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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 7, 1999
REGISTRATION NO. 333 -____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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 $6,000,000 of our
convertible promissory notes, which we issued pursuant to the Merger.
These promissory notes were converted on August 16, 1999. The number of
shares of our common stock registered hereunder also includes 500,000
shares which are issuable upon exercise of certain warrants we issued
pursuant to the Merger. Additionally, the number of shares of our
common stock registered hereunder includes 998,377 shares held by KCC
Delaware Company, which were acquired by KCC Delaware Company on March
30, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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SANTA BARBARA RESTAURANT GROUP, INC.
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5,998,377 SHARES OF COMMON STOCK
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($.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
National 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 National 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>
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TABLE OF CONTENTS
PAGE
<S> <C>
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> 10
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.
-9-
<PAGE> 11
<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>
-10-
<PAGE> 12
- ----------
(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 National 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> 13
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> 14
(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> 15
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)
II-1
<PAGE> 16
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> 17
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> 18
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 5th day of October, 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 October 5, 1999
William P. Foley II
/s/ Andrew F. Puzder Chief Executive Officer, Director October 5, 1999
- ------------------------------ (Principal Executive Officer)
Andrew F. Puzder
/s/ Theodore Abajian Chief Financial Officer
- ------------------------------ (Principal Financial Officer and October 5, 1999
Theodore Abajian Accounting Officer)
/s/ Frank P. Willey
- ------------------------------ Director October 5, 1999
Frank P. Willey
</TABLE>
II-4
<PAGE> 19
<TABLE>
<S> <C> <C>
/s/ Daniel L. Skaff
- ------------------------------ Director October 5, 1999
Daniel L. Skaff
/s/ Burt Sugarman
- ------------------------------ Director October 5, 1999
Burt Sugarman
/s/ Charles Rolles
- ------------------------------ Director October 5, 1999
Charles Rolles
/s/ C. Thomas Thompson
- ------------------------------ Director October 5, 1999
C. Thomas Thompson
/s/ Dermot F. Rowland
- ------------------------------ Director October 5, 1999
Dermot F. Rowland
</TABLE>
II-5
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
------ ----------- -----------
<S> <C> <C>
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 Exhibit 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)...........................
</TABLE>
<PAGE> 1
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of June 8, 1999, by and among SANTA BARBARA RESTAURANT GROUP,
INC., a Delaware corporation (the "Company"), and the persons and entities
listed on Schedule 1 attached hereto (individually, a "Holder," collectively,
the "Holders").
R E C I T A L S:
A. Concurrently with the execution and delivery of this Agreement, the
Company and La Salsa Holding Co., Inc. ("La Salsa"), among others, are entering
into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which
the Company has issued to the Holders an aggregate of 3,000,000 shares of Common
Stock, $.08 par value per share (the "Common Stock") of the Company (ii)
promissory notes (the "Notes") which, subject to the approval of the Company's
stockholders, shall be convertible into Common Stock and (iii) warrants (the
"Warrants") to purchase Common Stock, in the respective amounts set forth
opposite each Holder's name on Schedule I attached hereto.
B. The Company and the Holders desire to effect the registration of
such shares of Common Stock and the shares of Common Stock issuable upon
conversion of the Notes and exercise of the Warrants (the "Underlying Shares")
for resale under the Securities Act on the terms and conditions of this
Agreement.
A G R E E M E N T:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
"Approval Date" means the date that the stockholders of the Company
approve the conversion of the Notes to Common Stock in accordance with the terms
of the Notes.
"Common Stock" shall mean the shares of common stock, $.08 par value
per share, of the Company.
"Effectiveness Period" shall mean the period commencing on the date the
Registration Statement is declared or becomes effective under the Securities Act
and ending on the date that all Registrable Securities have ceased to be
Registrable Securities in accordance with the terms hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Filing Date" shall mean the date which is the earlier of (i) 30 days
following the Approval Date, or (ii) August 31, 1999.
"Holder" shall have the meaning specified in the introductory paragraph
of this Agreement.
<PAGE> 2
"Losses" shall mean losses, claims, liabilities, damages and expenses
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any action or claim).
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" shall mean the Common Stock issued to the
Holders pursuant to the Merger Agreement upon consummation of the transactions
contemplated thereby, Common Stock issuable upon conversion of the Notes (in the
event that the stockholders of the Company approve the conversion of the Notes
to Common Stock), Common Stock issuable upon exercise of the Warrants, and any
Common Stock issued with respect thereto upon any stock dividend, split, merger,
consolidation, reorganization or similar event, until, in the case of any such
Common Stock, (i) it is effectively registered under the Securities Act and
disposed of in accordance with the Registration Statement covering it, (ii) it
is saleable by the holder thereof pursuant to Rule 144(k), or (iii) it is sold
to the public pursuant to Rule 144.
"Registration Expenses" shall mean all fees and expenses incident to
the Company's performance of or compliance with this Agreement, whether or not
the Registration Statement becomes effective, which fees and expenses shall
include, without limitation, (i) all registration and filing fees with respect
to filings required to be made with the SEC, (ii) printing expenses, and (iii)
reasonable fees and disbursements of counsel for the Company in connection with
the Registration Statement.
"Registration Statement" shall mean any registration statement of the
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Rule 144" shall mean Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Underwritten Registration or Underwritten Offering" shall mean a
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Shelf Registration. The Company shall prepare and file with the SEC,
as soon as practicable but in any event on or prior to the Filing Date, a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 under the Securities Act registering the resale
-2-
<PAGE> 3
from time to time by the Holders of all of the Registrable Securities. The
Registration Statement shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by the Holders
in the manner or manners designated by them. The Company shall use its
reasonable best efforts to cause the Registration Statement to be declared
effective under the Securities Act as soon as practicable and to keep the
Registration Statement continuously effective under the Securities Act until the
expiration of the Effectiveness Period. Notwithstanding anything herein to the
contrary, no disposition of Registrable Securities hereunder shall take the form
of an Underwritten Offering without the prior agreement of the Company.
