AGREEMENT AND PLAN OF MERGER among TAXI HOLDINGS CORP., TAXI ACQUISITION CORP. and CHECKERS DRIVE-IN RESTAURANTS, INC. Dated as of February 16, 2006
EXHIBIT
2.1
AGREEMENT
AND PLAN OF MERGER
among
TAXI
HOLDINGS CORP.,
TAXI
ACQUISITION CORP.
and
CHECKERS
DRIVE-IN RESTAURANTS, INC.
Dated
as of February 16, 2006
|
ARTICLE
I THE
MERGER
|
1
|
|
|
SECTION
1.01.
|
The
Merger.
|
1
|
|
SECTION
1.02.
|
Closing.
|
2
|
|
SECTION
1.03.
|
Effective
Time.
|
2
|
|
SECTION
1.04.
|
Effects
of the Merger.
|
2
|
|
SECTION
1.05.
|
Certificate
of Incorporation; By-laws.
|
2
|
|
SECTION
1.06.
|
Directors
and Officers.
|
2
|
|
SECTION
1.07.
|
Conversion
of Securities.
|
3
|
|
SECTION
1.08.
|
Treatment
of Options; Termination of Employee Stock Purchase Plan.
|
3
|
|
SECTION
1.09.
|
Dissenting
Shares.
|
4
|
|
SECTION
1.10.
|
Surrender
of Shares; Payment; Stock Transfer Books.
|
5
|
|
SECTION
1.11.
|
Subsequent
Actions.
|
7
|
|
ARTICLE
II REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
7
|
|
|
SECTION
2.01.
|
Organization
and Qualification; Subsidiaries.
|
7
|
|
SECTION
2.02.
|
Certificate
of Incorporation and By-laws.
|
8
|
|
SECTION
2.03.
|
Capitalization.
|
8
|
|
SECTION
2.04.
|
Authority
Relative to the Transactions.
|
9
|
|
SECTION
2.05.
|
No
Conflict; Required Filings and Consents.
|
10
|
|
SECTION
2.06.
|
SEC
Filings; Financial Statements.
|
11
|
|
SECTION
2.07.
|
Absence
of Certain Changes or Events.
|
12
|
|
SECTION
2.08.
|
Absence
of Litigation.
|
13
|
|
SECTION
2.09.
|
Employee
Benefit Plans.
|
13
|
|
SECTION
2.10.
|
Property;
Title to Assets.
|
15
|
|
SECTION
2.11.
|
Taxes
|
17
|
|
SECTION
2.12.
|
Material
Contracts.
|
19
|
|
SECTION
2.13.
|
Environmental
Matters.
|
20
|
|
SECTION
2.14.
|
Labor
and Employment Matters.
|
21
|
|
SECTION
2.15.
|
Permits;
Compliance.
|
22
|
|
SECTION
2.16.
|
Intellectual
Property.
|
22
|
|
SECTION
2.17.
|
Insurance.
|
23
|
|
SECTION
2.18.
|
Opinion
of Financial Advisor.
|
23
|
|
SECTION
2.19.
|
Brokers.
|
24
|
|
SECTION
2.20.
|
Franchise
Matters.
|
24
|
|
SECTION
2.21.
|
Antitakeover
Provisions and Rights Agreements.
|
25
|
|
SECTION
2.22.
|
Investment
Companies.
|
26
|
|
SECTION
2.23.
|
Transactions
With Affiliates.
|
26
|
|
SECTION
2.24.
|
Certain
Business Practices.
|
26
|
|
SECTION
2.25.
|
No
Other Representations or Warranties.
|
26
|
|
ARTICLE
III REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
|
26
|
|
|
SECTION
3.01.
|
Corporate
Organization.
|
27
|
|
SECTION
3.02.
|
Authority
Relative to the Transactions.
|
27
|
|
SECTION
3.03.
|
No
Conflict; Required Filings and Consents.
|
27
|
|
SECTION
3.04.
|
Governmental
Consents.
|
28
|
|
SECTION
3.05.
|
Financing.
|
28
|
|
SECTION
3.06.
|
Brokers.
|
29
|
|
SECTION
3.07.
|
Interim
Operations of Merger Sub.
|
29
|
|
SECTION
3.08.
|
Litigation.
|
29
|
|
SECTION
3.09.
|
Board
Approval.
|
29
|
|
SECTION
3.10.
|
Vote
Required.
|
29
|
|
SECTION
3.11.
|
No
Company Shares.
|
29
|
|
ARTICLE
IV CONDUCT
OF BUSINESS PENDING THE MERGER
|
30
|
|
|
SECTION
4.01.
|
Conduct
of Business by the Company Pending the Merger.
|
30
|
|
SECTION
4.02.
|
Advice
of Changes; Government Filings.
|
34
|
|
SECTION
4.03.
|
Tax
Matters.
|
34
|
|
ARTICLE
V
ADDITIONAL
AGREEMENTS
|
35
|
|
|
SECTION
5.01.
|
Stockholders’
Meeting.
|
35
|
|
SECTION
5.02.
|
Proxy
Statement.
|
36
|
|
SECTION
5.03.
|
Access
to Information; Confidentiality.
|
37
|
|
SECTION
5.04.
|
No
Solicitation of Transactions.
|
37
|
|
SECTION
5.05.
|
Employee
Benefits Matters.
|
41
|
|
SECTION
5.06.
|
Directors’
and Officers’ Indemnification; Insurance.
|
42
|
|
SECTION
5.07.
|
Further
Action; Reasonable Best Efforts.
|
44
|
|
SECTION
5.08.
|
Public
Announcements.
|
44
|
|
SECTION
5.09.
|
Takeover
Statute.
|
45
|
|
SECTION
5.10.
|
Financing.
|
45
|
|
SECTION
5.11.
|
Disposition
of Litigation.
|
46
|
|
SECTION
5.12.
|
2005
Financial Statements
|
46
|
|
ARTICLE
VI CONDITIONS
TO THE MERGER
|
46
|
|
|
SECTION
6.01.
|
Mutual
Conditions to the Merger.
|
46
|
|
SECTION
6.02.
|
Conditions
to Obligations of Parent and Merger Sub.
|
47
|
|
SECTION
6.03.
|
Conditions
to Obligations of the Company.
|
48
|
|
ARTICLE
VII TERMINATION,
AMENDMENT AND WAIVER
|
48
|
|
|
SECTION
7.01.
|
Termination.
|
48
|
|
SECTION
7.02.
|
Effect
of Termination.
|
49
|
|
SECTION
7.03.
|
Fees
and Expenses.
|
50
|
|
SECTION
7.04.
|
Amendment.
|
53
|
-
ii -
|
SECTION
7.05.
|
Waiver.
|
53
|
|
ARTICLE
VIII GENERAL
PROVISIONS
|
54
|
|
|
SECTION
8.01.
|
Non-Survival
of Representations and Warranties.
|
54
|
|
SECTION
8.02.
|
Notices.
|
54
|
|
SECTION
8.03.
|
Certain
Definitions
|
55
|
|
SECTION
8.04.
|
Severability.
|
59
|
|
SECTION
8.05.
|
Entire
Agreement; Assignment.
|
59
|
|
SECTION
8.06.
|
Parties
in Interest.
|
59
|
|
SECTION
8.07.
|
Specific
Performance.
|
59
|
|
SECTION
8.08.
|
Governing
Law.
|
60
|
|
SECTION
8.09.
|
Waiver
of Jury Trial.
|
60
|
|
SECTION
8.10.
|
Headings.
|
60
|
|
SECTION
8.11.
|
Counterparts.
|
60
|
|
SECTION
8.12.
|
Company
Disclosure Schedule.
|
60
|
|
SECTION
8.13.
|
Interpretation
|
61
|
-
iii -
AGREEMENT
AND PLAN OF MERGER,
dated
as of February 16, 2006 (this “Agreement”),
among
TAXI HOLDINGS CORP., a Delaware corporation (“Parent”),
TAXI
ACQUISITION CORP., a Delaware corporation and direct wholly owned Subsidiary
of
Parent (“Merger
Sub”),
and
CHECKERS DRIVE-IN RESTAURANTS, INC., a Delaware corporation (the “Company”).
WHEREAS,
the
Boards of Directors of Merger Sub, a Special Committee (the “Special Committee”)
of the
Board of Directors of the Company (with authority delegated by the Board of
Directors of the Company, hereinafter the “Company
Board”),
and
the Company Board have each determined that it is in the best interests of
their
respective stockholders to enter into this Agreement providing for the merger
(the “Merger”)
of
Merger Sub with and into the Company in accordance with the General Corporation
Law of the State of Delaware (the “DGCL”),
upon
the terms and subject to the conditions set forth herein;
WHEREAS,
the
Special Committee has recommended that the Company Board approve this Agreement
and declare its advisability and approve the Merger in accordance with the
DGCL,
upon the terms and subject to the conditions set forth herein;
WHEREAS,
the
Boards of Directors of Parent and Merger Sub, and the Company Board, have each
approved this Agreement and declared its advisability and approved the Merger
in
accordance with the DGCL, upon the terms and subject to the conditions set
forth
herein;
WHEREAS,
Parent,
Merger Sub and the Company desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger; and
WHEREAS,
capitalized terms not defined in the context in the Section in which they first
appear shall have the meanings set forth in Section 8.03.
NOW,
THEREFORE,
in
consideration of the foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, Parent, Merger Sub and
the
Company hereby agree as follows:
ARTICLE
I
THE
MERGER
|
SECTION
1.01.
|
The
Merger.
|
Upon
the
terms and subject to the conditions set forth in this Agreement, and in
accordance with the DGCL, at the Effective Time (as defined below), Merger
Sub
shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (the “Surviving
Corporation”).
|
SECTION
1.02.
|
Closing.
|
The
closing of the Merger (the “Closing”)
shall
take place no later than the second Business Day after satisfaction or waiver
(as permitted by this Agreement and applicable law) of the conditions (excluding
conditions that, by their terms, cannot be satisfied until the Closing Date)
set
forth in Article VI (the “Closing
Date”),
unless another time or date is agreed to in writing by the parties hereto.
The
Closing shall be held at the offices of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, 1285 Avenue of the Americas, New York, New York, unless another
place is agreed to in writing by the parties hereto.
|
SECTION
1.03.
|
Effective
Time.
|
At
the
Closing, the parties shall cause the Merger to be consummated by filing a
certificate of merger (the “Certificate
of Merger”)
with
the Secretary of State of the State of Delaware, in such form as is required
by,
and executed in accordance with, the relevant provisions of the DGCL (the date
and time of such filing of the Certificate of Merger (or such later time as
may
be agreed by the parties hereto and specified in the Certificate of Merger)
being the “Effective
Time.”)
|
SECTION
1.04.
|
Effects
of the Merger.
|
The
Merger shall have the effects set forth in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto,
at
the Effective Time, all the property, rights, privileges, immunities, powers
and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of each of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
|
SECTION
1.05.
|
Certificate
of Incorporation; By-laws.
|
At
the
Effective Time, the Certificate of Incorporation of the Company as in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended in
accordance with its terms and applicable Law. At the Effective Time, the By-laws
of Merger Sub as in effect immediately prior to the Effective Time shall be
the
by-laws of the Surviving Corporation until thereafter duly amended in accordance
with their terms, the certificate of incorporation of the Surviving Corporation
and applicable Law.
|
SECTION
1.06.
|
Directors
and Officers.
|
The
directors of the Company and each of its Subsidiaries immediately prior to
the
Effective Time shall submit their resignations to be effective as of the
Effective Time, in each case to the extent requested in writing by Parent to
the
Company prior to the Effective Time. Immediately after the Effective Time,
Parent shall take the necessary action to cause the directors of Merger Sub
immediately prior to the Effective Time to become the directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation. The officers of the
Company immediately prior to the Effective Time shall be the initial officers
of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal.
2
|
SECTION
1.07.
|
Conversion
of Securities.
|
At
the
Effective Time, by virtue of the Merger and without any action on the part
of
Merger Sub, the Company or the holders of any of the following
securities:
|
(ii)
|
each
Share held in the treasury of the Company and each Share owned by
Merger
Sub, Parent or any direct or indirect Subsidiary of Parent or of
the
Company immediately prior to the Effective Time shall be canceled
without
any conversion thereof and no payment or distribution shall be made
with
respect thereto; and
|
|
(iii)
|
each
share of common stock, par value $0.001 per share, of Merger Sub
issued
and outstanding immediately prior to the Effective Time shall be
converted
into one share of common stock, par value $0.001 per share, of the
Surviving Corporation (“Surviving
Corporation Shares”).
|
|
SECTION
1.08.
|
Treatment
of Options;
Termination of Employee Stock Purchase
Plan.
|
|
(a)
|
Termination.
Between the date of this Agreement and the Effective Time, the Company
shall take all necessary action (which shall be effective as of the
Effective Time), including
obtaining all necessary consents or approvals from holders of
Company Stock Options (as defined below),
to:
|
|
(i)
|
terminate
(effective as of the Effective Time) each of the Company’s stock option
plans, including but not limited to those included on Disclosure
Schedule
2.03, and terminate each stock option agreement granted otherwise
than
under such plans, each as amended through the date of this Agreement
(collectively, the “Company
Stock Option Plans”);
and
|
|
(ii)
|
cancel,
as of the Effective Time, each outstanding option to purchase Shares
of
Company Common Stock granted under the Company Stock Option Plans
(each, a
“Company
Stock Option”)
that is outstanding and unexercised, whether or not vested or exercisable,
as of such date (in each case, without the creation of additional
liability to the Company or any of its Subsidiaries); and
|
|
(iii)
|
ensure
that following the Effective Time no holder of Company Stock Options
or
any participant in the Company Stock Option Plans or anyone other
than
Parent shall hold or have any right to acquire any equity securities
of
the Company, the Surviving Corporation or any Subsidiary thereof.
|
3
|
(b)
|
Treatment
of Outstanding Options.
(1)
As
of the Effective Time, each holder of a Company Stock Option cancelled
immediately prior to the Effective Time pursuant to
Section 1.08(a)(ii) shall be entitled to receive from the Surviving
Corporation an amount of cash, without interest (the “Option
Consideration”),
equal to the product of:
|
|
(A)
|
the
total number of Shares subject to such Company Stock Option, multiplied
by
|
|
(B)
|
the
excess, if any, of the Per Share Merger Consideration over the exercise
price per Share of such Company Stock Option (with the aggregate
amount of
such payment to the holder to be rounded to the nearest cent), less
applicable withholding taxes; and
|
|
(ii)
|
No
holder of a Company Stock Option that has an exercise price per Share
that
is equal to or greater than the Per Share Merger Consideration shall
be
entitled to any payment with respect to such cancelled Company Stock
Option before or after the Effective
Time.
|
|
(c)
|
Termination
of Employee Stock Purchase Plan.
Between the date of this Agreement and the Effective Time, the Company
shall take all necessary action (which shall be effective as of the
Effective Time) to terminate the Company’s Employee Stock Purchase Plan,
including incurring reasonable and customary expenses relating to
the
termination of such Plan.
|
|
SECTION
1.09.
|
Dissenting
Shares.
|
|
(b)
|
Notice
of Demand.
The Company shall give Parent prompt notice of any notice received
by the
Company of intent to demand the fair value of any Shares, withdrawals
of
such notices and any other instruments served pursuant to Section 262
of the DGCL and received by the Company. Parent shall have the right
to
participate in and to direct all negotiations and proceedings with
respect
to the exercise of dissenters’ rights under
|
4
| Section 262 of the DGCL. The Company shall not, except with the prior written consent of Parent or as otherwise required by an order, decree, ruling or injunction of a court of competent jurisdiction, make any payment with respect to any such exercise of dissenters’ rights or offer to settle or settle any such rights. |
|
SECTION
1.10.
|
Surrender
of Shares; Payment; Stock Transfer
Books.
|
5
|
paid
on the Per Share Merger Consideration payable upon the surrender
of any
Certificate for the benefit of the holder of such Certificate. If
the
payment equal to the Per Share Merger Consideration is to be made
to a
Person other than the Person in whose name the surrendered Certificate
is
registered on the stock transfer books of the Company, it shall be
a
condition of payment that the Certificate so surrendered shall be
endorsed
properly or otherwise be in proper form for transfer and that the
Person
requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Per Share Merger Consideration
to
a Person other than the registered holder of the Certificate surrendered,
or shall have established to the satisfaction of Merger Sub that
such
taxes either have been paid or are not applicable. If any holder
of Shares
is unable to surrender such holder’s Certificates because such
Certificates have been lost, stolen, mutilated or destroyed, such
holder
may deliver in lieu thereof an affidavit and indemnity bond in form
and
substance and with surety reasonably satisfactory to the Surviving
Corporation.
|
|
(c)
|
Delivery;
Escheat.
At any time following the six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent
to
deliver to it any funds which had been made available to the Paying
Agent
and not disbursed to holders of Shares (including, without limitation,
all
interest and other income received by the Paying Agent in respect
of all
funds made available to it), and, thereafter, such holders shall
look
solely to the Surviving Corporation (subject to abandoned property,
escheat and other similar laws) only as general creditors thereof
with
respect to any Per Share Merger Consideration that may be payable
upon due
surrender of the Certificates held by them. Notwithstanding the foregoing,
neither the Surviving Corporation, Parent nor the Paying Agent shall
be
liable to any holder of a Share for any Per Share Merger Consideration
delivered in respect of such Share to a public official pursuant
to any
abandoned property, escheat or other similar law. Any amounts remaining
unclaimed by holders of Shares two years after the Effective Time
(or such
earlier date, immediately prior to such time when the amounts would
otherwise escheat to or become property of any Governmental Authority)
shall become, to the extent permitted by applicable law, the property
of
the Surviving Corporation free and clear of any claims or interest
of any
Person previously entitled thereto.
|
|
(d)
|
Transfer
Books.
