EXHIBIT 2.1
AGREEMENT
and
PLAN OF MERGER
by and among
BENIHANA INC.,
BENIHANA MERGER CORP.,
RUDY'S RESTAURANT GROUP, INC.,
BAYVIEW PARTNERS
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Dated: July 22, 1997
TABLE OF CONTENTS
1. DEFINITIONS ........................................... 1
1.1 Defined Terms ......................................... 1
1.2 Other Definitional Provisions; Interpretation ......... 6
2. THE MERGER ............................................ 7
2.1 The Merger and Its Effect ............................. 7
2.2 Effective Time of the Merger .......................... 7
2.3 Articles of Incorporation and By-laws of Surviving
Corporation ......................................... 7
3. CONVERSION OF SHARES ON THE MERGER EFFECTIVE DATE ..... 8
3.1 Manner and Basis of Conversion ........................ 8
3.2 Procedure for Conversion of Share Certificates ........ 8
4. CLOSING ............................................... 8
4.1 Time and Place ........................................ 8
4.2 Delivery of Cash Consideration ........................ 9
5. REPRESENTATIONS AND WARRANTIES OF RUDY'S .............. 9
5.1 Corporate Organization of Rudy's ...................... 9
5.2 Subsidiaries .......................................... 9
5.3 Capitalization of Rudy's; Title to Shares ............. 10
5.4 Capitalization of Subsidiaries ........................ 10
5.5 Authorization, Etc. ................................... 10
5.6 No Violation .......................................... 11
5.7 Financial Statements .................................. 11
5.8 No Undisclosed Liabilities; Etc. ...................... 11
5.9 Absence of Certain Changes ............................ 12
5.10 Title to Properties; Encumbrances ..................... 14
5.11 Leases ................................................ 15
5.12 Restaurants; Liquor Licenses .......................... 16
5.13 Patents, Trademarks, Trade Names, Etc. ................ 16
5.14 Business Permits ...................................... 17
5.15 Tax Matters ........................................... 17
5.16 Transactions with Affiliates .......................... 19
5.17 Contracts and Commitments ............................. 19
5.18 Compliance with Contracts ............................. 20
5.19 Insurance ............................................. 20
5.20 Labor Relations ....................................... 20
5.21 Public Reports; Compliance ............................ 21
5.22 Litigation ............................................ 21
5.23 No Condemnation or Expropriation ...................... 22
5.24 Compliance with Law .................................. 22
5.25 Environmental Protection ............................. 23
5.26 Employee Benefit Plans ............................... 24
5.27 Brokers and Finders .................................. 26
5.28 Consents ............................................. 26
5.29 Books and Records .................................... 26
5.30 Fairness Opinion ..................................... 26
6. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL
SHAREHOLDERS ....................................... 26
6.1 Representations and Warranties of ▇▇▇▇▇▇▇ ............ 26
6.2 Representations and Warranties of Bayview ............ 27
7. REPRESENTATIONS AND WARRANTIES OF BENIHANA AND NEWCO . 27
7.1 Corporate Organizations; Etc. ........................ 27
7.2 Authorization, Etc. .................................. 27
7.4 No Violation ......................................... 28
7.5 Approvals of Governmental Authorities ................ 28
7.6 Brokers and Finders .................................. 28
7.7 Public Reports; Compliance ........................... 28
7.8 The Class A Stock .................................... 29
8. COVENANTS OF RUDY'S AND THE PRINCIPAL SHAREHOLDERS ... 29
A. Covenants of Rudy's .................................. 29
8.1 Conduct of Business - Negative Covenants ............. 29
8.2 Conduct of Business - Affirmative Covenants .......... 31
8.3 Shareholders' Meeting; Proxy Statement ............... 33
8.4 Access to Information and Personnel .................. 33
8.5 Estoppel Certificates or Consents .................... 33
8.6 Confidentiality ...................................... 34
8.7 No Solicitation ...................................... 34
8.8 Best Efforts ......................................... 34
8.9 Tax Returns; Section 338 Election .................... 34
B. Covenants of Principal Shareholders .................. 35
8.10 Covenants of Principal Shareholders .................. 35
9. COVENANTS OF BENIHANA AND NEWCO ...................... 35
9.1 Confidentiality ...................................... 35
9.2 Best Efforts ......................................... 36
10. CONDITIONS TO CLOSING ................................ 36
10.1 Conditions Precedent to the Performance of Benihana
and Newco .......................................... 36
10.2 Conditions Precedent to Rudy's Performance ........... 38
11. DELIVERIES AT CLOSING ................................ 39
11.1 Rudy's Obligations ................................... 39
11.2 Obligations of Benihana and Newco .................... 40
11.3 Filings .............................................. 40
12. POST CLOSING MATTERS ................................. 40
12.1 Offices of Rudy's .................................... 40
13. TERMINATION .......................................... 41
13.1 Termination .......................................... 41
13.2 Effect of Termination ................................ 42
13.3 Procedure Upon Termination ........................... 42
13.4 Survival ............................................. 43
14. GUARANTY OF INDEMNIFICATION .......................... 43
14.1 Guaranty ............................................. 43
14.2 Procedure ............................................ 43
15. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES ....... 43
16. MISCELLANEOUS ........................................ 44
16.1 Expenses ............................................. 44
16.2 Notices and Legal Process ............................ 44
16.3 Disclosure ........................................... 45
16.4 Counterparts ......................................... 45
16.5 Waiver and Amendment ................................. 45
16.6 Entire Agreement ..................................... 45
16.7 Binding Agreement .................................... 45
16.8 Governing Law ........................................ 45
16.9 Submission to Jurisdiction ........................... 46
16.10 Severability; Construction ........................... 46
16.11 References to Dollars ................................ 46
EXHIBIT LIST
8.1.12 Severance Letters
10.1.4 Rudy's Counsel Option
10.2.3 Benihana's Counsel Opinion
10.2.4 Non-Competition Agreement
10.2.5 Benihana Warrant
SCHEDULES
1.1 The Adjustment Amount
5.1.1 Foreign Qualification of Rudy's
5.1.2 Officers and Directors of Rudy's
5.2 Subsidiaries
5.6 No Violation
5.8 No Undisclosed Liabilities
5.9 Certain Changes
5.10.1 Owned Real Properties
5.11.1 Leases
5.12.1 Restaurants
5.12.2 Liquor Licenses
5.13.1 List of Patents, Trademarks, etc.
5.13.2 Licenses
5.13.3 Infringements
5.15.1 Taxes, Assessments and Deficiencies
5.15.2 States Where Returns Filed
5.15.3 NOL's
5.16.1 Transactions with Affiliates
5.17. Contracts and Commitments
5.19.1 Insurance Policies
5.19.2 Group Insurance Policies
5.20 Labor Matters
5.22 Litigation
5.26 Employee Benefit Plans
5.27 Brokers and Finders
5.28 Consents
8.1.12 Severance and Bonus Payments
10.1.6 Required Consents
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of July
22, 1997 by and among RUDY'S RESTAURANT GROUP, INC., a Nevada
corporation ("Rudy's"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), BAYVIEW
PARTNERS, a general partnership organized under the laws of Texas
("Bayview"), BENIHANA, INC., a Delaware corporation ("Benihana")
and BENIHANA MERGER CORP., a Nevada corporation and a wholly-
owned subsidiary of Benihana ("Newco"). Each of Rudy's and
Bayview are parties to the Agreement solely for purposes of the
representations and covenants set forth in Sections 6 and 8.10.
R E C I T A L S:
A. The Boards of Directors of Rudy's and Benihana and the Board
of Directors and sole stockholder of Newco, respectively, deem it
advisable and in the best interests of Rudy's, Benihana, and
Newco and their respective stockholders that Benihana acquire the
business and assets of Rudy's through the merger (the "Merger")
of Rudy's with Newco upon the terms and subject to the conditions
of this Agreement.
B. The Boards of Directors of Rudy's, Benihana and Newco,
respectively, and the stockholders of Newco have approved and
adopted this Agreement.
Accordingly, the Parties hereto hereby agree as follows:
1. DEFINITIONS:
1.1 DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings:
"ADJUSTMENT AMOUNT" shall have the meaning set forth on Schedule
1.1 hereto.
"AFFILIATE" means, as to any Person, a Person controlling,
controlled by or under common control with such Person.
"AGREEMENT" means this Agreement and Plan of Merger, as amended,
supplemented or otherwise modified from time to time.
"APPROVALS" has the meaning set forth in Section 5.14.
"ARTICLES OF MERGER" has the meaning set forth in Section 2.2.
"BALANCE SHEET DATE" means March 16, 1997.
"BENIHANA REPORTS" means Benihana's Annual Reports on Form 10-K
filed pursuant to Section 13 or 15(d) of the Exchange Act for the
fiscal years ended March 26, 1995, March 31, 1996 and March 30,
1997 and all other registration statements and reports required
to be or otherwise filed by it since March 26, 1995 with the SEC
pursuant to the Securities Act or the Exchange Act.
"CASH CONSIDERATION" means the amount of $5.00 per share plus the
Adjustment Amount payable in cash as the consideration for the
Merger to holders of Rudy's Shares.
"CLASS A STOCK" means the Class A Common Stock, par value $.10
per share, of Benihana.
"CLOSING" has the meaning set forth in Section 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations and rulings issued thereunder.
"COMMON CONTROL ENTITY" has the meaning set forth in Section
5.26.1.
"CONTRACTS" has the meaning set forth in Section 5.17.
"CONTRACTUAL OBLIGATION" means as to any Person, any provision of
any agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its property is bound.
"EFFECTIVE DATE" means the date upon which the Effective Time
occurs.
"EFFECTIVE TIME" means has the meaning set forth in Section 2.2.
"EMPLOYMENT PLANS" has the meaning set forth in Section 5.26.1.
"ENVIRONMENTAL LAWS" means any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority
regulating, relating to or imposing liability or standards of
conduct concerning environmental protection matters, including
without limitation, Hazardous Materials, as now or may at any
time hereafter be in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and
rulings issued thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.2.
"FAIRNESS OPINION" has the meaning set forth in Section 5.30.
"FIDUCIARY OBLIGATIONS" has the meaning set forth in Section 8.8.
"GAAP" means generally accepted accounting principles in the
United States of America in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any nation, state, county, local
or other governmental authority or any political subdivision
thereof and any federal, state, county, local or foreign entity
or body exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"HAZARDOUS MATERIALS" means any (i) "hazardous substance,"
"waste," "pollutants," or "contaminant" (as defined in Sections
101(14),(33) of the Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA") or the regulations
issued pursuant to Section 102 of CERCLA and found at 40 C.F.R.
SS302), including any element, compound, mixture, solutions, or
substance that is or may be designated pursuant to Section 102 of
CERCLA; (ii) substance that is or may be designated pursuant to
Section 311(b)(2)(A) of the Federal Water Pollution Control Act,
as amended (33 U.S.C. SS1251, 1321(b)(2)(A) ("FWPCA"); (iii)
hazardous waste having the characteristics identified under or
listed pursuant to Section 3001 of the Resource Conservation and
Recovery Act, as amended (42 U.S.C. SS 6901, 6921) ("RCRA"); (iv)
substance containing petroleum, as that term is defined in
Section 9001(8) of RCRA; (v) toxic pollutant that is or may be
listed under Section 307(a) of FWPCA; (vi) hazardous air
pollutant that is or may be listed under Section 112 of the Clean
Air Act, as amended (42 U.S.C. SS 7401, 7412); (vii) asbestos,
asbestos-containing material, or urea formaldehyde or material
that contains it; and (viii) waste oil and other petroleum
products.
"HIGHER OFFER" has the meaning set forth in Section 8.8.
"IRS" means the Internal Revenue Service.
"LEASES" has the meaning set forth in Section 5.12
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security interest or agreement or
preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other
title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing,
and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect
of any of the foregoing).
"LIQUOR LICENSE" has the meaning set forth in Section 5.12.
"MATERIAL ADVERSE EFFECT" means for a specified party, a material
adverse effect on (a) the business, operations, property,
condition, or prospects of the specified party and its
Subsidiaries taken as a whole, (b) the ability of the specified
party to perform its material obligations under this Agreement,
or (c) the validity or enforceability against the specified party
of this Agreement or the rights or remedies of any other party
hereunder to such an extent that such other party would be
deprived of the practical realization of the benefits
contemplated by this Agreement to be derived by such other party
from this Agreement and the transactions expressly referenced in
this Agreement, including the exhibits to this Agreement;
provided, however, that the existence of a Material Adverse
Effect shall be deemed not to include (x) the adverse impact, if
any, of changes in laws, rules, regulations, interpretations or
other promulgations of any Governmental Authority, or changes in
GAAP, regulatory accounting requirements and market conditions
applicable to companies in the same line of business as the
specified party, or (y) the impact of the fees and expenses of
all counsel, accountants and financial advisors, and the other
costs and expenses reasonably incurred by the specified party, in
connection with the Shareholders' Meeting, this Agreement and the
transactions referenced in this Agreement and the exhibits to
this Agreement.
"MERGER" shall have the meaning set forth in Recital A.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section
5.26.1.
"NASDAQ" means National Association of Securities Dealers, Inc.
Automated Quotation System.
"NEVADA LAW" means the Nevada Corporation Law including Chapters
78 and 92A of the Nevada Revised Statutes.
"NLRB" means the U.S. National Labor Relations Board.
"OWNED REAL ESTATE" has the meaning set forth in Section 5.10.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" has the meaning set forth in Section 5.27.1.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority
or other entity of whatever nature.
"PLANS" has the meaning set forth in Section 5.27.1.
"PRINCIPAL SHAREHOLDERS" means each of ▇▇▇▇▇▇▇ and Bayview;
"Principal Shareholder" means either of them.
"PROXY STATEMENT" has the meaning set forth in Section 8.3.
"REQUIREMENT OF LAW" means as to any Person, any law, treaty,
rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such
Person or any of its property is subject.
"RESTAURANT" has the meaning set forth in Section 5.12.
"RUDY'S" means Rudy's Restaurant Group, Inc., a Nevada
corporation, and its Subsidiaries, except where the context
indicates that reference is made to the parent company only.
