EXHIBIT (C)(1)
EXECUTION VERSION
------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
CARROLS CORPORATION
AND
POLLO TROPICAL, INC.
DATED AS OF JUNE 3, 1998
------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER....................................................................................2
Section 1.1. The Offer.................................................................................2
Section 1.2. Consent to Offer; Schedule 14D-9..........................................................3
Section 1.3. The Merger................................................................................4
Section 1.4. Effective Time; Closing...................................................................4
Section 1.5. Effect of the Merger......................................................................4
Section 1.6. Conversion of Shares......................................................................4
Section 1.7. Stock Options and Share Participation Plan................................................5
Section 1.8. Surrender of Shares; Stock Transfer Books.................................................5
ARTICLE II THE SURVIVING CORPORATION.....................................................................7
Section 2.1. Articles of Incorporation.................................................................7
Section 2.2. Bylaws....................................................................................7
Section 2.3. Directors and Officers....................................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................8
Section 3.1. Organization and Standing.................................................................8
Section 3.2. Capitalization............................................................................8
Section 3.3. Authority for Agreement...................................................................9
Section 3.4. No Conflict..............................................................................10
Section 3.5. Required Filings and Consents............................................................10
Section 3.6. Compliance...............................................................................11
Section 3.7. Reports and Financial Statements.........................................................11
Section 3.8. Information-Supplied.....................................................................12
Section 3.9. Absence of Certain Changes or Events.....................................................12
Section 3.10. Taxes....................................................................................13
Section 3.11. Title to Assets..........................................................................14
Section 3.12. Change of Control Agreements.............................................................15
Section 3.13. Litigation...............................................................................15
Section 3.14. Contracts and Commitments................................................................15
Section 3.15. Employee Benefit Plans...................................................................15
Section 3.16. Labor and Employment Matters.............................................................17
Section 3.17. Environmental Compliance and Disclosure..................................................17
Section 3.18. Affiliated Transactions..................................................................17
Section 3.19. Intellectual Property....................................................................18
Section 3.20. Brokers..................................................................................19
Section 3.21. Antitakeover Statutes; Rights Plan.......................................................19
Section 3.22. Year 2000................................................................................19
Section 3.23. Disclosure...............................................................................19
i
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER......................................................20
Section 4.1. Organization and Standing................................................................20
Section 4.2. Authority for Agreement..................................................................21
Section 4.3. No Conflict..............................................................................21
Section 4.4. Required Filings and Consents............................................................21
Section 4.5. Information Supplied.....................................................................21
Section 4.6. Financial Capability.....................................................................21
Section 4.7. Brokers..................................................................................21
Section 4.8. Disclosure...............................................................................22
ARTICLE V COVENANTS....................................................................................22
Section 5.1. Conduct of the Business Pending the Merger...............................................22
Section 5.2. Access to Information; Confidentiality...................................................23
Section 5.3. Directors................................................................................24
Section 5.4. Further Action...........................................................................24
Section 5.5. No Solicitation..........................................................................25
Section 5.6. Indemnification..........................................................................27
Section 5.7. Public Announcements.....................................................................27
Section 5.8. Fees and Expenses........................................................................28
Section 5.9. Company Shareholders' Meeting............................................................28
Section 5.10. Proxy Statement..........................................................................28
Section 5.11. Shareholder Lists........................................................................29
Section 5.12. Shares Held by Company Subsidiaries......................................................29
Section 5.13. Shareholder Litigation...................................................................29
Section 5.14. Employee Benefit Plans; Other Tax Returns................................................30
ARTICLE VI CONDITIONS...................................................................................30
Section 6.1. Conditions to the Obligation of Each Party...............................................30
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................................................31
Section 7.1. Termination..............................................................................31
Section 7.2. Effect of Termination....................................................................32
Section 7.3. Amendments...............................................................................33
Section 7.4. Waiver...................................................................................33
ARTICLE VIII GENERAL PROVISIONS...........................................................................33
Section 8.1. No Third Party Beneficiaries.............................................................33
Section 8.2. Entire Agreement.........................................................................33
Section 8.3. Succession and Assignment................................................................33
Section 8.4. Counterparts.............................................................................34
Section 8.5. Headings.................................................................................34
Section 8.6. Governing Law............................................................................34
Section 8.7. Severability; No Remedy in Certain Circumstances.........................................34
ii
Section 8.8. Specific Performance.....................................................................34
Section 8.9. Construction.............................................................................35
Section 8.10. Non-Survival of Representations and Warranties and Agreements............................35
Section 8.11. Certain Definitions......................................................................35
Section 8.12. Notices..................................................................................35
EXHIBITS
Exhibit 4.6 Commitment Letter
Exhibit 5.7 Initial Press Release
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June
3, 1998, between CARROLS CORPORATION, a Delaware corporation ("Buyer"), and
POLLO TROPICAL, INC., a Florida corporation (the "Company").
W I T N E S S E T H:
WHEREAS the respective Boards of Directors of Buyer and the Company
have approved the acquisition of the Company by Buyer on the terms and subject
to the conditions set forth in this Agreement.
WHEREAS, in furtherance of such acquisition, Buyer proposes to make a
tender offer (as it may be amended from time to time as permitted under this
Agreement, the "Offer") to purchase all the outstanding shares of Common Stock,
par value $0.01 per share, of the Company (the "Company Common Stock"; all the
outstanding shares of Company Common Stock being hereinafter collectively
referred to as the "Shares") at a purchase price of $11.00 per share (the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Agreement; and the Board of
Directors of the Company has adopted resolutions approving the Offer and the
Merger (as defined below), recommending that the Company's shareholders accept
the Offer and approving the acquisition of Shares by Buyer pursuant to the
Offer.
WHEREAS the respective Boards of Directors of Buyer and the Company
have each approved the merger of the Company into Buyer (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement, whereby each
share of Company Common Stock, other than shares of Company Common Stock owned
directly or indirectly by Buyer or the Company and Dissenting Shares (as defined
in Section 1.6(d)), will be converted into the right to receive the price per
share paid in the Offer.
WHEREAS Buyer and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Merger
and also to prescribe various conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
1
ARTICLE I
THE MERGER
Section 1.1. The Offer.
(a) Subject to the provisions of this Agreement, as promptly
as practicable after the date hereof, but in no event later than five (5)
business days following the public announcement of the terms of this Agreement,
Buyer shall commence the Offer. The Offer shall be subject only to the
conditions set forth in Annex I hereto (the "Offer Conditions"), (any of which
may be waived in whole or in part by Buyer in its sole discretion, provided
that, without the consent of the Company, Buyer shall not waive the Minimum
Condition (as defined in Annex I)) and to the terms and conditions of this
Agreement. The initial scheduled expiration date of the Offer shall be no more
than twenty (20) business days after the Offer is commenced. Buyer expressly
reserves the right to modify the terms of the Offer, except that, without the
consent of the Company, Buyer shall not (i) reduce the number of Shares subject
to the Offer, (ii) reduce the Offer Price, (iii) add to the Offer Conditions,
(iv) except as provided in the next sentence, extend the expiration date of the
Offer, (v) change the form of consideration payable in the Offer or (vi) amend
any other term of the Offer in any manner adverse to the holders of the Shares.
Notwithstanding the foregoing, Buyer may, without the consent of the Company,
(A) extend the Offer, if at the scheduled or extended expiration date of the
Offer any of the Offer Conditions shall not be satisfied or waived, until such
time as such conditions are satisfied or waived (provided, however, that the
expiration date may not be extended beyond August 7, 1998 without the consent of
the Company), and (B) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer or (C) if all Offer
Conditions are satisfied or waived but the number of shares of Company Common
Stock tendered is less than 80% of the then outstanding number of shares of
Company Common Stock (determined on a fully diluted basis for all outstanding
stock options and any other rights to acquire Shares), extend the Offer for an
aggregate period of not more than 10 business days (for all such extensions)
beyond the latest expiration date that would be permitted under clause (A) or
(B) of this sentence. Subject to the terms and conditions of the Offer and this
Agreement, Buyer shall accept for payment, and pay for, all Shares validly
tendered and not withdrawn pursuant to the Offer that Buyer becomes obligated to
accept for payment, and pay for, pursuant to the Offer as soon as practicable
after the expiration of the Offer.
(b) As soon as practicable on the date of commencement of
the Offer, Buyer (and, to the extent required by law, any affiliates of Buyer,
as co-bidders) shall file with the SEC a Tender Offer Statement on Schedule
14D-1(together with all supplements and amendments thereto, the "Schedule
14D-1"), which shall contain the offer to purchase and form of the related
letter of transmittal (together with any supplements or amendments thereto,
collectively, the "Offer Documents"). The Company shall provide Buyer (and, if
applicable, any affiliates of Buyer) with such information concerning the
Company as may reasonably be requested in connection with the preparation of the
Schedule 14D-1. Buyer agrees that the Offer Documents shall comply as to form in
all material respects with the Securities Exchange Act of 1934, as
2
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first published, sent or given
to the Company's shareholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Buyer with respect to information supplied
by the Company or any of its shareholders specifically for inclusion or
incorporation by reference in the Offer Documents. Each party hereto shall
promptly supplement, update and correct any information provided by it for use
in the Offer Documents if and to the extent that it is or shall have become
incomplete, false or misleading. In any such event, Buyer shall take all steps
necessary to cause the Offer Documents as so supplemented, updated or corrected
to be filed with the SEC and to be disseminated to the shareholders of the
Company, in each case, as and to the extent required by applicable United States
federal securities laws. The Company and its counsel shall be given an
opportunity to review and comment on the Schedule 14D-1 and each supplement,
amendment or response to comments with respect thereto prior to its being filed
with or delivered to the SEC. Buyer agrees to provide the Company and its
counsel in writing any comments Buyer or its counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments.
Section 1.2. Consent to Offer; Schedule 14D-9. The Company hereby
consents to the Offer and to the inclusion in the Offer and the related
documents of the recommendation of the Board of Directors of the Company set
forth in Section 3.3(b) hereof. As soon as practicable on the day that the Offer
is commenced, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all supplements and amendments
thereto, the "Schedule 14D-9") which, unless otherwise required due to any
applicable fiduciary duties of the Board of Directors of the Company to the
Company's shareholders under applicable law, as determined by the members
thereof in good faith after consultation with independent legal counsel (who may
be the Company's regularly engaged independent counsel), shall reflect the
recommendation of the Board of Directors of the Company set forth in Section
3.3(b) hereof. The Schedule 14D-9 shall comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date first
published, sent or given to the Company's shareholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation or warranty is made by the Company with respect to
information supplied by Buyer specifically for inclusion in the Schedule 14D-9.
