SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
MAIN STREET RESTAURANT GROUP, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.001
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(Title of Class of Securities)
560345308
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(CUSIP NUMBER)
BRADFORD L. HONIGFELD
78 OKNER PARKWAY
LIVINGSTON, NJ 07039
COPY TO:
STEVEN D. DREYER, ESQ.
ARENT FOX PLLC
1675 BROADWAY
NEW YORK, NY 10019
(212) 484-3900
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(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
APRIL 20, 2005
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(Date of Event which Requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box |_|.
Note. Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7 for other
parties to whom copies are to be sent.
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1 NAME OF REPORTING PERSONS
Bradford L. Honigfeld
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
BK and OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER OF SHARES 2,177,573
BENEFICIALLY OWNED BY ---------------------------------------------
EACH REPORTING PERSON 8 SHARED VOTING POWER
WITH
0
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9 SOLE DISPOSITIVE POWER
2,177,573
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,177,573
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.87
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14 TYPE OF REPORTING PERSON*
IN
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ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this statement relates is the
common stock, $ .001 par value per share (the "Common Stock"), of Main Street
Restaurant Group, Inc., a Delaware corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 5050 North 40th Street, Suite
200, Phoenix, Arizona 85018.
ITEM 2. IDENTITY AND BACKGROUND.
This statement on Schedule 13D is being filed by Bradford L. Honigfeld
("Mr. Honigfeld"). Mr. Honigfeld is the owner, developer, and operator, through
affiliated entities, of fast-food restaurants (Wendy's), casual dining
restaurants (T.G.I. Friday's) and limited service hotels. Mr. Honigfeld's
principal business address is 78 Okner Parkway, Livingston, NJ 07039.
During the last five years, Mr. Honigfeld has not been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Mr. Honigfeld is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Honigfeld has purchased the (i) 488,277 shares of Common Stock he
beneficially owns in open market transactions at an aggregate purchase price of
approximately $1,238,500 ("Open Market Purchases"); and (ii) 1,689,296 shares of
Common Stock he beneficially owns through a private negotiated sale transaction
by and between Mr. Honigfeld and Bart A. Brown, Jr. (the "Seller"), a former
member of the board of directors of the Issuer, at an aggregate purchase price
of approximately $5,271,491 (the "Privately Negotiated Purchase"). The terms of
the Privately Negotiated Purchase, as described herein, are contained in the
Amended and Restated Stock Purchase Agreement by and between Mr. Honigfeld and
Seller dated as of April 20, 2005, attached hereto as Exhibit 1 (the "Stock
Purchase Agreement").
Both the Open Market Purchases and the cash payment made in connection with
the Privately Negotiated Purchase were funded with borrowed funds from Majestic
Empire Holdings, LLC ("Majestic"), a Nevada limited liability company solely
owned by Mr. Honigfeld. The terms of the loan from Majestic (the "Majestic
Loan") to Mr. Honigfeld are evidenced by that certain promissory note dated as
of April 20, 2005 (the "Majestic Note"). Under the terms of the Majestic Note,
Mr. Honigfeld shall pay Majestic all principal and interest due under the LIBOR
Note (as defined below) based on a three (3) year payment schedule with monthly
payments on the first day of each month beginning on May 1, 2005. The Majestic
Note is attached hereto as Exhibit 2.
The source of funds for the Majestic Loan is a $6 million credit line
("Credit Line") provided by Manufacturers and Traders Trust Company (the "Bank")
to Majestic pursuant to an amended commitment letter ("Commitment") and LIBOR
Grid Note ("LIBOR Note"), both dated as of April 20, 2005. The form of the
Commitment and LIBOR Note are attached hereto as Exhibits 3 and 4, respectively.
Funds advanced under the Credit Line accrue interest, at Majestic's election, at
a rate equal to LIBOR plus 167.5 basis points or the prime rate announced by the
Bank. Amounts advanced under the Credit Line are due on demand. The final
maturity date for the Credit Line and all amounts advanced under the Credit Line
is May 1, 2009 (subject to extension by Majestic upon the satisfaction of
certain conditions). Under the terms of the Credit Line, Majestic will only pay
interest until demand or maturity; provided however, Majestic will pay the Bank,
commencing on August 10, 2005 and the 10th day of each November, February , May
and August thereafter, a fee equal to 1/4 of 1% of the average unused available
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amount of the Credit Line during the prior calendar quarter unless the average
quarterly outstanding amount of the Credit Line exceeds 50% of the maximum
amount of the Credit Line during such quarter. Majestic may prepay principal
upon two days notice, subject to a LIBOR breakage premium if the LIBOR rate is
elected and the prepayment does not occur on a LIBOR adjustment date (as defined
in the Commitment).