3. Piggy-Back Registration.
(a) Request for Registration. Each time the Company proposes
to file a registration statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of its security
holders of any class of equity security (other than a registration statement (A)
on Form S-4 or S-8 (or any substitute form that is adopted by the Commission),
(B) filed in connection with an exchange offer or offering of securities solely
to the Company's existing security holders or (C) filed in connection with an
acquisition, merger or similar transaction), the Company shall give written
notice of such proposed filing to the Holders of Registrable Securities as soon
as practicable (but in no event less than ten business days before the
anticipated filing date), and such notice shall offer such Holders the
opportunity to register such number of shares of Registrable Securities as each
such Holder may request, which request shall specify the Registrable Securities
intended to be disposed of by such Holder and the intended method of
distribution thereof (a "Piggy-Back Registration"). The Company shall use
commercially reasonable best efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any other similar securities of the Company
or any other security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 3(a) by giving written notice to the Company
of such withdrawal. The Company, in its sole discretion, may withdraw a
Piggy-Back Registration at any time prior to the time it becomes effective,
provided that the Company shall give immediate notice of such withdrawal to the
Holders of Registrable Securities requested to be included in such Piggy-Back
Registration.
(b) Reduction of Offering. In connection with an underwritten
offering where Piggy-Back Registration has been requested as provided in Section
3(a), the Company shall use commercially reasonable efforts to cause all
Registrable Securities requested to be included in such Piggy-Back Registration
to be included as provided in Section 3(a). If the managing underwriter or
underwriters of any such underwritten offering have given written notice to the
Holders of Registrable Securities requesting inclusion in such offering that it
is their opinion that the total number of shares which the Company, Holders of
Registrable Securities and any other persons participating in such registration
intend to include in such offering is such as to materially and adversely affect
the success of such offering, then (i) the number of shares to be offered for
the account of all other persons (other than the Company) participating in such
registration other than pursuant to demand registration rights shall be reduced
or limited (to zero if necessary) pro rata in proportion to the respective
number of shares requested to be registered by such persons to the extent
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<PAGE> 4
necessary to reduce the total number of shares requested to be included in such
offering to the number of shares, if any, recommended by the managing
underwriter or underwriters and (ii) if such managing underwriter or
underwriters recommend a further reduction in the number of shares in the
offering, then the number of shares to be offered for the account of the Holders
shall be reduced or limited (to zero if necessary) pro rata in proportion to the
respective number of shares requested to be registered by such Holders to the
extent necessary to reduce the total number of shares requested to be included
in such offering to the number of shares, if any, recommended by such managing
underwriter or underwriters.
(c) In the case of any registration initiated by the Company,
the Company shall have the right to designate the managing underwriter in any
underwritten offering.
4. Registration Procedures. In connection with the Company's
registration obligations under Section 2 or 3 hereof, the Company shall as
expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement as
provided above.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the Effectiveness
Period; and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement and
Prospectus during the Effectiveness Period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement as so amended or such Prospectus as so supplemented.
(c) Notify the Holders, and (if requested by any such person)
confirm such notice in writing, (i) when a Prospectus, any Prospectus
supplement, a Registration Statement or a post-effective amendment to a
Registration Statement has been filed with the SEC, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC or any other federal or state
governmental authority for amendments or supplements to a Registration Statement
or related Prospectus or for additional information, (iii) of the issuance by
the SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation or
threatening of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the existence of any fact or happening of any event which makes
any statement of a material fact in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue or which would require the making of any changes in the
Registration Statement or Prospectus in order that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and (vi) of the Company's determination that a
post-effective amendment to a Registration Statement would be appropriate.
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<PAGE> 5
(d) Use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction.
(e) If reasonably requested by the holders of a majority of
the Registrable Securities being sold, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to a Registration Statement such
information as the Company and such holders, in connection with any offering of
Registrable Securities, agree should be included therein as required by
applicable law, and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, that the Company shall not be
required to take any actions under this Section 4(e) that are not, in the
reasonable opinion of counsel for the Company, in compliance with applicable
law.
(f) Furnish to each Holder, without charge, at least one
conformed copy of the Registration Statement and any amendment thereto,
excluding schedules, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) Deliver to each Holder, in connection with any offering of
Registrable Securities, without charge, a reasonable quantity of the Prospectus
relating to such Registrable Securities and any amendment or supplement thereto
as such persons may reasonably request; and the Company hereby consents to the
use of such Prospectus or each amendment or supplement thereto by each of the
Holders of Registrable Securities in connection with any offering and sale in
compliance with this Agreement of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, to
register or qualify or cooperate with the Holders in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder reasonably requests in writing; keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided, that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or take any action that would subject it to general service of process
in suits or to taxation in any such jurisdiction where it is not then so
subject.
(i) Other than during a period during which sales of
Registrable Securities are deferred pursuant to Section 5 of this Agreement,
immediately upon the existence of any fact or the occurrence of any event as a
result of which a Registration Statement shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or a Prospectus
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, promptly prepare and file a post-effective amendment to each
Registration
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Statement or a supplement to the related Prospectus or any document incorporated
therein by reference or file any other required document (such as a Current
Report on Form 8-K) that would be incorporated by reference into the
Registration Statement in order that the Registration Statement shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and in order that the Prospectus will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
and, in the case of a post-effective amendment to a Registration Statement, use
its best efforts to cause such post-effective amendment to become effective as
soon as practicable.
