 Plans,
and Warrants options issued in connection with the guarantee of certain
(Continued) debt by the Company's President and Treasurer and prior
plans, which have expired, are summarized as follows:
<TABLE>
<CAPTION>
Weighted-
Average
Exercise
Shares Price
===============================================================
<S> <C> <C>
Balance, April 28, 1996 426,980 $1.00
Granted 328,500 1.04
Exercised (400) 0.96
Cancelled or expired (1,480) 7.00
---------------------------------------------------------------
Balance, April 27, 1997 753,600 1.01
Granted 237,846 1.34
Exercised - -
Cancelled or expired (3,500) 4.38
---------------------------------------------------------------
Balance, April 26, 1998 987,946 $1.08
===============================================================
</TABLE>
As of April 26, 1998, options for 660,800 shares were
exercisable at prices ranging from $0.88 to $2.38. As of
April 27, 1997, options for 544,200 shares were
exercisable at prices ranging from $0.88 to $4.38.
F-23
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
9. Stock Options The following table summarizes information about stock
and Warrants options outstanding at April 26, 1998:
(Continued)
<TABLE>
<CAPTION>
Options Outstanding
--------------------------------------------------
Weighted-
Number Average Weighted-
Range of Outstanding at Remaining Average
Exercise April 26, Contractual Exercise
Prices 1998 Life (years) Price
=======================================================================
<S> <C> <C> <C>
$ 2.38 5,000 2.3 $2.38
1.88 42,000 8.0 1.88
1.24 - 1.56 148,346 5.8 1.28
0.88 - 1.17 792,600 4.0 0.98
-----------------------------------------------------------------------
$0.88 - 2.38 987,946 4.5 $1.08
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
Options Exercisable
--------------------------------------------
Weighted-
Range of Number Average
Exercise Exercisable at Exercise
Prices April 26, 1998 Price
=======================================================================
<S> <C> <C>
$ 2.38 3,000 $2.38
1.88 32,400 1.88
1.24 - 1.56 6,000 1.56
0.88 - 1.17 619,400 0.96
-----------------------------------------------------------------------
$0.88 - 2.38 660,800 $1.01
=======================================================================
</TABLE>
F-24
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
9. Stock Options At April 26, 1998, warrants and units outstanding, all of
and Warrants which are exercisable, consist of the following:
(Continued)
(a) Warrant for the purchase of 210,000 shares of common
stock, at an exercise price of $2.00 per share
expiring April 29, 1999.
(b) Warrants to purchase 1,708,000 shares of common stock
at a purchase price of $3.20 per share from March 8,
1997 through September 7, 1999, issued in connection
with the Company's September 7, 1994 public offering.
(c) Warrants to purchase 75,000 units (375,000 shares) at
a purchase price of $3.20 per share, expiring
September 7, 1999, issued in connection with the
Company's September 7, 1994 public offering.
(d) Warrants to purchase 25,000 shares of common stock at
a purchase price of $2.00 per share through June 28,
1998 or at a purchase price of $2.80 per share from
June 29, 1998 through December 28, 2000 and warrants
to purchase 25,000 shares of common stock at a
purchase price of $2.00 per share through October 19,
1998 or at a purchase price of $2.80 per share from
October 20, 1998 through April 19, 2001, issued to
the bank in connection with the issuance of the notes
payable (see Note 4).
(e) Warrants to purchase 350,000 and 150,000 shares of
common stock at an exercise price of $3 per share,
expiring December 31, 2006 and January 25, 2008,
respectively, issued in consideration for brokerage
services connected with the issuance of the
convertible subordinated debentures (see Notes 6 and
10).
The convertible subordinated debentures with an
outstanding balance of $1,500,000 as of April 26, 1998 are
convertible into common shares at a conversion price of
$1.25 per share. Accordingly, 1,200,000 shares have been
reserved for conversion of the subordinated debentures.
F-25
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
9. Stock Options There were 5,623,846 shares reserved with respect to the
and Warrants above options, warrants and convertible debentures at
(Continued) April 26, 1998.
During fiscal 1998 and 1997, the following units, warrants
and options expired:
(a) Options to purchase 3,500 shares of common stock at
$4.38 per share
(b) Options to purchase 1,480 shares of common stock at
$7.00 per share.
At April 26, 1998, the Company has two stock-based
compensation plans, which are described above. The Company
accounts for its stock-based compensation plans using the
intrinsic value method. Accordingly, no compensation cost
has been recognized for its stock option plans. Had
compensation cost for the Company's two stock option plans
and options issued in connection with the guarantee of
certain debt been determined based on the fair value at
the grant dates for awards under those plans consistent
with the method of FASB Statement 123, Accounting for
Stock-Based Compensation, the Company's net income (loss)
and earnings (loss) per share would have been adjusted to
the pro forma amounts indicated below:
F-26
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
<TABLE>
<CAPTION>
9. Stock Options
and Warrants April 26, April 27,
(Continued) Years ended 1998 1997
=========================================================================
<S> <C> <C> <C>
Net income (loss) As reported $ 52,880 $ 12,263
Pro forma $(20,182) $(55,769)
Basic income (loss) As reported 0.01 0.00
per share Pro forma (0.00) (0.01)
Diluted income (loss) As reported 0.01 0.00
per share Pro forma (0.00) (0.01)
</TABLE>
In determining the pro forma amounts above, the Company
estimated the fair value of each option granted using the
Black-Scholes option pricing model with the following
weighted-average assumptions used for grants in 1998 and
1997, respectively: dividend yield of 0% for both years,
expected volatility of 46% and 35% for 1998 and 1997,
respectively, risk free rates ranging from 5.1% to 6.6%
for 1998, and 6.3% to 6.6% for 1997, and expected lives
ranging from 5 to 10 years for both 1998 and 1997. The
weighted average per share fair value of options granted
in fiscal 1998 and 1997 was $0.58 and $0.35, respectively.
<TABLE>
<CAPTION>
10. Supplemental Cash paid for interest and income taxes are as follows:
Cash Flow
Information April 26, April 27,
Years ended 1998 1997
=========================================================================
<S> <C> <C>
Interest $212,763 $127,185
Income taxes $ - $ -
</TABLE>
F-27
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
10. Supplemental Supplemental schedule of noncash operating and financing
Cash Flow activities are as follows:
Information
(Continued)
<TABLE>
<CAPTION>
April 26, April 27,
Years ended 1998 1997
===================================================================
<S> <C> <C>
Stock options and warrants issued
in exchange for services $ 29,456 $ 68,730
Capital leases entered into during
the year $302,765 $190,000
</TABLE>
11. Net Income The Company follows Statement of Financial Accounting
Per Share of Standards No. 128 ("SFAS No. 128"), Earnings per Share,
Common Stock issued by the Financial Accounting Standards Board.
The following is a reconciliation of the denominator
(number of shares used in the computation of earnings per
share). The numerator (net income) is the same for the
basic and diluted computations.
<TABLE>
<CAPTION>
April 26, April 27,
Years ended 1998 1997
===================================================================
<S> <C> <C>
Basic shares 5,175,096 5,015,306
Effect of dilutive securities:
Options 278,059 68,067
-------------------------------------------------------------------
Diluted shares 5,453,155 5,083,373
===================================================================
</TABLE>
F-28
<PAGE>
Boston Restaurant Associates, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
11. Net Income The following table summarizes securities that were
Per Share of outstanding as of April 26, 1998 and April 27, 1997, but
Common Stock not included in the calculations of net income per share
(Continued) because such securities are antidilutive:
<TABLE>
<CAPTION>
April 26, April 27,
Years ended 1998 1997
=================================================================
<S> <C> <C>
Options 57,000 108,500
Warrants 2,843,000 2,693,000
Convertible debentures 1,200,000 895,000
</TABLE>
12. Rights Offering During fiscal 1998, the Company completed a rights
offering registration under the Securities Act of 1933.
Pursuant to the offering, 2,006,277 shares of common stock
were issued and sold by the Company at a price of $1.00
per share. The Company received net proceeds after
expenses of approximately $1,756,000.
F-29
GUARANTY OF LEASE
For value received, the fact and sufficiency of which are hereby
acknowledged, and in consideration of the leasing of, and as an inducement to
H.C.B. CORPORATION (hereinafter referred to as the "Lessor"), to enter into an
Equipment Lease with PIZZERIA REGINA OF VIRGINIA, INC. (the "Lessee") of even
date (the "Lease"), the undersigned jointly and severally (the "Guarantor")
guarantees unto Lessor, and its successors and assigns, the punctual payment by
Lessee of all rents and other payments as and when due and payable under the
Lease and any extension or renewal thereof, and the full, faithful and punctual
performance by Lessee of all the covenants, agreements and provisions contained
in the Lease on the part of Lessee to be done, performed and observed during the
term of the Lease and any extension or renewal thereof.
No consent by Lessor to any assignment of the Lease or any subletting
by Lessee under the Lease, and no acceptance by Lessor of any one or more
checks, notes, bills, other commercial paper or other property on account or in
payment of, or as security for, any lease payment or other payment to be paid by
Lessee in connection with any settlement or compromise made by Lessor with
Lessee with respect to any such payment, and no other allowance or indulgence
granted or permitted by Lessor shall in any way affect the liabilities of any
Guarantor hereunder, nor in any way release the Guarantor from any obligations
under the terms of this Guaranty.
Guarantor hereby waives demand, notice of default or of non-payment,
every other notice and all suretyship defenses, and agrees to pay to Lessor any
and all costs and expenses, including court costs and reasonable attorney's
fees, incurred by Lessor in the enforcement of this Guaranty.
It is specifically understood by Guarantor that, insofar as the context
herein so requires or admits, the term "Lessor" shall include Lessor's
successors and assigns, and the term "Lessee" shall include Lessee's successors
and assigns.
Executed as a sealed instrument this 17th day of March, 1998.
WITNESS: BOSTON RESTAURANT ASSOCIATES, INC.
By _______________________________
George R. Chapdelaine,
President and Treasurer
_______________________________
GEORGE R. CHAPDELAINE,
Individually
_______________________________
JOHN P. POLCARI, Individually
GUARANTY OF LEASE
For value received, the fact and sufficiency of which are hereby
acknowledged, and in consideration of the leasing of, and as an inducement to
H.C.B. CORPORATION (hereinafter referred to as the "Lessor"), to enter into an
Equipment Lease with PIZZERIA REGINA OF FLORIDA, INC. (the "Lessee") of even
date (the "Lease"), the undersigned jointly and severally (the "Guarantor")
guarantees unto Lessor, and its successors and assigns, the punctual payment by
Lessee of all rents and other payments as and when due and payable under the
Lease and any extension or renewal thereof, and the full, faithful and punctual
performance by Lessee of all the covenants, agreements and provisions contained
in the Lease on the part of Lessee to be done, performed and observed during the
term of the Lease and any extension or renewal thereof.
