General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 13D General Statement of Beneficial Ownership 6 25K
2: EX-1 Underwriting Agreement 12 46K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 1 8K
Liquidation or Succession
4: EX-3 Articles of Incorporation/Organization or By-Laws 10 38K
5: EX-4 Instrument Defining the Rights of Security Holders 10 38K
6: EX-5 Opinion re: Legality 13 46K
7: EX-6 Opinion re: Discount on Capital Shares 13 46K
EX-3 — Articles of Incorporation/Organization or By-Laws
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EXHIBIT 3
GRILL CONCEPTS, INC.
CERTIFICATE OF DESIGNATIONS
OF
SERIES I CONVERTIBLE PREFERRED STOCK
The undersigned, Robert Spivak, President of GRILL CONCEPTS, INC., a
Delaware corporation (the "Corporation"), acting pursuant to Section 151 of the
General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY that at a
meeting of the Board of Directors of the Corporation duly convened and held on
June 6, 1997 the following resolution was adopted:
RESOLVED, that pursuant to Article Fourth of the Corporation's
Certificate of Incorporation relating to the shares of the
Corporation, the Board of Directors hereby authorizes, fixes and
creates a series of Preferred Stock, par value $.001 per share, having
the following powers, preferences, designations, rights and other
characteristics:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series I Convertible Preferred Stock" (the "Convertible
Preferred Stock") and the number of shares constituting the Convertible
Preferred Stock shall be 1,000. Such number of shares may be decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Convertible Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Convertible Preferred Stock.
Section 2. Conversion Rights.
a. Right to Convert. Each share of Convertible
Preferred Stock may be converted at the option of the holder thereof at any
time and without the payment of any additional consideration therefor, into the
number of fully paid, nonassessable shares of common stock $.00001 par value
per share, of the Corporation (the "Common Stock") as is determined by dividing
$1,000 (the "Original Issue Price") by $1.25 (the "Conversion Price").
b. Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of Convertible Preferred Stock.
In lieu of any fractional share to which the holder would otherwise be
entitled, the Corporation shall round up to the nearest whole share. In order
to convert Convertible Preferred Stock into shares of Common Stock, the holder
shall surrender the certificate or certificates thereof, duly endorsed, either
by overnight courier or two-day courier, to the office of the Corporation or of
any transfer agent for the Convertible Preferred Stock, and shall give written
notice to the Corporation
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at such office that the holder elects to convert the same, the number of shares
of Convertible Preferred Stock so converted and the number of shares of Common
Stock to be issued on conversion; provided, however, that the Corporation shall
not be obligated to honor any conversion notice covering less than 100 shares
of Convertible Preferred Stock unless such conversion notice covers all shares
of Convertible Preferred Stock then outstanding. The Corporation shall not be
obligated to issue certificates evidencing shares of Common Stock issuable upon
such conversion unless certificates evidencing such shares of Convertible
Preferred Stock are delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from
any loss incurred by it in connection with such certificates.
The Corporation shall use its best efforts to issue and deliver within
three (3) business days after delivery to the Corporation of such Convertible
Preferred Stock certificates, or after such agreement and indemnification, to
such holder of Convertible Preferred Stock at the address of the holder on the
stock books of the Corporation, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid. The
date on which notice of conversion is given (the "Date of Conversion") shall be
deemed to be the date set forth in such notice of conversion provided the
original shares of Convertible Preferred Stock to be converted are received by
the Corporation or the transfer agent, as the case may be, within three (3)
business days thereafter and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stick on the
Date of Conversion. If the original shares of Convertible Preferred Stock to
be converted are not received by the transfer agent within three (3) business
days after the Date of Conversion, the notice of conversion shall become null
and void.
