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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1999
REGISTRATION NO. 333-88601
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SANTA BARBARA RESTAURANT GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 33-0602639
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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360 SOUTH HOPE STREET, SUITE C300
SANTA BARBARA, CALIFORNIA 93105
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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ANDREW D. SIMONS, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
SANTA BARBARA RESTAURANT GROUP, INC.
360 SOUTH HOPE STREET, SUITE C300
SANTA BARBARA, CALIFORNIA 93105
(805) 898-7100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
C. CRAIG CARLSON, ESQ.
STRADLING YOCCA CARLSON & RAUTH
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660
(949) 725-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with dividend or
interest reinvestment plans, 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 the 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 maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered per share(1) offering price(1) registration fee
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<S> <C> <C> <C> <C>
Common Stock, $.08 par 5,998,377(2) $1.94 $11,636,851 $3,235
value shares
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(1) The offering price is estimated solely for the purpose of calculating
the registration fee in accordance with Rule 457(c) using the average
of the high and low price reported by the Bulletin Board Market managed
by Nasdaq for our common stock on September 29, 1999, which was
approximately $1.94 per share.
(2) The number of shares of our common stock registered hereunder
represents 3,000,000 shares which we issued as of July 15, 1999, the
effective date of the merger (the "Merger") of La Salsa Holding Co.
with and into La Salsa Merger, Inc., our wholly-owned subsidiary. The
number of shares of our common stock registered hereunder also includes
1,500,000 shares which we issued on the conversion of $6,000,000 of our
convertible promissory notes, which we issued pursuant to the Merger.
These promissory notes were converted on August 16, 1999. The number of
shares of our common stock registered hereunder also includes 500,000
shares which are issuable upon exercise of certain warrants we issued
pursuant to the Merger. Additionally, the number of shares of our
common stock registered hereunder includes 998,377 shares held by KCC
Delaware Company, which were acquired by KCC Delaware Company on March
30, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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EXPLANATORY NOTE
This S-3 Registration Statement has been amended to state that our stock is
traded on the Nasdaq Small Cap Market tier of the Nasdaq Stock Market not the
Nasdaq National Market. This Post Effective Amendment only affects pages one (1)
and eleven (11) of the Registration Statement.
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SANTA BARBARA RESTAURANT GROUP, INC.
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5,998,377 SHARES OF COMMON STOCK
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($.08 PAR VALUE)
The stockholders listed in this Prospectus under the section entitled
"Selling Stockholders" may offer and sell a total of 5,998,377 shares of our
Common Stock, par value $0.08 per share (the "Common Stock"), which they own or
will receive from time to time.
The Selling Stockholders may sell the shares of Common Stock described
in this Prospectus in public or private transactions, on or off the Nasdaq Small
Cap Market tier of the Nasdaq Stock Market ("Nasdaq Small Cap Market"), at
prevailing market prices, or at privately negotiated prices. The Selling
Stockholders may sell shares directly to purchasers or through brokers or
dealers. Brokers or dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders. We will not receive
any proceeds from the Selling Stockholders' sale of the shares of Common Stock.
We have agreed to bear the expenses in connection with the registration and sale
of the Common Stock offered by the Selling Stockholders and to indemnify the
Selling Stockholders against certain liabilities, including liabilities under
the Securities Act. More information is provided in the section titled "Plan of
Distribution."
Our common stock is currently traded on the Nasdaq Small Cap Market
under the symbol "SBRG." On September 29, 1999, the last reported sale price of
our common stock was $1.94 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this Prospectus is not complete and may be changed.
The selling stockholders may not sell these securities until the Registration
Statement filed with the Securities and Exchange Commission is effective. This
Prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
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This Prospectus is dated October 7, 1999
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TABLE OF CONTENTS
PAGE
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The Company.................................................................................3
Risk Factors................................................................................3
Use of Proceeds.............................................................................8
Selling Stockholders........................................................................8
Plan of Distribution.......................................................................11
Legal Matters..............................................................................11
Experts....................................................................................11
Where You Can Find More Information........................................................12
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SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
The information contained in or incorporated by reference in this
Prospectus discusses our plans and strategies for our business or state other
forward-looking statements that involve a number of risks and uncertainties.
Forward-looking statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," "seeks,"
"pro forma" or "anticipates," or other variations thereof (including their use
in the negative), or by discussions of strategies, plans or intentions. These
forward-looking statements reflect the current views of our management; however,
various risks, uncertainties and contingencies could cause our actual results,
performance or achievements to differ materially from those expressed in, or
implied by, these statements, including the following:
- - our ability to grow and implement cost-saving strategies;
- - increases in food, labor and occupancy and other operating costs;
- - our ability to compete in the quick-service, family dining and
steakhouse segments of the restaurant industry;
- - our ability to pay principal and interest on our debt;
- - our ability to borrow in the future;
- - our ability and the ability of our franchisees, suppliers and vendors to
implement an effective Y2K readiness program;
- - adverse legislation or regulation;
- - adverse weather conditions;
- - our ability to sustain or increase historical revenues and profit
margins; and
- - continuation of certain trends and general economic conditions in our
industry.