At the Effective Time, the stock transfer books of the Company shall
be
closed and thereafter there shall be no further registration of transfers
of Shares on the records of the Company. From and after the Effective
Time, the holders of Shares outstanding immediately prior to the
Effective
Time shall cease to have any rights with respect to such Shares except
as
otherwise provided herein or by applicable
Law.
|
|
(e)
|
Satisfaction.
All Per Share Merger Consideration paid upon the surrender for exchange
of
Certificates, and all Option Consideration paid in respect of Company
Stock Options, in each case in accordance with the terms of this
Article I
shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates
and
the Company Stock Options, as applicable. If, after the Effective
Time,
Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided
in
this Article I, except as otherwise provided by
Law.
|
6
|
(f)
|
Tax
Deduction; Withholding.
Each of the Surviving Corporation, the Paying Agent or Parent shall
be
entitled to deduct and withhold from any amounts otherwise payable
hereunder to any Person such amounts as it is required to deduct
and
withhold with respect to the making of such payment under any provision
of
Federal, state, local or foreign tax law. To the extent that amounts
are
so deducted and withheld, such deducted and withheld amounts shall
be
treated for all purposes of this Agreement as having been paid to
the
Person in respect of which such deduction and withholding was
made.
|
|
(g)
|
Adjustment
of Merger Consideration.
Notwithstanding anything in this Agreement to the contrary, but subject
to
Section 4.01, if, between the date of this Agreement and the
Effective Time, the issued and outstanding Shares shall have been
changed
into a different number of shares or a different class by reason
of any
stock split, reverse stock split, stock dividend, reclassification,
redenomination, recapitalization, split-up, combination, exchange
of
shares or other similar transaction, the Per Share Merger Consideration,
the Option Consideration and any other dependent items shall be
appropriately adjusted to provide to the holders of Company Common
Stock
and the parties hereto the same economic effect as contemplated by
this
Agreement prior to such action and as so adjusted shall, from and
after
the date of such event, be the Per Share Merger Consideration, the
Option
Consideration or other dependent item, subject to further adjustment
in
accordance with this sentence.
|
|
SECTION
1.11.
|
Subsequent
Actions.
|
If,
at
any time after the Effective Time, the Surviving Corporation shall consider
or
be advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of the Company
or Merger Sub acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company or Merger Sub, all such deeds, bills of sale, assignments and assurances
and to take and do, in the name and on behalf of each of such corporations
or
otherwise, all such other actions and things as may be necessary or desirable
to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise
to
carry out this Agreement.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Parent and Merger Sub, except as
set
forth on the applicable portion of the disclosure schedule delivered by the
Company to Parent and Merger Sub (the “Company
Disclosure Schedule”),
that
|
SECTION
2.01.
|
Organization
and Qualification;
Subsidiaries.
|
|
(a)
|
Organization.
Each of the Company and each Subsidiary of the Company is a corporation
duly organized, validly existing and in good standing under the laws
of
the
|
7
|
jurisdiction
of its formation and has the requisite power and authority and all
necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted. Each of
the
Company and each of its Subsidiaries is duly qualified or licensed
as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased
or
operated by it or the nature of its business makes such qualification
or
licensing necessary, except for such failures to be so qualified
or
licensed or in good standing that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect.
|
|
(b)
|
Subsidiaries.
A
true and complete list of all the Company’s Subsidiaries, together with
the jurisdiction of organization of each such Subsidiary, is set
forth in
Section 2.01(b) of the Company Disclosure Schedule. The Company does
not directly or indirectly own any equity or similar interest in,
or any
interest convertible into or exchangeable or exercisable for any
equity or
similar interest in, any corporation, partnership, joint venture
or other
business association or entity. All of the capital stock of, or other
equity interests in, each such Subsidiary are owned by the Company,
directly or through one or more directly or indirectly wholly owned
Subsidiaries of the Company, free and clear of all encumbrances or
other
restrictions (other than restrictions under applicable securities
laws).
All of the capital stock or other equity interests in each such Subsidiary
are validly issued, fully paid and nonassessable.
|
|
(c)
|
Power.
Each of the Company and each of its Subsidiaries has the requisite
corporate power and corporate authority in all material respects
to own,
lease and operate its properties and to carry on its respective businesses
as they are now being conducted.
|
|
SECTION
2.02.
|
Certificate
of Incorporation and
By-laws.
|
The
Company has heretofore furnished or made available to Parent a complete and
correct copy of the certificate of incorporation and the by-laws or equivalent
organizational documents, each as amended to date, of the Company and each
of
its Subsidiaries. Such certificates of incorporation, by-laws or equivalent
organizational documents are in full force and effect.
|
SECTION
2.03.
|
Capitalization.
|
|
(a)
|
Authorized
Stock.
The authorized capital stock of the Company consists of 175,000,000
Shares
and 2,000,000 shares of preferred stock. As of the date of this Agreement,
(i) 11,500,175 Shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable and 1,785,900 Shares
are held
in treasury, and (ii) no preferred stock is issued and outstanding.
Except as set forth in Section 2.03 of the Company Disclosure
Schedule, which Schedule sets forth the name of the holder of each
option,
warrant or other right to purchase capital stock of the Company,
the
number of Shares that may be purchased by such holder and the price
per
Share at which such Shares may be purchased, there are (i) no
options, warrants, agreements, or other arrangements of any character
that
are binding on the Company or any of its
|
8
|
Subsidiaries
that obligate the Company or any of its Subsidiaries to issue, sell,
redeem, repurchase or exchange any shares of capital stock of, or
other
equity interests in, the Company or any of its Subsidiaries or any
interest convertible into or exchangeable or exercisable for any
such
capital stock or other equity interests, (ii) no voting trusts, proxies
or
other similar agreements or understandings to which the Company or
any of
its Subsidiaries is bound with respect to the voting of any such
capital
stock or other equity interests, (iii) no contractual obligations
or
commitments restricting the transfer of, or requiring the registration
for
sale of, any such capital stock or other equity interests and (iv)
no
bonds, debentures, notes or other indebtedness having the right to
vote on
any matters on which shareholders of the Company may vote (whether
or not
dependent on conversion or other triggering event). The Company Common
Stock is not subject to statutory preemptive
rights.
|
|
(b)
|
Stock
Option Plans.
The Company has made available to Parent accurate and complete copies
of
all Company Stock Option Plans pursuant to which the Company has
granted
the Company Stock Options that are currently outstanding. All Shares
subject to issuance prior to the Closing as aforesaid, upon issuance
on
the terms and conditions specified in the instruments pursuant to
which
they are issuable, will be duly authorized, validly issued, fully
paid and
nonassessable.
|
|
SECTION
2.04.
|
Authority
Relative to the Transactions.
|
The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery by the Company of this Agreement and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
then
outstanding shares of Company Common Stock (the “Company
Stockholder Approval”)
and
the filing and recordation of appropriate merger documents as required by the
DGCL). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by the
other
parties thereto, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to the effect of any applicable bankruptcy, insolvency (including, without
limitation, all Laws relating to fraudulent transfers), reorganization,
moratorium or similar Laws affecting creditors’ rights generally and subject to
the effect of general principles of equity (regardless of whether considered
in
a proceeding at law or in equity). The Company Board, at a meeting duly called
and held, and acting in accordance with the unanimous recommendation of the
Special Committee, has:
|
(i)
|
determined
that this Agreement and the Merger contemplated hereby (collectively,
the
“Transactions”)
are fair to, and in the best interests of, the holders of
Shares;
|
|
(ii)
|
approved,
adopted and declared advisable this Agreement and the Transactions
(such
approval and adoption having been made in accordance with the DGCL
and the
Company’s certificate of incorporation, including without limitation
Section 203 of the DGCL); and
|
9
|
(iii)
|
resolved,
subject to Section 5.04(d), to recommend that the holders of Shares
approve and adopt this Agreement and the Merger (the “Company
Recommendation”).
|
|
SECTION
2.05.
|
No
Conflict; Required Filings and
Consents.
|
|
(a)
|
No
Conflict.
The execution and delivery by the Company of this Agreement do not,
and
the performance by the Company of this Agreement and the consummation
of
the Transactions by the Company do not and will
not:
|
|
(i)
|
violate
the certificate of incorporation or by-laws or any equivalent
organizational documents of the Company or any of its
Subsidiaries;
|
|
(ii)
|
violate
any United States or non-United States statute, law, ordinance,
regulation, rule, code, executive order, injunction, judgment, decree
or
other order (“Law”)
applicable to the Company or any of its Subsidiaries or by which
any
property or asset of the Company or any of its Subsidiaries is bound
or
affected, other than any such violation that would not, individually
or in
the aggregate, reasonably be expected to have a Company Material
Adverse
Effect; or
|
|
(iii)
|
result
in any breach of or constitute a default (or an event which, with
notice
or lapse of time or both, would become a default) under, or give
to others
any rights of termination, amendment, acceleration or cancellation
of,
require consent of or notification to any counterparty under, or
result in
the creation of a lien or other encumbrance on any property or asset
of
the Company or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company
or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any property or asset of any of them is bound or
affected,
except for any such conflicts, violations, breaches, defaults or
other
occurrences which would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect or with respect
to
agreements for which consents have been
obtained.
|
10
|
(c)
|
Section 16.
The Board of Directors of the Company, has taken, or prior to the
Effective Time will take, all action necessary so that the
Rule 16b-3(e) exemption from Section 16 under the Exchange Act
is applicable to the disposition by all persons who are directors
and/or
officers of the Company of the Company Common Stock and Company Stock
Options in or in connection with the
Merger.
|
|
SECTION
2.06.
|
SEC
Filings; Financial
Statements.
|
|
(a)
|
Company
SEC Reports.
The Company has filed or furnished, as the case may be, all forms,
reports, registration statements and other documents required to
be filed
or furnished by it with the SEC since September 30, 2003, and has
heretofore made available to
Parent:
|
|
(i)
|
its
Annual Reports on Form 10-K, as amended, for the fiscal years ended
December 30, 2002, December 29, 2003 and January 3, 2005,
respectively;
|
|
(ii)
|
its
Quarterly Reports on Form 10-Q for the periods ended March 28, 2005,
June 20, 2005, and September 12,
2005;
|
|
(iii)
|
all
proxy statements relating to the Company’s meetings of stockholders
(whether annual or special) held since September 30, 2003;
and
|
|
(iv)
|
all
other forms, reports, registration statements and other documents
filed by
the Company with the SEC since September 30, 2003 and prior to the
Effective Time.
|
(The
forms, reports, registration statements and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being, collectively, the “Company
SEC Reports”.)
The
Company SEC Reports were prepared in accordance with the applicable requirements
of the Exchange Act and the Securities Act, and the rules and regulations
promulgated thereunder. The Company SEC Reports, as of their respective dates
(and, in the case of any Company SEC Report that is a registration statement,
as
of the date such registration statement became effective), did not contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements therein, in light of
the
circumstances under which they were made, not misleading. All Company SEC
Reports, as of their respective dates, complied as to form in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act and the rules and regulations promulgated thereunder. As of the date of
this
Agreement, there are no outstanding or unresolved comments in comment letters
received by the Company from the SEC staff with respect to the SEC Reports.
None
of the Company’s Subsidiaries are reporting companies under the Securities Act
or the Exchange Act.
11
|
(d)
|
Liabilities.
Except for any liabilities or obligations which would not, individually
or
in the aggregate, reasonably be expected to have a Company Material
Adverse Effect, neither the Company nor any of its Subsidiaries has
any
liability or obligation (whether known, unknown, accrued, absolute,
contingent or otherwise):
|
|
(i)
|
liabilities
and obligations to the extent reflected, reserved for or disclosed
in the
consolidated balance sheet of the Company and its consolidated
subsidiaries as at September 12, 2005, as set forth in the Company’s
Quarterly Report on Form 10-Q for the period ended September 12,
2005 or
in the notes thereto; and
|
|
(ii)
|
liabilities
and obligations that were incurred in the ordinary course of business
consistent with past practice since September 12,
2005.
|
|
SECTION
2.07.
|
Absence
of Certain Changes or
Events.
|
Since
September 12, 2005, except as set forth in the Company SEC Reports filed
prior to the date hereof, Section 2.07 of the Company Disclosure Schedule,
or as expressly contemplated by this Agreement:
|
(i)
|
the
Company and the Subsidiaries have conducted their businesses only
in the
ordinary course and in a manner consistent with past
practice;
|
12
|
(ii)
|
there
has not been any event, circumstance, change or effect that, individually
or in the aggregate, has had, or would reasonably be expected to
have, a
Company Material Adverse Effect;
|
|
(iii)
|
except
in the ordinary course of business or as disclosed hereunder, there
has
not been any material increase in the compensation payable or which
could
become payable by the Company and its Subsidiaries to their officers
or
key employees, or any amendment of any compensation and benefit plans
resulting in a material increase in payments
thereunder;
|
|
(iv)
|
there
has not been any issuance or agreement to issue shares of Company
Common
Stock, other than under the Company Option
Plans;
|
|
(v)
|
any
material change in financial or tax accounting methods, principles
or
practices by the Company or any of its Subsidiaries except insofar
as may
have been required by a change in GAAP or Law and have been disclosed
in
Company SEC Reports;
|
|
(vi)
|
any
material Tax election by the Company or any of its Subsidiaries or
settlement or compromise by the Company or any of its Subsidiaries
of any
material Tax liability or refund;
and
|
|
(vii)
|
none
of the Company or any of its Subsidiaries has taken any action that,
if
taken after the date of this Agreement, would constitute a material
breach
of, or require a consent under, any of the covenants set forth in
Section 4.01.
|
|
SECTION
2.08.
|
Absence
of Litigation.
|
There
is
no litigation, suit, claim, action, proceeding, arbitration or investigation
(an
“Action”),
or
any judgments, decrees, injunctions, rules or orders of any Governmental
Authority pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries, or any property or asset
of
the Company or any of its Subsidiaries, except for any of the foregoing that
if
decided adversely to the Company or its Subsidiaries would not, individually
or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
SECTION
2.09. Employee
Benefit Plans.
|
(a)
|
Plans.
Section 2.09(a) of the Company Disclosure Schedule lists all material
employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”))
and all bonus, stock option, stock purchase, restricted stock, phantom
stock or other equity based compensation incentive, deferred compensation,
excess benefit, retiree medical or life insurance, supplemental
retirement, severance, salary continuation, pension, profit sharing,
savings, retirement, disability, insurance, Section 125 “cafeteria” or
“flexible” benefit, vacation, sick leave, employee loan, educational
assistance, change in control, termination or any other similar fringe
or
employee benefit plans, programs or arrangements, and all employment,
retention, termination, severance or other contracts or agreements,
that
cover any of the current or
|
13
|
(b)
|
Plan
Compliance.
Each Plan has been maintained, operated and administered in material
compliance with its terms and the requirements of all applicable
Laws
including, without limitation, ERISA and the Code. The Company and
the
Subsidiaries have performed, in all material respects, all obligations
required to be performed by them under, are not in any material respect
in
default under or in violation of, and to the Company’s Knowledge, no other
party is in default or violation of, any Plan, and there are no pending
or, to the Company’s Knowledge, threatened claims, lawsuits or
arbitrations (other than routine claims for benefits), relating to
any of
the Plans, or the assets of any trust for any Plan. With respect
to each
Plan, the Company has complied in all material respects with the
applicable health care continuation and notice provisions of COBRA
and the
applicable requirements of the Health Insurance Portability and
Accountability Act of 1996, as amended, and the regulations thereunder
(“HIPAA”),
including, but not limited to, the applicable requirements concerning
the
privacy, security, and/or electronic transmission of health information.
Neither the Company or any of its Subsidiaries nor,
|
14
|
to
the Company’s Knowledge, any of their respective directors, officers,
employees or agents has, with respect to any Plan, engaged in or
been a
party to any “prohibited transaction” (as defined in Section 4975 of the
Code or Section 406 of ERISA), which could result in the imposition
of
either a penalty assessed pursuant to Section 502(i) of ERISA or
a tax
imposed by Section 4975 of the Code, in each case applicable to the
Company or any of its Subsidiaries or any
Plan.
|
|
(c)
|
Payments.
There will be no material payment, accrual of additional benefits,
acceleration of payments or vesting of any benefit under any contract,
agreement, plan or other arrangement, whether or not a Plan, and
no
employee, officer or director of the Company or any of the Subsidiaries
will become entitled to any severance, termination pay or similar
payments
or benefits in connection with the Transactions (either alone or
in
combination with any other event), other than as specifically provided
for
in this Agreement. No payment, accrual of additional benefits,
acceleration of payments or vesting of any benefit under this Agreement,
any Plan or similar agreement or arrangement between the Company
or any of
its Affiliates and any “disqualified individual” (as such term is defined
in Section 280G of the Code) could constitute an “excess parachute
payment” (as such term is defined in Section 280G of the Code) in
connection with the transactions contemplated by this Agreement (either
alone or in combination with any other event). No amounts payable
under
any Plan or otherwise will fail to be deductible to the Company,
the
Surviving Corporation or their Subsidiaries for federal income tax
purposes by virtue of Section
162(m).
|
|
(d)
|
Contributions.
All contributions, premiums or payments required to be made with
respect
to any Plan have been made on or before their due dates, with such
exceptions as would not have a Company Material Adverse Effect.
All
liabilities or expenses of the Company or its Subsidiaries in respect
of
any Plan (including workers compensation) which have not been paid,
have
been properly accrued on the Company’s most recent financial statements in
compliance with GAAP.
|
|
(e)
|
Employees.
The Company has no direct or indirect liability, whether absolute
or
contingent, with respect to any misclassification of any person as
an
independent contractor rather than as an employee, or with respect
to any
employee leased from another
employer.
|
|
(f)
|
Plan
Actions.
Prior to the date of this Agreement, for each Company Stock Option
Plan,
the committee of the Company Board or other body authorized to administer
and interpret such Company Stock Option Plan has made the determination
and directed, in each case in accordance with the terms of such Company
Stock Option Plan, that the Company Stock Options shall be treated
as set
forth in Section 1.08(a) and Section 1.08(b) of this
Agreement.
|
|
SECTION
2.10.
|
Property;
Title to Assets.
|
|
(a)
|
Real
Property Owned or Leased by the Company.
|
15
|
(i)
|
Franchised
Property.