Unless (i) the shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock (the "Conversion Shares") have been held long
enough to satisfy the holding period set forth in, and the holder otherwise
meets the requirements of, Rule 144(k) (or any successor provision) promulgated
under the Securities Act of 1933 (the "Securities Act"), (ii) such shares
become freely tradeable pursuant to another exemption under the Securities Act,
or (iii) the converting holder purchased such shares pursuant to a current
prospectus under an effective registration statement covering the purchase and
sale of such shares, the certificate(s) representing the Conversion Shares will
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
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TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Additionally, until the third anniversary of the original sale of the
Convertible Preferred Stock (the "Warrant Vesting Date"), the Conversion Shares
shall bear a legend indicating that a sale, transfer or assignment of any of
the Conversion Shares prior to the Warrant Vesting Date (other than sales,
transfers or assignments, to members of the immediate family of Lew Wolff,
including trusts and/or family partnerships for the benefit of said family
members, or to executive officers, partners or principals of Wolff DiNapoli LLC
("Permitted Transferees")) shall require a written notice to the Corporation
and may result in the cancellation of certain warrants issuable in connection
with the Convertible Preferred Stock, which legend shall read as follows:
THE HOLDER OF THE SHARES EVIDENCED BY THIS CERTIFICATE SHALL
PROVIDE WRITTEN NOTICE TO GRILL CONCEPTS, INC. OF ANY SALE,
TRANSFER OR ASSIGNMENT OF THE SHARES EVIDENCED HEREBY
OCCURRING ON OR BEFORE JUNE 20, 2000. IN THE EVENT OF ANY
SALE, TRANSFER OR ASSIGNMENT ON OR BEFORE SUCH DATE, OTHER
THAN TRANSFERS OR ASSIGNMENTS TO PERMITTED TRANSFEREES (AS
DEFINED IN THE $2.00 WARRANTS AND $3.00 WARRANTS) OR TRANSFERS
OR ASSIGNMENTS TO WHICH GRILL CONCEPTS HAS PREVIOUSLY
CONSENTED, THE $2.00 WARRANTS AND $3.00 WARRANTS ISSUED IN
CONNECTION WITH GRILL CONCEPTS' INITIAL SALE OF THE SECURITIES
EVIDENCED HEREBY STOCK MAY BE SUBJECT TO CANCELLATION.
On or after the Warrant Vesting Date, the holder(s) of Conversion
Shares may request that the foregoing legend be removed from such certificates
and the Corporation shall use reasonable efforts to cause such legend to be so
removed.
Section 3. Dividend Provisions. The holders of Convertible
Preferred Stock will only be entitled to dividends if and when declared by the
Board of Directors on a non-cumulative basis pari passu with the holders of
Common Stock.
Section 4. Corporate Events.
a. Notices of Record Date. In the event of (i) any
declaration by the Corporation of a record date of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution or (ii) any capital
reorganization of the Corporation, any reclassification or recapitalization of
the capital stock of the Corporation, any merger or consolidation of the
Corporation and any other entity or person, or any voluntary or
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involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Convertible Preferred Stock at least
10 days prior to the record date specified herein, a notice specifying (A) the
date on which any such record date is to be declared for the purpose of such
dividend or distribution and a description of such dividend or distribution,
(B) the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, and (C) the time, if any, that is to be fixed, as to when the
holders of record of Common Stock (or other securities) become eligible to
receive securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution or winding up.
b. Corporate Changes. The Conversion Price shall be
appropriately adjusted to reflect any stock dividend, stock split or share
combination of the Common Stock. In the event of a merger, reorganization,
recapitalization or similar event of or with respect to the Corporation (a
"Corporate Change") (other than a Corporate Change in which all or
substantially all of the consideration received by the holders of the Company's
equity securities upon such Corporate Change consists of cash or assets other
than securities issued by the acquiring entity or any affiliate thereof and as
to which the holders of the Convertible Preferred Stock have received prior
notice pursuant to Section 4.a.) the Convertible Preferred Stock shall be
assumed by the acquiring entity and thereafter the Convertible Preferred Stock
shall be convertible into such class and type of securities as the Holder would
have received had the Holder converted the Convertible Preferred Stock
immediately prior to such Corporate Change, as appropriately adjusted to
equitably reflect the Conversion Price and any stock dividend, stock split or
share combination of the Common Stock after such corporate event.