"RUDY'S AUDITED FINANCIAL STATEMENTS" has the meaning set forth
in Section 5.7.
"RUDY'S REPORTS" means Rudy's Annual Reports on Form 10-KSB filed
pursuant to Sections 13 or 15(d) of the Exchange Act for the
fiscal years ended October 2, 1994, October 1, 1995 and September
29, 1996, and all other registration statements and reports
required to be or otherwise filed by it since October 2, 1994
with the SEC pursuant to the Securities Act or the Exchange Act.
"RUDY'S SHARES" means the issued and outstanding shares of Rudy's
Common Stock, par value $.01 per share.
"RUDY'S UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth
in Section 5.7.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SHAREHOLDERS' MEETING" means the special meeting of the
shareholders of Rudy's called pursuant to the provisions of
Section 8.3 hereof to approve this Agreement and the Merger.
"SIGNIFICANT EMPLOYEE" means as to any Person, "significant
employees" of such Person as that term is defined in Regulation
S-K of the Securities Act.
"SUBSIDIARY" means any Person of which shares of stock or other
ownership interests having ordinary voting power (other than
stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or
other managers of such Person are at the time owned, or the
management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by
Rudy's. A Subsidiary shall include a partnership which has
Rudy's or a Subsidiary as a general partner of such partnership.
"SURVIVING CORPORATION" means Rudy's, as the surviving
corporation of the Merger as provided by Section 2.1 hereof.
"TANGIBLE PROPERTY" means as to any Person, the plant, machinery,
equipment, leasehold improvements, vehicles, and structures of
such Person and related capitalized items and other tangible
property material to the business of such Person. Tangible
Property shall not be deemed to include the personal property of
▇▇▇▇▇▇▇ referred to in Section 12.1.
"TAXES" shall mean all foreign, federal, state, county, local and
other taxes, levies, impositions, deductions, charges and
withholdings, including, without limitation, income or franchise
taxes or other taxes imposed on or with respect to net income or
capital gain, gross receipts, profits, sales, use, occupation,
value added, ad valorem, transfer, withholding, payroll,
employment, excise or property taxes, and shall include any
interest, penalties or additions thereto.
"TAX RETURNS AND STATEMENTS" has the meaning set forth in Section
5.15.1.
"TRANSMITTAL LETTER" has the meaning set forth in Section 3.2.
"UNAUDITED BALANCE SHEET" means the unaudited consolidated
balance sheet of Rudy's and the Subsidiaries as at March 16, 1997
previously delivered to Benihana pursuant to Section 5.7.
"WARRANT" shall mean the Warrant to purchase an aggregate of
200,000 shares of the Class A Stock of Benihana referred to in
Section 10.2.5.
"WARRANT SHARES" means the shares of Class A Stock issuable upon
a due exercise of the Warrant.
"WELFARE PLAN" has the meaning set forth in Section 5.26.1.
1.2 OTHER DEFINITIONAL PROVISIONS; INTERPRETATION.
1.2.1 Unless otherwise specified therein, all
terms defined in this Agreement shall have the defined meanings
when used in any certificate or other agreement, instrument or
document made or delivered pursuant hereto.
1.2.2 The words "hereof", "herein" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule
references are to this Agreement unless otherwise specified.
1.2.3 The headings in this Agreement are
included for convenience of reference only and shall not in any
way affect the meaning or interpretation of this Agreement.
1.2.4 The meanings given to terms defined
herein shall be equally applicable to both the singular and
plural forms of such terms.
2. THE MERGER.
2.1 THE MERGER AND ITS EFFECT. Subject to the terms
and conditions of this Agreement, at the Effective Time, Newco
shall be merged with and into Rudy's and Rudy's shall be the
Surviving Corporation, in accordance with this Agreement. Upon
the effectiveness of the Merger: (a) the separate corporate
existence of Newco shall cease; (b) the Surviving Corporation
shall possess all of the rights, privileges, powers, immunities,
purposes and franchises, both public and private, of each of
Rudy's and Newco; (c) all real and personal property, tangible
and intangible, of every kind and description belonging to Rudy's
and Newco shall be vested in the Surviving Corporation without
further act or deed, and the title to any real estate or any
interest therein vested in either Rudy's or Newco shall not
revert or in any way be impaired by reason of the Merger; (d) the
Surviving Corporation shall be liable for all the obligations and
liabilities of each of Rudy's and Newco and any claim existing or
action or proceeding pending by or against either Rudy's or Newco
may be enforced as if the Merger had not taken place; and (e)
neither the rights of creditors nor any Liens upon the property
of either Rudy's or Newco shall be impaired by the Merger.
2.2 EFFECTIVE TIME OF THE MERGER. Upon the
satisfaction or waiver of the conditions set forth in Sections
10.1 and 10.2 and the Closing of the Merger in accordance with
Articles 4 and 11, the parties hereto shall cause Articles of
Merger meeting the requirements of Section 92A.200 of the Nevada
Law (the "Articles of Merger") to be properly executed and filed
in accordance with the terms of this Agreement and the applicable
provisions of the Nevada Law. The Merger shall become effective
at the time of the filing of the Articles of Merger as provided
above, or at such later time as the parties hereto have
theretofore agreed upon and designated in such filings as the
effective time of the Merger (the "Effective Time").
2.3 ARTICLES OF INCORPORATION AND BY-LAWS OF
SURVIVING CORPORATION. From and after the Effective Time, the
Articles of Incorporation and By-laws of Rudy's as in effect
immediately prior to the Effective Time shall be the Articles of
Incorporation and By-laws of the Surviving Corporation until
further amended.
3. CONVERSION OF SHARES ON THE MERGER EFFECTIVE DATE.
3.1 MANNER AND BASIS OF CONVERSION. PURSUANT TO THE
Merger, the manner and basis of converting the capital stock of
each of Rudy's and Newco into or for capital stock of the
Surviving Corporation or the Cash Consideration shall be as
follows:
3.1.1 At the Effective Time each share of common
stock of Newco issued and outstanding immediately prior to the
Effective Time shall be converted into one (1) share of common
stock of Rudy's as the Surviving Corporation.
3.1.2 At the Effective Time each of the Rudy's
Shares issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to
receive an amount equal to the Cash Consideration per share.
3.1.3 The Rudy's Shares to be converted into
cash pursuant to Section 3.1.2 are sometimes hereinafter referred
to as the "Converted Rudy's Shares."
3.2 PROCEDURE FOR CONVERSION OF SHARE CERTIFICATES.
As promptly as possible on or after the Effective Date, a letter
of transmittal ("Transmittal Letter") and instructions will be
mailed or otherwise made available for use in surrendering to the
First Union National Bank of North Carolina or other agent
appointed by Benihana (the "Exchange Agent") stock certificates
which immediately prior to the Effective Time represented
Converted Rudy's Shares. The Transmittal Letter will authorize
the Exchange Agent to do all things necessary to accomplish the
exchange of such stock certificates for the consideration
therefor. Each holder of record of Converted Rudy's Shares will
be entitled to receive, promptly upon proper surrender of the
stock certificate or certificates representing such shares to the
Exchange Agent together with a properly completed and duly
executed Transmittal Letter, and compliance with the terms of the
Transmittal Letter, the Cash Consideration. From and after the
Effective Time and until so surrendered, each certificate
representing Converted Rudy's Shares shall be deemed for all
corporate purposes to evidence only the right to receive, upon
proper surrender together with a properly completed and duly
executed Transmittal Letter, the Cash Consideration.
4. CLOSING.
4.1 TIME AND PLACE. The Merger shall be consummated
at a closing (the "Closing") at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, or at such other place as may be agreed by the parties.
The Closing shall take place at 10:00 a.m. on a date that is as
soon as practicable following the fulfillment or waiver, in
accordance with the terms of this Agreement, of all conditions to
the Closing but in no event later than January 31, 1998, subject
only to the provisions of Section 13.1.4. As promptly as
possible following the Closing, the Merger shall be consummated
by the filing of the Articles of Merger, as specified in Section
2.2.
4.2 DELIVERY OF CASH CONSIDERATION. At the Closing,
Benihana will deliver an amount equal to the Cash Consideration
per share multiplied by the number of Rudy's Shares owned by the
shareholders of Rudy's to the Exchange Agent for delivery to the
shareholders of Rudy's.
5. REPRESENTATIONS AND WARRANTIES OF RUDY'S.
In order to induce Benihana and Newco to enter into this
Agreement and to consummate the Merger and the other transactions
contemplated herein Rudy's makes each of the representations and
warranties set forth in this Article 5 as follows:
5.1 CORPORATE ORGANIZATION OF RUDY'S.
5.1.1 Rudy's is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Nevada and has full corporate power and authority to carry on
its business as it is now being conducted and to own the
properties and assets it now owns; is duly qualified or licensed
to do business as a foreign corporation and is in good standing
in the jurisdictions listed on Schedule 5.1.1, which are all the
jurisdictions in which ownership or leasing of property or the
conduct of its business requires such qualification, except where
the failure to be so qualified or licensed or to be in good
standing would not have a Material Adverse Effect. The copies of
the Articles of Incorporation and By-Laws of Rudy's heretofore
delivered to Benihana are complete and correct copies of such
instruments as presently in effect.
5.1.2 Schedule 5.1.2 hereto sets forth the name,
position and total compensation of each officer and director of
Rudy's and each Subsidiary, and the name, position and total
compensation for each other employee of or consultant to Rudy's
whose total compensation in the fiscal year ended September 29,
1996 was, or in the current fiscal year is expected to be, in
excess of $60,000.
5.2 SUBSIDIARIES. Schedule 5.2 hereto sets forth the
name and state of incorporation of each direct and indirect
Subsidiary of Rudy's. Except as set forth on Schedule 5.2,
Rudy's does not own, directly or indirectly, or have any
obligation to acquire, any capital stock or other equity
securities of any corporation, nor does Rudy's have any direct or
indirect equity or ownership investment, or any obligation to
incur such investment, in any corporation, limited liability
company, partnership, joint venture, trust or other business,
organization or entity. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws
of its respective state of incorporation set forth on Schedule
5.2 hereto and has full corporate power and authority to carry on
its business as it is now being conducted and to own the
properties and assets it now owns; is duly qualified or licensed
to do business as a foreign corporation in good standing in the
jurisdictions listed on Schedule 5.2, which are all the
jurisdictions in which ownership or leasing of property or the
conduct of its business requires such qualification, except where
the failure to be so qualified or licensed or to be in good
standing would not have a Material Adverse Effect. The copies of
the Certificate of Incorporation or Articles of Incorporation and
By-Laws of each Subsidiary heretofore delivered to Benihana are
complete and correct copies of such instruments as presently in
effect.
5.3 CAPITALIZATION OF RUDY'S; TITLE TO SHARES.
5.3.1 The authorized capital stock of Rudy's
consists of 30,000,000 shares of Common Stock, $.01 par value per
share, of which 3,765,000 shares are issued and outstanding and
10,000,000 shares of preferred stock, par value $.01, of which no
shares are issued or outstanding. There are no other shares of
capital stock issued except for shares of Common Stock held in
treasury, if any. All of the outstanding shares of Rudy's
capital stock are validly issued, fully paid and nonassessable.
There are no outstanding (i) securities convertible into or
exchangeable for any of Rudy's capital stock; (ii) options,
warrants, calls or other rights (including conversion rights,
preemptive rights or stock appreciation rights) with respect to
the issued and outstanding stock of Rudy's, or to purchase or
subscribe to any class of authorized capital stock of Rudy's or
securities convertible into or exchangeable for capital stock of
Rudy's; or (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the
issuance, sale, transfer, and/or assignment of any shares of
capital stock of Rudy's, any convertible or exchangeable
securities or any such options, warrants or rights.
5.3.2 ▇▇▇▇▇▇▇ is the owner, beneficially and of
record, of 2,086,000 Rudy's Shares which constitute 55.4% of the
issued and outstanding Rudy's Shares as of the date hereof,
Bayview is the owner, beneficially and of record, of 450,000
Rudy's Shares which constitute 12.0% of the issued and
outstanding Rudy's Shares as of the date hereof and each has
good, valid and marketable title to such Rudy's Shares free and
clear of all liens, encumbrances, security interests or claims,
whatsoever, with full power and authority to transfer and convey
the same.
5.4 CAPITALIZATION OF SUBSIDIARIES. Rudy's is the
record owner of all issued and outstanding shares of capital
stock of each Subsidiary listed on Schedule 5.2.. All issued and
outstanding shares of capital stock of each Subsidiary are equal
in their rights, preferences and privileges, validly issued,
fully paid and nonassessable. There are, with respect to each
Subsidiary, no outstanding (a) securities convertible into or
exchangeable for any of the capital stock of such Subsidiary; (b)
options, warrants, calls or other rights (including conversion
rights, preemptive rights or stock appreciation rights) with
respect to the issued and outstanding stock of such Subsidiary,
or to purchase or subscribe to capital stock of or securities
convertible into or exchangeable for capital stock of such
Subsidiary; (c) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the
issuance, sale, transfer, and/or assignment of any capital stock
of such Subsidiary, any such convertible or exchangeable
securities, or any such options, warrants or rights; or (d) any
shares of capital stock of such Subsidiary pledged as collateral
to secure any agreement or obligation.
5.5 AUTHORIZATION, ETC. This Agreement has been duly
and validly authorized by all necessary corporate action of
Rudy's (subject only to the approval of the shareholders of
Rudy's to this Agreement and the Merger under Nevada Law) and has
been duly and validly executed by Rudy's, Bayview and ▇▇▇▇▇▇▇.
Without limiting the generality of the foregoing, Rudy's has full
corporate power and authority to enter into this Agreement,
subject to such approval by the shareholders of Rudy's, and to
consummate the transactions contemplated hereby. This Agreement
is the legal, valid and binding obligation of Rudy's and, with
respect to Sections 6 and 8.10, of the Principal Shareholders
enforceable against Rudy's and the Principal Shareholders in
accordance with its terms, as applicable.