(j) If requested in connection with a disposition of
Registrable Securities pursuant to a Registration Statement, make available for
inspection by a representative of the Holders of Registrable Securities being
sold, financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries, and cause the executive officers, directors
and employees of the Company and its subsidiaries, to supply all information
reasonably requested by any such representative in connection with such
disposition; subject to reasonable assurances by each such person that such
information will only be used in connection with matters relating to such
Registration Statement; provided, however, that such persons shall first agree
in writing with the Company that any information that is reasonably and in good
faith designated by the Company in writing as confidential at the time of
delivery of such information shall be kept confidential by such persons and
shall be used solely for the purposes of exercising rights under this Agreement.
5. Holder's Obligations. Each Holder agrees, by acquisition of the
Registrable Securities, that no holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with such information regarding such Holder and the
distribution of such Registrable Securities as may be required to be included in
the Registration Statement or the Prospectus or as the Company may from time to
time reasonably request in writing. The Company may exclude from such
registration the Registrable Securities of any Holder who does not furnish such
information provided above for so long as such information is not so furnished.
Each Holder of Registrable Securities as to which any Registration Statement is
being effected agrees promptly to furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not misleading. Any sale of any Registrable
Securities by any Holder shall constitute a representation and warranty by such
Holder that the information relating to such Holder and its plan of distribution
is as set forth in the Prospectus delivered by such Holder in connection with
such disposition, that such Prospectus does not as of the time of such sale
contain any untrue statement of a material fact relating to such Holder or its
plan of distribution and that such Prospectus does not as of the time of such
sale omit to state any material fact relating to such Holder or its plan of
distribution necessary to make the statements in such Prospectus, in light of
the circumstances under which they were made, not misleading. In the event (A)
of the happening of any event of the kind described in Section 4(c)(ii),
4(c)(iii), 4(c)(iv), 4(c)(v), or 4(c)(vi) hereof or (B) that, in the judgment of
the Company, it is advisable to suspend use of the Prospectus for a discrete
period of time due to pending material corporate developments or similar
material events that have not yet been publicly disclosed and as to which
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<PAGE> 7
the Company believes public disclosure will be prejudicial to the Company, the
Company shall deliver a certificate in writing, signed by an authorized
executive officer of the Company, to the Holders to the effect of the foregoing
and, upon receipt of such certificate, each such Holder shall not sell any
Registrable Securities and shall not use the Prospectus until it is advised in
writing by the Company that the Prospectus may be used and such Holder has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. The Company will use its
reasonable best efforts to ensure that the use of the Prospectus may be resumed,
and sales of Registrable Securities may commence, as soon as practicable and, in
the case of a pending material corporate development or similar material event,
as soon as the earlier of (x) public disclosure of such pending material
corporate development or similar material event or (y) in the reasonable
judgment of the Company, public disclosure of such material corporate
development or similar material event would not be prejudicial to the Company.
6. Registration Expenses. All Registration Expenses shall be borne by
the Company; provided, however, that the Company shall not be responsible for
the payment of, and each Holder shall pay, all underwriting discounts, selling
commissions and stock transfer taxes applicable to the Registrable Securities,
all registration expenses to the extent that the Company is prohibited by
applicable Blue Sky laws from paying for or on behalf of such holder, and all
fees and expenses of counsel for any of the Holders.
7. Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Holder from and against any and all Losses
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such Losses arise out of or are based upon the
information relating to any Holder furnished to the Company in writing by or on
behalf of the Holders expressly for use therein (including, without limitation,
any information relating to the plan of distribution of Registrable Securities
furnished by such person); provided, that the Company shall not be liable to any
Holder to the extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if either (A)(i) such Holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such Holder to the person asserting the claims from
which such Losses arise and (ii) the Prospectus would have corrected such untrue
statement or alleged untrue statement or such omission or alleged omission, or
(B)(x) such untrue statement or alleged untrue statement, omission or alleged
omission is corrected in an amendment or supplement to the Prospectus and (y)
having previously been furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, with or prior to the
delivery of written confirmation of the sale of a Registrable Security to the
person asserting the claim from which such Losses arise.
(b) Indemnification by Holders. Each Holder agrees severally,
and not jointly, to indemnify and hold harmless the other Holders, the Company,
its directors, its officers who sign the Registration Statement, and each
person, if any, who controls the Company, from and against all
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<PAGE> 8
Losses arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, Prospectus
or preliminary prospectus or arising out of or based upon any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
relating to such Holder so furnished in writing by such Holder to the Company
expressly for use in such Registration Statement or Prospectus. Notwithstanding
the foregoing, in no event will a Holder be liable under this Section 7(b) for
any amount in excess of the aggregate amount of proceeds actually received by
such Holder from the sale of Registered Securities under the Registration
Statement, less any damages which such Holder has otherwise been required to pay
by reason of such untrue or alleged statement or omission or alleged omission.
(c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party (or both the indemnified
party and another party designated by the indemnifying party pursuant to the
preceding sentence) and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and expenses of
more than one separate firm for all Holders, and (b) the fees and expenses of
more than one separate firm for the Company, its directors, its officers who
sign a Registration Statement and each person, if any, who controls the Company
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act), and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Company, and
such directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In such case involving the Holders, such
firm shall be designated in writing by the Holders of the majority of
Registrable Securities sold pursuant to the Registration Statement. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment, subject to the other terms and conditions of
this Agreement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party, shall not have
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<PAGE> 9
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability or claims that are the subject matter of
such proceeding.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party under Section 7(a) or 7(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses, (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand or (ii) if the allocation provided by clause 7(d)(i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 7(d)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault of the Holders on the one hand and
the Company on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Holders or by the Company and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this paragraph are several in proportion to the respective number of
Registrable Securities they have sold pursuant to a Registration Statement, and
not joint.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 7(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party
exceeds the amount of any damages which such indemnifying party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The indemnity, contribution and expense reimbursement obligations of
the Company hereunder shall be in addition to any liability the Company may
otherwise have hereunder, under the Release Agreement or otherwise. The
provisions of this Section 7 shall survive so long as Registrable Securities
remain outstanding, notwithstanding any transfer of the Registrable Securities
by any Holder or any termination of this Agreement.