Each party shall promptly supplement, update and correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it is or
shall have become incomplete, false or misleading. In any such event, the
Company shall take all steps necessary to cause the Schedule 14D-9 as so
supplemented, updated or corrected to be filed with the SEC and to be
disseminated to the shareholders of the Company, in each case, as and to the
extent required by applicable United States federal securities laws. Buyer and
its counsel shall be given an opportunity to review and comment on the Schedule
14D-9 and each supplement, amendment or response to comments with respect
thereto prior to its being filed with or delivered to the SEC. The Company
agrees to
3
provide Buyer and its counsel in writing any comments the Company or
its counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments.
Section 1.3. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Florida Business
Corporation Act of the State of Florida (the "FBCA") and the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.4),
the Company shall be merged with and into Buyer. As a result of the Merger, the
separate corporate existence of the Company shall cease and Buyer shall continue
as the surviving corporation of the Merger. In its capacity as the surviving
corporation of the Merger, Buyer is sometimes referred to herein as the
"Surviving Corporation."
Section 1.4. Effective Time; Closing. As promptly as practicable (and
in any event within five (5) business days) after the satisfaction or waiver of
the conditions set forth in Article VI hereof, the parties hereto shall cause
the Merger to be consummated by filing articles of merger (the "Articles of
Merger") with the Secretary of State of each of the State of Florida and the
State of Delaware and by making all other filings or recordings required under
the FBCA and the DGCL in connection with the Merger, in such form as is required
by, and executed in accordance with the relevant provisions of, the FBCA and the
DGCL. The Merger shall become effective at such time as the Articles of Merger
are duly filed with the Secretary of State of each of the State of Florida and
the State of Delaware, or at such other time as the parties hereto agree shall
be specified in the Articles of Merger (the date and time the Merger becomes
effective, the "Effective Time"). On the date of such filing, a closing (the
"Closing") shall be held at 10:00 a.m., Eastern Standard Time, at the offices of
the Company, or at such other time and location as the parties shall otherwise
agree.
Section 1.5. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the FBCA and
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Buyer shall vest in the Surviving Corporation, and
all debts, liabilities, obligations, restrictions, disabilities and duties of
the Company and Buyer shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
Section 1.6. Conversion of Shares. At and as of the Effective Time, by
virtue of the Merger and without any action on the part of Buyer, the Company or
the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to
the Effective Time (other than Shares owned by Buyer or Dissenting Shares) shall
be canceled and, subject to Section 1.6(c), shall be converted automatically
into the right to receive an amount in cash equal to the Offer Price payable,
without interest, to the holder of such Share, upon surrender, in the manner
provided in Section 1.8, of the certificate that formerly evidenced such Share;
(b) Each Share issued and outstanding immediately prior to
the Effective Time owned by Buyer or any subsidiary of Buyer and each Share that
is owned by the Company
4
as treasury stock shall be canceled and retired and cease to exist and
no payment or distribution shall be made with respect thereto;
(c) Anything in this Agreement to the contrary
notwithstanding, any issued and outstanding Shares held by a person immediately
prior to the Effective Time (a "Dissenting Shareholder") who objects to the
Merger and complies with all the provisions of the FBCA concerning the right of
holders of Shares to dissent from the Merger and require appraisal of their
Shares in accordance with Section 607.1320 of the FBCA (the Shares held by such
a Dissenting Shareholder, "Dissenting Shares") shall not be converted as
described in Section 1.6(a) but shall become, by virtue of the Merger, the right
to receive such consideration as may be determined to be due to such Dissenting
Shareholder pursuant to the FBCA. Provided a Dissenting Shareholder complies
with the provisions of the FBCA, such Dissenting Shareholder shall have with
respect thereto solely the rights provided under Sections 607.1301, 607.1302 and
607.1320 of the FBCA. If, after the Effective Time, such Dissenting Shareholder
withdraws his demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in each case pursuant to Section 607.1320 of the FBCA, such
Shares shall be deemed to have been converted as of the Effective Time into the
right to receive, upon surrender of the certificates evidencing such Shares in
accordance with Section 1.8, the Offer Price. The Company shall give Buyer (i)
prompt notice of any demands for appraisal of Shares received by the Company and
(ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not, without the
prior written consent of Buyer, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
Section 1.7. Stock Options and Share Participation Plan. The Company
shall take all actions necessary to cause, pursuant to the Company's 1993 Stock
Option Plan, the Company's 1995 Stock Option Plan, the Company's 1995 Directors'
Stock Option Plan, the Company's 1995 Bonus/Fee Plan and the Company's 1995
Restricted Stock Plan (collectively, the "Company Stock Option Plans"), and the
Company shall give written notice to the holders of all outstanding options to
acquire Shares (the "Company Options") granted under the Company Stock Option
Plans of, the following: (i) such Company Options shall be exercisable in full
immediately prior to the Effective Time, and (ii) all Company Options that are
not exercised prior to the Effective Time will terminate and expire as of the
Effective Time. In addition, the written notice to each holder of Company
Options shall include an offer to pay such holder at the Effective Time, in
exchange for the cancellation of such holder's Company Options at the Effective
Time, an amount in cash determined by multiplying (A) the excess, if any, of the
Offer Price over the applicable exercise price per Share of the Company Option
by (B) the number of Shares such holder could have purchased had such holder
exercised such Company Option in full immediately prior to the Effective Time
(such amount, the "Option Consideration"), and each such Company Option shall
thereafter be canceled.
Section 1.8. Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Buyer shall designate a
bank or trust company to act as agent (the "Paying Agent") for the holders of
Shares for the purpose of paying the funds to which such holders shall become
entitled pursuant to Section 1.6(a) upon surrender of the
5
certificates evidencing such Shares. Buyer will, on or prior to the
Effective Time, deposit with the Paying Agent the Offer Price to be paid in
respect of the Shares (the "Fund"). The Fund shall be invested by the Paying
Agent as directed by Buyer. Any net profit resulting from, or interest or income
produced by, such investments, shall be payable to the Surviving Corporation.
The Surviving Corporation shall replace any monies lost through any investment
made pursuant to this Section 1.8(a). The Paying Agent shall make the payments
provided in Section 1.6(a).
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each person who was, at the Effective
Time, a holder of record of Shares entitled to receive the Offer Price pursuant
to Section 1.6(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Share Certificates") shall pass, only upon proper
delivery of the Share Certificates to the Paying Agent) and instructions for use
in effecting the surrender of the Share Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Share Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Share Certificate
shall be entitled to receive in exchange therefor the Offer Price for each Share
formerly evidenced by such Share Certificate, and such Share Certificate shall
then be canceled. Until so surrendered, each such Share Certificate shall, at
and after the Effective Time, represent for all purposes, only the right to
receive such Offer Price. No interest shall accrue or be paid to any beneficial
owner of Shares or any holder of any Share Certificate with respect to the Offer
Price payable upon the surrender of any Share Certificate. If payment of the
Offer Price is to be made to a person other than the person in whose name the
surrendered Share Certificate is registered on the stock transfer books of the
Company, it shall be a condition of payment that the Share Certificate so
surrendered shall be endorsed in blank or to the Paying Agent 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 Offer
Price to a person other than the registered holder of the Share Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable.
(c) At any time following the sixth (6th) month after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any portion of the Fund 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 amounts held in the Fund or other funds made available to it),
and thereafter each such holder shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws), and
only as general creditors thereof, with respect to any Offer Price that may be
payable upon due surrender of the Share Certificates held by such holder. If any
Share Certificates representing Shares shall not have been surrendered prior to
five (5) years after the Effective Time (or immediately prior to such earlier
date on which the Offer Price in respect of such certificate would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 3.5)), any such cash, shares, dividends or distributions payable in
respect of such Share Certificate shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or
6
interest of any person previously entitled thereto. Notwithstanding
the foregoing, none of the Surviving Corporation, Buyer or the Paying Agent
shall be liable to any holder of a Share for any Offer Price delivered in
respect of such Share to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) 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, except for Buyer, 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, and all cash paid
pursuant to this Article upon the surrender or exchange of Share Certificates
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares theretofore represented by such Share Certificate.
(e) Buyer, the Surviving Corporation and the Paying Agent,
as the case may be, shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares and/or Company Options such amounts that Buyer, the Surviving Corporation
or the Paying Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), the rules and regulations promulgated thereunder or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Buyer, the Surviving Corporation or the Paying Agent, such amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares and/or Company Options in respect of which such deduction and
withholding was made by Buyer, the Surviving Corporation or the Paying Agent.
(f) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each holder of Company Options a check
payable to such holder in an amount equal to the Option Consideration payable
with respect to all Company Options held by such holder.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1. Articles of Incorporation. The Buyer Certificate of
Incorporation in effect at the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with the DGCL.
Section 2.2. Bylaws. The bylaws of Buyer in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until thereafter amended
in accordance with the DGCL.
Section 2.3. Directors and Officers. From and after the Effective
Time, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Buyer at the Effective Time
7
shall be the directors of the Surviving Corporation, and (ii) the
officers of Buyer at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
With such exceptions as are set forth in a letter (the "Company
Disclosure Schedule") delivered by the Company to the other parties hereto
concurrently with the execution of this Agreement, the Company represents and
warrants to Buyer as follows:
Section 3.1. Organization and Standing. Each of the Company and each
subsidiary of the Company (a "Subsidiary") (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
government approvals to own, lease and operate its properties and assets and to
conduct its business as presently conducted and (iii) is duly qualified or
licensed to do business as a foreign corporation 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 where the failure thereof would not be reasonably expected to
have a Material Adverse Effect on the Company. "Material Adverse Effect" shall
mean, with respect to any party hereto, any change, event or effect shall have
occurred or been threatened (or any development shall have occurred or been
threatened involving a prospective change) that, when taken together with all
other adverse changes, events or effects that have occurred or been threatened,
would or would reasonably be expected to (i) be materially adverse to the
business, assets, properties, financial condition or results of operations of
such party and its subsidiaries taken as a whole, or (ii) prevent or materially
delay the consummation of the Offer and/or Merger. The Company has made
available to Buyer true and complete copies of its articles of incorporation
(the "Company Articles of Incorporation") and bylaws (the "Company Bylaws") and
the articles of incorporation and bylaws (or equivalent organizational
documents) of each Subsidiary, each as amended to date. Such articles of
incorporation, bylaws or equivalent organizational documents are in full force
and effect, and neither the Company nor any Subsidiary is in violation of any
provision of its articles of incorporation, bylaws or equivalent organizational
documents.
