<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO
SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
POLLO TROPICAL, INC.
(NAME OF SUBJECT COMPANY)
CARROLS CORPORATION
(BIDDER)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(AND ASSIGNEE INTERESTS THEREIN)
(TITLE OF CLASS OF SECURITIES)
731513 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
ALAN VITULI
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CARROLS CORPORATION
968 JAMES STREET
SYRACUSE, NEW YORK 13203
(315) 424-0513
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
Copy To:
HOWARD S. JACOBS, ESQ.
WAYNE A. WALD, ESQ.
ROSENMAN & COLIN LLP
575 MADISON AVENUE
NEW YORK, NEW YORK 10022-2585
(212) 940-8800
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE
---------------------- --------------------
$99,199,683 $19,839.94
* For purposes of calculating the filing fee only. This amount assumes the
purchase of (i) 8,223,818 outstanding shares of common stock, par value $.01
per share (the 'Common Stock'), of the subject company and (ii) 794,335 shares
of Common Stock issuable upon exercise of outstanding stock options, for
$11.00 per share of Common Stock, net to the seller in cash. The amount of
filing fee calculated in accordance with Rule 0-11 under the Securities
Exchange Act of 1934, as amended, equals 1/50 of one percentum of the value of
shares to be purchased.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid: Not applicable Filing party: Not applicable
Form of Registration No.: Not applicable Date Filed: Not applicable
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CUSIP No. 731513 10 7 SCHEDULE 14D-1 Page 2 of 8 Pages
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1. NAMES OF REPORTING PERSON:
Carrols Corporation
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
16-0958146
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS*:
BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) or 2(f)
/ /
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
0
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES*:
/ /
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
0%
10. TYPE OF REPORTING PERSON*:
CO
</TABLE>
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 731513 10 7 SCHEDULE 14D-1 Page 3 of 8 Pages
<TABLE>
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1. NAMES OF REPORTING PERSON:
Carrols Holdings Corporation
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
16-1287774
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS*:
BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) or 2(f)
/ /
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
0
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES*:
/ /
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
0%
10. TYPE OF REPORTING PERSON*:
CO
</TABLE>
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this 'Statement') relates to
the offer by Carrols Corporation, a Delaware corporation (the 'Purchaser'), to
purchase all of the outstanding shares (the 'Shares') of common stock, par value
$.01 per share (the 'Common Stock') of Pollo Tropical, Inc., a Florida
corporation (the 'Company'), at $11.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated June 10, 1998 (the 'Offer to Purchase'), a copy of which is attached
hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a copy of
which is attached hereto as Exhibit (a)(2) (which, together with any amendments
or supplements thereto, collectively constitute the 'Offer').
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Pollo Tropical, Inc., a Florida
corporation, and the address of its principal executive offices is 7300 N.
Kendall Drive, 8th Floor, Miami, Florida 33156.
(b) The class of securities to which this Statement relates is the Common
Stock. As of March 29, 1998, there were 8,223,818 Shares of Common Stock issued
and outstanding. The Purchaser is seeking to purchase all of the outstanding
Shares at a purchase price of $11.00 per Share, net to the seller in cash.
(c) The information set forth in 'Section 6--Price Range of the Shares;
Dividends on the Shares' of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is being filed by the Purchaser. The
information set forth in the 'INTRODUCTION' and 'Section 9--Certain Information
Concerning the Purchaser' of the Offer to Purchase is incorporated herein by
reference. The name, business address, present principal occupation or
employment, the material occupations, positions, offices or employment for the
past five years and citizenship of each director and executive officer of the
Purchaser and of Carrols Holdings Corporation, a Delaware corporation and the
sole stockholder of the Purchaser, and the name, principal business and address
of any corporation or other organization in which such occupations, positions,
offices and employment are or were carried on are set forth in Schedule I to the
Offer to Purchase and incorporated herein by reference.
(e)-(f) During the last five years neither the Purchaser nor, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I to the Offer
to Purchase have been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
any such person was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)(1) Other than the transactions described in Item 3(b) below, neither
the Purchaser, nor, to the best knowledge of the Purchaser, any of the persons
listed in Schedule I to the Offer to Purchase, has entered into any transaction
with the Company, or any of the Company's affiliates which are corporations,
since the commencement of the Company's third full fiscal year preceding the
date of this Statement, the aggregate amount of which was equal to or greater
than one percent of the consolidated revenues of the Company for (i) the fiscal
year in which such transaction occurred or (ii) the portion of the current
fiscal year which has occurred if the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, neither
the Purchaser nor, to the best knowledge of the Purchaser, any of the persons
listed in Schedule I to the Offer to Purchase, has entered into any transaction
since the commencement of the Company's third full fiscal year preceding the
date of this Statement, with the executive officers, directors or affiliates of
the Company which are not corporations, in which the aggregate amount involved
in such transaction or in a series of similar transactions, including all
periodic installments in the case of any lease or other agreement providing for
periodic payments or installments, exceeded $40,000.
4
<PAGE>
(b) The information set forth in the 'INTRODUCTION', 'Section 9--Certain
Information Concerning the Purchaser', 'Section 11--Background of the Offer;
Purpose of the Offer and the Merger; The Merger Agreement and Certain Other
Agreements' and 'Section 12--Plans for the Company; Other Matters' of the Offer
to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in 'Section 10--Source and Amount of
Funds' of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in the 'INTRODUCTION', 'Section
11--Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements' and 'Section 12-- Plans for the Company;
Other Matters' of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in 'Section 7--Effect of the Offer on the
Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations' of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth in 'Section 9--Certain Information
Concerning the Purchaser' and 'Section 11--Background of the Offer; Purpose of
the Offer and the Merger; The Merger Agreement and Certain Other Agreements' of
the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth in the 'INTRODUCTION', 'Section 10--Source and
Amount of Funds', 'Section 11--Background of the Offer; Purpose of the Offer and
the Merger; The Merger Agreement and Certain Other Agreements', 'Section
12--Plans for the Company; Other Matters' and 'Section 16--Fees and Expenses' of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in 'Section 11--Background of the Offer; Purpose
of the Offer and the Merger; The Merger Agreement and Certain Other Agreements'
and 'Section 16--Fees and Expenses' of the Offer to Purchase is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Not applicable. The bidder's financial condition is not material to a
decision by a security holder of the subject company whether to sell, tender or
hold securities being sought in the tender offer.
ITEM 10. ADDITIONAL INFORMATION
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between the Purchaser, or to the best knowledge of the Purchaser, any of the
persons listed in Schedule I to the Offer to Purchase, and the Company, or any
of the Company's executive officers, directors, controlling persons or
subsidiaries.
(b)-(c) The information set forth in the 'INTRODUCTION', 'Section 12--Plans
for the Company; Other Matters', 'Section 14--Conditions of the Offer' and
'Section 15--Certain Legal Matters' of the Offer to Purchase is incorporated
herein by reference.
5
<PAGE>
(d) The information set forth in 'Section 7--Effect of the Offer on the
Market for Shares; Stock Listing; Exchange Act Registration; Margin Regulations'
and 'Section 15--Certain Legal Matters' of the Offer to Purchase is incorporated
herein by reference.
(e) The information set forth in 'Section 15--Certain Legal Matters' of the
Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated herein by reference, is
hereby incorporated herein by this reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
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(a)(1) Offer to Purchase, dated June 10, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Letter for use by Brokers, Dealers, Banks, Trust Companies and Nominees to their Clients.
(a)(4) Cover letter, dated June 10, 1998, from the Purchaser to holders of common stock, par value $.01 per
share, of the Company.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(7) Press Release jointly issued by the Purchaser and the Company, dated June 4, 1998.
(a)(8) Press Release jointly issued by the Purchaser and the Company, dated June 10, 1998.
(a)(9) Form of Summary Advertisement, dated June 10, 1998.
(b) Commitment Letter, dated June 1, 1998, from Chase Bank of Texas, National Association and Chase
Securities Inc. to the Purchaser.
(c)(1) Agreement and Plan of Merger, dated as of June 3, 1998, by and among the Purchaser and the Company.
(c)(2) Tender Agreement.
(c)(3) Non-Competition Agreement.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: June 10, 1998
CARROLS CORPORATION
By: /s/ Joseph A. Zirkman
--------------------------------
Name: Joseph A. Zirkman
Title: Vice President and General Counsel
CARROLS HOLDINGS CORPORATION
By: /s/ Joseph A. Zirkman
---------------------------------
Name: Joseph A. Zirkman
Title: Vice President and General Counsel
7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT PAGE
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<S> <C> <C> <C>
(a)(1) -- Offer to Purchase, dated June 10, 1998.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Letter for use by Brokers, Dealers, Banks, Trust Companies and Nominees to their Clients.
(a)(4) -- Cover letter, dated June 10, 1998, from the Purchaser to holders of common stock, par value
$.01 per share, of the Company.
(a)(5) -- Notice of Guaranteed Delivery.
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(7) -- Press Release jointly issued by the Purchaser and the Company, dated June 4, 1998.
(a)(8) -- Press Release jointly issued by the Purchaser and the Company, dated June 10, 1998.
(a)(9) -- Form of Summary Advertisement, dated June 10, 1998.
(b) -- Commitment Letter, dated June 1, 1998, from Chase Bank of Texas, National Association and
Chase Securities Inc. to the Purchaser.
(c)(1) -- Agreement and Plan of Merger, dated as of June 3, 1998, by and among the Purchaser and the
Company.
(c)(2) -- Tender Agreement.
(c)(3) -- Non-Competition Agreement.
(d) -- None.
(e) -- Not applicable.
(f) -- None.
</TABLE>
8
<PAGE>
EXHIBIT (A)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
POLLO TROPICAL, INC.
BY
CARROLS CORPORATION
AT
$11.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 8, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF JUNE 3, 1998, BETWEEN CARROLS CORPORATION AND POLLO TROPICAL, INC. THE
BOARD OF DIRECTORS OF POLLO TROPICAL, INC. HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK AND
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE A MAJORITY OF THE SHARES OF COMMON STOCK
OUTSTANDING ON A FULLY DILUTED BASIS (THE 'MINIMUM CONDITION'), (II) THE WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER HAVING EXPIRED OR BEEN TERMINATED AND
(III) THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14.
IMPORTANT
Any shareholder who desires to tender all or any portion of such
shareholder's Shares (as defined herein) should either (i) complete and sign the
Letter of Transmittal (or facsimile thereof) in accordance with the instructions
in the Letter of Transmittal, mail or deliver it and any other required
documents to the Depositary and either deliver the certificates for such Shares
to the Depositary or tender such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3, or (ii) request such shareholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. Any shareholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance may be directed to the Information
Agent at the location and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
the Information Agent, or the Depositary, or to brokers, dealers, commercial
banks or trust companies. A shareholder also may contact brokers, dealers,
commercial banks or trust companies for assistance concerning the Offer.
------------------------------
The Information Agent for the Offer is:
D.F. KING & CO., INC.
June 10, 1998
<PAGE>
TABLE OF CONTENTS
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PAGE
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1. Terms of the Offer................................................................................... 3
2. Acceptance for Payment and Payment................................................................... 4
3. Procedure for Tendering Shares....................................................................... 5
4. Withdrawal Rights.................................................................................... 8
5. Certain Federal Income Tax Consequences.............................................................. 8
6. Price Range of the Shares; Dividends on the Shares................................................... 9
7. Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations.......................................................................................... 9
8. Certain Information Concerning the Company........................................................... 10
9. Certain Information Concerning the Purchaser......................................................... 12
10. Source and Amount of Funds........................................................................... 13
11. Background of the Offer; Purpose of the Offer and the Merger; The Merger Agreement and Certain Other
Agreements........................................................................................... 14
12. Plans for the Company; Other Matters................................................................. 28
13. Dividends and Distributions.......................................................................... 30
14. Conditions of the Offer.............................................................................. 31
15. Certain Legal Matters................................................................................ 32
16. Fees and Expenses.................................................................................... 34
17. Miscellaneous........................................................................................ 34
</TABLE>
<TABLE>
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SCHEDULE I -- The Directors and Executive Officers of Carrols Corporation and Carrols Holdings
Corporation
</TABLE>
<PAGE>
To the Holders of Common Stock
of Pollo Tropical, Inc.:
INTRODUCTION
CARROLS CORPORATION, a Delaware corporation (the 'Purchaser') and
wholly-owned subsidiary of Carrols Holdings Corporation, a Delaware corporation,
hereby offers to purchase any and all issued and outstanding shares of common
stock ('Common Stock'), par value $.01 per share (the 'Shares'), of Pollo
Tropical, Inc., a Florida corporation (the 'Company'), at a price of $11.00 per
Share (the 'Offer Price'), net to the seller in cash, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the 'Offer'). Tendering shareholders will not
be obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, transfer taxes on the sale of Shares
pursuant to the Offer. The Purchaser will pay all fees and expenses incurred by
D.F. King & Co., Inc., which is acting as the Information Agent (the
'Information Agent') in connection with the Offer, and American Stock Transfer &
Trust Company, which is acting as the Depositary (the 'Depositary') in
connection with the Offer.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE A MAJORITY OF THE SHARES OF COMMON STOCK
OUTSTANDING ON A FULLY DILUTED BASIS (THE 'MINIMUM CONDITION'). SEE SECTION 14.
As used in this Offer to Purchase, 'fully diluted basis' takes into account the
conversion or exercise of all outstanding options and other rights and
securities exercisable or convertible into shares of Common Stock. The Company
has informed the Purchaser that, as of March 29, 1998, there were (i) 8,223,818
shares of Common Stock issued and outstanding and (ii) outstanding options and
other rights to purchase an aggregate of 791,566 shares of Common Stock. The
Merger Agreement (as defined below) provides, among other things, that the
Company will not, without the prior written consent of the Purchaser, issue any
additional Shares (except on the exercise of outstanding options and other
rights and securities). Based on the foregoing and giving effect to the exercise
of all outstanding options and other rights outstanding as of June 3, 1998, the
Purchaser believes that the Minimum Condition will be satisfied if 4,509,078
shares of Common Stock are validly tendered and not withdrawn prior to the
expiration of the Offer.
As a condition and inducement to the Purchaser's entering into the Merger
Agreement and incurring the liabilities therein, concurrently with the execution
and delivery of the Merger Agreement, Larry J. Harris, Chairman of the Board and
Chief Executive Officer of the Company, and certain of his affiliates, who
together maintain voting power and dispositive power with respect to 1,448,074
Shares (excluding shares of Common Stock issuable upon exercise of outstanding
stock options held by Larry J. Harris), have entered into a Tender Agreement (as
defined in Section 11) with the Purchaser. Pursuant to the Tender Agreement, Mr.
Harris and such affiliates have agreed, among other things, to tender such
Shares in the Offer, to grant the Purchaser an irrevocable proxy with respect to
the voting of such Shares in favor of the Merger and to grant the Purchaser an
option to purchase all of such Shares upon the terms and subject to the
conditions set forth therein. See Section 11--TENDER AGREEMENT.
In addition, Mr. Harris has entered into a Non-Competition and
Confidentiality Agreement, dated as of June 3, 1998, with the Company (the
'Confidentiality Agreement'). Pursuant to the Confidentiality Agreement, Mr.
Harris and the Company have agreed that, among other things, except as otherwise
provided in the Confidentiality Agreement, (a) Mr. Harris will not engage in or
Participate In (as defined in the Confidentiality Agreement) during the
five-year period following the Commencement Date (as defined in Section 11) any
business which engages in the business of owning, operating or franchising
quick-service chicken-themed restaurants within the State of Florida and the
Commonwealth of Puerto Rico and Central America and South America and (b) (i)
the Purchaser will pay, in cash within five business days after the date that
the Purchaser pays for and acquires Shares pursuant to the Offer, to Harris the
sum of $350,000, less any amounts paid, with the written consent of Harris, by
the Company to third parties designated by Harris, and (ii) Harris will be
entitled to receive (x) in full his current salary and benefits until the
consummation of the Merger and (y) his accrued bonus of $90,000 pursuant to the
Company's Executive Bonus Plan in full satisfaction of any and all obligations
of the Company to pay Harris a bonus for the 1998 fiscal year, such bonus to be
payable within five business days after the date that the Purchaser pays for and
acquires any shares of the Common Stock pursuant to the Offer. See Section
11--NON-COMPETITION AND CONFIDENTIALITY AGREEMENT.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 3, 1998, (the 'Merger Agreement'), between the Purchaser and the
Company, pursuant to which, as soon as practicable (and in any event within five
business days) after the completion of the Offer and satisfaction or waiver, if
<PAGE>
permissible, of all conditions to the Merger (as defined below), the Company
will be merged with and into the Purchaser and the separate corporate existence
of the Company will thereupon cease. The merger, as effected pursuant to the
immediately preceding sentence, is referred to herein as the 'Merger,' and the
Purchaser as the surviving corporation of the Merger is sometimes herein
referred to as the 'Surviving Corporation.' At the effective time of the Merger
(the 'Effective Time'), each share of Common Stock then outstanding (other than
Shares owned by the Purchaser or any subsidiary of the Purchaser and Shares held
by shareholders who properly perfect their dissenters' rights under Florida law)
will be cancelled and converted into the right to receive the Offer Price or any
higher price per share of Common Stock paid in the Offer (the 'Merger
Consideration'), in cash payable to the holder thereof without interest. The
Merger Agreement is more fully described in Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK, AND
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
NationsBanc Montgomery Securities LLC ('NMS'), who was retained by a
Special Committee of the Board of Directors of the Company (comprised of
independent directors) as its financial advisor and to render a written opinion
to such Special Committee (for such Special Committee's use in connection with
the consideration of the proposed transaction and its recommendation to the
Company's Board of Directors relating thereto) as to the fairness from a
financial point of view of the consideration to be paid to the holders of Common
Stock pursuant to the Offer and under the terms of the Merger Agreement, has
delivered such written opinion to such Special Committee. Such opinion (the
'Fairness Opinion') is set forth in full as an exhibit and an annex to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the 'Schedule
14D-9') that is being mailed to shareholders of the Company.
The Merger Agreement provides that the initial scheduled expiration date of
the Offer shall be 20 business days after the date the Offer is commenced, but
that if all conditions to the Offer shall not have been satisfied or waived by
such date, the Purchaser may, subject to the terms of the Merger Agreement, from
time to time, in its sole discretion, extend the expiration date. In addition,
the Merger Agreement provides that the Purchaser shall, on the terms and subject
to the prior satisfaction or waiver of the conditions of the Offer, accept for
payment and purchase, as soon as permitted under the terms of the Offer, all
Shares validly tendered and not withdrawn prior to the expiration of the Offer;
provided, however, that if, immediately prior to the initial expiration date of
the Offer (as it may be extended), the Shares tendered and not withdrawn
pursuant to the Offer equal less than 80% of the outstanding shares of Common
Stock, the Purchaser may extend the Offer for a period not to exceed ten
business days, notwithstanding that all Offer Conditions (as defined in Section
1) are satisfied or waived as of such expiration date of the Offer. The Offer
will not remain open following the time Shares are accepted for payment.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of shareholders of the Company of
the Merger Agreement, if required by applicable law in order to consummate the
Merger. See Section 11. Under the Florida Business Corporation Act (the 'FBCA'),
except as otherwise provided below, the affirmative vote of a majority of the
outstanding shares of Common Stock is required to approve the Merger Agreement
and the Merger.
Under Section 607.1104 of the FBCA, if a corporation owns at least 80% of
the outstanding shares of each class of another corporation, the corporation
holding such stock may merge such other corporation into itself without any
action or vote on the part of the board of directors or the stockholders of such
other corporation (a 'short-form merger'). In the event that the Purchaser
acquires at least 80% of the outstanding shares of Common Stock pursuant to the
Offer or otherwise, then, at the election of the Purchaser, a short-form merger
could be effected without any approval of the Board of Directors or the
stockholders of the Company, subject to compliance with the provisions of
Section 607.1104 of FBCA. Even if the Purchaser does not own 80% of the
outstanding shares of Common Stock following consummation of the Offer, the
Purchaser could seek to purchase additional shares in the open market or
otherwise in order to reach the 80% threshold and employ a short-form merger.
The per share consideration paid for any Shares so acquired may be greater or
less than that paid in the Offer. The Purchaser presently intends to effect a
short-form merger if permitted to do so under the FBCA.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
<PAGE>
THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 4 of
this Offer to Purchase. The term 'Expiration Date' shall mean 12:00 Midnight,
New York City time, on Wednesday, July 8, 1998, unless and until the Purchaser,
in accordance with the terms of the Merger Agreement, shall have extended the
period of time for which the Offer is open, in which event the term 'Expiration
Date' shall mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire. The Offer is conditioned upon, among other things,
the satisfaction of the Minimum Condition and the expiration or termination of
all waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the regulations thereunder (the 'HSR Act'). See Section
11 and Section 14. If such conditions are not satisfied prior to the Expiration
Date, the Purchaser reserves the right (but shall not be obligated) to (i)
decline to purchase any of the Shares tendered and terminate the Offer, subject
to the terms of the Merger Agreement, (ii) waive any of the conditions to the
Offer, to the extent permitted by applicable law and the provisions of the
Merger Agreement, and, subject to complying with applicable rules and
regulations of the Securities and Exchange Commission (the 'Commission'),
purchase all Shares validly tendered or (iii) subject to the terms of the Merger
Agreement, extend the Offer and, subject to the right of shareholders to
withdraw Shares until the Expiration Date, retain the Shares which will have
been tendered during the period or periods for which the Offer is open or
extended.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (ii) to modify the
terms of the Offer by giving oral or written notice of such modification to the
Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer as described in
Section 14. Any extension, amendment or termination will be followed as promptly
as practicable by public announcement thereof, the announcement in the case of
an extension to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date in accordance
with the public announcement requirements of Rule 14d-4(c) under the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'). Without limiting the
obligation of the Purchaser under such Rule or the manner in which the Purchaser
may choose to make any public announcement, the Purchaser currently intends to
make announcements by issuing a press release to Corporate Communications, Inc.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE TO BE PAID BY
THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
The Merger Agreement provides that without the consent of the Company, the
Purchaser shall not waive the Minimum Condition or (i) reduce the number of
Shares subject to the Offer, (ii) reduce the Offer Price, (iii) add to the
conditions set forth in Annex I to the Merger Agreement (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, the Purchaser 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
Commission or the staff thereof applicable to the Offer or (C) if all of the
Offer Conditions are satisfied or waived but the number of shares of Common
Stock tendered is less than 80% of the then outstanding number of shares of
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 ten 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 the
Merger Agreement, the Purchaser shall accept for payment, and pay for, all
3
<PAGE>
Shares validly tendered and not withdrawn pursuant to the Offer that the
Purchaser becomes obligated to accept for payment, and pay for, pursuant to the
Offer as soon as practicable after the expiration of the Offer.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-l(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated that in its view an offer must remain open
for a minimum period of time following a material change in the terms of the
Offer and that waiver of a material condition, such as the Minimum Condition, is
a material change in the terms of the Offer. The release states that an offer
should remain open for a minimum of five business days from the date a material
change is first published, sent or given to security holders and that, if
material changes are made with respect to information not materially less
significant than the offer price and the number of shares being sought, a
minimum of ten business days may be required to allow adequate dissemination and
investor response. The requirement to extend the Offer will not apply to the
extent that the number of business days remaining between the occurrence of the
change and the then scheduled Expiration Date equals or exceeds the minimum
extension period that would be required because of such amendment. As used in
this Offer to Purchase, 'business day' has the meaning set forth in Rule 14d-1
under the Exchange Act.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed by the Purchaser to record holders of Shares and will be
furnished by the Purchaser to brokers, dealers, banks and similar persons whose
names, or the names of whose nominees, appear on the shareholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay, promptly
after the Expiration Date, for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4. All
determinations concerning the satisfaction of such terms and conditions will be
within the Purchaser's discretion, which determinations will be final and
binding. See Sections 1 and 14. The Purchaser expressly reserves the right, in
its sole discretion, to delay acceptance for payment of or payment for Shares in
order to comply in whole or in part with any applicable law, including, without
limitation, the HSR Act. Any such delays will be effected in compliance with
Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to pay
the consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of such
bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a timely Book-Entry Confirmation (as defined below) with respect
thereto), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined below), and (iii)
any other documents required by the Letter of Transmittal. The per share
consideration
4
<PAGE>
paid to any holder of Common Stock pursuant to the Offer will be the highest per
Share consideration paid to any other holder of such shares pursuant to the
Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of, or payment
for, Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (including such rights as are set forth in Sections 1 and 14), but
subject to compliance with Rule 14e-1(c) under the Exchange Act, the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to exercise, and duly exercise, withdrawal rights as described in
Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering shareholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility (as defined below) pursuant to the procedures set forth in Section 3,
such Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Offer.
