AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 7, 1999
REGISTRATION NO. 333-85223
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
STEAKHOUSE PARTNERS, INC.
------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
--------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
5812
----
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
94-3248672
----------
(I.R.S. EMPLOYER IDENTIFICATION NO.)
10200 WILLOW CREEK ROAD
SAN DIEGO, CA 92131
(619) 689-2333
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
AND PRINCIPAL PLACE OF BUSINESS)
----------------------
RICHARD M. LEE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
STEAKHOUSE PARTNERS, INC.
10200 WILLOW CREEK ROAD
SAN DIEGO, CA 92131
(619) 689-2333
---------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
===============================================================================
COPY TO:
HANK GRACIN, ESQ.
LEHMAN & EILEN LLP
50 CHARLES LINDBERGH BLVD., SUITE 505
UNIONDALE, NEW YORK 11553
TELEPHONE: (516) 222-0888
FACSIMILE: (516) 222-0948
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the 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, please check the following box. /x/
<PAGE>
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 registration statement for the same
offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d) 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 the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------
Title of each Proposed maximum Proposed maximum Amount of
class of securities Amount to be offering price per aggregate offering Registration
to be registered registered share (1) (2) price (1) Fee
- ------------------- ------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C>
Common Stock 705,197 shares $7.375 $5,200,828 $1,445.83(3)
<FN>
- -----------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933,
as amended.
(2) The closing price of the Common Stock of the Registrant on August 11, 1999
on the NASDAQ SmallCap Market was $7.375 per share.
(3) The registration fee has been calculated by multiplying the aggregate
offering price by .000278. The registration fee was paid with the previous
filing.
</FN>
</TABLE>
Pursuant to Rule 416, there are also registered hereby such additional
indeterminate number of shares as may become issuable as dividends or to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Pursuant to Rule 429 of the Securities Act of 1933, the prospectus included
in this registration statement also relates to certain unsold securities of the
Registrant registered under registration statement No. 333-69137 and to certain
unsold securities of the Registrant registered under registration statement No.
333-29093.
PROSPECTUS
STEAKHOUSE PARTNERS, INC.
705,197 SHARES OF COMMON STOCK
----------------------------
The 705,197 shares of common stock are being offered by the selling
stockholders. The common stock is currently traded on the NASDAQ SmallCap Market
under the symbol "SIZL." On October 6, 1999 the last sale price of the common
stock as reported on NASDAQ was $6.25 per share.
The common stock may be sold by the selling stockholders directly or
through underwriters, dealers or agents in market transactions or privately
negotiated transactions.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This investment involves a high degree of risk. Carefully consider the
risk factors beginning on page 6 in this prospectus.
------------------------
The date of this Prospectus is October 7, 1999.
------------------------
<PAGE>
No person has been authorized in connection with this offering to give
any information or to make any representation other than as contained in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by Steakhouse Partners. This Prospectus
does not constitute an offer to sell or the solicitation of an offer to buy any
securities covered by this Prospectus in any state or other jurisdiction to any
person to whom it is unlawful to make such offer or solicitation in such state
or jurisdiction. Neither the delivery of this Prospectus nor any sales made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of Steakhouse Partners since the date hereof.
WHERE YOU CAN GET MORE INFORMATION
At your request, we will provide you, without charge, a copy of any
exhibits to our registration statement incorporated by reference in this
prospectus. If you want more information, write or call us at:
Steakhouse Partners, Inc.
10200 Willow Creek Road
San Diego, California 92131
Telephone No.: (619) 689-2333
Facsimile No.: (619) 689-0231
Our fiscal year ends on December 28, 1999. We furnish our shareholders
annual reports containing audited financial statements and other appropriate
reports. In addition, we are a reporting company and file annual, quarterly and
current reports, proxy statements and other information with the SEC. You may
read and copy any reports, statements or other information we file at the SEC's
public reference room in Washington D.C. You can request copies of these
documents, upon payment of a duplicating fee, by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC
Internet site at http:\\www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below, which we have already filed with the
SEC, and any future filings we make with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until the selling shareholders
sell all of the securities offered by this prospectus.
STEAKHOUSE PARTNERS, INC. SEC FILINGS (FILE NO. 000-23739) PERIOD
- --------------------------------------------------------------------------------
Annual Report on Form 10KSB Year ended December 29, 1998
Quarterly Report on Form 10QSB Quarter Ended March 23, 1999
Quarterly Report on Form 10QSB Quarter Ended June 15, 1999
This prospectus is part of a registration statement we filed with the
SEC. You should rely on the information incorporated by reference or provided in
this prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus or the documents incorporated by reference is accurate as of any date
other than the date on the front of this prospectus or those documents.
<PAGE>
TABLE OF CONTENTS
Page No.
PROSPECTUS SUMMARY............................................................1
THE OFFERING..................................................................2
RISK FACTORS..................................................................3
SELECTED FINANCIAL AND OPERATING DATA.........................................9
INDEMNIFICATION..............................................................10
MARKET PRICE OF COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.....................................11
REGISTRATION RIGHTS..........................................................11
USE OF PROCEEDS FROM SALE OF COMMON STOCK....................................12
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION.............................12
DESCRIPTION OF SECURITIES....................................................14
DIVIDEND POLICY..............................................................16
LEGAL MATTERS................................................................16
EXPERTS ....................................................................17
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in
this prospectus. It is not complete and may not contain all of the information
that is important to you. To understand this offering fully, you should read the
entire prospectus carefully, including the risk factors and financial
statements.
This prospectus and the documents incorporated in this prospectus by
reference may contain forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. These
forward-looking statements are based on current expectations, estimates and
projections about Steakhouse Partners' industry, management's beliefs and
assumptions made by management. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict.
Accordingly, actual results may differ materially from those expressed
or forecasted in any such forward-looking statements. Such risks and
uncertainties include those risk factors and such other uncertainties noted
herein and in the documents incorporated herein by reference. Steakhouse
Partners assumes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Steakhouse Partners, Inc.
10200 Willow Creek Road
San Diego, California 92131
Telephone No. (619) 689-2333
Facsimile No. (619) 689-0231
<PAGE>
THE OFFERING
Common Stock Offered by Selling Stockholders... 705,197 shares
Common Stock to be offered by Steakhouse
Partners..................................... 0 shares
Common Stock Outstanding Before Offering (1)... 3,332,522 shares
Common Stock Outstanding After Offering........ 3,332,522 shares
Use of Proceeds................................ All of the shares offered from
time to time by this prospectus
are being offered by the
selling stockholders.
Steakhouse Partners shall not
receive any proceeds from these
sales of its stock.
- -------------------------
(1) Based on shares outstanding as of October 7, 1999.
2
<PAGE>
RISK FACTORS
Investing in Steakhouse Partners' shares is very risky. You should be
able to bear a complete loss of your investment. You should carefully consider
the following factors, among others.
OUR PRINCIPAL SUBSIDIARY IS IN DEFAULT UNDER ITS MORTGAGE LOAN AGREEMENT AND IF
WE DO NOT OBTAIN A WAIVER OF THE COVENANT VIOLATIONS IT COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR OPERATIONS AND FINANCIAL RESULTS.
As of December 29, 1998, Paragon Steakhouse Restaurants, Inc., our
principal subsidiary, was not in compliance with certain financial ratio loan
covenants under its mortgage loan agreement. To date we have not obtained a
formal waiver for the covenant violations. If we do not obtain a waiver of the
covenant violations it could have a material adverse effect on our operations
and financial results. Paragon is in technical default under the terms of the
mortgage loan agreement. We are exploring opportunities to refinance the
mortgage loan agreement and have so informed the financing company.