Section 3.2. Capitalization. The authorized capital stock of the
Company consists of fifteen million (15,000,000) Shares, and one million
(1,000,000) shares of preferred stock, $.0l par value per share (the "Preferred
Shares"). As of March 29, 1998, (i) 8,223,818 Shares (including 25,000 Shares of
restricted stock) are issued and outstanding, all of which are validly issued,
fully paid and nonassessable and free of preemptive rights and all of which were
issued in compliance with applicable securities laws and regulations, (ii)
791,566 Company Options were outstanding pursuant to the Company Stock Option
Plans, each such option entitling the holder thereof to purchase one Share, and
883,644 Shares are authorized and reserved for future issuance pursuant to the
exercise of such Company Options, and (iii) no Preferred Shares are issued and
outstanding. Since March 29, 1998, the Company has not (A) issued or permitted
to be issued any shares of capital stock of the Company or any Subsidiary, and
(B) split, combined
8
or reclassified any of its shares of capital stock of the Company or
any Subsidiary. The Company Disclosure Schedule sets forth a true and complete
list of the outstanding Company Options, including the exercise prices, vesting
schedules and existing provisions therefor. Except as set forth above, there are
no options, warrants, convertible securities, subscriptions, stock appreciation
rights, phantom stock plans or stock equivalents or other rights, agreements,
arrangements or commitments (contingent or otherwise) of any character issued or
authorized by the Company relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions or other equity interests in, the Company or any
Subsidiary. All Shares subject to issuance 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.
There are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital
stock of any Subsidiary or to pay any dividend or make any other distribution in
respect thereof or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any person. No bonds, debentures,
notes or other indebtedness having the right to vote on any matters on which
stockholders may vote of the Company or any Subsidiary are issued and
outstanding. The Company does not own an equity interest in any corporation,
partnership or other entity, except that the Company owns beneficially and of
record all the issued and outstanding capital stock of each Subsidiary. Schedule
21 to the Company's Annual Report on Form 10-K for the year ended December 28,
1997 sets forth a complete list of the Company's Subsidiaries. Each outstanding
share of capital stock of each Subsidiary is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by the Company or another
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever.
Section 3.3. Authority for Agreement.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Offer, the Merger and the other transactions
contemplated by this Agreement. The execution, delivery and performance by the
Company of this Agreement, and the consummation by the Company of the Offer, the
Merger and the other transactions contemplated by this Agreement, have been duly
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 Offer, the Merger or the other transactions contemplated by this
Agreement (other than, with respect to the Merger, the approval and adoption of
this Agreement by the affirmative vote of holders of a majority of the then
outstanding Shares and the filing and recordation of appropriate merger
documents as required by the FBCA and the DGCL). This Agreement has been duly
executed and delivered by the Company and, assuming this Agreement constitutes a
valid and binding obligation of Buyer, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
9
creditors' rights generally. The affirmative vote of holders of a majority of
the outstanding Shares entitled to vote at a duly called and held meeting of
shareholders is the only vote of the Company's shareholders necessary to approve
this Agreement, the Merger and the other transactions contemplated by this
Agreement.
(b) At a meeting duly called and held on May 29, 1998, the
Company's Board of Directors adopted resolutions approving this Agreement, the
Offer and the Merger, determining that the terms of the Offer and the Merger are
fair, from a financial point of view, to, and in the best interests of, the
Company's shareholders and recommending that the Company's shareholders accept
the Offer, tender their shares pursuant to the Offer and approve and adopt this
Agreement.
(c) The Company's Board of Directors has received the
opinion of NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC (the "Independent Advisor")
that the proposed consideration to be received by the holders of Shares pursuant
to the Offer and the Merger is fair, from a financial point of view, to such
holders. A copy of the Independent Advisor's written fairness opinion will be
delivered to the Special Committee within five business days.
Section 3.4. No Conflict. The execution and delivery of this
Agreement by the Company do not, and the performance of this Agreement by the
Company and the consummation of the Offer and the Merger and the other
transactions contemplated by this Agreement will not, (i) conflict with or
violate the Company Articles of Incorporation or Company Bylaws or equivalent
organizational documents of any of its Subsidiaries, (ii) conflict with or
violate any United States federal, state or local or any foreign statute, law,
rule, regulation, ordinance, code, order, judgment, decree or any other
requirement or rule of law (a "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, or (iii) result in a 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 right of termination, amendment,
acceleration or cancellation of, result in triggering any payment or other
obligations, 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 in the case of
clauses (ii) and (iii) above for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
Section 3.5. Required Filings and Consents. The execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any United States federal,
state or local or any foreign government or any court, administrative or
regulatory agency or commission or other governmental authority or agency (a
"Governmental Entity"), except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws"), filing and
recordation of appropriate merger documents as
10
required by the FBCA and the DGCL, the laws of other states in which
the Company is qualified to do or is doing business and foreign laws, (ii) for
those required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (iii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 3.6. Compliance. Except as set forth in the Company Reports
(as defined in Section 3.7), each of the Company and its Subsidiaries (i) has
been operated at all times in compliance with all Laws 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, and (ii) is not in default or
violation of any notes, bonds, mortgages, indentures, contracts, agreements,
leases, licenses, permits, franchises, or other instruments or obligations 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 the Company or any of its
Subsidiaries is bound or affected, except for any such noncompliance, conflicts,
defaults or violations pursuant to (i) or (ii) above that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 3.7. Reports and Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed by it with the SEC since December 31, 1995, and has
heretofore made available to Buyer (other than preliminary materials), in the
form filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal
years ended December 31, 1995, December 29, 1996 and December 28, 1997,
respectively, (ii) all proxy statements relating to the Company's meetings of
shareholders (whether annual or special) held since December 31, 1995, and (iii)
all other forms, reports and other registration statements filed by the Company
with the SEC after December 31, 1995 and before the Effective Time, including,
without limitation, the Form 10-Q for the quarter ended March 29, 1998, when
filed (the forms, reports and other documents referred to in clauses (i), (ii)
and (iii) above, together with any amendments or supplements thereto filed
before the Effective Time, being referred to herein, collectively, as the
"Company Reports"). The Company Reports (i) were prepared in accordance in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as the case may
be, and the rules and regulations thereunder and (ii) did not at the time they
were filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No Subsidiary is required to file any form, report or
other document with the SEC.
(b) Each of the financial statements (including, in each
case, any notes thereto) contained in the Company Reports complies as to form
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto and was prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Rule 10-01 of
Regulation S-X promulgated by the SEC) and each fairly presented (subject to, in
the case of the unaudited
11
statements, to normal, recurring audit adjustments, none of which will be
material) the consolidated financial position, results of operations,
shareholders' equity and cash flows of the Company and the Subsidiaries as at
the respective dates thereof and for the respective periods indicated therein.
(c) Except as and to the extent set forth in the Company
Reports, as of March 29, 1998, neither the Company nor any of its Subsidiaries
had any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by GAAP to be reflected on a
consolidated balance sheet of the Company and its subsidiaries (including the
notes thereto). Since March 29, 1998, except as and to the extent set forth in
the Company Reports and except for liabilities or obligations incurred in the
ordinary course of business consistent with past practice, neither the Company
nor any of its Subsidiaries has incurred any liabilities of any nature, whether
or not accrued, contingent or otherwise, that would have a Material Adverse
Effect on the Company, or would be required by GAAP to be reflected on a
consolidated balance sheet of the Company and its Subsidiaries (including the
notes thereto).
Section 3.8. Information-Supplied. None of the information supplied
or to be supplied by or on behalf of the Company specifically for inclusion or
incorporation by reference in the Schedule 14D-1 or the Schedule l3E-3 will, at
the date such documents are first published or sent or delivered to
shareholders, 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 made therein, in light of the circumstances under which they were
made, not misleading. Neither the Schedule 14D-9 at the date such document is
first published or sent or delivered to the shareholders, nor the Proxy
Statement (as defined in Section 5.11) (if applicable) at the date such document
is first published or sent or delivered to shareholders, 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 made therein, in
light of the circumstances under which they were made, not misleading. The
Schedule 14D-9 and the Proxy Statement (if applicable) will comply as to form in
all material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the SEC thereunder. Notwithstanding the
foregoing, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Buyer specifically for inclusion or incorporation by reference in
any of the foregoing documents.
Section 3.9. Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as disclosed in the Company Reports filed
prior to the date hereof, since December 28, 1997, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary
course and consistent with prior practice and there has not been (i) any event
or occurrence of any condition that has had or would reasonably be expected to
have a Material Adverse Effect on the Company, (ii) any declaration, setting
aside or payment of any dividend or any other distribution with respect to any
of the capital stock of the Company or any Subsidiary, (iii) any material change
in accounting methods, principles or practices (or any disagreement with the
Company's independent public accountants with respect to such methods,
principles or practices) employed by the Company (except insofar as may be
required by a change in GAAP), (iv) any action of the type described in Sections
5.1(b) or 5.1(c) which had such action been
12
taken after the date of this Agreement would be in violation of any such
Section, or (v) any condition, event or occurrence which could reasonably be
expected to prevent, hinder or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement.
Section 3.10. Taxes. The Company and each of its Subsidiaries (and
any consolidated, combined, unitary or aggregate group for tax purposes of which
the Company or any of its Subsidiaries has been a member) have timely filed all
material Tax Returns required to be filed by any of them. All such Tax Returns
are true, correct and complete, except for such instances which individually or
in the aggregate could not have a Material Adverse Effect on the Company. All
Taxes of the Company and its Subsidiaries which are (i) shown as due on such Tax
Returns, (ii) otherwise due and payable or (iii) claimed or asserted by any
taxing authority to be due, have been paid, except for those Taxes being
contested in good faith and for which adequate reserves have been established in
the financial statements included in the Company Reports in accordance with
GAAP. The Company does not know of any proposed or threatened Tax claims or
assessments which, if upheld, could individually or in the aggregate have a
Material Adverse Effect on the Company. The Company and each Subsidiary has
withheld and paid over to the relevant taxing authority all Taxes required to
have been withheld and paid in connection with payments to employees,
independent contractors, creditors, shareholders or other third parties, except
for such Taxes which individually or in the aggregate could not have a Material
Adverse Effect on the Company. No material deficiencies for any Taxes have been
proposed, asserted or assessed against the Company or any of its Subsidiaries
that are not adequately reserved for, no audit of any Tax Return of the Company
or any of its Subsidiaries is being conducted by a tax authority, and no
extension of the statute of limitations on the assessment of any taxes has been
granted to the Company or any of its Subsidiaries and is currently in effect.