5.6 NO VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the
transactions contemplated hereby will violate any provision of
the Certificate of Incorporation, Articles of Incorporation or
By-Laws or similar corporate documents of Rudy's or any
Subsidiary or will (a) violate, or be in conflict with, or
constitute a breach or default (or an event which, with the
giving of notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or acceleration
of the performance required by, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the
creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of Rudy's or any
Subsidiary under any Contractual Obligation to which Rudy's or
any Subsidiary is a party or by which Rudy's or any Subsidiary is
bound, or to which the property of Rudy's or any Subsidiary is
subject, except where such violation, conflict, breach, default,
termination, acceleration, security interest, lien or other
encumbrance would not have a Material Adverse Effect; or (b)
violate any statute or law or any judgment, decree, order,
regulation or rule of any court or Governmental Authority to
which Rudy's is subject, except where such violation would not
have a Material Adverse Effect.
5.7 FINANCIAL STATEMENTS. Rudy's has heretofore
delivered to Benihana: (a) consolidated balance sheets of Rudy's
as at September 29, 1996, October 1, 1995, October 2, 1994,
October 3, 1993 and September 27, 1992, together with
consolidated statements of income, changes in stockholders'
equity and changes in financial position (or statements of cash
flow) for the years then ended (the "Rudy's Audited Financial
Statements"), all certified by Deloitte & Touche LLP, independent
certified public accountants, whose reports thereon are included
therein; and (b) the Unaudited Balance Sheet, and the unaudited
consolidated statements of income and cash flow for the six
periods ended March 16, 1997. Such consolidated balance sheets
and notes thereto are true, complete and accurate in all material
respects and fairly present in accordance with generally accepted
accounting principles GAAP the consolidated assets, liabilities
and financial condition of Rudy's as at the respective dates
thereof, and all such consolidated statements of income, changes
in stockholders' equity and changes in financial position (or
statements of cash flow) and the notes thereto are true, complete
and accurate in all material respects and fairly present in
accordance with GAAP the results of operations for the periods
therein referred to. All of the foregoing financial statements
were prepared in accordance with GAAP consistently applied
throughout the periods involved (except in the case of the
Unaudited Balance Sheet to the extent subject to normal year end
adjustments).
5.8 NO UNDISCLOSED LIABILITIES; ETC.. Rudy's has no
liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) which were not properly reflected or
adequately reserved against in accordance with GAAP on the
Unaudited Balance Sheet, except for liabilities and obligations
incurred in the ordinary course of business and consistent with
past practice since the date thereof and except as set forth in
this Agreement. The reserves reflected on the Unaudited Balance
Sheet are adequate, appropriate and reasonable in light of
historical practices.
5.9 ABSENCE OF CERTAIN CHANGES. Except as and to the
extent set forth on Schedule 5.9, or disclosed in a Rudy's
Report, from the Balance Sheet Date through the date hereof,
Rudy's and its Subsidiaries have not (except as contemplated by,
or disclosed in, this Agreement):
5.9.1 amended any certificate or articles of
incorporation or by-laws or merged with or into or consolidated
with any other Person, subdivided or in any way reclassified any
shares of its capital stock or changed or agreed to change in any
manner the rights of its outstanding capital stock or, in any
material manner, the character of its business;
5.9.2 issued or sold or purchased any
convertible securities, or entered into any contracts or
commitments to issue or sell or purchase, any shares of its
capital stock;
5.9.3 entered into or amended any material
employment agreement, entered into any agreement with any labor
union or association representing any material employee or
entered into or amended any material Plan; amended any
certificate
5.9.4 incurred any liabilities or obligations
(absolute, accrued, contingent or otherwise) except nonmaterial
items incurred in the ordinary course of business and consistent
with past practice which do not exceed $25,000.00 individually,
or $50,000.00 in the aggregate, (counting obligations or
liabilities arising from any single transaction or a series of
similar transactions, and all periodic installments or payments
under any lease or other agreement providing for periodic
installments or payments, as a single obligation or liability),
or increased, or experienced any change in any assumptions
underlying or methods of calculating, any bad debt, contingency
or other reserves not in accordance with GAAP or entered into any
lease or sublease of real property or exercised any purchase
options or rights of first refusal contained in any of the Leases
(as hereinafter defined) except in the ordinary course of
business and consistent with past practice;
5.9.5 paid, discharged or satisfied any material
claim, liabilities or obligations (absolute, accrued, contingent
or otherwise) other than the payment, discharge or satisfaction
in the ordinary course of business and consistent with past
practice of liabilities and obligations reflected on or reserved
against on the Unaudited Balance Sheet or incurred in the
ordinary course of business and consistent with past practice
since the Balance Sheet Date;
5.9.6 permitted or allowed any of its Owned Real
Property, or property demised under the Leases or assets (real,
personal or mixed, tangible or intangible) to be subjected to any
mortgage, pledge, lien, security interest, encumbrance,
assignment, restriction or charge of any kind, except for liens
for current taxes not yet due;
5.9.7 written down the value of any inventory
(including write-downs by reason of shrinkage or ▇▇▇▇-down) or
written off as uncollectible any notes or accounts receivable,
except for immaterial write-downs and write-offs in the ordinary
course of business and consistent with past practice;
5.9.8 cancelled any debts or waived any claims
or rights involving more than $5,000;
5.9.9 sold, transferred, abandoned or otherwise
disposed of any of its Owned Real Property, or any interest
therein, or its other properties or assets (real, personal or
mixed, tangible or intangible, or entered into any lease (as
lessor or Lessee)) except in the ordinary course of business and
consistent with past practice;
5.9.10 disposed of or permitted to lapse (except
by its own terms) any rights to the use of any existing patent,
trademark, trade name or copyright, or disposed of or disclosed
(except as necessary in the conduct of its business) to any
person, other than representatives of Benihana, any trade secret,
formula, process or know-how not theretofore a matter of public
knowledge;
5.9.11 granted or committed to grant any general
increase in the compensation of officers, directors or employees
(including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) or any increases in
the compensation payable or to become payable to any officer,
director or employee, including payments or commitments to pay
severance or termination pay, except for increases granted in
the ordinary course of business consistent with past practices or
pursuant to existing agreements;
5.9.12 made any single capital expenditure or
commitment in excess of $50,000.00 for additions to property,
plant, equipment or intangible capital assets or made aggregate
capital expenditures and commitments in excess of $100,000.00
since the Balance Sheet Date for additions to property, plant,
equipment or intangible capital assets;
5.9.13 declared, paid or set aside for payment
any dividend or other distribution in respect of its capital
stock (other than "upstream" dividends from Subsidiaries) or
redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of capital stock or other securities of
Rudy's or a Subsidiary;
5.9.14 made any material change in any method of
accounting or accounting practice except as required by GAAP;
5.9.15 paid, distributed, loaned or advanced any
amount to, or sold, transferred or leased any properties or
assets (real, personal or mixed, tangible or intangible) to, or
entered into any agreement or arrangement with any Affiliates,
officers or directors of Rudy's, or any Affiliate or associate of
any officers or directors of Rudy's except for directors' fees,
and compensation to officers at rates not exceeding the rates of
compensation in effect during the period ended on the Balance
Sheet Date;
5.9.16 entered into or amended any written
contract or other agreement pursuant to which it agrees to
indemnify any party or to refrain from competing with any party;
5.9.17 except for inventory, supplies or
equipment acquired in the ordinary course of business, made any
acquisition of all or any part of the assets, properties, capital
stock or business of any other entity which is material to
Rudy's;
5.9.18 entered into any transaction other than
in the ordinary course of business; or
5.9.19 terminated, surrendered, cancelled or
assigned any of its properties demised under the Leases, or any
part thereof, except in the ordinary course of business
consistent with past practice; or
5.9.20 agreed, whether in writing or otherwise,
to take any action described in this Section.
5.10 TITLE TO PROPERTIES; ENCUMBRANCES. Rudy's has
good, valid, marketable and indefeasible fee simple title to all
the properties and assets which it purports to own, including,
without limitation, all the properties and assets reflected in
the Unaudited Balance Sheet, and all the properties and assets
purchased by Rudy's since the date of the Unaudited Balance
Sheet. Schedule 5.10.1 hereto lists each and every parcel of
real property owned in fee by Rudy's (such real property is
referred to herein as "Owned Real Properties"). Properties and
assets reflected in the Unaudited Balance Sheet, including,
without limitation, the Owned Real Properties, are free and clear
of all title defects or objections, liens, mortgages, deeds of
trust, claims, charges, security interests or other encumbrances
of any nature whatsoever, including, without limitation, leases,
subleases, rights of occupancy, deed restrictions, chattel
mortgages, conditional sales contracts, collateral security
arrangements and other title or interest retention arrangements,
and are not, in the case of the Owned Real Properties subject to
any rights of way, building use restrictions, exceptions,
variances or reservations of any nature whatsoever except, (a)
liens shown on the Unaudited Balance Sheet as securing specified
liabilities or obligations, with respect to which no material
defaults exist, (b) imperfections of title, covenants or
restrictions, if any, none of which are substantial in amount and
which would not have a Material Adverse Effect, (c) zoning or
land use ordinances which would not have a Material Adverse
Effect and (d) liens for taxes not yet due and payable. Rudy's
is in actual possession of the Owned Real Properties. To the
knowledge of Rudy's, no portion of any of the improvements
erected on the Owned Real Properties encroaches on adjoining
property or public streets and no portion of any of the Owned
Real Properties is, or has been, subjected to a special ad
valorem tax valuation such that a change in ownership or use
(whether now existing or in the future) has caused or will cause
additional ad valorem taxes to be imposed upon the Owned Real
Properties.
5.11 LEASES.
5.11.1 Schedule 5.11.1 hereto is an accurate and
complete list of all leases or rights of occupancy pursuant to
which Rudy's and any Subsidiary leases or subleases any real
property or interest therein or material personal property (the
"Leases"). A true and correct copy of each Lease has been
delivered to Benihana together with all amendments and
modifications thereto, and all subordination, non-disturbance
and/or attornment agreements related thereto, and no changes have
been made thereto since the date of delivery. Each Lease is
valid and in full force and effect except where such invalidity
or ineffectiveness would not have a Material Adverse Effect.
There are no existing defaults under any provision of any Lease,
and no event has occurred which (with or without notice, lapse of
time or both) would constitute a default thereunder, where any
such default would have a Material Adverse Effect.
5.11.2 Rudy's is in actual possession of the
properties demised under the Leases and to the knowledge of
Rudy's, has good and indefeasible title to the leasehold estates
conveyed under the Leases free and clear of all title defects or
objections, mortgages, liens, claims, charges, security interests
or other encumbrances of any nature whatsoever, including,
without limitation, leases, subleases, rights of occupancy,
chattel mortgages, conditional sales contracts, deed
restrictions, collateral security arrangements and other title or
interest retention arrangements, and are not, in the case of the
properties demised under the Leases subject to any rights of way,
building use restrictions, exceptions, variances, reservations or
limitations of any nature whatsoever except, (i) liens shown on
the Unaudited Balance Sheet as securing specific liabilities or
obligations with respect to which no material default exists,
(ii) imperfections of title, covenants or restrictions, if any,
none of which are substantial in amount or would have a Material
Adverse Effect, (iii) zoning or land use ordinances or which
would not have a Material Adverse Effect and (iv) liens for taxes
not yet due and payable. To the knowledge of Rudy's, no portion
of any of the improvements erected by and under the direction of
Rudy's on the properties demised under the Leases encroach on
adjoining property or public streets and no portion of any of the
properties demised under the Leases are, or have been, subjected
to a special ad valorem tax valuation such that a change in
ownership or use (whether now existing or in the future) has
caused or will cause additional ad valorem taxes to be imposed
upon the properties demised under the Leases.
5.11.3 The basic rent and all additional rent
payable under the Leases have been paid to date. To the
knowledge of Rudy's, except as set forth on Schedule 5.11.3, all
work required to be performed under the Leases by the landlords
thereunder or by Rudy's has been performed and to the extent that
Rudy's is responsible for payment of such work, has been fully
paid for, whether directly to the contractor performing such work
or to such landlord as reimbursement therefor except for items
which Rudy's is disputing in good faith.
5.11.4 There have been no casualties which could
result in the termination of any Lease or the application of any
buy-out provisions contained in any Lease relative to damage by
casualty.
5.12 RESTAURANTS; LIQUOR LICENSES. Schedule 5.12.1
hereto is a complete and accurate list of each restaurant or
other facility owned and/or operated by Rudy's or any Subsidiary
(the "Restaurants"). Schedule 5.12.2 is a complete and accurate
list of all liquor licenses held by Rudy's and the Subsidiaries
in connection with the operation of the Restaurants (the "Liquor
Licenses"). Each of the Liquor Licenses is presently in full
force and effect, duly and validly issued and appropriate and
adequate for the conduct of operations at the Restaurant for
which it is issued to be in the manner conducted as of the date
hereof.
5.13 PATENTS, TRADEMARKS, TRADE NAMES, ETC.
5.13.1 Schedule 5.13.1 sets forth:
(a) all patents held by Rudy's and each
Subsidiary and all reissues, divisions, continuations,
continuations in part and extensions thereof and all pending
patent applications by Rudy's, including, for each such patent,
the serial or patent number, filing and expiration date and
title;
(b) all registered trademarks and service
marks of Rudy's and each Subsidiary and pending applications by
Rudy's and each Subsidiary to register trademarks, including, for
each such trademark, the registration or application number,
filing and expiration date, and ▇▇▇▇, and all unregistered
trademarks and service marks used by Rudy's and/or any
Subsidiary; and
(c) all registered copyrights of Rudy's and
applications by Rudy's and each Subsidiary for registration of
copyrights, including the registration number, and filing and
expiration date of each such copyright.
5.13.2 Schedule 5.13.2 identifies all licenses
and other contracts or commitments to which Rudy's and each
Subsidiary is a party (either as licensor or licensee) or
otherwise subject relating to patents, trademarks, service marks,
trade names or copyrights (or applications or registration as
applicable for any thereof), trade secrets or other proprietary
know-how or technical assistance, and, except as set forth on
Schedule 5.13.2, no claims have been asserted by any person to
the use of any such patents, trademarks, trade names, copyrights,
technology, know-how or processes or challenging or questioning
the validity or effectiveness of any such license or agreement,
and Rudy's actually knows of any valid basis for any such claim.