The Purchaser reserves the right to transfer or assign, in whole or in
part, to any affiliate of the Purchaser, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering shareholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation received by the Depositary), in each case, prior to the
Expiration Date or (ii) the tendering shareholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the 'Book-Entry Transfer Facility') for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedure for such
transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents must, in any case, be transmitted to,
and received by, the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
shareholder must comply with the guaranteed delivery procedures described below.
The confirmation of a book-entry transfer of Shares into the Depositary's
account at the Book-Entry Transfer Facility as described above is referred to
herein as a 'Book-Entry Confirmation.' DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN
5
<PAGE>
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term 'Agent's Message' means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled 'Special
Delivery Instructions' or the box entitled 'Special Payment Instructions' on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agent's Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
'Eligible Institution' and, collectively, 'Eligible Institutions'). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A 'trading day' is any day on which the Nasdaq National Market
('Nasdaq') is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
6
<PAGE>
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above,
the tendering shareholder will irrevocably appoint designees of the Purchaser,
and each of them, as such shareholder's attorneys-in-fact and proxies in the
manner set forth in the Letter of Transmittal, each with full power of
substitution, to the full extent of such shareholder's rights with respect to
the Shares tendered by such shareholder and accepted for payment by the
Purchaser and with respect to any and all other Shares or other securities or
rights issued or issuable in respect of such Shares. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such shareholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
shareholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such shareholder (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares and other securities or rights, including, without limitation, in
respect of any annual, special or adjourned meeting of the Company's
shareholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares and other related securities or rights, including voting
at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser, in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders of any Shares determined by it not to be in proper form or
the acceptance for payment of which, or payment for which, may, in the opinion
of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right, in its sole discretion, subject to the provisions of the Merger
Agreement, to waive any of the conditions of the Offer or any defect or
irregularity in the tender of any Shares of any particular shareholder, whether
or not similar defects or irregularities are waived in the case of other
shareholders. No tender of Shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of the Purchaser, the Depositary, the Information Agent, the Company or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Subject to the terms of the Merger Agreement, the Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Backup Withholding. Under the 'backup withholding' provisions of federal
income tax law, unless a tendering registered holder, or his assignee (in either
case, the 'Payee'), satisfies the conditions described in Instruction 9 of the
Letter of Transmittal or is otherwise exempt, the cash payable as a result of
the Offer may be subject to backup withholding tax at a rate equal to 31% of the
gross proceeds. To prevent backup withholding, each Payee should complete and
sign the Substitute Form W-9 provided in the Letter of Transmittal. See
Instruction 9 of the Letter of Transmittal.
7
<PAGE>
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after August 10, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer as set forth in Section 3, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 3 any
time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the
Purchaser, the Depositary, the Information Agent, or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and also may be a
taxable transaction under state, local or foreign tax laws. In general, a
shareholder who tenders Shares in the Offer or receives cash in exchange for
Shares in the Merger will recognize gain or loss for federal income tax purposes
equal to the difference, if any, between the amount of cash received and the
shareholder's tax basis in the Shares sold. Gain or loss will be determined
separately for each block of Shares (i.e., Shares acquired at the same time and
price) exchanged pursuant to the Offer or the Merger. Such gain or loss
generally will be capital gain or loss if the Shares disposed of were held as
capital assets by the shareholder. In the case of a non-corporate shareholder, a
top U.S. federal tax rate of 20% will apply to any capital gain realized with
respect to Shares held for more than 18 months (i.e., 'long-term' capital gain),
and a top tax rate of 28% will apply to any gain realized with respect to Shares
held for more than one year but not more than 18 months (i.e., 'mid-term'
capital gain).
A holder of Shares who perfects such shareholder's appraisal rights, if
any, under the FBCA probably will recognize gain or loss at the Effective Time
in an amount equal to the difference between the 'amount realized' and such
shareholder's adjusted tax basis of such Shares. For this purpose, although
there is no authority to this effect directly on point, the amount realized
generally should equal the trading value per share of the Shares at the
Effective Time. Capital gain or capital loss (assuming that the Shares were held
as capital assets) should be recognized by such shareholder at the time of
actual receipt of payment, to the extent that such payment exceeds (or is less
than) the amount realized at the Effective Time.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Offer and the Merger without regard to
the particular facts and circumstances of each shareholder of the Company and is
based on the provisions of the Internal Revenue Code of 1986, as amended,
Treasury Department Regulations issued pursuant thereto and published rulings
and court decisions in effect as of the date hereof, all of which are subject to
change, possibly with retroactive effect. Special tax consequences not described
herein may be applicable to certain shareholders subject to special tax
treatment (including, but not limited to, insurance companies, tax-exempt
organizations, financial institutions or broker dealers, foreign shareholders
and shareholders who have acquired their Shares pursuant to the exercise of
employee stock options or otherwise as compensation). ALL SHAREHOLDERS SHOULD
CONSULT THEIR TAX ADVISORS WITH
8
<PAGE>
RESPECT TO SPECIFIC TAX EFFECTS APPLICABLE TO THEM OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY
STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.
The shares of Common Stock are traded on Nasdaq under the symbol 'POYO'.
The following table sets forth, for each of the calendar quarters indicated, the
high and low closing sales price per share of Common Stock on Nasdaq and
quarterly cash dividends based on published financial sources.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------
HIGH LOW CASH DIVIDENDS
---- --- --------------
<S> <C> <C> <C>
1996
- ------------------------------------------------------------------------------------
First Quarter $ 4 3/8 $3 3/8 $ --
Second Quarter 5 3 3/4 --
Third Quarter 4 1/2 2 7/8 --
Fourth Quarter 3 3/8 2 1/8 --
1997
- ------------------------------------------------------------------------------------
First Quarter $ 5 1/4 $2 1/8 $ --
Second Quarter 7 1/4 4 1/2 --
Third Quarter 7 3/8 4 3/4 --
Fourth Quarter 9 1/4 6 1/8
1998
- ------------------------------------------------------------------------------------
First Quarter $ 9 7/16 $7 15/16 $ --
Second Quarter (through June 5, 1998) 10 3/4 9 1/16 --
</TABLE>
On June 3, 1998, the last full trading day prior to the public announcement
of the execution of the Merger Agreement, the last reported sales price of the
Shares on Nasdaq was $10.00 per share of Common Stock. On June 9, 1998, the last
full trading day prior to the commencement of the Offer, the last reported sales
price of the Shares on Nasdaq was $10.75 per share of Common Stock. Shareholders
are urged to obtain a current market quotation for the Shares.
The Company, in filings with the Commission, has indicated that it
presently has no plans to pay any dividends on its capital stock. In addition,
under the terms of the Merger Agreement, the Company is not permitted to declare
or pay dividends on the Common Stock.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares by the Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly
and will reduce the number of holders of Shares, which could adversely affect
the liquidity and market value of the remaining Shares held by the public.
Stock Listing. The Common Stock is listed on Nasdaq. Depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer meet
the requirements of the National Association of Securities Dealers, Inc. (the
'NASD') for continued inclusion on Nasdaq. The NASD requires that an issuer
satisfy either of the following maintenance standards for continued inclusion on
Nasdaq: (a) have at least 750,000 publicly held shares, held by at least 400
round lot shareholders, with a market value of at least $5 million, a minimum
bid price of $1 per share and have net tangible assets of at least $4 million or
(b) have at least 1,100,000 publicly held shares, held by at least 400 round lot
shareholders, with a market value of $15 million, a minimum bid price of $5 per
share, have at least four registered and active market makers and have either
(i) a market capitalization of $50 million or (ii) total assets and total
revenue of $50 million each for the most recently completed fiscal year or two
of the last three most recently completed fiscal years. If Nasdaq were to cease
to publish quotations for the Shares, it is possible that the Shares would
continue to trade in the over-the-counter market and that price or other
quotations would be reported by other sources. The extent of the public market
for such Shares and the availability of such quotations would depend, however,
upon such factors as the number of shareholders and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act as described below, and other factors.
The Purchaser cannot predict whether the reduction in the number of Shares
9
<PAGE>
that might otherwise trade publicly would have an adverse or beneficial effect
on the market price for, or marketability of, the Shares or whether it would
cause future market prices to be greater or lesser than the Offer Price. The
Company has represented that, as of March 29, 1998, 8,223,818 Shares were issued
and outstanding.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act,
assuming there are no other securities of the Company subject to registration,
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement
pursuant to Section 14(a) in connection with shareholders' meetings and the
related requirement of furnishing an annual report to shareholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to 'going
private' transactions, no longer applicable to the Company. Furthermore, the
ability of 'affiliates' of the Company and persons holding 'restricted
securities' of the Company to dispose of such securities pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act of 1933, as amended (the
'Securities Act'), may be impaired or eliminated. If registration of the Common
Stock under the Exchange Act were terminated, such Shares would no longer be
'margin securities' or be eligible for continued listing on any stock exchange.
The Purchaser may seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from Nasdaq and the registration of the Shares under
the Exchange Act will be terminated following the consummation of the Merger.
Margin Regulations. The Shares presently are 'margin securities' under the
regulations of the Board of Governors of the Federal Reserve System (the
'Federal Reserve Board'), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would no
longer constitute 'margin securities' for the purposes of the margin regulations
of the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be 'margin securities.'
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption 'Selected Financial
Information,' has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the Commission and
other public sources. The Purchaser does not assume responsibility for the
accuracy or completeness of the information concerning the Company contained in
such documents and records or for any failure by the Company to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to the Purchaser.
The Company owns, operates and franchises quick-service restaurants
featuring grilled fresh chicken, marinated in a proprietary blend of tropical
fruit juices and spices, and authentic 'made from scratch' side dishes. The
menu's emphasis on freshness and quality, and its focus on chicken served hot
off the grill, provide a healthy and flavorful alternative to ordinary
quick-service restaurant chains. The Company's restaurants combine high quality,
distinctive taste and an inviting tropical setting with the convenience and
value pricing of quick-service restaurants. The Company opened its first
company-owned restaurant in 1988 in Miami, Florida, and its first international
franchised restaurant in 1995 in Puerto Rico. As of December 28, 1997, the
Company owned and operated 36 restaurants, all of which are located in Florida,
and franchised 19 restaurants, 11 of which are located in Puerto Rico, three in
the Dominican Republic, three in Ecuador, one in the Netherlands Antilles and
one in Miami, Florida. The Company is a Florida corporation with its principal
executive offices at 7300 Kendall Drive, 8th Floor, Miami, Florida 33156. The
telephone number of the Company at such offices is (305) 670-7696.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the Company's Annual Report on Form 10-K for the fiscal
10
<PAGE>
year ended December 28, 1997 and its Quarterly Report on Form 10-Q for the three
months ended March 29, 1998, both filed with the Commission pursuant to the
Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth below.
POLLO TROPICAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED
------------------- ------------------------------
MAR. 29, MAR. 30, DEC. 28, DEC. 29, DEC. 31,
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Operations:
Revenues..................................................... $ 17,609 $ 15,802 $ 65,930 $ 64,234 $ 56,044
Income (loss) before income taxes and extraordinary charge... 2,749 1,613 8,455 (3,194) (1,898)
Income (loss) before extraordinary charge.................... 1,705 1,000 5,243 (1,980) 1,178
Net income (loss)............................................ 1,705 1,000 5,243 (1,980) 1,115
Net Income (Loss) Per Share:
Basic........................................................ $ 0.21 $ 0.12 $ 0.64 $ (0.24) $ 0.14
Diluted...................................................... 0.20 0.12 0.63 (0.24) 0.14
Consolidated Balance Sheet Data:
Total assets................................................. $ 41,182 $ 46,390 $ 40,354 $ 48,501 $ 46,825
Total liabilities............................................ 9,655 21,221 10,623 24,359 20,866
Shareholders' equity......................................... 31,527 25,169 29,731 24,142 25,959
</TABLE>
Approximately 17.6% (16.1% on a fully diluted basis) of the Shares are held
by Larry J. Harris, Chairman and Chief Executive Officer of the Company, and
Molly W. Harris, as joint tenants, and the Harris Children's Trust
(collectively, the 'Shareholders'), who have agreed, among other things, to
tender, or cause to be tendered, all such Shares owned by them pursuant to the
Offer (excluding shares of Common Stock issuable upon exercise of outstanding
stock options held by Larry J. Harris). The Shareholders also have granted to
the Purchaser a proxy to vote the Shares owned by them in favor of the Merger.
See Section 11--TENDER AGREEMENT.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information are available for inspection at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, IL 60661. Copies of such information are
obtainable by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other
information. Such materials are also available for inspection at the offices of
Nasdaq, located at 1735 K Street, NW, Washington, DC 20006.
11
<PAGE>
9. CERTAIN INFORMATION CONCERNING THE PURCHASER.
General. The Purchaser is a Delaware corporation and the largest
franchisee of Burger King restaurants in the United States. As of June 4, 1998,
the Purchaser was operating 340 Burger King restaurants located in 13
Northeastern, Midwestern and Southeastern states. Since the beginning of the
Purchaser's last fiscal year, the Purchaser increased the total number of
restaurants that it operates by approximately 45% growing from 232 restaurants
to 340 restaurants. The principal business office of the Purchaser is located at
968 James Street, Syracuse, New York 13203.
For certain information concerning the executive officers and directors of
the Purchaser, see Schedule I.
Except as set forth in this Offer to Purchase neither the Purchaser, nor,
to the best knowledge of the Purchaser, any of the persons listed on Schedule I,
any associate or majority-owned subsidiary of any of the foregoing, beneficially
owns or has a right to acquire any Shares, and neither the Purchaser nor, to the
best of knowledge of the Purchaser, any of the persons or entities referred to
above, nor any of the respective executive officers, directors or subsidiaries
of any of the foregoing, has effected any transaction in Shares during the past
60 days.
Except as set forth in this Offer to Purchase, neither the Purchaser, nor,
to the best knowledge of the Purchaser, any of the persons listed on Schedule I,
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company, including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any securities of the Company, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against
loss, or the giving or withholding of proxies. Except as set forth in this Offer
to Purchase, none of the Purchaser, or any of their respective affiliates, nor,
to the best knowledge of the Purchaser, any of the persons listed on Schedule I,
has had, since January 1, 1995, any business relationships or transactions with
the Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission. Except as set forth in this
Offer to Purchase, since January 1, 1995, there have been no contacts,
negotiations or transactions between the Purchaser, any of its respective
affiliates or, to the best knowledge of the Purchaser, any of the persons listed
on Schedule I, and the Company or its affiliates concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors or a sale or other transfer of a material amount of
assets.
Franchise Development Agreement. In December, 1994, the Company and the
Purchaser entered into an exclusive franchise development agreement. The Company
received $120,000 in initial franchise fees during the 1994 fiscal year from the
Purchaser. No payments were due or made during the 1995 and 1996 fiscal years.
In April, 1997, the Company recognized $25,000 for forfeitures of exclusivity
fees when the franchise development agreement with the Purchaser was terminated
and $95,000 of the initial franchise fee was returned to the Purchaser.
Certain Relationships and Ownership of Common Stock. Alan Vituli, Chairman
of the Board and Chief Executive Officer of the Purchaser, is a director of the
Company and a member of the Company's Compensation Committee. As of June 9,
1998, Mr. Vituli beneficially owns (i) options presently exercisable into 24,154
shares of Common Stock, (ii) options exercisable into 4,000 shares of Common
Stock, which options become exercisable over two years, commencing May 31, 1998
and (iii) options exercisable into 2,769 shares of Common Stock, granted on May
26, 1998 pursuant to the Company's 1995 Bonus/Fee Plan which options became
exercisable immediately upon the grant thereof. Mr. Vituli's ownership of such
shares and such options amounts to less than one percent (1%) of the issued and
outstanding shares of the Company's Common Stock. Clayton Wilhite, a director of
the Purchaser, is a director of the Company. As of June 9, 1998, Mr. Wilhite
beneficially owns (i) options presently exercisable into 6,000 shares of Common
Stock, (ii) options exercisable into 10,000 shares of Common Stock granted to
Mr. Wilhite pursuant to the Company's 1995 Directors' Stock Option Plan, which
options become exercisable over two years, commencing August 12, 1998 and (iii)
options exercisable into 2,000 shares of Common Stock, which options become
exercisable over two years, commencing May 22, 1999. Mr. Wilhite's ownership of
such shares and such options amounts to less than 1% of the issued and
outstanding shares of the Company's Common Stock. All of such stock options
currently held by Messrs. Vituli and Wilhite were granted to them in connection
with their serving as members of the Board of Directors of the Company.
Carrols Holdings Corporation. 100% of the issued and outstanding capital
stock of the Purchaser is owned beneficially and of record by Carrols Holdings
Corporation ('Holdings'), a Delaware corporation. For
12
<PAGE>
certain information concerning the executive officers and directors of Carrols
Holdings Corporation, see Schedule I.
The following tables set forth the number and percentage of shares of
voting common stock of the Purchaser and of Holdings beneficially owned, as of
June 9, 1998, by (i) all persons known by the Purchaser to be the beneficial
owners of more than 5% of the shares of such voting common stock, (ii) each
Director of the Purchaser who owns shares of such voting common stock, (iii)
certain executive officers of the Purchaser, and (iv) all executive officers and
Directors of the Purchaser as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(A)
---------------------
NUMBER PERCENTAGE
------- ----------
<S> <C> <C>
SHAREHOLDERS OF CARROLS CORPORATION:
Carrols Holdings Corporation............................................................. 10 100%
968 James Street
Syracuse, New York 13203
SHAREHOLDERS OF CARROLS HOLDINGS CORPORATION:
Atlantic Restaurants, Inc................................................................ 566,667 47.8%
Madison Dearborn Capital Partners, L.P................................................... 283,333 23.9%
Madison Dearborn Capital Partners, L.P. II............................................... 283,334 23.9%
EXECUTIVE OFFICERS AND DIRECTORS OF CARROLS CORPORATION:
Alan Vituli(b)........................................................................... 36,633 3.1%
Daniel T. Accordino...................................................................... 15,316 1.3%
Joseph A. Zirkman........................................................................ 385 *
Paul R. Flanders......................................................................... 375 *
Richard H. Liem.......................................................................... 125 *
Directors and executive officers of the Purchaser as a group (12 persons)................ 52,959 4.5%
</TABLE>
- ------------------
* Less than one percent (1%)
(a) As used in this table, 'beneficial ownership' means the sole or shared power
to vote, or to direct the voting of, a security, or the sole or shared
investment power with respect to a security. For purposes of this table, a
person is deemed as of any date to have 'beneficial ownership' of any
security that such person has the right to acquire within 60 days after such
date. The number of shares shown in the table includes stock options which
are currently exercisable or exercisable within 60 days to purchase: 26,806
shares held by Mr. Vituli; 14,456 shares held by Mr. Accordino; 262 shares
held by Mr. Zirkman; 375 shares held by Mr. Flanders; and 125 shares held by
Mr. Liem.
(b) Includes 20,910 vested stock options contributed to and held by the Vituli
Family Trust.
10. SOURCE AND AMOUNT OF FUNDS.
The Purchaser estimates that the total amount of funds required by it to
(i) purchase all of the Shares pursuant to the Offer and finance the Merger
Consideration, and (ii) pay fees and expenses incurred in connection with the
Offer and the Merger will be approximately $97 million. It is anticipated that
all necessary funds will be obtained through borrowings from the proceeds of the
Company's current senior secured credit facility. Should any additional funds be
necessary, the Purchaser believes that it would have such additional funds
available to it from cash generated from its operations.
The Purchaser has entered into an engagement letter (the 'Engagement
Letter') dated June 1, 1998, with Chase Bank of Texas, National Association
('Chase') and Chase Securities Inc. ('CSI'), pursuant to which CSI has agreed to
structure, arrange and syndicate an amendment (the 'Amendment') to the
Purchaser's current loan agreement, dated May 12, 1997, with Chase, as agent and
lender and the other lenders thereunder (the 'Loan Agreement'), which will
provide for borrowings by the Purchaser of up to $150,000,000, including
existing availability under the Loan Agreement. The Amendment will provide for
the borrowing by the Purchaser of advance loans (the 'Advance Loans') in the
amount of up to 75% of the Offer Price and revolving loans (the 'Revolving
Loans') of up to $25,000,000 to fund the Offer and the Merger. Chase has
committed pursuant to the Engagement Letter to fund all the Advance Loans and
all the Revolving Loans. The following is a summary of certain provisions of the
Engagement Letter. The following summary does not purport to be complete and is
13
<PAGE>
qualified in its entirety by reference to the text of the Engagement Letter
which is incorporated herein by reference and a copy of which has been filed
with the Commission as Exhibit (b) to the Schedule 14D-1. The Engagement Letter
may be examined and copies may be obtained at the places and in the manner set
forth in Section 8 of this Offer to Purchase.