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<PAGE> 10
The indemnity and contribution provisions contained in this Section 7
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or the Company, its officers or
directors or any person controlling the Company and (iii) the sale of any
Registrable Securities by any Holder.
8. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this Section 8(a), may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Common Stock constituting Registrable
Securities; provided, however, that a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders of Registrable Securities may be given by
Holders of at least a majority of the Registrable Securities being sold by such
Holders; provided, further, however, that no amendment, modification,
supplement, waiver or consent to any departure from the provisions of Section 7
hereof shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing and shall be deemed given (i)
when made, if made by hand delivery, (ii) upon confirmation, if made by
telecopier or (iii) one business day after being deposited with a reputable
next-day courier, postage prepaid, to the parties as follows:
(x) if to a Holder of Registrable Securities, at the
address set forth on the signature page hereto, or most current address given by
such Holder.
(y) if to the Company, to:
Santa Barbara Restaurant Group, Inc.
3916 State Street, Suite 300
Santa Barbara, California 93105
Attention: Andrew F. Puzder,
Chief Executive Officer
Telephone: (805) 898-7134
Telecopy No.: (805) 898-7149
with a copy to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660-6441
Attention: C. Craig Carlson
Telephone: (949) 725-4000
Telecopy No.: (949) 725-4100
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<PAGE> 11
or to such other address as such person may have furnished to the other persons
identified in this Section 8(b) in writing in accordance herewith.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of and be binding upon each Holder of
any Registrable Securities; provided, that no Holder may assign any of such
Holder's rights under this Agreement without the Company's prior written
consent.
(d) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
contracts made and performed within the State of California without regard to
principles of conflict of laws.
(g) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby, and the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, illegal, void or unenforceable.
(h) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
among the parties with respect to such registration rights.
(i) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the court,
shall be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
(j) Further Assurances. Each of the parties hereto shall use
all best efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things reasonably necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and the other
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<PAGE> 12
documents contemplated hereby and consummate and make effective the transactions
contemplated hereby.
(k) Termination. This Agreement and the obligations of the
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Sections 5, 6, 7 or 8 hereof
each of which shall remain in effect in accordance with their terms.
(signature pages to follow)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SANTA BARBARA RESTAURANT GROUP, INC.
By: /s/ THEODORE ABAJIAN
-----------------------------------
Name: Theodore Abajian
Title: CFO
HOLDER:
Address:
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<PAGE> 1
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the"Agreement") is entered into
by and between SANTA BARBARA RESTAURANT GROUP, INC., a Delaware corporation (the
"Company" or "SBRG"), and KCC DELAWARE COMPANY, a Delaware corporation ("KCC"),
is entered into as of the 30th day of March, 1999.
This Agreement is made pursuant to the Assignment Agreement, dated
as of March __, 1999, between the Company and KCC (the "Assignment Agreement"),
in order to induce KCC to enter into the Assignment Agreement. The execution and
delivery of this Agreement is a condition to the closing of the Assignment
Agreement. All capitalized terms contained but not defined herein shall have the
meanings ascribed to them in the Assignment Agreement.
In consideration of the foregoing and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Definitions. As used in this Agreement, the following terms have
the following meanings:
Form S-3: The form so designated, promulgated by the
Commission for registration of securities under the Securities Act and any forms
succeeding to the functions of such form, whether or not bearing the same
designation.
Holder: KCC or a transferee of registration rights
pursuant to Section 9 of this Agreement, provided that anyone who acquires any
Registrable Securities in a distribution pursuant to a registration statement
filed by the Company under the Securities Act or in a transaction under Rule 144
under the Securities Act shall not thereby be deemed to be a "Holder."
Register, registered and registration: A registration
effected by filing a registration statement in compliance with the Securities
Act and the declaration or ordering by the Commission of effectiveness of such
registration statement.
Registrable Securities: All shares of the common stock
of the Company, par value $.08 per share (the "Common Stock"), acquired pursuant
to the Assignment Agreement and held by KCC upon consummation of the
transactions contemplated therein.
2. Demand Registration.
(a) Filing; Effectiveness.
(i) As soon as commercially reasonable after
receipt by the Company of a written demand from Holder, the Company shall
prepare and file with the Commission a "shelf" registration statement (the
"Shelf Registration Statement") on Form S-3 for an offering of all Registrable
Securities to be made on a continuous or extended basis pursuant to Rule 415
under the
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<PAGE> 2
Securities Act, or such successor rule or similar provision then in effect
("Rule 415") in respect of the resale from time to time by the Holders of the
Registrable Securities.
(ii) The Company shall use its commercially
reasonable best efforts to have the Shelf Registration Statement declared
effective within 60 days after its filing and to keep such Registration
Statement continuously effective for the period beginning on such date and
ending on the earlier of (A) the date on which the Holders no longer hold any
Registrable Securities and (B) the date that is two years after the Closing Date
(although the parties hereto acknowledge that Seller may sell its Shares
pursuant to Rule 144 under the Securities Act after one year if all of the
requirements of Rule 144 are met).
(b) Effective Registration. A registration will not be
deemed to have been effective unless the Registration Statement with respect
thereto has been declared effective by the Commission and the Company has
complied in all material respects with its obligations under this Agreement with
respect thereto; provided, however, that if after it has been declared
effective, the offering of Registrable Securities pursuant to a Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. If a registration
made pursuant to this Section 2 is deemed not to have been effected, then the
Company shall continue to be obligated to effect a registration pursuant to this
Section 2.
