<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
GRILL CONCEPTS, INC.
--------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.00001 par value
--------------------------------------------------------------------------------
(Title of Class of Securities)
398502104
--------------------------------------------------------------------------------
(CUSIP Number)
Lewis Wolff, 11828 La Grange Avenue, Los Angeles, California 90025
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 25, 1997
--------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1: and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 398502104 PAGE 2 OF PAGES
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lewis Wolff
Social Security No. xxxxxxxxxxxx
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,000,000
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,000,000
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000 Shares
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.4%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
1. SECURITY AND ISSUER
This Schedule 13D relates to the Common Stock of Grill Concepts, Inc.
(the "Company"). The principal executive offices of the Company are located at
11661 San Vicente Boulevard, Suite 404, Los Angeles, California 90049.
2. IDENTITY AND BACKGROUND
(a) This statement on Schedule 13D is filed by Lewis Wolff.
(b) The address of Mr. Wolff is 11828 La Grange Avenue, Los
Angeles, California 90025.
(c) Mr. Wolff is a private investor. He is also a managing member
of Wolff DiNapoli LLC, a California limited liability company which manages a
number of hotel properties in which Mr. Wolff as Trustee is an investor. The
principal business address of Wolff DiNapoli LLC is 11828 La Grange Avenue, Los
Angeles, California 90025.
(d) During the last five years, Mr. Wolff has not been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, Mr. Wolff was not a party to a
civil proceeding of a judicial or administrative body as a result of which he
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) Mr. Wolff is a citizen of the United States.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Wolff acquired the securities of the Company owned by him for cash
in the amount of $1,500,000. The source of the purchase price was Mr. Wolff's
personal funds.
4. PURPOSE OF TRANSACTION
Mr. Wolff has acquired the securities of the Company owned by him for
investment. He has no plans or proposals which relate to or would result in:
(a) the acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company;
<PAGE>
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries;
(d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any vacancies; subject, however, to Mr. Wolff's right,
pursuant to Section 7 of the Certificate of Designation of the Series I
Convertible Preferred Shares attached hereto as Exhibit 3, at any time while
Series I Convertible Preferred Shares are outstanding, (i) to request that he
be nominated for election as a director of the Company at the next annual
meeting of shareholders and (ii) if a vacancy occurs on the Board of Directors
of the Company prior to his election, to be appointed to fill such vacancy;
(e) any material change in the present capitalization or dividend
policy of the Company;
(f) any other material change in the Company's business or
corporate structure;
(g) changes in the Company's charter or bylaws or other action s
which may impede the acquisition of control of the Company by any person;
(h) causing a class of securities of the Company to cease to be
authorized to be quoted on the Nasdaq Small-Cap Market;
(i) a class of equity securities of the Company becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(j) any action similar to any of those enumerated above.
5. INTEREST IN SECURITIES OF THE ISSUER
(a) Lewis Wolff, Trustee of the Wolff Revocable Trust of 1993,
owns 200,000 shares of common stock of the Company and 1,000 shares of Series I
Convertible Preferred Stock which is presently convertible into 800,000 shares
of Common Stock of the Company for an aggregate beneficial ownership of
1,000,000 shares of Common Stock (the "Shares") equal to 6.4% of the
outstanding Common Stock assuming conversion of the Series I Convertible
<PAGE>
Preferred Stock. In addition, Mr. Wolff owns 500 shares of Series II
Convertible Preferred Stock, exercisable after one year unless earlier redeemed
by the Company; 750,000 Warrants to Purchase Common Stock at $2.00 per share,
exercisable after three years; and 750,000 Warrants to purchase Common Stock at
$3.00 per share, exercisable after three years. None of the Common Stock
issuable upon conversion of Series II Convertible Preferred Stock or upon
exercise of the Warrants is currently beneficially owned by Mr. Wolff.
(b) Mr. Wolff has the sole power to vote or to direct the vote and
sole power to dispose or to direct the disposition of the Shares.
(c) On June 25, 1997 Lewis Wolff, Trustee of the Wolff Revocable
Trust of 1993, purchased for cash in the amount of $1,500,000 the following
securities of the Company: 200,000 shares of Common Stock, $.00001 par value;
1,000 shares of Series I Convertible Preferred Stock; 500 shares of Series II
Convertible Preferred Stock; 750,000 Warrants to Purchase Common Stock at $2.00
per share; and 750,000 Warrants to Purchase Common Stock at $3.00 per share.
The purchase price was stated in the aggregate and no per share or per unit
purchase price was specified.
(d) No other person has the right to receive or the power to
direct the receipt of dividends from or the proceeds from the sale of the
Shares.
(e) Not applicable.
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Mr. Wolff is not a party to any contract, arrangement, understanding
or relationship (legal or otherwise) with respect to any securities of the
Company other than the Subscription Agreement pursuant to which Mr. Wolff
purchased the securities, a copy of which is attached hereto as Exhibit 1 and
which, among other things, grants Mr. Wolff registration rights with respect to
the Common Stock underlying the Series I Convertible Preferred Stock owned by
him; a letter from the Company dated June 20, 1997 extending the same
registration rights to the 200,000 shares of Common Stock owned by him; and the
terms of the various securities as set forth in the Certificate of Designation
of the Series I Convertible Preferred Stock, the Certificate
<PAGE>
of Designation of the Series II Convertible Preferred Stock, and the Warrants,
copies of which are attached hereto as Exhibit 3, 4, 5 and 6, respectively.
7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Subscription Agreement dated as of June 20, 1997
between Grill Concepts, Inc. and Lewis Wolff, Trustee
of the Wolff Revocable Trust of 1993.
Exhibit 2 Letter dated June 20, 1997 from Grill Concepts, Inc.
to Lewis Wolff, Trustee of the Wolff Revocable Trust
of 1993.
Exhibit 3 Certificate of Designation of Series I Convertible
Preferred Stock.
Exhibit 4 Certificate of Designation of Series II Convertible
Preferred Stock.
Exhibit 5 Warrant to Purchase Shares of Common Stock ($.00001
par value) of Grill Concepts, Inc. (W97-A1).
Exhibit 6 Warrant to Purchase Shares of Common Stock ($.00001
par value) of Grill Concepts, Inc. (W97-B1).
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
July 2, 1997
/S/ LEWIS WOLFF
-------------------------
Lewis Wolff
<PAGE>
EXHIBIT 1
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made as of the 20th
day of June 1997, by and between Grill Concepts, Inc., a corporation organized
under the laws of the State of Delaware (the "Company"), with its principal
offices at 11661 San Vicente Blvd., Suite 404, Los Angeles, California 90049 and
the purchaser whose name and address is set forth on the signature page hereof
(the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Purchaser agree as follows:
SECTION 1. Designation and Authorization of Sale of the
Offered Securities. Subject to the terms and conditions of this Agreement, the
Company has authorized the sale of up to 200,000 shares of Common Stock (the
"Common Shares"), 1,000 shares of its Series I Convertible Preferred Stock, par
value $0.001 per share (the "Series I Preferred Shares"), 500 shares of its
Series II Convertible Preferred Stock, par value $0.001 per share (the "Series
II Preferred Shares"), 750,000 five year $2.00 Warrants (the "$2.00 Warrants")
and 750,000 five year $3.00 Warrants (the "$3.00 Warrants")(the Common Shares,
Series I Preferred Shares, Series II Preferred Shares, $2.00 Warrants and $3.00
Warrants are referred to collectively as the "Offered Securities"). The Series
I Preferred Shares and Series II Preferred Shares will be convertible into
shares (the "Conversion Shares") of the Company's common stock, par value
$.00001 per share (the "Common Stock"), on the terms, and shall have the
dividend, liquidation and other rights, set forth in the respective
Certificates of Designations (the "Certificate of Designations"), attached as
Exhibits F and G to the Confidential Private Placement Memorandum (as defined
in Section 4.5 hereof.) The $2.00 Warrants and $3.00 Warrants will be
exercisable to acquire shares (the "Warrant Shares") of the Company's Common
Stock on the terms set forth in the respective forms of Warrant (the
"Warrants") attached as Exhibits D and E to the Confidential Private Placement
Memorandum.
SECTION 2. Agreement to Sell and Purchase the Offered
Securities. (a) At the Closing (as defined in Section 3),
the Company will sell to the Purchaser, and the Purchaser will buy from the
Company, upon the terms and conditions hereinafter set forth, the number of
Offered Securities shown on the signature page hereof at a Purchase Price equal
to $1,500,000 multiplied by the portion of the total Offered Securities
subscribed.
(b) The Company proposes to enter into this same
form of subscription agreement with certain other investors (the "Other
Purchasers") and expects to complete sales of the Offered Securities to them.
The Purchaser and the Other Purchasers are hereinafter sometimes collectively
referred to as the "Purchasers," and this Agreement and the agreements executed
by the Other
1
<PAGE>
Purchasers are hereinafter sometimes collectively referred to as the
"Agreements." The term "Documents" shall mean this Agreement, the Certificate
of Designations and the Warrants, collectively, together with any Schedules or
exhibits thereto.
(c) The Company reserves the right to reject in
its sole discretion, this subscription for Offered Securities in whole or in
part at any time before the Closing Date notwithstanding prior receipt by the
Purchaser of notice of acceptance of his subscription, if the Company deems
such action to be in the best interests of the Company, or if the placement is
oversubscribed, or for any other reason. The Company reserves the right to
reject this subscription if the Company reasonably believes that the Purchaser
is not an "accredited investor" (as defined in Rule 501 under the Securities
Act of 1933, as amended (the "Securities Act").
SECTION 3. Delivery of the Offered Securities at the Closing.
The completion of the purchase and sale of the Offered Securities (the
"Closing") shall occur at the offices of the Company, at 12:00 p.m. (Los
Angeles Time) on or before June 20, 1997, (the "Closing Date"), unless extended
by mutual agreement of the Company and the Purchaser. The Purchaser shall wire
Federal Reserve funds, or deliver certified funds, in an amount equal to the
aggregate price set forth on the signature page hereof to the Company for
receipt no later than 12:00 p.m. (Los Angeles Time) on the Closing Date. At
the Closing, the Company shall deliver to the Purchaser one or more
certificates registered in the name of the Purchaser, or in such nominee
name(s) as designated by the Purchaser, representing the number of Offered
Securities set forth on the signature page hereof. The name(s) in which the
certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as part of Appendix I. The Company's obligation
to complete the purchase and sale of the Offered Securities and deliver such
certificate(s) to the Purchaser at the Closing shall be subject to the
following condition, which may be waived by the Company without the consent of
each Purchaser: receipt by the Company of Federal Reserve funds in the full
amount of the purchase price for the Offered Securities being purchased
hereunder. The Purchaser's obligation to accept delivery of such
certificate(s) and to pay for the Offered Securities shall be subject to the
condition that the Company shall have (a) duly authorized and adopted the
Certificates of Designations establishing the terms of the Series I and Series
II Preferred Shares and filed the same with the Secretary of State of the State
of Delaware; and (b) duly authorized the issuance of the Offered Securities.
The Purchaser's obligations hereunder are not conditioned on the purchase by
any or all of the Other Purchasers of the Offered Securities that they have
agreed to purchase from the Company. The parties agree that there may be more
than one Closing.
2
<PAGE>
SECTION 4. Representations, Warranties and Covenants of the
Company. The Company hereby represents and warrants to, and covenants with,
the Purchaser as follows:
4.1. Organization and Qualification. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and
has all requisite corporate power and authority to conduct its business as
currently conducted. Each of the Company and its subsidiaries is qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the operations of the Company and its subsidiaries, taken as a whole.
4.2. Authorized Capital Stock; Authorization of
Securities. (a) As of June 2, 1997, the authorized capital stock of the
Company consists of: (i) 20,000,000 shares of common stock, par value $.00001
per share ("Common Stock"), of which 14,716,663 shares were validly issued and
are outstanding, fully paid and non-assessable; and (ii) 1,000,000 shares of
preferred stock, par value $.001 per share ("Preferred Stock"), of which 380
shares of Series A 10% Convertible Preferred Stock and 60 shares of Series B
Convertible Preferred Stock are outstanding. Except as set forth in the
Confidential Offering Memorandum (including warrants, options and other
securities described in Form 10-KSB of the Company for the year ended December
29, 1996 and Form 10-QSB for the quarter ended March 30, 1997, which Forms
appear as exhibits to the Confidential Offering Memorandum), there are no
outstanding securities exercisable for or convertible into shares of capital
stock of the Company. The Company has not completed any form of debt or equity
financing since March 30, 1997.
(b) The Offered Securities to be issued and sold
by the Company to the Purchasers will be, upon issuance and payment therefor,
duly authorized, validly issued, fully paid and non-assessable and will not be
subject to any preemptive or similar rights. The description of the Offered
Securities in the Confidential Offering Memorandum is complete and accurate in
all material respects.
(c) The Conversion Shares have been duly and
validly authorized and reserved for issuance upon conversion of the Series I
and Series II Preferred Shares and, when issued and delivered upon such
conversion, will be duly and validly issued and outstanding, fully paid and
non-assessable and will not have been issued in violation of or subject to any
preemptive rights or other similar rights. The Warrant Shares have been duly
and validly authorized and reserved for issuance upon exercise of the Warrants
and, when issued and delivered upon such payment, will be duly and validly
issued and outstanding, fully paid and non-assessable and will not have been
issued in violation of or subject to any
3
<PAGE>
preemptive rights or other similar rights. The shares which may be issuable as
dividends on the Series II Preferred Shares (the "Dividend Shares") have been
duly and validly authorized and reserved for issuance and, when issued and
delivered, will be duly and validly issued and outstanding, fully paid and
non-assessable and will not have been issued in violation of or subject to any
preemptive rights or other similar rights. The Conversion Shares, Dividend
Shares, and Warrant Shares are hereinafter collectively referred to as the
"Underlying Common Shares."
4.3. Due Execution, Delivery and Performance of
the Agreements. The Company has full power and authority to enter into this
Agreement and each Document. This Agreement has been, and each Document will
be, duly authorized, executed and delivered by the Company. The Company's
execution, delivery and performance of this Agreement and each Document will
not violate (i) any law, rule or regulation applicable to the Company or any of
its subsidiaries or (ii) the Certificate of Incorporation or Bylaws of the
Company or any of its subsidiaries or (iii) any provision of any indenture,
mortgage, agreement, contract or other instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such indenture, mortgage, agreement, contract or
other instrument or result in the creation or imposition of any lien, security
interest, mortgage, pledge, charge or other encumbrance upon any properties or
assets of the Company or any of its subsidiaries, except, in the case of such
clause (iii), where such violation, breach or default would not have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"). Upon their
execution and delivery (assuming the valid execution thereof by the respective
parties thereto other than the Company), this Agreement and the Documents will
constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' and contracting parties' rights generally and except
as enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.4. Litigation. Except as described in the
Confidential Offering Memorandum, there is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened, against or affecting
the Company or any of its subsidiaries which might result in any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries,
4
<PAGE>
taken as a whole, or which might materially and adversely affect their property
or assets or which might materially and adversely affect the consummation of
this Agreement and the other Documents; all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or of
which any of their property or assets is the subject which are not described in
the Confidential Offering Memorandum, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not material to
the business of the Company and its subsidiaries, taken as a whole.