Section 2.10(a)(i) of the Company Disclosure Schedule lists each
parcel of real property currently owned, leased, subleased or licensed
by
the Company or any of its Subsidiaries and leased or subleased, as
the
case may be, to a franchisee, together, in each case, with the type
of
store, store ID and address (the “Franchised
Property”).
|
|
(ii)
|
Company-Operated
Restaurants.
Section 2.10(a)(ii) of the Company Disclosure Schedule lists each
company-operated restaurant, together, in each case, with the store
ID,
type of store, address and designation as owned or leased (the
“Company-Operated
Restaurants”).
|
|
(iii)
|
Other
Real Property.
Section 2.10(a)(iii) of the Company Disclosure Schedule lists each
surplus or vacant parcel of real property currently owned, leased,
subleased or licensed by the Company or any of its Subsidiaries,
which,
together with that certain lease agreement between Cornerstone Suburban
Office, LP and Checkers Drive-In Restaurants, Inc. for the property
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ (the
“Headquarters
Lease”),
constitutes all real property owned, leased, subleased or licensed
by the
Company or any of its Subsidiaries and not listed in
Section 2.10(a)(i) or Section 2.10(a)(ii) of the Company
Disclosure Schedule (the “Other
Real Property”).
|
|
(b)
|
Owned
Real Property.
Set forth in Section 2.10(b) of the Company Disclosure Schedule is a
complete list of all real property and interests in real property
owned in
fee simple by the Company or any of its Subsidiaries (the “Owned
Real Property”).
The Company or a Subsidiary of the Company has good, valid and marketable
fee simple title to the Owned Real Property.
|
|
(d)
|
Leases.
True, correct and complete copies of all leases, subleases or licenses
for
each parcel of real property currently leased, subleased or licensed
by
the Company or any of its Subsidiaries (the “Leased
Real Property”),
together with any assignments, guaranties or amendments thereto
(collectively, the “Lease
Documents”)
have been delivered or made available to Parent. Except as would
not,
individually or in the aggregate, reasonably be expected to have
a Company
Material Adverse Effect, all such current leases, subleases and licenses
are in full force and effect, are valid and effective in accordance
with
their respective terms, and there is not, under any of such leases,
any
existing default or event of default (or event which, with notice
or lapse
of time, or both, would constitute a default) by the Company or any
of its
Subsidiaries or, to the Company’s Knowledge, by the other party to such
lease, sublease or license.
|
|
(e)
|
Liens.
Except as disclosed in Section 2.10(a)(i), 2.10(a)(ii), 2.10(a)(iii)
or
2.10(b) of the Company Disclosure Schedule, the Company and the
Subsidiaries own or have valid leasehold fee interests in all of
their
respective properties and assets (other than assets
|
16
|
disposed
of in the ordinary course of business since January 3, 2005), free
and
clear of all encumbrances except for defects in title, easements,
encroachments, restrictive covenants and similar encumbrances or
impediments that would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect. Except as
set forth
on Section 2.10(a)(iii) of the Company Disclosure Schedule, neither
the
Company nor any of its Subsidiaries is a party to or obligated under
any
option, right of first refusal or other contractual right to sell,
dispose
of or lease any of the Real Property or any portion thereof or interest
therein to any Person (other than pursuant to this Agreement). Neither
the
Company nor any of its Subsidiaries is a party to any agreement or
option
to purchase any real property or interest therein other than options
for
renewal of Leased Real Property for the benefit of the Company or
its
applicable Subsidiary.
|
|
(f)
|
Entire
Interest.
Except as set forth in Section 2.10(f)(i) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has leased
or
otherwise granted to any Person (other than pursuant to this Agreement)
any right to occupy or possess or otherwise encumber any portion
of the
Real Property other than in the ordinary course of business. Except
as set
forth in Section 2.10(f)(ii) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has vacated or abandoned
any portion of the Real Property or given notice to any third party
of
their intent to do the same.
|
|
(g)
|
Condemnation.
Except as set forth on Section 2.10(g) of the Company Disclosure
Schedule, neither the Company nor any applicable Subsidiary of the
Company
has received written notice of an expropriation or condemnation proceeding
pending, threatened or proposed against the Real
Property.
|
SECTION
2.11. Taxes
|
(a)
|
Tax
Returns.
The Company and its Subsidiaries have properly prepared and timely
filed
(or caused to be timely filed) all material Tax Returns required
to be
filed by or with respect to them and have fully and timely paid and
discharged all material Taxes required to be paid or discharged (whether
or not shown on such Tax Returns) and have made adequate provision
for any
taxes that are not yet due and payable for all taxable periods, or
portions thereof, ending on or before the date of this Agreement.
All such
Tax Returns (including information provided therewith or with respect
thereto) are true, correct and complete in all material respects.
Neither
the Company nor any of its Subsidiaries has granted any waiver of
any
statute of limitations with respect to, or any extension of a period
for
the assessment of, any Tax for any taxable period and no request
for any
such waiver or extension is currently pending. All amounts of Taxes
required to be withheld by or with respect to the Company or any
of its
Subsidiaries have been timely withheld and remitted in all material
respects to the applicable Governmental Authority. The Company and
its
Subsidiaries have each complied in all material respects with all
Tax
information reporting provisions under applicable laws. Neither the
Company nor any of its Subsidiaries is a party to any indemnification,
allocation or sharing agreement with respect to Taxes or has any
liability
for Taxes of any Person (other than members of the affiliated group,
within the meaning of Section 1504(a) of the Code, filing
consolidated federal income tax returns of which the Company is the
common
parent) under Treasury
|
17
|
Regulation
§ 1.1502-6, Treasury Regulation § 1.1502-78 or any similar state, local or
foreign Laws, as a transferee or successor, or otherwise. The Company
and
its Subsidiaries have made available to Parent correct and complete
copies
of all material Tax Returns, examination reports and statements of
deficiencies for taxable periods, or transactions consummated, for
which
the applicable statutory periods of limitations have not
expired.
|
|
(b)
|
Audits.
There are no pending or, to the Knowledge of the Company, threatened
in
writing, audits, examinations, investigations or other proceedings
in
respect of any Tax matter of the Company or any of its Subsidiaries.
No
Governmental Authority has given notice of its intention to assert
any
deficiency or claim for additional Taxes against the Company or any
of its
Subsidiaries. No claim has been made against the Company or any of
its
Subsidiaries by any Governmental Authority in a jurisdiction where
the
Company and its Subsidiaries do not file Tax Returns that the Company
or
such Subsidiary is or may be subject to taxation by that jurisdiction.
All
material deficiencies for Taxes asserted or assessed against the
Company
or any of its Subsidiaries have been fully and timely paid, settled
or
properly reflected in the most recent financial statements contained
in
the Company SEC Reports.
|
|
(c)
|
Tax
Liens.
There are no Tax liens upon any property or assets of the Company
or any
of the Subsidiaries except for statutory liens for current Taxes
not yet
due and payable and for such liens, which individually or in the
aggregate, would not exceed
$100,000.
|
|
(d)
|
Section
355.
Neither the Company nor any of its Subsidiaries has constituted a
“distributing corporation” or a “controlled corporation” (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of
shares qualifying for tax-free treatment under Section 355 of the
Code (i) in the two years prior to the date of this Agreement or
(ii) in a distribution that could otherwise constitute part of a
“plan” or “series of related transactions” (within the meaning of
Section 355(e) of the Code) in conjunction with the transactions
contemplated by this Agreement.
|
|
(e)
|
Tax
Adjustments.
Any adjustment of Taxes of the Company or any of its Subsidiaries
made by
the IRS, which adjustment is required to be reported to the appropriate
state, local, or foreign Taxing authorities, has been so
reported.
|
|
(f)
|
Closing
Agreements.
Neither the Company nor any of its Subsidiaries has executed or entered
into a closing agreement under Section 7121 of the Code or any
similar provision of state, local or foreign Laws, and neither the
Company
nor any of its Subsidiaries is subject to any private letter ruling
of the
Internal Revenue Service or comparable ruling of any other taxing
authority.
|
|
(g)
|
Employee
Remuneration.
There is no Contract, plan or arrangement covering any Person that,
individually or in the aggregate, could give rise to the payment
of any
amount that would not be deductible by Parent, the Company or any
of their
respective Subsidiaries by reason of Section 162(m) of the
Code.
|
18
|
(h)
|
Reportable
Transactions.
Neither the Company nor any of its Subsidiaries has entered into
any
transaction that constitutes (i) a “reportable transaction” within the
meaning of Treasury Regulation § 1.6011-4(b), (ii) a “confidential tax
shelter” within the meaning of Treasury Regulation § 301.6111-2(a)(2)
or (iii) a “potentially abusive tax shelter” within the meaning of
Treasury Regulation
§ 301.6112-1(b).
|
|
(i)
|
Net
Operating Losses.
Section 2.11(i) of the Company Disclosure Schedule sets forth in
detail
the limitations to which the net operating loss carryforwards of
the
Company and its Subsidiaries are subject under Section 382 or 384
of the
Code or otherwise.
|
|
(j)
|
Tax
Basis.
Section 2.11(j) of the Company Disclosure Schedule accurately reflects
in
all material respects the tax basis of the Company and its Subsidiaries
in
their respective assets.
|
|
SECTION
2.12.
|
Material
Contracts.
|
|
(a)
|
List
of Contracts:
Section 2.12(a) of the Company Disclosure Schedule sets forth a true
and complete list of each of contracts and agreements of the following
types to which the Company or any of its Subsidiaries is a party
or is
bound by, or to which any of the assets of the Company or its Subsidiaries
are subject (such contracts and agreements as are required to be
set forth
in Section 2.12(a) of the Company Disclosure Schedule being the
“Material
Contracts”):
|
|
(i)
|
each
“material contract” (as such term is defined in Item 601 (b)(10) of
Regulation S-K of the SEC) with respect to the Company and its
Subsidiaries (including, without limitation, material area contracts
and
material contracts with franchisees, supplier and similar
parties);
|
|
(ii)
|
all
contracts and agreements relating to issuances of securities of the
Company or any of its Subsidiaries (and all letters of intent, term
sheets
and draft agreements relating to any such pending
transactions);
|
|
(iii)
|
all
contracts and agreements relating to indebtedness for borrowed money
or
capitalized lease obligations, in each case for which the Company
or any
of its Subsidiaries is primarily or secondarily liable, or which
are
secured by assets of the Company or any of its Subsidiaries, and
in each
case in an amount in excess of
$1,000,000;
|
|
(iv)
|
all
contracts and agreements (A) containing any non-compete covenant or
other covenant limiting the right of the Company or any of its Affiliates
(or, after the Effective Time, Parent or its Affiliates) to engage
in any
line of business or to make use of any Intellectual Property Rights
or
(B) containing any material exclusive or sole supplier arrangement,
or other exclusive business arrangement, to which the Company or
any of
its Affiliates is (or, after the Effective Time, Parent or its Affiliates
would be) subject;
|
|
(v)
|
all
Lease Documents; and
|
19
|
(vi)
|
all
other contracts and agreements providing for payments by or to the
Company
or any of its Subsidiaries, or the guarantee (whether or not contingent)
by the Company or any of its Subsidiaries of obligations of any third
party, in excess of $250,000, whether or not made in the ordinary
course
of business, or which are otherwise material to the Company or any
of its
Subsidiaries or the conduct of its and their respective businesses,
or the
absence of which would, individually or in the aggregate, reasonably
be
expected to have a Company Material Adverse
Effect.
|
|
(b)
|
Validity;
Default.
(i) Each Material Contract is valid and in full force and effect and
enforceable against the Company or its applicable Subsidiary and
against
each other party thereto, in accordance with its terms; and
|
|
(ii)
|
(A) neither
the execution of this Agreement nor the consummation of any Transaction
shall constitute a default under, give rise to cancellation rights
under,
or otherwise adversely affect, in each case, in any material respect,
any
of the rights of the Company or any of its Subsidiaries under any
Material
Contract, and (B) neither the Company nor any of its Subsidiaries
nor, to the Knowledge of the Company, any other party thereto, is
in
material breach of, or default under, any Material Contract to which
it is
a party nor, to the Knowledge of the Company, has any event occurred
that,
with notice or lapse of time or both, would constitute such a breach
or
default, or permit termination, modification or acceleration of any
party’s rights under any Material
Contract.
|
The
Company has furnished or made available to Parent true and complete copies
of
all Material Contracts, including any amendments thereto.
|
SECTION
2.13.
|
Environmental
Matters.
|
|
(a)
|
Neither
the Company nor any of its Subsidiaries has received any written
notice,
demand, letter, claim or request for information alleging violation
of or
liability under any Environmental Law on the part of the Company
or any of
its Subsidiaries and there are no proceedings, actions, orders, decrees,
investigations, injunctions or other claims pending, or to the Knowledge
of the Company, threatened, relating to or otherwise alleging liability
under any Environmental Law or relating to the exposure of any person
to
hazardous substances.
|
|
(b)
|
Except
as would not, individually or in the aggregate, reasonably be expected
to
result, in a Company Material Adverse
Effect:
|
|
(i)
|
The
Company and each of its Subsidiaries is and has been in compliance
with
all applicable Environmental Laws.
|
|
(ii)
|
There
are no past or present actions, activities, circumstances, conditions,
events or incidents that are reasonably likely to prevent future
compliance with Environmental Laws or that have resulted in liability
or
are reasonably likely to result in liability under Environmental
Laws.
|
20
|
(iii)
|
Neither
the Company nor any of its Subsidiaries has assumed, either contractually
or by operation of law, any liability of any other Person pursuant
to
Environmental Laws.
|
|
(c)
|
The
Company has delivered to the Parent true, complete and correct copies
and
results of any reports, studies, analyses, tests or monitoring in
the
possession or control of the Company or any of its Subsidiaries that
pertain to material environmental contamination in, on, beneath or
adjacent to any property currently or formerly owned, operated, occupied
or leased by the Company or any of its Subsidiaries, or regarding
the
Company’s or any of its Subsidiaries’ compliance with applicable
Environmental Laws.
|
|
SECTION
2.14.
|
Labor
and Employment Matters.
|
|
(a)
|
(i) Neither
the Company nor any of its Subsidiaries has entered into, is a
party to or
is bound by any express or implied collective bargaining agreements
or
other agreement, contract, commitment, arrangement or understanding
with
any labor union or labor organization, and (ii) no union or other
labor
organization campaign is pending, or to the Knowledge of the Company
has
been threatened with respect to the employees of the Company or
any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is
currently, nor has been during the past five years, the subject
of any
strike, dispute, walk-out, work stoppage, slowdown or other organized
labor dispute involving the Company or any of its Subsidiaries,
nor, to
the Knowledge of the Company, is any such activity
threatened.
|
|
(b)
|
Except
as would not, individually or in the aggregate, reasonably be expected
to
have a Company Material Adverse Effect, (i) each of the Company and
each of its Subsidiaries has complied with all Laws relating to the
employment and safety of labor, including without limitation the
National
Labor Relations Act and other provisions relating to wages, hours,
benefits, collective bargaining, employment of minors, withholding,
immigration and all applicable occupational safety and health acts
and
Laws, (ii) neither the Company nor any of its Subsidiaries has
engaged in any unfair labor practice or discriminated on the basis
of
race, age, sex, disability or any other protected category in its
employment conditions or practices with respect to its employees,
customers or suppliers, and (iii) no action, suit, complaint, charge,
grievance, arbitration, employee proceeding or investigation by or
before
any Governmental Authority brought by or on behalf of any employee,
prospective employee, former employee, retired employee, labor
organization or other representative of the Company’s and its
Subsidiaries’ employees is pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries, except
as
disclosed in Section 2.14 of the Company Disclosure Schedule. Neither
the Company nor any of its Subsidiaries is a party to or otherwise
bound
by any consent decree with or citation by any Governmental Authority
relating to the Company’s or its Subsidiaries’ employees or employment
practices relating to the Company’s or its Subsidiaries’
employees.
|
|
(c)
|
The
Company and its Subsidiaries are and have been in compliance with
all
notice and other requirements under the Worker Adjustment and Retraining
Notification Act of 1988 (the “WARN
Act”)
and any similar applicable Law relating to plant closings and
|
21
|
layoffs.
Except as set forth on Section 2.14 of the Company Disclosure Schedule,
none of the employees of the Company and any of its Subsidiaries
has
suffered an “employment loss” (as defined in the WARN Act) within the 90
day period prior to the date of this
Agreement.
|
|
SECTION
2.15.
|
Permits;
Compliance.
|
Except
as
would not, individually or in the aggregate, reasonably be expected to have
a
Company Material Adverse Effect or as disclosed in the Company SEC Reports
filed
prior to the date hereof, each of the Company and each its Subsidiaries is
in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as now being conducted (the “Company
Permits”)
and
each such Company Permit is valid and in full force and effect. Except as would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or as disclosed in the Company SEC Reports filed prior
to the date hereof, each of the Company and each of its Subsidiaries is, and
has
been, in compliance with, and to the Knowledge of the Company is not under
investigation with respect to and has not been threatened to be charged with
or
given any notice of any violation of, any applicable Law or the terms and
conditions of any Company Permit.
|
SECTION
2.16.
|
Intellectual
Property.
|
|
(a)
|
Identification.
Section 2.16 of the Company Disclosure Schedule sets forth a true,
correct and complete list of all U.S. and material foreign (i) issued
Patents and Patent applications, (ii) Trademark registrations and
applications, (iii) Copyright registrations and applications, in each
case, which are owned by the Company.
|
|
(b)
|
Licenses.
Section 2.16 of the Company Disclosure Schedule sets forth a list of
all material licenses of Intellectual Property Rights under which
the
Company is either a (i) licensor, or (ii) licensee, distributor
or reseller.
|
|
(c)
|
Validity
and Enforceability.
