<PAGE> 1
As filed with the Securities Exchange Commission on March 4, 1997
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GRAND HAVANA ENTERPRISES, INC.
(FORMERLY, UNITED RESTAURANTS, INC.)
(Exact Name of Registrant as Specified in it Charter)
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DELAWARE 95-4428370
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1990 WESTWOOD BOULEVARD
LOS ANGELES, CALIFORNIA 90025
(310) 475-5600
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
1996 STOCK OPTION PLAN, and
CONSULTANT STOCK OPTIONS
(Full Title of the Plans)
HARRY SHUSTER
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
1990 WESTWOOD BOULEVARD
LOS ANGELES, CALIFORNIA 90025
(310) 475-5600
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
COPIES TO:
GERALD M. CHIZEVER, ESQ.
MADGE S. BELETSKY, ESQ.
RICHMAN, LAWRENCE, MANN, GREENE, CHIZEVER,
FRIEDMAN & PHILLIPS
9601 WILSHIRE BOULEVARD
BEVERLY HILLS, CALIFORNIA 90210
(310) 274-8300
(310) 274-2831 (FAX)
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title to Maximum Maximum
Securities to Amount to Offering Price Aggregate Amount of
be Registered be Registered Per Share Offering price Registration Fee
------------- ------------- --------- -------------- ----------------
<S> <C> <C> <C> <C>
Common Stock 626,500(1) $ 2.68(2) $1,679,020 $ 524.69
Common Stock 20,000(3) $ .80(4) $ 16,000 $ 5.00
Common Stock 5,000(3) $ 1.00(4) $ 5,000 $ 1.56
------- ------- ---------- --------
651,500(5) $1,700,020 $ 531.25
======= ========== ========
</TABLE>
(1) Represents the maximum number of shares of Common Stock which may be
issued pursuant to the 1996 Stock Option Plan.
(2) Estimated solely to determine the registration fee. Based on the option
exercise price for stock options already granted under the Plan and on the
average of the high and low sales prices per share of Common Stock of the
Company on February 27, 1997 with respect to shares of Common Stock
remaining to be granted under the Plan.
(3) Represents shares of Common Stock underlying options granted to a
consultant under the Consultant Stock Option Agreements.
(4) Based on the option exercise prices of stock options granted to a
consultant under the Consultant Stock Option Agreements.
(5) Plus such indeterminate number of additional shares of Common Stock as may
be required in the event of a stock dividend, reverse stock split or
combination of shares, recapitalization or other change in the Company's
capital stock.
EXPLANATORY NOTE
The Reoffer Prospectus which is filed as a part of this Registration
Statement has been prepared in accordance with the requirements of Part I of
Form S-3 and may be used for reoffers or resales of the Common Stock of United
Restaurants, Inc., a Delaware corporation (the "Company"), acquired by
"affiliates" (as such term is defined in Rule 405 of the General Rules and
Regulations under the Securities Act of 1933 (the "Securities Act")), pursuant
to the exercise of options granted under the Company's 1996 Stock Option Plan
and for the resale of certain "restricted securities" which may be acquired by a
consultant of the Company upon the exercise of options granted by the Company.
Pursuant to General Instruction C(2) of Form S-8, the Reoffer Prospectus may be
supplemented pursuant to Rule 424(b) under the Securities Act as the names of
additional persons and the amount of securities available to be resold by them
pursuant to the Reoffer Prospectus become known.
The documents containing the information specified in Part I of this
Form S-8 Registration Statement will be sent or given to participants in the
Company's 1996 Stock Option Plan as specified by Rule 428(b)(1). Such documents,
and the documents incorporated by reference in this Registration Statement
pursuant to Item 3 of Part II of this Form S-8, taken together, constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act.
ii
<PAGE> 3
FORM S-8 CROSS REFERENCE SHEET SHOWING LOCATION IN REOFFER
PROSPECTUS OF INFORMATION REQUIRED BY PART I OF FORM S-3
<TABLE>
<CAPTION>
FORM S-3 ITEM NUMBER LOCATION/HEADING IN PROSPECTUS
<S> <C> <C>
1. Forepart of Registration Statement Cover Page
and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Available Information; Documents
Cover Page of Prospectus Incorporated by Reference; Table of
Contents
3. Summary Information, Risk Factors Risk Factors
and Ratio of Earnings to Fixed
Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Documents Incorporated by Reference
Registered
10. Interests of Named Experts and Not Applicable
Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Documents Incorporated by Reference
Information
13. Disclosure of Commission Position Part II, Item 9, Undertakings
on Indemnification for Securities
Act Liabilities
</TABLE>
iii
<PAGE> 4
REOFFER PROSPECTUS
651,500 SHARES
GRAND HAVANA ENTERPRISES, INC.
Common Stock
This Prospectus relates to the sale of an aggregate of up to
651,500 shares (the "Shares"), of the common stock, par value $.01 per share
(the "Common Stock"), of Grand Havana Enterprises, Inc., a Delaware corporation
(the "Company"), which may be offered from time to time by certain stockholders
of the Company (the "Selling Stockholders"). See "Selling Stockholders." The
Common Stock to which this Prospectus relates may be issued (i) upon exercise of
stock options granted or to be granted by the Company pursuant to the Company's
1996 Stock Option Plan (the "Plan") and (ii) upon the exercise of stock options
granted to a consultant of the Company pursuant to a Stock Option Agreement
dated January 30, 1996 and a Stock Option Agreement dated September 15, 1996
(collectively, the "Consultant Stock Option Agreements").
The Selling Stockholders may from time to time offer their
shares of Common Stock to purchasers directly or through agents, brokers or
dealers. Such shares may be sold at market prices prevailing at the time of sale
or at negotiated prices. See "Plan of Distribution."
The Company will not receive any proceeds from the sale of the
Common Stock offered by the Selling Stockholders hereby. All expenses of
registration incurred in connection with this offering are being borne by the
Company, but all brokerage commissions and other expenses incurred by individual
Selling Stockholders will be borne by such Selling Stockholders.
The Common Stock is traded on the Nasdaq SmallCap Market under
the symbol "PUFF." On February 27, 1997 the last reported sale price of the
Common Stock on the Nasdaq SmallCap Market was $3.1875 per share.
---------------------
SEE "RISK FACTORS," COMMENCING ON PAGE 6 OF THIS PROSPECTUS,
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF
THE COMMON STOCK OFFERED HEREBY.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESEN-
TATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is March 4, 1997.
<PAGE> 5
TABLE OF CONTENTS
AVAILABLE INFORMATION ................................................. 3
DOCUMENTS INCORPORATED BY REFERENCE ................................... 4
THE COMPANY ........................................................... 5
RISK FACTORS .......................................................... 6
USE OF PROCEEDS ....................................................... 13
SELLING STOCKHOLDERS .................................................. 13
PLAN OF DISTRIBUTION .................................................. 14
LEGAL MATTERS ......................................................... 14
EXPERTS ............................................................... 14
2
<PAGE> 6
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files reports, proxy materials and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
materials and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Seven World Trade Center, 13th Floor, New York, N.Y. 10048 and
500 West Madison Street, Chicago, Illinois 60661. Copies of such material can
also be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, such material can be inspected at the offices of the
National Association of Securities Dealers, Inc., at 1735 K Street, N.W.,
Washington, D.C. 20006. The Commission maintains a website that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
The Company has filed a registration statement (the "Registration
Statement") on Form S-8 with respect to the Common Stock offered hereby with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement, certain
items of which are contained in schedules and exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any agreement,
instrument or other document referred to are not necessarily complete. With
respect to each such agreement, instrument or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
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<PAGE> 7
DOCUMENTS INCORPORATED BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1996, filed pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended, containing audited financial statements for
the fiscal year ended September 30, 1996.
(b) The Company's quarterly report on Form 10-QSB for the
fiscal quarter ended December 29, 1996, and all other reports, if any, filed by
the Company pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 since the end of the fiscal year ended September 30, 1996.
(c) The description of the Company's Common Stock contained in
its Registration Statement on Form 8-A, as filed with the Commission on
September 25, 1994, including any amendment or report filed for the purpose of
updating such description.
All documents filed by the Registrant pursuant to Section 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date hereof and prior to the filing
of a post-effective amendment to this registration statement which indicates
that all securities offered hereunder have been sold, or which deregisters all
securities then remaining unsold under this registration statement, shall be
deemed to be incorporated by reference in this registration statement and to be
a part hereof from the date of filing of such documents. Any statement contained
in a report or document shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in a subsequently filed document which also is or is deemed to be incorporated
by reference in this Prospectus modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom
a copy of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents). Requests for such copies should be directed to Grand Havana
Enterprises, Inc., 1990 Westwood Boulevard, Los Angeles, California 90025, Attn:
Corporate Secretary (telephone (310) 475-5600).
