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As filed with the Securities and Exchange Commission on May 7, 1998
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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JERRY'S FAMOUS DELI, INC.
(Exact name of registrant as specified in its charter)
12711 Ventura Boulevard
Suite 400
Studio City, California 91604
(818) 766-8311
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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California 5812 95-3302338
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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Isaac Starkman, Chief Executive Officer
Jerry's Famous Deli, Inc.
12711 Ventura Boulevard, Suite 400
Studio City, California 91604
(818) 766-8311
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Catherine DeBono Holmes, Esq.
Jeffer, Mangels, Butler & Marmaro
2121 Avenue of the Stars
10th Floor
Los Angeles, California 90067
(310) 203-8080
Fax (310) 203-0567
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to be Offering Price Aggregate Registration
Securities to be Registered Registered Per Share(1) Offering Price(2) Fee
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Common Stock, no par 934,509 Shs. $2.1094 $1,971,253.29 $581.52
value (2)
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) based on the average high and low market price of the
Registrant's Common Stock on May 5, 1998, as quoted in the Nasdaq National
Market.
(2) Which may be sold from time to time by certain Selling Security Holders.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429, the enclosed Prospectus constitutes a combined
Prospectus also relating to securities covered by a Registration Statement on
Form S-3 (No. 333-14629) and a Registration Statement on Form S-8 (No.
333-32497) and constitutes a post-effective amendment to each of said
Registration Statements. The following securities are being carried forward from
the S-3 Registration Statement: (i) 3,721,405 shares of Common Stock registered
for resale by the officers and directors of the Registrant and certain other
investors as to which a filing fee was previously paid; and (ii) 65,000 shares
of common stock issuable upon exercise of warrants. The following securities are
being carried forward from the S-8 Registration Statement: Up to 200,000 shares
of Common Stock which was issued by the Registrant to Kenneth J.
Abdalla, as to which a filing fee was previously paid.
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PROSPECTUS
4,855,914 SHARES OF COMMON STOCK
65,000 SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF WARRANTS
LOGO
COMMON STOCK
This Prospectus relates to the registration by Jerry's Famous Deli,
Inc. (the "Company"), at its expense, for the account of certain affiliated and
unaffiliated selling shareholders who may sell their securities from time to
time (collectively referred to herein as the "Selling Security Holders"), of the
following securities (the "Selling Security Holder Shares"): (i) up to 934,509
shares of the common stock of the Company, no par value (the "Common Stock"),
issued in connection with the Company's acquisition of The Epicure Market to
affiliates of the seller; (ii) up to 200,000 shares of Common Stock issued to an
executive of the Company; (iii) up to 3,721,405 shares of Common Stock for the
account of Waterton Management, LLC and certain of its affiliates and their
assignees, which includes 107,698 shares of Common Stock held by Yucaipa
Waterton Deli Investors, LLC, 1,579,994 shares of Common Stock held by Jerry's
Investors, LLC, 1,729,951 shares of Common Stock held by Ronald W. Burkle
Foundation, and 303,762 shares of Common Stock held by Gerlach & Co., and (iv)
up to 65,000 shares of Common Stock issuable upon exercise of warrants issued to
Waterton Management, LLC. The Selling Security Holder Shares are not being
underwritten and the Company will not receive any proceeds from the sale of the
Selling Security Holder Shares. See "Selling Security Holders." Sales of the
Selling Security Holder Shares may depress the market price of the Common Stock.
The Common Stock is traded on the Nasdaq National Market
under the symbol "DELI." On May 5, 1998, the last sale
price of the Company's Common Stock was $2.09.
THESE SECURITIES ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" ON PAGES 5-8 HEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Selling Security Holder Shares may be sold from time to time by the
Selling Security Holders, or by pledgees, donees, transferees or other
successors in interest. Such sales may be made on one or more exchanges or in
the over-the-counter market, or otherwise at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. The Selling Security Holder Shares may be sold by one or more of
the following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the Selling Security Holder Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this prospectus; (c) an exchange distribution in
accordance with the rules of such exchange; and (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, brokers or dealers engaged by the Selling Security Holders may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from Selling Security Holders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Act") in connection with
such sales. In addition, any Selling Security Holder Shares covered by this
prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this prospectus.
Upon the Company being notified by a Selling Security Holder that any
material arrangement has been entered into with a broker-dealer for the sale of
a Selling Security Holder Shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer, a supplemented prospectus will be filed, if required, pursuant to Rule
424(c) under the Act, disclosing (i) the name of each such Selling Security
Holder and of the participating broker-dealer(s), (ii) the number of Selling
Security Holder Shares involved, (iii) the price at which such Selling Security
Holder Shares were sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealer(s), where applicable, (v) that such
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broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus and (vi) other facts
material to the transaction.
All expenses incurred in connection with the registration of the
Selling Security Holder Shares, which expenses are not expected to exceed
$60,582 are being borne by the Company.
THE DATE OF THIS PROSPECTUS IS MAY 6, 1998
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the
Securities and Exchange Commission, (the "Commission") are incorporated herein
by reference: the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, and the Company's Report on Form 8-K and Amended Report on
Form 8-K for April 1, 1998.
All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the securities under this
Prospectus shall be deemed to be incorporated by reference herein and to be a
part thereof from the date of filing of such documents, except as to any portion
of any future Annual or Quarterly Report to Stockholders which is not deemed to
be filed under said provisions or any portion of a Proxy Statement not deemed
incorporated herein by reference. Any statement made in a document incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that such statement is replaced or modified by a
statement contained in a subsequently dated document incorporated by reference
or contained in this Prospectus. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated in this Prospectus by reference, other than exhibits to
such documents. Written or oral requests for such copies should be directed to
Christina Sterling, Chief Financial Officer, 12711 Ventura Boulevard, Suite 400,
Studio City, California 91604 (Telephone: (818) 766-8311).
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements and
other information with the Commission. These reports, proxy statements and other
information can be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
The Chicago Regional Office, Northwest Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and the New York Regional Office, 7
World Trade Center, 12th Floor, New York, New York 10048. Such reports, proxy
statements and other information filed by the Company can also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006. Copies of such materials can also be
obtained by mail at prescribed rates upon written request addressed to the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's web site
(http\\:www.sec.gov.)