For purposes of this Agreement, (a) "Tax" (and, with correlative meaning,
"Taxes") means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll, premium,
withholding, alternative or added minimum, ad valorem, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any Governmental Entity, and (b) "Tax Return" means any return, report or
similar statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
Neither the Company nor any of its Subsidiaries have executed any
closing agreement pursuant to Section 7121 of the Code or any predecessor
provisions thereof, or any similar provision of foreign, state or local law, or
has any ruling request pending with any tax authority. There are no tax
certiorari proceedings currently pending, tax abatements currently in effect or
tax assessments of which the Company has been notified or has knowledge in the
context of the Company's real estate assets. No assets of the Company or any of
its Subsidiaries constitutes tax-exempt financed property or tax-exempt use
property within the meaning of Section 168 of the Code, and no assets are
subject to a lease, safe-harbor lease, or other arrangement as a result of which
the Company or any Subsidiary is not treated as the owner for federal income tax
purposes. Neither the Company nor any of its Subsidiaries have filed a consent
pursuant to
13
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a "subsection (f) asset" (as such term is defined in
Section 341(f)(4) of the Code). Neither the Company nor any of its Subsidiaries
(i) are required or have agreed to make any adjustments pursuant to Section
481(a) of the Code or any similar provision of foreign, state or local law by
reason of a change in accounting method initiated by it or any other relevant
party, (ii) have knowledge that any tax authority has proposed any such
adjustment or change in accounting method, and/or (iii) have an application
pending with any tax authority requesting permission for any changes in
accounting methods that relate to the Business or Assets of Seller or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries are parties to any
contract, agreement, plan or arrangement covering any periods that, individually
or collectively, could give rise to any amount not being deductible by reason of
Section 280G of the Code. The Company and each of its Subsidiaries are not, have
never been, own no interest in, and have never owned an interest in, "S
corporations" within the meaning of Section 1361(a)(1) of the Code, "qualified
subchapter S Subsidiaries" within the meaning of Section 1361(b)(3)(B) of the
Code, "United States real property holding corporations" within the meaning of
Section 897 of the Code, "personal holding companies" within the meaning of
Section 542 of the Code, "controlled foreign corporations" within the meaning of
Section 957 of the Code, "foreign personal holding companies" within the meaning
of Section 552 of the Code, "passive foreign investment companies" within the
meaning of Section 1296 of the Code, "foreign investment companies" within the
meaning of Section 1246 of the Code, "FSC" within the meaning of Section 922 of
the Code, or a "DISC" or "Former DISC" within the meaning of Section 992 of the
Code. The Company and each of its Subsidiaries have not made, been party to, or
been the subject of, any elections under Sections 108, 168, 338, 441, 472, 1017,
1033 or 4977 of the Code. Neither the Company nor any of its Subsidiaries have
entered into any transfer pricing agreements with any tax authority. No assets
of the Company or any of its Subsidiaries are held in an arrangement for which
partnership Tax Returns are being filed or are required to be filed. Neither the
Company nor any of its Subsidiaries have availed itself of any Tax amnesty or
similar relief in any taxing jurisdiction. There are no transactions previously
entered into by either the Company or any of its Subsidiaries whose Tax
consequences may be affected by the transactions contemplated by this Agreement
(e.g., by a "clawback" or similar provision).
Section 3.11. Title to Assets.
(a) Except as set forth in the Company's audited balance
sheet (including any related notes thereto) for the fiscal year ended December
28, 1997 included in the Company's Annual Report on Form 10-K for the fiscal
year then ended (the "1997 Balance Sheet") or the other Company Reports, the
Company and each of its Subsidiaries have good and marketable title to all of
their real and personal properties and assets reflected on the 1997 Balance
Sheet or acquired after December 28, 1997 (other than assets disposed of since
December 28, 1997 in the ordinary course of business consistent with past
practice), in each case free and clear of all title defects, liens, claims,
charges, encumbrances and restrictions, except for (i) liens, encumbrances or
restrictions which secure indebtedness which is properly reflected in the 1997
Balance Sheet; (ii) liens for Taxes accrued but not yet payable; (iii) liens
arising as a matter of law in the ordinary course of business with respect to
obligations incurred after December 28, 1997, provided that the obligations
secured by such liens are not delinquent; and (iv) such title defects,
14
liens, encumbrances and restrictions, if any, as individually or in the
aggregate would not have a Material Adverse Effect on the Company. The Company
and each of its Subsidiaries either own, or have valid leasehold interests in,
and is in possession of, all properties and assets used by them in the conduct
of their business and each such lease is valid without default thereunder by the
lessee or, to the Company's knowledge, by the lessor, except where such default
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
(b) Neither the Company nor any of its Subsidiaries has any
legal obligation, absolute or contingent, to any other person to sell or
otherwise dispose of any interest in any of the restaurants owned or operated by
the Company, or to sell or dispose of any of its other assets with an individual
value of $25,000 or an aggregate value in excess of $100,000.
Section 3.12. Change of Control Agreements. Except as set forth in
Section 1.7(a) or the Company Reports filed prior to the date hereof, neither
the execution and delivery of this Agreement nor the consummation of the Offer,
the Merger or the other transactions contemplated by this Agreement, will
(either alone or in conjunction with any other event) result in, cause the
accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any director, officer or employee of the Company, and,
without limiting the generality of the foregoing, no amount paid or payable by
the Company in connection with the Offer, the Merger or the other transactions
contemplated by this Agreement (either solely as a result thereof or as a result
of such transactions in conjunction with any other event) will be an "excess
parachute payment" within the meaning of Section 280G of the Code.
Section 3.13. Litigation. Except for such matters which are
disclosed in the Company Reports or, if adversely determined, have not had, and
would not have, a Material Adverse Effect on the Company, there are no claims,
suits, actions, investigations, indictments or information, or administrative,
arbitration or other proceedings ("Litigation") pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries. Except
for such matters which are disclosed in the Company Reports or have not had, and
would not have, a Material Adverse Effect on the Company, there are no
judgments, orders, injunctions, decrees, stipulations or awards (whether
rendered by a court, administrative agency, or by arbitration, pursuant to a
grievance or other procedure) against or relating to the Company or any of its
Subsidiaries.
Section 3.14. Contracts and Commitments. All material contracts of
the Company or its Subsidiaries have been included in the Company Reports,
except for those contracts not required to be filed pursuant to the rules and
regulations of the SEC. The Company has made available true, correct and
complete copies of all such material contracts to Buyer. Neither the Company nor
any of its Subsidiaries is in default under any such contracts which has had, or
would have, a Material Adverse Effect on the Company.
Section 3.15. Employee Benefit Plans. All employee benefit plans,
compensation arrangements and other benefit arrangements covering employees of
the Company or any of its Subsidiaries (the "Company Benefit Plans") and all
employee agreements providing compensation, severance or other benefits to any
employee or former employee of the Company
15
or any of its Subsidiaries which are not disclosed in the Company Reports and
which exceed $100,000 per annum are set forth in the Company Disclosure
Schedule. True and complete copies of the Company Benefit Plans have been made
available to Buyer. To the extent applicable, the Company Benefit Plans comply
in all material respects with the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code, and any Company
Benefit Plan intended to be qualified under Section 401(a) of the Code has
received a determination letter and, to the knowledge of the Company continues
to satisfy the requirements for such qualification. Neither the Company nor any
of its Subsidiaries nor any ERISA Affiliate of the Company maintains,
contributes to or has maintained or contributed in the past six (6) years to any
benefit plan which is covered by Title IV of ERISA or Section 412 of the Code.
No Company Benefit Plan nor the Company nor any Subsidiary has incurred any
liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA
or, to the knowledge of the Company, engaged in any transaction that would
reasonably be expected to result in any such liability or penalty. Each Company
Benefit Plan has been maintained and administered in compliance with its terms
and with ERISA and the Code to the extent applicable thereto, except for such
non-compliance which individually or in the aggregate would not have a Material
Adverse Effect on the Company. There is no pending or, to the knowledge of the
Company, anticipated Litigation against or otherwise involving any of the
Company Benefit Plans and no Litigation (excluding claims for benefits incurred
in the ordinary course of Company Benefit Plan activities) has been brought
against or with respect to any such Company Benefit Plan. All contributions
required to be made as of the date hereof to the Company Benefit Plans have been
made or provided for. Except as described in the Company Reports or as required
by Law, neither the Company nor any of its Subsidiaries maintains or contributes
to any plan or arrangement which provides or has any liability to provide life
insurance or medical or other employee welfare benefits to any employee or
former employee upon his retirement or termination of employment, and neither
the Company nor any of its Subsidiaries has ever represented, promised or
contracted (whether in oral or written form) to any employee or former employee
that such benefits would be provided. No Company Benefit Plan is under
investigation or audit by either the United States Department of Labor or the
Internal Revenue Service. Except as provided for in this Agreement, the
execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit plan, policy,
arrangement or agreement or any trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee. No payment or benefit which will or may
be made by the Company, any of its Subsidiaries, any ERISA Affiliate or Buyer
with respect to any employee will constitute an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
For purposes of this Agreement "ERISA Affiliate" means any business or
entity which is a member of the same "controlled group of corporations," under
"common control" or an "affiliated service group" with an entity within the
meanings of Sections 414(b), (c) or (m) of the Code, as required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing Sections.
16
Section 3.16. Labor and Employment Matters. Neither the Company nor
any of its Subsidiaries is a party to, or bound by, any collective bargaining
agreement or other Contracts or understanding with a labor union or labor
organization. Except for such matters which, individually or in the aggregate,
would not have a Material Adverse Effect on the Company, there is no (i) unfair
labor practice, labor dispute (other than routine individual grievances) or
labor arbitration proceeding pending or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries relating to their business,
(ii) to the knowledge of the Company, activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
Subsidiaries, or (iii) lockouts, strikes, slowdowns, work stoppages or, to the
knowledge of the Company, threats thereof by or with respect to such employees.
Section 3.17. Environmental Compliance and Disclosure.