No consent by Lessor to any assignment of the Lease or any subletting
by Lessee under the Lease, and no acceptance by Lessor of any one or more
checks, notes, bills, other commercial paper or other property on account or in
payment of, or as security for, any lease payment or other payment to be paid by
Lessee in connection with any settlement or compromise made by Lessor with
Lessee with respect to any such payment, and no other allowance or indulgence
granted or permitted by Lessor shall in any way affect the liabilities of any
Guarantor hereunder, nor in any way release the Guarantor from any obligations
under the terms of this Guaranty.
Guarantor hereby waives demand, notice of default or of non-payment,
every other notice and all suretyship defenses, and agrees to pay to Lessor any
and all costs and expenses, including court costs and reasonable attorney's
fees, incurred by Lessor in the enforcement of this Guaranty.
It is specifically understood by Guarantor that, insofar as the context
herein so requires or admits, the term "Lessor" shall include Lessor's
successors and assigns, and the term "Lessee" shall include Lessee's successors
and assigns.
Executed as a sealed instrument this 17th day of March, 1998.
WITNESS: BOSTON RESTAURANT ASSOCIATES, INC.
By ________________________________
George R. Chapdelaine,
President and Treasurer
________________________________
GEORGE R. CHAPDELAINE,
Individually
________________________________
JOHN P. POLCARI, Individually
GUARANTY OF LEASE
For value received, the fact and sufficiency of which are hereby
acknowledged, and in consideration of the leasing of, and as an inducement to
H.C.B. CORPORATION (hereinafter referred to as the "Lessor"), to enter into an
Equipment Lease with OCEAN, INC. (the "Lessee") of even date (the "Lease"), the
undersigned jointly and severally (the "Guarantor") guarantees unto Lessor, and
its successors and assigns, the punctual payment by Lessee of all rents and
other payments as and when due and payable under the Lease and any extension or
renewal thereof, and the full, faithful and punctual performance by Lessee of
all the covenants, agreements and provisions contained in the Lease on the part
of Lessee to be done, performed and observed during the term of the Lease and
any extension or renewal thereof.
No consent by Lessor to any assignment of the Lease or any subletting
by Lessee under the Lease, and no acceptance by Lessor of any one or more
checks, notes, bills, other commercial paper or other property on account or in
payment of, or as security for, any lease payment or other payment to be paid by
Lessee in connection with any settlement or compromise made by Lessor with
Lessee with respect to any such payment, and no other allowance or indulgence
granted or permitted by Lessor shall in any way affect the liabilities of any
Guarantor hereunder, nor in any way release the Guarantor from any obligations
under the terms of this Guaranty.
Guarantor hereby waives demand, notice of default or of non-payment,
every other notice and all suretyship defenses, and agrees to pay to Lessor any
and all costs and expenses, including court costs and reasonable attorney's
fees, incurred by Lessor in the enforcement of this Guaranty.
It is specifically understood by Guarantor that, insofar as the context
herein so requires or admits, the term "Lessor" shall include Lessor's
successors and assigns, and the term "Lessee" shall include Lessee's successors
and assigns.
Executed as a sealed instrument this 17th day of March, 1998.
WITNESS: BOSTON RESTAURANT ASSOCIATES, INC.
By ________________________________
George R. Chapdelaine,
President and Treasurer
________________________________
GEORGE R. CHAPDELAINE,
Individually
________________________________
JOHN P. POLCARI, Individually
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, REASONABLE
SATISFACTION TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT IS AVAILABLE.
STOCK OPTION
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 set forth in Section 1.A 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.A Option No. __________
No. of Shares __________
Exercise Price __________
Date Issued __________
Date Expires __________
Vesting __________
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
Statue 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 share 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.
"Market Price" Means the absolute average of the high and low trade on
the date of evaluation.
<PAGE>
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 hereof and ending at 5:00 p.m. on the fifth anniversary
of the date hereof at a specified exercise price per share.
3. Exercise of Option. (a) Subject to Section 2 above, the purchase
rights represented by 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, 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
the surrender of this Option or such portion to the Company,
with the net issued 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 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 covenant
-------------------------------------------
that the Shares 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.
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
<PAGE>
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 form 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 he 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 reasonably
necessary to effect the sale of such securities, not to exceed nine months;
(b) prepare and file with Commission such amendments to such
Registration Statement and supplements to 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 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 no 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;
(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;
<PAGE>
(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 of 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 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 from 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 an 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 or 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 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 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
<PAGE>
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 of 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 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 Warrant. 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
<PAGE>
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 this Option,
-----------------------------------------
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 this Option, (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 202 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.
IN WITNESS WHEREOF, BOSTON RESTAURANT ASSOCIATES, INC. has caused this
Warrant to be executed under seal by its officer thereunto duly authorized
ORIGINAL ISSUANCE DATE:
BOSTON RESTAURANT ASSOCIATES, INC.
By:_____________________________________
George R. Chapdelaine
President
<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)
<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 this Option. The
certificate(s) for the shares issuable upon such net issued election shall be
issued in the name of the undersigned or as otherwise indicated below.
----------------------------
Signature
----------------------------
Name of Registration
----------------------------
Mailing Address
EQUIPMENT LEASE
This LEASE is made in the Commonwealth of Massachusetts, on March 17,
1998 between H.C.B. CORPORATION, a duly organized and existing Massachusetts
corporation, having a principal place of business at 280 Atlantic Avenue,
Boston, MA 02110 (herein called the "Lessor"), and PIZZERIA REGINA OF VIRGINIA,
INC. a duly organized and existing Virginia corporation, having a place of
business at the Regency Square Mall, Richmond, VA 23232 doing business under the
name and style of Pizzeria Regina (herein called the "Lessee"), wherein it is
agreed as follows:
1. The Lessor leases to Lessee and the Lessee rents from Lessor the
equipment ("Equipment") listed in the schedule hereto annexed, marked Exhibit
"A" and made a part hereof. Each item of Equipment listed is hereinafter called
an "Item", together with any parts, mechanisms and devices relating thereto or
used in connection therewith, attached to or delivered with the Equipment, or
thereafter attached to or used in connection therewith. The Lessor warrants and
represents to the Lessee that the Lessor has the authority to enter into this
Equipment Lease.
2. Lessor has not made and does not make any representation, warranty
or covenant, express or implied, with respect to the merchantability, fitness,
condition, quality or durability of any item of Equipment for Lessee's purposes,
or any other representation, warranty, or covenant, express or implied, with
respect to the leased Equipment or any part thereof; Lessee hereby disclaims any
and all liability of Lessor with respect thereto. Lessor shall not be liable or
responsible to Lessee for any damage, defect, failure to meet specifications,
late delivery, failure to deliver or shortage in respect to any item leased
hereunder, or for failure of the supplier to properly install or assemble any
item, or for the failure of the supplier thereof for any reason whatsoever, to
comply with the terms of any purchase order. Lessee agrees to look only to such
supplier and/or to any carrier of the item in respect thereto. Lessee agrees
that Lessor shall not be liable or responsible to Lessee for any claim, loss,
damage, liability or expense of any kind or nature caused, directly or
indirectly, by the leased Equipment or any part thereof, or the inadequacy
thereof for any purpose, or any defect or deficiency therein, or the use,
operation, or storage thereof, or the interruption or loss of the service or use
thereof, or arising from any other reason or cause whatsoever relating to or
concerning the leased Equipment, or any part thereof. Lessor assigns to Lessee
all rights under any manufacturer's warranties or guarantees, including any and
all rights of subrogation and any claims in connection with any defects as to
the Equipment.
3. The term of this Lease is for a period of five (5) years to commence
on March 17, 1998, and to end on March 16, 2003. The Lessee shall pay to the
Lessor, its successors and assigns, rental as follows: $2,002.00 on or before
March 17, 1998, and an equal amount on the same date of each month thereafter
until February 17, 2003. On March 17, 2003, Lessee may purchase the Equipment
upon payment to the Lessor of $8,415.32. Upon such payment, the Lessor agrees to
execute and deliver to the Lessee a Warranty Bill of Sale for the Equipment in
the form attached hereto as Exhibit B.
4. In the event the Lessee shall not exercise its option as
hereinbefore set forth, the Lessee shall, upon the expiration of the term of
this Lease, ship all of the Equipment (a) by delivering such Item at Lessee's
expense to such place as Lessor shall specify within the city or county in which
the same is then permanently located, or (b) by loading such Item at Lessee's
expense on board such carrier as Lessor shall specify and shipping the same,
freight collect, to destination designated by Lessor. At the end and/or
termination of this Lease, the Lessee shall surrender such Equipment to the
Lessor in good order and condition, reasonable wear and tear resulting from its
proper use alone excepted.
5. Equipment leased hereunder shall be located and used at the location
of the Lessee set forth above unless Lessor shall consent in writing to the
removal to a different location. The Lessee agrees to use its good faith and
reasonable efforts to furnish to Lessor, when required, a landlord's waiver of
distraint for rent and consent to remove all of the Equipment if any of the
above Equipment is affixed or to be affixed to realty during the rental period,
such release to be furnished prior to such affixation. Notwithstanding anything
hereinabove contained, the Equipment shall remain the personal property of the
Lessor until the Lessee exercises its purchase option and pays the purchase
option price at which time the Equipment shall become the personal property of
the Lessee. Lessor represents and warrants, and Lessee
<PAGE>
acknowledges, that the Equipment covered by this Lease is owned by the Lessor,
and such title shall remain in the Lessor at all times. The Lessee shall give
the Lessor immediate notice in the event that any of the Equipment is levied
upon or is about to become liable or is threatened with seizure, and the Lessee
shall indemnify the Lessor against all loss and damages caused by such action.
Upon the expiration of this Lease or termination for any reason whatsoever, the
Lessor shall have the right and privilege to remove its Equipment, in whole or
in part, without liability therefor.