Section 5. Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Convertible Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of Convertible Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to affect the conversion of all then outstanding shares
of the Convertible Preferred Stock, the Corporation will take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
Section 6. Liquidation Preference.
a. In the event of any liquidation, dissolution, or
winding up of the Corporation, either voluntary or involuntary, the holders of
shares of Convertible Preferred Stock shall be entitled
4
to receive, immediately after distributions of senior securities required by
the Corporation's Certificate of Incorporation, as amended, and prior and in
preference to any distribution to junior securities but in parity with any
distribution to parity securities, an amount per share equal to the Original
Issue Price (as adjusted for any reclassification, stock dividends,
combinations, splits and similar recapitalization affecting such shares) plus
accrued dividends, if any. If upon the occurrence of such event the assets and
funds thus distributed among the holders of the Convertible Preferred Stock and
parity securities shall be insufficient to permit the payment to such holders
of the full preferential amounts due to the holders of the Convertible
Preferred Stock and the parity securities, respectively, then the entire assets
and funds of the Corporation legally available for distribution shall be
distributed among the holders of the Convertible Preferred Stock and the parity
securities, pro rata, based on the respective liquidation amounts to which such
series of stock is entitled by the Corporations's Certificate of Incorporation,
as amended.
b. Upon the completion of the distribution required by
subsection 6.a., if assets remain in this Corporation, they shall be
distributed to holders of parity securities (unless holders of parity
securities have received distributions pursuant to subsection 6.a. above) and
junior securities in accordance with the Corporation's Certificate of
Incorporation, as amended.
c. A consolidation or merger of the Corporation with or
into any other corporation or corporations, or a sale, conveyance or
distribution of all or substantially all of the assets of the Corporation or
the effectuation by the Corporation of a transaction or series of related
transactions in which more than 50% of the voting power of the Corporation is
disposed of, shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section 6, but shall instead be treated pursuant to
Section 4 hereof.
Section 7. Voting Rights. The holders of Convertible Preferred
Stock will not have any voting rights except as set forth below or as otherwise
from time to time required by law. The affirmative vote or consent of the
holders of at least a majority of the outstanding shares of Convertible
Preferred Stock, voting separately as a class, will be required for an
amendment, alteration or repeal of the Corporation's Certificate of
Incorporation (including any certificate of designation of preferences) if, and
only if, the amendment, alteration or repeal adversely affects the powers,
preferences or special rights of the Convertible Preferred Stock.
To the extent that under Delaware law the vote of the holder
of the Convertible Preferred Stock, voting separately as a class, is required
to authorize a given action of the Corporation, the affirmative vote or consent
of the holders of at least a majority of the outstanding shares of the
Convertible Preferred Stock shall constitute the approval of such action by the
class.
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To the extent that under Delaware law the holders of the Convertible Preferred
Stock are entitled to vote on a matter with holders of Common stock, voting
together as one class, each share of Convertible Preferred Stock shall be
entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is
calculated. Holders of the Convertible Preferred Stock shall be entitled to
notice of all shareholders meetings or written consents with respect to which
they would be entitled to vote, which notice would be provided pursuant to the
Corporation's by-laws and applicable statutes.
Notwithstanding the foregoing, if at any time while shares of
Convertible Preferred Stock are outstanding, Mr. Lew Wolff should provide
written request of such, the Corporation shall use its best efforts to nominate
Mr. Wolff for election as a director of the Corporation at the next annual
shareholders meeting of the Corporation and shall recommend such election to
its shareholders and, in the event a vacancy occurs on the Board of Directors
of the Corporation prior to the election of Mr. Wolff, the Corporation's Board
of Directors shall appoint Mr. Wolff to fill any such vacancy. Until such time
as Mr. Wolff is elected as a director of the Corporation, Mr. Wolff shall be
entitled to notice of all meetings of the Corporation's Board of Directors and
may attend any such meeting as a non-voting advisory director.
Section 8.