The Company has filed with the Commission a registration statement
under the Securities Act with respect to the shares of Common Stock registered
hereby. This Prospectus omits certain information contained in said registration
statement as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the Common Stock, reference
is made to the registration statement, including the exhibits thereto.
Statements contained herein concerning the contents of any contract or any other
document are not necessarily complete, and in each instance, reference is made
to such contract or other document filed with the Commission as an exhibit to
the registration statement, or otherwise, each such statement being qualified in
all respects by such reference. The registration statement, including exhibits
and schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at the Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and at the New York Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates and at the Commission's web site.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes thereto appearing
elsewhere in this Prospectus and the documents incorporated herein by reference.
Unless otherwise indicated, all financial information, share and per share
information in this Prospectus assume (i) no exercise of warrants to purchase an
aggregate of up to 170,000 shares granted to an investment bank in connection
with the Company's initial public offering; (ii) no exercise of warrants for
65,000 shares granted to Waterton Management, LLC; and (iii) no exercise of
options to purchase an aggregate of up to 2,000,000 shares granted or available
to be granted to employees, officers, directors and consultants pursuant to
stock options.
THE COMPANY
Jerry's Famous Deli, Inc. (the "Company" or "JFD") is an operator of
New York deli-style restaurants. The Company currently operates 10 restaurants,
including eight in Southern California operating under the name "Jerry's Famous
Deli," one in Southern California operating under the name "Solley's" and one in
Miami, Florida, the venerable "Wolfie Cohen's Rascal House." The Company
recently acquired an existing location in Boca Raton, Florida, and is currently
renovating the location as a Rascal House. In addition, the Company completed
its acquisition of The Epicure Market, a well-known gourmet food market in
Miami, Florida on April 1, 1998.
In Southern California, the eight Jerry's Famous Deli restaurants have
the look and high energy feel of a New York deli-style restaurant, with Broadway
as the theme, and posters and colored klieg lighting creating the setting. The
Solley's restaurant in Sherman Oaks, California retains the smaller, family
atmosphere its patrons enjoyed for years before it was acquired by the Company
in 1996. The Rascal House, in Miami Beach, Florida, has its own unique character
that has been popular for over 40 years. However, the true strength of all of
the Company's restaurants is in the execution of the extraordinary menus at all
of the restaurants. At Jerry's Famous Deli restaurants, customers can choose
from a menu of over 600 items, while at Solley's and Rascal House, customers can
enjoy their old favorites, along with many of the Jerry's Famous Deli menu
items, all prepared with consistency and quality at every location. People come
to a Jerry's, Solley's or Rascal House for the food, and they expect their
favorite item the same way every time at each location. The Company depends
heavily on repeat customers, and it emphasizes consistency, quality and
cleanliness in an atmosphere acceptable to the whole family, and appealing to
the very different demographics in the clientele at different times of the day.
Each of the Company's restaurants offer moderately priced, high quality food for
in-store eating, take-out, delivery or catering services, seven days a week
operation, and high energy ambiance.
All of the eight Jerry's Famous Deli restaurants in operation at
December 31, 1997 had average annualized sales of approximately $5.8 million per
location for the year ended December 31, 1997. Solley's had sales of
approximately $3.7 million, and the Rascal House restaurant had sales of
approximately $9.5 million for 1997. In the September 1997 issue of The Los
Angeles Business Journal, six Jerry's Famous Deli restaurants were listed among
the top 25 highest grossing restaurants in Los Angeles County.
The Company's current objectives are to continue to expand its Southern
California and Southern Florida operations, where it can take advantage of its
well-known brand names and operational style. In addition, the Company seeks to
enter new areas with the acquisition of other well-established deli-style
restaurants and markets in larger metropolitan areas. The Company intends to
establish clusters of operations within specific regions to maximize brand name
recognition and benefit from operating and marketing efficiencies. Management
may consider additional public or private offerings of its common stock and
preferred stock as well as additional debt financing to fund its future
expansion efforts. There is no assurance that the Company's financial or growth
objectives can be achieved or that additional capital will be available to
finance the Company's business plan. See "Risk Factors."
The Company is organized under the laws of the State of California. The
Company's offices are located at 12711 Ventura Boulevard, Suite 400, Studio
City, California 91604. Its telephone number is (818) 766-8311.
THE OFFERING
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Common Stock offered by the Selling Security Holders: 4,855,914 shares
Common Stock issuable under Warrants 65,000 shares
Common Stock outstanding as of May 5, 1998: 15,144,664 shares
Nasdaq National Market Symbol: "DELI"
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RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THE
PROSPECTUS AND INFORMATION INCORPORATED HEREIN BY REFERENCE, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE MAKING AN
INVESTMENT. THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE INTO IT
CERTAIN FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS
STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THE
CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS AND INCORPORATED BY REFERENCE
HEREIN SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING
STATEMENTS WHEREVER THEY APPEAR IN OR ARE INCORPORATED HEREIN BY REFERENCE INTO
THIS PROSPECTUS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED HERE OR INCORPORATED HEREIN BY REFERENCE. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW, AS WELL AS THOSE
DISCUSSED ELSEWHERE HEREIN.
LIMITED OPERATING HISTORY WITH MULTIPLE RESTAURANTS. The Company was
founded in 1978 with the opening of its Studio City restaurant. Three additional
restaurants were opened in 1989, 1991 and 1994, respectively, and have each been
in operation for over four years. Two additional restaurants were opened in
February and June 1996, respectively, two additional restaurants (Solley's) were
acquired as of June 30, 1996, and one additional restaurant (Rascal House) was
acquired September 9, 1996. The newest restaurant was opened in August 1997.
Accordingly, the Company has a limited operating history in its current size and
configuration, and there is no assurance that such restaurants, or the Company
as a whole, will be profitable in the future.
LACK OF DIVERSIFICATION. At the present time, the Company intends to
invest only in deli-style restaurants and gourmet markets. As a result, changes
in consumer preferences, including a change in consumer preferences for
restaurants of the type operated by the Company, may have a disproportionate and
materially adverse impact on the Company's business and its operating results.
NEED FOR ADDITIONAL FINANCING. The expansion of the Company's
restaurant operations in 1996 and 1997 has been funded with the proceeds of an
initial public offering in October 1995 and sales of preferred shares in August
and November 1996, along with bank financing. Additional funds will be needed
for future acquisitions and development of new locations. There is no assurance
that the Company will be able to obtain such additional financing, or that such
additional financing will be available on terms acceptable to the Company and at
the times required by the Company. Failure to obtain such financing may
adversely impact the growth, development or general operations of the Company.