6. The parties hereto agree that this Lease is a net lease, and that
Lessee shall pay, without notice or demand, the rent reserved under paragraph 3
hereof, and all other sums payable under any other provision of this Lease, as
and when the same shall be due and payable; and the Lessee further agrees that
it shall pay promptly all costs, expenses and obligations of every kind and
nature relating to the Equipment which may arise or become due during the term
of this Lease, whether or not specifically mentioned herein. No such rental or
other sums payable by Lessee pursuant to this Lease shall be subject to set-off,
deduction, counterclaim or abatement, nor shall this Lease terminate, nor shall
Lessee be entitled to any credit against such rental or other sums, for any
reason whatsoever, including but not in any way limited to: any damage to or
destruction of the Equipment or any item thereof; any limitation, restriction,
deprivation or prevention of, or any interference with, Lessee's use of the
Equipment or any item thereof, whether the same shall be lawful or unlawful; any
dispossession of Lessee from the Equipment or any item thereof by title
paramount or otherwise; the requisition or taking by statute or by exercise of
the power of eminent domain or other governmental authority or otherwise, or by
injunction or by any private person, of the Equipment or any item thereof; the
prohibition of Lessee's business, in whole or in part, whether pursuant to law
or otherwise; or any reason whether similar or dissimilar to the foregoing,
unless caused by an act or omission of Lessor, its agents, employees, or
contractors. Lessee shall be entitled to the possession and use of the Equipment
during the term of and pursuant to the provisions of this Lease so long as no
event of default has occurred.
7. The Lessee agrees to use the leased Equipment only in good operating
condition. The Lessee shall obtain from the supplier and shall pay therefor, all
duplicate parts, extras, mechanisms and devices of every kind needed or used in
operating, repairing or renewing the leased Equipment and the same shall become
part of the leased Equipment. Other than repairs made to the Equipment by the
Lessee as required hereby, Lessee shall not otherwise make or allow to be made
any addition, subtraction or alteration to, from or in the leased Equipment
without the written consent of Lessor, but Lessor shall not be responsible for
delay on providing, or for failure to provide any such item or items.
8. (A) No loss or damage to the Equipment or any part thereof, unless
caused by an act or omission of Lessor, its agents, employees, or contractors
shall impair any obligation of Lessee under this Lease which shall continue in
full force and effect. Lessee shall, at its own expense, keep the Equipment
insured against all risks of loss or damage from every cause whatsoever for not
less than the then fair market value of said Equipment. If any Equipment is
determined by Lessor to be lost, stolen, destroyed or damaged in whole or in
part, Lessee at its option and at its expense, shall within (30) days; (i) place
the same in good repair, condition and working order, or (ii) replace the same
with like Equipment in good repair, condition or working order and deliver to
Lessor a bill of sale covering the replaced Equipment, or (iii) cause to be paid
over to Lessor any insurance proceeds payable on account of such loss, theft or
destruction.
(B) Lessee shall, at its own expense, carry public liability and
property damage insurance covering the Equipment. Policies providing coverage
against bodily injury and property damage shall provide for not less than
$1,000,000/$2,000,000 insurance for injury to or death of one person, and,
subject to that limit for each person, a total liability of
$1,000,000/$2,000,000 for all persons injured or killed in the same accident and
$100,000 property damage or such higher limits as Lessor may require. Blanket
coverage for liability and property damage may be provided by Lessee in lieu of
the foregoing.
(C) All said insurance shall be in form and with companies approved
by Lessor, and shall be in the joint names of Lessor and Lessee. Lessee shall
pay the premiums therefor and deliver said policies, or
<PAGE>
duplicates thereof, to Lessor. Each insurer shall agree by endorsement upon the
policy or policies issued by it or by independent instrument furnished to
Lessor, that it will give Lessor twenty (20) days' written notice before the
policy in question shall be altered or cancelled. With respect to any insurable
loss of the Equipment, the proceeds of such insurance, other than liability
insurance, at the option of Lessee, shall be applied (a) toward the replacement,
restoration or repair of the Equipment, or (b) toward payment of the obligations
of Lessee hereunder. Lessee assigns to Lessor all moneys to the extent due and
owing to the Lessor under this Lease with respect to any insurable loss of
Equipment which may become due under any policy covering the Equipment, and
directs the insurance company to make payment directly to Lessor or its
assignee.
(D) If Lessee fails to secure, maintain and pay for such insurance
coverage, and furnish Lessor with evidence satisfactory to it of such insurance
coverage having been obtained, maintained and paid for by Lessee within ten (10)
days of written request therefor, such failure on Lessee's part shall constitute
an event of immediate default.
(E) Lessee assumes all risks and liability, whether or not covered
by insurance, for loss or damage to the Equipment and for injuries or deaths of
persons and damage to property, howsoever arising from or incident to the use,
operation or storage of the items leased hereunder, whether such injury or death
to persons be of agents or employees of the Lessee or of third parties, and
whether such damage to property be of Lessee or of others unless the same is
caused by an act or omission of Lessor, its agents, employees, or contractors.
Lessee agrees to indemnify, save and hold Lessor harmless from all losses,
damages, claims, penalties and expenses, including attorneys' fees, however
arising or incurred, because of or incident to any item or the real or alleged
use, operation or storage thereof.
9. Lessee agrees to grant and provide Lessor and/or its representatives
free access to premises at all times during the process of delivery and/or
removal of Equipment. Employees of the Lessor shall have access to and may
inspect said Equipment at all reasonable times, which shall be upon at least
twenty-four (24) hours' advance notice except in the case of emergencies, during
normal business hours, and at any location, during the lease period. Lessee
agrees, whenever requested by Lessor, to give Lessor the exact location of all
Equipment covered by this Lease, if removed to any other location than as stated
herein.
10. Lessee shall pay all taxes of every kind and nature imposed or
levied by any taxing authority in connection with the ownership of the Equipment
by Lessor, the leasing, use possession and operation of Equipment and payment of
rentals therefor, including but not limited to, all federal, state and local
taxes and other governmental charges, however designated, levied or assessed
upon the Lessee and Lessor or either of them or said Equipment, or upon the use
or operation thereof, sales or use taxes, allocable privilege or allocable
franchise taxes measured by or based on gross revenue, personal property taxes
assessed on the Equipment of the Lessor, but excluding Lessor's income and
franchise taxes. A default under this paragraph shall be deemed a default under
this Lease. If Lessee does not pay any of such taxes and Lessor becomes
obligated to or at its option, pays the same, the Lessee shall pay the Lessor
the amount thereof on demand, together with any penalties or interest thereon,
all with interest at the rate of 15% per annum, and the same shall be deemed
additional rent. Lessee shall provide all permits and licenses necessary for the
installation, operation and use of the Equipment or any parts thereof. Lessee
will comply with all laws, regulations and ordinances applicable to the
installation, use, possession and operation of the Equipment. If compliance with
any ordinance, rule, regulation or permit by any governmental agency, requires
changes or additions to be made on or to the aforesaid Equipment, such changes
or additions shall be made by the Lessee at its own expense.
11. Without the prior written consent of Lessor, Lessee shall not
assign, transfer, pledge or hypothecate this Lease, the Equipment or any part
thereof, or any interest therein, or sublet or lend the Equipment or any part
thereof, or permit the Equipment or any part thereof to be used by anyone other
than Lessee. Consent by the Lessor to any of the foregoing prohibited acts
applies only in the given instance. Any such attempted action by Lessee either
by voluntary or involuntary act or by operation of law or otherwise, shall
constitute an event of immediate default. Neither this Lease or Lessee's
interest therein, is assignable or transferable by operation of law. If Lessee
is adjudged a bankrupt or makes an assignment
<PAGE>
for the benefit of creditors, or a receiver is appointed for Lessee, this Lease
shall not be treated as an asset of Lessee and Lessor may exercise any and all
remedies provided in paragraph 13 hereof.
12. (A) It is understood that Lessor may assign this Lease and/or
mortgage the Equipment, and that any assignee may assign the same. All rights of
Lessor hereunder may be assigned, pledged, mortgaged, transferred or otherwise
disposed of, either in whole or in part, without notice to or consent of the
Lessee. If Lessor assigns this Lease or the rentals due or to become due
hereunder or any other interest herein, whether as security for any of its
indebtedness or otherwise, Lessee agrees, after notice of such assignment has
been given by Lessor or such assignee to Lessee, that this agreement may not be
terminated and the terms and provisions thereof may not be altered, modified or
waived without the prior written consent of the assignee, and Lessee further
agrees unconditionally to pay to the assignee the rentals, or amounts equal to
such rentals, and all other sums which may be or become due hereunder directly
to such assignee, notwithstanding any of the terms of this Lease which might
relieve the Lessee from the payment of rentals hereunder, or the termination of
this Lease for any reason or any other event whatsoever including without
limitation the bankruptcy or insolvency of the Lessor or any disaffirmance of
this Lease by any trustee or receiver, and notwithstanding any defense, set off
or counterclaim whatsoever whether by reason of breach of this Lease or
otherwise, which Lessee may or might now or hereafter have as against Lessor,
Lessee reserving its rights to have recourse directly against Lessor on account
of any such defense, set off or counterclaim. Lessee's undertaking with respect
to any such assignee shall constitute a direct, independent and unconditional
obligation of Lessee to such assignee. The receipt by such assignee of such
payments shall discharge the obligations of Lessee to Lessor hereunder to the
extent thereof.
(B) All rights, powers and privileges and obligations of Lessor
hereunder shall be succeeded to by the assignee under any assignment. Lessee
agrees to execute any and all documents including, but not limited to, consent
to assignment, presented to it by Lessor to enable Lessor to effect the
foregoing. After notice to Lessee of any such assignment, Lessee agrees that it
shall possess and use the Equipment subject to the Assignee's interest therein.