5.13.3 Except as set forth on Schedule 5.13.3,
Rudy's and its Subsidiaries have not (during the past five
years), nor is Rudy's or any Subsidiary the subject of any
pending or, to the knowledge of Rudy's, threatened, claim
alleging that it has infringed upon any patent, trademark, trade
name or copyright or misappropriated or misused any invention,
trade secret or other proprietary information entitled to legal
protection. Other than as set forth on Schedule 5.13.3, Rudy's
has not asserted any claim of infringement, misappropriation or
misuse within the past five (5) years.
5.14 BUSINESS PERMITS. Except for immaterial items,
the failure of which would not have a Material Adverse Effect,
Rudy's has obtained all approvals, authorizations, consents,
licenses, franchises, orders, certificates or other permits of
all governmental or regulatory agencies, whether federal, state,
local or foreign (collectively, the "Approvals") necessary to the
operations of the business as presently conducted, including,
without limitation, the constructions, alterations, operation,
use and occupancy of the Owned Real Properties or any part
thereof, or the properties demised under the Leases or any part
thereof, or any of the improvements thereon, including, but not
limited to the certificates of occupancy or the local
equivalents, if any, and certificates relating to fire and health
approval. All such Approvals are in full force and effect and
good standing, Rudy's is not in material default under any
Approval and there exists no basis for the termination,
suspension or revocation of any such Approvals.
5.15 TAX MATTERS.
5.15.1 Rudy's and each of the Subsidiaries files
consolidated federal income tax returns. Rudy's and each
Subsidiary have (i) filed or has caused to be filed all federal,
foreign, state and local franchise, income or other tax returns
and statements which were required to be filed prior to the date
hereof (the "Tax Returns and Statements") on a timely basis in
accordance with the laws, regulations and administrative
requirements of the appropriate Governmental Authorities except
for such Tax Returns and Statements of which the failure to file
would not have a Material Adverse Effect, and (ii) paid within
the time and in the manner prescribed by law all material amounts
of Taxes (as defined below) shown on any Tax Returns and
Statements, due for all periods ending on or prior to the date
hereof. All Tax Returns and Statements were, when filed, and
continue to be, complete and accurate in all material respects,
and there exist no material inaccuracies in the Tax Returns and
Statements. Except as set forth on Schedule 5.15.1, no tax
assessments or deficiency has been made or proposed against
Rudy's or any Subsidiary nor has any notice been given of any
actual or proposed assessment or deficiency. Except as set forth
on Schedule 5.15.1, the Tax Returns and Statements are not
presently the subject of any audit or other administrative or
court proceeding by any Governmental Authority. No consents
extending any applicable statute of limitations have been filed
and no Governmental Authority has made a written request for such
a consent. None of the matters disclosed on Schedule 5.15.1 have
had or could reasonably be anticipated to have a Material Adverse
Effect.
5.15.2 Rudy's and the Subsidiaries file Tax
Returns and Statements with respect to the income, capital gain,
gross receipts or profits earned by them in the states and
localities listed on Schedule 5.15.2 and in no other states or
localities.
5.15.3 The net operating loss (as defined in
Section 172 of the Code) of Rudy's and the Subsidiaries on a
consolidated basis for federal income tax purposes as of
September 29, 1997 is as set forth on Schedule 5.15.3.
5.15.4 All taxes that Rudy's or the Subsidiaries
were required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid
to the appropriate Governmental Authority, except for those Taxes
of which the failure to withhold or collect would not have a
Material Adverse Effect. There are no liens with respect to
Taxes upon any of the properties or assets, real or personal,
tangible or intangible, of Rudy's or the Subsidiaries (except for
Taxes not yet due) and except for liens which would not have a
Material Adverse Effect.
5.15.5 No consent to the application of Section
341(f)(2) of the Code has been filed with respect to any assets
acquired by Rudy's or the Subsidiaries.
5.15.6 No property owned by Rudy's or the
Subsidiaries is property as to which an election was made under
Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately before the enactment of the Tax
Reform Act of 1986, or is "tax-exempt use property" within the
meaning of Section 168(h)(1) of the Code.
5.15.7 Rudy's and the Subsidiaries: (i) have not
agreed to or been required to make any adjustment pursuant to
Section 481(a) of the Code; (ii) have received no written notice
that the Internal Revenue Service has proposed any such
adjustment or change in accounting method; and (iii) do not have
an application pending with any Governmental Body requesting
permission for any change in accounting method.
5.15.8 None of Rudy's or any of the Subsidiaries
has in effect any tax elections under Section 108, 168, 338, 441,
471, 1017, 1033 or 4977 of the Code.
5.15.9 Rudy's and the Subsidiaries are not a
party (other than as an investor) to any industrial development
bond.
5.15.10 During the previous two fiscal years
Rudy's and the Subsidiaries have not engaged in any exchange
under which the gain realized on such exchange was not recognized
due to Section 1031 of the Code.
5.15.11 No written claim has ever been received
from any Governmental Authority representing any jurisdiction in
which Rudy's or the Subsidiaries do not file Tax Returns that
Rudy's or any of the Subsidiaries are or may be subject to
taxation by that jurisdiction.
5.15.12 Rudy's and the Subsidiaries are not and
have not been a party to any tax sharing or similar agreement or
arrangement.
5.15.13 Rudy's has provided Benihana with copies
of: (i) all material Tax Returns and Statement of or with
respect to Rudy's and the Subsidiaries for the period January 1,
1992 through the date hereof; (ii) any written notices, protests,
or closing agreements relating to issues arising in any audit,
litigation or similar proceeding with respect to the liability
for Taxes of Rudy's or the Subsidiaries; (iii) any elections or
disclosures filed by or on behalf of Rudy's or the Subsidiaries
with any taxing authority (whether or not filed with any Tax
Returns and Statements); and (iv) any letter, rulings,
determination letters or similar documents issued by any taxing
authority with respect to Rudy's or the Subsidiaries.
5.15.14 Rudy's is not a U.S. Real Property
Holding Corporation within the meaning of Section 897(c)(2) of
the Code.
5.16 TRANSACTIONS WITH AFFILIATES. To the knowledge
of Rudy's, except as set forth on Schedule 5.16.1 hereto, no
Affiliate, officer, director or employee of Rudy's has any
interest, directly or indirectly, in any lease, lien, contract,
license, encumbrance, loan or other Agreement to which Rudy's or
any Subsidiary is a party, or any interest in any competitor,
supplier or customer of Rudy's or any Subsidiary. Except as set
forth on Schedule 5.16.1 hereto, neither Rudy's nor any
Subsidiary is indebted, directly or indirectly, or to any
Affiliate for any liability or obligation, whether arising by
reason of stock ownership, contract, oral or written agreement or
otherwise.
5.17 CONTRACTS AND COMMITMENTS. Schedule 5.17 hereto
contains a complete, current and correct list of all material
contracts, commitments, obligations or agreements of Rudy's and
the Subsidiaries (other than the Leases) whether written or oral
(the "Contracts). For purposes of this Section 5.17 a contract
which is "material" shall mean a single contract, whether written
or oral:
5.17.1 pursuant to which any party thereto is
obligated to make annual payments aggregating more than $50,000;
5.17.2 which constitutes an employment agreement
or an agreement with any union or member organization;
5.17.3 which is not subject to cancellation by
Rudy's or a Subsidiary, as the case may be, on not more than
thirty (30) days notice without material penalty;
5.17.4 which constitutes a purchase or sale
contract or commitment which continues for a period of more than
twelve (12) months;
5.17.5 which constitutes an agreement which
restricts Rudy's or any Subsidiary from carrying out its business
anywhere in the world or from competing with any other person;
5.17.6 which constitutes an agreement by Rudy's
or any Subsidiary with any Affiliate.
True, correct and complete copies of all written
contracts described in this Section 5.17 have been delivered to
Benihana. Neither Rudy's nor any Subsidiary is materially in
default, nor does Rudy's have any knowledge of any factual
circumstances which can reasonably be expected to give rise to a
claim of default under any contract, except for defaults which
would not have a Material Adverse Effect.
5.18 COMPLIANCE WITH CONTRACTS. To the knowledge of
Rudy's, each of the Contracts and Leases is valid and in full
force and effect except when such invalidity or ineffectiveness
would not have a Material Adverse Effect. Neither Rudy's nor any
Subsidiary is in material default under any the Contracts or
Leases and, to the knowledge of Rudy's, no act or omission has
occurred which, with notice or lapse of time or both, would
constitute a breach or default under any term or provision of any
such Contract or Lease and no party is in breach or default under
any of the Contracts or Leases, and no act or omission has
occurred by any party which, with notice or lapse of time or
both, would constitute such a breach or default under any term or
provision thereof except where such breach or default would not
have a Material Adverse Effect.
5.19 INSURANCE.
5.19.1 Schedule 5.19.1 contains an accurate and
complete description of all policies of fire, business
interruption, liability, worker's compensation and other forms of
insurance owned or held by Rudy's. All such policies are in full
force and effect, all premiums with respect thereto covering all
periods up to and including the date hereof have been paid, and
no notice of cancellation or termination has been received with
respect to any such policy. Such policies are sufficient for
compliance with all requirements of law and of all of the
Contracts and Leases except where any such non-compliance would
not have a Material Adverse Effect; provide adequate insurance
coverage for the assets and operations of Rudy's in light of
current industry practice; will remain in full force and effect
through the respective dates set forth on Schedule 5.19.1.
Neither Rudy's nor any Subsidiary has been unable to obtain any
insurance with respect to its assets or operations, nor has its
coverage been limited by any insurance carrier to which it has
applied for any such insurance or with which it has carried
insurance during the last five (5) years.
5.19.2 Schedule 5.19.2 sets forth a true and
complete list of all group insurance programs in effect for
employees of Rudy's and the Subsidiaries. Rudy's and the
Subsidiaries are not in default with respect to any of its
obligations with respect to any such group insurance program
except where such default would not have a Material Adverse
Effect.
5.20 LABOR RELATIONS. Except to the extent set forth
on Schedule 5.20:
5.20.1 Rudy's and the Subsidiaries are in
compliance with all applicable laws respecting employment and
employment practices (including matters related to immigration or
citizenship status), terms and conditions of employment and wages
and hours, and is not engaged in any unfair labor practice except
for such minor violations that, individually or in the aggregate,
would have no Material Adverse Effect;
5.20.2 there is no unfair labor practice charge
or complaint against Rudy's or any Subsidiary pending before the
NLRB;
5.20.3 there is no labor strike, dispute,
slowdown or stoppage actually pending or threatened against or
affecting Rudy's or any Subsidiary;
5.20.4 no representation question is pending
before the NLRB exists respecting the employees of Rudy's or any
Subsidiary;
5.20.5 no grievance against Rudy's or any
Subsidiary or the conduct of its business, nor any arbitration
proceeding arising out of or under collective bargaining
agreements is pending;
5.20.6 neither Rudy's nor any Subsidiary is a
party to any collective bargaining agreement; and
5.20.7 neither Rudy's nor any Subsidiary has
experienced any work stoppage or other labor difficulty since
January 1, 1992.
5.21 PUBLIC REPORTS; COMPLIANCE.
5.21.1 Rudy's has heretofore delivered to
Benihana true and complete copies of the Rudy's Reports. Each of
the Rudy's Reports complied with all applicable rules and
regulations of the Securities Act or the Exchange Act, as the
case may be, as of their respective dates of filing. None of the
Rudy's Reports contained any untrue statement of a material fact
or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading (in each case as of the respective dates thereof).
5.21.2 Rudy's Shares are registered under Section
12(g) of the Exchange Act, are quoted in the NASDAQ, and Rudy's
is currently subject to the periodic reporting requirements of
Section 13 or Section 15(d) of the Exchange Act. Rudy's has
filed and will file all reports required to be filed by it
pursuant to the Exchange Act and the regulations promulgated
thereunder through the date hereof and the Closing. No such
reports filed by Rudy's after the date hereof and prior to the
Effective Time will contain, and the Proxy Statement will not
contain, any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein not misleading (in each case
as of the date filed).
5.22 LITIGATION. Except as set forth on Schedule 5.22
hereto:
5.22.1 there is no claim, action, suit or
arbitration proceeding, before any federal, state, municipal,
foreign or other court or governmental or administrative body or
agency, or any private arbitration tribunal or any investigation
or inquiry before any federal, state, municipal, foreign or other
court or governmental or administrative body now pending,
relating to or affecting Rudy's or any Subsidiary or any
director, officer, agent or employee thereof in his capacity as
such, or the assets, properties or business of Rudy's or any
Subsidiary, or the transactions contemplated by this Agreement,
nor has Rudy's, any Subsidiary received written notice of any
threat to institute such a proceeding;
5.22.2 there is not in effect any order, judgment
or decree of any court or governmental or administrative body
enjoining, barring, suspending, prohibiting or otherwise limiting
Rudy's or any Subsidiary or any officer, director, employee or
agent of Rudy's or any Subsidiary from conducting or engaging in
any aspect of its business, or requiring Rudy's or any Subsidiary
or any officer, director, employee or agent of Rudy's or any
Subsidiary to take certain action with respect to any aspect of
the its business which could reasonably be anticipated to have a
Material Adverse Effect; and
5.22.3 neither Rudy's nor any Subsidiary is in
violation of or default under any order, judgment, writ,
injunction or decree of any court or regulatory authority except
for such violations or defaults as would not have a Material
Adverse Effect.
5.22.4 None of the matters identified on Schedule
5.22 have had or could reasonably be anticipated to have a
Material Adverse Effect.
5.23 NO CONDEMNATION OR EXPROPRIATION. Neither the
Owned Real Properties, or any portion thereof or the properties
demised under the Leases, or any portion thereof or any other
assets of Rudy's and its Subsidiaries is subject to any
governmental decree or order to be sold of which Rudy's has
received notice or is being condemned, expropriated or otherwise
taken by any public authority with or without payment of
compensation therefor, nor, to the knowledge of Rudy's, has any
such condemnation, expropriation or taking been proposed.