To date, the financing company has not declared an event of default
under the mortgage loan agreement. If we do not obtain the agreement of the
financing company to waive the covenant violations it could have a material
adverse effect on our operations and financial results, including but not
limited to foreclosure upon Paragon's owned land, buildings and the improvements
thereon. We can give no assurance that we will be able to obtain the agreement
of the financing company to waive the covenant violations of Paragon before we
effect a refinancing of the mortgage loan agreement or that we will be able to
obtain the refinancing.
OUR PRINCIPAL SUBSIDIARY MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN AND IF
IT CEASES OPERATIONS IT WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS
AND FINANCIAL RESULTS.
The financial statements regarding Paragon which are incorporated by
reference into this prospectus have been prepared assuming that Paragon will
continue as a going concern; however, the financial condition of Paragon raises
substantial doubt about the ability of Paragon to continue as a going concern.
If Paragon ceases operations, it would have a material adverse effect on our
operations and financial results. Paragon has suffered substantial losses in
recent years. In addition, Paragon is not in compliance with certain loan
covenants under the terms of its mortgage loan agreement and such covenants have
not been waived or amended. If the lender demanded payment of the balance
outstanding, it is likely Paragon would not have available funds to meet the
lender's demand.
WE HAVE INCURRED LOSSES FROM INCEPTION AND MAY NEVER GENERATE SUBSTANTIAL
PROFITS, IF ANY AT ALL.
We were organized in May, 1996 and have incurred losses from inception.
We may never generate substantial profits, if any at all. We incurred a net loss
of $2,961,728, or $1.39 per share, on revenues of $6,519,421 for the fiscal year
ended December 29, 1998 and a net loss of $1,077,967, or $1.36 per share, on
revenues of $1,867,671 for the fiscal year ended December 30, 1997. For the 24
week period ended June 15, 1999, we incurrred a net loss of $3,639,328 or $1.44
per share, on revenues of $78,242,419. As of June 15, 1999 we had an accumulated
deficit of $8,621,575. Our ability to operate profitably is dependent upon the
successful execution of our business plans.
3
<PAGE>
WE HAVE NO SIGNIFICANT EXPERIENCE IN OPERATING A LARGE CHAIN OF RESTAURANTS AND
IF WE ARE NOT SUCCESSFUL IN OPERATING OUR RESTAURANTS IT WOULD HAVE A MATERIAL
ADVERSE EFFECT ON US.
We have no significant experience in operating a large chain of
restaurants or effectuating restaurant expansion. If we are not successful in
operating our restaurants or must close some restaurants, including the
restaurants acquired in the Paragon transaction, it would have a material
adverse effect upon us. We cannot assure you that we will be able to
successfully operate the restaurants acquired in the Paragon transaction. On
December 21, 1998 we completed our acquisition of Paragon, which then operated
seventy-three (73) steakhouse restaurants. Before the acquisition, we operated
only four (4) steakhouse restaurants. At present, we operate a total of
seventy-seven (77) restaurants. Our ability to successfully operate a
significantly larger number of restaurants depends on a number of factors,
including but not limited to:
* the availability, staffing, training and retention of skilled management
personnel;
* securing required governmental approvals and permits;
* adequately supervising construction and renovations;
* securing adequate financing; and
* achieving profitable operations.
IF WE ARE UNABLE TO OBTAIN ADDITIONAL FUNDS IN A TIMELY MANNER OR ON ACCEPTABLE
TERMS, WE MAY HAVE TO CURTAIL OR SUSPEND THE EXPANSION OF OUR OPERATIONS AND, AS
A LAST RESORT, CURRENT OPERATIONS, EITHER OF WHICH COULD LEAD TO OVERALL LOWER
REVENUES, WHICH COULD HAVE A SIGNIFICANT ADVERSE EFFECT ON OUR BUSINESS
RELATIONSHIPS, FINANCIAL RESULTS AND PROSPECTS.
If we were unable to obtain additional funds in a timely manner or on
acceptable terms, we may have to curtail or suspend, first, the expansion of our
operations, and, then, as a last resort, current operations, either of which
could lead to overall lower revenues, which could have a significant adverse
effect on our business relationships, financial results and prospects. For
example, in a cash crunch, we might have to suspend the opening of new
restaurants or reduce our expenditures on the advertising and promotion of our
existing restaurants, either of which could lead to less business for us and
lower overall revenues. We anticipate that our capital resources will be
sufficient to satisfy our capital requirements for the next 12 months. It is
possible, however, that due to unforeseen events, our capital resources and cash
generated from operations will be insufficient to fund our business during this
period. As a result, we would need to raise additional funds.
4
<PAGE>
FAILURE TO COMPLY WITH GOVERNMENT REGULATIONS COULD ADVERSELY AFFECT OUR
OPERATING PERFORMANCE.
Our restaurant operations are subject to the following laws and
government regulations:
* National and local health and sanitation laws and regulations;
* National and local employment and safety laws and regulations; and
* Local zoning, building code and land-use regulations.
We cannot assure you that we will be able to fully comply with all such
laws and regulations. Failure to comply with any of these laws or regulations,
or the loss of our liquor licenses, would have a material adverse effect on our
business. In addition, each of our restaurants must obtain licenses from
regulatory authorities allowing it to sell liquor, beer and wine, and each
restaurant must obtain a food service license from local health authorities.
Each restaurant's liquor license must be renewed annually and may be revoked at
any time for cause.
We may be subject to "dram-shop" liability, which generally provides a
person injured by an intoxicated person with the right to recover damages from
an establishment that wrongfully served alcoholic beverages to the intoxicated
person. We carry liquor liability coverage as part of our comprehensive general
liability insurance.
ADVERSE ECONOMIC CONDITIONS IN A LIMITED NUMBER OF STATES COULD HAVE A NEGATIVE
EFFECT ON OUR BUSINESS.
Our restaurants are located in eleven states, predominantly on the West
Coast and in the Great Lakes region. Adverse economic conditions in these states
could have an adverse effect on our financial results. Each of our restaurants
represents a significant investment and long-term commitment which limits our
ability to respond quickly or effectively to changes in local competitive
conditions or other changes that could affect our operations.
IF WE ARE UNABLE TO COMPETE EFFECTIVELY WITH OUR COMPETITORS, MANY OF WHICH HAVE
BEEN IN EXISTENCE LONGER THAN US, HAVE A MORE ESTABLISHED MARKET PRESENCE AND
HAVE SUBSTANTIALLY GREATER RESOURCES THAN US, WE WILL NOT BE ABLE TO INCREASE
REVENUES OR GENERATE PROFITS.
Our ability to increase revenues and operate profitably is directly
related to our ability to compete effectively with our competitors. Many of our
competitors have been in existence longer than us, have a more established
market presence and have substantially greater financial, marketing and other
resources than us, which give them competitive advantages over us.
Key competitive factors include:
* the quality and value of the food products offered;
* the quality of service;
* the price of the food products offered;
* the restaurant locations; and
* the ambiance of facilities.