13. In the event Lessee shall default in the payment of any rent,
additional rent, or any other sums due hereunder for a period of fifteen (15)
days, or in the event of any default or breach of the other terms and conditions
of this Lease continuing for fifteen (15) days after written notice of default,
or any other lease between the parties hereto, or if any execution or other writ
or process shall be issued in any action or proceeding, against the Lessee,
whereby the said Equipment may be taken or distrained, or if a proceeding in
bankruptcy, receivership or insolvency shall be instituted by or against the
Lessee or its property, or if the Lessee shall enter into any agreement or
composition with its creditors, breach any of the terms of any loan or credit
agreement, or default thereunder, then and in that event Lessor and its assignee
shall have all remedies available at law without being required to elect among
Lessor's remedies, and without limiting the foregoing, in addition shall have
the following rights and remedies to the extent permitted by law: (a) all
obligations, including any note issued in connection herewith, shall immediately
become due and payable at the option of the holder hereof without notice or
demand; (b) The holder hereof or its representative may enter the premises where
any of the Equipment may be located, and take and carry away the same with or
without legal process to the holder's place of storage; (c) sell the Equipment
at public or private sale, whether or not the Equipment is present at such sale
and whether or not the Equipment is in constructive possession of the holder or
the person conducting the sale, in one or more sales, as an entirety or in
parcels, for the best price that the holder can obtain, and upon such terms as
the holder may deem desirable; (d) the holder hereof may be the purchaser at any
such sale; (e) require Lessee to pay all expenses of such sale, taking, keeping
and storage of the Equipment, including reasonable attorney's fees; (f) apply
the proceeds of such sale to all expenses in connection with the taking and sale
of the Equipment, and any balance of such proceeds may be applied toward the
payment of the obligations in such order of application as the holder may from
time to time elect; (g) upon holder's demand Lessee agrees, at Lessee's expense,
to assemble the Equipment at a convenient place acceptable to both parties; and
(h) exercise any one or more rights or remedies accorded by law and the Uniform
Commercial Code. If the proceeds of any such sale are insufficient to pay the
expenses as aforesaid and the obligations, the Lessee agrees to pay any
deficiency to the holder hereof upon demand, and if such proceeds are more than
sufficient to pay such expenses and the obligations, the holder agrees to pay
surplus to Lessee. If this contract is referred to an attorney to enforce
collection Lessee agrees to pay reasonable attorney's fees and costs. Whenever
any
<PAGE>
payment is not made when due hereunder, Lessee promises to pay to Lessor its
assignee not later than one month thereafter an amount calculated at the rate of
five cents per dollar of each such delayed payment if allowed by law. In the
event of litigation of any matter connected with this Lease or resulting from
transactions hereunder, the right of a trial by jury is hereby waived by the
Lessee.
14. The omission by the Lessor at any time to enforce any default or
right reserved to it, or to require performance of any of the terms, covenants
or provisions hereof by the Lessee at any time designated, shall not be a waiver
of any such default or right to which the Lessor is entitled, nor shall it in
any way affect the rights to which the Lessor is entitled, nor shall it in any
way affect the rights of the Lessor to enforce such provisions thereafter. The
Lessor may exercise all remedies, successively or concurrently, pursuant to the
terms hereof, and any such action or inaction shall not operate to release the
Lessee until the full amount of the rentals due and to become due, and all other
sums to be paid hereunder have been paid in full.
15. Lessee authorizes the Lessor to fill in descriptive material in
connection with the Equipment, including, but not limited to, serial numbers, to
date the Lease, and to correct any patent errors.
16. At request of Lessor, Lessee will join Lessor in executing all such
documents and other instruments including financing statements pursuant to the
Uniform Commercial Code as may be necessary or desirable to evidence Lessor's
ownership of the Equipment. Lessee authorizes Lessor and Lessor's assignee and
each subsequent assignee to file a financing statement signed only by Lessor or
such assignee in all places where necessary to perfect Lessor's security
interest in all jurisdictions where such authorization is permitted by law. Upon
request of Lessor or any assignee hereof, Lessee agrees to deliver from time to
time but not more often than once in each six month period during the term of
this Lease, such information regarding its business affairs and financial
condition as may be reasonably requested.
17. The foregoing represents the entire lease between the parties. This
Lease may not be modified or changed orally but only by a writing signed by both
parties. This Lease shall be binding upon the parties hereto and their
respective successor and assigns. The parties agree that the interpretation and
legal effect of this Lease shall be governed by the laws of the Commonwealth of
Massachusetts. Notices, when required hereunder, shall be in writing by prepaid
mail, addressed to either of the parties at the addresses designated above, or
at such other addresses as may be designated by the parties during the term of
this Lease by written notice addressed to the other party and sent by prepaid
mail.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day
and year first above written.
PIZZERIA REGINA OF VIRGINIA, H.C.B. CORPORATION
INC.
By_________________________ By__________________________
George R. Chapdelaine,
President and Treasurer
EQUIPMENT LEASE
This LEASE is made in the Commonwealth of Massachusetts, on March 17,
1998 between H.C.B. CORPORATION, a duly organized and existing Massachusetts
corporation, having a principal place of business at 280 Atlantic Avenue,
Boston, MA 02110 (herein called the "Lessor"), and PIZZERIA REGINA OF FLORIDA,
INC. a duly organized and existing Florida corporation, having a place of
business at the Oviedo Marketplace, Oviedo, Florida doing business under the
name and style of Pizzeria Regina (herein called the "Lessee"), wherein it is
agreed as follows:
1. The Lessor leases to Lessee and the Lessee rents from Lessor the
equipment ("Equipment") listed in the schedule hereto annexed, marked Exhibit
"A" and made a part hereof. Each item of Equipment listed is hereinafter called
an "Item", together with any parts, mechanisms and devices relating thereto or
used in connection therewith, attached to or delivered with the Equipment, or
thereafter attached to or used in connection therewith. The Lessor warrants and
represents to the Lessee that the Lessor has the authority to enter into this
Equipment Lease.
2. Lessor has not made and does not make any representation, warranty
or covenant, express or implied, with respect to the merchantability, fitness,
condition, quality or durability of any item of Equipment for Lessee's purposes,
or any other representation, warranty, or covenant, express or implied, with
respect to the leased Equipment or any part thereof; Lessee hereby disclaims any
and all liability of Lessor with respect thereto. Lessor shall not be liable or
responsible to Lessee for any damage, defect, failure to meet specifications,
late delivery, failure to deliver or shortage in respect to any item leased
hereunder, or for failure of the supplier to properly install or assemble any
item, or for the failure of the supplier thereof for any reason whatsoever, to
comply with the terms of any purchase order. Lessee agrees to look only to such
supplier and/or to any carrier of the item in respect thereto. Lessee agrees
that Lessor shall not be liable or responsible to Lessee for any claim, loss,
damage, liability or expense of any kind or nature caused, directly or
indirectly, by the leased Equipment or any part thereof, or the inadequacy
thereof for any purpose, or any defect or deficiency therein, or the use,
operation, or storage thereof, or the interruption or loss of the service or use
thereof, or arising from any other reason or cause whatsoever relating to or
concerning the leased Equipment, or any part thereof. Lessor assigns to Lessee
all rights under any manufacturer's warranties or guarantees, including any and
all rights of subrogation and any claims in connection with any defects as to
the Equipment.
3. The term of this Lease is for a period of five (5) years to commence
on March 17, 1998, and to end on March 16, 2003. The Lessee shall pay to the
Lessor, its successors and assigns, rental as follows: $2,149.35 on or before
March 17, 1998, and an equal amount on the same date of each month thereafter
until February 17, 2003. On March 17, 2003, Lessee may purchase the Equipment
upon payment to the Lessor of $9,034.00. Upon such payment, the Lessor agrees to
execute and deliver to the Lessee a Warranty Bill of Sale for the Equipment in
the form attached hereto as Exhibit B.
4. In the event the Lessee shall not exercise its option as
hereinbefore set forth, the Lessee shall, upon the expiration of the term of
this Lease, ship all of the Equipment (a) by delivering such Item at Lessee's
expense to such place as Lessor shall specify within the city or county in which
the same is then permanently located, or (b) by loading such Item at Lessee's
expense on board such carrier as Lessor shall specify and shipping the same,
freight collect, to destination designated by Lessor. At the end and/or
termination of this Lease, the Lessee shall surrender such Equipment to the
Lessor in good order and condition, reasonable wear and tear resulting from its
proper use alone excepted.
5. Equipment leased hereunder shall be located and used at the location
of the Lessee set forth above unless Lessor shall consent in writing to the
removal to a different location. The Lessee agrees to use its good faith and
reasonable efforts to furnish to Lessor, when required, a landlord's waiver of
distraint for rent and consent to remove all of the Equipment if any of the
above Equipment is affixed or to be affixed to realty during the rental period,
such release to be furnished prior to such affixation. Notwithstanding anything
hereinabove contained, the Equipment shall remain the personal property of the
<PAGE>
Lessor until the Lessee exercises its purchase option and pays the purchase
option price at which time the Equipment shall become the personal property of
the Lessee. Lessor represents and warrants, and Lessee acknowledges, that the
Equipment covered by this Lease is owned by the Lessor, and such title shall
remain in the Lessor at all times. The Lessee shall give the Lessor immediate
notice in the event that any of the Equipment is levied upon or is about to
become liable or is threatened with seizure, and the Lessee shall indemnify the
Lessor against all loss and damages caused by such action. Upon the expiration
of this Lease or termination for any reason whatsoever, the Lessor shall have
the right and privilege to remove its Equipment, in whole or in part, without
liability therefor.
6. The parties hereto agree that this Lease is a net lease, and that
Lessee shall pay, without notice or demand, the rent reserved under paragraph 3
hereof, and all other sums payable under any other provision of this Lease, as
and when the same shall be due and payable; and the Lessee further agrees that
it shall pay promptly all costs, expenses and obligations of every kind and
nature relating to the Equipment which may arise or become due during the term
of this Lease, whether or not specifically mentioned herein. No such rental or
other sums payable by Lessee pursuant to this Lease shall be subject to set-off,
deduction, counterclaim or abatement, nor shall this Lease terminate, nor shall
Lessee be entitled to any credit against such rental or other sums, for any
reason whatsoever, including but not in any way limited to: any damage to or
destruction of the Equipment or any item thereof; any limitation, restriction,
deprivation or prevention of, or any interference with, Lessee's use of the
Equipment or any item thereof, whether the same shall be lawful or unlawful; any
dispossession of Lessee from the Equipment or any item thereof by title
paramount or otherwise; the requisition or taking by statute or by exercise of
the power of eminent domain or other governmental authority or otherwise, or by
injunction or by any private person, of the Equipment or any item thereof; the
prohibition of Lessee's business, in whole or in part, whether pursuant to law
or otherwise; or any reason whether similar or dissimilar to the foregoing,
unless caused by an act or omission of Lessor, its agents, employees, or
contractors. Lessee shall be entitled to the possession and use of the Equipment
during the term of and pursuant to the provisions of this Lease so long as no
event of default has occurred.