(a) Except for any matters which individually or in the
aggregate would not have a Material Adverse Effect, (i) the Company and each
of its Subsidiaries is in compliance with all applicable Laws relating to
Environmental Matters (as defined below); (ii) the Company and each of its
Subsidiaries has obtained, and is in compliance with, all Permits required by
applicable Laws for the use, storage, treatment, transportation, release,
emission and disposal of raw materials, by-products, wastes and other substances
used or produced by or otherwise relating to the operations of any of them;
(iii) to the Company's knowledge, there are no past or present events,
conditions, activities or practices that would prevent compliance or continued
compliance with any Law or give rise to any Environmental Liability (as defined
below); and (iv) there are no claims either by any Governmental Authority or
any third party pending, or to the Company's knowledge, threatened against the
Company or any of its subsidiaries arising from any Environmental Matter.
(b) As used in this Agreement, the term "Environmental
Matters" means any matter arising out of or relating to pollution or protection
of the environment, human safety or health, or sanitation, including, without
limitation, matters relating to food preparation and handling, emissions,
discharges, releases, exposures, or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes including petroleum and
its fractions, radiation, polychlorinated byphenols, biohazards and all toxic
agents of whatever type or nature into ambient air, surface water, ground water,
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants or hazardous or toxic materials or wastes including petroleum and
its factions, radiation, biohazards and all toxic agents of whatever type or
nature. "Environmental Liability" means any liability or obligation arising
under any Law or under any other theory of law or equity (including, without
limitation, any liability for personal injury, property damage or remediation)
arising from or relating to any Environmental Matters.
Section 3.18. Affiliated Transactions. All transactions between the
Company or any of its Subsidiaries, on the one hand, and any officer, director
or holder of in excess of five percent (5%) of the Shares, or any Affiliate of
any of them, have been disclosed in the Company Reports or the Company
Disclosure Schedule. Except as disclosed in the Company Reports, no officer,
director or holder of in excess of five percent (5%) of Shares has any interest
in (i) any assets,
17
including, without limitation any intellectual property, used or held for use
in the business of the Company and its Subsidiaries or (ii) any creditor,
supplier of franchisee of the Company or any of its Subsidiaries.
Section 3.19. Intellectual Property.
(a) The Company Disclosure Schedule sets forth a true and
complete list and description of (i) all United States and foreign patents,
trademarks, trade names, service marks, copyrights and applications therefor and
trade secrets (including secret recipes and formulae) owned by the Company and
its Subsidiaries (the "Intellectual Property Rights") and (ii) all United States
and foreign patents, trademarks, trade names, service marks, copyrights and
applications therefor and trade secrets (including secret recipes and formulae)
licensed to the Company or any of its Subsidiaries (the "Licensed Rights").
Except to the extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy) would not have a Material Adverse
Effect on the Company:
(1) The Company represents and warrants that (i)
the Intellectual Property Rights are free and clear of any liens,
claims or encumbrances; are not subject to any license (royalty bearing
or royalty free) and are not subject to any other arrangement requiring
any payment to any person nor the obligation to grant rights to any
person in exchange; (ii) the Licensed Rights are free and clear of any
liens, claims, encumbrances, royalties or other obligations; and (iii)
the Intellectual Property Rights and the Licensed Rights are all those
material rights necessary to the conduct of the business of each of the
Company, its Subsidiaries and the Company's franchisees as presently
conducted.
(2) The validity of the Intellectual Property
Rights and title thereto, and the validity of the Licensed Rights, (i)
have not been questioned in any prior litigation against or involving
the Company or any Subsidiaries; (ii) are not being questioned in any
pending litigation against or involving the Company or any
Subsidiaries; and (iii) to the knowledge of the Company, are not the
subject(s) of any threatened or proposed litigation.
(3) The business of each of the Company, its
Subsidiaries and, to the knowledge of the Company, the Company's
franchisees, as presently conducted, does not conflict with and has not
been alleged to conflict with any patents, trademarks, trade names,
service marks, copyrights or other intellectual property rights of
others.
(4) The consummation of the transactions
contemplated hereby will not result in the loss or impairment of any of the
Intellectual Property Rights or any of the Licensed Rights.
The Company does not know of any use by others of any of the
Intellectual Property Rights or the Licensed Rights material to the business of
the Company, its Subsidiaries or the Company's franchisees as presently
conducted.
18
(b) Each of the Company and its Subsidiaries owns, or
possesses valid license rights to, all computer software programs that are
material to the conduct of the business of the Company and its Subsidiaries.
There are no infringement suits, actions or proceedings pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary with
respect to any software owned or licensed by the Company or any Subsidiary.
Section 3.20. Brokers. Except pursuant to the Independent Advisor
Engagement Letter (as defined in Section 5.10(b)), no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement, the Offer, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company Disclosure Schedule includes a complete
and correct copy of all agreements between the Company and the Independent
Advisor pursuant to which such firm would be entitled to any payment relating to
this Agreement, the Offer, the Merger or the other transactions contemplated by
this Agreement.
Section 3.21. Antitakeover Statutes; Rights Plan. Each of the
Company and the Board of Directors of the Company has taken all action required
to be taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions contemplated
hereby are exempt from, the requirements of Sections 607.0901 and 607.0902 of
the FBCA. The Company is not a party to or subject to any "poison pill,"
shareholder rights plan, rights agreement or similar agreement, instrument or
plan.
Section 3.22. Year 2000. Any reprogramming and related testing,
and/or replacement of the Company's or any of its Subsidiaries' software,
computer systems and other information technology (the "Company's Systems"),
required to permit the Company's Systems accurately to process, provide and/or
receive date data (internally, and with third parties with whom the Company or
any of its Subsidiaries does a material amount of business), from, into and
between the 20th and 21st centuries, including the year 2000 and all leap years,
will be completed in all material respects on or before September 1, 1999, and
the cost to the Company and its Subsidiaries of such reprogramming, testing
and/or replacement will not result in a Material Adverse Effect. The Company's
Systems are, and subsequent to the completion of such reprogramming and related
testing and/or replacement of the Company's Systems, will be, adequate for the
conduct of the Company's business.
Section 3.23. Disclosure. No representation, warranty or covenant
made by the Company in this Agreement, the Exhibits or the Company Disclosure
Schedule contains an untrue statement of a material fact or omits to state a
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to the Company as follows:
Section 4.1. Organization and Standing. Buyer (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate it properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign corporation 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.
Section 4.2. Authority for Agreement. Buyer has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Offer, the Merger and the other
transactions contemplated by this Agreement. The execution, delivery and
performance by Buyer of this Agreement, and the consummation by Buyer of the
Offer, the Merger and the other transactions contemplated by this Agreement,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the Offer, the Merger or the other transactions
contemplated by this Agreement (other than, with respect to the Merger, the
filing and recordation of appropriate merger documents as required by the FBCA
and the DGCL). This Agreement has been duly executed and delivered by such
person and, assuming this Agreement constitutes a valid and binding obligation
of the Company, constitutes a legal, valid and binding obligation of Buyer
enforceable against such person in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally.
Section 4.3. No Conflict. The execution and delivery of this
Agreement by Buyer do not, and the performance of this Agreement by such person
and the consummation of the Offer, the Merger and the other transactions
contemplated by this Agreement will not, (i) conflict with or violate the
certificate of incorporation or bylaws of Buyer, (ii) conflict with or violate
any Law applicable to Buyer or by which any property or asset of Buyer is bound
or affected, 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 right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Buyer pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Buyer is a party or by which Buyer or any property or asset
of Buyer is bound or affected, except in the case of clauses (ii) and (iii) for
any such conflicts, violations, breaches, defaults or other occurrences which
would not, individually or in the aggregate, prevent or materially delay the
performance by Buyer of its respective obligations under this Agreement or the
consummation of the Offer, the Merger or the other transactions contemplated by
this Agreement.
20
Section 4.4. Required Filings and Consents. The execution and
delivery of this Agreement by Buyer do not, and the performance of this
Agreement by Buyer will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity, except
(i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws,
filing and recordation of appropriate merger documents as required by the FBCA
and the DGCL, the laws of other states in which Buyer is qualified to do or is
doing business and foreign laws, (ii) for those required by the HSR Act, and
(iii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not, individually or in
the aggregate, prevent or materially delay the performance by Buyer of any of
its obligations under this Agreement or the consummation of the Offer, the
Merger or the other transactions contemplated by this Agreement.
Section 4.5. Information Supplied. None of the information supplied
or to be supplied by Buyer specifically for inclusion or incorporation by
reference in the Schedule 14D-9 or the Proxy Statement (if applicable) will, at
the date such documents are first published, sent or delivered to shareholders
or, unless promptly corrected, at any time during the pendency of the Offer
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
made therein, in light of the circumstances under which they were made, not
misleading. Neither the Schedule 14D-1 nor the Schedule 13E-3 will, at the date
such document is first published, sent or delivered to the shareholders or,
unless promptly corrected, at any time during the pendency of the Offer, nor the
Proxy Statement (if applicable) at the date such document is first published,
sent or delivered to shareholders or, unless promptly corrected, at any time
during the pendency of the Company Shareholders' 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 made therein, in
light of the circumstances under which they were made, not misleading. The
Schedule 14D-1 and the Schedule 13E-3 will comply as to form and substance in
all material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the SEC thereunder. Notwithstanding the
foregoing, no representation or warranty is made by Buyer with respect to
statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in any of
the foregoing documents.
Section 4.6. Financial Capability. Attached hereto as Exhibit 4.6 is
a true and complete copy of a commitment letter addressed to Buyer from Chase
Bank of Texas, N.A., Buyer's senior debt financing source, for the aggregate
amount of up to $150 million of senior bank financing (the "Senior Financing")
for, among other things, the funds necessary to purchase all Shares pursuant to
the Offer and the Merger and to pay all fees and expenses payable by Buyer
related to the transactions contemplated by this Agreement (the "Aggregate Offer
Consideration"). Buyer has no reason to believe that the conditions to the
Senior Financing will not be satisfied or waived. The Senior Financing and
Buyer's available funds and committed equity capital will be sufficient to fund
the Aggregate Offer Consideration.
Section 4.7. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission payable by the
Company or any of its Affiliates in
21
connection with this Agreement, the Offer, the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Buyer or any of its Affiliates.
Section 4.8. Disclosure. No representation, warranty or covenant made
by Buyer in this Agreement or the exhibits hereto contains an untrue statement
of a material fact or omits to state a material fact required to be stated
herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V
COVENANTS
Section 5.1. Conduct of the Business Pending the Merger.
