FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15(d) of the securities exchange
act of 1934
For the quarterly period ended March 31, 1999
[ ] Transition report pursuant to section 13 or 15(d) of the securities
exchange act of 1934
For the transition period from to
Commission file number: 1-11754
Piccadilly Cafeterias, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-0604977
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3232 Sherwood Forest Blvd., Baton Rouge, Louisiana 70816
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (504)293-9440
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of Common Stock, without par value, as
of May 3, 1999, was 10,528,368.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
PICCADILLY CAFETERIAS, INC.
<TABLE>
<CAPTION>
(Amounts in thousands except share data)
- -----------------------------------------------------------------------------------------------------------------------------
Balances at March 31 June 30
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Accounts and notes receivable $ 1,170 $ 1,602
Inventories 9,265 12,489
Deferred income taxes 10,559 10,559
Other current assets 1,893 1,634
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 22,887 26,284
PROPERTY, PLANT AND EQUIPMENT 315,135 332,918
Less allowances for depreciation and unit closings 131,308 129,053
- -----------------------------------------------------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT 183,827 203,865
GOODWILL, net of $416 and $20 accumulated amortization at
March 31, 1999 and at June 30, 1998 14,184 12,447
OTHER ASSETS 13,281 11,264
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 234,179 $ 253,860
=============================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 12,969 $ 18,359
Accrued interest 1,093 418
Accrued salaries, benefits and related taxes 20,174 24,869
Accrued rent 5,337 5,036
Other accrued expenses 7,062 11,455
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 46,635 60,137
LONG-TERM DEBT 70,085 78,979
DEFERRED INCOME TAXES 2,017 1,417
RESERVE FOR UNIT CLOSINGS 19,090 20,104
ACCRUED EMPLOYEE BENEFITS, less current portion 12,893 12,787
SHAREHOLDERS' EQUITY
Preferred Stock, no par value; authorized 50,000,000 shares;
issued and outstanding: none --- ---
Common Stock, no par value, stated value $1.82 per share;
authorized 100,000,000 shares; issued and outstanding
10,528,368 shares at March 31, 1999 and
at June 30, 1998 19,141 19,141
Additional paid-in capital 18,735 18,735
Retained earnings 45,863 42,810
- -----------------------------------------------------------------------------------------------------------------------------
83,739 80,686
Less treasury stock at cost: 25,000 Common Shares at
March 31, 1999 and at June 30, 1998 280 250
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 83,459 80,436
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 234,179 $ 253,860
=============================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited)
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
PICCADILLY CAFETERIAS, INC.
<TABLE>
<CAPTION>
(Amounts in thousands -- except per share data)
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31 March 31
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 122,498 $ 76,641 $ 381,809 $ 234,782
Cost and expenses:
Cost of sales 73,566 44,002 229,213 136,153
Other operating expense 42,568 25,122 127,899 76,755
General and administrative expense 4,249 2,969 13,219 8,689
Interest expense 1,704 576 4,969 1,699
Other expense (income) (326) (142) (517) (411)
- -----------------------------------------------------------------------------------------------------------------------------------
121,761 72,527 374,783 222,885
- -----------------------------------------------------------------------------------------------------------------------------------
Gain on sale of Ralph & Kacoo's 1,556 --- 1,556 ---
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,293 4,114 8,582 11,897
Provision for income taxes (benefit) (505) 1,522 1,920 4,402
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 2,798 $ 2,592 $ 6,662 $ 7,495
===================================================================================================================================
Weighted average number of shares outstanding 10,505 10,503 10,504 10,503
===================================================================================================================================
Net income per share -- basic and assuming dilution $ .27 $ .25 $ .63 $ .71
===================================================================================================================================
Cash dividends per share $ .12 $ .12 $ .36 $ .36
===================================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
PICCADILLY CAFETERIAS, INC.
<TABLE>
<CAPTION>
(Amounts in thousands)
- -----------------------------------------------------------------------------------------------------------
Nine Months Ended March 31 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 6,662 $ 7,495
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 12,863 9,122
Costs associated with reserved units (145) (663)
Gain on sale of Ralph & Kacoo's (1,556) ---
Provision for deferred income taxes 600 600
Loss on sale of assets 362 81
Pension contributions in excess of expense (1,400) (950)
Change in operating assets and liabilities (8,594) 2,058
- -----------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,792 17,743
INVESTING ACTIVITIES
Net proceeds from sale of Ralph & Kacoo's 20,473 ---
Acquisition of business (5,697) ---
Purchase of property, plant and equipment (10,096) (10,243)
Proceeds from sale of property, plant and equipment 751 1,860
- -----------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 5,431 (8,383)
FINANCING ACTIVITIES
Payments on long-term debt -- net (8,894) (5,540)
Purchases of treasury stock (288) (33)
Dividends paid (5,041) (3,787)
- -----------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (14,223) (9,360)
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents --- ---
Cash and cash equivalents at beginning of period --- ---
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ --- $ ---
===========================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited)
NOTE TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
PICCADILLY CAFETERIAS, INC.
March 31, 1999
NOTE 1 -- FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions to
Form 10-Q and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The balance sheet data for June
30, 1998 is derived from audited financial statements.
Comparative results of operations by periods may be affected by
the timing of the opening of new units. Quarterly results are
additionally affected by seasonal fluctuations in customer volume.
Customer volume at established units is generally higher in the second
quarter ended December 31 and lower in the third quarter ending March
31 reflecting seasonal retail activity. A fluctuation in customer
volume has a disproportionate effect on operating profit.
NOTE 2 -- SALE OF RALPH & KACOO'S
On March 30, 1999, the Company completed the sale of the Ralph
& Kacoo's seafood restaurants and related commissary business (Cajun
Bayou Distributors and Management, Inc.) to Cobb Investment Company,
Inc. for $21.3 million in cash, which represented a $19,500,000 sales
price plus estimated working capital at March 30, 1999. During a
60-day period from March 30, 1999 the final sales price will be
adjusted based on actual working capital at March 30, 1999. The
Company does not expect a material change in the final sales price.
The transaction resulted in a gain of $1,556,000, and a net tax benefit
of $826,000.
The tax benefit was the result of the sale of the stock of
Cajun Bayou Distributors and Management, Inc. The tax basis in the
stock was $6,057,000 higher than the book basis in the stock due to
differences that were not classified as temporary differences under
SFAS 109, and resulted in a loss on the stock sale for tax purposes
when compared to the amount recorded for financial statement purposes.
This tax loss on the stock sale generated a net overall tax loss on
the sale of Ralph & Kacoo's.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
In May 1998, the Company acquired 89% of the common stock of
Morrison Restaurants, Inc. (Morrison) for $5.00 per share. The
acquisition was completed on July 31, 1998 when the Company purchased
the remaining outstanding Morrison shares for $5.00 per share (the
Morrison Acquisition). The aggregate purchase price of the Morrison
shares, including debt assumed, was approximately $57,270,000. The
Morrison Acquisition was financed through a syndicated loan for which
up to $125,000,000 could be borrowed. At March 31, 1999,
approximately $54,915,000 was available under this facility.
1999 THIRD QUARTER COMPARED TO 1998 THIRD QUARTER
Total sales increased $45,857,000 or 59.8%, from 1998.
Cafeteria sales increased $46,561,000. Cafeteria sales for 1999
include $48,748,000 of Morrison sales.
<PAGE>
The following table reconciles total cafeteria sales to same-
store cafeteria sales (units that were open for three full months in
both periods) for the quarters ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>
(Sales in thousands)
1999 1998
----------------------------------- -------------------------------- Sales
Sales Units Sales Units Change
<S> <C> <C> <C> <C> <C>
Total cafeteria sales $ 116,852 $ 70,291 66.2%
Less new units 1,259 3(A) 62 1(A)
Less closed units 54 2(B) 1,971 8(B)
Less Morrison units 48,748 ---
--------- ---------
Net same-store cafeteria sales $ 66,791 123 $ 68,258 123 (2.1%)
</TABLE>
(A) Includes three cafeterias opened since December 31. 1997.
(B) Includes five cafeterias and three Piccadilly Express (Associated
Grocers supermarkets) units closed since December 31, 1997.
The decrease in same-store sales of 2.1% is the result of a
3.3% decline in customer traffic combined with a 1.2% increase in
customer check average.
Beginning in the third quarter, the Company accelerated the
conversion schedule for Morrison's cafeterias (the Morrison
Conversions), which had a significant impact on the operating results
for the Morrison's units. Thirty-two units were converted in the
third quarter. Costs associated with each conversion amount to
$40,000 to $45,000.
In addition to the initial conversion costs, the Morrison's
units operating efficiency has been negatively impacted by the
conversion process. Food and labor costs are generally higher in
units for periods subsequent to the conversion to ensure that high
quality food and excellent dining room service are provided to our
customers. The Company expects the units to gradually reach
performance levels consistent with comparable Piccadilly units.
During 1999 and 1998, operating income (net sales less cost of
sales and other operating expenses) as a percentage of net sales was
5.2% and 9.8%, respectively. Food costs as a percentage of net sales
increased 0.7% as a result of inflationary pressures and the Morrison
Conversions. Labor costs as a percentage of net sales increased 1.9%,
reflecting higher wage rates and the Morrison Conversions. Other
operating expenses as a percentage of net sales increased 2.0% as a
result of higher advertising costs and the Morrison Conversions.
General and administrative expense as a percentage of net sales
decreased 0.4% reflecting the elimination of some Morrison expenses.
Interest expense increased $1,128,000 in 1999 reflecting the increased
debt levels associated with the Morrison Acquisition. The Company's
effective income tax rate is impacted by the non-deductibility of
goodwill amortization, resulting in a higher rate than in the prior
year. Excluding the tax benefit from the Ralph & Kacoo's sale, the
Company's effective tax rate would have been 43.5% compared to 37.0% in
the prior year.
NINE MONTHS ENDED MARCH 31, 1999 COMPARED TO NINE MONTHS ENDED
MARCH 31, 1998
Total sales increased $147,027,000 or 62.6% from 1998.
Cafeteria sales increased $148,315,000. Cafeteria sales for 1999
include $152,783,000 of Morrison sales.
The following table reconciles total cafeteria sales to same
store cafeteria sales (units that were open for six full months in both
periods) for the nine months ended March 31, 1999 and 1998.
<TABLE>
<CAPTION> (Sales in thousands)
1999 1998
----------------------------------- -------------------------------- Sales
Sales Units Sales Units Change
<S> <C> <C> <C> <C> <C>
Total cafeteria sales $ 364,126 $ 215,810 68.7%
Less new units 5,176 6(A) 990 4(A)
Less closed units 2,882 8(B) 6,891 8(B)
Less Morrison units 152,783 ---
--------- ---------
Net same-store cafeteria sales $ 203,285 116 $ 207,929 116 (2.2%)
</TABLE>
(A) Includes four cafeterias and two Piccadilly Express (Associated
Grocers supermarkets) units opened since June 30, 1997.
(B) Includes five cafeterias and three Piccadilly Express (Associated
Grocers supermarkets) units closed since June 30, 1997.
The decrease in same-store sales of 2.2% is the net result of a
3.2% decline in customer traffic and a 1.2% increase in customer check
average.
Beginning in the third quarter, the Company accelerated the
conversion schedule for Morrison's cafeterias (the Morrison
Conversions), which had a significant impact on the operating results
for the Morrison's units. Thirty-two units were converted in the
third quarter, compared to 12 and 16 conversions in the first
two fiscal quarters, respectively. Costs associated with each
conversion amount to $40,000 to $45,000.
In addition to the initial conversion costs, the Morrison's
units operating efficiency has been negatively impacted by the
conversion process. Food and labor costs are generally higher in
units for periods subsequent to the conversion to ensure that high
quality food and excellent dining room service are provided to our
customers. The Company expects the units to gradually reach
performance levels consistent with comparable Piccadilly units.
During 1999 and 1998, operating income (net sales less cost of
sales and other operating expenses) as a percentage of net sales was
6.5% and 9.3%, respectively. Food costs as a percentage of net sales
increased 0.6% due to inflationary pressures and the Morrison
Conversions. Labor costs as a percentage of net sales increased
1.5% reflecting higher wage rates and the Morrison Conversions.
Other operating expenses as a percentage of net sales increased 0.8%
due to higher advertising costs and the Morrison Conversions. Interest
expense increased $3,270,000 in 1999 reflecting the increased debt
levels associated with the Morrison Acquisition. The Company's
effective income tax rate is impacted by the non-deductibility of
goodwill amortization, resulting in a higher rate than in the prior
year. Excluding the tax benefit from the Ralph & Kacoo's sale, the
Company's effective tax rate would have been 39.0% compared to 37.0% in
the prior year.
Net cash provided by operating activities was $8,792,000,
reflecting a decrease of $8,951,000. Net changes in operating assets
and liabilities decreased cash flow by $11,912,000 reflecting the
timing of payments in the ordinary course of business and acquisition
related costs, including $1,175,000 of severance costs. Current
year investing activities include proceeds from the sale of Ralph &
Kacoo's and a Morrison property and the payment of Morrison Acquisition
related costs. Prior year investing activities include proceeds from
the sale of a cafeteria, closed in November, 1996.
The Company expects to complete the Morrison Conversions by the
end of the first quarter of fiscal year 2000. Approximately 40
conversions are scheduled for the fourth quarter of fiscal year 1999
and 14 units are scheduled for the first quarter of fiscal year 2000.
Funds for the Morrison Conversions will be provided by operating cash
flows.
YEAR 2000 IMPACT
Some of the Company's older computer programs were written
using two digits rather than four to define the applicable year. As
a result, those computer programs have time-sensitive code which treat
a date ending in "00" as the year 1900 rather than the year 2000. This
could cause a system failure or miscalculations causing disruptions,
including, among other things, a temporary inability to process
transactions, process reports, or engage in similar normal business
activities (Year 2000 Issues).
During fiscal 1996, the Company began migrating its information
technology (IT) from internally developed systems to commercially
available products. The decision to invest in updated technology was
made for a number of reasons including Year 2000 Issues. The Company
has completed an assessment of its year 2000 Issues and believes that
previously scheduled replacements of its IT will function properly
with respect to dates in the Year 2000 and thereafter. The related
projects of migrating the Company's IT and addressing Year 2000 Issues
are hereinafter collectively referred to as the Year 2000 Project.
The total cost of the Year 2000 Project is estimated to be
approximately $700,000, primarily for the purchases of new software,
which will be capitalized. To date, the Company has incurred and
capitalized approximately $665,000 of such costs. The Company believes
these costs would have been incurred notwithstanding the Year 2000
Issues.
With respect to the acquisition of Morrison, it is the
Company's intent to absorb the IT requirements of Morrison into the
Company's systems during fiscal 1999. Accordingly, no additional Year
2000 Issues are anticipated as a result of the acquisition of Morrison.
The acquisition of Morrison has the effect of delaying completion of
the Year 2000 Project to not later than June 30, 1999, which is prior
to any anticipated impact on its operating systems.
The Company believes that with conversions to new IT, Year 2000
Issues will not pose significant operational problems for its computer
systems. As of March 31, 1999, the Company has completed the
conversion for all systems for which Year 2000 Issues could have a
material impact on the operations of the Company. The Company has no
contingency plan, nor does it intend to create one, in the event that
Year 2000 Issues are not fully addressed in time. The Company believes
that the likelihood of such an occurrence having a material impact on
the Company's operations is remote.
FORWARD-LOOKING STATEMENTS
Forward-looking statements regarding management's present plans
or expectations for new unit openings, remodels, other capital
expenditures, the financing thereof, and disposition of impaired units
involve risks and uncertainties relative to return expectations and
related allocation of resources, and changing economic or competitive
conditions, as well as the negotiation of agreements with third
parties, which could cause actual results to differ from present plans
or expectations, and such differences could be material. Similarly,
forward-looking statements regarding management's present expectations
for operating results involve risks and uncertainties relative to these
and other factors, such as advertising effectiveness and the ability to
achieve cost reductions, which also would cause actual results to
differ from present plans. Such differences could be material.
Management does not expect to update such forward-looking statements
continually as conditions change, and readers should consider that such
statements speak only as the date hereof.
<PAGE>
ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. (a) Articles of Incorporation of the Company, as
restated through March 12, 1999, filed herewith
on pages 16 through 18.
(b) By-laws of the Company, as amended and restated
through March 12, 1999, filed herewith on pages
19 through 28.
10. (f) Stock and Asset Purchase Agreement, dated as of
January 15, 1999, by and among Piccadilly
Cafeterias, Inc., Piccadilly Restaurants, Inc.
and Cobb Investment Company, Inc., filed
herewith on pages 29 through 57.
27. Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PICCADILLY CAFETERIAS, INC.
(Registrant)
By: /s/Ronald A. LaBorde
Ronald A. LaBorde
President and Chief Executive
Officer
05/13/99
/s/ Ronald A. LaBorde 05/13/99
Ronald A. LaBorde, President, Date
Chief Executive Officer, and Director
/s/ J. Fred Johnson 05/13/99
J. Fred Johnson, Executive Vice President, Date
Chief Financial Officer and Treasurer
(Principal Financial Officer)
/s/ Mark L. Mestayer 05/13/99
Mark L. Mestayer, Executive Vice President, Date
Secretary & Director of Finance
(Principal Accounting Officer)
RESTATED
ARTICLES OF INCORPORATION
OF
PICCADILLY CAFETERIAS, INC.
Piccadilly Cafeterias, Inc., a Louisiana corporation (the
"Corporation"), through its undersigned President and Secretary and by
authority of its Board of Directors, does hereby certify the following:
FIRST: The Restated Articles of Incorporation set forth in
paragraph FIFTH below accurately set forth the Articles of Incorporation of
the Corporation and all amendments thereto in effect at the date hereof.
SECOND: Each amendment has been effected in conformity with law.
THIRD: The date of incorporation of the Corporation was July 1,
1965, and the date of these Restated Articles of Incorporation is March 12,
1999.
FOURTH: By unanimous written consent the Corporation's Board of
Directors adopted resolutions authorizing the restatement of the articles
of incorporation as set forth below.
FIFTH: The Restated Articles of Incorporation of the Corporation
are as follows:
ARTICLE I
NAME
The Name of this Corporation is PICCADILLY CAFETERIAS, INC.
ARTICLE II
OBJECTS AND PURPOSES
The objects and purposes for which this Corporation is organized
and the nature of the business and/or businesses to be carried on by it are
stated and declared to be as follows, to-wit:
A. To engage in the business of operating, conducting and
maintaining a cafeteria or cafeterias, with authority to own,
lease and operate all plants, equipment and facilities
necessary, incident or pertaining thereto.
B. To engage in the business of operating, constructing, leasing
and acquiring restaurants, eating establishments, factories,
plants, warehouses and supply houses for all types of products
and equipment and to sell same at retail or wholesale.
C. To engage in the business of constructing, leasing and
operating shopping centers, all types of rental property, and
to engage in joint ventures of all types with others.
D. To do all other things related to and necessary to carry on
the above purposes, to endorse notes and to guarantee
obligations of others.
ARTICLE III
DURATION
The duration of this Corporation shall be perpetual.
ARTICLE IV
REGISTERED OFFICE
[omitted intentionally]
ARTICLE V
REGISTERED AGENTS
[omitted intentionally]
ARTICLE VI
AUTHORIZED SHARES
The aggregate number of shares that the Corporation shall have the
authority to issue is one hundred fifty million (150,000,000) shares,
without par value, of which one hundred million (100,000,000) shall be
Common Stock and fifty million (50,000,000) shall be Preferred Stock.
Shareholders shall have no preemptive rights.
The Preferred Stock may be divided into and issued in one or more
series, and the preferences, limitations and relative rights of such shares
may vary between series in any and all respects but shall not vary within a
series. The Board of Directors of the Corporation is hereby expressly
vested with the authority to amend these Articles of Incorporation to fix
the preferences, limitations and relative rights, including without
limitation, voting rights, of the shares of Preferred Stock, and to
establish and fix variations in relative rights as between any established
and designated series thereof, to the fullest extent permitted by the
Louisiana Business Corporation Law, as now or hereafter in force, and to
increase or decrease the number of shares within each such series;
provided, however, that the Board of Directors may not decrease the number
of shares within a series below the number of shares within such series
that is then issued. The designations, preferences, limitations and
relative rights, including voting rights, of any Preferred Stock to be
issued shall be fixed by adoption by the Board of Directors of an amendment
to these Articles of Incorporation.
Section 1. Designation and Number of Shares. The shares of such
series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), and the number of shares
constituting such series shall be 500,000. Such number of shares of the
Series A Preferred Stock may be increased or decreased by resolution of the
Board of Directors; provided that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares issuable upon exercise or
conversion of outstanding rights, options or other securities issued by the
Corporation.
Section 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable
on September 30, December 31, March 31 and June 30 of each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of any share or fraction of a share of Series A Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater
of $1.00 and subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends or
other distributions and 100 times the aggregate per share amount of all
non-cash dividends or other distributions (other than a dividend payable
in shares of Common Stock of the Corporation, no par value, (any such
Common Stock, the "Common Stock") or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise)), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series A
Preferred Stock. If the Corporation shall at any time after November 6,
1998 (the "Rights Declaration Date") pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination of
the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause 2(a)(ii) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph 2(a) above
immediately after it declares a dividend or distribution on the Common
Stock (other than as described in clauses 2(a)(ii)(A) and 2(a)(ii)(B)
above); provided that if no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date (or, with respect to the first Quarterly Dividend Payment Date, the
period between the first issuance of any share or fraction of a share of
Series A Preferred Stock and such first Quarterly Dividend Payment Date), a
dividend of $1.00 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is on or before
the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue and be cumulative from
the date of issue of such shares, or unless the date of issue is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and on or before
such Quarterly Dividend Payment Date, in which case dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on
shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall not be more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall
have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of shareholders of
the Corporation. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the number
of votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as a single class on all matters submitted
to a vote of shareholders of the Corporation.
(c) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all
shares of Series A Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period,
all holders of Preferred Stock and any other series of Preferred Stock then
entitled as a class to elect directors, voting together as a single class,
irrespective of series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph 3(c)(iii) hereof or at any annual
meeting of shareholders, and thereafter at annual meetings of shareholders;
provided that neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders of 10%
in number of shares of Preferred Stock outstanding shall be present in
person or by proxy. The absence of a quorum of holders of Common Stock
shall not affect the exercise by holders of Preferred Stock of such voting
right. At any meeting at which holders of Preferred Stock shall exercise
such voting right initially during an existing default period, they shall
have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two
Directors or, if such right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the Preferred Stock
shall have the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of the required number.
After the holders of the Preferred Stock shall have exercised their right
to elect Directors in any default period and during the continuance of such
period, the number of Directors shall not be increased or decreased except
by vote of the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari passu with
the Series A Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during
an existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any shareholder or
shareholders owning in the aggregate not less than 10% of the total number
of shares of Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of holders of Preferred Stock,
which meeting shall thereupon be called by the President and Chief
Executive Officer or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this paragraph 3(c)(iii) shall be given to
each holder of record of Preferred Stock by mailing a copy of such notice
to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 20
days and not later than 60 days after such order or request or in default
of the calling of such meeting within 60 days after such order or request,
such meeting may be called on similar notice by any shareholder or
shareholders owning in the aggregate not less than 10% of the total number
of shares of Preferred Stock outstanding, irrespective of series.
Notwithstanding the provisions of this paragraph 3(c)(iii), no such special
meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of shareholders.
(iv) In any default period, the holders of Common Stock,
and other classes of stock of the Corporation if applicable, shall continue
to be entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph 3(c)(ii) hereof) be filled
by vote of a majority of the remaining Directors theretofore elected by the
holders of the class of stock which elected the Director whose office shall
have become vacant. References in this paragraph 3(c) to Directors elected
by the holders of a particular class of stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (y) of
the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the holders
of Preferred Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the articles of
incorporation or bylaws irrespective of any increase made pursuant to the
provisions of paragraph 3(c)(ii) hereof (such number being subject,
however, to change thereafter in any manner provided by law or in the
articles of incorporation or bylaws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(d) The Articles of Incorporation of the Corporation shall
not be amended in any manner (whether by merger or otherwise) so as to
adversely affect the powers, preferences or special rights of the Series A
Preferred Stock without the affirmative vote of the holders of a majority
of the outstanding shares of Series A Preferred Stock, voting separately as
a class.