7. The Lessee agrees to use the leased Equipment only in good operating
condition. The Lessee shall obtain from the supplier and shall pay therefor, all
duplicate parts, extras, mechanisms and devices of every kind needed or used in
operating, repairing or renewing the leased Equipment and the same shall become
part of the leased Equipment. Other than repairs made to the Equipment by the
Lessee as required hereby, Lessee shall not otherwise make or allow to be made
any addition, subtraction or alteration to, from or in the leased Equipment
without the written consent of Lessor, but Lessor shall not be responsible for
delay on providing, or for failure to provide any such item or items.
8. (A) No loss or damage to the Equipment or any part thereof, unless
caused by an act or omission of Lessor, its agents, employees, or contractors
shall impair any obligation of Lessee under this Lease which shall continue in
full force and effect. Lessee shall, at its own expense, keep the Equipment
insured against all risks of loss or damage from every cause whatsoever for not
less than the then fair market value of said Equipment. If any Equipment is
determined by Lessor to be lost, stolen, destroyed or damaged in whole or in
part, Lessee at its option and at its expense, shall within (30) days; (i) place
the same in good repair, condition and working order, or (ii) replace the same
with like Equipment in good repair, condition or working order and deliver to
Lessor a bill of sale covering the replaced Equipment, or (iii) cause to be paid
over to Lessor any insurance proceeds payable on account of such loss, theft or
destruction.
(B) Lessee shall, at its own expense, carry public liability and
property damage insurance covering the Equipment. Policies providing coverage
against bodily injury and property damage shall provide for not less than
$1,000,000/$2,000,000 insurance for injury to or death of one person, and,
subject to that limit for each person, a total liability of
$1,000,000/$2,000,000 for all persons injured or killed in the same accident and
$100,000 property damage or such higher limits as Lessor may require. Blanket
coverage for liability and property damage may be provided by Lessee in lieu of
the foregoing.
(C) All said insurance shall be in form and with companies approved
by Lessor, and shall be in the joint names of Lessor and Lessee. Lessee shall
pay the premiums therefor and deliver said policies, or
<PAGE>
duplicates thereof, to Lessor. Each insurer shall agree by endorsement upon the
policy or policies issued by it or by independent instrument furnished to
Lessor, that it will give Lessor twenty (20) days' written notice before the
policy in question shall be altered or cancelled. With respect to any insurable
loss of the Equipment, the proceeds of such insurance, other than liability
insurance, at the option of Lessee, shall be applied (a) toward the replacement,
restoration or repair of the Equipment, or (b) toward payment of the obligations
of Lessee hereunder. Lessee assigns to Lessor all moneys to the extent due and
owing to the Lessor under this Lease with respect to any insurable loss of
Equipment which may become due under any policy covering the Equipment, and
directs the insurance company to make payment directly to Lessor or its
assignee.
(D) If Lessee fails to secure, maintain and pay for such insurance
coverage, and furnish Lessor with evidence satisfactory to it of such insurance
coverage having been obtained, maintained and paid for by Lessee within ten (10)
days of written request therefor, such failure on Lessee's part shall constitute
an event of immediate default.
(E) Lessee assumes all risks and liability, whether or not covered
by insurance, for loss or damage to the Equipment and for injuries or deaths of
persons and damage to property, howsoever arising from or incident to the use,
operation or storage of the items leased hereunder, whether such injury or death
to persons be of agents or employees of the Lessee or of third parties, and
whether such damage to property be of Lessee or of others unless the same is
caused by an act or omission of Lessor, its agents, employees, or contractors.
Lessee agrees to indemnify, save and hold Lessor harmless from all losses,
damages, claims, penalties and expenses, including attorneys' fees, however
arising or incurred, because of or incident to any item or the real or alleged
use, operation or storage thereof.
9. Lessee agrees to grant and provide Lessor and/or its representatives
free access to premises at all times during the process of delivery and/or
removal of Equipment. Employees of the Lessor shall have access to and may
inspect said Equipment at all reasonable times, which shall be upon at least
twenty-four (24) hours' advance notice except in the case of emergencies, during
normal business hours, and at any location, during the lease period. Lessee
agrees, whenever requested by Lessor, to give Lessor the exact location of all
Equipment covered by this Lease, if removed to any other location than as stated
herein.
10. Lessee shall pay all taxes of every kind and nature imposed or
levied by any taxing authority in connection with the ownership of the Equipment
by Lessor, the leasing, use possession and operation of Equipment and payment of
rentals therefor, including but not limited to, all federal, state and local
taxes and other governmental charges, however designated, levied or assessed
upon the Lessee and Lessor or either of them or said Equipment, or upon the use
or operation thereof, sales or use taxes, allocable privilege or allocable
franchise taxes measured by or based on gross revenue, personal property taxes
assessed on the Equipment of the Lessor, but excluding Lessor's income and
franchise taxes. A default under this paragraph shall be deemed a default under
this Lease. If Lessee does not pay any of such taxes and Lessor becomes
obligated to or at its option, pays the same, the Lessee shall pay the Lessor
the amount thereof on demand, together with any penalties or interest thereon,
all with interest at the rate of 15% per annum, and the same shall be deemed
additional rent. Lessee shall provide all permits and licenses necessary for the
installation, operation and use of the Equipment or any parts thereof. Lessee
will comply with all laws, regulations and ordinances applicable to the
installation, use, possession and operation of the Equipment. If compliance with
any ordinance, rule, regulation or permit by any governmental agency, requires
changes or additions to be made on or to the aforesaid Equipment, such changes
or additions shall be made by the Lessee at its own expense.
11. Without the prior written consent of Lessor, Lessee shall not
assign, transfer, pledge or hypothecate this Lease, the Equipment or any part
thereof, or any interest therein, or sublet or lend the Equipment or any part
thereof, or permit the Equipment or any part thereof to be used by anyone other
than Lessee. Consent by the Lessor to any of the foregoing prohibited acts
applies only in the given instance. Any such attempted action by Lessee either
by voluntary or involuntary act or by operation of law or otherwise, shall
constitute an event of immediate default. Neither this Lease or Lessee's
interest therein, is assignable or transferable by operation of law. If Lessee
is adjudged a bankrupt or makes an assignment
<PAGE>
for the benefit of creditors, or a receiver is appointed for Lessee, this Lease
shall not be treated as an asset of Lessee and Lessor may exercise any and all
remedies provided in paragraph 13 hereof.
12. (A) It is understood that Lessor may assign this Lease and/or
mortgage the Equipment, and that any assignee may assign the same. All rights of
Lessor hereunder may be assigned, pledged, mortgaged, transferred or otherwise
disposed of, either in whole or in part, without notice to or consent of the
Lessee. If Lessor assigns this Lease or the rentals due or to become due
hereunder or any other interest herein, whether as security for any of its
indebtedness or otherwise, Lessee agrees, after notice of such assignment has
been given by Lessor or such assignee to Lessee, that this agreement may not be
terminated and the terms and provisions thereof may not be altered, modified or
waived without the prior written consent of the assignee, and Lessee further
agrees unconditionally to pay to the assignee the rentals, or amounts equal to
such rentals, and all other sums which may be or become due hereunder directly
to such assignee, notwithstanding any of the terms of this Lease which might
relieve the Lessee from the payment of rentals hereunder, or the termination of
this Lease for any reason or any other event whatsoever including without
limitation the bankruptcy or insolvency of the Lessor or any disaffirmance of
this Lease by any trustee or receiver, and notwithstanding any defense, set off
or counterclaim whatsoever whether by reason of breach of this Lease or
otherwise, which Lessee may or might now or hereafter have as against Lessor,
Lessee reserving its rights to have recourse directly against Lessor on account
of any such defense, set off or counterclaim. Lessee's undertaking with respect
to any such assignee shall constitute a direct, independent and unconditional
obligation of Lessee to such assignee. The receipt by such assignee of such
payments shall discharge the obligations of Lessee to Lessor hereunder to the
extent thereof.
(B) All rights, powers and privileges and obligations of Lessor
hereunder shall be succeeded to by the assignee under any assignment. Lessee
agrees to execute any and all documents including, but not limited to, consent
to assignment, presented to it by Lessor to enable Lessor to effect the
foregoing. After notice to Lessee of any such assignment, Lessee agrees that it
shall possess and use the Equipment subject to the Assignee's interest therein.
13. In the event Lessee shall default in the payment of any rent,
additional rent, or any other sums due hereunder for a period of fifteen (15)
days, or in the event of any default or breach of the other terms and conditions
of this Lease continuing for fifteen (15) days after written notice of default,
or any other lease between the parties hereto, or if any execution or other writ
or process shall be issued in any action or proceeding, against the Lessee,
whereby the said Equipment may be taken or distrained, or if a proceeding in
bankruptcy, receivership or insolvency shall be instituted by or against the
Lessee or its property, or if the Lessee shall enter into any agreement or
composition with its creditors, breach any of the terms of any loan or credit
agreement, or default thereunder, then and in that event Lessor and its assignee
shall have all remedies available at law without being required to elect among
Lessor's remedies, and without limiting the foregoing, in addition shall have
the following rights and remedies to the extent permitted by law: (a) all
obligations, including any note issued in connection herewith, shall immediately
become due and payable at the option of the holder hereof without notice or
demand; (b) The holder hereof or its representative may enter the premises where
any of the Equipment may be located, and take and carry away the same with or
without legal process to the holder's place of storage; (c) sell the Equipment
at public or private sale, whether or not the Equipment is present at such sale
and whether or not the Equipment is in constructive possession of the holder or
the person conducting the sale, in one or more sales, as an entirety or in
parcels, for the best price that the holder can obtain, and upon such terms as
the holder may deem desirable; (d) the holder hereof may be the purchaser at any
such sale; (e) require Lessee to pay all expenses of such sale, taking, keeping
and storage of the Equipment, including reasonable attorney's fees; (f) apply
the proceeds of such sale to all expenses in connection with the taking and sale
of the Equipment, and any balance of such proceeds may be applied toward the
payment of the obligations in such order of application as the holder may from
time to time elect; (g) upon holder's demand Lessee agrees, at Lessee's expense,
to assemble the Equipment at a convenient place acceptable to both parties; and
(h) exercise any one or more rights or remedies accorded by law and the Uniform
Commercial Code. If the proceeds of any such sale are insufficient to pay the
expenses as aforesaid and the obligations, the Lessee agrees to pay any
deficiency to the holder hereof upon demand, and if such proceeds are more than
sufficient to pay such expenses and the obligations, the holder agrees to pay
surplus to Lessee. If this contract is referred to an attorney to enforce
collection Lessee agrees to pay reasonable attorney's fees and costs. Whenever
any
<PAGE>
payment is not made when due hereunder, Lessee promises to pay to Lessor its
assignee not later than one month thereafter an amount calculated at the rate of
five cents per dollar of each such delayed payment if allowed by law. In the
event of litigation of any matter connected with this Lease or resulting from
transactions hereunder, the right of a trial by jury is hereby waived by the
Lessee.