We compete with national and regional chains, as well as individually
owned restaurants. The number of steakhouse restaurants with operations
generally similar to the concepts operated
5
<PAGE>
by us has grown substantially in the last several years. As our competitors
expand operations in various geographic areas, competition among steakhouse
restaurants with concepts similar to ours can be expected to intensify. Such
increased competition could adversely affect our revenues. In addition, the
restaurant industry has few non-economic barriers to entry. We cannot assure you
that third parties will not be able to successfully imitate and implement our
concepts.
UNFORESEEN COST INCREASES COULD ADVERSELY AFFECT OUR PROFITABILITY.
Our profitability is highly sensitive to increases in food, labor and
other operating costs. Our restaurants' dependence on frequent deliveries of
fresh food supplies means that shortages or interruptions in supply caused by
bad weather or other conditions could materially and adversely affect the
availability and cost of ingredients which in turn could materially and
adversely affect our profitability. In addition, unfavorable trends or
developments concerning the following factors could adversely affect our
results:
* inflation, food, labor and employee benefit costs (including increases in
hourly wage and minimum unemployment tax rates); and
* rent increases resulting from the rent escalation provisions in the
various restaurants' leases.
THE YEAR 2000 PROBLEM COULD CAUSE US TO SUFFER BUSINESS INTERRUPTIONS, OR
SHUTDOWN, REPUTATIONAL HARM OR LEGAL LIABILITY, AND AS A RESULT, MATERIAL
FINANCIAL LOSS.
We recognize that we, like all other businesses, are at risk if key
suppliers in utilities, communications, transportation, banking and government
are not ready for the year 2000. It is also possible that our computer software
applications, internal accounting, inventory tracking and other business
systems, working either alone or in conjunction with those of third parties who
do business with us, will not accept input of, store, manipulate and output
dates in the year 2000 or after without error. If any of this were to happen, we
may suffer business interruptions or shutdown, harm to our reputation or legal
liability and, as a result, material financial loss.
FUTURE SALES OF THE COMMON STOCK SOLD BY THE SELLING STOCKHOLDERS MAY CAUSE THE
MARKET PRICE OF OUR COMMON STOCK TO DROP.
Sales of substantial amounts of common stock, such as the shares sold
to the selling stockholders, or the perception that these sales could occur,
could result in lower market prices for our common stock and could impair our
ability to raise additional capital through the sale of our equity services or
through debt financing. We sold an aggregate of 705,197 shares of common stock
to the selling stockholders named in this prospectus. These shares may be sold
without restriction or further registration under the Securities Act of 1933, as
amended, as long as the prospectus covering the sales remains current and
effective.
IF WE ARE NOT ABLE TO RETAIN OUR KEY EXECUTIVES, IT WILL BE MORE DIFFICULT FOR
US TO MANAGE OUR OPERATIONS AND OUR OPERATING PERFORMANCE COULD BE ADVERSELY
AFFECTED.
Our success depends upon the contributions of our executive officers
and our other key personnel. The loss of the services of any of our executive
officers or other key personnel could have a significant adverse effect on our
business and operating results. We cannot assure you that we will be successful
in attracting and retaining key personnel.
6
<PAGE>
BECAUSE IT MAY BE DIFFICULT TO EFFECT A CHANGE IN CONTROL OF STEAKHOUSE PARTNERS
WITHOUT CURRENT MANAGEMENT'S CONSENT, A POTENTIAL SUITOR WHO OTHERWISE MIGHT BE
WILLING TO PAY A PREMIUM FOR ACQUIRING OUR COMPANY MAY DECIDE NOT TO ATTEMPT AN
ACQUISITION OF STEAKHOUSE PARTNERS.
Our executive officers, directors, and their affiliates beneficially
own 1,579,462 shares of our common stock. This represents approximately 38.2% of
the common stock issued and outstanding. As discussed below, our executive
officers also collectively own 1,000,000 shares of Series B Preferred Stock and
1,750,000 shares of Series C Preferred Stock, each of which carries voting
rights with the Common Stock on a one vote per share basis. Such concentration
of ownership and voting power may have the effect of delaying, deferring or
preventing a change in control of Steakhouse Partners. Potential suitors who
otherwise might be willing to pay a premium to acquire Steakhouse Partners may
decide not to try to acquire us because it may be difficult to effect a change
in control of Steakhouse Partners without current management's consent.
As of the date of this prospectus, 1,000,000 shares of Series B
Convertible Preferred Stock are outstanding, all of which are owned by Richard
M. Lee, our Chairman and Chief Executive Officer. The Series B Preferred carries
voting rights along with the common stock on a one-vote-per-share basis. In
addition, as of the date of this prospectus 1,750,000 shares of a newly
authorized Series C Convertible Preferred Stock are outstanding, all of which
are owned by Richard M. Lee and Hiram J. Woo, our President. The Series C
Preferred carries rights to vote with the common stock as one class on a one
vote-per-share basis. The issuance of a poison-pill or an additional large block
of stock with voting rights could also have the effect of delaying, deferring or
preventing a change of control of Steakhouse Partners.
In addition, the board of directors has the authority to issue up to
2,250,000 additional shares of preferred stock and to determine the price,
rights, preferences, privileges and restrictions, including voting rights, of
such stock without further shareholder approval. The rights of the holders of
common stock will be subjected to, and may be adversely affected by, the rights
of the holders of any preferred stock that may be issued in the future. Issuance
of additional shares of preferred stock could have the effect of delaying,
deferring or preventing a change in control of Steakhouse Partners.
FUTURE SALES OF COMMON STOCK MAY CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO
DROP.
Future sales of shares of common stock by us and our stockholders could
cause the market price of our common stock to drop. There are currently
1,119,659 restricted shares and 2,193,750 shares of common stock which are
freely tradeable or eligible to have the restrictive legend removed pursuant to
Rule 144(k) promulgated under the Securities Act. Of the 1,119,659 restricted
shares, 414,462 of these shares are currently eligible for resale under Rule
144. The balance of such shares are being registered for resale pursuant to this
prospectus. Sales of substantial amounts of common stock in the public market,
or the perception that the sales may occur, could have a significant adverse
effect on the market price of our common stock.
7
<PAGE>
SHAREHOLDERS MAY NOT BE ABLE TO RE-SELL THEIR STOCK OR MAY HAVE TO SELL AT
PRICES SUBSTANTIALLY LOWER THAN THE PRICE THEY PAID FOR IT.
The trading price for our common stock has been highly volatile and
could continue to be subject to significant fluctuations in response to
variations in our quarterly operating results, general conditions in the
restaurant industry or the general economy, and other factors. In addition, the
stock market is subject to price and volume fluctuations affecting the market
price for public companies generally, or within broad industry groups, which
fluctuations may be unrelated to the operating results or other circumstances of
a particular company. Such fluctuations may adversely affect the liquidity of
our common stock, as well as the price that holders may achieve for their shares
upon any future sale.
8
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
The following selected financial and operating data should be read in
conjunction with Steakhouse Partners' consolidated financial statements and the
notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in Steakhouse Partners' Annual Reports on
Form 10-KSB for the Twelve Months Ended December 29, 1998 and December 30, 1997.
The balance sheet data and statement of operations data as of and for the years
ended December 29, 1998 and December 30, 1997 are derived from the consolidated
financial statements of Steakhouse Partners, incorporated by reference herein,
that have been audited by Singer Lewak Greenbaum & Goldstein LLP, independent
accountants. The unaudited balance sheet data and unaudited statement of
operations data as of and for the June 15, 1999 and June 16, 1998 and for the 24
week periods then ended are derived from the consolidated financial statements
of Steakhouse Partners incorporated by reference herein, internal accounting
periods of Steakhouse Partners and include all adjustments necessary for a final
presentation of our financial position and results of operations for the
unaudited periods.