(a) The Company covenants and agrees that between the date
of this Agreement and the Effective Time, except as set forth in the Company
Disclosure Schedule or, unless Buyer shall otherwise agree in advance, which
consent shall not be unreasonably withheld and shall be subsequently confirmed
in writing, (i) the businesses of the Company and its Subsidiaries shall be
conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with prior practice (it being understood that the foregoing does not cover
future events resulting from the public announcement of the Offer and the
Merger), (ii) the Company and its Subsidiaries shall use all commercially
reasonable efforts to preserve substantially intact their business
organizations, to keep available the services of their current officers and
employees and to preserve the current relationships of the Company and its
Subsidiaries with customers, suppliers and other persons with which the Company
or its Subsidiaries has significant business relations, (iii) the Company will
comply with all applicable laws and regulations wherever its business is
conducted, including without limitation the timely filing of all reports, forms
or other documents with the SEC required pursuant to the Securities Act or the
Exchange Act, except where such noncompliance would not have a Material Adverse
Effect on the Company, (iv) the Company shall not commit to any significant
capital expenditures except those related to developing, constructing,
permitting, equipping and opening the five planned restaurants identified on the
Company Disclosure Schedule, and (iv) the Company shall not enter into any new
franchise agreement.
(b) The Company covenants and agrees that between the date
of this Agreement and the Effective Time, the Company shall not, nor shall the
Company permit any of its Subsidiaries to, (i) declare or pay any dividends on
or make other distributions (whether in cash, stock or property) in respect of
any of its capital stock, except for dividends by a wholly owned Subsidiary of
the Company to the Company or another wholly owned Subsidiary of the Company,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (iii) repurchase or otherwise
acquire or permit any Subsidiary to purchase or otherwise acquire, any shares of
its capital stock, (iv) issue, deliver or sell, or authorize or
22
propose the issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into any such shares of its capital stock, or any
rights, warrants or options to acquire any such shares or convertible
securities or any stock appreciation rights, phantom stock plans or stock
equivalents, other than the issuance of Shares upon the exercise of Company
Options outstanding as of the date of this Agreement under the Company Stock
Option Plans, and formula grants of Company Options to directors pursuant to
the 1995 Directors Stock Option Plan and the issuance by a wholly-owned
Subsidiary of the Company of its capital stock to its parent, or (vi) willfully
take any action that would make the Company's representations and warranties
set forth in Article III not true and correct in all material respects.
(c) The Company covenants and agrees that between the date
of this Agreement and the Effective Time, the Company shall not, nor shall the
Company permit any of its Subsidiaries to, (i) amend its articles of
incorporation or bylaws or other equivalent organizational documents, (ii) incur
any indebtedness for borrowed money or guaranty any such indebtedness of another
person, other than (A) borrowings under existing lines of credit (or under any
refinancing of such existing lines), or (B) indebtedness owing to, or guaranties
of indebtedness owing to, the Company, (iii) make any loans or advances to any
other person, other than advances to employees (that are not Affiliates of the
Company) in accordance with past practice, (iv) merge or consolidate with any
other entity in any transaction, or sell all or substantially all of its
business or assets, (v) make any material change, other than in the ordinary
course of business, consistent with past practice, or as required by the SEC or
law, with respect to any accounting methods, principles or practices used by the
Company (except insofar as may be required by a change in GAAP), (vi) make any
change in employment terms for any of its directors or officers; (vii) make any
change in employment terms for any of its employees outside the ordinary course
of business consistent with past practices, (viii) make any change to the
Company Benefit Plans except as required by law; (ix) materially amend or modify
the form of franchise agreement with, the procedures or rules and regulations
applicable to or the nature of its relationship with, its franchisees, or (x)
commit or agree to take any of the actions described in this Section 5.1.
Section 5.2. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company
shall, and shall cause the officers, directors, employees, auditors, attorneys,
financial advisors, lenders and other agents (collectively, the
"Representatives") of the Company to, afford the Representatives of Buyer full
and complete access at all reasonable times to the properties, offices,
restaurants and other facilities, books and records of the Company and its
Subsidiaries, and shall furnish Buyer with all financial, operating and other
data and information as Buyer, through its Representatives, may reasonably
request. Except as otherwise agreed to by the Company, unless and until Buyer
shall have purchased a majority of the outstanding Shares pursuant to the Offer
or otherwise, and notwithstanding termination of this Agreement, the terms of
any confidentiality agreement between the Company and Buyer or any of Buyer's
affiliates, agents or representatives (any such agreement, a "Confidentiality
Agreement") shall apply to all information about the Company which is furnished
under this Agreement by the Company to any such person.
23
(b) No investigation pursuant to this Section 5.2 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
Section 5.3. Directors. Promptly upon the acceptance for payment of,
and payment by Buyer for, Shares pursuant to the Offer, Buyer shall be entitled
to designate such number of directors on the Board of Directors of the Company
as will give Buyer, subject to compliance with Section 14(f) of the Exchange
Act, representation on such Board of Directors equal to at least that number of
directors, rounded up to the next whole number, which is the percentage that (i)
such number of Shares so accepted for payment and paid for by Buyer plus the
number of Shares otherwise owned by Buyer bears to (ii) the total number of
Shares outstanding, and the Company shall, at such time, cause Buyer's designees
to be appointed or elected provided, however, that in the event that Buyer's
designees are elected to the Board of Directors of the Company, until the
Effective Time such Board of Directors shall have at least two directors who are
directors on the date of this Agreement and who are not officers of the Company
(the "Independent Directors"); and provided further that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall designate a person to fill
such vacancy who shall be deemed to be an Independent Director for purposes of
this Agreement or, if no Independent Directors then remain, the other directors
shall designate two persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its subsidiaries, or officers or affiliates
of Buyer or any of its subsidiaries, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Subject to applicable law,
the Company shall take all action requested by Buyer necessary to effect any
such appointment or election, including mailing to its stockholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder (either separately or
combined with the Schedule 14D-9), and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Buyer shall have provided
to the Company on a timely basis all information required to be included in the
Information Statement with respect to Buyer's designees). In connection with the
foregoing, the Company will promptly, at the option of Buyer, either increase
the size of the Board of Directors of the Company or obtain the resignation of
such number of its current directors as is necessary to enable Buyer's designees
to be elected or appointed to the Board of Directors of the Company as provided
above.
Section 5.4. Further Action.
(a) Upon the terms and subject to the conditions hereof,
each of the parties hereto shall use all commercially reasonable 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 Law to consummate the
Offer and to consummate and make effective the Merger and the other transactions
contemplated by this Agreement, including, without limitation, using all
commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of each Governmental Entity
and parties to contracts with the Company and its Subsidiaries as are necessary
for the consummation of the Offer and the Merger and the other transactions
contemplated by this Agreement and to fulfill the
24
conditions set forth in Article VI. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers of each party to this Agreement and the
Surviving Corporation shall use all commercially reasonable efforts to take all
such action.
(b) In connection with, and without limiting the foregoing,
the Company shall use all commercially reasonable efforts to (i) to take all
actions necessary to ensure that no state antitakeover statute or similar
statute or regulation is or becomes operative with respect to this Agreement,
the Offer, the Merger or any other transactions contemplated by this Agreement,
and (ii) if any state antitakeover statute or similar statute or regulation is
or becomes operative with respect to this Agreement, the Offer, the Merger or
any other transaction contemplated by this Agreement, to take all actions
necessary to ensure that this Agreement, the Offer, the Merger and any other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, the Offer and
the other transactions contemplated by this Agreement.
Section 5.5. No Solicitation.
(a) The Company and its officers, directors, employees,
representatives and agents shall immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to an Acquisition
Proposal (as hereinafter defined). From and after the date hereof until the
termination of this Agreement, the Company shall not, nor shall it permit any of
its Subsidiaries to, authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney, accountant or
other representative retained by it or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or knowingly encourage (including by way of
furnishing non-public information or assistance), or knowingly take any other
action to facilitate, any inquiries or the making of any proposal which
constitutes, or would reasonably be expected to lead to, any Acquisition
Proposal or (ii) participate in any discussions or negotiations regarding any
Acquisition; provided, however, that if, at any time the Board of Directors of
the Company determines in good faith, after consultation with independent legal
counsel (who may be the Company's regularly engaged independent counsel), that
it is necessary to do so in order to comply with its fiduciary duties to the
Company's shareholders under applicable law, the Company may, in response to an
unsolicited Acquisition Proposal, and subject to compliance with Section 5.5(c),
(x) furnish information with respect to the Company to any person pursuant to a
confidentiality agreement in reasonably customary form and (y) participate in
discussions or negotiations regarding such Acquisition Proposal. For purposes of
this Agreement, "Acquisition Proposal" means any inquiry, proposal or offer (or
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in the foregoing) from any person relating
to any direct or indirect acquisition or purchase of 20% or more of the assets
of the Company and its subsidiaries or 20% or more of any class of equity
securities of the Company or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the Company or any of
its subsidiaries, any merger, consolidation, business combination, sale of all
or substantially all the assets, recapitalization, liquidation, dissolution or
25
similar transaction involving the Company or any of its subsidiaries, other than
the transactions contemplated by this Agreement, or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Offer and/or the Merger or which would
reasonably be expected to dilute materially the benefits to Buyer of the
transactions contemplated hereby.
(b) Except as set forth in this Section 5.5, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Buyer, the
approval or recommendation by such Board of Directors or such committee of the
Offer, this Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) cause the Company to
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that the Board of Directors of the
Company determines in good faith, after consultation with independent legal
counsel (who may be the Company's regularly engaged independent counsel), that
it is necessary to do so in order to comply with its fiduciary duties to the
Company's shareholders under applicable law, the Board of Directors of the
Company may (subject to the other provisions of Section 5.5) withdraw or modify
its approval or recommendation of the Offer, this Agreement and the Merger,
approve or recommend a Superior Proposal (as defined below), cause the Company
to enter into an agreement with respect to a Superior Proposal or terminate this
Agreement, but in each case only at a time that is after the third business day
following Buyer's receipt of written notice (a "Notice of Superior Proposal")
advising Buyer that the Board of Directors of the Company has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal. In addition,
if the Company proposes to enter into an agreement with respect to any
Acquisition Proposal, it shall concurrently with entering into such agreement
pay, or cause to be paid, to Buyer the Termination Fee (as such term is defined
in Section 5.8(b)). For purposes of this Agreement, a "Superior Proposal" means
any bona fide proposal made by a third party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, more than 20% of the
shares of Company Common Stock then outstanding or all or substantially all the
assets of the Company and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's shareholders than the Offer and the Merger.