In addition, such forward-looking statements are necessarily dependent
upon assumptions and estimates that may prove to be incorrect. Accordingly,
while we believe that the plans, intentions and expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
plans, intentions or expectations will be achieved. The information contained in
this Prospectus, including the information set forth under the caption "Risk
Factors," identifies important factors that could cause such differences.
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THE COMPANY
We are engaged in the food service industry. We changed our name from
"GB Foods Corporation" to "Santa Barbara Restaurant Group, Inc." in conjunction
with our merger with Timber Lodge Steakhouse, Inc. "Timber Lodge" and
acquisition of JB's Family Restaurants, Inc. on September 1, 1998. Prior to
these transactions, we were engaged primarily in the business of operating
Mexican quick-service restaurants under the trade name "The Green Burrito" in
Southern California and the sale and supervision of Green Burrito franchises.
With these transactions, we also are engaged in the business of operating and
franchising full-service family style restaurants.
On July 15, 1999, we acquired all of the issued and outstanding stock of
La Salsa Holding Co. ("La Salsa"), a restaurant holding company which, at that
time, owned and operated 52 "Fresh-Mex" concept stores and franchised an
additional 48 stores throughout the southwestern United States. Pursuant to this
transaction, La Salsa became one of our wholly-owned subsidiaries.
As of September 9, 1999, we operated 54 JB's restaurants, 51 La Salsa
Restaurants, 22 Timber Lodge Steakhouse restaurants, 6 Galaxy Diner restaurants
and 6 Green Burrito restaurants. We also franchise 38 Green Burrito stand-alone
restaurants, 207 dual-concept restaurants, 45 La Salsa restaurants and 29 JB's
restaurants for a total of 458 restaurants.
RISK FACTORS
You should carefully consider the following factors and other
information in this Prospectus before deciding to invest in our common stock.
Some information in this Prospectus may contain "forward looking" statements
that discuss future expectations of our financial condition or results of
operations. The risk factors noted in this section and other factors described
in this offering memorandum could cause actual results to differ materially from
those contained in any forward-looking statements.
RISK FACTORS ASSOCIATED WITH THE RECENT MERGERS AND ACQUISITION
Synergies May Not Materialize
Prior to the mergers with La Salsa and Timber Lodge, and the acquisition
of JB's Family Restaurants, our Board of Directors considered (i) the
diversification of the companies' geographic presence and the market segments
that each company serves, (ii) the prospects for expansion of the Timber Lodge
business into new southwestern and western markets and La Salsa in the
southwestern markets, (iii) the potential growth of our company through dual
concept restaurants and the mergers and acquisition, (iv) the potential
favorable impact of the Timber Lodge and La Salsa expansion on our financial
position, (v) the potential cost savings as a result of common management,
particularly in the area of reduced overhead, and (vi) other synergies that
might result from the integration of the companies. La Salsa, Timber Lodge and
JB's Family Restaurants are different concepts with unique accounting and
administrative needs. Therefore we face many challenges in realizing synergies
and combining resources and there can be no assurance that we will achieve the
projected synergies or that any cost benefits will be accomplished successfully
or as rapidly as desired.
We acquired La Salsa with the goal of implementing certain strategic
initiatives including opening new markets, reducing operating expenses and
implementing image enhancements, which are intended to improve our financial
position. Our ability to open new markets is dependent on a number of factors,
including our ability to locate suitable property at affordable rates, find
acceptable prospective franchisees and complete the construction, training and
other requirements necessary to open a La Salsa restaurant. There can be no
assurance that we, or our prospective franchisees, will be able to satisfy all
of the conditions required to open markets in accordance with our strategic plan
and if so, whether those markets will have a positive impact on our financial
position. We also expect to incur additional costs in building the
infrastructure necessary to effect these strategic initiatives and operate
multiple restaurant concepts. Although we believe some of these costs will be
off-set by synergies obtained
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through the integration of La Salsa's operations, there can be no assurance that
such synergies will be obtained or that the cost of the strategic initiatives
will not have an adverse impact on our financial results. Finally, our plans to
enhance the image of the La Salsa brand is dependent on the creation and
successful implementation of certain marketing and remodeling programs and
concepts designed to increase consumer demand for La Salsa brand food. No
assurance can be given that the programs and concepts which we select to promote
La Salsa's image enhancement will be successful and or improve our financial
position.