The Credit Line is secured by a real estate mortgage covering four
restaurant properties located in Queens and Kings Counties, New York owned by
Majestic (the "Properties"). The form of the Credit Line Mortgage is attached
hereto as Exhibit 5. The Commitment includes customary loan covenants, including
financial reporting and maintenance of the Properties. It also requires that
Majestic maintain a debt service coverage (as defined in the Commitment) of 115%
and that Majestic not permit other mortgages or liens on the Properties.
The Credit Line includes customary events of default and also specifies
that it will be an event of default if Mr. Honigfeld ceases to control Majestic,
fails to maintain (on a rolling 12 month average) minimum liquidity (as defined
in the Commitment) of $5 million or fails to maintain a minimum net worth of at
least $50 million.
In connection with the Credit Line, Mr. Honigfeld executed a personal
guaranty dated as of April 20, 2005 (the "Guaranty") guaranteeing the full and
immediate payment and performance of Majestic's payment obligations in regard to
interest and other charges (but not principal) arising from the Credit Line and
any principal loss to the Bank to the extent of the Allocable Loan Amounts (as
defined in the Commitment) associated with two of the Properties. The Guaranty
is attached hereto as Exhibit 6.
Majestic may draw the remaining available funds under the Credit Line
subject to customary drawing conditions specified in the Commitment, including
the following: (i) the maximum loan to value ratio, based upon an appraisal,
cannot exceed 75% based upon both the property leases and the fair value of the
Properties without the tenant leases, (ii) Majestic, subject to certain
exceptions, cannot borrow money from any other lender, and (iii) each tenant at
the Properties must maintain a ratio of earnings before interest, taxes,
depreciation, amortization and rent for the property to fixed charges (as
defined in the Commitment) of at least 115%.
In connection with the Privately Negotiated Purchase, Mr. Honigfeld (i)
paid a cash payment of $2,750,000, (ii) issued an unsecured promissory note to
Seller in the amount of $370,000 that will accrue interest at 5% per annum for a
period of four months from the date of purchase (the "Unsecured Note"), and
(iii) issued a secured promissory note in the amount of $2,151,491.39 that will
be payable over a term of 32 months, pursuant to a five year amortization
schedule with interest computed thereon at the rate of 5% per annum (the
"Secured Note"). Under the terms of the Unsecured Note, Mr. Honigfeld will pay
to Seller equal payments of $93,465.54 commencing on May 20, 2005 and continuing
monthly thereafter until August 20, 2005. Pursuant to the Secured Note, Mr.
Honigfeld will pay Seller equal payments in the amount of $43,874.80 commencing
on September 20, 2005 and continuing monthly thereafter until March 20, 2008. On
April 20, 2008, Mr. Honigfeld will make a final payment under the Secured Note
in the amount of $1,043,952.46. The Unsecured Note and the Secured Note
(collectively, the "Notes") are attached hereto as Exhibits 7 and 8,
respectively.
In connection with the Privately Negotiated Purchase and pursuant to the
Stock Pledge Agreement dated as of April 20, 2005 by and between Mr. Honigfeld
and Seller (the "Pledge Agreement"), Mr. Honigfeld granted a first security
interest to Seller in the shares Mr. Honigfeld acquired pursuant to the
Privately Negotiated Purchase as collateral security for the prompt and complete
payment and performance when due under the Secured Note. The Pledge Agreement is
attached hereto as Exhibit 9.
ITEM 4. PURPOSE OF TRANSACTION.
Mr. Honigfeld acquired the shares of Common Stock to which this statement
on Schedule 13D relates for the purpose of acquiring a significant equity
position in the Issuer.
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Mr. Honigfeld intends to review his holdings in the Issuer on a continuing
basis and, depending upon the price and availability of the Common Stock,
subsequent developments affecting the Issuer, the business prospects of the
Issuer, general stock market and economic conditions, tax considerations and
other factors deemed relevant, may at any time (as permitted by applicable law)
acquire through open market purchases or otherwise additional shares of Common
Stock; sell shares of Common Stock through the open market or otherwise; engage
or participate in discussions with the Issuer's management and/or other
stockholders of the Issuer; or engage in a transaction or series of transactions
with the purpose or effect of acquiring or influencing control of the Issuer.