If, on the other hand, such financing can be obtained, it will most likely
result in additional leverage or dilution of existing shareholders.
UNCERTAIN ABILITY TO MANAGE GROWTH AND EXPANSION. In order to achieve
growth, Management believes that the Company must develop new restaurants. The
Company's expansion plan calls for the addition of several new restaurants per
year. Management has limited experience opening restaurants at the current
expansion plan rate. The Company's ability to successfully expand will depend on
a number of factors, including without limitation, the selection and
availability of suitable locations, the hiring and training of sufficiently
skilled management and personnel, the availability of adequate financing,
distributors and suppliers, the obtaining of necessary governmental permits and
authorizations, and contracting with appropriate development and construction
firms, some of which are beyond the control of the Company. There is no
assurance that the Company will be able to open any new restaurants, or that any
new restaurants will be opened at budgeted costs or in a timely manner, or that
such restaurants can be operated profitably.
LIMITATIONS AND VULNERABILITY AS A RESULT OF GEOGRAPHIC CONCENTRATION.
Because all of the Company's existing restaurants (other than Rascal House in
Florida) are located in Southern California, the Company is vulnerable to the
Southern California economy, which has experienced adverse results in past
years. In addition, the Company's experience with construction and development
outside the Los Angeles metropolitan area is limited, which may increase
associated risks of development and construction as the Company expands outside
this area. Expansion to other geographic areas may require substantially more
funds for advertising and marketing since the Company will not initially have
name recognition or word of mouth advertising available to it in areas outside
of Southern California. The centralization of the Company's management in
Southern California may be a problem in terms of expansion to new geographic
areas, since the Company may suffer from lack of experience with local
distributors, suppliers and consumer factors and from other issues as a result
of the distance between the Company's main headquarters and its restaurant
sites. These factors could impede the growth of the Company.
SIGNIFICANT RESTAURANT INDUSTRY COMPETITION. The restaurant industry is
intensely competitive with respect to price, service, location, ambiance and
quality, both within the casual dining field and in general. As a result, the
rate of failure for restaurants is very high and the business of owning and
operating restaurants involves greater risks than for businesses generally.
There are many competitors of the Company in the casual dining segment that have
substantially greater financial and other resources than the Company and may be
better established in those markets where the Company has opened or intends to
open restaurants. There is no assurance that the Company will be able to compete
in these markets.
DEPENDENCE UPON CONSUMER TRENDS. The Company's restaurants are, by
their nature, dependent upon consumer trends with respect to the public's
tastes, eating habits (including increased awareness of nutrition), and
discretionary spending priorities, all of which can shift rapidly. In general,
such trends are significantly affected by many factors, including the national,
regional or local economy,
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changes in area demographics, increases in regional competition, food, liquor
and labor costs, traffic patterns, weather, natural disasters, and the
availability and relative cost of automobile fuel. Any negative change in any of
the above factors could negatively affect the Company and its operations.
DEPENDENCE ON KEY PERSONNEL. The Company believes that the development
of its business has been, and will continue to be, highly dependent on Isaac
Starkman, the Chairman of the Board and Chief Executive Officer of the Company.
In addition, any outstanding balances under the Company's credit facility with
Bank of America become immediately due and payable upon the death of any
principal officer or majority shareholder. Isaac Starkman is currently 60 years
old. Mr. Starkman has an employment agreement which requires that he devote a
substantial majority of his time to the Company; however, he does have, and will
continue to have, limited involvement with certain concession and souvenir
businesses in New York, and other business ventures, each unrelated to the
Company and its business. Guy and Jason Starkman, Vice Presidents of the
Company, are currently 27 and 24 years old, respectively. The Company has
obtained key man life insurance of $1,000,000 face amount on Isaac Starkman.
However, if Isaac Starkman's services become unavailable for any reason, it
could affect the Company's business and operations adversely.
POSSIBLE HIGHER COSTS UNDER EXISTING RELATED PARTY LEASES. The Company
currently leases its Westwood restaurant building and eight adjacent parking
spaces, along with three parking lots and a 1,200 square foot building adjacent
to its West Hollywood restaurant, from the Starkman Family Partnership ("The
Starkman Family Partnership"), an entity controlled by Isaac Starkman, the
controlling beneficial shareholder of the Company. There is no assurance that
the leases between The Starkman Family Partnership and the Company are as
favorable as the Company could have obtained from an unaffiliated third party.
These leases were not negotiated at arm's length and Isaac Starkman, the
controlling beneficial shareholder and the Chief Executive Officer of the
Company, had a conflict of interest in negotiating these transactions. In
addition, several of the leases are subject to renewal at their then fair market
value, which could involve substantial increases, depending upon the real estate
leasing market at the time of renewal of each of such leases. In the future, the
Company will not lease new restaurant sites or facilities or renew existing
leases from The Starkman Family Partnership or other affiliated persons or
entities unless the terms of the lease have been approved by the Company's
independent directors and deemed at least as favorable as would be available
from a non-affiliated third party by an independent national or regional real
estate evaluation firm or commercial leasing firm in a written opinion.
CERTAIN DISCONTINUED RESTAURANT CONCEPTS HAVE BEEN UNSUCCESSFUL.
Certain other restaurant operations established by Isaac Starkman, the
controlling beneficial shareholder of the Company, have not met with success. In
November 1984, Isaac Starkman established a casual dining restaurant named
Starky's, which combined a deli operation with pizza parlor and arcade at the
top of the Beverly Center, a large shopping mall in Los Angeles, California.
Starky's had no street visibility, and due to its location in an enclosed mall,
had restricted hours of operation and problems with hygienic conditions at the
mall which were outside of Management's control. A lawsuit was filed by Starky's
primarily related to the landlord's property maintenance which resulted in a
settlement subject to a confidentiality agreement and the closing of the
restaurant in December 1992. In addition, Jerry's Famous Pizza, a 2,300 square
foot pizza restaurant in Sherman Oaks, California ("Jerry's Famous Pizza"),
operated by Pizza by the Pound, Inc., a wholly-owned subsidiary acquired by the
Company in January, 1995, was not profitable. Management determined that it was
in the interest of shareholder value that the Company focus on its core business
of high volume deli style restaurants rather than confuse the financial markets'
perception of the Company by developing comparatively low volume restaurants in
the fast food pizza segment. As a result, the Company ceased operations of
Jerry's Famous Pizza.