4
<PAGE> 8
THE COMPANY
Grand Havana Enterprises, Inc. and its subsidiaries (collectively, the
"Company") is engaged in the business of the ownership, operation and
development of restaurants, including the ownership and operation of one "Grand
Havana Room" private membership restaurant and cigar club which opened in June
1995 and two additional Grand Havana Rooms, one in New York, New York and one in
Washington, D.C., which are scheduled to open in the near future. The Company
intends to actively pursue the operation of its existing Grand Havana Room
location and the development of additional "Grand Havana Room" locations in
major cities as its principal business focus. In addition to developing and
operating Grand Havana Rooms, the Company intends to enter into the retail cigar
market in New York, Las Vegas, Los Angeles and Washington, D.C. and to establish
its own cigar label for distribution throughout the United States.
On May 27, 1993, soon after its incorporation, the Company acquired all
of the issued and outstanding shares of the capital stock of Love's Enterprises,
Inc. ("Love's"). Love's, which has been in business since the 1950's, currently
operates three Company-owned Love's restaurants and is the franchisor of an
additional 10 Love's restaurants. In December 1996, the Board of Directors of
Love's adopted a formal plan of discontinuance of this subsidiary's operations,
and the Company has commenced negotiations with various interested parties to
dispose of the Company owned Love's restaurants and to convert the franchisees
of the Love's restaurants into licensees.
In April 1995, the Company opened "On Canon," an upscale Italian
restaurant and bar in Beverly Hills, California, which it continues to operate.
The Company's initial Grand Havana Room opened in June, 1995 and is
located in Beverly Hills, California, on the second floor above the Company's On
Canon restaurant. The Company has entered into leases for space in New York, New
York and Washington, D.C., in which it is currently developing two new Grand
Havana Rooms, which Grand Havana Rooms are anticipated to open in late winter or
early spring 1997.
The Grand Havana Room is a private club that includes the operation of
an upscale restaurant, a full bar and a private smoking lounge. The Grand Havana
Room also offers the ancillary sale of cigars, tobacco products and cigar
accessories. All of the facilities of the Grand Havana Room, including the bar
and restaurant, are only available for use by members and their guests. The
Company intends to actively engage in the development, ownership and operation
of Grand Havana Rooms in other major cities.
The Company was incorporated under the laws of the State of Delaware on
April 13, 1993 under the name "United Restaurants, Inc." The Company changed its
name to "Grand Havana Enterprises, Inc." in February 1997. The Company's
executive offices are located at, and its mailing address is, 1990 Westwood
Boulevard, 3rd Floor, Los Angeles, California 90025, and its telephone number is
(310) 475-5600.
5
<PAGE> 9
RISK FACTORS
An investment in the securities offered hereby is highly speculative
and involves a high degree of risk. Prospective investors should carefully
consider all of the information contained in this Prospectus and, in particular,
the following factors which could materially and adversely affect the operations
and prospects of the Company or an investment therein, before making a decision
to purchase any securities offered hereby:
Operating Losses. The Company has experienced operating losses since
its inception. For its fiscal years ended September 30, 1995 and September 30,
1996, the Company experienced net losses of $1,771,725 and $1,468,044,
respectively. In addition, for the three-month period ended December 29, 1996,
the Company had a net loss of $1,229,947 and anticipates that it will continue
to experience losses from its operations in the future. Although the Company
believes a significant portion of its negative operating results since inception
is due to the high corporate overhead and development costs incurred in
connection with the Company's expansion (and, with respect to its loss for the
quarter ended December 29, 1996, due to a loss associated with the Company's
discontinuance of its Love's operations), there can be no assurance that the
Company will be able to be operated profitably in the future. The Company
anticipates that it will continue to experience net operating losses as it
continues working on its ongoing development plans, including the establishment
of additional Grand Havana Rooms. Even after the Company's development plans are
completed, there can be no assurance that the restaurants and cigar clubs owned
by the Company will be able to be operated profitably. Failure by the Company to
operate one or more of its restaurants or cigar clubs profitably could result in
significant operating losses for the Company.
Dependence on Management. The Company's success will depend largely
upon the Company's management, in particular, Harry Shuster, the Company's
Chairman of the Board, President and Chief Executive Officer. The Company has
entered a consulting agreement with Mr. Shuster, which agreement is currently
renewable on a year-to-year basis unless either party determines to terminate
the agreement. The loss of the services of Mr. Shuster, or other key management
personnel, could have a material adverse effect on the Company's business and
prospects.
Geographic Concentration; Uncertainty of Market Acceptance. All of the
Company's current operations, including its On Canon restaurant and initial
Grand Havana Room, are in Southern California. Consequently, the results
achieved to date by the Company's existing restaurants and cigar club may not be
indicative of the prospects of market acceptance of a larger number of
restaurants and cigar clubs, particularly in wider and more geographically
dispersed areas with varied demographic characteristics, e.g., the Grand Havana
Rooms which the Company intends to open in the near future in New York and
Washington, D.C. The Company has not conducted and does not intend to conduct
formal concept feasibility or market studies with respect to the operation of
its Grand Havana Rooms in other markets. Achieving customer awareness and market
acceptance, particularly as the Company seeks to penetrate new markets, will
require extensive efforts and
6
<PAGE> 10
expenditures by the Company. There can be no assurance that the Company's new
Grand Havana Rooms will achieve significant market acceptance.
Risks of Expansion. Since its inception in 1993, the Company has
rapidly expanded through a series of acquisitions and development. The Company's
acquisition of the Love's restaurant chain in 1993 was not as profitable as
anticipated by the Company and the Company adopted a plan of discontinuance of
its Love's restaurants operations in December 1996. Although the Company intends
to continue its strategy of aggressive growth, in particular with respect to the
development of new private membership Grand Havana Rooms, and will seek to
increase significantly the number of Grand Havana Rooms, the Company has no
experience in the growth of restaurants and cigar clubs and/or in managing a
large number of restaurants and cigar clubs which are geographically dispersed.
The Company's expansion will be dependent on, among other things, market
acceptance of the Company's private membership restaurant and cigar club
concept, the availability of suitable restaurant and cigar club sites, timely
development and construction of the restaurant and cigar clubs, the hiring of
skilled management and other personnel, the general ability to successfully
manage growth (including monitoring the cigar clubs and restaurants, controlling
costs and maintaining effective quality controls), and the availability of
adequate financing. There can be no assurance that the Company will be
successful in its proposed expansion. In view of the Company's small restaurant
and cigar club base, the lack of success or closing of any of its restaurants
and cigar clubs could have a material adverse effect upon the Company.
Possible Need for Additional Financing. The Company's capital
requirements have been and will continue to be significant. As a result of its
expansion activities, the Company's working capital has continually been
reduced. The Company anticipates that in connection with its development plans
during the next 12 months of operations, the Company may require additional
funds which the Company may raise through the private placement of securities.
In this regard, the Company is currently conducting a private placement of its
securities in order to raise up to $1,000,000 and has raised an aggregate of
$785,000 in such private placement to date. Although management believes that
with its current working capital, the funds raised in the private placement, and
the monies received from initial membership fees at its new Grand Havana Rooms,
the Company will be able to operate its business and to fund the development of
its business for at least the next 12 months, there can be no assurance that the
Company will be able to do so. If the Company's working capital, funds received
in its private placement and membership fees are insufficient to funds its
continuing operations and development plans, there can be no assurance that
additional financing will be available to the Company on acceptable terms, or at
all.
Restaurant Industry. The restaurant business is often affected by
changes in consumer tastes, national, regional and local economic conditions,
demographic trends, traffic patterns and the type, number and location of
competing restaurants. In addition, factors such as inflation, increased food,
labor and employee benefit costs and availability of experienced management and
hourly employees may also adversely affect the restaurant industry in general
and the Company's On Canon restaurant, and restaurants in its Grand Havana
Rooms, in particular.
7
<PAGE> 11
Competition. The Company's Grand Havana Rooms will compete with other
clubs that offer private memberships as well as with other restaurants, bars and
other establishments which are open to the public and at which cigar smoking is
permitted. The Company is currently unaware of any other private membership
cigar clubs catering to affluent clientele, and the Company intends to maintain
this niche which the Company believes will enable it to compete effectively with
other private membership clubs as well as with other bars and restaurants that
are open to the public and permit the smoking of cigars. Many of the Grand
Havana Rooms' competitors have substantially greater financial, marketing,
personnel and other resources than the Company, and the Company believes its
ability to compete effectively will continue to depend on its ability to offer
an exclusive membership club that caters to affluent cigar smokers and offers a
high quality distinctive restaurant, smoking lounge and bar.
