- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: APRIL 18, 1996
BAYPORT RESTAURANT GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 0-10717 59-1827599
---- ---- ----
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
4000 HOLLYWOOD BLVD.
HOLLYWOOD, FLORIDA 33301
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 967-6700
- --------------------------------------------------------------------------------
<PAGE>
ITEM 5. OTHER EVENTS.
On April 18, 1996, the Registrant entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Landry's Seafood Restaurants, Inc., a
Delaware corporation ("Landry's"), and Landry's Acquisition, Inc., a Florida
corporation ("Acquisition"), pursuant to which Acquisition will be merged into
the Registrant with the result that the Registrant will become a wholly-owned
subsidiary of Landry's (the "Merger"). The Merger, which is intended to be a
tax-free reorganization, will be accounted for as a pooling of interests
business combination. Under the terms of the Merger Agreement, Landry's will
issue to the holders of the Registrant's common stock, $.001 par value per share
("Bayport Common Stock"), the number of shares of Landry's common stock, $.01
par value per share ("Landry's Common Stock"), equal to .2105 (the "Exchange
Ratio") multiplied by the number of outstanding shares of Bayport Common Stock
subject to certain adjustments discussed below. Based on 9,655,599 shares of
Bayport Common Stock issued and outstanding on March 29, 1996, Landry's will
issue (based on an assumed exchange ratio of .2105) 2,032,503 shares of Landry's
Common Stock, subject to certain adjustments discussed below, to the holders of
the outstanding shares of Bayport Common Stock. Cash will be issued in lieu of
fractional shares of Landry's Common Stock.
The Exchange Ratio is subject to adjustment in the event the average of
the daily closing prices of a share of Landry's Common Stock on the
Nasdaq-National Market as reported in THE WALL STREET JOURNAL for the five
consecutive trading days that end on the second trading day prior to the Closing
Date (as defined below) (i) exceeds $22 per share, in which case the Exchange
Ratio shall be adjusted downward to account for the increase in the share price
of Landry's Common Stock; or (ii) is less than $15 per share, in which case the
Exchange Ratio shall be adjusted upward to account for the decrease in the share
price of Landry's Common Stock.
In addition, the Exchange Ratio is subject to a downward adjustment in
the event that the Registrant's costs of completing construction of four
restaurants presently under construction exceed $13.0 million (the "Projected
Construction Costs") and/or if the pre-opening costs (the "Pre-opening Costs")
associated with such restaurants exceed $1.65 million (the "Projected
Pre-opening Costs"). As of this date, the Registrant has estimated that its
Projected Construction Costs with respect to these four restaurants will be
approximately $14.0 to 15.0 million and that its Projected Pre-Opening Costs
relating to these four restaurants will be approximately $1.65 million. The
final determination of the Projected Construction Costs and the Projected
Pre-opening Costs will be made shortly before the closing of the Merger, at a
time when the four restaurants are expected to be open or significantly closer
to completion than they are today. By way of example, if the combined overage of
the Projected Construction Costs and the Projected Pre-opening Costs were to
exceed their respective estimates by an aggregate of $1.0 million, the Exchange
Ratio would be reduced to .2060 (.2016 if the combined overage was $2.0
million).
The closing of the Merger (the "Closing Date") is subject to various
closing conditions, including the expiration of applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the receipt of
shareholder approval from the Registrant's shareholders,
2
<PAGE>
and the receipt by both parties of various customary opinions and
certifications. A meeting of the Registrant's shareholders is expected to be
held during the next 90 days to consider and vote upon the Merger. In addition,
prior to closing, Landry's has advised the Company that it anticipates
completing an underwritten public offering of approximately 4,600,000 shares of
Landry's Common Stock, which shall be deemed completed for the purposes of
consummating the transactions under the Merger Agreement on December 21, 1996,
whether or not actually completed.
Shares of the Registrant's Series B Convertible preferred stock, $.01
par value per share ("Bayport Preferred Stock"), are currently convertible into
shares of Bayport Common Stock at a ratio of four shares of Bayport Preferred
Stock for one share of Bayport Common Stock. Under the terms of the Merger
Agreement, outstanding shares of Bayport Preferred Stock shall be converted into
the number of shares of Landry's preferred stock, $.01 par value per share
("Landry's Preferred Stock"), which is equal to the number of outstanding shares
of Bayport Preferred Stock multiplied by the Exchange Ratio, as adjusted, and
divided by four. After the Merger, shares of Landry's Preferred Stock will
convert into shares of Landry's Common Stock on a one-for-one basis. All other
terms of the Landry's Preferred Stock will be identical to the terms of the
Bayport Preferred Stock.
Based on 2,136,499 shares of Bayport Preferred Stock issued and
outstanding on March 29, 1996 (at an assumed exchange ratio of .2105), Landry's
will issue 112,433 shares of Landry's Preferred Stock (each convertible into one
share of Landry's Common Stock), subject to the adjustments described above, to
the holders of the outstanding shares of Bayport Preferred Stock. Cash will be
issued in lieu of fractional shares of Landry's Preferred Stock.
At the closing of the Merger, outstanding options and warrants to
purchase shares of Bayport Common Stock will be converted into the right to
purchase that number of shares of Landry's Common Stock as the holder of such
would have been entitled to receive had they exercised such options or warrants
prior to consummation of the Merger. Options to purchase shares of Bayport
Common Stock issued pursuant to the Registrant's 1993 and 1995 Stock Option
Plans (which will be converted into options to purchase shares of Landry's
Common Stock, as described above) will, in accordance with the terms of the
plans, immediately vest at the closing of the Merger. All other options and
warrants will continue to vest in accordance with the vesting schedules
contained in the agreements evidencing such options and warrants.
The Merger Agreement contains customary representations and warranties
by the Registrant, Landry's and Acquisition and contains provisions governing
the conduct of the parties prior to the closing of the Merger.
The Merger Agreement may be terminated and the Merger abandoned at any
time prior to the consummation of the Merger: (i) by the mutual consent of the
Boards of Directors of the Registrant and Landry's; (ii) by the Board of
Directors of either the Registrant or Landry's if there has been a material
breach by the other of any representation or warranty in the Merger
3
<PAGE>
Agreement or of any covenant in the Merger Agreement which has not, or cannot
be, cured within 15 days after written notice thereof; (iii) by the Board of
Directors of either the Registrant or Landry's if the conditions to closing set
forth in the Merger Agreement are not met or waived by December 31, 1996, or the
Merger has not occurred by such date (except that neither the Registrant nor
Landry's shall be entitled to terminate if such party is in willful and material
violation of the Merger Agreement); (iv) by the Board of Directors of either the
Registrant or Landry's if the required approval of the shareholders of the
Registrant shall not have been obtained; or (v) if a governmental authority
shall have issued a final and non-appealable order or ruling enjoining,
restraining or otherwise prohibiting the Merger.
Under the terms of the Merger Agreement, the Registrant is prohibited
from, directly or indirectly, soliciting or encouraging the initiation of any
inquiries, proposals or offers regarding any acquisition, merger, takeover bid
or sale of all or substantially all of its assets. However, if the Registrant's
Board of Directors determines that it would be consistent with its fiduciary
responsibilities to approve or recommend an unsolicited proposal which it deems
superior to the Merger (the "Superior Proposal"), then the Registrant shall be
entitled to enter into the Superior Proposal and terminate the Merger Agreement.
In the event the Merger Agreement is terminated by the Registrant as a
result of entering into a Superior Proposal or because of the Registrant's
failure to satisfy certain of the closing conditions set forth in the Merger
Agreement, then Landry's shall be entitled to receive from the Registrant, a
cash fee payable six months after such termination (the "Termination Fee") in an
amount equal to 2.5% of (i) the product of the closing price of a share of
Landry's Common Stock on the date of such termination multiplied by the number
of shares of Landry's Common Stock which would have been issued or reserved for
issuance if the Merger had been consummated; plus (ii) any of the Registrant's
debt on the date of such termination ((i) plus (ii) above, is hereinafter, the
"Deal Value"). In addition, all expenses, including legal, accounting and tax
expenses, incurred by Landry's in connection with the Merger Agreement (the
"Expenses") would also be payable as part of the Termination Fee. If the Merger
Agreement is terminated by Landry's because of the Registrant's inability to
obtain approval of the Merger by its shareholders or because of the existence of
a material adverse change in the Registrant, the Termination Fee shall be equal
to 1.5% of the Deal Value plus the Expenses.
In conjunction with the execution of the Merger Agreement, Landry's
entered into a Contract Termination/Consulting Agreement with David J. Connor,
the Chairman and Chief Executive Officer of Bayport (the "Connor Agreement").
Under the Connor Agreement, Landry's has agreed, upon the consummation of the
Merger, to buy-out Mr. Connor's current employment agreement with Bayport for
$1,800,000. In addition upon consummation of the Merger, all options to purchase
shares of Bayport Common Stock (which will be converted into options to purchase
shares of Landry's Common Stock) held by Mr. Connor will vest immediately and
will remain outstanding for their full term. Further, subsequent to the closing
of the Merger, Mr. Connor will provide consulting services to Landry's for which
he will be paid a consulting fee of $10,000 per month for a period of two years
from the Closing Date, subject to certain conditions. For a period of three
4
<PAGE>
years following the effective date of the Merger, Mr. Connor has agreed that he
will not be involved in the seafood restaurant business in the United States in
any manner.
Landry's has also entered into a Contract Termination Agreement with
William D. Korenbaum, the President, Chief Operating and Financial Officer and
Treasurer of Bayport (the "Korenbaum Agreement"). Under the Korenbaum Agreement,
Landry's has agreed, upon consummation of the Merger, to buy-out Mr. Korenbaum's
current employment agreement with Bayport for $1,300,000. In addition upon
consummation of the Merger, all options to purchase shares of Bayport Common
Stock (which will be converted into options to purchase shares of Landry's
Common Stock) held by Mr. Korenbaum will vest immediately and will remain
outstanding for their full term. Further, subsequent to the closing of the
Merger, for consulting services and in addition to amounts he otherwise may
receive as an employee of Landry's, Mr. Korenbaum will receive $10,000 per month
for a period of two years following the Closing Date, subject to certain
conditions. For a period of three years following the effective date of the
Merger, Mr. Korenbaum has agreed that he will not be involved in the seafood
restaurant business in the United States in any manner.
Under their existing employment agreements, both Mr. Connor and Mr.
Korenbaum, upon a change of control of Bayport, are entitled to terminate their
employment with Bayport and receive, in addition to their annual salary through
the date of termination, the greater of (i) the sum of $1,500,000 (in the case
of Mr. Connor) and $1,000,000 (in the case of Mr. Korenbaum), or (ii) the
aggregate balance remaining under their employment agreement, without having to
fulfill their obligations or perform their duties thereunder. Further, in the
event of a change of control, all unvested stock options and bonus payments
previously paid and granted to each of Messrs. Connor and Korenbaum immediately
vest.
Additionally, subsequent to the Closing Date, Mr. Korenbaum will be
employed by Landry's at an annual salary of $175,000 and will receive options to
purchase 100,000 shares of Landry's Common Stock vesting over a three-year
period. Mr. Korenbaum's employment with Landry's is terminable at will by either
party.
Simultaneous with the execution of the Merger Agreement, the Registrant
entered into a loan agreement (the "Loan Agreement") with Landry's, pursuant to
which Landry's agreed to loan the Registrant up to $11,000,000 (the "Loan") to
be used to finance the continued construction of restaurants located in Chelsea
Piers and Great Neck, New York; Nashville, Tennessee; and Baltimore, Maryland
pending consummation of the Merger. Outstanding indebtedness under the Loan
Agreement bears interest at the prime rate, as published in THE WALL STREET
JOURNAL, plus 2%. Interest under the Loan Agreement is payable monthly.
The Loan is intended to be secured by collateral assignments of the
Registrant's leasehold interests on, and all other assets located at, its
restaurants in Nashville, Tennessee; Great Neck, New York; Chicago, Illinois;
and Myrtle Beach, South Carolina (the "Collateralized Properties"). The
aggregate advances available under the Loan Agreement are based on the delivery
of the
5
<PAGE>
necessary documentation for each of the Collateralized Properties to Landry's.
Currently, the Jupiter leasehold and restaurant has been collaterally assigned
to Landry's, resulting in the availability of $2,500,000 under the Loan
Agreement. At the time of the receipt by Landry's of the collateral assignments
of the Registrant's two leaseholds and restaurants in Myrtle Beach, the
collateral assignment of the Jupiter leasehold and restaurant will be reassigned
by Landry's, as described below.
Pursuant to the Loan Agreement and except as set forth below, if the
Merger is not consummated, the Registrant will have the opportunity to repay
indebtedness under the Loan Agreement for a period of 120 days from the date the
Merger Agreement is terminated, during which time Landry's has agreed to take no
action against the Registrant. At the end of such period, if the Registrant has
not repaid such indebtedness, Landry's will be obligated to take in full
consideration of repayment of such indebtedness the Collateralized Properties.
The Merger Agreement provides that, in the event the Registrant terminates the
Merger Agreement because of the Registrant's receipt of a Superior Proposal,
Landry's will automatically obtain ownership of the Collateralized Properties
for an amount equal to $11,000,000, less (i) any amounts previously provided by
Landry's to the Registrant; (ii) certain designated fees, costs and expenses;
and (iii) the cost to complete the construction of certain restaurants making up
a portion of the Collateralized Properties.
In connection with the Loan Agreement, The First National Bank of
Boston (as agent), The First National Bank of Boston and Capital Bank
(collectively, the "Lenders") have agreed to waive certain covenants, events of
default and termination fees under their Revolving Credit and Term Loan Facility
with the Registrant, unless and until the Merger Agreement is terminated.
Further, the Lenders have agreed to assign the collateral assignment
documentation relating to the Nashville and Jupiter restaurants to Landry's and
to permit the placement of liens on certain of the Registrant's other assets.
The collateral assignment documentation relating to the Jupiter restaurant will
be reassigned by Landry's to the Lenders upon Landry's receipt of the collateral
assignment documentation relating to the two Myrtle Beach restaurants.
Landry's operates 46 full service, mid priced casual dining seafood
restaurants in fifteen states, primarily under the names "Landry's Seafood
House,(Registered Trademark)" "Willie G's(Registered Trademark)" and "Joe's Crab
Shack(Service Mark)". Landry's is a public company whose securities are traded
on the NASDAQ National Market under the symbol "LDRY." Its principal executive
office is located at 1400 Post Oak Blvd., Suite 1010, Houston, Texas 77056
(713-850-1010).
The foregoing is a summary of certain information contained in the
agreements referenced herein. Reference is made to the more detailed information
contained in such agreements, which are exhibits to this report.
6
<PAGE>
ITEM 7. FINANCIAL INFORMATION AND EXHIBITS.
(a), (b) Not applicable.
(c) 2. Agreement and Plan of Merger, dated as of April 18,
1996, among Landry's Seafood Restaurants, Inc.,
Landry's Acquisition, Inc. and Bayport Restaurant
Group, Inc.
10.1 Contract Termination/Consulting Agreement, dated as
of April 18, 1996, by and between Landry's Seafood
Restaurants, Inc. and David J. Connor.
10.2 Contract Termination Agreement, dated as of April 18,
1996, by and between Landry's Seafood Restaurants,
Inc. and William D. Korenbaum.
10.3 Loan Agreement, dated as of April 18, 1996, by and
among Bayport Restaurant Group, Inc., Crab House,
Inc. and Landry's Seafood Restaurants, Inc.
10.4 Agreement Regarding Credit Facility, dated as of
April 18, 1996, among The First National Bank of
Boston, as Agent, The First National Bank of Boston
and Capital Bank, Bayport Restaurant Group, Inc.,
Crab House, Inc., Capt. Crab's Take-Away of 79th St.,
Inc., Take-Away/Kings Shopping Plaza, Inc., Cryotech
Industries of North Carolina, Inc. and Landry's
Seafood Restaurants, Inc.
10.5 Amendment No. 2 to Revolving Credit Agreement, dated
March 21, 1996, among The First National Bank of
Boston as Agent, The First National Bank of Boston
and Capital Bank, Bayport Restaurant Group, Inc.,
Crab House, Inc., Cap't. Crab's Take-Away of 79th
St., Inc., Take-Away/Kings Shopping Plaza, Inc. and
Cryotech Industries of North Carolina, Inc.
7
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
BAYPORT RESTAURANT GROUP, INC.
Date: April 30, 1996 By: /s/ WILLIAM D. KORENBAUM
------------------------
William D. Korenbaum,
President
8
===============================================================================
AGREEMENT AND PLAN OF MERGER
Among
LANDRY'S SEAFOOD RESTAURANTS, INC.,
LANDRY'S ACQUISITION, INC.
and
BAYPORT RESTAURANT GROUP, INC.
---------------
Dated as of April 18, 1996
===============================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
ARTICLE 1 DEFINITIONS................................................................................. 1
Section 1.1 Definitions......................................................... 1
ARTICLE 2 - THE CLOSING; THE MERGER; EFFECTS OF THE MERGER............................................. 6
Section 2.1 Closing............................................................. 6
Section 2.2 The Merger.......................................................... 7
Section 2.3 Effects of the Merger, Certificate and By-laws; Directors
and Officers........................................................ 7
ARTICLE 3 - MERGER CONSIDERATION; CONVERSION OF SHARES................................................. 7
Section 3.1 Conversion of Shares................................................ 7
Section 3.2 Exchange of Certificates............................................ 8
Section 3.3 Stock Options....................................................... 11
Section 3.4 Exchange Ratio Adjustment........................................... 12
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF BAYPORT........................................................... 13
Section 4.1 Organization........................................................ 13
Section 4.2 Affiliated Entities................................................. 13
Section 4.3 Capitalization...................................................... 14
Section 4.4 Authority; Enforceable Agreements................................... 14
Section 4.5 No Conflicts or Consents............................................ 15
Section 4.6 Corporate Documents, Stockholder Agreements and Board
of Directors........................................................ 15
Section 4.7 SEC Documents; Financial Statements; Liabilities.................... 16
Section 4.8 Accounts Receivable................................................. 17
Section 4.9 Absence of Certain Changes or Events................................ 17
Section 4.10 Contracts........................................................... 19
Section 4.11 Properties and Leases............................................... 20
Section 4.12 Condition of Bayport's Assets....................................... 21
Section 4.13 Voting Requirements................................................. 21
Section 4.14 Accounting Matters.................................................. 21
Section 4.15 Suppliers and Customers............................................. 21
Section 4.16 Employee Matters.................................................... 22
Section 4.17 Employee Benefit Plans.............................................. 22
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(Continued)
PAGE
----
<S> <C>
Section 4.18 Tax Matters......................................................... 25
Section 4.19 Litigation.......................................................... 27
Section 4.20 Insurance........................................................... 27
Section 4.21 Environmental Compliance............................................ 28
Section 4.22 Compliance With Law; Permits........................................ 29
Section 4.23 Interests in Clients, Suppliers, Etc................................ 29
Section 4.24 Transactions With Related Parties................................... 29
Section 4.25 Statements are True and Correct..................................... 30
Section 4.26 Broker's and Finder's Fee........................................... 30
Section 4.27 Disclosure.......................................................... 30
Section 4.28 Trademarks, Tradenames, etc......................................... 31
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF LANDRY'S AND SUB.................................................. 31
Section 5.1 Organization........................................................ 31
Section 5.2 Affiliated Entities................................................. 31
Section 5.3 Capitalization...................................................... 31
Section 5.4 Authority; Enforceable Agreements................................... 32
Section 5.5 No Conflicts or Consents............................................ 33
Section 5.6 Corporate Documents, Stockholder Agreements and Board
of Directors........................................................ 33
Section 5.7 SEC Documents; Financial Statements; Liabilities.................... 33
Section 5.8 Absence of Certain Changes or Events................................ 34
Section 5.9 Contracts........................................................... 36
Section 5.10 Environmental Compliance............................................ 36
Section 5.11 Accounting Matters.................................................. 37
Section 5.12 Employee Matters.................................................... 38
Section 5.13 Employee Benefit Plans.............................................. 38
Section 5.14 Litigation.......................................................... 38
Section 5.15 Legality of Landry's Stock.......................................... 39
Section 5.16 Statements are True and Correct..................................... 39
Section 5.17 No Stockholder Vote................................................. 39
Section 5.18 Broker's and Finder's Fee........................................... 39
Section 5.19 Disclosure.......................................................... 39
Section 5.20 Trademarks, Tradenames, etc......................................... 40
Section 5.21 Compliance With Law; Permits........................................ 40
Section 5.22 Properties and Leases............................................... 40
Section 5.23 Tax Matters......................................................... 41
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(Continued)
PAGE
----
<S> <C>
Section 5.24 Interests in Clients, Suppliers, Etc................................ 43
Section 5.25 Transactions With Related Parties................................... 43
ARTICLE 6 PRE-CLOSING COVENANTS....................................................................... 44
Section 6.1 Hart-Scott-Rodino; Cooperation and Best Efforts..................... 44
Section 6.2 Registration Statement and Proxy Statement; Bayport
Special Meeting..................................................... 44
Section 6.3 Conduct of Business By Both Parties Prior to the Closing
Date................................................................ 45
Section 6.4 Conduct of Business By Bayport Prior to the Closing
Date................................................................ 46
Section 6.5 No Solicitations.................................................... 48
Section 6.6 Press Releases...................................................... 49
Section 6.7 Access to Information and Confidentiality........................... 49
Section 6.8 Consultation and Reporting.......................................... 50
Section 6.9 Update Schedules.................................................... 50
Section 6.10 Bayport SEC Filings................................................. 50
Section 6.11 Sub Stockholder Approval............................................ 50
Section 6.12 Change in Control Agreements........................................ 50
Section 6.13 Bayport Group Affiliates Agreement.................................. 51
Section 6.14 Phase One........................................................... 51
ARTICLE 7 - CLOSING CONDITIONS......................................................................... 51
Section 7.1 Conditions Applicable to All Parties................................ 51
Section 7.2 Conditions to Landry's Obligations.................................. 52
Section 7.3 Conditions to Bayport's Obligations................................. 54
Section 7.4 Waiver of Conditions................................................ 56
ARTICLE 8 - POST-CLOSING COVENANTS..................................................................... 56
Section 8.1 Use of Bayport Name................................................. 56
Section 8.2 Indemnification of Directors and Officers of Bayport................ 56
Section 8.3 Publication of Post-Merger Results.................................. 57
Section 8.4 Employee Benefits................................................... 57
Section 8.5 Registration Rights................................................. 57
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(Continued)
PAGE
----
<S> <C>
ARTICLE 9 - TERMINATION................................................................................ 57
Section 9.1 Termination......................................................... 57
Section 9.2 Effect of Termination............................................... 58
Section 9.3 Acquisition of Bayport Properties................................... 58
ARTICLE 10 - MISCELLANEOUS............................................................................. 59
Section 10.1 Notices............................................................. 59
Section 10.2 Governing Law....................................................... 60
Section 10.3 Counterparts........................................................ 60
Section 10.4 Interpretation; Schedules........................................... 60
Section 10.5 Entire Agreement; Severability...................................... 61
Section 10.6 Amendment and Modification.......................................... 61
Section 10.7 Extension; Waiver................................................... 61
Section 10.8 Binding Effect; Benefits............................................ 61
Section 10.9 Assignability....................................................... 62
Section 10.10 Expenses............................................................ 62
Section 10.11 Gender and Certain Definitions...................................... 62
Section 10.12 Survival of Representations and Warranties.......................... 62
Section 10.13 Effect of Due Diligence............................................. 62
Section 10.14 Further Assurances.................................................. 62
</TABLE>
-iv-
<PAGE>
LIST OF SCHEDULES
Schedule 4.2
Schedule 4.5(a)
Schedule 4.5(b)
Schedule 4.7(b)
Schedule 4.7(d)
Schedule 4.7(f)
Schedule 4.7(g)
Schedule 4.8
Schedule 4.9
Schedule 4.10
Schedule 4.11
Schedule 4.11(a)
Schedule 4.11(d)
Schedule 4.12
Schedule 4.16(a)
Schedule 4.17(a)
Schedule 4.17(b)
Schedule 4.17(k)
Schedule 4.17(m)
Schedule 4.18
Schedule 4.19
Schedule 4.20
Schedule 4.23
Schedule 4.24(a)
Schedule 4.24(b)
Schedule 4.26
Schedule 4.28
Schedule 5.2(b)
Schedule 5.5(a)
Schedule 5.8
Schedule 5.9(b)
Schedule 5.10(b)
Schedule 5.10(c)
Schedule 5.10(d)
Schedule 5.13
Schedule 5.14
Schedule 5.22(b)
Schedule 5.23(a)(ii)
Schedule 5.23(a)(vi)
Schedule 5.23(a)(ix)
Schedule 5.23(a)(xii)
-v-
<PAGE>
LIST OF SCHEDULES
(Continued)
Schedule 5.24
Schedule 5.25(a)
Schedule 5.25(b)
Schedule 6.3
Schedule 6.4
Schedule 6.4(c)
Schedule 6.4(d)
Schedule 6.4(e)
Schedule 6.13
-vi-
<PAGE>
LIST OF ATTACHMENTS
Attachment "A" - List of Landry's Subsidiaries
-vii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER dated as of April 18, 1996 is by and
among Landry's Seafood Restaurants, Inc., a Delaware corporation ("Landry's"),
Landry's Acquisition, Inc., a wholly owned subsidiary of Landry's and a Florida
corporation ("Sub"), and Bayport Restaurant Group, Inc., a Florida corporation
("Bayport").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Landry's, Sub and
Bayport deem it desirable to merge Sub into Bayport (the "Merger") with the
result that Bayport shall become a wholly owned subsidiary of Landry's pursuant
to the terms and conditions hereof;
WHEREAS, it is the parties' mutual intent that the Merger constitute a
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code") and that this Agreement constitute a plan of reorganization
thereunder;
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling-of-interests;
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties agree as follows:
ARTICLE 1 DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the
following terms when capitalized have the meanings indicated.
"ADJUSTED EXCHANGE RATIO" shall mean (a) if the Average Market Price is
between $15.00 and $22.00: .2105 minus the product of .0526 and the ratio of
Excess Build-Out Costs and/or the Excess Pre-Opening Costs (as defined in
Section 3.4), calculated separately, divided by the outstanding Bayport Common
Stock plus Bayport Preferred Stock (the "Outstanding Bayport Stock"); (b) if the
Average Market Price is greater than $22.00: the quotient of (x) 4.63 minus the
fraction determined by dividing the Excess Build-Out Costs and/or the Excess
Pre-Opening Costs, calculated separately, by the Outstanding Bayport Stock
divided by (y) the Average Market Price; and (c) if the Average Market Price is
less than $15.00; the quotient of (xx) 3.16 minus the fraction determined by
dividing the Excess Build-Out Costs and/or the Excess Pre-Opening Costs,
calculated separately, by the Outstanding Bayport Stock divided by (yy) the
Average Market Price.
"AFFILIATE" shall have the meaning ascribed by Rule 12b-2 promulgated
under the Exchange Act.
1
<PAGE>
"AGREEMENT" shall mean this Agreement and Plan of Merger, including the
Schedules and Exhibits hereto, all as amended or otherwise modified from time to
time.
"AVERAGE MARKET PRICE" shall mean the average of the daily closing
prices of a share of Landry's Common Stock on the Nasdaq-National Market as
reported in THE WALL STREET JOURNAL for the five consecutive trading days that
end on the second trading day prior to the Closing Date.
"BAYPORT AUDITED FINANCIAL STATEMENTS" shall mean the audited
consolidated balance sheets and related statements of income, stockholders'
equity and cash flows, and the related notes thereto of Bayport as of and for
the years ended December 27, 1993, December 26, 1994 and December 25, 1995.
"BAYPORT COMMON STOCK" means the shares of Bayport common stock, $.001
par value per share.
"BAYPORT FINANCIAL STATEMENTS" shall mean the Bayport Audited
Financial Statements and the Bayport Interim Financial Statements, if any,
collectively.
"BAYPORT GROUP" shall mean Bayport and any entity in which Bayport
directly or indirectly owns at least 20% of its equity interest.
"BAYPORT INTERIM FINANCIAL STATEMENT" shall mean the unaudited balance
sheet and the related unaudited statements of earnings and cash flow of Bayport
as of and for the three-month period ended March 26, 1996.
"BAYPORT LATEST BALANCE SHEET" shall mean the most current balance
sheet of Bayport included in the Bayport Financial Statements.
"BAYPORT NON-QUALIFIED OPTIONS" shall mean any and all outstanding
non-qualified options granted to employees, officers, directors and others,
except for options outstanding under the Bayport Stock Option Plans.
"BAYPORT PREFERRED STOCK" shall mean the shares of Bayport Series B
Convertible Preferred Stock $.01 par value per share.
"BAYPORT STOCK OPTIONS" shall mean the Bayport Non-qualified Options
and any options granted and outstanding pursuant to the Bayport Stock Option
Plans.
"BAYPORT STOCK OPTION PLANS" shall mean collectively Bayport's 1995
Stock Option Plan, 1993 Stock Option Plan, 1985 Stock Option Plan, and any other
Bayport Non-qualified Stock Option Plan.
2
<PAGE>
"BAYPORT WARRANTS" shall mean warrants issued to the former partners of
Bayport Partners Limited Partners ("BPLP"), and to Alex. Brown & Sons
Incorporated, and any other outstanding warrants to purchase shares of Bayport
Common Stock.
"BENEFIT ARRANGEMENT" means any employment, severance or similar
contract, or any other contract, plan, policy or arrangement (whether or not
written) providing for compensation, bonus, profit-sharing, stock option or
other stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured arrangement),
health or medical benefits, disability benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health,
medical or life insurance benefits), other than the Employee Plans, that (A) is
maintained, administered or contributed to by any member of the Bayport Group or
Landry's Affiliated Group, as the case may be, and (B) covers any employee or
former employee of any such member.
"BUSINESS DAY" shall mean a day other than a Saturday, a Sunday or a
day on which national banks or the New York Stock Exchange is closed.
"CLOSING DATE" shall have the meaning ascribed to it in Section 2.1(a).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"DGCL" shall mean the General Corporation Law of the State of
Delaware, as amended.
"EFFECTIVE DATE" shall have the meaning ascribed to it in Section
2.1(b) hereof
"EFFECTIVE TIME" shall have the meaning ascribed to it in Section
2.1(b) hereof.
"EMPLOYEE PLAN " means a plan or arrangement as defined in Section 3(3)
of ERISA, that (A) is subject to any provision of ERISA, (B) is maintained,
administered or contributed to by any member of the Bayport Group or Landry's
Affiliated Group, as the case may be, and (C) covers any employee or former
employee of any such member.
"ENVIRONMENTAL LAWS" shall have the meaning ascribed to it in Section
4.21.
"ERISA " means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE RATIO", except as set forth in Sections 3.1 or 3.4,
shall mean .2105.
"FLORIDA BCA" shall mean the Florida Business Corporation Act, as
amended.
3
<PAGE>
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"HSR REPORT" shall mean the premerger notification and report form to
be filed under the HSR Act.
"KNOWLEDGE OF BAYPORT" shall mean the actual knowledge of David J.
Connor, William D. Korenbaum, Dennis Snuszka, David Kirincic or Ruth Stack, all
being executive officers of Bayport, without obligation to conduct further
inquiry outside the ordinary course of business.
"KNOWLEDGE OF LANDRY'S" shall mean the actual knowledge of Tilman J.
Fertitta, E. A. Jaksa, Jr., Steven L. Scheinthal or Paul S. West, all being
executive officers of Landry's, without obligation to conduct further inquiry
outside the ordinary course of business.
"LANDRY'S AFFILIATED GROUP" shall mean Landry's, Sub, and those
entities listed on Attachment "A" hereto.
"LANDRY'S AUDITED FINANCIAL STATEMENTS" shall mean the audited balance
sheets, and the related statements of earnings, stockholders' equity and cash
flows, and the related notes thereto of Landry's as of and for the years ended
December 31, 1993, 1994 and 1995.
"LANDRY'S COMMON STOCK" shall mean shares of Landry's common stock,
$.01 par value per share.
"LANDRY'S FINANCIAL STATEMENTS" shall mean the Landry's Audited
Financial Statements and the Landry's Interim Financial Statements, if any.
"LANDRY'S INTERIM FINANCIAL STATEMENTS" shall mean the unaudited
balance sheet, and the related unaudited statements of earnings and cash flows
of Landry's as of and for the three-month period ended March 31, 1996.
"LANDRY'S BALANCE SHEET" shall mean the most current balance sheet
included in the Landry's Financial Statements.
"LANDRY'S PREFERRED STOCK" shall mean the shares of Landry's Preferred
Stock, $.01 par value per share. Such Landry's Preferred Stock shall have the
same preferences, rights, terms and conditions as the Bayport Preferred Stock.
"LANDRY'S STOCK OPTION PLANS" shall mean Landry's 1993 Stock Option
Plan, Landry's 1995 Flexible Incentive Plan, Landry's Non-Employee Director
Plan, and the Landry's Seafood Restaurant's Stock Option Plan.
4
<PAGE>
"LIENS" shall mean pledges, liens, defects, leases, licenses, equities,
conditional sales contracts, charges, claims, encumbrances, security interests,
easements, restrictions, chattel mortgages, mortgages or deeds of trust, of any
kind or nature whatsoever.