The Company owns or has a valid right to use, free and clear of all
liens,
all Intellectual Property Rights necessary, or used or held for use
in
connection with the business of the Company. All such Intellectual
Property Rights are subsisting, valid and
enforceable.
|
|
(d)
|
Rights.
Except for the matters identified in Section 2.16 of the Company
Disclosure Schedule, (i) none of the Intellectual Property Rights
that are owned or licensed by the Company or any of its Subsidiaries
conflicts with, infringes upon or misappropriates or otherwise violates
the Intellectual Property Rights of any third party, (ii) the Company
has not been sued, charged in writing with, or named a defendant
in, any
claim, suit, action or proceeding involving a claim of infringement
of any
Intellectual Property Rights of others, (iii) to the Knowledge of the
Company, there is no threatened claim of infringement by the Company
or
any of its Subsidiaries of any Intellectual Property Rights of others,
and
(iv) to the Knowledge of the Company, there is no continuing
infringement by others of the Intellectual Property Rights of the
Company
or any of its
|
22
|
Subsidiaries.
No Intellectual Property Rights of the Company are subject to any
outstanding order, judgment, decree, stipulation or agreement restricting
the use thereof by the Company or any of its Subsidiaries. None of
the
Company or any of its Subsidiaries has entered into any agreement
to
indemnify any other individual or entity against any charge of
infringement of any Intellectual Property
Right.
|
|
SECTION
2.17.
|
Insurance.
|
Section 2.17
of the Company Disclosure Schedule lists, and the Company has made available
to
Parent or its representatives for review current and complete copies of, all
insurance policies, binders and surety and fidelity bonds relating to the
Company or any of its Subsidiaries (including, without limitation, all policies
or binders of casualty, general liability and workers’ compensation insurance),
all of which are currently in effect. All premiums and other amounts due and
payable under each such policy, binder and bond have been paid. Neither the
Company nor any of its Subsidiaries is in default with respect to any material
provision contained in any such policy, binder or bond and neither the Company
nor any of its Subsidiaries has failed to give any notice of or present any
material claim thereunder as required by the terms thereof. The Company has
not
received any written notice of cancellation or non-renewal of any such policy,
binder or bond. The Company has not received any written notice from any of
its
insurance carriers that any insurance premiums paid by it will be materially
increased in the future as a result of the claims experience of the Company.
Except as set forth on Section 2.17 of the Company Disclosure Schedule,
adequate reserves have been established for all claims under any such policy,
binder and bond as to which the insurer has denied coverage.
|
SECTION
2.18.
|
Opinion
of Financial Advisor.
|
The
Special Committee has received the opinion of Citigroup Global Markets Inc.,
financial advisor to the Special Committee, to the effect that, as of the date
of this Agreement, the Per
23
Share
Merger Consideration is fair, from a financial point of view, to the holders
of
Shares (other than members of the Company’s management, or their respective
Affiliates who, in connection with the Merger, enter into arrangements with
the
Parent or its Affiliates relating to employment or equity ownership in Parent
or
its Affiliate), which opinion will be confirmed in writing and a copy of which
will be delivered to Parent solely for informational purposes after receipt
thereof by the Company.
|
SECTION
2.19.
|
Brokers.
|
No
broker, finder or investment banker (other than Citigroup Global Markets Inc.,
a
true and complete copy of whose engagement letter has been provided to Parent)
is entitled to any brokerage, finder’s or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company or any of its Affiliates.
|
SECTION
2.20.
|
Franchise
Matters.
|
|
(a)
|
Except
as set forth in Section 2.20(a)(i) of the Company Disclosure Schedule,
there are no Persons authorized or privileged to use the Intellectual
Property Rights under any contract. Schedule 2.20(a)(i) of the Company
Disclosure Schedule sets forth the name, address and phone number
of each
franchisee who is operating a Rally’s restaurant or Checkers restaurant
and each developer who is authorized to open and operate a Rally’s
restaurant or Checkers restaurant, the date that the franchise or
area
development agreement was signed, the expiration date of the franchise
or
area development agreement, and payments due under the franchise
or area
development agreement. Except as set forth in Section 2.20(a)(ii)
of the
Company Disclosure Schedule, the royalty fee percentage specified
in each
extant franchise agreement remains in effect, is being paid when
due and
has not been reduced, modified, waived or otherwise affected by any
franchise agreement “side letter”, modification, amendment, waiver or
suspension, in whole or in part, and, to Company’s Knowledge, there are no
franchisees who are not in compliance with their franchise agreements.
Except as set forth in Section 2.20(a)(iii) of the Company Disclosure
Schedule, there are no area developers who are not in compliance
with
their development obligations under their area development agreements.
|
|
(b)
|
Section
2.20(b) of the Company Disclosure Schedule lists each state or other
jurisdiction in which the Company is currently registered, or with
which
the Company filed an application for registration or an exemption
from
registration, to sell franchises, and the effective date of each
such
registration. Except as set forth in Section 2.20(b) of the Company
Disclosure Schedule, all franchise registrations remain in full force
and
effect and are not the subject of any existing or threatened government
or
other action intended, in whole or in part, to result in the termination,
revocation, modification, suspension, conditioning or dissolution
of any
such franchise registration and/or any other circumstance which would
reasonably be expected to impair the Company’s ability routinely to renew
or amend any such franchise registration and/or enter into franchise
agreements in any jurisdiction. Except as would not, individually
or in
the aggregate, reasonably be expected to have a Company Material
Adverse
Effect, the Company is currently in compliance with all domestic
and
international laws relating to the offer and sale of franchises in
all
states and countries where the Company is conducting franchise activities
and has, without limitation, prepared all disclosure documents and
secured
all registrations to effectuate such franchise
activities.
|
24
|
(d)
|
Except
as set forth in the UFOCs or in Section 2.20(d) of the Company Disclosure
Schedule, (i) there is no franchise or franchise-related Action,
(ii) to
Company’s Knowledge there has not been any franchisee complaint, threats
to initiate an Action, threats to file complaints with any Governmental
Authority and/or threats to otherwise complain of the Company in
any
respect, (iii) there exists no formal or, to Company’s Knowledge, informal
complaint, inquiry, investigation, or judicial or administrative
action or
proceeding, communicated or commenced (as the case may be) by any
Governmental Authority to or against the Company regarding its offer
and
sale of franchises, the administration of its franchise network,
advancing
or referring to any complaint received from any franchisee, inquiring
of
or contesting any element of the Company’s franchise program or franchise
relationships, and/or otherwise related to the Company’s compliance with
any franchise Law, and (iv) to Company’s Knowledge, there exists no
material Action or other claims asserted by any third party against
any of
the Company’s franchisees in which the company is or may become a party
thereto, including under a negligence or “vicarious liability”
theory.
|
|
(e)
|
Except
as set forth in Section 2.20(e) of the Company Disclosure Schedule,
to
Company’s Knowledge, none of the Company’s franchisees or area developers
are currently involved in a workout or other financial restructuring
or
any insolvency, bankruptcy or similar proceeding; or contemplating
or
scheduled to undertake a workout or other financial restructuring
or any
insolvency, bankruptcy or similar
proceeding.
|
|
SECTION
2.21.
|
Antitakeover
Provisions and Rights
Agreements.
|
|
(a)
|
Antitakeover
Provisions.
The Company has taken all actions necessary such that no restrictive
provision of any “fair price,” “moratorium,” “control share acquisition,”
“business combination,” “stockholder protection,” “interested shareholder”
or other similar anti-takeover statute or regulation (including,
without
limitation, Section 203 of the DGCL) or similar restrictive provision
in the certificate of incorporation or by-laws or comparable
organizational documents of the Company or any of its Subsidiaries
is, or
at the Effective Time will be, applicable to the this Agreement or
to the
transactions contemplated hereby.
|
|
(b)
|
Rights
Agreements.
The Company has not entered into, and the Company Board has not adopted
or
authorized the adoption of, any stockholder rights or similar
agreement.
|
25
|
SECTION
2.22.
|
Investment
Companies.
|
Neither
the Company nor any Subsidiary of the Company is an “investment company” as
defined under the Investment Company Act of 1940, as amended.
|
SECTION
2.23.
|
Transactions
With Affiliates.
|
|
(a)
|
All
transactions, agreements, arrangements or understandings between
the
Company or any of its Subsidiaries, on the one hand, and the Company’s
affiliates (other than wholly-owned subsidiaries of the Company)
or other
Persons, on the other hand (an “Affiliate
Transaction”),
that are required to be disclosed in the Company SEC Reports in accordance
with Item 404 of Schedule S-K under the Securities Act have been
so
disclosed. There have been no Affiliate Transactions that are required
to
be disclosed under the Exchange Act pursuant to Item 404 of Schedule
S-K
under the Securities Act which have not already been disclosed in
the SEC
Reports.
|
|
(b)
|
Any
Affiliate Transaction at the time it was entered into and as of the
time
of any amendment or renewal thereof contained such terms, provisions
and
conditions as were at least as favorable to the Company or its applicable
Subsidiary as would have been obtainable by the Company or such Subsidiary
in a similar transaction with an unaffiliated third
party.
|
|
SECTION
2.24.
|
Certain
Business Practices.
|
Except
as
would not, individually or in the aggregate, reasonably be expected to have
a
Company Material Adverse Effect, neither the Company nor any of its Subsidiaries
nor any director, officer, agent or employee of the Company or any of its
Subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity or
for
the business of the Company or any of its Subsidiaries, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
|
SECTION
2.25.
|
No
Other Representations or
Warranties.
|
Except
for the representations and warranties contained in Article II of this
Agreement, Parent and Merger Sub both acknowledge that neither Company nor
any
other Person on behalf of the Company makes any other express or implied
representation or warranty with respect to the Company regarding any other
information provided to Parent.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent
and Merger Sub hereby, jointly and severally, represent and warrant to the
Company that:
26
|
SECTION
3.01.
|
Corporate
Organization.
|
Parent
is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Parent and Merger Sub has the requisite corporate power and corporate
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure to so qualify or to be good
standing would not, individually or in the aggregate, reasonably be expected
to
have a Parent Material Adverse Effect.
|
SECTION
3.02.
|
Authority
Relative to the
Transactions.
|
Each
of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its respective obligations hereunder
and
to consummate the Transactions. The execution and delivery by Parent and Merger
Sub of this Agreement and the consummation by Parent and Merger Sub of the
Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Merger
Sub
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Merger, the approval and adoption of this
Agreement by Parent as the sole stockholder of Merger Sub and the filing and
recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and, assuming due authorization, execution and delivery by the Company,
constitutes the legal, valid and binding obligation of each of Parent and Merger
Sub, enforceable against each of Parent and Merger Sub in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency
(including, without limitation, all Laws relating to fraudulent transfers),
reorganization, moratorium or similar Laws affecting creditors’ rights generally
and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
|
SECTION
3.03.
|
No
Conflict; Required Filings and
Consents.
|
The
execution and delivery by Parent and Merger Sub of this Agreement do not, and
the performance by Parent and Merger Sub of this Agreement and the consummation
of the Transactions by Parent and Merger Sub will not:
|
(i)
|
violate
the certificate of incorporation or by-laws of Parent or Merger
Sub;
|
|
(ii)
|
violate
any Law applicable to Parent or Merger Sub or by which any property
or
asset of either of them is bound or affected, other than any such
violation that would not, individually or in the aggregate, reasonably
be
expected to have a Parent Material Adverse Effect;
or
|
|
(iii)
|
result
in any breach of, or constitute a default (or an event which, with
notice
or lapse of time or both, would become a default) under, or give
to others
any rights of termination, amendment, acceleration or cancellation
of, or
result in the
|
27
|
creation
of a lien or other encumbrance on any property or asset of Parent
or
Merger Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or
obligation to which Parent or Merger Sub is a party or by which Parent
or
Merger Sub or any property or asset of either of them is bound or
affected, except for any such conflicts, violations, breaches, defaults
or
other occurrences which would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse
Effect.
|
|
SECTION
3.04.
|
Governmental
Consents.
|
The
execution, delivery, and performance of this Agreement by each of Parent and
Merger Sub and the consummation by each of Parent and Merger Sub of the
transactions contemplated hereby do not and will not require any consent,
approval, authorization or permit of, action by, filing with or notification
to,
any Governmental Authority, except for (i) those required under or in
relation to (A) the Exchange Act or the Securities Act, (B) compliance
with the applicable requirements of the HSR Act, (C) the DGCL with respect
to the filing of the Certificate of Merger, (D) rules and regulations of
the NASDAQ Stock Market and (E) such as may be required under any
applicable state securities or blue sky laws and (ii) such other consents,
permits, approvals, orders or authorizations the failure of which to obtain
would not, individually or in the aggregate, reasonably be expected to have
a
Parent Material Adverse Effect.
|
SECTION
3.05.
|
Financing.
|
|
(a)
|
Assuming
the amounts contemplated by (i) the commitment letter dated February
16,
2006 relating to debt financing (“Debt
Financing”)
of Merger Sub and (ii) the commitment letter dated February 6, 2006
relating to equity financing (“Equity
Financing”)
of Parent (together, the “Commitment
Letters”)
(true and complete copies of which have been made available to the
Company) are provided, Merger Sub will have at the Effective Time,
through
cash on hand, cash provided by Parent and/or available credit facilities,
the funds necessary to consummate the Merger, including the payment
of the
aggregate Per Share Merger Consideration and to pay all related fees
and
expenses of Parent and Merger Sub and those of the Company disclosed
to
Parent prior to the date hereof.
|
|
(b)
|
Neither
of the Commitment Letters has been amended or modified prior to the
date
of this Agreement, and the respective commitments contained in the
Commitment Letters have not been amended or modified prior to the
date of
this Agreement, and the respective commitments contained in the Commitment
Letters have not been withdrawn or rescinded in any respect prior
to the
date of this Agreement. As of the date of this Agreement, the Commitment
Letters are in full force and effect. As of the date of this Agreement,
Parent and its Affiliates are not party to any agreement, arrangement
or
understanding as to conditions precedent or other contingencies related
to
the funding of the full amount of the Transaction, other than as
set forth
in or contemplated by the Commitment Letters. Parent has no reasonable
expectation as of the date hereof that any of the conditions to the
Debt
Financing or Equity Financing contemplated by the Commitment Letters
within its control will not be satisfied or that the full amount
will not
be made available to Parent on the Closing
Date.
|
28
|
SECTION
3.06.
|
Brokers.
|
No
broker, finder or investment banker (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company,
Inc., the terms of whose engagement have been previously disclosed to the
Company) is entitled to any brokerage, finder’s or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf
of
Parent or any of its Affiliates.
|
SECTION
3.07.
|
Interim
Operations of Merger Sub.
|
Merger
Sub was formed solely for the purpose of effecting the Merger, has engaged
in no
other business activities and has conducted its operations only as contemplated
hereby or in connection therewith.
|
SECTION
3.08.
|
Litigation.
|
There
is
no action, suit or proceeding pending or threatened before any Governmental
Authority against Parent, Merger Sub or any of their Subsidiaries, and no
judgment, decree, injunction, rule, order or similar action of any Governmental
Authority is outstanding against Parent, Merger Sub or any of their Subsidiaries
that, in any such case, seeks directly or indirectly to restrain or prohibit
the
consummation of the Merger.
|
SECTION
3.09.
|
Board
Approval.
|
On
or
prior to the date of this Agreement, the Board of Directors of Parent and Merger
Sub have (i) determined that this Agreement and the transactions provided for
herein, including the Merger, are fair to and in the best interests of Parent,
Merger Sub, and their respective stockholders and (ii) adopted resolutions
approving this Agreement and declaring this Agreement and the Merger
advisable.
|
SECTION
3.10.
|
Vote
Required.
|
No
vote
of the holders of any class or series of capital stock or interests of Parent
is
necessary to approve the acquisition of Shares pursuant to the consummation
of
the Merger.
|
SECTION
3.11.
|
No
Company Shares.
|
As
of the
date hereof, neither Parent nor Merger Sub beneficially owns any shares of
Company capital stock.
29
ARTICLE
IV
CONDUCT
OF BUSINESS PENDING THE MERGER
|
SECTION
4.01.
|
Conduct
of Business by the Company Pending the
Merger.
|
|
(a)
|
Ordinary
Course.
The Company agrees that, between the date of this Agreement and the
Effective Time, except as expressly contemplated by any other provision
of
this Agreement or as set forth in Section 4.01 of the Company
Disclosure Schedule, unless Parent shall otherwise consent in writing
(such consent not to be unreasonably withheld or
delayed):
|
|
(i)
|
the
businesses of the Company and its Subsidiaries shall be conducted
in the
ordinary course of business and in a manner consistent with past
practice;
and
|
|
(ii)
|
the
Company shall use commercially reasonable efforts to preserve intact
the
business organization of the Company and its Subsidiaries, to keep
available the services of the current officers and employees of the
Company and its Subsidiaries and to preserve the current relationships
of
the Company and its Subsidiaries with customers, franchisees, suppliers
and other Persons with which the Company or any of its Subsidiaries
has
significant business relations.
|
|
(b)
|
Required
Consent.