(c) Form Used for Registration. In the event that Form
S-3 is not available for use by the Company for a Registration Statement
pursuant to this Section 2, the Company shall prepare and file a registration
statement on such form as shall be available for use by the Company at the time
the Company is obliged to prepare and file a registration statement hereunder.
In the event that Form S-3 thereafter becomes available for use by the Company,
the Company may prepare and file such Form S-3 in order to comply with its
obligations hereunder.
(d) The Company may defer its obligations to effect a
demand registration pursuant to this Agreement if, in the good faith judgment of
the Board of Directors of the Company, filing a registration statement with the
Commission at the time such a demand registration is requested would require
Adverse Disclosure (as hereinafter defined), provided that such deferral may not
extend beyond the date that filing of a registration statement with the
Commission would not require Adverse Disclosure therein, and provided further
that, notwithstanding anything to the contrary in this Agreement, the term of
this Agreement shall be extended for the same time period that any such filing
is so delayed by the Company. For purposes of this Agreement, the term "Adverse
Disclosure" means public disclosure of material non-public information relating
to a pending or imminent material acquisition, disposition or other business
combination, divestiture or transaction (a "Significant Transaction"), which
disclosure (i) would, in the good faith judgment of the Company, be required to
be made in any registration statement filed with the Commission by the Company
so that such registration statement would not be materially misleading, and (ii)
would have a material
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<PAGE> 3
adverse effect on the Company's ability to complete such Significant Transaction
or the terms upon which such Significant Transaction can be completed.
(e) Notwithstanding anything to the contrary in this
Agreement, no underwritten public offering of Registrable Securities shall be
made pursuant to a demand registration pursuant to this Agreement without the
Company's prior written consent, which consent shall not be unreasonably
withheld or delayed.
3. Piggy-Back Registration.
(a) Request for Registration. Each time the Company
proposes to file a registration statement under the Securities Act with respect
to an offering by the Company for its own account or for the account of its
security holders of any class of equity security (other than a registration
statement (A) on Form S-4 or S-8 (or any substitute form that is adopted by the
Commission), (B) filed in connection with an exchange offer or offering of
securities solely to the Company's existing security holders) or (C) filed in
connection with an acquisition, merger or similar transaction), the Company
shall give written notice of such proposed filing to the Holders of Registrable
Securities as soon as practicable (but in no event less than ten business days
before the anticipated filing date), and such notice shall offer such Holders
the opportunity to register such number of shares of Registrable Securities as
each such Holder may request, which request shall specify the Registrable
Securities intended to be disposed of by such Holder and the intended method of
distribution thereof (a "Piggy-Back Registration"). The Company shall use
commercially reasonable best efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any other similar securities of the Company
or any other security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 3(a) by giving written notice to the Company
of such withdrawal. The Company, in its sole discretion, may withdraw a
Piggy-Back Registration at any time prior to the time it becomes effective,
provided that the Company shall give immediate notice of such withdrawal to the
Holders of Registrable Securities requested to be included in such Piggy-Back
Registration.
(b) Reduction of Offering. In connection with an
underwritten offering where Piggy-Back Registration has been requested as
provided in Section 3(a), the Company shall use commercially reasonable efforts
to cause all Registrable Securities requested to be included in such Piggy-Back
Registration to be included as provided in Section 3(a). If the managing
underwriter or underwriters of any such underwritten offering have given written
notice to the Holders of Registrable Securities requesting inclusion in such
offering that it is their opinion that the total number of shares which the
Company, Holders of Registrable Securities and any other persons participating
in such registration intend to include in such offering is such as to materially
and adversely affect the success of such offering, then (i) the number of shares
to be offered for the account of all other persons (other than the Company)
participating in such registration other than pursuant to demand registration
rights shall be reduced or limited (to zero if necessary) pro rata in proportion
to the respective number of shares
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<PAGE> 4
requested to be registered by such persons to the extent necessary to reduce the
total number of shares requested to be included in such offering to the number
of shares, if any, recommended by the managing underwriter or underwriters and
(ii) if such managing underwriter or underwriters recommend a further reduction
in the number of shares in the offering, then the number of shares to be offered
for the account of the Holders shall be reduced or limited (to zero if
necessary) pro rata in proportion to the respective number of shares requested
to be registered by such Holders to the extent necessary to reduce the total
number of shares requested to be include in such offering to the number of
shares, if any, recommended by such managing underwriter or underwriters.
(c) In the case of any registration initiated by the
Company, the Company shall have the right to designate the managing underwriter
in any underwritten offering.