INCREASES IN FOOD COSTS. Among various other factors, the Company's
profitability is highly sensitive to changes in food costs, which sensitivity
requires Management to be able to anticipate and react to such changes. Various
factors beyond the Company's control, including adverse weather, labor strikes
and delays in any of the restaurants' frequent deliveries, may negatively affect
food costs, quality and availability. While in the past, Management has been
able to anticipate and react to increasing food costs through, among other
things, purchasing practices, menu changes and price adjustments, there can be
no assurance that it will be able to do so in the future.
INCREASE IN MINIMUM WAGE. The federal minimum wage increased from $4.25
an hour to $4.75 effective October 1, 1996, and again to $5.15 effective
September 1, 1997. In addition, the California minimum wage increased to $5.75
on April 1, 1998. President Clinton has proposed an additional increase in the
federal minimum wage to $6.15 an hour, which will be subject to congressional
approval. Approximately one-third of employees working in restaurants operated
by the Company receive salaries equal to the federal minimum wage.
SECURITY CONCERNS AND EXPENSES AT RESTAURANT SITES. In light of, among
other things, the 24-hour operation of some of the Company's restaurants,
security for patrons and workers at restaurant locations is an ongoing and
increasing concern and expense. The Company has previously had criminal
incidents at its restaurants, some of which have resulted in lawsuits. There is
no assurance that there will not be any additional problems at any of the
locations. The Company maintains its own security personnel at each location.
The Company also maintains general liability insurance.
POTENTIAL UNINSURED LOSSES. The Company has comprehensive insurance,
including general liability, fire and extended coverage, which the Company
considers adequate. However, there are certain types of losses which may be
uninsurable or not economically insurable. Such hazards may include earthquake,
hurricane and flood losses. While the Company currently maintains limited
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earthquake coverage, it may not be economically feasible to do so in the future.
Since the Company's operations are currently concentrated in one area of
Southern California, the Company has had temporary interruptions in its
operations due to such hazards in the past. Punitive damage awards are generally
not covered by insurance; thus, any awards of punitive damages as to which the
Company may be liable could adversely affect the ability of the Company to
continue to conduct its business, to expand its operations or to develop
additional restaurants. If such a loss should occur, the Company would, to the
extent that it is not covered for such loss by insurance, suffer a loss of the
capital invested in, as well as anticipated profits and/or cash flow from, such
damaged or destroyed properties. There is no assurance that any insurance
coverage maintained by the Company will be adequate, that it can continue to
obtain and maintain such insurance at all or that the premium costs will not
rise to an extent that they adversely affect the Company or the Company's
ability to economically obtain or maintain such insurance.
POTENTIAL "DRAM SHOP" LIABILITY. Restaurants in California and most
other states are subject to "dram shop" laws, rules and regulations, which
impose liability on licensed alcoholic beverage servers for injuries or damages
caused by their negligent service of alcoholic beverages to a visibly
intoxicated person or to a minor, if such service is the proximate cause of the
injury or damage and such injury or damage is reasonably foreseeable. While the
Company has limited amounts of liquor liability insurance and intends to
maintain liquor liability insurance as part of its comprehensive general
liability insurance which it believes should be adequate to protect against such
liability, there is no assurance that it will not be subject to a judgment in
excess of such insurance coverage or that it will be able to obtain or continue
to maintain such insurance coverage at reasonable costs, or at all. The
imposition of a judgment substantially in excess of the Company's current
insurance coverage would have a materially adverse effect on the Company and its
operations. The failure or inability of the Company to maintain or increase
insurance coverage could materially and adversely affect the Company and its
operations. In addition, punitive damage awards are generally not covered by
such insurance. Thus, any awards of punitive damages as to which the Company may
be liable could adversely affect the ability of the Company to continue to
conduct its business, to expand its operations or to develop additional
restaurants.
TRADEMARK AND SERVICE MARK RISKS. The Company has not had a challenge
to its use of the "Jerry's" service mark as of this time. However, to date, the
Company has used the service mark only in Southern California. In addition, the
Company has not secured clear rights to the use of the "Jerry's" service mark or
any other name, service mark or trademark used in the Company's business
operations, other than "JFD," in connection with restaurants. There are other
restaurants using the name "Jerry's" throughout the United States, and use of
the service mark or any other name, service mark or trademark in the Company's
business operations, other than "JFD," may be subject to challenge.
EFFECTS OF COMPLIANCE WITH GOVERNMENT REGULATION. The Company is
subject to various federal, state and local laws, rules and regulations
affecting its businesses and operations. Each of the Company's restaurants is
and shall be subject to licensing regulation and reporting requirements by
numerous governmental authorities, which may include alcoholic beverage control,
building, land use, health and safety and fire agencies in the state or
municipality in which the restaurant is located. Difficulties in obtaining or
failures to obtain the necessary licenses or approvals could delay or prevent
the development or operation of a given restaurant or limit, as with the
inability to obtain a liquor or restaurant license, its products and services
available at a given restaurant. Any problems which the Company may encounter in
renewing such licenses in one jurisdiction may adversely affect its licensing
status on a federal, state or municipal level in other relevant jurisdictions.
LIMITED CONTROL AND INFLUENCE ON THE COMPANY. The current officers and
directors of the Company in the aggregate, directly or beneficially, currently
own a majority of the total outstanding Common Stock. In addition, three out of
six directors are members of the Starkman family. As a result, these individuals
are in a position to materially influence, if not control the outcome of all
matters requiring shareholder or board approval, including the election of
directors. Such influence and control is likely to continue for the foreseeable
future and significantly diminishes control and influence which future
shareholders may have on the Company.
NO DIVIDENDS. It is the current policy of the Company that it will
retain earnings, if any, for expansion of its operations, remodeling of existing
restaurants and other corporate purposes, and it will not pay any cash dividends
in respect of the Common Stock in the foreseeable future.