a. Demand Registration Rights. The Corporation
covenants and agrees with the Holders of the Convertible Preferred Stock and
Conversion Shares (the "Registrable Securities") that, subject to the
availability of audited financial statements which would comply with Regulation
S-X under the Securities Act and provided that the holders have not previously
had the option of including all of the Registrable Securities in one or more
Piggyback Registrations pursuant to Section 8.b., upon written request of the
then Holder(s) of at least a majority of the Registrable Securities made at any
time within the period commencing three (3) years and ending five (5) years
after the date the Convertible Preferred Stock was initially issued (the
"Original Issuance Date"), the Corporation will file as promptly as practicable
and, in any event, within sixty (60) days after receipt of such written
request, at its expense (other than the fees of counsel and sales commissions
for such Holders), no more than once, a post-effective amendment (the
"Amendment") to a registration statement or a new registration statement under
the Securities Act, registering or qualifying the Registrable Securities for
sale. Within fifteen (15) days after receiving any such notice, the
Corporation shall give notice to the other Holders of the Registrable
Securities, if any, advising that the Corporation is proceeding with such
Amendment or registration statement and offering to include therein the
Registrable Securities of such Holders. The Corporation shall not be obligated
to any such other Holder unless such other Holder shall accept such offer by
notice
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in writing to the Corporation within ten (10) days thereafter. The Corporation
will use its best efforts, through its officers, directors, auditors and
counsel in all matters necessary or advisable, to file and cause to become
effective such Amendment or registration statement as promptly as practicable
and for a period of nine months thereafter to reflect in the Amendment or
registration statement financial statements which are prepared in accordance
with Section 10(a)(3) of the Securities Act and any facts or events arising
that, individually, or in the aggregate, represent a fundamental and/or
material change in the information set forth in the Amendment or registration
statement to enable any Holders of the Registrable Securities to sell such
Securities during said nine-month period. The Holders may sell the Registrable
Securities pursuant to the Amendment or registration statement without
converting the Convertible Preferred Stock. If any registration pursuant to
this paragraph 8.a. is an underwritten offering, the Holders of a majority of
the Registrable Securities to be included in such registration shall be
entitled to select the underwriter or managing underwriter (in the case of a
syndicated offering) of such offering, subject to the Corporation's approval
which shall not be unreasonably withheld.
b. Piggyback Registration Rights. The Corporation
covenants and agrees with any holder of the Registrable Securities that if, at
any time within the period commencing one year and ending five years from the
Original Issuance Date, it proposes to file a registration statement with
respect to any class of equity or equity-related security (other than in
connection with an offering to the Company's employees or in connection with an
acquisition, merger or similar transaction) under the Securities Act in a
primary registration on behalf of the Corporation and/or in a secondary
registration on behalf of holders of such securities and the registration form
to be used may be used for registration of the Registrable Securities, the
Corporation will give prompt written notice (which, in the case of a
registration statement pursuant to the exercise of demand registration rights
shall be within ten (10) business days after the Corporation's receipt of
notice of such exercise and, in any event, shall be at least 30 days prior to
such filing) to the holders of Registrable Securities at the addresses
appearing on the records of the Corporation of its intention to file a
registration statement and will offer to include in such registration statement
all, but not less than 20% of the Registrable Securities, subject to paragraphs
i and ii of this Section 8.b., such number of Registrable Securities with
respect to which the Corporation has received written requests for inclusion
therein within ten (10) days after the giving of notice by the Corporation.
All registrations requested pursuant to this Section 8.b. are referred to
herein as "Piggyback Registrations". All Piggyback Registrations pursuant to
this Section 8 will be made solely at the Corporation's expense. This Section
is not applicable to a registration statement filed by the Corporation on Forms
S-4 or S-8 or any successor forms.
i. Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on
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behalf of the Corporation and the underwriter(s) for such offering
determines in good faith and advises the Corporation in writing that
in its/their opinion the number of Registrable Securities requested to
be included in such registration exceeds the number that can be sold
in such offering without materially adversely affecting the
distribution of such securities by the Corporation, the Corporation
will include in such registration (A) first, the securities that the
Corporation proposes to sell and (B) second, the Registrable
Securities requested to be included in such registration, apportioned
pro rata among the holders of the Registrable Securities and holders
of other securities requesting registration.
ii. Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration
on behalf of holders of securities of the Corporation, and the
underwriter(s) for such offering advises the Corporation in writing
that in its/their opinion the number of Registrable Securities
requested to be included in such registration exceeds the number which
can be sold in such offering without materially adversely affecting
the distribution of such securities, the Corporation will include in
such registration (A) first, the securities requested to be included
therein by the holders requesting such registration, and (B) second,
the Registrable Securities requested to be included in such
registration and securities of holder of other securities requested to
be included in such registration statement, pro rata among all such
holders on the basis of the number of shares requested to be included
by each such holder, provided, however, the Corporation will use its
best efforts to include not less than 20% of the Registrable
Securities.