4. Registration Procedures. In connection with the obligations of
the Company to effect or cause the registration of any Registrable Securities
pursuant to the terms and conditions of this Agreement, the Company shall use
its commercially reasonable best efforts to effect the registration of such
Registrable Securities in accordance with the intended method of distribution,
and in connection therewith, the Company will:
(a) prepare and file with the Commission a registration
statement with respect to such shares and use commercially reasonable efforts to
cause such registration statement to become and remain effective as provided
herein;
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and current and to comply with the provisions of the Securities Act
with respect to the disposition of all shares covered by such registration
statement, including such amendments and supplements as may be necessary to
reflect the intended method of disposition from time to time of the prospective
seller or sellers of such shares;
(c) furnish to each prospective seller such number of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents, as such seller
or the managing underwriter may reasonably request in order to facilitate the
public sale or other disposition of the shares owned by such seller;
(d) use commercially reasonable best efforts to register
or qualify the shares covered by such registration statement under such other
securities or blue sky or other applicable laws of such jurisdiction within the
United States as each prospective seller shall reasonably request, to enable
such seller to consummate the public sale or other disposition in such
jurisdictions of the shares owned by such seller; provided, however, that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not at the time so qualified or to take any action
which would subject it to service of process in suits other than those arising
out of the offer or sale of the Registrable Securities covered by such
registration statement in any jurisdiction where it is not at the time so
subject;
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<PAGE> 5
(e) in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering; each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(f) notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(g) apply for listing and use its commercially
reasonable best efforts to list the Registrable Securities being registered on
any national securities exchange on which a class of the Company's equity
securities are listed or, if the Company does not have a class of equity
securities listed on a national securities exchange, apply for qualification and
use its commercially reasonable best efforts to qualify the Registrable
Securities being registered for inclusion on the automated quotation system of
the National Association of Securities Dealers, Inc. or on a national securities
exchange; and
(h) Provide a transfer agent and registrar for all
Registrable Securities registered hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
5. Information Provided by Holder
(a) Each Holder of Registrable Securities will furnish
to the Company such information as the Company may reasonably request in
connection with the registration of any Registrable Securities pursuant to this
Agreement and shall notify the Company as promptly as practicable of any
inaccuracy or change in such information.
(b) Failure of a prospective seller of Registrable
Securities to furnish the information described in this Section 5 shall not
affect the obligations of the Company under this Agreement to Holders who
furnish such information, unless such failure impairs or may impair the
viability of the offering or the legality of the registration statement or the
underlying offering.
6. Limitations on Required Registrations
(a) The Company shall not be required to effect more
than one registration pursuant to Section 2 hereof.
(b) Notwithstanding anything to the contrary in this
Agreement except to the extent specifically extended in this Agreement, the
obligation of the parties pursuant to this
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<PAGE> 6
Agreement hereof shall expire on the second anniversary of the Closing Date
(although the parties hereto acknowledge that Seller may sell its Shares
pursuant to Rule 144 under the Securities Act after one year if all of the
requirements of Rule 144 are met).
7. Expenses of Registration. All expenses incurred in effecting any
registration pursuant to this Agreement, including, without limitation, all
registration and filing fees, printing expenses, expenses of compliance with
blue sky laws, fees and disbursements of counsel for the Company, and expenses
of any audits incidental to or required by any such registration, shall be borne
by the Company, except all expenses, fees and disbursements of any counsel
retained by the Holders, and all underwriting or selling brokers' discounts and
commissions shall be borne by the Holders of the securities registered pursuant
to such registration, pro rata according to the quantity of their securities so
registered.
8. Indemnification
(a) Indemnification by Company. To the extent permitted
by law, the Company will indemnify each Holder requesting or joining in a
registration, each agent, officer and director of such Holder, each person
controlling such Holder within the meaning of Section 15 of the Securities Act
and each underwriter and selling broker of the securities so registered (each,
an "Indemnitee" and collectively, "Indemnitees") against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering, circular or other document incident to
any registration, qualification or compliance (or in any related registration
statement, notification or the like) or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act, the Exchange Act, or state securities laws or any rule or
regulation promulgated under the Securities Act, the Exchange Act or a state
securities law, in each case applicable to the Company, and will reimburse each
Indemnitee for any legal and any other fees and expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, provided however, that the Company will not be liable to
any Indemnitee in any such case to the extent that any such claim, loss, damage
or liability is caused by any untrue statement or omission based upon written
information furnished to the Company by or on behalf of such Indemnitee for use
therein and except that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or in the
amended prospectus filed with the Commission pursuant to Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
underwriter or any Indemnitee if there is no underwriter, if a copy of the Final
Prospectus was not furnished by such underwriter or Indemnitee to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the Securities Act and such underwriter or
Indemnitee was required under the Securities Act to furnish such Final
Prospectus; provided further, that this indemnity shall not be deemed to relieve
any underwriter of any of its due diligence obligations; provided, further, that
the
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<PAGE> 7
indemnity agreement contained in this Section 8(a) shall not apply to amounts
paid in settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld.
(b) Indemnification by Holders. To the extent permitted
by law, each Holder (severally and not jointly) requesting or joining in a
registration and each underwriter and selling broker of the securities so
registered will indemnify the Company and its agents, officers and directors and
each person, if any, who controls any thereof within the meaning of Section 15
of the Securities Act, and their respective successors against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other documents incident
to any registration, qualification or compliance (or in any related registration
statement, notification or the like) or any omission (or alleged omission) to
state therein a material fact required to be so stated therein or necessary to
make the statements therein not misleading and will reimburse the Company and
each other person indemnified pursuant to this paragraph (b) for any legal and
any other fees and expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action, provided,
however, that this paragraph (b) shall apply only if (and only to the extent
that) such statement or omission was made in reliance upon and in strict
conformity with written information (including, without limitation, written
negative responses to inquiries) furnished to the Company by or on behalf of
such Holder, underwriter or selling broker and stated to be specifically for use
in such prospectus, offering circular or other document (or related registration
statement, notification or the like) or any amendment or supplement thereto;
provided, that the indemnity agreement contained in this Section 8(b) shall not
apply to amounts paid in settlement or any such claim, loss, damage, liability
or action if such settlement is effected without the consent of the Holder or
underwriter, as the case may be, which consent shall not be unreasonably
withheld and provided, further, that the obligation of any such Holder shall be
limited to an amount equal to the net proceeds received by such Holder from the
sale of the Registered Securities in such offering contemplated herein, unless
such claim, loss, damage, liability or action resulted from such Holder's
fraudulent misconduct.