POSSIBLE ADVERSE IMPACT ON POTENTIAL BIDS TO ACQUIRE SHARES DUE TO
ISSUANCE OF PREFERRED OR COMMON STOCK. The Board of Directors of the Company has
authority to issue up to 5,000,000 shares of preferred stock of the Company (the
"Preferred Stock") and to fix the rights, preferences, privileges and
restrictions of such shares without any further vote or action by the
shareholders. In addition, the Company has authorized 60,000,000 shares of
Common Stock. Only 15,144,664 shares of Common Stock are currently outstanding,
and no preferred shares are currently outstanding. The potential issuance of
authorized and unissued preferred shares or Common Stock of the Company may
result in special rights and privileges, including voting rights, to individuals
designated by the Company and have the effect of delaying, deferring or
preventing a change in control of the Company. As a result, such potential
issuance may adversely affect the marketability and potential market price of
the shares. As additional acquisition opportunities become available, Management
may determine to issue and sell additional Common Stock or preferred shares at
any time in the future.
RECENT CHANGES IN LOCAL ENFORCEMENT OF HEALTH CODE AND NEGATIVE
PUBLICITY. As a result of a November 1997 series of investigative reports on
local television regarding restaurant health code violations, the Los Angeles
County Health Department has
-7-
<PAGE> 10
instigated stricter monitoring and enforcement of health code provisions. The
Company's Studio City restaurant was one of several prominent restaurants
mentioned in the November 1997 report, which resulted in negative publicity to
the Company. Management believes that this may have contributed to reduced
revenues from the Southern California restaurants in the fourth quarter of 1997.
The Health Department's current policy is to grade every restaurant "A," "B" or
"C," with A being best, B being acceptable and C being grounds for closing the
restaurant. Four of the Company's six restaurants in the Los Angeles County
Health Department jurisdiction have been inspected to date, and those have all
received "A" ratings from the Health Department under the new policy. The
Company expects that the other two of its Los Angeles County restaurants will be
inspected within the next six months, and that they will also receive "A"
ratings. The Company's Orange County and Pasadena restaurants have also been
inspected recently by the appropriate local health department authorities and
received "no violations observed" ratings, which are comparable to an "A"
rating.
NEGATIVE PUBLICITY FROM PRIVATE DAMAGE CLAIMS. Restaurants such as
those operated by the Company are subject to litigation in the ordinary course
of business, most of which the Company expects to be covered by its general
liability insurance. In 1994, after the Company catered a private function for
cast, crew and guests of the "Frasier" television show, several persons
complained of food poisoning symptoms, and filed claims against the Company. The
Company believes that the claims made against it have no merit, and its
insurance carrier has contested the action. In February 1998, as the case neared
trial, the suit received newspaper and television publicity due to the celebrity
status of the claimants, which may have a negative impact on revenues on the
Company's Southern California restaurants.
-8-
<PAGE> 11
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of shares of
Common Stock offered by the Selling Security Holder.
SELLING SECURITY HOLDERS
This Prospectus covers a total of 4,855,914 shares of Common Stock and
65,000 shares of Common Stock issuable upon exercise of a warrant. The following
is a list of the Common Stock owned by the Selling Security Holders,
constituting approximately 32.06% of the total outstanding shares of Common
Stock.
The table below indicates the Selling Security Holder Shares held by
the Selling Security Holders as of May 5, 1998, and the number of shares of
Common Stock which may be offered pursuant to this Prospectus. The Company is
not aware of any plans by any of the named persons to sell their Common Stock.
However, the Common Stock held by these individuals are being registered for
resale in order that these individuals, or any donee, pledgee or transferee of
such Selling Security Holder Shares, may, from time to time in the future as
they determine in their discretion, sell any number of shares of Common Stock
which they own. The number of shares of Common Stock registered for the account
of the individuals named below who are executive officers or directors of the
Company may be increased by a supplement to this prospectus to the extent that
such persons acquire additional shares through the exercise of options issued
under the 1995 Stock Option Plan. The Company will not receive any of the
proceeds of any future sales of such Common Stock. The Common Stock listed below
are not being underwritten.
<TABLE>
<CAPTION>
Name of Selling Amount of Amount of Amount of Shares Amount of Amount of Shares
Security Holder(1) Common Stock Common Stock Shares Issuable Shares Owned After
Owned Before Being Registered Owned After Under Being Offering (2)
Offering Offering (2) Warrant Registered
<S> <C> <C> <C> <C> <C> <C>
Harry Thal 317,330 317,330 0
Mitchell Thal 440,736 440,736 0
Naomi Thal 79,332 79,332 0
Harry Thal, as
trustee for the
estate of Edith
Thal 44,074 44,074 0
Stanley Witkin &
Vella Witkin 25,000 25,000 0
Kenneth W. Roth 28,037 28,037 0
Kenneth Abdalla 200,000 200,000 0
Waterton
Management
LLC(3) 1,687,692 1,687,692 0 65,000 65,000 0
Ronald W. Burkle
Foundation(4) 1,729,951 1,729,951 0
Gerlach & Co. 303,762 303,762 0
</TABLE>
(1) Information set forth in the table regarding the Selling Security
Holder Securities is provided to the best knowledge of the Company
based on information furnished to the Company by the respective Selling
Securities Holder and/or available to the Company through its stock
ledgers.
(2) Assumes that the Selling Security Holder sells all of the Selling
Security Holder Shares held by it.
(3) Includes 107,698 shares held by Yucaipa Waterton Deli Investors, LLC,
and 1,579,994 shares held by Jerry's Investors, LLC, which shares may
be deemed to be beneficially owned by Waterton Management LLC. Mr.
Abdalla, President and director of the Company, is the manager of
Waterton Management LLC.
(4) Mr. Abdalla, President and director of the Company, is a director of
the Ronald W. Burkle Foundation.
-9-
<PAGE> 12
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 60,000,000 shares of
Common Stock, no par value, and 5,000,000 shares of Preferred Stock, no par
value. As of May 5, 1998, there were 15,144,664 shares of Common Stock
outstanding and no Preferred Stock outstanding.
COMMON STOCK
The holders of outstanding Common Stock are entitled to receive
dividends out of assets legally available therefor at such times and in such
amounts as the Board of Directors may from time to time determine. The Company
has no present intention of paying dividends on its Common Stock. Upon
liquidation, dissolution or winding up of the Company, and subject to the
priority of any outstanding Preferred Stock, the assets legally available for
distribution to shareholders are distributable ratably among the holders of
Common Stock at the time outstanding.