14. The omission by the Lessor at any time to enforce any default or
right reserved to it, or to require performance of any of the terms, covenants
or provisions hereof by the Lessee at any time designated, shall not be a waiver
of any such default or right to which the Lessor is entitled, nor shall it in
any way affect the rights to which the Lessor is entitled, nor shall it in any
way affect the rights of the Lessor to enforce such provisions thereafter. The
Lessor may exercise all remedies, successively or concurrently, pursuant to the
terms hereof, and any such action or inaction shall not operate to release the
Lessee until the full amount of the rentals due and to become due, and all other
sums to be paid hereunder have been paid in full.
15. Lessee authorizes the Lessor to fill in descriptive material in
connection with the Equipment, including, but not limited to, serial numbers, to
date the Lease, and to correct any patent errors.
16. At request of Lessor, Lessee will join Lessor in executing all such
documents and other instruments including financing statements pursuant to the
Uniform Commercial Code as may be necessary or desirable to evidence Lessor's
ownership of the Equipment. Lessee authorizes Lessor and Lessor's assignee and
each subsequent assignee to file a financing statement signed only by Lessor or
such assignee in all places where necessary to perfect Lessor's security
interest in all jurisdictions where such authorization is permitted by law. Upon
request of Lessor or any assignee hereof, Lessee agrees to deliver from time to
time but not more often than once in each six month period during the term of
this Lease, such information regarding its business affairs and financial
condition as may be reasonably requested.
17. The foregoing represents the entire lease between the parties. This
Lease may not be modified or changed orally but only by a writing signed by both
parties. This Lease shall be binding upon the parties hereto and their
respective successor and assigns. The parties agree that the interpretation and
legal effect of this Lease shall be governed by the laws of the Commonwealth of
Massachusetts. Notices, when required hereunder, shall be in writing by prepaid
mail, addressed to either of the parties at the addresses designated above, or
at such other addresses as may be designated by the parties during the term of
this Lease by written notice addressed to the other party and sent by prepaid
mail.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day
and year first above written.
PIZZERIA REGINA OF FLORIDA, H.C.B. CORPORATION
INC.
By_________________________ By__________________________
George R. Chapdelaine,
President and Treasurer
EQUIPMENT LEASE
This LEASE is made in the Commonwealth of Massachusetts, on March 17,
1998 between H.C.B. CORPORATION, a duly organized and existing Massachusetts
corporation, having a principal place of business at 280 Atlantic Avenue,
Boston, MA 02110 (herein called the "Lessor"), and OCEAN, INC. a duly organized
and existing Massachusetts corporation, having a place of business at the Auburn
Mall, Auburn, Massachusetts doing business under the name and style of Pizzeria
Regina (herein called the "Lessee"), wherein it is agreed as follows:
1. The Lessor leases to Lessee and the Lessee rents from Lessor the
equipment ("Equipment") listed in the schedule hereto annexed, marked Exhibit
"A" and made a part hereof. Each item of Equipment listed is hereinafter called
an "Item", together with any parts, mechanisms and devices relating thereto or
used in connection therewith, attached to or delivered with the Equipment, or
thereafter attached to or used in connection therewith. The Lessor warrants and
represents to the Lessee that the Lessor has the authority to enter into this
Equipment Lease.
2. Lessor has not made and does not make any representation, warranty
or covenant, express or implied, with respect to the merchantability, fitness,
condition, quality or durability of any item of Equipment for Lessee's purposes,
or any other representation, warranty, or covenant, express or implied, with
respect to the leased Equipment or any part thereof; Lessee hereby disclaims any
and all liability of Lessor with respect thereto. Lessor shall not be liable or
responsible to Lessee for any damage, defect, failure to meet specifications,
late delivery, failure to deliver or shortage in respect to any item leased
hereunder, or for failure of the supplier to properly install or assemble any
item, or for the failure of the supplier thereof for any reason whatsoever, to
comply with the terms of any purchase order. Lessee agrees to look only to such
supplier and/or to any carrier of the item in respect thereto. Lessee agrees
that Lessor shall not be liable or responsible to Lessee for any claim, loss,
damage, liability or expense of any kind or nature caused, directly or
indirectly, by the leased Equipment or any part thereof, or the inadequacy
thereof for any purpose, or any defect or deficiency therein, or the use,
operation, or storage thereof, or the interruption or loss of the service or use
thereof, or arising from any other reason or cause whatsoever relating to or
concerning the leased Equipment, or any part thereof. Lessor assigns to Lessee
all rights under any manufacturer's warranties or guarantees, including any and
all rights of subrogation and any claims in connection with any defects as to
the Equipment.
3. The term of this Lease is for a period of five (5) years to commence
on March 17, 1998, and to end on March 16, 2003. The Lessee shall pay to the
Lessor, its successors and assigns, rental as follows: $1,985.70 on or before
March 17, 1998, and an equal amount on the same date of each month thereafter
until February 17, 2003. On March 17, 2003, Lessee may purchase the Equipment
upon payment to the Lessor of $8,346.80. Upon such payment, the Lessor agrees to
execute and deliver to the Lessee a Warranty Bill of Sale for the Equipment in
the form attached hereto as Exhibit B.
4. In the event the Lessee shall not exercise its option as
hereinbefore set forth, the Lessee shall, upon the expiration of the term of
this Lease, ship all of the Equipment (a) by delivering such Item at Lessee's
expense to such place as Lessor shall specify within the city or county in which
the same is then permanently located, or (b) by loading such Item at Lessee's
expense on board such carrier as Lessor shall specify and shipping the same,
freight collect, to destination designated by Lessor. At the end and/or
termination of this Lease, the Lessee shall surrender such Equipment to the
Lessor in good order and condition, reasonable wear and tear resulting from its
proper use alone excepted.
5. Equipment leased hereunder shall be located and used at the location
of the Lessee set forth above unless Lessor shall consent in writing to the
removal to a different location. The Lessee agrees to use its good faith and
reasonable efforts to furnish to Lessor, when required, a landlord's waiver of
distraint for rent and consent to remove all of the Equipment if any of the
above Equipment is affixed or to be affixed to realty during the rental period,
such release to be furnished prior to such affixation. Notwithstanding anything
hereinabove contained, the Equipment shall remain the personal property of the
<PAGE>
Lessor until the Lessee exercises its purchase option and pays the purchase
option price at which time the Equipment shall become the personal property of
the Lessee. Lessor represents and warrants, and Lessee acknowledges, that the
Equipment covered by this Lease is owned by the Lessor, and such title shall
remain in the Lessor at all times. The Lessee shall give the Lessor immediate
notice in the event that any of the Equipment is levied upon or is about to
become liable or is threatened with seizure, and the Lessee shall indemnify the
Lessor against all loss and damages caused by such action. Upon the expiration
of this Lease or termination for any reason whatsoever, the Lessor shall have
the right and privilege to remove its Equipment, in whole or in part, without
liability therefor.
6. The parties hereto agree that this Lease is a net lease, and that
Lessee shall pay, without notice or demand, the rent reserved under paragraph 3
hereof, and all other sums payable under any other provision of this Lease, as
and when the same shall be due and payable; and the Lessee further agrees that
it shall pay promptly all costs, expenses and obligations of every kind and
nature relating to the Equipment which may arise or become due during the term
of this Lease, whether or not specifically mentioned herein. No such rental or
other sums payable by Lessee pursuant to this Lease shall be subject to set-off,
deduction, counterclaim or abatement, nor shall this Lease terminate, nor shall
Lessee be entitled to any credit against such rental or other sums, for any
reason whatsoever, including but not in any way limited to: any damage to or
destruction of the Equipment or any item thereof; any limitation, restriction,
deprivation or prevention of, or any interference with, Lessee's use of the
Equipment or any item thereof, whether the same shall be lawful or unlawful; any
dispossession of Lessee from the Equipment or any item thereof by title
paramount or otherwise; the requisition or taking by statute or by exercise of
the power of eminent domain or other governmental authority or otherwise, or by
injunction or by any private person, of the Equipment or any item thereof; the
prohibition of Lessee's business, in whole or in part, whether pursuant to law
or otherwise; or any reason whether similar or dissimilar to the foregoing,
unless caused by an act or omission of Lessor, its agents, employees, or
contractors. Lessee shall be entitled to the possession and use of the Equipment
during the term of and pursuant to the provisions of this Lease so long as no
event of default has occurred.
7. The Lessee agrees to use the leased Equipment only in good operating
condition. The Lessee shall obtain from the supplier and shall pay therefor, all
duplicate parts, extras, mechanisms and devices of every kind needed or used in
operating, repairing or renewing the leased Equipment and the same shall become
part of the leased Equipment. Other than repairs made to the Equipment by the
Lessee as required hereby, Lessee shall not otherwise make or allow to be made
any addition, subtraction or alteration to, from or in the leased Equipment
without the written consent of Lessor, but Lessor shall not be responsible for
delay on providing, or for failure to provide any such item or items.
8. (A) No loss or damage to the Equipment or any part thereof, unless
caused by an act or omission of Lessor, its agents, employees, or contractors
shall impair any obligation of Lessee under this Lease which shall continue in
full force and effect. Lessee shall, at its own expense, keep the Equipment
insured against all risks of loss or damage from every cause whatsoever for not
less than the then fair market value of said Equipment. If any Equipment is
determined by Lessor to be lost, stolen, destroyed or damaged in whole or in
part, Lessee at its option and at its expense, shall within (30) days; (i) place
the same in good repair, condition and working order, or (ii) replace the same
with like Equipment in good repair, condition or working order and deliver to
Lessor a bill of sale covering the replaced Equipment, or (iii) cause to be paid
over to Lessor any insurance proceeds payable on account of such loss, theft or
destruction.