The restaurant industry is highly competitive with respect to price,
service, food quality and location, and there are numerous well-established
competitors possessing substantially greater financial, marketing, personnel and
other resources than the Company. These competitors include national, regional
and local chains, many of which specialize in or offer products similar to those
offered by the Company. The Company can also be expected to face competition
from numerous other restaurants and food service establishments. Many of the
Company's competitors have achieved significant national, regional and local
brand name and product recognition and engage in extensive advertising and
promotional programs, both generally and in response to efforts by additional
competitors to enter new markets or introduce new products. In addition, there
can be no assurance that consumers will regard the Company's products as
significantly distinguishable from competitive products, that substantially
equivalent products will not be introduced by the Company's competitors or that
the Company will be able to compete successfully.
Trademarks and Service Marks. The Company believes that its present and
proposed trademarks and service marks have significant value and are important
to the marketing of its restaurants and products. There can be no assurance,
however, that the Company's marks do not or will not violate the proprietary
rights of others, that the Company's marks would be upheld if challenged or that
the Company will not be prevented from using its marks, any of which could have
an adverse effect on the Company. In addition, there can be no assurance that
the Company will have the financial resources necessary to enforce or defend its
trademarks and service marks.
Food and Beverage Regulation. The Company's restaurants, including the
restaurants in the Company's Grand Havana Rooms, are subject to numerous
federal, state and local laws regulating their business, including health,
sanitation, safety standards, alcoholic beverage control and fire regulations.
The development and construction of additional restaurants, including those
within the Company's Grand Havana Rooms, will be subject to compliance with
applicable zoning, land use and environmental regulations. Each of the Company's
On Canon restaurant, and its currently operational Grand Havana Room, has
appropriate licenses from regulatory authorities allowing it to sell liquor,
beer and wine, and each restaurant has food service licenses from local health
authorities. The failure of a restaurant to obtain or retain liquor or food
service licenses could have a material adverse effect on its operations.
Difficulties in obtaining or failures to obtain the
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<PAGE> 12
required licenses or approvals could delay or prevent the development of a new
restaurant in a particular area including the proposed new Grand Havana Rooms to
be developed by the Company.
Alcoholic beverage control regulations require each of the Company's
restaurants to apply to a state authority and, in certain locations, county and
municipal authorities, for a license and permit to sell alcoholic beverages on
the premises. Typically, licenses must be renewed annually and may be revoked or
suspended for cause at any time. Alcoholic beverage control regulations relate
to numerous aspects of the daily operations of the Company's restaurants,
including minimum age of patrons and employees, hours of operation, advertising,
wholesale purchasing, inventory control and handling, and storage and dispensing
of alcoholic beverages. The Company has not encountered any material problems
relating to alcoholic beverage licenses to date. In California, there is a set
number of licenses available, but there is an active market through which new
licenses can be obtained at the then-applicable market price. The failure to
receive or retain, or a delay in obtaining, a liquor license in a particular
location could adversely affect the Company's ability to obtain such a license
elsewhere.
The Company is subject in California, and may be subject in certain
other states, to "dram-shop" statutes, which generally provide a person injured
by an intoxicated person the right to recover damages from an establishment that
wrongfully served alcoholic beverages to the intoxicated person. The Company
carries comprehensive general liability insurance which it believes is
consistent with coverage carried by other entities in the restaurant industry.
Even though the Company is covered by insurance, a judgment against the Company
under a dram-shop statute in excess of the Company's liability coverage could
have a material adverse effect on the Company. The Company has never been the
subject of a "dram-shop" claim.
Leasehold Commitments. The Company's income from operations is
currently insufficient to meet its lease payment obligations that will commence
in March 1997 with respect to its leases for its proposed New York, New York and
Washington, D.C. Grand Havana Rooms. Although the Company anticipates that it
will be able to meet these leasehold obligations initially from its existing
working capital, from initial membership fees and from the income from
operations of its New York Grand Havana Room and Washington, D.C. Grand Havana
Room once these establishments are opened, there can be no assurance that the
income from these establishments will be sufficient to allow the Company to
meets its leasehold obligations under these two leases.
Control by Management. Following completion of this offering, Harry
Shuster, the Chairman of the Board, President and Chief Executive Officer of the
Company, and Harvey Bibicoff, a director of the Company, will beneficially own,
in the aggregate, approximately 32% of the outstanding shares of Common Stock of
the Company (assuming the sale of all of the Selling Stockholder's shares). In
addition, United Leisure Corporation, a public company of which Harry Shuster is
the Chairman of the Board and Chief Executive Officer, will own approximately 7%
of the outstanding shares of Common Stock of the Company. Accordingly, such
persons will have significant influence over the outcome of all matters
9
<PAGE> 13
submitted to the stockholders for approval, including the election of Directors
of the Company.
Tobacco Industry Regulation. Cigars and other tobacco products are
subject to regulation in the United States at the federal, state and local
levels. Federal law has required health warnings on cigarettes since 1965;
however, there is currently no federal law requiring that cigars or pipe tobacco
carry such warnings. However, California requires "clear and reasonable"
warnings to consumers who are exposed to chemicals known to the state to cause
cancer or reproductive toxicity, including tobacco smoke and several of its
constituent chemicals. Violations of this law, known as Proposition 65, can
result in a civil penalty not to exceed $2,500 per day for each violation.
The majority of states, including California, restrict or prohibit
smoking in certain public places and restrict the sale of tobacco products to
minors. Local legislative and regulatory bodies have also increasingly moved to
curtail smoking by prohibiting smoking in certain buildings or areas or by
requiring designated "smoking" areas. Although the Company believes that because
it offers a private membership club it will be exempt from future regulations
that might further prohibit smoking, if regulations should be enacted which
would in any way limit or prohibit the smoking of cigars in the Company's Grand
Havana Rooms this would have a material adverse effect on the business of the
Company.
Cigars and pipe tobacco have long been subject to federal, state and
local excise taxes, and such taxes have frequently been increased or proposed to
be increased, in some cases significantly, to fund various legislative
initiatives. Enactment of significant increases in or new federal, state or
local excise taxes may result in significantly increasing the price of cigars
which could result in decreased sales of cigars at the Company's Grand Havana
Rooms, and a decrease in the number of persons who smoke cigars which could
cause a reduction in memberships at the Grand Havana Rooms.
A variety of bills relating to tobacco issues have been recently
introduced in the Congress of the United States, including bills that would have
(i) prohibited the advertising and promotion of all tobacco products and/or
restricted or eliminated the deductibility of advertising expenses; (ii)
increase labeling requirements on tobacco products to include, among other
things, addiction warnings and lists of additives and toxins; and (iii) shifting
regulatory control of tobacco products and advertisements from the U.S. Federal
Trade Commission to the U.S. Food and Drug Administration. There can be no
assurance as to the ultimate content, timing or effect of any additional
regulation of tobacco products by any federal, state, local or regulatory body,
and there can be no assurance that any such legislation or regulation would have
a material adverse affect on the Company's business.
No Dividends on Common Stock. The Company has never paid any dividends
on its Common Stock and does not anticipate payment of any cash dividends for
the foreseeable future.
Rule 144 Sales; Future Sales of Common Stock. As of February 15, 1997,
the Company had outstanding 7,509,100 shares of Common Stock, of which 2,012,500
were registered in the Company's initial public offering, and 1,066,000 were
registered for resale
10
<PAGE> 14
on behalf of a stockholder of the Company in a previous registration. Most of
the remaining 4,430,600 shares of Common Stock are "restricted securities" as
that term is defined under Rule 144 of the Securities Act and may be sold in
compliance with Rule 144 of the Securities Act. Ordinarily, under Rule 144, as
amended effective April 1997, a person who is an affiliate of the Company (as
that term is defined in Rule 144) and has beneficially owned restricted
securities for a period of one year may, every three months, sell in brokerage
transactions an amount that does not exceed the greater of (i) 1% of the
outstanding class of such securities or (ii) the average weekly trading volume
of trading in such securities on all national exchanges and/or reported through
the automated quotation system of a registered securities association during the
four weeks prior to the filing of a notice of sale by a securities holder. A
person who is not an affiliate of the Company who beneficially owns restricted
securities is also subject to the foregoing volume limitations but may, after
the expiration of two years, sell unlimited amounts of such securities under
certain circumstances. Possible or actual sales of the Company's outstanding
Common Stock by certain of the present stockholders under Rule 144, as well as
the sale of the shares by the Selling Stockholder in this offering, may have a
depressive effect on the price of the Company's Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.