Uncertainties In Integrating Business Operations and Achieving Cost
Savings
In determining that the mergers with Timber Lodge and La Salsa and the
acquisition of JB's Family Restaurants were in the best interests of our
shareholders, we considered the likelihood that cost savings such as reduced
corporate overhead and insurance costs, operating efficiencies such as food and
supplies purchasing economies resulting from the increased size of the combined
entity, and other synergies such as improved management practices and incentive
programs would result following consummation of the transactions. In particular,
our Board of Directors considered the potential for cost savings in approving
the transactions, although that factor was not the primary impetus for any of
the transactions. However, the cost savings, if any, are subject to many
uncertainties and to events and circumstances which we cannot control. Those
uncertainties, events and circumstances could cause actual results to differ
materially from our cost savings estimates, and there can be no assurance that
any cost savings, operating efficiencies or other synergies will be
accomplished. In addition, operations could be adversely affected if management
attention is diverted to meet problems which may arise in connection with the
integration of the businesses. The transactions have significantly increased our
size, which means that managing our company and integrating the acquired
business operations of Timber Lodge, La Salsa and JB's Family Restaurants will
continue to present a significant challenge to our management. We are in the
process of retaining additional personnel and securing more office space to help
us implement our strategic initiatives. Such actions could impact our cost
structure and have a negative impact on our financial results. We will continue
to evaluate the restaurant operations acquired in these transactions and various
short and long-term strategic considerations in the process of assessing the
extent to which Timber Lodge, La Salsa and JB's Family Restaurants' operations
will be integrated, restructured or otherwise modified by us. We are in the
process of implementing various growth or turnaround strategies at all of our
concepts to varying degrees including, but not limited to, image enhancements, a
refocused marketing strategy, improved management incentive programs and
reductions to corporate administrative costs. However, there can be no assurance
that these strategies will be successful. If we are unable to achieve
anticipated improvements in restaurant-level operating margins or reductions in
corporate overhead costs on a timely basis, cash flows generated from operations
may not be adequate to support our growth or turnaround strategies, some of
which require significant capital expenditures. Failure to effectively
accomplish the integration of our operations or to improve Timber Lodge's, La
Salsa's and JB's Family Restaurants' results of operations could have a material
adverse effect on our financial condition.
Timber Lodge Steakhouse(TM) Brand Expansion
We recently completed our conversion of five JB's Restaurants into the
Timber Lodge format. Our ability to successfully increase profits as a result of
these conversions depends on whether the conversion will attract new customers
without significantly reducing existing ones. There can be no assurance that the
conversion of these restaurants will have a favorable impact on our financial
results.
COMPETITIVE ENVIRONMENT IN THE QUICK-SERVICE AND FULL-SERVICE RESTAURANT
INDUSTRY
The food service industry is intensely competitive. Competition exists
with respect to the quality and value of food products offered, concept,
service, price, dining experience and location. We compete with major restaurant
chains, some of which dominate the quick-service or full-service restaurant
industries. Competitors also include a variety of fast food restaurants,
mid-price, full-service casual dining restaurants, health and nutrition-oriented
restaurants, delicatessens and prepared food stores, as well as supermarkets and
convenience stores. Many competitors have substantially greater financial,
marketing and other resources than we do, which may give them certain
competitive advantages. Some of the major quick-service restaurant chains have
increasingly offered selected food items and combination meals at discounted
prices. Future changes in the pricing or other marketing
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strategies of one or more of our competitors could have a material adverse
effect on our financial condition and results of operations. As competitors
expand their operations, competition can be expected to intensify. Increased
competition could have a material adverse effect on our financial condition and
results of operations.
The quick-service restaurant industry is intensely competitive in the
attraction of consumers and franchisees and in obtaining suitable sites for new
stores. Some of the key competitive factors in the restaurant industry are the
quality and value of the food products offered, quality of service, cleanliness,
name identification, restaurant location, price and attractiveness of
facilities. We compete with restaurants of all types in the local market areas
surrounding individual stores for a share of the consumers' restaurant food
dollars. In particular, we compete with quick-service restaurants, Mexican
restaurants and steakhouses.
The quick-service industry can be significantly affected by many
factors, including changes in local, regional or national economic conditions,
changes in consumer tastes, consumer concerns about the nutritional quality of
quick-service food and increases in the number of, and particular location of,
competing quick-services restaurants. Factors such as inflation, increases in
food, labor and energy costs, the availability and cost of suitable sites,
fluctuating interest and insurance rates, state and local regulations and
licensing requirements and the availability of an adequate number of hourly-paid
employees can also adversely affect the fast food restaurant industry. In
addition, other fast food chains with greater financial resources than us have
similar or competing operating concepts to ours in our geographic markets.
Major chains, which also have substantially greater financial resources
and longer operating histories than we do, dominate the quick-service fast food
restaurant industry. We compete primarily on the basis of food quality, price
and speed of service. A significant change in pricing or other marketing
strategies by one or more of our competitors could have an adverse impact on our
sales, earnings and growth. All of the major fast food chains have increasingly
offered selected food items and combination meals at discounted prices. While we
cannot predict the duration of this promotional activity or the extent to which
this pricing may become more or less competitive, this pricing could have a
continued adverse effect on our sales and earnings.
We believe our primary competition in the quick-service segment of the
restaurant industry is from established national quick-service restaurant chains
offering Mexican food, hamburgers, pizza, and chicken. These chains offer strong
competition, have national name recognition and greater advertising, financial,
and other resources than we do. These competitors also have a far greater
density of store sites and substantially larger facilities. We also compete with
regional and local quick-service restaurant chains and both quick-service and
full-service "mom-and-pop" restaurants in specific local markets.