Except as expressly contemplated by any other provision of this Agreement
or as set forth in Section 4.01 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries shall, between the
date of
this Agreement and the Effective Time, directly or indirectly, do,
or
propose to do, any of the following without the prior written consent
of
Parent (such consent not to be unreasonably withheld or
delayed):
|
|
(i)
|
amend
or otherwise change its certificate of incorporation or by-laws or
equivalent organizational
documents;
|
|
(ii)
|
issue,
sell, pledge, dispose of, grant or encumber, or authorize such issuance,
sale, pledge, disposition, grant, or encumbrance
of:
|
|
(A)
|
any
shares of any class of capital stock or other equity interests or
other
securities of the Company or any of its Subsidiaries, or any options,
warrants, convertible securities or other rights of any kind to acquire
any shares of such capital stock or other equity interest or other
securities (including, without limitation, any phantom interest),
of the
Company or any of its Subsidiaries (except for the issuance of Shares
issuable pursuant to employee stock options outstanding on the date
of
this Agreement and granted under Company Stock Option Plans in effect
on
the date of this Agreement); or
|
|
(B)
|
any
material assets of the Company or any of its
Subsidiaries;
|
30
|
(iii)
|
declare,
set aside, make or pay any dividend or other distribution, payable
in
cash, stock, property or otherwise, with respect to any of its capital
stock, other than to the Company or to any wholly owned Subsidiary
of the
Company;
|
|
(iv)
|
reclassify,
combine, split, subdivide or effect any similar transaction with
respect
to, or redeem, or purchase or otherwise acquire, directly or indirectly,
any of its capital stock;
|
|
(v)
|
other
than in the ordinary course of business and consistent with past
practice:
|
|
(A)
|
acquire
(including, without limitation, by merger, consolidation, or acquisition
of stock or assets or any other business combination) any corporation,
partnership, other business organization or any division thereof
or any
significant amount of assets; or
|
|
(B)
|
issue
any debt securities or similar obligations, incur indebtedness for
borrowed money or grant any lien or security interest securing obligations
with respect to indebtedness, or assume, guarantee or endorse, or
otherwise become responsible for, the obligations of any Person,
in excess
of $3,000,000, of which no more than $1,000,000 may be incurred with
respect to unsecured indebtedness for general corporate purpose,
and the
remainder of which shall be with respect to secured indebtedness
in
connection with capital expenditures permitted by Section
4.01(b)(xvii);
or
|
|
(C)
|
make
any material loan, advance or capital contribution to, or investment
in,
any other Person, other than to the Company or to any wholly owned
Subsidiary of the Company;
|
|
(vi)
|
(i)
|
hire
any additional employees other than in the ordinary course of business,
except (A) to fill vacancies arising after the date of this Agreement;
or
(B) to meet increased demand.
|
|
(B)
|
make
any offers to any officer or other executive employee (or any person
who
following such action, would be an officer or executive employee)
of an
employment position other than the employment position he or she
currently
holds, except for offers of an employment position made in the ordinary
course of business and consistent with past practice in connection
with
the promotion or demotion of any employee of the Company or any of
its
Subsidiaries who is not a director or officer of the
Company;
|
|
(C)
|
increase
the compensation payable or to become payable to, or except as required
to
comply with applicable Law, adopt, enter into, terminate, amend or
increase the amount or accelerate the payment or vesting of any benefit
or
award or amount payable under any Company Stock Option Plan or other
Plan
or other arrangement for the current or future benefit or welfare
of, any
director, officer or employee, except for increases in the ordinary
course
of business and consistent with past practice in salaries or wages
of
executive employees of the Company or any of its Subsidiaries who
are not
directors or officers of the
Company;
|
31
|
(D)
|
except
as set forth in Section 4.01 of the Company Disclosure Schedule,
grant any loan, advance, extensions of credit to current or former
employees or forgiveness or deferral of any loans due from any employee;
|
|
(E)
|
establish,
adopt, enter into, terminate or amend any Plan or establish, adopt
or
enter into any plan, agreement, program, policy, trust, fund or other
arrangement that would be a Plan if it were in existence as of the
date of
this Agreement for the benefit of any director, officer or employee
except
as required by this Agreement or the Transactions contemplated hereby,
or
as required by ERISA, the Code or to otherwise comply with applicable
Law;
|
|
(F)
|
other
than bonuses earned through the date hereof and other than in the
ordinary
course of business consistent with past practice for employees other
than
officers and directors, grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Plan; provided
that there shall be no grant or award to any director, officer or
employee
of stock options, restricted stock, stock appreciation rights, or
other
stock-based awards, or any removal of existing restrictions in any
Company
Stock Option Plan or other Plan or agreements or awards made thereunder
(provided that equity awards may be transferred in accordance with
the
applicable plan document or
agreement);
|
|
(G)
|
enter
into, amend or terminate any employment or severance agreement with
or,
except in accordance with the existing obligations of the Company
or any
of its Subsidiaries, grant any severance, termination, change in
control
or transaction bonus or pay to, any employee, officer or director
of the
Company or any of its Subsidiaries, except, with respect to non-officer
employees, in the ordinary course of
business;
|
|
(H)
|
other
than benefits accrued through the date hereof and other than in the
ordinary course of business for employees other than officers or
directors
of the Company, pay any benefit not provided for under any
Plan;
|
|
(vii)
|
enter
into, amend or modify in any material respect, or consent to the
termination of, any Material Contract, or amend, waive or modify
in any
material respect, fail to renew, or consent to the termination of,
the
Company’s or any of its Subsidiaries’ rights thereunder other than in the
ordinary course of business consistent with past
practice;
|
|
(viii)
|
fail
to make in a timely manner any required filings with the SEC required
under, and in compliance with, the Securities Act or the Exchange
Act or
the rules and regulations promulgated thereunder or under, and in
compliance with, the rules and regulations of the NASDAQ Stock
Market;
|
32
|
(ix)
|
change
any Tax election, annual tax accounting period, or method of tax
accounting, file amended Tax Returns or claims for Tax refunds by
the
Company or its Subsidiaries, enter into a closing agreement relating
to
Taxes or any settlement of any Tax claim, audit or
assessment;
|
|
(x)
|
make
any changes in its accounting methods, principles or practices currently
in effect, except as required by changes in GAAP or by Regulation
S-X
under the Exchange Act, in each case as concurred in by its independent
public accountants;
|
|
(xi)
|
adopt
a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization
of
the Company or any of its Subsidiaries (other than the
Transactions);
|
|
(xii)
|
except
as required by applicable Law or GAAP, revalue in any material respect
any
of its assets, including writing down the value of inventory in any
material manner, or writing-off notices or accounts receivable in
any
material manner;
|
|
(xiii)
|
(A)
enter into any material area development agreement or (B) enter into
any
franchise agreement or area development agreement without first amending
the Company’s effective UFOCs to include such information regarding the
transactions contemplated by this Agreement as required by applicable
Law;
|
|
(xiv)
|
pay,
discharge, satisfy, settle or compromise any claim, litigation, liability,
obligation (absolute, asserted or unasserted, contingent or otherwise)
or
any Action, except for settlements or compromises involving amounts
not
exceeding $300,000 in the aggregate, including all fees, costs and
expenses associated therewith;
|
|
(xv)
|
enter
into any negotiation with respect to, or adopt or amend in any respect,
any collective bargaining
agreement;
|
|
(xvi)
|
enter
into any material agreement or arrangement with any of its officers,
directors, employees or any “affiliate” or “associate” of any of its
officers or directors (as such terms are defined in Rule 405 under
the
Securities Act);
|
|
(xvii)
|
make,
authorize or agree to make any capital expenditures, or enter into
any
agreement or agreements providing for payments, except for capital
expenditures not exceeding (i) $10,000,000 in the aggregate, (ii)
$1,500,000 in respect of any single capital expenditure or series
of
related capital expenditures for new restaurant
development including the acquisition of the underlying land or (iii)
$1,000,000 in respect of any single capital expenditure or series
of
related capital expenditures for new restaurant development not including
the acquisition of the underlying
land;
|
|
(xviii)
|
terminate
or fail to renew any Company Permit that is material to the conduct
of the
businesses of the Company or any of its Subsidiaries;
|
33
|
(xix)
|
fail
to maintain in full force and effect all insurance (including
self-insurance) currently in effect, subject to renewal in the ordinary
course of business consistent with past
practice;
|
|
(xx)
|
take
any action or omit to take any action within its control that would,
or is
reasonably likely to, result in any of the conditions to the Merger
set
forth in Article VI of this Agreement not being satisfied;
or
|
|
(xxi)
|
authorize,
agree or commit to do any of the
foregoing.
|
|
SECTION
4.02.
|
Advice
of Changes; Government Filings.
|
|
(a)
|
Advise.
Each party shall promptly advise the other orally and in writing
of
(i) any representation or warranty made by it in this Agreement (A)
to the extent qualified by Material Adverse Effect or other materiality
qualifier becoming untrue or inaccurate and (B) to the extent not
qualified by Material Adverse Effect becoming untrue or inaccurate
in any
material respect except that this clause (B) shall be deemed
satisfied so long as such representations or warranties being untrue
or
inaccurate do not have a Material Adverse Effect on the Company or
Parent,
as the case may be, or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement
required to be complied with or satisfied by it under this Agreement.
However, no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions
to
the obligations of the parties or the remedies available under this
Agreement.
|
|
(b)
|
Filings.
The Company shall deliver to Parent copies of all reports and filings
made
with the SEC promptly after the same are filed. Subject to applicable
Laws
relating to the exchange of information, each of the Company and
Parent
shall have the right to review in advance, and to the extent practicable
each will consult with the other, with respect to all the information
relating to the other party and each of their respective Subsidiaries,
which appears in any filings, announcements or publications made
with, or
written materials submitted to, any third party or any Governmental
Authority in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties
hereto
agrees to act reasonably and as promptly as practicable. Each party
agrees
that, to the extent practicable, it will consult with the other party
with
respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities
necessary
or advisable to consummate the transactions contemplated by this
Agreement
and each party will keep the other party apprised of the status of
matters
relating to completion of the transactions contemplated
hereby.
|
|
SECTION
4.03.
|
Tax
Matters.
|
During
the period from the date of this Agreement to the Effective Time, the Company
and its Subsidiaries shall:
|
(a)
|
prepare
and timely file all Tax Returns required to be filed by them on or
before
the Closing Date (“Post-Signing
Returns”)
in a manner consistent with past practice, except as otherwise required
by
applicable Laws;
|
34
|
(b)
|
consult
with Parent with respect to all material Post-Signing Returns and
deliver
drafts of such Post-Signing Returns to Parent no later than
ten Business Days prior to the date on which such Post-Signing
Returns are required to be filed;
|
|
(c)
|
fully
and timely pay all Taxes due and payable in respect of such Post-Signing
Returns that are so filed;
|
|
(d)
|
properly
reserve (and reflect such reserve in their books and records and
financial
statements), for all Taxes payable by them for which no Post-Signing
Return is due prior to the Effective Time in a manner consistent
with past
practice;
|
|
(e)
|
promptly
notify Parent of any Legal Action or audit pending or threatened
against
the Company or any of its Subsidiaries in respect of any Tax matter,
including Tax liabilities and refund claims, and not settle or compromise
any such Legal Action or audit without Parent’s prior written consent in
excess of $250,000;
|
|
(f)
|
not
make or revoke any election with regard to Taxes or file any amended
Tax
Returns;
|
|
(g)
|
not
make any change in any Tax or accounting methods or systems of internal
accounting controls (including procedures with respect to the payment
of
accounts payable and collection of accounts receivable), except as
may be
appropriate to conform to changes in Tax laws or regulatory accounting
requirements or GAAP; and
|
|
(h)
|
terminate
all Tax Sharing Agreements to which the Company or any of its Subsidiaries
is a party such that there are no further Liabilities
thereunder.
|
ARTICLE
V
ADDITIONAL
AGREEMENTS
|
SECTION
5.01.
|
Stockholders’
Meeting.
|
Meeting.
The
Company, acting through the Company Board, and subject to Section 5.04(d),
shall:
|
(i)
|
in
accordance with applicable Law and the Company’s Certificate of
Incorporation and By-laws, duly call, give notice of, convene and
hold, as
promptly as practicable after the date of this Agreement, an annual
or
special meeting of its stockholders for the purpose of considering
and
taking action on this Agreement and the Merger (the “Stockholders’
Meeting”);
and
|
|
(ii)
|
(A)
|
include
in the Proxy Statement, and not subsequently withdraw or modify in
any
manner adverse to Merger Sub or Parent, the unanimous resolution
of the
Special Committee and the Company Board (1) that the terms of this
Agreement are fair to and in the best interests of the stockholders
of the
Company, (2) declaring this Agreement to be advisable, and
(3) recommending that the stockholders vote to approve and adopt this
Agreement and the Merger; and
|
35
|
(B)
|
use
its best efforts to obtain the Company Stockholder Approval and otherwise
comply with all legal requirements applicable to the Stockholders’
Meeting. At the Stockholders’ Meeting, Parent and Merger Sub shall cause
all Shares then beneficially owned by them and their affiliates to
be
voted in favor of the approval and adoption of this Agreement and
the
Merger.
|
|
SECTION
5.02.
|
Proxy
Statement.
|
|
(a)
|
Filing.
The Company shall file with the SEC, as promptly as practicable following
the date of this Agreement, a proxy statement under Section 14 of the
Exchange Act, and otherwise complying with the applicable provisions
of
the Exchange Act and of the rules and regulations promulgated under
the
Exchange Act, relating to the Company Stockholders’ Meeting (the
“Proxy
Statement”).
Parent, Merger Sub and the Company shall cooperate with each other
in the
preparation of the Proxy Statement and in responding to any comments
of
the SEC with respect to the Proxy Statement or any requests by the
SEC for
any amendment or supplement thereto or for additional information
and to
cause the Proxy Statement and all required amendments and supplements
thereto to be mailed to the holders of Shares entitled to vote at
the
Stockholders’ Meeting at the earliest practicable time.
|
|
(b)
|
Review.
Each of Merger Sub, Parent and the Company and its respective counsel
shall have a reasonable opportunity to review and comment
on:
|
|
(i)
|
the
Proxy Statement, including all amendments and supplements thereto,
prior
to such documents being filed with the SEC or disseminated to holders
of
Shares; and
|
|
(ii)
|
all
responses to requests for additional information and replies to comments
from the SEC or the staff thereof prior to their being filed with,
or sent
to, the SEC. Each of the Company, Parent and Merger Sub agrees to
use its
reasonable best efforts, after consultation with the other parties
hereto,
to respond promptly to all such comments of and requests by the
SEC.
|
|
(c)
|
Parent
Information.
In accordance with the foregoing, Parent and Merger Sub will furnish
such
information relating to both Parent and Merger Sub as may be required
by
the Exchange Act to be included in the Proxy Statement. Parent and
Merger
Sub agree that none of the information supplied or to be supplied
by or on
behalf of the Parent or Merger Sub for inclusion or incorporation
by
reference in the Proxy Statement will, at the date it is first mailed
to
the stockholders of the Company or at the time of the Stockholders’
Meeting, 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, in the light of the circumstances in
which
they are made, not misleading. Notwithstanding the foregoing, Parent
and
Merger Sub make no covenant with respect to the information supplied
or to
be supplied by or on behalf of the Company or its Subsidiaries for
inclusion or incorporation by reference in the Proxy
Statement.
|
36
|
(d)
|
Company
Information.
In accordance with the foregoing, the Company will furnish such
information relating to the Company and its Subsidiaries as may be
required by the Exchange Act to be included in the Proxy Statement.
The
Company agrees that none of the information supplied or to be supplied
by
or on behalf of the Company or its Subsidiaries for inclusion or
incorporation by reference in the Proxy Statement will, at the date
it is
first mailed to the stockholders of the Company or at the time of
the
Stockholders’ Meeting, 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, in the light of the circumstances
in which they are made, not misleading. Notwithstanding the foregoing,
the
Company makes no covenant with respect to the information supplied
or to
be supplied by or on behalf of Parent or Merger Sub for inclusion
or
incorporation by reference in the Proxy
Statement.
|
|
SECTION
5.03.
|
Access
to Information;
Confidentiality.
|
|
(a)
|
Access.
Subject to applicable Law and the confidentiality agreement, dated
January
13, 2006, between Parent and the Company (the “Confidentiality
Agreement”),
from the date of this Agreement until the Effective Time, the Company
shall (and shall cause its Subsidiaries
to):
|
|
(i)
|
provide
to Parent and Parent’s Representatives access, during normal business
hours and upon reasonable notice by Parent, to the officers, employees,
agents, properties, offices and other facilities of the Company and
its
Subsidiaries and to the books and records thereof;
and
|
|
(ii)
|
furnish
to Parent such information concerning the business, properties, contracts,
assets, liabilities, personnel and other aspects of the Company as
Parent
or its Representatives may reasonably
request.
|
|
(b)
|
Confidentiality
Agreement.
The Confidentiality Agreement shall survive the execution and delivery
of
this Agreement.
|
|
(c)
|
No
Waiver.
Except as otherwise expressly provided herein, no information or
knowledge
obtained by any party pursuant to this Section 5.03 or otherwise
shall affect or be deemed to modify any representation or warranty
made by
any party hereunder.
|
|
SECTION
5.04.
|
No
Solicitation of
Transactions.
|
|
(a)
|
Acquisition
Proposals.
The Company shall not, and the Company shall cause its Subsidiaries
and
its and their respective Representatives not to, directly or
indirectly:
|
|
(i)
|
solicit,
initiate or knowingly facilitate or encourage any inquiries for the
making
of any proposal or offer (including any proposal or offer to Company
stockholders) that constitutes, or would reasonably be expected to
lead
to, any Competing Transaction (as defined below) (each such proposal
or
offer an “Acquisition
Proposal”);
|
37
|
(ii)
|
participate
in discussions or negotiations with, disclose or provide any non-public
information relating to the Company or its Subsidiaries to, or afford
access to the officers, employees, agents, business, properties,
assets,
books or records of the Company or any of its Subsidiaries to, any
Person
with respect to or in connection with any potential Acquisition
Proposal;
|
|
(iii)
|
agree
to, approve, endorse or recommend any Competing Transaction or enter
into
any letter of intent or other contract, agreement or commitment providing
for or otherwise relating to any Competing
Transaction;
|
|
(iv)
|
grant
any waiver or release under any standstill or similar agreement by
any
Person who has made an Acquisition Proposal;
or
|
|
(v)
|
authorize
or direct any Representative of the Company or any of its Subsidiaries
to
take any such action.
|
The
Company shall, and shall cause its Subsidiaries and instruct its and their
Representatives to immediately cease and cause to be terminated all existing
discussions or negotiations with any Person conducted heretofore with respect
to
any proposal relating to a Competing Transaction.
|
(b)
|
Response
to Acquisition Proposal.
