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): March 10, 2006
GRILL CONCEPTS, INC.
(Exact name of registrant as specified in Charter)
Delaware 0-23226 13-3319172
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Indetification No.)
11661 San Vicente Blvd., Suite 404
Los Angeles, California 90049
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(Address of Principal Executive Offices)(Zip Code)
310-820-5559
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(Issuer Telephone number)
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(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):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] 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 March 10, 2006, Grill Concepts, Inc. (the "Company") entered into a credit
agreement (the "Credit Agreement") with Diamond Creek Investment Partners LLC
(the "Lender").
The Credit Agreement provides for a revolving term loan (the "Loan") to the
Company of the lesser of (1) $8.0 million, or (2) 2.25 times the Company's
trailing 12 month EBITDA. Funds may be borrowed under the Credit Agreement,
subject to satisfaction of all conditions of funding, in minimum monthly
advances of $500,000. Proceeds of the Loan may be used to pay expenses of the
Loan and for general corporate purposes. The interest rate on the Loan is, at
the option of the Company and subject to certain limitations on the use of LIBOR
based loans, equivalent to either (1) prime rate, but not less than 7%, plus an
applicable margin, or (2) the London Interbank Offered Rate, but not less than
4%, plus an applicable margin. The margin, in each case, varies based upon the
Company's leverage ratio (funded debt to EBITDA, each as defined) and ranges
from 2.75% to 3.50% with respect to prime rate loans and 5.50% to 6.25% with
respect to LIBOR loans. The current interest rate is equal to 10.5% and will be
adjusted quarterly commencing in the fourth quarter of 2006.
The Credit Agreement provides that the Company will pay all expenses incurred in
connection with the Loan, including expenses incurred by the Lender. By separate
agreement, the Company agreed to pay certain fees associated with the Loan,
including a loan fee of $120,000, an unused line fee of 0.5% of the unused
portion of the credit facility payable monthly, a loan servicing fee of $3,000
per month.
The Loan matures, and is payable in full, on March 9, 2011 subject to mandatory
prepayment to the extent, if any, that the outstanding principal balance of the
Loan exceeds 2.25 times trailing 12 month EBITDA or upon the occurrence of
certain defined extraordinary events. The Company may prepay amounts owing under
the Credit Agreement subject to payment of a prepayment premium of (1) 3% with
respect to prepayments occurring on or before March 9, 2007, and (2) 1% with
respect to prepayments occurring after March 9, 2007 and on or before March 9,
2008.
The Company's obligations under the Credit Agreement are secured by a first lien
on all of the Company's assets, including all of the capital stock and other
equity interests held by the Company in its subsidiaries, subject to existing
liens on such assets. The Loan requires the Company to comply with certain
ordinary lending covenants. These include, among others, financial covenants
relating to maximum debt to EBITDA ratio, minimum EBITDA and maximum capital
expenditures. The Company must also comply with certain information
requirements, including providing periodic financial statements and projections
as well as notices of defaults, litigation and other matters, maintenance of
insurance and compliance with laws as well as limitations on liens and
encumbrances, indebtedness, dispositions, dividends and retirement of capital
stock, consolidations and mergers, changes in nature of business and other
operating, financial and structural limitations.
Events of default in the Credit Agreement include, among others, (a) the failure
to pay when due the obligations owing under the Credit Agreement, (b) the
failure to perform and not timely remedy certain covenants, (c) certain cross
defaults or cross accelerations, (d) the occurrence of bankruptcy or insolvency
events, (e) the failure to make certain payments, or the occurrence of certain
events, relating to retirement plans, (f) certain adverse judgments against the
Company or any of its subsidiaries, (g) certain changes in ownership of the
Company's stock or the board of directors, or (h) the occurrence of, and failure
to remedy, a Material Adverse Effect (as defined in the Credit Agreement). Upon
the occurrence of an event of default, the Lender may terminate the loan
commitment and declare the Loan due and payable in full.
The foregoing is qualified in its entirety by reference to the Credit Agreement
filed herewith as Exhibit 10.1.
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
10.1 Credit Agreement, dated as of March 10, 2006, between
Grill Concepts, Inc. and Diamond Creek Investment Partners,
LLC
10.2 Fee Letter, dated March 10, 2006, between Grill Concepts,
Inc. and Diamond Creek Investment Partners LLC
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.
GRILL CONCEPTS, INC.
Dated: March 10, 2006
By: /s/ Philip Gay
Philip Gay
Executive Vice President and
Chief Financial Officer