4.5. Additional Information. The information
contained in the following documents which the Company has furnished to the
Purchaser, or will furnish prior to the Closing, is or will be true and correct
in all material respects as of their respective filing dates:
(a) the Company's Annual Report on Form 10-KSB
for the year ended December 29, 1996;
(b) the Company's Quarterly Report on Form 10-Q
dated March 30, 1997;
(c) the Confidential Offering Memorandum dated
June 18, 1997 containing certain summary
information relating to the sale of the
Offered Securities to the Purchasers by the
Company pursuant to the Agreements
(references herein to the Confidential
Offering Memorandum include such memorandum
and all exhibits thereto); and
(d) all other documents, if any (the "Other
Exchange Act Documents"), filed by the
Company with the Securities and Exchange
Commission (the "Commission") since the date
of filing of the aforementioned Form 10-KSB
with the Commission pursuant to the reporting
requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
4.6. No Material Change; No Material Misstatement
or Omission. (a) As of the date hereof, there has been no material
adverse change in the consolidated financial condition, business or results of
operations of the Company since March 30, 1997. Since March 30, 1997, neither
the Company nor any of its subsidiaries has incurred, other than in the
ordinary course of its business, any material liabilities or obligations,
direct or contingent, nor has the Company or any of its subsidiaries, nor paid
or declared any dividends or other distributions on their capital stock; and
there has been no change in the capital stock or, consolidated long-term debt
or, any increase in the
5
<PAGE>
consolidated short-term borrowings (other than in the ordinary course of
business) of the Company or any material adverse change to the business,
properties, assets, net worth, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries, taken as a whole
(other than the continuing losses from operations and the corresponding
reduction of net worth).
(b) As of the date thereof, the Confidential
Offering Memorandum, including all addenda and exhibits thereto, does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
4.7. Compliance with Rules and Regulations. The
offering and sale of the Offered Securities pursuant to the terms and
conditions of the Confidential Offering Memorandum and the Agreements do not
violate Schedule D to the NASD By-Laws. The Company has not received any oral
or written notification regarding its continued listing eligibility on any
securities exchange or securities market.
4.8. Issuance of Shares. The Company shall within
two (2) business days of the receipt by the Company of certificates evidencing
the Preferred Shares being converted, deliver to its transfer agent
instructions to immediately issue to such Purchaser, a certificate or
certificates representing the number of Conversion Shares and Dividend Shares
to which such Purchaser is entitled, which shall be legended as provided in the
Certificate of Designations.
4.9. No Consents, Etc. No consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with any court or any public, governmental, or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
respective properties or assets is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except for such as may be required by under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Offered Securities.
4.10. Securities Law Compliance. Assuming the
compliance by the Purchasers with their representations and warranties set
forth herein and in the other Agreements, the issuance, offer and sale by the
Company to the Purchasers of the Offered Securities is exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) or
3(b) thereof. During the past 12 months, the Company has filed all reports and
other filings applicable to it pursuant to the Exchange Act.
6
<PAGE>
SECTION 5. Representations, Warranties and Covenants of the
Purchaser. (a) The Purchaser represents and warrants to, and covenants with,
the Company that: (i) the Purchaser is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in shares presenting an investment decision like that involved in
the purchase of the Offered Securities, including investments in securities
issued by the Company, and has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase the
Offered Securities; (ii) the Purchaser is acquiring the number of Offered
Securities set forth on the signature page hereof in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of such Offered Securities or Underlying Common
Shares or any arrangement or understanding with any other persons regarding the
distribution or purchase of such Offered Securities or Underlying Common Shares
(this representation and warranty does not limit the Purchaser's right to sell
pursuant to an exemption from registration or pursuant to any registration
statement to be filed by the Company pursuant to the piggyback registration
rights included in the Offered Securities ("Registration Rights"); (iii) the
Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Offered Securities or Underlying Common
Shares except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder and
under the Exchange Act, and the rules and regulations promulgated thereunder,
and the terms and conditions of this Agreement; (iv) the Purchaser has
completed or caused to be completed the Stock Certificate Questionnaire,
attached hereto as Appendix I, and the answers thereto are true and correct to
the best knowledge of the Purchaser as of the date hereof; (v) the Purchaser
has, in connection with its decision to purchase the number of Offered
Securities set forth on the signature page hereof, relied solely upon its own
investigation and the Confidential Offering Memorandum, receipt of which is
hereby acknowledged, and the representations and warranties of the Company
contained in writing herein, and has not relied upon any other statements,
representations, warranties, covenants or assurances of the Company; (vi) the
Purchaser is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act ("Regulation D"); and (vii)
the Purchaser understands that the Offered Securities and the Underlying Common
Shares will contain a legend to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF
7
<PAGE>
1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT.
and, the certificates evidencing the Common Shares, Series I Preferred Shares
and underlying Conversion Shares shall bear a legend to the following effect:
THE HOLDER OF THE SHARES EVIDENCED BY THIS CERTIFICATE SHALL PROVIDE
WRITTEN NOTICE TO GRILL CONCEPTS, INC. OF ANY SALE, TRANSFER OR
ASSIGNMENT OF THE SHARES EVIDENCED HEREBY OCCURRING ON OR BEFORE JUNE
____, 2000. IN THE EVENT OF ANY SALE, TRANSFER OR ASSIGNMENT ON OR
BEFORE SUCH DATE, OTHER THAN TRANSFERS OR ASSIGNMENTS TO PERMITTED
TRANSFEREES (AS DEFINED IN THE $2.00 WARRANTS AND $3.00 WARRANTS) OR
TRANSFERS OR ASSIGNMENTS TO WHICH GRILL CONCEPTS HAS PREVIOUSLY
CONSENTED, THE $2.00 WARRANTS AND $3.00 WARRANTS ISSUED IN CONNECTION
WITH GRILL CONCEPTS' INITIAL SALE OF THE SECURITIES EVIDENCED HEREBY
MAY BE SUBJECT TO CANCELLATION.
(b) The Purchaser hereby covenants with the Company
that it will not directly or indirectly make any offer, sale, pledge, transfer
or other disposition of the Offered Securities or the Underlying Common Shares
other than in accordance with all applicable federal and state securities laws
and the terms and conditions of this Agreement, including, but not limited to,
the other representations, warranties and covenants of the Purchaser in this
Section 5.
(c) The Purchaser further represents and warrants
to, and covenants with, the Company that (i) the Purchaser has full right,
power, authority and capacity to enter into this Agreement and to consummate
the transactions contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, and (ii)
upon the execution and delivery of this Agreement, this Agreement shall
constitute a valid and binding obligation of the Purchaser enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(d) The Purchaser acknowledges that it has had
such access to financial and other information concerning the Company and the
Offered Securities as it deemed necessary in connection with its decision to
purchase the Offered Securities, including an opportunity to ask questions and
request information from the Company and its management, all such questions
have been answered and all information requested has been provided to the
satisfaction of the Purchaser, and the Purchaser has not relied on any third
party to conduct due diligence.
8
<PAGE>
(e) If the Purchaser proposes to sell, pledge,
assign or otherwise transfer or convey, directly or indirectly, any of the
Offered Securities or the Underlying Common Shares other than pursuant to an
effective registration statement, then the Purchaser shall provide the Company,
prior to the sale of any such Offered Securities or the Underlying Common
Shares with a legal opinion in form and substance satisfactory to the Company
of legal counsel satisfactory to the Company that such sale, pledge,
assignment, transfer or conveyance is exempt from the registration requirements
under the Securities Act and any applicable state securities and blue sky laws.
SECTION 6. Survival of Representations, Warranties and
Agreements. Notwithstanding any representation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by
the Company and the Purchaser in writing herein and in the closing certificates
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Offered Securities being purchased and the
payment therefor.
SECTION 7. Broker's Fee. Each of the parties hereto hereby
represents that, on the basis of any actions and agreements by it, there are no
brokers or finders entitled to compensation in connection with the sale of the
Offered Securities to the Purchaser.
SECTION 8. Notices. All notices, requests, consents and
other communications hereunder shall be in writing, shall be by telecopier,
with a copy being mailed by a nationally recognized overnight express courier,
and shall be deemed given when receipt is acknowledged by transmit confirmation
report and shall be addressed as follows:
(a) if to the Company, to:
Grill Concepts, Inc.
11661 San Vicente Blvd., Suite 404
Los Angeles, California 90049
Attn: Michael Weinstock, Vice-Chairman
Telephone: (310) 820-5559
Telecopier: (310) 820-6530
or to such other person at such other place as the Company
shall designate to the Purchaser in writing;
(b) if to the Purchaser, at its address and
telecopier number as set forth at the end of
this Agreement, or at such other address or
addresses as may have been furnished to the
Company in writing.
9
<PAGE>
SECTION 9. Changes. This Agreement may not be modified
or amended except pursuant to an instrument in writing signed by the Company
and the Purchaser.
SECTION 10. Headings. The headings of the various
sections of this Agreement have been inserted for convenience of reference only
and shall not be deemed to be part of this Agreement.
SECTION 11. Severability. In case any provision
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
SECTION 12. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California (without reference to its rules as to conflicts of law) and the
federal law of the United States of America.
SECTION 13. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original, but
all of which, when taken together, shall constitute but one instrument, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties. Facsimile signatures are
considered to be originals and shall have the same effect.
SECTION 14. Entire Agreement. This Agreement is intended
by the parties as a final expression of their agreement and 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. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
10
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this Agreement to be
executed by its duly authorized representative as of the day and year first
above written.
Print or Type: Name of Purchaser
(Individual or Institution):
Lewis N. Wolff, Trustee of Wolff
Revocable Trust of 1993
-----------------------------------
Name of Individual representing
Purchaser (if an Institution):
NA
-----------------------------------
Title of Individual representing
Purchaser (if an Institution):
NA
-----------------------------------
Signature by: Individual Purchaser or Individual
representing Purchaser:
[SIG]
-----------------------------------
Address: 11828 La Grange Avenue
---------------------------
Los Angeles, CA 90025
-----------------------------------
Telephone: (310) 477-3593
-----------------------------------
Telecopier: (310) 477-2522
-----------------------------------
AGGREGATE PURCHASE PRICE OF OFFERED
SECURITIES SUBSCRIBED: $1,500,000
-----------------------------------
SECURITIES SUBSCRIBED:
COMMON SHARES: 200,000
----------------------------------
SERIES I PREFERRED SHARES: 1,000
----------------------------------
SERIES II PREFERRED SHARES: 500
----------------------------------
$2.00 WARRANTS: 750,000
----------------------------------
$3.00 WARRANTS: 750,000
----------------------------------
ACCEPTED AND AGREED TO
THIS 20TH DAY OF JUNE 1997:
GRILL CONCEPTS, INC.
By: [SIG]
---------------------------
Name: Robert Spivak
Title: President
11
<PAGE>
Appendix I
GRILL CONCEPTS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Common Shares, Preferred
Shares and Warrants are to be registered in (this
is the name that will appear on your stock
certificate(s)). You may use a nominee name if
appropriate: Wolff Revocable Trust
of 1993
---------------------
2. The relationship between the Purchaser and
the Registered Holder listed in response to
item 1:
---------------------
3. The mailing address of the Registered Holder
listed in response to item 1 above:
11828 La Grange Ave #200
------------------------
Los Angeles CA 90025
------------------------
4. The Social Security Number or Tax Identification
Number of the Registered Holder listed
in response to item 1 above:
493 38 2274
-----------
12
<PAGE>
<PAGE>
EXHIBIT 2
[DAILY GRILL LOGO]
June 20, 1997
Mr. Lewis N. Wolff, Trustee
c/o Wolff-DiNapoli LLC
11828 LaGrange Avenue
Second Floor
Los Angeles, CA 90025
Re: GRILL CONCEPTS, INC.
Dear Mr. Wolff:
Reference is made to your purchase of 200,000 shares of common stock
(the "Common Shares") of Grill Concepts, Inc. (the "Company"), 1,000 shares of
the Company's Series I Convertible Preferred Stock, 500 shares of the Company's
Series II Convertible Preferred Stock, 750,000 five-year $2 Warrants and
750,000 five-year $3 Warrants, all pursuant to that certain Subscription
Agreement dated June 20, 1997 by and between you and the Company (the
"Subscription Agreement").
In connection with your acquisition of such securities, in addition to
the agreements contained in the Subscription Agreement and the documents
representing the various securities, the Company agrees that the Common Shares
shall be deemed to be Registerable Securities and that the holders of the Common
Shares shall be entitled to the same demand registration rights and piggyback
registration rights as are set forth for Registerable Securities at Section 8 of
the Certificate of Designations of Series I Convertible Preferred Stock.
Please acknowledge that the foregoing correctly represents our
agreement.
Very truly yours,
GRILL CONCEPTS, INC.
By: [SIG]
-----------------------------------
Acknowledged and agreed:
/s/ [SIG]
------------------------------
Lewis N. Wolff, Trustee
<PAGE>
<PAGE>
EXHIBIT 3
GRILL CONCEPTS, INC.
CERTIFICATE OF DESIGNATIONS
OF
SERIES I CONVERTIBLE PREFERRED STOCK
The undersigned, Robert Spivak, President of GRILL CONCEPTS, INC., a
Delaware corporation (the "Corporation"), acting pursuant to Section 151 of the
General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY that at a
meeting of the Board of Directors of the Corporation duly convened and held on
June 6, 1997 the following resolution was adopted:
RESOLVED, that pursuant to Article Fourth of the Corporation's
Certificate of Incorporation relating to the shares of the
Corporation, the Board of Directors hereby authorizes, fixes and
creates a series of Preferred Stock, par value $.001 per share, having
the following powers, preferences, designations, rights and other
characteristics:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series I Convertible Preferred Stock" (the "Convertible
Preferred Stock") and the number of shares constituting the Convertible
Preferred Stock shall be 1,000. Such number of shares may be decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Convertible Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Convertible Preferred Stock.
Section 2. Conversion Rights.
a. Right to Convert. Each share of Convertible
Preferred Stock may be converted at the option of the holder thereof at any
time and without the payment of any additional consideration therefor, into the
number of fully paid, nonassessable shares of common stock $.00001 par value
per share, of the Corporation (the "Common Stock") as is determined by dividing
$1,000 (the "Original Issue Price") by $1.25 (the "Conversion Price").
b. Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of Convertible Preferred Stock.
In lieu of any fractional share to which the holder would otherwise be
entitled, the Corporation shall round up to the nearest whole share. In order
to convert Convertible Preferred Stock into shares of Common Stock, the holder
shall surrender the certificate or certificates thereof, duly endorsed, either
by overnight courier or two-day courier, to the office of the Corporation or of
any transfer agent for the Convertible Preferred Stock, and shall give written
notice to the Corporation
1
<PAGE>
at such office that the holder elects to convert the same, the number of shares
of Convertible Preferred Stock so converted and the number of shares of Common
Stock to be issued on conversion; provided, however, that the Corporation shall
not be obligated to honor any conversion notice covering less than 100 shares
of Convertible Preferred Stock unless such conversion notice covers all shares
of Convertible Preferred Stock then outstanding. The Corporation shall not be
obligated to issue certificates evidencing shares of Common Stock issuable upon
such conversion unless certificates evidencing such shares of Convertible
Preferred Stock are delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from
any loss incurred by it in connection with such certificates.