In addition, the holders of certain warrants issued by the Company have
demanded registration of the shares of Common Stock underlying the Underwriters'
Unit Purchase Options issued by the Company in connection with its initial
public offering of securities ("Underwriters' Unit Purchase Options"), which
Underwriters Unit Purchase Options are exercisable for an aggregate of 175,000
shares of Common Stock at an exercise price of $5.00 per share, subject to
adjustment, 175,000 Class A Warrants and 175,000 Class B Warrants, with each
Class A Warrant entitling the holder to purchase one share of Common Stock at an
exercise price of $6.60 per share, subject to adjustment, and each Class B
Warrant entitling the holder to purchase one share of Common Stock at an
exercise price of $6.60 per share, subject to adjustment. The registration of
the shares of Common Stock underlying the Underwriters' Unit Purchase Option,
which the Company intends to complete in the near future, could have a further
depressive effect on the price of the Common Stock and could further impair the
Company's ability to raise capital through the sale of its equity securities.
Volatility of Market Price for the Common Stock. The market price for
the Common Stock prior to the date hereof has been highly volatile. Factors such
as the Company's operating results and announcements by the Company or its
competitors may have a significant impact on the market price for the Common
Stock. Additionally, in recent years, the stock market has experienced a high
level of price and volume volatility and market prices for the stock of many
companies have experienced wide price fluctuations not necessarily related to
the operating performance of such companies.
"Penny Stock" Regulations. The Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price (as defined) of less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions. If the securities offered
hereby are removed from Nasdaq, the Company's securities may be considered
"penny stock" and thereby become subject to rules that impose
11
<PAGE> 15
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and must have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure schedule prepared by the
Commission relating to the penny stock market. The broker-dealer also must
disclose the commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently, the
"penny stock" rules may restrict the ability of broker-dealers to sell the
Company's securities and may affect the ability of purchasers in this offering
to sell the Company's securities.
Future Issuances of Stock by the Company. As of February 15, 1997, the
Company had outstanding 7,509,100 shares of Common Stock out of a total of
22,000,000 shares of Common Stock authorized, without giving effect to the
exercise of 2,012,500 of the Company's Class A Warrants and 2,012,500 of the
Company's Class B Warrants currently outstanding, warrants to purchase an
aggregate of 1,046,666 shares of Common Stock issued in a recent private
placement by the Company, and without giving effect to the exercise of options
to purchase an additional 651,500 shares of Common Stock, which shares are being
registered in this offering, and without giving effect to the exercise of the
Underwriters' Unit Purchase Option. The remaining shares of Common Stock not
issued or reserved for issuance upon exercise of options or warrants may be
issued without any action or approval of the Company's stockholders. Although
there are no present plans, agreements or undertakings involving the issuance of
shares, other than the current private placement being conducted by the Company,
any such issuance could be used as a method of discouraging, delaying or
preventing a change in control of the Company or could dilute the public
ownership of the Company. There can be no assurance that the Company will not
undertake to issue such shares if it deems it appropriate to do so.
Possible Adverse Effects of Authorization of Preferred Stock. The
Company's Restated Certificate of Incorporation authorizes the issuance of a
maximum of 3,000,000 shares of Preferred Stock on terms that may be fixed by the
Company's Board of Directors without further stockholder action. The terms of
any series of Preferred Stock, which may include priority claims to assets and
dividends, and special voting rights, could adversely affect the rights of
holders of the Common Stock. To date, no Preferred Stock has been issued and the
Company has no current plans to issue such Preferred Stock. The issuance of such
Preferred Stock could make the possible takeover of the Company or the removal
of management of the Company more difficult, discourage hostile bids for control
of the Company in which stockholders may receive premiums for their shares of
Common Stock, or otherwise dilute the rights of holders of Common Stock and the
market price of the Common Stock.
12
<PAGE> 16
USE OF PROCEEDS
All of the shares of Common Stock offered hereby are being offered by
the Selling Stockholders. The Company will not receive any proceeds from the
sale of Common Stock by the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth, as of February 15, 1997: (i) the name
and position of each of the Selling Stockholders; (ii) the number of shares of
Common Stock owned by each Selling Stockholder; (iii) the number of shares of
Common Stock covered by this Prospectus and (iv) the amount and percentage of
the Common Stock to be owned by each Selling Stockholder after completion of
this offering, assuming the sale of all shares of Common Stock covered by this
Prospectus. The Company may supplement this Prospectus from time to time to
disclose additional Selling Stockholders. The shares to be sold pursuant to this
offering include all shares of Common Stock issuable to each person upon the
exercise of options granted or to be granted under the Company's 1996 Stock
Option Plan as well as those options granted to Joe Pantoliano, a consultant to
the Company ("Option Shares").
<TABLE>
<CAPTION>
Shares
Owned as of Shares Owned After Offering
February 15, Shares ---------------------------
Name and Position 1997(1) Offered(2) Number Percentage
- ----------------- ------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Joe Pantoliano 25,000(3) 25,000 0 *
Consultant
Stanley Shuster 100,000(4) 100,000 0 *
Vice President
</TABLE>
- ---------------
* less than 1%
(1) Includes shares issuable upon the exercise of options that are exercisable
within 60 days of the date hereof. The shares underlying such options are
deemed to be outstanding for the purpose of computing the percentage of
outstanding stock owned by such persons individually, but are not deemed
to be outstanding for the purpose of computing the percentage ownership of
any other person.
(2) Includes all shares of Common Stock that may be received upon exercise of
options granted to date, whether or not such options are currently vested.
(3) Includes options to purchase 25,000 shares exercisable within 60 days.
(4) Includes options to purchase 100,000 shares exercisable within 60 days.
The preceding table reflects all Selling Stockholders that are eligible
to reoffer and resell Common Stock, whether or not they have a present intent to
do so. There is no assurance that any of the Selling Stockholders will sell any
or all of the Common Stock offered by them hereunder. The inclusion in the
foregoing table of the individuals named therein shall not be deemed an
admission that any such individuals are "affiliates" of the Company.
13
<PAGE> 17
PLAN OF DISTRIBUTION
The shares of Common Stock being sold by the Selling Stockholders are
being sold for their own accounts. The Company will not receive any of the
proceeds from such sales of Common Stock.
The distribution of the Common Stock by the Selling Stockholders may be
effected from time to time, in one or more transactions, at prices and upon
terms then obtainable on the Nasdaq SmallCap Market, at prices related to the
prevailing market prices, at negotiated prices or otherwise. In the event that
one or more brokers or dealers sells Common Stock it may do so by purchasing
Common Stock as principal or by selling the Common Stock as agent. If sales are
made through brokers or dealers, any commissions and fees will be paid by the
Selling Stockholders. Such brokers or dealers and other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act in connection with such sales.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered
hereby will be passed upon for the Company by Richman, Lawrence, Mann, Greene,
Chizever, Friedman & Phillips, Beverly Hills, California.
EXPERTS
The consolidated balance sheets as of September 30, 1996, and 1995 and
the consolidated statements of income, changes in stockholders' equity and cash
flows for each of the two years in the period ended September 30, 1996,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the report of Hollander, Gilbert & Co., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY SELLING STOCKHOLDER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE. HOWEVER, IF ANY MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS IS REQUIRED
BY LAW TO BE DELIVERED, THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED
ACCORDINGLY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES OFFERED BY
THIS PROSPECTUS, NOR DOES IT
14
<PAGE> 18
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
15
<PAGE> 19
Part II -- Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
The following documents are incorporated by reference in this
registration statement.
(a) Registrant's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1996, filed pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended.
(b) Registrant's quarterly report on Form 10-QSB for the
fiscal quarter ended December 29, 1996, and all other reports, if any, filed by
the Company pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 since the end of the fiscal year ended September 30, 1996.
(c) The description of the Registrant's Common Stock contained
in the Registration Statement on Form 8-A, as filed with the Commission on
September 25, 1994, including any amendment or report filed for the purpose of
updating such description.
All documents filed by the Registrant pursuant to Section
13(a), 13(c) 14 and 15(d) of the Exchange Act after the date of this
registration statement and prior to the filing of a post-effective amendment to
this registration statement which indicates that all securities offered
hereunder have been sold, or which deregisters all securities then remaining
unsold under this registration statement, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents.
Item 4. Description of Securities.
Not applicable; the class of securities to be offered is
registered under Section 12 of the Exchange Act.
Item 5. Interest of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 102(b)(7) of the General Corporation Law of the State of
Delaware grants corporations the right to limit or eliminate the personal
liability of their directors in certain circumstances in accordance with
provisions therein set forth. Article SEVENTH of the Company's Restated
Certificate of Incorporation, filed in the Office of the Secretary of State of
the State of Delaware on August 31, 1993, provides for the elimination of
personal liability of a Director to the corporation or its stockholders for
monetary damages for the breach of the Director's fiduciary duty to the full
extent allowable under Section 102(b)(7).