"MATERIAL ADVERSE EFFECT" shall mean with respect to any party, a
material adverse effect on the financial condition, results of operations,
leases or construction of restaurants, business or prospects of such party and
its 20% or more owned direct and indirect subsidiaries, taken as a whole.
"MULTIEMPLOYER PLAN" means a plan or arrangement as defined in Section
4001(a)(3) and 3(37) of ERISA.
"PERMITTED LIENS" shall mean any mechanic's, worker's, materialmen's,
operator's, or other liens arising as a matter of law in the ordinary course of
business.
"PERSON" shall mean an individual, firm, corporation, general or
limited partnership, limited liability company, limited liability partnership,
joint venture, trust, governmental authority or body, association,
unincorporated organization or other entity.
"PRE-CLOSING PERIODS" shall mean all Tax periods ending at or before
the Effective Time and, with respect to any Tax period that includes but does
not end at the Effective Time, the portion of such period that ends at and
includes the Effective Time.
"PREFERRED EXCHANGE RATIO" shall be the Exchange Ratio divided by four.
"PROXY STATEMENT" shall mean the proxy statement of Bayport to be
included in the Registration Statement for the purpose of obtaining the approval
of the stockholders of Bayport of this Agreement and the prospectus of Landry's
to be included in the Registration Statement for the purpose of offering the
Landry's Common Stock to the Bayport stockholders upon consummation of the
Merger.
"REGISTRATION STATEMENT" shall mean the registration statement on Form
S-4 to be filed by Landry's with the SEC for the purpose, among other things, of
registering the Landry's Common Stock which will be issued to the holders of
Bayport Common Stock upon consummation of the Merger.
"RETURNS" shall mean all returns, reports, estimates, declarations and
statements of any nature regarding Taxes for any Pre-Closing Period required to
be filed by the taxpayer relating to its income, properties or operations.
"SEC" shall mean the Securities and Exchange Commission of the United
States.
5
<PAGE>
"SEC DOCUMENTS" shall mean all reports, schedules, forms, statements
and other documents filed with the SEC since January 1, 1994.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SPECIAL MEETING " shall have the meaning ascribed in Section 6.2(c)
hereof.
"SURVIVING CORPORATION" shall mean Bayport following the Effective
Time.
"TAXES" shall mean any federal, state, local, foreign or other taxes
(including, without limitation, income, alternative minimum, franchise,
property, sales, alcohol, liquor, beer, wine, use, lease, excise, premium,
payroll, wage, employment or withholding taxes), fees, duties, assessments,
withholdings or governmental charges of any kind whatsoever (including interest,
penalties and additions to tax).
"TITLE IV PLAN" means an Employee Plan, other than any Multiemployer
Plan, subject to Title IV of ERISA.
ARTICLE 2 - THE CLOSING; THE MERGER; EFFECTS OF THE
MERGER
Section 2.1 CLOSING. (a) The closing of the transactions contemplated
herein (the "Closing") will take place, assuming satisfaction or waiver of each
of the conditions set forth in Article 7 hereof, at the offices of Winstead
Sechrest & Minick P.C., 910 Travis, Suite 1700, Houston, Texas at 9:00 A.M.
(Central Time) on a date to be mutually agreed upon between the parties, which
shall be no earlier than (i) at Landry's sole discretion thirty-one Business
Days after the receipt by Landry's of the proceeds of an underwritten public
offering including any additional proceeds that might be received as a result of
sales to cover over-allotments of Common Stock of at least 3,500,000 shares and
(ii) the satisfaction of the conditions set forth in Article 7, or if no date
has been agreed to, on any date specified by one party to the other upon five
days' notice following satisfaction of the conditions set forth in clauses (i)
and (ii) above; provided that the limitation set forth in clause (i) if not
earlier satisfied shall be deemed satisfied as of December 21, 1996 (the date of
the Closing being referred to herein as the "Closing Date").
(b) At the Closing, the parties shall (i) deliver the documents,
certificates and opinions required to be delivered by Article 7 hereof, (ii)
provide proof or indication of the satisfaction or waiver of each of the
conditions set forth in Article 7 hereof, (iii) cause the appropriate officers
of Bayport and Sub to execute and deliver the Articles of Merger, attaching a
Plan of Merger (the "Articles of Merger") in substantially the form attached as
Exhibit A hereto and (iv) consummate the Merger by causing to be filed the
properly executed Articles of Merger with the Secretary of State of the State of
Florida in accordance with the provisions of the Florida BCA. The Merger shall
be effective upon filing of the Article of Merger with the Secretary of
6
<PAGE>
State of Florida (such date and time being hereinafter referred to respectively
as the "Effective Date" and the "Effective Time").
Section 2.2 THE MERGER. Subject to the terms and conditions of this
Agreement, Sub shall be merged with and into Bayport at the Effective Time.
Following the Merger, the separate corporate existence of Sub shall cease and
Bayport shall be the Surviving Corporation and shall succeed to and assume all
the rights and obligations of Sub in accordance with the Florida BCA.
Section 2.3 EFFECTS OF THE MERGER, CERTIFICATE AND BY-LAWS;
DIRECTORS AND OFFICERS.
(a) The Merger shall have the effects specified in Florida BCA.
(b) The Articles of Incorporation of Bayport, as amended and restated
and in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation thereafter unless and until amended
in accordance with its terms and as provided by law.
(c) The By-laws of Sub as in effect at the Effective Time shall be the
By-laws of the Surviving Corporation thereafter unless and until amended in
accordance with their terms, the terms of the Certificate of Incorporation of
the Surviving Corporation and as provided by law.
(d) The directors and officers of Sub at the Effective Time shall be
the directors and officers of the Surviving Corporation thereafter, each to hold
a directorship or office in accordance with the Certificate of Incorporation and
By-laws of the Surviving Corporation until their respective successors are duly
elected and qualified.
ARTICLE 3 - MERGER CONSIDERATION; CONVERSION OF SHARES
Section 3.1 CONVERSION OF SHARES. (a) At the Effective Time,
by virtue of the Merger and without any further action on the part of Landry's,
Sub, Bayport or the Surviving Corporation, or any holder of any of the following
securities:
(i) each share of common stock of Sub issued and outstanding at
the Effective Time shall be converted into one share of the
common stock, $.001 par value per share, of the Surviving
Corporation;
(ii) each issued share of Bayport Common Stock that is held in
treasury by Bayport or held by any subsidiary of Bayport shall
be cancelled and no stock of Landry's or other consideration
shall be delivered in exchange therefor;
(iii) each share of Bayport Common Stock issued and outstanding at
the Effective Time shall be converted into the right to
receive the Exchange Ratio (as it may be adjusted as provided
herein) of a fully paid and nonassessable share of Landry's
7
<PAGE>
Common Stock provided that if the Average Market Price of a
share of Landry's Common Stock is (a) greater than $22.00 than
the Exchange Ratio shall equal that number obtained by
dividing $4.63 by the Average Market Price or (b) less than
$15.00 than the Exchange Ratio shall equal that number
obtained by dividing $3.16 by the Average Market Price.;
(iv) each share of Bayport Preferred Stock issued and outstanding
at the Effective Time shall be converted into the right to
receive the Preferred Exchange Ratio of a fully paid and
non-assessable share of Landry's Preferred Stock.
As used herein, the "Merger Consideration" shall mean the rights of
holders of Bayport Common Stock and Bayport Preferred Stock to receive Landry's
Common Stock and Landry's Preferred Stock, or, in certain circumstances as set
forth in Section 3.2(e)(ii) hereof, cash.
(b) Upon conversion of the shares of Bayport Common Stock and
Bayport Preferred Stock into the Merger Consideration in the manner described in
paragraphs 3.1(a)(iii) and 3.1(a)(iv) above, each record holder of issued and
outstanding Bayport Common Stock and Bayport Preferred Stock immediately prior
to the Effective Time shall have the right to receive a certificate representing
such number of shares of Landry's Common Stock or Landry's Preferred Stock
(rounded down to the nearest whole share) equal to the product of (A) the
Exchange Ratio or, where applicable the Preferred Exchange Ratio, and (B) the
number of issued and outstanding shares of Bayport Common Stock or Bayport
Preferred Stock of which such Person is the record holder immediately prior to
the Effective Time.
Section 3.2 EXCHANGE OF CERTIFICATES. (a) As of the Effective Date,
Landry's shall deposit with American Stock Transfer Company or such company as
may be designated by Landry's (and reasonably acceptable to Bayport) (the
"Exchange Agent"), for the benefit of the holders of shares of Bayport Common
Stock and Bayport Preferred Stock, for exchange in accordance with this Article
3, through the Exchange Agent, certificates representing the shares of Landry's
Common Stock and Landry's Preferred Stock (such shares of Landry's Common Stock
and Landry's Preferred Stock being hereinafter referred to as the "Exchange
Fund") issuable pursuant to Section 3.1 in exchange for outstanding shares of
Bayport Common Stock and Bayport Preferred Stock. Except as contemplated by
Section 3.2(f), the Exchange Fund shall not be used for any other purpose.
Landry's agrees to make available to the Exchange Agent from time to time as
needed, cash sufficient to pay cash in lieu of fractional shares.
(b) As soon as reasonably practicable after the Effective Time,
Landry's shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Bayport Common Stock or Bayport Preferred
Stock (the "Certificates") whose shares were converted into the right to receive
shares of Landry's Common Stock or Landry's Preferred Stock (collectively
"Landry's Stock") pursuant to Section 3.1, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the
8
<PAGE>
Certificates to the Exchange Agent, and which shall be in such form and have
such other provisions as Landry's may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing shares of Landry's Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of shares
of Landry's Stock (rounded down to the nearest whole share) which such holder
has the right to receive pursuant to the provisions of this Article 3 after
taking into account all the shares of Bayport Common Stock or Bayport Preferred
Stock then held by such holder under all such Certificates so surrendered and/or
cash in lieu of fractional shares of Landry's Stock to which such holder is
entitled pursuant to Section 3.2(e)(ii), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Bayport
Common Stock which is not registered in the transfer records of Bayport, a
certificate representing the proper number of shares of Landry's Stock may be
issued to a person other than the person in whose name the Certificate so
surrendered is registered, if, upon presentation to the Exchange Agent, such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the issuance of shares of Landry's Stock to a person
other than the registered holder of such Certificate or establish to the
reasonable satisfaction of Landry's that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.2(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certificate representing
shares of Landry's Stock and cash in lieu of any fractional shares of Landry's
Stock as contemplated by this Section 3.2. No interest will be paid or will
accrue on any cash payable pursuant to this Article 3.
(c) No dividends or other distributions with respect to Landry's Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Landry's Stock
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 3.2(e) until the holder of record of
such Certificate shall surrender such Certificate. Following surrender of any
such Certificate, there shall be paid to the record holder of the certificate
representing whole shares of Landry's Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any cash payable in
lieu of a fractional share of Landry's Stock to which such holder is entitled
pursuant to Section 3.2(e)and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Landry's Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole shares of Landry's Common
Stock.
(d) All shares of Landry's Stock issued upon the surrender for exchange
of shares of Bayport Common Stock or Bayport Preferred Stock in accordance with
the terms hereof (including any cash paid pursuant to Section 3.2(c) or 3.2(e))
shall be deemed to have been
9
<PAGE>
issued in full satisfaction of all rights pertaining to such shares of Bayport
Common Stock or Bayport Preferred Stock, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Bayport Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
3.
(e) (i) No certificates or scrip representing fractional shares of
Landry's Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of Landry's.
(ii) In lieu of the issuance of fractional shares of Landry's
Common Stock or Landry's Preferred Stock, each holder of record of issued and
outstanding shares of Bayport Common Stock and Bayport Preferred Stock, as the
case may be, as of the Effective Time shall be entitled to receive a cash
payment (without interest) (each a "Fractional Payment" and, collectively, the
"Fractional Payments") equal to the fair market value of the fractional share of
Landry's Common Stock to which such holder would be entitled but for this
provision (assuming in the case of Landry's Preferred Stock, the immediate
conversion thereof to Landry's Common Stock). For purposes of calculating such
cash payment, the fair market value of a fraction of a share of Landry's Common
Stock shall be such fraction multiplied by the Average Market Price.
(f) Any portion of the Exchange Fund which remains undistributed to the
holders of the Certificates for six months after the Effective Time shall be
delivered to Landry's, upon demand, and any holders of the Certificates who have
not theretofore complied with this Article
3 shall thereafter look only to Landry's for payment of their claim for Landry's
Stock, any cash in lieu of fractional shares of Landry's Stock and any dividends
or distributions with respect to Landry's Stock.
(g) None of Landry's, Sub, Bayport or the Exchange Agent shall be
liable to any person in respect of any shares of Landry's Stock (or dividends or
distributions with respect thereto) or cash that the Exchange Agent delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by the Surviving Corporation or
Landry's, the posting by such person of a bond in such reasonable amount as the
Surviving Corporation or Landry's may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the shares of
Landry's Stock and any cash in lieu of fractional shares, and unpaid dividends
and distributions on shares of Landry's Stock deliverable in respect thereof,
pursuant to this Agreement.
10
<PAGE>
Section 3.3 STOCK OPTIONS. (a) As soon as practicable following the
date of this Agreement, the Board of Directors of Bayport (or, if appropriate,
any committee administering the Bayport Stock Option Plans) shall adopt such
resolutions or take such other actions as may be required to effect the
following with respect to all options to purchase shares of Bayport Common Stock
granted under the Bayport Stock Option Plans or otherwise ("Options") not
exercised prior to the Closing Date:
(i) adjust the terms of all such Options to purchase shares of
Bayport Common Stock to provide that, at the Effective Time, each
Option outstanding immediately prior to the Effective Time shall be
deemed to constitute an option to acquire, on substantially the same
terms and conditions (including full exercisability at such time as
such Option shall be exercisable by its terms), as were applicable to
such Option under the terms of such Option and the applicable Bayport
Stock Option Plans, the same number of shares of Landry's Common Stock
(rounded down to the nearest whole share) as the holder of such Option
would have been entitled to receive pursuant to the Merger had such
holder exercised such Option in full immediately prior to the Effective
Time, at a price per share equal to (y) the aggregate exercise price
for the shares of Bayport Common Stock otherwise purchasable pursuant
to such Option divided by (z) the number of shares of Landry's Common
Stock deemed purchasable pursuant to such Option; PROVIDED, HOWEVER,
that (i) no certificate or scrip representing fractional shares of
Landry's Common Stock shall be issued in respect of any Option as
adjusted pursuant to this Section 3.3 and (ii) any such fractional
share will not entitle the owner thereof to vote or to any rights of a
shareholder of Landry's; PROVIDED, FURTHER, that in the case of any
option to which Section 421 of the Code applies by reason of its
qualification under any of Section 422 of the Code ("qualified stock
options"), the option price, the number of shares purchasable pursuant
to such option and the terms and conditions of exercise of such option
shall be determined in order to comply with Section 424(a) of the Code;
and
(ii) make such other changes to the Bayport Stock Option Plans
as it deems appropriate to give effect to the Merger (subject to the
approval of Landry's, which shall not be unreasonably withheld).
(b) The provisions in the Bayport Stock Option Plans providing for the
issuance, transfer or grant of any capital stock of Bayport or any interest in
respect of any capital stock of the Bayport shall be deleted as of the Effective
Time, and Bayport shall use its best efforts to ensure that following the
Effective Time no holder of an Option or any participant in any Bayport Stock
Option Plan shall have any right thereunder to acquire any capital stock of
Bayport, Landry's or the Surviving Corporation, except as provided in Section
3.3(a).
(c) As soon as practicable after the Effective Time, Landry's shall
deliver to the holders of Options appropriate notices setting forth such
holder's rights pursuant to the respective Bayport Stock Option Plans and the
agreements evidencing the grants of such Options shall continue in effect on the
same terms and conditions (subject to the adjustments required by this
11
<PAGE>
Section 3.3 after giving effect to the Merger). Except as otherwise provided in
this Section 3.3, Landry's shall comply with the terms of the Bayport Stock
Option Plans and ensure, to the extent required by, and subject to the
provisions of such Bayport Stock Option Plans, that the Options which qualified
as incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time.
(d) Landry's agrees to use reasonable efforts to take such actions as
are necessary for the conversion of the Options in accordance with this Section
3.3, including (i) the reservation, issuance and listing of Landry's Common
Stock as is necessary to effectuate the transactions contemplated by Section
3.3(a), (ii) entering into such agreements as are necessary to assume such
Options and (iii) the filing of a registration statement or statements on Form
S-8 and/or S-3, if necessary, to facilitate the public sale of stock issuable
upon the exercise of such Options.
(e) A holder of an Option adjusted in accordance with this Section
3.3 may exercise such adjusted Option in whole or in part in accordance with its
terms by delivering a properly executed notice of exercise to Landry's, together
with the consideration therefor and the Federal withholding tax information, if
any, required in accordance with the related Bayport Stock Option Plans.
(f) All Bayport Warrants issued and outstanding as of the Effective
Time shall have their terms automatically adjusted at the Effective Time so that
each Bayport Warrant outstanding immediately prior to the Effective Time shall
be deemed to constitute a warrant to acquire, on substantially the same terms
and conditions as were applicable to such Bayport Warrant under the terms of
such Bayport Warrant, the same number of shares of Landry's Common Stock
(rounded down to the nearest whole share) as the holder of such Bayport Warrant
would have been entitled to receive pursuant to the Merger had such holder
exercised such Bayport Warrant in full immediately prior to the Effective Time,
at a price per share equal to (y) the aggregate exercise price for the shares of
Bayport Common Stock otherwise purchasable pursuant to such Bayport Warrant
divided by (z) the number of shares of Landry's Common Stock deemed purchasable
pursuant to such Bayport Warrant; PROVIDED, HOWEVER, that (i) no certificate or
scrip representing fractional shares of Landry's Common Stock shall be issued in
respect of any Bayport Warrant as adjusted pursuant to this Section 3.3 and (ii)
any such fractional share will not entitle the owner thereof to vote or to any
rights of a shareholder of Landry's.
Section 3.4 EXCHANGE RATIO ADJUSTMENT. (a) In determining the Exchange
Ratio, the parties have agreed to an estimate of the costs to complete
construction (the "Build-out Costs") and the pre-opening costs (the "Pre-Opening
Costs") of certain designated Restaurants (the "In-process Restaurants"). The
aggregate of such Build-out Costs has been stipulated to be $13,000,000 and the
aggregate of the Pre-Opening Costs have been stipulated to be $1,650,000. In the
event as of the Closing Date the estimated Build-Out Costs and/or the
Pre-Opening Costs, respectively, as determined by Landry's in good faith (the
"Landry's Estimate") exceed the Build-out Costs (the "Excess Build-Out Costs")
and/or the Pre-Opening Costs (the "Excess Pre-Opening Costs"), respectively, the
applicable Exchange Ratio shall be adjusted to be equal
12
<PAGE>
to the Adjusted Exchange Ratio, and such Adjusted Exchange Ratio shall for all
purposes of this Agreement be deemed the Exchange Ratio. No less than five days
prior to the Closing Date, Landry's shall provide to Bayport the Landry's
Estimate. The parties agree that the adjustment to the Exchange Ratio provided
for in this Section 3.4 shall be Landry's sole and exclusive remedy in the event
that the Landry's Estimate exceeds the Build-out Costs and/or the Pre-Opening
Costs and, notwithstanding anything to the contrary contained herein, in no
event shall such excess be deemed a breach of a representation, warranty or
covenant of Bayport hereunder.
(b) In the event Bayport disagrees with the determination of Landry's
Estimate, Bayport shall notify Landry's prior to the Closing Date and, such
Closing Date shall be postponed for a period not to exceed seven days during
which time the parties shall attempt to mutually determine an estimate of actual
and projected construction and pre-opening costs for the In-process Restaurants.
If, within such seven days Landry's and Bayport cannot reach a mutually
acceptable determination, one of the six nationally recognized accounting firms
which is not auditing the financial statements of either Bayport or Landry's,
mutually agreed to by the parties, shall determine the revised Build-out Costs,
and Pre-Opening Costs; the Excess Build-Out Cost and the Excess Pre-Opening
Costs. In no event shall the Exchange Ratio or the Adjusted Exchange Ratio be
greater than that set forth in Section 3.1 hereof.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF BAYPORT
Bayport represents and warrants to Landry's and Sub, as of the date
hereof that except as set forth in the Schedules numbered to correspond to the
applicable representation or warranty:
Section 4.1 ORGANIZATION. (a) Bayport is a corporation duly organized,
validly existing and in good standing under the laws of the state of Florida and
has all corporate power and authority to carry on its business as now being
conducted and to own its properties. Each other member of the Bayport Group is
duly organized under the laws of the state of its organization and has all the
requisite power and authority under the laws of such jurisdiction to carry on
its business as now being conducted and to own its properties. Each member of
the Bayport Group is duly qualified to do business and is in good standing in
each state in which the character or location of the properties owned or leased
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect on Bayport.
Section 4.2 AFFILIATED ENTITIES. (a) Schedule 4.2 lists each member
of the Bayport Group. All shares of the outstanding capital stock or equity
interests in each member of the Bayport Group have been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to
preemptive rights and except with respect to Bayport, are owned by Bayport, by
another member of the Bayport Group, which is wholly owned by Bayport, or by
13
<PAGE>
Bayport and another member of the Bayport Group, which is wholly owned by
Bayport, free and clear of all Liens.
(b) Except as listed on Schedule 4.2, Bayport does not, directly or
indirectly, own of record or beneficially, or have the right or obligation to
acquire, any outstanding securities or other interest in any corporation,
partnership, joint venture or other entity.
Section 4.3 CAPITALIZATION. (a) The authorized capital stock of Bayport
consists exclusively of 50,000,000 shares of Bayport Common Stock of which
9,655,599 shares were issued and outstanding and no shares were held in its
treasury as of March 29, 1996, and 15,000,000 shares of Bayport Preferred Stock
of which 2,136,499 were outstanding as of March 29, 1996 (giving the holders
thereof the right to convert such Bayport Preferred Stock into 534,124 shares of
Bayport Common Stock), and no additional shares of Bayport's capital stock have
been issued from such date to the date of this Agreement (except for any shares
issued upon exercise of Bayport Stock Options). All of such issued and
outstanding shares of Bayport Common Stock and Bayport Preferred Stock have been
validly issued, are fully paid and nonassessable and were issued free of
preemptive rights, in compliance with any rights of first refusal, and in
compliance with all legal requirements. No share of capital stock of Bayport has
been, or may be required to be, reacquired by Bayport for any reason or is, or
may be required to be, issued by Bayport for any reason, including, without
limitation, by reason of any option, warrant, security or right convertible into
or exchangeable for such shares, or any agreement to issue any of the foregoing,
except for shares of Bayport Common Stock issuable upon (i) the exercise of the
Bayport Stock Options (with such outstanding Bayport Options giving holders
thereof the right to acquire, in the aggregate, 2,111,500 shares of Bayport
Common Stock as of March 29, 1996 whether or not vested), (ii) the exercise of
rights associated with the Bayport Warrants (with such Bayport Warrants giving
the holders thereof the right to acquire, in the aggregate, 691,566 shares of
Bayport Common Stock as of April 15, 1996), or (iii) the conversion of 2,136,499
shares of Bayport Preferred Stock.
Section 4.4 AUTHORITY; ENFORCEABLE AGREEMENTS. (a) Subject to obtaining
approval of the holders of not less than a majority of the outstanding Bayport
Common Stock and Bayport Preferred Stock, voting as separate classes if required
by the Florida BCA, Bayport has the requisite corporate power and authority to
enter into this Agreement and to consummate the transactions described herein.
The execution and delivery of this Agreement by Bayport and the consummation by
Bayport of the transactions described herein have been duly authorized by all
necessary corporate action on the part of Bayport, except for the affirmative
vote of the holders of not less than a majority of the outstanding Bayport
Common Stock and Bayport Preferred Stock, voting as separate classes if required
by the Florida BCA, which shall have been obtained prior to the Effective Time.
(b) This Agreement has been duly executed and delivered by Bayport, and
(assuming due execution and delivery by the other parties hereto) constitutes a
valid and binding obligation of Bayport, enforceable in accordance with its
terms, except as such enforceability may be
14
<PAGE>
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and general equitable principles and provided that
the Merger may not be effected without the affirmative vote of the holders of
not less than a majority of the outstanding Bayport Common Stock and Bayport
Preferred Stock, voting as separate classes if required by the Florida BCA. The
Funding Agreement entered into by Bayport in connection with this Agreement has
been, or will be, duly executed and delivered by Bayport, and (assuming due
execution and delivery by the other parties thereto) constitutes, or will
constitute, a valid and binding obligation of Bayport, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
and general equitable principles.
Section 4.5 NO CONFLICTS OR CONSENTS. (a) Except as set forth on
Schedule 4.5(a), neither the execution, delivery or performance of this
Agreement by Bayport nor the consummation of the transactions contemplated
hereby will (i) violate, conflict with, or result in a breach of any provision
of, constitute a default (or an event that, with notice or lapse of time or
both, would constitute a default) under, result in the termination of, or
accelerate the performance required by, or result in the creation of any adverse
claim against any of the properties or assets of any member of the Bayport Group
under, (A) the Articles of Incorporation, By-laws or any other organizational
documents of any member of the Bayport Group, or (B) any note, bond, mortgage,
indenture, deed of trust, lease, license, agreement or other instrument or
obligation to which any member of the Bayport Group is a party, or by which any
member of the Bayport Group or any of its assets are bound, or (ii) subject to
obtaining clearance under the HSR Act and effectiveness of the Registration
Statement, violate any order, writ, injunction, decree, judgment, statute, rule
or regulation of any governmental body to which any member of the Bayport Group
is subject or by which any member of the Bayport Group or any of the assets of
the foregoing are bound.
(b) Except as set forth on Schedule 4.5(b), no consent, approval,
order, permit or authorization of, or registration, declaration or filing with,
any Person or of any government or any agency or political subdivision thereof
is required for the execution, delivery and performance by Bayport of this
Agreement and the covenants and transactions contemplated hereby or for the
execution, delivery and performance by Bayport of any other agreements entered,
or to be entered, into by Bayport in connection with this Agreement, except for
(i) the filing of the HSR Report by Bayport under the HSR Act and the early
termination or expiration of all applicable waiting periods thereunder, (ii) the
filing of the Proxy Statement included in the Registration Statement described
in Section 6.2 hereof with the SEC and the declaration of effectiveness thereof
by the SEC and the filing of other SEC required documents, (iii) the affirmative
vote of the holders of a majority of the outstanding Bayport Common Stock and
Bayport Preferred Stock, required to approve the Merger and (iv) the filing of
the Articles of Merger as provided in Section 2.1(b) hereof.
Section 4.6 CORPORATE DOCUMENTS, STOCKHOLDER AGREEMENTS AND
BOARD OF DIRECTORS. Bayport has delivered to Landry's true and complete copies
of its Articles of Incorporation and
15
<PAGE>
By-laws, as amended or restated through the date of this Agreement and the
organizational documents governing each member of the Bayport Group listed on
Schedule 4.2. The minute books of each member of the Bayport Group, contain
reasonably complete and accurate records of all corporate actions of the equity
owners of the various entities and of the boards of directors or other governing
bodies, including committees of such boards or governing bodies. The stock
transfer records of Bayport are maintained by its transfer agent and registrar
and, to the Knowledge of Bayport, contain complete and accurate records of all
issuances and redemptions of stock by Bayport. Except for outstanding Bayport
Stock Options and Bayport Warrants, neither Bayport nor, to the Knowledge of
Bayport, any of its Affiliates, is a party to any agreement with respect to the
capital stock of Bayport other than this Agreement.
Section 4.7 SEC DOCUMENTS; FINANCIAL STATEMENTS; LIABILITIES. (a)
Bayport has timely filed all required reports, schedules, forms, statements and
other documents with the SEC since January 1, 1994 (the "Bayport SEC
Documents"). The Bayport SEC Documents, and any such reports, forms and
documents filed by Bayport with the SEC after the date hereof, as amended,
complied, or will comply, as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Bayport SEC Documents, and none of the Bayport SEC Documents contained or will
contain any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Bayport SEC
Document has been superseded by a later filed Bayport SEC Document, none of the
Bayport SEC Documents contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) The Bayport Financial Statements included in the Bayport SEC
Documents have been audited by Grant Thornton LLP, independent accountants (in
the case of the Bayport Audited Financial Statements) in accordance with
generally accepted auditing standards, have been prepared in accordance with
United States generally accepted accounting principles applied on a basis
consistent with prior periods, and present fairly the financial position of
Bayport at such dates and the results of operations and cash flows for the
periods then ended. Except as set forth on Schedule 4.7(b), no member of the
Bayport Group has, nor are any of their respective assets subject to, any
liability, commitment, debt or obligation (of any kind whatsoever whether
absolute or contingent, accrued, fixed, known, unknown, matured or unmatured)
("Undisclosed Liabilities"), except (i) as and to the extent reflected on the
Bayport Latest Balance Sheet, or (ii) as may have been incurred or may have
arisen since the date of the Bayport Latest Balance Sheet in the ordinary course
of business and that are not material individually or in the aggregate or are
permitted by this Agreement.
(c) The Bayport Latest Balance Sheet includes appropriate reserves for
all Taxes and other liabilities incurred as of such date but not yet payable.
16
<PAGE>
(d) Except as set forth on Schedule 4.7(d), since the date of the
Bayport Latest Balance Sheet, there has been no change that has had or is likely
to have a Material Adverse Effect on Bayport.
(e) The statements of income included in the Bayport Financial
Statements do not contain any income or revenue realized from services that the
Surviving Corporation would be prohibited or restricted from offering after the
Effective Time pursuant to any covenant or provision in any material contract to
which any member of the Bayport Group is a party.
(f) Schedule 4.7(f) sets forth the budgets prepared by Bayport
establishing estimated costs of construction of In-Process Restaurants and
pre-opening expenses which accurately disclose the actual amounts expended and
to be expended for such costs and expenses including all capitalized costs of
any nature.
(g) Schedule 4.7(g) lists the average inventory of each restaurant
store, the North Carolina crab processing plant, and the Jacksonville central
distribution warehouse, in existence as of the dates noted therein.
Section 4.8 ACCOUNTS RECEIVABLE. All of the accounts receivable
reflected on the Bayport Latest Balance Sheet or created thereafter have arisen
only from BONA FIDE transactions in the ordinary course of business, represent
valid obligations owing to Bayport or another member of the Bayport Group and
have been accrued and recorded in accordance with generally accepted accounting
principles. Except as set forth on Schedule 4.8, such accounts receivable will
be collectible in full when due, without any counterclaims, set-offs or other
defenses and without provision for any allowance for uncollectible accounts
other than such allowance as appears on the Bayport Latest Balance Sheet.
Section 4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on Schedule 4.9, or in the Bayport SEC Documents, since the date of the Bayport
Latest Balance Sheet each member of the Bayport Group has conducted its business
only in the ordinary course, and has not:
(a) amended its Articles of Incorporation, By-laws or similar
organizational documents;
(b) incurred any liability or obligation of any nature (whether
absolute or contingent, accrued, fixed, known, unknown, matured or unmatured),
except in the ordinary course of business provided that the execution of a real
estate lease for a restaurant site shall not be considered an obligation
incurred in the ordinary course of business;
(c) suffered or permitted any of its assets to be or remain subject to
any mortgage or other encumbrance other than those disclosed on Schedule 4.11
and that collateralize indebtedness reflected on the Bayport Latest Balance
Sheet and Permitted Liens;
17
<PAGE>
(d) merged or consolidated with another entity or acquired or agreed to
acquire any business or any corporation, partnership or other business
organization, or sold, leased, or otherwise disposed of any assets except for
fair value and in the ordinary course of business;
(e) made any capital expenditure or commitment therefor, except in the
ordinary course of business, provided that any acquisition of restaurants or
restaurant sites, or acquisitions of, or improvements to, real property, shall
not be considered to be in the ordinary course of business;
(f) declared or paid any dividend or made any distribution with respect
to any of its equity interests, or redeemed, purchased or otherwise acquired any
of its equity interests, or issued, sold or granted any equity interests or any
option, warrant or other right to purchase or acquire any such interest other
than (i) issuances of Bayport Common Stock upon the exercise of any Bayport
Stock Option, the conversion of any Bayport Preferred Stock, or the exercise of
any Bayport Warrant; or (ii) the acceptance by Bayport of any shares of Bayport
Common Stock in consideration of the exercise of the Bayport Stock Options or in
satisfaction of any tax or tax withholding obligations of the holders of such
Bayport Stock Options in accordance with the Bayport Stock Option Plans;
(g) adopted any employee benefit plan or made any change in any
existing employee benefit plans or made any bonus or profit sharing distribution
or payment of any kind or granted any stock options;
(h) increased indebtedness for borrowed money, or made any loan to any
Person, other than through the issuance of standby or performance letters of
credit issued in the ordinary course of business;
(i) made any change affecting any banking, safe deposit or power
of attorney arrangements;
(j) written off as uncollectible any notes or accounts receivable, or
employee or non-employee loans, except for notes or accounts receivable in the
ordinary course of business which in the aggregate do not exceed $10,000;
(k) entered into or amended any employment, severance or similar
agreement or arrangement with any director or employee, or granted any increase
in the rate of wages, salaries, bonuses or other compensation or benefits of any
executive officer or other salaried employee.