Such discussions or transactions may take place at any time with or without
prior notice and may include, without limitation, entering into one or more
privately negotiated acquisitions of additional shares of Common Stock, making a
tender offer for some or all of the Common Stock, waging a proxy contest for
control of the board of directors of the Issuer or taking other actions that
could have the purpose or effect of directly or indirectly acquiring or
influencing control of the Issuer. Although the foregoing represents the range
of activities presently contemplated by Mr. Honigfeld with respect to the Issuer
and the Common Stock, Mr. Honigfeld has not decided whether he will seek to
acquire control of the Issuer and the possible activities of Mr. Honigfeld are
subject to change at any time. If Mr. Honigfeld determines to seek to acquire
control of the Issuer, and in this regard engages in discussions with the
Issuer's management and/or other stockholders of the Issuer regarding this
intention, Mr. Honigfeld will not decide as to the specific means of obtaining
such control until after such discussions have taken place. Mr. Honigfeld has
engaged, and/or may in the future engage, legal and other advisors to assist him
in evaluating strategic alternatives that are or may become available with
respect to his holdings in the Issuer.
Mr. Honigfeld previously had discussions with fewer than 10 stockholders of
the Issuer concerning acquisitions of the Common Stock. However, except for the
agreement between Mr. Honigfeld and Seller, no arrangements, agreements or
understandings were made or reached in connection therewith.
Except as set forth in this Statement, Mr. Honigfeld has no plan or
proposal that relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Mr. Honigfeld has acquired and, for the purpose of Rule 13d-3
promulgated under the Exchange Act, beneficially owns 2,177,573 shares of Common
Stock, representing approximately 14.87% of the outstanding shares of Common
Stock of the Issuer.(1)
(b) Mr. Honigfeld has sole power to vote and to dispose of 2,177,573 shares
of Common Stock.
(c) During the last sixty days the following shares of Common Stock were
purchased by Mr. Honigfeld:
DATE AMOUNT PRICE PER SHARE
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April 14, 2005 452,209 $2.5276 per share
April 15, 2005 36,068 $2.6486 per share
April 20, 2005 1,689,296 $3.1203 per share
(d) Inapplicable.
(e) Inapplicable.
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(1) For purposes of calculating the percentage of ownership of Common Stock held
by Mr. Honigfeld, the Issuer is deemed to have 14,641,929 shares of Common Stock
outstanding, as reported in its Proxy Statement on Form DEF 14A filed on April
22, 2005.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
To the best knowledge of Mr. Honigfeld, except for the Stock Purchase
Agreement, the Notes, and the Pledge Agreement as described in Item 3 and the
arrangement between Mr. Honigfeld and Seller as described below in this Item 6,
there are no other contracts, arrangements, understandings or relationships
(legal or otherwise), between Mr. Honigfeld and any other person, with respect
to any securities of the Issuer, including any securities pledged or otherwise
subject to a contingency the occurrence of which would give another person
voting power or investment power over such securities other than standard
default and similar provisions contained in loan agreements.
Seller holds options (the "Options") granted to him by the Issuer to
purchase 1,200,000 shares of Common Stock (the "Option Shares"). Pursuant to the
Stock Purchase Agreement, Seller granted an option to Mr. Honigfeld to purchase
(i) all Option Shares that Seller may purchase upon exercise of the Options, or
(ii) any other securities of the Issuer as converted from the Options (the
"Converted Shares"). Pursuant to the Stock Purchase Agreement, on each occasion
when Seller exercises any of the Options or receives any Converted Shares, he
shall give written notice to Mr. Honigfeld. Upon receiving such notice, Mr.
Honigfeld will have a 90-day period to purchase the Option Shares or Converted
Shares from Seller at the purchase price of $3.1203 per share.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1: Amended and Restated Stock Purchase Agreement dated April 20,
2005 by and between Mr. Honigfeld and Seller;
Exhibit 2: Promissory Note dated April 20, 2005 issued to Majestic from Mr.
Honigfeld;
Exhibit 3: Commitment Letter dated as of April 20, 2005 issued by the Bank;
Exhibit 4: LIBOR Note dated as of April 20, 2005;
Exhibit 5: Credit Line Mortgage dated as of April 20, 2005;
Exhibit 6: Guaranty dated as of April 20, 2005;
Exhibit 7: Unsecured Promissory Note dated April 20, 2005;
Exhibit 8: Secured Promissory Note dated April 20, 2005; and
Exhibit 9: Pledge Agreement dated April 20, 2005 by and between Mr.
Honigfeld and Seller.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 29, 2005
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Date
/s/ Bradford L. Honigfeld
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Signature
Name: Bradford L. Honigfeld
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