II-1
<PAGE> 20
Section 145 of the General Corporation Law of the State of Delaware
grants corporations the right to indemnify their directors, officers, employees
and agents in accordance with the provisions therein set forth. Article VI of
the Company's Bylaws, provides for indemnification of such persons to the full
extent allowable under applicable law. In addition, the Company has entered into
Indemnity Agreements with each of its Directors, which generally provide
contractual indemnity protection which is coextensive with the indemnity
provisions of the General Corporation Law of the State of Delaware and the
Company's Bylaws.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number Description of Document
(3)-1 Restated Certificate of Incorporation of the Registrant (filed
as Exhibit (3)-1 of the Company's Registration Statement on
Form SB-2 (Registration No. 33-68252-LA) (the "Registration
Statement") and incorporated herein by reference)
(3)-2 Bylaws of the Registrant (filed as Exhibit (3)-2 of the
Registration Statement and incorporated herein by reference)
(4)-1 1996 Stock Option Plan
(4)-2 Stock Option Agreement dated as of December 3, 1996 between
the Registrant and Stanley Shuster
(4)-3 Stock Option Agreement dated as of January 30, 1996 between
the Registrant and Joe Pantoliano
(4)-4 Stock Option Agreement dated as of September 15, 1996 between
the Registrant and Joe Pantoliano
(5) Opinion of Richman, Lawrence, Mann, Greene, Chizever, Friedman
& Phillips
(23)-1 Consent of Hollander, Gilbert & Co.
(23)-2 Consent of Richman, Lawrence, Mann, Greene, Chizever, Friedman
& Phillips (included in Exhibit 5)
II-2
<PAGE> 21
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or 15(d) of the Exchange Act that are incorporated by reference in
this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant
II-3
<PAGE> 22
of expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection which the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on February
27, 1997.
GRAND HAVANA ENTERPRISES, INC.
By: /s/ HARRY SHUSTER
______________________________________
Harry Shuster,
Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Harry Shuster President, February 27, 1997
________________________ Chairman of the Board,
Harry Shuster and Chief Executive Officer
and Director
(Executive and
Principal Financial Officer)
/s/ Harvey Bibicoff Director February 27, 1997
________________________
Harvey Bibicoff
Vice President and Director February __, 1997
________________________
Stanley Shuster
</TABLE>
II-5
<PAGE> 24
EXHIBIT INDEX
Exhibit
Number Description of Document
(3)-1 Restated Certificate of Incorporation of the Registrant (filed
as Exhibit (3)-1 of the Company's Registration Statement on
Form SB-2 (Registration No. 33-68252-LA) (the "Registration
Statement") and incorporated herein by reference)
(3)-2 Bylaws of the Registrant (filed as Exhibit (3)-2 of the
Registration Statement and incorporated herein by reference)
(4)-1 1996 Stock Option Plan
(4)-2 Stock Option Agreement dated as of December 3, 1996 between
the Registrant and Stanley Shuster
(4)-3 Stock Option Agreement dated as of January 30, 1996 between
the Registrant and Joe Pantoliano
(4)-4 Stock Option Agreement dated as of September 15, 1996 between
the Registrant and Joe Pantoliano
(5) Opinion of Richman, Lawrence, Mann, Greene, Chizever, Friedman
& Phillips
(23)-1 Consent of Hollander, Gilbert & Co.
(23)-2 Consent of Richman, Lawrence, Mann, Greene, Chizever, Friedman
& Phillips (included in Exhibit 5)
II-6
<PAGE> 1
Exhibit 4.1
UNITED RESTAURANTS, INC.
1996 STOCK OPTION PLAN
1. Purpose.
This 1996 Stock Option Plan (the "Plan") provides for the grant of
non-qualified stock options by United Restaurants, Inc. (the "Company"). The
purpose of the Plan is to enable the Company to attract and retain the services
of selected employees, officers, directors and other key contributors (including
consultants and nonemployee agents) of the Company or any subsidiary of the
Company in order to promote the success of the Company. Pursuant to the Plan,
such persons will be given the opportunity to acquire common stock of the
Company through the grant of non-qualified stock options. Non-qualified stock
options are those which do not qualify for preferential tax treatment afforded
incentive stock options under Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code"). For purposes of this Plan, the term "Company" shall be
deemed to include subsidiaries.
2. Shares Subject to the Plan.
Subject to adjustment as provided below, there will be reserved for
issuance upon the exercise of options under the Plan an aggregate of 626,250
shares of Common Stock. Such shares may be, in whole or in part, authorized but
unissued shares of Common Stock or issued shares of Common Stock which shall
have been reacquired by the Company. If an option granted under the Plan
expires, terminates or is cancelled, the unissued shares subject to such option
shall again be available under the Plan.
3. Effective Date and Duration of Plan.
3.1 Effective Date. The Plan shall be effective as of December 1,
1996.
3.2 Duration. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
such shares have lapsed; provided, however, the Board of Directors may suspend
or terminate the Plan at any time except with respect to options then
outstanding under the Plan. Termination shall not affect any outstanding option.
4. Administration.
4.1 Board of Directors. The Plan shall be administered by the Board
of Directors of the Company, which shall determine and designate from time to
time (a) the purchase price of the shares covered by each option, (b) whether
any payment will be required upon grant of the option, (c) the individuals to
whom, and the time or times at which, options shall be granted, (d) the number
of shares to be subject to each option, (e) when an option can be exercised and
whether in whole or in installments, (f) whether the
<PAGE> 2
options are immediately transferable, (g) whether the exercisability of the
options is subject to a risk of forfeiture or other conditions and (h) whether
the stock issued upon exercise of an option is subject to repurchase by the
Company, and the terms of such repurchase. Subject to the provisions of the
Plan, the Board of Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, advance the lapse of any
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The interpretation and
construction of the provisions of the Plan and related agreements by the Board
of Directors shall be final and conclusive. The Board of Directors may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem expedient
to carry the Plan into effect, and it shall be the sole and final judge of such
expediency.
4.2 Committee. The Board of Directors may delegate to a committee of
the Board of Directors or specified officers of the Company, or both (the
"Committee"), any or all authority for administration of the Plan. If authority
is delegated to a Committee, all references to the Board of Directors in the
Plan shall mean and relate to the Committee except (i) as otherwise provided by
the Board of Directors and (ii) that only the Board of Directors may amend or
terminate the Plan as provided in paragraphs 3 and 9.
5. Eligibility.
The Board of Directors may, from time to time, grant options under
the Plan to the Company's employees, officers and directors as well as to
consultants of the Company and other non-employees who the Board of Directors
believes have made or will make a valuable contribution to the Company.
6. Option Grants.
6.1 Option Price. With respect to each option grant, the Board of
Directors shall determine the option price (which shall not be less than 85% of
the last price at which shares of the Company's Common Stock were sold as
reported by NASDAQ on the day prior to the date of grant, or, if no last sales
price is available, such other price as the Board determine is at least 85% of
the fair market value of the stock on the date of grant).
6.2. Exercise of Options. Except as provided in paragraph 6.4 or as
otherwise determined by the Board of Directors, no option granted under the Plan
may be exercised unless, at the time of such exercise, the optionee is employed
by or is in the service of the Company and shall have been so employed or
provided such service continuously since the date such option was granted.
2
<PAGE> 3
Absence on leave or on account of illness or disability under rules established
by the Board of Directors shall not, however, be deemed an interruption of
employment or service for this purpose. Unless otherwise determined by the Board
of Directors, vesting of options shall not continue during an absence on leave
(including an extended illness) or on account of disability. Except as provided
in paragraphs 6.4 and 7, options granted under the Plan may be exercised from
time to time over the period stated in each option in such amounts and at such
times as shall be prescribed by the Board of Directors, provided that options
shall not be exercised for fractional shares. Unless otherwise determined by the
Board of Directors, if the optionee does not exercise an option in any one year
with respect to the full number of shares to which the optionee is entitled in
that year, the optionee's rights shall be cumulative and the optionee may
purchase those shares in any subsequent year during the term of the option.
6.3 Nontransferability. Unless otherwise determined by the Board of
Directors, each option granted under the Plan by its terms shall be
nonassignable and nontransferable by the optionee, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the optionee's domicile at the time of death, and each
option by its terms shall be exercisable during the optionee's lifetime only by
the optionee.
6.4 Termination of Employment or Service.
(a) General Rule. Unless otherwise determined by the Board of
Directors, in the event the employment or service of the optionee with the
Company terminates for any reason other than because of physical disability or
death as provided below, the option may be exercised at any time prior to the
expiration date of the option or the expiration of 30 days after the date of
such termination, whichever is the shorter period, but only if and to the extent
the optionee was entitled to exercise the option at the date of such
termination; provided, however, in connection with the termination of any
employee or other person rendering services to the Company, the Board of
Directors may determine, in its sole discretion, to allow the exercisability of
the option to continue until the original expiration date of the option.