The Advance Loans and the Revolving Loans will bear interest at the
Purchaser's option as follows: (i) the greater of the prime rate (or the Federal
Funds Rate, plus .50%) plus a variable margin between 0% and 1%, based upon debt
to EBITDA ratios or (ii) LIBOR plus a variable margin between 1.5% and 2.5%,
based upon debt to EBITDA ratios.
The Advance Loans require quarterly principal repayments at an annual rate
of 6% beginning with the end of the second quarter after the Advance Loans are
made, increasing 2% per year, with a final maturity date of June 30, 2003. The
Revolving Loans have a maturity date of December 31, 2001.
The Revolving Loans will be collateralized by substantially all of the
assets of the Purchaser (other than the Shares) and by a pledge of the
outstanding shares of common stock of the Purchaser.
LOAN AGREEMENT
Agreement
The Amendment and the Loan Agreement will contain certain covenants
including, without limitation, those limiting the ability of the Purchaser and
its subsidiaries to incur indebtedness, incur liens, sell or acquire assets of
businesses, change the nature of its business, make certain investments or pay
dividends. In addition, the Purchaser will be required to satisfy certain
financial ratio tests.
The obligations of CSI and Chase under the Engagement Letter are subject to
certain conditions, including, without limitation, there not occurring any
material adverse change in the business of the Purchaser and there not having
occurred a material disruption of, or material adverse change in, financial,
banking or capital market conditions that could impair the syndication of the
Amendment.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
The following description was prepared by the Purchaser and the Company.
Information about the Company was provided by the Company and the Purchaser does
not take any responsibility for the accuracy or completeness of any information
regarding meetings or discussions in which the Purchaser or its representatives
did not participate.
Alan Vituli, the Chairman and Chief Executive Officer of the Purchaser, has
served on the Board of Directors of the Company since 1993 and Clayton Wilhite,
a director of the Purchaser, has served on the Board of Directors of the Company
since August 1996. In light of Alan Vituli and Clayton Wilhite serving on the
Board of Directors of the Company, they have, from time to time, solely in their
capacity as directors of the Company, been a party to many discussions with the
Company's Board of Directors and senior management during the Company's past
three fiscal years concerning the Company's business.
14
<PAGE>
BACKGROUND OF THE OFFER
On December 9, 1997, the Company engaged NMS as its exclusive financial
advisor for the purpose of assisting the Company's management and Board of
Directors in evaluating and, if requested, in executing strategic alternatives
designed to enhance and/or maximize shareholder value, including but not limited
to 'Acquisitions' of other restaurant businesses and possible 'Reorganizations'
of the Company, including a sale of the Company.
On March 6, 1998, at a special meeting of the Company's Board of Directors,
Larry J. Harris, the Company's co-founder, Chairman and Chief Executive Officer,
submitted a written proposal, on behalf of himself, his wife, Molly W. Harris,
and William Carl Drew, the Company's Chief Financial Officer (together, the
'Harris Group'), to the Board of Directors for the merger of the Company
pursuant to which the public shareholders of the Company would receive $9.50 per
share in cash. The Company's outside directors thereafter considered the
proposal, informed Mr. Harris that they believed that the price offered was
inadequate and rejected such proposal. Mr. Harris formally withdrew such
proposal on March 8, 1998.
On March 13, 1998, Mr. Harris submitted to the Board a revised proposal
pursuant to which the public shareholders of the Company would receive $10.00
per share (the 'Harris Proposal'). In his letter, Mr. Harris noted that his
$10.00 per Share offer represented a premium of approximately 26% over the
closing sale price of the Shares on March 12, 1998 and a premium of
approximately 42% over the closing sale price of the Shares on December 12, 1997
and was higher than the trading price of the Shares in connection with any trade
on Nasdaq in over three years. Mr. Harris' letter was also accompanied by a
letter from Quad-C, Inc. ('Quad-C') confirming its interest in providing a
portion of the common equity necessary to support the Harris Proposal. Following
its receipt of the Harris Proposal, the Board established a special committee
consisting of two outside directors, Ronald L. Miller and Clayton Wilhite, to
evaluate and consider the proposal (the 'Special Committee'). The Board directed
the Special Committee to consider the Harris Proposal and authorized the Special
Committee to engage financial and legal advisors. The Special Committee
thereafter retained the law firm of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A. ('Greenberg Traurig') as its independent legal counsel. Greenberg
Traurig has from time to time provided legal services to the Company, which, in
recent periods, have consisted primarily of reviewing periodic reports, proxy
statements and other documents filed with the Commission. Public disclosure of
the Harris Proposal was made by the Company on March 13, 1998.
On March 23, 1998, the Special Committee held a telephonic meeting to
discuss generally the engagement of a financial advisor and the conduct of due
diligence by representatives of Mr. Harris, Quad-C and other parties interested
in exploring a possible acquisition of the Company. The Special Committee also
discussed the need to confirm the independence of NMS with respect to the Harris
Proposal, and also determined to interview several other nationally recognized
investment banking firms for possible retention to act as financial advisor to
the Special Committee. The Special Committee also discussed a recently filed
shareholder lawsuit and engaged Greenberg Traurig to represent the Company in
connection therewith. See 'Section 15--Legal Proceedings'.
On March 30, 1998, the Special Committee engaged NMS as its exclusive
financial advisor for the purpose of evaluating a possible 'Sale' of the Company
as well as other strategic alternatives, including the Harris Proposal.
The Special Committee, together with NMS and Greenberg Traurig, implemented
a two-step due diligence procedure with respect to potential bidders. Upon
execution of a confidentiality agreement in substantially the same form for all
bidders, the Company provided each potential acquiror with summary financial
information and the form of Agreement and Plan of Merger. More comprehensive due
diligence materials were also made available to potential acquirors at the
offices of Greenberg Traurig. NMS, on behalf of the Special Committee, requested
that all proposals be structured as a tender offer followed by a merger, as
provided for in the form of Agreement and Plan of Merger.
In early April 1998, Alan Vituli, the Chairman and Chief Executive Officer
of the Purchaser and a member of the Company's Board of Directors, informally
indicated to representatives of the Special Committee that the Purchaser was
interested in a possible acquisition of the Company. On April 9, 1998, Mr.
Vituli executed a confidentiality agreement on behalf of the Purchaser, and the
Purchaser commenced its due diligence review. The Special Committee's legal and
financial advisors also discussed with Mr. Miller, the Special Committee's
15
<PAGE>
Chairman, the potential conflict of interest issues raised by the continued
participation on the Special Committee of Mr. Wilhite, a director of both the
Company and the Purchaser.
On April 24, 1998, the Board held a special meeting by telephone conference
to discuss the activities, composition and compensation of the Special
Committee. Following discussion, Mr. Wilhite resigned from the Special Committee
and the Board appointed Mr. Craig Nash to replace Mr. Wilhite as the second
member of the Special Committee. The Board also agreed that Messrs. Miller and
Nash would each receive (i) $25,000 for their first month of services as a
member of the Special Committee, (ii) $7,500 for the second month of services,
and (iii) $5,000 for each month of services thereafter. The Board also approved
the payment to Mr. Wilhite of $25,000 for his service on the Special Committee.
On April 27, 1998, the Purchaser received from Greenberg Traurig a form of
Agreement and Plan of Merger. On May 7, 1998, NMS informed Mr. Vituli in writing
that the Purchaser's bid (including the Purchaser's comments to the form of
Agreement and Plan of Merger) was due on May 15, 1998.
On May 15, 1998, in a letter to NMS, the Purchaser submitted an offer
proposal (the 'Purchaser's Proposal') to acquire all of the Company's
outstanding shares at a cash price of $10.70 per Share pursuant to the tender
offer and merger structure set forth in the form of Agreement and Plan of
Merger. Such offer proposal included the Purchaser's comments to the form of
Agreement and Plan of Merger and a financing commitment from the Purchaser's
current lender to fund the acquisition.
On May 15, 1998, the Special Committee held a telephonic meeting to review
the status of the sale process and NMS reported that the Purchaser submitted the
Purchaser's Proposal.
On May 19, 1998, the Special Committee held a telephonic meeting to discuss
the Harris Proposal and the Purchaser's Proposal. The members of the Special
Committee and the Special Committee's financial and legal advisors also
discussed the proposed Merger Agreement and financing issues raised in
connection with each of the Harris Proposal and the Purchaser's Proposal.
Following such meeting, NMS discussed the Purchaser's Proposal with Mr.
Vituli and inquired if the Purchaser was willing to make an offer higher than
$10.70 per Share. In addition, following such meeting, Greenberg Traurig
commenced discussions with the Purchaser's counsel concerning the Purchaser's
comments to the form of Agreement and Plan of Merger that accompanied its
proposal.
On May 22, 1998, the Special Committee received an amended Harris Proposal
increasing the offer price to $10.75 per Share. The same day, Mr. Vituli advised
representatives of NMS that the Purchaser was willing to increase the price per
Share in the the Purchaser's Proposal. The Special Committee thereafter held a
telephonic meeting during which it discussed the amended Harris Proposal.
Following such meeting, NMS discussed with Mr. Vituli the Purchaser's Proposal
and again inquired if the Purchaser was willing to make an offer higher than the
Harris Proposal's amended $10.75 per Share bid.
On May 26, 1998, the Purchaser delivered a letter to the Special Committee
amending the Purchaser's Proposal by increasing the offer price to $11.00 per
Share. The same day, Mr. Harris advised representatives of NMS that in view of
the Purchaser's $11.00 offer, the Harris Group would not be in a position to
increase its bid.
On May 27, 1998, the Special Committee held a telephone conference to
discuss the revised Purchaser's Proposal and Mr. Harris' response. Following
discussions, the Special Committee unanimously recommended that the full Board
of Directors approve the Purchaser's Proposal and authorize the Company's
representatives to finalize negotiation of a definitive Agreement and Plan of
Merger with the Purchaser.
Immediately following such Special Committee meeting, the Board held a
telephonic meeting in which Mr. Vituli and Mr. Wilhite participated. The Special
Committee recommended that the Board (i) consider approval of the Purchaser's
Proposal, and (ii) instruct Greenberg Traurig to negotiate a final Agreement and
Plan of Merger with the Purchaser, with a view to the Board approving the
Purchaser's Proposal at its meeting on May 29, 1998. NMS thereafter summarized
the results of the Company's market check process and stated that it should be
in a position to deliver its oral opinion regarding the fairness of the
Purchaser's Proposal, from a financial point of view, at the Board meeting on
May 29, 1998. Mr. Harris confirmed that the Harris Group was no longer a bidder.
On May 29, 1998, the Company's Board met to consider the Purchaser's
Proposal. All members other than Mr. Wilhite attended. The Company's legal
advisors described in detail the transactions contemplated by the
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Purchaser's Proposal and the proposed agreements relating thereto. NMS also made
a presentation to the Board with respect to NMS' financial analyses conducted in
connection with the Purchaser's Proposal, and concluded its presentation by
rendering NMS' oral opinion (later confirmed in writing) to the members of such
Special Committee that, subject to certain important qualifications and subject
to certain assumptions made, matters considered, areas of reliance on others and
limitations on the review undertaken (in each case as set forth in the written
opinion), the consideration offered in connection with the Offer and the Merger
was fair from a financial point of view, as of that date. The Board then
discussed the terms and conditions of the Merger Agreement, including the Offer,
the Merger and the other transactions contemplated thereby. Following such
discussions, the Special Committee confirmed its recommendation that the Board
approve the Merger Agreement and the Board (other than Mr. Vituli, who
abstained, and Mr. Wilhite, who did not attend the meeting) approved the Merger
Agreement, the Offer and the Merger and concluded that the Merger is fair to and
in the best interest of the Company's shareholders.
From May 27 through June 3, 1998, representatives of the Purchaser and the
Company negotiated the terms of the Merger Agreement. Following the approval of
the Company's Board of Directors of the Purchaser's Proposal, between May 29,
1998 and June 3, 1998 representatives of the Purchaser and the Shareholders (as
defined in the Tender Agreement) negotiated the Tender Agreement and the
Confidentiality Agreement. During this period, the Purchaser also obtained an
updated commitment letter from its lender for the debt financing required for
the consummation of the Offer and the Merger and the Company obtained certain
lessors' consents under certain restaurant leases.
On June 3, 1998, the Purchaser, the Company and the Shareholders, as
applicable, executed the Merger Agreement, the Tender Agreement and the
Confidentiality Agreement. Public disclosure of the Offer and Merger Agreement
was made on the morning of June 4, 1998, prior to the opening of trading of
Shares on Nasdaq.
On the date of this Offer to Purchase, the Purchaser commenced the Offer.
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer, the Merger and the Merger Agreement is to enable
the Purchaser to acquire the entire equity interest in the Company. The Offer is
being made pursuant to the Merger Agreement and is intended to increase the
likelihood that the Merger will be effected. The purpose of the Merger is to
acquire all outstanding Shares not purchased pursuant to the Offer. The
transaction is structured as a merger in order to ensure the acquisition by the
Purchaser of all the outstanding Shares.
If the Merger is consummated, the Company will be merged with and into the
Purchaser, the Purchaser will be the surviving corporation in the Merger and the
separate corporate existence of the Company will cease. As a result, the
Purchaser will have complete control over the management and future conduct of
the Company's business and any increase in its value. Similarly, the Purchaser
will also bear the risk of any losses incurred in the operation of the Company's
business, and any decrease in the value of the Company's business.
Shareholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and to participate in its earnings
and any future growth. If the Merger is consummated, the shareholders will no
longer have an equity interest in the Company and instead will have only the
right to receive cash consideration pursuant to the Merger Agreement or to
exercise statutory appraisal rights under Florida law. See Section 12.
Similarly, the shareholders of the Company will not bear the risk of any
decrease in the value of the Company after selling their Shares in the Offer or
the subsequent Merger.
The primary benefits of the Offer and the Merger to the shareholders of the
Company are that such shareholders are being afforded an opportunity to sell all
of their Shares for cash at a price which represents (i) a premium of
approximately 10% over $10.00, the closing market price per Share of the Common
Stock on the last full trading day prior to the initial public announcement that
the Company and the Purchaser had executed the Merger Agreement, (ii) a more
substantial premium over recent historical trading prices, and (iii) a premium
of approximately 38.5% over $7.94, the closing market price per Share of the
Common Stock on the last full trading day prior to the initial public
announcement of the Harris Proposal.
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THE MERGER AGREEMENT
As of June 3, 1998, the Purchaser and the Company entered into the Merger
Agreement, pursuant to which the Purchaser agreed to make the Offer. The
following is a summary of certain provisions of the Merger Agreement. The
following summary does not purport to be complete and is qualified in its
entirety by reference to the text of the Merger Agreement which is incorporated
herein by reference and a copy of which has been filed with the Commission as
Exhibit (c)(1) to the Schedule 14D-1. The Merger Agreement may be examined and
copies may be obtained at the places and in the manner set forth in Section 8 of
this Offer to Purchase. Capitalized terms not otherwise defined herein have the
meanings set forth in the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer by
the Purchaser. The obligation of the Purchaser to accept for payment and pay for
Shares tendered is subject to there being tendered, and not withdrawn prior to
the expiration of the Offer, that number of Shares that would constitute a
majority of the Shares then outstanding (determined on a fully diluted basis for
all outstanding stock options and any other rights to acquire shares) (the
'Minimum Condition'), and to the satisfaction of the other conditions described
in Annex I to the Merger Agreement. The Merger Agreement provides that the
Purchaser shall not waive the Minimum Condition or (i) reduce the number of
Shares subject to the Offer, (ii) reduce the Offer Price, (iii) add to the
conditions set forth in Annex I to the Merger Agreement (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, the Purchaser 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
Commission 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 the
Merger Agreement, the Purchaser shall accept for payment, and pay for, all
Shares validly tendered and not withdrawn pursuant to the Offer that the
Purchaser becomes obligated to accept for payment, and pay for, pursuant to the
Offer as soon as practicable after the expiration of the Offer.
Designation of Directors. The Merger Agreement provides that, promptly
upon the acceptance for payment of, and payment by the Purchaser for, Shares
pursuant to the Offer, the Purchaser shall be entitled to designate such number
of directors on the Board of Directors of the Company as will give the
Purchaser, 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 the Purchaser plus
the number of Shares otherwise owned by the Purchaser or any of its subsidiary
bears to (ii) the total number of Shares outstanding, and the Company shall, at
such time, cause the Purchaser's designees to be appointed or elected; provided,
however, that in the event that the Purchaser'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 the
Merger 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 the Merger
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 the Purchaser or any of its subsidiaries, and such persons shall be deemed to
be Independent Directors for purposes of the Merger. Subject to applicable law,
the Company shall take all action requested by the Purchaser necessary to effect
any such appointment or election, including mailing to its shareholders 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 the Purchaser shall have
provided to the Company on a timely basis all information required to be
included in the
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Information Statement with respect to the Purchaser's designees). In connection
with the foregoing, the Company will promptly, at the option of the Purchaser,
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
the Purchaser's designees to be elected or appointed to the Board of Directors
of the Company as provided above. The Purchaser intends that Messrs. Vituli and
Wilhite, who currently serve as directors of both the Purchaser and the Company,
will remain on the Board of Directors of the Company as designees of the
Purchaser after the acceptance for payment of, and payment by the Purchaser for,
Shares pursuant to the Offer.
The Merger. The Merger Agreement provides that, at the Effective Time the
Company will be merged with and into the Purchaser, and the Purchaser will
continue as the Surviving Corporation. The Merger will 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'). The parties expect
to file the Articles of Merger as soon as practicable following the closing of
the Merger, which will take place as promptly as practicable (and in any event
within five business days) after the conditions to the parties' obligation to
effect the Merger have been satisfied or waived.
Each Share issued and outstanding immediately prior to the Effective Time
(other than Shares owned by the Purchaser or any of its subsidiaries, or
Dissenting Shares (as defined in the Merger Agreement)) shall be cancelled and,
subject to the Merger Agreement, 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 3
hereof, of the certificate that formerly evidenced such Share. Each Share issued
and outstanding immediately prior to the Effective Time owned by the Purchaser
or any of its subsidiaries and each Share that is owned by the Company as
treasury stock shall be cancelled and retired and cease to exist and no payment
or distribution shall be made with respect thereto. Each share of Common Stock,
par value $.0l per share, of the Purchaser issued and outstanding immediately
prior to the Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable share of Common Stock, par value $.0l per
share, of the Surviving Corporation and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation.
The Merger Agreement provides that (i) the Purchaser's 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 Delaware General Corporation Law (the 'DGCL') and (ii) the
bylaws of the Purchaser in effect at the Effective Time shall be the bylaws of
the Surviving Corporation until thereafter amended in accordance with the DGCL.
The Merger Agreement also provides that the directors of the Purchaser at the
Effective Time will be the directors of the Surviving Corporation and that the
officers of the Purchaser at the Effective Time will be the officers of the
Surviving Corporation.
The respective obligations of the Purchaser, on the one hand, and the
Company, on the other hand, to effect the Merger are subject to, among other
things, the satisfaction of each of the following conditions: The Merger
Agreement and the Merger shall have been approved and adopted by the requisite
vote of the shareholders of the Company, if and to the extent required by the
FBCA, the Company Articles of Incorporation and the Company Bylaws. See
Conditions to the Merger.
Recommendation. The Company represents in the Merger Agreement that at a
meeting duly called and held on May 29, 1998, the Company's Board of Directors
adopted resolutions approving the Merger 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 the Merger
Agreement. The recommendation of the Board of Directors of the Company may be
withdrawn, modified or amended if 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 the exercise
of the director's fiduciary duties requires such withdrawal, amendment or
modification. The Company has agreed to file a Solicitation/Recommendation
Statement on Schedule 14D-9 containing such recommendations with the Commission
and to mail such Schedule 14D-9 to the shareholders of the Company
contemporaneous with the commencement of the Offer.
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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.
Interim Operations; Covenants. Pursuant to the Merger Agreement, the
Company has covenanted and agreed that: between the date of the Merger Agreement
and the Effective Time, except as set forth in the Company Disclosure Schedule
to the Merger Agreement (the 'Company Disclosure Schedule') or, unless the
Purchaser 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 (as defined in the Merger
Agreement) 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 (v) the Company shall not enter into any new
franchise agreement. Between the date of the Merger 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 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 the Merger 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 (v) willfully take any action that would make
the Company's representations and warranties set forth in Article III of the
Merger Agreement not true and correct in all material respects. Between the date
of the Merger 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
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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 Section 5.1 of the
Merger Agreement.
No Solicitation. In the Merger Agreement, the Company agrees that 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). Until
the termination of the Merger 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 the Merger
Agreement, (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 the Merger 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
similar transaction involving the Company or any of its subsidiaries, other than
the transactions contemplated by the Merger 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 the Purchaser of the
transactions contemplated hereby.
In the Merger Agreement the Company further agrees that, except as set
forth in the Merger Agreement, 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 the Purchaser, the approval or recommendation by
such Board of Directors or such committee of the Offer, the Merger 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 applicable
provisions of the Merger Agreement) withdraw or modify its approval or
recommendation of the Offer, the Merger Agreement and the Merger, approve or
recommend a Superior Proposal (as hereinafter defined), cause the Company to
enter into an agreement with respect to a Superior Proposal or terminate the
Merger Agreement, but in each case only at a time that is after the third
business day following the Purchaser's receipt of written notice (a 'Notice of
Superior Proposal') advising the Purchaser 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
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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 the Purchaser the Termination Fee (as such term is
defined in the Merger Agreement). For purposes of the Merger 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.
In addition to the obligations of the Company set forth in the prior two
paragraphs, the Company shall promptly advise the Purchaser 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.
Nothing contained in the Merger Agreement 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), 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 the Merger
Agreement, withdraw or modify, or propose to withdraw or modify, its position
with respect to the Offer, the Merger Agreement or the Merger or approve or
recommend, or propose to approve or recommend, an Acquisition Proposal.
Pursuant to the Merger Agreement, 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 the
Purchaser 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 the Purchaser with all financial, operating
and other data and information as the Purchaser, through its Representatives,
may reasonably request.