No holder of shares of Common Stock has a preemptive right to subscribe
to future issuances of securities by the Company. Accordingly, all holders of
Common Stock will suffer dilution of their percentage interest in the Company
upon future sales of Common Stock or securities convertible into Common Stock.
Holders of Common Stock are entitled to cast one vote for each share
held of record on all matters presented to shareholders, other than with respect
to the election of directors, for which cumulative voting is currently required
under certain circumstances by applicable provisions of California law. Under
cumulative voting, each shareholder may give any one candidate whose name is
placed in nomination prior to the commencement of voting a number of votes equal
to the number of directors to be elected, multiplied by the number of votes to
which the shareholder's shares are normally entitled, or distribute such number
of votes among as many candidates as the shareholder sees fit. The effect of
cumulative voting is that the holders of a majority of the outstanding shares of
Common Stock may not be able to elect all of the Company's directors. The Common
Stock is fully paid and nonassessable.
PREFERRED SHARES
The Company is authorized to issue 5,000,000 shares of Preferred Stock.
The Company's Board of Directors is authorized to issue the Preferred Stock in
one or more Series and, with respect to each series, to determine the
preferences and rights and the qualifications, limitations or restrictions
thereof, including the dividend rights, conversion rights, voting rights,
redemption rights and terms, liquidation preferences, sinking fund provisions,
the number of shares constituting each series and the designation of such
series. The Board of Directors could, without shareholder approval, issue
Preferred Stock with voting and other rights that could adversely affect the
voting rights of the holders of Common Stock and could have certain
anti-takeover effects.
On August 30, 1996, the Company filed a Certificate of Determination in
connection with the issuance of up to 19,000 Series A Preferred Shares. Each
Preferred Share has a right to dividends of $80.00 per share per year, payable
quarterly in arrears, in cash or shares of Common Stock. Each Preferred Share
has a liquidation preference of $1,000 per share. Each Preferred Share is
convertible at the option of the holders, at any time commencing ninety days
following the initial issuance of shares, and is automatically converted on the
third anniversary of the date of issuance, into Common Stock, at a conversion
price equal to the average market price of the Common Stock for the five days
preceding the conversion, less a 17% discount from such market price, provided
that the maximum conversion price will be no more than $6.00 per share and the
minimum conversion price will be no less than $3.00 per share. The Company sold
an aggregate of 12,000 shares of Series A Preferred Stock in August and November
of 1996, of which 2,000 shares were converted to Common Stock in December 1996.
In January 1997, the Company issued a new class of Series B Preferred
Shares into which the Series A Preferred Shares were converted. The Series B
Preferred Shares were substantially identical to the Series A Preferred Shares,
except that each Series B Preferred Share had voting rights equal to 109 shares
of Common Stock. On March 27, 1997, the holders of the Series B Preferred Shares
converted all remaining 10,000 shares outstanding to 3,139,593 shares of common
stock at a conversion price of approximately $3.19 per share. As of May 5, 1998,
no shares of Preferred Stock were outstanding.
TRANSFER AGENT
U.S. Stock Transfer Corporation, Glendale, California is the transfer
agent and registrar for the shares of Common Stock.
PLAN OF DISTRIBUTION
The Selling Security Holder Shares may be sold from time to time by the
Selling Security Holders, or by pledgees, donees, transferees or other
successors in interest. Such sales may be made on one or more exchanges or in
the over-the-counter market, or
-10-
<PAGE> 13
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The Selling Security
Holder Shares may be sold by one or more of the following: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the Selling Security
Holder Shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
prospectus; (c) an exchange distribution in accordance with the rules of such
exchange; and (d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers. In effecting sales, brokers or dealers engaged by
the Selling Security Holders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from
Selling Security Holders in amounts to be negotiated immediately prior to the
sale. Such brokers or dealers and any other participating brokers or dealers may
be deemed to be "underwriters" within the meaning of the Act in connection with
such sales. In addition, any Selling Security Holder Shares covered by this
prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this prospectus.
Upon the Company being notified by a Selling Security Holder that any
material arrangement has been entered into with a broker-dealer for the sale of
Selling Security Holder Shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplemented prospectus will be filed, if required, pursuant to Rule 424(c)
under the Act, disclosing (i) the name of each such Selling Security Holder and
of the participating broker-dealer(s), (ii) the number of Selling Security
Holder Shares involved, (iii) the price at which such Selling Security Holder
Shares were sold, (iv) the commissions paid or discounts or concessions allowed
to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did
not conduct any investigation to verify the information set out or incorporated
by reference in this prospectus and (vi) other facts material to the
transaction.
The Selling Security Holders have been advised that during the time
each is engaged in distribution of the securities covered by this Prospectus,
each must comply with Regulation M under the Securities Exchange Act of 1934, as
amended, and pursuant thereto: (i) shall not engage in any stabilization
activity in connection with the Company's securities; (ii) shall furnish each
broker through which securities covered by this Prospectus may be offered the
number of copies of this Prospectus which are required by each broker; and (iii)
shall not bid for or purchase any securities of the Company or attempt to induce
any person to purchase any of the Company's securities other than as permitted
under the Securities Exchange Act of 1934, as amended. Any Selling Security
Holders who may be "affiliated purchasers" of the Company as defined in
Regulation M have been further advised that they must coordinate their sales
under this Prospectus with each other and the Company for purposes of Regulation
M. Each Selling Security Holder must also furnish each broker through whom
Selling Security Holder Shares are sold copies of this Prospectus.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby have
been passed upon for the Company by Jeffer, Mangels, Butler & Marmaro LLP, Los
Angeles, California.
EXPERTS
The consolidated balance sheets of Jerry's Famous Deli, Inc. as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, equity and cash flows for each of the three years in the period
ended December 31, 1997, are incorporated by reference herein and in the
registration statement, have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
-11-
<PAGE> 14
================================================================================
NO DEALER, SALES REPRESENTATIVE OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY THE COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................................. 2
ADDITIONAL INFORMATION....................................................................... 2
PROSPECTUS SUMMARY........................................................................... 3
RISK FACTORS................................................................................. 4
USE OF PROCEEDS.............................................................................. 8
SELLING SECURITY HOLDERS..................................................................... 8
DESCRIPTION OF CAPITAL STOCK................................................................. 8
PLAN OF DISTRIBUTION......................................................................... 9
LEGAL MATTERS................................................................................ 9
EXPERTS...................................................................................... 9
</TABLE>
---------------
4,855,914 Shares of Common Stock
65,000 Shares of Common Stock
issuable upon exercise of Warrants
JERRY'S FAMOUS DELI, INC.