Notwithstanding anything to the contrary in this Section 5.04, before
the receipt of the Company Stockholder Approval, the Company Board
or
Special Committee may furnish information to, and enter into discussions
with, a Person who has made a bona fide, written Acquisition Proposal,
but
only if:
|
|
(i)
|
such
Acquisition Proposal was made after the date of this Agreement (it
being
understood that, subject to compliance with Section 5.04(a), such an
Acquisition Proposal made after the date of this Agreement by a Person
who
made an Acquisition Proposal regarding a Competing Transaction prior
to
the date of this Agreement shall be considered a new Acquisition
Proposal
made after the date of this Agreement) and none of the Company, its
Subsidiaries and their Representatives has violated any of the
restrictions set forth in this
Section 5.04;
|
|
(ii)
|
the
Company Board or Special Committee has determined in good faith after
consultation with outside legal counsel (who may be the Company’s
regularly engaged outside legal counsel or counsel to the Special
Committee) and a financial advisor that such Acquisition Proposal
constitutes, or is reasonably likely to result in, a Superior Proposal
(as
defined below);
|
|
(iii)
|
prior
to taking such action such person shall have executed a confidentiality
agreement on terms no less favorable to the Company than those contained
in the Confidentiality Agreement (a copy of which shall promptly
be
provided to Parent);
|
|
(iv)
|
Parent
is provided, on a substantially concurrent basis, any non-public
information provided or made available to such Person that was not
previously provided or made available to Parent and its Representatives;
and
|
38
|
(v)
|
the
Company shall have delivered to Parent a prior written notice advising
Parent that the Company Board or Special Committee, as applicable,
intends
to take such action, and shall keep Parent reasonably informed on
a
current basis as to the status of and any material developments regarding
any such inquiry or proposal
|
|
(c)
|
Notice
of Superior Proposal.
In addition to the obligations of the Company set forth in
Sections 5.04(a) and (b), the Company shall promptly as practicable
(and, in any event, within 24 hours) (i) advise Parent and Merger
Sub, telephonically and in writing, of the Company’s receipt of any
Acquisition Proposal, any communication from any Person that would
reasonably be expected to lead to an Acquisition Proposal or any
request
for information relating to the Company or any of its Subsidiaries
or for
access to the officers, employees, agents, business, properties,
assets,
books or records of the Company or any of its Subsidiaries by any
Person
that has made, or would reasonably be expected to make, an Acquisition
Proposal and (ii) provide Parent and Merger Sub, in writing, with the
terms and conditions of any such Acquisition Proposal, and a copy
of such
Acquisition Proposal, inquiry or request and the identity of the
Person
making the same. The Company shall inform Parent as promptly as
practicable (and, in any event, within 24 hours) of any change to
the
material terms of any such Acquisition Proposal. As promptly as
practicable (and, in any event, within 24 hours) after determination
by
the Company Board or Special Committee that an Acquisition Proposal
constitutes a Superior Proposal, the Company shall deliver to Parent
and
Merger Sub, a written notice (a “Notice
of Superior Proposal”)
advising them of such determination, specifying the terms and conditions
of such Superior Proposal and the identity of the Person making such
Superior Proposal, and providing Parent and Merger Sub with a copy
of the
Superior Proposal.
|
39
|
Company
Recommendation or to terminate this Agreement pursuant to Section
7.01(iv)(b), as applicable, and (C) containing all information required
by
Section 5.04(c), together with copies of any written offer or proposal
in
respect of such Superior Proposal (it being understood and agreed
that any
material amendment to the financial terms or other material terms
of such
Superior Proposal shall require a new Adverse Recommendation Notice
and a
new three (3) Business Day period) and (ii) during such three Business
Day
period the Company Board and Special Committee shall have negotiated
in
good faith with Parent concerning any amendments proposed by Parent
to
this Agreement and to the transactions contemplated hereby. Any disclosure
that the Company Board may be compelled to make with respect to an
Acquisition Proposal or otherwise in order to comply with its fiduciary
duties under applicable Law or Rule 14d-9 or 14e-2 under the Exchange
Act
will not constitute a violation of this Agreement; provided,
that any such disclosure that would constitute a Change in Company
Recommendation, and any disclosure of a decision to terminate this
Agreement pursuant to Section 7.01(iv)(b), shall be made only in
compliance with this Section
5.04(d).
|
|
(e)
|
Discussions
Prior to Agreement.
The fact that the Company, any of its Subsidiaries, or any of their
Representatives have had discussions or negotiations with Persons
prior to
the date of this Agreement regarding a possible Acquisition Proposal
shall
not prevent the Company from taking any of the actions permitted
by this
Section 5.04 with respect to a new Acquisition Proposal submitted by
any such Person after the date of this Agreement, that was not solicited
in violation of this
Section 5.04.
|
|
(i)
|
any
merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or other similar transaction
(including any so-called merger-of-equals and whether or not the
Company
is the entity surviving any such transaction) involving the Company
or any
of its Subsidiaries which results in any person beneficially owning
20% or
more of any class of equity or voting securities of the Company or
of any
of its Subsidiaries or 20% or more of the assets of the Company and
its
Subsidiaries (directly or indirectly, including by the ownership
of equity
or voting securities);
|
|
(ii)
|
any
sale, lease, exchange, transfer or other disposition (directly or
indirectly, including by the transfer of equity or voting securities)
of
20% or more of the assets of the Company and its
Subsidiaries;
|
|
(iii)
|
any
sale, exchange, transfer or other disposition of equity or voting
securities in which the Company or any of its Subsidiaries participates
and which results in any person beneficially owning 20% or more of
any
class of equity or voting securities of the Company or of any of
its
Subsidiaries; or
|
|
(iv)
|
any
transaction or series of transactions, including a tender offer or
exchange offer, that, if consummated, would result in any person
beneficially owning more than 20% of any class of equity or voting
securities of the Company or of any of its
Subsidiaries.
|
40
|
SECTION
5.05.
|
Employee
Benefits Matters.
|
|
(a)
|
Future
Participation.
From and after the Effective Time and until one calendar year thereafter,
employees of the Company and its Subsidiaries shall be offered
participation in employee benefit plans, programs, policies and
arrangements that are no less favorable in the aggregate to those
provided
under the applicable employee benefit plans (as defined in
Section 3(3) of ERISA (excluding plans exempt under
Section 201(2) of ERISA)), programs, policies and arrangements of the
Company and its Subsidiaries in effect at the Effective Time
(collectively, “Current
Plans”).
Nothing contained in this Section 5.05
shall:
|
|
(i)
|
obligate
or commit Parent or its Subsidiaries to continue any particular Current
Plan after the Effective Time or to maintain in effect any particular
Current Plan or any level or type of
benefits;
|
|
(ii)
|
obligate
or commit Parent or its Subsidiaries to provide any employee of the
Company or any of its Subsidiaries with any equity compensation pursuant
to any equity compensation plans, programs or arrangements sponsored
or
provided by Parent or any of its Subsidiaries or Affiliates for the
benefit of its employees;
|
|
(iii)
|
obligate
or commit Parent or its Subsidiaries to employ or continue the employment
of any individual; or
|
|
(iv)
|
prohibit
Parent or its Subsidiaries from making any changes to any Current
Plan.
|
|
(b)
|
Prior
Credit.
Parent will cause the Surviving Corporation and its Subsidiaries
to credit
each employee of the Company and its Subsidiaries as of the Effective
Time
with such number of unused vacation days and other paid time off
accrued
by each employee with the Company and its Subsidiaries prior to the
Effective Time in accordance with the Company’s personnel policies
applicable to such employees on the date hereof, copies of which
have been
made available to Parent. However, Parent may, in its sole discretion
and
to the extent permitted by applicable law, require that such vacation
and
other paid time off be taken by the employee prior to September 30,
2006.
|
41
|
(c)
|
Eligibility
and Vesting.
Employees of the Company and its Subsidiaries shall receive credit
for
purposes of eligibility to participate and vesting (but not for benefit
accruals under any defined benefit pension plan) under any employee
benefit plan, program or arrangement established or maintained by
the
Surviving Corporation or any of its U.S. affiliates for service accrued
prior to the Effective Time with the Company or any of its Subsidiaries
to
the extent such employee may be eligible to participate on or after
the
Effective Time to the same extent recognized by the Company or any
of its
Subsidiaries under comparable plans immediately prior to the Effective
Time. However, such crediting of service shall not operate to duplicate
any benefit or the funding of any such
benefit.
|
|
(d)
|
Welfare
Benefit Plans.
With
respect to any welfare benefit plans, programs and arrangements in
which
an employee of the Company or its Subsidiaries may be eligible to
participate after the Effective Time, Parent shall, and shall cause
the
Surviving Corporation to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation
and coverage requirements applicable to such employees to the extent
such
conditions were satisfied under the comparable welfare plans of the
Company and its Subsidiaries prior to the Effective Time and (ii)
to the
extent permitted and applicable under any such plan, recognize for
purposes of satisfying any analogous annual deductible or out-of-pocket
requirements any deductible and out-of-pocket expenses paid by any
such
employee prior to the Effective Time in the calendar year in which
the
Effective Time occurs.
|
|
(e)
|
WARN
Act.
No later than five business days prior to the Closing Date, the Company
shall provide Parent with a list setting forth the number of employees
terminated from each site of employment of the Company and its
Subsidiaries during the 90-day period ending on the Closing Date
for
reasons qualifying the termination as “employment losses” under the WARN
Act and the date of each such termination with respect to each
termination; provided, that this sentence shall not apply with respect
to
any site of employment at which sufficient employees have not been
employed at any time in such 90-day period for terminations of employment
at such site to be subject to the WARN
Act.
|
|
SECTION
5.06.
|
Directors’
and Officers’ Indemnification;
Insurance.
|
|
(a)
|
Indemnification.
Without limiting any additional rights that any employee, officer
or
director may have under any employment agreement or benefit Plan
or under
the Company’s certificate of incorporation or by laws, for a period of six
(6) years from the Effective Time, Parent shall, and shall cause
the
Surviving Corporation to, indemnify and hold harmless each present
(as of
immediately prior to the Effective Time) and former officer or director
of
the Company and the Company’s Subsidiaries (the “Indemnified
Directors and Officers”),
against all claims, losses, liabilities, damages, judgments, inquiries,
fines and reasonable fees, costs and expenses, including, attorneys’ fees
and disbursements (collectively, “Costs”),
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of actions taken by them in their capacity as officers
or
directors at or prior to the Effective Time (including this Agreement
and
the transactions and actions
|
42
|
contemplated
hereby), or taken by them at the request of the Company or any Company
Subsidiary, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that applicable Law permits
a
Delaware corporation to indemnify its officers and directors. Each
Indemnified Director and Officer will be entitled to advancement
of
expenses incurred in the defense of any claim, action, suit, proceeding
or
investigation from the Surviving Corporation within ten (10) Business
Days
of receipt by the Surviving Corporation from the Indemnified Director
or
Officer of a request therefor and reasonable documentation thereof;
provided
that any Person to whom expenses are advanced provides an undertaking
to
repay such advances if it is ultimately determined that such person
is not
entitled to indemnification. The Surviving Corporation shall not
settle,
compromise or consent to the entry of any judgment in any proceeding
or
threatened action, suit, proceeding, investigation or claim (and
in which
indemnification could be sought by such Indemnified Director or Officer
hereunder), unless such settlement, compromise or consent includes
an
unconditional release of such Indemnified Director or Officer from
all
liability arising out of such action, suit, proceeding, investigation
or
claim or such Indemnified Director or Officer otherwise
consents.
|
|
(b)
|
Maintenance.
The certificate of incorporation and by-laws of the Surviving Corporation
shall continue to contain provisions no less favorable with respect
to
indemnification, advancement of expenses and exculpation of former
or
present directors and officers than are presently set forth in the
Company’s certificate of incorporation and by-laws, which provisions shall
not, except to the extent required to comply with applicable Law,
be
amended, repealed or otherwise modified for a period of six (6) years
from
the Effective Time in any manner that would adversely affect the
rights
thereunder of any such individuals.
|
|
(c)
|
D&O
Insurance.
Prior to the Effective Time, the Company shall endeavor to (and if
it
unable to, Parent shall cause the Surviving Corporation to after
the
Effective Time) obtain, and the Surviving Corporation shall maintain
for a
period of six (6) years following the Effective Time, directors’ and
officers’ liability insurance coverage with respect to matters existing or
occurring at or prior to the Effective Time, from an insurance carrier
with the same or better credit rating as the Company’s current insurance
carrier with respect to directors’ and officers’ liability insurance,
having terms and conditions and providing coverage in an amount at
least
as favorable to the insured parties as the terms and conditions and
amounts of coverage of the Company’s existing policies; provided,
that Parent and its Subsidiaries shall not be required by this Section
5.06(c) to incur costs in excess of 300% of the annual premiums paid
by
the Company under its directors’ and officers’ liability policies as in
effect as of the date hereof.
|
|
(d)
|
Existing
Agreements.
Parent shall, and shall cause the Surviving Corporation to, honor
and
perform under all indemnification agreements entered into by the
Company
or any Company Subsidiary set forth in Section 5.06 of the Company
Disclosure Schedule.
|
|
(e)
|
Survivability.
Notwithstanding anything herein to the contrary, if any claim for
indemnification pursuant to Section 5.06(a) is made by any Indemnified
Director or Officer by written notice to the Company on or prior
to the
sixth anniversary of the Effective Time (such notice to set forth
in
reasonable detail the facts relevant to such claim) the provisions
of this
Section 5.06(a) shall continue in effect with respect to such claim
until
the final disposition of such claim.
|
43
|
(f)
|
Heirs.
This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Directors and Officers and
their
respective heirs and legal representatives. The indemnification provided
for herein shall not be deemed exclusive of any other rights to which
an
Indemnified Director or Officer is entitled, whether pursuant to
Law,
contract or otherwise.
|
|
(g)
|
Successors
and Assigns.
In the event that the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or
entity
of such consolidation or merger or (ii) transfers or conveys all
or
substantially all of its properties and assets as an entirety in
one or a
series of related transactions to any Person(s), then, and in each
such
case, proper provision shall be made so that such continuing or surviving
corporation or entity or such Persons(s), as the case may be, shall
assume
the obligations set forth in this Section 5.06; provided that the
Surviving Corporation shall not be relieved from such obligation.
In
addition, the Surviving Corporation shall not distribute, sell, transfer
or otherwise dispose of any of its assets in a manner that would
reasonably be expected to render the Surviving Corporation unable
to
satisfy its obligations under this Section 5.06. Parent hereby
unconditionally guarantees the obligations of the Surviving Corporation
under this Section 5.06.
|
|
SECTION
5.07.
|
Further
Action; Reasonable Best
Efforts.
|
Actions.
Upon
the terms and subject to the conditions of this Agreement, each of the parties
hereto shall:
|
(i)
|
make
promptly its respective filings, and thereafter make any other required
submissions, under any applicable foreign, federal or state antitrust,
competition or fair trade Laws with respect to the Transactions;
and
|
|
(ii)
|
use
its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper
or
advisable under applicable Laws or otherwise to consummate and make
effective the Transactions, including, without limitation, using
its
reasonable best efforts to obtain all Permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities
and
parties to contracts with the Company and its Subsidiaries as are
necessary for the consummation of the Transactions and to fulfill
the
conditions to the Merger.
|
|
SECTION
5.08.
|
Public
Announcements.
|
The
initial press release relating to this Agreement shall be a joint press release
the text of which has been agreed to by each of Parent and the Company.
Thereafter, subject to applicable Law or the requirements of The NASDAQ Stock
Market, each of Parent and the Company shall use its reasonable best efforts
to
consult with each other before issuing any press release or otherwise making
any
public statements with respect to this Agreement, the Merger, or any of the
other Transactions.
44
|
SECTION
5.09.
|
Takeover
Statute.
|
If
any
“fair price,” “moratorium,” “control share acquisition,” “interested
stockholder,” “business combination,” “stockholder protection,” “interested
shareholder” or other similar anti-takeover statute or regulation (including,
without limitation, Section 203 of the DGCL) or similar restrictive
provision of the certificate of incorporation or by-laws or comparable
organizational documents of the Company or any of its Subsidiaries (each a
“Takeover
Provision”)
shall
become applicable to the transactions contemplated hereby, the Company and
the
members of the Company Board or the Special Committee of the Company, subject
to
Section 5.04, shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act
to
eliminate the effects of such Takeover Provision on the transactions
contemplated hereby.
|
SECTION
5.10.
|
Financing.
|
|
(a)
|
The
Company agrees to provide, and will cause its Subsidiaries and its
and
their respective directors, officers and employees to provide, all
cooperation reasonably necessary in connection with the arrangement
of
financing to be consummated contemporaneously with or at or after
the
expiration of the Effective Time in respect of the transactions
contemplated by this Agreement, including participation in meetings,
due
diligence sessions, road shows, the preparation of offering memoranda,
private placement memoranda, prospectuses and similar documents,
the
execution and delivery of any commitment letters, underwriting or
placement agreements, pledge and security documents, other definitive
financing documents, or other requested certificates or documents
(including a certificate of the chief financial officer of the Company
with respect to solvency matters, to the extent such certification
may be
accurately made), audited and unaudited financial statements, comfort
letters of accountants and legal opinions as may be reasonably requested
by Parent or Merger Sub and taking such other actions as are reasonably
required to be taken by the Company in connection with the Commitment
Letters, providing
that such cooperation shall not interfere unreasonably with the business
or operations of the Company or its Subsidiaries and the Company
and its
Subsidiaries shall not be required to incur material incremental
out-of-pocket costs in respect of such cooperation unless Parent
shall
have undertaken to reimburse the Company and its Subsidiaries all
such
reasonable and documented out-of-pocket costs.
|
|
(b)
|
Parent
and Merger Sub shall each use its reasonable best efforts to take,
or
cause to be taken, all appropriate actions, and to do, or cause to
be
done, all things necessary or advisable to cause the condition set
forth
in Section
6.02(v)
to
be satisfied. Parent shall provide the Company with prompt written
notice
in the event that any Commitment Letter is terminated, or if there
is any
written amendment, modification or supplement to any Commitment Letter,
after the date hereof and prior to the Effective Time. Upon request
of the
Company, Parent shall keep the Company reasonably informed of material
developments in connection with the Commitment Letters and, upon
reasonable request of the Company, shall provide the Company with
interim
drafts of agreements to be entered into in connection with the Commitment
Letters.
|
45
|
SECTION
5.11.
|
Disposition
of Litigation.
|
In
connection with any litigation which may be brought against the Company or
its
directors relating to the transactions contemplated hereby, the Company shall
keep Parent and Merger Sub, and any counsel which Parent and Merger Sub may
retain at their own expense, informed of the status of such litigation and
will
provide Parent’s and Merger Sub’s counsel the right to participate in the
defense of such litigation to the extent Parent and Merger Sub are not otherwise
a party thereto, and the Company shall not enter into any settlement or
compromise of any such stockholder litigation without Parent’s and Merger Sub’s
prior written consent, which consent shall not be unreasonably withheld or
delayed.
|
SECTION
5.12.
|
2005
Financial Statements
|
Prior
to
the Effective Time, the Company shall deliver to Parent the audited consolidated
financial statements required to be included in the Company’s Annual Report on
Form 10-K for fiscal year ended on or about January 3, 2006, accompanied by
an
opinion of the independent accounting firm selected by the Company Board
containing no exceptions or qualifications as to scope (the “2005
Audited Financials”).