The full-service restaurant industry is also intensely competitive with
respect to price, service, location and food quality. There are many
well-established competitors with substantially greater financial and other
resources than ours. In our view, our principal competitors in the full-service
restaurant industry are not only other steakhouses but also any other
restaurants which offer a casual atmosphere and moderately-priced meals within
its geographic markets.
Expansion of the steakhouse concept has increased in recent years. In
addition to traditional steakhouse restaurants, we expect to face competition
from new entries into the steakhouse market, such as national steakhouse chains
which have greater name recognition, are more well-established and have
significantly greater resources than Timber Lodge. Competitors include Outback
Steakhouse, Inc., Lone Star Steakhouse and Saloon, and Long Horn Steakhouse,
operated by Rare Hospitality International, Inc. Other competitors include a
large number of national and regional restaurant chains, many of which have been
in existence for a substantially longer period than Timber Lodge has and may be
better established in the markets where Timber Lodge restaurants are or may be
located.
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CONTROL BY PRINCIPAL STOCKHOLDERS AND RELIANCE ON KEY PERSONNEL
Fidelity National Title ("Fidelity") holds 4,717,765 shares of our
common stock and has the right to acquire an additional 1,969,994 shares upon
exercise of currently exercisable warrants. CKE Restaurants, Inc. ("CKE") holds
1,656,453 shares of our common stock. William P. Foley, II, Chairman of the
Board and Chief Executive Officer of Fidelity and CKE, and our Chairman of the
Board, personally owns 1,174,400 shares of our common stock and owns 650,000
options to purchase shares of our common stock, all of which are presently
exercisable. Mr. Foley as an individual does not have or share voting or
investment power over our stock held by Fidelity.
Therefore, of the 20,485,593 shares of our common stock that is
outstanding as of September 29, 1999, Fidelity, CKE, and Mr. Foley collectively
own 7,548,618 shares (excluding shares issued upon the exercise of Fidelity's
remaining warrants and Mr. Foley's exercisable options); if Fidelity's remaining
warrants and Mr. Foley's stock options were fully exercised, Fidelity, CKE, and
Mr. Foley collectively would own 10,168,612 shares. Consequently, Fidelity and
CKE collectively may have the practical ability to elect their nominees to our
Board of Directors.
Our success is dependent on our ability to attract and retain
experienced successful executives to our management teams. The loss of one or
more members of senior management could adversely affect our business and
development.
GOVERNMENT REGULATIONS
We are subject to federal regulation and certain state laws which govern
the offer and sale of franchises. Many state franchise laws impose substantive
requirements on franchise agreements, including limitations on noncompetition
provisions and on provisions concerning the termination or nonrenewal of a
franchise. Some states require that certain materials be registered before
franchises can be offered or sold in that state. The failure to obtain or retain
licenses or approvals to sell franchises could adversely affect us or our
franchisees. The restaurant industry is also subject to extensive federal, state
and local governmental regulations, including those relating to the preparation
and sale of food and those relating to building and zoning requirements. We and
our franchisees are also subject to laws governing relationships with employees,
including minimum wage requirements, overtime, working and safety conditions and
citizenship requirements. Many of our employees are paid hourly rates based upon
the federal and state minimum wage laws. Recent legislation increasing the
minimum wage has resulted in higher labor costs to us and our franchisees and
further increases in the minimum wage could increase our labor costs. We
anticipate that increases in the minimum wage may be offset through pricing and
other cost-control efforts; however, we cannot assure you that we or our
franchisees will be able to pass such additional costs on to customers in whole
or in part.
A percentage of revenues for our Timber Lodge and La Salsa restaurants
are attributable to the sale of alcoholic beverages. Alcoholic beverages control
regulations require each of our restaurants to apply to a state authority and,
in certain locations, county or municipal authorities for a license or permit to
sell alcoholic beverages on the premises and to provide service for extended
hours and on Sundays. Typically, licenses must be renewed annually and may be
revoked or suspended for cause at any time. Alcoholic beverage control
regulations relate to numerous aspects of the daily operation of our
restaurants. These aspects include the minimum age of patrons and employees,
hours of operation, advertising, wholesale purchasing, inventory control and
handling, storage and dispensing of alcoholic beverages. Failure of a restaurant
to obtain or retain liquor or food service licenses would adversely affect its
operations.
In certain states, we may be subject to "dram-shop" statutes, which
generally provide that a person injured by an intoxicated person has the right
to recover damages from an establishment which wrongfully served alcoholic
beverages to the intoxicated person. Timber Lodge and La Salsa carry liquor
liability coverage as part of their existing comprehensive general liability
insurance and neither has ever been named in a lawsuit involving a "dram-shop"
statute.
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The Americans with Disabilities Act (the "ADA") prohibits discrimination
in employment and public accommodations, such as restaurants, on the basis of
disability. Under the ADA, we are required to provide service to, or make
reasonable accommodations for the employment and service of, disabled persons.
We believe our restaurants are in substantial compliance with the ADA.