(b) Termination Because of Physical Disability. Unless
otherwise determined by the Board of Directors, in the event of the termination
of employment or service because of physical disability (as that term is defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended), the
option may be exercised at any time prior to the expiration date of the option
or the expiration of 12 months after the date of such termination, whichever is
the shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination.
3
<PAGE> 4
(c) Termination Because of Death. Unless otherwise determined
by the Board of Directors, in the event of the death of an optionee while
employed by or providing service to the Company, the option may be exercised at
any time prior to the expiration date of the option or the expiration of 12
months after the date of such death, whichever is the shorter period, but only
if and to the extent the optionee was entitled to exercise the option at the
date of such termination and only by the person or persons to whom such
optionee's rights under the option shall pass by the optionee's will or by the
laws of descent and distribution of the state or country of domicile at the time
of death.
(d) Amendment of Exercise Period Applicable to Termination. The
Board of Directors, at the time of grant or at any time thereafter, may but
shall have no obligation to extend the aforesaid 30-day and 12-month exercise
periods to any length of time not later than the original expiration date of the
option, and may increase the portion of an option that is exercisable, subject
to such terms and conditions as the Board of Directors may determine.
(e) Failure To Exercise Option. To the extent that the option
of any deceased optionee or of any optionee whose employment or service
terminates is not exercised within the applicable period, all further rights to
purchase shares pursuant to such option shall cease and terminate.
6.5 Purchase of Shares. Unless the Board of Directors determines
otherwise, shares may be acquired pursuant to an option granted under the Plan
only upon receipt by the Company of notice in writing from the optionee of the
optionee's intention to exercise, specifying the number of shares as to which
the optionee desires to exercise the option and the date on which the optionee
desires to complete the transaction (which date shall not be later than ten (10)
business days after the date of exercise), and, if required in order to comply
with the Securities Act of 1933, as amended, containing a representation that it
is the optionee's present intention to acquire the shares for investment and not
with a view to distribution, and any other information the Board of Directors
may request. Unless the Board of Directors determines otherwise, on or before
the date specified for completion of the purchase of shares pursuant to an
option, the optionee must have paid the Company the full purchase price of such
shares in cash (including, with the consent of the Board of Directors, cash that
may be the proceeds of a loan from the Company). No shares shall be issued until
full payment therefor has been made. Each optionee who has exercised an option
shall immediately upon notification of the amount due, if any, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state and
local tax withholding requirements. If additional withholding is or becomes
required beyond any amount deposited before delivery of the certificates, the
optionee shall pay such amount to the Company on demand. If the optionee fails
to pay the amount demanded, the Company may withhold that amount from other
amounts payable by the
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<PAGE> 5
Company to the optionee, including salary, subject to applicable law.
7. Changes in Capital Structure.
If the outstanding Common Stock of the Company is hereafter
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of any recapitalization, reclassification, stock split, combination of
shares or dividend payable in shares, appropriate adjustment shall be made by
the Board of Directors in the number and kind of shares available for awards
under the Plan. In addition, the Board of Directors shall make appropriate
adjustment in the number and kind of shares as to which outstanding options, or
portions thereof then unexercised, shall be exercisable, so that the optionee's
proportionate interest before and after the occurrence of the event is
maintained. Notwithstanding the foregoing, the Board of Directors shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Board of
Directors. Any such adjustments made by the Board of Directors shall be
conclusive.
8. Effect of Liquidation or Reorganization.
8.1 Cash Stock or Other Property for Stock. Except as provided in
paragraph 8.2, upon a merger, consolidation, acquisition of property or stock,
reorganization or liquidation of the Company, as a result of which the
stockholders of the Company receive cash, stock or other property in exchange
for or in connection with their shares of Common Stock, any option granted
hereunder shall terminate, but the optionee shall have the right during a 30-day
period immediately prior to any such merger, consolidation, acquisition of
property or stock, reorganization or liquidation to exercise his or her option
in whole or in part whether or not the vesting requirements applicable to the
option have been satisfied.
8.2 Conversion of Options on Stock for Stock Exchange. If the
stockholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger, consolidation, acquisition of property or stock,
separation or reorganization, all options granted hereunder shall be converted
into options to purchase shares of Exchange Stock unless the Board of Directors,
in its sole discretion, determines that any or all of such options granted
hereunder shall not be converted into options to purchase shares of Exchange
Stock but instead shall terminate in accordance with the provisions of paragraph
8.1. The amount and price of converted options shall be determined by adjusting
the amount and price of the options granted hereunder in the same proportion as
used for determining the number of shares of Exchange Stock the
5
<PAGE> 6
holders of the Common Stock receive in such merger, consolidation, acquisition
of property or stock, separation or reorganization.
9. Corporate Mergers, Acquisitions, Etc.
The Board of Directors may also grant options under the Plan having
terms, conditions and provisions that vary from those specified in this Plan,
provided that any such awards are granted in substitution for, or in connection
with the assumption of, existing options issued by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant to or by
reason of a transaction involving a corporate merger, consolidation, acquisition
of property or stock, separation, reorganization or liquidation to which the
Company or a subsidiary is a party.
10 Change of Control.
Notwithstanding the provisions of any option which provide for its
exercise in installments as designated by the Board, all options shall become
immediately exercisable in the event of a "change in control" or "threatened
change in control" of the Company. The term "change in control" shall refer to
the acquisition, in any single transaction or series of related transactions, of
25% or more of the voting securities of the Company by any person or by persons
acting as a group within the meaning of Section 13(d) of the Securities Exchange
Act of 1934; provided, however, that for purposes of the Plan no change in
control or threatened change in control shall be deemed to have occurred if
prior to the acquisition of, or offer to acquire, 25% or more of the voting
securities of the Company, the full Board shall have adopted, by not less than a
two-thirds vote, a resolution specifically approving such acquisition or offer.
Whether a "threatened change in control" has occurred shall be determined by the
Board in its sole discretion. The term "person" shall include any individual,
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, or unincorporated organization.
11. Amendment of Plan.
The Board of Directors may at any time, and from time to time,
modify or amend the Plan in such respects as it shall deem advisable because of
changes in the law while the Plan is in effect or for any other reason. Except
as provided in paragraphs 6.4, 7 and 8, however, no change in an award already
granted shall be made without the written consent of the holder of such award.
12. Government and Other Regulations.
The obligation of the Company to sell and deliver shares under the
options granted under the Plan shall be subject to (i) all applicable laws,
rules and regulations and such approvals by any governmental agencies as may be
required, including, without
6
<PAGE> 7
limitation, the effectiveness of a registration statement under the Securities
Act of 1933, and (ii) the requirements of any stock exchange upon which the
Common Stock may then be listed. At the time of the grant or exercise of any
option, the Company may, if it is deemed necessary or desirable for any reason
connected with any law or regulation of any governmental authority relating to
the regulation of securities, require the holder to make such representations
regarding his acquisition of the Common Stock or agree to comply with such
restrictions on the transfer of the Common Stock as the Board may specify. In
the event such representations are required, no shares shall be issued to such
individual unless and until the Company is satisfied with any such
representation.
13. Employment and Service Rights.
Nothing in the Plan or any award pursuant to the Plan shall (a) confer upon any
employee any right to be continued in the employment of the Company or interfere
in any way with the right of the Company by whom such employee is employed to
terminate such employee's employment at any time, for any reason, with or
without cause, or to decrease such employee's compensation or benefits, or (b)
confer upon any person engaged by the Company any right to be retained or
employed by the Company or to the continuation, extension, renewal, or
modification of any compensation, contract, or arrangement with or by the
Company.
14. Rights as a Shareholder.
The recipient of any award under the Plan shall have no rights as a
shareholder with respect to any Common Stock until the date of issue to the
recipient of a stock certificate for such shares. Except as otherwise expressly
provided in the Plan, no adjustment shall be made for dividends or other rights
for which the record date occurs prior to the date such stock certificate is
issued.
This 1996 Stock Option Plan has been approved by the Board of Directors of
United Restaurants, Inc. as of December 1, 1996.
7
<PAGE> 1
Exhibit 4.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made and entered into
as of December 3, 1996, by and between UNITED RESTAURANTS, INC. ("Company"), a
Delaware corporation, and Stanley Shuster ("Optionee").