<TABLE>
<CAPTION>
YEAR ENDED 24 WEEKS ENDED
------------------------------ -------------------------
December 29, December 30, June 15, June 16,
1998 1997 1999 1998
------------ ------------ ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net......................................................... $ 6,519,421 $ 1,867,671 $78,242,419 $ 655,041
Cost of Sales......................................................... 6,160,522 2,006,351 75,177,629 729,675
----------- ----------- ----------- ----------
Gross profit (loss)................................................... 358,899 (138,680) 3,064,790 (74,634)
Total operating expenses..................................... 2,219,992 416,100 4,589,718 463,513
----------- ----------- ----------- ----------
Loss from operations.................................................. (1,861,093) (554,780) (1,524,928) (538,147)
Total other income (expenses)................................ (816,466) (523,187) 2,026,529 206,688
----------- ----------- ----------- ----------
Extraordinary Loss on extinguishment of debt.......................... (278,125) -- -- --
Provision for taxes .................................................. (6,044) -- (87,871) --
----------- ----------- ----------- ----------
Net loss.............................................................. $(2,961,728) $(1,077,967) $(3,639,328) $ (744,835)
----------- ----------- ----------- ----------
Basic loss per share after extraordinary item......................... ($1.39) ($1.36) $(1.44) $(0.39)
----------- ----------- ----------- ----------
Diluted loss per share after extraordinary item....................... ($1.39) ($1.36) $(1.44) $(0.39)
----------- ----------- ----------- ----------
Weighted-average shares outstanding .................................. 2,135,241 790,296 2,529,623 1,885,994
BALANCE SHEET DATA:
Working Capital (Deficit)............................................. (39,122,838) (2,338,536) (33,234,439) 1,891,609
Total assets.......................................................... 67,446,977 2,252,033 65,510,954 4,862,139
Long-term debt, net of current portion................................ 12,298,830 818,999 14,120,547 782,878
Stockholders' equity.................................................. 1,551,705 (1,414,706) 427,057 3,020,356
</TABLE>
9
<PAGE>
INDEMNIFICATION
Steakhouse Partners' Bylaws require Steakhouse Partners, to the fullest
extent permitted or required by Delaware law, to (i) indemnify its directors and
officers against any and all liabilities and (ii) advance any and all reasonable
expenses incurred in any proceeding to which any such director or officer is a
party or in which such director or officer is deposed or called to testify as a
witness because he or she is or was a director or officer of Steakhouse
Partners. Generally, Delaware statutory law permits indemnification of a
director upon a determination that he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The right to
indemnification granted in Steakhouse Partners' Bylaws is not exclusive of any
other rights to indemnification against liabilities or the advancement of
expenses which a director or officer may be entitled to under any written
agreement, Board resolution, vote of stockholders, Delaware law or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, 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.
10
<PAGE>
MARKET PRICE OF COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Common Stock of Steakhouse Partners has been traded on the NASDAQ
SmallCap Market under the symbol "SIZL" since February 27, 1998, the date of
Steakhouse Partners' initial public offering. As of October 6, 1999, the last
sale price as reported on NASDAQ was $6.25 per share.
The following table sets forth the range of high and low closing prices
for Steakhouse Partners' Common Stock for each quarterly period indicated, as
reported by brokers and dealers making a market in the capital stock. Such
quotations reflect inter-dealer prices without retail markup, markdown or
commission, and may not necessarily represent actual transactions:
COMMON STOCK
QUARTER ENDED HIGH LOW
- -------------------- ----------------------- -------------------------
September 30, 1999 $9.50 $6.13
June 30, 1999 $7.313 $4.00
March 31, 1999 $8.625 $4.00
December 31, 1998 $7.375 $4.125
September 30, 1998 $5.375 $2.50
June 30, 1998 $6.00 $4.25
March 31, 1998* $5.625 $4.844
* From the initial time of trading in March 2, 1998, the closing price was
$5.031.
We have not paid any dividends on our common stock. We currently intend
to retain any earnings for use in our business, and do not anticipate paying
cash dividends in the foreseeable future.
As of September 30, 1999, there were approximately 800 record holders
of our common stock.
REGISTRATION RIGHTS
In connection with our private placement of 705,197 shares of common
stock on June 11, 1999, June 17, 1999 and July 15, 1999 and pursuant to the
terms of four subscription agreements dated as of June 11, 1999, June 17,
1999, July 15, 1999 and July 15, 1999 by and between Steakhouse Partners and
each of the selling stockholders, we are obligated to use our best efforts to
cause this registration statement to become effective by October 8, 1999. We are
further obligated to register and qualify the registerable shares under such
state securities laws as the
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<PAGE>
selling stockholders may reasonably request. We will bear the reasonable
expenses of the registration and qualification of the shares under the
Securities Act and state securities laws other than any underwriting discounts
and commissions and the expenses of counsel for the selling stockholders.
If the registration statement is not effective by October 8, 1999, then
Steakhouse Partners must make payments to the selling stockholders in such
amounts and at such times as are determined pursuant to Section 5(b)(iii) of the
subscription agreements, which states that the amount to be paid by us to the
selling stockholders shall be equal to two (2%) percent per month of the
purchase price paid by the selling stockholders for the common stock. Thus, if
the registration statement is not effective by October 8, 1999, then for the
period from October 8, 1999 to November 7, 1999, we must pay to the selling
stockholders a penalty of $86,520. If the registration statement still is not
effective on November 7, 1999, then for the period from November 7, 1999 to
December 7, 1999, we must pay to the selling stockholders an additional penalty
of $86,520 and so on.
USE OF PROCEEDS FROM SALE OF COMMON STOCK
None of the proceeds from the sale of the common stock registered
hereunder by the selling stockholders will accrue to Steakhouse Partners.
Through private placement, Steakhouse Partners has obtained $2,001,000
of financing from the sale of 363,818 shares of Common Stock to Merseyside
Pension Fund and BNP Securities Ltd., exclusive of fees and other expenses
related to this sale.
Through private placement, Steakhouse Partners obtained $2,025,000 of
financing from the sale of 300,000 shares of Common Stock to RS Diversified
Growth Fund, RS/NE Diversified Growth Fund, The Paisley Pacific Fund LP and The
Paisley Fund LP, exclusive of fees and other expenses related to this sale.
Through private placement, Steakhouse Partners has obtained $300,000 of
financing from the sale of 41,379 shares of Common Stock to D. Jonathan
Merriman, exclusive of fees and other expenses related to the sale.
We intend to apply the net proceeds of the sale of the common stock for
working capital purposes.
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
The selling stockholders whose shares of common stock are being
registered hereby are Merseyside Pension Fund ("Merseyside"), BNP Securities
Ltd. ("BNP"), RS Diversified Growth Fund, RS/NE Diversified Growth Fund, The
Paisley Pacific Fund LP, The Paisley Fund LP, and D. Jonathan Merriman.
Merseyside is an English corporation with a principal place of business
at Castle Chambers, 416 Cook Street, Liverpool, England.
BNP is a British Virgin Islands corporation with a principal place of
business at 24 Boulevard Princess Charlotte, ML 9800, Monaco.
RS Diversified Growth Fund is a Delaware corporation with a principal
place of business at 388 Market Street, San Francisco, California 94111.