Notwithstanding the foregoing, if any such underwriter shall determine
in good faith and advise the Corporation in writing that the distribution of
the Registrable Securities requested to be included in the registration
concurrently with the securities being registered by the Corporation would
materially adversely affect the distribution of such securities by the
Corporation, then the holders of such Registrable Securities shall delay their
offering and sale for such period ending on the earliest of (1) 90 days
following the effective date of the Corporation's registration statement, (2)
the day upon which the underwriting syndicate, if any, for such offering shall
have been disbanded or, (3) such date as the Corporation, managing underwriter
and holders of Registrable Securities shall otherwise agree. In the event of
such delay, the Corporation shall file such supplements, post-effective
amendments and take any such other steps as may be necessary to permit such
holders to make their proposed offering and sale for a period of 120 days
immediately following the end of any such period of delay. If any party
disapproves the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Corporation, the underwriter, and the
holder. Notwithstanding the foregoing, the Corporation shall not be required
to file a registration statement to include shares pursuant to this Section 8
if
8
independent counsel, reasonably satisfactory to the Corporation, renders an
opinion to the Corporation that the Registrable Securities proposed to be
disposed of may be transferred pursuant to the provisions of Rule 144 under the
Securities Act or otherwise without registration under the Securities Act.
c. Action to be Undertaken by the Corporation. In
connection with the registration of Registrable Securities hereunder, the
Corporation agrees to (i) bear the expenses of any registration; provided,
however, that in no event shall the Corporation be obligated to pay (A) any
fees and disbursements of special counsel for holders of Registrable
Securities, (B) any underwriters' discount or commission in respect of such
Registrable Securities, and (C) any stock transfer taxes attributable to the
sale of the Registrable Securities; (ii) use its best efforts to register or
qualify the Registrable Securities for offer or sale under state securities or
Blue Sky laws of such jurisdictions in which such holders shall reasonably
request, provided, however, that no qualification shall be required in any
jurisdiction where, as a result thereof, the Corporation would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction to which it is not then subject; and (iii) enter
into a cross-indemnity agreement, in customary form, with each underwriter, if
any, and each holder of securities included in such registration statement.
d. Action to be Taken by the Holders. The Corporation's
obligations under this Section 8 shall be conditioned upon a timely receipt by
the Corporation in writing of: (i) information as to the terms of such public
offering furnished by or on behalf of each holder of Registrable Securities
intending to make a public offering of his, her or its Registrable Securities,
and (ii) such other information as the Corporation may reasonably require from
such holders, or any underwriter for any of them, for inclusion in such
registration statement.
Section 9. Protective Provisions. So long as shares of
Convertible Preferred Stock are outstanding, the Corporation shall not take any
action that would impair the rights of the holders of the Convertible Preferred
Stock set forth herein and shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Convertible Preferred Stock:
a. alter or change the rights, preferences or privileges
of the shares of the Convertible Preferred Stock or any other securities so as
to affect adversely the Convertible Preferred Stock;
b. create any new class or series of stock having a
preference over the Convertible Preferred Stock with respect to distributions
pursuant to Section 6 above;
c. do any act or thing which would result in taxation of
the holders of shares of the Convertible Preferred Stock under
9
Section 305 of the Internal Revenue Code of 1986, as amended (or any comparable
provision of the Internal Revenue code as hereinafter from time to time
amended);
d. redeem, repurchase or pay any distribution with
respect to any class of securities of the Corporation ranking junior to the
Convertible Preferred Stock or redeem or repurchase any shares of Series A
Preferred Stock or Series B Preferred Stock; or
e. reissue any shares of the Convertible Preferred Stock
after such shares have previously been converted, redeemed or repurchased.
Section 10. Miscellaneous. The Convertible Preferred Stock shall
rank pari passu with the Series A Preferred Stock, Series B Preferred Stock and
Series II Preferred Stock of the Corporation with respect to rights on
liquidation.
IN WITNESS WHEREOF, I have executed this Certificate this __ day of
June, 1997.
[SIG]
---------------------------
President, Robert Spivak
ATTEST:
[SIG]
------------------------------
Secretary, Michael Weinstock
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Dates Referenced Herein and Documents Incorporated by Reference
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