(e) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent
shall not be required for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding shares
of Series A Preferred Stock shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred
Stock and all such other parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem, purchase or otherwise acquire for value any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the
Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such other
parity stock upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any shares of stock
of the Corporation unless the Corporation could, under paragraph 4(a),
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock without designation as to
series and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors as permitted
by the Articles of Incorporation or as otherwise permitted under Louisiana
Law.
Section 6. Liquidation, Dissolution and Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock shall have received $0.01 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment; provided that the
holders of shares of Series A Preferred Stock shall be entitled to receive
an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such
other parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or
winding up. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater
or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, Etc. If the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash or any other property, then in any such case the
shares of Series A Preferred Stock shall at the same time be similarly
exchanged for or changed into an amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate
amount of stock, securities, cash or any other property, as the case may
be, into which or for which each share of Common Stock is changed or
exchanged. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater
or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior
(as to dividends and upon liquidation, dissolution and winding up) to all
other series of the Corporation's preferred stock except any series that
specifically provides that such series shall rank junior to the Series A
Preferred Stock.
Section 10. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Preferred Stock.
ARTICLE VII
PAID-IN CAPITAL
The amount of paid-in capital with which the Corporation shall
begin business is One Thousand and no/100 ($1,000.00) Dollars, which will
be paid in cash.
ARTICLE VIII
DIRECTORS
A. The property, business and affairs of the Corporation shall be
managed and controlled by the Board of Directors. The number of directors
of the Corporation (exclusive of directors to be elected by the holders of
any one or more classes or series of preferred stock of the Corporation or
any other class or series of stock of the Corporation other than the Common
Stock, which may at some time be outstanding, voting separately as a class
or classes) shall be determined as provided in the bylaws of the
Corporation.
B. The Board of Directors (exclusive of directors to be elected
by the holders of any one or more classes or series of preferred stock of
the Corporation or any other class or series of stock of the Corporation
other than the Common Stock, which may at some time be outstanding, voting
separately as a class or classes) shall be divided into three classes, as
nearly equal in number as possible, with the term of office of one class
expiring each year. At the annual meeting of shareholders in 1988, three
directors of the first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, three directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and four directors of the third class
shall be elected to hold office for a term expiring at the third succeeding
annual meeting. At each annual meeting of shareholders, the respective
successors to the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding annual
meeting.
C. Any vacancies in the Board of Directors, for any reason, and
any newly created directorships resulting from any increase in the number
of directors shall be filled by the Board of Directors, acting by not less
than a majority of the directors then in office, although less than a
quorum. Any directors so chosen to fill any such vacancies or newly
created directorships shall hold office until the next election of the
class for which such directors shall have been chosen and until their
respective successors shall be duly elected and qualified. Notwithstanding
the foregoing, and except as otherwise required by law, whenever the
holders of any one or more classes or series of preferred stock of the
Corporation or any other class or series of stock of the Corporation other
than the Common Stock, which may at some time be outstanding, shall have
the right, voting separately as a class or classes, to elect one or more
directors of the Corporation, the provisions of this section (C) of this
Article VIII shall not apply with respect to the director or directors
elected by such holders of preferred stock or other stock. No decrease in
the number of directors shall shorten the term of any incumbent director.
D. Notwithstanding any other provision of these Articles of
Incorporation or the bylaws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, these Articles of
Incorporation or the bylaws of the Corporation), any director or the entire
Board of Directors of the Corporation may be removed only with cause and
only by the affirmative vote of the holders of two-thirds (2/3rds) of all
shares of capital stock of the Corporation entitled to vote generally in
the election of directors, voting together as a single class.
Notwithstanding the foregoing, and except as otherwise required by law,
whenever the holders of any one or more classes or series of preferred
stock of the Corporation or any other class or series of stock of the
Corporation other than the Common Stock, which may at some time be
outstanding, shall have the right, voting separately as a class or classes,
to elect one or more directors of the Corporation, the election, term of
office, filling of vacancies and other features of such directorships shall
be governed by the terms of these Articles of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article VIII unless expressly provided by such terms.
E. Except as otherwise provided in these Articles of
Incorporation, the number, classification, qualifications, terms of office,
manner of election, times and places of meetings, and the powers and duties
of the directors shall be as, from time to time, fixed by the bylaws.
F. Any director absent from a meeting may be represented by any
other director or shareholder who may cast the vote of the absent director
according to the written instructions, general or special, of said absent
director, filed with the secretary.
G. Notwithstanding any other provision of these Articles of
Incorporation or the bylaws of the Corporation to the contrary (and
notwithstanding the fact that some lesser percentage may be specified by
law, these Articles of Incorporation or the bylaws of the Corporation) and
in addition to any other requirements of the provisions of any class or
series of stock of the Corporation which may be outstanding, no amendment
to these Articles of Incorporation shall amend, alter, change or repeal any
provision of paragraphs (A) through (D) of this Article VIII unless the
amendments effecting such amendment, alteration, change or repeal shall
receive the affirmative vote of the holders of not less than eighty percent
(80%) of all shares of stock of the Corporation entitled to vote generally
in the election of directors, voting together as a single class, provided
that this paragraph (G) shall not apply to, and only such vote as shall be
required by statute shall, subject to the provisions of any class or series
of stock of the Corporation which may at the time be outstanding, be
required for any amendment, alteration, change or repeal recommended to the
shareholders pursuant to a resolution of the Board of Directors of the
Corporation, provided that affirmative votes for such resolution shall have
been cast by not less than a majority of the "Continuing Directors," as
defined below, then in office. For purposes of the immediately preceding
sentence, the term "Continuing Directors" means any member of the Board of
Directors of the Corporation who held the office of director on August 15,
1988 or who thereafter was elected director either (1) by a resolution
adopted by the Board of Directors, provided that affirmative votes for such
resolution shall have been cast by not less than a majority of the
Continuing Directors then in office, or (2) by a vote of the shareholders
of the Corporation after his or her nomination as a director was
recommended for submission to the shareholders of the Corporation by a
resolution adopted by the Board of Directors, provided that affirmative
votes for such resolution shall have been cast by not less than a majority
of the Continuing Directors then in office.
ARTICLE IX
INCORPORATORS
[omitted intentionally]
ARTICLE X
RIGHT TO PURCHASE AND/OR REDEEM SHARES
The Corporation may purchase and/or redeem its own shares in the
manner and under the conditions provided in Section 23 and 45 of the
Business Corporations Law. Such shares so purchased (unless it is desired
that such shares be canceled) shall be considered treasury shares, and may
be re-issued and disposed of as authorized by law or may be canceled and
the capital stock reduced, as the board of directors may, from time to
time, determine.
ARTICLE XI
COMPROMISE ARRANGEMENTS
This Corporation claims, and shall have the benefit of the
provisions of Section 63 of the Business Corporations Law.
ARTICLE XII
DIVIDENDS
If at any time this Corporation should own wasting assets intended
for sale in the ordinary course of business, or shall own property having a
limited life, it may pay dividends from the net profits arising from such
assets, without deduction for depreciation or depletion of assets thereby
sustained.
ARTICLE XIII
VOLUNTARY TRANSFER OF CORPORATE ASSETS
If at any time when the Corporation is able to meet its liabilities
then matured, pursuant to the affirmative vote of the holders of at least a
majority of the shares having voting power, given at a general or special
shareholders' meeting called for that purpose, the board of directors shall
have power and authority, by resolution adopted at any regular or special
meeting called for that purpose, to sell, lease or exchange, or make any
other disposition of all of the assets of the Corporation, including its
good will, franchise, and/or other rights, upon such terms and conditions
as it deems expedient, including an exchange for shares and/or securities
of another corporation, domestic or foreign; and if the Corporation is
unable to meet the liabilities then matured, the board of directors by a
majority vote of the whole board shall have power and authority to make
such sale, lease, exchange or other disposition, as aforesaid, without the
vote or consent aforesaid, of the shareholders.
ARTICLE XIV
No director or officer shall be personally liable to the
Corporation or any of its shareholders for monetary damages for any breach
of fiduciary duty by such director or officer as a director or officer.
Notwithstanding the foregoing sentence, a director or officer shall be
liable to the extent provided by applicable law (a) for breach of the
director's or officer's duty of loyalty to the Corporation or its
shareholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) for liability
under R.S. 12:92(D), or (d) for any transaction from which the director or
officer derived an improper personal benefit. If the Louisiana Business
Corporation Law hereafter is amended to authorize the further elimination
or limitation of the liability or directors or officers, then the liability
of a director of officer of the Corporation, in addition to the limitation
on personal liability of a director or officer provided herein, shall be
limited to the fullest extent permitted by the amended Louisiana Business
Corporation Law. No amendment to or repeal of this Article XIV shall apply
to or have any effect on the liability or alleged liability to any acts or
omissions of such director or officer occurring prior to such amendment.
These Restated Articles of Incorporation are dated March 12, 1999.
PICCADILLY CAFETERIAS, INC.
By: /S/ RONALD A. LABORDE
Ronald A. LaBorde, President
By: /S/ MARK L. MESTAYER
Mark L. Mestayer, Secretary
<PAGE>
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
BEFORE ME, the undersigned authority, personally came and appeared
Ronald A. LaBorde and Mark L. Mestayer to me known to be the persons who
signed the foregoing instrument as President and Secretary of Piccadilly
Cafeterias, Inc., respectively, and who, having been duly sworn,
acknowledged and declared, in the presence of the two witnesses whose names
are subscribed below, that they signed such instrument as their free act
and deed for the purposes mentioned therein.
IN WITNESS WHEREOF, the appearers, witnesses and I have hereunto
affixed our hands on this 12th day of March, 1999, at Baton Rouge,
Louisiana.
WITNESSES:
/S/ MARY E. RANDALL /S/ RONALD A. LABORDE
Ronald A. LaBorde
/S/ SHARON S. BROWN /S/ MARK L. MESTAYER
Mark L. Mestayer
/S/ SHARON M. TAYLOR
NOTARY PUBLIC
BYLAWS OF
PICCADILLY CAFETERIAS, INC.
(AS AMENDED AND RESTATED MARCH 12, 1999)
ARTICLE I
OFFICES
Section 1.1 OFFICES. The principal business office of Piccadilly
Cafeterias, Inc. (the "Company") shall be at Baton Rouge, Louisiana.
The Company may have such other business offices within or without the
State of Louisiana as the board of directors may from time to time
establish.
ARTICLE II
CAPITAL STOCK
Section 2.1 CERTIFICATE REPRESENTING SHARES. Shares of the
capital stock of the Company shall be represented by certificates in
such form or forms as the board of directors may approve, provided that
such form or forms shall comply with all applicable requirements of law
or of the articles of incorporation. Such certificates shall be signed
by the chief executive officer, or an executive vice president, and by
the secretary or an assistant secretary, of the Company and may be
sealed with the seal of the Company or imprinted or otherwise marked
with a facsimile of such seal. In the case of any certificate
countersigned by any transfer agent or registrar, provided such
countersigner is not the Company itself or an employee thereof, the
signature of any or all of the foregoing officers of the Company may be
represented by a printed facsimile thereof. If any officer whose
signature, or a facsimile thereof, shall have been set upon any
certificate shall cease, prior to the issuance of such certificate, to
occupy the position in right of which is signature, or facsimile
thereof, was so set upon such certificate, the Company may nevertheless
adopt and issue such certificate with the same effect as if such officer
occupied such position as of such date of issuance; and issuance and
delivery of such certificate by the Company shall constitute adoption
thereof by the Company. The certificates shall be consecutively
numbered, and as they are issued, a record of such issuance shall be
entered in the books of the Company.
Section 2.2 STOCK CERTIFICATE BOOK AND SHAREHOLDERS OF RECORD.
In the absence of a duly appointed transfer agent or registrar, the
secretary of the Company shall maintain, among other records, a stock
certificate book, the stubs in which shall set forth the names and
addresses of the holders of all issued shares of the Company, the number
of shares held by each, the number of certificates representing such
shares, the date of issue of such certificates, and whether or not such
shares originate from original issue or from transfer. The names and
addresses of shareholders as they appear on the stock certificate book
shall be the official list of shareholders of record of the Company for
all purposes. The board of directors may appoint a transfer agent or
registrar to maintain the stock register and to record transfer of
shares thereon. The Company shall be entitled to treat the holder of
record of any shares as the owner thereof for all purposes, and shall
not be bound to recognize any equitable or other claim to, or interest
in, such shares or any rights deriving from such shares on the part of
any other person, including, but without limitation, a purchaser,
assignee, or transferee, unless and until such other person becomes the
holder of record of such shares, whether or not the Company shall have
either actual or constructive notice of the interest of such other
person.
Section 2.3 SHAREHOLDER'S CHANGE OF NAME OR ADDRESS. Each
shareholder shall promptly notify the secretary of the Company, at its
principal business office, by written notice sent by certified mail,
return receipt requested, of any change in name or address of the
shareholder from that as it appears upon the official list of
shareholders of record of the Company. The secretary of the Company
shall then enter such changes into all affected Company records,
including, but not limited to, the official list of shareholders of
record.
Section 2.4 TRANSFER OF STOCK. The shares represented by any
certificate of the Company are transferable only on the books of the
Company by the holder of record thereof or by his duly authorized
attorney or legal representative upon surrender of the certificate for
such shares, properly endorsed or assigned. The board of directors may
make such rules and regulations concerning this issue, transfer,
registration and replacement of certificates as they deem desirable or
necessary.
Section 2.5 TRANSFER AGENT AND REGISTRAR. The board of
directors may appoint one or more transfer agents or registrars of the
shares, or both and may require all share certificates to bear the
signature of a transfer agent or registrar, or both.
Section 2.6 LOST, STOLEN OR DESTROYED CERTIFICATES. The Company
may issue a new certificate for shares of stock in the place of any
certificate theretofore issued and alleged to have been lost, stolen or
destroyed, but the board of directors may require the owner of such
lost, stolen or destroyed certificate, or his legal representative, to
furnish an affidavit as to such loss, theft, or destruction and to give
a bond in such form and substance, and with such variety of sureties,
with fixed or open penalty, as the board may direct, in order to
indemnify the Company and its transfer agents and registrars, if any,
against any claim that may be made on account of the alleged loss, theft
or destruction or such certificate.
Section 2.7 FRACTIONAL SHARES. Only whole shares of the stock
of the Company shall be issued. In case of any transaction by reason of
which a fractional share might otherwise be issued, the directors, or
the officers in their exercise of powers delegated by the directors,
shall take such measures consistent with the law, the articles of
incorporation and these bylaws, including (for example, and not by way
of limitation) the payment in cash of an amount equal to the fair value
of any fractional share, as they may deem proper to avoid the issuance
of any fractional share.
ARTICLE III
SHAREHOLDERS MEETINGS
Section 3.1 ANNUAL MEETING. Commencing in the calendar year
1979, the annual meeting of the shareholders, for the election of
directors and for the transaction of such other business as may properly
come before the meeting, shall be held at the principal office of the
Company, at 10:00 a.m., local time, on the first Monday in November of
each year unless such day is a legal holiday, in which case such meeting
shall be held at such hour on the first day thereafter which is not a
legal holiday; or at such other place and time as may be designated by
the board of directors. Failure to hold any annual meeting or meetings
shall not work a forfeiture or dissolution of the Company.
Section 3.2 SPECIAL MEETING. Special meetings may be called at
any time by the chief executive officer or the board of directors. At
any time, upon written request of any shareholder or shareholders
holding in the aggregate one-tenth of the total voting power, the
secretary shall call a special meeting of shareholders to be held at the
registered office at such time as the secretary may fix, not less than
fifteen nor more than sixty days after the receipt of said request, and
if the secretary shall neglect or refuse to fix such time or to give
notice of the meeting, the shareholder or shareholders making the
request may do so.
Section 3.3 BUSINESS BROUGHT BEFORE MEETINGS. At any meeting of
the shareholders, only such business shall be conducted as shall have
been properly brought before the meeting. Nominations for the election
of directors at a meeting at which directors are to be elected may be
made by or at the direction of the board of directors, or a committee
duly appointed thereby, or by any shareholder of record entitled to vote
generally for the election of directors who complies with the procedures
set forth in Section 3.4 below. Other matters to be properly brought
before a meeting of the shareholders must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of
the board of directors, including matters covered by Rule 14a-8 of the
Securities and Exchange Commission, (b) otherwise properly brought
before the meeting by or at the direction of the board of directors, or
(c) otherwise properly brought before the meeting by any shareholder of
record entitled to vote at such meeting who complies with the procedures
set forth in Section 3.4 below.
Section 3.4 REQUIRED NOTICE. A notice of the intent of a
shareholder to make a nomination or to bring any other matter before a
shareholder's meeting shall be made in writing and received by the
Secretary of the Company not more than 160 days and not less than 120 days
in advance of the date in the current year that corresponds to the date on
which proxy materials were first mailed by the Company in connection with
the previous year's annual meeting, or, in the event of a special meeting
of shareholders or an annual meeting scheduled to be held either 30 days
earlier or later than such anniversary date, such notice shall be received
by the Secretary of the Company within 15 days of the earlier of the date
on which notice of such meeting is first mailed to shareholders or public
disclosure of the meeting date is made.
Section 3.5 Contents of Notice. Every such notice by a
shareholder shall set forth:
(a) the name, age, business address and residential address of
the shareholder of record who intends to make a nomination or bring up
any other matter, and any beneficial owner or other person acting in
concert with such shareholder;
(b) a representation that the shareholder is a holder of
record of shares of the Company's capital stock that accord such
shareholder the voting rights specified in Section 3.3 above and that
the shareholder intends to appear in person at the meeting to make the
nomination or bring up the matter specified in the notice;
(c) with respect to any notice of an intent to make a
nomination, a description of all agreements, arrangements or
understandings among the shareholder, any person acting in concert with
the shareholder, each proposed nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder;
(d) with respect to any notice of an intent to make a
nomination, (i) the name, age, business address and residential address
of each person proposed for nomination, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of
capital stock of the Company of which such person is the beneficial
owner, and (iv) any other information relating to such person that would
be required to be disclosed in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission had such nominee
been nominated by the board of directors; and
(e) with respect to any notice of an intent to bring up any
other matter, a complete and accurate description of the matter, the
reasons for conducting such business at the meeting, and any material
interest in the matter of the shareholder and the beneficial owner, if
any, on whose behalf the proposal is made.
Section 3.6 OTHER REQUIRED INFORMATION. Notice of an intent to
make a nomination shall be accompanied by the written consent of each
nominee to serve as a director of the Company if so elected. The
Company may require any proposed nominee to furnish such other
information or certifications as may be reasonably required by the
Company to determine the eligibility and qualifications of such person
to serve as a director.
Section 3.7 DISQUALIFICATION OF CERTAIN PROPOSALS. With respect
to any proposal by a shareholder to bring before a meeting any matter
other than the nomination of directors, the following shall govern:
(a) If the Secretary of the Company has received sufficient
notice of a proposal that may properly be brought before the meeting, a
proposal sufficient notice of which is subsequently received by the
Secretary and that is substantially duplicative of the first proposal
shall not be properly brought before the meeting. If in the judgment of
the board of directors a proposal deals with substantially the same
subject matter as a prior proposal submitted to shareholders at a
meeting held within the preceding five years, it shall not be properly
brought before any meeting held within three years after the latest such
previous submission if (i) the proposal was submitted at only one
meeting during such preceding period and it received affirmative votes
representing less than 3% of the total number of votes cast in regard
thereto, (ii) the proposal was submitted at only two meetings during
such preceding period and it received at the time of its second
submission affirmative votes representing less than 6% of the total
number of votes cast in regard thereto, or (iii) the proposal was
submitted at three or more meetings during such preceding period and it
received at the time of its latest submission affirmative votes
representing less than 10% of the total number of votes cast in regard
thereto.
(b) Notwithstanding compliance with all of the procedures set
forth above in this Section, no proposal shall be deemed to be properly
brought before a meeting of shareholders if, in the judgment of the
board, it is not a proper subject for action by shareholders under
Louisiana law.
Section 3.8 POWER TO DISREGARD PROPOSALS. At the meeting of
shareholders, the chairman shall declare out of order and disregard any
nomination or other matter not presented in accordance with the
foregoing procedures or which is otherwise contrary to the foregoing
terms and conditions.
ARTICLE IV
THE BOARD OF DIRECTORS
Section 4.1 NUMBER. The business and affairs of the Company
shall be managed and controlled by the board of directors; and, subject
to any restrictions imposed by law, by the articles of incorporation, or
by these bylaws, the board of directors may exercise all the powers of
the Company. The board of directors shall consist of that number of
members fixed in a resolution of the board of directors. Such number
may be increased or decreased by a subsequent resolution, provided that
no decrease shall effect a shortening of the term of any incumbent
director.
Section 4.2 QUALIFICATIONS AND TERM. Except as otherwise
contemplated by Section 4.15 hereof, no person who is seventy years of
age or older may be nominated, elected, or appointed to serve as a
member of the board of directors, nor may a person who is or will be
seventy years of age or older at the beginning of the term of office of
a class of the board of directors be eligible to serve as a member of
that class for such term. Directors need not be residents of Louisiana
or shareholders of the Company absent provision to the contrary in the
articles of incorporation or laws of the State of Louisiana. The term
of office of directors and the method of appointing persons to fill
vacancies on the board of directors shall be as set forth in the
articles of incorporation.
Section 4.3 REMOVAL OF DIRECTORS. Any Director may be removed
from office, only for cause, upon the affirmative vote of the holders of
two-thirds (2/3) of the combined voting power of the then outstanding
shares of stock entitled to vote generally in the election of directors,
voting together as a single class.
Section 4.4 CAUSE DEFINED. Cause for the removal of a director
is defined as the existence of gross misconduct or neglect, willful and
wanton malfeasance in office, or fraud on behalf of, or present in the
actions of, any director currently serving on the board.
Section 4.5 REGULAR MEETINGS. Regular meetings of the board of
directors shall be held immediately following each annual meeting of
shareholders, at the place of such meeting, and at such other times and
places as the board of directors shall determine. No notice of any kind
of such regular meetings needs to be given to either old or new members
of the board of directors.
Section 4.6 SPECIAL MEETINGS. Special meetings of the board of
directors shall be held at any time by call of the chief executive
officer, president, the secretary or by a majority of the directors.
The secretary shall give notice of each special meeting to each director
at his usual business or residence address by mail at least three days
before the meeting or by telegraph or telephone at least one day before
such meeting. Except as otherwise provided by law, by the articles of
incorporation, or by these bylaws, such notice need not specify the
business to be transacted at, or the purpose of, such meeting. No
notice shall be necessary for any adjournment of any meeting. The
signing of a written waiver of notice, of any special meeting by the
person or persons entitled to such notice, whether before or after the
time stated therein, shall be equivalent to the receiving of such
notice. Attendance of a director at a meeting shall also constitute a
waiver of notice of such meeting, except where a director attends a
meeting for the express and announced purpose of objecting to the
transaction of any business on the grounds that the meeting is not
lawfully called or convened.
Section 4.7 QUORUM. A majority of the number of directors fixed
by these bylaws shall constitute a quorum for the transaction of
business and act of not less than a majority of such quorum of the
directors shall be required in order to constitute the act of the board
of directors, unless the act of a greater number shall be required by
law, by the articles of incorporation or by these bylaws.
Section 4.8 PROCEDURE AT MEETINGS. The board of directors, at
each regular meeting held immediately following the annual meeting of
shareholders, shall appoint one of their number as chairman of the board
of directors. The chairman of the board shall preside at meetings of
the board. In his absence at any meeting, any officer authorized by
these bylaws or any member of the board selected by the members present
shall preside. The secretary of the Company shall act as secretary at
all meetings of the board. In his absence, the presiding officer of the
meeting may designate any person to act as secretary. At meetings of
the board of directors, the business shall be transacted in such order
as the board may from time to time determine.
Section 4.9 PRESUMPTION OF ASSENT. Any director of the Company
who is present at a meeting of the board of directors at which action on
any corporate matter is taken shall be presumed to have assented to the
action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the
secretary of the Company immediately after adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor
of such action.