The
2005 Audited Financials shall be prepared in accordance with GAAP applied on
a
consistent basis throughout the periods indicated (except as may be indicated
in
the notes thereto) and shall fairly present, in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company and its consolidated Subsidiaries as at the respective dates thereof
and
for the respective periods indicated therein.
ARTICLE
VI
CONDITIONS
TO THE MERGER
|
SECTION
6.01.
|
Mutual
Conditions to the Merger.
|
The
obligations of the Company, Parent and Merger Sub to consummate the Merger
shall
be subject to the satisfaction or waiver (where permissible), at or prior to
the
Closing, of the following conditions:
|
(i)
|
the
Company shall have obtained the Company Stockholder Approval;
|
|
(ii)
|
no
Governmental Authority shall have enacted, issued, promulgated, enforced
or entered any law, rule, regulation, judgment, decree, executive
order or
award (an “Order”)
which is then in effect and has the effect of making the Merger illegal
or
otherwise preventing or prohibiting consummation of the Merger;
and
|
|
(iii)
|
the
waiting period (and any extension thereof) applicable to the Merger
under
the HSR Act shall have been terminated or shall have
expired.
|
46
|
SECTION
6.02.
|
Conditions
to Obligations of Parent and Merger Sub.
|
The
obligations of Parent and Merger Sub to effect the Merger shall be further
subject to the satisfaction or waiver at or prior to the Effective Time of
the
following conditions:
|
(i)
|
the
representations and warranties of the Company set forth in this Agreement,
disregarding all materiality and Company Material Adverse Effect
qualifiers (except as set forth in Section 2.07(ii)), shall be true
and correct, in each case as of the date of this Agreement and at
and as
of the Effective Time, as though made on and as of such date (unless
any
such representation or warranty is made only as of a specific date,
in
which event as of such specified date), except for failures to be
true and
correct which would not, individually or in the aggregate, reasonably
be
expected to have a Company Material Adverse
Effect;
|
|
(ii)
|
the
Company shall have performed in all material respects each of the
obligations, and complied in all material respects with each of the
agreements and covenants, required to be performed by, or complied
with
by, it under this Agreement at or prior to the Closing;
|
|
(iii)
|
there
shall not have been any event, circumstance, change or effect that,
individually or in the aggregate, has had, or would reasonably be
expected
to have, a Company Material Adverse
Effect;
|
|
(iv)
|
Parent
shall have received a certificate of the Chief Executive Officer
or the
Chief Financial Officer of the Company, certifying that the conditions
set
forth in Sections 6.02(i), (ii) and (iii) have been satisfied;
|
|
(v)
|
Parent
or Merger Sub, as applicable, shall have received the proceeds of
the
financing contemplated by the Commitment Letters, or alternate financing,
on terms and conditions reasonably acceptable to Parent and Merger
Sub;
|
|
(vi)
|
the
Company shall have obtained, and provided to Parent and Merger Sub
copies
of evidence with respect to, the Company Required Consents, the terms
of
which shall be reasonably satisfactory to Parent and Merger Sub;
|
|
(vii)
|
The
2005 Audited Financials shall reflect 2005 EBITDA of no less than
$23,700,000 (provided,
that failure of the Company to satisfy this condition shall not,
by
itself, constitute the basis for payment of the Company Termination
Fee or
the Parent Expenses);
|
|
(viii)
|
no
suit, action, proceeding, claim, inquiry or investigation by any
Governmental Authority or any third party shall be pending seeking
to
prohibit or restrain, or seeking damages in connection with the Merger
or
the transactions contemplated by this Agreement;
and
|
|
(ix)
|
the
aggregate number of Dissenting Shares shall be less than 10% of the
total
number of shares of Company Common Stock outstanding at the Effective
Time.
|
47
|
SECTION
6.03.
|
Conditions
to Obligations of the
Company.
|
The
obligation of the Company to effect the Merger shall be further subject to
the
satisfaction or waiver at or prior to the Closing of the following
conditions:
|
(i)
|
the
representations and warranties of the Parent and Merger Sub set forth
in
this Agreement, disregarding all materiality and Parent Material
Adverse
Effect qualifiers, shall be true and correct, in each case as of
the date
of this Agreement and at and as of the Effective Time, as though
made on
and as of such date (unless any such representation or warranty is
made
only as of a specific date, in which event as of such specified date),
except for failures to be true and correct which would not, individually
or in the aggregate, reasonably be expected to have a Parent Material
Adverse Effect;
|
|
(ii)
|
each
of Parent and Merger Sub shall have performed in all material respects
each of the obligations, and complied in all material respects with
each
of the agreements and covenants, required to be performed by or complied
with by it under this Agreement at or prior to the Closing;
and
|
|
(iii)
|
the
Company shall have received certificates of the Chief Executive Officer
or
the Chief Financial Officer of each of Parent and Merger Sub, certifying
that the conditions set forth in Sections 6.03(i) and (ii) have been
satisfied.
|
ARTICLE
VII
TERMINATION,
AMENDMENT AND WAIVER
|
SECTION
7.01.
|
Termination.
|
This
Agreement may be terminated and the Merger contemplated hereby may be abandoned
at any time prior to the Effective Time, notwithstanding adoption thereof by
the
stockholders of the Company (except as otherwise provided in Section
7.01(iv)(b)):
|
(i)
|
by
mutual written consent of Parent, Merger Sub and the
Company;
|
|
(ii)
|
by
Parent or the Company if any court or other Governmental Authority
of
competent jurisdiction shall have issued a final order, decree or
ruling
or taken any other final action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
is
or shall have become final and
non-appealable;
|
|
(iii)
|
by
either Parent or the Company if the Effective Time shall not have
occurred
on or before the date which is six months from the date hereof (the
“Termination
Date”);
provided,
that the right to terminate this Agreement pursuant to this
Section 7.01(iii) shall not be available to the party seeking to
terminate if any action of such party or the failure of such party
to
perform any of its obligations under this Agreement required to be
performed at or prior to the Effective Time has been the cause of,
or
resulted in, the failure of the Effective Time to occur on or before
the
Termination Date and such action or failure to perform constitutes
a
breach of this Agreement;
|
48
|
(iv)
|
by
the Company (a) if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of Parent
or
Merger Sub contained in this Agreement such that the conditions set
forth
in Sections 6.03(i) or 6.03(ii) would not be satisfied and, in either
such case, such breach is not capable of being cured or, if capable
of
being cured, shall not have been cured prior to the Termination Date;
provided
that the Company shall not have the right to terminate this Agreement
pursuant to this Section 7.01(iv)(a) if the Company is then in
material breach of any of its covenants or agreements contained in
this Agreement or (b) if prior to the obtaining of the Company Stockholder
Approval (A) the Company Board or the Special Committee shall have
received a Superior Proposal, (B) the Company, the Company Board
and the
Special Committee shall have complied in all material respects with
Sections 5.01 through 5.04 (including Section 5.04(d)), (C) on the
date of
such termination, the Company enters into a definitive agreement
for, or
consummates, the transaction contemplated by such Superior Proposal
and
(D) Parent shall have received the Company Termination Fee in accordance
with Section 7.03(b);
|
|
(v)
|
by
Parent (a) if there shall have been a breach of any representation,
warranty, covenant or agreement on the part of the Company contained
in
this Agreement such that the conditions set forth in Sections 6.02(i)
or 6.02(ii) would not be satisfied and, in either such case, such
breach
is not capable of being cured or, if capable of being cured, shall
not
have been cured prior the Termination Date; provided
that Parent shall not have the right to terminate this Agreement
pursuant
to this Section 7.01(v)(a) if Parent or Merger Sub is then in
material breach of any of its covenants or agreements contained in
this
Agreement, or (b) if the Company Board or the Special Committee shall
have made a Change in Company Recommendation;
|
|
(vi)
|
by
either Parent or the Company if, upon a vote taken thereon at the
Stockholders Meeting or any postponement or adjournment thereof,
this
Agreement shall not have been adopted by the holders of at least
a
majority in combined voting power of the outstanding Shares; or
|
|
(vii)
|
by
Parent if the Company, the Company Board or the Special Committee
shall
have willfully and materially breached any of Sections 5.01, 5.02
or
5.04.
|
|
SECTION
7.02.
|
Effect
of Termination.
|
In
the
event of the termination of this Agreement pursuant to Section 7.01, this
Agreement shall forthwith become void, and there shall be no liability under
this Agreement on the part of any party hereto, except:
49
|
(i)
|
as
set forth in Section 7.03; and
|
|
(ii)
|
except
as set forth in Section
7.03,
nothing herein shall relieve any party from liability for fraud or
for any
willful breach of any of its representations, warranties, covenants
or
agreements set forth in this Agreement prior to such
termination.
|
However,
the terms of this Section 7.02, Section 7.03, 7.04 and 7.05 and Article VIII,
shall survive any termination of this Agreement.
|
SECTION
7.03.
|
Fees
and Expenses.
|
|
(a)
|
Generally.
Except as otherwise expressly set forth in this Agreement, all fees
and
expenses incurred in connection with the Transactions shall be paid
by the
party incurring such expenses, whether or not the Merger is consummated.
“Expenses”
includes all reasonable out-of-pocket expenses (including all fees
and
expenses of financing sources, counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred
by
or on behalf of a party or its prospective financing sources in connection
with or related to the authorization, preparation, negotiation, execution
and performance of this Agreement.
|
|
(b)
|
Company
Termination Fee and Parent Expenses.
|
|
(i)
|
In
the event that this Agreement is terminated by the Company pursuant
to
Section
7.01(iv)(b),
or by Parent pursuant to Section 7.01(v)(b) or
Section 7.01(vii), then the Company shall pay $7,000,000 (such
amount, the “Company
Termination Fee”)
to Parent or as directed by Parent, as
promptly as reasonably practicable (and, in any event, within two
Business
Days following such termination or, in the case of termination pursuant
to
Section
7.01(iv)(b),
prior to such termination), payable by wire transfer of immediately
available funds.
|
|
(ii)
|
In
the event that (a) this Agreement is terminated (A) by Parent or
the Company pursuant to Section 7.01(vi), (B) by Parent pursuant
to Section 7.01(v)(a) or (C) by Parent or the Company pursuant
to Section 7.01(iii), then the Company shall reimburse Parent for all
Expenses incurred by or on behalf of Parent or its Affiliates or
their
prospective financing sources as of the time of such reimbursement
up to a
maximum of $3,000,000 (the “Parent
Expenses”),
as promptly as reasonably practicable following delivery of reasonable
documentation thereof (and, in any event, within two Business Days
following delivery of such documentation), payable by wire transfer
of
immediately available funds.
|
|
(iii)
|
In
the event that (a) this Agreement is terminated (A) by Parent or
the Company pursuant to Section 7.01(vi) and, at any time after the
date of this Agreement and prior to the Stockholders Meeting, an
Acquisition Proposal shall have been publicly disclosed or otherwise
communicated to the Company Board or the Special Committee, (B) by
Parent pursuant to Section 7.01(v)(a) and, at any time
|
50
|
after
the date of this Agreement and prior to the breach giving rise to
Parent’s
right to terminate under Section 7.01(v)(a), an Acquisition Proposal
shall
have been publicly disclosed or otherwise communicated to the Company
Board or the Special Committee, or (C) by Parent or the Company pursuant
to Section 7.01(iii) and at any time after the date of this Agreement
and
prior to the termination of this Agreement, an Acquisition Proposal
shall
have been publicly disclosed or otherwise communicated to the Company
Board or the Special Committee and (b) within nine (9) months after
this
termination, the Company enters into an agreement in respect of any
Competing Transaction or a Competing Transaction is consummated,
then the
Company shall pay the Company Termination Fee (minus the amount,
if any,
previously paid pursuant to Section 7.03(b)(ii)) to Parent, by wire
transfer of immediately available funds, on the date of the agreement
in
respect of the Competing Transaction or, if earlier, prior to consummation
of the Competing Transaction, as may be applicable; provided
that, for purpose of this Section 7.03(b)(iii), the term “Competing
Transaction” shall have the meaning assigned to such term in Section
5.04(f), except that the references to “20%” shall be deemed to be
references to “50%”. For the avoidance of doubt, the aggregate amount
payable to Parent in respect of the Parent Expenses and the Company
Termination Fee shall not exceed $7,000,000 in the
aggregate.
|
|
(iv)
|
The
payment of the Company Termination Fee and the Parent Expenses in
accordance with this Section 7.03(b) shall constitute liquidated
damages
and, except as provided in Section 7.03(d), shall constitute the
sole and
exclusive remedy of Parent and Merger Sub for any and all damages
arising
under or in connection with any breach of any representation, warranty,
covenant or agreement on the part of the Company contained in this
Agreement. Except as provided in this Section 7.03(b) or Section
7.03(d),
in no event shall Parent, Merger Sub, their respective Affiliates
or any
party acting on behalf of Parent, Merger Sub or their respective
Affiliates, (i) seek to obtain any recovery or judgment in connection
with
any breach of any representation, warranty, covenant or agreement
on the
part of the Company contained this Agreement or (ii) be entitled to
seek or obtain any other damages of any kind, including, without
limitation, consequential, indirect or punitive damages, in connection
with any breach of any representation, warranty, covenant or agreement
on
the part of the Company contained in this Agreement, in each case
against
any of the Company or any shareholder, partner, trustee, director,
officer
or agent of the Company or any of its Affiliates. The parties acknowledge
that the Company Termination Fee and the Parent Expenses together
constitute a
reasonable estimate of the damages that will be suffered by reason
of any
action
or omission giving rise to a right of payment of the Company Termination
Fee and/or the Parent Expenses.
The Affiliates of each party hereto may rely upon the terms of this
paragraph.
|
|
(c)
|
Parent
Termination Fee and Company Expenses.
|
|
(i)
|
In
the event that (i) this Agreement is terminated by the Company pursuant
to
Section 7.01(iv) or (ii) following satisfaction of all other conditions
to
Closing set
|
51
|
forth
in Sections 6.01 and 6.02 (other than conditions that, by their nature,
are to be and shall be satisfied at Closing), Parent exercises, by
written
notice to the Company, Parent and Merger Sub’s right not to effect the
Closing based on the condition set forth in Section 6.02(v) not having
been satisfied (each of clauses (i) and (ii), a “Parent
Payment Event”),
then Parent shall reimburse the Company for all Expenses incurred
by or on
behalf of the Company or its Affiliates as of the time of such
reimbursement up to a maximum of $3,000,000 (the “Company
Expenses”),
as promptly as reasonably practicable following the Parent Payment
Event
and delivery of reasonable documentation of such Company Expenses
(and, in
any event, within two Business Days following the Parent Payment
Event and
delivery of such documentation), payable by wire transfer of immediately
available funds.
|
|
(ii)
|
In
the event that (a) a Parent Payment Event occurs and
(b) within nine (9) months after such Parent Payment Event, the
Company has not either entered into an agreement in respect of a
Competing
Transaction or consummated a Competing Transaction, then Parent shall
pay
an amount (the “Parent
Termination Fee”)
equal to $7,000,000 minus the amount previously paid to the Company
as
Company Expenses pursuant to Section 7.03(c)(i); provided
that, for purpose of this Section 7.03(c)(ii), the term “Competing
Transaction” shall have the meaning assigned to such term in
Section 5.04(f), except that the references to “20%” shall be deemed
to be references to “50%”. For the avoidance of doubt, the aggregate
amount payable to the Company in respect of the Company Expenses
and the
Parent Termination Fee shall not exceed $7,000,000 in the aggregate.
Such
payment shall be made as promptly as reasonably practicable (and,
in any
event, within two Business Days following the date such payment becomes
due and payable), payable by wire transfer of immediately available
funds.
|
|
(iii)
|
The
payment of the Parent Termination Fee and the Company Expenses in
accordance with this Section 7.03(c) shall constitute liquidated
damages
and, except as provided in Section 7.03(d), shall constitute the
sole and
exclusive remedy of the Company for any and all damages arising under
or
in connection with any Parent Payment Event or with any breach of
any
representation, warranty, covenant or agreement on the part of Parent
or
Merger Sub contained in this Agreement. Except as provided in this
Section
7.03(c) or Section 7.03(d), in no event shall the Company, its Affiliates
or any party acting on behalf of the Company or its Affiliates, (i)
seek
to obtain any recovery or judgment in connection with any Parent
Payment
Event or with any breach of any representation, warranty, covenant
or
agreement on the part of Parent or Merger Sub contained in this Agreement
or (ii) be entitled to seek or obtain any other damages of any kind,
including, without limitation, consequential, indirect or punitive
damages, in connection with any Parent Payment Event or with any
breach of
any representation, warranty, covenant or agreement on the part of
Parent
or Merger Sub contained in this Agreement, in each case against any
of
Parent, Merger Sub, any of their Affiliates, or any shareholder,
partner,
trustee, director, officer or agent of Parent, Merger Sub or any
of their
Affiliates. The
|
52
|
parties
acknowledge that the Parent Termination Fee and the Company Expenses
together constitute a reasonable estimate of the damages that will
be
suffered by reason of any action or omission giving rise to a right
of
payment of the Parent Termination Fee and/or the Company Expenses.