5.24 COMPLIANCE WITH LAW. Except to the extent any
such non-compliance or violation would not have a Material
Adverse Effect, the operations of Rudy's and each of the
Subsidiaries have been conducted in accordance with all
applicable laws, regulations and other requirements of all
national governmental authorities, and of all states,
municipalities and other political subdivisions and agencies
thereof, having jurisdiction over Rudy's or any of its
Subsidiaries, including, without limitation, all such laws,
regulations and requirements relating to antitrust, consumer
protection, equal opportunity, discrimination on the basis of
race, national origin, sex, age, immigration, health,
occupational safety, plant closing, pension, requirements of any
Board of Fire Underwriters or similar body, building, zoning,
subdivision matters, Environmental Laws or toxic waste laws.
During the past three (3) years, neither Rudy's nor any
Subsidiary has received any notification of any asserted present
or past failure by Rudy's or any Subsidiary to comply with such
laws, rules or regulations.
5.25 ENVIRONMENTAL PROTECTION.
5.25.1 None of the Owned Real Properties or the
properties demised under the Leases or real property previously
owned or leased by Rudy's (which shall mean Rudy's, the
Subsidiaries and all corporation or other business entities
substantially all of the capital stock or other interest of
which, or all or substantially all of the assets of which, Rudy's
or Subsidiaries has acquired) has been used at any time during
which Rudy's owned or leased such real property, or otherwise has
been in possession or control of such real property or leased
property, and, to the knowledge of Rudy's, none of the Owned Real
Properties or the properties demised under the Lease or the real
property previously owned or leased by Rudy's was used at any
time prior to the time such company owned, leased, possessed or
controlled such real property or leased property (i) as a site
for the disposal or storage of Hazardous Materials, or (ii) so as
(x) to cause a material violation or (y) to give rise to a
material removal or restoration obligation or material liability
for the costs of removal or restoration by others or a material
liability for damages to others under, any Environmental Law or
under the regulations of any Governmental Authority having
jurisdiction over any of such real property. Each of Rudy's and
the Subsidiaries have complied and are in compliance with all
applicable Environmental Laws except where such non-compliance
would not have a Material Adverse Effect.
5.25.2 Rudy's and each of the Subsidiaries have
obtained and are in compliance with (except where any such non-
compliance would not have a Material Adverse Effect) all
environmental permits, licenses and other authorizations which
are required with respect to the operation of its business,
except for such permits, licenses and other authorizations of
which the failure to obtain would not have a Material Adverse
Effect. As to any such permit, license or other authorization
which has or is about to expire, Rudy's or its respective
Subsidiary has timely applied for renewal thereof under
Environmental Laws except where failure to renew would not have a
Material Adverse Effect.
5.25.3 There is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter
pending or, to the knowledge of Rudy's, threatened against Rudy's
or any Subsidiary relating in any way to the Environmental Laws
or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated
or approved thereunder.
5.25.4 No release, spill, seepage, leak or
emission has occurred on the Owned Real Property or to the
knowledge of Rudy's, on the properties demised under the Leases
or on any real property previously owned or leased by Rudy's
during the time of Rudy's ownership or possession.
5.25.5 There are no underground storage tanks
located on any of the Owned Real Properties, or on any of the
properties demised under the Leases, nor to the knowledge of
Rudy's have there been any underground storage tanks removed from
any real property owned or leased by any company during the
period such real property was owned or leased by Rudy's, except
to the extent that such underground storage tanks were removed in
compliance with all applicable laws or required by applicable
laws, ordinances, rules and regulations, and, to the extent such
removal was performed upon notice and with the approval of, and
the inspection and confirmation of closure as to such removal was
performed by, all applicable governmental agencies having
jurisdiction.
5.25.6 Rudy's has delivered to Benihana true,
correct and complete copies or results of any reports
inspections, safety procedures, logs, data, contracts, invoices,
studies or tests initiated by Rudy's or landlords or by any
Governmental Authority which are in the possession of Rudy's
pertaining to Hazardous Materials, at any part of the Owned Real
Properties or the properties demised under the Lease or Rudy's
with respect to the business, any of Rudy's predecessors or
concerning compliance with or liability under Environmental Laws
and other environmental matters in the operation of the business
and such properties.
5.26 EMPLOYEE BENEFIT PLANS.
5.26.1 Schedule 5.26 hereto contains a complete
list of "Plans" consisting of each:
(a) "multiemployer pension plan," as defined
in Section 3(37) of ERISA, to which Rudy's or any Subsidiary (or
any entity that is treated as a single employer with Rudy's or
any Subsidiary under Section 414(b), (c), (m) or (o) of the Code
("Common Control Entity") contributes or is required to
contribute, or with respect to which any of Rudy's, any
Subsidiary or a Common Control Entity has any liability (the
foregoing plans and any additional multiemployer pension plan to
which Rudy's, any Subsidiary or any Common Control Entity has
previously contributed or been required to contribute at any time
after September 25, 1980 (the "Multiemployer Plans");
(b) "employee welfare benefit plan," as
defined in Section 3(l) of ERISA, sponsored or maintained by
Rudy's, any Subsidiary or any Common Control Entity, or to which
Rudy's, any Subsidiary or any Common Control Entity contributes
or is required to contribute, including each multiemployer
welfare plan ("Welfare Plan");
(c) "employee pension benefit plan," as
defined in Section 3(2) of ERISA (other than a Multiemployer
Plan), sponsored or maintained by Rudy's, any Subsidiary or any
Common Control Entity or to which Rudy's, any Subsidiary or any
Common Control Entity contributes or is required to contribute
("Pension Plan"); and
(d) any other bonus, deferred or incentive
compensation, pension, profit-sharing, retirement, stock
purchase, stock grant, stock option, disability, sick pay, salary
continuation, cafeteria, flexible spending account, dependent
care assistance, or any other fringe benefit plan, arrangement or
practices, other than normal payroll practices and policies
concerning holidays and vacations, sponsored or maintained by
Rudy's or any Subsidiary, whether formal or informal
(collectively, "Employment Plans").
5.26.2 There are no "accumulated funding
deficiencies," as defined in Section 302(a)(2) of ERISA and
Section 412 of the Code, whether or not waived, with respect to
any of the Pension Plans.
5.26.3 The Unaudited Balance Sheet reflects, to
the extent required by GAAP as consistently applied by Rudy's, an
accrual of all accrued but unpaid contributions to any Pension
Plan, a Multiemployer Plan, and an accrual of all amounts accrued
but unpaid under the Welfare Plans and the Employment Plans, all
as of the Balance Sheet Date.
5.26.4 Each Pension Plan and each related trust
agreement, annuity contract, or other funding instrument, is
qualified and tax exempt under the provisions of Sections 401(a)
(or 403(a) as appropriate) and 501(a) of the Internal Revenue
Code ("Code"), and a determination letter has been received from
the Internal Revenue Service as to such qualified status.
5.26.5 Each Pension Plan, Welfare Plan and
Employment Plan complies in all material respects with all
applicable laws (including to the extent applicable, without
limitation, the Code and ERISA) and is operated in accordance
with its terms, except where such non-compliance would have no
Material Adverse Effect.
5.26.6 Each of Rudy's, any Subsidiary and any
Common Control Entity has paid all premiums (and interest charges
and penalties for late payment, if applicable), due heretofore to
the PBGC with respect to each Pension Plan. Except as described
on Schedule 5.26, there has been no "reportable event", as
defined in Section 4043(b) of ERISA and the PBGC regulations
under that Section, with respect to any Pension Plan as to which
notice has not been waived under applicable PBGC under PBGC
regulations. No liability to the PBGC has been incurred by
Rudy's, any Subsidiary or any Common Control Entity, on account
of the termination of any Pension Plan. The PBGC has not
instituted proceedings to terminate any Pension Plan and to the
knowledge of Rudy's, there exists no condition or set of
circumstances which could reasonably be expected to present a
significant risk of the termination of any Pension Plan by the
PBGC.
5.26.7 Except as set forth on Schedule 5.26, none
of Rudy's, any Subsidiary nor any Common Control Entity has
withdrawn from a Multiemployer Plan in a "complete withdrawal" or
a "partial withdrawal" as defined in Sections 4203 and 4205 of
ERISA, respectively.
5.26.8 True and complete copies of each of the
following documents have been delivered by Rudy's to Benihana:
(i) each Welfare Plan, each Pension Plan and each Multiemployer
Plan, related trust agreements, annuity contracts, or other
funding instruments; (ii) each Employment Plan and complete
descriptions of any such plans that are not in writing; (iii) the
most recent determination letter issued by the Internal Revenue
Service with respect to each Pension Plan; (iv) Annual Reports on
Form 5500 Series required to be filed with any governmental
agency for each Welfare Plan and each Pension Plan for the two
most recent plan years; and (v) all actuarial reports prepared
for the last two available plan years for each Pension Plan.
5.26.9 Except as described on Schedule 5.26,
neither Rudy's, any Subsidiary nor any Welfare Plan or Employment
Plan is obligated to make any payment of post-retirement life,
accidental death, medical or disability insurance benefits of any
type, excluding, for this purpose, the provisions of any such
benefit as a result of an individual's exercise of his or her
health care continuation rights under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, to or with respect
to any former employee of Rudy's or a Subsidiary.
5.27 BROKERS AND FINDERS. Except as set forth on
Schedule 5.27, Rudy's is not a party to any agreement with any
person that would obligate Rudy's or any of the Subsidiaries to
pay any brokerage fee, commission, finder's fees or investment
banking fee in connection with the transactions contemplated by
this Agreement.
5.28 CONSENTS. Except as set forth in this Agreement,
the consummation of the transactions contemplated hereby in
respect to Rudy's and Principal Shareholders and the fulfillment
of the terms of this Agreement in respect of Rudy's and the
Principal Shareholders do not require the consent, approval,
filing with, registration or release of any governmental
authority or any other Person including, without limitation, any
Person who is a party to a contract or a lease, except for those
approvals, consents, filings, registrations or releases the
failure of which to file or obtain would not have a Material
Adverse Effect.
5.29 BOOKS AND RECORDS. Rudy's has maintained
complete and correct copies of: (a) the Articles or Certificate
of Incorporation and by-laws and other charter documents of
Rudy's and each of the Subsidiaries and all amendments thereto;
(b) the stock records of Rudy's and each Subsidiary; and (c) the
minutes and other records of the meetings and other proceedings
of the shareholders and directors of Rudy's and each Subsidiary
are complete and current in all material respects.
5.30 FAIRNESS OPINION. The Board of Directors of
Rudy's has received the written opinion (the "Fairness Opinion")
of Ladenburg ▇▇▇▇▇▇▇▇ & Co., Inc. to the effect that the Cash
Consideration is fair, from a financial point of view, to the
holders of the Rudy's Shares, other than the Principal
Shareholders. Benihana has been furnished with a true and
complete copy of the Fairness Opinion.
6. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL
SHAREHOLDERS.
6.1 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇.
In order to induce Benihana and Newco to enter into
this Agreement and to consummate the Merger and the other
transactions contemplated herein, ▇▇▇▇▇▇▇ represents and warrants
as follows:
6.1.1 ▇▇▇▇▇▇▇ is the owner, beneficially and of
record, of 2,086,000 Rudy's Shares and ▇▇▇▇▇▇▇ has good, valid
and marketable title to such Rudy's Shares free and clear of all
liens, encumbrances, security interests or claims whatsoever.
6.1.2 This Agreement has been duly and validly
executed by ▇▇▇▇▇▇▇ as to the provisions of Sections 6 and 8.10.
The provisions of Sections 6 and 8.10 are the legal, valid and
binding obligations of ▇▇▇▇▇▇▇ enforceable against ▇▇▇▇▇▇▇ in
accordance with their terms.
6.1.3 ▇▇▇▇▇▇▇ is acquiring the Warrant for
investment and not with a view to distribution of the Warrant or
the Warrant Shares without compliance with the registration
provisions of the Securities Act or the availability of an
exemption therefrom.
6.2 REPRESENTATIONS AND WARRANTIES OF BAYVIEW.
In order to induce Benihana and Newco to enter into
this Agreement and to consummate the Merger and the other
transactions contemplated herein, Bayview represents and warrants
as follows:
6.2.1 Bayview is the owner, beneficially and of
record, of 450,000 Rudy's Shares. Bayview has good, valid and
marketable title to such Shares free and clear of all liens,
encumbrances, security interests or claims whatsoever.
6.2.2 This Agreement has been duly and validly
authorized and executed by all necessary corporate action of
Bayview as to the provisions of Section 6 and 8.10. The
provisions of Sections 6 and 8.10 are legal, valid and binding
obligations of Bayview enforceable against Bayview in accordance
with their terms.
7. REPRESENTATIONS AND WARRANTIES OF BENIHANA AND NEWCO.
In order to induce Rudy's to enter into this Agreement and
to consummate the Merger and the other transactions contemplated
herein, Benihana and Newco represent and warrant to Rudy's as
follows:
7.1 CORPORATE ORGANIZATIONS; ETC.. Benihana and Newco
are corporations duly organized, validly existing and in good
standing under the laws of the States of Delaware and Nevada,
respectively.
7.2 AUTHORIZATION, ETC.. This Agreement and each
agreement, document and instrument required to be delivered by
Benihana at the Closing, including, without limitation, the
Warrant, have been duly and validly authorized by all necessary
corporate action of Benihana and Newco, as the case may be.
Benihana and Newco each have full corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement is the valid and binding
agreement of Benihana and Newco enforceable against them in
accordance with its terms.
7.3 WARRANT SHARES. The Warrant Shares, when issued
upon a due exercise of the Warrant, will be fully paid, validly
issued, duly authorized and non-assessable shares of the Class A
Stock of Benihana.
7.4 NO VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the
transactions contemplated hereby will violate any provision of
the Certificate of Incorporation, Articles of Incorporation or
By-Laws or similar corporate documents of Benihana or any
subsidiary of Benihana or will (a) violate, or be in conflict
with, or constitute a breach or default (or an event which, with
the giving of notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or acceleration
of the performance required by, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the
creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of Benihana or any
subsidiary of Benihana under any Contractual Obligation to which
Benihana or any subsidiary of Benihana is a party or by which
Benihana or any subsidiary of Benihana is bound, or to which the
property of Benihana or any subsidiary of Benihana is subject,
except where such violation, conflict, breach, default,
termination, acceleration, security interest, lien or other
encumbrance would not have a Material Adverse Effect; or (b)
violate any statute or law or any judgment, decree, order,
regulation or rule of any court or Governmental Authority to
which Benihana is subject, except where such violation would not
have a Material Adverse Effect.