Section 4.10 BOARD DISCRETION IN EVALUATING BUSINESS
COMBINATIONS AND TENDER OFFERS. In accordance with La. R.S. 12:92(g)1-
4, as it may be amended from time to time, the board, when evaluating
the terms of a potential business combination or tender offer, may, in
exercising its judgment in determining what is in the best interest of
the Company and its shareholders, consider the following factors and any
other factors that it deems relevant:
(a) Financial considerations of the proposed business
combination or tender offer itself including, but not limited to, the
following:
(i) the consideration being offered in the proposed
transaction in relation to the then current market price for the
outstanding capital stock of the Company;
(ii) the market price for the capital stock of the Company
over a period of years;
(iii) the estimated price that might be achieved in a
negotiated sale of the Company in whole or in part;
(iv) he premiums over market price for the securities of
other corporations in similar transactions;
(v) current political, economic, and other factors
bearing on securities prices and the Company's financial condition and
future prospects;
(b) The social and economic effects of such transactions on
the Company, its subsidiaries, or their employees, customers, creditors,
and the communities in which the Company and its subsidiaries do
business;
(c) The business and financial conditions and earnings
prospects of the acquiring party or parties, including, but not limited
to debt service and other existing or likely financial obligations of
the acquiring party or parties, and the possible effect of such
conditions upon the Company and its subsidiaries and the communities in
which the Company and its subsidiaries do business;
(d) The competence, experience, and integrity of the acquiring
party or parties and its or their management.
Section 4.11 ACTION WITHOUT A MEETING. Any action required by
statute to be taken at a meeting of the directors of the Company, or
which may be taken at such meeting, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed
by each director entitled to vote at such meeting, and such consent
shall have the same force and effect as a unanimous vote of the
directors. Such signed consent, or a signed copy thereof, shall be
placed in the minute book of the Company.
Section 4.12 COMPENSATION. Directors, by resolution of the board
of directors, shall receive such compensation and reimbursement for
expenses as the board of directors may establish. Nothing herein shall
preclude any director from serving the Company in any other capacity or
receiving compensation therefor.
Section 4.13 EXECUTIVE COMMITTEE. The board of directors, by
resolution adopted by authority of the number of directors fixed by
these bylaws, may designate an executive committee, which committee
shall consist of two or more of the directors of the Company. Such
executive committee may exercise such majority of the board of directors
in the business and affairs of the Company as the board of directors may
by resolution duly delegate to it except as prohibited by law. The
designation of such committee and the delegation thereto of authority
shall not operate to relieve the board of directors, or any member
thereof, of any responsibility imposed upon it or him by law. Any
member of the executive committee may be removed by the board of
directors by the affirmative vote of a majority of the number of
directors fixed by the bylaws whenever in the judgment of the board the
best interests of the Company will be served thereby.
The executive committee shall keep regular minutes of its
proceedings and report the same to the board of directors when required.
The minutes of the proceedings of the executive committee shall be
placed in the minute book of the Company.
Section 4.14 ADVISORY DIRECTORS. The board of directors may for
its convenience, and at its discretion, appoint from time to time one or
more advisory directors. The term of office of an advisory director
shall be one year from the date of appointment, although a person may be
re-appointed for additional one-year terms. Any advisory director may
be removed by the board of directors whenever in its judgment the best
interests of the Company are served thereby. Appointment of an advisory
director shall not of itself create any contractual rights. An advisor
director may be furnished with notice, if any, of each regular and
special meeting of the board of directors, together with copies of any
board materials provided to the members of the board of directors before
or during such meetings, and may attend such board meetings, provided
that the chairman of the board of directors shall have the power not to
provide any such material to the advisory directors as he in good faith
believes should only be made available to the voting members of the
board. Solely in the discretion of the board of directors, an advisory
director may also be furnished with notice of a meeting of any committee
of the board of directors, together with copies of any committee
materials provided to the members of such committee before or during
such meetings, and may attend such committee meetings. Notwithstanding
the foregoing, an advisory director shall not be counted for purposes of
determining whether a quorum of the board of directors or any committee
thereof exists for transacting business, nor may an advisory director
vote or execute a written consent of directors or committee members on
any matter that may come before the board of directors or any committee
thereof. An advisory director shall not have the responsibility for the
management or control of the business and affairs of the Company. Each
advisory director shall be reimbursed for reasonable and necessary
expenses actually incurred by such advisory director in connection with
attending a board or committee meeting and shall receive an attendance
fee for each meeting attended in the same amount as is paid to non-
officer members of the board of directors for attending such meetings.
Notwithstanding the foregoing, an advisory director shall not be
entitled to any monthly or annual fee or retainer for serving as an
advisory director or attending any board or committee meeting.
ARTICLE V
OFFICERS
Section 5.1 NUMBER. The officers of the Company shall consist of
a chairman of the board of directors, a chief executive officer, a
president, one or more senior executive vice presidents, executive vice
presidents, a secretary and a treasurer; and, in addition, such other
officers and assistant officers and agents as may be deemed necessary or
desirable. Officers shall be elected or appointed by the board of
directors. Any two or more offices may be held by the same person
except that the president and secretary shall not be the same person.
In its discretion, the board of directors may leave unfilled any office
except those of chief executive officer, president, treasurer and
secretary.
Section 5.2 ELECTION; TERM; QUALIFICATION. Officers shall be
chosen by the board of directors annually at the meeting of the board of
directors following the annual shareholders' meeting. Each officer
shall hold office until his successor has been chosen and qualified, or
until his death, resignation, or removal.
Section 5.3 REMOVAL. Any officer or agent elected or appointed
by the board of directors may be removed by the board of directors
whenever in its judgment the best interests of the Company will be
served thereby, but such removal shall be without prejudice to the
contact rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create any
contract rights.
Section 5.4 VACANCIES. Any vacancy in any office for any cause
may be filled by the board of directors at any meeting.
Section 5.5 DUTIES. The officers of the Company shall have such
powers and duties, except as modified by the board of directors, as
generally pertain to their offices, respectively, as well as such powers
and duties as from time to time shall be conferred by the board of
directors and by these bylaws.
Section 5.6
(a) THE CHAIRMAN OF THE BOARD. The directors may elect from
their number a Chairman of the Board who shall be an officer of the
Company and who shall preside at all meetings of the board of directors.
He shall perform such duties as the board of directors may prescribe.
(b) THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
of the Company shall have general direction of the operations of the
Company and general supervision over its officers, subject, however, to
the control of the board of directors. He shall at each annual meeting,
and from time to time, report to the shareholders and to the board of
directors all matters within his knowledge which, in his opinion, the
interest of the Company may require to be brought to the notice of such
persons. He may sign, with the secretary, any or all certificates of
stock of the Company. Without in anyway limiting powers otherwise
granted to him or to any other officer, he shall be authorized to sign
and execute in the name of the Company all contracts or other
instruments in the usual and regular course of business, pursuant to
Section 6.2 hereof, and to execute leases, sales, easements, servitudes,
restrictive covenants, mortgages and other encumbrances on behalf of the
Company containing such terms and conditions as he may deem appropriate
and in the best interest of the Company. The chief executive officer in
general shall perform all duties incident to the office of the chief
executive officer and such other duties from time to time may be
assigned to him by the board of directors or as are prescribed by these
bylaws.
(c) THE PRESIDENT. At the request of the chief executive
officer, or in his absence or disability, the president shall perform
the duties of the chief executive officer, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the
chief executive officer. Any action taken by the president in the
performance of the duties of the chief executive officer shall be
conclusive evidence of the absence or inability to act of the chief
executive officer at the time such action was taken. The president
shall perform such other duties as may, from time to time, be assigned
him by the board of directors, the chairman of the board or the chief
executive officer. The president may sign, with the secretary,
certificates of stock of the Company.
Section 5.7
(a) THE SENIOR EXECUTIVE VICE PRESIDENTS. At the request of
the chief executive officer, or in his and the president's absence or
disability, the senior executive vice presidents, in the order of their
election, shall perform the duties of the chief executive officer, or,
if so requested by the chief executive officer, the duties of the
president, and, when so acting, shall have all the powers of, and be
subject to all restrictions upon, such office. Any action taken by a
senior executive vice president in the performance of the duties of the
chief executive officer or president shall be conclusive evidence of the
absence or inability to act of the chief executive officer or president
at the time such action ws taken. The senior executive vice presidents
shall perform such other duties as may, from time to time, be assigned
to them by the board of directors, the chairman of the board of
directors or the president. A senior executive vice president may sign,
with the secretary, certificates of stock of the Company.
(b) EXECUTIVE VICE PRESIDENTS. The executive vice presidents
shall perform such duties and have such powers as the board of directors
may prescribe and as the chief executive officer, president or a senior
executive vice president may assign or authorize by delegation, subject
to the general supervision of such delegating officer.
(c) VICE PRESIDENTS. The vice presidents shall perform such
duties and have such powers as the board of directors may prescribe and
as the chief executive officer, president, a senior executive vice
president or an executive vice president may assign or authorize by
delegation, subject to the general supervision of such delegating
officer.
Section 5.8 SECRETARY. The secretary shall keep the minutes of
all meetings of the shareholders, of the board of directors, and of the
executive committee, if any, of the board of directors, in one or more
books provided for such purpose and shall see that all notices are duly
given in accordance with the provisions of those bylaws or as required
by law. He shall be custodian of the corporate records and of the seal
of the Company and see that the seal of the Company is affixed to all
documents the execution of which on behalf of the Company under its seal
is duly authorized; shall have general charge of the stock certificate
books, transfer books and stock ledgers, and such other books and papers
of the Company as the board of directors may direct, upon application at
the office of the Company during business hours; and in general shall
perform all duties and exercise all powers incident to the office of the
secretary and such other duties and powers as the board of directors,
the chief executive officer or the president from time to time may
assign to or confer on him.
Section 5.9 TREASURER. The treasurer shall keep complete and
accurate records of account, showing at all times the financial
condition of the Company. He shall be the legal custodian of all money,
notes, securities and other valuables which may from time to time come
into the possession of the Company. He shall furnish at meetings of the
board of directors, or whenever requested, a statement of the financial
condition of the Company, and shall perform such other duties as these
bylaws may require or the board of directors may prescribe.
Section 5.10 ASSISTANT OFFICERS. Any assistant secretary or
assistant treasurer appointed by the board of directors shall have power
to perform, and shall perform, all duties incumbent upon the secretary
or treasurer of the Company, respectively, subject to the general
direction of such respective officers, and shall perform such other
duties as these bylaws may require or the board of directors may
prescribe.
Section 5.11 SALARIES. The salaries or other compensation of
the officers shall be fixed from time to time by the board of directors.
No officer shall be prevented from receiving such salary or other
compensation by reason of the fact that he is also a director of the
Company.
Section 5.12 BONDS OF OFFICERS. The board of directors may
secure the fidelity of any officer of the Company by bond or otherwise,
on such terms and with such surety or sureties, conditions, penalties or
securities as shall be deemed proper by the board of directors.
Section 5.13 DELEGATION. The board of directors may delegate
temporarily the powers and duties of any officer of the Company, in case
of his absence or for any other reason, to any other officer, and may
authorize the delegation by any officer of the Company of any of his
powers and duties to any agent or employee, subject to the general
supervision of such officer.
ARTICLE VI
MISCELLANEOUS
Section 6.1 DIVIDENDS. Dividends on the outstanding shares of
the Company, subject to the provisions of the articles of incorporation,
may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid by the Company in cash,
in property, or in the Company's own shares, but only out of the
unreserved and unrestricted earned surplus of the Company, except as
otherwise allowed by law.
Subject to limitations upon the authority of the board of directors
imposed by law or by the articles of incorporation, the declaration of
an provision for payment of dividends shall be at the discretion of the
board of directors.
Section 6.2 CONTRACTS. The chief executive officer shall have
the power and authority to execute on behalf of the Company, contracts
or instruments in the usual and regular course of business, and in
addition the board of directors, chairman or the chief executive officer
may authorize any officer or officers, agent or agents, of the Company
to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the Company, and such authority may be general
or confined to specific instances. Unless so authorized by the board of
directors or the chief executive officer, or by these bylaws, no
officer, agent or employee shall have any power or authority to bind the
Company by any contract or engagement, or to pledge its credit or to
render it pecuniarily liable for any purpose or in any amount.
Section 6.3 CHECKS, DRAFTS, ETC. All checks, drafts, or other
orders for the payment of money, notes, or other evidences of
indebtedness issued in the name of the Company shall be signed by such
officers or employees of the Company as shall from time to time be
authorized pursuant to these bylaws or by resolution of the board of
directors.
Section 6.4 DEPOSITORIES. All funds of the Company shall be
deposited from time to time to the credit of the Company in such banks
or other depositories as the board of directors may from time to time
designate, and upon such terms and conditions as shall be fixed by the
board of directors. The board of directors may from time to time
authorize the opening and maintaining within any such depository as it
may designate, of general and special accounts, and may make such
special rules and regulations with respect thereto as it may deem
expedient.
Section 6.5 ENDORSEMENT OF STOCK CERTIFICATES. Subject to the
specific directions of the board of directors, any share or shares of
stock issued by any corporation and owned by the Company, including
required shares of the Company's own stock, may for sale or transfer, be
endorsed in the name of the Company by the chief executive officer,
president or any senior executive vice president, and such endorsement
may be attested or witnessed by the secretary or any assistant secretary
either with or without the affixing thereto of the corporate seal.
Section 6.6 CORPORATE SEAL. The corporate seal shall be in
such form as the board of directors shall approve, and such seal, or a
facsimile thereof, may be impressed on, affixed to, or in any manner
reproduced upon, instruments of any nature required to be executed by
officers of the Company.
Section 6.7 FISCAL YEAR. The fiscal year of the Company shall
begin and end on such dates as the board of directors at any time shall
determine.
Section 6.8 BOOKS AND RECORDS. The Company shall keep correct
and complete books and records of account and shall keep minutes of the
proceedings of its shareholders and board of directors, and shall keep
at its registered office or principal place of business, or at the
office of its transfer agent or registrar, a record of its shareholders,
giving the names and addresses of all shareholders and the number and
class of the shares held by each.
Section 6.9 RESIGNATIONS. Any director or officer may resign
at any time. Such resignations shall be made in writing and shall take
effect at the time specified therein, or, if no time is specified, at
the time of its receipt by the chief executive officer or secretary.
The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
Section 6.10 INDEMNIFICATION OF OFFICERS AND DIRECTORS. The
Company shall indemnify any person who was or is a party or is
threatened to be made a party to action, suit or proceeding, whether
civil, criminal, administrative or investigative (including any action
by or in the right of the Company), by reason of the fact that he is or
was a director or officer of the Company against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; however, in case
of action by or in the right of the Company; the indemnity shall be
limited to expenses (including attorneys' fees and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the action to conclusion) actually and
reasonably incurred in connection with the defense of settlement of such
action and no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable for willful or intentional misconduct in the
performance of his duty to the Company unless and only to the extent
that the court shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, he is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. The indemnification
provided by or granted pursuant to this Section 6.10 shall be deemed
exclusive of any other rights to which the person indemnified is
entitled under any law, statute, bylaw, agreement, authorization of
shareholders or directors, regardless of whether the directors
authorizing such indemnification are beneficiaries thereof, or
otherwise, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
his heirs and legal representatives. If any indemnification which would
otherwise be granted by this Section 6.10 shall be disallowed by any
competent court or administrative body as illegal or against public
policy, the any director or officer with respect to whom such
adjudication was made, and any other officer or director, shall be
indemnified to the fullest extent permitted by law and public policy, it
being the express intent of the Company to indemnify its officers and
directors to the fullest extent possible in conformity with these
bylaws, all applicable laws, and public policy.
Section 6.11 MEETINGS BY TELEPHONE. Subject to the provisions
required or permitted by these bylaws or the laws of the State of
Louisiana for notice of meetings, shareholders, members of the board of
directors, or members of any committee designated by the board of
directors may participate in and hold any meeting required or permitted
under these bylaws by telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this section shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not
lawfully called or convened.
Section 6.12 CONTROL SHARE ACQUISITION STATUTE. The Company
expressly waives the benefits of La. R.S. 12:135-140.2, as they may be
amended from time to time.
ARTICLE VII
AMENDMENTS
Section 7.1 AMENDMENTS. These bylaws may be altered, amended,
or repealed, or new bylaws may be adopted, by a majority of the board of
directors at any duly held meeting of directors or by the holders of a
majority of the shares represented at any duly held meeting of
shareholders; provided that notice of such proposed action shall have
been contained in the notice of any such meeting.
STOCK AND ASSET PURCHASE AGREEMENT
Dated as of January 15, 1999
By and Among
PICCADILLY CAFETERIAS, INC.,
PICCADILLY RESTAURANTS, INC.
and
COBB INVESTMENT COMPANY, INC.
<PAGE>
STOCK AND ASSET PURCHASE AGREEMENT
STOCK AND ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of
January 15, 1999, by and among Piccadilly Cafeterias, Inc., a Louisiana
corporation ("Piccadilly"), Piccadilly Restaurants, Inc., a Louisiana
corporation, ("Restaurants" and together with Piccadilly, the "Sellers"),
and Cobb Investment Company, Inc., a Delaware corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, Sellers own certain assets principally used in the operation
of seven Ralph & Kacoo's seafood restaurants (the "Business"); and
WHEREAS, Piccadilly owns 98 shares of common stock, no par value per
share, of Cajun Bayou Distributors and Management, Inc., a Louisiana
corporation ("Bayou"), which constitutes all of the issued and outstanding
capital stock of Bayou (the "Shares"), and Bayou owns certain intellectual
property, inventory, franchisor rights and a warehouse and distribution
facility used exclusively in the operation of the Business; and
WHEREAS, Sellers desire to sell the assets used exclusively in the
operation of the Business, including the Shares, other than certain
specified assets, and to transfer certain specified obligations and
liabilities of Sellers incurred in connection with the ownership and
operation of the Business; and
WHEREAS, Buyer desires to acquire such assets and the Shares and is
willing to assume such specified obligations and liabilities on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, each of the following
terms shall have the meanings set forth below:
An "Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, through one or more intermediaries, controls,
has the right to control (in fact or by agreement), is controlled by, or is
under common control with, such Person.
"Benefit Arrangement" shall mean any employment, severance or similar
contract, or any other contract, plan, policy or arrangement providing for
compensation, bonus, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, insurance
coverage (including any self-insured arrangement), health or medical
benefits, disability benefits, and post-employment and retirement benefits,
other than Employee Plans.
"Business Financial Statements" shall mean the unaudited balance
sheets as of June 30, 1998, and the related unaudited statements of
earnings of the Business, as of and for the years ended June 30, 1996, 1997
and 1998, and the unaudited balance sheet as of September 30, 1998 and the
related unaudited statement of earnings of the Business for the three
months ended September 30, 1998, which are attached hereto as Exhibit A.
The "Business Latest Balance Sheet" means the balance sheet of
Business as of September 30, 1998 that is included among the Business
Financial Statements.
The "Closing" means the closing of the Stock and Asset Sale.
The "Closing Date" means the date upon which the Closing occurs.
The "Closing Date Working Capital" means the Working Capital of the
Business as of the Closing Date.
The "Closing Date Working Capital Statement" has the meaning specified
in Section 2.9.
The "Closing Payment" means the payment made by Buyer to Sellers at
Closing consisting of a cash payment in the amount of $21,076,613 plus or
minus the amount by which the Estimated Working Capital exceeds or is less
than the Working Capital of the Business reflected on the Business Latest
Balance Sheet.
The "Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means that certain Confidentiality
Agreement dated October 14, 1998, and as amended on December 2, 1998, by
and between Buyer and Southcoast Capital L.L.C., as financial advisor to,
and on behalf of, Piccadilly.
"Current Assets" means any and all assets of the Business that are
categorized as such on the Business Latest Balance Sheet or the Closing
Date Working Capital Statement, as the case may be, including, but not
limited to, accounts receivable, inventory and prepaid expenses.
"Current Liabilities" means any liabilities of the Business listed on
the Business Latest Balance Sheet or the Closing Date Working Capital
Statement, as the case may be, other than Intercompany Indebtedness (which
will be eliminated at Closing in accordance with Section 2.7 hereof).
"Descriptive Memorandum" means the Confidential Descriptive Memorandum
of the Business dated September 1998.
"Effective Time" means 12:00 midnight on the Closing Date.
"Employee Plan" means (a) a plan or arrangement as defined in Section
3(3) of ERISA that (i) is maintained, administered or contributed to by
Bayou, Sellers or any ERISA Affiliate or (ii) covers any employee or former
employee of Bayou, Sellers or any ERISA Affiliate, and (b) a plan or
arrangement as defined in Section 3(37) and Section 4001(a)(3) of ERISA
that covers, or covered at any time during the five year period prior to
the Closing Date, any employee or former employee of Bayou, Sellers or any
ERISA Affiliate.
"Environmental Claim" refers to any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter or written communication from
any governmental agency, department, bureau, office or other authority, or
any third party involving violations of Environmental Laws or Releases of
Hazardous Materials from (i) any assets, properties or businesses of the
Business; (ii) adjoining properties or businesses onto properties of the
Business or (iii) onto any facilities which received Hazardous Materials
generated by the Business.
"Environmental Laws" mean the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") 42 USC 9601 et seq., as amended;
the Resource Conservation and Recovery Act ("RCRA"), 42 USC 6901, et seq.,
as amended; the Clean Air Act ("CAA"), 42 USC 7401, et seq., as amended;
the Clean Water Act ("CWA") 33 USC 1251, et seq., as amended; the
Occupational Safety and Health Act ("OSHA"), 20 USC 655, et seq., as
amended; and any other federal, state, local or municipal laws, statutes,
regulations, rules, or ordinances imposing liability or establishing
standards of conduct for the protection of the environment, human health
and safety.
"Environmental Liabilities" mean any monetary obligations, losses,
liabilities (including strict liability), damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable out-of-pocket fees, disbursements and expenses of counsel, out-
of-pocket expert and consulting fees and out-of-pocket costs for
environmental site assessments, remedial investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of
any Environmental Claim filed by any governmental authority or any third
party which relate to any violations of Environmental Laws, Remedial
Actions, Releases or threatened Releases from or onto (i) any property
owned or leased by Bayou or Sellers and used in the Business or (ii) any
facility which received Hazardous Materials generated by Bayou or Sellers
and used in the Business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person within the "controlled group" of
corporations with respect to Bayou or Sellers, as defined in Section 414(b)
of the Code and the regulations promulgated thereunder, and all trades or
businesses that are under "common control" with respect to Bayou or
Sellers, as defined in Section 414(c) of the Code and the regulations
promulgated thereunder.
"Estimated Working Capital" means the estimate of the Working Capital
of the Business that is set forth in the Estimated Working Capital
Statement, it being understood that the Estimated Working Capital will be
stated as of the last day of the calendar month immediately preceding the
Closing Date (or, if the Closing is held before the tenth day of a month,
as of the last day of the second preceding month), adjusted for any
subsequent extraordinary items.
"Estimated Working Capital Statement" means the statement prepared by
Sellers and delivered to Buyer pursuant to and in accordance with Section
2.8 and 2.10 hereof.
"Final Adjustment" means the adjustment provided for in Section 2.9
hereof.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Hazardous Materials" means (a) any element, compound, or chemical
that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or hazardous substance, extremely
hazardous substance or chemical, hazardous waste, medical waste,
biohazardous or infectious waste, special waste, or solid waste under
Environmental Laws; (b) petroleum, petroleum-based or petroleum-derived
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic including but not limited to corrosivity,
ignitability, toxicity or reactivity as well as any radioactive or
explosive materials; and (e) any raw materials, building components,
excluding lead-based paint but including regulated asbestos-containing
materials and manufactured products containing Hazardous Materials.
"Indebtedness" means all obligations of the Business (whether for
principal, interest, premium, fees or otherwise) for or arising under (i)
all indebtedness for borrowed money (including all notes payable and all
obligations evidenced by bonds, debentures, notes or other similar
instruments but excluding Intercompany Indebtedness), (ii) unpaid
reimbursement obligations arising in connection with guaranties, or (iii)
any lease obligation that would be required to be capitalized in accordance
with GAAP.