The Corporation shall use its best efforts to issue and deliver within
three (3) business days after delivery to the Corporation of such Convertible
Preferred Stock certificates, or after such agreement and indemnification, to
such holder of Convertible Preferred Stock at the address of the holder on the
stock books of the Corporation, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid. The
date on which notice of conversion is given (the "Date of Conversion") shall be
deemed to be the date set forth in such notice of conversion provided the
original shares of Convertible Preferred Stock to be converted are received by
the Corporation or the transfer agent, as the case may be, within three (3)
business days thereafter and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stick on the
Date of Conversion. If the original shares of Convertible Preferred Stock to
be converted are not received by the transfer agent within three (3) business
days after the Date of Conversion, the notice of conversion shall become null
and void.
Unless (i) the shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock (the "Conversion Shares") have been held long
enough to satisfy the holding period set forth in, and the holder otherwise
meets the requirements of, Rule 144(k) (or any successor provision) promulgated
under the Securities Act of 1933 (the "Securities Act"), (ii) such shares
become freely tradeable pursuant to another exemption under the Securities Act,
or (iii) the converting holder purchased such shares pursuant to a current
prospectus under an effective registration statement covering the purchase and
sale of such shares, the certificate(s) representing the Conversion Shares will
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
2
<PAGE>
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Additionally, until the third anniversary of the original sale of the
Convertible Preferred Stock (the "Warrant Vesting Date"), the Conversion Shares
shall bear a legend indicating that a sale, transfer or assignment of any of
the Conversion Shares prior to the Warrant Vesting Date (other than sales,
transfers or assignments, to members of the immediate family of Lew Wolff,
including trusts and/or family partnerships for the benefit of said family
members, or to executive officers, partners or principals of Wolff DiNapoli LLC
("Permitted Transferees")) shall require a written notice to the Corporation
and may result in the cancellation of certain warrants issuable in connection
with the Convertible Preferred Stock, which legend shall read as follows:
THE HOLDER OF THE SHARES EVIDENCED BY THIS CERTIFICATE SHALL
PROVIDE WRITTEN NOTICE TO GRILL CONCEPTS, INC. OF ANY SALE,
TRANSFER OR ASSIGNMENT OF THE SHARES EVIDENCED HEREBY
OCCURRING ON OR BEFORE JUNE 20, 2000. IN THE EVENT OF ANY
SALE, TRANSFER OR ASSIGNMENT ON OR BEFORE SUCH DATE, OTHER
THAN TRANSFERS OR ASSIGNMENTS TO PERMITTED TRANSFEREES (AS
DEFINED IN THE $2.00 WARRANTS AND $3.00 WARRANTS) OR TRANSFERS
OR ASSIGNMENTS TO WHICH GRILL CONCEPTS HAS PREVIOUSLY
CONSENTED, THE $2.00 WARRANTS AND $3.00 WARRANTS ISSUED IN
CONNECTION WITH GRILL CONCEPTS' INITIAL SALE OF THE SECURITIES
EVIDENCED HEREBY STOCK MAY BE SUBJECT TO CANCELLATION.
On or after the Warrant Vesting Date, the holder(s) of Conversion
Shares may request that the foregoing legend be removed from such certificates
and the Corporation shall use reasonable efforts to cause such legend to be so
removed.
Section 3. Dividend Provisions. The holders of Convertible
Preferred Stock will only be entitled to dividends if and when declared by the
Board of Directors on a non-cumulative basis pari passu with the holders of
Common Stock.
Section 4. Corporate Events.
a. Notices of Record Date. In the event of (i) any
declaration by the Corporation of a record date of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution or (ii) any capital
reorganization of the Corporation, any reclassification or recapitalization of
the capital stock of the Corporation, any merger or consolidation of the
Corporation and any other entity or person, or any voluntary or
3
<PAGE>
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Convertible Preferred Stock at least
10 days prior to the record date specified herein, a notice specifying (A) the
date on which any such record date is to be declared for the purpose of such
dividend or distribution and a description of such dividend or distribution,
(B) the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, and (C) the time, if any, that is to be fixed, as to when the
holders of record of Common Stock (or other securities) become eligible to
receive securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution or winding up.
b. Corporate Changes. The Conversion Price shall be
appropriately adjusted to reflect any stock dividend, stock split or share
combination of the Common Stock. In the event of a merger, reorganization,
recapitalization or similar event of or with respect to the Corporation (a
"Corporate Change") (other than a Corporate Change in which all or
substantially all of the consideration received by the holders of the Company's
equity securities upon such Corporate Change consists of cash or assets other
than securities issued by the acquiring entity or any affiliate thereof and as
to which the holders of the Convertible Preferred Stock have received prior
notice pursuant to Section 4.a.) the Convertible Preferred Stock shall be
assumed by the acquiring entity and thereafter the Convertible Preferred Stock
shall be convertible into such class and type of securities as the Holder would
have received had the Holder converted the Convertible Preferred Stock
immediately prior to such Corporate Change, as appropriately adjusted to
equitably reflect the Conversion Price and any stock dividend, stock split or
share combination of the Common Stock after such corporate event.
Section 5. Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Convertible Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of Convertible Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to affect the conversion of all then outstanding shares
of the Convertible Preferred Stock, the Corporation will take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
Section 6. Liquidation Preference.
a. In the event of any liquidation, dissolution, or
winding up of the Corporation, either voluntary or involuntary, the holders of
shares of Convertible Preferred Stock shall be entitled
4
<PAGE>
to receive, immediately after distributions of senior securities required by
the Corporation's Certificate of Incorporation, as amended, and prior and in
preference to any distribution to junior securities but in parity with any
distribution to parity securities, an amount per share equal to the Original
Issue Price (as adjusted for any reclassification, stock dividends,
combinations, splits and similar recapitalization affecting such shares) plus
accrued dividends, if any. If upon the occurrence of such event the assets and
funds thus distributed among the holders of the Convertible Preferred Stock and
parity securities shall be insufficient to permit the payment to such holders
of the full preferential amounts due to the holders of the Convertible
Preferred Stock and the parity securities, respectively, then the entire assets
and funds of the Corporation legally available for distribution shall be
distributed among the holders of the Convertible Preferred Stock and the parity
securities, pro rata, based on the respective liquidation amounts to which such
series of stock is entitled by the Corporations's Certificate of Incorporation,
as amended.
b. Upon the completion of the distribution required by
subsection 6.a., if assets remain in this Corporation, they shall be
distributed to holders of parity securities (unless holders of parity
securities have received distributions pursuant to subsection 6.a. above) and
junior securities in accordance with the Corporation's Certificate of
Incorporation, as amended.
c. A consolidation or merger of the Corporation with or
into any other corporation or corporations, or a sale, conveyance or
distribution of all or substantially all of the assets of the Corporation or
the effectuation by the Corporation of a transaction or series of related
transactions in which more than 50% of the voting power of the Corporation is
disposed of, shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section 6, but shall instead be treated pursuant to
Section 4 hereof.
Section 7. Voting Rights. The holders of Convertible Preferred
Stock will not have any voting rights except as set forth below or as otherwise
from time to time required by law. The affirmative vote or consent of the
holders of at least a majority of the outstanding shares of Convertible
Preferred Stock, voting separately as a class, will be required for an
amendment, alteration or repeal of the Corporation's Certificate of
Incorporation (including any certificate of designation of preferences) if, and
only if, the amendment, alteration or repeal adversely affects the powers,
preferences or special rights of the Convertible Preferred Stock.
To the extent that under Delaware law the vote of the holder
of the Convertible Preferred Stock, voting separately as a class, is required
to authorize a given action of the Corporation, the affirmative vote or consent
of the holders of at least a majority of the outstanding shares of the
Convertible Preferred Stock shall constitute the approval of such action by the
class.
5
<PAGE>
To the extent that under Delaware law the holders of the Convertible Preferred
Stock are entitled to vote on a matter with holders of Common stock, voting
together as one class, each share of Convertible Preferred Stock shall be
entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is
calculated. Holders of the Convertible Preferred Stock shall be entitled to
notice of all shareholders meetings or written consents with respect to which
they would be entitled to vote, which notice would be provided pursuant to the
Corporation's by-laws and applicable statutes.
Notwithstanding the foregoing, if at any time while shares of
Convertible Preferred Stock are outstanding, Mr. Lew Wolff should provide
written request of such, the Corporation shall use its best efforts to nominate
Mr. Wolff for election as a director of the Corporation at the next annual
shareholders meeting of the Corporation and shall recommend such election to
its shareholders and, in the event a vacancy occurs on the Board of Directors
of the Corporation prior to the election of Mr. Wolff, the Corporation's Board
of Directors shall appoint Mr. Wolff to fill any such vacancy. Until such time
as Mr. Wolff is elected as a director of the Corporation, Mr. Wolff shall be
entitled to notice of all meetings of the Corporation's Board of Directors and
may attend any such meeting as a non-voting advisory director.
Section 8.
a. Demand Registration Rights. The Corporation
covenants and agrees with the Holders of the Convertible Preferred Stock and
Conversion Shares (the "Registrable Securities") that, subject to the
availability of audited financial statements which would comply with Regulation
S-X under the Securities Act and provided that the holders have not previously
had the option of including all of the Registrable Securities in one or more
Piggyback Registrations pursuant to Section 8.b., upon written request of the
then Holder(s) of at least a majority of the Registrable Securities made at any
time within the period commencing three (3) years and ending five (5) years
after the date the Convertible Preferred Stock was initially issued (the
"Original Issuance Date"), the Corporation will file as promptly as practicable
and, in any event, within sixty (60) days after receipt of such written
request, at its expense (other than the fees of counsel and sales commissions
for such Holders), no more than once, a post-effective amendment (the
"Amendment") to a registration statement or a new registration statement under
the Securities Act, registering or qualifying the Registrable Securities for
sale. Within fifteen (15) days after receiving any such notice, the
Corporation shall give notice to the other Holders of the Registrable
Securities, if any, advising that the Corporation is proceeding with such
Amendment or registration statement and offering to include therein the
Registrable Securities of such Holders. The Corporation shall not be obligated
to any such other Holder unless such other Holder shall accept such offer by
notice
6
<PAGE>
in writing to the Corporation within ten (10) days thereafter. The Corporation
will use its best efforts, through its officers, directors, auditors and
counsel in all matters necessary or advisable, to file and cause to become
effective such Amendment or registration statement as promptly as practicable
and for a period of nine months thereafter to reflect in the Amendment or
registration statement financial statements which are prepared in accordance
with Section 10(a)(3) of the Securities Act and any facts or events arising
that, individually, or in the aggregate, represent a fundamental and/or
material change in the information set forth in the Amendment or registration
statement to enable any Holders of the Registrable Securities to sell such
Securities during said nine-month period. The Holders may sell the Registrable
Securities pursuant to the Amendment or registration statement without
converting the Convertible Preferred Stock. If any registration pursuant to
this paragraph 8.a. is an underwritten offering, the Holders of a majority of
the Registrable Securities to be included in such registration shall be
entitled to select the underwriter or managing underwriter (in the case of a
syndicated offering) of such offering, subject to the Corporation's approval
which shall not be unreasonably withheld.
b. Piggyback Registration Rights. The Corporation
covenants and agrees with any holder of the Registrable Securities that if, at
any time within the period commencing one year and ending five years from the
Original Issuance Date, it proposes to file a registration statement with
respect to any class of equity or equity-related security (other than in
connection with an offering to the Company's employees or in connection with an
acquisition, merger or similar transaction) under the Securities Act in a
primary registration on behalf of the Corporation and/or in a secondary
registration on behalf of holders of such securities and the registration form
to be used may be used for registration of the Registrable Securities, the
Corporation will give prompt written notice (which, in the case of a
registration statement pursuant to the exercise of demand registration rights
shall be within ten (10) business days after the Corporation's receipt of
notice of such exercise and, in any event, shall be at least 30 days prior to
such filing) to the holders of Registrable Securities at the addresses
appearing on the records of the Corporation of its intention to file a
registration statement and will offer to include in such registration statement
all, but not less than 20% of the Registrable Securities, subject to paragraphs
i and ii of this Section 8.b., such number of Registrable Securities with
respect to which the Corporation has received written requests for inclusion
therein within ten (10) days after the giving of notice by the Corporation.
All registrations requested pursuant to this Section 8.b. are referred to
herein as "Piggyback Registrations". All Piggyback Registrations pursuant to
this Section 8 will be made solely at the Corporation's expense. This Section
is not applicable to a registration statement filed by the Corporation on Forms
S-4 or S-8 or any successor forms.
i. Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on
7
<PAGE>
behalf of the Corporation and the underwriter(s) for such offering
determines in good faith and advises the Corporation in writing that
in its/their opinion the number of Registrable Securities requested to
be included in such registration exceeds the number that can be sold
in such offering without materially adversely affecting the
distribution of such securities by the Corporation, the Corporation
will include in such registration (A) first, the securities that the
Corporation proposes to sell and (B) second, the Registrable
Securities requested to be included in such registration, apportioned
pro rata among the holders of the Registrable Securities and holders
of other securities requesting registration.
ii. Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration
on behalf of holders of securities of the Corporation, and the
underwriter(s) for such offering advises the Corporation in writing
that in its/their opinion the number of Registrable Securities
requested to be included in such registration exceeds the number which
can be sold in such offering without materially adversely affecting
the distribution of such securities, the Corporation will include in
such registration (A) first, the securities requested to be included
therein by the holders requesting such registration, and (B) second,
the Registrable Securities requested to be included in such
registration and securities of holder of other securities requested to
be included in such registration statement, pro rata among all such
holders on the basis of the number of shares requested to be included
by each such holder, provided, however, the Corporation will use its
best efforts to include not less than 20% of the Registrable
Securities.