WHEREAS, the Company has adopted a 1996 Stock Option Plan ("Plan")
for the granting to the Company's employees, officers, directors and other key
contributors of options to purchase shares of Common Stock from the Company in
order to encourage stock ownership in the Company by such persons; and
WHEREAS, pursuant to the Plan, the Company's Board of Directors has
approved the execution of this Agreement to evidence the grant to the Optionee
of the right and option to purchase shares of the Common Stock of the Company
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
obligations herein contained, it is agreed as follows:
1. Grant and Exercise of Option.
The Company grants, as of the date set forth above, to the Optionee
the right and option to purchase, on the terms and conditions hereinafter set
forth, all or any part of an aggregate of 100,000 shares of the Company's no par
value Common Stock ("Shares") at the purchase price of $1.00 per Share,
exercisable in the amount and at the times set forth in this paragraph below:
(a) The options granted under this Agreement may be exercised
only in accordance with the terms of the Plan, a copy of which is incorporated
herein by reference. All of the options shall be exercisable during the five (5)
year period after the date hereof.
(b) No Shares shall be delivered pursuant to the exercise of
any option, in whole or in part, until qualified for delivery under such laws
and regulations as may be deemed by the Board of Directors to be applicable
thereto and until payment in full of the option price therefor is received by
the Company. No Optionee shall be or deemed to be a holder of any Shares subject
to such option unless and until the certificate or certificates therefor have
been issued.
(c) Notwithstanding anything provided herein to the contrary,
any option granted shall terminate at the close of business on the date
preceding the fifth anniversary of the date of grant.
<PAGE> 2
2. Notice.
Any notice to the Company provided for in this Agreement shall be in
writing addressed to it in care of its Secretary at its principal corporate
office, and any notice to the Optionee shall be in writing addressed to him or
her at the address then appearing for him or her on the personnel records of the
Company. Either party may designate to the other a different address for the
purpose of this paragraph by a written notice given in accordance herewith.
3. Plan Incorporated Herein.
The option hereby granted is subject to, and the Company and the
Optionee agree to be bound by, all of the terms and conditions of the Plan, a
copy of which is attached hereto and made a part hereof. The Plan shall control
in the event there is any conflict between the Plan and this Agreement and on
matters not contained in this Agreement.
4. Date of Grant; Applicable Law.
This Option has been granted, executed and delivered the day and
year first above written, and the interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of California.
UNITED RESTAURANTS, INC.
By: /s/ Harry Shuster
President
/s/ Stanley Shuster
OPTIONEE: Stanley Shuster
2
<PAGE> 1
Exhibit 4.3
STOCK OPTION AGREEMENT
AGREEMENT, dated as of January 30, 1996, between UNITED RESTAURANTS, INC.,
a Delaware corporation (the "Company"), and JOE PANTOLIANO (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee acts as a consultant for the Company and is
considered by the Board of Directors of the Company as a substantial contributor
to the development of the Company's business during its early stages and for the
future; and
WHEREAS, the Company desires to provide the Optionee with incentive to
remain a consultant for the Company and to continue to work for its best
interests in the future.
NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants hereinafter contained, the Company and the Optionee hereby agree
as follows:
1. Grant of Option. The Company hereby grants to the Optionee the irrevocable,
non-qualified option (the "Option") to purchase, on the terms and conditions
herein set forth, up to 5,000 of the Company's fully paid and nonassessable
shares of Common Stock, par value $.01 per share, at an option price determined
as set forth in Section 2 of this Agreement.
2. Option Price. The option price for any shares of Common Stock of the Company
to be purchased pursuant to the Option by valid exercise from time to time
during the term thereof by the Optionee shall be $1.00 per share.
<PAGE> 2
3. Period of Option. The Option is exercisable at any time during a period
commencing February 1, 1996, and ending January 30, 2001. The Option may be
exercised from time to time during the option period as to the total number of
shares thereby or any lesser amount thereof. The Option is nonexercisable after
January 30, 2001.
4. Adjustments. If each of the outstanding shares of Common Stock of the Company
(other than shares held by dissenting stockholders) shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation (whether by reason of agreement,
consolidation, recapitalization, reclassification, split-up, combination of the
shares or otherwise), then there shall be substituted for each share covered by
the Option, the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock of the Company (other than shares
held by dissenting stockholders) shall be so changed or for which each such
share shall be changed. If there shall be any other change in the number or kind
of the outstanding shares of Common Stock of the Company, or any stock or
securities into which such Common Stock shall have been changed, or for which it
shall have been exchanged, then if the Board of Directors of the Company shall,
in its sole discretion, determine that such change equitably requires an
adjustment in the number or kind or option price of the shares covered by the
Option, or an adjustment in the number or kind of other shares subject, or which
may be subject, to the Option, such adjustment shall be made in accordance with
such determination. Fractional shares resulting from any adjustment in the
Option pursuant to this Section 4 may be settled in cash or otherwise as the
Board of Directors of the Company shall determine. Notice of any adjustment
shall be given by the Company to the Optionee and such adjustment (whether or
not such notice is given or received) shall be effective and binding for all
purposes of the Option.
2
<PAGE> 3
5. Reservation of Shares. The Company covenants and agrees that it has reserved
and shall at all times, so long as the Option is outstanding, reserve and keep
available out of its authorized but unissued Common Stock, par value $.01 per
share, solely for the purpose of issuing Common Stock upon the exercise of the
Option, the full number of shares of Common Stock deliverable upon the exercise
of the Option.
6. Stockholder's Rights. The Optionee shall not, based on his being Optionee
hereunder, be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other security of the Company which may at any time be
issuable on the exercise of the Option for any purpose, nor shall anything
contained herein be construed to confer upon the Optionee, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
Directors on any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of par value
or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Option shall have been exercised and
the Common Stock purchasable upon the exercise hereof shall have become
deliverable as provided herein.
7. Termination of Relationship with the Company. Upon the termination of the
Optionee's relationship by the Company, his rights to exercise the Option shall
be only as follows:
a. If the Optionee's relationship with the Company is terminated for
any reason other than death, including but not limited to
disability, he (or his estate in the event of his death after such
termination) may, within 90 days following such termination,
exercise the Option with respect to all or any part of the shares
subject thereto, unless the Option earlier expires.
3
<PAGE> 4
b. If the Optionee's relationship with the Company is terminated by
death, or if the Optionee should die within 90 days after his
relationship with the Company is otherwise terminated, his estate
shall have the right for a period of one year following the date of
such death to exercise the Option with respect to all or any part of
the shares subject thereof, unless the Option earlier expires. An
Optionee's "estate" shall mean his legal representatives upon his
death or any person who acquires the right to exercise the Option by
reason of the Optionee's death.
8. Transferability. The Option is not transferable by the Optionee otherwise
than by will or the laws of descent or distribution, and is exercisable during
the Optionee's lifetime only by the Optionee.
9. Method of Exercise of Option. The Option may be exercised in whole or in part
by the Optionee's giving written notice, specifying the number of shares which
the Optionee elects to purchase and the date on which such purchase is to be
made, to the Company by mail, postage prepaid, or delivering such notice
addressed to the Company, at its principal office in Los Angeles, California,
attention of the President, at least ten and not more than thirty days prior to
the date specified in such notice as the date on which such purchase is to be
made. Such notice shall contain, if required by the Company, on issuing the
shares to the Optionee, will comply with the applicable securities laws, a
written representation by the Optionee that (i) he is acquiring the shares to be
so purchased for investment and not with a view to distribution to the public
and (ii) he will not dispose of the shares so purchased except in compliance
with the Securities Act of 1933, as amended, and the rules and regulations (such
as Rule 144) promulgated thereunder applicable at the time to such disposition.
4
<PAGE> 5
The Company may require further assurances that the acquisition of the shares
will not involve any violations of law.
If such exercise shall be in accordance with the provisions of the Option,
the Company shall, on the date specified in the notice and against receipt from
the Optionee of the option price, deliver, at its principal office in Los
Angeles, California, a certificate or certificates for the shares of Common
Stock so purchased and shall pay all stamp taxes payable in connection
therewith. For purposes of this Section 9, a person to whom the Option is
transferred by will or the laws of descent and distribution, as contemplated by
Section 8 shall be deemed the Optionee.
Each stock certificate for shares issued on exercise of the Option shall
bear the following (or similar) legend:
"The Shares represented by this Certificate have not been registered
under the Securities Act of 1933. The Shares may not be sold or
offered for sale in the absence of an effective Registration
Statement for the Shares under the Securities Act of 1933 or an
opinion of counsel of the Company that such registration is not
required."
10. Binding Agreement. This Option Agreement shall be binding upon and shall
insure to the benefit of any successor or assign of the Company and the
Optionee's legal representative.
11. Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the Option and may not be changed orally, but only by an
instrument in writing signed by the party against whom enforcement of any
change, modification or extension is sought.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the day and year first above written.