----------------
PROSPECTUS
----------------
May 6, 1998
================================================================================
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following tables sets forth the various expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions and non-accountable expense allowance.
All of the amounts shown are estimates except the Securities and Exchange
Commission registration and NASD filing fees.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee .... $ 582
Nasdaq filing fee ...................................... $17,500
Accounting fees and expenses ........................... $ 5,000
Printing and engraving expenses ........................ $ 5,000
Transfer agent and registrar (fees and expenses) ....... $ 500
Blue Sky fees and expenses (including counsel fees) .... $ 2,000
Other legal fees and legal expenses .................... $20,000
Miscellaneous expenses ................................. $10,000
Total .................................................. $60,582
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to provisions of the California General Corporation Law, the
Articles of Incorporation of the registrant (the "Company"), as amended, include
a provision which eliminates the personal liability of its directors to the
Company and its shareholders for monetary damage to the fullest extent
permissible under California law. This limitation has no effect on a director's
liability (i) for acts or omissions that involve intentional misconduct or a
knowing and culpable violation of law, (ii) for acts or omissions that a
director believes to be contrary to the best interests of the Company or its
shareholders or that involve the absence of good faith on the part of the
director, (iii) for any transaction from which a director derived an improper
personal benefit, (iv) for acts or omissions that show a reckless disregard for
the director's duty to the Company or its shareholders in circumstances in which
the director was aware, or should have been aware, in the ordinary course of
performing his or her duties, of a risk of a serious injury to the Company or
its shareholders, (v) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
Company or its shareholders, (vi) under Section 310 of the California General
Corporation Law (concerning contracts or transactions between the Company and a
director) or (vii) under Section 316 of the California General Corporation Law
(concerning directors' liability for improper dividends, loans and guarantees).
The provision does not eliminate or limit the liability of an officer for any
act or omission as an officer, notwithstanding that the officer is also a
director or that his actions, if negligent or improper, have been ratified by
the Board of Directors. Further, the provision has no effect on claims arising
under federal or state securities or blue sky laws and does not affect the
availability of injunctions and other equitable remedies available to the
Company's shareholders for any violation of a director's fiduciary duty to the
Company or its shareholders.
The Company's Articles of Incorporation authorize the Company to indemnify
its officers, directors and other agents to the fullest extent permitted by
California law. The Company's Articles of Incorporation also authorize the
Company to indemnify its officers, directors and agents for breach of duty to
the corporation and its shareholders through bylaw provisions, agreements or
both, in excess of the indemnification otherwise provided under California law,
subject to certain limitations. The Company has entered into indemnification
agreements with its non-employee directors whereby the Company will indemnify
each such person (an "indemnitee") against certain claims arising out of certain
past, present or future acts, omissions or breaches of duty committed by an
indemnitee while serving in his employment capacity. Such indemnification does
not apply to acts or omissions which are knowingly fraudulent, deliberately
dishonest or arise from willful misconduct. Indemnification will only be
provided to the extent that the indemnitee has not already received payments in
respect of a claim from the Company or from an insurance company. Under certain
circumstances, such indemnification (including reimbursement of expenses
incurred) will be allowed for liability arising under the Securities Act.
THE COMPANY HAS PURCHASED A DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
POLICY INSURING DIRECTORS AND OFFICERS OF THE COMPANY.
II-i
<PAGE> 16
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
3.1 Articles of Incorporation, as amended (including Second Amended and Restated Certificate of
Determination of Rights of Series A Preferred Shares and Certificate of Determination of Rights of Series
B Preferred Shares), incorporated by reference to Exhibit 3.1 of the Company's Annual Report on Form
10-K for the year ended December 31, 1996, as filed with the Securities and Exchange Commission on
March 31, 1997 (the "1996 10-K").
3.2 Bylaws of the Company, incorporated by reference to Exhibit 3.2 of the Company's Registration
Statement on Form S-1, as filed on July 18, 1995 (Registration No. 33-94724), and declared effective by
the Securities and Exchange Commission on October 20, 1995 (referred to herein as the "1995
Registration Statement").
4.1 Specimen Common Stock Certificate of the Company, incorporated by reference to Exhibit 4.1 of the
1995 Registration Statement.
4.2 Specimen Series B Stock Certificate of the Company, incorporated by reference to Exhibit 4.3 of the
1996 10-K.
4.3 Specimen Common Stock Purchase Warrant, incorporated by reference to Exhibit 10.2 of the Company's
Report on Form 8-K for August 22, 1996 (the "Waterton 8-K").
5.1 Opinion of Jeffer, Mangels, Butler & Marmaro LLP
10.1 Asset Purchase Agreement, dated as of December 12, 1998, among the Company, Epicure Market, Inc., a
Florida corporation ("Seller"), Harry Thal, Mitchell Thal, and E & L Thal Real Estate Account
Partnership, a Florida general partnership, a/k/a E & L Thal Real Estate Account, a Florida general
partnership a/k/a E & L Thal Partners, a Florida general partnership, as modified by the Modification to
Asset Purchase Agreement dated as of February 17, 1998, incorporated by reference to Exhibit 10.1 of
the Company's Report on Form 8-K for April 1, 1998 (the "Epicure 8-K").
10.2 Lease Agreement, dated as of April 1, 1998, between the Company and E&L Thal Real Estate Account
Partnership, incorporated by reference to Exhibit 10.2 of the Epicure 8-K.
10.3 Employment Agreement, dated as of April 1, 1998, by and between the Company and Harry Thal,
incorporated by reference to Exhibit 10.3 of the Epicure 8-K.
10.4 Employment Agreement, dated as of April 1, 1998, by and between the Company and Mitchell Thal,
incorporated by reference to Exhibit 10.4 of the Epicure 8-K.