FOOD SERVICE INDUSTRY
Food service businesses are often affected by changes in consumer
tastes, national, regional and local economic conditions and demographic trends.
The performance of individual restaurants may be adversely affected by factors
such as traffic patterns, demographics and the type, number and location of
competing restaurants. Multi-unit food service businesses such as ours can also
be materially and adversely affected by publicity resulting from poor food
quality, illness, injury or other health concerns or operating issues stemming
from one restaurant or a limited number of restaurants. Consumers may also raise
concerns about the nutritional value of quick-service food. Dependence on
frequent deliveries of fresh produce and groceries subjects food service
businesses such as ours to the risk that shortages or interruptions in supply,
caused by adverse weather or other conditions, could adversely affect the
availability, quality and cost of ingredients. In addition, unfavorable trends
or developments concerning factors such as inflation, increased food, labor and
employee benefit costs including increases in hourly wage and unemployment tax
rates, increases in the number and locations of competing quick-service
restaurants, regional weather conditions and the availability of experienced
management and hourly employees may also adversely affect the food service
industry in general and our financial condition and results of operations in
particular. Changes in economic conditions affecting our customers could reduce
traffic in some or all of our restaurants or impose practical limits on pricing,
either of which could have a material adverse effect on our financial condition
and results of operations. Our continued success will depend in part on the
ability of management to anticipate, identify and respond to changing
conditions.
ENVIRONMENTAL MATTERS
We are subject to various federal, state and local environmental laws.
These laws govern discharges to air and water, as well as handling and disposal
practices for solid and hazardous wastes. These laws may also impose liability
for damages from and the costs of cleaning up sites of spills, disposals or
other releases of hazardous materials. We may be responsible for environmental
conditions relating to our restaurants and the land on which our restaurants are
located, regardless of whether we lease or own the restaurants or land in
question and regardless of whether such environmental conditions were created by
us or by a prior owner or tenant. Although we cannot assure you that all such
environmental conditions have been identified, these conditions include the
presence of asbestos containing materials, leaks from chemical storage tanks and
on-site spills.
We are not aware of any environmental conditions that would have a
material adverse effect on our businesses, assets or results of operations taken
as a whole. Although environmental site assessments prepared for certain
properties recommend limited further investigations or minor repairs, based on
the information currently available to us, we do not believe any of these other
issues would have a material adverse effect on these properties. Nevertheless,
we cannot assure you that environmental conditions relating to prior, existing
or future restaurants or restaurant sites will not have a material adverse
effect on us. Moreover, there is no assurance that: (1) future laws, ordinances
or regulations will not impose any material environmental liability; or (2) the
current environmental condition of the properties will not be adversely affected
by tenants or other third parties or by the condition of land or operations in
the vicinity of the properties (such as underground storage tanks).
RISKS ASSOCIATED WITH GROWTH STRATEGY
We have, and will continue to, seek out and evaluate opportunities to
develop and expand our operations, brands, and formats, whether by internal
expansion, the acquisition of existing assets or operations, or the acquisition
of new brands or formats. Expansion, especially by acquisition, involves a
number of special risks that could adversely affect our operating results,
including the diversion of management's attention, the assimilation of acquired
operations and personnel, the amortization of acquired intangible assets, and
the potential loss of key employees. In addition, the assimilation of acquired
operations can be delayed for unforeseen reasons, and brand
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name changes or conversions may not be received by customers as well as
expected. No assurance can be given that the recent mergers with JB's Family
Restaurants and La Salsa, or acquisition of Timber Lodge, or any other
acquisition by us will not materially and adversely affect us, or that any
acquisition by us will enhance our business. If we decide to make any
significant acquisitions of other businesses, we may be required to issue
additional equity or debt securities or borrow additional money. The issuance,
if any, of additional equity or convertible debt securities could result in
dilution of shareholders' interests in our stock.
Our growth strategy includes, among other things, opening additional
company-operated and franchised restaurants, dual-branding our restaurant
concepts and remodeling our restaurants. The success of our growth strategy will
depend on numerous factors. Many of these factors are beyond our control and our
franchisees, including the hiring, training and retention of qualified
management and other restaurant personnel, the ability to obtain necessary
governmental permits and approvals, the availability of appropriate financing
and general economic conditions. We face competition from other restaurant
operators, retail chains, companies and developers for desirable site locations,
which may adversely affect the cost, implementation and timing of our expansion
plans. To manage our planned expansion, we must ensure the continuing adequacy
of our existing systems and procedures, including our supply and distribution
arrangements, restaurant management, financial controls and informational
systems.
Our growth will also depend in part on our ability to increase sales at
existing restaurants. In connection with our strategic initiatives, we expect to
continue remodeling and upgrading equipment at many of our restaurants. We will
incur significant capital expenditures in remodeling and converting restaurants
and will experience a loss of revenues during the brief periods of time that
restaurants are closed for remodeling or conversion. There can be no assurance
that such remodeling and conversion will increase the revenues generated by
these restaurants or, even if revenues are increased, that such increases will
be sustainable. In addition, although the sales results experienced by the
franchised restaurants that have been remodeled or converted to dual-brand
restaurants have generally been favorable to date, there can be no assurance
that such favorable sales results are sustainable or that they are indicative of
sales results that will be achieved by restaurants to be remodeled or converted
in the future. There can also be no assurance that we will be able to achieve
same-store increases in our company-operated restaurants.