RS/NE Diversified Growth Fund is a Delaware corporation with a
principal place of business at 388 Market Street, San Francisco, California
94111.
The Paisley Pacific Fund LP is a Delaware limited partnership with a
principal place of business at 388 Market Street, San Francisco, California,
94111.
The Paisley Fund LP is a Delaware limited partnership with a principal
place of business at 388 Market Street, San Francisco, California 94111.
D. Jonathan Merriman is an individual with a business address at 600
California Street, San Francisco, California 94123.
No selling stockholder has any affiliation with Steakhouse Partners or
its officers, directors, promoters or principal shareholders.
Neither Merseyside nor BNP has a domestic agent for service of process.
It may be difficult for United States investors to effect service within the
United States upon Merseyside
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<PAGE>
and/or BNP and their respective officers and directors, or to realize in the
United States upon judgments rendered against Merseyside and/or BNP and their
respective officers and directors by courts of the United States predicated upon
civil liabilities under the Securities Act of 1933 or state securities laws.
Steakhouse Partners has agreed to register the public offering of the
selling stockholders' shares of common stock under the Securities Act and to pay
all expenses in connection therewith other than brokerage commissions and
discounts in connection with the sale of the common stock and the expenses of
counsel.
The following table sets forth the names of the selling stockholders,
the number of shares of common stock owned beneficially by each of the selling
stockholders as of August 5, 1999, the number of shares which may be offered
for resale pursuant to this prospectus and the number of shares of common stock
owned beneficially by each of the selling stockholders after the offering.
The information included below is based upon information provided by
the selling stockholders. Because the selling stockholders may offer all, some
or none of their common stock, no definitive estimate as to the number of shares
thereof that will be held by the selling stockholders after such offering can be
provided and the following table has been prepared on the assumption that all
shares of common stock offered under this prospectus will be sold.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK SHARES OF COMMON STOCK
BENEFICIALLY COMMON BENEFICIALLY
NAME OF SELLING OWNED PRIOR TO STOCK BEING OWNED AFTER
STOCKHOLDER OFFERING (1)(2) OFFERED OFFERING (3) PERCENT (4)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merseyside Pension Fund 182,000 182,000 0 0.0%
BNP Securities Ltd. 181,818 181,818 0 0.0%
RS Diversified Growth
Fund 115,000 115,000 0 0.0%
RS/NE Diversified
Growth Fund 55,000 55,000 0 0.0%
The Paisley Pacific Fund LP 120,000 120,000 0 0.0%
The Paisley Fund LP 10,000 10,000 0 0.0%
D. Jonathan Merriman 41,379 41,379 0 0.0%
- -----------------------
(1) Each of the parties listed has sole voting and investment power with respect
to all shares of Common Stock indicated.
(2) As required by regulations of the Securities and Exchange Commission,
the number of shares shown as beneficially owned includes shares which
can be purchased within 60 days after August 5, 1999.
(3) Assumes the sale of all shares offered hereby.
(4) Based upon 3,314,522 shares outstanding.
</TABLE>
The selling stockholders' shares may be offered and sold from time to
time as market conditions permit, provided that a registration statement
covering such shares is effective at the time of such offer and/or sale. Under
Section 10(a)(3) of the Securities Act of 1933, as amended, when a prospectus is
used more than nine months after the effective date of the registration
statement, the information contained therein must be as of a date not more than
16 months prior to such use.
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<PAGE>
The selling stockholders' shares may be offered and sold in the NASDAQ
SmallCap market, or otherwise, at prices and terms then prevailing or at prices
related to the then-current market price, or in negotiated transactions. The
selling stockholders' shares may be sold by one or more of the following
methods, without limitation: (i) a block trade in which a broker or dealer so
engaged will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (ii) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
accounts pursuant to this prospectus; (iii) ordinary brokerage transactions and
transactions in which the broker solicits purchases; and (iv) transactions
between sellers and purchasers without a broker or dealer. In effecting sales,
brokers or dealers engaged by the selling stockholders may arrange for other
brokers or dealers to participate. Such brokers or dealers may receive
commissions or discounts from selling stockholders in amounts to be negotiated.
Such brokers and dealers and any other participating brokers and dealers may be
deemed to be "underwriters" within the meaning of the Securities Act, in
connection with such sales.
DESCRIPTION OF SECURITIES
The authorized capital stock of Steakhouse Partners consists of
10,000,000 shares of common stock, $.01 par value (the "Common Stock"), and
5,000,000 shares of preferred stock, $.001 par value (the "Preferred Stock").
The following summaries of certain terms of Steakhouse Partners' common
stock and preferred stock do not purport to be complete and are subject to, and
qualified in their entirety by, the provisions of Steakhouse Partners'
certificate of incorporation and the provisions of applicable law.
COMMON STOCK
As of the date of this Prospectus, there are 3,273,143 shares of Common
Stock issued and outstanding held by approximately 800 holders of record.
Holders of Common Stock are entitled to one vote for each share held of record
on all matters submitted to a vote of the stockholders. Subject to preferences
that may be applicable to any then outstanding Preferred Stock, holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of Steakhouse
Partners, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
then outstanding Preferred Stock. Holders of Common Stock have no right to
convert their Common Stock into any other securities. The Common Stock has no
preemptive or other subscription rights. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of Common
Stock are duly authorized, validly issued, fully paid and nonassessable.
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<PAGE>
PREFERRED STOCK
Steakhouse Partners has issued 1,000,000 shares of Series B Preferred
Stock ("Series B Preferred") to Richard M. Lee. The Series B Preferred is not
redeemable and carries rights to vote with the Common Stock as one class on a
one-vote-per-share basis. The Series B Preferred is convertible into Common
Stock, at the option of the holder, upon the earlier to occur of: (i) eight (8)
years after the closing date of Steakhouse Partners' initial public offering; or
(ii) the first fiscal year of Steakhouse Partners in which Steakhouse Partners'
annual net profits equal or exceed $3.5 million. Upon conversion of the Series B
Preferred, the holder will be required to pay to Steakhouse Partners, in cash, a
conversion price per share equal to $7.50.
The Series B Preferred carries no dividends prior to March 2, 2000, the
second anniversary of the closing of the Steakhouse Partners' initial public
offering, but thereafter, if the above conversion test is satisfied, the Series
B Preferred will participate in any dividends declared on the Common Stock, on
an "as-converted" basis. The Series B Preferred carries a liquidation value of
$0.001 per share prior to March 2, 2000. Thereafter, if the above conversion
test satisfied, the Series B Preferred will upon liquidation participate pari
passu with the Common Stock, on an "as-converted" basis.
If and to the extent that the shares of Common Stock issuable upon
conversion of the Series B Preferred are not includable in a registration
statement on Form S-8, at the request of the holders thereof, delivered to
Steakhouse Partners within three years of any such conversion of the Series B
Preferred shares, Steakhouse Partners will prepare and file, at its own expense,
one (1) registration statement on Form S-3 (to the extent available) to enable
such holders to resell shares of Common Stock acquired upon conversion of the
Series B Preferred. The Board of Directors may change or otherwise adjust the
terms of the above-described Series B Preferred Stock in its sole discretion.
Steakhouse Partners has issued 1,750,000 shares of a new series of
preferred stock, designated as the Series C Convertible Preferred Stock, to
Richard M. Lee and Hiram J. Woo.