"Intercompany Indebtedness" means (i) the entire net Indebtedness owed
or owing as of the Closing Date by Bayou to Piccadilly or any subsidiary of
Piccadilly, (ii) any tax liability of Bayou that is required to be paid by
Piccadilly pursuant to Section 9.6, or (iii) any other liability,
obligation or commitment of Bayou to Piccadilly or any subsidiary of
Piccadilly as of the Closing Date.
"Knowledge of Sellers" means actual knowledge of the chief executive
officer or chief financial officer of Piccadilly.
A "Lien" means, with respect to the Shares or any asset of the
Business, any title defect, lien, mortgage, easement, pledge, charge,
transfer restriction, right of first refusal, preemptive right, option,
claim, security interest, right of others or other encumbrance of any
nature whatsoever, other than restrictions imposed by federal or state
securities laws.
A "Material Adverse Effect" means a material adverse effect on the
results of operation or financial condition of the Business, or any
material limitation on the ability of the Sellers to consummate the Stock
and Asset Sale.
"Permits" shall have the meaning specified in Section 4.15.
A "Permitted Lien" means (i) Liens consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on
the use of real property that in the aggregate do not materially detract
from the value or interfere with the use of such real property or
materially impair the marketability thereof, (ii) Liens for current taxes
or assessments on property that are accrued but not yet payable, and (iii)
mechanic's, materialman's and other liens for goods and services
incorporated into or provided with respect to the property encumbered
thereby arising by operation of law in the ordinary course of business,
provided that the obligations secured by such Liens (A) are not more than
30 days past due, (B) are fully reflected in the Business Latest Balance
Sheet or the Closing Date Working Capital Statement and (C) do not
materially interfere with the use or enjoyment of any of the Business'
properties or assets and do not materially impair the marketability
thereof.
"Person" means any natural person, corporation, partnership, limited
liability company, trust and any other entity or organization of any kind,
including governmental or political subdivisions or agencies or
instrumentalities thereof.
"Purchase Price" means the Closing Payment plus or minus any amount
paid by Buyer to Sellers, or Sellers to Buyer, pursuant to Section 2.9,
together with the assumption by the Buyer of the Assumed Liabilities and
Buyer's allocated portion of the Shared Liabilities.
"Release" means any spill, leak, emission, discharge, pump, empty,
injection, escape, leaching, migration, dumping or disposal of Hazardous
Materials (including the abandonment or discarding of barrels, containers
or other closed receptacles containing Hazardous Materials) into the
environment.
"Remedial Action" means all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the indoor or outdoor environment, (ii)
prevent or minimize a Release or threatened Release of Hazardous Materials
so they do not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, (iii) perform post-remedial
operation and maintenance activities, or (iv) any other actions authorized
by 42 U.S.C. <section>9601.
"Returns" means all returns, declarations, reports, statements and
other documents required to be filed in respect of Taxes, and the term
"Return" means any one of the foregoing.
"Sellers' Group" means, individually and collectively, Piccadilly,
Bayou, Restaurants or any other Person as to which Bayou is liable for
Taxes incurred by such Person either as a transferee, pursuant to U.S.
Treasury Regulations Section 1.1502-6, or pursuant to any other provision
of federal, state, local or foreign law or regulation or otherwise.
The "Stock and Asset Sale" means the sale of the Shares by Piccadilly
and the sale of assets of the Business by Sellers to the Buyer in
accordance with this Agreement.
"Taxes" means all federal, state, local, foreign or other net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
property, withholding or other taxes, fees, assessments or charges of any
kind whatever, together with any interest and any penalties, additions to
tax or additional amounts with respect thereto, and the term "Tax" means
any one of the foregoing.
"Transition Services Agreement" means the agreement between Buyer and
Piccadilly that is required to be delivered at Closing pursuant to Section
7.1(d) hereof.
"Working Capital" means the amount, if any, by which the Business'
Current Assets exceed its Current Liabilities.
SECTION 2. PURCHASE AND SALE; CONDITION OF ASSETS
2.1 PURCHASE AND SALE OF SHARES. Subject to the terms and
conditions hereof, at the Closing Piccadilly will sell to Buyer, and Buyer
will purchase from Piccadilly, the Shares, free and clear of all Liens.
2.2 ASSETS CONVEYED. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing Sellers shall convey, sell,
transfer and deliver to Buyer and Buyer shall purchase, acquire and accept
from Sellers, all right, title and interest of Sellers in and to all
assets, properties and rights of Sellers of every kind, nature and
description, corporeal or incorporeal, tangible or intangible, wherever
located, used by Sellers exclusively in connection with the operation of
the Business (collectively, the "Acquired Assets"), but excluding those
assets, properties and rights specified in Section 2.3. The Acquired
Assets include, but are not limited to:
(a) The immovable property of the Business that is listed
and described on Schedule 4.6(a)(i) together with all buildings, structures
and improvements located thereon and fixtures attached thereto and all
rights, ways, privileges and servitudes attendant thereto (the "Immovable
Property");
(b) All rights and interests of the Sellers under the real
property leases listed and described on Schedule 4.6(a)(iii) (the "Real
Property Leases");
(c) All machinery, equipment, furniture, supplies, tools,
vehicles, spare parts and other movable assets of the Business, including,
without limitation, those assets listed and described on Schedule
4.6(a)(ii) (collectively, the "Equipment");
(d) All inventory of the Business, including, without
limitation, foodstuffs, staples and utensils;
(e) All claims and rights of the Sellers under all
agreements, contracts, leases (other than Real Property Leases), evidences
of indebtedness, purchase and sale orders and other executory contracts and
commitments of Sellers to the extent they relate exclusively to the
Business, including without limitation those listed on Schedule 4.7 (the
"Contracts");
(f) All claims and rights of the Sellers under all licenses,
permits, consents, use agreements, approvals, authorizations and
certificates of any regulatory, administrative or other governmental agency
or body to the extent they relate exclusively to the Business, in each case
to the extent transferable by Sellers, including without limitation those
listed on Schedule 4.15 (the "Licenses and Permits");
(g) All rights and interests of Sellers arising under any
claim or potential claim against any person, whether arising under contract
rights, subrogation rights or at law or equity, including, without
limitation, all claims against suppliers, customers and insurance
underwriters and brokers, in each case only to the extent they arise out of
or relate exclusively to the Business and based on facts or circumstances
occurring after the Closing Date;
(h) All accounts receivable of the Business;
(i) Originals or duplicate copies, to the extent in
existence, of all property tax records and supporting schedules, drawings,
plans, blueprints, files, papers and all other records, including those
maintained on magnetic tape or microfiche format, other than employee
personnel records, relating exclusively to the Acquired Assets or the past
or present operations of the Business, it being understood by Buyer that it
may not be possible to segregate certain records from Piccadilly's records
but that copies of information set forth in such records as it relates
exclusively to the Acquired Assets or the Business shall be provided to the
Buyer;
(j) Except as otherwise set forth in Section 2.3 and to the
extent transferrable by Sellers, all personal computer hardware units and
personal computer software computer programs that have been developed by
third parties and are used exclusively in the Business, including, without
limitation, those listed on Schedule 4.6(a)(ii);
(k) All of Sellers' or Bayou's intellectual property
relating exclusively to the Business or the Acquired Assets, including,
without limitation, recipes, trade secrets, trademarks and trade names,
trademark and trade name registrations, service marks and service mark
registrations, copyrights, copyright registrations, the applications
therefor and all rights of Sellers or Bayou as licensee under licenses, to
the extent transferable, relating to such intellectual property, together
with all of the goodwill appurtenant thereto, including without limitation
the intellectual property listed on Schedule 4.8;
(l) All catalogues, brochures, sales literature, promotional
material and other sales material of the Business (the "Promotional
Materials"); and
(m) All of Sellers' or Bayou's franchisee rights, franchisor
rights and purchased goodwill relating exclusively to the Business.
2.3 EXCLUDED ASSETS. Notwithstanding the provisions of Section
2.2 hereof, the Acquired Assets do not include the following (the "Excluded
Assets"):
(a) Cash;
(b) All of Sellers' right, title and interest to properties
and assets other than the properties and assets conveyed pursuant to
Section 2.2;
(c) All claims or rights of Sellers, if any, against third
parties based on facts or circumstances occurring prior to the Closing Date
other than the accounts receivable of the Business transferred pursuant to
Section 2.2(h);
(d) All insurance policies of Sellers and rights thereunder,
including rights to any cancellation value on the Closing Date;
(e) Rights of the Sellers to the refund of any federal or
state income tax, ad valorem real estate or property tax, and any other
similar tax that was paid prior to the Closing Date, subject to Section
2.6(c), and the benefit, if any, of net operating loss carry-forwards or
carry-backs of the Sellers;
(f) All assets related to any pension, profit sharing, stock
bonus, stock option, thrift or other retirement plan, medical,
hospitalization, dental, life, disability, vacation or other insurance or
benefit plan, employee stock ownership plan, deferred compensation, stock
ownership, stock purchase, bonus, benefit or other incentive plan,
severance plan or other similar plan relating to the Sellers or their
employees;
(g) All marks or other intellectual property of the Sellers
other than those marks described on Schedule 4.8 but including, without
limitation, any and all trademarks or service marks, trade names, slogans
or other like property relating to or including the names "Piccadilly
Cafeterias," "Piccadilly Restaurants," "Piccadilly," "Morrison
Restaurants," "Morrison" and all derivations, variations and abbreviations
thereof; and
(h) Any other assets that are identified on Schedule 2.3(h).
2.4 ASSUMPTION OF SPECIFIED LIABILITIES. Except as otherwise
provided in this Agreement, subject to and in accordance with the terms and
provisions of this Agreement, at the Closing Buyer will assume only the
following liabilities (collectively, the "Assumed Liabilities"):
(a) All payment and performance obligations of the Business
arising after the Closing Date under the Contracts, the Real Property
Leases, and the Licenses and Permits;
(b) All liabilities of the Business reflected on the Closing
Date Working Capital Statement;
(c) The monetary liability for any accrued and unused
vacation benefits of employees employed by Sellers or Bayou in the Business
on the Closing Date;
(d) All liabilities and obligations of the Business for any
federal, state, parish or local taxes that are incurred by the Business
after the Closing Date (including but not limited to sales and gross
receipts, income, ad valorem, franchise, use, excise, employment and
payroll taxes);
(e) All liabilities and obligations of the Business that
arise out of, result from or relate to personal injury or property damage
arising out of or related to an act, omission or occurrence after the
Closing Date;
(f) All liabilities and obligations of the Business that
arise out of, result from, or relate to, any violation of any applicable
law, statute, ordinance, regulation or other governmental requirement after
the Closing Date, to the extent that such liabilities or obligations are
attributable to actions taken or events occurring after the Closing Date;
and
(g) All other indebtedness, liabilities or obligations of
the Business to the extent they arise out of or are related to an event,
omission, act or occurrence that occurs after the Closing Date.
2.5 EXCLUDED LIABILITIES. Except as set forth in Section 2.6,
Buyer shall not assume and shall not be responsible for any liabilities,
obligations or commitments of Sellers other than the Assumed Liabilities
(the "Excluded Liabilities").
2.6 SHARED LIABILITIES. The following liabilities and obligations
relating to the Business and the Acquired Assets (the "Shared Liabilities")
shall be shared between Buyer and Sellers as follows:
(a) With respect to utility charges that relate to billing
periods beginning before the Closing Date and ending after the Closing
Date, the responsibility for payment shall be prorated between the parties
on the basis of measured utility usage before and after the Effective Time
(if meter or other measured service readings are made at or near such time)
or otherwise on the basis of the proportional number of calendar days in
the relevant billing period before and after the Closing Date,
respectively;
(b) With respect to rentals payable on the Real Property
Leases and Contracts that relate to lease or contract periods beginning
before and ending after the Closing Date, the responsibility for payment
will be allocated between the parties on the basis of the proportional
number of calendar days in the relevant lease period before and after the
Closing Date, respectively; and
(c) With respect to ad valorem property, real estate and
similar taxes for the applicable tax year, the responsibility for payment
will be allocated between the parties on the basis of the proportional
number of calendar days in the relevant tax year before and after the
Closing Date, respectively.
Except as provided below, if either party pays all or any portion of
the Shared Liabilities for which the other party is entirely or partially
responsible hereunder, then the responsible party will promptly (but in no
event later than 30 days after demand by the paying party) reimburse the
paying party for that payment, provided that any demand for reimbursement
shall be accompanied by appropriate evidence of payment thereof.
2.7 INTERCOMPANY INDEBTEDNESS. At the Closing, Piccadilly will make
a capital contribution to Bayou in an amount equal to the Intercompany
Indebtedness at the time of the contribution thereby eliminating the
Intercompany Indebtedness.
2.8 CONSIDERATION. Upon the terms and subject to the conditions
contained in this Agreement, in consideration of and payment for the
Acquired Assets and the Shares, at the Closing Buyer shall (a) assume the
Assumed Liabilities and Buyer's portion of the Shared Liabilities, and (b)
pay to Sellers the amount of the Closing Payment (such payment to be made
in the manner specified in Section 3.2 hereof). To facilitate the
calculation of the Closing Payment, Sellers shall deliver to Buyer not less
than three days in advance of the Closing Date the Estimated Working
Capital Statement, which statement shall reflect the Estimated Working
Capital.
2.9 FINAL ADJUSTMENT
(a) As soon as practicable, but in no event later than 60
days following the Closing Date, Sellers shall determine the Business'
Closing Date Working Capital and Buyer shall afford Sellers, or its
representatives reasonable access to the books, records and personnel of
the Business for the purpose of making such determination. Within such 60-
day period Sellers shall deliver to Buyer a written statement (the "Closing
Date Working Capital Statement") setting forth its determination of the
Closing Date Working Capital. If Buyer objects to the Closing Date Working
Capital Statement, such objection shall be made in writing and delivered to
Sellers within 15 days following Buyer's receipt of the Closing Date
Working Capital Statement, failing which such statement shall be deemed to
have been accepted by Buyer. Any objections that are not resolved between
Sellers and Buyer within 15 days following Sellers' receipt of Buyer's
statement of objections shall be submitted to binding arbitration to be
conducted by a representative of Ernst & Young LLP, which shall represent
Sellers, a representative of Wilson, Price, Barranco, Blankenship &
Billingsley, P.C., which shall represent Buyer, and another nationally
recognized accounting firm mutually acceptable to Buyer and Sellers and
selected within 30 days of the date of the submission of the statement of
objections. The fees of each accounting firm representative shall be paid
by the party that it represents, and responsibility for payment of the fees
of the third accounting firm shall be divided equally between Buyer and
Sellers. Such arbitrating body shall make its determination (which
determination shall be made by majority vote) within 90 days of the date
the objections are first submitted for arbitration, and such determination
shall be final, non-appealable and binding upon the parties.
(b) If the Closing Date Working Capital determined pursuant
to Section 2.9(a) exceeds the Estimated Working Capital, then Buyer shall,
within five business days of the earlier of the date that Buyer accepts the
Closing Date Working Capital Statement or any disputes with respect to the
Closing Date Working Capital Statement have otherwise been resolved (the
"Acceptance Date"), pay Sellers in cash the amount of such excess. If the
Closing Date Working Capital determined pursuant to Section 2.9(a) is less
than the Estimated Working Capital, Sellers shall, within five business
days of the Acceptance Date, pay Buyer in cash the amount of such
deficiency. Interest shall accrue and be due with respect to any payments
due by one party to the other hereunder at the rate of 7% per annum
beginning on the 91st day following the Closing Date, and any such payments
(including any interest accrued thereon) shall be made by bank wire
transfer of immediately available funds to an account specified in writing
by payee to payor.
2.10 BASIS OF PREPARATION OF WORKING CAPITAL STATEMENTS. Sellers
agree that in preparing the Estimated Working Capital Statement and Closing
Date Working Capital Statement, they shall determine the Current Assets and
Current Liabilities of the Business as of the applicable date applying the
same accounting policies and principles as were used in preparing the
Business Latest Balance Sheet and shall accrue expenses through the date
that Working Capital is calculated in such statements as if such date were
at the end of an accounting period, except that the Closing Date Working
Capital Statement shall rely on a physical inventory made by
representatives of Buyer and Sellers and a valuation thereof consistent
with the representations made in Section 4.19 hereof. Such statements
shall be accompanied by a certificate of the Chief Financial Officer of
Piccadilly to the foregoing effect.
2.11 PURCHASE PRICE ALLOCATION. Buyer and Seller agree that the
allocation of the Purchase Price among each of the Acquired Assets
transferred hereunder will be as determined by mutual agreement of the
parties; provided, however, that the amount of the Purchase Price to be
allocated to the Shares shall be no less than $3.5 million , all as to be
set forth on an allocation statement to be executed by Buyer and Sellers.
Buyer and Sellers will each file or cause to be filed all federal, state
and local tax returns in accordance with such allocation.
2.12 TRANSFER OF TITLE. Title and risk of loss with respect to the
Acquired Assets and the Shares and Buyer's right to operate and control the
Acquired Assets and the Business will pass from Seller to Buyer at the
Effective Time.
2.13 CONDITION OF ASSETS: INTENDED USE. (a) Prior to the Closing,
Buyer will have carefully inspected the Acquired Assets and will knowingly
and voluntarily accept such Acquired Assets "as is" and "where is." Except
for the representations and warranties given in Section 4 hereof, no
representation or warranty, express or implied, has been made by or on
behalf of Sellers with respect to the present condition of the Acquired
Assets or the present or future suitability thereof for any intended use by
Buyer. Sellers do not warrant that the Acquired Assets are free from
redhibitory latent defects or vices. Buyer hereby (i) expressly waives all
rights in redhibition and reduction of purchase price pursuant to Louisiana
Civil Code Articles 2520 et seq. and the warranty imposed by Louisiana
Civil Code Article 2476 and (ii) releases Sellers from any liability for
redhibitory or latent defects or vices under Louisiana Civil Code Articles
2520 (1870) through 2548 (1870); provided, however, that the foregoing
shall not be deemed to be a waiver of any claim for a breach of a
representation, warranty or covenant contained in this Agreement, or for
willful concealment or fraud.
(b) Sellers make no warranty, express or implied, regarding
the commercial suitability of the Acquired Assets for Buyer's intended use.
Buyer acknowledges that Buyer's knowledge of its intended commercial
activity is superior to that of Sellers and consequently Sellers cannot
offer, and have not offered, any warranty, express or implied, with regard
to Buyer's intended commercial use of the Acquired Assets.
SECTION 3. THE CLOSING
3.1 CLOSING. The closing of the transactions contemplated hereby
shall take place at the offices of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P. in New Orleans, Louisiana commencing at 10:00
a.m. local time on any date specified by one party to the other upon five
days' notice following satisfaction of the latest to occur of the
conditions set forth in Section 7.1; provided that the other conditions set
forth in Section 7 shall have been satisfied or waived by the party
entitled to grant such waiver.
3.2 DELIVERIES AT CLOSING. If all conditions set forth in Section
7 are satisfied or waived by each party entitled to grant such waiver, at
the Closing: (a) Sellers shall deliver, or cause to be delivered to Buyer
the following:
(i) Such deeds, bills of sale, assignments, releases,
consents to assignments and other instruments of sale, conveyance,
assignment, assumption and transfer satisfactory in form and substance to
Buyer and Sellers as may reasonably be required in order to convey to Buyer
all of Sellers' right, title and interest in and to the Acquired Assets;
(ii) certificates evidencing the Shares, which shall
be properly endorsed for transfer or accompanied by duly executed stock
powers, in either case executed in blank or in favor of Buyer or its
nominee as the Buyer may have directed prior to the Closing Date;
(iii) to the extent transferrable, originals of all
permits, licenses and governmental, administrative and regulatory approvals
and authorizations that are in Seller's possession and that are necessary
to own and operate the Acquired Assets;
(iv) such other documents and instruments as shall be
reasonably necessary to effect the transactions contemplated hereby.
(b) Buyer shall deliver, or cause to be delivered to Sellers
the following:
(i) the Cash Payment, in cash by wire transfer to an
account or accounts specified by Sellers prior to the Closing;
(ii) an assumption agreement pursuant to which Buyer
shall assume the Assumed Liabilities and its allocated portion of the
Shared Liabilities; and
(iii) such other documents and instruments as shall be
reasonably necessary to effect the transactions contemplated hereby.
(c) Buyer and Sellers shall each provide to the other such
proof of satisfaction of the conditions set forth in Section 7 as the
parties whose obligations are conditioned upon such satisfaction may
reasonably request.
(d) Buyer and Sellers shall each provide to the other the
certificates and other agreements and documents required by Section 7 and
take such other action as is required to consummate the transactions
contemplated hereby.
SECTION 4. REPRESENTATIONS OF THE SELLERS
The Sellers represent and warrant to the Buyer as follows:
4.1 CORPORATE ORGANIZATION. (a) Each of the Sellers is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Louisiana and has the full corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder.
(b) Bayou is a corporation duly organized, validly existing
and in good standing under the laws of the State of Louisiana. Bayou has
full corporate power and authority to own its properties and assets and to
carry on its business as it is now being conducted. Bayou is duly
qualified or licensed to do business as a foreign corporation in good
standing in the jurisdictions in which the ownership of its property or the
conduct of its business requires such qualification, except those
jurisdictions, if any, in which the failure to be so qualified would not
have a Material Adverse Effect.
4.2 CAPITAL STOCK. Bayou has an authorized capitalization
consisting of 10,000 shares without par value of Common Stock, of which the
Shares are the only issued and outstanding shares of Common Stock. All
such outstanding Shares have been duly authorized and validly issued and
are fully paid and nonassessable. No shares of Common Stock are held in
Bayou's treasury. There are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or
agreements of any character, whether absolute or contingent, providing for
the purchase, issuance or sale of any shares of the capital stock of Bayou
other than as contemplated by this Agreement.
4.3 OWNERSHIP OF SHARES. (a) Piccadilly is the lawful, beneficial
and record owner of the Shares, all of which are owned by Piccadilly free
and clear of any Liens, and upon Closing Buyer will acquire good and valid
title to the Shares free and clear of Liens.
(b) Bayou has no subsidiaries and does not own or have the
right or obligation to acquire, directly or indirectly, any capital stock
or other equity or proprietary interest in any Person.
4.4 AUTHORIZATION; ENFORCEABILITY. The Board of Directors of each
of the Sellers has duly approved and authorized the execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby, and no other corporate proceedings on the part of the Sellers are
necessary to approve and authorize the execution and delivery of this
Agreement by the Sellers and the consummation by the Sellers of the
transactions contemplated hereby. This Agreement constitutes a legal,
valid and binding obligation of each of the Sellers, enforceable against
each in accordance with its terms, except that the enforcement hereof may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
4.5 NO APPROVALS OR CONFLICTS. Neither the execution, delivery or
performance by the Sellers of this Agreement nor the consummation by them
of the transactions contemplated by this Agreement will (a) violate,
conflict with or result in the breach of any provision of the articles of
incorporation or by-laws of either of the Sellers or Bayou, (b) violate,
conflict with or result in a breach of any provision of, or constitute a
default under, or result in the termination or cancellation of, or
accelerate the performance required by, or result in the creation of any
Lien upon the Acquired Assets, or upon any of the properties of Bayou or
upon Piccadilly's interest in the Shares under, any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or
commitment or obligation to which either of the Sellers, Bayou or any of
their properties may be bound or affected, (c) violate any order, writ,
injunction, decree, judgment, ruling, law, rule or regulation of any court
or governmental authority, domestic or foreign, applicable to either of the
Sellers or Bayou or any of their respective properties, or (d) except for
any required filings under the HSR Act (as provided in Section 6.1(b)) or
those that have already been obtained, require any consent, approval or
authorization of, or notice to, or declaration, filing or registration
with, any governmental or regulatory authority in connection with the
execution, delivery and performance of this Agreement by the Sellers.
4.6 PROPERTIES.
(a) The following Schedules set forth the information
indicated as of the dates noted on such Schedules:
(i) Schedule 4.6(a)(i) is a description of the Immovable
Property;
(ii) Schedule 4.6(a)(ii) is a list of the Equipment;
(iii) Schedule 4.6(a)(iii) is a list of the Acquired
Assets that are not owned by Seller, but are leased to
Seller, such that the interest therein to be conveyed to
Purchaser is that of a leasehold interest, together with
an identification of each such lease;
(iv) Schedule 4.6(a)(iv) is a list of all leases to
which any of the Acquired Assets owned by Seller are
subject;
(b) With respect to the Immovable Property:
(i) Except as set forth on Schedule 4.6(b) hereof, a
Seller or Bayou has insurable title to the Immovable Property free and
clear of any Liens other than Permitted Liens.