Notwithstanding the foregoing, if any such underwriter shall determine
in good faith and advise the Corporation in writing that the distribution of
the Registrable Securities requested to be included in the registration
concurrently with the securities being registered by the Corporation would
materially adversely affect the distribution of such securities by the
Corporation, then the holders of such Registrable Securities shall delay their
offering and sale for such period ending on the earliest of (1) 90 days
following the effective date of the Corporation's registration statement, (2)
the day upon which the underwriting syndicate, if any, for such offering shall
have been disbanded or, (3) such date as the Corporation, managing underwriter
and holders of Registrable Securities shall otherwise agree. In the event of
such delay, the Corporation shall file such supplements, post-effective
amendments and take any such other steps as may be necessary to permit such
holders to make their proposed offering and sale for a period of 120 days
immediately following the end of any such period of delay. If any party
disapproves the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Corporation, the underwriter, and the
holder. Notwithstanding the foregoing, the Corporation shall not be required
to file a registration statement to include shares pursuant to this Section 8
if
8
<PAGE>
independent counsel, reasonably satisfactory to the Corporation, renders an
opinion to the Corporation that the Registrable Securities proposed to be
disposed of may be transferred pursuant to the provisions of Rule 144 under the
Securities Act or otherwise without registration under the Securities Act.
c. Action to be Undertaken by the Corporation. In
connection with the registration of Registrable Securities hereunder, the
Corporation agrees to (i) bear the expenses of any registration; provided,
however, that in no event shall the Corporation be obligated to pay (A) any
fees and disbursements of special counsel for holders of Registrable
Securities, (B) any underwriters' discount or commission in respect of such
Registrable Securities, and (C) any stock transfer taxes attributable to the
sale of the Registrable Securities; (ii) use its best efforts to register or
qualify the Registrable Securities for offer or sale under state securities or
Blue Sky laws of such jurisdictions in which such holders shall reasonably
request, provided, however, that no qualification shall be required in any
jurisdiction where, as a result thereof, the Corporation would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction to which it is not then subject; and (iii) enter
into a cross-indemnity agreement, in customary form, with each underwriter, if
any, and each holder of securities included in such registration statement.
d. Action to be Taken by the Holders. The Corporation's
obligations under this Section 8 shall be conditioned upon a timely receipt by
the Corporation in writing of: (i) information as to the terms of such public
offering furnished by or on behalf of each holder of Registrable Securities
intending to make a public offering of his, her or its Registrable Securities,
and (ii) such other information as the Corporation may reasonably require from
such holders, or any underwriter for any of them, for inclusion in such
registration statement.
Section 9. Protective Provisions. So long as shares of
Convertible Preferred Stock are outstanding, the Corporation shall not take any
action that would impair the rights of the holders of the Convertible Preferred
Stock set forth herein and shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Convertible Preferred Stock:
a. alter or change the rights, preferences or privileges
of the shares of the Convertible Preferred Stock or any other securities so as
to affect adversely the Convertible Preferred Stock;
b. create any new class or series of stock having a
preference over the Convertible Preferred Stock with respect to distributions
pursuant to Section 6 above;
c. do any act or thing which would result in taxation of
the holders of shares of the Convertible Preferred Stock under
9
<PAGE>
Section 305 of the Internal Revenue Code of 1986, as amended (or any comparable
provision of the Internal Revenue code as hereinafter from time to time
amended);
d. redeem, repurchase or pay any distribution with
respect to any class of securities of the Corporation ranking junior to the
Convertible Preferred Stock or redeem or repurchase any shares of Series A
Preferred Stock or Series B Preferred Stock; or
e. reissue any shares of the Convertible Preferred Stock
after such shares have previously been converted, redeemed or repurchased.
Section 10. Miscellaneous. The Convertible Preferred Stock shall
rank pari passu with the Series A Preferred Stock, Series B Preferred Stock and
Series II Preferred Stock of the Corporation with respect to rights on
liquidation.
IN WITNESS WHEREOF, I have executed this Certificate this __ day of
June, 1997.
[SIG]
---------------------------
President, Robert Spivak
ATTEST:
[SIG]
------------------------------
Secretary, Michael Weinstock
10
<PAGE>
<PAGE>
EXHIBIT 4
GRILL CONCEPTS, INC.
CERTIFICATE OF DESIGNATIONS
OF
SERIES II CONVERTIBLE PREFERRED STOCK
The undersigned, Robert Spivak, President of GRILL CONCEPTS, INC., a
Delaware corporation (the "Corporation"), acting pursuant to Section 151 of the
General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY that at a
meeting of the Board of Directors of the Corporation duly convened and held on
June 6, 1997 the following resolution was adopted:
RESOLVED, that pursuant to Article Fourth of the Corporation's
Certificate of Incorporation relating to the shares of the
Corporation, the Board of Directors hereby authorizes, fixes and
creates a series of Preferred Stock, par value $.001 per share, having
the following powers, preferences, designations, rights and other
characteristics:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series II Convertible Preferred Stock" (the "Convertible
Preferred Stock") and the number of shares constituting the Convertible
Preferred Stock shall be 500. Such number of shares may be decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Convertible Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Convertible Preferred Stock.
Section 2. Conversion Rights.
a. Right to Convert. Each share of Convertible
Preferred Stock may be converted at the option of the holder thereof commencing
one year following the date on which the Convertible Preferred Stock was first
issued (the "Original Issuance Date") and without the payment of any additional
consideration therefor, into the number of fully paid, nonassessable shares of
common stock, $.00001 par value per share, of the Corporation (the "Common
Stock") as is determined by dividing $1,000 (the "Original Issue Price") by the
greater of (i) $1.00, or (ii) 75% of the average closing price (the "Closing
Price") of the Corporation's Common Stock for the five (5) trading days
immediately prior to the Date of Conversion, as defined below in Section 2.b.,
as reported on Nasdaq (the "Conversion Price"). Notwithstanding the foregoing,
in no event shall the Conversion Price exceed $2.50 per share.
b. Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of Convertible Preferred Stock.
In lieu of any fractional share to which the holder would otherwise be
entitled, the Corporation shall round up
1
<PAGE>
to the nearest whole share. In order to convert Convertible Preferred Stock
into shares of Common Stock, the holder shall surrender the certificate or
certificates thereof, duly endorsed, either by overnight courier or two-day
courier, to the office of the Corporation or of any transfer agent for the
Convertible Preferred Stock, and shall give written notice to the Corporation
at such office that the holder elects to convert the same, the number of shares
of Convertible Preferred Stock so converted and the number of shares of Common
Stock to be issued on conversion; provided, however, that the Corporation shall
not be obligated to honor any conversion notice covering less than 100 shares
of Convertible Preferred Stock unless such conversion notice covers all shares
of Convertible Preferred Stock then outstanding. The Corporation shall not be
obligated to issue certificates evidencing shares of Common Stock issuable upon
such conversion unless certificates evidencing such shares of Convertible
Preferred Stock are delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates.
The Corporation shall use its best efforts to issue and deliver within
three (3) business days after delivery to the Corporation of such Convertible
Preferred Stock certificates, or after such agreement and indemnification, to
such holder of Convertible Preferred Stock at the address of the holder on the
stock books of the Corporation, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid. The
date on which notice of conversion is given (the "Date of Conversion") shall be
deemed to be the date set forth in such notice of conversion provided the
original shares of Convertible Preferred Stock to be converted are received by
the Corporation or the transfer agent, as the case may be, within three (3)
business days thereafter and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on the
Date of Conversion. If the original shares of Convertible Preferred Stock to
be converted are not received by the transfer agent within three (3) business
days after the Date of Conversion, the notice of conversion shall become null
and void.
Unless (i) the shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock (the "Conversion Shares") and/or the shares of
Common Stock issuable as dividends on the Convertible Preferred Stock (the
"Dividend Shares") have been held long enough to satisfy the holding period set
forth in, and the holder otherwise meets the requirements of, Rule 144(k) (or
any successor provision) promulgated under the Securities Act of 1933 (the
"Securities Act"), (ii) such shares become freely tradeable pursuant to another
exemption under the Securities Act, or (iii) the converting holder purchased
such shares pursuant to a current prospectus under an effective registration
statement covering the
2
<PAGE>
purchase and sale of such shares, the certificate(s) representing the
Conversion Shares and the Dividend Shares will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Section 3. Dividend Provisions. The holders of shares of
Convertible Preferred Stock shall be entitled to receive, in preference to the
holders of Common Stock or any other junior stock, a cumulative annual dividend
payment of $100 per share of Convertible Preferred Stock held (as adjusted for
any reclassification, stock dividends, combinations, splits and similar
recapitalization affecting such shares). Dividends are payable only upon
conversion of the Convertible Preferred Stock pursuant to Section 2 hereof and
are payable either (i) in shares of Common Stock, with the number of shares of
Common Stock so payable to be determined by dividing the accrued dividend
payable by the Conversion Price in effect on the Date of Conversion and rounded
up to the nearest full share, or (ii) in cash, at the option of the
Corporation. Dividends on the shares of Convertible Preferred Stock shall
accumulate from the date the Convertible Preferred Stock was initially issued
(the "Original Issuance Date") through the Date of Conversion on the basis of a
calendar year consisting of twelve (12) months each consisting of thirty (30)
days. Dividends shall payable in cash only out of the assets of the
Corporation legally available for the payment thereof.
Section 4. Corporate Events.
a. Notices of Record Date. In the event of (i) any
declaration by the Corporation of a record date of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution or (ii) any capital
reorganization of the Corporation, any reclassification or recapitalization of
the capital stock of the Corporation, any merger or consolidation of the
Corporation and any other entity or person, or any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the Corporation
shall mail to each holder of Convertible Preferred Stock at least 10 days prior
to the record date specified herein, a notice specifying (A) the date on which
any such record date is to be declared for the purpose of such dividend or
distribution and a description of such dividend or distribution, (B) the date
on which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective,
and (C) the time, if any, that is to be fixed, as to when the holders of
3
<PAGE>
record of Common Stock (or other securities) become eligible to receive
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution or winding up.
b. Corporate Changes. The Conversion Price shall be
appropriately adjusted to reflect any stock dividend, stock split or share
combination of the Common Stock. In the event of a merger, reorganization,
recapitalization or similar event of or with respect to the Corporation (a
"Corporate Change") (other than a Corporate Change in which all or
substantially all of the consideration received by the holders of the Company's
equity securities upon such Corporate Change consists of cash or assets other
than securities issued by the acquiring entity or any affiliate thereof and as
to which the holders of the Convertible Preferred Stock have received prior
notice pursuant to Section 4.a.) the Convertible Preferred Stock shall be
assumed by the acquiring entity and thereafter the Convertible Preferred Stock
shall be convertible into such class and type of securities as the Holder would
have received had the Holder converted the Convertible Preferred Stock
immediately prior to such Corporate Change, as appropriately adjusted to
equitably reflect the Conversion Price and any stock dividend, stock split or
share combination of the Common Stock after such corporate event.
Section 5. Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Convertible Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of Convertible Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to affect the conversion of all then outstanding shares
of the Convertible Preferred Stock, the Corporation will take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
Section 6. Redemption. The Corporation shall have the right but
not the obligation to redeem, in part or in whole, any shares of Convertible
Preferred Stock remaining outstanding on or after the second anniversary date
of the Original Issuance Date at a redemption price of $1,000 per share plus
any accrued but unpaid dividends (the "Redemption Price"). In the event the
Corporation elects to redeem part or all of the outstanding shares of
Convertible Preferred Stock, the Corporation shall provide a written notice of
such intent to the holders of the Convertible Preferred Stock at least ten (10)
days in advance of the date set for redemption (the "Redemption Date"). Such
notice shall set forth the Redemption Date, the number of shares to be
redeemed, the Redemption Price, the time, place and manner of delivery of funds
and certificates evidencing the shares to be redeemed and the procedures to be
followed to collect the Redemption Price. The
4
<PAGE>
holders' right to convert shares of Convertible Preferred Stock to be redeemed
shall terminate at 5:00 P.M. Pacific time on the business day immediately
preceding the Redemption Date.
Section 7. Liquidation Preference.
a. In the event of any liquidation, dissolution, or
winding up of the Corporation, either voluntary or involuntary, the holders of
shares of Convertible Preferred Stock shall be entitled to receive, immediately
after distributions of senior securities required by the Corporation's
Certificate of Incorporation, as amended, and prior and in preference to any
distribution to junior securities but in parity with any distribution to parity
securities, an amount per share equal to the Original Issue Price (as adjusted
for any reclassification, stock dividends, combinations, splits and similar
recapitalization affecting such shares) plus accrued dividends. If upon the
occurrence of such event the assets and funds thus distributed among the
holders of the Convertible Preferred Stock and parity securities shall be
insufficient to permit the payment to such holders of the full preferential
amounts due to the holders of the Convertible Preferred Stock and the parity
securities, respectively, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed among the holders of
the Convertible Preferred Stock and the parity securities, pro rata, based on
the respective liquidation amounts to which such series of stock is entitled by
the Corporations's Certificate of Incorporation, as amended.
b. Upon the completion of the distribution required by
subsection 7.a., if assets remain in this Corporation, they shall be
distributed to holders of parity securities (unless holders of parity
securities have received distributions pursuant to subsection 7.a. above) and
junior securities in accordance with the Corporation's Certificate of
Incorporation, as amended.
c. A consolidation or merger of the Corporation with or
into any other corporation or corporations, or a sale, conveyance or
distribution of all or substantially all of the assets of the Corporation or
the effectuation by the Corporation of a transaction or series of related
transactions in which more than 50% of the voting power of the Corporation is
disposed of, shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section 7, but shall instead be treated pursuant to
Section 4 hereof.
Section 8. Voting Rights. The holders of Convertible Preferred
Stock will not have any voting rights except as set forth below or as otherwise
from time to time required by law. The affirmative vote or consent of the
holders of at least a majority of the outstanding shares of Convertible
Preferred Stock, voting separately as a class, will be required for an
amendment, alteration or repeal of the Corporation's Certificate of
Incorporation (including any certificate of designation of preferences) if, and
only if, the amendment, alteration or repeal
5
<PAGE>
adversely affects the powers, preferences or special rights of the Convertible
Preferred Stock.
To the extent that under Delaware law the vote of the holder
of the Convertible Preferred Stock, voting separately as a class, is required
to authorize a given action of the Corporation, the affirmative vote or consent
of the holders of at least a majority of the outstanding shares of the
Convertible Preferred Stock shall constitute the approval of such action by the
class. To the extent that under Delaware law the holders of the Convertible
Preferred Stock are entitled to vote on a matter with holders of Common stock,
voting together as one class, each share of Convertible Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is
calculated. Holders of the Convertible Preferred Stock shall be entitled to
notice of all shareholders meetings or written consents with respect to which
they would be entitled to vote, which notice would be provided pursuant to the
Corporation's by-laws and applicable statutes.
Notwithstanding the foregoing, if, at any time while shares of
Convertible Preferred Stock are outstanding, Mr. Lew Wolff should provide
written request of such, the Corporation shall use its best efforts to nominate
Mr. Wolff for election as a director of the Corporation at the next annual
shareholders meeting of the Corporation and shall recommend such election to
its shareholders and, in the event a vacancy occurs on the Board of Directors
of the Corporation prior to the election of Mr. Wolff, the Corporation's Board
of Directors shall appoint Mr. Wolff to fill any such vacancy. Until such time
as Mr. Wolff is elected as a director of the Corporation, Mr. Wolff shall be
entitled to notice of all meetings of the Corporation's Board of Directors and
may attend any such meetings as a non-voting advisory director.