7.5 APPROVALS OF GOVERNMENTAL AUTHORITIES. No action,
consent, approval or authorization of or declaration, filing or
registration with any person or entity, including without
limitation, any Governmental Authority is required to be obtained
or made by or on behalf of Benihana or Newco in connection with
the execution, delivery and performance by Benihana and Newco of
this Agreement or the consummation of the transactions
contemplated hereby in respect of Benihana and Newco.
7.6 BROKERS AND FINDERS. Neither Benihana nor Newco
is a party to any agreement with any person or entity which would
obligate Rudy's, any Subsidiary or the Principal Shareholders to
pay any commission, finder's fee, investment banking fee, or
brokerage fee in connection with the transactions contemplated by
this Agreement.
7.7 PUBLIC REPORTS; COMPLIANCE. Benihana has
heretofore delivered to Rudy's true and complete copies of the
Benihana Reports. Each of the Benihana Reports complied with all
applicable rules and regulations of the Securities Act or the
Exchange Act, as the case may be, as of their respective dates of
filing. None of the Benihana Reports contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to make
the statements therein not misleading (in each case as of the
respective dates thereof).
7.8 THE CLASS A STOCK. The Class A Stock and the
Common Stock, par value $.10 per share, of Benihana are
registered under Section 12(g) of the Exchange Act, are quoted on
NASDAQ, and Benihana is currently subject to the periodic
reporting requirements of Section 13 or Section 15(c) of the
Exchange Act. Benihana has filed and will file all reports
required to be filed by it pursuant to the Exchange Act and the
regulations promulgated thereunder through the date hereof and
the Closing.
8. COVENANTS OF RUDY'S AND THE PRINCIPAL SHAREHOLDERS.
A. COVENANTS OF RUDY'S
8.1 CONDUCT OF BUSINESS - NEGATIVE COVENANTS.
From the date hereof through the Effective Time and except as
contemplated by this Agreement, Rudy's and the Subsidiaries shall
not, without the prior written consent of Benihana, conduct the
business of Rudy's and the Subsidiaries other than in the
ordinary course or commit or cause or authorize any act or
omission which deviates from the ordinary course of business.
Without limiting the generality of the foregoing, prior to the
Effective Time, none of the following shall occur without the
prior written consent of Benihana:
8.1.1 Rudy's and the Subsidiaries shall not
institute any new methods of purchase, sale, lease, management,
accounting or operation or engage in any transaction or activity,
enter into any agreement or make any commitment or amend any
existing material agreement, except in the ordinary course of
business and consistent with past practice.
8.1.2 Rudy's and the Subsidiaries shall not
change or amend their articles or certificates of incorporation
or by-laws or propose any such change or amendment.
8.1.3 Rudy's and the Subsidiaries shall not
offer, issue or sell any shares of the capital stock or other
securities (such term as used in this subsection to include,
without limitation, debt securities) of Rudy's or any Subsidiary
of any kind whatsoever, acquire directly or indirectly, by
redemption or otherwise, any such capital stock, reclassify or
split-up any such capital stock, declare or pay any dividends
thereon in cash, securities or other property, or make any other
distribution with respect thereto, or grant or enter into any
stock options, warrants, or other rights to acquire securities of
Rudy's or any Subsidiary or enter into any other contracts or
commitments of any kind with respect to the issuance of
additional shares of capital stock or other securities of Rudy's
or any Subsidiary.
8.1.4 Rudy's and the Subsidiaries shall not
borrow or agree to borrow any funds or incur, or assume or become
subject to, whether directly or by way of guaranty or otherwise,
any obligation or liability (absolute or contingent), except in
the ordinary court of business consistent with past practices or
pursuant to existing credit arrangements copies of which have
previously been furnished to Benihana.
8.1.5 Rudy's and the Subsidiaries shall not pay,
discharge, waive, satisfy or compromise or adjust any claim,
liability or obligation (absolute, accrued, contingent or
otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice
of liabilities or obligations reflected or reserved against the
Unaudited Balance Sheet or incurred in the ordinary course of
business and consistent with past practice since the date of the
Unaudited Balance Sheet.
8.1.6 Rudy's and the Subsidiaries shall not make
any single capital expenditure or commitment in excess of $50,000
for additions to property, plant, equipment or intangible capital
assets or make any capital expenditure or commitments so that the
aggregate of capital expenditures and commitments do not exceed
$100,000 since the Balance Sheet Date for additions to property,
plant, equipment or intangible capital assets;
8.1.7 Rudy's and the Subsidiaries shall not
prepay any obligation having a fixed maturity of more than sixty
(60) days from the date such obligation was incurred.
8.1.8 Rudy's and the Subsidiaries shall not
permit or allow any of its property or assets (real, personal or
mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien or encumbrance, except in the ordinary course of
business and consistent with past practice or pursuant to
existing credit arrangements which have been disclosed to
Benihana.
8.1.9 Rudy's and the Subsidiaries shall not write
down the value of any inventory (including write-downs by reason
of shrinkage or markdown) or write off as uncollectible any notes
or accounts receivable, except for immaterial write-downs of
inventory or accounts receivable in the ordinary course of
business and consistent with past practice.
8.1.10 Rudy's and the Subsidiaries shall not
cancel any debts or waive any claims or rights involving more
than $1,000 or sell, transfer, or otherwise dispose of any of its
properties or assets, except in the ordinary course of business
and consistent with past practice.
8.1.11 Rudy's and the Subsidiaries shall not
dispose of any rights to the use of any patent, trademark, trade
name or copyright, or dispose of or disclose to any person any
trade secret, formula, process or know-how not theretofore a
matter of public knowledge except where such disposition or
disclosure would not have a Material Adverse Effect.
8.1.12 Rudy's and the Subsidiaries shall not
grant any increase in the compensation of officers or general
increase in the compensation of employees (including any such
increase pursuant to any bonus, pension, profit sharing or other
plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employee, except increases
granted in the ordinary course of business and reasonable
increases to employees who are not officers consistent with past
practice and pursuant to existing agreements. Notwithstanding
the preceding or any other term or condition hereof, Rudy's shall
be entitled to expend or commit to expend on or before the
Effective Time, an amount not to exceed an aggregate of $787,500
to be paid as severance payments or bonuses to certain employees
of Rudy's. Schedule 8.1.12 sets forth the names of each employee
with respect to whom such payments will be made and the
respective amounts of each such payment. Rudy's shall cause each
of such employees (except any who have accepted an offer of
continued employment following the Effective Time from the
Surviving Corporation or Benihana) to deliver a letter (each a
"Severance Letter") to the Surviving Corporation at the Closing
providing for the terms as annexed hereto as Exhibit 8.1.12.
8.1.13 Rudy's and the Subsidiaries shall not
sell, transfer, surrender, terminate, sublease or lease any
properties or assets to, or enter into any agreement or
arrangement with, any of their officers or directors, except
pursuant to existing arrangements with such directors and
officers relating to directors' fees and compensation to
officers.
8.1.14 Rudy's and the Subsidiaries shall not
modify any collective bargaining or other labor agreement to
which they are a party or by which it may be bound, except for
immaterial modifications in the ordinary course of business which
are consistent with past practice or required by applicable law.
8.1.15 Rudy's and the Subsidiaries shall not
terminate any Plan or withdraw from any Multiemployer Plan or
fail to notify Benihana of any "prohibited transaction", as such
term is defined in Section 4975 of the Internal Revenue Code.
8.1.16 Rudy's and the Subsidiaries shall not
enter into or consent to any amendment of, or sublease with
respect to the properties demised under the Leases except in the
ordinary course of business and consistent with past practice.
8.1.17 Rudy's and the Subsidiaries shall not take
any action, or omit the taking of any action, which would cause
any of the representations or warranties made in Article 5 hereof
to be or become untrue or incorrect in any material respect as of
the Closing Date.
8.1.18 Rudy's and the Subsidiaries shall not
agree or commit, whether in writing or otherwise, to do any of
the foregoing.
8.2 CONDUCT OF BUSINESS - AFFIRMATIVE COVENANTS.
Prior to the Effective Time, Rudy's and each Subsidiary will
conduct its business in the ordinary course and consistent with
past practice, except where the failure to do so would not have a
Material Adverse Effect. Without limiting the generality of the
foregoing, prior to the Effective Time each of Rudy's and the
Subsidiaries:
8.2.1 will maintain its good standing and
qualification to do business in all jurisdictions where it is
required to be qualified to do business, and all licenses,
permits, franchises, rights and privileges which are necessary
for the conduct of the its business;
8.2.2 shall continue at its expense to maintain
its property and equipment in customary repair, order and working
condition, reasonable wear and use excepted, and keep in full
force and effect the Leases, except those which expire by their
terms, and, if any Leases expire by their own terms, renew the
same if such renewal is in the ordinary course of business and
consistent with past custom and practice;
8.2.3 shall duly comply with all laws, regulatory
requirements and agreements to which it is subject or by which it
is bound;
8.2.4 shall maintain the current insurance upon
its properties and with respect to the conduct of its business;
8.2.5 shall pay and discharge, before the same
shall become delinquent, all Taxes imposed on it or against its
income or profits or any of its properties, and all other
Liabilities which, if unpaid, might become an encumbrance, except
to the extent and so long as (i) the same are being contested in
good faith and by appropriate proceedings, and (ii) it shall have
set aside on its books reasonable reserves with respect thereto
under GAAP consistently applied;
8.2.6 shall use commercially reasonable efforts
to keep intact its present business organizations, keep available
the services of its present officers, employees and agents and
use commercially reasonable efforts to preserve its present
relationships with all customers, clients, accounts, suppliers
and other entities or persons having business relationships with
it, in each case in the ordinary course of business or in a
manner consistent with customary historical practices or course
of conduct;
8.2.7 shall furnish to Benihana for its
examination (i) its minute books containing all records required
to be set forth of all proceedings, consents, actions and
meetings of the shareholders and Board of Directors; (ii) all
permits, orders, and consents issued by any governmental
authority with respect to Rudy's and such Subsidiary, and all
applications for such permits, orders, and consents; and (iii)
its stock transfer books setting forth all transfers of any
shares of capital stock;
8.2.8 shall maintain its books, records and
accounts with accuracy and consistently with past practices; and
8.2.9 shall comply with the requirements of any
state, city or local law, statute, ordinance, regulation or
otherwise in any state, city or locality in which any of the
Owned Real Properties are located and/or in which any of the
properties demised under the Leases are located, which law,
statute, ordinance or regulation imposes a transfer tax and/or
filing requirement in connection with the transactions
contemplated hereby.
8.3 SHAREHOLDERS' MEETING; PROXY STATEMENT.
8.3.1 Promptly following the date hereof, Rudy's
will prepare and file with the SEC a proxy statement (the "Proxy
Statement") for a special meeting of the shareholders of Rudy's
to be held pursuant to Section 8.3.2. The Proxy Statement shall
contain all information required by Schedule 14A promulgated
under the Exchange Act. Benihana will cooperate with Rudy's in
the preparation of the Proxy Statement, including the furnishing
of all information with respect to Benihana, including financial
statements, to the extent required to be included in the Proxy
Statement.
Rudy's covenants and warrants that at the time it
is furnished to the shareholders of Rudy's, the Proxy Statement
shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein in order
to make the statements therein not misleading. Such covenant
shall not be deemed to apply to information furnished in writing
by Benihana specifically for inclusion in the Proxy Statement.
8.3.2 At the earliest practicable date following
the date that the Proxy Statement has been cleared for mailing by
the SEC, Rudy's shall distribute the Proxy Statement to its
shareholders giving notice of the Shareholders' Meeting for the
purposes of adopting this Agreement and approving the Merger and
soliciting proxies in favor thereof. The Shareholders' Meeting
shall be held as soon as practicable (but in no event less than
30 or more than 60 days) following the date that the Proxy
Statement has been cleared for mailing by the SEC.
8.4 ACCESS TO INFORMATION AND PERSONNEL. Subject to
the confidentiality obligations under Section 9.1 hereof, at
reasonable times before the Effective Time, Benihana, through its
duly appointed representatives and agents, during normal business
hours and in a manner which does not unduly interfere with the
business operations of Rudy's or any of the Subsidiaries, shall
have the right to speak with, interview and discuss the business
and operations of Rudy's and the Subsidiaries with the officers,
employees, attorneys and agents of Rudy's and the Subsidiaries
and shall have the right to visit the premises of Rudy's and the
Subsidiaries, to examine, to the extent permitted by law, any and
all records, books, contracts, commitments, shareholder lists,
files, working papers and drafts prepared by accountants and any
independent public accounting firms retained by Rudy's and the
Subsidiaries and other documents pertaining to the business and
operations of Rudy's and the Subsidiaries and the ownership of
its properties and to undertake such other steps as Benihana
considers appropriate to familiarize itself with Rudy's and the
Subsidiaries. All of such interviews, discussions and
inspections shall be coordinated reasonably in advance with the
President of Rudy's.
8.5 ESTOPPEL CERTIFICATES OR CONSENTS. Immediately
upon its execution of this Agreement, Rudy's shall exercise its
best efforts to obtain and deliver to Benihana at the Closing
customary estoppel certificates from landlords under the leases
and, with respect to Leases which require the consent of the
landlord thereunder for the transactions contemplated hereby,
landlord consents (such consents not to be conditioned on any
increased rental, other payment, reduced term, or other change of
lease terms) in form and substance reasonably satisfactory to
Benihana.
8.6 CONFIDENTIALITY. During the period before the
Effective Time, each of Rudy's and the Principal Shareholders
severally covenants that it shall not disclose or assist in the
disclosure by any person or entity, or use to the competitive
detriment of Benihana, any confidential or proprietary
information regarding Benihana, except that disclosure of such
information may be made to their respective legal counsel,
accountants, financial advisors, investment bankers and their
other authorized agents and representatives, and to such persons
only to the extent required for activities directly related to
the transactions contemplated by this Agreement, or except to the
extent that disclosure is required by law or by a court of
competent jurisdiction. Following the Closing, the Principal
Shareholders shall not disclose or acquiesce in the disclosure by
any person or entity (other than Rudy's), or use to the
competitive detriment of Benihana or Rudy's, any confidential or
proprietary information regarding Benihana or Rudy's.