(ii) There are no commitments made by Sellers or Bayou
to any governmental or quasi-governmental authority having jurisdiction, or
to any third party, to dedicate or grant any portion of the Immovable
Property for easements, rights-of-ways, or other public purposes, or to
subject the Immovable Property to any restrictions, or to incur any other
expense or obligation relating to the Immovable Property.
(c) A Seller or Bayou has good title to all of the Acquired
Assets (other than the Immovable Property, as to which the title warranty
is limited to that set forth in Section 4.6(b)(i) hereof) except for (i)
any Acquired Assets subject to a leasehold interest, as identified on
Schedule 4.6(a)(iv), and (ii) such inventory as has been disposed of in the
ordinary course of business.
(d) With respect to the Real Property Leases, Seller
represents as follows:
(i) Sellers have provided Buyer with complete and
correct copies of the Real Property Leases;
(ii) None of the Real Property Leases have been
modified, amended or assigned by Sellers, and each of them is legally
valid, binding and enforceable against Sellers and, to the actual knowledge
of Sellers, against each other Person that is a party thereto, in
accordance with its respective terms and is, to the knowledge of Sellers,
in full force and effect;
(iii) There are no monetary defaults by Sellers and no
material nonmonetary defaults by Sellers, or, to the actual knowledge of
Sellers, any other party to the Real Property leases;
(iv) Sellers have not received notice of any default,
offset, counterclaim or defense under any of the Real Property Leases;
(v) No condition or event has occurred which with the
passage of time or the giving of notice or both would constitute a default
or breach by either of Sellers of the terms of any of the Real Property
Leases. All of the rent, security deposits, reserve funds, and other sums
and charges due and payable under the Real Property Leases have been paid
in full through the date hereof; and
(vi) To the actual knowledge of Sellers there are no
purchase contracts, options or other agreements of any kind whereby any
Person as of the date hereof, has acquired or will have any basis to assert
any right, title or interest in, or right to the possession, use, enjoyment
or proceeds of, any part or all of the interests in the Immovable Property
subject to the Real Property Leases.
4.7 CONTRACTS. Set forth on Schedule 4.7 is a list of all
contracts and commitments of either of the Sellers or Bayou relating to the
operation of the Business or the Acquired Assets (including without
limitation, mortgages, indentures, loan agreements, long-term supply
contracts and open contracts), except (1) the leases listed in Schedules
4.6(a)(iii) and (iv), (2) any contracts entered into in the ordinary course
of business that involve an aggregate expenditure in any year of less than
$10,000, provided that all of such undisclosed contracts do not involve
expenditures in excess of $100,000 in the aggregate, (3) any purchase
orders or commitments entered into in the ordinary course of business, and
(4) any contracts relating to Excluded Assets. Except as set forth on
Schedule 4.7, all such contracts or agreements are valid and in full force
and effect and, to the Knowledge of Sellers, no party thereto is in default
in any material respect under the terms thereof.
4.8 INTELLECTUAL PROPERTY. Schedule 4.8 identifies currently
registered trademarks, trade names, copyrights, and service marks used now
or within the last five years by Sellers or Bayou in the operation of the
Business. Except as set forth on Schedule 4.8, (a) neither of the Sellers
nor Bayou is bound by or a party to any options, licenses or agreements of
any kind with respect to trademarks, trade names, service marks, copyrights
and pending applications therefor relating to the Business and (b) neither
of the Sellers nor Bayou has been informed of any claims or suits pending
or threatened against it claiming an infringement by it of any recipes,
copyrights, licenses, trademarks, service marks or trade names of others in
connection with the Business.
4.9 LITIGATION AND CLAIMS. Except as set forth in Schedule 4.9,
there is no action, suit, investigation or proceeding at law or in equity,
any arbitration or any administrative or other proceeding relating to the
Business or the Acquired Assets or to Sellers' ability or right to sell the
Acquired Assets, by or before any court, governmental instrumentality or
agency, pending or, to the Knowledge of Sellers, threatened or contemplated
in writing against or affecting Bayou or Sellers, or any of its properties
or rights, that is likely to have a Material Adverse Effect. Neither of
the Sellers nor Bayou is currently subject to any judgment, order or decree
entered in any lawsuit or proceeding.
4.10 EMPLOYMENT RELATIONS. There (a) is no unfair labor practice
complaint against Bayou or Sellers relating to the Business or the Acquired
Assets pending before the National Labor Relations Board, (b) is no labor
strike, slowdown or stoppage pending or, to the Knowledge of Sellers,
threatened against or involving the employees of the Business, (c) is no
labor union that claims to represent the employees of the Business, (d) is
no collective bargaining agreement currently being negotiated by Bayou or
Sellers with respect to the employees of the Business, (e) is pending no
labor or labor related grievance related to the Business that is likely to
be material and no arbitration proceeding arising out of or under any
collective bargaining agreement of Bayou or Sellers and no claim therefor
has been asserted, and (f) has not been any material labor difficulty
experienced by Bayou or Sellers relating to the Business or the Acquired
Assets during the past three years. There are no employment contracts or
agreements with any employees of the Business, except for those agreements
listed on Schedule 10.5(d).
4.11 EMPLOYEE BENEFIT PLANS. (a) Bayou has no Employee Plans or
Benefit Arrangements other than through its participation, and the
participation of its employees, in the Employee Plans and Benefit
Arrangements of Piccadilly described in Section 10.5. Buyer will not incur
any liability, or other obligation to, or with respect to, such Benefit
Arrangement or Employee Plan that covers or provides benefits to former or
active employees of the Business or their beneficiaries, including any
fine, tax or penalty imposed by any federal, state or local government or
governmental agency or government-owned corporation, now or at any time in
the future, except for any severance benefits payable to such employees in
accordance with Section 10.5(d) and the provisions of Schedule 10.5(d)
hereto. (b) None of the Acquired Assets is subject to any lien in favor
of or asserted by the Internal Revenue Service, the Pension Benefit
Guaranty Corporation, the Department of Labor or any other governmental
authority, agency, department or government-owned corporation. All group
health plans of Piccadilly that are subject to Sections 601, et seq. of
ERISA or analogous state law and that cover employees of the Business have
at all times fully complied with the requirements of such statutes,
including without limitation the notification and continuation of coverage
of requirements thereof.
4.12 INTERESTS IN SUPPLIERS AND COMPETITORS. None of Bayou or
either of the Sellers, nor any officer or director (or, to the Knowledge of
Sellers, any member of the immediate family of a director or officer)
thereof, possesses, directly or indirectly, any financial interest in, or
is a director, officer or employee of, any Person that is a supplier,
distributor, lessor, lessee or competitor of the Business. Ownership of
less than 5% of any class of securities of a company that has registered at
least one class of its securities under the Securities Exchange Act of 1934
shall not be deemed a financial interest for purposes of this section.
4.13 ENVIRONMENTAL MATTERS. (a) One of the Sellers or Bayou
possesses all necessary Permits and authorizations that are required under
Environmental Laws to operate the Business and the Acquired Assets. Except
as disclosed on Schedule 4.13 or in a Report referred to in Section
4.13(e), to the Knowledge of Sellers, the operations of the Business are in
compliance in all material respects with all Environmental Laws, or such
Permits or authorizations, including but not limited to all laws and
regulations imposing record-keeping, maintenance, testing, storage,
transportation, use, generation, collection, treatment, recovery, removal,
discharge, disposal, inspection, registration, notification and reporting
requirements with respect to Hazardous Materials.
(b) None of Bayou nor either of the Sellers is subject to
any third party claims, administrative or judicial proceedings, agreements
or orders relating to the Business or the Acquired Assets pursuant to, nor
has any of them received any written notice of any actual or alleged
violations of, or responsibilities under, any Environmental Law.
(c) Except as disclosed on Schedule 4.13 or in an
Environmental Report referred to in Section 4.13(e), to the Knowledge of
Sellers, there are no Hazardous Materials used, disposed of, discharged or
stored by Bayou or Sellers in connection with the Business, and any
Hazardous Materials disclosed on Schedule 4.13 as used, disposed of,
discharged or stored are and have been so used, disposed of, discharged or
stored in compliance with Environmental Laws. To the Knowledge of Sellers,
there has been no Release at or from any of the Immovable Property
violating Environmental Laws or requiring Remedial Action, or at any
disposal, storage or treatment facility which received Hazardous Materials
generated by the Business or the Acquired Assets which is reasonably likely
to result in Environmental Liabilities.
(d) There are no disposal sites for Hazardous Materials
located on the Immovable Property.
(e) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses (collectively,
"Environmental Reports") conducted by, or which are in the possession or
control of, Bayou, or the Sellers in relation to any Immovable Property,
except for those Environmental Reports which have been made available to
the Buyer prior to the date hereof, which Environmental Reports are listed
on Schedule 4.13. Sellers shall have no liability under Section 8.1(a)(i)
with respect to any matter fairly disclosed in an Environmental Report.
Seller represents that it has provided Buyer with complete copies of any
Environmental Reports referenced herein.
(f) There are no underground storage tanks on the Immovable
Property.
4.14 COMPLIANCE WITH LAWS. (a) Each of the Sellers and Bayou is in
compliance in all material respects with, and is not in default or
violation in any material respect under, and has not conducted its
operations in violation in any material respect of, any law, rule,
regulation, decree or order applicable to the Business or the Acquired
Assets.
(b) Except as provided in Schedule 4.14, at no time during
the last five years has either of the Sellers or Bayou been notified in
writing that it was the subject of any federal, state or local criminal
investigation. Except as provided in Schedule 4.14, at no time in the last
five years has either of the Sellers or Bayou been notified in writing by
any federal, state or local governmental authority of any violation of any
law, regulation, ordinance, rule or order (including those described in
other subsections of this Section 4).
4.15 LICENSES AND PERMITS. One of the Sellers or Bayou possesses
such federal, state, and local licenses, permits and other authorizations
necessary for the continued conduct of the Business in the ordinary course,
consistent with past practices, without material interruption,
(collectively "Permits"), and such Permits are in full force and effect and
have been and are being fully complied with by it in all material respects.
None of the governmental agencies or instrumentalities that have issued the
Permits has notified Bayou or Sellers in writing of its intent to modify,
revoke, terminate or fail to renew any such Permit, and, to the Knowledge
of Sellers, no such action has been threatened. No Permit shall be
modified, revoked or shall lapse as a result of the Stock and Asset Sale,
except as provided for in Schedule 4.15.
4.16 FINANCIAL STATEMENTS. The Business Financial Statements have
been prepared in accordance with GAAP applied on a basis consistent with
prior periods and present fairly the financial condition and results of
operations of the Business as of the respective dates hereof and for the
periods referred to therein. The interim financial statements included
within the Business Financial Statements reflect all adjustments which are
necessary for a fair statement of the results for the interim periods
presented therein. Except as disclosed in Schedule 4.16, the Business does
not have, nor are any of its assets subject to, any liability, commitment,
indebtedness or obligation (of any kind whatsoever, whether absolute,
accrued, contingent, known, unknown, matured or unmatured) ("Undisclosed
Liabilities") except for Undisclosed Liabilities that (i) are disclosed or
required to be disclosed or are expressly exempted from disclosure by
another representation contained in this Section 4, (ii) are contained or
disclosed in the Business Financial Statements, (iii) arise under the
economic terms and general provisions of any contract or arrangement of
Business or (iv) could not be reasonably expected to have a Material
Adverse Effect.
4.17 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule
4.17 or as expressly provided for elsewhere herein, neither Bayou nor
either of the Sellers has with respect to the Business or the Acquired
Assets, since the date of the Business Latest Balance Sheet: (a) incurred
any Indebtedness except Intercompany Indebtedness, (b) permitted any of the
Acquired Assets to be subjected to any Lien, other than a Permitted Lien,
(c) sold, transferred or otherwise disposed of any assets that would
constitute Acquired Assets, except for dispositions or consumptions of
assets or inventory in the ordinary course of business, (d) made any
material capital expenditure or commitment therefor except in the ordinary
course of business, (e) made any loan to any Person other than intercompany
loans that are included within Intercompany Indebtedness, (f) waived any
rights or settled any claims, except for such waivers or settlements
granted or entered into in the ordinary course of business, (g) granted any
increase in the rate of wages, salaries or other compensation or benefits
to any of its employees, other than increases or payments in the ordinary
course of its business consistent with past practice, (h) adopted, or
amended or modified in any respect, any Benefit Arrangement or Employee
Plan, (i) made any change in any method of accounting practice, (j)
suffered or incurred any damage, destruction, fire, explosion, accident,
flood, or other casualty loss or act of God (whether or not covered by
insurance) that has had a Material Adverse Effect, (k) amended or
terminated, or suffered any amendment or termination of, any Permit,
contract, lease, license, purchase order or similar commitment or right
that is likely to have a Material Adverse Effect, (l) suffered any labor
disputes or disturbances that is likely to have a Material Adverse Effect,
(m) otherwise failed to operate its business in the ordinary course
consistent with past practices so as to preserve its business organization
intact and to preserve the goodwill of its customers, suppliers, employees
and others with whom it has business relations, or (n) agreed to do any of
the foregoing.
4.18 TAXES. All foreign, federal, state, parish and local Tax
Returns required to be filed by or on behalf of members of the Sellers'
Group have been filed within the time period and in the manner prescribed
by law. Sellers have no reason to believe that any such Returns filed for
the five preceding calendar years do not reflect accurately all liability
for Taxes required to be paid in connection with the operations of the
Business for the periods covered thereby. All Taxes owed in connection
with the operations of the Business or the ownership, use or operation of
the Acquired Assets have been paid in full or appropriate provision for
payment has been made through the date hereof, including all estimated
corporate income Tax payments due and payable through the date hereof.
Sellers and Bayou currently have no outstanding Tax liability under the law
of any jurisdiction that would subject Buyer or the Acquired Assets to the
liability or withholding requirements of such jurisdiction's law. There is
no pending examination or proceeding by any authority or agency with
respect to the Sellers' Group relating to the assessment or collection of
any Taxes.
4.19 INVENTORY. All inventory of Sellers and Bayou related to the
Business consist of items normally usable or saleable in the ordinary
course of the Business. The values at which such inventories are reflected
on the Business Latest Balance Sheet have been, and the value of all
inventories acquired thereafter until the Closing Date will be, determined
in accordance with GAAP. The value of all items of inventory reflected on
the Closing Date Working Capital Statement which are below standard quality
or are obsolete, unmarketable or unusable will have been written down to
net realizable value. The inventories of the Sellers and Bayou related to
the Business are reasonable in amount and comply with all applicable
industry standards, and the amount and mix of the inventories are
consistent with the reasonable requirements of the Business in accordance
with past practices.
4.20 EMPLOYEES: WAGE INCREASES. Schedule 10.5(a) lists (i) all
employees of the Business as of December 31, 1998 (the "Business
Employees"), indicating the name of the employer of each Business Employee
and the names, current rates of compensation, date of hire, and Social
Security numbers of the Business Employees. To the extent not set forth on
Schedule 4.7, Schedule 10.5(d) also lists any employment agreements with
current Business Employees. The employee records to be transferred by
Sellers as part of the Business will be correct and complete in all
material respects and will reflect the liability of Sellers or Bayou, if
any, for accrued vacation and sick leave.
4.21 INSURANCE. Schedule 4.21 sets forth the following information
with respect to each insurance policy (including policies provided for
property, casualty, liability and workers compensation, and bond and surety
arrangements) issued to Piccadilly and naming Restaurants and Bayou as
additional insureds and which relate to Acquired Assets or the operation of
the Business: (a) the name, address and telephone number of the broker; (b)
the name of the insurer; (c) the policy number and the period of coverage;
(d) the scope and the amount of coverage. With respect to each such
insurance policy: (i) the policy is legal, valid, and binding and
enforceable and in full force and effect; (ii) Sellers and Bayou are not in
breach or default (including in respect to the payment of premiums or the
giving of notices), and no event has occurred which notice or lapse of time
would constitute such a breach or default or permit termination,
modification, or acceleration, under the policy; and (iii) no party to the
policy has given written notice that it has repudiated any provision
thereof. Sellers and Bayou have continuously had substantially the same
insurance coverage as that herein described for the last five (5) calendar
years, and all such current coverage has been written
on an occurrence basis.
4.22 AFFILIATED TRANSACTIONS. Except as set forth on Schedule 4.22
and except for any Intercompany Indebtedness that will be negated at the
Closing pursuant to Section 2.7 herein, neither of the Sellers, nor any
shareholder, officer, director, or employee of the Sellers, or any
corporation or other entity controlled by or under common control, with any
of the foregoing, and no relative of any of the foregoing has:
(a) borrowed money from or loaned money to the Business
which remains outstanding (excluding travel advances in the ordinary course
of business and consistent with past practice);
(b) any contractual or other claim (except for compensation
as disclosed in the schedules to this Agreement) express or implied for any
kind whatsoever against the Business;
(c) any interest in any of the Acquired Assets (whether
ownership, contractual or otherwise); or
(d) engaged in any other transaction with the Business
(other than employment relationships) not otherwise reflected on Schedule
4.7.
4.23 BUYER'S ABILITY TO OPERATE THE BUSINESS. Except as disclosed
on Schedule 4.23 and subject to the consents, if any, required with respect
to the Real Property Leases and the Contracts, upon the sale to Buyer of
the Acquired Assets and the assumption by Buyer of the Assumed Liabilities
hereunder, Buyer shall have received from Sellers all the property,
equipment, inventory, contracts, permits, intellectual property, leasehold
interests, books and records, hardware and software, and other assets and
rights necessary for Buyer to conduct the Business in substantially the
same manner as it is presently conducted by Sellers and Bayou.
4.24 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of the Sellers or Bayou is, or will be, entitled to any
commission or broker's or finder's fees from any parties hereto, or any
Affiliate of the parties hereto, in connection with the Stock and Asset
Sale, other than fees to Southcoast Capital L.L.C., the payment of which
shall be Piccadilly's sole responsibility.
4.25 NO OTHER REPRESENTATIONS. Sellers shall not be deemed to have
made to Buyer any representation or warranty other than as expressly made
by Sellers in this Section 4. Without limiting the generality of the
foregoing, and notwithstanding any otherwise express representations and
warranties made by Sellers in this Section 4, Seller makes no
representation or warranty to Buyer with respect to:
(a) any projections, estimates or budgets heretofore
delivered to or made available to Buyer of future revenues, expenses or
expenditures or future results of operations of Bayou and the Business; or
(b) except as expressly covered by a representation and
warranty contained in this Section 4 hereof, any appraisals, opinions of
value or description of the business or operations of Bayou and the
Business or any other information or documents (financial or otherwise)
made available to Buyer or its counsel, accountants or advisers with
respect to Bayou and the Business.
SECTION 5. REPRESENTATIONS OF THE BUYER
The Buyer represents and warrants to the Seller that:
5.1 CORPORATE ORGANIZATION. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
5.2 AUTHORIZATION; ENFORCEABILITY. The Board of Directors of the
Buyer has duly approved and authorized the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and
no other corporate proceedings on the part of the Buyer are necessary to
approve and authorize the execution and delivery of this Agreement by the
Buyer and the consummation by the Buyer of the transactions contemplated
hereby. This Agreement constitutes a legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms,
except that the enforcement hereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in
a proceeding in equity or at law).
5.3 NO APPROVALS OR CONFLICTS. Neither the execution and delivery
by the Buyer of this Agreement nor the consummation by the Buyer of the
Stock and Asset Sale will (a) violate, conflict with or result in the
breach of any provision of the certificate of incorporation or by-laws of
the Buyer, (b) violate, conflict with or result in a breach of any
provision of, or constitute a default under, or result in the termination
or cancellation of, or accelerate the performance required by, or result in
the creation of any Lien upon any of the properties of the Buyer under, any
note, bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or commitment or obligation to which the Buyer or any of
its properties may be bound or affected, (c) violate any order, writ,
injunction, decree, judgment, ruling, law, rule or regulation of any court
or governmental authority, domestic or foreign, applicable to the Buyer or
its properties, or (d) except for any required filings under the HSR Act
(as provided in Section 6.1(b)) or those that have already been obtained,
require any consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any governmental or regulatory
authority in connection with the execution, delivery and performance of
this Agreement by the Buyer other than those that, in the case of clauses
(b), (c) and (d) above, are not likely to have a Material Adverse Effect.
5.4 PURCHASE OF SHARES FOR INVESTMENT. Buyer represents and
warrants that it will acquire the Shares for investment and not with a view
to, or for resale in connection with, the distribution or other disposition
thereof in violation of the Securities Act of 1933, as amended. Buyer
agrees that it will not, directly or indirectly, offer, transfer, sell,
pledge, hypothecate or otherwise dispose of any of the Shares (or solicit
offers to buy, purchase, or otherwise acquire or take a pledge of any of
the Shares), except in compliance with the Securities Act, the rules and
regulations promulgated thereunder and applicable state securities laws.
5.5 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of the Buyer is, or will be, entitled to any commission or
broker's or finder's fees from the any parties hereto, or any Affiliate of
the parties hereto, in connection with the Stock and Asset Sale.
5.6 PROCEEDINGS. There is no action, suit or proceeding at law or
in equity, any arbitration or any administrative or other proceeding by or
before any governmental instrumentality or agency, pending or, to the
knowledge of the Buyer, threatened against or affecting the Buyer that
could have a material adverse effect on the ability of the Buyer to
consummate the Stock and Asset Sale.
5.7 INVESTIGATION. Buyer acknowledges that (a) it has had the
opportunity to visit with the Sellers and Bayou and meet with their
respective officers and other representatives to discuss the Business and
the Acquired Assets and the liabilities, financial condition, cash flow and
operations of the Business; and (b) it has made its own independent
examination, investigation, analysis and evaluation of each, including
Buyer's own estimate of the value of the Business.
5.8 FINANCING. The Buyer has available funds or has obtained firm
financing commitments ("Commitment Letters") from reputable lenders for
amounts sufficient to enable it to finance fully the Purchase Price and the
transactions contemplated hereby and has delivered true and complete copies
of such commitments to the Sellers.
SECTION 6. PRE-CLOSING COVENANTS
From the date hereof through the Closing Date, the parties covenant
and agree as follows:
6.1 COOPERATION AND BEST EFFORTS; HSR FILING. (a) Each party will
cooperate with the other and use its best efforts to (i) procure all
necessary and appropriate consents and approvals, (ii) complete and file
all necessary and appropriate applications, notifications, filings and
certifications, (iii) satisfy all requirements prescribed by law for, and
all conditions set forth in this Agreement to, the consummation of the
Stock and Asset Sale, and (iv) effect the Stock and Asset Sale at the
earliest practicable date.
(b) Without limiting the generality of the foregoing, within
ten business days after the execution of this Agreement, Buyer and Sellers
shall each file or cause to be filed any notification and report forms and
related materials that it or its Affiliates may be required to file with
the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act").
6.2 PRESS RELEASES. Buyer will cooperate with the Sellers in the
preparation of any press releases announcing the execution of this
Agreement or the consummation of the Stock and Asset Sale. Buyer, without
the prior consent of Sellers, will not issue any press release or other
written or oral statement for general circulation relating to the
transactions contemplated hereby. Sellers agree that they will consult
with Buyer prior to the issuance of any press release or other written or
oral statement for general circulation relating to the transactions
described hereby, except to the extent such consultation is not feasible
for the Sellers to discharge their legal obligations.
6.3 REVIEW OF THE BUSINESS. Prior to the Closing Date, the Sellers
will afford the Buyer and its representatives, during regular business
hours and upon reasonable notice, such access to the properties, personnel
and books and records of the Business as the Buyer may reasonably request
in connection with the Stock and Asset Sale including the financing
therefor, in accordance with the terms of the Confidentiality Agreement, in
particular Section 7 thereof. To the extent the obligations hereunder
would not require the interruption of existing services, the unreasonable
devotion of managerial resources or attention, or materially interfere with
customer relations, Sellers shall fully cooperate in locating and affording
access to all such properties, assets, books and records for the Buyer, and
shall make such properties and assets available for such inspection by
Buyer. An employee or representative of Sellers, shall be entitled to be
present at any or all inspections of the Business' properties, assets and
records by Buyer or Buyer's representatives.