Section 9. Registration Rights.
a. Demand Registration Rights. The Corporation
covenants and agrees with the Holders of the Convertible Preferred Stock,
Conversion Shares or Dividend Shares (the "Registrable Securities") that,
subject to the availability of audited financial statements which would comply
with Regulation S-X under the Securities Act and provided that the holders have
not previously had the option of including all of the Registrable Securities in
one or more Piggyback Registrations pursuant to Section 8.b., upon written
request of the then Holder(s) of at least a majority of the Registrable
Securities made at any time within the period commencing three (3) years and
ending five (5) years after the Original Issuance Date, the Corporation will
file as promptly as practicable and, in any event, within sixty (60) days after
receipt of such written request, at its expense (other than the fees of counsel
and sales commissions for such Holders), no more than once, a post- effective
amendment (the "Amendment") to a registration statement or a new registration
statement under the Securities Act,
6
<PAGE>
registering or qualifying the Registrable Securities for sale. Within fifteen
(15) days after receiving any such notice, the Corporation shall give notice to
the other Holders of the Registrable Securities, if any, advising that the
Corporation is proceeding with such Amendment or registration statement and
offering to include therein the Registrable Securities of such Holders. The
Corporation shall not be obligated to any such other Holder unless such other
Holder shall accept such offer by notice in writing to the Corporation within
ten (10) days thereafter. The Corporation will use its best efforts, through
its officers, directors, auditors and counsel in all matters necessary or
advisable, to file and cause to become effective such Amendment or registration
statement as promptly as practicable and for a period of nine months thereafter
to reflect in the Amendment or registration statement financial statements
which are prepared in accordance with Section 10(a)(3) of the Securities Act
and any facts or events arising that, individually, or in the aggregate,
represent a fundamental and/or material change in the information set forth in
the Amendment or registration statement to enable any Holders of the
Registrable Securities to sell such Securities during said nine-month period.
The Holders may sell the Registrable Securities pursuant to the Amendment or
registration statement without converting the Convertible Preferred Stock. If
any registration pursuant to this paragraph 8.a. is an underwritten offering,
the Holders of a majority of the Registrable Securities to be included in such
registration shall be entitled to select the underwriter or managing
underwriter (in the case of a syndicated offering) of such offering, subject to
the Corporation's approval which shall not be unreasonably withheld.
b. Piggyback Registration Rights. The Corporation
covenants and agrees with any holder of the Convertible Preferred Stock,
Conversion Shares or Dividend Shares (the "Registrable Securities") that if, at
any time within the period commencing one year and ending five years from the
Original Issuance Date, it proposes to file a registration statement with
respect to any class of equity or equity- related security (other than in
connection with an offering to the Company's employees or in connection with an
acquisition, merger or similar transaction) under the Securities Act in a
primary registration on behalf of the Corporation and/or in a secondary
registration on behalf of holders of such securities and the registration form
to be used may be used for registration of the Registrable Securities, the
Corporation will give prompt written notice (which, in the case of a
registration statement pursuant to the exercise of demand registration rights
shall be within ten (10) business days after the Corporation's receipt of
notice of such exercise and, in any event, shall be at least 30 days prior to
such filing) to the holders of Registrable Securities at the addresses
appearing on the records of the Corporation of its intention to file a
registration statement and will offer to include in such registration statement
all, but not less than 20% of the Registrable Securities, subject to paragraphs
i and ii of this Section 9.b., such number of Registrable Securities with
respect to which the Corporation has received written requests for inclusion
therein within ten (10) days after the giving of notice
7
<PAGE>
by the Corporation. All registrations requested pursuant to this Section 9.b.
are referred to herein as "Piggyback Registrations". All Piggyback
Registrations pursuant to this Section 9 will be made solely at the
Corporation's expense. This Section is not applicable to a registration
statement filed by the Corporation on Forms S-4 or S-8 or any successor forms.
i. Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on behalf
of the Corporation and the underwriter(s) for such offering determines
in good faith and advises the Corporation in writing that in its/their
opinion the number of Registrable Securities requested to be included
in such registration exceeds the number that can be sold in such
offering without materially adversely affecting the distribution of
such securities by the Corporation, the Corporation will include in
such registration (A) first, the securities that the Corporation
proposes to sell and (B) second, the Registrable Securities requested
to be included in such registration, apportioned pro rata among the
holders of the Registrable Securities and holders of other securities
requesting registration.
ii. Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration
on behalf of holders of securities of the Corporation, and the
underwriter(s) for such offering advises the Corporation in writing
that in its/their opinion the number of Registrable Securities
requested to be included in such registration exceeds the number which
can be sold in such offering without materially adversely affecting
the distribution of such securities, the Corporation will include in
such registration (A) first, the securities requested to be included
therein by the holders requesting such registration, and (B) second,
the Registrable Securities requested to be included in such
registration and securities of holder of other securities requested to
be included in such registration statement, pro rata among all such
holders on the basis of the number of shares requested to be included
by each such holder, provided, however, the Corporation will use its
best efforts to include not less than 20% of the Registrable
Securities.
Notwithstanding the foregoing, if any such underwriter shall determine
in good faith and advise the Corporation in writing that the distribution of
the Registrable Securities requested to be included in the registration
concurrently with the securities being registered by the Corporation would
materially adversely affect the distribution of such securities by the
Corporation, then the holders of such Registrable Securities shall delay their
offering and sale for such period ending on the earliest of (1) 90 days
following the effective date of the Corporation's registration statement, (2)
the day upon which the underwriting syndicate, if any, for such offering shall
have been disbanded or, (3) such date as the Corporation, managing underwriter
and holders of Registrable Securities shall otherwise agree. In the event of
such delay, the
8
<PAGE>
Corporation shall file such supplements, post-effective amendments and take any
such other steps as may be necessary to permit such holders to make their
proposed offering and sale for a period of 120 days immediately following the
end of any such period of delay. If any party disapproves the terms of any
such underwriting, it may elect to withdraw therefrom by written notice to the
Corporation, the underwriter, and the holder. Notwithstanding the foregoing,
the Corporation shall not be required to file a registration statement to
include shares pursuant to this Section 9 if independent counsel, reasonably
satisfactory to the Corporation, renders an opinion to the Corporation that the
Registrable Securities proposed to be disposed of may be transferred pursuant
to the provisions of Rule 144 under the Securities Act or otherwise without
registration under the Securities Act.
c. Action to be Undertaken by the Corporation. In
connection with the registration of Registrable Securities hereunder, the
Corporation agrees to (i) bear the expenses of any registration; provided,
however, that in no event shall the Corporation be obligated to pay (A) any
fees and disbursements of special counsel for holders of Registrable
Securities, (B) any underwriters' discount or commission in respect of such
Registrable Securities, and (C) any stock transfer taxes attributable to the
sale of the Registrable Securities; (ii) use its best efforts to register or
qualify the Registrable Securities for offer or sale under state securities or
Blue Sky laws of such jurisdictions in which such holders shall reasonably
request, provided, however, that no qualification shall be required in any
jurisdiction where, as a result thereof, the Corporation would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction to which it is not then subject; and (iii) enter
into a cross-indemnity agreement, in customary form, with each underwriter, if
any, and each holder of securities included in such registration statement.
d. Action to be Taken by the Holders. The Corporation's
obligations under this Section 9 shall be conditioned upon a timely receipt by
the Corporation in writing of: (i) information as to the terms of such public
offering furnished by or on behalf of each holder of Registrable Securities
intending to make a public offering of his, her or its Registrable Securities,
and (ii) such other information as the Corporation may reasonably require from
such holders, or any underwriter for any of them, for inclusion in such
registration statement.
Section 10. Protective Provisions. So long as shares of
Convertible Preferred Stock are outstanding, the Corporation shall not take any
action that would impair the rights of the holders of the Convertible Preferred
Stock set forth herein and shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Convertible Preferred Stock:
a. alter or change the rights, preferences or privileges
of the shares of the Convertible Preferred Stock or any
9
<PAGE>
other securities so as to affect adversely the Convertible Preferred Stock;
b. create any new class or series of stock having a
preference over the Convertible Preferred Stock with respect to distributions
pursuant to Section 7 above;
c. do any act or thing which would result in taxation of
the holders of shares of the Convertible Preferred Stock under Section 305 of
the Internal Revenue Code of 1986, as amended (or any comparable provision of
the Internal Revenue code as hereinafter from time to time amended);
d. redeem, repurchase or pay any distribution with
respect to any class of securities of the Corporation ranking junior to the
Convertible Preferred Stock or redeem or repurchase any shares of Series A
Preferred Stock or Series B Preferred Stock; or
e. reissue any shares of the Convertible Preferred Stock
after such shares have previously been converted, redeemed or repurchased.
Section 11. Miscellaneous. The Convertible Preferred Stock shall
rank pari passu with the Series A Preferred Stock, Series B Preferred Stock and
Series I Preferred Stock of the Corporation with respect to rights on dividends
and liquidation.
IN WITNESS WHEREOF, I have executed this Certificate this __ day of
June, 1997.
[SIG]
---------------------------------
President, Robert Spivak
ATTEST:
[SIG]
----------------------------
Secretary, Michael Weinstock
10
<PAGE>
<PAGE>
EXHIBIT 5
THIS WARRANT AND THE SHARES OF COMMON STOCK OF GRILL CONCEPTS, INC. TO BE
ISSUED UPON ANY EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THIS WARRANT IS SUBJECT TO CANCELLATION IF ANY COMMON SHARES OR SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION OF THE SERIES I CONVERTIBLE PREFERRED
STOCK OF GRILL CONCEPTS, INC. SOLD IN CONJUNCTION WITH THE ISSUANCE OF THIS
WARRANT ARE SOLD, TRANSFERRED OR ASSIGNED (OTHER THAN AS PERMITTED BY SECTION 9
HEREOF) PRIOR TO THE WARRANT VESTING DATE.
W97-A 1
WARRANT
to Purchase Shares
of
Common Stock (.00001 par value)
of
GRILL CONCEPTS, INC.
June 20, 1997
This certifies that, for value received, Lewis N. Wolff, Trustee of
Wolff Revocable Trust of 1993, ("Wolff") and any subsequent transferee pursuant
to the terms hereof (each, a "Holder"), is entitled to purchase, subject to the
provisions of this Warrant, from Grill Concepts, Inc., a Delaware corporation
(the "Issuer"), at any time or from time to time on or after June 20, 2000
(subject to adjustment pursuant to Section 5(d))(the "Warrant Vesting Date") and
on or before June 20, 2002 (the "Expiration Date"), Seven Hundred Fifty Thousand
(750,000) fully paid and nonassessable shares of common stock, $.00001 par value
(the "Common Stock"), of the Issuer at an exercise price equal to $2.00 per
share, subject to adjustment pursuant to the terms hereunder (the "Exercise
Price") (such shares of Common Stock and other securities issued and issuable
upon exercise of this Warrant, the "Warrant Shares").
Section 1. Exercise of Warrant.
(a) Subject to the provisions hereof, this Warrant may be
exercised, in whole or in part, but not as to a fractional share, at
any time or from time to time on or after the Warrant Vesting Date and
on or before the Expiration Date, by presentation and surrender hereof
to the Issuer at the address which, in accordance with the provisions
of Section 10 hereof, is then effective for notices to the Issuer,
with the Election to Purchase Form annexed hereto as Schedule One,
duly executed
1
<PAGE>
and accompanied by payment to the Issuer as further set forth below in
this Section 1, for the account of the Issuer, of the Exercise Price
for the number of Warrant Shares specified in such form. If this
Warrant should be exercised in part only, the Issuer shall, upon
surrender of this Warrant, execute and deliver a new Warrant
evidencing the rights of the Holder hereof to purchase the balance of
the Warrant Shares purchasable hereunder. The Issuer shall maintain
at its principal place of business a register for the registration of
this Warrant and registration of transfer of the Warrant. The
Exercise Price for the number of Warrant Shares specified in the
Election to Purchase Form shall be payable (i) in United States
Dollars by certified or official bank check payable to the order of
the Issuer or by wire transfer of immediately available funds to an
account specified by the Issuer for that purpose; or (ii) if permitted
by the Issuer as evidenced by written notice to such effect, by means
of a "cashless exercise." In the event the Issuer permits "cashless
exercise," the Holder may deliver in payment of the Exercise Price (x)
certificates representing shares of Common Stock theretofore owned by
the Holder having a fair market value equal to the Exercise Price; (y)
an election by the Holder to have the Issuer withhold the number of
shares of Common Stock the fair market value, less the Exercise Price,
of which is equal to the aggregate Exercise Price of the Warrant
Shares specified in the Election to Purchase Form, or (z) any
combination of the preceding and cash, equal in value to the full
amount of the Exercise Price. For purposes hereof, the "fair market
value" of shares of Common Stock shall equal the closing sales price
of the Issuer's Common Stock on the last trading day immediately
preceding the date on which the Election to Purchase Form is delivered
to the Issuer along with the Warrant and payment of the Exercise
Price.
(b) Certificates representing Warrant Shares shall bear
the following restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Section 2. Reservation of Shares; Preservation of Rights of Holder.
The Issuer hereby agrees that there shall be reserved for issuance and/or
delivery upon exercise of this Warrant, such number of Warrant Shares as shall
be required for issuance or delivery upon exercise of this Warrant. The
Warrant surrendered upon exercise shall be canceled by the Issuer. After the
Expiration Date no shares of Common Stock shall be subject to reservation in
respect of this Warrant. The Issuer further agrees (i) that it
2
<PAGE>
will not, by amendment of its Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observation or performance of
any of the covenants, stipulations or conditions to be observed or performed
hereunder by the Issuer, (ii) promptly to take all action as may from time to
time be required in order to permit the Holder to exercise this Warrant and the
Issuer duly and effectively to issue shares of its Common Stock or other
securities as provided herein upon the exercise hereof, and (iii) promptly to
take all action required or provided herein to protect the rights of the Holder
granted hereunder against dilution. Without limiting the generality of the
foregoing, should the Warrant Shares at any time consist in whole or in part of
shares of capital stock having a par value, the Issuer agrees that before
taking any action which would cause an adjustment of the Exercise Price so that
the same would be less than the then par value of such Warrant Shares, the
Issuer shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Issuer may validly and legally issue
fully paid and nonassessable shares of such Common Stock at the Exercise Price
as so adjusted. The Issuer further agrees that it will not establish a par
value for its Common Stock while this Warrant is outstanding in an amount
greater than the Exercise Price.
Section 3. Exchange, Transfer, Assignment or Loss of Warrant. This
Warrant is not transferable or assignable except to members of the immediate
family of Lew Wolff, including trusts and/or family partnerships for the
benefit of said family members. Any attempted transfer of this Warrant, the
Warrant Shares or any new Warrant not in accordance with this Section shall be
null and void, and the Issuer shall not in any way be required to give effect
to such transfer. No transfer of this Warrant shall be effective for any
purpose hereunder until (i) written notice of such transfer and of the name and
address of the transferee has been received by the Issuer, and (ii) the
transferee shall first agree in a writing deposited with the Secretary of the
Issuer to be bound by all the provisions of this Warrant. Upon surrender of
this Warrant to the Issuer by any transferee authorized under the provisions of
this Section 3, the Issuer shall, without charge, execute and deliver a new
Warrant registered in the name of such transferee at the address specified by
such transferee, and this Warrant shall promptly be canceled. The Issuer may
deem and treat the registered holder of any Warrant as the absolute owner
thereof for all purposes, and the Issuer shall not be affected by any notice to
the contrary. Any Warrant if presented by an authorized transferee, may be
exercised by such transferee without prior delivery of a new Warrant issued in
the name of the transferee.
Upon receipt by the Issuer of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Issuer will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute a separate
3
<PAGE>
contractual obligation on the part of the Issuer, whether or not the Warrant so
lost, stolen destroyed or mutilated shall be at any time enforceable by anyone.