Except as otherwise agreed to by the Company, unless and until the
Purchaser shall have purchased a majority of the outstanding Shares pursuant to
the Offer or otherwise, and notwithstanding termination of the Merger Agreement,
the terms of any confidentiality agreement between the Company and the Purchaser
or any of its affiliates, agents or representatives shall apply to all
information about the Company which is furnished under the Merger Agreement by
the Company to any such person.
Each of the Company and the Purchaser has agreed in the Merger Agreement to
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 the Merger
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 the Merger
Agreement and to fulfill the conditions to the obligations of the Purchaser and
the Company to effect the Merger set forth in the Merger Agreement.
Pursuant to the Merger Agreement, each of the Company and the Purchaser has
agreed to consult with each other before issuing any press release or otherwise
making any public statements with respect to the Merger Agreement, the Offer or
the Merger and not to 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
the Purchaser or the Company is a party.
Company Shareholders Meeting. If required by applicable law in order to
consummate the Merger: (a) the Company shall, at the direction of the Purchaser,
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 for the purpose of voting on the approval and adoption of the Merger
Agreement and the Merger (the 'Company Shareholder Approval'), and the Company
shall, at the direction of the Purchaser, solicit from
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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 the Purchaser, helpful to secure the vote or consent of such holders
required by the FBCA or the Merger Agreement to effect the Merger.
Proxy Statement. If required by applicable law in connection with the
Merger, the Company will, at the direction of the Purchaser, as promptly as
practicable following the consummation of the Offer prepare and file, a proxy or
information statement relating to the 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 has consented
to the inclusion in the Proxy Statement of the recommendation of the Board of
Directors of the Company described in the Merger Agreement, subject to any
modification, amendment or withdrawal thereof, and has represented that NMS has,
subject to the terms of its engagement letter with the Company (the 'Independent
Advisor Engagement Letter'), consented to the inclusion of references to the
Fairness Opinion in the Proxy Statement. Notwithstanding the foregoing, if at
any time the Purchaser shall acquire at least 80% of the outstanding Shares, the
Purchaser 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 to the
obligations of the Purchaser and the Company to effect the Merger set forth in
the Merger Agreement without the Company Shareholders' Meeting in accordance
with Section 607.1104 of the FBCA.
Indemnification. The Merger Agreement provides that all rights to
indemnification by the Company existing on the date of the Merger Agreement 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 the Merger
Agreement, or pursuant to any other agreements in effect on the date thereof,
shall survive the Merger and shall continue in full force and effect in
accordance with their terms for a period of at least six years from the
Effective Time. The Merger Agreement further provides that the Purchaser will
provide, or cause the Surviving Corporation to provide, for a period not less
than six 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 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. The Merger Agreement will survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, 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 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 applicable indemnification obligations set forth in
the Merger Agreement.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
and warranties by the Company as to, among other things, organization and good
standing, capitalization, authority for agreement, non-contravention, required
filings and consents, compliance, reports and financial statements,
information-supplied, absence of certain changes or events, taxes, title to
assets, change of control agreements, litigation, contracts and commitments,
employee benefit plans, labor and employment matters, environmental compliance
and disclosure, affiliated transactions, intellectual property, brokers,
antitakeover statutes, rights plan, Year 2000 compliance, and disclosure. In
addition, the Purchaser represented and warranted as to, among other things,
organization and good standing, authority for agreement, non-contravention,
required filings and consents, information supplied, financial capability,
brokers, interim operations of the Purchaser and disclosure.
Conditions to the Merger. The obligations of each of the Purchaser and the
Company to effect the Merger are subject to the satisfaction or waiver of
certain conditions, including (i) if and to the extent required by the
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FBCA, the DGCL, the Company's Articles of Incorporation, the Purchaser's
Certificate of Incorporation, the Company's Bylaws, and the Purchaser's Bylaws,
the Merger Agreement and the Merger shall have been approved and adopted by the
requisite vote of the shareholders of the Company and the Purchaser; (ii) 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 (as defined in the Merger
Agreement) 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; (iii) 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; and (iv) the
Purchaser shall have previously accepted for payment and paid for all Shares
tendered pursuant to the Offer.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time before the Effective Time, whether before or after
shareholder approval:
(a) by mutual written consent of the Purchaser and the Company;
(b) by either the Purchaser 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 the Purchaser having accepted for payment any
Shares pursuant to the Offer or (y) the Purchaser 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
such right to terminate the Merger Agreement pursuant to this Section
(b)(i) shall not be available to any party whose failure to perform
any of its obligations under the Merger 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 the Merger 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 such
right to terminate the Merger Agreement pursuant to this Section
(b)(ii) shall not be available to any party that has failed to
perform its obligations under Section 5.4 of the Merger Agreement or
the proviso contained in Section 6.1(b) thereof;
(c) by the Purchaser if
(i) (A) the representations and warranties of the Company with
respect to capitalization in the Merger Agreement 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 with
respect to capitalization in the Merger Agreement (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 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;
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provided, however, that the right of the Purchaser to terminate the Merger
Agreement pursuant to this clause shall not be available if the Purchaser
or any affiliate of the Purchaser shall acquire any Shares pursuant to the
Offer;
(d) by the Purchaser if the Purchaser is entitled to terminate the
Offer as a result of the occurrence of any event set forth in paragraph (e)
of Annex I to the Merger Agreement;
(e) by the Company in connection with entering into a definitive
agreement in accordance with the Merger Agreement, provided it has complied
with all provisions thereof, including the notice provisions therein and
the payment of the Termination Fee (as defined in the Merger Agreement),
and provided that the Company shall not have breached in any material
respect certain non-solicitation provisions of the Merger Agreement;
(f) by the Company, if, prior to the consummation of the Offer,
(i) the representations and warranties of the Purchaser 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 the Purchaser; or
(ii) the Purchaser fails to comply in all material respects with
its obligations and covenants contained herein;
(g) by the Company, if the Purchaser 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 constitute a material breach of the Merger
Agreement).
Effect of Termination. In the event of a termination of the Merger
Agreement by either the Company or the Purchaser as provided in the Merger
Agreement, the Merger Agreement shall forthwith become void and there shall be
no liability or obligation on the part of the Purchaser or the Company or their
respective officers, directors, shareholders or affiliates, except with respect
to Section 3.20 thereof, Section 4.8 thereof, the last sentence of Section 5.2
thereof, Section 5.8 thereof, the last sentence of Section 5.11 thereof, Section
7.2 thereof and Article VIII thereof; provided, however, that, subject to the
provisions of Section 8.7 thereof, nothing in the Merger Agreement shall relieve
any party for liability for any breach thereof.
Fees and Expenses. Except as set forth in the Merger Agreement, the Merger
Agreement provides that all fees, costs and expenses incurred in connection with
the Merger Agreement and the transactions contemplated by the Merger Agreement
(the 'Expenses') shall be paid by the party incurring such fees, costs and
expenses. The Merger Agreement provides further that if (i) the Purchaser
terminates the Merger Agreement under Section 7.1(d) thereof, or (ii) the
Company terminates the Merger Agreement pursuant to Section 7.1(e) thereof, the
Company shall assume and pay, or cause to be paid, to the Purchaser a
termination fee in the amount of $2,250,000, plus all of Purchaser's Expenses,
not to exceed $500,000. In addition, if the Purchaser terminates the Offer as a
result of the occurrence of any event set forth in paragraph (j) of Annex I to
the Merger Agreement, the Company shall reimburse the Purchaser for all of the
Purchaser's Expenses up to a maximum of $500,000.
Amendments and Modifications. Subject to applicable law, the Merger
Agreement may be amended, modified or supplemented by a written agreement of the
respective Boards of Directors of the Purchaser and the Company, provided, that
after the approval of the Merger Agreement by the shareholders of the Company,
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 the Purchaser's designees
pursuant to the Merger Agreement 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 the Merger Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
the Merger Agreement or (iii) extend the time for performance of the Purchaser's
obligations under the Merger Agreement.
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TENDER AGREEMENT
The following is a summary of certain provisions of the Tender Agreement.
The following summary does not purport to be complete and is qualified in its
entirety by reference to the text of the Tender Agreement which is incorporated
herein by reference and a copy of which has been filed with the Commission as
Exhibit (c)(2) to the Schedule 14D-1. The Tender Agreement may be examined and
copies may be obtained at the places and in the manner set forth in Section 8 of
this Offer to Purchase.
As a condition and inducement to the Purchaser's entering into the Merger
Agreement and incurring the liabilities therein, concurrently with the execution
and delivery of the Merger Agreement, Larry J. Harris and Molly W. Harris, as
joint tenants, and the Harris Children's Trust (each, a 'Shareholder'), which
together share voting power and dispositive power with respect to an aggregate
of approximately 17.6% (16.1% on a fully diluted basis) of the Shares, have
entered into a Tender Agreement (the 'Tender Agreement'), dated as of even date
with the Merger Agreement, with the Purchaser. In the Tender Agreement, the
Shareholders represented that they own, in the aggregate, 1,448,074 Shares
(excluding shares of Common Stock issuable upon the exercise of outstanding
stock options held by Larry J. Harris).
In the Tender Agreement, the Shareholders agree that they will tender their
Shares (excluding shares of Common Stock issuable upon the exercise of
outstanding stock options held by Larry J. Harris) pursuant to and in accordance
with the terms of the Offer and that they will not withdraw any Shares so
tendered. Pursuant to the Tender Agreement, the Shareholders have granted to the
Purchaser during the term of the Merger Agreement an irrevocable proxy to vote
their shares, or grant a consent or approval in respect of such Shares, in
connection with any meeting of the shareholders of the Company (a) in favor of
the Merger, the Merger Agreement and all other transactions contemplated by the
Merger Agreement and (b) against (i) any merger agreement or merger (other than
the Merger Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, joint venture, recapitalization,
dissolution, liquidation or winding up of or by the Company and (ii) any
amendment of the Company's Articles of Incorporation or Bylaws or other proposal
or transaction (including any consent solicitation to remove or elect any
directors of the Company) involving the Company or any of its subsidiaries which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, or result in a material breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under or with respect to, the Offer, the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
Additionally, in the Tender Agreement, the Shareholders granted to the
Purchaser an irrevocable option (the 'Option') to purchase their Shares at a
purchase price per share equal to the Offer Price in cash or such higher per
share consideration paid to other Company shareholders who have tendered into
the Offer, in cash.
During the term of the Tender Agreement, each Shareholder has agreed that
it will not, except as contemplated by the terms of the Tender Agreement, (i)
transfer (the term 'transfer' shall include, without limitation, for the
purposes of the Tender Agreement, any sale, gift, pledge or other disposition),
or consent to any transfer of, any or all of such Shareholder's Shares or any
interest therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares or any
interest therein, (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to such Shares, (iv) deposit such
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares or (v) take any other action that would restrict, limit
or interfere in any material respect with the performance of its obligations
under the Tender Agreement or the transactions contemplated thereby.
Notwithstanding the foregoing, each Shareholder may transfer Shares to certain
family members, affiliates and charitable organizations, provided that, except
in certain limited circumstances, such family members, affiliates and charitable
organizations agree to be bound by the terms of the Tender Agreement.
Termination of the Tender Agreement. The Tender Agreement shall terminate
upon the earlier of (a) the date upon which the Merger Agreement is terminated
in accordance with its terms, (b) the date that Buyer shall have purchased and
paid for the Shares of each Shareholder pursuant to the Tender Agreement, (c)
August 31, 1998, if the Offer is not consummated on or before August 31, 1998
and (d) October 31, 1998, if the Merger is not consummated on or before October
31, 1998. Upon termination of the Tender Agreement, all obligations of the
parties thereto shall terminate.
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NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality
Agreement. The following summary of the Confidentiality Agreement does not
purport to be complete and is qualified in its entirety by reference to the text
of the Confidentiality Agreement which is incorporated herein by reference and a
copy of which has been filed with the Commission as Exhibit (c)(3) to the
Schedule 14D-1. The Confidentiality Agreement may be examined and copies may be
obtained at the places and in the manner set forth in Section 8 of this Offer to
Purchase.
The Confidentiality Agreement contains provisions pursuant to which, among
other matters, Harris agrees that during the period he is employed by the
Company and for a period of two years after the earlier of (A) the date Harris
ceases to be employed by the Company or (B) the date that the Purchaser pays for
and acquires any shares of the Common Stock pursuant to the Offer (each the
'Commencement Date'), he will not engage in or Participate In (as defined in the
Confidentiality Agreement) any business or organization which engages in the
business of owning, operating or franchising quick-service chicken-themed
restaurants within the State of Florida and the Commonwealth of Puerto Rico and
Central America and South America, except that in each case such non-competition
provisions will not be deemed breached merely because Harris owns not more than
5% of the outstanding common stock or other equity interests of a corporation,
partnership or other entity, if, (i) at the time of its acquisition by Harris
such stock is listed on a national securities exchange, is reported on Nasdaq,
or is regularly traded in the over-the-counter market by a member of a national
securities exchange or (ii) Harris' investment in such corporation, partnership
or other entity is solely a passive investment and Harris maintains not more
than 5% of the voting control of such corporation, partnership or other entity.
The Confidentiality Agreement further provides that during the period
Harris is employed by the Company and for a period of two years after the
Commencement Date, except as otherwise provided in the Confidentiality
Agreement, (i) Harris will not attempt to employ, offer employment to, directly
or indirectly solicit or endeavor to entice away from the Company or any of its
subsidiaries or the business operation of the Company as operated by the
Purchaser or any of the Purchaser's subsidiaries, any of its respective
employees or former employees and (ii) Harris will not directly or indirectly
employ any person who is an employee or former employee of the Company or any of
its subsidiaries, or the business operation of the Company as operated by the
Purchaser or any of the Purchaser's subsidiaries, provided, that such
non-solicitation terms shall not apply to (w) the solicitation or employment by
Harris of any former employee after the earlier of (A) the one year anniversary
of the date of the cessation of employment with the Company of such former
employee, and (B) the second anniversary of the Commencement Date, (x) the
solicitation or employment by Harris of not more than one restaurant manager at
any time after the date that is 18 months after consummation of the Merger, (y)
the solicitation or employment by Harris of a former key employee of the
Company; provided that such former employee shall not participate in any
activity in connection with such employment by Harris related to the
identification of property to be used as a restaurant, or (z) the solicitation
or employment of Harris' current secretary. Notwithstanding the foregoing, such
non-solicitation provisions shall not apply to employees or former employees
(other than such former key employee) who ceased to be employees prior to June
3, 1998.
The Confidentiality Agreement also provides that during the period Harris
is employed by the Company and for a period of five years after the Commencement
Date, Harris will not disclose, and will keep confidential, any trade secrets,
confidential or proprietary information of the Company and its subsidiaries not
in the public domain acquired by Harris while employed by the Company or while
performing services for the company or Carrols, including without limitation,
matters of a business nature, such as information about costs, profits, markets,
leases, agreements, financial information, technical and production know-how,
developments, inventions, processes, recipes or administrative procedures.
In addition, pursuant to the Confidentiality Agreement, (i) the Purchaser
will pay, in cash within five business days after the date that the Purchaser
pays for and acquires and Shares pursuant to the Offer, to Harris the sum of
$350,000, less any amounts paid, with the written consent of Harris, by the
Company to third parties designated by Harris, and (ii) Harris will be entitled
to receive (a) in full his current salary and benefits until the consummation of
the Merger and (b) his accrued bonus of $90,000 pursuant to the Company's
Executive Bonus Plan in full satisfaction of any and all obligations of the
Company to pay Harris a bonus for the 1998 fiscal year, such bonus to be payable
within five business days after the date that the Purchaser pays for and
acquires any shares of the Common Stock pursuant to the Offer. Harris will
continue to be employed by the Company until the consummation of the Merger.
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12. PLANS FOR THE COMPANY; OTHER MATTERS.
Plans for the Company. The Purchaser is conducting a detailed review of
the Company and its assets, operations, properties, policies, management and
personnel and will consider, subject to the terms of the Merger Agreement, what,
if any, changes would be desirable in light of the circumstances which exist
upon completion of the Offer. The Merger Agreement provides that, promptly upon
the acceptance for payment of, and payment by the Purchaser for, Shares pursuant
to the Offer, the Purchaser shall be entitled to designate such number of
directors on the Board of Directors of the Company as will give the Purchaser,
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 the Purchaser plus the number of Shares
otherwise owned by the Purchaser or any subsidiary of the Purchaser bears to
(ii) the total number of Shares outstanding, and the Company shall, at such
time, cause the Purchaser's designees to be appointed or elected; provided,
however, that in the event that the Purchaser'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 the
Merger 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 the Merger
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 the Purchaser or any of its subsidiaries, and such persons shall be deemed to
be Independent Directors for purposes of the Merger.
Pursuant to an understanding between the Purchaser and the Company, the
Purchaser and the Company have agreed, among other things, that William C. Drew,
Chief Financial Officer of the Company, will continue in his capacity as Chief
Financial Officer of the Company through the one month anniversary of the
closing of the Merger to provide continuity and will be available to provide
information as needed thereafter. In consideration of such services, Mr. Drew
will be paid half his full maximum annual bonus due plus a lump sum severance
payment upon his departure equal to Mr. Drew's one year annual base salary.
In addition, the Purchaser is conducting ongoing discussions with other key
employees of the Company relating to, among other things, continuing employment
with the Purchaser.
The Merger Agreement provides that (i) the Purchaser's 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 Delaware General Corporation Law (the 'DGCL') and (ii) the
bylaws of the Purchaser in effect at the Effective Time shall be the bylaws of
the Surviving Corporation until thereafter amended in accordance with the DGCL.
The Merger Agreement also provides that the directors of the Purchaser at the
Effective Time will be the directors of the Surviving Corporation and that the
officers of the Purchaser at the Effective Time will be the officers of the
Survivng Corporation.
EXCEPT AS DISCLOSED IN THIS OFFER TO PURCHASE, THE PURCHASER DOES NOT HAVE
ANY PRESENT PLANS OR PROPOSALS THAT WOULD RESULT IN AN EXTRAORDINARY CORPORATE
TRANSACTION, SUCH AS A SALE OR TRANSFER OF ASSETS, INVOLVING THE COMPANY OR ANY
OF ITS SUBSIDIARIES, OR ANY MATERIAL CHANGES IN THE COMPANY'S CORPORATE
STRUCTURE, BUSINESS OR COMPOSITION OF ITS MANAGEMENT OR PERSONNEL.
OTHER MATTERS
Shareholder Approval. Under the FBCA, the approval of the Board of
Directors of the Company and the affirmative vote of the holders of a majority
of the outstanding Shares are required to adopt and approve the Merger Agreement
and the transactions contemplated thereby. The Company has represented in the
Merger Agreement that the execution and delivery of the Merger Agreement by the
Company and the consummation by the Company of the transactions contemplated by
the Merger Agreement have been duly authorized by all necessary corporate action
on the part of the Company, subject to the approval of the Merger by the
Company's stockholders in accordance with the FBCA. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is the only vote of the holders of any class
or series of the Company's capital stock which is necessary to approve the
Merger Agreement and the
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transactions contemplated thereby, including the Merger. Therefore, unless the
Merger is consummated pursuant to the short-form merger provisions under the
FBCA described below (in which case no further corporate action by the
stockholders of the Company will be required to complete the Merger), the only
remaining required corporate action of the Company will be the approval of the
Merger Agreement and the transactions contemplated thereby by the affirmative
vote of the holders of a majority of the shares of Common Stock. The Merger
Agreement provides that the Purchaser will vote, or cause to be voted, all of
the Shares then owned by the Purchaser in favor of the approval of the Merger
and the adoption of the Merger Agreement. In the event that the Purchaser
acquires in the aggregate at least a majority of the shares of Common Stock, the
vote of no other stockholders of the Company will be required to approve the
Merger and the Merger Agreement.
Short-Form Merger. Section 607.1104 of the FBCA provides that, if a
corporation owns at least 80% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge such other corporation
into itself without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a 'short-form merger'). In the event
that the Purchaser acquires at least 80% of the outstanding shares of Common
Stock, pursuant to the Offer or otherwise, then, at the election of the
Purchaser, a short-form merger could be effected without any approval of the
Board of Directors or the stockholders of the Company, subject to compliance
with the provisions of Section 607.1104 of the FBCA. Even if the Purchaser does
not own 80% of the outstanding shares of Common Stock following consummation of
the Offer, the Purchaser could seek to purchase additional shares in the open
market or otherwise in order to reach the 80% threshold and employ a short-form
merger. The per share consideration paid for any Shares so acquired may be
greater or less than that paid in the Offer. The Purchaser presently intends to
effect a short-form merger if permitted to do so under the FBCA.
FLORIDA AFFILIATED TRANSATIONS STATUTE
The FBCA contains an affiliated transactions statute which provides that
certain transactions involving a Florida corporation, such as the Company, and a
shareholder owning 10% or more of the corporation's outstanding voting shares
(an 'affiliated shareholder') must generally be approved by the affirmative vote
of the holders of two-thirds of the voting shares other than those owned by the
affiliated shareholder. The transactions covered by the statute include, with
certain exceptions, (1) mergers and consolidations to which the corporation and
the affiliated shareholder are parties, (2) sales or other dispositions of
substantial amounts of the corporation's assets to the affiliated shareholder,
(3) issuances by the corporation of substantial amounts of its securities to the
affiliated shareholder, (4) the adoption of any plan for the liquidation or
dissolution of the corporation proposed by or pursuant to an arrangement with
the affiliated shareholder, (5) any reclassification of the corporation's
securities which has the effect of substantially increasing the percentage of
the outstanding voting shares of the corporation beneficially owned by the
affiliated shareholder and (6) the receipt by the affiliated shareholder of
certain loans or other financial assistance from the corporation. These special
voting requirements do not apply in any of the following circumstances: (1) if
the transaction was approved by a majority of the corporation's disinterested
directors (as defined in the statute), (2) if the corporation did not have more
than 300 shareholders of record at any time during the preceding three years,
(3) if the affiliated shareholder has been the beneficial owner of at least 80%
of the corporation's outstanding voting shares for the past five years, (4) if
the affiliated shareholder is the beneficial owner of at least 90% of the
corporation's outstanding voting shares, exclusive of those acquired in a
transaction not approved by a majority of disinterested directors or (5) if the
consideration received by each shareholder in connection with the transaction
satisfies the 'fair price' provisions of the statute. This statue applies to any
Florida corporation unless the original articles of incorporation or an
amendment to the articles of incorporation or bylaws contain a provision
expressly electing not to be governed by this statute. Such an amendment to the
articles of incorporation or bylaws must be approved by the affirmative vote of
a majority of disinterested shareholders and is not effective until 18 months
after approval.