UNITED RESTAURANTS, INC.
By: /s/ Harry Shuster
Harry Shuster, Chairman
of the Board, President and
Chief Executive Officer
AGREED to and ACCEPTED as of
- -----------------
/s/ Joe Pantoliano
Joe Pantoliano
6
<PAGE> 1
Exhibit 4.4
STOCK OPTION AGREEMENT
AGREEMENT, dated as of September 15, 1996, between UNITED RESTAURANTS,
INC., a Delaware corporation (the "Company"), and JOE PANTOLIANO (the
"Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee acts as a consultant for the Company and is
considered by the Board of Directors of the Company as a substantial contributor
to the development of the Company's business during its early stages and for the
future; and
WHEREAS, the Company desires to provide the Optionee with incentive to
remain a consultant for the Company and to continue to work for its best
interests in the future.
NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants hereinafter contained, the Company and the Optionee hereby agree
as follows:
1. Grant of Option. The Company hereby grants to the Optionee the irrevocable,
non-qualified option (the "Option") to purchase, on the terms and conditions
herein set forth, up to 20,000 of the Company's fully paid and nonassessable
shares of Common Stock, par value $.01 per share, at an option price determined
as set forth in Section 2 of this Agreement.
2. Option Price. The option price for any shares of Common Stock of the Company
to be purchased pursuant to the Option by valid exercise from time to time
during the term thereof by the Optionee shall be $.80 per share.
<PAGE> 2
3. Period of Option. The Option is exercisable at any time during a period
commencing February 1, 1996, and ending January 30, 2001. The Option may be
exercised from time to time during the option period as to the total number of
shares thereby or any lesser amount thereof. The Option is nonexercisable after
January 30, 2001.
4. Adjustments. If each of the outstanding shares of Common Stock of the Company
(other than shares held by dissenting stockholders) shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation (whether by reason of agreement,
consolidation, recapitalization, reclassification, split-up, combination of the
shares or otherwise), then there shall be substituted for each share covered by
the Option, the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock of the Company (other than shares
held by dissenting stockholders) shall be so changed or for which each such
share shall be changed. If there shall be any other change in the number or kind
of the outstanding shares of Common Stock of the Company, or any stock or
securities into which such Common Stock shall have been changed, or for which it
shall have been exchanged, then if the Board of Directors of the Company shall,
in its sole discretion, determine that such change equitably requires an
adjustment in the number or kind or option price of the shares covered by the
Option, or an adjustment in the number or kind of other shares subject, or which
may be subject, to the Option, such adjustment shall be made in accordance with
such determination. Fractional shares resulting from any adjustment in the
Option pursuant to this Section 4 may be settled in cash or otherwise as the
Board of Directors of the Company shall determine. Notice of any adjustment
shall be given by the Company to the Optionee and such adjustment (whether or
not such notice is given or received) shall be effective and binding for all
purposes of the Option.
2
<PAGE> 3
5. Reservation of Shares. The Company covenants and agrees that it has reserved
and shall at all times, so long as the Option is outstanding, reserve and keep
available out of its authorized but unissued Common Stock, par value $.01 per
share, solely for the purpose of issuing Common Stock upon the exercise of the
Option, the full number of shares of Common Stock deliverable upon the exercise
of the Option.
6. Stockholder's Rights. The Optionee shall not, based on his being Optionee
hereunder, be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other security of the Company which may at any time be
issuable on the exercise of the Option for any purpose, nor shall anything
contained herein be construed to confer upon the Optionee, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
Directors on any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of par value
or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Option shall have been exercised and
the Common Stock purchasable upon the exercise hereof shall have become
deliverable as provided herein.
7. Termination of Relationship with the Company. Upon the termination of the
Optionee's relationship by the Company, his rights to exercise the Option shall
be only as follows:
a. If the Optionee's relationship with the Company is terminated for
any reason other than death, including but not limited to
disability, he (or his estate in the event of his death after such
termination) may, within 90 days following such termination,
exercise the Option with respect to all or any part of the shares
subject thereto, unless the Option earlier expires.
3
<PAGE> 4
b. If the Optionee's relationship with the Company is terminated by
death, or if the Optionee should die within 90 days after his
relationship with the Company is otherwise terminated, his estate
shall have the right for a period of one year following the date of
such death to exercise the Option with respect to all or any part of
the shares subject thereof, unless the Option earlier expires. An
Optionee's "estate" shall mean his legal representatives upon his
death or any person who acquires the right to exercise the Option by
reason of the Optionee's death.
8. Transferability. The Option is not transferable by the Optionee otherwise
than by will or the laws of descent or distribution, and is exercisable during
the Optionee's lifetime only by the Optionee.
9. Method of Exercise of Option. The Option may be exercised in whole or in part
by the Optionee's giving written notice, specifying the number of shares which
the Optionee elects to purchase and the date on which such purchase is to be
made, to the Company by mail, postage prepaid, or delivering such notice
addressed to the Company, at its principal office in Los Angeles, California,
attention of the President, at least ten and not more than thirty days prior to
the date specified in such notice as the date on which such purchase is to be
made. Such notice shall contain, if required by the Company, on issuing the
shares to the Optionee, will comply with the applicable securities laws, a
written representation by the Optionee that (i) he is acquiring the shares to be
so purchased for investment and not with a view to distribution to the public
and (ii) he will not dispose of the shares so purchased except in compliance
with the Securities Act of 1933, as amended, and the rules and regulations (such
as Rule 144) promulgated thereunder applicable at the time to such disposition.
4
<PAGE> 5
The Company may require further assurances that the acquisition of the shares
will not involve any violations of law.
If such exercise shall be in accordance with the provisions of the Option,
the Company shall, on the date specified in the notice and against receipt from
the Optionee of the option price, deliver, at its principal office in Los
Angeles, California, a certificate or certificates for the shares of Common
Stock so purchased and shall pay all stamp taxes payable in connection
therewith. For purposes of this Section 9, a person to whom the Option is
transferred by will or the laws of descent and distribution, as contemplated by
Section 8 shall be deemed the Optionee.
Each stock certificate for shares issued on exercise of the Option shall
bear the following (or similar) legend:
"The Shares represented by this Certificate have not been registered
under the Securities Act of 1933. The Shares may not be sold or
offered for sale in the absence of an effective Registration
Statement for the Shares under the Securities Act of 1933 or an
opinion of counsel of the Company that such registration is not
required."
10. Binding Agreement. This Option Agreement shall be binding upon and shall
insure to the benefit of any successor or assign of the Company and the
Optionee's legal representative.
11. Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the Option and may not be changed orally, but only by an
instrument in writing signed by the party against whom enforcement of any
change, modification or extension is sought.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the day and year first above written.
UNITED RESTAURANTS, INC.
By: /s/ Harry Shuster
Harry Shuster, Chairman
of the Board, President and
Chief Executive Officer
AGREED to and ACCEPTED as of
September 16, 1996
/s/ Joe Pantoliano
Joe Pantoliano
6
<PAGE> 1
Exhibit 5
[Letterhead of Richman, Lawrence, Mann, Greene, Chizever, Friedman & Phillips]
March 3, 1997
Grand Havana Enterprises, Inc.
1990 Westwood Blvd.
Penthouse
Los Angeles, California 90025
Ladies and Gentlemen:
You have requested our opinion as counsel for Grand Havana
Enterprises, Inc., a Delaware corporation (formerly, United Restaurants, Inc.)
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended, of up to 626,500 shares of Common Stock of the Company
issuable upon exercise of options granted or to be granted under the Company's
1996 Stock Option Plan, and of up to 25,000 shares of Common Stock of the
Company issuable upon the exercise of options granted to a consultant of the
Company.
We have examined the Company's Registration Statement on Form S-8 in
the form to be filed with the Securities and Exchange Commission on or about
March 3, 1997 (the "Registration Statement"). We have examined such further
documents as we have deemed necessary as a basis for the opinion hereafter
expressed.
Based on the foregoing, we are of the opinion that, upon issuance
and sale in the manner described in the Registration Statement, the shares of
Common Stock covered by the Registration Statement will be legally issued, fully
paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ RICHMAN, LAWRENCE, MANN, GREENE,
CHIZEVER, FRIEDMAN & PHILLIPS
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-8, to be filed with the Securities and Exchange Commission
on or about March 3, 1997, of our report, dated October 25, 1996, on our audits
of the consolidated financial statements of Grand Havana Enterprises, Inc.
(formerly, United Restaurants, Inc.) and subsidiaries. We also consent to the
reference of our firm under the caption "Experts" in the registration statement.
/s/ Hollander, Gilbert & Co.
Los Angeles, California
February 28, 1997