The
Affiliates of each party hereto may rely upon the terms of this
paragraph.
|
|
(d)
|
Acknowledgement.
Each of the Company, Parent, and Merger Sub acknowledges that the
agreements contained in this Section 7.03 are an integral part of
the
transactions contemplated by this Agreement. In the event that the
Company
shall fail to pay the Company Termination Fee or Parent Expenses
when due
or Parent shall fail to pay the Parent Termination Fee or Company
Expenses
when due, the Company or Merger Sub and Parent, as the case may be,
shall
reimburse the other party for all reasonable costs and expenses actually
incurred or accrued by such other party (including reasonable fees
and
expenses of counsel) in connection with the collection under and
enforcement of this Section 7.03.
|
|
SECTION
7.04.
|
Amendment.
|
This
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective
Time.
However, after the approval and adoption of this Agreement and the Transactions
by the stockholders of the Company, no amendment may be made that would reduce
the amount or change the type of consideration into which each Share shall
be
converted upon consummation of the Merger unless the Company shall have obtained
such consent of the holders of Shares as may be required by the DGCL with
respect to such amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
|
SECTION
7.05.
|
Waiver.
|
At
any
time prior to the Effective Time, any party hereto may:
|
(i)
|
extend
the time for the performance of any obligation or other act of any
other
party hereto;
|
|
(ii)
|
waive
any inaccuracy in the representations and warranties of any other
party
contained herein or in any document delivered pursuant hereto;
and
|
|
(iii)
|
waive
compliance with any agreement of any other party or any condition
to its
own obligations contained herein.
|
Any
such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
53
ARTICLE
VIII
GENERAL
PROVISIONS
|
SECTION
8.01.
|
Non-Survival
of Representations and
Warranties.
|
The
representations and warranties in this Agreement and in any certificate
delivered pursuant hereto shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 7.01, as the case may
be.
|
SECTION
8.02.
|
Notices.
|
All
notices, requests, claims, demands and other communications hereunder shall
be
in writing and shall be given (and shall be deemed to have been duly given
upon
receipt) by delivery in person, by facsimile transmissions between the hours
of
9:00 A.M. and 5:00 P.M. in the recipient party’s time zone, or by registered or
certified mail (postage prepaid, return receipt requested) or recognized
overnight courier to the respective parties at the following addresses (or
at
such other address for a party as shall be specified in a notice given in
accordance with this Section 8.02):
if
to
Parent or Merger Sub:
c/o
Wellspring Capital Management LLC
Lever
House
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: President
with
a
copy to:
▇▇▇▇,
Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇
▇.
▇▇▇▇▇▇, Esq.
if
to the
Company:
Checkers
Drive-In Restaurants, Inc.
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇,
▇▇
▇▇▇▇▇
Telephone
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile
No: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇, Esq. and ▇▇▇▇▇ ▇’▇▇▇▇
54
with
a
copy to:
▇▇▇▇▇▇
▇▇▇▇ & Priest LLP
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile
No: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇
▇.
▇▇▇▇, Esq.
|
SECTION
8.03.
|
Certain
Definitions
|
|
(a)
|
For
purposes of this Agreement:
|
“Affiliate”
of
a
specified Person means a Person who, directly or indirectly through one or
more
intermediaries, controls, is controlled by, or is under common control with,
such specified Person.
“Business
Day”
means
any day on which the principal offices of the SEC in Washington, D.C. are open
to accept filings, or, in the case of determining a date when any payment is
due, any day on which banks are authorized or required by law to close in The
City of New York.
“Code”
means
the United States Internal Revenue Code of 1986, as amended including any
successor provisions and transition rules, whether or not codified.
“Company
Material Adverse Effect”
means
any event, circumstance, change or effect that, individually or in the aggregate
with all other events, circumstances, changes and effects, is or is reasonably
likely (i) to prevent or materially impede, interfere with, hinder, or
delay the consummation by the Company of the transactions contemplated by this
Agreement or (ii) to be materially adverse to the business, financial
condition, assets, liabilities, or results of operations of the Company and
its
Subsidiaries taken as a whole or; provided,
however, that, for purposes of this clause (ii) of this definition, any change
or effect to the extent arising from any of the matters described in the
following clauses (A) through (D) shall not constitute, or be considered in
determining the existence of, a Company Material Adverse Effect:
(A) changes in general economic conditions, (B) general changes or
developments in the industries in which the Company and its Subsidiaries
operate, (C) except with respect to Section 2.05 and Section 2.21, the
announcement of this Agreement and the transactions contemplated hereby,
including any termination of, reduction in or similar negative impact on
relationships, contractual or otherwise, with any customers, suppliers,
franchisees, distributors, partners or employees of the Company and its
Subsidiaries, to the extent such change or effect is due to the identity of
Parent or its Affiliates, or (D) changes in any tax laws or regulations or
applicable accounting regulations or principles, unless, in the case of the
foregoing clauses (A), (B) and (D), such changes referred to therein have a
disproportionate effect on the Company and its Subsidiaries taken as a whole
relative to other participants in the industries in which the Company and its
Subsidiaries operate.
“Company
Required Consents”
means
all consents, authorizations and approvals the failure to obtain in connection
with the execution and delivery by the Company of this Agreement and the
consummation of the Transactions by the Company, would, individually or in
the
aggregate, reasonably be expected to have a Company Material Adverse
Effect.
55
“Control”
(including the terms “controlled
by”
and
“under
common control with”)
means
the possession, directly or indirectly, or as trustee or executor, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, as trustee or executor,
by
contract or credit arrangement or otherwise.
“2005
EBITDA”
means
net income for fiscal year ended on or about January 3, 2006, before deducting
interest expense, taxes, depreciation and amortization.
“Environmental
Law”
means
any Law relating to: (A) the protection, investigation, remediation, or
restoration of the environment or natural resources, (B) the handling, use,
storage, treatment, disposal, release or threatened release of any hazardous
substance, (C) noise, odor, pollution, contamination, land use, any injury
or
threat of injury to persons or property, or (D) the protection of the health
and
safety of employees or the public.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Knowledge
of the Company”
and
the
“Company’s
Knowledge”
and
words of similar import means the actual knowledge (after due inquiry) of any
executive officer of the Company or any of its Subsidiaries.
“Parent
Material Adverse Effect”
means
any event, circumstance, change or effect that, individually or in the aggregate
with all other events, circumstances, changes and effects, is or is reasonably
likely to prevent or materially impede, interfere with, hinder, or delay the
consummation by Parent and Merger Sub of the transactions contemplated by this
Agreement.
“Person”
means
an individual, corporation, partnership, limited partnership, limited liability
company, person (including, without limitation, a “person” as defined in
Section 13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government.
“Representative”
means,
with respect to any Person, such the officers, directors, employees,
accountants, auditors, attorneys, consultants, legal counsel, agents, investment
bankers, financial advisors and other representatives of such Person and of
such
Person’s anticipated sources of financing.
“Subsidiary”
or
“Subsidiaries”
when
used with respect to any party, shall mean any corporation or other
organization, whether incorporated or unincorporated, at least a majority of
the
securities or other interests of which by their terms ordinary voting power
to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly
or
indirectly owned or controlled by such party or by any one or more of its
subsidiaries, or by such party and one or more of its subsidiaries.
“Tax
Returns”
means
in respect of any Tax, any return, declaration, report, election, estimate
claim
for refund or information return or other statement, form or disclosure filed
or
required to be filed with any Governmental Authority or taxing authority,
including any schedule or attachment thereto, and including any amendment
thereof.
56
“Tax“
or
“Taxes”
shall
mean (i) any and all federal, state, provincial, local, foreign and other
taxes, assessments, fees, levies, duties, tariffs, customs, imposts and other
governmental charges of any kind (together with any and all interest, penalties,
assessments additions to tax and additional amounts imposed with respect
thereto) imposed in connection therewith or by any Governmental Authority or
taxing authority, including, without limitation: taxes or other charges on
or
with respect to income, capital gains franchise, windfall or other profits,
gross receipts, real or personal property, sales, goods and services use,
capital stock, branch payroll, employment, social security (or similar),
workers’ compensation, utility, severance, production, occupation, premium,
unemployment compensation or net worth’s-taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; customs duties; tariffs and
similar charges, (ii) any liability for payment of amounts described in
clause (i) whether as a result of transferee liability, of being a member of
an
affiliated, consolidated, combined or unitary group for any period, or otherwise
through operation of law, and (iii) any liability for the payment of
amounts described in clause (i) or (ii) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or implied agreement
to indemnify any other person.
|
(b)
|
The
following terms have the meaning set forth in the Sections set forth
below:
|
|
Location
of definition
|
|
|
2005
Audited Financials
|
Section
5.12
|
|
Acquisition
Proposal
|
Section 5.01(a)(i)
|
|
Action
|
Section
2.08
|
|
Adverse
Recommendation Notice
|
Section
5.04(d)
|
|
Affiliate
Transaction
|
Section
2.23(a)
|
|
Agreement
|
Preamble
|
|
Certificate
of Merger
|
Section
1.03
|
|
Certificates
|
Section
1.10(b)
|
|
Change
in the Company Recommendation
|
Section
5.04(d)
|
|
Closing
|
Section
1.02
|
|
Closing
Date
|
Section
1.02
|
|
COBRA
|
Section
2.09(a)
|
|
Commitment
Letters
|
Section
3.05(a)
|
|
Company
|
Preamble
|
|
Company
Board
|
Recitals
|
|
Company
Common Stock
|
Section
1.07(i)
|
|
Company
Disclosure Schedule
|
ARTICLE
II
|
|
Company
Expenses
|
Section
7.03(c)(i)
|
|
Company-Operated
Restaurants
|
Section
2.10(a)(ii)
|
|
Company
Permits
|
Section
2.15
|
|
Company
Recommendation
|
Section
2.04(iii)
|
|
Company
SEC Reports
|
Section
2.06(a)(iv)
|
|
Company
Software
|
Section
2.16(e)
|
|
Company
Stock Option
|
Section
1.08(a)(ii)
|
57
| Defined Term | Location of definition |
|
Company
Stock Option Plans
|
Section
1.08(a)(i)
|
|
Company
Stockholder Approval
|
Section
2.04
|
|
Company
Termination Fee
|
Section
7.03(b)(i)
|
|
Competing
Transaction
|
Section
5.04(f)
|
|
Confidentiality
Agreement
|
Section
5.03(a)
|
|
Copyrights
|
Section
2.16(e)
|
|
Current
Plans
|
Section
5.05(a)
|
|
Debt
Financing
|
Section
3.05(a)
|
|
DGCL
|
Recitals
|
|
Dissenting
Shares
|
Section
1.09(a)
|
|
Effective
Time
|
Section
1.03
|
|
Equity
Financing
|
Section
3.05(a)
|
|
ERISA
|
Section
2.09(a)
|
|
Expenses
|
Section
7.03(a)
|
|
Franchised
Property
|
Section
2.10(a)(i)
|
|
GAAP
|
Section
2.06(b)
|
|
Governmental
Authority
|
Section
2.05(b)
|
|
Headquarters
Lease
|
Section
2.10(a)(iii)
|
|
HIPAA
|
Section
2.09(b)
|
|
HSR
Act
|
Section
2.05(b)
|
|
Indemnified
Directors/Officers
|
Section
5.06(a)
|
|
Intellectual
Property Rights
|
Section
2.16(e)
|
|
Law
|
Section
2.05(a)(ii)
|
|
Lease
Documents
|
Section
2.10(d)
|
|
Leased
Real Property
|
Section
2.10(d)
|
|
Material
Contracts
|
Section
2.12(a)
|
|
Merger
|
Recitals
|
|
Merger
Sub
|
Preamble
|
|
Notice
of Superior Proposal
|
Section
5.04(c)
|
|
Option
Consideration
|
Section
1.08(b)
|
|
Order
|
Section
6.01(ii)
|
|
Other
Real Property
|
Section
2.10(a)(iii)
|
|
Owned
Real Property
|
Section
2.10(b)
|
|
Parent
|
Preamble
|
|
Parent
Expenses
|
Section
7.03(b)(ii)
|
|
Parent
Payment Event
|
Section
7.03(c)(i)
|
|
Patents
|
Section
2.16(e)
|
|
Paying
Agent
|
Section
1.10(a)
|
|
Per
Share Merger Consideration
|
Section
1.07(i)
|
|
Plans
|
Section
2.09(a)
|
|
Post-Signing
Returns
|
Section
4.03(a)
|
|
Proxy
Statement
|
Section
5.02(a)
|
|
Real
Property
|
Section
2.10(c)
|
|
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act
|
Section
2.06(c)
|
|
SEC
|
Section
1.10(a)
|
58
| Defined Term | Location of definition |
|
Securities
Act
|
Section
2.05(b)
|
|
Shares
|
Section
1.07(i)
|
|
Special
Committee
|
Recitals
|
|
Stockholders’
Meeting
|
Section
5.01(i)
|
|
Superior
Proposal
|
Section
5.04(g)
|
|
Surviving
Corporation
|
Section
1.01
|
|
Surviving
Corporation Shares
|
Section
1.07(iii)
|
|
Takeover
Provision
|
Section
5.09
|
|
Termination
Date
|
Section
7.01(iii)
|
|
Trademarks
|
Section
2.16(e)
|
|
Transactions
|
Section
2.04(i)
|
|
UFOCs
|
Section
2.20(c)
|
|
WARN
Act
|
Section
2.14(c)
|
|
SECTION
8.04.
|
Severability.
|
If
any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions is not affected
in any manner materially adverse to any party. Upon such determination that
any
term or other provision is invalid, illegal or incapable of being enforced,
the
parties hereto shall modify this Agreement so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order
that the Transactions be consummated as originally contemplated to the fullest
extent possible.
|
SECTION
8.05.
|
Entire
Agreement; Assignment.
|
This
Agreement, including all exhibits, annexes and schedules hereto, together with
the Confidentiality Agreement, constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements
and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
|
SECTION
8.06.
|
Parties
in Interest.
|
This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than as provided in
Section
7.03(b)(iv)
and
Section
7.03(c)(iii)
and,
following the Effective Time, Section 5.06 (which is intended to be for the
benefit of the Persons covered thereby and may be enforced by such
Persons).
|
SECTION
8.07.
|
Specific
Performance.
|
The
parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
59
|
SECTION
8.08.
|
Governing
Law.
|
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware applicable to contracts executed in and to be performed
in
that State, without giving effect to any other choice of law or conflict of
law
provision or rule (whether of the State of Delaware or otherwise). The parties
hereto hereby:
|
(i)
|
submit
to the exclusive jurisdiction of any such state or federal court
sitting
in the State of Delaware for the purpose of any Action arising out
of or
relating to this Agreement brought by any party hereto;
and
|
|
(ii)
|
irrevocably
waive, and agree not to assert by way of motion, defense, or otherwise,
in
any such Action, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt
or
immune from attachment or execution, that the Action is brought in
an
inconvenient forum, that the venue of the Action is improper, or
that this
Agreement or the Transactions may not be enforced in or by any of
the
above-named courts.
|
|
SECTION
8.09.
|
Waiver
of Jury Trial.
|
EACH
PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT
OR
PROCEEDING ARISING OUT OF THIS AGREEMENT.
|
SECTION
8.10.
|
Headings.
|
The
descriptive headings contained in this Agreement are included for convenience
of
reference only and shall not affect in any way the meaning or interpretation
of
this Agreement.
|
SECTION
8.11.
|
Counterparts.
|
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but
all of which taken together shall constitute one and the same
agreement.
|
SECTION
8.12.
|
Company
Disclosure Schedule.
|
The
inclusion of any item in any Section of the Company Disclosure Schedule shall
also apply to other sections and subsections to the extent that it is reasonably
apparent on the face of such disclosure that such disclosure would also apply
to
or qualify such other sections and subsections; however, such
inclusion:
|
(a)
|
does
not represent a determination by the Company that such item is “material”;
|
60
|
(b)
|
does
not represent a determination by the Company that such item did not
arise
in the ordinary course of business.
|
|
SECTION
8.13.
|
Interpretation
|
The
words
"hereof", "herein" and "hereunder" and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience
of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles and Sections are, unless otherwise indicated,
references to Articles and Sections of this Agreement. Any singular term in
this
Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words "include", "includes" or "including" are used
in
this Agreement, they shall be deemed to be followed by the words "without
limitation", whether or not they are in fact followed by those words or words
of
like import. References to any statute are to that statute as amended from
time
to time, and to the rules and regulations promulgated thereunder, and, in each
case, to any successor statute, rules or regulations thereto.
61
IN
WITNESS
WHEREOF,
Parent,
Merger Sub and the Company have caused this Agreement to be executed as of
the
date first written above by their respective officers thereunto duly
authorized.
|
TAXI
HOLDINGS CORP.
|
||
|
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
|
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
President
|
||
|
TAXI
ACQUISITION CORP.
|
||
|
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
|
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
President
|
||
|
CHECKERS
DRIVE-IN RESTAURANTS, INC.
|
||
|
By:
|
/s/ ▇▇▇▇▇ ▇'▇▇▇▇ | |
|
Name:
▇▇▇▇▇ ▇'▇▇▇▇
Title:
Chairman
|
||
62