FLORIDA CONTROL SHARE ACQUISITIONS STATUTE
The FBCA also contains a control share acquisitions statute which provides
that a person who acquires shares in an issuing public Florida corporation, such
as the Company, in excess of certain specified thresholds will generally not
have any voting rights with respect to such shares unless such voting rights are
approved by a majority of the shares entitled to vote, excluding interested
shares. The thresholds specified in the FBCA are the acquisition of a number of
shares representing: (a) 20% or more, but less than 33% of all voting power of
the
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corporation, (b) 33% or more but less than a majority of all voting power of the
corporation or (c) a majority or more of all voting power of the corporation.
This statute does not apply if, among other things, the acquisition (a) is
approved by the corporation's board of directors, (b) is pursuant to a pledge or
other security interest created in good faith and not for the purpose of
circumventing the statute, (c) pursuant to the laws of intestate succession or
pursuant to gift or testamentary transfer or (d) pursuant to a statutory merger
or share exchange to which the corporation is a party. This statute also does
not apply to acquisitions of shares of a corporation if, prior to the pertinent
acquisition of shares, the corporation's articles of incorporation or bylaws
provide that the corporation shall not be governed by the statute. This statute
also permits a corporation to adopt a provision in its articles of incorporation
or bylaws providing for the redemption by the corporation of such acquired
shares in certain circumstances. Unless otherwise provided in the corporation's
articles of incorporation or bylaws prior to the pertinent acquisition of
shares, in the event that such shares are accorded full voting rights by the
shareholders of the corporation and the acquiring shareholder acquires a
majority of the voting power of the corporation, all shareholders who did not
vote in favor of according voting rights to such acquired shares are entitled to
dissenters' rights.
The Company has represented in the Merger Agreement that the Board of
Directors of the Company has approved the Merger and the purchase of Shares in
the Offer in such a manner that the provisions of the Florida Affiliated
Transactions Statute and the Florida Business Corporation Act are not applicable
to any of the transactions contemplated by the Merger Agreement, including the
Merger and the purchase of Shares in the Offer.
Appraisal Rights. Holders of the Shares do not have appraisal rights as a
result of the Offer. However, if the Merger is consummated, holders of the
Shares at the effective time of the Merger will have certain rights pursuant to
the provisions of Sections 607.1302 and 607.1320 of the FBCA. Dissenting
stockholders of the Company who comply with the applicable statutory procedures
will be entitled to receive a judicial determination of the fair value of their
Shares (exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors other
than, or in addition to, the price per share of Common Stock, as the case may
be, to be paid in the Merger or the market value of the Shares. The value so
determined could be more or less than the price per Share to be paid in the
Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF THE FBCA.
The foregoing description of the FBCA, including the descriptions of
Sections 607.1302 and 607.1320, is not necessarily complete and is qualified in
its entirety by reference to the FBCA.
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act, which is applicable to certain 'going private' transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 requires, among other things, that certain
financial information concerning the fairness of the Merger and the
consideration offered to minority stockholders in the Merger be filed with the
Commision and disclosed to stockholders prior to the consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that between the date of the Merger 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 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
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or stock equivalents, other than the issuance of Shares upon the exercise of
Company Options outstanding as of the date of the Merger 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 of the Merger Agreement not true and correct
in all material respects.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser 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 the Purchaser'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) the Minimum Condition shall have been
satisfied 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 the Merger
Agreement, the Purchaser 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 the
Merger 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 the Purchaser or any of its subsidiaries that
constitutes a breach of the Merger Agreement):
(a) there shall have been instituted, pending or threatened any action
or proceeding by any person or Government Entity (as defined in the Merger
Agreement) (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 the Purchaser
(or any of its affiliates) of shares of 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 (as defined in the Merger Agreement); (ii) seeks to
make the purchase of or payment for some or all of the shares of Common
Stock pursuant to the Offer or the Merger illegal; (iii) seeks to impose
limitations on the ability of the Purchaser (or any of its affiliates)
effectively to acquire or hold, or to require the Purchaser 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 the
Purchaser 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 the Purchaser (or its affiliates) to acquire or hold or
exercise full rights of ownership of the shares of 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;
(c) (A) the representations and warranties of the Company in Section
3.2 of the Merger 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 the Merger
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 the Merger 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 the Purchaser its approval or recommendation of the Offer, the
Merger or this Agreement, or approved or recommended any Acquisition
Proposal (as defined in the
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Merger Agreement), (ii) the Company shall have entered into any agreement
with respect to any Superior Proposal (as defined in the Merger Agreement)
in accordance with Section 5.5(b) of the Merger 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 the Merger Agreement and the transactions contemplated thereby 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 Merger 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
certain specified landlords.
The foregoing conditions are for the sole benefit of the Purchaser and may,
except as otherwise provided in the Merger Agreement, be asserted by the
Purchaser regardless of the circumstances giving rise to any such condition and
may be waived by the Purchaser, in whole or in part, at any time and from time
to time, in the sole discretion of the Purchaser. The failure by the Purchaser
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.
15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on information provided by
the Company, neither the Company nor the Purchaser is aware of any license or
regulatory permit that appears to be material to the business of the Company
that might be adversely affected by the Purchaser's acquisition of Shares as
contemplated herein or of any approval or other action by a domestic or foreign
governmental, administrative or regulatory agency or authority that would be
required for the acquisition and ownership of the Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser presently contemplates that such approval or other action will be
sought, except as described below under 'State Takeover Laws.' While, except as
otherwise described in this Offer to Purchase, the Purchaser does not presently
intend to delay the acceptance for payment of or payment for Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that failure to obtain
any such approval or other action might not result in consequences adverse to
the Company's business or that certain parts of the Company's business might not
have to be disposed of or other substantial conditions complied with in the
event that such approvals were not obtained or such other actions were not taken
or in order to obtain any such approval or other action. If certain types of
adverse action are taken with respect to the matters discussed below, the
Purchaser could decline to accept for payment or pay for any Shares tendered.
See Section 14 for certain conditions to the Offer, including conditions with
respect to governmental actions.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated only following the
expiration or early termination of the applicable waiting period under the HSR
Act.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, such purchase may not be made until the expiration of a
15 calendar day waiting period following the required filing
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of a Notification Report Form under the HSR Act by the Purchaser (provided the
Company has submitted its filing under the HSR Act within ten days of the
Purchaser's filing), which the Purchaser expects to submit on or before June 10,
1998. Accordingly, if the Notification and Report Form is filed on or before
June 10, 1998, the waiting period under the HSR Act would expire at 11:59 P.M.,
New York City time, on the fifteenth day after such filing, unless early
termination of the waiting period is granted by the FTC and the Department of
Justice, Antitrust Division (the 'Antitrust Division') or the Purchaser or each
of the Purchaser and the Company receives a request for additional information
or documentary material prior thereto. If either the FTC or the Antitrust
Division issues a request for additional information or documentary material
prior to the expiration of the 15 day waiting period, the waiting period will be
extended and will expire at 11:59 P.M., New York City time, on the tenth
calendar day after the date of substantial compliance by the Purchaser with such
request unless terminated earlier by the FTC and the Antitrust Division. If such
a request is issued, the purchase of and payment for Shares pursuant to the
Offer will be deferred until the additional waiting period expires or is
terminated. Only one extension of such waiting period pursuant to a request for
additional information or documentary material is authorized by the rules
promulgated under the HSR Act. Thereafter, the waiting period can be extended
only by court order. Although the Company is required to file certain
information and documentary material with the Antitrust Division and the FTC in
connection with the Offer, neither the Company's failure to make such filings
nor a request to the Company from the Antitrust Division or the FTC for
additional information or documentary material will extend the waiting period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as either deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant to
the Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or the Purchaser or its subsidiaries. Private
parties and states attorneys general may also bring legal action under the
antitrust laws under certain circumstances. There can be no assurance that a
challenge to the Offer on antitrust grounds will not be made, or, if such a
challenge is made, of the result thereof. See Section 15.
If the Antitrust Division, the FTC, a state or a private party raises
antitrust concerns in connection with a proposed transaction, the Purchaser may
engage in negotiations with the relevant governmental agency or party concerning
possible means of addressing these issues and may delay consummation of the
Offer or the Merger while such discussions are ongoing. Both the Purchaser and
the Company have agreed to use their respective best efforts to resolve any
antitrust issues.
Federal Reserve Board Regulations. Regulations G, U and X (the 'Margin
Regulations') of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. All financing for the Offer
will be structured so as to be in full compliance with the Margin Regulations.
Legal Proceedings. On March 17, 1998, a purported shareholder of the
Company, Harbor Finance Partners, individually and on behalf of all others
similarly situated, commenced a lawsuit in the Circuit Court of the Eleventh
Judicial Circuit in and for Miami-Dade County, Florida, against the Company and
its directors with respect to the Harris Proposal and seeking, among other
things, (a) a declaratory judgment that the lawsuit is properly maintainable as
a class action and certifying plaintiff as representative of the class, (b) a
declaratory judgment that the Company and its directors have committed a gross
abuse of trust and have breached their fiduciary duties to plaintiff and the
other members of the class, (c) preliminary and permanent injunctive relief
enjoining the Company and its directors from proceeding with or implementing the
transactions contemplated by the Harris Proposal, (d) a declaratory judgment
rescinding the transactions contemplated by the Harris Proposal in the event
that it is consummated, (e) a declaratory judgment awarding compensatory damages
against the Company and its directors, jointly and severally, in an amount to be
determined at trial and (f) a declaratory judgment awarding Harbor Finance
Partners and the class their costs and disbursements and reasonable allowances
for Harbor Finance Partners' counsel and experts' fees and expenses. The
complaint is predicated inter alia upon the theory that the Harris Proposal
allegedly was not conceived with the best interest of the Company's shareholders
in mind and that the Company's Board of Directors allegedly has disregarded its
33
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fiduciary duty to seek to obtain the highest price for the Company's
shareholders. The Company's time to respond to the complaint has not yet
expired.
16. FEES AND EXPENSES.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and American Stock Transfer & Trust Company to act as the Depositary in
connection with the Offer. Such firms each will receive reasonable and customary
compensation for their services. The Purchaser has also agreed to reimburse each
such firm for certain reasonable out-of-pocket expenses and to indemnify each
such firm against certain liabilities in connection with their services,
including certain liabilities under federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person for making solicitations or recommendations in connection with
the Offer. Brokers, dealers, banks and trust companies will be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares other than the Company.
The Purchaser is not aware of any jurisdiction in which the making of the Offer
or the tender of Shares in connection therewith would not be in compliance with
the laws of such jurisdiction. If the Purchaser becomes aware of any
jurisdiction in which the making of the Offer would not be in compliance with
applicable law, the Purchaser will make a good faith effort to comply with any
such law. If, after such good faith effort, the Purchaser cannot comply with any
such law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the offices of the
Commission and Nasdaq in the manner set forth in Section 8 of this Offer to
Purchase (except that they will not be available at the regional offices of the
Commission).
34
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SCHEDULE I
THE DIRECTORS AND EXECUTIVE OFFICERS OF CARROLS
CORPORATION AND CARROLS HOLDING CORPORATION
1. Carrols Corporation. Set forth below is the name, business address and
present principal occupation or employment, and material occupations, positions,
offices or employments for the past five years, of the directors and executive
officers of Carrols Corporation. Each such person is a citizen of the United
States of America and, unless otherwise indicated, the business address of each
such person is c/o Carrols Corporation, 968 James Street, Syracuse, New York
13203.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
<TABLE>
<S> <C>
Alan Vituli............................... Chairman of the Board since 1986 and Chief Executive Officer since
March 1992. Between 1983 and 1985, Mr. Vituli was employed by Smith
Barney, Harris Upham & Co., Inc. as a senior vice president
responsible for real estate transactions. From 1966 until joining
Smith Barney, Mr. Vituli was associated with the accounting firm of
Coopers & Lybrand, first as an employee and the last ten years as a
partner. Among the positions held by Mr. Vituli at Coopers & Lybrand
was national director of mergers and acquisitions. Prior to joining
Coopers & Lybrand, Mr. Vituli was employed in a family owned
restaurant business. Mr. Vituli has also served as a Director on the
Board of Directors of the Company since 1993.
Daniel T. Accordino....................... President, Chief Operating Officer and Director since February 1993.
Executive Vice President-Operations from December 1986 and Senior
Vice President from April 1984. From 1979 to April 1984, Mr.
Accordino was Vice President responsible for restaurant operations,
having previously served as Assistant Director of Restaurant
Operations. Mr. Accordino has been employed by Carrols Corporation
since 1973.
Paul R. Flanders.......................... Vice President-Finance and Treasurer since April 1997. Prior to
joining Carrols Corporation, he was Vice President-Corporate
Controller of Fay's Incorporated from 1989 to 1997, and Vice
President-Controller for Computer Consoles, Inc. from 1982 to 1989.
Mr. Flanders was also associated with the accounting firm of Touche
Ross & Co. from 1977 to 1982.
Timothy J. LaLonde........................ Vice President-Controller since July 1997. Prior to joining Carrols
Corporation, he was a Controller at Fay's Incorporated from 1992 to
1997. Prior to that he was a Senior Audit Manager with the accounting
firm of Deloitte & Touche LLP having been associated with that firm
beginning in 1978.
Richard H. Liem........................... Vice President-Financial Operations since May 1994. Prior to joining
Carrols Corporation, Mr. Liem was a Senior Audit Manager with the
accounting firm of Price Waterhouse beginning in 1983.
Joseph A. Zirkman......................... Vice President and General Counsel since January 1993. Secretary
since February 1993. Prior to joining Carrols Corporation, Mr.
Zirkman was an associate with the New York City law firm of Baer
Marks & Upham beginning in 1986.
</TABLE>
S-1
<PAGE>
<TABLE>
<S> <C>
Steven Barnes............................. Vice President-Regional Director. Vice President since February 1997
and Regional Director of Operations since 1993. Prior to joining
Carrols Corporation, Mr. Barnes was Vice President-Operations of
Snapps Restaurants, Inc. from 1989 to 1993.
Michael A. Biviano........................ Vice President-Regional Director. Regional Director of Operations
since October 1989, having served as District Supervisor from
December 1983 to October 1989. Mr. Biviano has been employed by
Carrols Corporation since 1973.
Joseph W. Hoffman......................... Regional Director of Carrols Corporation since July 1997. Mr. Hoffman
joined Carrols Corporation in 1993 in connection with one of Carrols
Corporation's acquisitions and served in the capacity of District
Supervisor from 1993 to 1997. Prior to 1993, he was in a similar
capacity with Community Food Service, Inc.
David R. Smith............................ Vice President-Regional Director. Regional Director of Operations
since 1984, having served as District Supervisor from 1975 to 1984.
Mr. Smith has been employed by Carrols Corporation since 1972.
James E. Tunnessen........................ Vice President-Regional Director. Regional Director of Operations
since August 1988, having served as District Supervisor from 1979 to
August 1988. Mr. Tunnessen has been employed by Carrols Corporation
since 1972.
Richard L. Verity......................... Vice President-Regional Director since August 1997 when he joined
Carrols Corporation in conjunction with Carrols Corporation's
acquisition of a group of 63 restaurants. Mr. Verity was previously
with Resser Management Corp. from 1986 to 1997 and held the position
of Executive Vice President.
Benjamin D. Chereskin..................... Director since March 1997. He has been a Vice President of Madison
Dearborn Capital Partners since co-founding the firm in 1993. Prior
to that, Mr. Chereskin was with First Chicago Venture Capital for
nine years. Mr. Chereskin also serves on the Board of Directors of
Beverages & More, Inc., The Cornerstone Investments Group, Inc.,
Tuesday Morning Corporation and National Wholesale Liquidators, Inc.
James M. Conlon........................... Director since February 1998. Since 1992, he has held the position of
Managing Director-Merchant Banking, USA for Dilmun Investments, Inc.
From 1989 to 1992 Mr. Conlon was a securities analyst for TIAA-CREF.
David J. Mathies, Jr...................... Director since April 1996. Since 1988, Mr. Mathies has been President
of Dilmun Investments, Inc. From 1971 to 1988, he was employed by
Mellon Bank, where he was head of their Pension Management Group,
providing investment management services to middle market clients.
C. Ronald Petty........................... Director since July 1997. Chairman, Chief Executive and President of
Peter Piper, Inc. since November 1996. Prior to joining Peter Piper,
Mr. Petty was the Executive Vice President of Flagstar Companies,
Inc. and President and Chief Executive Officer of Denny's from July
1993 to October 1996. Before that, he served as President and Chief
Executive of Miami Subs Corporation and held a variety of senior
positions with Burger King Corporation including
</TABLE>
S-2
<PAGE>
<TABLE>
<S> <C>
President and Chief Operating Officer of its U.S. and International
division.
Robin P. Selati........................... Director since March 1997. Since 1993, he has been associated with
Madison Dearborn Capital Partners. Prior to 1993, he was associated
with Alex Brown & Sons Incorporated in the consumer/retail investment
banking group. Mr. Selati also serves as a Director on the Board of
Directors of Peter Piper, Inc., Tuesday Morning Corporation, and
National Wholesale Liquidators, Inc.
Clayton E. Wilhite........................ Director since July 1997. Since 1996, he has been the Chairman of
Thurloe Holdings, L.L.C. Prior to 1996 he was with D'Arcy Masius
Benton & Bowles, Inc. ('DMB&B') having served as its Vice Chairman
from 1995 to 1996, President of DMB&B/North America from 1988 to
1995, and as Chairman and Managing Director of DMB&B/St. Louis from
1985 to 1988. Mr. Wilhite has also served as a Director on the Board
of Directors of the Company since August 1996.
</TABLE>
2. Carrols Holdings Corporation. Set forth below is the name, business
address and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of the
directors and executive officers of Carrols Holdings Corporation. Each such
person is a citizen of the United States of America and, unless otherwise
indicated, the business address of such person is Carrols Corporation, 968 James
Street, Syracuse, New York 13203. Further information concerning the directors
and executive officers listed below, each of whom also serves as a director
and/or executive officer of the Purchaser, is provided above.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
<TABLE>
<S> <C>
Alan Vituli............................... Chairman of the Board since 1986 and Chief Executive Officer
since March 1992.
Daniel T. Accordino....................... President, Chief Operating Officer and Director since
February 1993.
Paul R. Flanders.......................... Vice President, Chief Financial Officer and Treasurer
since April 1997.
Joseph A. Zirkman......................... Vice President and General Counsel since January 1993.
Secretary since February 1993.
Benjamin D. Chereskin..................... Director since March 1997.
James M. Conlon........................... Director since February 1998.
David J. Mathies, Jr...................... Director since April 1996.
C. Ronald Petty........................... Director since July 1997.
Robin P. Selati........................... Director since March 1997.
Clayton E. Wilhite........................ Director since July 1997.
</TABLE>
S-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each shareholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or By Facsimile
Overnight Delivery: Transmission:
(For Eligible
Institutions Only)
40 Wall Street (718) 234-5001
46th Floor Confirm Receipt
New York, New York 10005 of Facsimile
by Telephone:
(718) 921-8200
-------------------------------------
Questions and requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the
Guidelines for Certification of Taxpayer Identification on Substitute Form W-9
may be directed to the Information Agent at the location and telephone numbers
set forth below. Shareholders may also contact their broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: 1-800-758-7358
<PAGE>
EXHIBIT (A)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
POLLO TROPICAL, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JUNE 10, 1998
BY
CARROLS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 8, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or By Facsimile
Overnight Delivery: Transmission:
(For Eligible
40 Wall Street Institutions
46th Floor Only)
New York, New York 10005
(718) 234-5001
Confirm Receipt
of Facsimile
by Telephone:
(718) 921-8200
-------------------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFORE AND COMPLETE THE
SUBSTITUTE FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
DESCRIPTION OF COMMON STOCK SHARES TENDERED
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND SHARES TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATES (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------ ----------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER
CERTIFICATE EVIDENCED BY OF SHARES
NUMBER(S)* CERTIFICATE(S) TENDERED**
----------- -------------- -----------
<S> <C> <C> <C>
TOTAL SHARES:
</TABLE>
* Need not be completed by shareholders delivering Shares by Book-Entry
Transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to an account maintained by the Depositary at The Depository
Trust Company ('DTC') (the 'Book-Entry Transfer Facility') pursuant to the
procedures set forth in Section 3 of the Offer to Purchase (as defined below).
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary. Shareholders who deliver Shares by book-entry
transfer are referred to herein as 'Book-Entry Shareholders' and other
shareholders are referred to herein as 'Certificate Shareholders.'
Shareholders whose certificates evidencing Shares ('Share Certificates')
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary or complete the procedures
for book-entry transfer prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase) must tender their Shares according to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2.
<PAGE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
---------------------------------------------
Check Box of the Book-Entry Transfer Facility
/ / DTC
Account Number: Transaction Code Number:
------------------ -------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
-------------------------------------------
Window Ticket No. (if any):
------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------
Name of Institution which Guaranteed Delivery:
-----------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, CHECK BOX OF THE BOOK-ENTRY TRANSFER
FACILITY:
/ / DTC
Account Number (if delivered by Book-Entry Transfer): __________________________
Transaction Code Number: _______________________________________________________
/ / CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE ASSISTANCE
IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS LETTER OF
TRANSMITTAL, THE COMPANY'S STOCK TRANSFER AGENT WILL CONTACT YOU DIRECTLY
WITH REPLACEMENT INSTRUCTIONS.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Carrols Corporation, a Delaware
corporation (the 'Offeror'), the above-described shares of Common Stock of Pollo
Tropical, Inc., a Florida corporation (the 'Company'), par value $.01 per share
(the 'Shares'), pursuant to the Offeror's offer to purchase all outstanding
Shares at a price of $11.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated June 10,
1998 (the 'Offer to Purchase'), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, together with the Offer to Purchase and any
amendments or supplements hereto or thereto, constitute the 'Offer'). The
undersigned understands that the Offeror reserves the right to transfer or
assign, in whole or in part from time to time, to any of its affiliates the
right to purchase Shares tendered pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers
to, or upon the order of the Offeror, all right, title and interest in and to
all the Shares that are being tendered hereby (and any and all other Shares or
other securities issued or issuable in respect thereof (collectively,
'Distributions')) and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (a) deliver certificates for such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by the Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Offeror, upon receipt by the Depositary, as the undersigned's agent, of the
purchase price (adjusted, if appropriate, as provided in the Offer to purchase),
(b) present such Shares and all Distributions for cancellation and transfer on
the Company's books and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares and all Distributions and that, when the same are accepted for payment by
the Offeror, the Offeror will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, claims, charges and
encumbrances, and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute any signature guarantees or additional
documents deemed by the Depositary or the Offeror to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares and all
Distributions. In addition, the undersigned shall promptly remit and transfer to
the Depositary for the account of the Offeror any such Distributions issued to
the undersigned, in respect of the tendered Shares, accompanied by documentation
of transfer, and pending such remittance or appropriate assurance thereof, the
Offeror shall be entitled to all rights and privileges as owner of any such
Distributions and, subject to the terms of the Agreement and Plan of Merger,
dated as of June 3, 1998, by and between the Offeror and the Company, may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by the Offeror, in its sole discretion.