Section 4. Rights of Holder. Neither a Holder nor his transferee by
devise or the laws of descent and distribution or otherwise shall be, or have
any rights or privileges of, a shareholder of the Issuer with respect to any
Warrant Shares, unless and until certificates representing such Warrant Shares
shall have been issued and delivered thereto.
Section 5. Adjustments in Exercise Price and Warrant Shares. The
Exercise Price and Warrant Shares shall be subject to adjustment from time to
time as provided in this Section 5.
(a) If the Issuer is recapitalized through the
subdivision or combination of its outstanding shares of Common Stock
into a larger or smaller number of shares, the number of shares of
Common Stock for which this Warrant may be exercised shall be
increased or reduced, as of the record date for such recapitalization,
in the same proportion as the increase or decrease in the outstanding
shares of Common Stock, and the Exercise Price shall be adjusted so
that the aggregate amount payable for the purchase of all Warrant
Shares issuable hereunder immediately after the record date for such
recapitalization shall equal the aggregate amount so payable
immediately before such record date.
(b) If the Issuer declares a dividend on Common Stock, or
makes a distribution to holders of Common Stock, and such dividend or
distribution is payable or made in Common Stock or securities
convertible into or exchangeable for Common Stock, or rights to
purchase Common Stock or securities convertible into or exchangeable
for Common Stock, the number of shares of Common Stock for which this
Warrant may be exercised shall be increased, as of the record date for
determining which holders of Common Stock shall be entitled to receive
such dividend or distribution, in proportion to the increase in the
number of outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into common Stock) of
Common Stock as a result of such dividend or distribution, and the
Exercise Price shall be adjusted so that the aggregate amount payable
for the purchase of all the Warrant Shares issuable hereunder
immediately after the record date for such dividend or distribution
shall equal the aggregate amount so payable immediately before such
record date.
(c) If the Issuer declares a dividend on Common Stock
(other than a dividend covered by subsection (b) above) or distributes
to holders of its Common Stock, other than as part of its dissolution
or liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any cash or other of
its assets (other than Common Stock or securities convertible into or
exchangeable
4
<PAGE>
for Common Stock), the Holder shall receive notice of such event as
set forth in Section 7 below.
(d) In case of any consolidation of the Issuer with, or
merger of the Issuer into, any other corporation (other than a
consolidation or merger in which the Issuer is the continuing
corporation and in which no change occurs in its outstanding Common
Stock), or in case of any sale or transfer of all or substantially all
of the assets of the Issuer, or in the case of any statutory exchange
of securities with another corporation (including any exchange
effected in connection with a merger of a third corporation into the
Issuer, except where the Issuer is the surviving entity and no change
occurs in its outstanding Common Stock), the corporation formed by
such consolidation or the corporation resulting from such merger or
the corporation which shall have acquired such assets or securities of
the Issuer, as the case may be, shall execute and deliver to the
Holder simultaneously therewith a new Warrant, satisfactory in form
and substance to the Holder, together with such other documents as the
Holder may reasonably request, entitling the Holder thereof to receive
upon exercise of such Warrant the kind and amount of shares of stock
and other securities and property receivable upon such consolidation,
merger, sale, transfer, or exchange of securities, or upon the
dissolution following such sale or other transfer, by a holder of the
number of shares of Common Stock purchasable upon exercise of this
Warrant immediately prior to such consolidation, merger, sale,
transfer, or exchange. Such new Warrant shall contain the same basic
other terms and conditions as this Warrant and shall provide for
adjustments which, for events subsequent to the effective date of such
written instrument, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5. If any
such consolidation, merger, sale, transfer or exchange should occur
prior to the Warrant Vesting Date, the Warrant Vesting Date shall be
adjusted to the date which is one business day prior to the closing of
any such consolidation, merger, sale, transfer or exchange. The above
provisions of this paragraph (d) shall similarly apply to successive
consolidations, mergers, exchanges, sales or other transfers covered
hereby.
(e) If the Issuer shall, at any time before the
expiration of this Warrant dissolve, liquidate or wind up its affairs,
the Holder shall, upon exercise of this Warrant have the right to
receive, in lieu of the shares of Common Stock of the Issuer that the
Holder otherwise would have been entitled to receive, the same kind
and amount of assets as would have been issued, distributed or paid to
the Holder upon any such dissolution, liquidation or winding up with
respect to such shares of Common Stock of the Issuer had the Holder
been the holder of record of such shares of Common Stock receivable
upon exercise of this Warrant on the date for determining those
entitled to receive any such distribution. If any such dissolution,
liquidation or winding up results in any cash
5
<PAGE>
distribution in excess of the Exercise Price provided by this Warrant
for the shares of Common Stock receivable upon exercise of this
Warrant, the Holder may, at the Holder's option, exercise this Warrant
without making payment of the Exercise Price and, in such case, the
Issuer shall, upon distribution to the Holder, consider the Exercise
Price to have been paid in full and, in making settlement to the
Holder, shall obtain receipt of the Exercise Price by deducting an
amount equal to the Exercise Price for the shares of Common Stock
receivable upon exercise of this Warrant from the amount payable to
the Holder. For purposes of this paragraph, the sale of all or
substantially all of the assets of the Issuer and distribution of the
proceeds thereof to the Issuer's shareholders shall be deemed
liquidation.
(f) If an event occurs which is similar in nature to the
events described in this Section 5, but is not expressly covered
hereby, the Board of Directors of the Issuer shall make or arrange for
an equitable adjustment to the number of Warrant Shares and the
Exercise Price.
(g) The term "Common Stock" shall mean the Common Stock,
$.00001 par value, of the Issuer as the same exists at the date of
issuance of this Warrant or as such stock may be constituted from time
to time, except that for the purpose of this Section 5, the term
"Common Stock" shall include any stock of any class of the Issuer
which has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Issuer and which is not subject to redemption by
the Issuer.
(h) The Issuer shall retain a firm of independent public
accountants of recognized standing (who may be any such firm regularly
employed by the Issuer) to make any computation required under this
Section 5, and a certificate signed by such firm shall be conclusive
evidence of the correctness of any computation made under this Section
5.
(i) Whenever the number of Warrant Shares or the Exercise
Price shall be adjusted as required by the provisions of this Section
5, the Issuer forthwith shall file in the custody of its secretary or
an assistant secretary, at its principal office, and furnish to each
Holder hereof, a certificate prepared in accordance with paragraph (h)
above, showing the adjusted number of Warrant Shares and the Exercise
Price and setting forth in reasonable detail the circumstances
requiring the adjustments.
(j) Notwithstanding any other provision, this Warrant
shall be binding upon and inure to the benefit of any successors and
assigns of the Issuer.
(k) No adjustment in the Exercise Price in accordance
with the provisions of this Section 5 need be made if such
6
<PAGE>
adjustment would amount to a change in such Exercise Price of less
than $.01 provided however, that the amount by which any adjustment is
not made by reason of the provisions of this paragraph (k) shall be
carried forward and taken into account at the time of any subsequent
adjustment in the Exercise Price.
(l) If an adjustment is made under this Section 5 and the
event to which the adjustment relates does not occur, then any
adjustments in accordance with this Section 5 shall be readjusted to
the Exercise Price and the number of Warrant Shares which would be in
effect had the earlier adjustment not been made.
Section 6. Taxes on Issue or Transfer of Common Stock and Warrant.
The Issuer shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock or
other securities on the exercise of this Warrant. The Issuer shall not be
required to pay any tax which may be payable in respect of any transfer of this
Warrant or in respect of any transfers involved in the issue or delivery of
shares or the exercise of this Warrant in a name other than that of the Holder
and the person requesting such transfer, issue or delivery shall be responsible
for the payment of any such tax (and the Issuer shall not be required to issue
or deliver said shares until such tax has been paid or provided for).
Section 7. Notice of Adjustment. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, or (b) if the Issuer shall offer generally
to the holder of Common Stock the right to subscribe to or purchase any shares
of any class of Common Stock or securities convertible into Common Stock or any
other similar rights, or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the surviving entity,
recapitalization of the capital stock of the Issuer, consolidation or merger of
the Issuer with or into another corporation, sale, lease or other transfer of
all or substantially all of the property and assets of the Issuer, or voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, or (d) if
the Issuer shall give to its stockholders any notices, report or other
communication respecting any significant or special action or event, then in
such event, the Issuer shall give to the Holder, at least ten days prior to the
relevant date described below (or such shorter period as is reasonably possible
if ten days is not reasonably possible), a notice containing a description of
the proposed action or event and stating the date or expected date on which a
record of the Issuer's stockholders is to be taken for any of the foregoing
purposes, and the date or expected date on which any such dividend,
distribution, subscription, reclassification, reorganization, consolidation,
combination, merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if
any is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of
7
<PAGE>
Common Stock for securities or other property deliverable upon such event.
Section 8. Registration Rights.
a. Demand Registration Rights. The Issuer covenants and
agrees with the holders of Warrants or Warrant Shares (the "Registrable
Securities") that, subject to the availability of audited financial statements
which would comply with Regulation S-X under the Securities Act and provided
that the Holders have not previously had the option of including all of the
Registrable Securities in one or more Piggyback Registrations pursuant to
Section 8.b., upon written request of the then Holder(s) of at least a majority
of the Warrants or the Registrable Securities, or both, made at any time within
the period commencing three years and ending five years after the date herein
first set forth, the Issuer will file as promptly as practicable and, in any
event, within 60 days after receipt of such written request, at its expense
(other than the fees of counsel and sales commissions for such Holders), no
more than once, a post-effective amendment (the "Amendment") to a registration
statement, or a new registration statement under the Securities Act,
registering or qualifying the Registrable Securities for sale. Within fifteen
(15) days after receiving any such notice, the Issuer shall give notice to the
other Holders of the Registrable Securities, if any, advising that the Issuer
is proceeding with such Amendment or registration statement and offering to
include therein the Registrable Securities of such Holders. The Issuer shall
not be obligated to any such other Holder unless such other Holder shall accept
such offer by notice in writing to the Issuer within ten (10) days thereafter.
The Issuer will use its best efforts, through its officers, directors, auditors
and counsel in all matters necessary or advisable, to file and cause to become
effective such Amendment or registration statement as promptly as practicable
and for a period of nine months thereafter to reflect in the Amendment or
registration statement financial statements which are prepared in accordance
with Section 10(a)(3) of the Securities Act and any facts or events arising
that, individually, or in the aggregate, represent a fundamental and/or
material change in the information set forth in the Amendment or registration
statement to enable any Holders of the Warrants to either sell such Warrants or
to exercise such Warrants and sell Warrant Shares, or to enable any holders of
Warrant Shares to sell such Warrant Shares, during said nine-month period. The
Holders may sell the Registrable Securities pursuant to the Amendment or
registration statement without exercising the Warrants. If any registration
pursuant to this paragraph 8(a) is an underwritten offering, the Holders of a
majority of the Registrable Securities to be included in such registration
shall be entitled to select the underwriter or managing underwriter (in the
case of a syndicated offering) of such offering, subject to the Issuer's
approval which shall not be unreasonably withheld.
b. Piggyback Registration Rights. The Issuer covenants
and agrees with any holder of the Registrable Securities that if, at any time
within the period commencing on the Warrant Vesting
8
<PAGE>
Date and ending on the Expiration Date, it proposes to file a registration
statement with respect to any class of equity or equity-related security (other
than in connection with an offering to the Issuer's employees or in connection
with an acquisition, merger or similar transaction) under the Securities Act in
a primary registration on behalf of the Issuer and/or in a secondary
registration on behalf of holders of such securities and the registration form
to be used may be used for registration of the Registrable Securities, the
Issuer will give prompt written notice (which, in the case of a registration
statement pursuant to the exercise of demand registration rights shall be
within ten (10) business days after the Issuer's receipt of notice of such
exercise and, in any event, shall be at least 30 days prior to such filing) to
the holders of Registrable Securities at the addresses appearing on the records
of the Issuer of its intention to file a registration statement and will offer
to include in such registration statement all, but not less than 20% of the
Registrable Securities, subject to paragraphs i and ii of this Section 8.b.
such number of Registrable Securities with respect to which the Issuer has
received written requests for inclusion therein within ten (10) days after the
giving of notice by the Issuer. All registrations requested pursuant to this
Section 8.b. are referred to herein as "Piggyback Registrations". All
Piggyback Registrations pursuant to this Section 8 will be made solely at the
Issuer's expense. This Section is not applicable to a registration statement
filed by the Issuer on Forms S-4 or S-8 or any successor forms.
i. Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on behalf
of the Issuer and the underwriter(s) for such offering determines in
good faith and advises the Issuer in writing that in its/their opinion
the number of Registrable Securities requested to be included in such
registration exceeds the number that can be sold in such offering
without materially adversely affecting the distribution of such
securities by the Issuer, the Issuer will include in such registration
(A) first, the securities that the Issuer proposes to sell and (B)
second, the Registrable Securities requested to be included in such
registration, apportioned pro rata among the holders of the
Registrable Securities and holders of other securities requesting
registration.
ii. Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration
on behalf of holders of securities of the Issuer, and the
underwriter(s) for such offering advises the Issuer in writing that in
its/their opinion the number of Registrable Securities requested to be
included in such registration exceeds the number which can be sold in
such offering without materially adversely affecting the distribution
of such securities, the Issuer will include in such registration (A)
first, the securities requested to be included therein by the holders
requesting such registration, and (B) second, the Registrable
Securities requested to be included in such
9
<PAGE>
registration and securities of holder of other securities requested to
be included in such registration statement, pro rata among all such
holders on the basis of the number of shares requested to be included
by each such holder, provided, however, the Issuer will use its best
efforts to include not less than 20% of the Registrable Securities.
Notwithstanding the foregoing, if any such underwriter shall determine
in good faith and advise the Issuer in writing that the distribution of the
Registrable Securities requested to be included in the registration
concurrently with the securities being registered by the Issuer would
materially adversely affect the distribution of such securities by the Issuer,
then the holders of such Registrable Securities shall delay their offering and
sale for such period ending on the earliest of (1) 90 days following the
effective date of the Issuer's registration statement, (2) the day upon which
the underwriting syndicate, if any, for such offering shall have been disbanded
or, (3) such date as the Issuer, managing underwriter and holders of
Registrable Securities shall otherwise agree. In the event of such delay, the
Issuer shall file such supplements, post-effective amendments and take any such
other steps as may be necessary to permit such holders to make their proposed
offering and sale for a period of 120 days immediately following the end of any
such period of delay. If any party disapproves the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Issuer, the underwriter, and the holder. Notwithstanding the foregoing, the
Issuer shall not be required to file a registration statement to include shares
pursuant to this Section 8 if independent counsel, reasonably satisfactory to
the Issuer, renders an opinion to the Issuer that the Registrable Securities
proposed to be disposed of may be transferred pursuant to the provisions of
Rule 144 under the Securities Act or otherwise without registration under the
Securities Act.
c. Actions to be taken by the Issuer. In connection
with the registration of Registrable Securities hereunder, the Issuer agrees to
(i) bear the expenses of any registration; provided, however, that in no event
shall the Issuer be obligated to pay (A) any fees and disbursements of special
counsel for holders of Registrable Securities, (B) any underwriters' discount
or commission in respect of such Registrable Securities, and (C) any stock
transfer taxes attributable to the sale of the Registrable Securities; (ii) use
its best efforts to register or qualify the Registrable Securities for offer or
sale under state securities or Blue Sky laws of such jurisdictions in which
such holders shall reasonably request, provided, however, that no qualification
shall be required in any jurisdiction where, as a result thereof, the Issuer
would be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction to which it is not then
subject; and (iii) enter into a cross-indemnity agreement, in customary form,
with each underwriter, if any, and each holder of securities included in such
registration statement.