10.5 Stock Restriction Agreement dated April 1, 1998, among National Deli Corporation, the Company, Harry
Thal, Mitchell Thal, Naomi Thal, Estate of Edith Thal, and Katz, Barron, Squitero, Faust & Berman,
P.A., incorporated by reference to Exhibit 10.5 of the Epicure 8-K.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Jeffer, Mangels, Butler & Marmaro (included in Exhibit 5.1)
24 Power of Attorney (incorporated by reference to page II-4 of this Registration Statement on Form S-3).
</TABLE>
II-ii
<PAGE> 17
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any Prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually, or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement; notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) (Section
230.424(b) of this Chapter) if, in the aggregate,
the changes in volume and price represent no more
than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising from the Securities
Act of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Registrant, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or Rule
497(h) under the Act shall be deemed to be part of this Registration Statement
as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-iii
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California on the 6th day of May, 1998.
JERRY'S FAMOUS DELI, INC.
By:/s/ISAAC STARKMAN
---------------------------------------
Isaac Starkman, Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Isaac
Starkman his true and lawful attorney-in-fact and agent, acting alone, with full
powers of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, any Amendments
thereto and any Registration Statement for the same offering which is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, each acting alone, full powers and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all said attorney-in-fact
and agent, acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Company in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ISAAC STARKMAN Director, Chief Executive Officer May 6, 1998
- ----------------------------- and Chairman of the Board
Isaac Starkman
/s/KENNETH ABDALLA President and Director May 6, 1998
- -----------------------------
Kenneth Abdalla
/s/GUY STARKMAN Vice President and Director May 6, 1998
- -----------------------------
Guy Starkman
/s/JASON STARKMAN Vice President and Director May 6, 1998
- -----------------------------
Jason Starkman
/s/CHRISTINA STERLING Chief Financial Officer and May 6, 1998
- ----------------------------- Principal Accounting Officer
Christina Sterling
/s/PAUL GRAY Director May 6, 1998
- -----------------------------
Paul Gray
/s/STANLEY SCHNEIDER Director May 6, 1998
- -----------------------------
Stanley Schneider
</TABLE>
II-iv
<PAGE> 1
EXHIBIT 5.1
[JEFFER, MANGELS, BUTLER & MARMARO LLP LETTERHEAD]
May 6, 1998
56849-0001
Jerry's Famous Deli, Inc.
12711 Ventura Boulevard, Suite 400
Studio City, California 91604
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
At your request, we have examined the Registration
Statement on Form S-3 (the "Registration Statement") (including a Form S-3
Prospectus), which Jerry's Famous Deli, Inc., a California corporation (the
"Company"), proposes to file with the Securities and Exchange Commission (the
"Commission").
The Registration Statement covers (i) up to 934,509 shares
of the common stock of the Company, no par value (the "Common Stock"), issued in
connection with the Company's acquisition of The Epicure Market to affiliates of
the seller; (ii) up to 200,000 shares of Common Stock issued to an executive of
the Company (the "Consulting Shares"); (iii) up to 3,721,405 shares of Common
Stock for the account of Waterton Management, LLC and certain of its affiliates
and their assignees, and (iv) up to 65,000 shares of Common Stock issuable upon
exercise of warrants issued to Waterton Management, LLC (collectively, the
"Shares").
In connection with rendering this opinion, we have examined
originals, or copies identified to our satisfaction as being true copies of
originals, of such corporate records of the Company and other documents which we
considered necessary for the purposes of this opinion.
In our review and examination of documents we have assumed
(i) the genuineness of all signatures; (ii) the authenticity of all documents
submitted to us as originals and the conformity to authentic original documents
of all documents submitted to us as certified, conformed or photostatic copies
thereof; (iii) all signatories have adequate power and authority to execute the
Agreement; and (iv) each person signing a document is a competent adult person
not operating under any legal disability, duress or having been defrauded in the
execution of documents.
<PAGE> 2
JEFFER, MANGELS, BUTLER & MARMARO LLP
Based upon and subject to the foregoing, it is our opinion
that the Shares are duly authorized and legally issued as fully paid shares,
except for the Consulting Shares which are partially paid shares subject to the
receipt of full payment, consisting of consulting services to be rendered from
March 27, 1997 through December 31, 1998. In accordance with California
Corporations Code Section 409(d), the Consulting Shares bear a legend indicating
the total amount of the consideration to be paid therefor and the amount paid
thereon. Upon the completion of each calendar quarter of consulting services
commencing with the quarter ending June 30, 1997, one seventh of the total
number of the Consulting Shares will become fully paid and nonassessable shares
of the Common Stock of the Company.
We express no opinion as to compliance with the securities
or "blue sky" laws of any state in which the Shares are proposed to be offered
and sold or as to the effect, if any, which non-compliance with such laws might
have on the validity of issuance of the Shares.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the filing of this opinion in
connection with such filings of applications by the Company as may be necessary
to register, qualify or establish eligibility for an exemption from registration
or qualification of the Shares under the blue sky laws of any state or other
jurisdiction. In giving this consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Commission
promulgated thereunder.
Nothing herein shall be deemed to relate to or constitute
an opinion concerning any matters not specifically set forth above.
The opinion set forth herein is based upon the federal laws
of the United States of America and the laws of the State of California, all as
now in effect. We express no opinion as to whether the laws of any particular
jurisdiction apply, and no opinion to the extent that the laws of any
jurisdiction other than those identified above are applicable to the subject
matter hereof.
The information set forth herein is as of the date of this
letter. We disclaim any undertaking to advise you of changes which may be
brought to our attention after the effective date of the Registration Statement.
Very truly yours,
/s/ JEFFER, MANGELS, BUTLER & MARMARO LLP
-----------------------------------------
JEFFER, MANGELS, BUTLER & MARMARO LLP
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-3 (File No. 333- ) of our report dated March 25,
1998 on our audits of the consolidated financial statements of Jerry's Famous
Deli, Inc. as of December 31, 1997 and 1996, and for each of the three years
in the period ended December 31, 1997, which report is included in the
Company's Annual Report on Form 10-K and our report dated March 20, 1998
on our audits of the financial statements of Epicure Market, Inc. as of
September 27, 1997 and September 28, 1996 and for each of the two years in
the period ended September 27, 1997, which report is included in the Company's
Form 8-KA. We also consent to the reference to our firm under the caption
"Experts."
COOPERS & LYBRAND L.L.P.
Los Angeles, California
May 5, 1998