USE OF PROCEEDS
All of the net proceeds for the sale of the Common Stock covered by this
Prospectus will go to the Selling Stockholders who offer and sell their shares.
We will not receive any of the proceeds from the sale of these shares by the
Selling Stockholders.
SELLING STOCKHOLDERS
We issued 3,000,000 shares of the Common Stock to certain of the Selling
Stockholders (former stockholders of La Salsa) on July 15, 1999, pursuant to
the terms of an Agreement and Plan of Merger ("Agreement") wherein La Salsa was
merged (the "Merger") with and into La Salsa Merger, Inc. ("Merger Sub"), a
wholly-owned subsidiary of ours. On the effective date of the Merger, La Salsa
became one of our wholly-owned subsidiaries. In connection with the Merger, we
issued to the former stockholders of La Salsa convertible promissory notes in
the amount of $6,000,000 (the "Notes"). On August 16, 1999, the Notes were
converted into 1,500,000 shares of the Common Stock. Additionally, in connection
with the Merger, the former stockholders of La Salsa received warrants to
purchase 500,000 shares of the Common Stock. Pursuant to the Agreement, we
entered into a Registration Rights Agreement, dated as of June 8, 1999, with the
former La Salsa stockholders in which we agreed to file a Registration Statement
with the SEC to register for resale the shares of the Common Stock.
In addition to the 5,000,000 shares of the Common Stock we are seeking
to register on behalf of the former La Salsa stockholders, we are also seeking
to register 998,377 shares of the Common Stock which are held by
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<PAGE> 11
KCC Delaware Company, a Delaware corporation. KCC Delaware Company acquired
these shares in March of 1999 pursuant to an agreement which granted them
piggy-back registration rights. Pursuant to these registration rights, we agreed
to file a Registration Statement with the SEC to register for resale the 998,377
shares of the Common Stock held by KCC Delaware Company.
The following table sets forth the following information as of September
29, 1999: names of the Selling Stockholders; number of shares of the Common
Stock beneficially owned by each Selling Stockholder; number of shares of the
Common Stock each Selling Stockholder may offer to sell; and number of shares of
our common stock beneficially owned by each Selling Stockholder upon completion
of this offering, assuming all of the offered shares are sold. Other than as set
forth in the footnotes to the table below, none of the Selling Stockholders has,
or during the past three years has had, any position, office or other material
relationship with us or any of our predecessors or affiliates.
As of September 29, 1999, we had 20,485,593 shares of our common stock
outstanding. For purposes of computing the number and percentage of shares
beneficially owned by each Selling Stockholder as of September 29, 1999, only
shares which such stockholder has the right to acquire on or before November 28,
1999 are deemed outstanding, but are not deemed outstanding for the purpose of
computing the percentage ownership of any other Selling Stockholder.
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<PAGE> 12
<TABLE>
<CAPTION>
PERCENTAGE OF
COMMON STOCK
COMMON STOCK COMMON STOCK OWNED UPON
COMMON STOCK BEING OFFERED OWNED UPON COMPLETION OF
OWNED PRIOR TO PURSUANT TO THIS COMPLETION OF THIS OFFERING IF
SELLING STOCKHOLDER THIS OFFERING(1) PROSPECTUS(2) THIS OFFERING(3) GREATER THAN 1%(3)
- ------------------- ---------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
KCC Delaware Company(4) 998,377 998,377 0 0
Theodore Ashford 8,839 8,839 0 0
Donald Benjamin 1,243 1,243 0 0
John Butcher 133,334 133,334 0 0
Charles L. Boppell 52,818 52,818 0 0
Champps Entertainment, Inc. 1,419,444 1,419,444 0 0
James Crooks 405 405 0 0
Crown Point Associates III, L.P. 82,634 82,634 0 0
Crown-Glynn Assoc., L.P. 39,664 39,664 0 0
Nueberger & Berman, Trustee for
the Crown Trust 42,970 42,970 0 0
Tony de la Rosa 1,220 1,220 0 0
Monica Franquina 2 2 0 0
Robert G. Gammel 116,197 116,197 0 0
Jeanne Giles 1,016 1,016 0 0
Suzanne Grinley 21 21 0 0
Frank Holdraker 4,833 4,833 0 0
Hughes Investment Mgmt. Company 265,223 265,223 0 0
InterWest Partners IV 817,617 817,617 0 0
Everett J. Jefferson 5,083 5,083 0 0
Sienna Holdings, Inc., Trustee for
Howard S. Kabrins and La Salsa, Inc.(5) 65,634 65,634 0 0
Joseph King 35 35 0 0
Charles A. Lynch 133,334 133,334 0 0
Charles A. Lynch, Trustee for
Lynch Family Trust 11,334 11,334 0 0
Laurie Markowski 476 476 0 0
Moon Fong Mathewson 317 317 0 0
Antionette Niedle 19 19 0 0
Noro-Moseley Partners 265,223 265,223 0 0
Edward T. Peabody 3,051 3,051 0 0
Tom Saiza 1,373 1,373 0 0
Catherine Sabatini 507 507 0 0
Larry Sarokin 3,233 3233 0 0
Steve Sather 1,016 1,016 0 0
Peter Seidler 82,634 82,634 0 0
Steven R. Selcer 151,723 151,723 0 0
Sienna Holdings, Inc.(5) 6,665 6,665 0 0
Sienna Limited Partnership I(5) 702,784 702,784 0 0
Sienna Limited Partnership II(5) 510,363 510,363 0 0
Vicki Tanner 6,911 6,911 0 0
Daniel Torres 884 884 0 0
Sheryl Cave 275 275 0 0
Ronald Weinstock 6,542 6,542 0 0
Ronald Weinstock, Inc. 621 621 0 0
FSC Corporation 51,462 51,4620 0 0
L.S. Nevada Associates 1,016 1,016 0 0
--------- --------- ---- ----
TOTAL 5,998,372 5,998,372 0 0
========= ========= ==== ====
</TABLE>
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<PAGE> 13
- ----------
(1) The number of shares of our common stock owned prior to this offering
include any shares of our common stock beneficially held by the Selling