10
<PAGE>
d. Action to be Taken by the Holders. The Issuer's
obligations under this Section 8 shall be conditioned upon a timely receipt by
the Issuer in writing of: (i) information as to the terms of such public
offering furnished by or on behalf of each holder of Registrable Securities
intending to make a public offering of his, her or its Registrable Securities,
and (ii) such other information as the Issuer may reasonably require from such
holders, or any underwriter for any of them, for inclusion in such registration
statement.
Section 9. Cancellation. Notwithstanding any other provision
hereof, in the event that any holder of (a) Common Shares issues in conjunction
with the issuance of this Warrant, or (b) shares of Common Stock issuable upon
conversion of the Issuer's Series I Convertible Preferred Stock, shall sell,
assign or transfer such shares of Common Stock, other than transfers or
assignments to members of the immediate family of Mr. Lew Wolff, including
trusts and/or family partnerships for the benefit of said family members,
transfers or assignments to executive officers, partners and/or principals of
Wolff DiNapoli LLC (the referenced family members and affiliates of Wolff
DiNapoli are referred to as "Permitted Transferees") or (c) transfers or
assignments consented to in writing by the Issuer, on or before the Warrant
Vesting Date, as adjusted in accordance with Section 5(d), this Warrant shall
be automatically canceled and all rights of the Holder hereof shall terminate
immediately.
Section 10. Notices. All communications hereunder shall be in
writing, and, if sent to the Holder shall be sufficient in all respects if
delivered, sent by registered mail, or by facsimile and confirmed to the Holder
at:
LEW WOLFF
-----------------------------
11828 La Grange Avenue
-----------------------------
Los Angeles, CA 90064
-----------------------------
Attention: Lewis Wolff
-----------------
Telephone: (310) 477-3593
-----------------
Fax: (310) 477-2522
------------------------
or if to any other Holder, addressed to such Holder at such address as it shall
have specified to the Issuer in writing, or, if sent to the Issuer, shall be
delivered, sent by registered mail or by facsimile and confirmed to the Issuer
at:
Grill Concepts, Inc.
11661 San Vicente Blvd.
Suite 404
Los Angeles, CA 90019
Attention: Michael Weinstock, Vice Chairman
Telephone: (310) 820-5559
Facsimile: (310) 820-6530
Section 11. Governing Law. This Warrant shall be governed by, and
interpreted in accordance with, the laws of the State of California.
11
<PAGE>
Dated: June 20, 1997
GRILL CONCEPTS, INC.
By: [SIG]
---------------------------
Name: [Name]
-------------------------
Title: President
------------------------
ATTEST:
[SIG]
----------------------------
Michael Weinstock, Secretary
12
<PAGE>
Schedule One
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant and
to purchase ______ shares of Grill Concepts, Inc. Common Stock issuable upon
the exercise of this Warrant, and requests that certificates for such shares be
issued in the name of:
__________________________________________________________________
(Name)
_________________________________________________________________
(Address)
_________________________________________________________________
(United States Social Security or other taxpayer
identifying number, if applicable)
and, if different from above, be delivered to:
_________________________________________________________________
(Name)
_________________________________________________________________
(Address)
and, if the number of Warrant Shares so purchased are not all of the Warrant
Shares issuable upon exercise of this Warrant, that a Warrant to purchase the
balance of such Warrant Shares be registered in the name of, and delivered to,
the undersigned at the address stated below.
Date:__________________________, 19___________
Name of Registered Owner: ______________________________________
_________________________________________________________________
Address: _______________________________________________________
_________________________________________________________________
Signature: _____________________________________________________
13
<PAGE>
<PAGE>
EXHIBIT 6
THIS WARRANT AND THE SHARES OF COMMON STOCK OF GRILL CONCEPTS, INC. TO BE
ISSUED UPON ANY EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THIS WARRANT IS SUBJECT TO CANCELLATION IF ANY COMMON SHARES OR SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION OF THE SERIES I CONVERTIBLE PREFERRED
STOCK OF GRILL CONCEPTS, INC. SOLD IN CONJUNCTION WITH THE ISSUANCE OF THIS
WARRANT ARE SOLD, TRANSFERRED OR ASSIGNED (OTHER THAN AS PERMITTED BY SECTION 9
HEREOF) PRIOR TO THE WARRANT VESTING DATE.
W97-B 1
WARRANT
to Purchase Shares
of
Common Stock (.00001 par value)
of
GRILL CONCEPTS, INC.
June 20, 1997
This certifies that, for value received, Lewis N. Wolff, Trustee of
Wolff Revocable Trust of 1993 ("Wolff") and any subsequent transferee pursuant
to the terms hereof (each, a "Holder"), is entitled to purchase, subject to the
provisions of this Warrant, from Grill Concepts, Inc., a Delaware corporation
(the "Issuer"), at any time or from time to time on or after June 20, 2000
(subject to adjustment pursuant to Section 5(d))(the "Warrant Vesting Date") and
on or before June 20, 2002 (the "Expiration Date"), Seven Hundred Fifty Thousand
(750,000) fully paid and nonassessable shares of common stock, $.00001 par value
(the "Common Stock"), of the Issuer at an exercise price equal to $3.00 per
share, subject to adjustment pursuant to the terms hereunder (the "Exercise
Price") (such shares of Common Stock and other securities issued and issuable
upon exercise of this Warrant, the "Warrant Shares").
Section 1. Exercise of Warrant.
(a) Subject to the provisions hereof, this Warrant may be
exercised, in whole or in part, but not as to a fractional share, at
any time or from time to time on or after the Warrant Vesting Date and
on or before the Expiration Date, by presentation and surrender hereof
to the Issuer at the address which, in accordance with the provisions
of Section 10 hereof, is then effective for notices to the Issuer,
with the Election to Purchase Form annexed hereto as Schedule One,
duly executed
1
<PAGE>
and accompanied by payment to the Issuer as further set forth below in
this Section 1, for the account of the Issuer, of the Exercise Price
for the number of Warrant Shares specified in such form. If this
Warrant should be exercised in part only, the Issuer shall, upon
surrender of this Warrant, execute and deliver a new Warrant
evidencing the rights of the Holder hereof to purchase the balance of
the Warrant Shares purchasable hereunder. The Issuer shall maintain
at its principal place of business a register for the registration of
this Warrant and registration of transfer of the Warrant. The
Exercise Price for the number of Warrant Shares specified in the
Election to Purchase Form shall be payable (i) in United States
Dollars by certified or official bank check payable to the order of
the Issuer or by wire transfer of immediately available funds to an
account specified by the Issuer for that purpose; or (ii) if permitted
by the Issuer as evidenced by written notice to such effect, by means
of a "cashless exercise." In the event the Issuer permits "cashless
exercise," the Holder may deliver in payment of the Exercise Price (x)
certificates representing shares of Common Stock theretofore owned by
the Holder having a fair market value equal to the Exercise Price; (y)
an election by the Holder to have the Issuer withhold the number of
shares of Common Stock the fair market value, less the Exercise Price,
of which is equal to the aggregate Exercise Price of the Warrant
Shares specified in the Election to Purchase Form, or (z) any
combination of the preceding and cash, equal in value to the full
amount of the Exercise Price. For purposes hereof, the "fair market
value" of shares of Common Stock shall equal the closing sales price
of the Issuer's Common Stock on the last trading day immediately
preceding the date on which the Election to Purchase Form is delivered
to the Issuer along with the Warrant and payment of the Exercise
Price.
(b) Certificates representing Warrant Shares shall bear
the following restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Section 2. Reservation of Shares; Preservation of Rights of Holder.
The Issuer hereby agrees that there shall be reserved for issuance and/or
delivery upon exercise of this Warrant, such number of Warrant Shares as shall
be required for issuance or delivery upon exercise of this Warrant. The
Warrant surrendered upon exercise shall be canceled by the Issuer. After the
Expiration Date no shares of Common Stock shall be subject to reservation in
respect of this Warrant. The Issuer further agrees (i) that it
2
<PAGE>
will not, by amendment of its Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observation or performance of
any of the covenants, stipulations or conditions to be observed or performed
hereunder by the Issuer, (ii) promptly to take all action as may from time to
time be required in order to permit the Holder to exercise this Warrant and the
Issuer duly and effectively to issue shares of its Common Stock or other
securities as provided herein upon the exercise hereof, and (iii) promptly to
take all action required or provided herein to protect the rights of the Holder
granted hereunder against dilution. Without limiting the generality of the
foregoing, should the Warrant Shares at any time consist in whole or in part of
shares of capital stock having a par value, the Issuer agrees that before
taking any action which would cause an adjustment of the Exercise Price so that
the same would be less than the then par value of such Warrant Shares, the
Issuer shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Issuer may validly and legally issue
fully paid and nonassessable shares of such Common Stock at the Exercise Price
as so adjusted. The Issuer further agrees that it will not establish a par
value for its Common Stock while this Warrant is outstanding in an amount
greater than the Exercise Price.
Section 3. Exchange, Transfer, Assignment or Loss of Warrant. This
Warrant is not transferable or assignable except to members of the immediate
family of Lew Wolff, including trusts and/or family partnerships for the
benefit of said family members. Any attempted transfer of this Warrant, the
Warrant Shares or any new Warrant not in accordance with this Section shall be
null and void, and the Issuer shall not in any way be required to give effect
to such transfer. No transfer of this Warrant shall be effective for any
purpose hereunder until (i) written notice of such transfer and of the name and
address of the transferee has been received by the Issuer, and (ii) the
transferee shall first agree in a writing deposited with the Secretary of the
Issuer to be bound by all the provisions of this Warrant. Upon surrender of
this Warrant to the Issuer by any transferee authorized under the provisions of
this Section 3, the Issuer shall, without charge, execute and deliver a new
Warrant registered in the name of such transferee at the address specified by
such transferee, and this Warrant shall promptly be canceled. The Issuer may
deem and treat the registered holder of any Warrant as the absolute owner
thereof for all purposes, and the Issuer shall not be affected by any notice to
the contrary. Any Warrant if presented by an authorized transferee, may be
exercised by such transferee without prior delivery of a new Warrant issued in
the name of the transferee.
Upon receipt by the Issuer of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Issuer will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute a separate
3
<PAGE>
contractual obligation on the part of the Issuer, whether or not the Warrant so
lost, stolen destroyed or mutilated shall be at any time enforceable by anyone.
Section 4. Rights of Holder. Neither a Holder nor his transferee by
devise or the laws of descent and distribution or otherwise shall be, or have
any rights or privileges of, a shareholder of the Issuer with respect to any
Warrant Shares, unless and until certificates representing such Warrant Shares
shall have been issued and delivered thereto.
Section 5. Adjustments in Exercise Price and Warrant Shares. The
Exercise Price and Warrant Shares shall be subject to adjustment from time to
time as provided in this Section 5.
(a) If the Issuer is recapitalized through the
subdivision or combination of its outstanding shares of Common Stock
into a larger or smaller number of shares, the number of shares of
Common Stock for which this Warrant may be exercised shall be
increased or reduced, as of the record date for such recapitalization,
in the same proportion as the increase or decrease in the outstanding
shares of Common Stock, and the Exercise Price shall be adjusted so
that the aggregate amount payable for the purchase of all Warrant
Shares issuable hereunder immediately after the record date for such
recapitalization shall equal the aggregate amount so payable
immediately before such record date.
(b) If the Issuer declares a dividend on Common Stock, or
makes a distribution to holders of Common Stock, and such dividend or
distribution is payable or made in Common Stock or securities
convertible into or exchangeable for Common Stock, or rights to
purchase Common Stock or securities convertible into or exchangeable
for Common Stock, the number of shares of Common Stock for which this
Warrant may be exercised shall be increased, as of the record date for
determining which holders of Common Stock shall be entitled to receive
such dividend or distribution, in proportion to the increase in the
number of outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into common Stock) of
Common Stock as a result of such dividend or distribution, and the
Exercise Price shall be adjusted so that the aggregate amount payable
for the purchase of all the Warrant Shares issuable hereunder
immediately after the record date for such dividend or distribution
shall equal the aggregate amount so payable immediately before such
record date.
(c) If the Issuer declares a dividend on Common Stock
(other than a dividend covered by subsection (b) above) or distributes
to holders of its Common Stock, other than as part of its dissolution
or liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any cash or other of
its assets (other than Common Stock or securities convertible into or
exchangeable
4
<PAGE>
for Common Stock), the Holder shall receive notice of such event as set
forth in Section 7 below.
(d) In case of any consolidation of the Issuer with, or
merger of the Issuer into, any other corporation (other than a
consolidation or merger in which the Issuer is the continuing
corporation and in which no change occurs in its outstanding Common
Stock), or in case of any sale or transfer of all or substantially all
of the assets of the Issuer, or in the case of any statutory exchange
of securities with another corporation (including any exchange
effected in connection with a merger of a third corporation into the
Issuer, except where the Issuer is the surviving entity and no change
occurs in its outstanding Common Stock), the corporation formed by
such consolidation or the corporation resulting from such merger or
the corporation which shall have acquired such assets or securities of
the Issuer, as the case may be, shall execute and deliver to the
Holder simultaneously therewith a new Warrant, satisfactory in form
and substance to the Holder, together with such other documents as the
Holder may reasonably request, entitling the Holder thereof to receive
upon exercise of such Warrant the kind and amount of shares of stock
and other securities and property receivable upon such consolidation,
merger, sale, transfer, or exchange of securities, or upon the
dissolution following such sale or other transfer, by a holder of the
number of shares of Common Stock purchasable upon exercise of this
Warrant immediately prior to such consolidation, merger, sale,
transfer, or exchange. Such new Warrant shall contain the same basic
other terms and conditions as this Warrant and shall provide for
adjustments which, for events subsequent to the effective date of such
written instrument, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5. If any
such consolidation, merger, sale, transfer or exchange should occur
prior to the Warrant Vesting Date, the Warrant Vesting Date shall be
adjusted to the date which is one business day prior to the closing of
any such consolidation, merger, sale, transfer or exchange. The above
provisions of this paragraph (d) shall similarly apply to successive
consolidations, mergers, exchanges, sales or other transfers covered
hereby.