(c) Each party entitled to indemnification hereunder
(the "Indemnified Party") shall give notice to the party required to provide the
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party (at its expense) to assume the defense of any
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, shall conduct the defense of such claim or litigation, shall
be reasonably satisfactory to he Indemnified Party and the Indemnified Party may
participate in such defense at such party's expense, and provided further that
the omission by any Indemnified Party to give notice as provided herein shall
not relieve the Indemnifying Party of its obligations under this Section 8
except to the extent that the omission results in a failure of actual notice to
the Indemnifying Party and such Indemnifying Party is damaged solely as a result
of the failure to give notice. The Indemnified Party may retain separate
counsel; provided that the fees and expenses of such separate counsel shall be
paid by the Indemnifying Party only if the Indemnified Party reasonably
concludes that there may be defenses available to it, him or her which are
different from or additional to those available to the Indemnifying Party and
the
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<PAGE> 8
Indemnifying Party approves such conclusion, which approval shall not be
unreasonably withheld. No Indemnifying Party, in the defense of any such claim
or litigation, shall consent, except with the consent of each Indemnified Party,
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section
8 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. This relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
(f) The reimbursement required by this Section 8 shall
be made by periodic payments during the course of the investigation or defense,
as and when bills are received or expenses incurred.
(g) The obligations of the Company under this Section 8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement.
9. Transfer of Registration Rights. The registration rights granted
to the Holders under this Agreement may be transferred but only to (i) a
transferee who shall acquire not less than the greater of 50,000 shares of
Registrable Securities or 50% of the Registrable Securities held by any Holder
and (ii) affiliates of any Holder. Any such transfer shall become effective only
after receipt by the Company of (i) a written notice of the transfer, including
the name, address and tax payer identification number of the transferee and the
number of Registrable Securities transferred, and (ii) an agreement executed by
the transferee to be bound by the terms of this Agreement.
10. Delay of Registration. A Holder shall have no right to take any
action to restrain, enjoin, or otherwise delay any registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
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<PAGE> 9
11. Reports Under the Securities Act and the Exchange Act. With a
view to making available to the Holders the benefits of any rule or regulation
of the Commission that may at any time permit a Holder to sell securities of the
Company to the public pursuant to a registration on Form S-3, the Company agrees
to file with the Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act.
12. Removal of Rule 144 Legend. At any time after the second
anniversary of the issuance of any Registrable Securities, if a Holder is not,
and has not been for at least the prior three months, an affiliate of the
Company for purposes of Rule 144 under the Securities Act and delivers to the
Company an opinion to that effect from counsel reasonably acceptable to the
Company, such Holder may request the Company to remove any related restrictive
legend on such Holder's certificates representing shares of Common Stock, which
request the Company agrees to honor promptly in the normal course of business.
After such removal, the owner of any such shares no longer shall be a Holder and
such shares no longer shall be Registrable Securities subject to this Agreement.
13. Expenses. Each party to this Agreement shall bear its own
expenses relating to the preparation, execution, delivery and performance of
this Agreement and all transactions contemplated thereby.
14. Survival of Agreements. All agreements, presentations and
warranties and covenants contained herein or made in writing by or on behalf of
any party in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Agreement (despite any investigation at any
time made by any other party or on its behalf). All statements contained in any
certificate or other instrument executed and delivered by any party or its duly
authorized officers or representatives pursuant hereto in connection with the
transactions contemplated hereby shall be deemed representations by the that
party hereunder.
15. Holders' Obligations Several. Each Holder's obligations under
this Agreement are several, and no Holder is jointly obligated hereunder to
render the performance of any other Holder, nor excused from performance
hereunder by reason of any other Holder's nonperformance.
16. Notices. All notices, requests, consents and other
communications herein shall be in writing and shall be deemed to be delivered
(i) on the date delivered, if personally delivered or transmitted via facsimile
with return confirmation of such transmission; (ii) on the business day after
the date sent, if sent by recognized overnight courier service and (iii) on the
fifth day after the date sent, if mailed by first-class certified mail, postage
prepaid and return receipt requested, as follows:
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<PAGE> 10
If to the Company: Santa Barbara Restaurant Group, Inc.
3916 State Street, Suite 300
Santa Barbara, CA 93105
Attention: Andrew Puzder
Facsimile No: (805) 898-7149
Telephone No: (805) 563-1566
If to Holder: KCC Delaware Company
c/o GIANT GROUP, LTD.
9000 Sunset Blvd., 16th Floor
Los Angeles, CA 90069
Facsimile No: (310) 273-5249
Telephone No: (310) 273-5678
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties.
17. Modifications; Waiver. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any provision of this Agreement may be amended and the observance of
any such provision may be waived (either generally or in a particular instance
and either retroactively or prospectively) with (but only with) the written
consent of the Company and each of the Holders.
18. Entire Agreement. This Agreement, together with the schedules
and exhibits attached hereto and made a part hereof, contains the entire
agreement between the parties with respect to the transactions contemplated
hereby, and supersedes all negations, agreements, representations, warranties,
commitments, whether in writing or oral, prior to the date hereof.
19. Successors and Assigns. Except as otherwise expressly provided
in this Agreement, all of the terms of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
transferees of the parties hereto.