The holders of shares of the Series C Preferred Stock have the
right to vote on all matters with the holders of the Common Stock, voting
together as a single class, on a one vote per share basis. The shares of the
Series C Preferred Stock are convertible into shares of Common Stock, at
the option of the holder, at any time upon the earlier to occur of (i) March 2,
2006 or (ii) the date it is determined that Steakhouse Partners' net profits for
any fiscal year have equaled or
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<PAGE>
exceeded $4.2 million (the "Conversion Test"). Upon conversion of the Series C
Preferred Stock, the holder will be required to pay to Steakhouse Partners a
conversion price per share equal to $8.53.
The shares of Series C Preferred Stock may not be redeemed by
Steakhouse Partners absent the unanimous consent of the holders thereof. The
holders of outstanding Series C Preferred Stock shall not be entitled to receive
dividends prior to March 2, 2000, the second anniversary of the closing date of
Steakhouse Partners' initial public offering. Thereafter, in the event the
Conversion Test is satisfied, the Series C Preferred Stock will participate in
any dividends declared on the Common Stock, on an "as converted" basis.
In the event of a voluntary or involuntary liquidation, dissolution or
winding up of Steakhouse Partners prior to March 2, 2000, or at any time
thereafter if the Conversion Test is not satisfied, the holders of Series C
Preferred Stock shall be entitled to $0.001 per share. In the event of a
voluntary or involuntary liquidation, dissolution or winding up of Steakhouse
Partners after the satisfaction of the Conversion Test, the holders of Series C
Preferred Stock shall be entitled to share with the holders of Common Stock pari
passu in the assets of Steakhouse Partners, on an "as converted" basis.
If and to the extent that the shares of Common Stock issuable upon
conversion of the Series C Preferred Stock are not includable in a registration
statement on Form S-8, at the request of the holders thereof, delivered to
Steakhouse Partners within three years of any such conversion of the Series C
Preferred shares, Steakhouse Partners will prepare and file, at its own expense
one (1) registration statement on Form S-3 (to the extent available) to enable
such holders to resell shares of Common Stock acquired upon conversion of the
Series C Preferred Stock. The Board of Directors may change or otherwise adjust
the terms of the above-described Series C Preferred Stock in its sole
discretion.
The Board of Directors of Steakhouse Partners, without further action
by the stockholders, has authority to issue all or any portion of the additional
2,250,000 shares of authorized but unissued Preferred Stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences and the number of shares constituting any
series or the designation of such series. The issuance of Preferred Stock could
adversely affect the voting power of holders of the Common Stock and could have
the effect of delaying, deferring or preventing a change in control of
Steakhouse Partners.
DIVIDEND POLICY
Steakhouse Partners has not paid any cash or other dividends on its
Common Stock since its inception and does not anticipate paying any such
dividends in the foreseeable future. Steakhouse Partners intends to retain any
earnings for use in Steakhouse Partners' operations and to finance the expansion
of its business.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon for
Steakhouse Partners by Lehman & Eilen LLP, Uniondale, New York. Hank Gracin,
Esq., counsel to Lehman & Eilen LLP, owns 4,496 shares of common stock of
Steakhouse Partners.
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<PAGE>
EXPERTS
The audited financial statements of Steakhouse Partners, Inc. for the
years ended December 29, 1998 and December 30, 1997 incorporated by reference
into this Prospectus have been audited by Singer Lewak Greenbaum & Goldstein
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. Reference is made to said reports which include
explanatory paragraphs that state substantial doubt about Steakhouse Partners'
ability to continue as a going concern, as described in Note 1 to the audited
financial statements of Steakhouse Partners, Inc.
17
<PAGE>
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY STEAKHOUSE PARTNERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, BY
ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE
SUCH OFFER OR SOLICITATION OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
================================================================================
TABLE OF CONTENTS
-----------------
Page No.
--------
Prospectus Summary...........................................1
The Offering.................................................2
Risk Factors.................................................3
Selected Financial and Operating Data........................9
Indemnification.............................................10
Market Price of Common Equity and Related
Stockholder Matters.......................................11
Registration Rights.........................................11
Use of Proceeds from Sale of Common Stock...................12
Selling Securityholders and Plan of Distribution............12
Description of Securities...................................14
Dividend Policy.............................................16
Legal Matters...............................................16
Experts.....................................................17
705,197 SHARES
STEAKHOUSE PARTNERS, INC.
COMMON STOCK
------------------------------
PROSPECTUS
------------------------------
OCTOBER 7, 1999
<PAGE>
STEAKHOUSE PARTNERS, INC.
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses for the issuance and distribution of the shares
of Common Stock registered hereby are set forth in the following table.
SEC registration fee................................................. $1,445.83
Legal fees and expenses.............................................. 30,000
Accounting fees and expenses......................................... 3,000
Blue sky fees and expenses (including counsel fees).................. 3,000
Printing and engraving expenses...................................... 1,000
Miscellaneous........................................................ 1,554.17
---------
Total................................................................ $ 40,000
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
sets forth the conditions and limitations governing the indemnification of
officers, directors and other persons. References are made to Article VI of the
Registrant's Bylaws, a copy of which is incorporated herein by reference as
Exhibit 3.4, which provides for indemnification of officers and directors of the
Registrant to the full extent authorized by the aforesaid section of the General
Corporation Law of the State of Delaware.
Section 102(b) of the General Corporation Law of the State of Delaware
permits corporations to eliminate or limit the personal liability of a director
to the corporation or its stockholders for monetary damages for breach of the
fiduciary duty of care as a director. Reference is made to Article Tenth of the
Registrant's Restated Certificate of Incorporation, as amended, a copy of which
is incorporated herein by reference as Exhibit 3.1, which limits a director's
liability in accordance with the aforesaid section of the General Corporation
Law of the State of Delaware.
The Registrant has entered into Indemnification Agreements with its
executive officers and directors. These Indemnification Agreements provide that
the executive officers and directors will be indemnified to the fullest extent
permitted by law against all expenses (including attorneys' fees), judgments,
fines and amounts paid or incurred by them for settlement in any action or
proceeding, including any derivative action, on account of their service as a
director or officer of Steakhouse Partners or of any subsidiary of Steakhouse
Partners or of any other company or enterprise in which they are serving at the
request of Steakhouse Partners. No indemnity will be provided to any director or
II-1
<PAGE>
officer under these agreements on account of conduct which is finally adjudged
to be knowingly fraudulent or deliberately dishonest or willful misconduct. In
addition, no indemnification will be provided if there is a final adjudication
that such indemnification is not lawful, or in respect of any suit in which
judgment is rendered against a director or officer for an accounting of profits
made from a purchase or sale of securities of Steakhouse Partners in violation
of Section 16(b) of the Securities Exchange Act of 1934, or of any similar
statutory law, or on account of any compensation paid to a director or officer
which is adjudicated to have been in violation of law, and in certain other
circumstances.
The Registrant presently has in effect directors and officers liability
insurance which it believes is adequate in amount and scope of coverage.
ITEM 16. EXHIBITS.
The following exhibits are filed as part of this Registration
Statement:
1.1(1) Form of Underwriting Agreement.
3.1(1) Restated Certificate of Incorporation of Galveston's
Steakhouse Corp.
3.2(1) Certificate of Correction to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
3.3(1) Certificate of Amendment to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
3.4(1) By-Laws of Galveston's Steakhouse Corp.
3.5(1) Certificate of Amendment to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
3.6(1) Certificate of Amendment to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
3.7(5) Certificate of Amendment to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
4.1(1) Form of Specimen of Common Stock Certificate.