Stockholder, and assumes the exercise of all warrants to purchase shares
of our common stock held by the Selling Stockholder.
(2) For each of the Selling Stockholders, other than KCC Delaware Company,
the number of shares of the Common Stock being offered under this
Prospectus represents the number of shares of Common Stock issued at the
closing of the merger with La Salsa, the number of shares issued on the
conversion of promissory notes issued at the closing of the merger with
La Salsa, as well as the number of shares issuable assuming exercise of
warrants to purchase shares of the Common Stock issued at the closing of
the merger with La Salsa.
(3) Upon the completion of the offering and assuming the sale by the Selling
Stockholders of all of the shares of the Common Stock available for
resale under this Prospectus, the Selling Stockholders will not own any
of our common stock.
(4) Burt Sugarman, who has been a director of the Company since March 30,
1999, is the Chairman and Chief Executive Officer of KCC Delaware
Company. KCC Delaware Company is a wholly-owned subsidiary of Giant
Group, Inc., a public company of which Mr. Sugarman serves as Chairman
and Chief Executive Officer.
(5) Daniel L. Skaff, who has been a director of the Company since August 16,
1999, is the Chairman and Chief Executive Officer of Sienna Holdings,
Inc., as well as the President and majority shareholder of Sienna
Associates, the general partner of Sienna Limited Partnership I and
Sienna Limited Partnership II.
PLAN OF DISTRIBUTION
All or a portion of the Common Stock offered by this Prospectus may be
offered for sale from time to time on the Nasdaq Small Cap Market or on one or
more exchanges, or otherwise at prices and terms then obtainable, or in
negotiated transactions. The distribution of these securities may be effected in
one or more transactions that may take place on the over-the-counter market,
including, among others, ordinary brokerage transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such
securities as principals, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Usual
and customary or specifically negotiated brokerage fees or commissions may be
paid by the Selling Stockholders.
We will not receive any part of the proceeds from the sale of the Common
Stock. The Selling Stockholders and intermediaries through whom such securities
are sold may be deemed "underwriters" within the meaning of the Securities Act,
in which event commissions received by such intermediary may be deemed to be
underwriting commissions under the Securities Act. We will pay all expenses of
the registration of securities covered by this Prospectus. The Selling
Stockholders will pay any applicable underwriters' commissions and expenses,
brokerage fees or transfer taxes.
LEGAL MATTERS
Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport
Beach, California, will issue an opinion about the legality of the Common Stock
being offered by this Prospectus.
EXPERTS
Grant Thornton LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the years
ended December 31, 1997 and December 31, 1996, as set forth in
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<PAGE> 14
their report, which is incorporated in this Prospectus by reference. These
financial statements are incorporated by reference in reliance on their report,
given on their authority as experts in accounting and auditing.
The consolidated financial statements of Santa Barbara Restaurant Group,
Inc. and its subsidiaries as of December 31, 1998 and for the year then ended
have been incorporated in the Prospectus by reference in reliance upon the
report of KPMG LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of La Salsa Holding Co. and its
subsidiaries as of December 31, 1998 and for the year then ended incorporated in
this Prospectus by reference have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549, at 7 World Trade Center, Suite 1300,
New York, New York 10048, and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You can also obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
facilities. Our SEC filings are also available at the office of the New York
Stock Exchange. For further information on obtaining copies of our public
filings at the New York Stock Exchange, you should call (212) 656-5060.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this Prospectus and later information that we file with the
SEC will automatically update and supercede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act") prior to the termination of this offering:
(1) our Current Report on Form 8-K/A, filed with the SEC on September
27, 1999;
(2) our Quarterly Report on Form 10-Q for the period ended July 15,
1999, filed with the SEC on August 17, 1999;
(3) our Current Report on Form 8-K, filed with the SEC on July 28, 1999;
(4) our Definitive Proxy Statement addressing the Annual Meeting of
Stockholders, filed with the SEC on July 14, 1999;
(5) our Quarterly Report on Form 10-Q for the period ended April 22,
1999, filed with the SEC on June 4, 1999;
(6) our Amended Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1998, filed with the SEC on April 28, 1999;
(7) our Current Report on Form 8-K, filed with the SEC on April 8, 1999;
(8) our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed with the SEC on March 31, 1999; and
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<PAGE> 15
(9) all other reports filed by us pursuant to Section 13(a) or 15(d) of
the Exchange Act since December 31, 1998.