<PAGE>
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Alan Vituli or Joseph A.
Zirkman and each of them, and any other designees of the Offeror, the attorneys
and proxies of the undersigned, each with full power of substitution, to vote at
any annual, special or adjourned meeting of the Company's shareholders or
otherwise act (including pursuant to written consent) in such manner as each
such attorney and proxy or his or her substitute shall in his or her sole
discretion deem proper, to execute any written consent concerning any matter as
each such attorney and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, and to otherwise act with respect to,
all the Shares tendered hereby which have been accepted for payment by the
Offeror prior to the time any such vote or action is taken (and any and all
Distributions issued or issuable in respect thereof) and with respect to which
the undersigned is entitled to vote. This appointment is effective when, and
only to the extent that, the Offeror accepts for payment such Shares as provided
in the Offer to Purchase. This power of attorney and proxy is coupled with an
interest in the tendered Shares, is irrevocable and is granted in consideration
of the acceptance for payment of such Shares in accordance with the terms of the
Offer. Such acceptance for payment shall revoke all prior powers of attorney and
proxies given by the undersigned at any time with respect to such Shares and no
subsequent powers of attorney or proxies may be given by the undersigned (and,
if given, will not be deemed effective). The Offeror reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Offeror's acceptance for payment of such Shares, the Offeror must be
able to exercise full voting and other rights with respect to such Shares,
including voting at any shareholders meeting then scheduled.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase to Offeror
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Offeror upon the terms and subject to the conditions of the
Offer. The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Offeror may not be required to accept for payment any
of the tendered Shares. The Offeror's acceptance for payment of Shares pursuant
to the Offer will constitute a binding agreement between the undersigned and the
Offeror upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under 'Special Payment Instructions,'
please issue the check for the purchase price of any Shares purchased, and/or
return any certificates for Shares not tendered or accepted for payment, in the
name(s) of the registered holder(s) appearing under 'Description of Shares
Tendered.' Similarly, unless otherwise indicated under 'Special Delivery
Instructions,' please mail the check for the purchase price of any Shares
purchased, and/or any certificates for Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under 'Description of Shares Tendered.' In the
event that both the Special Delivery Instructions and the Special Payment
Instructions are completed, please issue the check for the purchase price of any
Shares purchased, and/or return any certificates for Shares not tendered or
accepted for payment in the name(s) of, and mail said check and/or any
certificates to, the person or persons so indicated. In the case of a book-entry
delivery of Shares, please credit the account maintained at the Book-Entry
Transfer Facility indicated above with any Shares not accepted for payment. The
undersigned recognizes that the Offeror has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder(s) thereof if the Offeror does not accept for payment any of
the Shares so tendered.
<PAGE>
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the To be completed ONLY if the check for the purchase of
purchase price of Shares or Share Certificates Shares purchased or Share Certificates evidencing
evidencing Shares not tendered or not purchased are Shares not tendered or not purchased are to be mailed
to be issued in the name of someone other than the to someone other than undersigned, or to the
undersigned. undersigned at an address other than that shown under
'Description of Shares Tendered.'
Issue check and/or certificate(s) to:
Mail check and/or certificate(s) to:
Name: Name:
---------------------------------------------- --------------------------------------------------
(PLEASE PRINT) (PLEASE PRINT)
Address: Address:
------------------------------------------ -----------------------------------------------
- --------------------------------------------------- -----------------------------------------------
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
- ---------------------------------------------------
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
- ---------------------------------------------------
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
</TABLE>
IMPORTANT
SHAREHOLDER(S): SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Signature(s) of Holder(s))
Dated: , 1998
------------------------------------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by a person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in- fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s):
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Print)
Capacity: ---------------------------------------------------------------------
(Please Provide Full Title)
- -------------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(Include Zip Code)
Telephone No.:
----------------------------------------------------------------
(Include Area Code)
Taxpayer Identification or
Social Security Number:
-------------------------------------------------------
(See Substitute Form W-9 on Reverse Side)
GUARANTEE OF SIGNATURE(S)
(If required--see Instructions 1 and 5)
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY. FINANCIAL
INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE PROVIDED BELOW.
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each an 'Eligible Institution,'
and collectively, 'Eligible Institutions'). No signature guarantee is required
on this Letter of Transmittal (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled 'Special Delivery
Instructions' or the box entitled 'Special Payment Instructions' in this Letter
of Transmittal or (ii) if such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by shareholders
either if Share Certificates are to be forwarded herewith or if a tender of
Shares is to be made pursuant to the procedures for delivery by book-entry
transfer set forth in Section 3 of the Offer to Purchase. For Shares to be
validly tendered pursuant to the Offer, either (i) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees, or in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase), and any other required
documents, must be received by the Depositary at one of the Depositary's
addresses set forth herein prior to the Expiration Date (as defined in the Offer
to Purchase) and either certificates for tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered pursuant to
the procedures for book-entry transfer (and a Book Entry Confirmation received
by the Depositary), in each case, prior to the Expiration Date, or (ii) the
tendering shareholder must comply with the guaranteed delivery procedure set
forth below.
Shareholders whose Share Certificates are not immediately available or who
cannot complete the procedures for book-entry transfer on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, may tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedures, (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Offeror (or facsimile thereof), must
be received by the Depositary prior to the Expiration Date and (iii) the
certificates for (or a Book-Entry Confirmation with respect to) such Shares,
together with this properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the case
of a book-entry transfer, an Agent's Message, and any other required documents
are received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of
the Offer to Purchase. A 'trading day' is any day on which the Nasdaq National
Market is open for business. The Notice of Guaranteed Delivery may be delivered
by hand to the Depositary or transmitted by telegram, facsimile transmission or
mail to the Depositary and must include a guarantee by an Eligible Institution
in the form set forth in such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
SHARE CERTIFICATES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under 'Description of
Shares Tendered' is inadequate, the Share Certificate numbers and/or the number
of Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule attached hereto.
4. Partial Tenders. If fewer than all the Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered, fill in the
number of Shares which are to be tendered in the box entitled 'Number of Shares
Tendered.' In such case, new Share Certificate(s) for the remainder of the
Shares that were evidenced by the Share Certificate(s) delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled 'Special Delivery
Instructions' on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares represented by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificate(s) evidencing such shares without any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
<PAGE>
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Offeror of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and tendered hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment or Share Certificates
evidencing Shares not tendered or not accepted for payment are to be issued in
the name of a person other than the registered holder(s), in which case the
Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) or such Share Certificate(s).
Signatures on such Share Certificate(s) or stock powers must be guaranteed by an
Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the shares tendered hereby, the certificates evidencing
the Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered
holder(s) appear(s) on such Share Certificates. Signatures on such Share
Certificate(s) or stock powers must be guaranteed by an Eligible Institution.
See Instruction 1.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6, the
Offeror will pay, or cause to be paid, any stock transfer taxes with respect to
the transfer and sale of Shares to it or its assignee pursuant to the Offer. If,
however, payment of the purchase price of any Shares is to be made to, or if
Share Certificates evidencing Shares not tendered or accepted for payment are to
be issued in the name of, a person other than the registered holder(s), or if
tendered Shares Certificates are registered in the name of a person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such person or
otherwise payable on the account of the transfer to such other person) will be
deducted from the purchase price of such Shares purchased, unless evidence
satisfactory to the Offeror of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of and/or Shares Certificates not accepted for payment are to be
returned to a person other than the signer of this Letter of Transmittal or if a
check is to be sent and/or such Share Certificates are to be returned to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown in the box entitled 'Description of Shares Tendered' on
the reverse hereof, the appropriate boxes on the reverse side of this Letter of
Transmittal should be completed. Any shareholder tendering Shares by book-entry
transfer will have any Shares not accepted for payment returned by crediting the
account maintained by such shareholder at the Book-Entry Transfer Facility from
which such transfer was made.
8. Waiver of Conditions. Except as otherwise provided in the Offer to
Purchase, the Offeror reserves the absolute right, in its sole discretion, to
waive any of the conditions of the Offer or any defect or irregularity in the
tender of any Shares of any particular shareholder, whether or not similar
defects or irregularities are waived in the case of other shareholders.
9. Substitute Form W-9. The tendering shareholder (or other payee) is
required, unless an exemption applies, to provide the Depositary with a correct
Taxpayer Identification Number ('TIN'), generally the shareholder's social
security or federal employer identification number, and with certain other
information, on Substitute Form W-9, which is provided under 'Important Tax
Information' below, and to certify under penalties of perjury, that such number
is correct and that the shareholder (or other payee) is not subject to backup
withholding. If a tendering shareholder is subject to backup withholding, he or
she must cross out item (2) of the Certification Box on Substitute Form W-9
before signing such Form. Failure to furnish the correct TIN on the Substitute
Form W-9 may subject the tendering shareholder (or other payee) to a $50 penalty
imposed by the Internal Revenue Service and payments of cash to the tendering
shareholder (or other payee) pursuant to the Offer may be subject to backup
withholding of 31%. If the tendering shareholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future, he
or she should write 'Applied For' in the space provided for the TIN in Part I,
sign and date the Substitute Form W-9 and sign and date the Certificate of
Awaiting Taxpayer Identification Number. If 'Applied For' is written in Part I
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% of all such payments for surrendered Shares
thereafter until a TIN is provided to the Depositary.
10. Lost or Destroyed Certificates. If any Share Certificate(s) has (have)
been lost or destroyed, the shareholder should check the appropriate box on the
reverse side of the Letter of Transmittal. The Company's stock transfer agent
will then instruct such shareholder as to the procedure to be followed in order
to replace the Share Certificate(s). The shareholder will have to post a surety
bond of approximately 2% of the current market value of the stock. This Letter
of Transmittal and related documents cannot be processed until procedures for
replacing lost or destroyed Share Certificates have been followed.
11. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at the locations and telephone numbers set
forth below.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF),
TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE, AND SHARE CERTIFICATES, OR A BOOK-ENTRY
CONFIRMATION, FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY (OR A FACSIMILE COPY
THEREOF) MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder surrendering Shares must,
unless an exemption applies, provide the Depositary (as payor) with his correct
TIN on Substitute Form W-9 included in this Letter of Transmittal. If the
shareholder is an individual, his TIN is such shareholder's social security
number. If the correct TIN is not provided, the shareholder may be subject to a
$50 penalty imposed by the Internal Revenue Service and payments of cash to the
tendering shareholder (or other payee) pursuant to the Offer may be subject to
backup withholding of 31% of all payments of the purchase price.
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. In
order for an exempt foreign shareholder to avoid backup withholding, such person
should complete, sign and submit a Form W-8, Certificate of Foreign Status,
signed under penalties of perjury, attesting to his exempt status. A Form W-8
can be obtained from the Depositary. Exempt shareholders, other than foreign
shareholders, should furnish their TIN, write 'Exempt' on the face of the
Substitute Form W-9 and sign, date and return the Substitute Form W-9 to the
Depositary. See the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payment made to payee. Backup withholding is not an additional tax.
Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of his correct TIN (or the TIN of any other
payee) by completing the Substitute Form W-9 included in this Letter of
Transmittal certifying (1) that the TIN provided on the Substitute Form W-9 is
correct (or that such shareholder is awaiting a TIN), and that (2) the
shareholder is not subject to backup withholding because (i) the shareholder has
not been notified by the Internal Revenue Service that the shareholder is
subject to backup withholding as a result of a failure to report all interest
and dividends or (ii) the Internal Revenue Service has notified the shareholder
that the shareholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the TIN, generally the
social security number or employer identification number, of the record holder
of the Shares tendered hereby. If the Shares are in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the tendering shareholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write 'Applied For' in the space
provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign
and date the Certificate of Awaiting Taxpayer Identification Number, which
appears in a separate box below the Substitute Form W-9. If 'Applied For' is
written in Part I and the Depositary is not provided with a TIN by the time of
payment, the Depositary will withhold 31% of all payments of the purchase price
until a TIN is provided to the Depositary.
TAXPAYER IDENTIFICATION NUMBER
The registered holder is required to give the Exchange Agent the social
security number or employer identification number of the registered holder of
the certificate(s). If the certificate(s) are in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
<PAGE>
PLEASE FILL IN ALL OF THE APPROPRIATE BOXES BELOW.
PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
Name as shown above on account (if joint account, list first and circle the name
of the person or entity whose number you enter in Part 1 below).
Address (if shareholder does not complete, signature in Part 1 below will
constitute a certification that the above address is correct).
City, State and ZIP code.
<TABLE>
<S> <C> <C>
SUBSTITUTE PART I -- PLEASE PROVIDE Social Security Number
FORM W-9 YOUR TIN IN THE BOX AT OR
RIGHT AND CERTIFY BY Employer Identification
SIGNING AND DATING BELOW. Number
PART II -- For Payees exempt from backup withholding,
see the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9
and complete as instructed.
CERTIFICATION -- Under penalties of perjury, I
DEPARTMENT OF THE certify that:
TREASURY (1) The number shown on this form is my correct
INTERNAL REVENUE Taxpayer Identification Number (or I am waiting
SERVICE for a number to be issued to me) and
Payer's Request for (2) I am not subject to backup withholding either
Taxpayer because I have not been notified by the Internal
Identification Revenue Service (IRS) that I am subject to backup
Number ('TIN') withholding as a result of a failure to report
all interest or dividends, or the IRS has
notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out
item (2) in Part 2 above if you have been
notified by the IRS that you are currently
subject to backup withholding because of under-
reported interest or dividends on your tax
returns. However, if after being notified by the
IRS that you were subject to backup withholding,
you receive another notification from the IRS
that you are no longer subject to backup
withholding, do not cross out such item (2).
(Also see instructions in the enclosed
Guidelines).
SIGNATURE DATE
--------------------------- ----------
PART III -- Awaiting TIN / /
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under the penalties of perjury that a Taxpayer Identification
Number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me threafter will be withheld
until I provide a number.
Signature Date
--------------------------------------------- ---------------
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent at the locations and telephone numbers set forth below:
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect (212) 269-5550
ALL OTHERS CALL TOLL FREE 1-800-758-7358
<PAGE>
EXHIBIT (A)(3)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
POLLO TROPICAL, INC.
AT
$11.00 NET PER SHARE
BY
CARROLS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 8, 1998, UNLESS THE OFFER IS EXTENDED.
June 10, 1998
TO BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
We have been appointed by Carrols Corporation, a Delaware corporation (the
'Offeror'), to act as Information Agent in connection with the Offeror's offer
to purchase all outstanding shares (the 'Shares') of common stock, par value
$.01 per share, (the 'Common Stock') of Pollo Tropical, Inc., a Florida
corporation (the 'Company'), at a price of $11.00 per Share, net to the seller
in cash, without interest, upon the terms and subject to the conditions set
forth in the Offeror's Offer to Purchase, dated June 10, 1998 (the 'Offer to
Purchase'), and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the 'Offer') enclosed
herewith. The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of June 3, 1998, by and between the Offeror and the Company.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee we are enclosing
copies of the following documents:
1. Offer to Purchase;
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not
permit all required documents to reach the Depositary by the Expiration
Date (as defined in the Offer to Purchase) or if the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A Solicitation/Recommendation Statement on Schedule 14D-9 filed
with the Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 8, 1998, UNLESS THE OFFER IS EXTENDED.
<PAGE>
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility (as defined in the Offer to Purchase), (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery, and (iii) and any other
documents required by the Letter of Transmittal.
If holders of Shares wish to tender Shares, but cannot deliver such
holders' certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender may be effected by following the guaranteed delivery procedure described
in Section 3 of the Offer to Purchase.
The Offeror will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer. However,
upon request, the Offeror will reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Offeror will pay or cause to be paid any stock transfer taxes
payable with respect to the transfer of Shares to it, except as otherwise
provided in the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
D.F. King & Co., Inc., the Information Agent, at the address and telephone
numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent at the address and telephone numbers set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
D.F. KING & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU
OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF THE OFFEROR, THE
COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
EXHIBIT (A)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
POLLO TROPICAL, INC.
AT
$11.00 NET PER SHARE
BY
CARROLS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 8, 1998, UNLESS THE OFFER IS EXTENDED.
TO OUR CLIENTS:
Enclosed for your consideration are an Offer to Purchase, dated June 10,
1998 (the 'Offer to Purchase'), and a related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the 'Offer')
relating to the offer by Carrols Corporation, a Delaware corporation (the
'Offeror'), to purchase all outstanding shares (the 'Shares') of common stock,
par value $.01 per share (the 'Common Stock'), of Pollo Tropical, Inc., a
Florida corporation (the 'Company'), at a price of $11.00 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer. The Offer is being made in connection with the Agreement
and Plan of Merger, dated as of June 3, 1998, by and between the Offeror and the
Company (the 'Merger Agreement'). Also enclosed is a Solicitation/Recommendation
Statement on Schedule 14D-9.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us (or our nominee) for
your account, upon the terms and subject to the condition set forth in the
Offer.
Your attention is invited to the following:
1. The tender price is $11.00 per share of Common Stock, net to the
seller in cash, without interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement and the transactions contemplated thereby, has determined
that each of the Merger Agreement and the transactions contemplated thereby
are fair to, and in the best interests of, the Company and the holders of
the Common Stock and recommends that the Company's holders tender their
Shares in the Offer.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, July 8, 1998, unless the Offer is extended.
<PAGE>
5. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
the Offeror pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
contained in this letter. An envelope in which to return your instructions to us
is enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto, and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Offeror by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE>
Instructions with Respect to the Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
POLLO TROPICAL, INC.
BY
CARROLS CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated June 10, 1998, and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
'Offer') in connection with the offer by Carrols Corporation, a Delaware
corporation, to purchase all outstanding shares (the 'Shares') of common stock,
par value $.01 per share (the 'Common Stock'), of Pollo Tropical, Inc., a
Florida corporation (the 'Company').
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
<TABLE>
<S> <C>
Dated: , 1998 SIGN HERE
-----------------
Number of Shares to be Tendered: Signature(s) of Holder(s)
- ------------------------------- ---------------------------------------------------------
shares of Common Stock*
---------------------------------------------------------
Name(s) of Holder(s)
---------------------------------------------------------
Please Type or Print
---------------------------------------------------------
Please Type or Print
---------------------------------------------------------
Address
---------------------------------------------------------
Zip Code
---------------------------------------------------------
Area Code and Telephone Number
---------------------------------------------------------
Taxpayer Identification or Social
Security Number
</TABLE>
- ------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE>
EXHIBIT (A)(5)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
POLLO TROPICAL, INC.
TO
CARROLS CORPORATION
(Not to be Used for Signature Guarantees)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if certificates
evidencing shares (the 'Shares') of common stock, par value $.01 per share (the
'Common Stock') of Pollo Tropical, Inc., a Florida corporation (the 'Company'),
are not immediately available or time will not permit all required documents to
reach American Stock Transfer & Trust Company as Depositary (the 'Depositary'),
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase
(as defined below)) or the procedure for delivery by book-entry transfer cannot
be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand or transmitted by telegram, facsimile transmission or mail to
the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or By Facsimile
Overnight Delivery: Transmission:
40 Wall Street (For Eligible
46th Floor Institutions
New York, New York 10005 Only)
(718) 234-5001
Confirm Receipt
of Facsimile
by Telephone:
(718) 921-8200
-------------------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, AND TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an 'Eligible Institution'
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Carrols Corporation, a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated June 10, 1998 (the 'Offer to Purchase'), and the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the 'Offer'), receipt of each of which is hereby
acknowledged, the number of Shares specified below pursuant to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase.
Series and Certificate Nos. of Shares (if available):
Common Stock, par value $.01 per share
<TABLE>
<S> <C>
Name(s) of Record Holder(s) Address(es):
------------------------- -----------------------------------------
- ----------------------------------------------------- ------------------------------------------------------
(Zip) Code
Certificate Nos. Area Code and Tel. No.:
------------------------------------- ------------------------------
Number of Shares Tendered Signature(s):
--------------------------- ----------------------------------------
Dated:
-----------------------------------------------
</TABLE>
PLEASE TYPE OR PRINT
Check box if Shares will be delivered by book-entry transfer:
/ / The Depository Trust Company
Account No.:
----------------------------------
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR THE SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Offer to
Purchase), hereby guarantees delivery to the Depositary, at one of its addresses
set forth above, certificates ('Share Certificates') evidencing the Shares
tendered hereby, in proper form for transfer, or confirmation of book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company, in any case with delivery of a Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, or an Agent's Message (as defined
in the Offer to Purchase) in the case of a book-entry delivery, and any other
required documents, all within three days on which the Nasdaq National Market is
open for business after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and Share
Certificates to the Depositary within the time period shown herein. Failure to
do so could result in a financial loss to such Eligible Institution.
-----------------------------------------
(Name of Firm)
-----------------------------------------
(Authorized Signature)
-----------------------------------------
(Name)
-----------------------------------------
(Title)
-----------------------------------------
(Address)
-----------------------------------------
(Zip Code)
-----------------------------------------
(Area Code and Telephone No.)
PLEASE TYPE OR PRINT
Dated: , 1998
------------------
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT (A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens, e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, e.g., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GIVE THE SOCIAL SECURITY NUMBER
FOR THIS TYPE OF ACCOUNT: NUMBER OF
- --------------------------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual account
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, the first
individual on the account(1)
3. Husband and wife (joint account) The actual owner of the account or,
if joint funds, either person(1)
4. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the
only contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent
committee for a designated ward, person(3)
minor, or incompetent person
7.a. A revocable savings trust account The grantor-trustee(1)
(in which grantor is also trustee)
b. Any 'trust' account that is not a
legal or valid trust under State law
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GIVE THE EMPLOYER IDENTIFICATION NUMBER
FOR THIS TYPE OF ACCOUNT: NUMBER OF
- --------------------------------------------------------------------------------
<S> <C> <C>
8. Sole proprietorship The owner(4)
9. A valid trust, estate, or pension The legal entity (do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not designated
in the account title)(5)
10. Corporate account The corporation
11. Religious, charitable, organization The organization
or educational account
12. Partnership account The partnership held in the name of
the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity (such as a State or
Agriculture in the name of the actual local government, school district, or
owner(1) prison) that receives agricultural
program payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), for Form W-7 for International Taxpayer
Identification Number (for alien individuals required to file U.S. tax returns),
at an office of the Social Security Administration or the Internal Revenue
Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write 'Applied For' in the space for the taxpayer identification number
in Part I, sign and date the Form, and give it to the requester.