(l) cancelled, waived, released or otherwise compromised any
debt, claim or right, except as permitted under clause (j);
(m) made any change in any accounting principle or practice or
method or application thereof;
18
<PAGE>
(n) suffered the termination, suspension or revocation of any
license or permit necessary for the operation of its business;
(o) entered into any transaction other than on an arm's-length
basis;
(p) suffered any damage, destruction or loss (whether or not covered by
insurance) which has had or could reasonably be anticipated to have (after
giving effect to any insurance benefit either (i) that has been received or (ii)
the payment obligation for which has been acknowledged by the insurer) a
Material Adverse Effect on Bayport;
(q) agreed, whether or not in writing, to do any of the foregoing;
(r) suffered any stop work orders, notices of lien or notices
of failure of permits or any matter which would prevent or delay the
construction of a restaurant; or
(s) materially decrease the weekly average inventory of any
restaurant or house bank accounts in any restaurant.
Section 4.10 CONTRACTS. Except as set forth on Schedule 4.10 or in any
Bayport SEC Document no member of the Bayport Group is a party to: (i) any
collective bargaining agreement; (ii) any written or oral employment or other
agreement or contract with or commitment to any salaried employee; (iii) any
agreement, contract or commitment containing any covenant limiting its freedom
to engage in any line of business or to compete with any Person or to open or
operate a restaurant within a certain area or any restaurant owned or operated
by Bayport; (iv) any oral or written obligation of guaranty or indemnification
arising from any agreement, contract or commitment, except as provided in its
Articles of Incorporation; (v) any joint venture, partnership or similar
contract involving a sharing of profits or expenses; (vi) any non-disclosure
agreement, non-competition agreement, agreement with an officer, director or
employee of any member of the Bayport Group, tax indemnity, tax sharing or tax
allocation agreement or severance, bonus or commission agreement; (vii) any
agreement or contract under which any member of the Bayport Group is the
licensee of computer software or other intellectual property with a per unit
cost greater than $2,500; (viii) any contract between any member of the Bayport
Group and any of their respective Affiliates (other than other members of the
Bayport Group); (ix) any indenture, mortgage, loan, credit, sale-leaseback or
similar contract under which any member of the Bayport Group has borrowed any
money or issued any note, bond or other evidence of indebtedness for borrowed
money or guaranteed indebtedness for money borrowed by others; (x) any hedge,
swap, exchange, futures or similar agreements or contracts in an amount in
excess of $25,000; or (xi) any other oral or written agreement, contract or
commitment that has had or may have a Material Adverse Effect on Bayport. There
is no existing breach by any member of the Bayport Group of, nor is there any
pending or to the Knowledge of Bayport threatened claim that, any member of the
Bayport Group has breached any of the terms or conditions of any of its material
agreements, contracts or
19
<PAGE>
commitments, and to the Knowledge of Bayport, no other parties to such
agreements, contracts or commitments have breached any of its terms or
conditions.
Section 4.11 PROPERTIES AND LEASES. (a) With respect to assets, each
member of the Bayport Group has, except with respect to assets disposed of in
the ordinary course of business (none of which are material to the operations of
its business) or such assets as are no longer used or useful in the conduct of
its business, good and valid title to all real property and all other properties
and assets reflected in the Bayport Latest Balance Sheet free and clear of all
Liens, except for (i) Liens that secure indebtedness that is properly reflected
in the Bayport Latest Balance Sheet; (ii) Liens for Taxes accrued but not yet
payable; (iii) Permitted Liens, provided that the obligations collateralized by
such Permitted Liens are not delinquent or are being contested in good faith and
in no event shall the obligations collateralized by any such contested Permitted
Liens in the aggregate exceed $150,000; (iv) such imperfections of title and
encumbrances, if any, as do not materially detract from the value or materially
interfere with the present use of any such properties or assets or the potential
sale of any such properties and assets and (v) capital leases and leases of such
properties, if any, to third parties for fair and adequate consideration.
Schedule 4.11(a) contains a list of all Liens (other than Permitted Liens) and
equipment leases in an amount in excess of $25,000 or property collateralizing
indebtedness on the Bayport Latest Balance Sheet and any guaranty or other
credit support arrangement pursuant to which any member of the Bayport Group has
guaranteed an obligation of any other member of the Bayport Group where assets
are the collateral. A member of the Bayport Group owns, or has valid leasehold
interests in, all properties and assets used in the conduct of its business.
(b) With respect to each lease of any real property, or a material
amount of other personal property, to which a member of the Bayport Group is a
party (i) such member of the Bayport Group has a valid leasehold interest in
such real property or personal property; (ii) such lease is in full force and
effect in accordance with its terms; (iii) all rents and other monetary amounts
that have become due and payable thereunder have been paid in full; (iv) no
waiver, indulgence or postponement of the obligations thereunder has been
granted by the other party thereto; (v) there exists no material default (or an
event that, with notice or lapse of time or both would constitute a material
default) under such lease; (vi) such member of the Bayport Group has not
violated any of the material terms or conditions under any such lease and to the
Knowledge of Bayport there has been no (A) condition or covenant to be observed
or performed by any other party under any such lease that has not been fully
observed and performed and (B) in the case of each lease concerning demised
premises subleased to any member of the Bayport Group, condition or covenant to
be observed or performed by any other party thereto that has not been fully
observed and performed and there does not exist any event of default or event,
occurrence, condition or act that, with the giving of notice, the lapse of time
or the happening of any further event or condition, would become a default under
any such prime lease; and (vii) except as set forth on Schedule 4.5(b), the
transactions described in this Agreement will not constitute a default under or
cause for termination or modification of any such lease.
20
<PAGE>
(c) To the Knowledge of Bayport, the rent charged to any member of the
Bayport Group under any lease, between any member of the Bayport Group and any
of its Affiliates (other than another member of the Bayport Group) is at or
below the market rate as of the time such lease was entered into, and any such
lease contains such other terms and conditions that are no less favorable to
Bayport than would be obtainable in an arms-length transaction with an
independent third party lessor.
(d) Schedule 4.11(d) contains a list of all real property owned by
members of the Bayport Group and a list of all leases to which the members of
the Bayport Group are parties.
Section 4.12 CONDITION OF BAYPORT'S ASSETS. Except as set forth on
Schedule 4.12, all of the material tangible assets of the Bayport Group which
are being used in the business of the Bayport Group are currently in good and
usable condition, ordinary wear and tear excepted, and there is no deferred
maintenance requirements on any such assets which would require an expenditure
in excess of $10,000 per store. To the Knowledge of Bayport, there are no
defects in such assets or other conditions that have or would be reasonably
likely to have a Material Adverse Effect on Bayport. Such assets and the other
properties being leased by a member of the Bayport Group pursuant to the leases
described on Schedule 4.11(d), constitute all of the material operating assets
being utilized by the Bayport Group in the conduct of its business and such
assets are sufficient in quantity and otherwise adequate for the operations of
the Bayport Group as currently conducted.
Section 4.13 VOTING REQUIREMENTS. The affirmative vote of a majority of
the outstanding shares of Bayport Common Stock and Bayport Preferred Stock
entitled to vote on the Merger (voting as separate classes if required by the
Florida BCA) and required by Bayport's Articles of Incorporation or the Florida
BCA, is the only vote of the holders of any class or series of Bayport's capital
stock necessary to approve this Agreement and the transactions described herein.
Section 4.14 ACCOUNTING MATTERS. No member of the Bayport Group, nor to
the Knowledge of Bayport any of its Affiliates, has taken or agreed to take any
action that (without giving effect to any action taken or agreed to be taken by
Landry's or any of its Affiliates) would prevent Landry's from accounting for
the business combination to be effected by the Merger as a pooling-of-interests.
Upon execution of this Agreement, Bayport will have received a letter from its
independent public accountants to the effect that if the Merger were to be
consummated on the date of this Agreement, Bayport qualifies as an entity that
may be a party to a business combination for which the pooling-of-interests
method of accounting would be available.
Section 4.15 SUPPLIERS AND CUSTOMERS. To the Knowledge of Bayport, (a)
no supplier providing products, materials or services to any member of the
Bayport Group intends to cease selling such products, materials or services to
any member of the Bayport Group or to limit or reduce such sales to any member
of the Bayport Group or materially alter the terms or conditions of any such
sales and (b) no customer of any member of the Bayport Group intends to
terminate,
21
<PAGE>
limit or reduce its or their business relations with any member of the Bayport
Group except where such action would not have a Material Adverse Effect on
Bayport. Notwithstanding the foregoing, no representation or warranty is
provided that any supplier or customer of Bayport will continue to do business
with Landry's after the consummation of the Merger.
Section 4.16 EMPLOYEE MATTERS. (a) Schedule 4.16(a) sets forth the
name, title, current annual compensation rate (including bonus and commissions),
current base salary rate, accrued bonus, accrued sick leave, accrued severance
pay and accrued vacation benefits of each salaried employee of each member of
the Bayport Group. Copies of organizational charts, any employee handbook(s),
and any reports and/or plans prepared or adopted pursuant to the Equal
Employment Opportunity Act of 1972, as amended, have been provided to Landry's.
(b) Each of the following is true with respect to the Bayport
Group:
(i) to the Knowledge of Bayport, each such member is in
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages and
hours and occupational safety and health, and is not engaged in any
unfair labor practice within the meaning of Section 8 of the National
Labor Relations Act, and there is no proceeding pending or to the
Knowledge of Bayport threatened, or, any investigation pending or to
the Knowledge of Bayport threatened against it relating to any thereof,
and to the Knowledge of Bayport there is no basis for any such
proceeding or investigation;
(ii) none of the employees of any such member is a
member of, or represented by, any labor union and there are no efforts
being made to unionize any of such employees; and
(iii) there are no charges of, formal, informal or internal
complaints of, or proceedings involving, discrimination or harassment
(including but not limited to discrimination or harassment based upon
sex, age, marital status, race, religion, color, creed, national
origin, sexual preference, handicap or veteran status) pending or to
the Knowledge of Bayport threatened, nor is there any investigation
pending or to the Knowledge of Bayport threatened, including, but not
limited to, investigations before the Equal Employment Opportunity
Commission or any federal, state or local agency or court, with respect
to any such member.
Section 4.17 EMPLOYEE BENEFIT PLANS. With respect to any member
of the Bayport Group:
(a) Schedule 4.17(a) lists each Employee Plan that each member of the
Bayport Group maintains, administers, contributes to, or has any contingent
liability with respect thereto. Bayport has provided a true and complete copy of
each such Employee Plan, current summary plan description, (and, if applicable,
related trust documents) and all amendments thereto,
22
<PAGE>
together with (i) the three most recent annual reports, if any, prepared in
connection with each such Employee Plan (Form 5500 including, if applicable,
Schedule B thereto); (ii) the most recent actuarial report, if any, and trust
reports prepared in connection with each Employee Plan; (iii) all material
communications received from or sent to the Internal Revenue Service ("IRS") or
the Department of Labor ("DOL") within the last two years (including a written
description of any material oral communications relating to the IRS Voluntary
Compliance Resolution or Closing Agreement Programs); (iv) the most recent IRS
determination letter with respect to each Employee Plan and the most recent
application for a determination letter, both as applicable; (v) all insurance
contracts or other funding arrangements, currently in force; and (vi) an
actuarial study of any post-employment life or medical benefits provided, if
any.
(b) Schedule 4.17(b) identifies each Benefit Arrangement that each
member of the Bayport Group maintains, administers, contributes to, or has any
contingent liability with respect thereto. Bayport has furnished to Landry's
copies or descriptions of each Benefit Arrangement and any of the information
set forth in Section 4.17(a) applicable to any such Benefit Arrangement. Each
Benefit Arrangement has been maintained and administered in substantial
compliance with its terms and with the requirements (including reporting
requirements, if any) prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangement.
(c) Benefits under any Employee Plan or Benefit Arrangement are as
represented in said documents and have not been increased or modified (whether
written or not written) subsequent to the dates of such documents. To the
Knowledge of Bayport, no member of the Bayport Group has communicated to any
employee or former employee any intention or commitment to modify any Employee
Plan or Benefit Arrangement or to establish or implement any other employee or
retiree benefit or compensation arrangement.
(d) No Employee Plan is (i) a Multiemployer Plan, (ii) a Title IV Plan
or (iii) is maintained in connection with any trust described in Section
501(c)(9) of the Code. No member of the Bayport Group has ever maintained or
become obligated to contribute to any employee benefit plan (i) that is subject
to Title IV of ERISA, (ii) to which Section 412 of the Code applies, or (iii)
that is a Multiemployer Plan. No member of the Bayport Group has within the last
five years engaged in, or is a successor corporation to an entity that has
engaged in, a transaction described in Section 4069 of ERISA.
(e) Each Employee Plan which is intended to be qualified under Section
40l(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, and no event has occurred since such adoption that
would adversely affect such qualification and each trust created in connection
with each such Employee Plan forming a part thereof is exempt from tax pursuant
to Section 501(a) of the Code. A favorable determination letter has been issued
by the IRS as to the qualification of each such Employee Plan for which a
determination is available under the Code and to the effect that each such trust
is exempt from taxation under Section 501(a) of the Code. Each Employee Plan has
been maintained and administered in
23
<PAGE>
substantial compliance with its terms and with the requirements (including
reporting requirements, if any) prescribed by any and all applicable statutes,
orders, rules and regulations, including but not limited to ERISA and the Code.
(f) Full payment has been made of all amounts which any member of the
Bayport Group is or has been required to have paid as contributions to or
benefits due under any Employee Plan or Benefit Arrangement under applicable law
or under the terms of any such plan or any arrangement.
(g) No member of the Bayport Group, or any of their respective
directors, officers or employees has engaged in any transaction with respect to
an Employee Plan that could subject Bayport to a tax, penalty or liability for a
prohibited transaction, as defined in Section 406 of ERISA or Section 4975 of
the Code. None of the assets of any Employee Plan are invested in employer
securities or employer real property.
(h) To the Knowledge of Bayport, there are no facts or circumstances
that might give rise to any liability under Title I of ERISA.
(i) No member of the Bayport Group has any current or projected
liability in respect of post-retirement or post-employment welfare benefits for
retired, current or former employees, except as required to avoid excise tax
under Section 4980B of the Code, relating to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA").
(j) There is no litigation, administrative or arbitration proceeding to
the Knowledge of Bayport or other dispute pending or threatened that involves
any Employee Plan or Benefit Arrangement.
(k) No employee or former employee of any member of the Bayport Group
will become entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced benefit (including acceleration of an award, vesting
or exercise of an incentive award) or any fee or payment of any kind solely as a
result of any of the transactions contemplated hereby, except as disclosed on
Schedule 4.17(k) and no such disclosed payment constitutes a parachute payment
described in Section 280G of the Code, except as disclosed on Schedule 4.17(k).
(l) To the Knowledge of Bayport, all group health plans (as defined in
Code Section 5000(b)(1)) of any member of the Bayport Group have at all times
fully complied with all applicable notification and continuation coverage
requirements of Section 4980B(f) of the Code and Section 601 of ERISA, and the
regulations promulgated thereunder. Further, no Employee Plan provides health,
medical, death or survivor benefits to any stockholders or directors who are not
employees, former employees or beneficiaries thereof, except to the extent
otherwise required by the continuation requirements of Section 4980B(f) of the
Code and Section 601 of ERISA, and to the Knowledge of Bayport there are no
claims by terminated employees with respect thereto.
24
<PAGE>
(m) Except as set forth on Schedule 4.17(m), no employee or former
employee, officer or director of any member of the Bayport Group is or will
become entitled to receive any award under a Bayport discretionary or other
bonus plans.
(n) All obligations under any such Employee Plans have been in the
aggregate, accrued on the Bayport Financial Statements to the extent required
(including items relating to vesting via passage of time or as a result of the
Merger).
Section 4.18 TAX MATTERS.
(a) Except as set forth on Schedule 4.18, each of the following is true
with respect to each member of the Bayport Group to the extent applicable to
such member:
(i) all Returns required to be filed have been filed,
including legal periods permitted by extensions, by each member of the
Bayport Group when due in accordance with all applicable laws; all
Taxes shown on the Returns have been timely paid when due; the Returns
have been properly completed in compliance in all material respects
with all applicable laws and regulations and completely and accurately
reflect the facts regarding the income, expenses, properties, business
and operations required to be shown thereon; the Returns are not
subject to penalties under Section 6662 of the Code (or any
corresponding provision of state, local or foreign tax law);
(ii) each member of the Bayport Group has paid all Taxes
required to be paid by it (whether or not shown on a Return) or for
which it is liable (provided that it shall not be considered a breach
of this representation if it is ultimately determined that additional
tax payments are due but such assessment is based on an adjustment to a
return or position, if such member has a reasonable basis for the
position taken with respect to such Taxes), whether to taxing
authorities or to other persons under tax allocation agreements, and
the charges, accruals, and reserves for Taxes due, or accrued but not
yet due, relating to its income, properties, transactions or operations
for any Pre-Closing Period as reflected on its books (including,
without limitation, the Bayport Latest Balance Sheet) are adequate in
the aggregate to cover such Taxes;
(iii) there are no agreements or consents currently in effect
for the extension or waiver of the time (A) to file any Return or (B)
for assessment or collection of any Taxes relating to the income,
properties or operations of any member of the Bayport Group, and to the
Knowledge of the Bayport Group no member the Bayport Group has been
requested to enter into any such agreement or consent;
(iv) there are no Tax liens (other than for current
Taxes not yet due and payable) upon the assets of any member of the
Bayport Group;
25
<PAGE>
(v) all material elections with respect to Taxes
affecting any member of the Bayport Group are set forth in
Schedule 4.18;
(vi) all Taxes that the Bayport Group is required by law to
withhold or collect have been duly withheld or collected, and have been
timely paid over to the appropriate governmental authorities to the
extent due and payable (provided that it shall not be considered a
breach of this representation if it is ultimately determined that
additional tax payments are due but such assessment is based on an
adjustment to a return or position, if such member has a reasonable
basis for the position taken with respect to such withholding and
collection);
(vii) Schedule 4.18 hereto sets forth (A) the taxable years
of each member of the Bayport Group as to which the respective statutes
of limitations (as defined in Code Section 6501(a) without application
of exceptions contained in other provisions of Code Section 6501) with
respect to Taxes (limited, however, to Taxes imposed by the Code) have
not expired, and (B) with respect to such taxable years, those years
for which examinations have not been completed, those years for which
examinations are currently being conducted, those years for which
examinations have not been initiated, and those years for which
required Returns have not yet been filed. Schedule 4.18 lists each
state in which any member of the Bayport Group has, at any time within
the three year period ending on the date hereof, filed a Return.
(viii) all Tax deficiencies which have been claimed, proposed
or asserted against any member of the Bayport Group have been fully
paid or finally settled, and no issue has been raised in any
examination which, by application of similar principles to the same or
a similar factual situation or practice, can be expected to result in
the proposal or assertion of a Tax deficiency for any other year not so
examined;
(ix) to the Knowledge of Bayport, each member of the
Bayport Group has complied in all material respects with all applicable
Tax laws;
(x) no member of the Bayport Group is a party to any
agreement, contract, arrangement or plan that would result, separately
or in the aggregate, in the payment of any "excess parachute payments"
within the meaning of Code Section 280G (or any comparable provision of
state or local law);
(xi) no member of the Bayport Group has agreed, nor is it
required, to make any adjustment under Code Section 481(a) (or any
comparable provision of state or local law) by reason of a change in
accounting method or otherwise;
(xii) no member of the Bayport Group has filed a consent
pursuant to the collapsible corporation provisions of Section 341(f) of
the Code (or any corresponding provision of state, local or foreign
income law) or agreed to have Section 341(f)(2) of the
26
<PAGE>
Code (or any corresponding provision of state, local or foreign income
law) apply to any disposition of any asset owned by it;
(xiii) none of the assets of any member of the Bayport Group
is property that such company is required to treat as being owned by
any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Internal Revenue Code of
1954 as in effect prior to January 1, 1984;
(xiv) none of the assets of any member of the Bayport Group
directly or indirectly secures any debt, the interest on which is tax
exempt under Section 103(a) of the Code;
(xv) none of the assets of any member of the Bayport
Group is "tax-exempt use property" within the meaning of Section 168(h)
of the Code;
(xvi) no member of the Bayport Group has made a deemed
dividend election under Section 1.1502-32(f)(2) of the Treasury
Regulations or a consent dividend election under Section 565 of the
Code;
(xvii) since 1990, no member of the Bayport Group has ever
been a member of an affiliated group (used herein as defined in Section
1504 of the Code) other than an affiliated group of which Bayport is
the parent corporation;
(xviii) since 1990, no member of the Bayport Group is (or has
ever been) a party to any tax sharing agreement nor has any such member
assumed the tax liability of any other person under contract.
Section 4.19 LITIGATION. Except as disclosed on Schedule 4.19, there
are no actions, suits, proceedings, arbitrations, claims or investigations
pending or, to the Knowledge of Bayport, threatened before any court, any
governmental agency or instrumentality or any arbitration panel, against or
affecting any member of the Bayport Group or any of the directors, officers, or
employees of the Bayport Group which could reasonably be expected to have
Material Adverse Effect on Bayport. To the Knowledge of Bayport, no facts or
circumstances exist that would be likely to result in the filing of any such
action that could reasonably be expected to have a Material Adverse Effect on
Bayport. Except as disclosed on Schedule 4.19, no member of the Bayport Group is
subject to any currently pending judgment, order or decree entered in any
lawsuit or proceeding.
Section 4.20 INSURANCE. Schedule 4.20 contains a list of the insurance
policies that each member of the Bayport Group currently maintains or maintained
in 1995, with respect to its business, properties and employees each of which is
in full force and effect and a complete and correct copy of each has been
delivered to Landry's. All insurance premiums currently due with respect to such
policies have been paid and no member of the Bayport Group is otherwise in
27
<PAGE>
default with respect to any such policy, nor has any member of the Bayport Group
failed to give any notice or to present any claim under any such policy. No
member of the Bayport Group has received notice of cancellation or non-renewal
of any such policy. Such policies are sufficient for substantial compliance with
all material requirements of law and all agreements to which any member of the
Bayport Group is a party.
Section 4.21 ENVIRONMENTAL COMPLIANCE. (a) Except where the absence of,
or non-compliance with, would not reasonably be expected to have a Material
Adverse Effect on Bayport, each member of the Bayport Group possesses all
necessary licenses, permits and other approvals and authorizations that are
required under, and are, and to the Knowledge of Bayport at all times in the
past have been, in compliance with, all federal, state, local and foreign laws,
common law duties, ordinances, codes and regulations relating to pollution or
the protection of the environment (collectively, "Environmental Laws"),
including without limitation all Environmental Laws governing the generation,
use, collection, treatment, storage, transportation, recovery, removal,
discharge or disposal of hazardous substances or wastes, and all Environmental
Laws imposing record-keeping, maintenance, testing, inspection, notification and
reporting requirements with respect to hazardous substances or wastes. For
purposes of this Agreement, "hazardous substances" and "hazardous wastes" are
materials defined as "hazardous substances," "hazardous wastes," or "hazardous
constituents" in (i) the Comprehensive-Environ-mental Response, Compensation and
Liability Act of 1980 42 U.S.C. Sections 9601-9675, as amended by the Superfund
Amendments and Reauthorization Act of 1986, and any amendments thereto and
regulations thereunder; (ii) the Resource Conservation and Recovery Act of 1976,
42 U.S.C. Sections 6901-6992, as amended by the Hazardous and Solid Waste
Amendments of 1984, and any amendments thereto and regulations thereunder; (iii)
the Oil Pollution Act of 1990, 33 U.S.C. Sections 2701-2761, and any amendments
thereto and regulations thereunder; or (iv) any other federal, state, local or
foreign environmental law or regulation.
(b) No member of the Bayport Group is, nor has it been, subject to any
administrative or judicial proceeding pursuant to, or has received any notice of
any violation of, or claim alleging liability under, any Environmental Laws,
and, to the Knowledge of Bayport, no facts or circumstances exist that would be
likely to result in a claim, citation or allegation against any member of the
Bayport Group for a violation of, or alleging liability under, any Environmental
Laws that could reasonably be expected to have a Material Adverse Effect on
Bayport.
(c) There are no underground tanks of any type (including tanks storing
gasoline, diesel fuel, oil or other petroleum products) or disposal sites for
hazardous substances, hazardous wastes or any other waste, located on or under
the real estate currently owned, leased or used by any member of the Bayport
Group and to the Knowledge of Bayport there were no such disposal sites located
on or under the real estate previously owned, leased or used by any member of
the Bayport Group on the date of the sale thereof by any member of the Bayport
Group or during the period of lease for use by any member of the Bayport Group.
28
<PAGE>
(d) Except in the ordinary course of business, and in all cases in
compliance with Environmental Laws, no member of the Bayport Group has engaged
any third party to handle, transport or dispose of hazardous substances or
wastes (including for this purpose, gasoline, diesel fuel, oil or other
petroleum products, or bilge waste) on its behalf.
Section 4.22 COMPLIANCE WITH LAW; PERMITS. Other than compliance with
Environmental Laws which is covered in Section 4.21: (a) the operations and
activities of each member of the Bayport Group comply in all respects material
to its business with all applicable laws, regulations, ordinances, rules or
orders of any federal, state or local court or any governmental authority except
for any violation or failure to comply that could not reasonably be expected to
result in a Material Adverse Effect on Bayport, and
(b) except to the extent that failure to comply will not have a
Material Adverse Effect on the conduct of its business, each member of the
Bayport Group possesses all governmental licenses, permits and other
governmental authorizations that are (i) required under all federal, state and
local laws and regulations for the ownership, use and operation of its assets or
(ii) otherwise necessary to permit the conduct of its business without
interruption, and such licenses, permits and authorizations are in full force
and effect and have been and are being fully complied with by it except for any
violation or failure to comply that could not reasonably be expected to result
in a Material Adverse Effect on Bayport. No member of the Bayport Group has
received any notice of any violation of any of the terms and conditions of any
such license, permit or authorization and, to the Knowledge of Bayport, no facts
or circumstances exist that would form the reasonable basis of a revocation,
claim, citation or allegation against it for a violation of any such license,
permit or authorization. No such license, permit or authorization or any renewal
thereof will be terminated, revoked, suspended, modified or limited in any
respect as a result of the transactions contemplated by this Agreement except
for any violation or failure to comply that could not reasonably be expected to
result in a Material Adverse Effect on Bayport.
Section 4.23 INTERESTS IN CLIENTS, SUPPLIERS, ETC. Except as set forth
in Schedule 4.23, no officer or director of any member of the Bayport Group
possesses, directly or indirectly, any financial interest in, or is a director,
officer or employee of, any corporation or business organization that is a
supplier, customer, lessor, lessee, or competitor or potential competitor of the
Bayport Group or that has entered into any material contract with any member of
the Bayport Group. Ownership of less than 1% of any class of securities of a
company whose securities are registered under the Exchange Act will not be
deemed to be a financial interest for purposes of this Section 4.23.
Section 4.24 TRANSACTIONS WITH RELATED PARTIES. (a) Schedule 4.24(a)
lists all transactions between January 1, 1993 and the date of this Agreement
involving or for the benefit of any member of the Bayport Group, on the one
hand, and any director or officer of any member of the Bayport Group or
Affiliate of such director or officer, on the other hand, including, (i) any
debtor or creditor relationship, (ii) any transfer or lease of real or personal
29
<PAGE>
property, (iii) wages, salaries, commissions, bonuses and agreements relating to
employment and (iv) purchases or sales of products or services.
(b) Schedule 4.24(b) lists (i) all agreements and claims of any
nature that any officer or director of any member of the Bayport Group or any
Affiliate (other than another member of the Bayport Group) of such officer or
director has with or against any member of the Bayport Group as of the date of
this Agreement that are not identified on the Bayport Latest Balance Sheet and
(ii) all agreements and claims of any nature that any member of the Bayport
Group has with or against any officer or director of any member of the Bayport
Group or any Affiliate (other than another member of the Bayport Group) of such
officer or director as of the date of this Agreement that are not identified on
the Bayport Latest Balance Sheet.
Section 4.25 STATEMENTS ARE TRUE AND CORRECT. None of the information
that has been or will be supplied by the Bayport Group included in (i) the
Registration Statement to be filed by Landry's with the SEC in connection with
the Landry's Common Stock to be issued in the Merger, (ii) the Proxy Statement
to be mailed to the stockholders of Bayport in connection with its stockholders
meeting, and (iii) any other documents to be filed with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby
will at the respective times such documents are filed, and, in the case of the
Registration Statement, when it becomes effective and, with respect to the Proxy
Statement, when first mailed to the stockholders of Bayport, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading, or, in the
case of the Proxy Statement or any amendment thereof or supplement thereto, at
the time of the Bayport stockholders' meeting, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading. All documents that Bayport is responsible for filing with
the SEC or any other regulatory authority in connection with the transactions
contemplated hereby, will comply in all material respects with the provisions of
applicable law.
Section 4.26 BROKER'S AND FINDER'S FEE. No agent, broker, Person or
firm acting on behalf of Bayport is or will be entitled to any commission or
broker's or finder's fee from any of the parties hereto or from any Affiliate of
the parties hereto, in connection with any of the transactions contemplated
herein, except fees to Alex. Brown & Sons Incorporated to be paid by Bayport
that are disclosed in Schedule 4.26, and which do not exceed $750,000,
including all costs and expenses.
Section 4.27 DISCLOSURE. (a) No representations or warranties by
Bayport in this Agreement and no statement contained in the schedules or
exhibits or in any certificate to be delivered pursuant to this Agreement,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
30
<PAGE>
(b) Landry's has been furnished with, or given access to, complete and
correct copies of all agreements, instruments and documents, together with any
amendments or supplements thereto, set forth on, or underlying a disclosure set
forth on, a Schedule provided by Bayport. Each of the Schedules provided by
Bayport is complete and correct.
Section 4.28 TRADEMARKS, TRADENAMES, ETC. Bayport and each member of
the Bayport Group own or possesses, or possesses a valid right or license to
use, all intellectual property, patents, trademarks, tradenames, servicemarks,
copyrights and licenses (collectively "I.P. Rights"), and all rights with
respect to the foregoing, reasonably necessary for the conduct of their business
as now conducted, without any known conflict, asserted or not, with the rights
of others. Schedule 4.28 lists all I.P. Rights.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF
LANDRY'S AND SUB
Landry's and Sub jointly and severally represent and warrant to
Bayport, as of the date hereof that, except as set forth in the Schedules
numbered to correspond to the applicable representation or warranty:
Section 5.1 ORGANIZATION. Landry's and Sub are corporations duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation and have all corporate power and authority to
carry on their business as now being conducted and to own their properties. Each
other member of the Landry's Affiliated Group is duly organized under the laws
of the state of its organization and has all the requisite power and authority
under the laws of such jurisdiction to carry on its business as now being
conducted and to own its properties. Each member of the Landry's Affiliated
Group is duly qualified to do business and is in good standing in each state in
which the character or location of the properties owned or leased by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect on Landry's.
Section 5.2 AFFILIATED ENTITIES. (a) All shares of the outstanding
capital stock or equity interests in each such member of the Landry's Affiliated
Group have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to preemptive rights and, are owned by
Landry's, by another member of the Landry's Affiliated Group or by Landry's and
another member of the Landry's Affiliated Group, free and clear of all Liens.
(b) Except as listed on Schedule 5.2(b), Landry's does not, directly
or indirectly, own of record or beneficially, or have the right or obligation to
acquire, any outstanding securities or other interest in any corporation,
partnership, joint venture or other entity.
Section 5.3 CAPITALIZATION. (a) The authorized capital stock of
Landry's consists exclusively of 30,000,000 shares of common stock, $0.01 par
value per share, of which 18,204,220 shares were issued and outstanding and no
shares were held in its treasury as of
31
<PAGE>
April 15, 1996, and 2,000,000 shares of preferred stock, $0.01 par value, of
which none are currently outstanding, and no additional shares of Landry's
capital stock have been issued from such date to the date of this Agreement
(except for any shares issued upon exercise of any options referred to in the
second following sentence). All of such issued and outstanding shares have been
validly issued, are fully paid and nonassessable and were issued free of
preemptive rights, in compliance with any rights of first refusal, and in
compliance with all legal requirements. No share of capital stock of Landry's
has been, or may be required to be, reacquired by Landry's for any reason or is,
or may be required to be, issued by Landry's for any reason, including, without
limitation, by reason of any option, warrant, security or right convertible into
or exchangeable for such shares, or any agreement to issue any of the foregoing,
except for options granted under and issuable upon the exercise of stock options
granted under the Landry's Stock Option Plans. As of March 31, 1996, 2,751,520
shares were reserved for issuance upon exercise of options pursuant to the
Landry's Stock Option Plans.
(b) The authorized capital stock of Sub consists of 1,000 shares of
Common Stock, $.10 par value per share, of which 1,000 shares are issued and
outstanding and owned by Landry's and no shares are held in its treasury. All of
such issued and outstanding shares have been validly issued, are fully paid and
nonassessable and were issued free of preemptive rights, in compliance with any
rights of first refusal, and in compliance with all legal requirements. No share
of capital stock of Sub has been, or may be required to be, reacquired by Sub
for any reason or is, or may be required to be, issued by Sub for any reason,
including by reason of any option, warrant, security or right convertible into
or exchangeable for such shares or any agreement to issue any of the foregoing.
Section 5.4 AUTHORITY; ENFORCEABLE AGREEMENTS. (a) Landry's and Sub
each has the requisite corporate power and authority to enter into this
Agreement and to consummate the transactions described herein. The execution and
delivery of this Agreement by Landry's and Sub and the consummation by Landry's
and Sub of the transactions described herein have been duly authorized by all
necessary corporate action on the part of Landry's and Sub.