(B) Lessee shall, at its own expense, carry public liability and
property damage insurance covering the Equipment. Policies providing coverage
against bodily injury and property damage shall provide for not less than
$1,000,000/$2,000,000 insurance for injury to or death of one person, and,
subject to that limit for each person, a total liability of
$1,000,000/$2,000,000 for all persons injured or killed in the same accident and
$100,000 property damage or such higher limits as Lessor may require. Blanket
coverage for liability and property damage may be provided by Lessee in lieu of
the foregoing.
(C) All said insurance shall be in form and with companies approved
by Lessor, and shall be in the joint names of Lessor and Lessee. Lessee shall
pay the premiums therefor and deliver said policies, or duplicates thereof, to
Lessor. Each insurer shall agree by endorsement upon the policy or policies
issued by it or by independent instrument furnished to Lessor, that it will give
Lessor twenty (20) days' written notice
<PAGE>
before the policy in question shall be altered or cancelled. With respect to any
insurable loss of the Equipment, the proceeds of such insurance, other than
liability insurance, at the option of Lessee, shall be applied (a) toward the
replacement, restoration or repair of the Equipment, or (b) toward payment of
the obligations of Lessee hereunder. Lessee assigns to Lessor all moneys to the
extent due and owing to the Lessor under this Lease with respect to any
insurable loss of Equipment which may become due under any policy covering the
Equipment, and directs the insurance company to make payment directly to Lessor
or its assignee.
(D) If Lessee fails to secure, maintain and pay for such insurance
coverage, and furnish Lessor with evidence satisfactory to it of such insurance
coverage having been obtained, maintained and paid for by Lessee within ten (10)
days of written request therefor, such failure on Lessee's part shall constitute
an event of immediate default.
(E) Lessee assumes all risks and liability, whether or not covered
by insurance, for loss or damage to the Equipment and for injuries or deaths of
persons and damage to property, howsoever arising from or incident to the use,
operation or storage of the items leased hereunder, whether such injury or death
to persons be of agents or employees of the Lessee or of third parties, and
whether such damage to property be of Lessee or of others unless the same is
caused by an act or omission of Lessor, its agents, employees, or contractors.
Lessee agrees to indemnify, save and hold Lessor harmless from all losses,
damages, claims, penalties and expenses, including attorneys' fees, however
arising or incurred, because of or incident to any item or the real or alleged
use, operation or storage thereof.
9. Lessee agrees to grant and provide Lessor and/or its representatives
free access to premises at all times during the process of delivery and/or
removal of Equipment. Employees of the Lessor shall have access to and may
inspect said Equipment at all reasonable times, which shall be upon at least
twenty-four (24) hours' advance notice except in the case of emergencies, during
normal business hours, and at any location, during the lease period. Lessee
agrees, whenever requested by Lessor, to give Lessor the exact location of all
Equipment covered by this Lease, if removed to any other location than as stated
herein.
10. Lessee shall pay all taxes of every kind and nature imposed or
levied by any taxing authority in connection with the ownership of the Equipment
by Lessor, the leasing, use possession and operation of Equipment and payment of
rentals therefor, including but not limited to, all federal, state and local
taxes and other governmental charges, however designated, levied or assessed
upon the Lessee and Lessor or either of them or said Equipment, or upon the use
or operation thereof, sales or use taxes, allocable privilege or allocable
franchise taxes measured by or based on gross revenue, personal property taxes
assessed on the Equipment of the Lessor, but excluding Lessor's income and
franchise taxes. A default under this paragraph shall be deemed a default under
this Lease. If Lessee does not pay any of such taxes and Lessor becomes
obligated to or at its option, pays the same, the Lessee shall pay the Lessor
the amount thereof on demand, together with any penalties or interest thereon,
all with interest at the rate of 15% per annum, and the same shall be deemed
additional rent. Lessee shall provide all permits and licenses necessary for the
installation, operation and use of the Equipment or any parts thereof. Lessee
will comply with all laws, regulations and ordinances applicable to the
installation, use, possession and operation of the Equipment. If compliance with
any ordinance, rule, regulation or permit by any governmental agency, requires
changes or additions to be made on or to the aforesaid Equipment, such changes
or additions shall be made by the Lessee at its own expense.
11. Without the prior written consent of Lessor, Lessee shall not
assign, transfer, pledge or hypothecate this Lease, the Equipment or any part
thereof, or any interest therein, or sublet or lend the Equipment or any part
thereof, or permit the Equipment or any part thereof to be used by anyone other
than Lessee. Consent by the Lessor to any of the foregoing prohibited acts
applies only in the given instance. Any such attempted action by Lessee either
by voluntary or involuntary act or by operation of law or otherwise, shall
constitute an event of immediate default. Neither this Lease or Lessee's
interest therein, is assignable or transferable by operation of law. If Lessee
is adjudged a bankrupt or makes an assignment for the benefit of creditors, or a
receiver is appointed for Lessee, this Lease shall not be treated as an asset of
Lessee and Lessor may exercise any and all remedies provided in paragraph 13
hereof.
<PAGE>
12. (A) It is understood that Lessor may assign this Lease and/or
mortgage the Equipment, and that any assignee may assign the same. All rights of
Lessor hereunder may be assigned, pledged, mortgaged, transferred or otherwise
disposed of, either in whole or in part, without notice to or consent of the
Lessee. If Lessor assigns this Lease or the rentals due or to become due
hereunder or any other interest herein, whether as security for any of its
indebtedness or otherwise, Lessee agrees, after notice of such assignment has
been given by Lessor or such assignee to Lessee, that this agreement may not be
terminated and the terms and provisions thereof may not be altered, modified or
waived without the prior written consent of the assignee, and Lessee further
agrees unconditionally to pay to the assignee the rentals, or amounts equal to
such rentals, and all other sums which may be or become due hereunder directly
to such assignee, notwithstanding any of the terms of this Lease which might
relieve the Lessee from the payment of rentals hereunder, or the termination of
this Lease for any reason or any other event whatsoever including without
limitation the bankruptcy or insolvency of the Lessor or any disaffirmance of
this Lease by any trustee or receiver, and notwithstanding any defense, set off
or counterclaim whatsoever whether by reason of breach of this Lease or
otherwise, which Lessee may or might now or hereafter have as against Lessor,
Lessee reserving its rights to have recourse directly against Lessor on account
of any such defense, set off or counterclaim. Lessee's undertaking with respect
to any such assignee shall constitute a direct, independent and unconditional
obligation of Lessee to such assignee. The receipt by such assignee of such
payments shall discharge the obligations of Lessee to Lessor hereunder to the
extent thereof.
(B) All rights, powers and privileges and obligations of Lessor
hereunder shall be succeeded to by the assignee under any assignment. Lessee
agrees to execute any and all documents including, but not limited to, consent
to assignment, presented to it by Lessor to enable Lessor to effect the
foregoing. After notice to Lessee of any such assignment, Lessee agrees that it
shall possess and use the Equipment subject to the Assignee's interest therein.
13. In the event Lessee shall default in the payment of any rent,
additional rent, or any other sums due hereunder for a period of fifteen (15)
days, or in the event of any default or breach of the other terms and conditions
of this Lease continuing for fifteen (15) days after written notice of default,
or any other lease between the parties hereto, or if any execution or other writ
or process shall be issued in any action or proceeding, against the Lessee,
whereby the said Equipment may be taken or distrained, or if a proceeding in
bankruptcy, receivership or insolvency shall be instituted by or against the
Lessee or its property, or if the Lessee shall enter into any agreement or
composition with its creditors, breach any of the terms of any loan or credit
agreement, or default thereunder, then and in that event Lessor and its assignee
shall have all remedies available at law without being required to elect among
Lessor's remedies, and without limiting the foregoing, in addition shall have
the following rights and remedies to the extent permitted by law: (a) all
obligations, including any note issued in connection herewith, shall immediately
become due and payable at the option of the holder hereof without notice or
demand; (b) The holder hereof or its representative may enter the premises where
any of the Equipment may be located, and take and carry away the same with or
without legal process to the holder's place of storage; (c) sell the Equipment
at public or private sale, whether or not the Equipment is present at such sale
and whether or not the Equipment is in constructive possession of the holder or
the person conducting the sale, in one or more sales, as an entirety or in
parcels, for the best price that the holder can obtain, and upon such terms as
the holder may deem desirable; (d) the holder hereof may be the purchaser at any
such sale; (e) require Lessee to pay all expenses of such sale, taking, keeping
and storage of the Equipment, including reasonable attorney's fees; (f) apply
the proceeds of such sale to all expenses in connection with the taking and sale
of the Equipment, and any balance of such proceeds may be applied toward the
payment of the obligations in such order of application as the holder may from
time to time elect; (g) upon holder's demand Lessee agrees, at Lessee's expense,
to assemble the Equipment at a convenient place acceptable to both parties; and
(h) exercise any one or more rights or remedies accorded by law and the Uniform
Commercial Code. If the proceeds of any such sale are insufficient to pay the
expenses as aforesaid and the obligations, the Lessee agrees to pay any
deficiency to the holder hereof upon demand, and if such proceeds are more than
sufficient to pay such expenses and the obligations, the holder agrees to pay
surplus to Lessee. If this contract is referred to an attorney to enforce
collection Lessee agrees to pay reasonable attorney's fees and costs. Whenever
any payment is not made when due hereunder, Lessee promises to pay to Lessor its
assignee not later than one month thereafter an amount calculated at the rate of
five cents per dollar of each such delayed payment
<PAGE>
if allowed by law. In the event of litigation of any matter connected with this
Lease or resulting from transactions hereunder, the right of a trial by jury is
hereby waived by the Lessee.
14. The omission by the Lessor at any time to enforce any default or
right reserved to it, or to require performance of any of the terms, covenants
or provisions hereof by the Lessee at any time designated, shall not be a waiver
of any such default or right to which the Lessor is entitled, nor shall it in
any way affect the rights to which the Lessor is entitled, nor shall it in any
way affect the rights of the Lessor to enforce such provisions thereafter. The
Lessor may exercise all remedies, successively or concurrently, pursuant to the
terms hereof, and any such action or inaction shall not operate to release the
Lessee until the full amount of the rentals due and to become due, and all other
sums to be paid hereunder have been paid in full.
15. Lessee authorizes the Lessor to fill in descriptive material in
connection with the Equipment, including, but not limited to, serial numbers, to
date the Lease, and to correct any patent errors.