4.2(1) Form of Underwriter's Warrant Agreement.
5.1(6) Opinion of Lehman & Eilen LLP, counsel to Steakhouse Partners
concerning the legality of securities being registered.
10.1(1) Lease between Walter Bollenbacher Family Trust and TLC Corp.
(Seller) dated November 1, 1994 and assigned to Galveston's
Steakhouse Corp. June 25, 1996. (re: Torrance).
10.2(1) Lease between University Plaza, Ltd. and Galveston's Steakhouse
Corp. dated September 4, 1996. (re: Fullerton).
10.3(1) Lease between Mission Grove Plaza, LP and Kent Andersen
(Seller) dated March 8, 1993 and assigned to Galveston's
Steakhouse Corp. March 1, 1997. (re: Riverside).
10.4(1) Lease between E & R Co-ownership (The Family Corner) and
Galveston's Steakhouse Corp. dated February 1, 1997. (re:
Norco).
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<PAGE>
10.5(1) Employment Contract between Galveston's Steakhouse Corp. and
Hiram J. Woo dated June 3, 1996.
10.6(1) Employment Contract between Galveston's Steakhouse Corp. and
Richard M. Lee dated June 3, 1996.
10.7(1) Asset Purchase Agreement between Galveston's Steakhouse Corp.
as buyer and TLC Restaurant Management Corp., Better Business
Security, Inc., River Diego Investment Corp. and Ron Walton,
collectively as seller dated April 10, 1996.
10.8(1) Escrow Instruction with Jean Allen Escrow Co., Inc. dated
February 20, 1996 reference to Asset Purchase Agreement cited
in 10.9 above.
10.9(1) Note Payable in the amount of $375,000 to Ron Walton, et. al.
with extension of Due Date to August 29, 1997.
10.10(1) Note Payable in the amount of $870,000 to Ron Walton, et. al.
10.13(1) Asset Purchase Agreement between Galveston's Steakhouse Corp.
as buyer and Kent & Jenny Andersen as sellers dated September
23, 1996.
10.14(1) Escrow Instruction with Jean Allen Escrow Co., Inc. dated
December 3, 1996 with Estimated Closing Statement dated March
3, 1997 reference to Asset Purchase Agreement cited in 10.13
above.
10.15(1) Galveston's Steakhouse Corp. Omnibus Stock Plan.
10.16(1) Richard M. Lee Stock Option Agreement.
10.17(1) Hiram J. Woo Stock Option Agreement.
10.18(2) Merger Agreement dated August 31, 1998 by and among Galveston's
Steakhouse Corp., Tri-Core Steakhouse, Inc., Paragon Steakhouse
Restaurants, Inc. and Kyotaru Co. Ltd.
10.17(3) First Amendment to Merger Agreement dated August 31, 1998, by
and among Galveston's Steakhouse Corp. and Tri-Core Steakhouse,
Inc., on the one hand, and Paragon Steakhouse Restaurants, Inc.
and Kyotaru Co., Ltd., on the other hand.
10.18(3) Second Amendment to Merger Agreement dated August 31, 1998, by
and among Galveston's Steakhouse Corp. and Tri-Core Steakhouse,
Inc., on the one hand, and Paragon Steakhouse Restaurants, Inc.
and Kyotaru Co., Ltd., on the other hand.
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<PAGE>
10.21(3) Third Amendment to Merger Agreement dated August 31, 1998, by
and among Galveston's Steakhouse Corp. and Tri-Core Steakhouse,
Inc., on the one hand, and Paragon Steakhouse Restaurants, Inc.
and Kyotaru Co., Ltd., on the other hand.
10.22(3) Form of Agreement Not to Compete.
10.21(3) Form of Management Agreement.
10.22(3) Form of Non-negotiable Promissory Note.
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<PAGE>
10.23(5) Securities Purchase Agreement dated June 11, 1999 by and
between Galveston's Steakhouse Corp. and Merseyside Pension
Fund.
10.24(5) Securities Purchase Agreement dated June 17, 1999 by and
between Galveston's Steakhouse Corp. and BNP Securities Ltd.
10.25(5) Securities Purchase Agreement dated July 15, 1999 by and among
Galveston's Steakhouse Corp., RS Diversified Growth Fund, RS/NE
Diversified Growth Fund, The Paisley Pacific Fund LP and The
Paisley Fund LP.
10.26(5) Securities Purchase Agreement dated July 15, 1999 by and
between Galveston's Steakhouse Corp. and D. Jonathan Merriman.
23.1(6) Consent of Singer Lewak Greenbaum & Goldstein LLP.
23.2(6) Consent of Lehman & Eilen LLP, counsel to Steakhouse Partners
(included in their opinion filed as Exhibit 5.1).
27.1(4) Financial Data Schedule.
99.1(2) Press release dated September 1, 1998.
--------------------
(1) Incorporated by reference from Registration Statement on Form SB-2
(File No. 333-29093).
(2) Incorporated by reference from Form 8-K, Current Report, filed with the
SEC on September 14, 1998.
(3) Incorporated by reference from Form 8-K, Current Report, filed with the
SEC on January 4,1999.
(4) Incorporated by reference from Annual Report on Form 10-KSB,
filed with the SEC on April 13, 1999.
(5) Previously filed.
(6) Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission (the
"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 Steakhouse
Partners of expenses incurred or paid by a director, officer or controlling
person of Steakhouse Partners 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 of whether such
indemnification by it is against public policy as expressed in the 1933 Act, and
will be governed by the final adjudication of such issue.
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<PAGE>
(b) That, subject to the terms and conditions of Section 13(a) of the Securities
Exchange Act of 1934, it will file with the Securities and Exchange Commission
such supplementary and periodic information, documents and reports as may be
prescribed by any rule or regulation of the Commission heretofore or hereafter
dully adopted pursuant to authority conferred in that section.
(c) That any post-effective amendment filed will comply with the applicable
form, rules and regulations of the Commission in effect at the time such
post-effective amendment is filed.
(d) 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 1933 Act;
(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;
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.
(e) That, for the purpose of determining any liability under the 1933 Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(f) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of this
offering.
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
STEAKHOUSE PARTNERS CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED IN SAN DIEGO, CALIFORNIA, ON THIS 7TH DAY OF OCTOBER, 1999.
STEAKHOUSE PARTNERS, INC.
By: /S/ Richard M. Lee
----------------------
RICHARD M. LEE
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER (PRINCIPAL
EXECUTIVE OFFICER)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/Richard M. Lee Chairman of the Board of Directors October 7, 1999
- ---------------------- and Chief Executive Officer
Richard M. Lee
/s/Hiram J. Woo Director, President, Secretary and October 7, 1999
- ---------------------- Chief Financial Officer (Principal
Hiram J. Woo Financial and Accounting Officer
/s/Tom Edler Director October 7, 1999
- ----------------------
Tom Edler
/s/Mark W. Goudge Director October 7, 1999
- ----------------------
Mark W. Goudge
/s/Tod Lindner Director October 7, 1999
- ----------------------
Tod Lindner
II-7
<PAGE>
EXHIBIT INDEX
1.1(1) Form of Underwriting Agreement.
3.1(1) Restated Certificate of Incorporation of Galveston's
Steakhouse Corp.
3.2(1) Certificate of Correction to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
3.3(1) Certificate of Amendment to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
3.4(1) By-Laws of Galveston's Steakhouse Corp.