(b) This Agreement has been duly executed and delivered by Landry's and
Sub, and (assuming due execution and delivery by the other parties thereto)
constitutes a valid and binding obligation of Landry's and Sub, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally. The other agreements entered, or to be entered, into by
Landry's and Sub in connection with this Agreement have been, or will be, duly
executed and delivered by Landry's and Sub, and (assuming due execution and
delivery by the other parties thereto) constitute, or will constitute, valid and
binding obligations of Landry's and Sub, enforceable in accordance with their
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and general
equitable principals.
32
<PAGE>
Section 5.5 NO CONFLICTS OR CONSENTS. (a) Except as set forth on
Schedule 5.5(a), neither the execution, delivery or performance of this
Agreement by Landry's or Sub nor the consummation of the transactions
contemplated hereby will (i) violate, conflict with, or result in a breach of
any provision of, constitute a default (or an event that, with notice or lapse
of time or both, would constitute a default) under, result in the termination
of, or accelerate the performance required by, or result in the creation of any
adverse claim against any of the properties or assets of any member of the
Landry's Affiliated Group under, (A) the certificates of incorporation, by-laws
or other organizational documents of any member of the Landry's Affiliated Group
or (B) any note, bond, mortgage, indenture, deed of trust, lease, license,
agreement or other instrument or obligation to which any member of the Landry's
Affiliated Group is a party, or by which any member of the Landry's Affiliated
Group or any of its assets are bound, or (ii) subject to obtaining clearance
under the HSR Act and effectiveness of the Registration Statement, violate any
order, writ, injunction, decree, judgment, statute, rule or regulation of any
governmental body to which any member of the Landry's Affiliated Group is
subject or by which any member of the Landry's Affiliated Group or any of the
assets of the foregoing are bound.
(b) No consent, approval, order, permit or authorization of, or
registration, declaration or filing with, any Person or of any government or any
agency or political subdivision thereof is required for the execution, delivery
and performance by Landry's or Sub of this Agreement and the covenants and
transactions contemplated hereby or for the execution, delivery and performance
by Landry's or Sub of any other agreements entered, or to be entered, into by
Landry's or Sub in connection with this Agreement, except for (i) the filing of
the HSR Report by Landry's under the HSR Act and the early termination or
expiration of applicable waiting periods thereunder, (ii) the filing of the
Registration Statement on Form S-4 described in Section 6.2 hereof with the SEC
and the declaration of effectiveness thereof by the SEC and (iii) the filing of
the Certificate of Merger as provided in Section 2.1(b) hereof.
Section 5.6 CORPORATE DOCUMENTS, STOCKHOLDER AGREEMENTS AND BOARD OF
DIRECTORS. Landry's has delivered to Bayport true and complete copies of its
certificate of incorporation and by-laws, as amended or restated through the
date of this Agreement, and the organizational documents governing each member
of the Landry's Affiliated Group. The minute books of each member of the
Landry's Affiliated Group contain reasonably complete and accurate records of
all corporate actions of the equity owners of the various entities and of the
boards of directors or other governing bodies, including committees of such
boards or governing bodies. The stock transfer records of Landry's are
maintained by its transfer agent and registrar, and to the Knowledge of
Landry's, contain complete and accurate records of all issuances and redemptions
of stock by Landry's. Neither Landry's nor any of its Affiliates, is a party to
any agreement with respect to the capital stock of Landry's other than this
Agreement and the Landry's Stock Option Plans.
Section 5.7 SEC DOCUMENTS; FINANCIAL STATEMENTS; LIABILITIES.
(a) Landry's has filed all required reports, schedules, forms, statements and
other documents with the SEC since
33
<PAGE>
January 1, 1994 (the "Landry's SEC Documents"). As of their respective dates,
the Landry's SEC Documents, and any such reports, forms and documents filed by
Landry's with the SEC after the date hereof, complied, or will comply, as to
form in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Landry's SEC Documents, and none of
the Landry's SEC Documents contained, or will contain, any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any Landry's SEC Document has been revised or
superseded by a later filed Landry's SEC Document, none of the Landry's SEC
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The Landry's Financial Statements included in the Landry's SEC
Documents have been audited by Arthur Andersen, LLP, certified public
accountants (in the case of the Landry's Audited Financial Statements) in
accordance with generally accepted auditing standards, have been prepared in
accordance with United States generally accepted accounting principles and,
except as disclosed therein, applied on a basis consistent with prior periods,
and present fairly the financial position of Landry's and its consolidated
subsidiaries at such dates and the results of operations and cash flows for the
periods then ended. No member of the Landry's Affiliated Group has, nor are any
of their respective assets subject to, any liability, commitment, debt or
obligation (of any kind whatsoever whether absolute or contingent, accrued,
fixed, known, unknown, matured or unmatured), except (i) as and to the extent
reflected on the Landry's Latest Balance Sheet, or (ii) as may have been
incurred or may have arisen since the date of the Landry's Latest Balance Sheet
in the ordinary course of business and that are not material individually or in
the aggregate or are permitted by this Agreement.
(c) The Landry's Latest Balance Sheet includes appropriate reserves for
all Taxes and other liabilities incurred as of such date but not yet payable.
(d) Since the date of the Landry's Latest Balance Sheet, there has been
no change that has had or is likely to have a Material Adverse Effect on
Landry's.
(e) The statements of earnings included in the Landry's Financial
Statements do not contain any income or revenue realized from services that the
Surviving Corporation would be prohibited or restricted from offering after the
Effective Time pursuant to any covenant or provision in any material contract to
which any member of the Landry's Affiliated Group is a party.
Section 5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on Schedule 5.8, since the date of the Landry's Latest Balance Sheet, each
member of the Landry's Affiliated Group has conducted its business only in the
ordinary course, and has not:
34
<PAGE>
(a) amended its certificate of incorporation, by-laws
or similar organizational documents;
(b) incurred any liability or obligation of any nature
(whether absolute or contingent, accrued, fixed, known, unknown,
matured or unmatured), except in the ordinary course of business;
(c) suffered or permitted any of its assets to be or
remain subject to any mortgage or other encumbrance;
(d) merged or consolidated with another entity (other than a
subsidiary) or acquired or agreed to acquire any business or any
corporation, partnership or other business organization, or sold,
leased, transferred or otherwise disposed of any material portion of
its assets except for fair value in the ordinary course of business;
(e) suffered any damage, destruction or loss (whether
or not covered by insurance) which has had or could have a Material
Adverse Effect on Landry's;
(f) suffered the termination, suspension or revocation
of any license or permit necessary for the operation of its business;
(g) entered into any transaction other than on an
arm's-length basis;
(f) declared or paid any dividend or made any distribution
with respect to any of its equity interests, or except for the possible
sale of Common Stock in an underwritten public offering redeemed,
purchased or otherwise acquired any of its equity interests, or issued,
sold or granted any equity interests or any option. warrant or other
right to purchase or acquire any such interest other than (i) grants
of, and issuances of shares of Landry's Common Stock upon the exercise
of, stock options issued under a Landry's Stock Option Plan, provided
that any new options granted by Landry's shall not have covered more
than 800,000 shares, (ii) the acceptance by Landry's of any shares in
consideration of the exercise of such Landry's stock options or in
satisfaction of any tax or tax withholding obligations of the holders
of such options, and (iii) payments within the Landry's Affiliated
Group by entities other than Landry's as part of its cash management
program that may be characterized as dividends or distributions;
(h) adopted any employee benefit plan or made any change
in any existing employee benefit plans;
(i) entered into or amended any employment, severance
or similar agreement or arrangement with any director or employee;
35
<PAGE>
(j) made any change in any accounting principle or
practice or method or application thereof;
(k) suffered the termination suspension or revocation
of any license or permit necessary for the operation of its business;
or
(l) agreed, whether or not in writing, to do any of the
foregoing.
Section 5.9 CONTRACTS. (a) Each material agreement, contract or
commitment to which any member of the Landry's Affiliated Group is a party that
would be required to be filed as an exhibit to a report, schedule, form,
statement or other document with the SEC (each a "Material Contract") has been
so filed, and between the date of the filing of its most recent Annual Report on
Form 10-K and the date of this Agreement, Landry's has not entered into any
Material Contract other than this Agreement. Landry's will file with the SEC any
Material Contract required to be filed that it enters into between the date of
this Agreement and the Closing Date and will furnish Bayport with a copy of any
such Material Contract. No member of the Landry's Affiliated Group has breached,
nor is there any pending or, to the Knowledge of Landry's, threatened, claim
that it has breached, any of the terms or conditions of any of its Material
Contracts, and to the Knowledge of Landry's, no other parties to any such
Material Contract have breached any of its terms or conditions. Bayport has been
provided with a complete and accurate copy of each Material Contract entered
into prior to the date of this Agreement.
(b) Except as set forth on Schedule 5.9(b) or in the Landry's
SEC Documents, Landry's is not a party to: (i) any collective bargaining
agreement; (ii) any oral or written obligation of guaranty or indemnification
arising from any agreement, contract or commitment, in excess of $500,000,
except as provided in its Certificate of Incorporation; (iii) any non-disclosure
agreement, non-competition agreement, agreement with an officer, director or
employee of Landry's, tax indemnity, tax sharing or tax allocation agreement or
severance, bonus or commission agreement; (iv) any indenture, mortgage, loan,
credit, sale-leaseback or similar contract under which it borrowed any money or
issued any note, bond or other evidence of indebtedness for borrowed money or
guaranteed indebtedness for money borrowed by others; (v) any hedge, swap,
exchange, futures or similar agreements or contracts in an amount in excess of
$100,000; or (vi) any other oral or written agreement, contract or commitment
that has had or may have a Material Adverse Effect on Landry's. There is no
existing breach by Landry's nor is there any pending, or to the Knowledge of
Landry's threatened, claim that Landry's has breached any of the terms or
conditions of any of its material agreements, contracts, or commitments, and to
the Knowledge of Landry's, no other parties to such agreement, contracts or
commitments have breached any of its terms or conditions.
Section 5.10 ENVIRONMENTAL COMPLIANCE. (a) Each member of the Landry's
Affiliated Group possesses all necessary licenses, permits and other approvals
and authorizations that are required under, and are, and to the Knowledge of
Landry's at all times in the past have been, in compliance with, all
Environmental Laws, including without limitation all Environmental Laws
36
<PAGE>
governing the generation, use, collection, treatment, storage, transportation,
recovery, removal, discharge or disposal of hazardous substances or wastes, and
all Environmental Laws imposing recordkeeping, maintenance, testing, inspection,
notification and reporting requirements with respect to hazardous substances or
wastes.
(b) Except as set forth on Schedule 5.10(b) or as otherwise disclosed
in Landry's SEC Documents, no member of the Landry's Affiliated Group is, nor
has it been, subject to any administrative or judicial proceeding pursuant to,
or has received any notice of any violation of, or claim alleging liability
under, any Environmental Laws and, to the Knowledge of Landry's, no facts or
circumstances exist that would be likely to result in a claim, citation or
allegation against any member of the Landry's Affiliated Group for a violation
of, or alleging liability under, any Environmental Laws that would have a
Material Adverse Effect on Landry's.
(c) Except as listed on Schedule 5.10(c), there are no underground
tanks of any type (including tanks storing gasoline, diesel fuel, oil or other
petroleum products) or disposal sites for hazardous substances, hazardous wastes
or any other waste, located on or under the real estate currently owned, leased
or used by any member of the Landry's Affiliated Group and to the Knowledge of
Landry's there were no such disposal sites located on or under the real estate
previously owned, leased or used by any member of the Landry's Affiliated Group
on the date of the sale thereof by any member of the Landry's Affiliated Group
or during the period of lease for use by any member of the Landry's Affiliated
Group.
(d) Except in the ordinary course of business, and in all cases in
compliance with Environmental Laws, no member of the Landry's Affiliated Group
has engaged any third party to handle, transport or dispose of hazardous
substances or wastes (including for this purpose, gasoline, diesel fuel, oil or
other petroleum products, or bilge waste) on its behalf, and except as set forth
on Schedule 5.10(d), the disposal by each member of the Landry's Affiliated
Group of its hazardous substances and wastes has been in compliance with all
Environmental Laws.
Section 5.11 ACCOUNTING MATTERS. No member of the Landry's Affiliated
Group nor any of its Affiliates has taken or agreed to take any action that
(without giving effect to any action taken or agreed to be taken by Bayport or
any of its Affiliates) would prevent Landry's from accounting for the business
combination to be effected by the Merger as a pooling-of-interests. Upon the
execution of this Agreement, Landry's will have received a letter from its
independent public accountants to the effect that Landry's is eligible to be a
party to a merger accounted for by the pooling-of-interests method of accounting
and that based on such accounting firm's knowledge of the transactions
contemplated by the Agreement and inquiries of the affairs of Bayport, they are
not aware of any matters which prohibit the use of pooling-of-interests
accounting in connection with the Merger.
37
<PAGE>
Section 5.12 EMPLOYEE MATTERS.
Each of the following is true with respect to the Landry's Affiliated
Group:
(i) to the Knowledge of Landry's, each such member is in
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages and
hours and occupational safety and health, and is not engaged in any
unfair labor practice within the meaning of Section 8 of the National
Labor Relations Act, and there is no proceeding pending or to the
Knowledge of Landry's threatened, or, any investigation pending or to
the Knowledge of Landry's threatened against it relating to any
thereof, and to the Knowledge of Landry's there is no basis for any
such proceeding or investigation;
(ii) none of the employees of any such member is a member
of, or represented by, any labor union and there are no efforts being
made to unionize any of such employees; and
(iii) there are no charges of, formal, informal or internal
complaints of, or proceedings involving, discrimination or harassment
(including but not limited to discrimination or harassment based upon
sex, age, marital status, race, religion, color, creed, national
origin, sexual preference, handicap or veteran status) pending or to
the Knowledge of Landry's threatened, nor is there any investigation
pending or to the Knowledge of Landry's threatened, including, but not
limited to, investigations before the Equal Employment Opportunity
Commission or any federal, state or local agency or court, with respect
to any such member.
Section 5.13 EMPLOYEE BENEFIT PLANS. Except as set forth on Schedule
5.13 and Landry's Stock Option Plans, Landry's has no Employee Plans. Each
Employee Plan and Benefit Arrangement of Landry's has been maintained and
administered in substantial compliance with its terms and with the requirements
(including reporting requirements, if any) prescribed by any and all statutes,
orders, rules and regulations which are applicable thereto, including ERISA and
the Code.
Section 5.14 LITIGATION. Except (i) as disclosed in Landry's SEC
Documents, or (ii) that are not material individually or in the aggregate, or
(iii) are listed on Schedule 5.14, there are no actions, suits, proceedings,
arbitrations or investigations pending or, to the Knowledge of Landry's,
threatened, before any court, any governmental agency or instrumentality or any
arbitration panel, against or affecting any member of the Landry's Affiliated
Group or any of the directors, officers, or employees of the foregoing, and to
the Knowledge of Landry's no facts or circumstances exist that would be likely
to result in the filing of any such action that would have a Material Adverse
Effect on Landry's. No member of the Landry's Affiliated Group is subject to any
currently pending judgment, order or decree entered in any lawsuit or
proceeding.
38
<PAGE>
Section 5.15 LEGALITY OF LANDRY'S STOCK. The Landry's Common Stock and
Landry's Preferred Stock to be issued in connection with the Merger (including
any shares of Landry's Common Stock to be issued upon exercise of Bayport Stock
Options and Bayport Warrants or conversion of the Bayport Preferred Stock), when
issued and delivered in accordance with the terms hereof, and thereof, will be
duly authorized, validly issued, fully paid and non-assessable, and free of
preemptive rights or other rights of first refusal.
Section 5.16 STATEMENTS ARE TRUE AND CORRECT. None of the information
included in (i) the Registration Statement to be filed by Landry's with the SEC
in connection with the Landry's Common Stock to be issued in the Merger, (ii)
the Proxy Statement to be mailed to the stockholders of Bayport in connection
with its stockholders meeting, and (iii) any other documents to be filed with
the SEC or any other regulatory authority in connection with the transactions
contemplated hereby that has been or will be supplied by the Landry's Affiliated
Group, will, at the respective times such documents are filed, and, in the case
of the Registration Statement, when it becomes effective and, with respect to
the Proxy Statement, when first mailed to the stockholders of Bayport, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading, or. in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Bayport stockholders' meeting, be false or misleading with
respect to any material fact or omit to state any material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading. All documents that Landry's is responsible for filing with
the SEC or any other regulatory authority in connection with the transactions
contemplated hereby, will comply in all material respects with the provisions of
applicable law.
Section 5.17 NO STOCKHOLDER VOTE. No vote of any class of stockholders
of Landry's is required to approve this Agreement or the transactions
contemplated hereby in order to comply with the DGCL, Landry's Certificate of
Incorporation or By-laws, or the rules and regulations of the Nasdaq-National
Market.
Section 5.18 BROKER'S AND FINDER'S FEE. No agent, broker, Person or
firm acting on behalf of Landry's is or will be entitled to any commission or
broker's or finder's fee from any of the parties hereto, or from any Affiliate
of the parties hereto, in connection with any of the transactions contemplated
herein, except fees to Montgomery Securities to be paid by Landry's.
Section 5.19 DISCLOSURE. (a) No representations or warranties by
Landry's or Sub in this Agreement and no statement contained in the schedules or
exhibits or in any certificates to be delivered pursuant to this Agreement,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
(b) Bayport has been furnished with complete and correct copies
of all agreements, instruments and documents, together with any amendments or
supplements thereto, set forth on,
39
<PAGE>
or underlying a disclosure set forth on, a Schedule provided by Landry's.
Each of the Schedules provided by Landry's is complete and correct.
Section 5.20 TRADEMARKS, TRADENAMES, ETC. Landry's owns or possesses,
or possesses a valid right or license to use, all intellectual property,
patents, trademarks, tradenames, servicemarks, copyrights and licenses, and all
rights with respect to the foregoing, necessary for the conduct of its business
as now conducted, without any known conflict with the rights of others.
Section 5.21 COMPLIANCE WITH LAW; PERMITS. Other than compliance with
Environmental Laws which is covered in Section 5.10: (a) the operations and
activities of Landry's comply in all respects material to its business with all
applicable laws, regulations, ordinances, rules or orders of any federal, state
or local court or any governmental authority except for any violation or failure
to comply that could not reasonably be expected to result in a Material Adverse
Effect on Landry's, and
(b) except to the extent that failure to comply will not have a
Material Adverse Effect on the conduct of its business, possesses all
governmental licenses, permits and other governmental authorizations that are
(i) required under all federal, state and local laws and regulations for the
ownership, use and operation of its assets or (ii) otherwise necessary to permit
the conduct of its business without interruption, and such licenses, permits and
authorizations are in full force and effect and have been and are being fully
complied with by it except for any violation or failure to comply that could not
reasonably be expected to result in a Material Adverse Effect on Landry's.
Landry's has received any notice of any violation of any of the terms and
conditions of any such license, permit or authorization and, to the Knowledge of
Landry's, no facts or circumstances exist that would form the reasonable basis
of a revocation, claim, citation or allegation against it for a violation of any
such license, permit or authorization. No such license, permit or authorization
or any renewal thereof will be terminated, revoked, suspended, modified or
limited in any respect as a result of the transactions contemplated by this
Agreement except for any violation or failure to comply that could not
reasonably be expected to result in a Material Adverse Effect on Landry's.
Section 5.22 PROPERTIES AND LEASES. (a) With respect to assets,
Landry's has, except with respect to assets disposed of in the ordinary course
of business (none of which are material to the operations of its business) or
such assets as are no longer used or useful in the conduct of its business, good
and valid title to all real property and all other properties and assets
reflected in the Landry's Latest Balance Sheet free and clear of all Liens,
except for (i) Liens that secure indebtedness that is properly reflected in the
Landry's Latest Balance Sheet; (ii) Liens for Taxes accrued but not yet payable;
(iii) Permitted Liens, provided that the obligations collateralized by such
Permitted Liens are not delinquent or are being contested in good faith; (iv)
such imperfections of title and encumbrances, if any, as do not materially
detract from the value or materially interfere with the present use of any such
properties or assets or the potential sale of any such properties and assets and
(v) capital leases and leases of such properties, if any, to third
40
<PAGE>
parties for fair and adequate consideration. Landry's owns, or has valid
leasehold interests in, all properties and assets used in the conduct of its
business.
(b) Except as set forth on Schedule 5.22(b), with respect to each
lease of any real property, or a material amount of other personal property, to
which Landry's is a party (i) Landry's has a valid leasehold interest in such
real property or personal property; (ii) such lease is in full force and effect
in accordance with its terms; (iii) all rents and other monetary amounts that
have become due and payable thereunder have been paid in full; (iv) no waiver,
indulgence or postponement of the obligations thereunder has been granted by the
other party thereto; (v) there exists no material default (or an event that,
with notice or lapse of time or both would constitute a material default) under
such lease; (vi) Landry's has not violated any of the material terms or
conditions under any such lease and to the Knowledge of Landry's there has been
no (A) condition or covenant to be observed or performed by any other party
under any such lease that has not been fully observed and performed and (B) in
the case of each lease concerning demised premises subleased to Landry's,
condition or covenant to be observed or performed by any other party thereto
that has not been fully observed and performed and there does not exist any
event of default or event, occurrence, condition or act that, with the giving of
notice, the lapse of time or the happening of any further event or condition,
would become a default under any such prime lease; and (vii) the transactions
described in this Agreement will not constitute a default under or cause for
termination or modification of any such lease.
Section 5.23 TAX MATTERS.
(a) Each of the following is true with respect to Landry's:
(i) all Returns have been or will be timely filed, including
legal periods permitted by extensions, by Landry's when due in
accordance with all applicable laws; all Taxes shown on the Returns
have been or will be timely paid when due; the Returns have been
properly completed in compliance with all applicable laws and
regulations and completely and accurately reflect the facts regarding
the income, expenses, properties, business and operations required to
be shown thereon; the Returns are not subject to penalties under
Section 6662 of the Code (or any corresponding provision of state,
local or foreign tax law);
(ii) except as set forth on Schedule 5.23(a)(ii), Landry's
has paid all Taxes required to be paid by it (whether or not shown on a
Return) or for which it could be liable, (provided that it shall not be
considered a breach of this representation if it is ultimately
determined that additional tax payments are due but such assessment is
based on an adjustment to a return or position, if such member has a
reasonable basis for the position taken with respect to such Taxes),
whether to taxing authorities or to other persons under tax allocation
agreements or otherwise, and the charges, accruals, and reserves for
Taxes due, or accrued but not yet due, relating to its income,
properties,
41
<PAGE>
transactions or operations for any Pre-Closing Period as reflected on
its books (including, without limitation, the Landry's Latest Balance
Sheet) are adequate to cover such Taxes;
(iii) there are no agreements or consents currently in effect
for the extension or waiver of the time (A) to file any Return or (B)
for assessment or collection of any Taxes relating to the income,
properties or operations of Landry's for any Pre-Closing Period, and
Landry's has not been requested to enter into any such agreement or
consent;
(iv) there are no Liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of Landry's;
(v) all Taxes that Landry's is required by law to withhold or
collect have been duly withheld or collected, and have been timely paid
over to the appropriate governmental authorities to the extent due and
payable (provided that it shall not be considered a breach of this
representation if it is ultimately determined that additional tax
payments are due but such assessment is based on an adjustment to a
return or position, if such member has a reasonable basis for the
position taken with respect to such withholding and collection);
(vi) Schedule 5.23(a)(vi) lists each state in which Landry's
has, in the last three years, filed a Return.
(vii) all Tax deficiencies which have been claimed, proposed
or asserted against Landry's have been fully paid or finally settled,
and no issue has been raised in any examination which, by application
of similar principles, can be expected to result in the proposal or
assertion of a Tax deficiency for any other year not so examined;
(viii) to the Knowledge of Landry's, Landry's has complied
in all material respects with all applicable Tax laws;
(ix) except as set forth on Schedule 5.23(a)(ix), Landry's
is not a party to any agreement, contract, arrangement or plan that
would result, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Code Section 280G (or
any comparable provision of state or local law);
(x) Landry's has not agreed, nor is it required, to make any
adjustment under Code Section 481(a) (or any comparable provision of
state or local law) by reason of a change in accounting method or
otherwise;
(xi) Landry's has not filed a consent pursuant to the
collapsible corporation provisions of Section 341(f) of the Code (or
any corresponding provision of state, local or foreign income law) or
agreed to have Section 341(f)(2) of the Code (or any
42
<PAGE>
corresponding provision of state, local or foreign income law) apply
to any disposition of any asset owned by it;
(xii) except as set forth on Schedule 5.23(a)(xii), none of
Landry's assets is property that such company is required to treat as
being owned by any other person pursuant to the so-called "safe harbor
lease" provisions of former Section 168(f)(8) of the Code;
(xiii) none of the assets of Landry's directly or indirectly
secures any debt, the interest on which is tax exempt under Section
103(a) of the Code;
(xiv) none of the assets of Landry's is "tax-exempt use
property" within the meaning of Section 168(h) of the Code;
(xv) Landry's has not made a deemed dividend election under
Section 1.1502- 32(f)(2) of the Treasury Regulations or a consent
dividend election under Section 565 of the Code;
(xvi) since August 1993, Landry's has never been a member of
an affiliated group filing for purposes of filing United States
consolidated returns other than a group of which Landry's is the parent
corporation;
(xvii) since August 1993, Landry's is not (nor has ever been)
a party to any tax sharing agreement nor has any such member assumed
the tax liability of any other person under contract.
Section 5.24 INTERESTS IN CLIENTS, SUPPLIERS, ETC. Except as set forth
in Schedule 5.24, no officer or director of Landry's possesses, directly or
indirectly, any financial interest in, or is a director, officer or employee of,
any corporation or business organization that is a supplier, customer, lessor,
lessee, or competitor or potential competitor of Landry's or that has entered
into any material contract with Landry's. Ownership of less than 1% of any class
of securities of a company whose securities are registered under the Exchange
Act will not be deemed to be a financial interest for purposes of this
Section 5.24.
Section 5.25 TRANSACTIONS WITH RELATED PARTIES. (a) Schedule 5.25(a)
or the Landry's SEC Documents list all transactions between August 18, 1993 and
the date of this Agreement involving or for the benefit of Landry's, on the one
hand, and any director or officer of Landry's, on the other hand, including, (i)
any debtor or creditor relationship, (ii) any transfer or lease of real or
personal property, (iii) wages, salaries, commissions, bonuses and agreements
relating to employment and (iv) purchases or sales of products or services.
(b) Schedule 5.25(b) or the Landry's SEC Documents list (i) all
agreements and claims of any nature that any officer or director of Landry's has
with or against Landry's as of the date
43
<PAGE>
of this Agreement that are not identified on the Landry's Latest Balance Sheet
and (ii) all agreements and claims of any nature that Landry's has with or
against any officer or director of Landry's as of the date of this Agreement
that are not identified on the Landry's Latest Balance Sheet.
ARTICLE 6 PRE-CLOSING COVENANTS
Section 6.1 HART-SCOTT-RODINO; COOPERATION AND BEST EFFORTS. (a)
Bayport and Landry's shall cooperate in good faith and take all actions
reasonably necessary or appropriate to file within ten days of the date hereof,
and expeditiously and diligently prosecute to a favorable conclusion, the HSR
Reports required to be filed by each of them in connection herewith with the
Federal Trade Commission (the "FTC") and the Department of Justice (the "DOJ")
pursuant to the HSR Act; provided that Landry's shall not be required to accept
any conditions that may be imposed by the FTC or the DOJ in connection with such
filings that would require the divestiture of any Landry's or Bayport assets or
otherwise have a Material Adverse Effect on such party.
(b) Bayport and Landry's agree that from the date of this Agreement
through the Effective Time, neither party shall enter into any transaction with
a third party or recapitalization that would have the effect of impeding the
ability to obtain HSR Act clearance.
(c) Each party shall cooperate with the other and use its reasonable
best efforts to (i) receive all necessary and appropriate consents of third
parties to the transactions contemplated hereunder, (ii) satisfy all
requirements prescribed by law for, and all conditions set forth in this
Agreement to, the consummation of the Merger, and (iii) effect the Merger in
accordance with this Agreement at the earliest practicable date.
Section 6.2 REGISTRATION STATEMENT AND PROXY STATEMENT; BAYPORT SPECIAL
MEETING. (a) Landry's will prepare and file the Registration Statement under the
Securities Act which will include the Proxy Statement complying with all the
requirements of the Securities Act applicable thereto, for the purpose, among
other things, of registering the Landry's Common Stock which will be issued to
the holders of Bayport Common Stock pursuant to the Merger, which will be
issuable upon conversion of the Landry's Preferred Stock issued in the Merger
and which will be issuable upon exercise of the Bayport Warrants immediately
following the Merger. Landry's shall use its best efforts to cause the
Registration Statement to become effective as soon as practicable, to qualify
the Landry's Common Stock under the securities or blue sky laws of such
jurisdictions as may be required and to keep the Registration Statement and such
qualifications current and in effect for so long as necessary to consummate the
transactions contemplated hereby. In addition, Landry's shall file such forms as
are required to cause such Landry's Common Stock to be listed on the
Nasdaq-National Market and be fully tradeable except to the extent any shares of
Landry's Common Stock received by stockholders of Bayport are subject to the
provisions of Rule 145 of the SEC or are restricted under applicable rules
related to tax-free reorganizations and pooling-of-interest accounting rules.
44
<PAGE>
(b) Each of the parties will cooperate in the preparation of the
Registration Statement and the Proxy Statement. Each of the parties will as
promptly as practicable after the date hereof furnish all such data and
information relating to it as the other may reasonably request for the purpose
of including such data and information in the Registration Statement and Proxy
Statement.
(c) Bayport shall, as soon as practicable following effectiveness of
the Registration Statement, take all action necessary under the Florida BCA and
its Articles of Incorporation and By-laws to convene a special meeting of its
stockholders (the "Special Meeting") for the purpose of approving this
Agreement. Bayport will, through its Board of Directors, recommend to its
stockholders approval of this Agreement and the transactions described herein,
subject to the terms set forth in Section 6.5 hereof.
Section 6.3 CONDUCT OF BUSINESS BY BOTH PARTIES PRIOR TO THE CLOSING
DATE. During the period from the date of this Agreement to the Effective Time,
Bayport and Landry's shall each use its reasonable best efforts to preserve the
goodwill of employees, suppliers, customers, landlords, contractors, bankers,
and others having business relations with it and to do nothing knowingly to
impair its ability to keep and preserve its business as it exists on the date of
this Agreement. Without limiting the generality of the foregoing, and except as
set forth on Schedule 6.3, during the period from the date of this Agreement to
the Effective Time of the Merger each of Bayport and Landry's shall not, without
the prior written consent of the other:
(a) declare, set aside, increase or pay any dividend
(including any stock dividends), or declare or make any distribution
on, or directly or indirectly combine, redeem, reclassify, purchase, or
otherwise acquire, any shares of its capital stock or authorize the
creation or issuance of, or, except for the public offering of
approximately 3.5 million shares of Landry's Common Stock, issue,
deliver or sell any additional shares of its capital stock or any
securities or obligations convertible into or exchangeable for its
capital stock or effect any stock split or reverse stock split or other
recapitalization, except (i) the grant of, and the issuance of any
shares upon the exercise of, any stock options issued pursuant to a
Landry's Stock Option Plan, provided that any new options granted by
Landry's pursuant to any such Plan shall not cover more than 800,000
shares; (ii) the acceptance by Landry's of any shares in consideration
of the exercise of such Landry's Stock Option or in satisfaction of any
tax or tax withholding obligations of the holders of such options;
(iii) the issuance of any shares upon the exercise of Bayport Stock
Options or Bayport Warrants or the conversion of Bayport Preferred
Stock; or (iv) the acceptance by Bayport of any shares of Bayport
Common Stock in consideration of the exercise of the Bayport Stock
Options or in satisfaction of any tax or tax withholding obligations of
the holders of such Bayport Stock Options.
(b) amend its certificate of incorporation or by-laws,
or adopt or amend any resolution or agreement concerning
indemnification of its directors, officers, employees or agents;
45
<PAGE>
(c) pledge or otherwise encumber any shares of its capital
stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, or any
other voting securities or convertible securities;
(d) commit or omit to do any act which act or omission would
cause a breach of any covenant contained in this Agreement or would
cause any representation or warranty contained in this Agreement to
become untrue, as if each such representation and warranty were
continuously made from and after the date hereof;
(e) violate any applicable law, statute, rule,
governmental regulation or order that would have a Material Adverse
Effect on such party;
(f) fail to maintain its books, accounts and records in the
usual manner on a basis consistent with that heretofore employed or
change any accounting method, policy, practice or application
previously employed;
(g) fail to pay, or to make adequate provision in all material
respects for the payment of, all Taxes, interest payments and penalties
due and payable (for all periods up to the Effective Date, including
that portion of its fiscal year to and including the Effective Date) to
any city, parish, state, the United States, foreign or any other taxing
authority, except those being contested in good faith by appropriate
proceedings and for which sufficient reserves have been established, or
make any elections with respect to Taxes;
(h) make any material tax election that is inconsistent with
any corresponding election made on a prior return or settle or
compromise any income tax liability for an amount materially in excess
of the liability therefor that is reflected on the Bayport Financial
Statements or Landry's Financial Statements, as the case may be;
(i) take any action that would prevent the accounting
for the business combination to be effected by the Merger as a
pooling-of-interests;
(j) authorize any of, or agree or commit to do any of,
the foregoing actions.
