Unassociated Document
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported): September 1, 2006
GRILL
CONCEPTS, INC.
(Exact
name of registrant as specified in Charter)
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Delaware
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0-23226
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13-3319172
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(State
or other jurisdiction of incorporation or organization)
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(Commission
File No.)
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(IRS
Employer Identification No.)
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11661
San
Vicente Blvd., Suite 404
Los
Angeles, California 90049
(Address
of Principal Executive Offices)(Zip Code)
310-820-5559
(Issuer
Telephone number)
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
Item
1.01. Entry
into a Material Definitive Agreement.
On
September 1, 2006, Grill Concepts, Inc., and its subsidiary Grill Concepts
Management, Inc. (collectively, the “Company”), entered into an Agreement for
Purchase and Sale of Assets (the “Purchase Agreement”) with Hotel Restaurant
Properties, Inc. (“HRP”), Hotel Restaurant Properties II, Inc., Hotel Restaurant
Properties II Management, Inc., Keith Wolff and Adam Keller (collectively,
the
“Sellers”).
Pursuant
to the terms of the Purchase Agreement, the Sellers agreed to sell to the
Company and the Company agreed to purchase from the Sellers certain rights
and
interests of the Sellers relating to the current and future operation of Company
restaurants in hotel properties pursuant to the terms of an Agreement, dated
August 27, 1998, as amended (the “HRP Agreement”). Under the terms of the HRP
Agreement, the Sellers had the exclusive right to obtain hotel-based locations
for Company restaurants and were entitled to receive a portion of the net
income, management fees, licensing fees or similar fees of the Company from
the
operation of such hotel-based restaurants. The Company, at the date of the
Purchase Agreement, operated seven restaurants subject to the HRP Agreement
in
Skokie, Illinois, San Francisco, California, Houston, Texas, Washington, D.C.,
Burbank, California, Portland, Oregon and Long Beach, California.
Under
the
Purchase Agreement, the Sellers agreed to transfer to the Company all of the
rights in the management agreements (the “Transferred Agreements”) relating to
the San Francisco, Houston, Washington, D.C. and Portland restaurants as well
as
ownership of the Houston liquor license.
Pursuant
to the Purchase Agreement, the HRP Agreement was amended, effective June 30,
2006 (the “Effective Date”), to eliminate exclusivity provisions under which the
Company would use the Sellers as the exclusive parties to identify potential
hotel restaurant locations and to eliminate certain provisions under which
the
Sellers could cause the Company to purchase HRP and the Company could acquire
HRP. Under the Purchase Agreement, the Sellers also agreed to relinquish any
rights to fees or other compensation relating to Company restaurants opened
in
hotels pursuant to management, license or lease agreements entered on or after
March 29, 2006, including any fees relating to restaurants proposed to be opened
in Memphis, Tennessee and Seattle, Washington.
The
Sellers will retain their rights in the management contracts relating to the
Burbank, Skokie and Long Beach restaurants subject to the continuing terms
of
the HRP Agreement, as amended, and subject to the rights of the Company to
terminate operations of the Skokie and Long Beach restaurants.
The
purchase price of the acquired assets under the Purchase Agreement is $2,771,133
(the “Purchase Price”). Closing of the purchase and sale shall occur, and the
Purchase Price is payable, on the earlier of June 30, 2007 (the “Outside Closing
Date”) or a mutually agreeable date not more than 10 days after the date on
which the aggregate payments (the “Income Stream Payments”) received by the
Sellers, after the Effective Date and prior to closing, under the Transferred
Agreements equal $294,151 (the “Maximum Income Stream Payments”). From and after
the Effective Date the Income Stream Payments shall not exceed the Maximum
Income Stream Payments after the payment of which no further payments shall
be
made to the Sellers with respect to the Transferred Agreements. In the event
that the Sellers shall not have received the Maximum Income Stream Payments
by
the closing date, the Purchase Price shall be increased by the excess of the
Maximum Income Stream Payments over the actual Income Stream Payments as of
the
closing date.
On
the
closing date, the HRP Agreement will be further amended to eliminate the license
granted thereunder for the Sellers to operate managed outlets under the HRP
Agreement, eliminate restrictions on the Sellers’ ability to provide similar
hotel restaurant location services to parties other than the Company and to
eliminate other provisions relating to the Transferred Agreements.
At
closing, the Sellers shall enter into a Non-Competition Agreement pursuant
to
which the Sellers, for a period of 5 years from the closing date, will not
assist any owner, operator, franchisor or franchisee of a branded restaurant
in
entering into a lease, license or management agreement to operate a restaurant,
provide room service or provide food for banquet room events at any hotel (the
“Restricted Business”), provided, however, that the Sellers shall not be
prohibited from (i) owning up to 10% of any publicly traded company engaged
in
the Restricted Business, (ii) engaging in the Restricted Business with respect
to hotel properties owned by the Sellers or affiliates of the Sellers and
managed by the Sellers or the affiliates of the Sellers or (iii) engaging in
the
Restricted Business with up to 3 additional hotels. Branded restaurants, for
purposes of the Non-Competition Agreement, mean a restaurant concept operated
in
ten or more locations under a single brand name.
Pursuant
to the Purchase Agreement, the Company has agreed to indemnify the Sellers
with
respect to any additional tax that may be incurred, as well as related penalties
and interest, in the event that the goodwill allocated to the sale is reduced
for tax purposes on audit or other adjustment.
Closing
of the purchase and sale is subject to satisfaction of various conditions,
including delivery of the purchase price, execution and delivery of the
Non-Competition Agreement, the delivery of all required consents, assignments,
releases and other documents, the accuracy of representations and warranties,
the absence of litigation contesting the transaction and other standard
commercial conditions.
The
foregoing is qualified in its entirety by reference to the Purchase Agreement
filed herewith as Exhibit 10.1.
Item
1.02. Termination
of a Material Definitive Agreement.
See
Item
1.01.
Item
2.03. Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
See
Item
1.01.
Item
9.01. Financial
Statements and Exhibits.
(c) Exhibits
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10.1
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Agreement
for Purchase and Sale of Assets, dated as of September1, 2006, between
Hotel Restaurant Properties, Inc., Hotel Restaurant Properties II,
Inc.,
Hotel Restaurant Properties II Management, Inc., Keith Wolff, Adam
Keller,
Grill Concepts, Inc. and Grill Concepts Management,
Inc.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this Report to be signed on its behalf by the undersigned hereunto
duly authorized.
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GRILL
CONCEPTS, INC.
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Dated:
September 5, 2006
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By:
/s/ Philip Gay
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Philip
Gay
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President
and
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Chief
Executive Officer
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