(e) If the Issuer shall, at any time before the
expiration of this Warrant dissolve, liquidate or wind up its affairs,
the Holder shall, upon exercise of this Warrant have the right to
receive, in lieu of the shares of Common Stock of the Issuer that the
Holder otherwise would have been entitled to receive, the same kind
and amount of assets as would have been issued, distributed or paid to
the Holder upon any such dissolution, liquidation or winding up with
respect to such shares of Common Stock of the Issuer had the Holder
been the holder of record of such shares of Common Stock receivable
upon exercise of this Warrant on the date for determining those
entitled to receive any such distribution. If any such dissolution,
liquidation or winding up results in any cash
5
<PAGE>
distribution in excess of the Exercise Price provided by this Warrant
for the shares of Common Stock receivable upon exercise of this
Warrant, the Holder may, at the Holder's option, exercise this Warrant
without making payment of the Exercise Price and, in such case, the
Issuer shall, upon distribution to the Holder, consider the Exercise
Price to have been paid in full and, in making settlement to the
Holder, shall obtain receipt of the Exercise Price by deducting an
amount equal to the Exercise Price for the shares of Common Stock
receivable upon exercise of this Warrant from the amount payable to
the Holder. For purposes of this paragraph, the sale of all or
substantially all of the assets of the Issuer and distribution of the
proceeds thereof to the Issuer's shareholders shall be deemed
liquidation.
(f) If an event occurs which is similar in nature to the
events described in this Section 5, but is not expressly covered
hereby, the Board of Directors of the Issuer shall make or arrange for
an equitable adjustment to the number of Warrant Shares and the
Exercise Price.
(g) The term "Common Stock" shall mean the Common Stock,
$.00001 par value, of the Issuer as the same exists at the date of
issuance of this Warrant or as such stock may be constituted from time
to time, except that for the purpose of this Section 5, the term
"Common Stock" shall include any stock of any class of the Issuer
which has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Issuer and which is not subject to redemption by
the Issuer.
(h) The Issuer shall retain a firm of independent public
accountants of recognized standing (who may be any such firm regularly
employed by the Issuer) to make any computation required under this
Section 5, and a certificate signed by such firm shall be conclusive
evidence of the correctness of any computation made under this Section
5.
(i) Whenever the number of Warrant Shares or the Exercise
Price shall be adjusted as required by the provisions of this Section
5, the Issuer forthwith shall file in the custody of its secretary or
an assistant secretary, at its principal office, and furnish to each
Holder hereof, a certificate prepared in accordance with paragraph (h)
above, showing the adjusted number of Warrant Shares and the Exercise
Price and setting forth in reasonable detail the circumstances
requiring the adjustments.
(j) Notwithstanding any other provision, this Warrant
shall be binding upon and inure to the benefit of any successors and
assigns of the Issuer.
(k) No adjustment in the Exercise Price in accordance
with the provisions of this Section 5 need be made if such
6
<PAGE>
adjustment would amount to a change in such Exercise Price of less
than $.01 provided however, that the amount by which any adjustment is
not made by reason of the provisions of this paragraph (k) shall be
carried forward and taken into account at the time of any subsequent
adjustment in the Exercise Price.
(l) If an adjustment is made under this Section 5 and the
event to which the adjustment relates does not occur, then any
adjustments in accordance with this Section 5 shall be readjusted to
the Exercise Price and the number of Warrant Shares which would be in
effect had the earlier adjustment not been made.
Section 6. Taxes on Issue or Transfer of Common Stock and Warrant.
The Issuer shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock or
other securities on the exercise of this Warrant. The Issuer shall not be
required to pay any tax which may be payable in respect of any transfer of this
Warrant or in respect of any transfers involved in the issue or delivery of
shares or the exercise of this Warrant in a name other than that of the Holder
and the person requesting such transfer, issue or delivery shall be responsible
for the payment of any such tax (and the Issuer shall not be required to issue
or deliver said shares until such tax has been paid or provided for).
Section 7. Notice of Adjustment. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, or (b) if the Issuer shall offer generally
to the holder of Common Stock the right to subscribe to or purchase any shares
of any class of Common Stock or securities convertible into Common Stock or any
other similar rights, or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the surviving entity,
recapitalization of the capital stock of the Issuer, consolidation or merger of
the Issuer with or into another corporation, sale, lease or other transfer of
all or substantially all of the property and assets of the Issuer, or voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, or (d) if
the Issuer shall give to its stockholders any notices, report or other
communication respecting any significant or special action or event, then in
such event, the Issuer shall give to the Holder, at least ten days prior to the
relevant date described below (or such shorter period as is reasonably possible
if ten days is not reasonably possible), a notice containing a description of
the proposed action or event and stating the date or expected date on which a
record of the Issuer's stockholders is to be taken for any of the foregoing
purposes, and the date or expected date on which any such dividend,
distribution, subscription, reclassification, reorganization, consolidation,
combination, merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if
any is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of
7
<PAGE>
Common Stock for securities or other property deliverable upon such event.
Section 8. Registration Rights.
a. Demand Registration Rights. The Issuer covenants and
agrees with the holders of Warrants or Warrant Shares (the "Registrable
Securities") that, subject to the availability of audited financial statements
which would comply with Regulation S-X under the Securities Act and provided
that the Holders have not previously had the option of including all of the
Registrable Securities in one or more Piggyback Registrations pursuant to
Section 8.b., upon written request of the then Holder(s) of at least a majority
of the Warrants or the Registrable Securities, or both, made at any time within
the period commencing three years and ending five years after the date herein
first set forth, the Issuer will file as promptly as practicable and, in any
event, within 60 days after receipt of such written request, at its expense
(other than the fees of counsel and sales commissions for such Holders), no
more than once, a post-effective amendment (the "Amendment") to a registration
statement, or a new registration statement under the Securities Act,
registering or qualifying the Registrable Securities for sale. Within fifteen
(15) days after receiving any such notice, the Issuer shall give notice to the
other Holders of the Registrable Securities, if any, advising that the Issuer
is proceeding with such Amendment or registration statement and offering to
include therein the Registrable Securities of such Holders. The Issuer shall
not be obligated to any such other Holder unless such other Holder shall accept
such offer by notice in writing to the Issuer within ten (10) days thereafter.
The Issuer will use its best efforts, through its officers, directors, auditors
and counsel in all matters necessary or advisable, to file and cause to become
effective such Amendment or registration statement as promptly as practicable
and for a period of nine months thereafter to reflect in the Amendment or
registration statement financial statements which are prepared in accordance
with Section 10(a)(3) of the Securities Act and any facts or events arising
that, individually, or in the aggregate, represent a fundamental and/or
material change in the information set forth in the Amendment or registration
statement to enable any Holders of the Warrants to either sell such Warrants or
to exercise such Warrants and sell Warrant Shares, or to enable any holders of
Warrant Shares to sell such Warrant Shares, during said nine-month period. The
Holders may sell the Registrable Securities pursuant to the Amendment or
registration statement without exercising the Warrants. If any registration
pursuant to this paragraph 8 (a) is an underwritten offering, the Holders of a
majority of the Registrable Securities to be included in such registration
shall be entitled to select the underwriter or managing underwriter (in the
case of a syndicated offering) of such offering, subject to the Issuer's
approval which shall not be unreasonably withheld.
b. Piggyback Registration Rights. The Issuer covenants
and agrees with any holder of the Registrable Securities that if, at any time
within the period commencing on the Warrant Vesting
8
<PAGE>
Date and ending on the Expiration Date, it proposes to file a registration
statement with respect to any class of equity or equity-related security (other
than in connection with an offering to the Issuer's employees or in connection
with an acquisition, merger or similar transaction) under the Securities Act in
a primary registration on behalf of the Issuer and/or in a secondary
registration on behalf of holders of such securities and the registration form
to be used may be used for registration of the Registrable Securities, the
Issuer will give prompt written notice (which, in the case of a registration
statement pursuant to the exercise of demand registration rights shall be
within ten (10) business days after the Issuer's receipt of notice of such
exercise and, in any event, shall be at least 30 days prior to such filing) to
the holders of Registrable Securities at the addresses appearing on the records
of the Issuer of its intention to file a registration statement and will offer
to include in such registration statement all, but not less than 20% of the
Registrable Securities, subject to paragraphs i and ii of this Section 8.b.,
such number of Registrable Securities with respect to which the Issuer has
received written requests for inclusion therein within ten (10) days after the
giving of notice by the Issuer. All registrations requested pursuant to this
Section 8.b. are referred to herein as "Piggyback Registrations". All
Piggyback Registrations pursuant to this Section 8 will be made solely at the
Issuer's expense. This Section is not applicable to a registration statement
filed by the Issuer on Forms S-4 or S-8 or any successor forms.
i. Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on behalf
of the Issuer and the underwriter(s) for such offering determines in
good faith and advises the Issuer in writing that in its/their opinion
the number of Registrable Securities requested to be included in such
registration exceeds the number that can be sold in such offering
without materially adversely affecting the distribution of such
securities by the Issuer, the Issuer will include in such registration
(A) first, the securities that the Issuer proposes to sell and (B)
second, the Registrable Securities requested to be included in such
registration, apportioned pro rata among the holders of the
Registrable Securities and holders of other securities requesting
registration.
ii. Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration
on behalf of holders of securities of the Issuer, and the
underwriter(s) for such offering advises the Issuer in writing that in
its/their opinion the number of Registrable Securities requested to be
included in such registration exceeds the number which can be sold in
such offering without materially adversely affecting the distribution
of such securities, the Issuer will include in such registration (A)
first, the securities requested to be included therein by the holders
requesting such registration, and (B) second, the Registrable
Securities requested to be included in such
9
<PAGE>
registration and securities of holder of other securities requested to
be included in such registration statement, pro rata among all such
holders on the basis of the number of shares requested to be included
by each such holder, provided, however, the Issuer will use its best
efforts to include not less than 20% of the Registrable Securities.
Notwithstanding the foregoing, if any such underwriter shall determine
in good faith and advise the Issuer in writing that the distribution of the
Registrable Securities requested to be included in the registration
concurrently with the securities being registered by the Issuer would
materially adversely affect the distribution of such securities by the Issuer,
then the holders of such Registrable Securities shall delay their offering and
sale for such period ending on the earliest of (1) 90 days following the
effective date of the Issuer's registration statement, (2) the day upon which
the underwriting syndicate, if any, for such offering shall have been disbanded
or, (3) such date as the Issuer, managing underwriter and holders of
Registrable Securities shall otherwise agree. In the event of such delay, the
Issuer shall file such supplements, post-effective amendments and take any such
other steps as may be necessary to permit such holders to make their proposed
offering and sale for a period of 120 days immediately following the end of any
such period of delay. If any party disapproves the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Issuer, the underwriter, and the holder. Notwithstanding the foregoing, the
Issuer shall not be required to file a registration statement to include shares
pursuant to this Section 8 if independent counsel, reasonably satisfactory to
the Issuer, renders an opinion to the Issuer that the Registrable Securities
proposed to be disposed of may be transferred pursuant to the provisions of
Rule 144 under the Securities Act or otherwise without registration under the
Securities Act.
c. Action to be Taken by the Issuer. In connection with
the registration of Registrable Securities hereunder, the Issuer agrees to (i)
bear the expenses of any registration; provided, however, that in no event
shall the Issuer be obligated to pay (A) any fees and disbursements of special
counsel for holders of Registrable Securities, (B) any underwriters' discount
or commission in respect of such Registrable Securities, and (C) any stock
transfer taxes attributable to the sale of the Registrable Securities; (ii) use
its best efforts to register or qualify the Registrable Securities for offer or
sale under state securities or Blue Sky laws of such jurisdictions in which
such holders shall reasonably request, provided, however, that no qualification
shall be required in any jurisdiction where, as a result thereof, the Issuer
would be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction to which it is not then
subject; and (iii) enter into a cross-indemnity agreement, in customary form,
with each underwriter, if any, and each holder of securities included in such
registration statement.
10
<PAGE>
d. Action to be Taken by the Holders. The Issuer's
obligations under this Section 8 shall be conditioned upon a timely receipt by
the Issuer in writing of: (i) information as to the terms of such public
offering furnished by or on behalf of each holder of Registrable Securities
intending to make a public offering of his, her or its Registrable Securities,
and (ii) such other information as the Issuer may reasonably require from such
holders, or any underwriter for any of them, for inclusion in such registration
statement.
Section 9. Cancellation. Notwithstanding any other provision hereof,
in the event that any holder of (a) Common Shares issued in conjunction with
the issuance of this Warrant, or (b) shares of Common Stock issuable upon
conversion of the Issuer's Series I Convertible Preferred Stock, shall sell,
assign or transfer such shares of Common Stock, other than transfers or
assignments to members of the immediate family of Mr. Lew Wolff, including
trusts and/or family partnerships for the benefit of said family members,
transfers or assignments to executive officers, partners and/or principals of
Wolff DiNapoli LLC (the referenced family members and affiliates of Wolff
DiNapoli are referred to as "Permitted Transferees") or (c) transfers or
assignments consented to in writing by the Issuer, on or before the Warrant
Vesting Date, as adjusted in accordance with Section 5(d), this Warrant shall
be automatically canceled and all rights of the Holder hereof shall terminate
immediately.
Section 10. Notices. All communications hereunder shall be in
writing, and, if sent to the Holder shall be sufficient in all respects if
delivered, sent by registered mail, or by facsimile and confirmed to the Holder
at:
Lewis Wolff, Trustee
-----------------------------
11828 La Grange Avenue
-----------------------------
Los Angeles, Ca 90064
-----------------------------
Attention: Lewis Wolff
-------------------
Telephone: (310) 477-3593
-------------------
Fax: (310) 477-2522
------------------------
or if to any other Holder, addressed to such Holder at such address as it shall
have specified to the Issuer in writing, or, if sent to the Issuer, shall be
delivered, sent by registered mail or by facsimile and confirmed to the Issuer
at:
Grill Concepts, Inc.
11661 San Vicente Blvd.
Suite 404
Los Angeles, CA 90019
Attention: Michael Weinstock, Vice Chairman
Telephone: (310) 820-5559
Facsimile: (310) 820-6530
11
<PAGE>
Section 11. Governing Law. This Warrant shall be governed by, and
interpreted in accordance with, the laws of the State of California.
Dated: June 20, 1997
GRILL CONCEPTS, INC.
By: [SIG]
---------------------------
Name: [NAME]
-------------------------
Title: President
------------------------
ATTEST:
[SIG]
----------------------------
Michael Weinstock, Secretary
12
<PAGE>
Schedule One
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant and
to purchase ______ shares of Grill Concepts, Inc. Common Stock issuable upon
the exercise of this Warrant, and requests that certificates for such shares be
issued in the name of:
__________________________________________________________________
(Name)
_________________________________________________________________
(Address)
_________________________________________________________________
(United States Social Security or other taxpayer
identifying number, if applicable)
and, if different from above, be delivered to:
_________________________________________________________________
(Name)
_________________________________________________________________
(Address)
and, if the number of Warrant Shares so purchased are not all of the Warrant
Shares issuable upon exercise of this Warrant, that a Warrant to purchase the
balance of such Warrant Shares be registered in the name of, and delivered to,
the undersigned at the address stated below.
Date:__________________________, 19___________
Name of Registered Owner: ______________________________________
_________________________________________________________________
Address: _______________________________________________________
_________________________________________________________________
Signature: _____________________________________________________
13