(k) materially decrease the average restaurant
inventory or house bank accounts in any restaurant.
(l) enter into any new line of business.
Section 6.4 CONDUCT OF BUSINESS BY BAYPORT PRIOR TO THE CLOSING DATE.
During the period from the date of this Agreement to the Effective Time, in
addition to its covenants set forth in Section 6.3, each member of the Bayport
Group shall use its best efforts to preserve the possession and control of all
of its assets other than those permitted to be disposed of pursuant
46
<PAGE>
to the terms of this Agreement, shall conduct its business only in the ordinary
course consistent with past practice, and, except as otherwise provided herein
or set forth on Schedule 6.4 hereto, shall not, without the prior written
consent of Landry's:
(a) enter into or modify any written or oral employment,
severance or similar agreement or arrangement with any director or
employee, or grant any increase in the rate of wages, salaries, bonuses
or other compensation or benefits of any executive officer or other
salaried employee;
(b) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or division thereof or (ii) any assets that are material, individually
or in the aggregate, to such party and its subsidiaries taken as a
whole, except purchases of inventory in the ordinary course of business
consistent with past practice;
(c) except as disclosed on Schedule 6.4(c), or, except for
dispositions made in the ordinary course of business and consistent
with past practices, sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
other properties or assets;
(d) except as disclosed on Schedule 6.4(d), incur any
indebtedness for borrowed money, excluding the obtaining of letters of
credit or surety bonds in the ordinary course of business consistent
with past practices, but including any borrowings under the existing
Bayport credit facility with the First National Bank of Boston, as
Agent (provided that, to the extent Bayport applies cash to reduce any
outstanding debt under the term loan portion of such facility, it shall
be permitted to re-borrow such amount under the revolving line of
credit portion of such facility); or guarantee any such indebtedness of
another Person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of such party or any of its
subsidiaries, guarantee any debt securities of another Person, enter
into any "keep well" or other agreement to maintain any financial
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, or make any loans, advances or
capital contributions to, or investments in, any other Person, or alter
any credit terms.
(e) except as disclosed on Schedule 6.4(e), make or agree to
make any new capital expenditures other than those made in the ordinary
course of business and consistent with past practices out of available
cash (excluding the proceeds of borrowings);
(f) except in the ordinary course of business, place or suffer
to exist on any of its assets or properties any Lien, other than Liens
listed on Schedule 4.11(a) and Permitted Liens, or forgive any material
indebtedness owing to it or any claims which it
47
<PAGE>
may have possessed, or waive any right of substantial value or
discharge or satisfy any material noncurrent liability;
(g) grant or pay to any salaried employee or former salaried
employee, officer or director of any member of the Bayport Group any
award under any Bayport discretionary or other bonus plans or under any
Bayport Stock Option Plans;
(h) authorize any of, or agree or commit to do any of,
the foregoing actions.
Section 6.5 NO SOLICITATIONS. (a) No member of the Bayport Group shall
directly or indirectly, through any officer, director, employee, representative
or agent of any member of the Bayport Group, solicit or encourage the initiation
or submission of any inquiries, proposals or offers regarding any acquisition,
merger, take-over bid, sale of all or substantially all of the assets of, or
sales of shares of capital stock of Bayport, whether or not in writing and
whether or not delivered to the stockholders of Bayport generally (including
without limitation by way of a tender offer), or similar transactions involving
Bayport (any of the foregoing inquiries or proposals being referred to herein as
an "Acquisition Proposal"); provided, however, that nothing contained in this
Agreement shall prevent the Board of Directors of Bayport from referring any
third party to this Section 6.5. Nothing contained in this Section 6.5 or any
other provision of this Agreement shall prevent the Board of Directors of
Bayport from considering or negotiating an unsolicited bona fide Acquisition
Proposal. If the Board of Directors of Bayport, after duly considering advice,
written or otherwise, of outside counsel and financial advisors to Bayport,
determines in good faith that it would be consistent with its fiduciary
responsibilities to approve or recommend (and in connection therewith withdraw
or modify its approval or recommendation of this Agreement, and the transactions
contemplated hereby or thereby) a Superior Proposal (as defined below), then,
notwithstanding any such approval or recommendation (x) Bayport shall not enter
into any agreement with respect to the Superior Proposal and (y) any other
obligation of Bayport under this Agreement shall not be affected, unless this
Agreement is terminated pursuant to Section 9.1(f) hereof prior to or
simultaneously with the grant of such approval or the making of such
recommendation and Bayport, within three Business Days following such
termination resulting from such Superior Proposal, pays Landry's the Termination
Fee (as defined in Section 9.1(f)). As used herein the term "Superior Proposal"
means a bona fide proposal made by a third party to acquire Bayport pursuant to
a tender or exchange offer, a merger, a sale of all or substantially all of its
assets or otherwise that the Board of Directors determines in its good faith
judgment to be more favorable to Bayport's stockholders than the transactions
contemplated by this Agreement (after considering the advice, written or
otherwise, of Bayport's professional advisors). In making a determination of
whether a Superior Proposal is more favorable, the Bayport Board of Directors,
without limiting the generality of the foregoing, nor attempting to establish
the priorities thereof or weight to be given thereto, shall consider not only
the price offered by the third party as compared to the total consideration set
forth in this Agreement, but shall also compare the market liquidity of the
Landry's Common Stock to the liquidity of the consideration offered by the third
party, compare the tax consequences of the Merger to the tax consequences of the
transaction proposed by the third party, determine whether the transaction
48
<PAGE>
proposed by the third party has any financing or other conditions or
contingencies, and make any other meaningful comparison of the relative benefits
offered to the Bayport stockholders by the Merger as compared to the transaction
proposed by the third party.
(b) Bayport shall immediately notify Landry's after receipt of any
formal, informal, written or oral Acquisition Proposal or any request for
nonpublic information relating to any member of the Bayport Group in connection
with an Acquisition Proposal or for access to the properties, books or records
of any member of the Bayport Group that informs the Board of Directors of any
member of the Bayport Group that it is considering making, or has made, an
Acquisition Proposal. To the extent not prohibited by confidentiality provisions
imposed by the offering party, such notice to Landry's shall be made orally and
in writing and shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or contact.
(c) If the Board of Directors of Bayport receives a request for
material nonpublic information by a Person who makes or who states in writing
that it intends, subject to satisfactory review of such nonpublic information,
to make, a bona fide Acquisition Proposal, Bayport may, subject to the execution
of a confidentiality agreement substantially similar to that then in effect
between Bayport and Landry's, provide such Person with access to information
regarding Bayport.
(d) Nothing contained in this Section 6.5 shall prevent Bayport from
complying with Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act,
if applicable, with regard to an Acquisition Proposal made in the form of a
tender offer by a third party.
Section 6.6 PRESS RELEASES. Landry's and Bayport shall jointly prepare
any press release with respect to the transactions described in this Agreement.
Landry's and Bayport will consult with each other before issuing, any press
releases or other public statements with respect to any transactions described
in this Agreement, including the Merger. Landry's and Bayport shall not issue
any such press releases or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to a listing agreement with the Nasdaq-National Market.
Section 6.7 ACCESS TO INFORMATION AND CONFIDENTIALITY. (a) Prior to the
Closing Date, each of Bayport and Landry's shall afford to the other party and
to the officers, employees. accountants, counsel, financial advisors and other
representatives of such other party, reasonable access during normal business
hours to their respective premises, books and records and will furnish to the
other party (i) a copy of each report, schedule, registration statement and
other documents filed by it during such period pursuant to the requirements of
federal or state securities laws, and (ii) such other information with respect
to its business and properties as such other party reasonably requests.
49
<PAGE>
(b) Each of Bayport and Landry's will, and will cause its officers,
directors, employees, agents and representatives to, (i) hold in confidence,
unless compelled to disclose by judicial or administrative process, or, in the
opinion of its counsel, by other requirements of law, all nonpublic information
concerning the other party furnished in connection with the transactions
contemplated by this Agreement until such time as such information becomes
publicly available (otherwise than through the wrongful act of such person),
(ii) not release or disclose such information to any other person, except in
connection with this Agreement to its auditors, attorneys, financial advisors,
other consultants and advisors, and (iii) not use such information for any
competitive or other purpose other than with respect to its consideration and
evaluation of the transactions contemplated by this Agreement. In the event of
termination of this Agreement for any reason, Bayport and Landry's will promptly
return or destroy all documents containing nonpublic information so obtained
from the other party and any copies made of such documents and any summaries,
analyses or compilations made therefrom.
Section 6.8 CONSULTATION AND REPORTING. During the period from the date
of this Agreement to the Closing Date, each of Bayport will, subject to any
applicable legal or contractual restrictions confer on a regular and frequent
basis with Landry's to report material operational matters and to report on the
general status of ongoing operations including profits margin options, cost
increases and adverse trends. Bayport will notify Landry's of any unexpected
emergency or other change in the normal course of its business or in the
operation of its properties and of any governmental complaints, investigations,
adjudicatory proceedings, or hearings (or communications indicating that the
same may be contemplated) and will keep Landry's fully informed of such events
and permit Landry's representatives prompt access to all materials prepared by
or on behalf of Bayport or served on Bayport, in connection therewith.
Section 6.9 UPDATE SCHEDULES. Each party hereto will promptly disclose
to the other any information contained in its representations and warranties and
on the related schedules that, because of an event occurring after the date
hereof, is incomplete or no longer correct; provided, however, that none of such
disclosures will be deemed to modify, amend or supplement the representations
and warranties of such party, unless the other party consents to such
modification, amendment or supplement in writing.
Section 6.10 BAYPORT SEC FILINGS. Bayport agrees to use its best
efforts to prepare and file with the SEC its quarterly report on Form 10-Q for
the quarter ending March 25, 1996 and a Form 10K-A before the Closing Date.
Section 6.11 SUB STOCKHOLDER APPROVAL. Landry's, as the sole
stockholder of Sub, shall take all action necessary to effect the necessary
stockholder approval by Sub of this Agreement.
Section 6.12 CHANGE IN CONTROL AGREEMENTS. Messrs. Connor and
Korenbaum, executive officers of Bayport, agree that they each shall terminate
those certain Employment Agreements entered into on April 1, 1995, effective as
of the Closing Date.
50
<PAGE>
Section 6.13 BAYPORT GROUP AFFILIATES AGREEMENT. Schedule 6.13 sets
forth a list of Bayport's "affiliates" (as that term is used in paragraph (c)
and (d) of Rule 145 under the Securities Act). To facilitate the treatment of
the Merger for accounting purposes as a "pooling-of-interests", Bayport and each
member of the Bayport Group shall use its best efforts to deliver to Landry's
within 20 days after the execution of this Agreement, a written agreement from
each of its affiliates (the "Bayport Affiliates Agreement") in form and
substance reasonably satisfactorily to Landry's. As a condition to any transfer
of any Bayport Common Stock or Bayport Preferred Stock, Bayport shall use its
best efforts to cause any such transferee to agree in writing that such
transferee will make no disposition (a) of Bayport Common Stock or Bayport
Preferred Stock or of Landry's Common Stock in the 30-day period prior to the
Effective Time or (b) of Landry's Common Stock after the Effective Time until
Landry's shall have publicly released its first report of quarterly financial
statements that include the combined financial statements of Landry's and
Bayport for a period of at least 30 days of post Merger combined operations.
Landry's shall, at least 30 days prior to the Effective Date, cause to be
delivered to each person Landry's believes to be an "affiliate" (as that term is
used in paragraphs (c) and (d) of Rule 145 under the Securities Act), of
Landry's, a notice informing such persons of restrictions on transfer resulting
from the Merger being accounted for as a pooling-of-interest in accordance with
generally accepted accounting principles and all published rules, regulations
and policies of the SEC.
Section 6.14 PHASE ONE. Bayport shall provide at its expense, to
Landry's a Phase 1 Environmental Report covering any property owned or leased by
Bayport as such shall be reasonably requested by Landry's.
ARTICLE 7 - CLOSING CONDITIONS
Section 7.1 CONDITIONS APPLICABLE TO ALL PARTIES. The obligations of
each of the parties hereto to effect the Merger and the other transactions
contemplated by this Agreement are subject to the satisfaction or waiver of the
following conditions at or prior to the Closing:
(a) REGISTRATION AND LISTING EFFECTIVENESS; STOCKHOLDER
APPROVAL. The Registration Statement shall have become effective with
the SEC (and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted by the SEC) and the Proxy
Statement included therein shall have been mailed to the Bayport
stockholders, the shares of Landry's Common Stock to be issued pursuant
to the Merger shall have been approved for listing on the
Nasdaq-National Market, subject to official notice of issuance, and the
required approval of the stockholders of Bayport of this Agreement
shall have been obtained at the Special Meeting.
(b) NO RESTRAINING ACTION. No action, suit, or
proceeding before any court or governmental or regulatory authority
will be pending, no investigation by any governmental or regulatory
authority will have been commenced, and no action, suit or
51
<PAGE>
proceeding by any governmental or regulatory authority will have been
threatened, against Bayport, Landry's or any of the principals,
officers or directors of any of them, seeking to restrain, prevent or
change the transactions contemplated hereby or questioning the legality
or validity of any such transactions or seeking damages in connection
with any such transactions.
(c) CONSULTING AGREEMENT. Landry's shall have executed
and delivered a Consulting Agreement, providing for certain
consulting services to be performed by David J. Connor.
Section 7.2 CONDITIONS TO LANDRY'S OBLIGATIONS. The obligations of
Landry's to effect the Merger and the other transactions contemplated by this
Agreement are also subject to the satisfaction or waiver of the following
conditions at or prior to the Closing:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of Bayport in this Agreement or in any
certificate delivered to Landry's pursuant hereto as of the date hereof
will be deemed to have been made again at and as of the Closing Date
(without regard to any Schedule updates furnished by Bayport after the
date hereof unless consented to by Landry's) and will then be true and
correct in all material respects, except to the extent any such
representation or warranty is qualified by materiality or by reference
to the term "Material Adverse Effect" in which case such representation
or warranty shall be true and correct, and (ii) Bayport will have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with
by Bayport prior to or on the Closing Date.
(b) NO MATERIAL ADVERSE CHANGE. There shall not have
occurred any event or circumstance resulting in a Material Adverse
Effect with respect to Bayport from the date of this Agreement to the
Closing Date.
(c) HSR ACT. The waiting periods (and any extensions thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have expired and no condition shall have been imposed on
Bayport or Landry's to obtain such termination that would require the
divestiture of any of either of such party's assets or otherwise have a
Material Adverse Effect on such party.
(d) CONSENTS AND APPROVALS. All governmental and other
third-party consents and approvals, if any, necessary to permit the
consummation of the transactions contemplated by this Agreement, or to
permit the continued operation of the business of Bayport in
substantially the same manner after the Closing Date as before, will
have been received.
(e) CLOSING CERTIFICATE. The receipt by Landry's of a
certificate executed by the Chief Executive Officer and Chief
Financial Officer of Bayport dated the Closing
52
<PAGE>
Date, certifying that the conditions specified in Section 7.2(a) and
7.2(b) hereof have been fulfilled.
(f) GOOD STANDING AND TAX CERTIFICATES. Bayport will have
delivered to Landry's, each dated as of a date not earlier than five
days prior to the Closing Date, (i) copies of the certificates of
incorporation or other organizational documents, including all
amendments thereto, certified by the appropriate government official of
each member of the Bayport Group, (ii) to the extent issued by such
jurisdiction, certificates from the appropriate governmental official
to the effect that each member of the Bayport Group is in good standing
in such jurisdiction and listing all organizational documents of the
members of the Bayport Group on file, (iii) to the extent issued by
such jurisdiction, a certificate from the appropriate governmental
official in each jurisdiction in which each member of the Bayport Group
is qualified to do business to the effect that such member is in good
standing in such jurisdiction and (iv) to the extent issued by such
jurisdiction, certificates as to the tax status of each member of the
Bayport Group in its jurisdiction of organization and each jurisdiction
in which such member is qualified to do business.
(g) CONFIRMATION OF POOLING-OF-INTERESTS AVAILABILITY. The
receipt by Landry's of an opinion or confirmation thereof of its
independent public accountants that is eligible to be a party to a
merger accounted for by the pooling-of-interests method of accounting
and that based on such accounting firm's knowledge of the transactions
contemplated by the Agreement and inquiries of the affairs of Bayport,
they are not aware of any matters which prohibit the use of
pooling-of-interests accounting in connection with the Merger.
(h) FAIRNESS OPINION. Landry's shall have received an opinion
from Montgomery Securities on the date this Agreement is executed by
Landry's, in form and substance satisfactory to Landry's, to the effect
that the aggregate of the Merger Consideration and any other payments
to be paid by Landry's is fair to Landry's and to Landry's stockholders
from a financial point of view, and such opinion shall not have been
withdrawn prior to the Closing.
(i) TAX OPINION. Landry's shall have received from
Winstead Sechrest & Minick P.C. an opinion to the effect that the
Merger and the transactions contemplated hereby will constitute a
reorganization under Section 368 of the Code.
(j) OPINION OF COUNSEL. Landry's shall have received
from Akerman, Senterfitt & Eidson, P.A. counsel to Bayport, an
opinion, dated as of the Closing Date in form and substance
satisfactory to Landry's.
(k) BAYPORT SEC FILINGS. Bayport shall have filed with the SEC
its quarterly report on Form 10-Q for the fiscal quarter ending March
25, 1996 and a report on Form 10K-A.
53
<PAGE>
(l) RENEGOTIATION OF LEASES. Bayport shall have been released
from all lease and other obligations in connection with the Crab House
Restaurants in Grand Casino Biloxi and Grand Casino Gulfport and shall
have received an amount equal to Bayport's unamortized hard
construction costs, unamortized FF&E and small wares offset by any
monies due for rent and Bayport shall have had deleted from the leases
covering restaurants in Edgewater, New Jersey (insofar as it relates to
New York City), Orlando 1 and Myrtle 2 (insofar as it relates to
existing Landry's restaurants), and Orlando 2, Myrtle 1 (on a best
efforts basis only) and Singer Island (with respect to Singer Island to
be reduced to 5 miles as it relates to Landry's) any provision
restricting Landry's from opening or maintaining a restaurant in a
geographical area or requiring any of Landry's restaurants results of
operations to be considered in determining Bayport's lease payments.
Landry's shall have received a consent to assignment and/or estoppel
certificate from each lessor of any lease of any real property to which
a member of the Bayport Group is a party in form and substance
satisfactory to Landry's.
(m) NON-COMPETE AGREEMENTS. Landry's shall have
received a non-compete and non-solicitation agreement, satisfactory
to Landry's, from David J. Connor and William D. Korenbaum.
(n) LOANS TO OFFICERS, ETC. At the Closing, all Bayport loans
to officers, employees, shareholders or directors shall have been fully
paid, other than loans to employees for relocating and computer
purchases made in the ordinary course of business.
Section 7.3 CONDITIONS TO BAYPORT'S OBLIGATIONS. The obligations of
Bayport to effect the Merger and the other transactions contemplated by this
Agreement are also subject to the satisfaction or waiver of the following
conditions at or prior to the Closing:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of Landry's in this Agreement or in any
certificate delivered to Bayport pursuant hereto as of the date hereof
will be deemed to have been made again at and as of the Closing Date
(without regard to any Schedule updates furnished by Landry's after the
date hereof unless consented to by Bayport) and will then be true and
correct in all material respects, except to the extent any such
representation or warranty is qualified by materiality or by reference
to the term "Material Adverse Effect", and (ii) Landry's will have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with
by Landry's prior to or on the Closing Date.
(b) NO MATERIAL ADVERSE CHANGE. There shall not have
occurred any event or circumstance resulting in a Material Adverse
Effect with respect to Landry's from the date of this Agreement to
the Closing Date.
54
<PAGE>
(c) HSR ACT. The waiting periods (and any extensions thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
(d) CONSENTS AND APPROVALS. All governmental and other
third-party consents and approvals, if any, necessary to permit the
consummation of the transactions contemplated by this Agreement will
have been received.
(e) CLOSING CERTIFICATE. The receipt by Bayport of a
certificate executed by the Chief Executive Officer and Chief Financial
Officer of Landry's dated the Closing Date, certifying that the
conditions specified in Section 7.3(a) and 7.3(b) hereof have been
fulfilled.
(f) GOOD STANDING AND TAX CERTIFICATES. Landry's will have
delivered to Bayport, each dated as of a date not earlier than five
days prior to the Closing Date, (i) copies of the certificates of
incorporation, including all amendments thereto, certified by the
appropriate government official, of each member of the Landry's
Affiliated Group, (ii) certificates from the appropriate governmental
official to the effect that each member of the Landry's Affiliated
Group is in good standing in such jurisdiction and listing all charter
documents of such members on file, (iii) a certificate from the
appropriate governmental official in each jurisdiction in which each
member of the Landry's Affiliated Group is qualified to do business to
the effect that such member is in good standing in such jurisdiction
and (iv) certificates as to the tax status of each member of the
Landry's Affiliated Group in its jurisdiction of organization and each
jurisdiction in which such member is qualified to do business.
(g) CONFIRMATION OF POOLING-OF-INTERESTS AVAILABILITY. The
receipt by Bayport of an opinion or confirmation thereof of its
independent accountants that Bayport qualifies as an entity that may be
party to a business combination for which the pooling-of-interests
method of accounting would be available.
(h) FAIRNESS OPINION. Bayport shall have received a letter
from Alex. Brown & Sons Incorporated dated the date this Agreement is
executed by Bayport and confirmed within five days prior to the date
the Proxy Statement is mailed to the Bayport stockholders, in form and
substance satisfactory to Bayport, to the effect that the aggregate of
the Merger Consideration to be received by holders of Bayport Common
Stock and Bayport Preferred Stock will be fair to such holders from a
financial point of view, and such opinion shall not have been withdrawn
prior to the Closing.
(i) TAX OPINION. The receipt by Bayport of an opinion
from Akerman, Senterfitt & Eidson, P.A. to the effect that the Merger
and the transactions contemplated hereby will constitute a
reorganization under Section 368 of the Code.
55
<PAGE>
(j) OPINION OF COUNSEL. The receipt by Bayport of opinions
from Winstead Sechrest & Minick P.C., counsel for Landry's, in form and
substance satisfactory to Bayport.
Section 7.4 WAIVER OF CONDITIONS. Any condition to a party's obligation
to effect the Merger hereunder may be waived by that party in writing, other
than the conditions specified in Sections 7.1(a) or 7.1(b), the first two lines
of 7.2(c) or 7.3(c).
ARTICLE 8 - POST-CLOSING COVENANTS
Section 8.1 USE OF BAYPORT NAME. Landry's shall be entitled to
use the Bayport name and any abbreviation thereof and any associated trade or
service marks.
Section 8.2 INDEMNIFICATION OF DIRECTORS AND OFFICERS OF BAYPORT.
(a) From and after the Effective Time of the Merger, Landry's agrees to
indemnify and hold harmless, and to cause Surviving Corporation to honor its
separate indemnification obligations to, each person who is an officer or
director of Bayport (or a member of the Bayport Group serving at the request of
Bayport) on the date of this Agreement (together with those persons discussed in
the last sentence of this subsection, an "Indemnified Person") from and against
all damages, liabilities, judgments and claims (and related expenses including,
but not limited to, attorney's fees and amounts paid in settlement) based upon
or arising out of the transactions contemplated by this Agreement and based upon
or arising from his or her capacity as an officer or director of Bayport (or a
member of the Bayport Group serving at the request of Bayport), to the same
extent he or she would have been indemnified under the Certificate of
Incorporation or By-laws of Bayport as such documents were in effect on the date
of this Agreement. Subject to an Indemnified Person's obligation to refund any
advances in accordance with the Florida BCA, Landry's shall advance all
litigation costs reasonably incurred by such Indemnified Person.
(b) The rights granted to the Indemnified Persons hereby shall be
contractual rights inuring to the benefit of all Indemnified Persons and shall
survive this Agreement and any merger, consolidation or reorganization of
Landry's.
(c) The rights to indemnification granted by this Section 8.2 are
subject to the following limitations: (i) amounts otherwise required to be paid
by Landry's to an Indemnified Person pursuant to this Section 8.2 shall be
reduced by any amounts that such Indemnified Person has recovered by virtue of
the claim for which indemnification is sought and Landry's shall be reimbursed
for any amounts paid by Landry's that such Indemnified Person subsequently
recovers by virtue of such claim; (ii) any claim for indemnification pursuant to
this Section 8.2 must be submitted in writing to the Chief Executive Officer of
Landry's promptly upon such Indemnified Person becoming aware of such claim,
provided that any such failure to advise promptly has a
56
<PAGE>
prejudicial effect on Landry's; and (iii) an Indemnified Person shall not settle
any claim for which indemnification is provided herein without the prior written
consent of Landry's.
Section 8.3 PUBLICATION OF POST-MERGER RESULTS. Landry's shall use its
reasonable best efforts to cause financial results covering at least thirty days
of post-Merger combined operations to be published in its first report of
quarterly financial statements as soon as practicable after such information is
required to be filed with the SEC.
Section 8.4 EMPLOYEE BENEFITS. Following the consummation of the
Merger, Landry's shall arrange to make generally available to the employees of
Bayport the benefits generally applicable to Landry's employees.
Section 8.5 REGISTRATION RIGHTS. Landry's shall use its reasonable best
efforts to cause a Registration Statement or Registration Statements on Form S-8
and or S-3 to be filed with the SEC at Closing and covering the shares of
Landry's Common Stock to be issued upon exercise of the Bayport Stock Options
(provided that no representation is made by Landry's that any such Form S-8
Registration Statement will in all cases be available to permit resales of
Landry's Common Stock).
ARTICLE 9 - TERMINATION
Section 9.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated herein abandoned at any time before the Effective Time,
whether before or after approval by the stockholders of Bayport as follows:
(a) MUTUAL CONSENT. By the mutual consent of the Boards
of Directors of Bayport and Landry's.
(b) MATERIAL BREACH. By the Board of Directors of either
Bayport or Landry's if there has been a material breach by the other of
any representation or warranty contained in this Agreement or of any
covenant contained in this Agreement, which in either case cannot be,
or has not been, cured within 15 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) ABANDONMENT. By the Board of Directors of either Bayport
or Landry's if (i) all conditions to Closing required by Article 7
hereof have not been met or waived by December 31, 1996, or (ii) the
Merger has not occurred by such date; provided, however, that neither
Bayport nor Landry's shall be entitled to terminate this Agreement
pursuant to this subparagraph (c) if such party is in willful and
material violation of any of its representations, warranties or
covenants in this Agreement.
57
<PAGE>
(d) LACK OF APPROVAL. By the Board of Directors of either
Bayport or Landry's, if any required approval of the stockholders of
Bayport shall not have been obtained by reason of the failure to obtain
the required vote at the Special Meeting of Bayport stockholders or at
any adjournment thereof.
(e) GOVERNMENT ACTION. If any governmental authority shall
have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger
and such order, decree, ruling or other action shall have become final
and nonappealable.
(f) TERMINATION FEE. If the Agreement is terminated (a) by
Bayport's Board of Directors pursuant to Section 6.5, or (b) by
Landry's because of Bayport's failure to satisfy the conditions to
Closing set forth in Sections 7.2(a), (d), (j), (l), or (n) and 7.3(g),
Bayport shall be obligated to pay to Landry's a fee (the "Termination
Fee") in cash in an amount equal to (i) 2.5% of (x) the product of the
closing sale price of Landry's Common Stock on the Nasdaq-National
Market on the date of termination multiplied by the number of shares of
Landry's Common Stock which would have been issued or reserved for
issuance if the transaction contemplated hereby had been consummated on
such date, plus (y) any Bayport debt on such date; plus (ii) all
expenses, including legal, accounting and tax expenses, expenses
incurred in connection with the rendering of the "fairness opinion,"
and expenses incurred by Landry's in connection with the negotiation
and preparation of this Agreement and the transactions contemplated
herein. If this Agreement is terminated by Landry's because of
Bayport's inability to obtain approval of this Agreement by its
stockholders, or because of Bayport's failure to satisfy the conditions
to Closing set forth in Section 7.2(b) then the amount set forth in (i)
above for determining the Termination Fee shall be reduced from 2.5% to
1.5%. Bayport shall be obligated to pay the applicable Termination Fee
within six months following such termination.
Section 9.2 EFFECT OF TERMINATION. Upon termination of this Agreement
pursuant to this Article 9, this Agreement shall be void and of no effect, other
than the obligation to pay the Termination Fee referred to in Section 9.1(f), if
applicable, and the provisions of Section 9.3 and shall result in no obligation
of or liability to any party or their respective directors, officers, employees,
agents or shareholders, other than the confidentiality and non-solicitation
provisions hereof unless such termination was the result of an intentional
breach of any representation, warranty or covenant in this Agreement in which
case in addition to the Termination Fee, if any to be paid hereunder, the party
who breached the representation, warranty or covenant shall be liable to the
other party for damages, and all costs and expenses incurred in connection with
the preparation, negotiation, execution and performance of this Agreement.
Section 9.3 ACQUISITION OF BAYPORT PROPERTIES. In the event this
Agreement is terminated as a result of Bayport's acceptance of a Superior
Proposal as described in Section 6.5, then Landry's shall immediately exercise
its right, which right is hereby irrevocably granted by Bayport, to convert any
outstanding collateralized debt of Bayport owed to Landry's (the
58
<PAGE>
"Landry's Debt") to ownership of the collateral (the "Collateral") securing such
debt by notifying the escrow agent holding any documents required for conveying
the collateral (the "Conveyance Documents") to deliver the Conveyance Documents
to Landry's. Upon receipt by Landry's of the Conveyance Documents, Landry's
shall: (i) assign all of its right, title and interest in and to any documents
evidencing the Landry's Debt (the "Loan Documents") to those banks which are
secured lenders of Bayport (the "Banks"); and (ii) disburse to Banks the sum of
$11 million less: any amounts previously loaned by Landry's to Bayport pursuant
to the Landry's Debt, any accrued but unpaid interest on the Landry's Debt, any
costs and expenses incurred in connection with the Landry's Debt, and any
unadvanced amounts pursuant to the Landry's Debt required to complete the
construction of any of the Collateral. Upon such receipt of the Conveyance
Documents and the disbursement to the Banks, Landry's shall be deemed to have
converted the Landry's Debt to ownership of those leasehold estates owned by
Bayport which form a part of the Collateral (the "Collateral Tracts") and all
improvements, furniture, fixtures, equipment and other personalty located on
each of the Collateral Tracts together with all accounts, contract rights,
trademarks, trade names, trade dress and general intangibles now or hereafter
existing as a result of operations on the Collateral Tracts (the "Collateral
Personalty"), and Bayport shall be conclusively deemed to have sold the
Collateral Tracts and Collateral Personalty to Landry's.
ARTICLE 10 - MISCELLANEOUS
Section 10.1 NOTICES. All notices hereunder must be in writing and will
be deemed to have been duly given upon receipt of hand delivery; certified or
registered mail, return receipt requested; or telecopy transmission with
confirmation of receipt:
(a) If to Landry's:
Landry's Seafood Restaurant, Inc.
1400 Post Oak Blvd., Suite 1010
Houston, Texas 77056
Attn: Tilman J. Fertitta
Fax: (713) 623-4702
with a copy to:
Winstead Sechrest & Minick P.C.
910 Travis, Suite 1700
Houston, Texas 77002
Attn: Arthur S. Berner
Fax: (713) 951-3800
59
<PAGE>
(b) If to Bayport:
Bayport Restaurant Group, Inc.
4000 Hollywood Blvd.
Hollywood, Florida 33021
Attn: David J. Connor
Fax: (305) 967-8846
with a copy to:
Akerman, Senterfitt & Eidson, P.A.
28th Floor
Suntrust International Center
One Southeast Third Avenue
Miami, Florida 33131
Attn: Philip B. Schwartz
Fax: (305) 374-5095
Such names and addresses may be changed by written notice to each person listed
above.
Section 10.2 GOVERNING LAW. This Agreement shall be governed by,
construed and interpreted in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 10.3 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
Section 10.4 INTERPRETATION; SCHEDULES. (a) When a reference is made in
this Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
(b) The information set forth in the Schedules to this Agreement is
qualified in its entirety by reference to the specific provisions of this
Agreement, and is not intended to constitute, and shall not be construed as
constituting, separate representations or warranties of the party to which such
Schedules relate except as and to the extent provided in this Agreement.
Inclusion of information in the Schedules shall not be construed as an admission
that such information is material for purposes of the specific provisions of
this Agreement to which such
60
<PAGE>
information relates. Information included in the Schedules that is not required
to be so included under the specific provisions of this Agreement shall be
deemed to be included for informational purposes only and information of a
similar nature need not be included, at the discretion of the party providing
such information. Any information disclosed by a party in any Schedule shall be
deemed to be disclosed in all the Schedules of such party and for all purposes
under this Agreement to the extent the specific provisions of this Agreement
require such disclosure.
(c) In the event of any inconsistency between provisions of this
Agreement and any provision contained in the documents evidencing the Landry's
Debt (the "Debt Documents") the provisions of the Debt Documents shall control.
Section 10.5 ENTIRE AGREEMENT; SEVERABILITY. (a) This Agreement,
including the Exhibits and Schedules hereto, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the parties with respect to such subject
matter.