8.7 NO SOLICITATION. Neither the Principal
Shareholders, their representatives or agents, nor Rudy's not its
officers, directors, representatives or agents shall, directly or
indirectly, solicit, initiate or participate in discussions or
negotiations with, or provide any information to, any Person
(other than Benihana or Newco) concerning, or enter into any
agreement providing for any merger, sale of material assets,
sale of shares of capital stock or similar transactions involving
Rudy's; provided that the Board of Directors of Rudy's may
furnish information and may participate in such discussion or
negotiations if required to satisfy the Fiduciary Obligations (as
hereinafter defined) of the Board of Directors of Rudy's.
"Fiduciary Obligations" shall arise if the Board of Directors
believes, in good faith, after consultation with its financial
and legal advisors, that such Person may make a bona fide
proposal for a transaction materially more favorable to the
stockholders of Rudy's from a financial point of view than the
transactions contemplated hereby (a "Higher Offer"). The Board
of Directors will communicate to Benihana within one business day
of receipt the terms of any proposal received, or the fact that
Rudy's has received inquiry with respect to, any such
transactions.
8.8 BEST EFFORTS. So long as this Agreement remains
in effect, Rudy's and the Principal Shareholders shall use their
best efforts to cause the transactions contemplated herein to be
consummated at the earliest practicable date. Rudy's shall
proceed as soon as practicable in the procurement of permits,
consents and approvals and in the taking of any other action, and
the satisfaction of all other requirements prescribed by law or
otherwise necessary for consummation of the acquisition on the
terms herein provided, and shall diligently prosecute the same.
8.9 TAX RETURNS; SECTION 338 ELECTION. For all
periods ending on or prior to the Effective Time, Rudy's shall
file all Tax Returns and Statements which are required by
applicable law to be filed, all in a manner consistent with past
practices. In connection therewith, Rudy's agrees that any
decision as to whether to make an election under Section 338 of
the Code (or any corresponding or similar provision under state
or local law) shall be made by Benihana in its sole discretion
and Rudy's will cooperate at Benihana's expense as requested in
connection with all such elections.
B. COVENANTS OF PRINCIPAL SHAREHOLDERS.
8.10 COVENANTS OF PRINCIPAL SHAREHOLDERS.
8.10.1 Prior to the Effective Time, the Principal
Shareholders shall not, directly or indirectly, sell, transfer,
pledge, hypothecate, encumber or otherwise dispose or surrender
possession of, or enter into any contract or agreement for the
sale, transfer or other disposition of the ▇▇▇▇ Shares, except by
will, intestacy or otherwise by operation of law.
8.10.2 The Principal Shareholders shall not
permit Rudy's or the Subsidiaries to take any actions in
contravention of Section 8.1.
8.10.3 The Principal Shareholders shall use their
reasonable efforts to cause Rudy's and the Subsidiaries to comply
with the covenants of Section 8.2.
8.10.4 At the Shareholders' Meeting, the
Principal Shareholders will vote, or cause to be voted, all of
Rudy's Shares owned beneficially by each of them in favor of
approving the Merger and this Agreement.
8.10.5 The Principal Shareholders shall comply
with the covenants set forth in Sections 8.6, 8.7 and 8.8 to the
extent applicable to them.
9. COVENANTS OF BENIHANA AND NEWCO.
9.1 CONFIDENTIALITY. Prior to the Closing, Benihana
and Newco shall not disclose or acquiesce in the disclosure by
any Person, or use to the competitive detriment of Rudy's, any
confidential or proprietary information regarding Rudy's or its
business or financial condition, contained in any documents or
otherwise furnished by or on behalf of Rudy's or the Principal
Shareholders, or otherwise learned by Benihana or Newco as a
result of participation in the transactions contemplated hereby,
to any Person except its legal counsel, accountants, financial
advisors, bankers, investment bankers and other authorized agents
and representatives, and to such persons only to the extent
required for activities directly related to the transactions
contemplated by this Agreement, including, without limitation,
the financing of Benihana's obligation hereunder. If the
transaction contemplated by this Agreement for any reason does
not close, Benihana and Newco agree to, and shall thereafter
continue to, abide by the preceding provisions of this Section
9.1 and in so doing, and without limitation, shall permanently
protect the confidentiality of all confidential or proprietary
information provided to it by Rudy's and return to Rudy's all
written information provided to Benihana and Newco by Rudy's, and
also shall return or, at Rudy's election, destroy all copies made
of such written information and submit its affidavit of its duly
authorized officers that all such written information and copies
have been returned. In addition, neither Benihana nor any
subsidiary of Benihana will, without the prior written consent of
Rudy's, solicit or make an offer of employment to any present
employee of Rudy's for a period of 12 months from the date of any
termination of this Agreement without a Closing.
9.2 BEST EFFORTS. So long as this Agreement remains
in effect, Benihana and Newco shall use their best efforts to
cause the transactions contemplated hereby to be consummated at
the earliest practicable date. Benihana and Newco shall proceed
as soon as practicable in the procurement of permits, consents
and approvals (including, without limitation, Liquor License
applications or transfers) and in the taking of any other action,
and the satisfaction of all other requirements prescribed by law
or otherwise necessary for consummation of the acquisition on the
terms herein provided, and shall diligently prosecute the same.
10. CONDITIONS TO CLOSING.
10.1 CONDITIONS PRECEDENT TO THE PERFORMANCE OF
BENIHANA AND NEWCO. The obligations of Benihana and Newco to
consummate the acquisition in accordance with this Agreement is
subject to the fulfillment of each of the following conditions,
any of which may be waived in writing by Benihana, in whole or in
part, in its sole discretion:
10.1.1 COMPLIANCE WITH THIS AGREEMENT.
(a) Rudy's and the Principal Shareholders
shall have performed and satisfied in all material respects all
covenants, obligations, agreements and conditions required by
this Agreement to be performed and satisfied by each of them, on
or prior to the Effective Date;
(b) The representations and warranties
contained in Articles 5 and 6 hereof shall be in all material
respects true, correct and complete as of the date when made and
at and as of the Effective Date as though such representations
and warranties were made at and as of such date, except for
changes expressly permitted or contemplated by the terms of this
Agreement. For purposes of this condition and the certificate
required by subsection (c) below, any decline in sales or net
income of Rudy's arising from operations in the ordinary course,
consistent with past practices and not resulting from a violation
of any covenant of Rudy's hereunder shall be deemed a change
expressly permitted or contemplated by the terms of this
Agreement;
(c) Rudy's shall have delivered to Benihana
a certificate signed by its Chief Executive Officer and Chief
Financial Officer dated as of the Effective Date. Such
certificate shall certify as to the truth, completeness and
correctness in all material respects of each of the
representations and warranties set forth in Article 5 made by
Rudy's and as to the fulfillment in all material respects of the
covenants set forth in Article 8A hereof which are required by
this Agreement to be performed and satisfied by Rudy's on or
before the Effective Date.
10.1.2 APPROVALS. All corporate action, including
approval by the shareholders of Rudy's at the Shareholders'
Meeting, necessary for Rudy's to approve the execution and
delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement shall have been taken
and not revoked by the Board of Directors and shareholders of
Rudy's, and Rudy's shall have delivered to Benihana certified
copies of resolutions of the Board of Directors and shareholders
of Rudy's evidencing such action.
10.1.3 NO MATERIAL ADVERSE EFFECT. As of the
Effective Date, there shall have been no condition, development
or occurrence in respect of the assets, business, financial
condition or prospects of Rudy's and the Subsidiaries which would
constitute a Material Adverse Effect when compared to such
condition as at the Balance Sheet Date, other than any such
condition, development or occurrence arising from operations in
the ordinary course and consistent with past practices or course
of conduct and which does not consist of or result from a
violation of any covenant of Rudy's hereunder, and, on the
Effective Date, Rudy's shall deliver a certificate to such effect
signed by the Chief Financial Officer of Rudy's.
10.1.4 OPINION OF COUNSEL FOR RUDY'S. Benihana
shall have received the legal opinion of counsel for Rudy's,
including an opinion of Nevada counsel, dated as of the Effective
Date, which opinion shall opine as to the items set forth on
Exhibit 10.1.4, subject to customary exceptions and
qualifications (the "Rudy's Counsel Opinion").
10.1.5 NO INJUNCTION. On the Effective Date,
there shall be no effective injunction, writ, preliminary or
temporary restraining order or order of any nature issued by a
court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the
transaction contemplated hereby that Benihana deems unacceptable
in its sole discretion.
10.1.6 CONSENTS AND APPROVALS. Benihana shall
have received any necessary approvals and consents from all third
parties, including, without limitation, the landlords under the
Leases to the extent such consent is required by the terms of the
Leases, and the approval of all relevant state authorities with
respect to Newco's and Benihana's acquisition of an interest in
the Restaurants pursuant to the Merger, and such approvals and
consents shall not have expired or been withdrawn as of the
Effective Date. Each of such required consents is set forth on
Schedule 10.1.6 hereof.
10.1.7 NO LITIGATION. As of the Effective Date,
no writ, action, investigation, inquiry, litigation or other
proceeding relating to or affecting Rudy's or any Subsidiary or
any of their respective directors, officers, employees or agents
in their capacities as such, the assets, properties or business
of Rudy's or the transactions contemplated by this Agreement
shall have been instituted seeking any relief which, if granted,
would have a Material Adverse Effect or challenging the legality
of the Merger, seeking to restrain the consummation thereof or
seeking damages in connection therewith.
10.1.8 APPROVAL OF DOCUMENTATION. The form and
substance of all certificates, instruments, opinions, and other
documents delivered to Benihana under this Agreement shall be
reasonably satisfactory in all material respects to Benihana and
its counsel.
10.1.9 APPRAISAL RIGHTS. Holders of Rudy's
Shares representing no more than 7.5% of the outstanding Rudy's
Shares shall have duly submitted valid written requests for the
payment of the fair value of their Rudy's Shares in accordance
with Section 92A.380 of the Nevada Law.
10.1.10 SEVERANCE LETTERS. Benihana shall have
received duly executed copies of the Severance Letters referred
to in Section 8.1.12.
10.1.11 FAIRNESS OPINION. The Fairness Opinion
shall have been confirmed in writing by Ladenburg ▇▇▇▇▇▇▇▇ & Co.,
Inc. as of the date of mailing of the Proxy Statement.
10.1.12 RESIGNATIONS. Each of the directors and
officers of Rudy's and the Subsidiaries immediately prior to the
Effective Time shall have resigned from all offices held by a
written letter of resignation, copies of which shall be delivered
to Benihana at the Closing.
10.2 CONDITIONS PRECEDENT TO RUDY'S PERFORMANCE. The
obligation of Rudy's to consummate the Merger in accordance with
this Agreement is subject to the fulfillment of each of the
following conditions, any of which may be waived in writing by
Rudy's, in whole or in part, in its sole discretion:
10.2.1 COMPLIANCE WITH THIS AGREEMENT.
(a) Benihana and Newco shall have performed
and satisfied in all material respects all covenants,
obligations, agreements and conditions required by this Agreement
to be performed and satisfied by Benihana and Newco on or prior
to the Effective Date;
(b) The representations and warranties of
Benihana and Newco contained in Article 7 hereof shall be true,
correct and complete in all material respects as of the date when
made and at and as of the Effective Date as though such
representations and warranties had been made on such date, except
for changes expressly permitted on contemplated by the terms of
this Agreement;
(c) Benihana shall have delivered to Rudy's
a certificate, signed by its President and its Chief Financial
Officer, dated as of the Effective Date, certifying as to the
truth, completeness and correctness in all material respects of
each of the representations and warranties set forth in Article 7
hereof and the fulfillment in all material respects of each of
the covenants set forth in Article 9 hereof.
10.2.2 APPROVALS. All corporate action by
Benihana and Newco necessary to approve the execution and
delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement prior to the
Effective Date shall have been taken and not revoked and Benihana
shall have delivered to Rudy's certified copies of resolutions of
the Board of Directors of Benihana and Newco evidencing such
actions.
10.2.3 OPINIONS OF COUNSEL FOR BENIHANA. Rudy's
shall have received the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP, counsel for Benihana and Newco, dated as of the
Effective Date, and addressed to Rudy's, which opinion shall
opine as to the items set forth on Exhibit 10.2.3, subject to
customary exceptions and qualifications (the "Benihana's Counsel
Opinion").
10.2.4 NON-COMPETITION AGREEMENT. The Surviving
Corporation and Benihana shall have offered to enter into a Non-
Competition Agreement with each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
substantially in the form annexed as Exhibit 10.2.4 hereto.
10.2.5 WARRANT. Benihana shall have issued the
Warrant to ▇▇▇▇▇▇▇, providing for the right to purchase 200,000
shares of the Class A Stock at a price of $8.00 per share and
containing the further terms and conditions, and in substantially
the form, as annexed hereto as Exhibit 10.2.5.
10.2.6 FAIRNESS OPINION. The Fairness Opinion
shall have been confirmed in writing by Ladenburg ▇▇▇▇▇▇▇▇ & Co.,
Inc. as of the date of mailing of the Proxy Statement.
10.2.7 APPROVAL OF DOCUMENTATION. The form and
substance of all certificates, instruments, opinions, and other
documents delivered to Rudy's under this Agreement shall be
reasonably satisfactory in all material respects to Rudy's and
its counsel.
10.2.8 ABSENCE OF LEGAL CHALLENGE TO MERGER. As
of the Effective Date, there shall be in effect no order, writ,
injunction, judgment or decree of any court or Governmental
Authority in the United States or any state or territory thereof,
prohibiting the consummation of the Merger or any of the other
transactions specified in or required by the terms of this
Agreement, and there shall be no action, suit or proceeding or
pending before any court, Governmental Authority or other body
challenging the legality of the Merger or any of the transactions
specified in or required by the terms of this Agreement, seeking
to restrain their consummation or seeking damages in connection
therewith.