3.5(1) Certificate of Amendment to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
3.6(1) Certificate of Amendment to Restated Certificate of
Incorporation of Galveston's Steakhouse Corp.
4.1(1) Form of Specimen of Common Stock Certificate.
4.2(1) Form of Underwriter's Warrant Agreement.
5.1(6) Opinion of Lehman & Eilen LLP, counsel to Steakhouse Partners
concerning the legality of securities being registered.
10.1(1) Lease between Walter Bollenbacher Family Trust and TLC Corp.
(Seller) dated November 1, 1994 and assigned to Galveston's
Steakhouse Corp. June 25, 1996. (re: Torrance).
10.2(1) Lease between University Plaza, Ltd. and Galveston's Steakhouse
Corp. dated September 4, 1996. (re: Fullerton).
10.3(1) Lease between Mission Grove Plaza, LP and Kent Andersen
(Seller) dated March 8, 1993 and assigned to Galveston's
Steakhouse Corp. March 1, 1997. (re: Riverside).
10.4(1) Lease between E & R Co-ownership (The Family Corner) and
Galveston's Steakhouse Corp. dated February 1, 1997. (re:
Norco).
10.5(1) Employment Contract between Galveston's Steakhouse Corp. and
Hiram J. Woo dated June 3, 1996.
10.6(1) Employment Contract between Galveston's Steakhouse Corp. and
Richard M. Lee dated June 3, 1996.
10.7(1) Asset Purchase Agreement between Galveston's Steakhouse Corp.
as buyer and TLC Restaurant Management Corp., Better Business
Security, Inc., River Diego Investment Corp. and Ron Walton,
collectively as seller dated April 10, 1996.
II-8
<PAGE>
10.8(1) Escrow Instruction with Jean Allen Escrow Co., Inc. dated
February 20, 1996 reference to Asset Purchase Agreement cited
in 10.9 above.
10.9(1) Note Payable in the amount of $375,000 to Ron Walton, et. al.
with extension of Due Date to August 29, 1997.
10.10(1) Note Payable in the amount of $870,000 to Ron Walton, et. al.
10.13(1) Asset Purchase Agreement between Galveston's Steakhouse Corp.
as buyer and Kent & Jenny Andersen as sellers dated September
23, 1996.
10.14(1) Escrow Instruction with Jean Allen Escrow Co., Inc. dated
December 3, 1996 with Estimated Closing Statement dated March
3, 1997 reference to Asset Purchase Agreement cited in 10.13
above.
10.15(1) Galveston's Steakhouse Corp. Omnibus Stock Plan.
10.16(1) Richard M. Lee Stock Option Agreement.
10.17(1) Hiram J. Woo Stock Option Agreement.
10.18(2) Merger Agreement dated August 31, 1998 by and among Galveston's
Steakhouse Corp., Tri-Core Steakhouse, Inc., Paragon Steakhouse
Restaurants, Inc. and Kyotaru Co. Ltd.
10.17(3) First Amendment to Merger Agreement dated August 31, 1998, by
and among Galveston's Steakhouse Corp. and Tri-Core Steakhouse,
Inc., on the one hand, and Paragon Steakhouse Restaurants, Inc.
and Kyotaru Co., Ltd., on the other hand.
10.18(3) Second Amendment to Merger Agreement dated August 31, 1998, by
and among Galveston's Steakhouse Corp. and Tri-Core Steakhouse,
Inc., on the one hand, and Paragon Steakhouse Restaurants, Inc.
and Kyotaru Co., Ltd., on the other hand.
10.21(3) Third Amendment to Merger Agreement dated August 31, 1998, by
and among Galveston's Steakhouse Corp. and Tri-Core Steakhouse,
Inc., on the one hand, and Paragon Steakhouse Restaurants, Inc.
and Kyotaru Co., Ltd., on the other hand.
10.22(3) Form of Agreement Not to Compete.
10.21(3) Form of Management Agreement.
10.22(3) Form of Non-negotiable Promissory Note.
II-9
<PAGE>
10.23(5) Securities Purchase Agreement dated June 11, 1999 by and
between Galveston's Steakhouse Corp. and Merseyside Pension
Fund.
10.24(5) Securities Purchase Agreement dated June 17, 1999 by and
between Galveston's Steakhouse Corp. and BNP Securities Ltd.
10.25(5) Securities Purchase Agreement dated July 15, 1999 by and among
Galveston's Steakhouse Corp., RS Diversified Growth Fund, RS/NE
Diversified Growth Fund, The Paisley Pacific Fund LP and The
Paisley Fund LP.
10.26(5) Securities Purchase Agreement dated July 15, 1999 by and
between Galveston's Steakhouse Corp. and D. Jonathan Merriman.
23.1(6) Consent of Singer Lewak Greenbaum & Goldstein LLP.
23.2(6) Consent of Lehman & Eilen LLP, counsel to Steakhouse Partners
(included in their opinion filed as Exhibit 5.1).
27.1(4) Financial Data Schedule.
II-10
<PAGE>
99.1(2) Press release dated September 1, 1998.
--------------------
(1) Incorporated by reference from Registration Statement on Form SB-2
(File No. 333-29093).
(2) Incorporated by reference from Form 8-K, Current Report, filed with the
SEC on September 14, 1998.
(3) Incorporated by reference from Form 8-K, Current Report, filed with the
SEC on January 4, 1999.
(4) Incorporated by reference from Annual Report on Form 10-KSB,
filed with the SEC on April 13, 1999.
(5) Previously filed.
(6) Filed herewith.
II-11
EXHIBIT 5.1
LEHMAN & EILEN LLP
50 Charles Lindbergh Boulevard
Suite 505
Uniondale, New York 11553
October 7, 1999
Board of Directors
Steakhouse Partners, Inc.
10200 Willow Creek Road
San Diego, CA 92131
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
At your request, this letter relates to Amendment No. 1 to the
Registration Statement on Form S-3 filed by Steakhouse Partners, Inc. (the
"Company") with the Securities and Exchange Commission on October 7, 1999 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 705,197 shares of the Company's common
stock $.01 par value (herein, the "Shares").
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the proceedings taken by the
Company in connection with the issuance of the Shares, the Registration
Statement and such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such inquiries
of such officers and representatives, as we have deemed relevant or necessary as
a basis for the opinions hereinafter set forth.
In such examination, we have assumed without independent verification,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents of documents submitted
to us as certified or photostatic copies and the authenticity of the originals
of such latter documents. As to all questions of fact material to this opinion
that have not been independently established, we have relied upon
representations of the Company in the Registration Statement, certificates or
comparable documents of officers of the Company and of public officials.
Based on the foregoing, and subject to the qualifications stated
herein, as of the date hereof, it is our opinion that upon the issuance and sale
in the manner described in the Registration Statement, such Shares will be
validly issued, fully paid and non-assessable. This opinion relates only to the
number of Shares set forth above.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Lehman & Eilen LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this amended Registration
Statement on Form S-3 of our report, dated March 31, 1999, which appears in the
Annual Report on Form 10-KSB of Steakhouse Partners, Inc. (formerly Galveston's
Steakhouse Corp.) and subsidiaries for the years ended December 29, 1998 and
December 30, 1997. We also consent to the reference to our Firm under the
caption "Experts" in the aforementioned Registration Statement.
/s/ Singer Lewak Greenbaum & Goldstein LLP
-----------------------------------------
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
October 7, 1999