(c) In addition to the obligations of the Company set forth
in paragraphs (a) and (b) of this Section 5.5, the Company shall promptly advise
Buyer orally and in writing of any request for information or of any Acquisition
Proposal, the material terms and conditions of such request or Acquisition
Proposal and the identity of the person making such request or Acquisition
Proposal.
(d) Nothing contained in this Section 5.5 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with independent legal
counsel (who may be the Company's regularly engaged independent counsel),
26
failure so to disclose would be inconsistent with its fiduciary duties to the
Company's shareholders under applicable law; provided, however, neither the
Company nor its Board of Directors nor any committee thereof shall, except as
permitted by Section 5.5(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to the Offer, this Agreement or the Merger or
approve or recommend, or propose to approve or recommend, an Acquisition
Proposal.
Section 5.6. Indemnification.
(a) It is understood and agreed that all rights to
indemnification by the Company now existing in favor of each present and former
director and officer of the Company (the "Indemnified Parties") as provided in
the Company Articles of Incorporation or the Company Bylaws, in each case as in
effect on the date of this Agreement, or pursuant to any other agreements in
effect on the date hereof, copies of which have been made available to Buyer,
shall survive the Merger and shall continue in full force and effect in
accordance with their terms for a period of at least six (6) years from the
Effective Time.
(b) In addition, Buyer will provide, or cause the Surviving
Corporation to provide, for a period not less than six (6) years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time (the "D&O Insurance") that is no less favorable in any
material respect than the Company's existing D&O Insurance policy or, if
substantially equivalent insurance coverage is unavailable, the best available
coverage; provided, however, that Buyer and the Surviving Corporation shall not
be required to pay an annual premium for the D&O Insurance in excess of 150% of
the annual premium currently paid by the Company for such insurance, but in such
case shall purchase as much such coverage as possible for such amount.
(c) This Section 5.6 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Buyer, the
Surviving Corporation and the Indemnified Parties and their respective heirs,
personal representatives, successors and assigns, and shall be binding on all
successors and assigns of Buyer and the Surviving Corporation. If the Surviving
Corporation or any of its 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 all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
5.7.
Section 5.7. Public Announcements. Buyer and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement, the Offer or the Merger and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by law or any listing agreement
with a national securities exchange or trading system to which Buyer or the
Company is a party. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement is set
forth in Exhibit 5.7 to this Agreement.
27
Section 5.8. Fees and Expenses.
(a) Except as provided below in this Section 5.8, all fees
and expenses incurred in connection with the Offer, the Merger, this Agreement
and the transactions contemplated by this Agreement ("Expenses") shall be paid
by the party incurring such fees or expenses, whether or not the Offer or the
Merger is consummated.
(b) If (i) Buyer terminates this Agreement under Section
7.1(d), or (ii) the Company terminates this Agreement pursuant to Section
7.1(e), the Company shall assume and pay, or cause to be paid, to Buyer a
termination fee in the amount of $2,250,000, plus all of Buyer's Expenses not to
exceed $500,000 (the "Termination Fee").
(c) If Buyer terminates the Offer as a result of the
occurrence of any event set forth in paragraph (j) of Annex I to this Agreement,
the Company shall reimburse Buyer for all of Buyer's Expenses up to a maximum of
$500,000.
Section 5.9. Company Shareholders' Meeting. If required by applicable
law in order to consummate the Merger:
(a) The Company shall, at the direction of Buyer, cause a
meeting of its shareholders (the "Company Shareholders' Meeting") to be duly
called and held as soon as practicable following the consummation of the Offer
(which shall include acceptance for payment of and payment for all Shares duly
tendered) for the purpose of voting on the approval and adoption of this
Agreement and the Merger (the "Company Shareholder Approval"). The Company shall
take all action necessary in accordance with applicable law and the Company
Articles of Incorporation and Company Bylaws to duly call, give notice of, and
convene the Company Shareholders' Meeting.
(b) The Company shall, at the direction of Buyer, solicit
from holders of Shares entitled to vote at the Company Shareholders' Meeting
proxies in favor of such approval and shall take all other action necessary or,
in the judgment of Buyer, helpful to secure the vote or consent of such holders
required by the FBCA or this Agreement to effect the Merger.
Section 5.10. Proxy Statement.
(a) If required by applicable law in connection with the
Merger, the Company will, at the direction of Buyer, as promptly as practicable
following the consummation of the Offer prepare and file, a proxy or information
statement relating to Company Shareholders' Meeting (together with all
amendments, supplements and exhibits thereto, the "Proxy Statement") with the
SEC and will use all commercially reasonable efforts to respond to the comments
of the SEC and to cause the Proxy Statement to be mailed to the Company's
shareholders at the earliest practical time. The Company will notify Buyer
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Buyer with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or
28
the Merger. If at any time prior to the Shareholders' Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company will promptly prepare and mail to its
shareholders such an amendment or supplement. The Company will not mail any
Proxy Statement, or any amendment or supplement thereto, to which Buyer
reasonably objects.
(b) The Company hereby consents to the inclusion in the
Proxy Statement of the recommendation of the Board of Directors of the Company
described in Section 3.3(b), subject to any modification, amendment or
withdrawal thereof, and represents that the Independent Advisor has, subject to
the terms of its engagement letter with the Company (the "Independent Advisor
Engagement Letter"), consented to the inclusion of references to its opinion in
the Proxy Statement.
(c) Notwithstanding the foregoing, if at any time Buyer
shall acquire at least 80% of the outstanding Shares, Buyer and the Company
shall take all necessary and appropriate action to cause the Merger to become
effective as promptly as practicable after the expiration of the Offer and the
satisfaction or waiver of the conditions set forth in Article VI without the
Company Shareholders' Meeting in accordance with Section 607.1104 of the FBCA.
Section 5.11. Shareholder Lists. The Company shall promptly (but in
no event later than three (3) business days after the date of this Agreement),
or shall cause its transfer agent to promptly, furnish Buyer with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of the
most recent practicable date, together with all other available listings and
computer files containing names, addresses and security position listings of
record holders and beneficial owners of Shares. The Company shall furnish Buyer
with such additional information, including, without limitation, updated
listings and computer files of shareholders, mailing labels and security
position listings, and such other assistance as Buyer or its agents may
reasonably request. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Buyer and its agents shall hold in
strict confidence (and subject to the provisions of any applicable
Confidentiality Agreement) the information contained in any such labels,
listings and files, will use such information only in connection with the Offer
and the Merger and, if this Agreement shall be terminated, will, upon request,
deliver, and will use their best efforts to cause their agents, affiliates and
representatives to deliver, to the Company or destroy all copies of such
information then in their possession or control, or as otherwise provided in any
such Confidentiality Agreement.
Section 5.12. Shares Held by Company Subsidiaries. The Company
agrees to cause each of the Subsidiaries of the Company that owns any Shares to
not tender any such Shares pursuant to the Offer.
Section 5.13. Shareholder Litigation. The Company shall give Buyer
the opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement; provided, however, that no
29
such settlement shall be agreed to without Company's and Buyer's consent, which
shall not be unreasonably withheld.
Section 5.14. Employee Benefit Plans; Other Tax Returns. As soon as
practicable, but in no event later than July 31, 1998, the Company shall file
(i) all required Forms 5500 with respect to the Company Benefit Plans, (ii) all
required Florida escheat tax returns and (iii) its Florida 1996 intangible tax
return.
ARTICLE VI
CONDITIONS
Section 6.1. Conditions to the Obligation of Each Party. The
respective obligations of Buyer and the Company to effect the Merger are subject
to the satisfaction of the following conditions, unless waived in writing by all
parties:
(a) Company Shareholder Approval. This Agreement and the
Merger shall have been approved and adopted by the requisite votes of the
shareholders of the Company and Buyer, if and to the extent required by the
FBCA, the DGCL, the Company Articles of Incorporation, the Buyer Certificate of
Incorporation, the Company Bylaws and the Buyer Bylaws.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding by any Governmental Entity seeking any of the foregoing be
pending; provided, however, that the parties invoking this condition shall use
all commercially reasonable efforts to have any such order, injunction or other
restraint vacated.
(c) There shall not be any action taken by any Governmental
Entity, or any statute, vote, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal.
(d) Purchase of Shares. Buyer shall have previously accepted for
payment and paid for all Shares tendered pursuant to the Offer.
30
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the Merger by the
shareholders of the Company:
(a) By mutual written consent of Buyer and the Company;
(b) by either Buyer or the Company:
(i) if (x) as a result of the failure of any of the
Offer Conditions the Offer shall have terminated or expired in
accordance with its terms without Buyer having accepted for
payment any Shares pursuant to the Offer or (y) Buyer shall
not have accepted for payment any Shares pursuant to the Offer
prior to the 60th day after commencement of the Offer;
provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to
any party whose failure to perform any of its obligations
under this Agreement results in the failure of any such
condition or if the failure of such condition results from
facts or circumstances that constitute a breach of
representation, warranty or covenant under this Agreement by
such party; or
(ii) if any Governmental Entity shall have issued
an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting
the acceptance for payment of, or payment for, shares of
Company Common Stock pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become
final and nonappealable; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1(b)(ii)
shall not be available to any party that has failed to perform
its obligations under Section 5.4 or the proviso contained in
Section 6.1(b);
(c) by Buyer if
(i) (A) the representations and warranties of the
Company in Section 3.2 shall not have been true and correct in
all material respects when made, or (B) the other
representations and warranties of the Company shall not have
been true and correct in all material respects when made,
except, solely in the case of representations and warranties
that are not qualified by Material Adverse Effect, where such
failure to be true and correct would not, in the aggregate,
have a Material Adverse Effect on the Company;
(ii) (A) the representations and warranties of the
Company in Section 3.2 (other than representations and
warranties made as of a specified date) shall have ceased at
any later date to be true and correct in all material respects
as if made as of such later date, or (B) the other
representations and warranties of the
31
Company (other than representations and warranties made as of
a specified date) shall have ceased at any later date to be
true and correct in all material respects as if made at such
later date, except, solely in the case of representations and
warranties that are not qualified by Material Adverse Effect,
where such failure to be true and correct would not, in the
aggregate, have a Material Adverse Effect on the Company; or
(iii) the Company shall have failed to comply in
all material respects with its obligations and covenants
contained herein;
provided, however, that the right of Buyer to terminate this Agreement pursuant
to this clause shall not be available if Buyer shall acquire any shares of
Company Common Stock pursuant to the Offer;
(d) by Buyer if Buyer is entitled to terminate the Offer as a
result of the occurrence of any event set forth in paragraph (e) of Annex I to
this Agreement;
(e) by the Company in connection with entering into a
definitive agreement in accordance with Section 5.5(b), provided it has complied
with all provisions thereof, including the notice provisions therein and the
payment of the Termination Fee, and provided that the Company shall not have
breached in any material respect the provisions of Section 5.5(a);
(f) by the Company, if, prior to the consummation of the
Offer,
(i) the representations and warranties of Buyer
shall not have been true and correct in all material respects
when made or shall have ceased at any later date to be true
and correct in all material respects as if made at such later
date, except, solely in the case of representations and
warranties that are not qualified by Material Adverse Effect,
where such failure would not, in the aggregate, have a
Material Adverse Effect on Buyer; or
(ii) Buyer fails to comply in all material respects
with its obligations and covenants contained herein;
(g) by the Company, if Buyer shall have failed to commence
the Offer within five (5) business days following the date of the initial public
announcement of the Offer (except as a result of any acts or omissions of the
Company that constitutes a material breach of this Agreement).