(b) If any provision of this Agreement is determined to be invalid or
unenforceable, in whole or in part, it is the parties' intention that such
determination will not be held to affect the validity or enforceability of any
other provision of this Agreement, which provisions will otherwise remain in
full force and effect.
Section 10.6 AMENDMENT AND MODIFICATION. This Agreement may be amended
or modified only by written agreement of the parties hereto. This Agreement may
be amended by the parties at any time before or after any required approval of
matters presented in connection with the Merger by the stockholders of Bayport;
PROVIDED, HOWEVER, that after any such approval, there shall be made no
amendment that by law requires further approval by such stockholders without the
further approval of such stockholders.
Section 10.7 EXTENSION; WAIVER. At any time prior to the Effective Time
of the Merger, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) waive compliance with any
of the agreements or conditions contained in this Agreement except for Sections
7.1(a) or 7.1(b), the first two lines of 7.2(c) and 7.3(c). The failure of a
party to insist upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach. Any waiver must be in
writing.
Section 10.8 BINDING EFFECT; BENEFITS. This Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing in this
61
<PAGE>
Agreement, express or implied, is intended to confer on any Person other than
the parties hereto and their respective successors and assigns (and, to the
extent provided in Section 8.2, the indemnified Persons and their successors and
assigns) any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
Section 10.9 ASSIGNABILITY. This Agreement is not assignable by
any party hereto without the prior written consent of the other parties.
Section 10.10 EXPENSES. Except as otherwise provided herein, each of
the parties hereto shall pay all of its own expenses relating to the
transactions contemplated by this Agreement, including without limitation the
fees and expenses of its own financial, legal and tax advisors.
Section 10.11 GENDER AND CERTAIN DEFINITIONS. All words used herein,
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires.
Section 10.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representation, warranty, covenant or agreement shall survive the Closing Date.
Section 10.13 EFFECT OF DUE DILIGENCE. No investigation by Landry's or
Bayport into the business, operations and conditions of the other shall diminish
in any way the effect of any representation or warranty made by either party in
this Agreement or shall relieve such party of any of its obligations under this
Agreement.
Section 10.14 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplate hereby and to carry into effect the intends and
purposes of this Agreement.
62
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
LANDRY'S SEAFOOD RESTAURANTS, INC.
By: /s/ TILMAN J. FERTITTA
------------------------------------------
TILMAN J. FERTITTA
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
LANDRY'S ACQUISITION, INC.
By: /s/ TILMAN J. FERTITTA
------------------------------------------
TILMAN J. FERTITTA
PRESIDENT
BAYPORT RESTAURANT GROUP, INC.
By: /s/ DAVID J. CONNOR
------------------------------------------
DAVID J. CONNOR
CHAIRMAN, AND CHIEF EXECUTIVE OFFICER
CONTRACT TERMINATION/CONSULTING AGREEMENT
THIS Agreement is made and entered into as of the date stated below by
and between Landry's Seafood Restaurants, Inc., a Delaware corporation (the
"Company"), and David J. Connor ("Consultant").
W I T N E S S E T H:
WHEREAS, the Company proposes to acquire Bayport Restaurant Group, Inc.
("Bayport") through the merger of a subsidiary of the Company with and into
Bayport (the "Merger");
WHEREAS, Consultant is presently the Chairman and Chief Executive
Officer of Bayport;
WHEREAS, the Company wishes to retain the services of Consultant, and
Consultant is willing to perform services for the Company, upon the terms and
conditions hereinafter set forth;
WHEREAS, Consultant will acquire during the course of Consultant's
consulting with the Company certain valuable and confidential information
concerning the Company, the suppliers and employees of the Company, and the
products and services provided by the Company, the revelation of which would
damage the business, goodwill, and competitive position of the Company; and
Consultant will develop personal contacts with the suppliers and employees of
the Company during the course of Consultant's consulting with the Company which
are vital to the Company's business;
WHEREAS, Consultant possesses similar confidential information and has
developed similar relationships with respect to the business of Bayport, and the
Company will pay fair value for such information and relationships in connection
with the Merger;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties do hereby agree as follows:
1. TERMINATION OF EMPLOYMENT CONTRACT. The Company and Consultant agree
that on the effective date of the Merger, the existing Employment Agreement
between Consultant and Bayport dated April 1, 1995 shall terminate, and neither
Bayport nor the Company, nor any successor of Bayport or affiliate of the
Company, nor Consultant will have any further rights or obligations thereunder.
In consideration of such agreement of Consultant: (a) the Company shall pay to
Consultant at the closing of the Merger the amount of $1,800,000 by wire
transfer of immediately available funds to an account designated by Consultant;
and (b) the Company shall provide for the full vesting as of the closing of the
Merger of all options to acquire stock of Bayport (which as of the closing of
the Merger shall be converted into options to acquire stock of the Company)
which have been granted to Consultant and such options shall remain exercisable
for the time periods stated therein without regard to Consultant's employment
with Bayport or the Company.
<PAGE>
2. ENGAGEMENT. The Company hereby engages Consultant, and
Consultant hereby accepts such engagement and agrees to perform the consulting
services specified herein, upon the terms and conditions hereinafter set forth.
3. TERM. The term of Consultant's engagement under this Agreement shall
be for a period of two (2) years, beginning on the effective date of the Merger;
provided, however, that the Company may terminate Consultant's engagement under
this Agreement prior to the end of such term by immediately paying to Consultant
a lump sum payment equal to the then present value of the remaining payments due
Consultant under Section 5 hereof, using a 7% discount rate (the "Termination
Payment"); PROVIDED, FURTHER, in the event of the death of the Consultant, the
Company shall pay to the Consultant's estate the Termination Payment. Upon
expiration or termination of the term of this Agreement as provided above, the
parties shall have no further rights or obligations hereunder, save and except
the obligation of the Company to pay to Consultant amounts described in the
prior sentence, and the obligations of Consultant under Sections 9 and 10
hereof.
4. CONSULTING SERVICES. Consultant agrees to perform such consulting
services relating to the Company's business as may be requested from time to
time by the President of the Company. Consultant shall make himself available to
the Company to perform such services during normal business hours, upon
reasonable notice by the Company. The Company shall not require Consultant to
travel excessively in order to perform his services hereunder, and, to the
extent practicable, Consultant may perform such services by telephone.
Consultant shall be free to dispose of such portion of his time, energy, and
skill that he is not obligated to devote to the Company hereunder in such manner
and to such persons or Business Entities (as hereinafter defined) as he sees
fits, subject, however, to the provisions of Sections 9 and 10 of this
Agreement. Consultant shall at all times perform his services hereunder in a
professional manner. Consultant shall take all steps necessary for the reporting
and payment of any income taxes of Consultant arising out of this Agreement.
5. COMPENSATION. The Company shall pay to Consultant, as his entire
compensation for all services rendered hereunder, a consulting fee of ten
thousand dollars ($10,000.00) per month, payable on the first day of each
calendar month during the term hereof. The fee payable for the first and last
months during the term of this Agreement shall be prorated to reflect the number
of days during those months actually covered by the term of this Agreement.
6. OTHER BENEFITS. As an independent contractor of the Company,
Consultant shall not be entitled to participate in any benefit programs
established for the employees of the Company.
7. EXPENSES. During the period of Consultant's engagement by
the Company hereunder, Consultant is authorized to incur reasonable expenses in
connection with any consulting services requested by the Company, including
expenses for entertainment, travel, and similar items. The Company will
reimburse Consultant for all such expenses upon presentation
-2-
<PAGE>
to the Company of an itemized account of such expenses. No expense in excess of
$250 will be reimbursed unless such expense has been approved by the President
of the Company.
8. DEFINITIONS. As used in this Agreement, the following words
or phrases shall mean and include the following:
(a) The term "Business Entity" shall mean and include any corporation,
partnership, joint venture, proprietorship, or other incorporated or
unincorporated organization, association or entity, including any division or
business operated by any of the foregoing under a trade or assumed name.
(b) The term "Subsidiaries" shall mean and include those Business
Entities in which the Company owns any interest, directly or indirectly.
(c) The term "employee of the Company" shall mean any person employed
by the Company or any of its Subsidiaries in any capacity at any time during the
three (3) year period following the effective date of the Merger.
9. CONFIDENTIALITY
(a) Consultant acknowledges that the Company's continued operations and
success in the Seafood Restaurant Business are dependent upon certain methods,
processes, designs, systems, and know-how of the Company, which constitute
secret and confidential information of the Company and which are valuable,
special, and unique assets of the Company. Consultant further acknowledges that
the Company's continued operations and success in the seafood restaurant
business are dependent upon the Company's continuing relationships with, and
knowledge about, suppliers of the Company and the goodwill those relationships
create. As a result of his engagement by the Company, Consultant will be placed
in a position to establish and maintain close personal contacts with suppliers
of the Company and other Business Entities doing business or having
relationships with the Company and their employees, and the employees of the
Company. Consultant acknowledges that Consultant will have access to secret and
confidential information of the Company relating to such Business Entities and
their employees and the employees of the Company, all of which is a valuable,
special, and unique asset of the Company's business. The secret and confidential
information described above includes, but is not limited to: (i) the names,
addresses, and telephone numbers of suppliers and of their employees and
representatives; (iv) the nature of the internal business operations and
accounting procedures of the Company; (v) the methods, processes, designs,
systems, and know-how used, developed, or acquired by the Company in connection
with the seafood restaurant business, including, without limitation, any such
methods, processes, designs, systems, and know-how invented, conceived,
developed, improved, or perfected by Consultant during the term of this
Agreement; (vii) information regarding the salaries, bonuses, or other
compensation paid by the Company to its employees; and (viii) accounting and
financial information regarding the
-3-
<PAGE>
operations and financial position of the Company. In addition, Consultant
possesses secret and confidential information with respect to Bayport, for which
the Company will pay fair value in connection with the Merger.
(b) Consultant acknowledges that all of the secret and confidential
information described in subsection (a) of this Section 9 is, or with respect to
Bayport, will become upon closing of the Merger, the sole and exclusive property
of the Company. Consultant acknowledges that such secret and confidential
information is revealed to Consultant in trust, based solely upon the
confidential relationship existing between the Company and Consultant, or was
invented, conceived, developed, improved, or perfected by Consultant on behalf
of the Company or Bayport. Consultant acknowledges and agrees that all records,
memoranda, notes, files, invoices, proposals, business plans, contracts,
correspondence and other documents or written information, and all other
computer or electronically stored records, data, software, and disks, whether in
the possession of the Company or Consultant, concerning such secret and
confidential information (hereinafter collectively called "Records") are or will
become the sole and exclusive property of the Company and that all Records,
materials, and supplies furnished to Consultant by the Company or Bayport or
developed by Consultant during the course of his employment by Bayport or his
engagement by the Company, and all data or information recorded or placed on
such Records by Consultant or any other person belong to the Company and shall
at all times remain the Company's sole and exclusive property. Consultant agrees
that, upon termination of term of this Agreement, howsoever such termination is
brought about, or upon request of the Company prior to such termination,
Consultant shall deliver to the Company all Records and all of such materials
supplies and equipment in the possession of Consultant. Consultant agrees that
he will not make or retain any copies of such Records for his own personal use,
or take the originals or copies of any such Records from the offices of the
Company upon termination of this Agreement. Consultant further agrees that he
will not, either during or after the term of this Agreement, use any of such
Records of their contents or any of the secret and confidential information
described in subsection (a) of this Section 9, or publish, distribute, or
deliver any of such Records to any other person or entity, or disclose to any
person or entity the contents of such Record or any of the secret and
confidential information described in subsection (a) of this Section 9, except
as may be required in the course of Consultant's engagement by the Company.
10. COVENANT NOT TO COMPETE. Consultant acknowledges that due to the
secret and confidential information, and personal contacts with the suppliers
and employees of the Company, acquired by Consultant during the course of his
engagement by the Company, or possessed by Consultant with respect to Bayport
prior to the Merger but for which the Company will pay full consideration, the
Company would be irreparably damaged should Consultant in any way enter into
competition with the Company. Therefore, and specifically in consideration of
Consultant's engagement by the Company, Consultant agrees that for a period of
three (3) years following the effective date of the Merger, Consultant will not:
(i) directly or indirectly be employed by, own, manage,
-4-
<PAGE>
operate, join, control, or participate in the ownership, management, operation,
or control of, or be connected with, in any manner, any Business Entity which is
then engaged in the seafood restaurant business in the United States; or (ii)
directly or indirectly solicit any employee of the Company or any of its
Subsidiaries to accept employment, whether permanent or temporary, with any
competing Business Entity described above or to terminate such employee's
employment with the Company or any of its Subsidiaries. Consultant and the
Company agree that if any provision of this Section 10 is found to be invalid or
unenforceable, such provision shall be automatically modified to the extent
necessary to make it valid and enforceable. Consultant and the Company agree
that the covenant contained in this Section 10 is ancillary to the Merger, shall
be independent of the other terms and conditions of this Agreement and shall
continue for the period specified herein regardless of any termination of this
Agreement. Consultant hereby agrees and acknowledges that the restrictions
contained in this section are reasonable, will not preclude Consultant from
earning a livelihood, and are necessary to protect the Company's legitimate
interests in the secret and confidential information described in Section 9
hereof.
11. INJUNCTIVE RELIEF. Consultant acknowledges that if Consultant shall
violate or breach any of the provisions of the preceding two sections, the
Company will suffer immediate and irreparable harm, damage, and injury which
cannot be adequately compensated by an award of damages, and the Company will
have no other adequate remedy at law. Accordingly, Consultant agrees and
acknowledges that, in addition to all other remedies available to the Company,
the Company shall be entitled to seek and procure specific enforcement of the
obligations of the preceding two sections by injunction or any other remedy
available at law or in equity. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for any breach or threatened breach of this Agreement, including the
recovery of damages from Consultant.
12. AUTHORITY. Consultant understands and agrees that under the
terms of this Agreement, he is not an agent of the Company and therefore has no
authority whatsoever to act on behalf of or bind the Company with regard to any
matter or contract.
13. INDEPENDENT CONTRACTOR STATUS. Consultant is an independent
contractor of the Company hereunder and no provision hereof shall be deemed to
constitute Consultant as the agent, employee, partner, or joint venturer of the
Company.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by certified mail,
return receipt requested, to Consultant at the address shown below, or to the
Company at its office at 1400 Post Oak Boulevard, Suite 1010, Houston, Texas
77056, Attention: President, or to such other address as either party shall
designate by written notice to the other party.
-5-
<PAGE>
15. VALIDITY. In the event any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement and the Agreement shall
be construed as if such invalid, illegal, or unenforceable provisions were
omitted.
16. WAIVER. The failure of the Company at any time, or from time to
time, to require performance by Consultant of any provision hereof shall in no
way affect the rights of the Company thereafter to enforce the same, nor shall
the waiver by the Company of any breach of any provision hereof by Consultant
constitute a waiver of any succeeding breach of such provision or a waiver of
any breach of any other provision hereof; and the failure of Consultant at any
time, or from time to time, to require performance by the Company of any
provision hereof shall in no way affect the rights of Consultant thereafter to
enforce the same, nor shall the waiver by Consultant of any breach of any
provision hereof by the Company constitute a waiver of any succeeding breach of
such provision or a waiver of any breach of any other provision hereof.
17. ENTIRE AGREEMENT. This Agreement supersedes any and all prior
agreements between the Company and Consultant and constitutes the sole existing
agreement between the Company and Consultant. This Agreement may be amended,
modified, superseded, or cancelled, and any of the terms, provisions, covenants,
representations, or conditions contained herein may be waived only by a written
instrument executed by all parties hereto, or in the case of a waiver, by the
party waiving compliance. The construction and effect of this Agreement shall
not be affected in any way by any customs or practices of the Company,
Consultant, or of the industry, field, or profession of the Company or
Consultant, whether arising prior or subsequent to the date of this Agreement.
18. ASSIGNMENT. Consultant may not assign his rights or
obligations hereunder. The rights and obligations of the Company hereunder shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company.
19. GOVERNING LAW. This Agreement shall be interpreted,
construed, and governed according to the laws of the state of Delaware.
EXECUTED this 18th day of April, 1996, to be effective on the date
specified above.
-6-
<PAGE>
The Company: Consultant:
LANDRY'S SEAFOOD RESTAURANTS,
INC., a Delaware corporation /s/ DAVID J. CONNOR
------------------------------
David J. Connor
Address:
_______________________________
_______________________________
_______________________________
By:/s/ TILMAN J. FERTITTA
---------------------------------
Tilman J. Fertitta, President
-7-
CONTRACT TERMINATION AGREEMENT
THIS Agreement is made and entered into as of the date stated below by
and between Landry's Seafood Restaurants, Inc., a Delaware corporation (the
"Company"), and William D. Korenbaum ("Executive").
W I T N E S S E T H:
WHEREAS, the Company proposes to acquire Bayport Restaurant Group, Inc.
("Bayport") through the merger of a subsidiary of the Company with and into
Bayport (the "Merger");
WHEREAS, Executive is presently the President of Bayport;
WHEREAS, the Company and Executive desire to terminate the current
Employment Agreement between Bayport and Executive dated April 1, 1995 effective
the effective date of the Merger, upon the terms and conditions hereinafter set
forth;
WHEREAS, Executive has acquired during the course of Executive's
employment with Bayport certain valuable and confidential information concerning
Bayport, the suppliers and employees of Bayport, and the products and services
provided by Bayport, the revelation of which would damage the business,
goodwill, and competitive position of Bayport, or of the Company following the
Merger; and Executive has developed personal contacts with the suppliers and
employees of Bayport during the course of Executive's employment with Bayport
which are vital to Bayport's business;
WHEREAS, the Company will pay fair value for such information and
relationships in connection with the Merger;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties do hereby agree as follows:
1. TERMINATION OF EMPLOYMENT CONTRACT. The Company and Executive agree
that on the effective date of the Merger, the Employment Agreement shall
terminate, and neither Bayport nor the Company, nor any successor of Bayport or
affiliate of the Company, nor Executive will have any further rights or
obligations thereunder. In consideration of such agreement of Executive and the
other agreements of Executive contained herein: (a) the Company shall pay to
Executive at the closing of the Merger the amount of $1,300,000 by wire transfer
of immediately available funds to an account designated by Executive; (b) the
Company shall provide for the full vesting as of the closing of the Merger of
all options to acquire stock of Bayport (which as of the closing of the Merger
shall be converted into options to acquire stock of the Company) which have been
granted to Executive and such options shall remain exercisable for the time
periods stated therein without regard to Executive's employment with Bayport or
the Company; (c) the Company shall pay to the Executive $10,000 a month during
the 12 month period immediately following closing date of the Merger; and (d)
the Company shall purchase at closing of the Merger an annuity for the benefit
of the Executive that pays the Executive
<PAGE>
$10,000 a month for the 12 month period commencing 12 months following the
closing date of the Merger. No interest or other earnings shall accrue or be
payable with respect to any such payments.
2. DEFINITIONS. As used in this Agreement, the following words
or phrases shall mean and include the following:
(a) The term "Business Entity" shall mean and include any corporation,
partnership, joint venture, proprietorship, or other incorporated or
unincorporated organization, association or entity, including any division or
business operated by any of the foregoing under a trade or assumed name.
(b) The term "Subsidiaries" shall mean and include those Business
Entities in which the Company owns any interest, directly or indirectly.
(c) The term "employee of the Company" shall mean any person employed
by the Company or any of its Subsidiaries in any capacity at any time during the
three (3) year period following the effective date of the Merger.
3. CONFIDENTIALITY
(a) Executive acknowledges that the operations and success of Bayport
in the Seafood Restaurant Business are dependent upon certain methods,
processes, designs, systems, and know-how of Bayport, which constitute secret
and confidential information of the Company and which are valuable, special, and
unique assets of Bayport. Executive further acknowledges that operations and
success of Bayport in the seafood restaurant business are dependent upon the
Bayport's continuing relationships with, and knowledge about, suppliers of
Bayport and the goodwill those relationships create. Executive further
acknowledges that as a result of his employment by the Company, Executive has
full knowledge of such secret and confidential information and has been in a
position to establish and maintain close personal contacts with suppliers of
Bayport and other Business Entities doing business or having relationships with
Bayport and their employees, and the employees of the Company. Executive further
acknowledges that the Company is paying fair value for such confidential
information and relationships and the goodwill they create in connection with
the Merger. The secret and confidential information described above includes,
but is not limited to: (i) the names, addresses, and telephone numbers of
suppliers and of their employees and representatives; (iv) the nature of the
internal business operations and accounting procedures of Bayport; (v) the
methods, processes, designs, systems, and know-how used by Bayport in connection
with the seafood restaurant business, including, without limitation, any such
methods, processes, designs, systems, and know-how invented, conceived,
developed, improved, or perfected by Executive during his employment by Bayport;
(vii) information regarding the salaries, bonuses, or other compensation paid by
Bayport to its employees; and
-2-
<PAGE>
(viii) accounting and financial information regarding the operations and
financial position of Bayport.
(b) Executive acknowledges that all of the secret and confidential
information described in subsection (a) of this Section 3 will become upon
closing of the Merger the sole and exclusive property of the Company. Executive
acknowledges and agrees that all records, memoranda, notes, files, invoices,
proposals, business plans, contracts, correspondence and other documents or
written information, and all other computer or electronically stored records,
data, software, and disks, whether in the possession of the Company, Bayport, or
Executive, concerning such secret and confidential information (hereinafter
collectively called "Records") are or will become the sole and exclusive
property of the Company and that all Records, materials, and supplies furnished
to Executive by Bayport or developed by Executive during the course of his
employment by Bayport , and all data or information recorded or placed on such
Records by Executive or any other person will belong to the Company and shall at
all times remain the Company's sole and exclusive property. Executive agrees
that upon request of the Company after the closing of the Merger, Executive
shall deliver to the Company all Records and all of such materials supplies and
equipment in the possession of Executive. Executive agrees that he will not make
or retain any copies of such Records for his own personal use, or take the
originals or copies of any such Records from the offices of Bayport. Executive
further agrees that he will not use any of such Records or their contents or any
of the secret and confidential information described in subsection (a) of this
Section 3, or publish, distribute, or deliver any of such Records to any other
person or entity, or disclose to any person or entity the contents of such
Record or any of the secret and confidential information described in subsection
(a) of this Section 3, except as may be required in the course of Executive's
employment by Bayport or the Company.
4. COVENANT NOT TO COMPETE. Executive acknowledges that due to the
secret and confidential information, and personal contacts with the suppliers
and employees of Bayport, possessed by Executive with respect to Bayport but for
which the Company will pay full consideration in connection with the Merger, the
Company would be irreparably damaged should Executive in any way enter into
competition with the Company. Therefore, and specifically in consideration of
the covenants of the Company contained herein, Executive agrees that for a
period of three (3) years following the date of the termination of Executive's
employment with the Company, Executive will not: (i) directly or indirectly be
employed by, own, manage, operate, join, control, or participate in the
ownership, management, operation, or control of, or be connected with, in any
manner, any Business Entity which is then engaged in the seafood restaurant
business in the United States; or (ii) directly or indirectly solicit any
employee of the Company or any of its Subsidiaries to accept employment, whether
permanent or temporary, with any competing Business Entity described above or to
terminate such employee's employment with the Company or any of its
Subsidiaries. Executive and the Company agree that if any provision of this
Section 4 is found to be invalid or unenforceable, such provision shall be
automatically modified to the extent necessary to make it valid and enforceable.
-3-
<PAGE>
Executive hereby agrees and acknowledges that the restrictions contained in this
section are reasonable, are ancillary to the Merger, will not preclude Executive
from earning a livelihood, and are necessary to protect the Company's legitimate
interests in the secret and confidential information described in Section 3
hereof and other intangible property of Bayport being acquired by the Company in
connection with the Merger.
5. INJUNCTIVE RELIEF. Executive acknowledges that if Executive shall
violate or breach any of the provisions of the preceding two sections, the
Company will suffer immediate and irreparable harm, damage, and injury which
cannot be adequately compensated by an award of damages, and the Company will
have no other adequate remedy at law. Accordingly, Executive agrees and
acknowledges that, in addition to all other remedies available to the Company,
the Company shall be entitled to seek and procure specific enforcement of the
obligations of the preceding two sections by injunction or any other remedy
available at law or in equity. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for any breach or threatened breach of this Agreement, including the
recovery of damages from Executive.
6. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by certified mail,
return receipt requested, to Executive at the address shown below, or to the
Company at its office at 1400 Post Oak Boulevard, Suite 1010, Houston, Texas
77056, Attention: President, or to such other address as either party shall
designate by written notice to the other party.
7. VALIDITY. In the event any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement and the Agreement shall
be construed as if such invalid, illegal, or unenforceable provisions were
omitted.
8. WAIVER. The failure of the Company at any time, or from time to
time, to require performance by Executive of any provision hereof shall in no
way affect the rights of the Company thereafter to enforce the same, nor shall
the waiver by the Company of any breach of any provision hereof by Executive
constitute a waiver of any succeeding breach of such provision or a waiver of
any breach of any other provision hereof; and the failure of Executive at any
time, or from time to time, to require performance by the Company of any
provision hereof shall in no way affect the rights of Executive thereafter to
enforce the same, nor shall the waiver by Executive of any breach of any
provision hereof by the Company constitute a waiver of any succeeding breach of
such provision or a waiver of any breach of any other provision hereof.
9. ENTIRE AGREEMENT. This Agreement supersedes any and all prior
agreements between the Company and Executive and constitutes the sole existing
agreement between the Company and Executive with respect to the subject matter
hereof.
-4-
<PAGE>
This Agreement may be amended, modified, superseded, or cancelled, and any of
the terms, provisions, covenants, representations, or conditions contained
herein may be waived only by a written instrument executed by all parties
hereto, or in the case of a waiver, by the party waiving compliance.
10. ASSIGNMENT. Executive may not assign his rights or
obligations hereunder. The rights and obligations of the Company hereunder
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company.
11. GOVERNING LAW. This Agreement shall be interpreted,
construed, and governed according to the laws of the state of Delaware.
EXECUTED this 18th day of April, 1996, to be effective on the date
specified above.
The Company: Executive:
LANDRY'S SEAFOOD RESTAURANTS,
INC., a Delaware corporation
/s/ WILLIAM D. KORENBAUM
------------------------
William D. Korenbaum
Address:
_________________________
_________________________
_________________________
By: /s/ TILMAN J. FERTITTA
-----------------------------------
Tilman J. Fertitta, President
-5-
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of the18th day of
April, 1996, by and among BAYPORT RESTAURANT GROUP, INC., a Florida corporation
("Borrower"), whose address is 4000 Hollywood Boulevard, Suite 695-S, Hollywood,
Florida 03021, Borrower's wholly-owned subsidiary, CRAB HOUSE, INC., a Florida
corporation whose address is 4000 Hollywood Boulevard, Suite 695-S, Hollywood,
Florida 03021 ("Crab House") and LANDRY'S SEAFOOD RESTAURANTS, INC., a Delaware
corporation ("Landry's"), whose address is 1400 Post Oak Boulevard, Suite 1010,
Houston, Texas 77056.
I
DEFINITION OF TERMS
As used in this Agreement, the following terms shall have the
respective meanings indicated below:
ADVANCE: A disbursement by Landry's, whether by check to Borrower,
check to third party, journal entry to pay interest on the Loan or otherwise, of
any of the proceeds of the Loan or any insurance proceeds.
AGREEMENT: This Loan Agreement, as the same may from time to time be
amended or supplemented.
AGREEMENT REGARDING CREDIT FACILITY: That certain agreement by and
among Borrower, Crab House, some of Borrower's other wholly-owned subsidiaries,
Landry's, and Banks dated April 18, 1996.
ALLOCATIONS: The line items set forth, as to each of the Projects,
in the Project Budgets for which Advances of Loan proceeds will be made.
BALTIMORE BUDGET: The budget set forth on Exhibit "C-1" attached hereto
and incorporated herein by reference, setting forth the costs and expenses
associated with the completion of the Baltimore Improvements.
BALTIMORE IMPROVEMENTS: All site preparation, amenities, buildings,
parking lots and landscaping being constructed by Crab House on the Baltimore
Tract, all as more particularly described in the plans and specifications
applicable to the Baltimore Tract.
BALTIMORE TRACT: The leasehold estate owned by Crab House with
respect to a restaurant site in Baltimore, Maryland all as more particularly
described on Exhibit "B-1" attached
Loan Agreement - Page 1
<PAGE>
hereto and made a part hereof.
BANKS: The First National Bank of Boston and Capital Bank.
CHELSEA PIER BUDGET: The budget set forth on Exhibit "C-2" attached
hereto and incorporated herein by reference, setting forth the costs and
expenses associated with the completion of the Chelsea Pier Improvements.
CHELSEA PIER IMPROVEMENTS : All site preparation, amenities, buildings,
parking lots and landscaping being constructed by Crab House on the Chelsea Pier
Tract, all as more particularly described in the plans and specifications
applicable to the Chelsea Pier Tract.
CHELSEA PIER TRACT: The leasehold estate owned by Crab House with
respect to a restaurant site in New York City, New York, all as more
particularly described on Exhibit "B-2" attached hereto and made a part hereof.
CHICAGO TRACT: That certain leasehold estate owned by Borrower which
is described on Exhibit "A-2" attached hereto and made a part hereof.
COLLATERAL TRACTS : Those leasehold estates owned by Borrower or Crab
House which are now or hereafter encumbered by Borrower or Crab House by a
valid, first priority, perfected Deed of Trust to secure the repayment of the
Loan.
COLLATERAL PERSONALTY: All improvements, furniture, fixtures, equipment
and other personalty located on each of the Collateral Tracts together with all
accounts, contract rights, trade marks, trade names, trade dress and general
intangibles now or hereafter existing as a result of operations on the
Collateral Tracts and which shall be the subject of a valid, first priority,
perfected Security Agreement to secure the repayment of the Loan.
COMPLETION DATE: The date, as to each of the Projects, on which such
Project is scheduled for completion, as specifically set forth on Exhibit "D"
attached hereto and made a part hereof.
CONVEYANCE DOCUMENTS. All deeds, bills of sale, assignments, license
agreements and other documents pursuant to which title to the Collateral Tracts
and Collateral Personalty will be conveyed to Landry's upon its conversion of
the Loan debt to ownership as provided for herein.
CONVEYANCE ESCROW: That certain escrow agreement by and among
Landry's,
Loan Agreement - Page 2
<PAGE>
Borrower, Crab House and Escrow Agent pursuant to which the Conveyance Documents
will be deposited with Escrow Agent to be released to Landry's upon the terms
and conditions set forth therein.
DEED OF TRUST: Collectively, all deeds of trust, mortgages, collateral
assignments of leases or other lien documents, reasonably satisfactory to
Landry's in form and substance, pursuant to which Borrower and Crab House have
granted, or hereafter will grant, first priority liens on the Collateral Tracts
to secure the Loan.
ESCROW AGENT: Chicago Title Insurance Company, Attention: Janet Karr,
909 Fannin Street, Houston, Texas.
EVENT OF DEFAULT: Any happening or occurrence described in Section
6.1 of this Agreement.
FINANCING STATEMENT: The financing statement or financing statements
(on Standard Form UCC-1 or otherwise) applicable to the Collateral Tracts and
the Collateral Personalty now or hereafter executed and delivered by Borrower
and Crab House in connection with the Loan Documents.
GOVERNMENTAL AUTHORITY: Any and all courts, boards, agencies,
commissions, offices, or authorities of any nature whatsoever for any
governmental unit (federal, state, county, district, municipal, city or
otherwise), whether now or hereafter in existence.
GOVERNMENTAL REQUIREMENTS: All statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions or decrees of any Governmental Authority
applicable to Borrower, Crab House or the Projects.
GREAT NECK BUDGET: The budget set forth on Exhibit "C-3" attached
hereto and incorporated herein by reference, setting forth the costs and
expenses associated with the completion of the Great Neck Improvements.
GREAT NECK IMPROVEMENTS: All site preparation, amenities, buildings,
parking lots and landscaping being constructed by Crab House on the Great Neck
Tract, all as more particularly described in the plans and specifications
applicable to the Great Neck Tract.
GREAT NECK TRACT: The leasehold estate owned by Crab House with respect
to a restaurant site in Great Neck, New York, all as more particularly described
on Exhibit "B-3" attached hereto and made a part hereof.
Loan Agreement - Page 3
<PAGE>
IMPROVEMENTS: Collectively, the Baltimore Improvements, the Chelsea
Improvements, the Great Neck Improvements, and the Nashville Improvements.
INITIAL ADVANCE: The Advance to be made at the time Borrower
satisfies the conditions set forth in Sections 3.01 and 3.02 of this Agreement.
INSPECTING PERSON: Collectively, such persons designated by Landry's
from time to time who may inspect the Improvements from time to time for the
benefit of Landry's.
JUPITER TRACT: That certain leasehold estate owned by Crab House,
Inc. which is described on Exhibit "A-1" attached hereto and made a part hereof.
LAND: Collectively, the Baltimore Tract, the Chelsea Pier Tract, the
Great Neck Tract, and the Nashville Tract.
LOAN: The loan evidenced by the Note.
LOAN AMOUNT: $11,000,000.
LOAN DOCUMENTS: The Note, the Deed of Trust, this Agreement, the
Security Agreement, the Financing Statement, the Agreement Regarding Credit
Facility, the Conveyance Escrow and all other documents now or hereafter
executed by the Borrower, Crab House or any other person or party in connection
with the Loan, the indebtedness evidenced by the Note, or the covenants
contained in this Agreement.