6.4 CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE. The Sellers and
Bayou shall conduct the operations of the Business in the ordinary and
usual course of business, preserve intact the Business and maintain the
current relationships of the Business with suppliers, distributors,
customers and others having business relationships with it. Without the
prior written consent of the Buyer, the Sellers shall not commit or omit to
do any act, and shall cause Bayou not to commit or omit to do any act, that
(i) would cause a breach of any agreement, commitment or covenant of the
Sellers contained in this Agreement in any material respect, or (ii) would
cause the representations and warranties contained in Section 4 to become
untrue in any material respect.
6.5 NOTIFICATION OF CHANGES. (a) Each of the Sellers and the
Buyer shall promptly notify the other of any event that causes any
representation or warranty given by either of them, respectively, in
Sections 4 and 5 to become untrue.
(b) The Sellers shall have the right until the Closing to
supplement or amend any of the Schedules described in Section 4 with
respect to any matter arising or discovered after the date of this
Agreement which, if existing or known on the date of this Agreement, would
have been required to be set forth or described in such Schedules. For all
purposes of this Agreement, including for purposes of determining whether
the conditions set forth in Section 7 have been fulfilled, the Schedules
shall be deemed to include only that information contained therein on the
date of this Agreement and shall be deemed to exclude all information
contained in any supplement or amendment thereto, except to the extent that
they reflect an event or condition that would be beneficial to the Buyer;
provided, however, that if the Closing shall occur, then all matters
disclosed pursuant to any such supplement or amendment shall be deemed
included in the Schedules at Closing (without necessity of a written waiver
or other action on the part of any party) and to modify the applicable
representations and warranties for all purposes.
6.6 CONFIDENTIALITY AGREEMENT. Notwithstanding anything to the
contrary therein, the Confidentiality Agreement shall remain in full force
and effect until the earlier of (i) the Closing Date or (ii) two years
after the termination of this Agreement under Section 11.
6.7 MATTERS AFFECTING THE IMMOVABLE PROPERTY.
(a) Promptly after execution of this Agreement, Buyer shall
obtain, at Buyer's expense, ALTA title policy commitments, ALTA surveys,
and Phase I environmental audits for the Immovable Property (the ALTA title
commitments, ALTA surveys, and Phase I environmental audits for the
Immovable Property being referred to herein collectively as the "Immovable
Property Audit Documents"). The title policy commitments shall be
accompanied by copies of the exceptions noted therein. Buyer shall have
thirty (30) days from date hereof to obtain the Immovable Property Audit
Documents. Buyer shall have fifteen (15) days after receipt of all of the
Immovable Property Audit Documents to conduct or cause to be conducted,
such review of the status of the Immovable Property as Buyer shall
determine (this forty-five (45) day period being referred to herein as the
"Immovable Property Audit Period"). If any such review by Buyer shall
reveal an Immovable Property Matter (as hereinafter defined) with respect
to the Immovable Property, Buyer shall deliver to Sellers a written notice
describing the Immovable Property Matter (the "Immovable Property Notice")
by the end of the Immovable Property Audit Period. Any Immovable Property
Matter which has been disclosed in the Immovable Property Audit Documents
and is not included in an Immovable Property Notice delivered by the Buyer
to Sellers shall be deemed to be accepted by Buyer and shall not give rise
to a right to terminate the Agreement as provided in Section 6.7(b).
Notwithstanding the above, any Immovable Property Matter that has been
disclosed in a Schedule to this Agreement (other than the title policies
attached as Exhibit 4.6(a)(i) to Schedule 4.6(a)(i)) or in the Business
Financial Statements, shall not form the basis of an Immovable Property
Notice.
(b) If Buyer shall deliver to Sellers an Immovable Property
Notice, Sellers may, in their discretion, elect to cure or remedy the
Immovable Property Matter disclosed therein. If Sellers shall fail to cure
or remedy any Immovable Property Matter within 30 days of receipt of such
Immovable Property Notice (the "Cure Period"), then Buyer may, in its
discretion, elect to terminate this Agreement by serving written notice
thereof on Sellers in person or by registered or certified mail on or after
the expiration of the Cure Period but no later than 10 days after the
expiration of said period.
(c) For purposes of this Agreement, "Immovable Property
Matter" shall mean: (i) any Lien other than a Permitted Lien with respect
to the Immovable Property; or (ii) a condemnation, expropriation or public
taking of all or any portion of any of the Immovable Property which,
individually or in the aggregate, has a material adverse effect on the
respective parcel of Immovable Property, or (iii) the presence of any
Hazardous Materials on any of the Immovable Property or the existence of
any environmental damages related to any of the Immovable Property that is
not disclosed in Schedule 4.13 or in a Report referred to in Section
4.13(e) hereof.
6.8 INSURANCE. Sellers and Bayou will continue to maintain
casualty insurance on the Acquired Assets with reputable insurance
companies having substantially the same coverages as the insurance policies
set forth on Schedule 4.21 to this Agreement. All such insurance policies
shall include a provision that they shall not be canceled on less than
thirty (30) days prior written notice to all insureds.
6.9 THIRD PARTY CONSENTS. Each of Sellers shall use its reasonable
best efforts to secure the written approval of all parties necessary for
the assignment of its interest in the Real Property Leases and the
Contracts to Buyer. Said consent shall include a statement that no default
currently exists under the respective Real Property Lease or Contract, as
the case may be, that no monetary or non-monetary default currently exists
under the respective Real Property Lease or Contract, as the case may be;
and in the case of the Real Property Leases, an agreement on the part of
the landlord and its lender, if any, that they will not disturb the
possession of Buyer under the Real Property Lease on the condition that
Buyer remains in compliance with the terms of the Real Property Lease,
agrees
to subordinate the Real Property Lease to the interest of the lender, and
attorn to the landlord and its lender.
6.10 AMENDMENT TO PENSION PLAN. Piccadilly agrees to amend the
Piccadilly Cafeterias, Inc. Pension Plan ("Pension Plan") prior to the
Closing Date to eliminate any language that could be interpreted as
requiring a partial termination of the Pension Plan as a result of the
transactions contemplated by this Agreement. Specifically, such amendment
will provide that the withdrawal from the Pension Plan by Bayou will not
result in a termination of the plan with respect to employees of Bayou and,
further, that, following such withdrawal, all assets of the Plan will
continue to be available to pay the benefits attributable to the employees
of Bayou.
6.11 IMMOVABLE PROPERTY. Prior to the Closing Date, each of Sellers
shall use its reasonable best efforts to remove from the public records the
inscriptions listed on Schedule 6.11 pertaining to the Immovable Property
or Buyer shall have received indemnity insurance against such inscriptions
from a title insurer. To the extent that any of the inscriptions on
Schedule 6.11 have not been removed or insured over by a title insurer as
of the Closing Date, from and after the Closing Date, Piccadilly shall
indemnify and hold harmless Buyer from and against any costs incurred by
Buyer in removing or satisfying any such inscriptions.
SECTION 7. CONDITIONS TO CLOSING
7.1 CONDITIONS APPLICABLE TO ALL PARTIES. The obligations of each
of the parties hereto to consummate the Stock and Asset Sale are subject to
the satisfaction (or the waiver by the Buyer and the Sellers) of the
following conditions at or prior to the Closing:
(a) Restraining Action. No judgment, order or decree shall
have been issued or rendered by any court or other governmental body to
restrain or prohibit the Stock and Asset Sale.
(b) Statutory Requirements and Regulatory Approval. All
statutory requirements for the valid consummation of the Stock and Asset
Sale shall have been fulfilled and all appropriate orders, consents and
approvals from all regulatory agencies and other governmental authorities
whose order, consent or approval is required by law for the consummation of
the Stock and Asset Sale shall have been received.
(c) HSR Act Proceedings. Any applicable waiting period
under the HSR Act shall have expired or been earlier terminated.
(d) Transition Services Agreement. The parties shall have
entered into a Transition Services Agreement in substantially the form
attached as Exhibit B.
7.2 ADDITIONAL CONDITIONS APPLICABLE TO THE BUYER'S OBLIGATIONS.
The obligations of the Buyer to consummate the Stock and Asset Sale are
also subject to the satisfaction (or waiver by the Buyer) of the following
conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Sellers contained in Section 4 that
are qualified as to materiality shall be true and correct and such
representations and warranties that are not so qualified shall be true and
correct in all material respects on the Closing Date and the Sellers shall
have performed in all material respects all covenants required by this
Agreement to be performed by them at or prior to the Closing. The Sellers
shall have delivered to the Buyer on the Closing Date a certificate, dated
the Closing Date and duly executed by the Sellers, certifying to the
fulfillment of the conditions set forth in this paragraph.
(b) Immovable Property Audit. Buyer shall have received the
title insurance policy issued pursuant to the ALTA title policy commitment
included in the Immovable Property Audit Documents (or a marked up
commitment that will become the basis for the title insurance policy) as
required in Section 6.7 hereof. In addition, the Immovable Property Audit
Period specified in Section 6.7 shall have expired and either (i) Buyer
shall not have served an Immovable Property Notice on Sellers, or (ii) any
Immovable Property Matter disclosed in an Immovable Property Notice shall
have been cured to Buyer's satisfaction.
(c) Consents and Approvals. The consent of all parties
necessary for the assignment of Sellers' interest in the Real Property
Leases and the Sewer Service Agreement by and between the Water Works and
Sewer Board of the City of Birmingham and Piccadilly Restaurants, Inc.
dated August 23, 1994 shall have been obtained. Further, Restaurants shall
have executed and recorded a notice of amendment to the lease between
Bossier Crossroads, Inc. and Restaurants.
7.3 ADDITIONAL CONDITIONS APPLICABLE TO THE SELLERS' OBLIGATIONS.
The Sellers' obligations to consummate the Stock and Asset Sale are also
subject to the satisfaction (or the waiver by the Seller) of the following
conditions at or prior to the Closing:
(i) Representations, Warranties and Covenants. The
representations and warranties of the Buyer contained in Section 5 that are
qualified as to materiality shall be true and correct and such
representations and warranties that are not so qualified shall be true and
correct in all material respects on the Closing Date and the Buyer shall
have performed in all material respects all covenants required by this
Agreement to be performed by it at or prior to the Closing. The Buyer
shall have delivered to the Sellers on the Closing Date a certificate,
dated the Closing Date and duly executed by the Buyer, certifying to the
fulfillment of the conditions set forth in this paragraph.
SECTION 8. INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS
8.1 INDEMNIFICATION. (a) After the Closing Date, subject to the
terms and conditions of this Section 8, including the limits on indemnity
set forth in Section 8.4, and further subject to the provisions of Section
9 regarding taxes, which indemnification obligation shall be independent of
this Section, Piccadilly shall indemnify and hold harmless the Buyer and
its Affiliates, and their respective officers, directors, employees, agents
and representatives (the "Buyer Indemnitees") from, and will pay to the
Buyer Indemnitees the amount (net of any proceeds received by the Buyer
Indemnitee from insurance or any quantifiable tax benefits in the year
incurred (but giving effect to any tax detriment from receipt of
indemnification proceeds), obtained) of, any loss, liability, judgment,
damage, cost or expense (including interest, penalties, and the reasonable
fees, disbursements and expenses of attorneys, accountants and other
professional advisors) (collectively, "Losses") arising from or in
connection with (i) any breach of any representation or warranty of the
Sellers contained in Section 4, (ii) a breach of any agreement or covenant
contained herein that by its terms is to be performed by the Sellers after
the Closing Date, (iii) Sellers' allocated portion of the Shared
Liabilities or (iv) any Excluded Liabilities.
(b) After the Closing Date, subject to the terms and
conditions of this Section 8, including the limits on indemnity set forth
in Section 8.4, the Buyer shall indemnify and hold harmless the Sellers and
their Affiliates and their respective officers, directors and
representatives (the "Seller Indemnitees") from, and will pay to the
Seller Indemnitees the amount (net of any proceeds received by the Seller
Indemnitee from insurance any quantifiable tax benefits in the year
incurred (but giving effect to any tax detriment from receipt of
indemnification proceeds) obtained) of, any Losses arising from or in
connection with (i) any breach of any representation or warranty of the
Buyer contained in Section 5, (ii) a breach of any agreement or covenant
contained herein that by its terms is to be performed by the Buyer after
the Closing Date, (iii) any Assumed Liabilities or Buyer's allocated
portion of the Shared Liabilities, or (iv) the operations or conduct of the
Business or the ownership or use of the Acquired Assets after the Closing
Date.
8.2 NOTICE AND DEFENSE OF CLAIMS. (a) A Person seeking
indemnification under this Section 8 (the "Indemnified Person") shall give
prompt written notice to the indemnifying person or persons, or successors
thereto (the "Indemnifying Person"), of any matter with respect to which
the Indemnified Person seeks to be indemnified (the "Indemnity Claim").
Such notice shall state the nature of the Indemnity Claim and, if known,
the amount of the Loss. If the Indemnity Claim arises from a claim of a
third party, the Indemnified Person shall give such notice within a
reasonable time after the Indemnified Person has actual notice of such
claim, and in the event that a suit or other proceeding is commenced,
within 20 days after receipt of written notice by the Indemnified Person
thereof. Notwithstanding anything in this paragraph to the contrary, the
failure of an Indemnified Person to give timely notice of an Indemnity
Claim shall not bar such Indemnity Claim except and to the extent that the
failure to give timely notice has impaired materially the ability of the
Indemnifying Person to defend the Indemnity Claim.
(b) If the Indemnity Claim arises from the claim or demand
of a third party, the Indemnifying Person shall assume its defense,
including the hiring of counsel and the payment of all fees and expenses.
The Indemnified Person shall have the right to employ separate counsel and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Person unless both the
Indemnified Person and the Indemnifying Person are named as parties and the
Indemnified Person shall in good faith determine that representation by the
same counsel is inappropriate. In the event that the Indemnifying Person,
within 30 days after notice of any such action or claim, fails to assume
the defense thereof, the Indemnified Person shall have the right to
undertake the defense, compromise or settlement of such action, claim or
proceeding for the account of the Indemnifying Person, subject to the right
of the Indemnifying Person to assume the defense of such action, claim or
proceeding at any time prior to the settlement, compromise or final
determination thereof. Anything in this Section 8 to the contrary
notwithstanding, the Indemnifying Person shall not, without the Indemnified
Person's prior consent, settle or compromise any action or claim or consent
to the entry of any judgment with respect to any action, claim or
proceeding for anything other than money damages paid by the Indemnifying
Person. The Indemnifying Person may, without the Indemnified Person's
prior consent, settle or compromise any such action, claim or proceeding or
consent to entry of any judgment with respect to any such action or claim
that requires solely the payment of money damages by the Indemnifying
Person and that includes as an unconditional term thereof the release by
the claimant or the plaintiff of the Indemnified Person from all liability
in respect of such action, claim or proceeding.
(c) If the Indemnity Claim does not arise from the claim or
demand of a third party, the Indemnifying Person shall have 30 days after
receipt of written notice of such Indemnity Claim to object to such claim
by giving written notice to the Indemnified Person specifying the reasons
for such objection or objections. If the Indemnifying Person has not so
objected to the Indemnity Claim as of the close of business on such
thirtieth day, the total amount of the Indemnity Claim shall thereupon
become chargeable to and payable by the Indemnifying Person in accordance
with the terms and conditions of this section. If the Indemnifying Person
objects to the Indemnity Claim, the parties shall attempt to resolve the
challenge through negotiation in good faith. If the parties are unable to
settle any such dispute within ten Business Days after notice of the
Indemnifying Person's objection is received by the Indemnified Person,
either party may submit such matter to a single arbitrator. The arbitrator
will be selected by the joint agreement of the parties, but if they do not
agree within 20 calendar days of the lapse of the ten-Business Day period
referred to above, the selection shall be made in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the
"Rules"). If no such arbitrator is appointed within 45 calendar days of
any such request to such association, either party may apply to a court
having jurisdiction to make such appointment. The arbitrator shall conduct
the arbitration in the Parish of East Baton Rouge, State of Louisiana, in
accordance with the Rules and shall make a final determination, to be
provided in writing to each party, that resolves the dispute. The
prevailing party shall be entitled to recover from the other party the fees
of the arbitrator and the administrative costs of the arbitration. The
arbitrator shall apply the statutory and decisional law of the State of
Louisiana in substantially the same manner as do the courts of the State of
Louisiana in the case of contracts made and wholly performed within that
jurisdiction. All results of the arbitration proceeding shall be final,
conclusive and binding on all parties to this Agreement, and judgment upon
the arbitrator's award may be entered in any court of the State of
Louisiana having competent jurisdiction, unless such results or award are
clearly erroneous on the record before the arbitrator.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The right to
indemnification under Section 8.1 for any breach of the representations and
warranties made by each party herein shall survive until the first
anniversary of the Closing Date, except that the representations set forth
in Section 4.18 shall survive until the fifth anniversary of the Closing
Date, and the representations set forth in Sections 4.2 and 4.3 shall
survive indefinitely.
8.4 LIMITATIONS. Notwithstanding anything to the contrary in this
Agreement:
(a) Subject to paragraph (e), neither the Sellers, on the
one hand, nor the Buyer, on the other hand, shall have any obligation to
make indemnification payments with respect to Indemnity Claims arising
under Sections 8.1(a)(i) or 8.1(b)(i), respectively, until the aggregate of
all claims against it hereunder exceeds one percent of the Purchase Price
and then only to the extent of any excess.
(b) Subject to paragraph (e), neither the Sellers, on the
one hand, nor the Buyer, on the other hand, shall have any liability with
respect to Indemnity Claims arising under Sections 8.1(a)(i) or 8.1(b)(i)
in excess of ten percent of the Purchase Price in the aggregate for all
such Indemnity Claims.
(c) In no event shall any recovery under this Agreement
include the loss of anticipated profits, loss of managerial time, or lost
opportunity.
(d) In the absence of fraud, this Section 8 shall serve as
the sole and exclusive remedy of the Buyer Indemnitees and the Seller
Indemnitees for Losses and for any other claims (other than those arising
under Section 6.11, 9 or 10.5) in any way relating to this Agreement to the
exclusion of all other statutory or common law remedies (including rights
under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended), whether based on contract, tort, strict liability
or otherwise.
(e) The limitations of paragraph (a) and (b) do not apply
with respect to any claim which arises under clause 8.1(a)(iii) or (iv) or
8.1(b)(iii) or (iv), irrespective of whether any such claim could also
arise under clause 8.1(a)(i) or 8.1(b)(i), respectively.
8.5 ADJUSTMENT TO PURCHASE PRICE. If Sellers make any payment
pursuant to this Section 8, then such amount shall be treated as an
adjustment to the Purchase Price.
SECTION 9. TAX MATTERS
9.1 PREPARATION OF RETURNS AND PAYMENT OF TAXES. Piccadilly and
Bayou shall prepare and timely file (taking into account the extension of
any due date) all Returns and amendments thereto required to be filed by
them and the Sellers' Group on or before the Closing Date. Piccadilly,
Bayou, and each member of the Sellers' Group shall pay and discharge all
such Taxes upon or against it or any of its properties or assets (including
the Acquired Assets) before such Taxes shall become delinquent and before
penalties accrue thereon, except to the extent and as long as: (a) such
Taxes are being contested in good faith and by appropriate proceedings
pursued diligently and in such a manner as not to cause any material
adverse effect upon the Business; and (b) Bayou shall have set aside on its
books reserves (segregated to the extent required by sound accounting
practice) in the amount of the demanded principal imposition (together with
interest and penalties relating thereto, if any).
9.2 TAXES AND RETURNS FOR PERIODS THROUGH THE CLOSING DATE.
Piccadilly will include, or cause to be included, the income of Bayou and
the Business on the Sellers' Group's consolidated federal and any
consolidated, unitary or combined state and local income Tax Returns for
all periods through the Closing Date. Piccadilly will file timely or cause
to be filed timely such Returns and Piccadilly will pay or cause to be paid
any taxes attributable to such income, provided however that to the extent
that a liability for such taxes has been accrued on the Closing Date
Working Capital Statement, then Piccadilly shall have no obligation to make
such tax payment. Except as provided in Section 9.4, Piccadilly also will
timely prepare and file, or cause to be prepared and filed, all other
income Tax Returns of Bayou for all periods that end on or before the
Closing Date and will pay or cause to be paid all Taxes related thereto,
provided however that to the extent that a liability for such taxes has
been accrued and included in Closing Date Working Capital Statement, then
Piccadilly shall have no obligation to make such tax payment. Bayou will
furnish Tax information in its possession and reasonably requested by
Piccadilly for inclusion in such Tax Returns for the Sellers' Group for the
period ending on the Closing Date. The income of Bayou will be apportioned
to the period up to and including the Closing Date and to the period after
the Closing Date by closing the books of Bayou as of the end of the Closing
Date. The Buyer and Piccadilly agree that, if Bayou is permitted under any
applicable state or local income tax law to treat the Closing Date as the
last day of a taxable period, the Buyer, Piccadilly and Bayou shall treat
the Closing Date as the last day of such taxable period.
9.3 TAXES AND RETURNS FOR TRANSACTIONS THAT OCCUR AFTER THE
CLOSING DATE. The Buyer shall be responsible for all Taxes of Bayou and
the Business for taxable periods beginning after the Closing Date. The
Buyer shall be responsible for any Taxes that result from, any action or
election made by the Buyer or Bayou at the direction of the Buyer on or
after the Closing Date. If such an action or an election results in an
increase in Piccadilly's liability for Taxes under this Agreement, the
Buyer shall pay to Piccadilly an amount equal to the increase in such
Taxes.
9.4 TAXES AND RETURNS FOR PERIODS COMMENCING BEFORE THE CLOSING
DATE AND ENDING AFTER THE CLOSING DATE. The Buyer shall prepare or cause
to be prepared and file or cause to be filed any Tax Return of Bayou for
taxable periods that begin before the Closing Date and end after the
Closing Date. At least fifteen (15) business days before the filing of any
such Tax Returns with respect to income Taxes, the Buyer shall submit
copies of such Returns to Piccadilly for Piccadilly's approval, which
approval shall not be unreasonably withheld. Piccadilly shall pay to the
Buyer within fifteen (15) days after the date on which Taxes are paid by
the Buyer with respect to such periods an amount equal to the excess of (i)
the portion of such Taxes which relates to the portion of such taxable
period ending on the Closing Date (the "Pre-Closing Period") over (ii) the
amount of any Taxes (including estimated Tax payments) paid by Piccadilly
or Bayou prior to the Closing Date with respect to such taxable periods,
provided however that to the extent that a liability for such Taxes has
been accrued and included in Closing Date Working Capital Statement, then
Piccadilly shall have no obligation to make such Tax payment and provided
Piccadilly shall have no liability for any elections under Section 338 of
the Code or comparable provision of state law. In the event that the
amount described in (ii) of the immediately preceding sentence exceeds the
amount described in (i) of same sentence, the Buyer shall pay the excess to
Piccadilly within fifteen (15) days after the date on which such Taxes are
paid by the Buyer with respect to such periods. For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and
are payable for a taxable period that includes (but does not end on) the
Closing Date, the portion of such Taxes which relates to the Pre-Closing
Period shall (i) in the case of any personal property and real property
Taxes, be deemed to be the amount of such Tax for the entire taxable period
multiplied by a fraction, the numerator of which is the number of days in
the Pre-Closing Period and the denominator of which is the number of days
in the entire taxable period, and (ii) in the case of all other Taxes, be
determined based on the actual operations of Bayou through the Closing
Date.
9.5 AUDITS. Piccadilly will allow, or cause to be allowed, Bayou
or its representatives to participate at Buyer's own expense in any audits
of the consolidated federal and consolidated, unitary or combined, income
tax Returns of Piccadilly and the Sellers' Group to the extent that such
audits relate to Bayou or the Business or Acquired Assets.