Generally, you will then have 60 days to obtain a taxpayer identification number
and furnish it to the requester. If the requester does not receive your taxpayer
identification number within 60 days, backup withholding, if applicable, will
begin and will continue until you furnish your taxpayer identification number to
the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING PENALTIES
Payees specifically exempted from backup withholding on ALL payments include the
following:*
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
o A foreign government or a political subdivision, agency or instrumentality
thereof.
o An international organization or any agency or instrumentality thereof.
o A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An entity registered at all times during the tax year under the Investment
Company Act of 1940.
o A foreign central bank of issue.
Exempt payees described above should file a substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE 'EXEMPT' ON THE FACE OF THE FORM,
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to non-resident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if (i) this interest is $600 or more, (ii) the
interest is paid in the course of the payer's trade or business and (iii) you
have not provided your correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. --If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING. --If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. --If you falsify certifications
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage dividends that are
not subject to information reporting are also not subject to backup withholding.
For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A.
PRIVACY ACT NOTICES. Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
- ------------------
* Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulation
promulgated thereunder.
2
<PAGE>
EXHIBIT (A)(7)
Contacts: W. Carl Drew Paul Flanders
Chief Financial Officer Vice President-Finance
Pollo Tropical, Inc. Carrols Corporation
(305) 670-7696 (315) 424-0513, Ext. 223
CARROLS CORPORATION TO ACQUIRE POLLO TROPICAL, INC.
SYRACUSE, N.Y. and MIAMI, Fla. (June 4, 1998)--Carrols Corporation, Burger
King's largest U.S. franchisee, and Pollo Tropical, Inc. (Nasdaq/NM:POYO)
jointly announced today that they have entered into a definitive Agreement and
Plan of Merger under which Carrols Corporation would purchase, for cash, all of
the outstanding common shares of Pollo Tropical at a price of $11 per share, or
a total of approximately $90 million for the 8.2 million common shares
outstanding.
Under the Agreement, Carrols Corporation will shortly commence a tender
offer followed by a merger in which each of the remaining shares of Pollo
Tropical will be exchanged for $11 in cash.
The tender offer will be made pursuant to definitive offering documents to
be filed with the Securities and Exchange Commission. The tender offer will be
conditioned on the tender of a majority of Pollo Tropical's outstanding shares
of common stock on a fully diluted basis, the expiration or termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and
certain other customary closing conditions for transactions of this type.
Alan Vituli, Chairman and CEO of Carrrols Corporation, stated, 'This is a
unique and attractive opportunity for Carrrols Corporation. Pollo Tropical has a
strong position in the industry. The restaurants have outstanding unit economics
and potential for low-risk growth. It has a young and dynamic management team.
Each of the organizations will benefit from the combination.'
Larry J. Harris, Chairman and CEO of Pollo Tropical, stated, 'Our entire
organization has worked hard to continually improve the value of Pollo Tropical,
and this purchase price reflects those efforts. The Board of Directors and
management team believe that the interests of the shareholders and employees are
well served in this transaction.'
Pollo Tropical, Inc. headquartered in Miami, owns and operates 36, and
franchises 19, quick-service restaurants featuring grilled fresh chicken
marinated in a proprietary blend of tropical fruit juices and spices and
authentic 'made from scratch' side dishes served in an inviting tropical
setting.
Carrols Corporation, the largest franchisee of Burger King restaurants in
the United States, currently operates 340 Burger King restaurants located in 13
northeastern, midwestern and southeastern states.
<PAGE>
EXHIBIT (A)(8)
Contacts: Paul Flanders W. Carl Drew
Vice President-Finance Chief Financial Officer
Carrols Corporation Pollo Tropical, Inc.
(315) 424-0513, Ext. 223 (305) 670-7696
CARROLS CORPORATION BEGINS ALL-CASH TENDER OFFER FOR POLLO TROPICAL, INC. COMMON
SHARES; OFFER TO EXPIRE JULY 8, 1998, UNLESS EXTENDED
SYRACUSE, N.Y. and MIAMI, Fla. (June 10, 1998)--Carrols Corporation today
commenced its previously announced all-cash tender offer for all outstanding
shares of Pollo Tropical, Inc. (Nasdaq/NM:POYO) common stock at a price of
$11.00 per share. The offer is scheduled to expire at 12:00 midnight, New York
City time, on Wednesday, July 8, 1998, unless extended.
A notice of tender offer appears in today's New York Times. A Schedule
14D-1 and Schedule 14D-9 and related documents are being filed today with the
Securities and Exchange Commission. Offer documents will be mailed to all of
Pollo Tropical, Inc. shareholders beginning Wednesday, June 10, 1998.
As of March 29, 1998, Pollo Tropical, Inc. had 8,223,818 shares of common
stock outstanding. The offer has been approved by the Board of Directors of
Pollo Tropical, Inc. and Carrols Corporation has obtained a commitment from
Larry J. Harris, the Chairman and Chief Executive Officer of Pollo Tropical, his
wife and certain of his affiliates to tender their holdings of 17.6% of the
outstanding Pollo Tropical common shares (excluding outstanding stock options)
pursuant to the tender offer.
Pollo Tropical, Inc. headquartered in Miami, owns and operates 36, and
franchises 19, quick-service restaurants featuring grilled fresh chicken
marinated in a proprietary blend of tropical fruit juices and spices and
authentic 'made from scratch' side dishes served in an inviting tropical
setting.
Carrols Corporation, the largest franchisee of Burger King restaurants in
the United States, currently operates 340 Burger King restaurants located in 13
Northeastern, Midwestern and Southeastern states.
D.F. King & Co., Inc. is the information agent for the offer. Copies of the
offering documents may be obtained by calling D.F. King collect at (212)
269-5550 (Banks and Brokers) or toll free at 1-800-758-7358 (All Others).
<PAGE>
EXHIBIT (A)(9)
FORM OF SUMMARY ADVERTISEMENT
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase, dated June 10, 1998 ('Offer to Purchase') and
the related Letter of Transmittal and is being made to all holders of Shares.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction or any administrative or judicial action pursuant thereto. In any
jurisdiction where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Carrols Corporation by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
POLLO TROPICAL, INC.
at
$11.00 NET PER SHARE
by
CARROLS CORPORATION
Carrols Corporation, a Delaware corporation (the 'Purchaser'), is offering
to purchase all of the issued and outstanding shares (the 'Shares') of common
stock, par value $.01 per share (the 'Common Stock'), of Pollo Tropical, Inc., a
Florida corporation (the 'Company'), for $11.00 per Share (the 'Offer Price'),
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
'Offer').
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, JULY 8, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 3, 1998 (the 'Merger Agreement'), by and between the Purchaser and
the Company pursuant to which, as soon as practicable after the completion of
the Offer and satisfaction or waiver, if permissible, of all conditions to the
Merger (as defined below), the Company will be merged with and into the
Purchaser and the separate corporate existence of the Company will thereupon
cease. The merger, as effected pursuant to the immediately preceding sentence,
is referred to herein as the 'Merger,' and the Purchaser as the surviving
corporation of the Merger is sometimes herein referred to as the 'Surviving
Corporation.' At the effective time of the Merger (the 'Effective Time'), each
share of Common Stock then outstanding (other than Shares held by the Purchaser
and Shares held by shareholders who perfect their dissenters' rights under
Florida law) will be cancelled and extinguished and converted into the right to
receive the Offer Price or any higher price per Share paid in the Offer, in cash
payable to the holder thereof without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK, AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER
<PAGE>
OF SHARES OF COMMON STOCK WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS (THE 'MINIMUM CONDITION'), (ii) THE WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER HAVING EXPIRED OR BEEN TERMINATED AND
(iii) THE OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. As used herein
'fully diluted basis' takes into account the conversion or exercise of all
outstanding options and other rights and securities exercisable or convertible
into shares of Common Stock.
As a condition and inducement to the Purchaser's entering into the Merger
Agreement and incurring the liabilities therein, Larry J. Harris and Molly W.
Harris, as joint tenants, and the Harris Children's Trust (collectively, the
'Shareholders'), which together share voting power and dispositive power with
respect to 1,448,074 Shares (excluding shares of Common Stock issuable upon the
exercise of outstanding stock options held by Larry J. Harris), concurrently
with the execution and delivery of the Merger Agreement, have entered into a
tender agreement (the 'Tender Agreement'), dated as of June 3, 1998, with the
Purchaser. Pursuant to the Tender Agreement, the Shareholders have agreed, among
other things, to tender such Shares held by them in the Offer, and to grant the
Purchaser an irrevocable proxy with respect to the voting of such Shares in
favor of the Merger and to grant the Purchaser an option (the 'Option') with
respect to such Shares upon the terms and subject to the conditions set forth
therein. The Option can only be exercised in certain circumstances as described
in Section 11 of the Offer to Purchase.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
American Stock Transfer & Trust Company (the 'Depositary') of the Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
shareholders. In all cases, payment for Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or a timely Book-Entry Confirmation (as defined in
the Offer to Purchase) with respect thereto), (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase), and (iii) any other documents
required by the Letter of Transmittal. The per Share consideration paid to any
holder of Common Stock pursuant to the Offer will be the highest per Share
consideration paid to any other holder of such Shares pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY
THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date (as defined
in the Offer to Purchase) and, unless theretofore accepted for payment and paid
for by the Purchaser pursuant to the Offer, may also be withdrawn at any time
after August 10, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution (as defined in Section 3 of the Offer to Purchase), the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer as
set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility (as defined in the Offer to Purchase) to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly
2
<PAGE>
tendered for purposes of the Offer. However, withdrawn Shares may be tendered by
again following one of the procedures described in Section 3 of the Offer to
Purchase any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the
Purchaser, the Depositary, the Information Agent, or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal, or incur any liability for failure to give any such
notification.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time, to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal and
other relevant documents will be mailed by the Purchaser to record holders of
Shares, and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent, at the address and telephone numbers set forth below,
and copies will be furnished at the Purchaser's expense. The Purchaser will not
pay any fees or commissions to any broker or dealer or other person for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: 1-800-758-7358
June 10, 1998
3
<PAGE>
EXHIBIT (B)
Chase Securities Inc.
707 Travis Street, 8-CBBN-96
Houston, Texas 77002-8096
Carrols Corporation
Senior Secured Credit Facility
Engagement Letter
June 1, 1998
Carrols Corporation
968 James Street
Syracuse, New York 13203
Attention: Alan Vituli
Re: Loan Agreement dated May 12, 1997 among Carrols Corporation
("Carrols") as Borrower, Chase Bank of Texas, National Association
(formerly known as Texas Commerce Bank National Association)
("Chase"), as Agent, Heller Financial, Inc., as Documentation
Agent, and First Union National Bank of North Carolina, as
Co-Agent, and all the other Banks thereto as amended, modified or
restated (the "Credit Agreement").
Ladies and Gentlemen:
You have advised Chase Bank of Texas, National Association
("Chase") and Chase Securities Inc. ("CSI") that Carrols Corporation
(the "Borrower" or "you"), desires to amend its Credit Agreement, which
amendment shall include but not be limited to the changes to the Credit
Agreement requested by the Borrower and specified on Schedule I hereto
(the "Requested Changes"). In that connection, you have requested that
CSI agree to structure, arrange and syndicate the amendment in an
aggregate amount of up to $150,000,000 (the "Facility"), inclusive of
the existing availability under the Credit Agreement, and that Chase
commit to provide the entire principal amount of the Facilty and
continue to serve as administrative agent for the Facility.
CSI is pleased to advise you that it is willing to act as
exclusive advisor and arranger for the Facility.
Futhermore, Chase is pleased to advise you of its commitment to
underwrite the entire amount of the additional funds, or if necessary,
the entire amount of funds for the Facility, upon the terms and
subject to the conditions set forth or referred to in this engagement
letter (this "Engagement Letter"). Proceeds from the Facility will be
<PAGE>
used to: (i) fund the entire purchase price to acquire 100% of the outstanding
shares of Pollo Tropical, Inc. (including transaction costs); (ii) refinance
certain existing indebtedness; and (iii) fund on-going working capital, capital
expenditures and future acquisitions. The provisions of this Engagement Letter
are subject to compliance with the Senior Notes Documentation.
You agree actively to assist CSI in arrangement of the Facility. Such
assistance shall include (a) your using commercially reasonable efforts to
ensure that the syndication efforts benefit materially from your existing
lending relationships, (b) direct contact between senior management and advisors
of the Borrower and the proposed Lenders, and (c) the hosting, with CSI, of one
or more meetings of prospective Lenders.
Chase and CSI shall be entitled, after consultation with you, to change
the structure, terms or pricing, but not the aggregate amount, of the Facility
after July 10, 1998 if the syndication has not been completed and if Chase and
CSI determine that such changes are advisable in order to insure a successful
syndication of the Facility.
To assist CSI in its syndication efforts, you agree promptly to prepare
and provide to CSI and Chase all information with respect to the Borrower, the
Facility and the other transactions contemplated hereby and by Schedule 1 and
the Fee Letter referred to below, including all financial information and
projections (the "Projections"), as we may reasonably request in connection with
the arrangement of the Facility. You hereby represent and covenant that (a) all
information other than the Projections (the "Information") that has been or will
be made available to Chase or CSI by you or any of your representatives is or
will be, when taken as a whole and when furnished, complete and correct in all
material respects and does not or will not, when taken as a whole considered
with all other information given to Chase or CSI by you or your representatives
and when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been or will be made
available to Chase or CSI by you or your representatives have been or will be
prepared in good faith based upon assumptions believed reasonable when made. You
understand that in arranging the Facility we may use and rely on the Information
and Projections without independent verification thereof.
You hereby acknowledge and consent that CSI may share, the Information
and any other information or matters relating to the Borrower, or the
transactions contemplated hereby with affiliates of CSI, including The Chase
Manhattan Bank, and Chase, and that such affiliates may likewise share
information relating to the Borrower or such transactions with CSI.
As consideration for Chase's commitment hereunder and CSI's agreement to
perform the services described herein, you agree to repay at closing to CSI and
Chase on the date on which the documentation evidencing the Facility is executed
by all parties
-2-
<PAGE>
thereto (the "Closing Date") the nonrefundable fees set forth in the Fee Letter
dated the date hereof and delivered herewith (the "Fee Letter").
Chase's commitment hereunder and CSI's agreement to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its subsidiaries, taken as a whole, (b) there not having
occurred a material disruption of or material adverse change in financial,
banking or capital market conditions that, in our judgment, could materially
impair the syndication of the Facility, (c) our satisfaction that prior to and
during the syndication of the Facility there shall be no competing senior
secured financing, (d) the negotiation, execution and delivery on or before
June 30, 1998 of definitive documentation with respect to the Facility
satisfactory to Chase and its counsel (such documentation to include terms set
forth in Schedule 1) Those matters that are not covered by the provisions hereof
and of Schedule 1 are subject to the approval and agreement of Chase, CSI and
the Borrower.
You agree to indemnify and hold harmless Chase, CSI, their affiliates
and their respective officers, directors, employees, advisors, and agents
(each, an "Indemnified Person") from and against any and all losses, claims,
damages and liabilities to which any such Indemnified Person may become subject
arising out of or in connection with this Engagement Letter, the Facility,
the use of the proceeds thereof, or any related transaction or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any Indeminified Person is a party thereto, and to
reimburse each Indemnified Person upon demand for any legal or other expenses
incurred in connection with investigating or defending any of the foregoing,
provided that the foregoing indemnity will not, as to any Indemnified Person,
apply to Losses or related expenses to the extent they arise from the willful
misconduct or gross negligence of such Indemnified Person. YOU AGREE THAT THE
INDEMNITY CONTAINED IN THE PRECEDING SENTENCE EXTENDS TO AND IS INTENDED TO
COVER LOSSES AND RELATED EXPENSES ARISING OUT OF THE ORDINARY, SOLE OR
CONTRIBUTORY NEGLIGENCE OF AN INDEMNIFIED PERSON. In addition, you agree to
reimburse Chase, CSI and their affiliates on demand for all out-of-pocket
expenses (including due diligence expenses, syndication expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Facility and any related documentation (including this
Engagement Letter, Schedule 1, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver thereof.
No Indemnified Person shall be liable for any indirect or consequential damages
in connection with its activities related to the Facility.
<PAGE>
This Engagement Letter shall not be assignable by you without the prior
written consent of Chase and CSI (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. This Engagement
Letter may not be amended or waived except by an instrument in writing signed by
you, Chase and CSI. This Engagement Letter may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Engagement Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. This Engagement Letter
(together with Schedule 1) and the Fee Letter are the only agreements that have
been entered into among us with respect to the Facility and set forth the entire
understanding of the parties with respect thereto. This Letter Agreement, the
Fee Letter and the Term Sheet (including all exhibits and schedules hereto or
thereto) shall be governed by and construed in accordance with, the laws of the
State of New York.
This Engagement Letter is delivered to you on the understanding that
neither this Engagement Letter, Schedule 1 or the Fee Letter nor any of their
terms or substance shall be disclosed, directly or indirectly, to any other
person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof).
The reimbursement, indemnification and confidentiality provisions
contained herein and in the Fee Letter shall remain in full force and effect
regardless of whether definitive financing documentation shall be executed and
delivered and notwithstanding the termination of this Engagement or Chase's
commitment hereunder.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of Schedule 1 and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter not later
than 5:00 p.m., Houston, Texas time, on or before June 5, 1998. Chase's
commitment and CSI's agreements herein will expire at such time in the event
Chase has not received such executed counterparts in accordance with the
immediately preceding sentence.
-4-
<PAGE>
Chase and CSI are pleased to have been given the opportunity to
assist you in connection with this important financing.
Very truly yours.
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ MICHAEL J. COSTELLO
--------------------------
Name: Michael J. Costello
Title: Vice President
CHASE SECURITIES INC.
By: /s/ TROY D. TAYLOR
--------------------------
Name: Troy D. Taylor
Title: Vice President
Accepted and agreed to as of
the date first above written by:
CARROLS CORPORATION
By: /s/ PAUL R. FLANDERS
--------------------------
Name: Paul R. Flanders
Title: Vice President-Finance
<PAGE>
EXHIBIT (C)(1)
EXECUTION VERSION
- ------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
CARROLS CORPORATION
AND
POLLO TROPICAL, INC.
DATED AS OF JUNE 3, 1998
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
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
<PAGE>
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
<PAGE>
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
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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:
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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
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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
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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
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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
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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
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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
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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
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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
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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 Montgomery 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
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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 Hart-Scott-Rodino 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
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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
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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
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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,
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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
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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.
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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,
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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.
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(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.
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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.
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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
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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
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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.
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(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
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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
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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),
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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.
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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
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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
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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.
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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
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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.
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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.
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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
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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
968 James Street
Syracuse, New York 13203
Telecopier: (315) 475-9616
Attention: Alan Vituli, Chairman and Chief Executive
Officer
with a copy to: Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022-2585
Telecopier: (212) 940-8776
Attention: Wayne A. Wald, Esq.
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<PAGE>
If to the Company: Pollo Tropical, Inc.
7300 N. Kendall Drive
8th Floor
Miami, Florida 33156
Telecopier: (305) 670-6403
Attention: Larry J. Harris
with a copy to: Greenberg Traurig Hoffman
Lipoff Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Telecopier: (305) 579-0717
Attention: Mr. Bruce E. Macdonough
* * * *
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
36
<PAGE>
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/ Joseph Zirkman
---------------------------------------------------
Name: Joseph Zirkman
Title: Vice President and General Counsel
POLLO TROPICAL, INC.
By: /s/ Larry J. Harris
---------------------------------------------------
Name: Larry J. Harris
Title: Chairman and Chief Executive Officer
37
<PAGE>
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;
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(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
<PAGE>
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
</TABLE>
<PAGE>
EXHIBIT (C)(2)
TENDER AGREEMENT
THIS TENDER AGREEMENT is made and entered into as of this 3rd day of
June 1998, among CARROLS CORPORATION, a Delaware corporation ("Buyer"), and
Larry J. Harris and Molly W. Harris, as joint tenants, and the Harris
Children's Trust (each, a "Shareholder").
WHEREAS, concurrently with the execution of this Agreement, Buyer and
Pollo Tropical, Inc., a Florida corporation (the "Company") are entering into
an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, (i) that, upon the terms and
subject to the conditions therein, Buyer will make the Offer (as defined in
Section 2) for all outstanding shares of Common Stock (as defined below) at a
price of $11.00 per share in cash, and (ii) for the merger of the Company with
and into the Buyer (the "Merger") at such $11.00 per share price; and
WHEREAS, as a condition to the willingness of Buyer to enter into the
Merger Agreement, Buyer has requested that the Shareholders agree, and in
order to induce Buyer to enter into the Merger Agreement, the Shareholders
have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
Buyer of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
SECTION 1. Representations and Warranties.
(a) Each Shareholder severally, and not jointly, represents and
warrants to Buyer as follows:
(i) Such Shareholder is the record and beneficial owner of
the number of shares of Common Stock, par value $.01 per share, of
the Company (the "Common Stock"), separately identified as such, set
forth opposite such Shareholder's name in Schedule A hereto (as may
be adjusted from time to time pursuant to Section 5, such
Shareholder's "Shares"). Except for such Shareholder's Shares and any
other shares of Common Stock subject hereto, such Shareholder is not
the record or beneficial owner of any shares of Common Stock.
(ii) This Agreement has been duly authorized, executed and
delivered by such Shareholder and, assuming this Agreement
constitutes a valid and binding obligation of Buyer, constitutes the
legal, valid and binding obligation of such Shareholder, enforceable
against such Shareholder 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. Neither the execution and
delivery of
<PAGE>
this Agreement nor the consummation by such Shareholder of the
transactions contemplated hereby will result in a violation of, or a
default under, or conflict with, any contract, trust, commitment,
agreement, understanding, arrangement or restriction of any kind to
which such Shareholder is a party or bound or to which such
Shareholder's Shares are subject. To the best of such Shareholder's
actual knowledge, without inquiry, consummation by such Shareholder
of the transactions contemplated hereby will not violate, or require
any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable
to such Shareholder or such Shareholder's Shares, except for any
necessary filing under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and except for any filings under applicable
securities laws.