You may request a copy of these filings (other than an exhibit to a
filing unless that exhibit is specifically incorporated by reference into that
filing) at no cost, by writing to or telephoning us at the following address:
General Counsel
Santa Barbara Restaurant Group, Inc.
360 South Hope Street, Suite C300
Santa Barbara, California 93105
Telephone requests may be directed to (805) 898-7134
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<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the estimated costs and expenses in connection
with the offering of the shares of the Common Stock pursuant to this
Registration Statement:
<TABLE>
<S> <C>
Registration fee to the Securities
and Exchange Commission ................................ $ 3,235
Accounting Fees and Expenses ........................... $10,000*
Legal Fees and Expenses ................................ $10,000*
Miscellaneous Expenses ................................. $ 5,000*
-------
Total ........................................... $28,235
=======
</TABLE>
* Estimated
All expenses of the offering, other than selling discounts, commissions
and legal fees and expenses incurred separately by the Selling Stockholders,
will be paid by us.
Item 15. Indemnification of Directors and Officers.
Our Certificate of Incorporation limits, to the maximum extent permitted
by Delaware law, the personal liability of directors for monetary damages for
breach of their fiduciary duties as a director. Our Bylaws provide that we shall
indemnify our officers and directors and may indemnify our employees and other
agents to the fullest extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law ("DGCL") provides
that a corporation may indemnify any person made a party to an action (other
than an action by or in the right of the corporation) by reason of the fact that
he or she was a director, officer, employee or agent of the corporation or was
serving at the request of the corporation against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action if 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
(other than an action by or in the right of the corporation), has no reasonable
cause to believe his or her conduct was unlawful.
Item 16. Exhibits.
4.1 Registration Rights Agreement dated as of June 8, 1999*
4.2 Registration Rights Agreement dated as of March 30, 1999*
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation*
23.1 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in Ex. 5.1)*
23.2 Consent of Grant Thornton LLP*
23.3 Consent of KPMG LLP*
23.4 Consent of Deloitte & Touche LLP*
24.1 Power of Attorney (included on signature page)*
- ----------
* Previously Filed
II-1
<PAGE> 17
Item 17. Undertakings.
(a) We hereby undertake:
(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; 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; provided, however, that paragraphs
(a)(1)(i) and (a)(1)(ii) above do not apply if the registration
statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference 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.
(b) We hereby undertake that, for purposes of determining any liability
under the Securities Act of 1933, each filing of our annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934, (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
Registration Statement 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.
(c) 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, we have 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 us 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,
we will, unless in the opinion of our 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.
(d) We hereby undertake that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a
II-2
<PAGE> 18
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
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-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, we certify
that we have reasonable grounds to believe that we meet all of the requirements
for filing on Form S-3 and have duly caused this Registration Statement to be
signed on our behalf by the undersigned, thereunto duly authorized, in the City
of Santa Barbara, State of California, on the 3rd day of November, 1999.
SANTA BARBARA RESTAURANT GROUP, INC.
By: /s/ Andrew F. Puzder
--------------------------------
Andrew F. Puzder
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Santa Barbara Restaurant
Group, Inc., do hereby constitute and appoint Andrew F. Puzder and Theodore
Abajian, and each of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and behalf in our capacities as directors
and officers and to execute any and all instruments for us and in our names in
the capacities indicated below, which said attorneys and agents, or either of
them, may deem necessary or advisable to enable said corporation to comply with
the Securities Act of 1933, as amended, and any rules, regulations, and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names and in the capacities
indicated below, any and all amendments (including post-effective amendments) to
this Registration Statement, or any related registration statement that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
as amended; and we do hereby ratify and confirm all that the said attorneys and
agents, or either of them, shall 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 by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William P. Foley II
- ------------------------------ Chairman of the Board of Directors November 3, 1999
William P. Foley II
/s/ Andrew F. Puzder Chief Executive Officer, Director November 3, 1999
- ------------------------------ (Principal Executive Officer)
Andrew F. Puzder
/s/ Theodore Abajian Chief Financial Officer
- ------------------------------ (Principal Financial Officer and November 3, 1999
Theodore Abajian Accounting Officer)
/s/ Frank P. Willey
- ------------------------------ Director November 3, 1999
Frank P. Willey
</TABLE>
II-4