9.6 INDEMNIFICATION FOR TAXES. (a) From and after the Closing
Date, Piccadilly shall protect, defend, indemnify and hold harmless the
Buyer and Bayou from any and all Taxes (including any obligation to
contribute to the payment of any Taxes determined on a consolidated,
combined or unitary basis with respect to a Sellers' Group of corporations
that includes or included Bayou) which are (i) imposed on Piccadilly or any
member (other than Bayou) of the consolidated, unitary or combined Sellers'
Group which includes or included Bayou or (ii) imposed on Bayou in respect
of its income, business, property or operations or for which Bayou may
otherwise be liable (A) for any taxable period ending on or before the
Closing Date (except for those periods described in Section 9.3) and for
any Pre-Closing Period (as defined and determined in Section 9.4), provided
however that to the extent that a liability for such Taxes has been accrued
and included in the Closing Date Working Capital Statement, then Piccadilly
shall have no obligation to make such Tax payment, (B) resulting by reason
of the several liability of Bayou pursuant to Treasury Regulations section
1.1502-6 or any analogous state, local or foreign law or regulation or by
reason of Bayou having been a member of any consolidated, combined or
unitary Sellers' Group on or prior to the Closing Date, or (C) resulting
from Bayou ceasing to be a member of the affiliated Sellers' Group (within
the meaning Section 1504(a) of the Code) that includes Piccadilly. Any
indemnification of Buyer for any Taxes hereunder shall be reduced by any
tax benefit resulting to Buyer or Bayou from the adjustment resulting in
the indemnification. Furthermore, if Piccadilly is required to pay
additional Taxes for a Pre-Closing Period, and such payment provides a tax
benefit to Buyer or Bayou for a Post-Closing Period, than Buyer shall
indemnify Piccadilly to the extent of such tax benefit.
(b) In the case of any audit, examination or other
proceeding ("Proceeding") with respect to Taxes for which Piccadilly is or
may be liable pursuant to this Agreement, the Buyer shall promptly inform
Piccadilly, and shall afford Piccadilly, at Piccadilly's expense, the
opportunity to control the conduct of such Proceedings. The Buyer shall
execute or cause to be executed powers of attorney or other documents
necessary to enable Piccadilly to take all actions desired by Piccadilly
with respect to such Proceeding to the extent such Proceeding may affect
the amount of Taxes for which Piccadilly is liable pursuant to this
Agreement. Piccadilly shall have the right to control any such
Proceedings, and, if there is substantial authority therefor, to initiate
any claim for refund, file any amended Return or take any other action
which it deems appropriate with respect to such Taxes. Notwithstanding the
foregoing, Piccadilly shall not agree to any settlement concerning Taxes
for any taxable period ending on or before the Closing Date which may
result in a material increase in Taxes for any taxable period ending after
the Closing Date without the prior written consent of the Buyer. By
written notice to Piccadilly, the Buyer shall have the right to instruct
Piccadilly to forego Proceedings with respect to one or more items for
which Piccadilly may be liable to indemnify the Buyer. Such notice shall
constitute a waiver of the right of the Buyer to indemnification for any
Taxes arising out of such item for the period or periods involved, but
shall not otherwise waive any rights of the Buyer under this Section.
Buyer shall not agree to extend the statute of limitations for any taxable
period of Bayou before or which includes the Closing Date without the prior
consent of Piccadilly. Any indemnification of Buyer for any Taxes
hereunder shall be reduced by any tax benefit resulting to Buyer or Bayou
from the adjustment resulting in the indemnification.
(c) If the Buyer receives, or is entitled to receive, any
refund of Taxes (either by actual receipt or by application against future
Taxes of Bayou), then the Buyer shall pay to Piccadilly the portion of such
refund that (i) relates to the Pre-Closing Period of any taxable period
that begins before and ends after the Closing Date (as defined and
determined pursuant to Section 9.4) or (ii) relates to any taxable period
that ends prior to or on the Closing Date. Any payment described in this
Section 9.6(c) shall be made by the Buyer to Piccadilly within thirty (30)
days of the date on which the Buyer receives the refund of Taxes.
9.7 COOPERATION ON TAX MATTERS. The Buyer and Piccadilly and Bayou
shall cooperate fully, and to the extent reasonably requested by the other
party, in connection with the filing of Returns pursuant to this Section
and in connection with any audit, litigation or other Proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon
the other party's request) the provision, of records and information which
are reasonably relevant to any such Return, audit, litigation or other
Proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Buyer and Piccadilly agree to retain all books and records
with respect to Tax matters pertinent to Bayou and the Business relating to
any taxable period beginning before the Closing Date until the expiration
of the applicable statute of limitation (and to the extent notified by the
Buyer or Piccadilly, any extensions thereof) of the respective taxable
periods and to abide by all record retention agreements entered into with
any taxing authority.
9.8 TRANSFER TAXES. Buyer shall pay and hold Sellers harmless from
and against any sales, use or transfer tax assessed with respect to the
assets of Bayou, the Shares or the Acquired Assets.
9.9 SURVIVAL. The indemnities set forth in this Section 9 shall
survive the Closing Date and shall terminate on the date that is 30 days
after the expiration of the applicable statute of limitations.
SECTION 10. OTHER POST-CLOSING COVENANTS
After the Closing Date, the parties covenant and agree as follows:
10.1 ASSIGNMENT OF CERTAIN CONTRACTS. Notwithstanding any other
provision of this Agreement to the contrary, except for the third-party
consents described in Section 7.2(c), to the extent that any agreement,
contract, license, lease, permit or other authorization, purchase or sale
order, or other executory contract or commitment for which assignment to
Buyer is contemplated hereby is not assignable without the consent of
another Person, this Agreement shall not be deemed to constitute or require
an assignment or an attempted assignment thereof if such assignment or
attempted assignment would constitute a breach thereof. If such consent
has not been obtained by the Closing Date, Sellers agree to (i) cooperate
with Buyer in any reasonable arrangement designed to provide for Buyer
substantially the same benefits and obligations under any such agreement,
contract, license, lease, permit or other authorization, purchase or sale
order, or other executory contract or commitment without cost to Buyer,
including (A) enforcing for the benefit of Buyer any or all rights of
Sellers under any contract, commitment, permit or other authorization, or
other agreement against any other Person that is a party thereto, or (B) at
Buyer's election, not transferring, conveying, assigning or delivering to
Buyer at the Closing, and retaining legal title or right thereto, while
permitting Buyer the possession and use of such assets or rights for
Buyer's account and with Buyer receiving the benefits and burdens of such
assets or rights as if such assets or rights had been so transferred,
conveyed, assigned and delivered, and (ii) take all reasonable further
action to obtain such consents, approvals or novations as may be required
under such instrument, applicable law or otherwise to effect the transfer
of the asset or right to Buyer.
10.2 FURTHER ASSURANCES. Sellers and Buyer each agree to execute
and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions
contemplated by this Agreement, including without limitation any and all
documents necessary to assign to Buyer any of the Acquired Assets used by
Sellers in the operation of the Business that are not conveyed to Buyer at
the Closing.
10.3 RECORD RETENTION. The Buyer agrees that, for a period of five
years following the Closing, it shall not, and shall cause Bayou not to,
destroy, discard, deface or otherwise alter any of the books, records or
other data of the Business in its possession covering or prepared during
the period ending on the Closing Date, without furnishing prior notice to
Piccadilly and a reasonable opportunity for Piccadilly, at its cost, to
take custody of such books, records or other data.
10.4 MAIL AND OTHER COMMUNICATIONS. (a) Sellers hereby authorizes
Buyer after the Closing Date to receive and open all mail and other
communications addressed to Sellers received by Buyer and to act with
respect to such mail and other communications in such manner as Buyer may
elect if such mail and other communications relate to the Business and
related rights and obligations of Buyer under this Agreement, or if such
mail and other communications do not so relate, to forward such mail and
other communications promptly to Sellers.
(b) After the Closing, Sellers shall promptly deliver to
Buyer the original of any mail or other communication received by it
pertaining to the Business and related rights and obligations of Buyer
under this Agreement, and any monies, checks or other instruments of
payment to which Buyer is entitled, and Buyer shall promptly deliver to
Sellers any monies, checks or instruments of payment to which Sellers is
entitled.
10.5 COVENANTS CONCERNING EMPLOYEE MATTERS.
(a) Set forth on Schedule 10.5(a) is a list of each
individual currently employed by the Sellers or Bayou exclusively in
relation to the Business (the "Business Employees"). Buyer hereby agrees
that (i) effective as of the Closing Date each Business Employee who is
employed by either of the Sellers shall be terminated as an employee of
such Seller and shall be offered employment by Buyer and (ii) it will not
publish or otherwise issue any notice of or take any action that would
constitute or effectuate a "plant closing" or "mass layoff" (within the
meaning of the Worker Adjustment and Retraining Notification Act) with
respect to the operation of the Business prior to the 61st day following
the Closing Date, unless such notice or other action with respect to a
"plant closing" or "mass layoff" is permitted to occur under such Act
without penalty or liability to either Buyer or Sellers. Except as set
forth in Section 10.5(a)(ii) or in Section 10.5(d) nothing herein shall be
construed as an ongoing commitment by Buyer to continue the employment of
any Business Employee.
(b) Participation in Piccadilly's Plans. (i) Effective as
of the Closing Date, Bayou shall cease to be a participating employer in
all of Piccadilly's Employee Plans or Benefit Arrangements, and Piccadilly
shall take all such action as is necessary to effect such cessation of
participation.
(ii) Buyer shall incur no liability under the Pension
Plan (as defined in section 6.10 herein). The accrued benefits of the
Business Employees under the Pension Plan shall be frozen as of the Closing
Date, and Piccadilly shall determine the time and manner of payment of
their benefits.
(iii) Effective as of the Closing Date, the Business
Employees shall cease to participate in Piccadilly's non-pension Benefit
Arrangements and Employee Plans (the "Welfare Benefit Plans"). Piccadilly
shall retain responsibility under the Welfare Benefit Plans for all costs
of coverage and all amounts payable by reason of claims incurred by the
Business Employees prior to the Closing Date including claims which are not
submitted until after the Closing Date. A claim shall be deemed to have
been incurred on the date of the occurrence of (A) death or dismemberment
in the case of claims under life insurance and accidental death and
dismemberment benefits, (B) the date of the initial disability in the case
of claims under disability benefits, or (C) the date on which the charge or
expense giving rise to such claim is incurred in the case of all other
claims. For purposes of Section 10.5(b)(iii)(C), a claim shall be deemed
to have been incurred on the date that the first charge or expense in a
course of treatment giving rise to such claim has been incurred.
(iv) Piccadilly shall remain responsible for all
record keeping and welfare benefits with respect to any employees or former
employees of the Business who are, as of the Closing Date: (A) on COBRA
continuation coverage or (B) on long term disability leave and covered
under Piccadilly's welfare benefit plans. Immediately following the
Closing Date, Piccadilly will notify all Business Employees of their
entitlement to a continuation of health coverage provided by Piccadilly to
such Business Employees under Piccadilly's group health plan prior to the
Closing Date.
(c) Post-Closing Benefits. Following consummation of the
Stock and Asset Sale, the Buyer shall cause the Business Employees to be
eligible to participate in an "employee welfare benefit plan" and "employee
pension benefit plan" (within the meaning of Section 3(1) and Section 3(2)
of ERISA, respectively) of the Buyer or subsidiary or affiliate of the
Buyer, or such other benefit plan, fund or program that the Buyer may wish
to establish for such employees on or after the Closing Date, provided that
nothing herein shall prevent the Buyer from terminating the employment of
any such employee or modifying or terminating such plans from time to time.
For purposes of any length of service requirements, waiting periods,
vesting periods or differential benefits based on length of service in any
such plan for which such an employee may be eligible after Closing, the
Buyer shall ensure that service by such employee with the Business prior to
the Closing shall be deemed to be service with the Buyer, shall waive any
waiting period for participation or coverage in any welfare benefit plans
or policies and, to the extent such employee was a participant in
Piccadilly's medical benefits plan and such condition was covered under
such plan, shall waive any pre-existing medical condition provision of such
plan or policy.
(d) Stay Agreements. Buyer shall honor and not revoke all
terms of the Employee Stay Incentive Agreements for employees of the
Business that were executed in September, 1998, as set forth on Schedule
10.5(d).
(e) Indemnification for Piccadilly Benefit Plans. In
addition to its obligations under Section 8, from and after the Closing
Date, Piccadilly shall indemnify and hold harmless Buyer and Bayou from any
and all liabilities that either Buyer or Bayou incurs or that arises with
respect to Piccadilly's Employee Plans or Benefit Arrangements.
SECTION 11. TERMINATION
11.1 TERMINATION. This Agreement may, by notice given at or prior
to the Closing, be terminated:
(a) By the mutual written consent of the Sellers and the
Buyer.
(b) By the Buyer or Sellers if there has been a material
breach by the other of any covenant contained in this Agreement that is not
or cannot be cured within 45 days after written notice of such breach is
given to the party committing such breach, provided that the right to
effect such cure shall not extend beyond the date set forth in subparagraph
(c) below.
(c) By the Buyer or Sellers if (i) any condition to Closing
required by Section 7 has not been met or waived by each party entitled to
grant such waiver by March 31, 1999, (ii) any such condition cannot be met
by such date and has not been waived by each party in whose favor such
condition runs or (iii) the Stock and Asset Sale has not occurred by such
date; provided, however, that the right to terminate this Agreement
pursuant to this paragraph shall not be available to a party if its failure
to fulfill or perform any obligation under this Agreement has been a
substantial cause of, or has substantially resulted in, the failure of the
Closing to occur or be capable of occurring on or before such date.
(d) By the Buyer in accordance with Section 6.7 hereof.
11.2 EFFECT OF TERMINATION; SURVIVAL. Upon termination of this
Agreement pursuant to this Section 11, this Agreement shall be void and
there shall be no liability by reason of this Agreement, or the termination
thereof, on the part of any party or their respective directors, officers,
employees, agents or shareholders except for any liability of a party
hereto arising out of a material breach of its representations and
warranties contained herein or arising out of a material breach of any
covenant in this Agreement prior to the date of termination or any covenant
that survives pursuant to the following sentence. The following provisions
shall survive any termination of this Agreement: Sections 6.6 and 12.
SECTION 12. MISCELLANEOUS
12.1 NOTICES. Any notice, communication, request, reply, consent,
advice or disclosure notice ("notice") required or permitted to be given or
made by any party to the other in connection with this Agreement must be in
writing and may be given or served by depositing such notice in the United
States mail, postage prepaid and registered or certified with return
receipt requested, or by hand delivering such notice, or by sending such
notice by a national commercial courier service for next business day
delivery, in each case properly addressed as provided below. Notice
deposited in the mail in the manner described above shall be effective 72
hours after such deposit, notice hand delivered in person or delivered by
commercial courier shall be effective at the time of delivery and notice
given by facsimile shall be effective when such facsimile is transmitted to
the facsimile number specified in this Section 12.1 and confirmation of
transmission is received by the giver of such notice (provided that a
confirmation copy is sent no later than the next Business Day by documented
overnight delivery service). For purposes of notice, the addresses of the
parties shall, until changed as hereinafter provided, be as follows:
If to the Sellers:
Piccadilly Cafeterias, Inc.
3232 Sherwood Forest Blvd.
Baton Rouge, Louisiana 70817
Attention: Ronald A. LaBorde
FACSIMILE NO: 504-296-8370
With a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
201 St. Charles Avenue, 51st Floor
New Orleans, Louisiana 70170-5100
Attention: Curtis R. Hearn
FACSIMILE NO: 504-582-8012
If to the Buyer:
Cobb Investment Company, Inc.
1241 Airport Road, 2nd Floor
Destin, Florida 32541
Attention: Tommy Kranz
FACSIMILE NO: 850-654-5839
With a copy to:
Burr Forman
3100 South Trust Tower
420 North 20th Street
Birmingham, Alabama 35203
Attention: Jack Stephenson
FACSIMILE NO: 205-458-5100
Chaffe, McCall, Phillips, Toler & Sarpy LLP
2300 Energy Centre
1100 Poydras Street
New Orleans, Louisiana 70163-2300
Attention: Kathleen S. Plemer
FACSIMILE NO: 504-585-7587
or such substituted persons or addresses of which any of the parties may
give notice to the other in writing.
12.2 WAIVER. The failure by any party to enforce any of its rights
hereunder shall not be deemed to be a waiver of such rights, unless such
waiver is an express written waiver which has been signed by the waiving
party. Waiver of any one breach shall not be deemed to be a waiver of any
other breach of the same or any other provision hereof.
12.3 EXPENSES. Regardless of whether the transactions contemplated by
this Agreement are consummated, all expenses, including fees for legal,
accounting, investment banking, financial and other advisory services,
incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party hereto incurring them,
provided that the Buyer shall bear all stock transfer taxes, recording
charges and filing fees, if any, that may be imposed in connection with the
transfer of the Shares from Piccadilly to the Buyer.
12.4 INTERPRETATION. (a) The table of contents and section headings
contained herein are inserted for convenience only and shall not affect in
any way the meaning or interpretation of this Agreement. Each of the
parties has participated substantially in the negotiation and drafting of
this Agreement and each party hereby disclaims any defense or assertion in
any litigation or arbitration that any ambiguity herein should be construed
against the draftsman.
(b) References to "Sections" or "Schedules" shall be to Sections
of or Schedules to this Agreement unless otherwise specifically provided.
(c) Wherever the words "include", "includes", and "including"
are used herein, such words shall be deemed to be followed by the words
"without limitation."
12.5 INTEGRATED AGREEMENT. This Agreement (along with the Exhibits
and Schedules referenced herein), the Confidentiality Agreement and the
Transition Services Agreement constitute the entire understanding and
agreement among the parties hereto with respect to the subject matter
hereof, and there are no agreements, covenants or understandings, among the
parties other than those set forth herein or therein, all prior agreements
and understandings being superseded hereby. Except and as to the extent
set forth in Sections 4 and 5, any schedule hereto or any certificate
delivered pursuant to Section 7, neither party makes any representations or
warranties whatsoever, and
disclaims all liability and responsibility for any representation or
warranty made or communicated orally or in writing to the other party
(including any information, opinion or advice that may have been provided
to the other party by any officer, director or employee of such party, such
party's counsel or accountants, or any other agent, consultant or
representative of such party, none of which has been relied upon by the
other party). Without limiting the generality of the foregoing, this
Agreement shall not be governed by the warranties provided by Article 2 of
the Uniform Commercial Code or any similar laws adopted in any
jurisdiction.
12.6 CHOICE OF LAW. The validity of this Agreement, the construction
of its terms and the determination of the rights and duties of the parties
hereto in accordance therewith shall be governed by and construed in
accordance with the laws of the State of Louisiana applicable to contracts
made and to be performed wholly within such State.
12.7 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and no party hereto may assign its rights or obligations hereunder without
the prior written consent of the other party, except that the Buyer may
assign its rights to a wholly-owned subsidiary hereunder as long as Buyer
is not relieved of its obligations hereunder. Nothing in this Agreement is
intended or shall be construed to confer upon or to give any person other
than the parties hereto any rights or remedies under or by reason of this
Agreement.
12.8 AMENDMENT. Unless otherwise provided herein, this Agreement may
be amended only by an agreement in writing signed by each party hereto.
12.9 COUNTERPARTS. This Agreement may be executed by the parties in
one or more counterparts, all of which shall be deemed an original, but all
of which taken together shall constitute one and the same instrument.
12.10 BULK SALES LAW. Buyer hereby waives compliance by Sellers with
the provisions of any bulk sales laws applicable to this transaction, if
any, and Sellers hereby agree to indemnify Buyer for any claims and demands
of whatever nature (other than the liabilities expressly assumed by Buyer
under this Agreement) asserted against Buyer by any creditor of Sellers for
noncompliance by Sellers or Buyer with any bulk sales laws or similar laws
which may be applicable to the sale or transfer of the Acquired Assets
hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the day and year first above written.
Piccadilly Cafeterias, Inc.
By: /S/ RONALD A. LABORDE
Ronald A. LaBorde
President and
Chief Executive Officer
Piccadilly Restaurants, Inc.
By: /S/ RONALD A. LABORDE
Ronald A. LaBorde
President and
Chief Executive Officer
Cobb Investment Company, Inc.
By: /S/ THOMAS E. KRANZ
Name: Thomas E. Kranz
Title: Assistant Vice President and
Chief Financial Officer
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agreement"), dated and
effective as of March 30, 1999, is by and between Piccadilly
Cafeterias, Inc., a Louisiana corporation ("Piccadilly") and Cobb
Investment Company, Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, pursuant to the terms of the Stock and Asset Purchase
Agreement dated as of January 15, 1999 by and among the parties hereto and
Piccadilly Restaurants, Inc., Buyer purchased on the date hereof (the
"Closing Date") the assets used exclusively in the operation of seven Ralph
& Kacoo's seafood restaurants (the "Business"), and 98 shares of common
stock of Cajun Bayou Distributors and Management, Inc., a Louisiana
corporation that owns certain other assets used exclusively in the
operation of the Business;
WHEREAS, Piccadilly has historically provided those services described
in Section 2 below, together with all customary, ancillary or related
activities that are associated with or incidental to such services
(collectively, the "Services"), to the Business, and Buyer desires that
Piccadilly or one or more of its subsidiaries as may be designated by
Piccadilly, continue to provide such Services to the Business on a
temporary basis;
WHEREAS, Piccadilly is willing to provide the Services to the Business
upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
Section 1. RIGHTS AND DUTIES OF PICCADILLY.
(a) Upon the terms and subject to the conditions set forth herein,
Piccadilly agrees from and after the date hereof to provide the Services to
the Business.
(b) Buyer acknowledges and agrees that Piccadilly may, at its
election, cause one or more of it subsidiaries or third party contractors
or service providers to perform the Services.
(c) Piccadilly and Buyer acknowledge and agree that the nature, scope
and quality of the Services shall be as set forth in this Agreement and as
has been provided by Piccadilly and its affiliates to the Business prior to
the Closing Date.
Section 2. DESCRIPTION OF SERVICES. Piccadilly and Buyer agree that
Piccadilly shall provide the following Services pertaining to the Business:
(a) accounting and financial services, including maintenance of books
and records, accounting systems and payroll systems;
(b) financial reporting services, including preparation of financial
statements for internal and external uses and coordination and general
administration of any other financial reporting needs of the Business;
(c) preparation and filing of payroll tax returns under Buyer's
employer identification number;
(d) management information and system services, including computer
operations, data input, systems and programming and technical support; and
(e) such other services as may mutually be agreed upon by the parties
hereto.
Section 3. ADMINISTRATION OF SERVICES.
(a) Buyer agrees to provide the appropriate department within
Piccadilly with all data, records, files, statements, invoices, billings
and other information reasonably requested by Piccadilly that is necessary
or advisable to allow Piccadilly to perform the Services contemplated by
this Agreement. Buyer shall have reasonable access to all data, records,
files, statements, invoices, billings and other information generated by or
in the custody of Piccadilly relating to the Services provided pursuant to
this Agreement.
(b) Buyer acknowledges and agrees that the Services shall be provided
only with respect to the Business.
(c) Buyer represents and warrants that the Services will not be used
in violation of any applicable federal, state or local law or any rules or
regulations promulgated thereunder.
(d) Each party shall (i) maintain confidential and secret all
confidential information that may be disclosed by the other party in
connection with the provision of the Services hereunder, (ii) restrict
disclosure of such confidential information to those of its employees who
have a need to know such information in order to comply with its
obligations hereunder and (iii) employ the same standards of care with
respect to such confidential information as it uses to protect its own
confidential information. The obligations of this Section 3(d) shall
survive the expiration and termination of this Agreement for a period of
five years.
Section 4. COMPENSATION.
(a) Buyer shall reimburse Piccadilly for all actual costs of goods,
services or other items purchased, leased or otherwise procured from third
parties by Piccadilly for the direct benefit of the Business, to the extent
such costs are paid by Piccadilly ("Direct Costs").
(b) As compensation for the performance of the Services, Buyer shall
pay to Piccadilly a monthly fee of $10,000 (the "Monthly Fee").
(c) Piccadilly will invoice Buyer by the 15th day of each month for
the Direct Costs and the Monthly Fee provided during the preceding month.
All amounts shown on each invoice shall be due and payable on the last day
of the month of such invoice.
(d) In the event of a dispute as to the propriety of invoiced
amounts, Buyer shall pay all undisputed amounts but shall be entitled to
withhold payment of any amount in dispute and shall promptly notify
Piccadilly in writing of the basis of the dispute and the amount disputed.