MERGER AGREEMENT: That certain agreement of even date herewith pursuant
to which Landry's and Borrower have agreed that, pursuant to the terms thereof,
Bayport will merge with and into a wholly-owned subsidiary of Landry's and all
of the outstanding shares of Borrower will be exchanged for shares of Landry's.
MYRTLE I TRACT: That certain leasehold estate owned by Borrower which
is described on Exhibit "A-3" attached hereto and made a part hereof.
MYRTLE II TRACT: That certain leasehold estate owned by Crab House
which is described on Exhibit "A-4" attached hereto and made a part hereof.
NASHVILLE BUDGET: The budget set forth on Exhibit "C-4" attached
hereto and incorporated herein by reference, setting forth the costs and
expenses associated with the
Loan Agreement - Page 4
<PAGE>
completion of the Nashville Improvements.
NASHVILLE IMPROVEMENTS: All site preparation, amenities, buildings,
parking lots and landscaping being constructed by Crab House on the Nashville
Tract, all as more particularly described in the plans and specifications
applicable to the Nashville Tract.
NASHVILLE TRACT: The leasehold estate owned by Crab House with respect
to a restaurant site in Nashville, Tennessee, all as more particularly described
on Exhibit "B-4" attached hereto and made a part hereof.
NOTE: The promissory note dated as of even date herewith in the
principal sum of the Loan Amount (together with all renewals and extensions
thereof) which has been executed and delivered by Borrower to Landry's
representing the Loan.
PROJECTS: Collectively, the Land and the Improvements.
PROJECT BUDGETS: Collectively, the Baltimore Budget, the Chelsea
Pier Budget, the Great Neck Budget, and the Nashville Budget.
SECURITY AGREEMENT: Collectively, all security agreements, whether
contained in the Deed of Trust or otherwise creating a valid, first priority and
perfected security interest in the Collateral Personalty (including
replacements, substitutions, proceeds and after-acquired property).
II
THE LOAN
2.1 AGREEMENT TO LEND. Landry's hereby agrees to lend up to but not in
excess of the Loan Amount to Borrower, and Borrower hereby agrees to borrow such
sum from Landry's, all upon and subject to the terms and provisions of this
Agreement, such sum to be evidenced by the Note. No principal amount repaid by
Borrower may be reborrowed by Borrower. Borrower's liability for repayment of
the interest on account of the Loan shall be limited to and calculated with
respect to Loan proceeds actually disbursed to Borrower and only from the date
or dates of such disbursements. Landry's may, in Landry's discretion, disburse
funds by journal entry to pay interest due but unpaid under the Note and
disburse Loan proceeds directly to third parties to pay costs or expenses
required to be paid by Borrower pursuant to this Agreement. Loan proceeds
disbursed by journal entry, as well as those disbursed directly by Landry's to
pay costs or expenses required to be paid by Borrower pursuant to this
Agreement, shall constitute Advances to Borrower.
Loan Agreement - Page 5
<PAGE>
2.2 ADVANCES. The purposes for which Loan proceeds are allocated and
the respective amounts of such Allocations are set forth in the respective
Project Budgets. Provided that all conditions precedent have been satisfied, the
Initial Advance shall be made as soon after the execution of this Agreement as
such conditions precedent have been satisfied and subsequent Advances shall be
made on or about the fifteenth day of each subsequent month commencing May 15,
1996.
2.3 ALLOCATIONS. The Allocations shall be disbursed only for the
purposes set forth in each of the Project Budgets. Funds allocated pursuant to
one of the Project Budgets may not be reallocated to one of the other Project
Budgets unless and until it has been established, by virtue of the completion of
the Project for which such funds were allocated, that such funds are excess.
Landry's shall not be obligated to make an Advance for an Allocation set forth
in any of the Project Budgets to the extent that the amount of the Advance for
such Allocation would, when added to all prior Advances for such Allocation,
exceed the total of such Allocation as set forth in the applicable of the
Project Budgets.
2.4 LIMITATION ON ADVANCES. To the extent that Loan proceeds disbursed
by Landry's pursuant to the Allocations are insufficient to pay all costs
required for the development, construction and completion of the Projects,
Borrower shall pay such excess costs with funds derived from sources other than
the Loan. Under no circumstances shall the sum of all Advances made exceed the
Loan Amount.
2.5 REALLOCATIONS. Landry's reserves the right, at its option, to
disburse Loan proceeds allocated to any of the Allocations for such other
purposes or in such different proportions as Landry's may, in its reasonable
discretion, deem necessary or advisable; provided however that Landry's shall
not reallocate funds from one of the Project Budgets to another of the Project
Budgets without the consent of Borrower. Borrower shall not be entitled to
require that Landry's reallocate funds among the Allocations except to the
extent that Borrower has completed one or more of the Projects and excess funds
are available in the Project Budgets applicable to such completed Projects.
2.6 CONTINGENCY ALLOCATIONS. Any amount allocated in the Project
Budgets for "contingencies" or other non-specific purposes may, in Landry's
discretion, be disbursed by Landry's to pay future contingent costs and expenses
of completing and equipping the Improvements (on a Project specific basis) and
such other costs or expenses as Landry's shall approve. Under no circumstances,
other than in connection with the exercise by Landry's of its right to convert
the Loan debt to ownership of the Collateral Tracts and Collateral Personalty,
shall the Borrower have the right to require Landry's to disburse any amounts
allocated for such contingencies, and Landry's may impose such requirements and
conditions as it deems prudent
Loan Agreement - Page 6
<PAGE>
and necessary should it elect to disburse all or any portion of the amounts
so allocated.
2.7 ONGOING COMMITMENT. Notwithstanding the termination of the Merger
Agreement, other than a termination as a result of Borrower accepting a Superior
Proposal (as such term is defined in the Merger Agreement) as described in
Section 6.5 of the Merger Agreement, so long as Borrower continues to meet the
conditions precedent to the making of Advances, then Landry's shall, until such
time as it converts the Loan debt to ownership, continue to make Advances as
provided for herein.
III
ADVANCES
3.1 CONDITIONS TO INITIAL ADVANCE. The obligation of Landry's
to make the Initial Advance hereunder is subject to the prior or simultaneous
occurrence of each of the following conditions:
(a) Borrower shall have obtained the execution of the Agreement Regarding
Credit Facility by Banks, Borrower, Crab House and some of Borrower's other
wholly-owned subsidiaries, as applicable.
(b) Borrower shall have obtained from Banks' agent assignments to Landry's
of all of their right, title and interest in and to all mortgages, deeds of
trust, security agreements, collateral assignments, financing statements and
other collateral documents which are held by Banks' agent with respect to the
Jupiter Tract and the Collateral Personalty associated with the Jupiter Tract.
(c) Borrower shall have furnished to Landry's certified copies of
resolutions of Borrower and Crab House authorizing execution, delivery and
performance of all of the Conveyance Documents and Loan Documents and
authorizing the borrowing hereunder, along with such certificates of
existence, certificates of good standing and other certificates or documents
as Landry's may reasonably require to evidence Borrower's and Crab House's
authority.
(d) Borrower shall have furnished to Landry's true copies of all
organization documents of Borrower and Crab House, including all amendments or
supplements thereto (receipt of which is acknowledged by Landry's).
Loan Agreement - Page 7
<PAGE>
(e) Landry's shall have received from Borrower all of the Loan Documents
duly executed by Borrower and, where required, by Crab House, and the Loan
Documents shall remain outstanding and enforceable in accordance with their
terms, all as required hereunder.
(f) The Conveyance Documents as to the Jupiter Tract shall have been duly
executed by Borrower and, where required, by Crab House, and the Conveyance
Documents shall have been delivered to the Escrow Agent pursuant to the terms
of the Conveyance Escrow.
(g) Borrower shall have furnished to Landry's an opinion of counsel for
Borrower and Crab House, which counsel shall be satisfactory to Landry's, to
the effect that (i) Borrower and Crab House are duly organized, validly
existing and in good standing under the laws of the State of Florida and that
each is qualified to do business in all jurisdictions where such qualification
is required to preclude a material adverse affect on Borrower or Crab House;
(ii) the Loan Documents have been duly authorized, executed and delivered by
Borrower and, where required, by Crab House, (iii) the Conveyance Documents
have been duly authorized, executed and delivered to Escrow Agent by Borrower
and, where required, by Crab House; (iv) to the knowledge of such counsel,
there are no actions, suits or proceedings pending or threatened against or
affecting Borrower, Crab House, the Jupiter Tract or the Collateral Personalty
relating to the Jupiter Tract, or involving the priority, validity or
enforceability of the liens or security interests arising out of the Loan
Documents, at law or in equity, or before or by any Governmental Authority,
except actions, suits or proceedings fully covered by insurance or which, if
adversely determined, would not substantially impair the ability of Borrower
to pay when due any amounts which may become payable in respect to the Loan as
represented by the Note; (v) to the knowledge of such counsel, neither
Borrower nor Crab House is in default with respect to any order, writ,
injunction, decree or demand of any court or any Governmental Authority of
which such counsel has knowledge; and (vi) to the knowledge of such counsel,
the consummation of the transactions hereby contemplated and the performance
of this Agreement will not violate or contravene any provision of any
instrument creating or governing the business operations of Borrower or Crab
House and will not result in any breach of, or constitute a default under, any
mortgage, deed of trust, lease, bank loan or credit agreement or other
instrument to which Borrower or Crab House is a party or by which Borrower,
Crab House, the Jupiter Tract or the Collateral Personalty relating to the
Jupiter Tract may be bound or affected.
(h) Landry's shall have received from Borrower such other instruments,
evidence and certificates as it may reasonably require.
Loan Agreement - Page 8
<PAGE>
3.2 CONDITIONS TO ADVANCES. The obligation of Landry's to make each
Advance hereunder, including the Initial Advance, shall be subject to the prior
or simultaneous occurrence or satisfaction of each of the following conditions:
(a) The representations and warranties made by Borrower and Crab House,
as contained in this Agreement and in all other Loan Documents shall be true and
correct as of the date of each Advance; and if requested by Landry's, Borrower
and Crab House shall give certificates to Landry's to that effect.
(b) The covenants made by Borrower and Crab House to Landry's, as
contained in this Agreement and in all other Loan Documents shall have been
fully complied with, except to the extent such compliance may be limited by the
passage of time or the completion of construction of the Improvements.
(c) Except in connection with the Initial Advance, Landry's shall have
received an agreement, to the extent consent is required pursuant to the terms
of any lease by which the leasehold estate in a Collateral Tract was created,
from each of the fee title owners of each of the Collateral Tracts which are
being encumbered as a condition precedent to such Advance, as well as from the
lessors of each of the leases by which Borrower's or Crab House's leasehold
estate in such Collateral Tracts was created (to the extent that such lessors
are different from the fee title owners, such fee owners and lessors being
hereinafter collectively called, "OWNERS") whereby such Owners agree:
(i) that Borrower or Crab House, as applicable,
are permitted to grant a mortgage, deed of trust,
collateral assignment of lease or other lien, in form and
substance reasonably satisfactory to Landry's, on such
leasehold estates to Landry's to secure Borrower's
obligations to Landry's under this Agreement;
(ii) that Borrower or Crab House, as applicable,
are permitted to convey the Collateral Tracts to Landry's
or a designee which (1) has a net worth reasonably
acceptable to such Owner, (2) is an operator reasonably
experienced in the restaurant business, (3) will continue
to operate the applicable Collateral Tract as a
restaurant, (4) is a tenant that will be in keeping with
the then existing tenant mix if the Collateral Tract is
part of a multi-tenant facility and (5) the proposed use
of the Collateral Tract will not violate any use
restrictions by which Owner is bound but only to the
extent that Landry's would have also been prohibited from
engaging in such use, as contemplated by the Conveyance
Documents and that the leases by which such leasehold
estates in the Collateral Tracts were created will be
deemed to have been
Loan Agreement - Page 9
<PAGE>
modified to the extent necessary to except from the
operation of any "radius" clause or similar restriction
any restaurant sites owned by Landry's as of the date on
which the Conveyance Documents are delivered to Landry's;
(iii) that such Owners will give Landry's written
notice of any breach or default by Borrower or Crab House,
as applicable, under such leases and, prior to pursuing
any remedies available to such Owners for such breach or
default, afford to Landry's a reasonable period of time,
not to exceed an additional fifteen days after the cure
period provided for in the Lease has expired, within which
to effect a cure of such breach or default (but without
any obligation on the part of Landry's to do so ) in the
event Borrower or Crab House, as applicable, does not
effect such cure within the time period permitted in such
leases; provided however that if such breach or default is
not of the type which can be reasonably cured by Landry's
unless and until it gains possession of the applicable
Collateral Tract, then such cure period shall be extended
for such time as may be required for Landry's to acquire
possession of or title to the applicable of the Collateral
Tracts;
(iv) that in the event of a foreclosure of the
Deed of Trust with respect to any of the Collateral
Tracts, any purchaser at such foreclosure sale that is
reasonably acceptable to such Owner shall be entitled to
become the lessee of the leasehold estate foreclosed and
that, upon performing the covenants set forth in the
leases applicable thereto such purchaser shall enjoy all
of the rights and benefits provided to the lessee under
the terms of such leases.
(d) No Event of Default as enumerated in Section 6.1(b) shall then
exist.
(e) All work typically done at the stage of construction when the
Advance is requested shall have been done, and all materials, supplies, chattels
and fixtures typically furnished or installed at such stage of construction
shall have been furnished or installed.
(f) At the time each Collateral Tract and its Collateral Personalty
become security for the Loan (but not in connection with each Advance
thereafter) Borrower shall have provided to Landry's evidence that Borrower or
Crab House, as applicable, holds good and sufficient leasehold title to such
Collateral Tracts, as well as good title to related Collateral Personalty, each
subject to no claims, adverse interests or exceptions other than those which are
acceptable to Landry's in its sole and absolute discretion.
Loan Agreement - Page 10
<PAGE>
(g) Borrower shall have provided evidence to Landry's that the
leasehold estates in each of the Collateral Tracts are superior to the liens of
any mortgages placed on the Collateral Tracts by the Owners thereof or that
acceptable non-disturbance agreements have been provided to Borrower or Crab
House, as applicable, and that such non-disturbance agreements will inure to the
benefit of Borrower's or Crab House's successors and assigns, as applicable.
3.3 ADVANCE AMOUNT LIMITATIONS. Mention is made that it is contemplated
that the Collateral Tracts will ultimately consist of the Nashville Tract, the
Chicago Tract, the Great Neck Tract, the Myrtle I Tract and the Myrtle II Tract,
together with the Collateral Personalty associated with each; however due to the
constraints of time Borrower will not have been able to obtain the consents of
the Owners, as contemplated by Section 3.2(c) hereof, at the time of the Initial
Advance. Further, as a condition to entering into the Agreement Regarding Credit
Facility, Banks have required that Collateral Tracts and Collateral Personalty
be encumbered only contemporaneously with the making of Advances which are
approximately equal to the agreed Loan collateral value of such Collateral
Tracts and Collateral Personalty as they then exist. Accordingly, and
notwithstanding anything in this Agreement to the contrary, it is agreed as
follows:
(a) so long as the Collateral Tracts and Collateral Personalty consists
only of the Jupiter Tract and the Collateral Personalty associated therewith,
Landry's shall not be obligated to make Advances which exceed, in the aggregate,
Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00);
(b) at the time the Nashville Tract becomes one of the Collateral
Tracts, its associated personalty becomes Collateral Personalty and Conveyance
Documents are executed and delivered to the Conveyance Escrow with respect to
the Nashville Tract and its associated Collateral Personalty, then the
limitation on aggregate Advances will increase by Five Hundred Thousand and
No/100 Dollars ($500,000.00);
(c) at the time the Chicago Tract becomes one of the Collateral Tracts,
its associated personalty becomes Collateral Personalty and Conveyance Documents
are executed and delivered to the Conveyance Escrow with respect to the Chicago
Tract and its associated Collateral Personalty, then the limitation on aggregate
Advances will increase by Two Million One Hundred Thousand and No/100 Dollars
($2,100,000.00);
(d) at the time the Great Neck Tract becomes one of the Collateral
Tracts, its associated personalty becomes Collateral Personalty and Conveyance
Documents are executed and delivered to the Conveyance Escrow with respect to
the Great Neck Tract and its associated Collateral Personalty, then the
limitation on aggregate Advances will increase by Five Hundred Thousand
Loan Agreement - Page 11
<PAGE>
and No/100 Dollars ($500,000.00);
(e) at the time the Myrtle I Tract becomes one of the Collateral
Tracts, its associated personalty becomes Collateral Personalty and Conveyance
Documents are executed and delivered to the Conveyance Escrow with respect to
the Myrtle I Tract and its associated Collateral Personalty, then the limitation
on aggregate Advances will increase by Two Million Seven Hundred Thousand and
No/100 Dollars ($2,700,000.00);
(f) at the time the Myrtle II Tract becomes one of the Collateral
Tracts, its associated personalty becomes Collateral Personalty and Conveyance
Documents are executed and delivered to the Conveyance Escrow with respect to
the Myrtle II Tract and its associated Collateral Personalty, then the
limitation on aggregate Advances will increase by Two Million Seven Hundred
Thousand and No/100 Dollars ($2,700,000.00); and
(g) provided, however, that at such time as the Collateral Tracts
consist of the Nashville Tract, the Great Neck Tract, the Myrtle I Tract and the
Myrtle II Tract, and their respective Collateral Personalty, then
notwithstanding that the lien on the Jupiter Tract and on its related Collateral
Personalty has been reassigned to Banks' agent, the aggregate amount of Advances
shall not be limited by the provisions of this Section 3.3, and Landry's shall
thereafter be obligated to Advance, subject to the provisions of this Agreement,
the full Loan Amount.
3.4 ADVANCE NOT A WAIVER. No Advance of the proceeds of the
Loan shall constitute a waiver of any of the conditions of Landry's obligation
to make further Advances.
3.5 ADVANCE NOT AN APPROVAL. The making of any Advance or
part thereof shall not be deemed an approval or acceptance by Landry's of the
work theretofore done.
3.6 TIME AND PLACE OF ADVANCES. All Advances are to be made at the
office of Landry's, or at such other place as Landry's may designate; and
Landry's shall require, other than with respect to the Initial Advance, five (5)
days' prior notice in writing before the making of any such Advance. Advances
shall be made, by federal wire transfer to an account in the continental United
States designated by Borrower, within ten (10) days after the request for such
Advance, together with supporting documentation, has been submitted, failing in
which Landry's shall, prior to the end of such time period, notify Borrower, in
writing, as to the reasons why such Advance has not been made.
3.7 LIEN WAIVERS. Prior to making any Advance, other than the Initial
Advance, Landry's shall have received evidence satisfactory to Landry's that
payment in full has been made for all obligations accrued through the date of
the preceding Advance and Borrower shall have
Loan Agreement - Page 12
<PAGE>
furnished to Landry's lien waivers signed by all general contractors, major
subcontractors (meaning those whose subcontracts exceed, on any of the Projects,
$10,000.00) and major suppliers (meaning those whose supply contracts or
purchase orders exceed, on any of the Projects, $10,000.00) to the Project
acknowledging such payment and waiving lien rights through the date of the
preceding Advance.
3.8 NO THIRD PARTY BENEFICIARIES. The benefits of this Agreement shall
not inure to any third party, nor shall this Agreement be construed to make or
render Landry's liable to any materialmen, subcontractors, contractors, laborers
or others for goods and materials supplied or work and labor furnished in
connection with the construction of the Improvements or for debts or claims
accruing to any such persons or entities against Borrower. Landry's shall not be
liable for the manner in which any Advances under this Agreement may be applied
by Borrower and Borrower's contractors. Notwithstanding anything contained in
the Loan Documents, or any conduct or course of conduct by the parties hereto,
before or after signing the Loan Documents, this Agreement shall not be
construed as creating any rights, claims or causes of action against Landry's,
or any of its officers, directors, agents or employees, in favor of any
contractor, subcontractor, supplier of labor or materials, or any of their
respective creditors, or any other person or entity other than Borrower. Without
limiting the generality of the foregoing, Advances made to any contractor,
subcontractor or supplier of labor or materials, pursuant to any requests for
Advances, whether or not such request is required to be approved by Borrower,
shall not be deemed a recognition by Landry's of a third-party beneficiary
status of any such person or entity.
IV
WARRANTIES AND REPRESENTATIONS
Borrower hereby unconditionally warrants and represents to Landry's, as
of the date hereof and at all times during the term of the Agreement, that:
4.1 PLANS AND SPECIFICATIONS. The plans and specifications for each of
the Projects are satisfactory to Borrower and Crab House and are in compliance,
in all material respects, with all Governmental Requirements and, to the extent
required by applicable law or any effective restrictive covenant, have been
approved by each Governmental Authority and by the beneficiaries of any
restrictive covenant affecting the Project.
4.2 GOVERNMENTAL REQUIREMENTS. No material violation of any
Governmental Requirements exists or will exist with respect to the Projects and
neither the Borrower nor Crab House are, nor will they be, in default with
respect to any Governmental Requirements.
Loan Agreement - Page 13
<PAGE>
4.3 UTILITY SERVICES. All utility services of sufficient size and
capacity necessary for the construction of the Improvements and the operation
thereof for their intended purposes are available at the property lines of the
Land for connection to the Improvements, including potable water supply, storm
and waste water facilities, and gas, electric and telephone facilities.
4.4 ACCESS. All roads necessary for the full utilization of the
Improvements for their intended purposes have been completed or the necessary
rights-of-way therefor have either been acquired by the appropriate Governmental
Authority or have been dedicated to the public use and accepted by such
Governmental Authority.
V
COVENANTS OF BORROWER
Borrower hereby unconditionally covenants and agrees with Landry's that
until the Loan shall have been paid in full and the lien of the Deed of Trust
shall have been released:
5.1 COMPLETION. Borrower will cause the construction of the
Improvements to be prosecuted with diligence and continuity and will complete
the same in accordance with the plans and specifications applicable to same on
or before the applicable Completion Date as to each of the Projects, free and
clear of liens or claims for liens for material supplied and for labor services
performed in connection with the construction of the Improvements.
5.2 NO CHANGES. Borrower will not, without the prior written consent of
Landry's, amend, alter or change, pursuant to change order, amendment or
otherwise, the plans and specifications for any of the Projects, except to the
extent, on each discrete Project, the cost of an individual change does not
exceed $5,000.00 and the aggregate of the changes on each such discrete Project
does not exceed $20,000.00.
5.3 ADVANCES. Borrower will receive the Advances and will hold same as
a trust fund for the purpose of paying the cost of construction of the
Improvements and related nonconstruction costs related to the Projects as
provided for herein. Borrower will apply the same promptly to the payment of the
costs and expenses for which each Advance is made and will not use any part
thereof for any other purpose.
5.4 LANDRY'S EXPENSES. Borrower will, at the time the Note
is repaid, reimburse Landry's for all expenses of Landry's, including reasonable
attorneys' fees, incurred in connection with the preparation, execution,
delivery and performance of the Loan Documents and Conveyance Documents. Upon
request from Borrowers, Landry's will furnish reasonable
Loan Agreement - Page 14
<PAGE>
supporting documentation with respect to such costs and expenses.
5.5 DEFECTS AND VARIANCES. Borrower will, upon demand of Landry's and
at Borrower's sole expense, correct any structural defect in the Improvements or
any variance from the applicable plans and specifications not approved in
writing by Landry's.
5.6 ESTOPPEL CERTIFICATES. Borrower will deliver to Landry's, promptly
after request therefor, estoppel certificates or written statements, duly
acknowledged, stating the amount that has then been advanced to Borrower under
this Agreement, the amount due on the Note, and whether any offsets or defenses
exist against the Note or any of the other Loan Documents.
5.7 INSPECTING PERSON. Borrower will pay the reasonable fees of any
Inspecting Person not an employee of Landry's, and Borrower will pay the
reasonable expenses of all Inspecting Persons, including those employed by
Landry's. Upon request from Borrowers, Landry's will furnish reasonable
supporting documentation with respect to such costs and expenses. Borrower and
Crab House will cooperate, with the Inspecting Person and will cause each of
Borrower's or Crab Houses's contractors, each subcontractor and the employees of
each of them to cooperate with the Inspecting Person and, upon request, will
furnish the Inspecting Person whatever the Inspecting Person may consider
necessary or useful in connection with the performance of the Inspecting
Person's duties. Without limiting the generality of the foregoing, Borrower
shall furnish or cause to be furnished such items as working details, plans and
specifications and details thereof, samples of materials, licenses, permits,
certificates of public authorities, zoning ordinances, building codes and copies
of the contracts between Borrower and Crab House and each of their respective
contractors. Borrower will permit Landry's, the Inspecting Person and their
representative to enter the Project for the purposes of inspecting same. If the
Inspecting Person shall be, or for any reason becomes, disqualified or unable to
act or continue to act as Inspecting Person, or if Landry's in its sole
discretion desires, Landry's may appoint a successor Inspecting Person; and any
such successor shall have the same duties to Landry's and shall be entitled to
the same cooperation as if he had originally been named herein. Borrower
acknowledges that the duties of the Inspecting Person run solely to Landry's and
that the Inspecting Person shall have no obligations or responsibilities
whatsoever to Borrower, Crab House or to any of Borrower's or Crab House's
contractors of any of such contractor's agents, employees, or subcontractors.
5.8 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Borrower will
comply promptly with all Governmental Requirements.
5.9 COMPLIANCE WITH RESTRICTIVE COVENANTS. Borrower will comply with
all restrictive covenants, if any, affecting the Land. Construction of the
Improvements will be
Loan Agreement - Page 15
<PAGE>
performed in a good and workmanlike manner, within the perimeter boundaries of
the Land and within all applicable building and setback lines in accordance with
all Governmental Requirements. There are, and will be, no structural defects in
the Improvements.
5.10 NOTICES RECEIVED. Borrower will promptly deliver to Landry's a
true and correct copy of all notices received by Borrower or Crab House, from
any person or entity with respect to the Collateral Tracts, the Collateral
Personalty, the Projects, or any or all of them.
VI
EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. The following shall constitute
"Events of Default" hereunder:
(a) if Borrower or Crab House shall fail to comply with any of the
covenants, duties or obligations of Borrower in this Agreement and such failure
shall not be cured to the reasonable satisfaction of Landry's within fifteen
(15) days following written notice thereof to Borrower;
(b) if Borrower or Crab House (i) shall allow the levy against the
Collateral Tracts, Collateral Personalty or any part thereof, of any execution,
attachment, sequestration or other writ which is not vacated within sixty days
after the levy; or (ii) shall allow the appointment of a receiver, trustee or
custodian of Borrower or Crab House or of the Collateral Tracts, Collateral
Personalty or any part thereof, which receiver, trustee or custodian is not
discharged within sixty days after the appointment; or (iii) files as a debtor a
petition, case, proceeding or other action pursuant to, or voluntarily seeks of
the benefit or benefits of any bankruptcy or insolvency law, or takes any action
in furtherance thereof; or (iv) files either a petition, complaint, answer or
other instrument which seeks to effect a suspension of, or which has the effect
of suspending any of the rights or powers of Landry's granted in the Note,
herein, the Conveyance Escrow or in any Loan Document; or (v) allows the filing
of a petition, case, proceeding or other action against Borrower or Crab House
as a debtor under any bankruptcy or insolvency law or seeks appointment of a
receiver, trustee, custodian or liquidator of Borrower or Crab House or of the
Collateral Tracts, Collateral Personalty or any part thereof, or of any
significant portion of Borrower's or Crab House's other property; and (a)
Borrower or Crab House admits, acquiesces in or fails to contest diligently the
material allegations thereof, or (b) the petition, case, proceeding or other
action results in the entry of an order for relief or order granting the relief
sought against Borrower or Crab House, or (c) the petition, case, proceeding or
other action is not permanently dismissed or discharged on or before the earlier
of trial thereon or sixty days
Loan Agreement - Page 16
<PAGE>
next following the date of filing;
(c) if Borrower shall fail, prior to the time when the entirety of the
Loan has been Advanced, to pay the interest due on the Note at the time provided
for the same to be paid;
(d) if Borrower shall fail, after the time when the entirety of the
Loan has been Advanced, to pay the interest due on the Note at the time provided
for the same to be paid.
6.2 REMEDIES.
(a) Landry's shall have the right, but not the obligation, as its sole
and exclusive remedy for an Event of Default which is enumerated in Section 6.1
(a) and as one of its remedies for an Event of Default which is enumerated in
Section 6.1 (b) above, to enter into possession of the Projects and perform any
and all work and labor necessary to complete the Improvements. All amounts so
expended by Landry's shall be deemed to have been disbursed to Borrower as Loan
proceeds and secured by the Deed of Trust. For this purpose, Borrower and Crab
House hereby constitute and appoint Landry's as Borrower's and Crab House's true
and lawful attorney-in-fact, with full power of substitution to complete the
Improvements in the name of Borrower or Crab House, as applicable, and hereby
empower Landry's, acting as Borrower's or Crab House's attorney-in-fact, as
follows: to use any funds which may remain unadvanced hereunder, for the purpose
of completing the Improvements in the manner called for by the plans and
specifications applicable to same; to make such additions and changes and
corrections in the plans and specifications which shall be necessary or
advisable to complete the Improvements in the manner contemplated by the plans
and specifications; to continue all or any existing construction contracts or
subcontracts; to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for said purposes; to pay, settle or compromise
all existing bills and claims which are or may be liens against the Project, or
may be necessary or desirable for the completion of the work or the clearing of
title; to execute all the applications and certificates in the name of Borrower
or Crab House which may be required by any construction contract; and to do any
and every act with respect to the construction of the Improvements which
Borrower or Crab House could do in Borrower's or Crab House's own behalf. It is
understood and agreed that this power of attorney shall be deemed to be a power
coupled with an interest which cannot be revoked. Landry's, acting as Borrower's
and Crab House's attorney-in-fact, shall also have power to prosecute and defend
all actions or proceedings in connection with the Projects and to take such
action and require such performance as it deems necessary.
(b) Landry's shall have the right, upon the happening of an Event of
Default set forth in Section 6.1(b) or 6.1(d) above, to pursue any and all
rights at law or in equity available to a secured creditor.
Loan Agreement - Page 17
<PAGE>
(c) Landry's shall have the right, as its sole and exclusive remedy for
an Event of Default set forth in Section 6.1(c) to make one or more Advances, by
journal entry, to itself to pay the interest and in such event Borrower shall be
obligated to provide substitute funds in order to pay the shortfalls, if any, in
the Project Budgets resulting from such Advances to pay interest.
VII
LANDRY'S DISCLAIMERS - BORROWER'S INDEMNITIES
7.1 NO OBLIGATION BY LANDRY'S TO CONSTRUCT. Landry's has no liability
or obligation whatsoever or howsoever in connection with the Project or the
development, construction or completion thereof or work performed thereon, and
has no obligation except to disburse the Loan proceeds as herein agreed,
Landry's is not obligated to inspect the Improvements nor is Landry's liable,
and under no circumstances whatsoever shall Landry's be or become liable, for
the performance or default of any contractor or subcontractor, or for any
failure to construct, complete, protect or insure the Project, or any part
thereof, or for the payment of any cost or expense incurred in connection
therewith, or for the performance or nonperformance of any obligation of
Borrower or Crab House to Landry's nor to any other person, firm or entity
without limitation. Nothing, including without limitation any disbursement of
Loan proceeds nor acceptance of any document or instrument, shall be construed
as such a representation or warranty, express or implied, on Landry's part.
7.2 NO OBLIGATION BY LANDRY'S TO OPERATE. Any term or condition of any
of the Loan Documents to the contrary notwithstanding, Landry's shall not have,
and by its execution and acceptance of this Agreement hereby expressly
disclaims, any obligation or responsibility for the management, conduct or
operation of the business and affairs of Borrower or Crab House. Any term or
condition of the Loan Documents which permits Landry's to disburse funds or to
take or refrain from taking any action with respect to Borrower, Crab House, the
Project or any other collateral for repayment of the Loan, shall be deemed to be
solely to permit Landry's to audit and review the management, operation and
conduct of the business and affairs of Borrower and Crab House, and to maintain
and preserve the security given by Borrower and Crab House to Landry's for the
Loan, and may not be relied upon by any other person. Further, Landry's shall
not have, has not assumed and by its execution and acceptance of this Agreement
hereby expressly disclaims any liability or responsibility for the payment or
performance of any indebtedness or obligation of Borrower or Crab House and no
term or condition of the Loan Documents, shall be construed otherwise. Borrower
hereby expressly acknowledges that no term or condition of the Loan Documents
shall be construed so as to deem the relationship between Borrower, Crab House
and Landry's to be other than that of borrower, pledgor and lender, and Borrower
shall at all times represent that the relationship between Borrower, Crab House
and
Loan Agreement - Page 18
<PAGE>
Landry's is solely that of borrower, pledgor and lender. Borrower hereby
indemnifies and agrees to hold Landry's harmless from and against any cost,
expense or liability incurred or suffered by Landry's as a result of any
assertion or claim of any obligation or responsibility of Landry's for the
management, operation and conduct of the business and affairs of Borrower or
Crab House, or as a result of any assertion or claim of any liability or
responsibility of Landry's for the payment or performance of any indebtedness or
obligation of Borrower or Crab House.