Section 7.2. Effect of Termination. In the event of a termination of
this Agreement by either the Company or Buyer as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Buyer or the Company or their respective officers,
directors, shareholders or affiliates, except with respect to Section 3.20,
Section 4.8, the last sentence of Section 5.2, Section 5.8, the last sentence of
Section 5.11, this Section 7.2 and Article VIII; provided, however, that,
subject to the provisions of Section 8.7, nothing herein shall relieve any party
for liability for any breach hereof.
32
Section 7.3. Amendments. This Agreement may not be amended except by
action of the board of directors of each of the parties hereto set forth in an
instrument in writing signed on behalf of each of the parties hereto; provided,
however, that after approval of the Merger by the shareholders of the Company
(if required), no amendment may be made without the further approval of the
shareholders of the Company if the effect of such amendment would be to reduce
the Offer Price or change the form thereof or which by law requires the further
approval of such shareholders. Following the election or appointment of Buyer's
designees pursuant to Section 5.3 and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors then in office shall
be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this Agreement or (iii) extend the time for performance of Buyer's obligations
under this Agreement.
Section 7.4. Waiver. At any time prior to the Effective Time, whether
before or after the Company Shareholders' Meeting, any party hereto, by action
taken by its board of directors, may, to the extent permitted by law, (i) extend
the time for the performance of any of the covenants, obligations or other acts
of any other party hereto or (ii) waive any inaccuracy of any representations or
warranties or compliance with any of the agreements, covenants or conditions of
any other party or with any conditions to its own obligations. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party by its
duly authorized officer. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights. The waiver of any such right with respect to particular
facts and other circumstances shall not be deemed a waiver with respect to any
other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. No Third Party Beneficiaries. Other than the provisions
of Sections 5.6 hereof, nothing in this Agreement shall confer any rights or
remedies upon any person other than the parties hereto.
Section 8.2. Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes the entire
Agreement among the parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, with respect to the subject matter hereof.
Section 8.3. Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder (whether by operation of law or
otherwise) without the prior written approval of the other parties.
33
Section 8.4. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 8.5. Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 8.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without regard
to principles of conflicts of law thereof.
Section 8.7. Severability; No Remedy in Certain Circumstances. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent jurisdiction
declares that any term or provision hereof is invalid or unenforceable, the
parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed unless the foregoing inconsistent action or the
failure to take an action constitutes a material breach of this Agreement or
makes this Agreement impossible to perform, in which case this Agreement shall
terminate pursuant to Article VII hereof. Except as otherwise contemplated by
this Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority, such
party shall incur no liability or obligation unless such party did not in good
faith seek to resist or object to the imposition or entering of such order or
judgment.
Section 8.8. Specific Performance. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Florida or in a Florida state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (i) consents to submit such
party to the personal jurisdiction of any Federal court located in the State of
Florida or any Florida state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that such
party will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (iii) agrees that such party will
not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the state
of
34
Florida or a Florida state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
Section 8.9. Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.10. Non-Survival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time or, in the
case of the Company, shall survive the acceptance for payment of, and payment
for, Shares by Buyer pursuant to the Offer. This Section 8.10 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time of the Merger.
Section 8.11. Certain Definitions. For purposes of this Agreement,
the terms "Associate" and "Affiliate" shall have the same meaning as set forth
in Rule l2b-2 promulgated under the Exchange Act, and the term "person" shall
mean any individual, corporation, partnership (general or limited), limited
liability company, limited liability partnership, trust, joint venture,
joint-stock company, syndicate, association, entity, unincorporated organization
or government or any political subdivision, agency or instrumentality thereof.
The phrase "made available" in this Agreement shall mean that the information
referred to has been made available, if requested by the party to whom such
information is to be made available.
Section 8.12. 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
telecopy (when confirmed), sent by overnight courier (providing proof of
delivery) or by registered or certified mail (postage prepaid, return receipt
requested) 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 8.12:
If to Buyer: Carrols Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Chairman and Chief Executive
Officer
with a copy to: Rosenman & Colin LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
35
If to the Company: Pollo Tropical, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇ Traurig ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
* * * *
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
36
IN WITNESS WHEREOF, Buyer and the Company have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
CARROLS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President and General Counsel
POLLO TROPICAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
37
ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Buyer
shall not be required to accept for payment or, subject to applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Buyer's obligation to pay for or return tendered Shares after the termination
or withdrawal of the Offer), to pay for any Shares tendered pursuant to the
Offer unless (i) there shall have been validly tendered and not withdrawn prior
to the expiration of the Offer such number of Shares that would constitute a
majority of the outstanding Shares (determined on a fully diluted basis for all
outstanding stock options and any other rights to acquire Shares) (the "Minimum
Condition") and (ii) any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall have expired or been terminated.
Furthermore, notwithstanding any other term of the Offer or this Agreement,
Buyer shall not be required to accept for payment or, subject as aforesaid, to
pay for any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement and
before the acceptance of such Shares for payment or the payment therefor, any of
the following conditions exists (other than as a result of any action or
inaction of Buyer or any of its subsidiaries that constitutes a breach of this
Agreement):
(a) there shall have been instituted, pending or threatened
any action or proceeding by any person or Government Entity (which, in the case
of any action or proceeding brought by a person other than a Governmental
Entity, shall have a reasonable likelihood of success) which (i) seeks to
challenge the acquisition by Buyer (or any of its affiliates) of shares of
Company Common Stock pursuant to the Offer, restrain or prohibit the making or
consummation of the Offer or the Merger, or obtain damages in connection
therewith in an amount which would have a Material Adverse Effect; (ii) seeks to
make the purchase of or payment for some or all of the shares of Company Common
Stock pursuant to the Offer or the Merger illegal; (iii) seeks to impose
limitations on the ability of Buyer (or any of its affiliates) effectively to
acquire or hold, or to require Buyer or the Company or any of their respective
affiliates or subsidiaries to dispose of or hold separate, any material portion
of the assets or the business of Buyer and its affiliates or any material
portion of the assets or the business of the Company and its subsidiaries taken
as a whole, as a result of the Offer or the Merger; or (iv) seeks to impose
material limitations on the ability of Buyer (or its affiliates) to acquire or
hold or exercise full rights of ownership of the shares of Company Common Stock
purchased by it, including, without limitation, the right to vote the shares
purchased by it on all matters properly presented to the shareholders of the
Company;
(b) there shall have been promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger, any statute, rule,
regulation, judgment, decree, order or injunction, other than the application to
the Offer or the Merger of applicable waiting periods under the HSR Act, that
would reasonably be expected to directly or indirectly result in any of the
consequences referred to in clauses (i) through (iv) of subsection (a) above;
1
(c) (A) the representations and warranties of the Company in
Section 3.2 of this Agreement shall not have been true and correct in all
material respects when made, or shall thereafter have ceased to be true and
correct in all material respects as if made as of such later date (other than
representations and warranties made as of a specified date) or (B) the other
representations and warranties made by the Company in this Agreement shall not
have been true and correct in all material respects when made, or shall
thereafter have ceased to be true and correct in all material respects as if
made as of such later date (other than representations and warranties made as
of a specified date), except, solely in the case of representations and
warranties that are not qualified by Material Adverse Effect, where such
failure to be true and correct would not, in the aggregate, have a Material
Adverse Effect on the Company;
(d) the Company shall not have performed and complied in all
material respects with all obligations, agreements and covenants required to be
performed or complied with by it under this Agreement;
(e) (i) the Board of Directors of the Company shall have
failed to approve and recommend or shall have withdrawn or modified in a manner
adverse to Buyer its approval or recommendation of the Offer, the Merger or
this Agreement, or approved or recommended any Acquisition Proposal, (ii) the
Company shall have entered into any agreement with respect to any Superior
Proposal in accordance with Section 5.5(b) of this Agreement, (iii) the Board
of Directors of the Company thereof shall have resolved to take any of the
foregoing actions or (iv) each of the Company and the Board of Directors shall
not have taken all action required to be taken by it in order to exempt this
Agreement and the transactions contemplated hereby from the requirements of
Sections 607.0901 and 607.0902 of the FBCA;
(f) the Company shall commence a case under any chapter of
Title XI of the United States Code or any similar law or regulation; or a
petition under any chapter of Title XI of the United States Code or any similar
law or regulation is filed against the Company which is not dismissed within
five business days;
(g) the Agreement shall have been terminated in accordance
with its terms;
(h) any change, event or effect shall have occurred or been
threatened that, when taken together with all other adverse changes, events or
effects that have occurred or been threatened, has or is reasonably likely to
have a Material Adverse Effect;
(i) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for securities on any national securities
exchange or in the over-the-counter market, (ii) the declaration of any banking
moratorium or any suspension of payments in respect of banks or any material
limitation (whether or not mandatory) on the extension of credit by lending
institutions in the United States, or (iii) the commencement of a war or
material armed hostilities involving the United States and having a material
adverse effect on the functioning of the financial markets in the United States;
or
(j) the Company shall not have obtained any required consent
of the landlords listed in Section 3.4 of the Company Disclosure Schedule.
2
The foregoing conditions are for the sole benefit of Buyer and may,
except as otherwise provided in this Agreement, be asserted by Buyer regardless
of the circumstances giving rise to any such condition and may be waived by
Buyer, in whole or in part, at any time and from time to time, in the sole
discretion of Buyer. The failure by Buyer at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any right, the waiver of such
right with respect to any particular facts or circumstances shall not be deemed
an ongoing right which may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered Shares not theretofore accepted for payment shall forthwith be
returned by the Paying Agent to the tendering shareholders.
3