16. At request of Lessor, Lessee will join Lessor in executing all such
documents and other instruments including financing statements pursuant to the
Uniform Commercial Code as may be necessary or desirable to evidence Lessor's
ownership of the Equipment. Lessee authorizes Lessor and Lessor's assignee and
each subsequent assignee to file a financing statement signed only by Lessor or
such assignee in all places where necessary to perfect Lessor's security
interest in all jurisdictions where such authorization is permitted by law. Upon
request of Lessor or any assignee hereof, Lessee agrees to deliver from time to
time but not more often than once in each six month period during the term of
this Lease, such information regarding its business affairs and financial
condition as may be reasonably requested.
17. The foregoing represents the entire lease between the parties. This
Lease may not be modified or changed orally but only by a writing signed by both
parties. This Lease shall be binding upon the parties hereto and their
respective successor and assigns. The parties agree that the interpretation and
legal effect of this Lease shall be governed by the laws of the Commonwealth of
Massachusetts. Notices, when required hereunder, shall be in writing by prepaid
mail, addressed to either of the parties at the addresses designated above, or
at such other addresses as may be designated by the parties during the term of
this Lease by written notice addressed to the other party and sent by prepaid
mail.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day
and year first above written.
OCEAN, INC. H.C.B. CORPORATION
By_________________________ By_________________________
George R. Chapdelaine,
President and Treasurer
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS
WE HEREBY CONSENT TO THE INCORPORATION BY REFERENCE TO THE COMPANY'S
PREVIOUSLY FILED REGISTRATION STATEMENT ON FORM S-8 OF OUR REPORT DATED JUNE 17,
1998 RELATING THE CONSOLIDATED FINANCIAL STATEMENTS OF BOSTON RESTAURANT
ASSOCIATES, INC. APPEARING IN THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE
YEAR ENDED APRIL 26, 1998.
BDO SEIDMAN, LLP
BOSTON, MASSACHUSETTS
JULY 17, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF APRIL 26, 1998 AND APRIL 27, 1997 AND
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AS OF APRIL 26, 1998 AND APRIL
27, 1997 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> 12-MOS
<FISCAL-YEAR-END> APR-26-1998
<PERIOD-START> APR-28-1997
<PERIOD-END> APR-26-1998
<EXCHANGE-RATE> 1.00
<CASH> 1,788,361
<SECURITIES> 0
<RECEIVABLES> 46,958
<ALLOWANCES> 0
<INVENTORY> 212,071
<CURRENT-ASSETS> 2,096,542
<PP&E> 5,464,288<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,764,975
<CURRENT-LIABILITIES> 1,083,350
<BONDS> 0
0
0
<COMMON> 70,220
<OTHER-SE> 10,846,333
<TOTAL-LIABILITY-AND-EQUITY> 6,764,975
<SALES> 11,255,049
<TOTAL-REVENUES> 11,261,444
<CGS> 2,267,331
<TOTAL-COSTS> 10,928,919
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 304,860
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,880
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<FN>
<F1>PLEASE NOTE: PP&E DOES NOT INCLUDE ACCUMULATED DEPRECIATION.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF APRIL 27, 1997 AND APRIL 28, 1996 AND
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AS OF APRIL 27, 1997 AND APRIL
28, 1996 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> 12-MOS
<FISCAL-YEAR-END> APR-27-1997
<PERIOD-START> APR-29-1996
<PERIOD-END> APR-27-1997
<EXCHANGE-RATE> 1.00
<CASH> 726,054
<SECURITIES> 0
<RECEIVABLES> 69,729
<ALLOWANCES> 0
<INVENTORY> 209,295
<CURRENT-ASSETS> 1,032,610
<PP&E> 2,656,328<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,633,118
<CURRENT-LIABILITIES> 1,245,682
<BONDS> 0
0
0
<COMMON> 50,157
<OTHER-SE> 9,043,199
<TOTAL-LIABILITY-AND-EQUITY> 4,633,118
<SALES> 11,410,886
<TOTAL-REVENUES> 11,415,263
<CGS> 2,532,050
<TOTAL-COSTS> 11,251,059
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 156,924
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,263
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
<FN>
<F1>PLEASE NOTE: PP&E DOES NOT INCLUDE ACCUMULATED DEPRECIATION.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JANUARY 25, 1998 AND APRIL 27, 1997 (AUDITED)
AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED
JANUARY 25, 1998 AND JANUARY 26, 1997 (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-26-1998
<PERIOD-START> OCT-27-1997
<PERIOD-END> JAN-25-1998
<EXCHANGE-RATE> 1.00
<CASH> 243,129
<SECURITIES> 0
<RECEIVABLES> 28,863
<ALLOWANCES> 0
<INVENTORY> 226,829
<CURRENT-ASSETS> 588,690
<PP&E> 4,809,302<F1>
<DEPRECIATION> 2,005,011
<TOTAL-ASSETS> 4,719,339
<CURRENT-LIABILITIES> 1,114,095
<BONDS> 0
0
0
<COMMON> 50,157
<OTHER-SE> 1,435,937
<TOTAL-LIABILITY-AND-EQUITY> 4,719,339
<SALES> 2,818,548
<TOTAL-REVENUES> 2,824,442
<CGS> 570,668
<TOTAL-COSTS> 2,724,125
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,019
<INCOME-PRETAX> 27,298
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,298
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<FN>
<F1>PLEASE NOTE: PP&E DOES NOT INCLUDE ACCUMULATED DEPRECIATION AND OTHER
INTANGIBLE ASSETS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JANUARY 26, 1997 AND APRIL 28, 1996 (AUDITED)
AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED
JANUARY 26, 1997 AND JANUARY 28, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-27-1997
<PERIOD-START> OCT-28-1996
<PERIOD-END> JAN-26-1997
<EXCHANGE-RATE> 1.00
<CASH> 444,350
<SECURITIES> 0
<RECEIVABLES> 50,944
<ALLOWANCES> 0
<INVENTORY> 242,711
<CURRENT-ASSETS> 818,060
<PP&E> 3,817,841<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,635,901
<CURRENT-LIABILITIES> 1,577,845
<BONDS> 0
0
0
<COMMON> 50,150
<OTHER-SE> 8,953,788
<TOTAL-LIABILITY-AND-EQUITY> 4,653,901
<SALES> 2,856,969
<TOTAL-REVENUES> 2,859,296
<CGS> 613,350
<TOTAL-COSTS> 2,801,549
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,689
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,057
<EPS-PRIMARY> .004
<EPS-DILUTED> .004
<FN>
<F1>PLEASE NOTE: PP&E DOES NOT INCLUDE ACCUMULATED DEPRECIATION AND OTHER
INTANGIBLE ASSETS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 26, 1997 AND APRIL 27, 1997 (AUDITED)
AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED
OCTOBER 26, 1997 AND OCTOBER 27, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-26-1998
<PERIOD-START> APR-28-1997
<PERIOD-END> OCT-26-1997
<EXCHANGE-RATE> 1.00
<CASH> 631,581
<SECURITIES> 0
<RECEIVABLES> 132,707
<ALLOWANCES> 0
<INVENTORY> 214,996
<CURRENT-ASSETS> 1,018,843
<PP&E> 4,511,373<F1>
<DEPRECIATION> 1,916,083
<TOTAL-ASSETS> 4,900,966
<CURRENT-LIABILITIES> 1,273,829
<BONDS> 0
0
0
<COMMON> 50,157
<OTHER-SE> 1,399,213
<TOTAL-LIABILITY-AND-EQUITY> 4,900,966
<SALES> 2,989,820
<TOTAL-REVENUES> 2,991,414
<CGS> 602,586
<TOTAL-COSTS> 2,867,136
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77,503
<INCOME-PRETAX> 52,677
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,677
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<FN>
<F1>PLEASE NOTE: PP&E DOES NOT INCLUDE ACCUMULATED DEPRECIATION.
</FN>
</TABLE>
<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>
<RESTATED>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-27-1997
<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<F1>
<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> .01
<EPS-DILUTED> .01
<FN>
<F1>PLEASE NOTE: PP&E DOES NOT INCLUDE ACCUMULATED DEPRECIATION.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JULY 27, 1997 AND APRIL 27, 1997 (AUDITED) AND
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED JULY
27, 1997 AND JULY 28, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-26-1998
<PERIOD-START> APR-28-1997
<PERIOD-END> JUL-27-1997
<EXCHANGE-RATE> 1.00
<CASH> 928,686
<SECURITIES> 0
<RECEIVABLES> 40,398
<ALLOWANCES> 0
<INVENTORY> 212,894
<CURRENT-ASSETS> 1,303,949
<PP&E> 5,000,078<F1>
<DEPRECIATION> 2,338,333
<TOTAL-ASSETS> 4,879,883
<CURRENT-LIABILITIES> 1,280,579
<BONDS> 0
0
0
<COMMON> 50,157
<OTHER-SE> 1,337,103
<TOTAL-LIABILITY-AND-EQUITY> 4,879,883
<SALES> 2,845,885
<TOTAL-REVENUES> 2,846,812
<CGS> 574,507
<TOTAL-COSTS> 2,718,554
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,524
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,833
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<FN>
<F1>PLEASE NOTE: PP&E DOES NOT INCLUDE ACCUMULATED DEPRECIATION.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JULY 28, 1996 AND APRIL 28, 1996 (UNAUDITED)
AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED JULY 28,
1996 AND JULY 30, 1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<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> APR-29-1996
<PERIOD-END> JUL-28-1996
<EXCHANGE-RATE> 1.00
<CASH> 145,443
<SECURITIES> 0
<RECEIVABLES> 46,331
<ALLOWANCES> 0
<INVENTORY> 234,691
<CURRENT-ASSETS> 471,906
<PP&E> 2,906,606<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,137,555
<CURRENT-LIABILITIES> 1,995,855
<BONDS> 0
0
0
<COMMON> 50,150
<OTHER-SE> 8,953,788
<TOTAL-LIABILITY-AND-EQUITY> 4,137,555
<SALES> 2,798,851
<TOTAL-REVENUES> 2,800,240
<CGS> 659,325
<TOTAL-COSTS> 2,702,933
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,046
<INCOME-PRETAX> 76,261
<INCOME-TAX> 0
<INCOME-CONTINUING> 95,918
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,261
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
<FN>
<F1>PLEASE NOTE: PP&E DOES NOT INCLUDE ACCUMULATED DEPRECIATION.
</FN>
</TABLE>