11. DELIVERIES AT CLOSING.
11.1 RUDY'S OBLIGATIONS. At the Closing, Rudy's shall
deliver to Benihana or as Benihana may designate:
11.1.1 the certificates required by Section
10.1.1 and 10.1.3 hereof;
11.1.2 Rudy's Counsel Opinion required by Section
10.1.4 hereof;
11.1.3 a true and complete copy of the letter
from Ladenburg ▇▇▇▇▇▇▇▇ & Co., Inc. as to the Fairness Opinion
required by Section 10.1.11 hereof;
11.1.4 the certified resolutions required by
Section 10.1.2 hereof;
11.1.5 the duly executed resignations required by
Section 10.1.12 hereof;
11.1.6 the duly executed consents required by
Section 10.1.6; and
11.1.7 the Severance Letters.
11.2 OBLIGATIONS OF BENIHANA AND NEWCO. At the
Closing, and against delivery of each of the items required to be
delivered by Rudy's under Section 11.1 above, Benihana and Newco
shall deliver the following.
11.2.1 the Certificate required under Section
10.2.1(c);
11.2.2 the certified resolutions required by
Section 10.2.2;
11.2.3 Benihana's Counsel Opinion required by
Section 10.2.3. hereof;
11.2.4 The Non-Competition Agreement with ▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ required by Section 10.2.4;
11.2.5 The Warrant; and
11.2.6 The Cash Consideration will be delivered
to the Exchange Agent and the Escrow Agent as contemplated by
Section 4.3 hereof.
11.3 FILINGS. Promptly upon the completion or waiver
of the conditions set forth in Article 10 hereof and the
deliveries required by Sections 11.1 and 11.2 hereof, the
Surviving Corporation will cause the Articles of Merger to be
filed in Nevada, thereby consummating the Merger.
12. POST CLOSING MATTERS.
12.1 OFFICES OF RUDY'S. Benihana shall cause the
Surviving Corporation to continue to maintain the executive
offices of Rudy's located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ until the expiration of the current lease on such
offices in August, 1998. During such period Benihana and the
Surviving Corporation will permit ▇▇▇▇▇▇▇ and his affiliates to
occupy such offices in accordance with their present practices.
Benihana and the Surviving Corporation also acknowledge that the
furniture, equipment and other personal items in such offices are
the personal property of ▇▇▇▇▇▇▇ and may be removed from such
offices, at ▇▇▇▇▇▇▇'▇ election.
13. TERMINATION.
13.1 TERMINATION. This Agreement and the transactions
contemplated herein may be terminated and/or abandoned at any
time before the Closing:
13.1.1 By the written mutual consent of Rudy's
and Benihana;
13.1.2 By Rudy's, by giving written notice to the
other parties to this Agreement, if there is a continuing
material breach by Benihana of any of the representations,
warranties, covenants or obligations of Benihana set forth
herein; provided, however, that at the time of such termination,
Rudy's is not in material breach of any of its representations,
warranties, covenants or obligations hereunder (or, if Rudy's is
in such material breach, Rudy's has not commenced to cure and is
not then continuing to diligently pursue the cure of such
breach); provided further, however, that Benihana has a period of
20 days in which to cure such default;
13.1.3 By Benihana by giving written notice to
the other parties to this Agreement, if there is a continuing
material breach by Rudy's or Principal Shareholders of any of the
representations, warranties, covenants or obligations of Rudy's
or the Principal Shareholders, as the case may be, set forth
herein; provided, however, that at the time of such termination,
Benihana and Newco are not in material breach of any of their
representations, warranties, covenants or obligations hereunder
(or, if either is in such material breach, Benihana or Newco, as
the case may be, has not commenced to cure and is not then
continuing to diligently pursue the cure of such breach);
provided further, however, that Rudy's and the Principal
Shareholders have a period of 20 days in which to cure such
default;
13.1.4 By either Benihana or Rudy's, if the
Closing shall not have taken place by January 31, 1998 (the
"Final Date"), provided that at the time of such termination the
terminating party is not in material breach of any of its
representations, warranties, covenants or obligations hereunder
(or, if in such material breach, has not commenced to cure and is
not then continuing to diligently pursue the cure of such
breach). In addition, if, at the Final Date, the sole reason
that the Closing has not taken place is the failure of a third
party to have taken any action required to be taken in order to
satisfy any party's obligation to consummate the Merger (for
example, the issuing or transfer of a liquor license for a
Restaurant) and each party hereto has taken all steps required
hereunder of such party to cause such third party to take such
action, then either party may elect to extent the Final Date,
effective upon notice to the other party, to a date no later than
July 31, 1998;
13.1.5 By Rudy's, subject to Section 13.2.3, if,
prior to the Shareholders Meeting, the Board of Directors of
Rudy's determines, solely due to its Fiduciary Obligations, that
it will not recommend the approval of this Agreement or the
Merger by the Shareholders of Rudy's (or if such recommendation
is withdrawn) and shall have recommended a Higher Offer to the
shareholders of Rudy's.
13.2 EFFECT OF TERMINATION.
13.2.1 WILFUL BREACH BY RUDY'S OR THE PRINCIPAL
SHAREHOLDERS. If this Agreement is terminated by Benihana
pursuant to Sections 13.1.3 as the result of any wilful breach of
any covenant or agreement of Rudy's or the Principal
Shareholders, then Rudy's shall be fully liable for any and all
costs, expenses or damages incurred or suffered by the other
party in connection with, or in respect of, this Agreement and
the transactions contemplated hereby (including, without
limitation, any commitment fees or other amounts paid or payable
by Benihana to any financing source or otherwise incurred in
connection with arranging for, soliciting or obtaining any such
financing).
13.2.2 BREACH BY BENIHANA OR NEWCO. If this
Agreement is terminated by Rudy's pursuant to Section 13.1.2,
then Benihana shall promptly pay Rudy's the sum of $1,000,000,
which represents a good faith estimate of the cost and expenses
incurred by Rudy's in developing the transactions contemplated by
this Agreement. Nothing in this Section 13.2.2 shall relieve
Benihana or Newco from any liability for breach of this Agreement
or limit the availability of any remedy available to Rudy's
provided for hereunder or by law.
13.2.3 TERMINATION BECAUSE OF FIDUCIARY
OBLIGATIONS. In the event this Agreement is terminated by the
Board of Directors of Rudy's pursuant to Section 13.1.5, Rudy's
agrees to pay Benihana a fee equal to the greater of (i)
Benihana's out-of-pocket fees and expenses incurred in developing
and negotiating this Agreement and the transactions contemplated
hereby and (ii) $1,000,000, which represents a good faith
estimate of the cost and expenses incurred by Benihana, together
with the value of lost opportunities, in developing the
transactions contemplated by this Agreement.
13.2.4 OTHER TERMINATIONS. If this Agreement is
terminated as permitted by Subsection 13.1.1, or otherwise
pursuant to Section 13.1 and Subsections 13.2.1 , 13.2.2 and
13.2.3 are not applicable, such termination shall be without
liability of any party (or any shareholder, director, employee,
agent, consultant or representative of such party) to any other
party.
13.3 PROCEDURE UPON TERMINATION. In the event of
termination and abandonment pursuant to this Article 13, written
notice thereof shall forthwith be given to the other party and
the transactions contemplated by this Agreement shall be
terminated and/or abandoned, without further action by any party.
If the transactions contemplated by this Agreement are terminated
and/or abandoned as provided herein:
13.3.1 Each party will redeliver all documents,
work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same; and
13.3.2 All confidential information received by
any party hereto with respect to the business of any other party
or its subsidiaries shall be treated in accordance with Sections
8.7 and 9.1 hereof.
13.4 SURVIVAL. The provisions of Sections 13.2 and
13.3 shall survive termination of this Agreement.
14. GUARANTY OF INDEMNIFICATION.
14.1 GUARANTY. From and after the Effective Time,
Benihana hereby unconditionally guarantees (the "Benihana
Guarantee") the indemnification obligations of Rudy's to its
officers and directors ("Indemnified Persons") immediately prior
to the Effective Time, to the extent provided by the Articles of
Incorporation and By-Laws of Rudy's in effect immediately prior
to the Effective Time and to the extent permitted by the Nevada
Law. Benihana hereby waives any requirement of any Indemnified
Person to pursue their rights hereunder directly against Rudy's
before proceeding against Benihana under the Benihana Guarantee
and waives all other requirements of notice or demand, except as
set forth in Section 14.2 hereof. This guarantee shall survive
the Closing until the expiration of the statute of limitations of
Rudy's indemnification obligations to the Indemnified Persons.
Each Indemnified Person shall be deemed a third party beneficiary
of the Benihana Guarantee.
14.2 PROCEDURE. Any person seeking indemnification
pursuant to the Benihana Guarantee shall provide prompt notice to
Benihana of the assertion of any claim as to which such person
may seek indemnification. Benihana shall be entitled to assume
the defense of any such matter with counsel of it choice, who
shall be reasonably acceptable to the Indemnified Person. The
Indemnified Person shall furnish reasonable cooperation to
Benihana and its counsel in the defense of any such matter and
may participate in such defense with its own counsel, at its own
expense. Notwithstanding the preceding, Benihana shall be
obligated to pay the reasonable fees and expenses of no more than
one counsel for an Indemnified Person, if Benihana receives a
written opinion of counsel for such Indemnified Person to the
effect that there may exist defenses to such Indemnified Person's
potential liability which are different from those available to
Benihana or Rudy's or that there is a significant possibility of
a conflict of interest between such Indemnified Person, on the
one hand, and Benihana and Rudy's, on the other, in connection
with the defense of such matter.
15. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The respective representations and warranties of the
parties contained herein or in any certificates or other
documents delivered prior to or at the Effective Date shall not
be deemed waived or otherwise affected by any investigation made
by any party hereto. The representations and warranties
contained herein shall not survive the Closing. This Article 15
shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Effective
Date.
16. MISCELLANEOUS.
16.1 EXPENSES. Except as otherwise provided hereto,
the parties hereto shall each bear its own expenses in connection
with the transactions contemplated by this Agreement, including
the fees of attorneys, accountants, advisors, brokers, investment
bankers and other representatives and transfer taxes.
16.2 NOTICES AND LEGAL PROCESS. All notices and other
communications and legal process shall be in writing and shall be
personally delivered, transmitted by telecopier, telex or cable,
or transmitted by postage prepaid, registered or certified mail
with return receipt requested or by recognized courier service,
as elected by the party giving such notice, addressed as follows:
(a) If to Rudy's or the Principal Shareholders:
Rudy's Restaurant Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ ▇▇▇▇▇ & Rennert
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Benihana, Newco or the Surviving Corporation:
Benihana Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notices shall be deemed to have been given, made and received
only when delivered (personally, by facsimile transmission or by
courier services such as FedEx, or by other messenger), addressed
as set forth above. Any party hereto may change its address for
purpose hereof by notice to the other parties hereto.
16.3 DISCLOSURE. Each party shall provide the other a
reasonable opportunity for consultation with respect to the text
of any press release announcing the execution of this Agreement
or the transactions contemplated hereby.
16.4 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be an original,
but such counterparts together shall constitute one and the same
instrument.
16.5 WAIVER AND AMENDMENT. The parties may by written
instrument extend the time for the performance of any of the
obligations or other acts of the other hereunder and may waive
(i) any inaccuracies of the other in the representations or
warranties contained in this Agreement or in any document
delivered pursuant hereto, (ii) compliance with any of the
covenants, undertakings or agreements of the other, or
satisfaction of any of the conditions to its or their
obligations, contained in this Agreement or (iii) the performance
(including performance to the satisfaction of a party or its
counsel) by the other of any of its or their obligations set out
herein. Any waiver, amendment or supplement hereof shall be in
writing.
16.6 ENTIRE AGREEMENT. Unless otherwise specifically
agreed in writing, this Agreement and the Schedules and Exhibits
hereto and the other agreements anticipated hereby represent the
entire understanding of the parties with reference to the
transactions set forth herein and supersede all prior
representations, warranties, understandings and agreements
heretofore made by the parties, and neither this Agreement nor
any provisions hereof may be amended, waived, modified or
discharged except by an Agreement in writing signed by the party
against whom the enforcement of any amendment, waiver, change or
discharge is sought.
16.7 BINDING AGREEMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective heirs, successors and permitted assigns except
that no party may assign or transfer its rights or obligation
▇▇▇▇▇▇ this Agreement without the prior written consent of the
other parties to this Agreement. Notwithstanding the foregoing,
Benihana and Newco may assign all or any portion of its rights
hereunder: as collateral security to one or more Persons that
provide the financing for the Merger.
16.8 GOVERNING LAW. The interpretation and
enforceability of this Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Florida without reference to the conflicts of laws provisions
thereof. The Merger shall comply with the Nevada Law.
16.9 SUBMISSION TO JURISDICTION. The parties hereto
hereby irrevocably and unconditionally each:
(a) submits for itself and its property in
any legal action or proceeding relating to this Agreement, or for
recognition and enforcement of any judgment in respect thereof,
to the nonexclusive general jurisdiction of the State of Florida
and its courts and the courts of the United States of America for
the Southern District of Florida located in Dade County;
(b) consents that any such action or
proceeding may be brought in such courts, and waives any
objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action
or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same; and
(c) agrees that nothing herein shall affect
the right to effect service of process in any other manner
permitted by law or shall limit the right to ▇▇▇ in any other
jurisdiction.
16.10 SEVERABILITY; CONSTRUCTION. In the event any
provision hereof is determined to be invalid or unenforceable,
the remaining provisions hereof shall be deemed severable
therefrom and shall remain in full force and effect. Words and
phrases defined in the plural shall also be used in the singular
and vice versa and be construed in the plural or singular as
appropriate and apparent in the context used. Unless otherwise
specifically provided herein, accounting terms shall be given and
assigned their usual meaning and effect as defined or used in
GAAP.
16.11 REFERENCES TO DOLLARS. All references to
"dollars" and "$" shall mean United States dollars.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written:
BENIHANA INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
BENIHANA MERGER CORP.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
RUDY'S RESTAURANT GROUP, INC.
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
BAYVIEW PARTNERS*
By:/s/▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇,
Managing Partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇*
------------------------------------------------
* Solely for the purposes of Sections 6 and 8.10