Piccadilly shall provide Buyer with the records and supporting data with
respect to the disputed amounts and the parties agree to attempt in good
faith to resolve any such dispute failing which, the dispute shall be
submitted to an independent accounting firm, which shall have the sole and
exclusive authority to arbitrate the dispute, and whose decision shall be
conclusive and binding upon the parties.
(e) Any amounts owed by either party hereunder to the other party
that remain unpaid on the due date therefor shall bear interest at a rate
equal to the lesser of (i) 1% above such party's actual cost of funds or
(ii) the highest rate permitted by applicable law.
Section 5. TERMS OF AGREEMENT: TERMINATION. This Agreement shall
commence as of the date first above written and shall continue in effect
until (i) the parties mutually agree in writing to terminate this Agreement
or (ii) 30 days after receipt by Piccadilly of written notice from Buyer of
its request to terminate this Agreement. Upon termination of this
Agreement, Buyer shall be liable for all Direct Costs incurred in
accordance with Section 4 prior to termination, and for the payment of the
Monthly Fee through the end of the month following termination of the
Agreement.
Section 6. LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) Piccadilly makes no representation or warranty whatsoever,
express or implied, with respect to the Services. In no event shall
Piccadilly be liable to Buyer for (i) any loss, cost or expense resulting
from any act or omission taken at the express direction of Buyer or (ii)
any special, indirect or consequential damages resulting from any error or
omission in the performance of the Services or from the breach of this
Agreement.
(b) Neither Piccadilly nor Buyer shall be liable for any loss or
damage or any nonperformance, partial or whole, under this Agreement,
caused by any strike, labor troubles, riot, act of a public enemy,
insurrection, act of God, or any law, rule or regulation promulgated by any
governmental body or agency, or any demand or requisition of any
governmental body or agency, or any other cause beyond the control of the
parties hereto.
(c) Buyer shall reimburse, indemnify and hold harmless Piccadilly
and its successors, assigns, affiliates, directors, officers, employees and
agents from and against any and all judgments, losses, damages,
liabilities, demands, actions, suits, taxes, charges, costs, claims,
expenses and disbursements (including legal fees and expenses) of any kind
and nature whatsoever that may at any time be imposed on, incurred by or
asserted against Piccadilly (including any claims against Piccadilly for
indemnification by any such person) or any such person (whether or not
indemnified by Piccadilly or any other person) in connection with any suit
or proceeding, whether judicial or administrative, relating to or arising
out of any acts or omissions performed or omitted by Piccadilly or any such
person in connection with or arising out of the performance of the Services
unless such act or omission by Piccadilly or such person constituted bad
faith, willful misfeasance, gross negligence, recklessness or a willful,
material breach of this Agreement.
Section 7. RELATIONSHIP OF PARTIES.
Nothing contained in this Agreement (a) shall constitute Piccadilly
and Buyer as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (b) shall be
construed to impose any liability as such on either of them, (c) shall be
deemed to confer on either of them any express, implied or apparent
authority to incur any obligation or liability on behalf of the other, or
(d) shall be deemed to, or in fact, create any benefit for, or impose any
obligation on the parties in favor of, any person not party to this
Agreement. Piccadilly shall at all times during the term hereof act as an
independent contractor, and none of Piccadilly's employees, subcontractors,
agents or representatives shall be considered employees of Buyer as a
result of this Agreement.
Section 8. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between the
parties hereto with respect to the matters set forth in this Agreement.
This Agreement shall not be amended, modified or supplemented except by an
instrument in writing executed by each of the parties hereto.
(b) Each of the parties hereto shall use its best efforts to take
or cause to be taken, to the extent necessary, all actions necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery, certified or registered mail,
return receipt requested or telecopy transmission with confirmation of
receipt to the address of each of the parties set forth opposite the
signature of such party on the signature page hereof. All notices and
communications shall be deemed given upon receipt thereof.
(d) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Louisiana without the
application of any conflicts of law principles.
(e) 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.
(f) The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) In the event that any provision of this Agreement shall be
determined to be invalid or unenforceable, in whole or in part, it is the
parties intention that such determination shall not be held to affect the
validity or enforceability of any other provision of this Agreement, which
provisions shall otherwise remain in full force and effect.
(h) This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. This
Agreement shall not be assignable by any party hereto without the prior
written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
Addresses for Notices: PICCADILLY CAFETERIAS, INC.
3232 Sherwood Forest Boulevard
Baton Rouge, Louisiana 70817
Attn: Ronald A. LaBorde By: /S/ RONALD A. LABORDE
Name: Ronald A. LaBorde
Title: President and Chief Executive
Officer
COBB INVESTMENT COMPANY, INC.
1241 Airport Road, 2nd Floor
Destin, Florida 32541
Attn: Thomas E. Kranz
By: /S/ THOMAS E. KRANZ
Name: Thomas E. Kranz
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
CONSENT AND WAIVER AGREEMENT
This Consent and Waiver Agreement (the "Waiver") dated as of March
10, 1999 is by and among Piccadilly Cafeterias, Inc., a Louisiana
corporation ("Piccadilly"), Piccadilly Restaurants, Inc., a Louisiana
corporation ("Restaurants" and together with Piccadilly, the "Sellers") and
Cobb Investment Company, Inc., a Delaware corporation (the "Buyer").
W I T N E S S E T H
WHEREAS, Sellers and Buyer have entered into that certain Stock and
Asset Purchase Agreement (the "Purchase Agreement") pursuant to which Buyer
has agreed to purchase (the "Purchase") all of the assets held by Sellers
that are principally used in the operation of seven Ralph & Kacoo's Seafood
Restaurants, including all of the issued and outstanding shares of Cajun
Bayou Distributors and Management, Inc. (the "Business"); and
WHEREAS, the Sellers and Buyer have mutually agreed that it is in the
best interest of the Business that the Ralph & Kacoo's Seafood Restaurant
located in Jackson, Mississippi (the "Jackson Restaurant") be closed for
business prior to the closing of the Purchase; and
WHEREAS, Buyer has consented to the closing of the Jackson Restaurant,
and agrees to share with Sellers any and all expenses incurred by Sellers
resulting from the closing of the Jackson Restaurant; and
WHEREAS, Sellers and Buyer have agreed that the closing of the Jackson
Restaurant should in no way affect or impede the transactions contemplated
by the Purchase Agreement.
NOW THEREFORE, the Sellers and Buyer hereby agree as follows:
1. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Purchase Agreement.
2. In accordance with Sections 6.4 and 12.2 of the Purchase
Agreement, Buyer hereby consents to the closure of the Jackson Restaurant
and hereby waives any and all breaches by either or both of the Sellers of
any of their representations, warranties or covenants contained in the
Purchase Agreement that may arise or result from the closure of the Jackson
Restaurant prior to the Closing Date.
3. Buyer also hereby acknowledges that the employees of the Jackson
Restaurant listed on Schedule A attached hereto shall, effective upon the
closure of the Jackson Restaurant, be excluded from the definition of
Business Employees as used in the Purchase Agreement, and Schedule 10.5(a)
to the Purchase Agreement is hereby deemed amended to so remove such
employees.
4. Sellers shall be responsible for any and all amounts payable to
the terminated employees of the Jackson Restaurant for accrued wages or
vacation benefits or any other payments that may be due such employees
under Piccadilly's Employee Plans or Benefit Arrangements.
5. Sellers and Buyer hereby acknowledge and agree that
notwithstanding the closure of the Jackson Restaurant, all Acquired Assets
located at, or arising from or relating to the operation of the Business
at, the Jackson Restaurant, shall be conveyed to Buyer, and all Assumed
Liabilities arising from the operation of the Business at the Jackson
Restaurant shall be assumed by the Buyer, all in accordance with the terms
of the Purchase Agreement at the Closing Date.
6. Notwithstanding paragraph 5 above, Sellers and Buyer hereby
acknowledge and agree that the Real Property Lease pertaining to the
Jackson Restaurant site may be terminated prior to the Closing Date. If
said Real Property Lease is so terminated, the Acquired Assets shall not
include said Real Property Lease, but shall include all other Acquired
Assets located at, or arising from or relating to the operation of the
Business at the Jackson Restaurant. Likewise, if said Real Property Lease
is terminated prior to the Closing Date, the Assumed Liabilities shall not
include any liabilities arising from said Real Property Lease.
7. Except as otherwise provided herein, the parties agree that any
and all fees or expenses that may be incurred by Sellers outside the
ordinary course of business as a result of the closure of the Jackson
Restaurant shall be shared equally between Buyer and Sellers. Buyer and
Sellers will use reasonable efforts to keep each other informed and to
consult with each other as such fees or expenses are incurred.
8. Except and solely to the extent affected hereby, all terms and
conditions of the Purchase Agreement are hereby confirmed and shall
continue in full force and effect.
9. The parties may execute this Waiver in any number of counterparts
each of which shall be deemed to be an original and all of which shall
constitute one and the same instrument.
10. (a) Sellers acknowledge that Buyer has been notified of a claim
(the "Claim") against the assets of Piccadilly Restaurants, Inc. in
connection with attempts to enforce the judgment (the "Judgment") rendered
in that certain action styled Jenny G. Graves, et al. v. Piccadilly
Restaurants, Inc. d/b/a Ralph and Kacoo's, et al., Civil Action No. 3:97 CV
423 LN, United States District Court, Southern District of Mississippi,
Jackson Division (the "Lawsuit"). Buyer understands that Sellers, in their
sole discretion, may appeal this Judgment or contest the enforcement
thereof, in which event the Claim may not be finally resolved or satisfied
on the Closing Date. Sellers and Buyer recognize and agree that it shall
be the sole responsibility of Sellers, in their discretion, to appeal the
Judgment or contest the Claim and that Buyer will require that the Acquired
Assets transferred to Buyer on the Closing Date be free and clear of all
liens or encumbrances securing the payment of the Judgment. However, if
Sellers have not finally resolved the Claim on the Closing Date, Buyer will
agree to accept the Acquired Assets subject to the Claim on the condition
that Sellers provide such security as may be required by Buyer and its
lender, Whitney National Bank, to assure that all asserted or threatened
liens or encumbrances arising in connection with the Judgment or the Claim
will be released and will in no way interfere with Buyer's interest in or
operation of the Acquired Assets.
(b) In addition to the indemnity provisions described in the
Purchase Agreement, and subject to the notice and defense provisions
described in Section 8.2 of the Purchase Agreement, Piccadilly shall
indemnify and hold harmless the Buyer Indemnities from, and will pay to the
Buyer Indemnitees the amount (net of any proceeds received by the Buyer
Indemnitee from insurance or any quantifiable tax benefits in the year
incurred (but giving effect to any tax detriment from receipt of
indemnification proceeds), obtained) of, any loss, liability, judgment,
damage, cost or expense (including interest, penalties, and the reasonable
fees, disbursements and expenses of attorneys, accountants and other
professional advisors) (collectively, "Losses") arising from or in
connection with the Lawsuit. Further, any Losses connected with the
Lawsuit shall not be subject to the limits on indemnity set forth in
Sections 8.3 and 8.4 of the Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Waiver
all as of the day and year first above written.
PICCADILLY CAFETERIAS, INC.
By: /S/ RONALD A. LABORDE
Ronald A. LaBorde
President and Chief Executive
Officer
PICCADILLY RESTAURANTS, INC.
By: /S/ RONALD A. LABORDE
Ronald A. LaBorde
President and Chief Executive
Officer
COBB INVESTMENT COMPANY, INC.
By: /S/ THOMAS E. KRANZ
Thomas E. Kranz
Executive Vice President and
Chief Financial Officer
<PAGE>
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement"), dated and
effective as of March 30, 1999, is by and between Piccadilly Restaurants,
Inc., a Louisiana corporation ("Piccadilly") and Cobb Investment Company,
Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, pursuant to the terms of the Stock and Asset Purchase
Agreement dated as of January 15, 1999 (the "Purchase Agreement") by and
among the parties hereto and Piccadilly Cafeterias, Inc., Buyer purchased
on the date hereof (the "Closing Date") the assets used exclusively in the
operation of seven Ralph & Kacoo's seafood restaurants (the "Business"),
and 98 shares of common stock of Cajun Bayou Distributors and Management,
Inc., a Louisiana corporation that owns certain other assets used
exclusively in the operation of the Business;
WHEREAS, Buyer has not yet obtained its liquor licenses for the five
Ralph & Kacoo's seafood restaurants located in Louisiana (collectively, the
"Louisiana Restaurants" and each a "Louisiana Restaurant"), more
particularly described as follows:
(i) 6110 Bluebonnet Boulevard, Baton Rouge, Louisiana 70809;
(ii) 519 Toulouse Street, New Orleans, Louisiana 70130;
(iii)601 Veterans Memorial Boulevard, Metairie, Louisiana 70005;
(iv) 7110 Airline Highway, Baton Rouge, Louisiana 70805; and
(v) 1700 Old Minden Road, #141, Bossier City, Louisiana 71111;
WHEREAS, Buyer desires that Piccadilly continue to provide management
services for the Louisiana Restaurants (the "Management Services") as more
fully described in Section 2 below, on a temporary basis until such time as
Buyer is able to obtain liquor licenses for the Louisiana Restaurants; and
WHEREAS, Piccadilly is willing to provide the Management Services to
the Louisiana Restaurants upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
Section 1. RIGHTS AND DUTIES OF PICCADILLY.
(a) Upon the terms and subject to the conditions set forth herein,
Piccadilly agrees from and after the date hereof to provide the Management
Services to the Louisiana Restaurants.
(b) In furtherance of its obligations provided for in paragraph (a),
and notwithstanding anything to the contrary in the Purchase Agreement (in
particular, Section 10.5 thereof), at the Closing the five Senior Managers
and the two District Managers listed on Exhibit A hereto (collectively, the
"Managers") shall not be terminated as employees of Piccadilly and shall
continue to be employees of Piccadilly until each such person's employment
is terminated as provided in Section 6 hereto. Piccadilly shall continue
to pay each Manager the salary, and provide any benefits, that each such
Manager currently enjoys during the term of the continuation of such
Manager's employment hereunder.
(c) Piccadilly shall maintain insurance coverage covering the
Managers, including but not limited to, worker's compensation coverage and
general liability coverage, the cost of which shall be reimbursed by Buyer.
(d) Piccadilly and Buyer acknowledge and agree that the nature, scope
and quality of the Management Services shall be as set forth in this
Agreement and as has been provided by Piccadilly to the Louisiana
Restaurants prior to the Closing Date.
(e) Todd Gerald, one of the District Managers listed on Exhibit A, is
responsible for management of the two Louisiana Restaurants located in
Baton Rouge, and is also responsible for the supervision of the Ralph &
Kacoo's restaurant located in Birmingham, Alabama (the "Birmingham
Restaurant"). Although Piccadilly will not be providing Management
Services to the Birmingham Restaurant, the salary and employee benefits
paid to Todd Gerald by Piccadilly under Section 1(b) above will include, in
part, compensation for the management supervision services provided to the
Birmingham Restaurant by Todd Gerald. Notwithstanding anything herein to
the contrary, Piccadilly and Buyer acknowledge and agree that Buyer will
reimburse Piccadilly for the full amount of any compensation, benefits or
other costs paid by Piccadilly to Todd Gerald or as a result of Todd
Gerald's employment by Piccadilly during the term of this Agreement.
Section 2. DESCRIPTION OF SERVICES. Piccadilly and Buyer agree that
Piccadilly shall provide Management Services pertaining to the Louisiana
Restaurants for the benefit of Buyer as follows:
(a) the services of the five Senior Managers listed on Exhibit A at
each of the Louisiana Restaurants, each of whom will manage the day-to-day
operations of the applicable Louisiana Restaurant at which he or she was
employed immediately prior to the date hereof and the two District Managers
listed on Exhibit A, each of whom will supervise the management of the
applicable Louisiana Restaurants indicated on Exhibit A; and
(b) such other services as may mutually be agreed upon by the parties
hereto.
Section 3. ADMINISTRATION OF SERVICES.
(a) Piccadilly shall have reasonable access to all data, records,
files, statements, invoices, billings and other information generated by or
in the custody of Buyer relating to the Management Services provided
pursuant to this Agreement, and other information reasonably requested by
Piccadilly that is necessary or advisable to allow Piccadilly to perform
the Management Services contemplated by this Agreement.
(b) Buyer acknowledges and agrees that the Management Services shall
be provided only with respect to the Louisiana Restaurants.
(c) Buyer shall have the right to provide direction and supervision
to Managers in such manner that the Management Services will not be used in
violation of any applicable federal, state or local law or any rules or
regulations promulgated thereunder.
(d) Each party shall (i) maintain confidential and secret all
confidential information that may be disclosed by the other party in
connection with the provision of the Management Services hereunder, (ii)
restrict disclosure of such confidential information to those of its
employees who have a need to know such information in order to comply with
its obligations hereunder and (iii) employ the same standards of care with
respect to such confidential information as it uses to protect its own
confidential information. The obligations of this Section 3(d) shall
survive the expiration and termination of this Agreement for a period of
five years.
Section 4. COMPENSATION.
(a) Buyer shall reimburse Piccadilly for all actual costs incurred by
Piccadilly in providing the Management Services, including, but not limited
to the salaries of the Managers, payroll taxes, any employment benefits
such Managers receive from Piccadilly, travel expenses of the Managers, and
insurance premiums, such as general liability and worker's compensation,
to the extent such costs are paid and reasonably documented by Piccadilly
("Direct Costs").
(b) Piccadilly will invoice Buyer by the 15th day of each month for
the Direct Costs provided during the preceding month. All amounts shown on
each invoice shall be due and payable on the last day of the month of such
invoice.
(c) In the event of a dispute as to the propriety of invoiced
amounts, Buyer shall pay all undisputed amounts but shall be entitled to
withhold payment of any amount in dispute and shall promptly notify
Piccadilly in writing of the basis of the dispute and the amount disputed.
Piccadilly shall provide Buyer with the records and supporting data with
respect to the disputed amounts and the parties agree to attempt in good
faith to resolve any such dispute failing which, the dispute shall be
submitted to an independent accounting firm, which shall have the sole and
exclusive authority to arbitrate the dispute, and whose decision shall be
conclusive and binding upon the parties.
(d) Any amounts owed by either party hereunder to the other party
that remain unpaid on the due date therefor shall bear interest at a rate
equal to the lesser of (i) 1% above such party's actual cost of funds or
(ii) the highest rate permitted by applicable law.
Section 5. TERMS OF AGREEMENT: TERMINATION. This Agreement shall
commence as of the date first above written and shall continue in effect
until (i) with respect to each Louisiana Restaurant, Buyer shall have
received a liquor license for that Louisiana Restaurant, at which time the
Agreement shall terminate as to that Louisiana Restaurant; (ii) the parties
mutually agree in writing to terminate this Agreement; or (iii) 30 days
after receipt by either party of written notice from the other party of its
request to terminate this Agreement. Upon termination of this Agreement,
Buyer shall be liable for all Direct Costs incurred in accordance with
Section 4 prior to termination.
Section 6. EFFECT OF TERMINATION. Immediately upon termination of
the Agreement, whether terminated in full or terminated with respect to one
or more individual Louisiana Restaurant(s), the employment by Piccadilly of
the Senior Manager(s) of the Louisiana Restaurant(s) as to which such
termination is effected shall, in accordance with Section 10.5 of the
Purchase Agreement, be terminated. Further, the employment by Piccadilly
of each District Manager shall terminate upon the termination of this
Agreement as to all of the Louisiana Restaurants that the particular
District Manger supervises. Upon such termination of employment of the
Managers, such Manager or Managers shall become employees of Buyer, and
shall thereafter have the same rights and benefits of the Business
Employees, as that term is defined in the Purchase Agreement.
Section 7. LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) Piccadilly makes no representation or warranty whatsoever,
express or implied, with respect to the Management Services. In no event
shall Piccadilly be liable to Buyer for (i) any loss, cost or expense
resulting from any act or omission by the Managers taken at the express
direction of Buyer or (ii) any special, indirect or consequential damages
resulting from any error or omission by the Managers in the performance of
the Management Services or from the breach of this Agreement.
(b) Neither Piccadilly nor Buyer shall be liable for any loss or
damage or any nonperformance, partial or whole, under this Agreement,
caused by any strike, labor troubles, riot, act of a public enemy,
insurrection, act of God, or any law, rule or regulation promulgated by any
governmental body or agency, or any demand or requisition of any
governmental body or agency, or any other cause beyond the control of the
parties hereto.
(c) Buyer shall reimburse, indemnify and hold harmless Piccadilly
and its successors, assigns, affiliates, directors, officers, employees and
agents from and against any and all judgments, settlements, losses,
damages, attorneys' fees (both defense fees and statutory attorney fees to
prevailing parties), liabilities, demands, actions, suits, taxes, charges,
costs, claims, expenses and disbursements of any kind and nature whatsoever
that may at any time be imposed on, incurred by or asserted against
Piccadilly (including any claims against Piccadilly for indemnification by
any such person) or any such person (whether or not indemnified by
Piccadilly or any other person) in connection with any suit or proceeding,
whether judicial or administrative, relating to or arising out of any acts
or omissions performed or omitted by Piccadilly or the Managers or any such
person in connection with or arising out of the performance of the
Management Services unless such act or omission by Piccadilly or the
Managers constituted a willful, material breach of this Agreement.
Section 8. RELATIONSHIP OF PARTIES.
Nothing contained in this Agreement (a) shall constitute Piccadilly
and Buyer as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (b) shall be
construed to impose any liability as such on either of them, (c) shall be
deemed to confer on either of them any express, implied or apparent
authority to incur any obligation or liability on behalf of the other, or
(d) shall be deemed to, or in fact, create any benefit for, or impose any
obligation on the parties in favor of, any person not party to this
Agreement. Piccadilly and the Managers shall at all times during the term
hereof act as independent contractors, and none of Piccadilly's employees,
subcontractors, agents or representatives or the Managers shall be
considered employees of Buyer as a result of this Agreement.
Section 9. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between the
parties hereto with respect to the matters set forth in this Agreement.
This Agreement shall not be amended, modified or supplemented except by an
instrument in writing executed by each of the parties hereto.
(b) Each of the parties hereto shall use its best efforts to take
or cause to be taken, to the extent necessary, all actions necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery, certified or registered mail,
return receipt requested or telecopy transmission with confirmation of
receipt to the address of each of the parties set forth opposite the
signature of such party on the signature page hereof. All notices and
communications shall be deemed given upon receipt thereof.
(d) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Louisiana without the
application of any conflicts of law principles.
(e) 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.
(f) The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) In the event that any provision of this Agreement shall be
determined to be invalid or unenforceable, in whole or in part, it is the
parties intention that such determination shall not be held to affect the
validity or enforceability of any other provision of this Agreement, which
provisions shall otherwise remain in full force and effect.
(h) This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. This
Agreement shall not be assignable by any party hereto without the prior
written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
Addresses for Notices: PICCADILLY RESTAURANTS, INC.
3232 Sherwood Forest Boulevard
Baton Rouge, Louisiana 70817
Attn: Ronald A. LaBorde By: /S/ RONALD A. LABORDE
Name: Ronald A. LaBorde
Title: President and Chief Executive
Officer
COBB INVESTMENT COMPANY, INC.
1241 Airport Road, 2nd Floor
Destin, Florida 32541
Attn: Thomas E. Kranz
By: /S/ THOMAS E. KRANZ
Name: Thomas E. Kranz
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
ALL EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Statements for the period ending March 31, 1999 and is qualified in its entirety
by reference to such financial statements. Amounts are in thousands of dollars.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,170
<ALLOWANCES> 0
<INVENTORY> 9,265
<CURRENT-ASSETS> 22,887
<PP&E> 315,135
<DEPRECIATION> 131,308
<TOTAL-ASSETS> 234,179
<CURRENT-LIABILITIES> 46,635
<BONDS> 0
0
0
<COMMON> 19,141
<OTHER-SE> 64,598
<TOTAL-LIABILITY-AND-EQUITY> 234,179
<SALES> 381,809
<TOTAL-REVENUES> 381,809
<CGS> 229,213
<TOTAL-COSTS> 370,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,969
<INCOME-PRETAX> 8,582
<INCOME-TAX> 1,920
<INCOME-CONTINUING> 6,662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,661
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.63
</TABLE>