(iii) Such Shareholder's Shares and the certificates
representing such Shares are now and at all times during the term
hereof will be held by such Shareholder, or by a nominee or custodian
for the benefit of such Shareholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever,
except for any such encumbrances or proxies arising hereunder and
except as provided in the last sentence of Section 3(a).
(iv) Such Shareholder understands and acknowledges that
Buyer is entering into the Merger Agreement in reliance upon such
Shareholder's execution and delivery of this Agreement. Such
Shareholder acknowledges that the irrevocable proxy set forth in
Section 4 is granted in consideration for the execution and delivery
of the Merger Agreement by Buyer.
(b) The Buyer represents and warrants to the Shareholders as follows:
(i) The Buyer (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, (b) has full corporate power and authority to own, lease
and operate its 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.
(ii) The Buyer has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
by this Agreement. The execution, delivery and performance by the
Buyer of this Agreement, and the consummation by the Buyer of the
transactions contemplated by this Agreement, have been duly
authorized by all necessary corporate action and no other corporate
proceedings on the part of the Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by the
Buyer and, assuming this Agreement constitutes a valid and binding
obligation of the Shareholders, constitutes the legal, valid and
binding obligation of the Buyer enforceable against it in accordance
with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of
2
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creditors' rights generally. Neither the execution and delivery of
this Agreement nor the consummation by the Buyer of the transactions
contemplated hereby will result in a violation of, or a default
under, or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Buyer is a party or bound or to which the Buyer is subject. To the
best of Buyer's actual knowledge, without inquiry, consummation by
Buyer of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable
to Buyer, except for any necessary filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and except for any filings under applicable securities laws.
SECTION 2. Agreement to Tender. Each Shareholder hereby severally
agrees that, unless this Agreement is terminated, except during such time as
the Company's Board of Directors has withdrawn its recommendation of the Offer
or has modified such recommendation in a manner adverse to Buyer until such
recommendation is reinstated, it shall tender its Shares pursuant to and in
accordance with the terms of the Offer (as defined in the Merger Agreement)
and that, unless this Agreement is terminated, except during such time as the
Company's Board of Directors has withdrawn its recommendation of the Offer or
has modified such recommendation in a manner adverse to Buyer until such
recommendation is reinstated, it shall not withdraw any Shares so tendered (it
being understood that the obligation contained in this sentence is
unconditional). The parties agree that each Shareholder will, for all Shares
tendered by such Shareholder in the Offer and accepted for payment by Buyer,
receive a price per Share in cash equal to $11.00, or such higher per share
consideration paid to other shareholders who have tendered into the Offer in
cash.
SECTION 3. Covenants. Each Shareholder severally, and not jointly,
agrees with, and covenants to, Buyer that, unless this Agreement is
terminated, except during such time as the Company's Board of Directors has
withdrawn its recommendation of the Offer or has modified such recommendation
in a manner adverse to Buyer until such recommendation is reinstated:
(a) Such Shareholder shall not, except as contemplated by the terms
of this Agreement or the Offer,
(i) transfer (the term "transfer" shall include, without
limitation, for the purposes of this Agreement, any sale, gift,
pledge or other disposition), or consent to any transfer of, any or
all of such Shareholder's Shares or any interest therein,
(ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such
Shares or any interest therein,
(iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to such Shares,
(iv) deposit such Shares into a voting trust or enter into a
voting agreement or arrangement with respect to such Shares, or
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<PAGE>
(v) take any other action that would restrict, limit or
interfere in any material respect with the performance of its
obligations hereunder or the transactions provided for herein.
Notwithstanding anything to the contrary provided in this Agreement, a
Shareholder shall have the right to transfer Shares (i) to any Family Member,
(ii) to the trustee or trustees of a trust solely (except for remote
contingent interests) for the benefit of Shareholder and/or one or more Family
Members, (iii) to a foundation created or established by Shareholder, or any
other charitable organization, (iv) to a corporation of which such Shareholder
and/or any Family Members owns all of the outstanding capital stock, (v) to a
partnership of which Shareholder and/or any Family Members owns all of the
partnership interests, (vi) to the executor, administrator or personal
representative of the estate of Shareholder, (vii) to any guardian, trustee or
conservator appointed with respect to the assets of Shareholder or (viii) to
any beneficiary of the Harris Children's Trust, provided, that in the case of
any such transfer, the transferee (except in the case of a charitable
organization in an amount not to exceed an aggregate of 30,000 Shares) shall
execute an agreement to be bound by the terms of this Agreement. For purposes
of this Agreement, "Family Member" shall have the meaning ascribed to "Related
Parties" under Section 672(c) of the Internal Revenue Code of 1986, as
amended.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought with respect to the Merger, the Merger
Agreement or any transaction contemplated thereby, such Shareholder shall,
including by executing a written consent if requested by the Buyer or the
Company, vote (or cause to be voted) such Shareholder's Shares in favor of the
Merger, the Merger Agreement and all other transactions contemplated thereby.
(c) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, such Shareholder shall, including by
executing a written consent if requested by the Buyer or the Company, vote (or
cause to be voted) such Shareholder's Shares against (i) any merger agreement
or merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, joint venture,
recapitalization, dissolution, liquidation or winding up of or by the Company
and (ii) any amendment of the Company's Articles of Incorporation or By-laws
or other proposal or transaction (including any consent solicitation to remove
or elect any directors of the Company) involving the Company or any of its
subsidiaries which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify, or result in a material breach
of any covenant, representation or warranty or any other obligation or
agreement of the Company under or with respect to, the Offer, the Merger, the
Merger Agreement or any of the other transactions contemplated by the Merger
Agreement.
(d) Such Shareholder shall permit the Buyer to publish and disclose
in the Offer Documents (as defined in the Merger Agreement) and, if approval
of the Company's shareholders is required under applicable law, the proxy
statement (including all documents and schedules filed with the Securities and
Exchange Commission) its identity and ownership or other rights with respect
to the Common Stock and the nature of its commitments, arrangements and
understandings under this Agreement.
4
<PAGE>
SECTION 4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) During the term of this Agreement, except during such time as the
Company's Board of Directors has withdrawn its recommendation of the Offer or
has modified such recommendation in a manner adverse to Buyer until such
recommendation is reinstated, each Shareholder hereby irrevocably grants to,
and appoints, Buyer and Alan Vituli, in his capacity as an officer of the
Buyer, and any other individual who shall hereafter be designated by Buyer,
and each of them individually, such Shareholder's proxy and attorney-in-fact
(with full power of substitution), for and in the name, place and stead of
such Shareholder, to vote such Shareholder's Shares, or grant a consent or
approval in respect of such Shares, in accordance with Section 3(b) or Section
3(c).
(b) Such Shareholder represents that any proxies heretofore given in
respect of such Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Such Shareholder hereby affirms that the irrevocable proxy set
forth in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. Such
Shareholder hereby further affirms that the irrevocable proxy is coupled with
an interest and may under no circumstances be revoked. Such Shareholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy is executed and intended
to be irrevocable in accordance with the provisions of Section 607.0722 of the
Florida Business Corporations Act (the "Corporation Law").
SECTION 5. Certain Events. Each Shareholder agrees that this
Agreement and the obligations hereunder shall attach to such Shareholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation such Shareholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the Common Stock, or the acquisition of
additional shares of Common Stock or other securities or rights of the Company
by any Shareholder, the number of Shares listed on Schedule A beside the name
of such Shareholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Common Stock or
other securities or rights of the Company issued to or acquired by such
Shareholder.
SECTION 6. Voidability. If prior to the execution hereof, the Board
of Directors of the Company shall not have duly and validly authorized and
approved by all necessary corporate action the acquisition of Common Stock by
Buyer and the other transactions contemplated by this Agreement and the Merger
Agreement, so that by the execution and delivery hereof (a) Buyer would
become, or could reasonably be expected to become, an "Interested shareholder"
with whom the Company would be prevented for any period pursuant to Section
607.0901 of the Corporation Law from engaging in any "Affiliated transaction"
(as such terms are defined in Section 607.0901 of the Corporation Law) or (b)
Section 607.0902 of the Corporation Law would be violated, then
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<PAGE>
this Agreement shall be void and unenforceable until such time as such
authorization and approval shall have been duly and validly obtained.
SECTION 7. Shareholder Capacity. No person executing this Agreement
who is or becomes during the term hereof a director or officer of the Company
makes any agreement or understanding herein in his or her capacity as such
director or officer. Each Shareholder signs solely in its capacity as the
record holder and beneficial owner of such Shareholder's Shares and nothing
herein shall limit or affect any actions taken by a Shareholder or any
officer, director, partner or affiliate of such Shareholder in its capacity as
an officer or director of the Company to the extent specifically permitted by
the Merger Agreement.
SECTION 8. Further Assurances. Each Shareholder shall, upon request
of Buyer execute and deliver any additional documents and take such further
actions as may reasonably be requested by Buyer as necessary to carry out the
provisions hereof and to vest the power to vote such Shareholder's Shares as
contemplated by Section 4 in Buyer and the other irrevocable proxies described
therein.
SECTION 9. Termination. This Agreement, and all rights and
obligations of the parties hereunder, shall terminate upon the earlier of (a)
the date upon which the Merger Agreement is terminated in accordance with its
terms, (b) the date that Buyer shall have purchased and paid for the Shares of
each Shareholder pursuant to Section 2, (c) August 31, 1998, if the Offer is
not consummated on or before August 31, 1998 and (d) October 31, 1998, if the
Merger is not consummated on or before October 31, 1998. Upon termination of
this Agreement, all obligations of the parties hereto shall terminate.
SECTION 10. Option. Unless this Agreement is terminated, except
during such time as the Company's Board of Directors has withdrawn its
recommendation of the Offer or has modified such recommendation in a manner
adverse to Buyer until such recommendation is reinstated:
(a) Each Shareholder hereby grants to Buyer an irrevocable option
(the "Option") to purchase all such Shareholder's Shares at a purchase price
per share (the "Purchase Price") equal to the Offer Price in cash or such
higher per share consideration paid to other shareholders who have tendered
into the Offer, in cash. The Option will become exercisable, in whole but not
in part, by Buyer if, and only if, such Shareholder shall have breached
Section 2 and Buyer shall otherwise have accepted shares of Common Stock for
purchase pursuant to the Offer. If the Option becomes exercisable, the Option
may be exercised at any time during the period commencing with the acceptance
by Buyer of shares of Common Stock for purchase pursuant to the Offer and
ending simultaneously with the final expiration of the Offer pursuant to the
Merger Agreement (the "Option Period").
(b) If Buyer wishes to exercise the Option with respect to the
Shares, it may do so by giving written notice (the date of such notice being
herein called the "Notice Date") to the Shareholders (in the manner set forth
in Section 11(b)) specifying that all the Shareholders' Shares are to be
purchased and specifying the place, time and date (not earlier than one
business day, nor later than 10 business days, from the Notice Date) for the
closing of the purchase of the
6
<PAGE>
Shareholders' Shares by Buyer pursuant to such exercise. Such notice may be
given prior to the commencement of the Option Period if the Option shall have
become exercisable as provided in Section 10(a).
(c) Buyer represents that the Shares purchased by Buyer pursuant to
the Option will be acquired for investment only and not with a view to any
public distribution thereof, and Buyer will not offer to sell or otherwise
dispose of any Shares so acquired by it in violation of the registration
requirements of the Securities Act of 1933, as amended.
SECTION 11. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
(b) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to Buyer, to the
address set forth in Section 8.12 of the Merger Agreement; and (ii) if to a
Shareholder, to the address set forth on Schedule A hereto, or such other
address as may be specified in writing by such Shareholder.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective (even without the signature of any other Shareholder) as to any
Shareholder when one or more counterparts have been signed by each of Buyer
and such Shareholder and delivered to Buyer and such Shareholder.
(e) This Agreement (including the documents and instruments referred
to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the Florida and, to the extent expressly provided herein,
the Corporation Law, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except by laws of descent. Any assignment in
violation of the foregoing shall be void.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any event, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in
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<PAGE>
any way be affected, impaired or invalidated, and shall be enforced to the
fullest extent permitted by law.
(i) Each Shareholder agrees that irreparable damage would occur and
that Buyer would not have any adequate remedy at law 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 Buyer
shall be entitled to an injunction or injunctions to prevent breaches by any
Shareholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement. 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 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, and (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 located in the
State of Florida (or a state court in Florida if the Federal courts do not
have subject matter jurisdiction). The prevailing party in any judicial action
shall be entitled to receive from the other party reimbursement for the
prevailing party's reasonable attorneys' fees and disbursements, and court
costs.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed
by such party.
(k) All representations and warranties contained herein shall expire
upon the termination of this Agreement in accordance with Section 9 hereof.
(l) Notwithstanding anything in this Agreement to the contrary, (i)
until the exercise of any stock options, the term "Shares" as used herein
shall be deemed not to include any such stock options and (ii) nothing
contained herein shall be deemed to require any Shareholder to exercise such
stock options in order to tender the Shares issued upon such exercise.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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<PAGE>
IN WITNESS WHEREOF, the Buyer and the Shareholders have caused this
Agreement to be duly executed and delivered as of the date first written
above.
CARROLS CORPORATION
By: /s/ Joseph Zirkman
--------------------------------------
Name: Joseph Zirkman
Title: Vice President and General Counsel
SHAREHOLDERS
/s/ Larry J. Harris
------------------------------------------
Larry J. Harris
/s/ Molly Harris
------------------------------------------
Molly Harris
HARRIS CHILDREN'S TRUST
By: /s/ Malcolm H. Neuwahl
--------------------------------------
Name: Malcolm H. Neuwahl
Title: Trustee
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<PAGE>
Schedule A
----------
Name and Address of Shareholder Number of Shares of Common Stock
Beneficially Owned
Larry J. Harris and Molly W. Harris, 1,147,156
as Joint Tenants ------------------
10221 S.W. 143rd Street
Miami, Florida 33176
Harris Children's Trust 300,918
Malcolm H. Neuwahl, Trustee ------------------
1500 San Remo Avenue
Suite 125
Coral Gables, Florida 33146
10
<PAGE>
EXHIBIT (C)(3)
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT (the "Agreement"),
dated as of June 3, 1998, by and among Pollo Tropical, Inc., a Florida
corporation (the "Company"), Larry J. Harris, an individual ("Harris"), and
Carrols Corporation, a Delaware corporation ("Carrols").
WITNESSETH
----------
WHEREAS, the Company and Carrols have entered into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant
to which Carrols will make a tender offer at a price per share of at least
$11.00 per share (the "Offer") to acquire all of the outstanding shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"), on a
fully diluted basis and, after the consummation of the Offer, the Company will
merge with and into Carrols (the "Merger");
WHEREAS, Harris owns shares of the Common Stock (the "Harris
Shares"), and has agreed to tender and sell the Harris Shares to Carrols in
the Offer pursuant to and subject to the terms and conditions of a Tender
Agreement, dated as of the date hereof (the "Tender Agreement"), among
Carrols, Harris and certain other shareholders of the Company party thereto;
and
WHEREAS, Harris is willing to enter into this Agreement in
consideration of (i) the Company and Carrols completing the transactions
contemplated by the Merger Agreement and the Tender Agreement and (ii) the
consideration described in Section 2 hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
Section 1. Non-Competition
(a) Harris agrees that during the period he is employed by the
Company and for a period of two years after the earlier of (A) the date Harris
ceases to be employed by the Company or (B) the date that Carrols pays for and
acquires any shares of the Common Stock pursuant to the Offer (each the
"Commencement Date"), he will not engage in or Participate In any business or
organization which engages in the business of owning, operating or franchising
quick service chicken-themed restaurants within the State of Florida and the
Commonwealth of Puerto Rico and Central America and South America, except that
in each case the provisions of this Section 1 will not be deemed breached
merely because Harris owns not more than 5% of the outstanding common stock or
other equity interests of a corporation, partnership or other entity, if, (i)
at the time of its acquisition by Harris such stock is listed on a national
securities exchange, is reported on Nasdaq, or is regularly traded in the
over-the-counter market by a member of a national securities exchange or (ii)
Harris' investment in such corporation, partnership or other entity is solely
a passive investment and Harris maintains not more than 5% of the voting
control of such corporation, partnership or other entity.
<PAGE>
(b) As used in this Agreement, the term "Participate In" shall mean:
"directly or indirectly, for his own benefit or for, with, or through any other
person, firm, or corporation, own, manage, operate, control, loan money to, or
participate in the ownership, management, operation, or control of, or be
connected as a director, officer, employee, partner, consultant, agent or
independent contractor."
(c) During the period Harris is employed by the Company and for a
period of two years after the Commencement Date, (i) Harris will not attempt
to employ, offer employment to, directly or indirectly solicit or endeavor to
entice away from the Company or any of its subsidiaries or the business
operation of the Company as operated by Carrols or any of Carrols'
subsidiaries any of its respective employees or former employees (including,
without limitation, Glen Rozansky) and (ii) Harris will not directly or
indirectly employ any person who is an employee or former employee (including,
without limitation, Glen Rozansky) of the Company or any of its subsidiaries
or the business operation of the Company as operated by Carrols or any of
Carrols' subsidiaries; provided, that the terms of this Section 1(c) shall not
apply to (w) the solicitation or employment by Harris of any former employee
after the earlier of (A) the one year anniversary of the date of the cessation
of employment with the Company of such former employee, and (B) the second
anniversary of the Commencement Date, (x) the solicitation or employment by
Harris of not more than one restaurant manager at any time after the date that
is 18 months after consummation of the Merger, (y) the solicitation or
employment by Harris of Glen Rozansky; provided that Rozansky shall not
participate in any activity in connection with such employment by Harris
related to the identification of property to be used as a restaurant, or (z)
the solicitation or employment of Harris' current secretary. Notwithstanding the
foregoing, this Section 1(c) shall not apply to employees or former employees
(other than Glen Rozansky) who ceased to be employees prior to the date hereof.
(d) During the period Harris is employed by the Company and for a
period of five years after the Commencement Date, Harris will not disclose,
and will keep confidential, any trade secrets, confidential or proprietary
information of the Company and its subsidiaries not in the public domain
acquired by Harris while employed by the Company, including without
limitation, matters of a business nature, such as information about costs,
profits, markets, leases, agreements, financial information, technical and
production know-how, developments, inventions, processes, recipes or
administrative procedures; provided, however, that the provisions of this
Section 1(d) will not be breached if Harris is required by law to disclose
such confidential or proprietary information; provided, further, that in such
event Harris shall promptly notify Carrols of any such required disclosure.
Harris shall return all tangible evidence of such confidential information to
the Company prior to or at the termination of his employment.
(e) Since a breach of the provisions of this Section 1 could not
adequately be compensated by money damages, the Company and Carrols shall be
entitled, in addition to any other right and remedy available to it, to an
injunction restraining such breach or a threatened breach, and in either case
no bond or other security shall be required in connection therewith. Harris
agrees that the provisions of this Section 1 are necessary and reasonable to
protect Carrols or any of its subsidiaries in the conduct of its business. If
any restriction contained in this Section 1 shall be deemed to be invalid,
illegal, or unenforceable by reason of the extent, duration, or geographical
scope thereof, or otherwise, then the court making such determination shall
have the right to reduce such extent, duration, geographical scope, or other
provisions hereof, and in its reduced form such restriction shall then be
enforceable in the manner contemplated hereby.
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<PAGE>
Section 2. Payment to Harris; Salary and Bonus; Use of Office.
(a) Carrols will pay to Harris the sum of Three Hundred Fifty
Thousand Dollars ($350,000), less any amounts paid, with the written consent
of Harris, by the Company to third parties designated by Harris. Such amount
shall be payable in cash within five (5) business days after the date that
Carrols pays for and acquires any shares of the Common Stock pursuant to the
Offer.
(b) In addition, Harris will be entitled to receive (i) in full his
current salary and benefits until the consummation of the Merger and (ii) a
bonus of Ninety Thousand Dollars ($90,000) in full satisfaction of any and all
obligations of the Company to pay Harris a bonus for the 1998 fiscal year,
such bonus to be payable within five (5) business days after the date that
Carrols pays for and acquires any shares of the Common Stock pursuant to the
Offer.
(c) Harris shall be entitled to the continued, uninterrupted use of
his current office at the Company's headquarters, located at 7300 N. Kendall
Drive, 8th Floor, Miami, Florida 33156, until August 31, 1998.
Section 3. Amendment to Agreement.
This Agreement may not be modified or amended, nor any term hereof
waived, except by a writing signed by all of the parties to this Agreement.
Section 4. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of, the
parties hereto and their respective successors, heirs, legal representatives
and permitted assigns.
Section 5. Headings.
The captions and descriptive headings in this Agreement are inserted
for convenience only, do not constitute a part of this Agreement, and shall
not be taken into account in construing any of the provisions of this
Agreement.
Section 6. Execution in Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same instrument.
Section 7. 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 in accordance with this Section
7:
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<PAGE>
If to Carrols:
Carrols Corporation
968 James Street
Syracuse, New York 13203
Telecopier: (315) 475-9616
Attention: Alan Vituli,
Chairman and Chief Executive Officer
with a copy to:
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
Telecopier: (212) 940-8776
Attention: Wayne A. Wald, Esq.
If to Larry J. Harris:
Larry J. Harris
10221 Southwest 143rd Street
Miami, Florida 33176
With a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Telecopier: (404) 572-5100
Attention: C. William Baxley
If to the Company:
Pollo Tropical, Inc.
7300 N. Kendall Drive
8th Floor
Miami, Florida 33156
Telecopier: (305) 670-7696
Attention: President
in each case, with a copy to:
Greenberg Traurig
Hoffman Lipoff Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Telecopier: (305) 579-0717
Attention: Bruce E. Macdonough, Esq.
4
<PAGE>
Section 8. Effectiveness; Termination.
This Agreement, and all rights and obligations of the parties
hereunder shall become effective only upon the closing of the Offer and shall
terminate if the Merger Agreement is terminated in accordance with its terms
prior to the closing of the Offer.
Section 9. Governing Law
This Agreement shall be governed and construed in accordance with the
laws of the State of Florida, without giving effect to conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CARROLS CORPORATION
By: /s/ Joseph Zirkman
-----------------------------------------
Name: Joseph Zirkman
Title: Vice President and General Counsel
POLLO TROPICAL, INC.
By: /s/ Nicholas A. Castaldo
-----------------------------------------
Name: Nicholas A. Castaldo
Title: President/C.O.O.
/s/ Larry J. Harris
---------------------------------------------
Larry J. Harris
5