7.3 INDEMNITY BY BORROWER. Borrower hereby indemnifies Landry's and
each affiliate thereof and their respective officers, directors, employees, and
agents from, and holds each of them harmless against, any and all losses,
liabilities, claims, damages, costs, and expenses to which any of them may
become subject, insofar as such losses, liabilities, claims, damages, costs, and
expenses arise from or relate to any of the Loan Documents or any of the
transactions contemplated thereby (excluding the Merger Agreement) or from any
investigation, litigation, or other proceeding, including, without limitation,
any threatened investigation, litigation, or other proceeding relating to any of
the foregoing. Without intending to limit the remedies available to Landry's
with respect to the enforcement of its indemnification rights as stated herein
or as stated in any Loan Document, in the event any claim or demand is made or
any other fact comes to the attention of Landry's in connection with, relating
or pertaining to, or arising out of the Loan Documents or the Projects, which
Landry's reasonably believes might involve or lead to some liability of
Landry's, Borrower shall, immediately upon receipt of written notification of
any such claim or demand, assume in full the personal responsibility for and the
defense of any such claim or demand and pay in connection therewith any loss,
damage, deficiency, liability or obligation, including, without limitation,
legal fees and court costs incurred in connection therewith. In the event of
court action in connection with any such claim or demand, Borrower shall assume
in full the responsibility for the defense of any such action and shall
immediately satisfy and discharge any final decree or judgment rendered therein.
In the event that any of the foregoing matters are tendered to Borrower for
defense and Borrower fails or refuses to accept such tender, then Landry's may,
in its sole discretion, make any payments sustained or incurred by reason of any
of the foregoing; and Borrower shall immediately repay to Landry's, in cash and
not with proceeds of the Loan, the amount of such payment, with interest thereon
at the default rate of interest provided for in the Note. Landry's shall have
the right to join Borrower as a party defendant in any legal action brought
against Landry's as a result of the Loan Documents or the Projects, and Borrower
hereby consents to the entry of an order making Borrower a party defendant to
any such action.
7.4 NO AGENCY. Nothing herein shall be construed as making
or constituting Landry's as the agent of Borrower or Crab House in making
payments pursuant to any construction contracts or subcontracts entered into by
Borrower or Crab House for construction of the Improvements or otherwise. The
purpose of all requirements of Landry's hereunder is
Loan Agreement - Page 19
<PAGE>
solely to allow Landry's to check and require documentation (including, but not
limited to, lien waivers) sufficient to protect Landry's and the Loan
contemplated hereby. Neither Borrower nor Crab House shall have any right to
rely on any procedures required by Landry's, each hereby acknowledging that
Borrower and Crab House have sole responsibility for constructing the
Improvements and paying for work done in accordance therewith and that Borrower
and Crab House have, each acting solely on its own behalf, selected or approved
each contractor, each subcontractor and each materialman, Landry's having no
responsibility for any such persons or entities or for the quality of their
materials or workmanship.
VIII
THIS AGREEMENT SUPERSEDES
In the event of a conflict between the terms and conditions of this
Agreement and the terms and conditions of any other Loan Document, the terms and
conditions of this Agreement shall control.
IX
CONVERSION TO OWNERSHIP
9.1 In the event the Merger Agreement is terminated for any reason
,other than a termination as a result of Borrower accepting a Superior Proposal
as described in Section 6.5 of the Merger Agreement, then the Note shall be
immediately due and payable in full; however, for a period one hundred twenty
(120) days following such termination Landry's shall, provided that the interest
payments on the Note are timely paid each month, continue to make Advances as
contemplated by Section 2.7 hereof and forbear from taking any action to collect
the unpaid principal on the Note or realize on the Collateral Tracts and
Collateral Personalty.
9.2 During such one hundred twenty (120) day period Borrower or Crab
House, as applicable, shall be permitted to continue to operate the Collateral
Tracts each for its own account. Such operations shall be conducted in the same
manner in which they have historically been conducted, all taxes and utilities
shall be paid by Borrower or Crab House, all improvements, furniture, fixtures
and equipment shall, at Borrower's or Crab House's expense, be insured for their
full replacement value (evidence of which shall be provided to Landry's) with
Landry's named as a loss payee and none of the Collateral Personalty shall be
removed (except as the same becomes worn, broken or obsolete and is replaced in
the ordinary course of business).
Loan Agreement - Page 20
<PAGE>
9.3 At the end of such one hundred twenty (120) day period, if Borrower
shall not have repaid any of the principal balance of the Note, together with
accrued but unpaid interest, then Landry's shall exercise its right, which right
is hereby irrevocably granted by Borrower and Crab House, to convert the debt
evidenced by the Note to ownership by notifying the Document Escrow Agent to
deliver the Conveyance Documents to Landry's. Upon receipt by Landry's of the
Conveyance Documents Landry's shall assign all of its right, title and interest
in and to the Loan Documents to Banks' agent, disburse to Banks' agent any then
undisbursed principal under the Note (less any accrued but unpaid interest, less
the costs and expenses provided for in Sections 5.4 and 5.7 hereof then owed by
Borrower and less the then unadvanced amounts set forth on the Great Neck Budget
and the Nashville Budget), Landry's shall be deemed to have converted the debt
evidenced by the Note to ownership of the Collateral Tracts and Collateral
Personalty, and Borrower and Crab House, as applicable, shall be conclusively
deemed to have sold the Collateral Tracts and Collateral Personalty to Landry's
for an amount equal to the unpaid principal balance of the Note (including the
amount then disbursed to Banks' agent).
9.4 At such time as the Note shall have been fully repaid then the Note
shall be returned to Borrower marked "Paid".
9.5 In the event the Merger Agreement is terminated as a result of the
acceptance by Borrower of a Superior Proposal as described in Section 6.5 of the
Merger Agreement, then Landry's shall immediately exercise its right, which
right is hereby irrevocably granted by Borrower and Crab House, to convert the
debt evidenced by the Note to ownership by notifying the Document Escrow Agent
to deliver the Conveyance Documents to Landry's. Upon receipt by Landry's of the
Conveyance Documents Landry's shall assign all of its right, title and interest
in and to the Loan Documents to Banks' agent, disburse to Banks' agent any then
undisbursed principal under the Note (less any accrued but unpaid interest, less
the costs and expenses provided for in Sections 5.4 and 5.7 hereof then owed by
Borrower and less the then unadvanced amounts set forth on the Great Neck Budget
and the Nashville Budget), Landry's shall be deemed to have converted the debt
evidenced by the Note to ownership of the Collateral Tracts and Collateral
Personalty, and Borrower and Crab House, as applicable, shall be conclusively
deemed to have sold the Collateral Tracts and Collateral Personalty to Landry's
for an amount equal to the unpaid principal balance of the Note (including the
amount then disbursed to Banks' agent).
9.6 The Deed of Trust and the Security Agreement shall secure
Borrower's obligations under the Loan Documents, including without limitation,
the Note and this Agreement. In the event that Landry's attempts to convert the
debt evidenced by the Note to ownership and Borrower, Crab House or any other
person or entity makes any attempt to impede, hinder or delay the delivery of
the Conveyance Documents to Landry's, or if Borrower, Crab House or any other
person or entity, attempts to set aside the conveyances effected by the
Conveyance
Loan Agreement - Page 21
<PAGE>
Documents, then the Deed of Trust and the Security Agreement shall be deemed to
be in full force and effect and Landry's shall be entitled to immediately
foreclose the liens of same. Borrower shall be fully liable for any and all
deficiencies arising from such foreclosure and all costs and expenses, including
without limitation attorneys' fees, incurred by Landry's in doing so shall be
the reimbursed by Borrower to Landry's. Landry's and Borrower hereby acknowledge
and declare that the aggregate value of the Collateral Tracts and Collateral
Personalty does not now, nor is it anticipated to in the future, exceed the
stated principal amount of the Note, the discrete values of each component of
the Collateral Tracts and Collateral Personalty do not exceed the amounts set
forth in Section 9.4 above, and that such amounts have been bargained for and
agreed to as representing not less than fair and adequate consideration for the
conveyance of the Collateral Tracts and Collateral Personalty or any discrete
component thereof. Further, in the event that Landry's forecloses the Deed of
Trust and the Security Agreement then neither Borrower nor Crab House shall have
any rights of redemption with respect to either the Collateral Tracts or
Collateral Personalty, all of which rights are hereby waived.
X
MISCELLANEOUS
10.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, Borrower, Crab House and Landry's, and their
respective successors and assigns, provided that neither Borrower nor Crab House
may assign any rights or obligations under this Agreement without the prior
written consent of Landry's. No assignment of this Agreement by Landry's shall
relieve it from its obligations to make the Advances provided for herein.
10.2 HEADINGS. The Article, Section, and Subsection entitlements hereof
are inserted for convenience of reference only and shall in no way alter,
modify, define or be used in construing the text of such Articles, Sections or
Subsections.
10.3 SURVIVAL. The provisions hereof shall survive the execution of all
instruments herein mentioned, shall continue in full force and effect until the
Loan has been paid in full and shall not be affected by any investigation made
by any party. This instrument may be amended only by an instrument in writing
executed by the parties hereto.
10.4 CONTROLLING AGREEMENT; APPLICABLE LAW. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. COURTS WITHIN THE
STATE OF TEXAS SHALL HAVE JURISDICTION
Loan Agreement - Page 22
<PAGE>
OVER ANY AND ALL DISPUTES AMONG BORROWER, CRAB HOUSE AND LANDRY'S, WHETHER IN
LAW OR EQUITY, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL DISPUTES ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT; AND VENUE IN ANY
SUCH DISPUTE WHETHER IN FEDERAL OR STATE COURT SHALL BE LAID IN HARRIS COUNTY,
TEXAS.
10.5 NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and shall be considered properly given if in accordance with
the procedures for giving notice which are set forth in the Note.
10.6 RELIANCE BY LANDRY'S. Landry's is relying and is entitled to rely
upon each and all of the provisions of this Agreement; and accordingly, if any
provision or provisions of this Agreement should be held to be invalid or
ineffective, then all other provisions hereof shall continue in full force and
effect notwithstanding.
10.7 ENTIRE AGREEMENT. THIS WRITTEN LOAN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN OR ORAL AGREEMENTS BETWEEN THE PARTIES.
10.8 WAIVER OF JURY TRIAL. BORROWER AND CRAB HOUSE HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF THIS AGREEMENT OR
ANY OF THE OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Loan Agreement - Page 23
<PAGE>
BORROWER:
BAYPORT RESTAURANT GROUP, INC.
By: /s/ DAVID J. CONNOR
----------------------------------------
Name: DAVID J. CONNOR
--------------------------------------
Title: CHAIRMAN
-------------------------------------
CRAB HOUSE:
CRAB HOUSE, INC.
By: /s/ WILLIAM D. KORENBAUM
----------------------------------------
Name: WILLIAM D. KORENBAUM
--------------------------------------
Title: PRESIDENT
-------------------------------------
LANDRY'S:
LANDRY'S SEAFOOD RESTAURANTS, INC.
By: /s/ TILMAN J. FERTITTA
----------------------------------------
Name: TILMAN J. FERTITTA
--------------------------------------
Title: CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
-------------------------------------
Loan Agreement - Page 24
<PAGE>
EXHIBIT A
A-1 JUPITER TRACT
A-2 CHICAGO TRACT
A-3 MYRTLE I TRACT
A-4 MYRTLE II TRACT
Loan Agreement - Page 25
<PAGE>
EXHIBIT B
B-1 BALTIMORE TRACT
B-2 CHELSEA PIER TRACT
B-3 GREAT NECK
B-4 NASHVILLE
Loan Agreement - Page 26
<PAGE>
EXHIBIT C
C-1 BALTIMORE BUDGET
C-2 CHELSEA PIER BUDGET
C-3 GREAT NECK BUDGET
C-4 NASHVILLE BUDGET
Loan Agreement - Page 27
<PAGE>
EXHIBIT D
PROJECT COMPLETION DATES
PROJECT COMPLETION DATE
- -------------------------------------------------------------------------------
Baltimore June 30, 1996
Chelsea Pier June 30, 1996
Great Neck September 30, 1996
Nashville June 30, 1996
Loan Agreement - Page 28
AGREEMENT REGARDING CREDIT FACILITY
This Agreement Regarding Credit Facility ("AGREEMENT") is entered into
effective as of the 18th day of April, 1996, by and among THE FIRST NATIONAL
BANK OF BOSTON, AS AGENT, THE FIRST NATIONAL BANK OF BOSTON and CAPITAL BANK
(collectively, "LENDERS"), BAYPORT RESTAURANT GROUP, INC. ("BAYPORT") CRAB
HOUSE, INC. ("CRAB HOUSE"), CAPT. CRAB'S TAKE-AWAY OF 79TH STREET, INC.,
TAKE-AWAY/KING SHOPPING PLAZA, INC., AND CRYOTECH INDUSTRIES OF NORTH CAROLINA,
INC. (collectively, "BORROWER") and LANDRY'S SEAFOOD RESTAURANTS, INC.
("LANDRY'S").
R E C I T A L S
Whereas, Lenders and Borrower entered into that certain Revolving
Credit and Term Loan Agreement dated December 14, 1994 (together with the First
Amendment thereto dated February 6, 1996, the Waiver and Second Amendment
thereto dated March 21, 1996 and including all notes and other documents
executed pursuant thereto, the "CREDIT AGREEMENT") pursuant to the terms of
which Lenders agreed to make available to Borrower loan proceeds of up to
Sixteen Million and No/100 Dollars (the "LOAN") secured by various assignments,
security interests, and leasehold mortgages (collectively, the "LOAN
COLLATERAL");
Whereas, Landry's and Bayport have, concurrently with the execution of
this Agreement, entered into an agreement whereby Bayport will merge with and
into a wholly-owned subsidiary of Landry's and all of the outstanding shares of
Bayport will be exchanged for shares of Landry's (the "MERGER AGREEMENT");
Whereas, Landry's and Bayport have also, concurrently with the
execution of this Agreement and the Merger Agreement, entered into a Loan
Agreement (herein so called) in the form attached hereto as EXHIBIT "A" and
incorporated herein by reference, with all capitalized terms not otherwise
defined in this Agreement having the meanings ascribed to them in the Loan
Agreement;
Whereas, Bayport has heretofore used a portion of the proceeds of the
Loan for the purpose of paying the costs of construction of improvements to the
Land; however there are currently unpaid accrued construction costs payable with
respect to each of the Projects and substantial additional funds are required to
complete the construction, equipping and furnishing of each of the Projects;
Whereas, Lenders are unwilling to advance additional funds to Bayport
for the purpose of paying the outstanding payables on the Projects or for the
purpose of completing, equipping and furnishing of the Projects;
Whereas, as a condition precedent to Landry's obligations to advance
funds to Bayport pursuant to the terms of the Loan Agreement, Bayport is
required to obtain the consent and agreement of Lenders to various provisions
thereof;
<PAGE>
Whereas, Lenders believe that each will benefit, directly or
indirectly, as a result of Landry's furnishing of funding to Bayport pursuant to
the terms of the Loan Agreement and desires to grant their consent and agreement
to various provisions thereof as hereinafter provided;
A G R E E M E N T
Now Therefore, in consideration of the foregoing premises and the
mutual benefits that will be obtained by the execution hereof, it is agreed as
follows:
1. Notwithstanding any contrary provision contained in the Credit
Agreement, Lenders hereby agree that:
(a) the execution, delivery, performance, and consummation by
Bayport of the Merger Agreement shall not constitute an Event of
Default (as such term is defined in the Credit Agreement);
(b) the execution, delivery, performance and consummation by Bayport
of the Loan Agreement, as well as the obtaining of credit thereunder
and the execution, delivery and performance of all promissory notes,
deeds of trust, mortgages, security agreements, assignments, deeds,
bills of sale and other documents contemplated thereby shall not
constitute an Event of Default;
(c) so long as the Merger Agreement is in effect, or the transaction
contemplated by the Merger Agreement has been consummated, then at all
times prior to December 31, 1996, all or any part of the outstanding
balance of the Loan may be prepaid, from time to time, without notice,
premium or penalty;
(d) so long as the Merger Agreement is in effect, or the transaction
contemplated by the Merger Agreement has been consummated, then at all
times prior to December 31, 1996, the credit facility evidenced by the
Credit Agreement may be terminated without the payment of the Early
Termination Fee (as such term is defined in the Credit Agreement);
(e) so long as (i) the Merger Agreement is in effect or the
transaction contemplated by the Merger Agreement has been consummated
and (ii) all required payments of interest payable under the Credit
Agreement are paid within the time period permitted, then at all times
prior to December 31, 1996, Lenders will forbear from declaring an
Event of Default, charging interest at the default rate provided for in
Section 2.7(b) of the Credit Agreement, accelerating the maturity of
the Loan, or otherwise seeking to enforce any of the affirmative or
negative covenants contained in the Credit Agreement; provided,
however, if Landry's commences the exercise of its remedies as a result
of the occurrence of one or more of the events enumerated in either
Section 6.1(b) or Section 6.1(d) of the Loan Agreement, then Landry's
shall promptly give Lenders written notice of same and Lenders shall
then be entitled to declare an Event of Default and exercise their
remedies under the Credit Agreement or any other Loan Document as such
term is defined in the Credit Agreement.
2
<PAGE>
(f) so long as the Merger Agreement has not been terminated the
Credit Agreement will not be modified, changed, amended, increased or
extended without the prior written consent of Landry's, which consent
may be granted or withheld in its sole and absolute discretion.
2. Upon the execution hereof and concurrently with the disbursement by
Landry's to Bayport of the Initial Advance pursuant to the Loan Agreement,
Lenders will assign to Landry's all of Lenders' right, title and interest in and
to all mortgages, deeds of trust, collateral assignments of lease, security
agreements, financing statements and other collateral documents which pertain to
the Jupiter Tract and to the Collateral Personalty associated with the Jupiter
Tract. Such assignments shall be made without recourse or warranty on the part
of Lenders. At the time of such assignments Bayport or Crab House, as
applicable, shall be permitted to execute and to deliver into the Conveyance
Escrow, the Conveyance Documents associated with the Jupiter Tract and the
Jupiter Collateral Personalty.
3. Following the execution hereof and concurrently with the
disbursement by Landry's to Bayport of the second Advance pursuant to the Loan
Agreement, Lenders will assign to Landry's all of Lenders' right, title and
interest in and to all mortgages, deeds of trust, collateral assignments of
lease, security agreements, financing statements and other collateral documents
which pertain to the Nashville Tract and to the Collateral Personalty associated
with the Nashville Tract. Such assignments shall be made without recourse or
warranty on the part of Lenders. At the time of such assignments Bayport or Crab
House, as applicable, shall be permitted to execute and to deliver into the
Conveyance Escrow, the Conveyance Documents associated with the Nashville Tract
and the Nashville Collateral Personalty.
4. Following the execution hereof and as Bayport or Crab House, as
applicable, are able to obtain the required consents and estoppels from the
Owners, Bayport or Crab House, as applicable, shall be permitted to grant liens
to Landry's on their respective leasehold interests in and to the Chicago Tract,
the Great Neck Tract, the Myrtle I Tract, and the Myrtle II Tract and to execute
and deliver into the Conveyance Escrow, the Conveyance Documents as to each.
5. Landry's obligation to make Advances to Bayport is, pursuant to the
Loan Agreement, limited in the aggregate based on the number and identity of the
Collateral Tracts and Collateral Personalty on which Landry's then holds first
priority perfected liens on and for which Conveyance Documents are then in the
Conveyance Escrow. As Bayport desires to qualify for an increase in the limit of
Advances, and provided that Landry's has then received first priority perfected
liens on one or more of the Tracts set forth in the preceding paragraph 4, then
concurrently with the making of each Advance which exceeds the prior limit, the
Lenders will, with respect to whichever of the foregoing listed Tracts is then
being used to qualify Bayport to receive an Advance in excess of the previous
limit, assign to Landry's all of Lenders' right, title and interest in and to
all security agreements, financing statements and other collateral documents
which pertain to the Collateral Personalty associated with such Tract. Such
assignments shall be made without recourse or warranty on the part of Lenders.
At the time of such assignments Bayport or Crab House, as applicable, shall be
permitted to execute and to deliver into the Conveyance Escrow, the Conveyance
Documents associated with such Collateral Personalty.
3
<PAGE>
6. At such time as Landry's holds valid, first priority, and perfected
liens in the Myrtle I Tract and the Myrtle II Tract then Landry's will, provided
that by doing so Bayport will not then be in violation of the Advance
limitations set forth in the Loan Agreement, reassign to Lenders' agent all of
Landry's right, title and interest in and to all mortgages, deeds of trust,
collateral assignments of lease, security agreements, financing statements and
other collateral documents which pertain to the Jupiter Tract and to the
Collateral Personalty associated with the Jupiter Tract. Such reassignment shall
be made without recourse or warranty on the part of Landry's.
7. Landry's agrees that it will notify Lenders, in writing, if the
Merger Agreement is terminated.
8. By the execution hereof Landry's assumes no liability under the
Credit Agreement and Lenders agree that Landry's shall have no liability to
Lenders for the repayment of any of Borrower's debts nor for the performance of
any of Borrower's obligations under the Credit Agreement or otherwise.
9. Lenders agree to send Landry's a copy of all written notices which
either sends to Borrower pursuant to or regarding the Credit Agreement. Landry's
agrees to send Lenders a copy of all written notices which it sends to Borrower
pursuant to or regarding the Loan Agreement.
10. All notices or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and shall be considered as
properly given if (a) mailed by first class United States mail, postage prepaid,
registered or certified with return receipt requested, (b) by delivering same in
person to the intended addressee, (c) by delivery to an independent third party
commercial delivery service for same day or next day delivery and providing for
evidence of receipt at the office of the intended addressee, or (d) by prepaid
telegram, telex, or telefacsimile to the addressee. Notice so mailed shall be
effective upon its deposit with the United States Postal Service or any
successor thereto; notice sent by such a commercial delivery service shall be
effective upon delivery to such commercial delivery service; notice given by
personal delivery shall be effective only if and when received by the addressee;
and notice given by other means shall be effective only if and when received at
the office or designated place or machine of the intended addressee. For
purposes of notice, the addresses of the parties shall be as set forth herein;
provided, however, that any party shall have the right to change its address for
notice hereunder to any other location within the continental United States by
the giving of thirty (30) days' notice to the other party in the manner set
forth herein. The addresses of the parties are as follows:
Lenders: The First National Bank of Boston
115 Perimeter Center Place N.E.
Suite 500
Atlanta, Georgia 30346
Attention: John Hood
Facsimile: (404) 393-4166
4
<PAGE>
With Copy To: Hinckley, Allen & Snyder
One Financial Center
Boston, Massachusetts 02109
Attention: Paula K. Andrews, Esq.
Facsimile: (617) 345-9020
Landry's: Landry's Seafood Restaurants, Inc.
1400 Post Oak Boulevard
Suite 1010
Houston, Texas 77056
Attention: Steven L. Scheinthal, Esq.
Facsimile: (713) 623-4702
With Copy To: Winstead Sechrest & Minick P.C.
910 Travis Street, Suite 1700
Houston, Texas 77002
Attention: Arthur S. Berner, Esq.
Facsimile: (713) 951-3800
Borrower: Bayport Restaurant Group, Inc.
4000 Hollywood Boulevard
Suite 695-S
Hollywood, Florida 03021
Attention: David J. Connor
Facsimile: (305) 961-8778
With Copy To: Akerman, Senterfitt & Eidson, P.A.
Suntrust International Center
28th Floor
One S.E. 3rd Avenue
Miami, Florida 33131-1704
Attention: Philip B. Schwartz, Esq.
Facsimile: (305) 374-5095
11. This Agreement shall be binding upon and inure to the benefit each
of the parties' successors and assigns.
12. As a matter of convenience this Agreement may be executed in
counterparts which counterparts will, when taken together, constitute one
originally executed Agreement.
5
<PAGE>
In witness whereof we have set our hands effective as of the date first
above written.
LENDERS:
THE FIRST NATIONAL BANK OF BOSTON, AS
AGENT
By: /s/ JOHN K. HOOD
---------------------------------------
Name: JOHN K. HOOD
-------------------------------------
Title: DIRECTOR
------------------------------------
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ JOHN K. HOOD
---------------------------------------
Name: JOHN K. HOOD
-------------------------------------
Title: DIRECTOR
------------------------------------
CAPITAL BANK
By: /s/ EDWARD P. TIETJEN
---------------------------------------
Name: EDWARD P. TIETJEN
-------------------------------------
Title: SENIOR VICE PRESIDENT
------------------------------------
6
<PAGE>
BORROWER:
BAYPORT RESTAURANT GROUP, INC.
By: /s/ DAVID J. CONNOR
---------------------------------------
Name: DAVID J. CONNOR
-------------------------------------
Title: CHAIRMAN
------------------------------------
CRAB HOUSE, INC.
By: /s/ WILLIAM D. KORENBAUM
---------------------------------------
Name: WILLIAM D. KORENBAUM
-------------------------------------
Title: PRESIDENT
------------------------------------
CAPT. CRAB'S TAKE-AWAY OF 79TH
STREET, INC.
By: /s/ WILLIAM D. KORENBAUM
---------------------------------------
Name: WILLIAM D. KORENBAUM
-------------------------------------
Title: PRESIDENT
------------------------------------
TAKE-AWAY/KING SHOPPING PLAZA, INC.
By: /s/ WILLIAM D. KORENBAUM
---------------------------------------
Name: WILLIAM D. KORENBAUM
-------------------------------------
Title: PRESIDENT
------------------------------------
CRYOTECH INDUSTRIES OF NORTH
CAROLINA, INC.
By: /s/ WILLIAM D. KORENBAUM
---------------------------------------
Name: WILLIAM D. KORENBAUM
-------------------------------------
Title: PRESIDENT
------------------------------------
7
<PAGE>
LANDRY'S:
LANDRY'S SEAFOOD RESTAURANTS, INC.
By: /s/ TILMAN J. FERTITTA
--------------------------------------
Name: TILMAN J. FERTITTA
------------------------------------
Title: CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
-----------------------------------
8
<PAGE>
Exhibit "A"
LOAN AGREEMENT
9
-1-
BAYPORT RESTAURANT GROUP, INC.
AND SUBSIDIARIES
WAIVER AND SECOND AMENDMENT
THIS WAIVER AND SECOND AMENDMENT (this "Waiver and Amendment") is
entered into as of March 21, 1996 by and among Bayport Restaurant Group, Inc.,
Crab House, Inc., Capt. Crab's Take-Away of 79th Street, Inc., Take-Away/King
Shopping Plaza, Inc. and Cryotech Industries of North Carolina, Inc. (each
collectively referred to herein as the "Borrower" or the "Borrowers"), the
financial institutions party to the Agreement (as defined below) (the
"Lenders"), and The First National Bank of Boston, a national banking
association having its head office at 100 Federal Street, Boston, Massachusetts,
its successors and assigns, as agent for the Lenders (the "Agent").
PRELIMINARY STATEMENT. The parties have entered into a Revolving Credit
and Term Loan Agreement dated December 14, 1994 as amended by First Amendment
dated as of February 6, 1996 (the "Agreement"). The Borrower has advised the
Agent that it anticipates that its financial statements for the period ending
December 25, 1995 will reflect non-compliance with certain covenants set forth
in the Agreement as follows:
(i) The EBIT to interest expense ratio specified by Section 5.7 of the
Agreement requires a ratio of not less than 1:1 as of the end of each
fiscal quarter; the Borrower has advised the Agent that while a final
calculation is not yet available, it anticipates that the ratio for the
fiscal quarter ending December 25, 1995 will be less than 1:1.
(ii) The leverage ratio specified by Section 5.9 of the Agreement
requires a ratio of not more than 1:1 as of the end of each fiscal
quarter; the Borrower has advised the Agent that the ratio for the
fiscal quarter ended December 25, 1995 will be 1.1:1.
(iii) The capital expenditures limitation specified by Section 6.4 of
the Agreement permits capital expenditures of not more than $15,170,000
in fiscal year 1995; the Borrower has advised the Agent that capital
expenditures for fiscal year 1995 totalled approximately $18,930,000.
In response to the Borrower's request for waiver of its compliance with
these covenants for this period, and subject to the conditions and amendments
set forth herein, the Lenders and the Borrower have agreed to amend the
Agreement on the terms set forth herein. All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Agreement.
In consideration of the foregoing, the receipt by the Agent of a waiver
fee of $25,000 for the pro rata account of the Lenders, the receipt by the Agent
of an updated Projected Cash Flow summary for and through the period ending July
8, 1996, and the mutual benefits to be derived
<PAGE>
-2-
by the parties hereto from a continuing relationship under the Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, each of the Borrower and the Lenders agrees as follows:
1. WAIVER. In reliance upon the accuracy of the financial statements
delivered to the Agent and the Borrower's representations that other than those
specifically referenced herein, no Default or Event of Default exists under the
Agreement, the Lenders hereby waive the Borrower's compliance with:
(i) Section 5.7 for the fiscal quarter ended December 25, 1995; PROVIDED
THAT the ratio of EBIT to interest expense reflected in the final
audited financial statements for the fiscal year ended December 25, 1995
(the "Audited Statements") is not less than .50:1;
(ii) Section 5.9 as of the fiscal year ended on December 25, 1995; and
(iii) Section 6.4 for the fiscal year ended December 25, 1995; PROVIDED
THAT the total capital expenditures as reflected in the Audited
Statements is not more than $19,000,00.
This waiver is limited to the defaults referenced above and is not, nor
shall it be construed as, a waiver of any other default under the Agreement, now
existing or hereafter occurring. Nothing in this paragraph shall be construed to
be an amendment of any provision of the Agreement and, except as otherwise
expressly provided in this Waiver and Amendment, all of the provisions of the
Agreement remain in full force and effect.
2. AMENDMENTS. (a) Section 5.1 of the Agreement is hereby amended
by relettering subclause (j) as new subclause (k), and by substituting the
following as new subclause(j) :
"(j) as soon as available but in any event not more than 30 days after
the end of each month, beginning with the month ending March 31, 1996,
an updated Project Cost Summary Report for such month and the calendar
year to date detailing expenditures for each construction or remodeling
project undertaken by the Borrower, broken down by type of expenditure
for each project, and total expenditures per project per month;"
(b) Section 6.4 of the Agreement is hereby amended by adding
the following sentence at the end thereof:
"The Borrower shall not begin any remodeling project on any existing
Property for which cost is estimated to exceed $250,000 without the
prior written consent of the Lenders."
This Waiver and Amendment shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts without regard to
its conflicts of law rules. All parts of the Agreement not affected by this
Waiver are hereby ratified and affirmed in all respects, PROVIDED THAT if any
provision of the Agreement shall conflict or be inconsistent with
<PAGE>
-3-
this Waiver and Amendment, the terms of this Waiver and Amendment shall
supersede and prevail. Upon and after the date of this Waiver and Amendment all
references to the Agreement in that document, or in any related document, shall
mean the Agreement as amended by this Waiver and Amendment. Except as expressly
provided in this Waiver and Amendment, the execution and delivery of this Waiver
and Amendment does not and will not amend, modify or supplement any provision
of, or constitute a consent to or a waiver of any noncompliance with the
provisions of the Agreement, and, except as specifically provided in this Waiver
and Amendment, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, each of the Borrower, the Agent and the Lenders in
accordance with Section 11.7 of the Agreement, has caused this Waiver and
Amendment to be executed and delivered by their respective duly authorized
officers as an instrument under seal as of the date set forth in the preamble on
page one of this Waiver and Amendment.
BORROWER:
BAYPORT RESTAURANT GROUP, INC.
WITNESSED:
By: /s/ RUTH STACK By: /s/ WILLIAM D. KORENBAUM
-------------- ----------------------------------
President
Signed At: HOLLYWOOD, FLORIDA
<PAGE>
-4-
CRAB HOUSE, INC.
WITNESSED:
By: /s/ RUTH STACK By: /s/ WILLIAM D. KORENBAUM
-------------- ----------------------------------
President
Signed At: HOLLYWOOD, FLORIDA
CAPT. CRAB'S TAKE-AWAY OF 79TH
STREET., INC.
WITNESSED:
By: /s/ RUTH STACK By: /s/ WILLIAM D. KORENBAUM
-------------- ----------------------------------
President
Signed At: HOLLYWOOD, FLORIDA
CRYOTECH INDUSTRIES OF NORTH
CAROLINA, INC.
WITNESSED:
By: /s/ RUTH STACK By: /s/ WILLIAM D. KORENBAUM
-------------- ----------------------------------
President
Signed At: HOLLYWOOD, FLORIDA
TAKE-AWAY/KING SHOPPING PLAZA, INC.
WITNESSED:
By: /s/ RUTH STACK By: /s/ WILLIAM D. KORENBAUM
-------------- ----------------------------------
President
Signed At: HOLLYWOOD, FLORIDA
<PAGE>
-5-
AGENT:
THE FIRST NATIONAL BANK OF
BOSTON, as Agent
WITNESSED:
By: /s/ LORETTA TALLON By: /s/ WILLIAM C. PURINTON
------------------ ----------------------------------
Vice President
Signed At: BOSTON, MASSACHUSETTS
LENDERS:
THE FIRST NATIONAL BANK OF
BOSTON
WITNESSED:
By: /s/ SCOTT M. D'ORSI By: /s/ WILLIAM C. PURINTON
------------------- ----------------------------------
Vice President
Signed At: BOSTON, MASSACHUSETTS
CAPITAL BANK
WITNESSED:
By: /s/ BARBARA G. VARONA By: /s/ EDWARD P. TIETJEN
--------------------- ----------------------------------
Senior Vice President
Signed At: MIAMI, FLORIDA