20. Enforcement.
(a) Remedies at Law or in Equity. If any party hereto
shall default in any of its obligations under this Agreement or if any
representation or warranty made by or on behalf of it in this Agreement or in
any certificate, report or other instrument delivered by it under or pursuant to
any term hereof shall be untrue or misleading in any material respect as of the
date of this Agreement or as of the Closing Date or as of the date it was made,
furnished or delivered, any other party may proceed to protect and enforce its
rights by suit in equity or action at law, whether for the specific performance
of any term contained in this Agreement, injunction against the breach of any
such term or in furtherance of the exercise of any power granted in this
Agreement, or to enforce any other legal or equitable right of such party or to
take any one of more of such actions. In the event any party brings such an
action against another, the prevailing party in such dispute, as determined by a
final
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<PAGE> 11
non-appealable order, shall be entitled to recover from the losing party all
fees, costs and expenses enforcing any right of such prevailing party under or
with respect to this Agreement, including without limitation such reasonable
fees and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
(b) Remedies Cumulative; Waiver. No remedy referred to
herein is intended to be exclusive, but each shall be cumulative and in addition
to any other remedy referred to above or otherwise available at law or in
equity. No express or implied waiver by any party of any default shall be a
waiver of any future or subsequent default. The failure or delay of any party in
exercising any rights granted hereunder shall not constitute a waiver of any
such right and any single or partial exercise of any particular right by any
party shall not exhaust the same or constitute a waiver of any other right
provided herein.
21. Execution and Counterparts; Facsimile Execution. This Agreement
may be executed in any number of counterparts, each of which when so executed
and delivered shall be deemed an original, and all such counterparts together
shall constitute one instrument. In addition, to the extent that receipt is
confirmed, this Agreement may be executed and sent by telecopy with the original
to follow by a nationally recognized overnight delivery service.
22. Governing Law; Jurisdiction; and Severability. This Agreement
shall be governed by the internal laws of the State of Delaware, without regard
to principles of conflicts of law. Each party hereto consents to the
jurisdiction of any federal court located in the State of California, County of
Los Angeles for the purpose of any action, suit or proceeding arising out of or
based on this Agreement or any provision hereof. In the event any provision of
this agreement of the application of any such provision to any party shall be
held by a court of competent jurisdiction to be contrary to law, the remaining
provisions of this agreement shall remain in full force and effect.
23. Headings. The descriptive headings of the Sections hereof and
the Schedules and Exhibits hereto are inserted only and do not constitute a part
of this Agreement.
24. Stand-Off. If requested by the managing underwriter(s) of an
underwritten public offering or the initial purchaser(s) or placement agent(s)
in any offering being resold pursuant to Rule 144A under the Securities Act of
securities by the Company, Holders shall agree on the same terms applicable to
officers and directors of the Company not to effect any public sale or
distribution of any of the Company's Common Stock for a period not to exceed 180
days following any 15 days prior to the date of the final prospectus contained
in the registration statement filed or of the offering memorandum with such
offering, provided that such provision shall apply to a Holder only if such
Holder beneficially owns 5% or more of the outstanding Common Stock of the
Company and/or an affiliate of the Holder is an officer, director or beneficial
owner of 5% or more of the Company's Common Stock, and provided further that the
term of this Agreement for any Holder shall be extended for any such period of
time the Holder is required by this Section 24 to refrain from selling
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<PAGE> 12
any shares of the Company's Common Stock, and provided further that this Section
24 shall be of no further force or effect upon expiration of the term of this
Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
by their duly authorized officers as of the date first written above.
THE COMPANY:
SANTA BARBARA RESTAURANT GROUP, INC.
By: \s\
-------------------------------------
Name:
Title:
HOLDER:
KCC DELAWARE COMPANY
By: \s\
-------------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 5.1
October 5, 1999
Santa Barbara Restaurant Group, Inc.
360 South Hope Street, Suite 1600
Santa Barbara, California 93105
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
At your request, we have examined the form of Registration Statement on
Form S-3 (the "Registration Statement") being filed by Santa Barbara Restaurant
Group, Inc., a Delaware corporation (the "Company"), with the Securities and
Exchange Commission in connection with the registration under the Securities Act
of 1933, as amended, of an aggregate of 5,998,377 shares of the Company's common
stock, $0.08 par value ("Common Stock"). The number of shares registered
includes 3,000,000 shares issued in connection with the merger of La Salsa
Holding Co., Inc. (the "Merger"), 1,500,000 shares issued upon conversion of
$6,000,000 of the Company's convertible promissory notes issued in connection
with the Merger, and 500,000 shares issuable upon exercise of warrants issued in
connection with the Merger. The number of shares registered also includes
998,377 shares issued to KCC Delaware Company on March 30, 1999. The shares of
Common Stock may be offered for resale from time to time by and for the account
of the Selling Stockholders of the Company as named in the Registration
Statement.
We have reviewed the corporate action of the Company in connection with
this matter and have examined such documents, corporate records and other
instruments as we have deemed necessary for the purposes of this opinion.
Based on the foregoing, it is our opinion that 5,998,377 shares of
Common Stock covered by the Registration Statement have been duly authorized and
validly issued, and are fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
/s/ Stradling Yocca Carlson & Rauth
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated January 30, 1998 accompanying the 1997 and 1996
consolidated financial statements included in the Annual Report on Form 10-K of
Santa Barbara Restaurant Group, Inc. for the year ended December 31, 1998. We
hereby consent to the incorporation by reference of said report in the
Registration Statement of Santa Barbara Restaurant Group, Inc. on Form S-3 and
to the use of our name as it appears under the caption "Experts".
Irvine, California
October 6, 1999
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Stockholders
Santa Barbara Restaurant Group, Inc.
We consent to the use in the Registration Statement on Form S-3 of Santa Barbara
Restaurant Group, Inc. of our report dated February 18, 1999, except for Note 18
which is as of March 30, 1999, incorporated by reference herein and the
reference to our firm under the heading "Experts" in the Prospectus, which is a
part of the Registration Statement.
KPMG LLP
Orange County, California
October 5, 1999
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Santa Barbara Restaurant Group, Inc. on Form S-3 of our report dated February
26, 1999 (related to the consolidated financial statements of La Salsa Holding
Co.), appearing in the Current Report on Form 8-K/A of Santa Barbara Restaurant
Group, Inc. filed on September 27, 1999 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
October 5, 1999
